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): October 21, 2002
EVCI CAREER COLLEGES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 001-14827 06-1488212
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
35 East Grassy Sprain Road, Suite 200, Yonkers, New York 10710
(Address of principal executive offices)
Registrant's telephone number, including area code (914) 787-3500
Item 2. Acquisition or Disposition of Assets.
On October 21, 2002, Interboro Holding, Inc. ("IHI"), a
wholly-owned subsidiary of EVCI Career Colleges Incorporated, sold all
outstanding shares of ICTS, Inc. to Digital Workforce Development Centers Inc.
("Digital Workforce"). Digital Workforce is an affiliate of Digital Corporation,
an independent training and learning company, based in Reston, Virginia, with
seven learning and management solution centers located in the D.C. Capitol
region. ICTS was not operating at the time of this sale. For information about
the discontinuation of ICTS' operations in the first week of October 2002, see
the press release dated October 8, 2002 and included as Exhibit 99.1 to this
report.
IHI sold ICTS to Digital Workforce for $1.00, because Digital Workforce
provided the prospect for reorganizing ICTS under court protection while
permitting ICTS students to complete the courses they were currently taking.
On October 29, 2002, the post sale management of ICTS caused it to file a
reorganization petition under the U.S. Bankruptcy Code. As part of the agreement
of sale with Digital Workforce, IHI agreed to provide $100,000 of debtor in
possession financing and to exchange its resulting priority claim for 33 1/3 %
of ICTS' free cash flow, commencing January 1, 2003, as a part of a plan of
reorganization of ICTS. In addition, EVCI has a claim in the bankruptcy for
approximately $2.7 million it has advanced to ICTS since it was acquired by IHI
in July 2001 from six individuals and three funds. There is a significant risk
that ICTS may not be successfully reorganized or that a reorganization will not
include this exchange of IHI's priority claim or a substantial payment to EVCI
for its claim.
Separate from ICTS' bankruptcy, EVCI and IHI have filed a demand for
commercial arbitration against these six individual owners. In this arbitration,
they are seeking compensatory damages in the amount of $1.95 million for breach
of representations and warranties, including as to: accounts payable, student
refunds payable, revenue to be earned, revenue received, revenue to be received
and payment of taxes.
During the quarter ended September 30, 2002, EVCI recorded a loss on the
disposition of ICTS of approximately $1,400,000, which is approximately $100,000
less than the approximately $1.5 million loss reported from the discontinuance
of ICTS' operations.
Item 7. Financial Statements and Exhibits
Exhibits
10.1 Stock Purchase Agreement dated October 16, 2002, between
Interboro Holding Inc. and Digital Workforce Development
Centers Inc.
10.2 Letter dated October 21, 2002 from Interboro Holding, Inc.
to Ziad Kahn, Chairman and Chief Executive Officer of
Digital Workforce Development Centers Inc.
Exhibit and Schedule (Copies will be provided to the
Commission upon request) Exhibit B - Accounts Receivable
Schedule 7.9 - Personal Property Leases
99.1 Press release of EVCI dated October 8, 2002
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
EVCI CAREER COLLEGES INCORPORATED
Dated: November 5, 2002 By: /s/Richard Goldenberg
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Name: Richard Goldenberg
Title: Chief Financial Officer
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