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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13
or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): February 8, 2000
MARGO CARIBE, INC.
(Exact name of registrant as specified in this charter)
PUERTO RICO 0-15336
(State or other jurisdiction of (Commission File No.)
incorporation)
66-0550881
(IRS Employer Identification No.)
ROAD 690, KILOMETER 5.8 VEGA ALTA, PUERTO RICO 00692
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (787) 883-2570
(Former Name or Former Address, if changed since last report)
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ITEM 5. OTHER EVENTS
On February 8, 2000, Margo Caribe, Inc., a Puerto Rico corporation
("Margo"), entered into a non-binding letter of intent (the "Letter of Intent")
with iTract, LLC ("iTract"), TheTechDept.com, Inc. and Michael J. Spector. The
Letter of Intent provides for the merger of iTract with a new wholly-owned
subsidiary of Margo (the "Transaction"). Under the Transaction, iTract
shareholders would receive 88% of the issued and outstanding shares of common
stock of Margo (on a fully diluted basis) in exchange for all the common stock
of iTract. It is a condition to the Transaction that Margo sell prior to the
merger its nursery and other operating businesses and that at the effective time
of the merger it have at least $5 million in cash and cash equivalents and not
be subject to liabilities exceeding $10,000 in the aggregate. The Transaction is
subject to negotiation of definitive agreements and the satisfaction of certain
other conditions, including the satisfactory completion of due diligence
examinations, the qualification of the Transaction as a tax-free reorganization
for federal and Puerto Rico income tax purposes, the continued listing of the
shares on the NASDAQ Small Cap Market and obtaining the approval of Margo's
stockholders and an opinion from an investment banking firm satisfactory to
Margo that the Transaction is fair to Margo's shareholders from a financial
point of view.
On February 9, 2000, Margo issued a press release announcing that it
had entered into the Letter of Intent. A copy of such press release is attached
hereto as Exhibit 99.1 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORM, FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press release issued by Margo Caribe, Inc. on
February 9, 2000
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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 hereunto duly authorized.
MARGO CARIBE, INC.
By: /s/ Alfonso Ortega
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Alfonso Ortega
Vice President and
Chief Financial Officer
Date: February 10, 2000
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EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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99.1 Press release issued by Margo Caribe, Inc. on February 9, 2000
EXHIBIT 99.1
MARGO CARIBE, INC.
P.O. BOX 706
DORADO, PR 00646
NEWS RELEASE
NASDAQ SYMBOL: MRGO
FOR IMMEDIATE RELEASE
CONTACTS: Michael Spector Alfonso Ortega
(787) 883-2570, Ext. 24 (787) 883-2570, Ext. 33
MARGO CARIBE, INC.
ANNOUNCES LETTER OF INTENT
TO MERGE WITH ITRACT, LLC
Vega Alta, Puerto Rico, February 9, 2000 - Margo Caribe, Inc. ("Margo") (NASDAQ
Symbol: MRGO) announced today that it has entered into a non-binding letter of
intent to merge with iTract, LLC, a privately held early-stage internet company
building a communication tool that will allow its users to deliver rapidly a
highly targeted marketing campaign using e-mail, fax and postal mail.
Founded by its Chairman, Henry Kauftheil, iTract seeks to address the
needs of businesses that seek more efficient, expedient and cost-effective ways
to promote and communicate products and services to their target audiences.
iTract will target small to medium sized businesses that want to reach thousands
of potential customers for a fraction of the cost of traditional direct
marketing. iTract's system will allow users to send out faxes, e-mails and
postal mail in volume from the same document directly off the computer at the
same time. iTract is also building a permission-based fax and e-mail list that
is demographically organized and can be custom configured to meet the client's
marketing needs.
Under the proposed merger, iTract would merge with a new wholly-owned
subsidiary of Margo. As a result of the merger, iTract shareholders would
receive 88% of the issued and outstanding shares of common stock of Margo (on a
fully diluted basis assuming exercise of all outstanding stock options) in
exchange for all the common stock of iTract. Thus, following the merger, iTract
shareholders would control Margo, holding 88% of the common stock of the company
with Margo shareholders holding 12%. Prior to the effective time of the merger,
all outstanding stock options held by officers, directors and employees of Margo
would vest and become immediately exercisable. Margo would change its name
following the merger to iTract, Inc. A majority of the Board of Directors of the
merged company would be composed of members of iTract's Board of Directors and
iTract's management would manage the merged company. In order for the merger to
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be effected on a tax free basis to shareholders, Margo would reincorporate as a
Delaware corporation prior to the effective time of the merger with iTract. The
letter of intent does not provide for any break-up fee.
It is a condition to the consummation of the Merger that Margo sell
prior to the Merger its nursery and other operating businesses. In addition, as
of the effective time of the merger, Margo must have at least $5 million in cash
and cash equivalents and not be subject to liabilities exceeding $10,000 in the
aggregate.
In connection with the execution of the letter of intent, Michael J.
Spector, President, Chief Executive Officer and the controlling shareholder of
Margo, and other Margo shareholders have agreed to make a $2.0 million loan to
International Commerce Exchange Systems, Inc. ("ICES"), an indirect parent
company of iTract. The loan is payable in a single balloon payment on the
closing day of the merger. If the merger is not consummated, such loan will be
converted into common stock of ICES.
The transaction is expected to close in the second quarter of 2000,
subject to the negotiation of definitive agreements, the satisfactory completion
of due diligence examinations, and the satisfaction of various other conditions
customary and appropriate for this type of transaction, including the approval
of the merger by the majority of Margo's and iTract's equity holders, the
qualification of the merger as a tax-free reorganization for federal and Puerto
Rico income tax purposes, continued listing of the shares on the NASDAQ Small
Cap Market and obtaining an opinion from an investment banking firm satisfactory
to Margo that the transaction is fair to Margo's shareholders from a financial
point of view. The letter of intent provides that concurrent with the execution
of the merger agreement, Michael J. Spector will agree to vote his Margo shares,
representing approximately 66% of Margo's outstanding common stock, in favor of
the merger. No assurance can be given that Margo will reach a definitive merger
agreement or that, if reached, the parties will be able to satisfy the
conditions to the consummation of the merger. If the parties do not execute a
merger agreement within thirty (30) days, the letter of intent will be
automatically terminated.
Michael J. Spector, President and Chief Executive Officer of Margo
said: "We believe iTract provides an outstanding opportunity for Margo's
shareholders. This transaction would provide Margo's shareholders the
opportunity to participate in the fast growth internet-based marketing
industry."
Henry Kauftheil, iTract's Chairman, added "iTract is designed to allow
businesses to assemble and deliver a targeted electronic, fax or postal mailing
without the high cost, long lead times and production headaches of conventional
direct marketing. Our customers will be able to build sales, improve effective
communications and reduce their marketing costs simultaneously. With the
proposed merger, existing Margo shareholders will be able to participate in this
opportunity, while iTract will be able to position itself to obtain the benefits
of a public company with access to the capital markets."
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Margo Caribe, Inc. is currently engaged in the business of growing and
distributing a wide range of both indoor and outdoor tropical foliage and
flowering plants in Vega Alta and Barranquitas, Puerto Rico. The Company is also
engaged in the sale of lawn and garden products and the provision of landscaping
services and maintenance throughout Puerto Rico and the Caribbean. The Company
manufactures potting soils and other lawn and garden bag goods under the Rain
Forest trade name.
Statements in this release that are not historical facts are "forward
looking" statements and "safe harbor statements" under the Private Securities
Litigation Reform Act of 1995 that involve risks and/or uncertainties, including
risks and/or uncertainties as described in Margo's filings with the Securities
and Exchange Commission.
