SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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 17, 2002
eResource Capital Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-8662
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(State or other jurisdiction (Commission File Number)
of incorporation)
23-226039
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(IRS Employer Indentification Number)
5935 Carnegie Boulevard, Suite 101, Charlotte, NC 28209
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(704)553-9330
ITEM 5. OTHER EVENTS
eResource Capital Group, Inc. (the "Company") has signed of a letter of
intent to raise $4,350,000 in cash and other assets through the sale of a
minority interest of approximately 25% in the Company's home technology
business.
On April 17, 2000, the Company executed a binding letter of intent (the
"Letter of Intent") to exchange 100% of the common stock of its wholly owned
subsidiary LST, Inc. for 16,000,000 restricted shares (the "Share
Consideration") of PRNM in a non-taxable transaction (the "Princeton
Transaction"). After the closing of the Princeton Transaction, the Company will
own 16,000,000 shares of PRNM or approximately 75% of its then issued and
outstanding voting Common Stock and will control PRNM. PRNM will file a
registration statement to register the Share Consideration as soon as
practicable following execution of the definitive acquisition agreement, but in
no event later than six months from the date of the closing of the transaction.
The parties also agreed in the Letter of Intent to use their best
efforts to sign a definitive agreement concerning this transaction by no later
than May 24, 2002. The Princeton Transaction is contingent upon PRNM having
no more than 5,500,000 shares outstanding as of the closing date, on a
fully-diluted basis. PRNM has represented to the Company that its Board of
Directors approved the Princeton Transaction on April 17, 2002. The Company's
Board of Directors approved the Princeton Transaction on April 10, 2002. The
Company expects the Princeton Transaction to close on or before June 30, 2002
("the Closing"). The Letter of Intent is attached hereto as Exhibit 99.1 to this
filing.
Background
The Company acquired LST, Inc., d/b/a Lifestyle Technologies
("Lifestyle"), in April 2001. Lifestyle was formed to take advantage of the fast
growing home technology and security market by integrating high-speed Internet,
security, satellite and entertainment and communications applications in new and
existing homes or commercial buildings. In the fourth quarter of fiscal 2001,
the Company worked with Lifestyle to develop a national franchising program,
which was implemented in September 2001. In connection with the launch of the
franchising program, Lifestyle sold its Raleigh, NC, Hilton Head, SC,
Greenville, SC and Columbia, SC locations to franchisees and has sold the
franchise rights to ten additional markets. Also, in July 2001, LST acquired a
home technology business located in Atlanta, GA. The Company currently operates
locations in Charlotte, NC and Atlanta, GA.
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BUSINESS OF PRNM
PRNM, an Idaho corporation, presently owns a small real estate
investment in Dallas, Texas, but has no substantial operating business. PRNM
trades under the ticker "OTCBB:PRNM". PRNM's principal executive offices are
located at 1111 South Main Street, Suite 127, Grapevine, TX 76051. Subsequent to
the Closing, PRNM's principal executive offices are expected to be re-located to
Dallas, TX and its name changed to better reflect its new corporate direction.
Terms of the Princeton Transaction
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The following is a summary of certain terms of the Letter of Intent.
Any capitalized term not defined in this Form 8-K shall have the meaning set
forth in the Letter of Intent.
Share Exchange
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The Letter of Intent provides that the Company will exchange all of the
issued and outstanding shares of the capital stock of Lifestyle for 16,000,000
restricted shares of PRNM's Common Stock, provided, however, that such number of
shares shall be adjusted to the extent necessary to prevent the product of the
number of PRNM shares issued to the Company and the average closing stock price
of PRNM's common stock on the NASDAQ Bulletin Board over the twenty (20) days
immediately preceding the Closing from falling below $16,000,000. The Shares to
be issued to RCG shall be registered by PRNM (A) pursuant to a registration
statement on Form S-4 and (B) under any applicable state securities laws, as
soon as reasonably practicable following execution of the merger agreement, but
in any event no later than six months after the Closing.
Board of Directors and Management
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The Letter of Intent also provides that the Company will be entitled to
elect two (2) members of PRNM's Board of Directors as of the Closing. The Board
of Directors at Closing will elect the new Chief Executive Officer of PRNM.
Stock options
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The Letter of Intent also provides that each outstanding option or
warrant issued to Lifestyle employees, or in connection with the Company's
acquisition of Lifestyle, entitling the holder to purchase shares of the
Company's Common Stock will be converted into an option or warrant to purchase a
number of shares of PRNM common with an appropriate adjustment to share numbers
and a similar adjustment in exercise price.
Bridge Loan
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Within 15 days of the date of the signing of the Letter of Intent, PRNM
shall extend a $275,000 loan to LST. If the Princeton Transaction is not
consummated, PRNM shall, and RCG shall cause LST to, enter into a loan agreement
on such terms as the parties may agree.
Representations, Warranties, Conditions and Covenants
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The Letter of Intent contains the following representations and
covenants of PRNM: PRNM shall covenant to have approximately (A) (i) $1,300,000
in cash and short-term liquid investments and (ii) $3,050,000 worth of other net
tangible assets and (B) not more than $40,000 in liabilities, as of the Closing.
PRNM agreed not to take any action outside of the ordinary course of
business without the prior written consent of RCG, provided, however, that PRNM
shall be entitled to take such action as is reasonably necessary to limit the
outstanding shares of PRNM common stock to no more than 5,500,000 as of the
Closing. The Company agreed not to take any action outside of the ordinary
course of business with respect to Lifestyle, to negotiate exclusively with PRNM
with respect to the sale of Lifestyle and not to solicit, negotiate, enter into
any agreement or entertain other offers or alternate acquisition or merger
proposals for Lifestyle, its assets or stock from the date of the Letter of
Intent until the earlier of (i) termination of the merger agreement and (ii)
June 30, 2002.
The Company and PRNM will make certain customary representations and
warranties in the definitive agreements for this transaction, including
representations and warranties regarding their authority to enter into the
Princeton Transaction and the respective due organization and good standing of
the Company and PRNM. The obligations of each the Company and PRNM to consummate
the transactions contemplated by the Princeton Transaction will be subject to
the satisfaction or waiver of certain customary conditions, such as that the
representations and warranties made by each party to the Princeton Agreement be
true and correct as of Closing and the absence of litigation, pending or
threatened, to enjoin the consummation of the Princeton Transaction. At the time
of Closing, the Company and PRNM will determine whether all the foregoing
conditions have been satisfied or waived and that all the covenants of PRNM have
been fulfilled.
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The foregoing description of the Princeton Transaction and the Letter
of Intent is qualified in its entirety by reference to the Letter of Intent,
which is filed as Exhibit 99.1 to this filing and is incorporated herein by
reference.
ACCOUNTING TREATMENT
For accounting purposes, the Princeton Transaction will be treated as
an issuance of equity in Lifestyle for cash and other assets, i.e. a capital
stock transaction. RCG will continue to consolidate the financial statements of
Lifestyle and will record minority interest equal to the fair value of the
assets received in the Princeton Transaction, or approximately $4,350,000.
Neither the Company nor Lifestyle will not record any gain or loss as a result
of the Closing of the Princeton Transaction.
Lifestyle's historical financial statements will become the separately
reported historical financial statements of the public entity PRNM. The fair
value of PRNM's net assets acquired will be recorded on Lifestyle's financial
statements as of the date of Closing with a corresponding increase in
Lifestyle's stockholders' equity. PRNM will be required to continue to fulfill
its reporting requirements as a public company.
PROPOSED DIVIDEND OF PRNM COMMON STOCK
The Company intends to distribute a portion of the PRNM shares that it
receives in connection with this transaction to its stockholders (the
"Distribution"). The establishment of a record date and the amount of the
Distribution itself has not been determined, but it is the present intent of the
Company's Board of Directors that any such distribution would occur after the
effectiveness of the registration statement on which the Share Consideration is
registered.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Letter of Intent dated April 17, 2002.
99.2 Press release dated April 22, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Company has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
eResource Capital Group, Inc.
Date: April 22, 2002 By: /s/ JOHN W. VAN HEEL
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John Van Heel
Vice President of Finance
EXHIBIT INDEX
99.1 Letter of Intent, dated April 17, 2002.
99.2 Press release dated April 22, 2002.
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EXHIBIT 99.1
CONFIDENTIAL
Letter of Intent
DATE: April 17, 2002
PARTIES: Princeton Mining Company, an Idaho corporation ("PRNM")
eResource Capital Group, Inc., a Delaware corporation ("RCG")
TRANSACTION: Newly formed acquisition subsidiary ("Acquisition Sub"), a
wholly-owned subsidiary of PRNM, to acquire from RCG a 100%
interest in LST, Inc. ("LST"), a wholly-owned subsidiary of
RCG, through acquisition of all outstanding LST shares (the
"Acquisition") in a reverse triangular merger of Acquisition
Sub into LST, whereby LST will be the surviving corporation
and a wholly-owned subsidiary of PRNM.
PURCHASE PRICE
AND PAYMENT: 16,000,000 fully-paid, nonassessable shares (the "Shares")
of common stock of PRNM; provided, however, that such number
of shares shall be adjusted to the extent necessary to
prevent the product of the number of PRNM shares issued to
RCG and the average closing stock price of PRNM's common
stock over the twenty (20) days immediately preceding the
closing (the "Closing") of the Acquisition from falling
below $16,000,000. The Shares to be issued to RCG shall be
registered by PRNM (A) pursuant to a registration statement on
Form S-4 and (B) under any applicable state securities laws,
as soon as reasonably practicable following execution of the
acquisition agreement, but in any event no later than 6 months
from the date of the Closing.
RCG STOCK
OPTIONS/
WARRANTS: Each outstanding option or warrant issued to LST employees, or
in connection with RCG's acquisition of LST, entitling the
holder to purchase shares of RCG will be converted into an
option or warrant to purchase PRNM stock with an appropriate
adjustment to share numbers and a similar adjustment in
exercise price. It is understood that LST related RCG stock
options will be subject to change-of-control acceleration
provisions. RCG will not grant any stock options to LST
employees after the date hereof. Upon consummation of the
Acquisition, PRNM shall negotiate in good faith to enter into
employee stock option agreements with LST employees hired on
or after the date hereof.
PRNM BOARD
SEATS: RCG will be entitled to elect two (2) members of PRNM's Board
of Directors as of the Closing. Such Board representatives
shall be entitled to receive the same expense reimbursements
granted to outside Board representatives. The Board of
Directors at Closing will elect the new Chief Executive
Officer of PRNM.
CLOSING; CLOSING
CONTINGENCIES: The Closing of the transactions contemplated by this Letter of
Intent shall occur no later than June 30, 2002, and shall be
contingent upon (i) PRNM having no more than 5,500,000 shares
outstanding as of the Closing on a fully-diluted basis, and
(ii) the approval of the Acquisition by RCG's Board of
Directors and ratification of the Board's approval by RCG's
shareholders. PRNM hereby represents and warrants that the
Acquisition was approved by its Board of Directors as of April
17, 2002.
EXPENSES: All expenses incurred in connection with the Acquisition will
be paid by the party incurring such costs.
NO BROKERS: Neither party shall have retained a broker or owe any broker
commissions in connection with the Acquisition.
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PUBLIC
ANNOUNCEMENTS: The existence and terms of this Letter of Intent may be
disclosed by each of the parties in respective press
releases with prior notice to the other party as to the
content of such release.
OTHER TERMS:
Definitive Agreement. PRNM and RCG will use their best efforts
to sign an acquisition agreement concerning the matters
contemplated hereby by no later than May 24, 2002. The
acquisition agreement shall contain standard public company
representations, warranties and covenants relating to LST and
the Shares and shall provide for indemnification for breaches
of such representations, warranties and covenants. PRNM shall
covenant to have approximately (A) (i) $1,300,000 in cash and
short-term liquid investments and (ii) $3,050,000 worth of
other net tangible assets and (B) not more than $40,000 in
liabilities, as of the Closing. Each of PRNM and RCG agrees to
negotiate in good faith with respect to the terms and
conditions of the acquisition agreement.
Bridge Loan. Within 15 days of the date hereof, PRNM shall
extend a $275,000 loan to LST. If the Acquisition is not
consummated, PRNM shall, and RCG shall cause LST to, enter
into a loan agreement on such terms as the parties may agree.
Exclusivity. RCG agrees to negotiate exclusively with PRNM
with respect to the sale of LST and not to solicit, negotiate,
enter into any agreement or entertain other offers or
alternate acquisition or merger proposals for LST, its assets
or stock from the date hereof until the earlier of (i)
termination of the acquisition agreement and (ii) June 30,
2002.
Representations and Covenants. PRNM represents that it has
approximately 29,000,000 shares of capital stock outstanding
on a fully-diluted basis. PRNM hereby covenants and agrees not
to take any action outside of the ordinary course of business
without the prior written consent of RCG, including
effectuating any corporate restructuring, declaring or paying
any dividends or other distributions with respect to capital
stock, effectuating any stock split, combination or
reclassification of capital stock, issuing any shares of
capital stock or securities convertible into stock, or
accelerating or amending the period of exercisability of or
repricing of warrants, prior to the Closing; provided,
however, PRNM shall be entitled to take such action as is
reasonably necessary to fulfill subsection (i) of the Closing
Contingencies set forth above. RCG hereby covenants and agrees
not to take any action outside of the ordinary course of
business with respect to LST.
Governing Law: This Letter of Intent shall be governed
by Delaware law, without regard to its principles of
conflicts of law.
Counterparts. This Letter of Intent may be executed in
counterparts (whether by facsimile or otherwise), each of
which shall be deemed an original and all of which shall
constitute one and the same agreement.
BINDING NATURE: Upon execution of this Letter of Intent by both
parties hereto, the provisions hereof shall constitute the
legally binding and enforceable agreements of PRNM and RCG and
their respective successors and permitted assigns in
consideration of the costs to be borne by the parties in
pursuing the proposed Acquisition and the parties mutual
undertakings as to the matters described herein.
eRESOURCE CAPITAL GROUP, INC.
By:
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Print Name:
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Title:
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PRINCETON MINING COMPANY
By:
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Print Name:
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Title:
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EXHIBIT 99.2
[EResource Capital Group letterhead]
eResource Capital Group, Inc. Signs LOI to Sell Approximately 25% of LifeStyle
Technologies for $4.35 Million in Cash and Other Assets
Charlotte, NC--April 22, 2002--eResource Capital Group, Inc. ("RCG," AMEX: RCG)
announced today that it has signed a letter of intent to sell a portion of LST,
Inc. d/b/a LifeStyle Technologies ("LST"), its' home technology subsidiary, to
Princeton Mining Company ("PRNM," OTCBB: PRNM). The transaction has an
approximate equity value of $16 million and is expected to close no later than
June 30, 2002, at which time LST will become a wholly-owned subsidiary of PRNM.
Upon closing, RCG will receive 16,000,000 shares of PRNM common stock, which
represents approximately 75% of the outstanding stock of PRNM. Upon assuming
control, RCG anticipates changing PRNM's name to reflect the new corporate
direction. The transaction is contingent upon PRNM having no more than 5.5
million shares outstanding at closing. The transaction will add approximately
$4.35 million in assets, of which $1.3 million will be cash, to the existing
assets of LST.
"We have a better opportunity to maximize the success of LST by it being a
stand-alone entity" stated Mike Pruitt, President and CEO of RCG. RCG invested
approximately $8.5 million to acquire the LST business and has spent the last 13
months developing the business. Significant milestones include establishing and
initiating a national franchise program and entering the Atlanta market. As a
result of internal growth and franchising, the LifeStyle Technologies' network
has grown from one location in Charlotte with 5 employees to 13 locations with
over 100 employees.
Mr. Pruitt indicated that RCG intends to both register and distribute a portion
of the 16 million shares it receives in PRNM to shareholders of RCG at a future
date. "We hope that this transaction will increase shareholder value by helping
unlock the value of LST, as well as provide the investment community with the
ability to invest directly in LST."
About LifeStyle Technologies
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LST, based in Charlotte, N.C., is positioned to take advantage of the fast
growing home technology and security market by integrating high-speed Internet,
security, satellite, and entertainment and communication applications in new and
existing homes or commercial buildings. Through its' 11 franchise locations and
company-owned locations in Charlotte, NC and Atlanta, GA, LST works with owners
of existing homes, as well as with new home builders and buyers, to install the
necessary infrastructure - including both hardware and wiring - to enhance the
end-user's enjoyment and interaction with new technologies. For more information
or to contact Lifestyle directly, visit www.lifestech.com or call, toll free,
1-866-543-3789.
About eResource Capital Group
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eResource Capital Group, Inc. (AMEX: RCG), based in Charlotte, N.C., is
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a network of technology and service companies brought together under one
operating company to benefit from synergistic relationships and the infusion of
intellectual and capital resources. RCG plans to strengthen its network through
timely acquisitions and by growing and enhancing its member companies. Operating
companies in the RCG network include: LifeStyle Technologies; flightserv.com;
Internet Aviation Services, Ltd.; DM Marketing, Inc.; Avenel Ventures, Inc.;
Avenel Alliance, Inc.; and Logisoft Computer Products Corp. More information is
available on RCG at www.eresourcecapital.com.
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For investor information, contact Andrew Lauman at 704-553-9330 ext. 23 or
adl@eresourcecapital.com.
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Statements in this news release about anticipated or expected future revenue or
growth or expressions of future goals or objectives, including statements
regarding whether current plans to grow and strengthen the company's existing
network will be implemented or accomplished, are forward- looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. All forward-looking statements in this release are based upon
information available to the Company on the date of this release. Any
forward-looking statements involve risks and uncertainties, including the risk
that the Company will be unable to grow or strengthen its network due to a lack
of capital or an inability to identify acquisition candidates, as well as those
risks and uncertainties described in the Company's filings with the Securities
and Exchange Commission, that could cause actual events or results to differ
materially from the events or results described in the forward-looking
statements, whether as a result of new information, future events or otherwise.
Readers are cautioned not to place undue reliance on these forward-looking
statements.
INVESTOR RELATIONS: Andrew Lauman, eResource Capital Group, Inc.
, adl@eresourcecapital.com Telephone: 704-553-9330
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End of Filing
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