pcg8k_jan122009.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported) January 12, 2009
Commission
File Number 000-03718
PARK
CITY GROUP, INC.
(Exact
name of small business issuer as specified in its charter)
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Nevada
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37-1454128
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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3160
Pinebrook Road; Park City, Utah 84098
(Address
of principal executive offices)
(435)
645-2000
(Registrant's
telephone number)
__________________________________
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
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On January 12, 2009, Park City Group,
Inc. (the “Company”) entered into a Securities Purchase Agreement with certain
investors (“Purchase Agreement”), pursuant to which the Company issued
Subordinated Promissory Notes in an aggregate principal amount of $1,538,241.56
(“Exchange Notes”). The Exchange Notes were issued, together with
shares of the Company’s Common Stock, in exchange for the surrender to the
Company of certain shares of Series E Preferred Stock of Prescient Applied
Intelligence, Inc. (the “Exchange”) held by such investors. Prescient Applied
Intelligence, Inc. (“Prescient”) is a wholly-owned subsidiary of the Company as
a result of the merger of Prescient with and into a wholly-owned subsidiary of
the Company (the “Prescient Merger”). In connection with the
Exchange, each share of Series E Preferred Stock was exchanged for an Exchange
Note in the principal amount of $4,021.30, and 900 shares of the Company’s
Common Stock. The Exchange Notes, which bear interest computed at a
rate of twelve percent (12%) per annum, are due and payable on July 12,
2011.
On January 12, 2009, the Company
entered into an additional Purchase Agreement with Robert W. Allen, pursuant to
which the Company issued a Subordinated Promissory Note to Mr. Allen in the
principal amount of $523,013.70 (the “Allen Note”). Mr. Allen is a
director of the Company. The Allen Note was issued by the Company to
replace a Subordinated Promissory Note issued to Mr. Allen on August 28, 2008 in
the principal amount of $500,000, which Note was due and payable, together with
accrued but unpaid interest, on or before December 1, 2008. The
Company and Mr. Allen extended the maturity date of the original Note to January
12, 2009. The principal amount of the Allen Note reflects the principal amount
of the original Note issued to Mr. Allen, plus accrued interest of
$23,013.70. The Allen Note bears interest computed at a rate of
twelve percent (12%) per annum, and is due and payable on the earlier
to occur of July 12, 2011 or upon an event of default. In addition to
the Allen Note, Mr. Allen was issued 116,667 shares of the Company’s Common
Stock in consideration for the exchange of the original Note.
In consideration for certain investment
and financial advisory services provided to the Company in connection with the
Prescient Merger, including the financing thereof, the Company entered into a
Purchase Agreement with Taglich Brothers, Inc. (“Taglich”), on January 9, 2009,
pursuant to which the Company issued to Taglich a Subordinated Promissory Note
in the principal amount of $221,171.50, in lieu of cash fees owed to Taglich
(the “Taglich Note”). The Taglich Note bears interest computed at a
rate of twelve percent (12%) per annum, and is due and payable on the earlier to
occur of July 12, 2011 or upon an event of default. In addition to
the Taglich Note, Taglich was issued 49,500 shares of the Company’s Common
Stock, and warrants exercisable for 50,000 shares of the Company’s Common Stock
at $1.80 per share.
On April
1, 2009, the Company issued a Subordinated Promissory Note to Riverview
Financial Corp. (“Riverview”) in the principal amount of $620,558.53 (“New
Note”). Riverview is controlled by Randall K. Fields, the Chairman of
the Board, President and Chief Executive Officer of the Company. The
New Note was issued in consideration for the cancellation of a Promissory Note,
dated August 28, 2008, issued by the Company to Riverview in the original
principal amount of $1,499,000 (the “Old Note”), which principal amount was
reduced by $1.0 million as a result of a payment made to Riverview by the
Company on February 3, 2009. The New Note includes accrued but unpaid
interest under the Old Note of $80,171.84, certain fees owed to Riverview by the
Company in the amount of $35,123.68 for guaranteeing amounts owed by the Company
under a line of credit with a bank, and $5,263.01 representing certain late fees
owed Riverview by the Company resulting from the failure by the Company to pay
certain amounts to Riverview under the terms of a Services Agreement between the
Company and Riverview, dated July 1, 2005, described below. The New
Note, which bears interest computed at a rate of twelve percent (12%) per annum,
is due on the earlier of September 30, 2011 or upon an event of
default.
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Item
3.02
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Unregistered
Sales of Equity Securities.
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See Item 2.03 above.
The
securities issued by the Company as described in Item 2.03 above were issued
either in exchange for existing securities of the Company, or were issued to
satisfy certain obligations of the Company. As a result, the Company
did not receive any proceeds from the issuance of the securities. No
underwriters were involved in issuance of the securities, which were issued in
private transactions, in reliance on an exemption from registration under
Section 3(a)(9) and/or Section 4(2), as applicable, of the Securities Act of
1933, as amended (the "Securities Act"), and Rule 506 of Regulation D
promulgated thereunder. All of the securities issued by the Company were
acquired by accredited investors, for investment purposes only and not with a
view toward the public distribution thereof. Each certificate
representing the shares of Common Stock bears a legend indicating that such
securities have not been registered under the Securities Act and that they are
subject to specified restrictions on transferability. The securities were issued
by the Company without any general solicitation or advertising.
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Item
5.01
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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On April 9, 2009, the Company entered
into a Services Agreement (“Agreement”) with Fields Management, Inc. (“FMI”), to
provide certain executive management services to the Company, including
designating an executive to perform the functions of President and Chief
Executive Officer for the Company (“Executive”). The Agreement amends
and replaces the Services Agreement between FMI and the Company, dated July 1,
2005. FMI is controlled by Randall K. Fields, FMI’s designated
Executive, who currently serves as the Company’s Chairman of the Board,
President and Chief Executive Officer.
Under the terms of the Services
Agreement, which continues through June 30, 2013, FMI is paid an annual base fee
of $325,000, payable in equal semi-monthly installments. In addition,
FMI is entitled to the following:
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·
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an
incentive bonus based upon the Company’s achievement of performance goals
determined each year by the Compensation Committee of the Company’s Board
of Directors;
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·
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up
to $1,200 per month for reimbursement of a vehicle of Executive’s
choice;
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·
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an
annual allowance of up to $6,000 for computer equipment;
and
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·
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600,000
shares of Common Stock of the Company, subject to a pro-rata (10) ten-year
vesting schedule.
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The
Company is also obligated to maintain two term life insurance policies in the
name of the Executive for $10.0 million each, with the beneficiary of one to be
designated by the Executive, and the other to be designated by the
Company.
On April
9, 2009, the Company also entered into an Employment Agreement with Randall K.
Fields (“Employment Agreement”), pursuant to which Mr. Fields is to be employed
by the Company in the position of Sales Department Manager through June 20, 2013
for annual compensation of $50,000.
Item
9.01 Financial
Statements and Exhibits.
See
Exhibit Index.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
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Dated: June
5, 2009
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PARK
CITY GROUP, INC.
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By: /s/
John Merrill
John Merrill
Chief
Financial Officer
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Exhibit Index