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): OCTOBER 5, 2000
CDSI HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0001-22563 95-4463937
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(Commission File Number) (I.R.S. Employer Identification No.)
100 S.E. SECOND STREET, MIAMI, FLORIDA 33131
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(Address of principal executive offices) (Zip Code)
(305) 579-8000
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(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 5, 2000, Controlled Distribution Systems, Inc. ("CDS"), a
wholly-owned subsidiary of CDSI Holdings Inc. (the "Company"), completed the
sale to Gutlove and Shirvint Inc. ("Gutlove") of the assets of its cigarette
vending route, including vending machines and a van. The purchase price for the
vending route, which is primarily located in New York state, was $34,140 in cash
and the assumption of a $10,800 note secured by the van. The cash portion of the
purchase price was paid $29,140 on October 5, 2000 with the remaining $5,000 to
be paid by December 1, 2000.
The sale of the vending route was effected pursuant to an Asset
Purchase Agreement, dated as of September 18, 2000, between Gutlove and CDS. The
sale was negotiated on an arm's length basis between Gutlove and CDS. The amount
of the cash consideration was based on the cigarette and coin inventory of the
vending route at the open of business on October 2, 2000. The purchaser is not
affiliated with the Company or any of its affiliates, or any director or officer
of the Company, or any affiliate or associate of any such director or officer.
The vending route constituted the only current source of revenue for
the Company. After giving effect to the cash received from Gutlove on October 5,
2000, the Company had cash and cash equivalents of approximately $250,000. The
Company intends to seek new Internet-related or other business opportunities. As
the Company has only limited cash resources, the Company's ability to complete
any acquisition or investment opportunities it may identify will depend on its
ability to raise additional financing, as to which there can be no assurance. As
of the date of this report, the Company has not identified any potential
acquisition or investment. There can be no assurance that the Company will
successfully identify, complete or integrate any future acquisition or
investment, or that acquisitions or investments, if completed, will contribute
favorably to its operations and future financial condition.
The foregoing summary of the sale of the vending route is qualified in
its entirety by reference to the text of the Asset Purchase Agreement, which is
included as an exhibit hereto and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations
for the year ended December 31, 1999 and the six months ended June 30, 2000 have
been prepared giving effect to the sale of the vending route on October 5, 2000.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations
give effect to the sale of the vending route as if it had occurred on January 1,
1999.
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The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June
30, 2000 has been prepared giving effect to the sale of the vending route as if
it had occurred on June 30, 2000.
The unaudited pro forma financial information should be read in
conjunction with the Company's historical Consolidated Financial Statements and
the related notes thereto contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1999 and its quarterly reports on Form 10-Q for
the quarters ended March 31, 2000 and June 30, 2000.
The unaudited pro forma financial information does not purport to be
indicative of what the Company's financial position or results of operations
would actually have been had such transactions been completed on the dates
indicated or to project the Company's results of operations for any future date.
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CDSI HOLDINGS AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
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PRO FORMA
ADJUSTMENTS
HISTORICAL CDS ASSET SALE PRO FORMA
----------- --------------- -----------
Revenues ..................................... $ 177,030 $ (177,030) $ --
----------- ----------- -----------
Cost and expenses:
Cost of revenues ......................... 150,483 (150,483) --
Research and development ................. 12,616 (12,616) --
Sales and marketing ...................... 22,580 (22,580) --
Amortization of intangible assets ........ 45,491 (45,491) --
General and administrative ............... 121,845 (105,749) 16,096
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353,015 (336,919) (16,096)
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Operating loss ........................... (175,985) 159,889 (16,096)
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Other income (expense):
Interest income .......................... 5,192 -- 5,192
Interest expense ......................... (295) (295) --
Equity in loss of ThinkDirectMarketing.com -- -- --
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4,897 (295) 5,192
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Net loss ................................. $ (171,088) $ 160,184 $ (10,904)
=========== =========== ===========
Net loss per share (basic and diluted) ....... $ (0.05) $ 0.05 $ 0.00
=========== =========== ===========
Shares used in computing net loss
per share ................................ 3,120,000 3,120,000 3,120,000
=========== =========== ===========
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CDSI HOLDINGS AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1999
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PRO FORMA
ADJUSTMENTS
HISTORICAL CDS ASSET SALE PRO FORMA
----------- --------------- -----------
Revenues ..................................... $ 431,587 $ (431,587) $ --
----------- ----------- -----------
Cost and expenses:
Cost of revenues ......................... 593,273 (593,273) --
Research and development ................. 122,355 (122,355) --
Amortization of intangible assets ........ 402,503 (402,503) --
Sales and marketing ...................... 451,465 (451,465) --
General and administrative ............... 1,078,107 (740,340) 337,767
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2,647,703 (2,309,936) 337,767
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Operating loss ...................... (2,216,116) 1,878,349 (337,767)
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Other income (expense):
Interest income .......................... 45,545 -- 45,545
Interest expense ......................... (744) (744) --
Equity in loss of ThinkDirectMarketing.com (501,924) -- (501,924)
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(457,123) (744) (456,379)
----------- ----------- -----------
Net loss ............................ $(2,673,239) $ 1,879,093 $ (794,146)
=========== =========== ===========
Net loss per share (basic and diluted) ....... $ (0.86) $ 0.60 $ (0.26)
=========== =========== ===========
Shares used in computing net loss
per share ................................ 3,120,000 3,120,000 3,120,000
=========== =========== ===========
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CDSI HOLDINGS AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
JUNE 30, 2000
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PRO FORMA
ADJUSTMENTS
HISTORICAL CDS ASSET SALE PRO FORMA
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ASSETS:
Current assets:
Cash and cash equivalents ............... $ 210,680 $ 39,829 $ 250,509
Accounts receivable ..................... 889 (889) --
Inventory ............................... 39,829 (39,829) --
Prepaid expenses and other current assets 41,598 -- 41,598
----------- ----------- -----------
Total current assets ............... 292,996 (889) 292,107
Property and equipment, net ............. 30,213 (15,355) 14,858
Other assets ............................ 18,505 -- 18,505
----------- ----------- -----------
Total assets ....................... $ 341,714 $ (16,244) $ 325,470
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of note payable ......... $ 3,039 $ (3,039) $ --
Accounts payable and accrued expenses ... 104,269 (29,082) 75,187
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Total current liabilities .......... 107,308 (32,121) 75,187
----------- ----------- -----------
Note payable ................................ 8,094 (8,094) --
Commitments and contingencies ............... -- -- --
Stockholders' equity:
Common stock, $.01 par value. Authorized
25,000,000 shares; 3,120,000 shares
issued and outstanding ............... 31,200 -- 31,200
Additional paid-in capital .............. 8,209,944 -- 8,209,944
Accumulated deficit ..................... (8,014,832) 23,971 (7,990,861)
----------- ----------- -----------
Total stockholders' equity ......... 226,312 23,971 250,283
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Total liabilities and stockholders'
equity ........................... $ 341,714 $ (16,244) $ 325,470
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(c) The following Exhibits are provided in accordance with the
provisions of Item 601 of Regulation S-K and are filed herewith unless otherwise
noted.
EXHIBIT INDEX
10.1 Asset Purchase Agreement, dated as of September 18, 2000, between
Gutlove and Shirvint, Inc. and Controlled Distribution Systems, Inc.
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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.
CDSI HOLDINGS INC.
By: /s/ J. BRYANT KIRKLAND III
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J. Bryant Kirkland III
Vice President and Chief Financial Officer
Date: October 19, 2000
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