SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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):
May 6, 2003 (April 17, 2003)
CNE Group, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-9224 56-2346563
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
200 West 57th Street, Suite 507
New York, New York 10019
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(Address of Principal Executive Offices) (Zip Code)
212-775-0400
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Registrant's telephone number, including area code
CareerEngine Network, Inc.
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(Former name or former address, if changed since last report)
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ITEM 2. Acquisition or Disposition of Assets.
On April 23, 2003, CNE Group, Inc. ("CNE") acquired all of the outstanding stock
of SRC Technologies, Inc.("SRC") and Econo-Comm, Inc. ("ECI") by merging these
companies into its wholly-owned subsidiaries.
CNE issued to Michael and Carol Gutowski, the principal stockholders of SRC, an
aggregate of 4,867,937 shares of its non-voting Series C Preferred Stock and a
like number of ten year Class C Warrants, each to purchase one share of its
Common Stock at $1.00 per share. The Class C Warrants are not exercisable and
are not detachable from the C Preferred Stock prior to 66 months after their
issuance. CNE issued to the other common stockholders of SRC, including Larry
Reid, SRC's Chief Operating Officer, an aggregate of 899,976 shares of its
Common Stock, 1,697,961 shares of its non-voting Series A Preferred Stock and a
like number of ten year non-detachable Class A Warrants, each to purchase one
share of its Common Stock at $1.00 per share. The Class A Warrants are not
exercisable and are not detachable from the A Preferred Stock prior to 66 months
after their issuance. The Company issued an aggregate of 440,000 shares of its
Series B Preferred Stock to the holders of the SRC Series B Preferred Stock. The
A Preferred Stock has an aggregate liquidating preference over all other CNE
equity of $1,697,961 and the B Preferred Stock has an aggregate liquidating
preference over all other CNE equity except the A Preferred Stock of $440,000.
The C Preferred Stock has no liquidating preference.
CNE issued to Gary Eichsteadt and Thomas Sullivan, the stockholders of ECI, an
aggregate of 4,867,938 shares of its Series C Preferred Stock and a like number
of Class C Warrants. In addition, Messrs. Eichsteadt and Sullivan retained
certain of ECI's trade receivables aggregating in the amount of approximately
$100,000. The Company also acquired a patent related to the operation of ECI's
business from Mr. Eichsteadt for four notes each in the principal amount of
$500,000, bearing interest at the annual rate of 8% payable quarterly and due on
October 31, 2008.
There were no relationships between CNE or any of its affiliates and any of the
sellers of the assets acquired by the Company prior to the acquisition
transactions. Messrs. Gutowski and Reid and Ms. Gutowski became directors and
Mr. Gutowski became President and Mr. Reid became Executive Vice President of
the Company immediately subsequent to the consummation of the acquisitions. Ms.
Gutowski and Messrs. Eichsteadt and Sullivan became executive officers,
respectively, of the Company's subsidiaries that merged with SRC and ECI.
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On April 23, 2003, CNE also effected a private financing pursuant to which it
issued its notes (the "Notes") in the aggregate principal amount of $750,000, of
which $650,000 was contributed by officers of the Company, and 3,124,350 ten
year Class B Warrants, each to purchase one share of its Common Stock at $0.50
per share. The Notes bear interest at the annual rate of 10% payable quarterly
and are due on April 30, 2004. The Warrants are non-dilutive until the Notes
have been repaid. The due date of the Notes may be extended at the Company's
option for an additional year in consideration for the issuance of 10 year
cashless warrants to purchase 5% of the Company's then outstanding common stock
at $0.50 per share. These Warrants will also be non-dilutive until the Notes
have been repaid.
The Company is using the funds obtained from this financing to pay certain ECI
notes payable and for working capital. The financing was effected pursuant to
the exemption from the registration provisions of the Securities Act of 1993
provided by Section 4(2) thereof.
Reference is made to the (i) SRC and ECI Merger Agreements, (ii) Designations
for the Company's Series A, B, C, and E Preferred Stock, (iii) form of the Class
A and C Warrants, (iv) form of the 8% Notes issued to Mr. Eichstead, (v) Asset
Purchase Agreement, Patent Assignment and Pledge Agreement relating to the
Company's acquisition of the patent from Mr. Eichsteadt, and (vi) form of the
10% Note and the Class B Warrant issued in connection with the Company's
financing, copies of which are being filed as Exhibits to this Form 8-K. All
statements made with respect to the transactions discussed in this Item 2 are
qualified by such reference.
Item 5. OTHER INFORMATION
On April 17, 2003, pursuant to the terms of Section 251(g) of the Delaware
General Corporation Law, CareerEngine Network, Inc. ("CareerEngine") became a
wholly-owned subsidiary of CNE Group, Inc. Pursuant to this transaction the
Company acquired all of the assets of CareerEngine, all former stockholders of
CareerEngine became the stockholders of the Company, which is the entity that is
now publicly traded on the American and Pacific Stock Exchanges under the symbol
"CNE," and the officers and directors of CareerEngine became the officers and
directors of the Company.
As a successor entity to CareerEngine, the Company's shares are deemed to be
registered under Section 12(g) of the Securities Exchange Act of 1934 and Rule
12g-3 promulgated thereunder. The shares have been issued without registration
in reliance upon exemptions provided in Section 3(a)(9) of the Securities Act of
1933 and Rule 145 promulgated thereunder. CareerEngine has been subject to the
reporting requirements of the Exchange Act since 1986. The last report filed by
CareerEngine was its Annual Report on Form 10-KSB for the year ended December
31, 2002.
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Reference is made to the (i) Agreement and Plan of Merger among CNE Group, Inc.,
CNE Acquisition, Inc. and CareerEngine Network, Inc, (ii) Certificate of
Incorporation of CNE Group, Inc., (iii) Certificate of Amendment of the
Certificate of Incorporation of CNE Group, Inc., and (iv) Amended and Restated
By-laws of CNE Group, Inc, copies of which are being filed as Exhibits to this
Form 8-K. All statements made with respect to the transactions discussed in this
Item 5 are qualified by such reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
It is impracticable for the Registrant to file the financial information of the
business acquired at this time and such financial information will be filed by
amendment to this Current Report on Form 8-K not later than 60 days after the
last day that this Form 8-K is required to be filed, in accordance with Item 7
of Form 8-K.
(b) Pro Forma Financial Information.
It is impracticable for the Registrant to file the pro forma financial
information required hereunder at this time and such pro forma financial
information will be filed by amendment to this Current Report on Form 8-K Pro
not later than 60 days after the last day that this Form 8-K is required to be
filed, in accordance with Item 7 of Form 8-K.
(c) Exhibits.
The following documents are being filed as exhibits to this report.
Exhibit No. Description
2.1 Agreement and Plan of Merger among CNE Group, Inc., CNE General
Acquisition, Inc. (a wholly-owned subsidiary of CNE Group, Inc.)
and CareerEngine Network, Inc., dated as of April 7, 2003.
2.2 Agreement and Plan of Reorganization of CNE Group, Inc., CNE
Acquisition Corp. I (a wholly-owned subsidiary of CNE Group, Inc.),
SRC Technologies, Inc. and others, dated April 23, 2003.
2.3 Agreement and Plan of Reorganization among CNE Group, Inc., CNE
Acquisition Corp. II (a wholly-owned subsidiary of CNE Group,
Inc.), Econo-Comm, Inc. D/B/A Mobile Communications and the
Stockholders of Econo-Comm, Inc. dated as of April 23, 2003.
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3.1 Certificate of Incorporation of CNE Group, Inc.
3.2 Certificate of Amendment of the Certificate of Incorporation of CNE
Group, Inc.
3.3 Amended and Restated By-Laws of CNE Group, Inc.
4.1 Certificate of Designations of CNE Group, Inc., Series A Preferred
Stock adopted pursuant to Section 151(g) of the Delaware General
Corporation Law.
4.2 Certificate of Designations of CNE Group, Inc., Series B Preferred
Stock adopted pursuant to Section 151(g) of the Delaware General
Corporation Law.
4.3 Certificate of Designations of CNE Group, Inc., Series C Preferred
Stock adopted pursuant to Section 151(g) of the Delaware General
Corporation Law.
4.4 Certificate of Designations of CNE Group, Inc., Series E Preferred
Stock adopted pursuant to Section 151(g) of the Delaware General
Corporation Law.
4.5 Form of Class A Warrants to Purchase Common Stock of CNE Group,
Inc.
4.6 Form of Class B Warrants to Purchase Common Stock of CNE Group,
Inc.
4.7 Form of Class C Warrants to Purchase Common Stock of CNE Group,
Inc.
4.8 Form of CNE Group, Inc. 10% Subordinated Note.
4.9 Form of 8% Subordinated Note issued by CNE Group, Inc. to Gary
Eichsteadt, to purchase all right, title and interest in Patent No.
6,060,979, dated April 23, 2003.
10.1 Asset Purchase Agreement between CNE Group, Inc. and Gary
Eichsteadt, dated April 23, 2003.
10.2 Assignment of patent by Gary Eichsteadt to CNE Group, Inc., dated
April 23, 2003.
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10.3 Pledge Agreement made by CNE Group, Inc. and Gary Eichsteadt, dated
April 23, 2003.
10.4 Employment Agreement between CNE Group, Inc. and George W. Benoit.
10.5 Employment Agreement between CNE Group, Inc. and Anthony S.
Conigliaro.
10.6 Employment Agreement between Connectivity, Inc. and Carol Gutowski.
10.7 Employment Agreement between Econo-Comm, Inc. and Gary Eichsteadt.
10.8 Employment Agreement between CNE Group, Inc. and Larry M. Reid.
10.9 Employment Agreement between CNE Group, Inc. and Michael J.
Gutowski.
10.10 Employment Agreement between Econo-Comm, Inc. and Thomas L.
Sulllivan.
99.1 News Release dated April 23, 2003.
ITEM 9. REGULATION FD DISCLOSURE
On April 23, 2003, CNE Group, Inc. issued the news release attached hereto as
Exhibit 99.1 and incorporated by reference as if fully set forth herein.
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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 thereunto duly authorized.
CNE GROUP, INC.
Date: May 6, 2003 By: /s/ George W. Benoit
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George W. Benoit,
Chairman of the Board of Directors
and Chief Executive Officer
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