UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): March 16, 2005
Digital Learning Management Corporation
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(Exact name of registrant specified in charter)
Delaware 000-26293 88-0420306
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(State of (Commission File (IRS Employer
Incorporation) Number) Identification No.)
19950 Mariner Avenue
Torrance, CA 90503
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(Address of principal executive offices) (Zip Code)
(310) 921-3444
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(Registrant's telephone number, including area code)
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(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))
FORWARD-LOOKING INFORMATION
This current report on Form 8-K contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995,
including the plans and objectives of management for the business, operations,
and economic performance of Digital Learning Management Corporation, a Delaware
corporation (the "Company," "we," "us," or "our"). These forward-looking
statements generally can be identified by the context of the statements or the
use of words such as the Company or its management "believes," "anticipates,"
"intends," "expects," "plans" or words of similar meaning. Similarly, statements
that describe the Company's future operating performance, financial results,
plans, objectives, strategies, or goals are forward-looking statements. Although
management believes that the assumptions underlying the forward looking
statements are reasonable, these assumptions and the forward-looking statements
are subject to various factors, risks and uncertainties, many of which are
beyond the control of the Company. Accordingly, actual results could differ
materially from those contemplated by the forward-looking statements. For
further information regarding risks and uncertainties associated with the
Company's business, please refer to its filings with the Securities and Exchange
Commission, including, but not limited to, its quarterly report on Form 10-QSB
for the three months ended September 30, 2004. Investors are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date of this current report on Form 8-K. The Company undertakes no
obligation to update publicly any forward-looking statements to reflect new
information, events or circumstances after the date of this report or to reflect
the occurrence of unanticipated events.
ITEM 2.05 COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
On March 16, 2005, the board of directors of the Company finalized its decision
to discontinue the Company's operations at its vocational schools and its
acquisition strategy of accredited vocational schools and campuses. The Company
will continue to focus on its online Virtual Learning ("e-Learning") systems and
related services strategy, with sales and services focused around its Virtual
University Appliance ("VU Appliance") product.
In connection with its change in business strategy, the Company will close the
operations of two of its subsidiaries, Software Education of America, Inc.
("SEA") and Global Computer Systems, Inc./TechConsults.net ("Global"), both of
which were acquired by the Company in 2004. The Company has advanced
approximately $1.5 million to SEA. Because the Company is unlikely to recover
these advances, the closure of SEA is expected to result in a one-time write-off
of approximately $1.5 million, which will be recorded in the fourth quarter of
2004. Similarly, the Company expects the closure of Global to result in a
one-time write-off of approximately $400,000, which will also be recorded in the
fourth quarter of 2004.
The Company expects to report a substantial loss in large part as a result of
the write-offs associated with the close of operations of SEA and Global in its
financial results for fiscal year 2004. Moreover, the Company expects that its
revenues for fiscal year 2005 will fall substantially short of expectations as a
result of the closures.
ITEM 8.01 OTHER EVENTS
Change in Business Strategy
Effective March 16, 2005, the Company has decided it will discontinue operations
at its vocational schools and will no longer pursue acquisitions accredited
vocational schools and campuses going forward. The Company will continue to
focus on its online e-Learning systems and related services strategy, with sales
and services focused around its VU Appliance product.
The VU Appliance product, which was introduced by the Company in October 2004,
is a pre-packaged and "turn-key" hardware and software solution designed to
address the e-Learning needs of corporations and educational institutions. It is
a comprehensive "out-of-the-box" virtual learning solution that allows customers
to quickly create 100% web-based virtual learning environments. The platform
allows customers to create, publish and deliver courseware for e-Learning in
addition to managing their traditional classroom learning environment. The
Company utilizes its President's filed United States Patent (Provisional) in its
VU Appliance. The Company believes its success in the future lies in
successfully marketing, selling and improving its VU Appliance product and
related services. The Company intends to remain focused on further developing
and adding to its intellectual property assets, utilizing its expertise to help
the online learning initiatives of its customers with e-Learning systems
solutions.
The market for e-Learning systems is very competitive and there are several
products in the market from large and well capitalized companies such as
SumTotal(TM), eCollege(TM), Blackboard(TM) and WebCT(TM). These companies have
far greater resources than the Company and therefore can make the Company's
entry in the e-Learning systems marketplace difficult. With this in mind, there
can be no assurance that the Company will succeed in its objectives.
Liquidity Deficiency
If we are unable to successfully obtain additional financing, we will not have
sufficient cash to continue operations. As of March 1, 2005, we had cash and
cash equivalents of approximately $200,000. We will need to raise additional
funds from either one or a combination of additional financings, exercise and/or
conversion of outstanding securities, mergers or acquisitions, or otherwise
obtain capital via sale or license of certain of our assets, in order to satisfy
our future liquidity requirements. Current market conditions present uncertainty
as to our ability to secure additional financing or effectuate any merger or
acquisition, as well as our ability to reach profitability. There can be no
assurances that we will be able to secure additional financing or effectuate any
such merger or acquisition, or obtain favorable terms on such financing if it is
available, or as to our ability to achieve positive cash flow from operations.
If we cannot effectuate financing transactions to raise needed funds on
acceptable terms, we will not be able to develop or enhance our products, take
advantage of future opportunities or respond to competitive pressure or
unanticipated requirements. A material shortage of capital will require us to
take drastic steps such as reducing our level of operations, disposing of
selected assets or seeking protection under federal bankruptcy laws. We cannot
assure you that we will be able to meet our future capital requirements.
Late Filing of Annual Report on Form 10-K
Due to our liquidity crisis, we may not be able to file our Annual Report on
Form 10-KSB on a timely basis. Such failure may cause us to be delisted by the
OTC Bulletin Board and could adversely affect our ability to raise additional
needed funds.
Legal Proceeding
In the Form 8-K filed with the Securities and Exchange Commission on February
28, 2005, the Company previously reported a complaint filed by Wells Fargo Bank
against SEA regarding an alleged default on a line of credit in the aggregate
amount of approximately $158,000. One of the other guarantors of the line of
credit filed a cross-complaint against the Company on March 1, 2005 for
indemnity in the amount of approximately $158,000, plus attorneys' fees. The
cross complaint also alleges a default on separate note by SEA in the amount of
approximately $12,500.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Digital Learning Management Corporation
By: /s/ Aurangzeb Bhatti
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Name: Aurangzeb Bhatti
Title: President
Dated: March 17, 2005