2
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): April 22, 2004
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The CattleSale Company
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(Exact name of registrant as specified in its charter)
Delaware 001-07636 74-1605174
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
9901 IH-10 West, Suite 800, San Antonio, Texas 78230-2292
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(Address of Principal Executive Offices) (Zip Code)
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Registrant's telephone number, including area code: 210-558-2898
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Item 5. Other Events
The CattleSale Company (the "Buyer") has entered into a letter of intent with
IDComm, Inc. (the "Seller") dated as of April 15, 2004 for the proposed
acquisition of certain assets of the Seller. A press release announcing the
proposed acquisition and a copy of the letter of intent are attached as exhibits
99.1 and 99.2, respectively.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
99.1 Press Release dated April 22, 2004
99.2 Letter of Intent between The CattleSale Company and IDCOMM, Inc. dated
April 15, 2004
SIGNATURE
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.
The CattleSale Company
(Registrant)
Date: April 22, 2004
By: /s/ Phillip P. Krumb
Phillip P. Krumb
Chief Financial Officer
Exhibit 99.1
FOR IMMEDIATE RELEASE
THE CATTLESALE COMPANY
TO ACQUIRE EQUITY POSITION IN IDCOMM, INC.
San Antonio, Texas, April 22, 2004...The CattleSale Company (BB OTC "CTLE")
announced today that it has entered into a letter of intent to acquire a 45
percent equity position in IDComm, Inc. IDComm has proprietary software for
Distributed Database Technology using RF Tags and 2-D Barcode structures. IDComm
Inc., headquartered in Santa Clarita, California, is an industry leader in
distributed database technology software (SmartWare(TM)) and integration systems
for the identification and traceability of objects that move from database to
database, industry to industry and country to country. IDComm has successfully
implemented SmartWare(TM) technology along with read/write hardware into the
cattle industry through licensing arrangements with CowTek, Inc., which has
previously executed a letter of intent to be acquired by CattleSale. IDComm
presently is developing programs targeted at six industries. Two of these
programs are designed for maintenance and identification systems using RF Tag
technology and one program is designed for large values used extensively in the
power generation and refinery industry. Large equipment companies, such as farm
equipment and trucking, also have a need for this type of ID and maintenance
record keeping capability. A specific product for the shipping industry is being
developed using the SmartWare(TM) technology to replace the Bill-Of-Lading
paperwork, which will modernize and streamline the import and export of product
worldwide.
CattleSale's proposed investment in IDComm follows the letter of intent to
purchase CowTek Inc. announced last month. IDComm owns the patents on the
SmartWare (TM) technology licensed to CowTek, Inc.
The proposed acquisition is structured around the issuance of shares of The
CattleSale Company's $10 Convertible Preferred Stock B and stock options for The
CattleSale Company's common stock. The proposed transaction has an expected
close date of May 1, 2004 and is contingent on final due diligence, a definitive
purchase agreement and approval of both companies' board of directors. This
letter of intent also provides The CattleSale Company with a 5 year option,
beginning 12 months after closing, to purchase an additional 10% of the common
stock of IDComm at fair market value to be defined in the definitive Purchase
Agreement.
"This acquisition not only adds a very attractive investment to the
company's asset base, but it will also protect CattleSale's investment in CowTek
insuring long term stability and growth of both businesses. The proprietary
software technology that IDComm has developed for the RFID world is very
exciting. Tracking and providing historical data that can reside on the product
is definitely the wave of the future", stated David Geiman, CattleSale CEO.
"We are excited about having CattleSale Company as an investor in our company
and having their representation on our board of directors", said Mr. George
Davlantes, CEO and co-founder of IDComm, Inc.
Contact:
David Geiman, CEO
The CattleSale Company
San Antonio, Texas 78230
(210) 558 2898
This press release contains forward-looking statements about the business,
financial condition and prospects of the Company. The actual results of the
Company could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties, including without
limitation, the risks associated with entering into a new line of business,
changes in product demand, the reliability of the internet, changes in
competition, economic conditions, new product development, changes in tax and
other governmental rules and regulations applicable to the Company, and other
risks indicated in the Company's filings with the Securities and Exchange
Commission. These risks and uncertainties are beyond the ability of the Company
to control, and in many cases, the Company cannot predict the risks and
uncertainties that could cause its actual results to differ materially from
those indicated by the forward-looking statements. When used in this press
release the words "believes," "estimates," "plans," "expects," and "anticipates"
and similar expressions as they relate to the Company or its management are
intended to identify forward-looking statements.
Exhibit 99.2
The CattleSale Company
9901 IH 10 West Suite 800
San Antonio, TX 78230
April 15, 2004
PERSONAL & CONFIDENTIAL
Mr. George Davlantes
IDCOMM CEO
17516 Sarita Ave
Santa Clarita, CA 91364
VIA FAX TRANSMISSION
Dear George:
The purpose of this letter is to set forth our mutual understanding in
connection with the proposed acquisition of Stock and Options (the Assets) of
IDComm, Inc. (the "Seller") by The CattleSale Company (the "Buyer"):
1. The Seller. The Seller is a California Corporation headquartered in Santa
Clarita, CA. and has developed and patented a system and method for
managing historical information on an object on an electronic tag. The
system allows for decentralized database solutions.
2. Purchase of Assets. The Buyer proposes to acquire certain Assets, free and
clear of all liens, claims and encumbrances. A summary of the Assets
included, but not limited to, are below;
>> 45% ownership in IDComm, Inc.
>> 5 year purchase option, whose term begins 12 months after this
closing, for an additional 10% of the common stock of IDComm at Fair
Market Value. The Purchase agreement shall sufficiently define "Fair
Market Value". In addition, the Purchase Agreement shall outline that
in the event of an outside offer to purchase IDComm, post Closing, the
same Fair Market Value protocol will apply and the Buyer will have 60
days from the establishment of Fair Market Value to exercise its
purchase option.
>> Seats on IDComm Board of Directors that represent a 45% ownership
representation.
The parties anticipate that the closing shall occur on or before May 1,
2004.
3. Liabilities. Buyer assumes responsibility for no liabilities.
4. Purchase Price. The purchase price to be paid by the Buyer for the Assets
shall consist of the following:
>> $1.5 million Dollars face amount (150,000 shares) of The CattleSale
Company $10 Series B Cumulative, Convertible Preferred Stock (See
Section 7).
>> 500,000 CTLE Stock options exercisable at $.25 for 3 years.
>> 3 Year Sale Look Back Agreement that provides for additional profit
participation for the Seller in the event the Seller sells the
additional 10% equity position of IDComm referenced above to the Buyer
and then within 12 months the Buyer resells the IDComm Assets at an
additional profit. This protection would be for 3 years from Closing
and during that period protect the profit potential of the additional
10% equity for a period of 12 months after a resale by the Buyer.
5. Contingency: This transaction is contingent on the successful completion of
the CattleSale acquisition of CowTek assets.
6. Provisions for buyback: 3 Year Option Agreement for the Seller to buy back
IDComm stock for 150,000 shares of Preferred B CattleSale stock or the
equivalent in cash, in event of the Buyer's bankruptcy or forced
liquidation.
7. The Preferred Stock. The rights and preference of the Series B Preferred
Stock ("Preferred Stock"), which each have a par value of $.01 per share,
are as follows:
Dividends: Dividends accrue and are cumulative from the date of issuance in
an annual amount equal to 2.5% per year per share, payable
semi-annually, when, as and if declared by the Board of Directors.
Dividends are payable in cash, shares of Preferred Stock (valued at
$10 per share) or shares of Common Stock (valued, (x) if there is a
market for the Common Stock, at the average price of a share of Common
Stock during the last thirty (30) days of trading, or (y) if there is
not a market for the Common Stock, at $1.38 per share), or any
combination thereof.
Conversion: Each share of Preferred Stock is convertible at any time at the
option of the holder into 7.25 shares of Common Stock.
Redemption: At any time after the earlier of:
A merger or consolidation effecting the sale in one or a series of related
transactions of all or substantially all of the Company's assets or a sale of
more than fifty percent (50%) of the Company's outstanding voting securities, or
the realization by the Company of aggregate net proceeds in excess of
$10,000,000 in connection with the sale of Common Stock pursuant to a public
offering registered under the Securities Act of 1933, as amended (a "Qualified
Public Offering"),
8. Definitive Purchase Agreement. Closing of the transactions shall be subject
to the execution and delivery of a definitive Purchase Agreement (the
"Agreement") between the Buyer and the Seller. The Agreement will contain
such representations and warranties, covenants, terms and conditions as are
customary and appropriate for a transaction of this type including, without
limitation, the parties' obligations to close being conditioned on
obtaining any required shareholder and board of director or other governing
body consents and completion of due diligence.
9. Confidentiality. Seller acknowledges that the Buyer is a publicly traded
company and is bound by very strict restrictions on the release of
information. Both Buyer and Seller agree to at all times maintain the
confidentiality of all confidential and/or proprietary information of both
CowTek and The CattleSale companies and will not disclose such information,
or use it for any purpose other than its evaluation of the proposed
transaction. Seller will not release any information on this potential
transaction to any party outside of its senior management team, without the
prior consent of the Buyer, or as otherwise required by law.
10. Expenses. The Seller and the Buyer shall each be responsible for their own
respective legal, due diligence, accounting and/or financing fees or
expenses.
11. Exclusivity Period. In connection with the proposed transactions, you
understand that the Buyer will require a brief period of cooperation to
complete its due diligence investigation. Accordingly, the Seller, and its
agents, agrees to negotiate exclusively with the Buyer with respect to any
transactions relating to the Seller's Assets of the kind described in this
letter during the period ending on May 30, 2004 (the "Exclusivity Period").
During the Exclusivity Period, the Buyer and Seller shall use their
commercially reasonable best efforts to negotiate and execute a definitive
Agreement, in form and substance satisfactory to the respective parties and
their attorneys.
12. Amendment; Assignment. This Letter of Intent may not be amended except by
an agreement in writing, signed by all parties. The Buyer or the Seller
without the written consent of all parties shall not assign this Letter of
Intent.
13. Governing Law. This Letter of Intent shall be governed by, and construed in
accordance with, the laws of the State of Illinois.
14. Binding Provisions. Only the provisions of paragraphs 9 through 13 shall
constitute the legally binding and enforceable obligations of the parties
hereto.
If you agree to the foregoing, please so signify by executing the enclosed copy
of this letter in the space provided and delivering it to us.
Very truly yours,
The CattleSale Company
By:/s/ David W. Pequet
Name: David W. Pequet
Title: Director
AGREED TO AND ACCEPTED:
On this 15 day of April 2004
IDComm, Inc.
By:/s/ George Davlantes
George Davlantes, CEO