Precom “Rescinds” Acquisition of Saddleback Financial's Assets

(Leasing News reported Saddleback would be closing last Thursday, with reports

from readers that they new people fired, and also saw furniture being moved. It

was after our two reports, that the company made it official.  Here is their

press release where they “rescind:”.

Precom Technology, announced that it will complete a one for two reverse split of its stock, effective at the close of business on August 26, 2002. All shareholders of record as of the close of business on August 26 will be notified, in accordance with Florida corporate law, to surrender their existing certificates for a new certificate, representing one-half of the shares originally held. As a result of the reverse split, Precom will have 23,402,065 common shares issued and outstanding.

The proposed reverse split was first announced on March 22, 2002 in the company's filing with the SEC on Form 8-K. As required by Florida law, written notice of the reverse split, which was accomplished by action of the Board of Directors, will be sent to all shareholders of record on August 26, 2002, within 30 days of the record date.

Robert Hipple, CEO of Precom, stated, "This reverse split is being completed at this time before the company embarks on anticipated acquisitions and growth, and while management, directors and employees, and related parties control more than 92 percent of the stock, so that the effect of the reverse is felt primarily by the insiders. It was also necessary because more than 48 million shares were issued and outstanding, out of 50 million common shares authorized, which was too many total shares outstanding. This left no room for issuing shares in connection with future acquisitions".

Precom also announced the acquisition of the assets of Saddleback Financial Corp. announced on June 3, 2002, had been rescinded. According to Drew Roberts, CFO of Precom, "after reviewing the financial operations of Saddleback, it was determined that the business could not be operated profitably because of past problems associated with the selling corporation, and the acquisition should not be completed. Under the terms of the acquisition transaction, 2 million shares of Precom stock were to be transferred by CGI International Holdings, Precom's then majority shareholder, in exchange for all of the tangible assets of Saddleback, good will, the Saddleback name and all work in process. In addition, Precom agreed to issue convertible preferred shares for the balance of the agreed acquisition price, and to enter into a consulting agreement with the owner of Saddleback for an additional 500,000 shares. CGI has not transferred any shares to Saddleback, and Precom has not issued the preferred shares or any shares in connection with the consulting agreement, and a number of the conditions to a final closing were not completed.

According to Roberts, "The proposed acquisition of the Saddleback business represented what we believed was an opportunity to acquire a going business in a growing market segment. Unfortunately, our due diligence has disclosed that the Saddleback business was badly managed and under-funded, and could not be saved. Therefore, we determined not to complete the acquisition. We are still positive about the equipment lease finance market and have already been in discussions with other potential acquisition targets in this market segment. We will also continue our own leasing services to our existing client base while we locate suitable acquisition partners."