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
ActiveCore Technologies, Inc.
(Exact name of registrant as specified in its charter)
Nevada 000-30397 65-6998896
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(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
156 Front Street West, Suite 210, Toronto, Ontario, Canada M5J 2L6
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(Address of Principal Executive Officers) (Zip Code)
Registrant's telephone number, including area code: (416) 252-6200
(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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This Form 8-K and other reports filed by Registrant from time to time with the
Securities and Exchange Commission contain or may contain forward-looking
statements as that term is defined in the Private Securities Litigation Reform
Act of 1995. These statements relate to future events or our future financial
performances. In some cases, you can identify forward-looking statements by
terminology such as "may", "will", "should", "intends", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", "potential", or "continue",
or the negative of these terms or other comparable terminology. Such statements
reflect the current view of Registrant with respect to future events and are
subject to risks, uncertainties, assumptions and other factors relating to
Registrant's industry, Registrant's operations and results of operations and any
businesses that may be acquired by Registrant. Should one or more of these risks
or uncertainties materialize, or should the underlying assumptions prove
incorrect, actual results may differ significantly from those anticipated,
believed, estimated, expected, intended or planned.
Although Registrant believes that the expectations reflected in the
forward-looking statements are reasonable, Registrant cannot guarantee future
results, levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, Registrant
does not intend to update any of the forward-looking statements to conform these
statements with actual results.
Item 1.01 Entry Into a Material Definitive Agreement
On March 16, 2005, ActiveCore Technologies, Inc. (the "Company") signed a share
purchase agreement (the "Share Purchase Agreement") with Andrew Wickett
("Wickett") and Debbie Gracie-Smith ("Gracie-Smith"), the only shareholders of
Cratos Technology Solutions Inc. ("Cratos"), pursuant to which the Company will
acquire all of the stock of Cratos in exchange for approximately CAD$2.6 million
in cash and Company common stock. The closing of the transaction is contingent
on certain conditions described below and is expected to occur on March 25th,
2005.
Under the terms of the Share Purchase Agreement, the Company will issue
approximately 8.9 million shares of common stock of the Company (the "Purchaser
Shares") and pay cash in the amount of CAD$200,000 which will be paid to Wickett
and Gracie-Smith in equal proportions. The per share stock consideration will be
USD$0.223 which is based on the 20 trading day average closing price of the
Company's common stock determined at the time of execution of the Share Purchase
Agreement. The purchase price is subject to an adjustment mechanism which will
require (i) the Company to issue additional shares to Wickett and Gracie-Smith
(in equal proportions) in the event Cratos' exceeds certain specified financial
targets, and (ii) Wickett and Gracie-Smith to contribute back to the Company's
treasury Purchaser Shares (in equal proportions) in the event Cratos' fails to
achieve certain specified financial targets.
In addition to the foregoing, the Company will also make a cash payment on
behalf of Cratos to its primary supplier which cash payment will equal all
amounts due to such supplier and which amounts represent receivables to Cratos.
This supplier will also receive a specified number of bonus shares of the
Company's common stock in consideration for its agreement to (i) enter into
renewed agreements which Cratos, and (ii) terminate any existing security
agreements between such party and Cratos as well as discharge any registered
security and agree to subordinate any future security to that of any senior
lender of the Company.
Registration Rights Agreement
The shares of the Company's common stock to be issued pursuant to the Share
Purchase Agreement will not be registered at the time of issuance with the
Securities Exchange Commission (the "Commission") or the securities commission
of any United States state, and were issued in reliance upon an exemption under
the Securities Act of 1933. Pursuant to the terms of the Share Purchase
Agreement, the Company will grant to each of Wickett and Gracie-Smith
registration rights in respect of the Purchaser Shares which will require the
Company to prepare and file with the Commission, no later than 90 days from the
closing date, a registration statement in respect of said shares. The Company
shall use its best efforts to have the registration statement declared effective
by the Commission within 120 days of the closing date.
Lock-Up Agreement
Pursuant to the terms of the Share Purchase Agreement, each of Wickett and
Gracie-Smith will agree to a contractual lock-up and voting restrictions in
respect of the Purchaser Shares. Specifically, the Purchaser Shares will be
subject to a lock-up in accordance with the following release conditions: (i)
20% of the Purchaser Shares shall be released on the seventh business day
following the closing date; (ii) 40% of the Purchaser Shares will be released on
the first anniversary of the closing date; and (iii) 40% of the Purchaser Shares
will be released on the second anniversary of the Closing Date.
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Each of Wickett and Gracie-Smith will also agree for a period of two years from
the closing date to vote the Purchaser Shares in support of any recommendation
made by the directors and/or management of the Company at any annual or special
meeting of the Company.
Employment Agreement for Wickett
Pursuant to the terms of the Share Purchase Agreement, Wickett (or a personal
services company on Wickett's behalf) and the Company shall enter into an
employment agreement pursuant to which Wickett shall continue as Cratos'
President and Chief Executive Officer for a period of two years after the
closing date. The employment agreement provides for an annual salary of
CAD$130,000 and a bonus of 3% of Cratos' net revenues to be determined on a per
project basis.
Employment Agreement for Gracie-Smith
Pursuant to the terms of the Share Purchase Agreement, Gracie-Smith (or a
personal services company on Gracie-Smith's behalf) and the Company shall enter
into an employment agreement pursuant to which Gracie-Smith shall continue as
Cratos' Chief Operating Officer for a period of two years after the closing
date. The employment agreement provides for an annual salary of CAD$130,000 and
a bonus of 3% of Cratos' net revenues to be determined on a per project basis.
Reverse Stock Split
As a condition to the acquisition of Cratos, the Company agreed to complete a
ten for one reverse split of its common stock. On March 1, 2005, the reverse
split was effective. Upon completion of the reverse split and prior to the
acquisition of Cratos, the Company had approximately 49 million shares of common
stock issued and outstanding. All of the shares that will be issued in
connection with the Cratos acquisition will be post-split shares. The
reverse-stock split was reported in a current report on Form 8-K by the Company
on February 22, 2005.
Press Release
On March 16, 2005, the Company issued a press release discussing the Share
Purchase Agreement and the transaction. A copy of that press release is attached
hereto as Exhibit 99.1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 22, 2005
ActiveCore Technologies, Inc.
By: /s/ [Peter J. Hamilton]
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Name: Peter J. Hamilton
President & CEO
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EXHIBIT INDEX
Exhibit No. Description
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10.1
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10.2
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10.3
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99.1 Press Release
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