8-K 1 v017249_8k.txt ================================================================================ 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) April 27, 2005 ------------- RCG COMPANIES INCORPORATED (Exact name of registrant as specified in its charter) ------------- Delaware 1-8662 23-2265039 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 6836 Morrison Blvd., Ste. 200, Charlotte, North Carolina 28211 (Address of principal executive offices) (Zip Code) (704) 366-5054 (Registrant's telephone number, including area code) Not Applicable (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)) [GRAPHIC OMITTED] ================================================================================ Item 1.01 Entry into Material Definitive Agreement Disclosure information required for Item 1.01 is contained in Item 2.01 below which is incorporated by reference. Item 2.01 Completion of Acquisition or Disposition of Assets On April 27, 2005, RCG Companies Incorporated ("RCG"), pursuant to the terms of an Asset Purchase Agreement dated April 26, 2005 (the "APA"), closed a transaction through which its wholly owned subsidiary Logisoft Corp. ("Logisoft") and Logisoft's wholly owned subsidiary eStorefronts.net Corp.("eStorefronts" and together with Logisoft the "Sellers") sold substantially all of the assets of Sellers to RMK Holdings, LLC ("Buyer"), in consideration for which Buyer paid Sellers $699,000 and assumed $2,083,000 of Sellers' liabilities. The purchase price paid is subject to a post closing adjustment, as set forth in the APA, once the closing date financial statements have been finalized. In connection with the transactions set forth in the APA, RCG executed (i) a Guaranty and Indemnification Agreement pursuant to which it guaranteed the payment and performance obligations of Sellers under the APA, and (ii) a Noncompetition Agreement pursuant to which it agreed not to compete with Buyer in a limited number of States for a period of 5 years in the business of reselling computer software and hardware, sales, design, hosting and maintenance of internet and intranet websites, information technology consulting and ecommerce software development and consulting. The foregoing disclosures are in all cases subject to the terms and provisions set forth in the APA, the Guaranty and Indemnification Agreement, and the Noncompetition Agreement, copies of which are filed herewith as exhibits. Item 7.01 Regulation FD Disclosure A copy of a press release with respect to the foregoing transactions is attached hereto as an Exhibit. Item 9.01. Financial Statements and Exhibits (b) Unaudited pro forma financial information of RCG reflecting the sale of Logisoft business. The unaudited pro forma consolidated financial information gives effect to the sale of the Logisoft business as if the disposition had occurred for the consolidated balance sheet on December 31, 2004, and for the consolidated statement of operations on July 1 of each period presented. The pro forma adjustments are based on presently available information. The unaudited pro forma information has been included as required by the 1 Securities and Exchange Commission and is not necessarily indicative of the results that would have been reported had the disposition actually occurred on the dates specified, nor is it indicative of the results that may be obtained in the future. RCG Companies Incorporated and Subsidiaries UNADITED PRO FORMA COMBINED BALANCE SHEET DATA AT DECEMBER 31, 2004 (In thousands) Pro Forma Adjustments
RCG Sale of Other RCG Historical Logisoft Adjustments Pro Forma ------------ ------------ ------------ ------------ ASSETS Cash and cash equivalents $ 1,163 $ 1,161 $ 2,324 Restricted cash 7,279 -- 7,279 Accounts receivable, net 1,353 (1,277) 76 Prepaid expenses and other current assets 1,858 (87) 1,771 ------------ ------------ ------------ ------------ Total current assets 11,653 (203) 11,450 Property and equipment, net 853 (366) 487 Deferred costs and other assets 49 (43) 6 Net non-current assets of discontinued operations 376 -- 376 Goodwill and other intangible assets 18,005 (7,917) 10,088 ------------ ------------ ------------ ------------ Total assets $ 30,936 $ (8,529) [A] $ 22,407 ============ ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Notes payable and other obligations-current portion $ 3,949 $ (501) $ 3,448 Accounts payable and accrued expenses 11,959 (1,819) 10,140 Net non-current liabilities of discontinued operations 4,478 -- 4,478 Unearned income 6,296 -- 6,296 ------------ ------------ ------------ ------------ Total current liabilities 26,682 (2,320) 24,362 Warrant obligations 1,593 -- 1,593 Notes payable and other obligations 4,847 (64) 4,783 ------------ ------------ ------------ ------------ Total liabilities 33,122 (2,384) [B] 30,738 Commitments and Contingencies Shareholders' equity: Common stock 896 -- 896 Additional paid-in capital 125,461 -- 125,461 Accumulated deficit (127,911) (6,145) (134,056) Treasury stock at cost (632) -- (632) ------------ ------------ ------------ ------------ Total shareholders' equity (2,186) (6,145) (8,331) ------------ ------------ ------------ ------------ Total liabilities and shareholders' equity $ 30,936 $ (8,529) $ 22,407 ============ ============ ============ ============
See Notes to Unaudited Pro Forma Consolidated Financial Information. 2 RCG Companies Incorporated and Subsidiaries UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2004 (In thousands, except share data)
Pro Forma Adjustments --------------------- RCG Sale of Other RCG Historical Logisoft Adjustments Pro Forma -------------- -------------- -------------- -------------- Revenue: Services ................................... $ 41,341 $ (203) $ 41,138 Product sales .............................. 7,369 (7,369) -- -------------- -------------- -------------- -------------- Total revenue ..................... 48,710 (7,572) 41,138 -------------- -------------- -------------- -------------- Cost of revenue: Services ................................... 41,349 (6) 41,343 Product sales .............................. 6,520 (6,520) -- -------------- -------------- -------------- -------------- Total cost of revenue ............. 47,869 (6,526) 41,343 -------------- -------------- -------------- -------------- Gross profit ...................... 841 (1,046) (205) -------------- -------------- -------------- -------------- Selling, general and administrative expenses 7,598 (1,192) 6,406 Depreciation and amortization .............. 221 (76) 145 -------------- -------------- -------------- -------------- Operating costs and expenses ...... 7,819 (1,268) 6,551 -------------- -------------- -------------- -------------- Operating loss .................... (6,978) (222) (6,756) Interest expense, net ...................... 335 (42) 293 Other expense .............................. 325 8 333 -------------- -------------- -------------- -------------- Loss from continuing operations before extraordinary items ........................ (7,638) (256) (7,382) Gain on debt restructuring .............. 2,257 -- 2,257 -------------- -------------- -------------- -------------- Loss from continuing operations .... $ (5,381) $ (256) $ (5,125) ============== ============== ============== ============== Basic and diluted loss per share: Loss from continuing operations ....... $ (0.25) $ (0.01) NA $ (0.24) ============== ============== ============== ============== Weighted average shares outstanding ........ 21,419,404 21,419,404 NA 21,419,404 ============== ============== ============== ==============
See Notes to Unaudited Pro Forma Consolidated Financial Information. 3 RCG Companies Incorporated and Subsidiaries UNADITED PRO FORMA COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2004 (In thousands, except share data)
Pro Forma Adjustments --------------------- RCG Sale of Other RCG Historical Logisoft Adjustments Pro Forma -------------- -------------- -------------- -------------- Revenue: Services ................................... $ 165,765 $ (389) $ 165,376 Product sales .............................. 15,042 (15,042) -- -------------- -------------- -------------- -------------- Total revenue ..................... 180,807 (15,431) 165,376 -------------- -------------- -------------- -------------- Cost of revenue: Services ................................... 154,812 (260) 154,552 Product sales .............................. 13,244 (13,244) -- -------------- -------------- -------------- -------------- Total cost of revenue ............. 168,056 (13,504) 154,552 -------------- -------------- -------------- -------------- Gross profit ...................... 12,751 1,927 10,824 -------------- -------------- -------------- -------------- Selling, general and administrative expenses 18,637 (2,138) 16,499 Depreciation and amortization .............. 810 (204) 606 Goodwill impairment ........................ 1,199 (199) 1,000 -------------- -------------- -------------- -------------- Operating costs and expenses ...... 20,646 (2,541) 18,105 -------------- -------------- -------------- -------------- Operating loss .................... (7,895) (614) (7,281) Interest expense, net ...................... 842 (74) 768 Gain on investments, net ................... (120) -- (120) Other income ............................... (95) 100 5 -------------- -------------- -------------- -------------- Loss from continuing operations ... $ (8,522) $ (588) $ (7,934) ============== ============== ============== ============== Basic and diluted loss per share: Loss from continuing operations ....... $ (0.51) $ (.04) NA $ (0.47) ============== ============== ============== ============== Weighted average shares outstanding ........ 16,799,540 16,799,540 NA 16,799,540 ============== ============== ============== ==============
See Notes to Unaudited Pro Forma Consolidated Financial Information. 4 RCG Companies Incorporated and Subsidiaries NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (A) Total assets of the Logisoft business sold, net of the assumed cash received if the transaction had closed on December 31, 2004. (B) Liabilities assumed by the Purchaser. (c) Exhibits Exhibit Description ------- ----------- 10.1 Asset Purchase Agreement dated April 26, 2005, between RMK Holdings, LLC, Logisoft Corp., and eStorefronts.net Corp. 10.2 Guaranty and Indemnification Agreement, dated April 26, 2005, between RCG Companies Incorporated and RMK Holdings, LLC 10.3 Noncompetition Agreement, dated April 26, 2005, between RCG Companies Incorporated and RMK Holdings, LLC 99.1 Press Release dated April 28, 2005 5 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: April 29, 2005 RCG COMPANIES INCORPORATED By: /s/ Marc Bercoon ----------------------- Marc Bercoon Chief Financial Officer