<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A No. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): September 16, 1997 (July 3,
1997)
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
----------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Florida 0-27994 59-3203301
---------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
186 P.C.N.A. Parkway, Lake Helen, FL 32744-0280
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 228-1000
--------------
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) On July 3, 1997, The Publishing Company of North America, Inc. (the
"Company"), through a 100% owned subsidiary, acquired 100% of the outstanding
capital stock of College Directory Publishing, Inc. ("CDP") in a tax-free
merger. CDP is a Conshohocken, Pennsylvania-based publisher of college and
university membership directories. The Company issued an aggregate of 750,000
shares of its common stock and paid $300,000 to CDP's two stockholders. Up to
250,000 of the shares are subject to cancellation if CDP's net pre-tax income
over a three-year period commencing January 1, 1997 do not aggregate at least
$1,875,000. Additionally, as part of the merger consideration, the two former
stockholders of CDP are entitled to each receive 12-1/2% of CDP's net pre-tax
income for each of the three fiscal years beginning January 1, 1997. The two
former stockholders of CDP entered into employment agreements with CDP. The
Company loaned CDP $200,000 as additional working capital.
The cash paid came from the existing cash balances of the Company. No
portion of the purchase price was borrowed by the Company. There was no
material relationship between the former stockholders of CDP and the Company, or
any of the Company's affiliates, officers or directors or any associate of such
officers or directors. Both of the former stockholders of CDP were appointed to
its board of directors, together with three designees of the Company.
(b) CDP's equipment including computers were used in its college and
university membership directory publishing business and continue to be used for
that purpose.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Filed herewith are the
following financial statements of College Directory Publishing, Inc.:
Report of Independent Certified Public Accountants
Audited Financial Statements
Balance Sheet as of December 31, 1996
Statement of Income and Accumulated Deficit for the year ended
December 31, 1996
Statement of Cash Flows for the year ended December 31, 1996
Notes to Financial Statements
1
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (CONTINUED)
(b) PRO-FORMA FINANCIAL INFORMATION. Filed herewith are the following pro
forma condensed financial statements with a description of the
transaction and other related information:
Unaudited Pro Forma Financial Statements
Condensed Balance Sheet as of December 31, 1996
Condensed Balance Sheet as of June 30, 1997
Condensed Statement of Operations for the year ended
December 31, 1996
Condensed Statement of Operations for the six months
ended June 30, 1997
(c) EXHIBITS.
2. Agreement and Plan of Merger (1)(2)
(1) Contained in the Report on Form 8-K filed by the registrant
with the Securities and Exchange Commission on July 18, 1997.
(2) Confidential treatment has been requested for an exhibit to
this Agreement and Plan of Merger.
2
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
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.
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
---------------------------------------------
(Registrant)
By (Signature and Title): /s/ James M. Koller
---------------------------------------------
James M. Koller, Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: September 16, 1997
3
<PAGE>
Financial Statements
College Directory Publishing, Inc.
YEAR ENDED DECEMBER 31, 1996
WITH REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
F-1
<PAGE>
College Directory Publishing, Inc.
Financial Statements
Year ended December 31, 1996
CONTENTS
Report of Independent Certified Public Accountants...........................F-3
Audited Financial Statements
Balance Sheet................................................................F-4
Statement of Income and Accumulated Deficit..................................F-5
Statement of Cash Flows......................................................F-6
Notes to Financial Statements................................................F-7
F-2
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
College Directory Publishing, Inc.
We have audited the accompanying balance sheet of College Directory Publishing,
Inc. as of December 31, 1996, and the related statements of income and
accumulated deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of College Directory Publishing,
Inc. as of December 31, 1996, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
August 15, 1997
Orlando, Florida
F-3
<PAGE>
College Directory Publishing, Inc.
Balance Sheet
December 31, 1996
ASSETS
Current assets:
Cash $ 451,454
Accounts receivable, less allowance for doubtful accounts
of $137,987
499,453
Directories in progress 4,795
----------
Total current assets 955,702
Property and equipment, net 22,851
Other assets 3,846
----------
Total assets $ 982,399
----------
----------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 718,017
Accrued expenses 283,308
Deferred revenue 23,976
----------
Total current liabilities 1,025,301
Shareholders' deficit:
Common shares, $2 par value:
3,000 shares authorized, issued and outstanding 6,000
Accumulated deficit (48,902)
----------
Total shareholders' deficit (42,902)
----------
Total liabilities and shareholders' deficit $ 982,399
----------
----------
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
College Directory Publishing, Inc.
Statement of Income and Accumulated Deficit
Year ended December 31, 1996
Net sales $2,535,695
Costs and expenses:
Salaries and commissions 607,216
Materials and printing 956,342
Royalties 428,378
Depreciation 9,411
Marketing and selling 148,545
General and administrative 359,942
----------
2,509,834
----------
Income from operations 25,861
Interest expense, net of interest income of $3,950 (17,488)
----------
Net income 8,373
Retained earnings at January 1, 1996 135,328
Distributions (161,000)
Distribution in satisfaction of shareholder loan (31,603)
----------
Accumulated deficit at December 31, 1996 $ (48,902)
----------
----------
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
College Directory Publishing, Inc.
Statement of Cash Flows
Year ended December 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,373
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 9,411
Bad debt expense 190,131
Interest income (1,727)
Increase in accounts receivable (49,120)
Increase in directories in progress (4,795)
Increase in other assets (2,595)
Increase in accounts payable and accrued expenses 37,829
Increase in deferred revenue 23,976
---------
Net cash provided by operating activities 211,483
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (3,896)
---------
Net cash used in investing activities (3,896)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to shareholders (161,000)
---------
Net cash used in financing activities (161,000)
---------
Net increase in cash 46,587
Cash at beginning of year 404,867
---------
Cash at end of year $ 451,454
---------
---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 21,438
---------
---------
NONCASH TRANSACTION
Distribution in satisfaction of shareholder loan $ 31,603
---------
---------
SEE ACCOMPANYING NOTES.
F-6
<PAGE>
College Directory Publishing, Inc.
Notes to Financial Statements
December 31, 1996
1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
College Directory Publishing, Inc. (the Company) was incorporated under the laws
of the State of Delaware on July 17, 1988. The primary business activity of the
Company is publishing student telephone directories for colleges and
universities and selling advertising in those directories. The Company publishes
directories across the United States.
REVENUE RECOGNITION
Revenues and related costs are recorded by the Company upon shipment of
directories. Costs incurred for directories in progress are stated at costs, not
in excess of estimated realizable value. Deferred revenue represents amounts
received from advertisers prior to shipment of the related directories.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are comprised primarily of amounts due from advertisers in
the directories. The Company provides for doubtful accounts applying the
specific identification method. At December 31, 1996, the Company had identified
total doubtful accounts of $137,987. Management believes all other accounts
receivable to be fully collectible.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation for computer equipment
and office furniture is computed using the straight-line method over seven and
five years, respectively. Expenditures for maintenance and repairs are charged
to expense as incurred. Major improvements are capitalized.
ROYALTIES
Royalties are paid to certain colleges and universities pursuant to publication
contracts. The agreements have varying terms typically consisting of a flat fee
for the rights to publication and in some cases additional payments for
advertising sales in excess of agreed-upon levels.
F-7
<PAGE>
College Directory Publishing, Inc.
Notes to Financial Statements (continued)
December 31, 1996
1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
ADVERTISING COSTS
The costs of advertising are expensed as incurred. For the year ended December
31, 1996. Advertising costs included in selling and marketing expense were
$13,057.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
DECEMBER 31,
1996
------------
Computer equipment $68,638
Office furniture 1,489
------------
70,127
Less accumulated depreciation (47,276)
------------
$22,851
------------
------------
3. LINE OF CREDIT
The Company has a $400,000 line of credit with PNC Bank which carries an
interest rate of prime plus 0.5% (8.75% at December 31, 1996) and matures June
30, 1997. As of December 31, 1996, there was no outstanding borrowings. The line
is secured by the Company's equipment and receivables, and personally guaranteed
by the shareholders. In January 1997, the Company borrowed $200,000 against the
line of credit.
F-8
<PAGE>
College Directory Publishing, Inc.
Notes to Financial Statements (continued)
December 31, 1996
4. RELATED PARTY TRANSACTIONS
During 1996, shareholder borrowings from the Company in the amount of $31,603,
including accrued interest of $6,816, were repaid through distributions to
shareholders. There were no outstanding borrowings as of December 31, 1996.
5. EMPLOYEE BENEFIT PLANS
Effective January 1, 1996, the Company adopted a defined contribution 401(k)
profit-sharing plan to provide retirement benefits for eligible employees. To be
eligible, an employee must be at least 21 years of age, have worked at least 90
days, and be a full-time employee working at least 1,000 hours. The Company may
elect to make a discretionary contribution annually to the profit sharing plan.
No contribution was made for the year ended December 31, 1996.
6. OPERATING LEASES
The Company leases office space, equipment and vehicles under operating leases
expiring in various years through 2001. Minimum future rental payments under
these noncancelable leases having remaining terms in excess of one year as of
December 31, 1996 in the aggregate are:
Year ended December 31,
-----------------------
1997 $ 68,222
1998 38,680
1999 16,670
2000 8,436
2001 1,359
--------
Total minimum future rental payments $133,367
--------
--------
Rent expense for the year ended December 31, 1996 was $56,114.
F-9
<PAGE>
College Directory Publishing, Inc.
Notes to Financial Statements (continued)
December 31, 1996
7. INCOME TAXES
The Company, with the consent of its shareholders, has elected to be taxed as an
S-corporation under sections of the federal and state income tax laws, which
provide that, in lieu of corporation income taxes, the shareholders separately
account for their pro rata share of the Company's items of income, deduction,
losses and credits. Therefore, these statements do not include any provision for
corporate income taxes.
8. SUBSEQUENT EVENTS
In May 1997, the Company renegotiated its line of credit with PNC Bank for
$650,000. The line, which carries an interest rate of prime plus .5%, is secured
by substantially all assets of the Company and matures June 30, 1998.
In May 1997, the Company signed a promissory note with PNC Bank for $150,000.
The note carries an interest rate of prime plus 1% and is secured by
substantially all assets of the Company. The loan calls for monthly repayment
beginning July 1, 1997 with the final payment due May 1, 2002.
On July 3, 1997, The Publishing Company of North America, Inc. (TPCNA) through a
wholly-owned subsidiary, acquired 100% of the outstanding capital stock of
College Directory Publishing, Inc. in a tax-free merger. TPCNA issued an
aggregate of 750,000 shares of its common stock and made cash payments of
$300,000 to the Company's two stockholders. Up to 250,000 of the shares are
subject to cancellation if the Company's net pre-tax income over a three-year
period commencing January 1, 1997 does not aggregate at least $1,875,000.
Additionally, as part of the merger consideration, the two former stockholders
of the Company are entitled to each receive 12-1/2% of the Company's net pre-tax
income for each of the three fiscal years beginning January 1, 1997. The two
former stockholders of the Company entered into employment agreements with TPCNA
and its wholly-owned subsidiary. In connection with the merger, TPCNA loaned the
Company $200,000 as additional working capital.
F-10
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
PRO FORMA FINANCIAL INFORMATION
The Pro Forma Condensed Financial Statements filed herewith have been prepared
from the historical financial statements of The Publishing Company of North
America, Inc., and the historical financial statements of College Directory
Publishing, Inc., and should be read in conjunction therewith. The pro forma
condensed financial information is presented for illustrative purposes only and
may not be indicative of the financial position or results of operations which
would have actually been reported had the merger occurred on the dates indicated
below, nor is it intended to project future financial positions or results of
operations.
The following pro forma financial information filed herewith give effect to
the merger under the purchase method of accounting in accordance with
Accounting Principles Board Opinion No. 16 ("APB No. 16"). Under this method
of accounting, the total purchase cost has been allocated to CDP's assets and
liabilities based on their estimated fair values. The excess of the purchase
price over the net assets acquired is recorded as goodwill. The unaudited
pro forma condensed financial statements reflect management's best estimate
based upon currently available information. These allocations are subject to
valuations as of the date of the transaction based upon appraisals and other
studies which are not yet completed. Accordingly, the final allocations may
be different from the amounts reflected herein. Any purchase price
adjustments will be made within six months from the date of this Report and
are not expected to be materially different from the unaudited pro forma
condensed financial statements taken as a whole.
On July 3, 1997, The Publishing Company of North America, Inc. (the "Company"),
through a 100% owned subsidiary, acquired 100% of the outstanding capital stock
of College Directory Publishing, Inc. ("CDP") in a tax-free merger. Details of
the transaction are contained in the Company's current report on Form 8-K filed
with the Securities and Exchange Commission on July 18, 1997, of which this
Report is an amendment. CDP is a Conshohocken, Pennsylvania-based publisher of
college and university student telephone directories. The Company issued an
aggregate of 750,000 shares of its common stock and paid $300,000 to CDP's two
stockholders. Additionally, as part of the merger consideration, the two former
stockholders of CDP are entitled to each receive 12-1/2% of CDP's net pre-tax
income for each of the three fiscal years beginning January 1, 1997. The two
former stockholders of CDP entered into employment agreements with CDP. The
Company loaned CDP $200,000 as additional working capital. The cash paid came
from the existing cash balances of the Company.
Of the shares of the Company's common stock issued to CDP's two stockholders,
none may be sold or transferred for the first twelve months following closing on
July 3, 1997 ("Closing"). For the second twelve months following Closing, up to
100,000 shares may be sold or transferred. For the third twelve months
following Closing, an additional 100,000 shares may be sold or transferred. At
the end of three years following Closing, up to 500,000 shares cumulative may be
sold or transferred. For the purposes of this Report, the fair value of the
500,000 shares is estimated at the closing price of the Company's stock on the
day immediately preceding Closing, which was $2.75 per share, less a discount of
50% which the Company has been advised is a discount amount customarily applied
to prices of shares of publicly-traded companies in private placement
transactions involving shares with two-year "lock-up" periods during which the
shares may not be
PF-1
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
PRO FORMA FINANCIAL INFORMATION (CONTINUED)
sold or transferred. The discount amount was based upon the advice of counsel
and an informal conversation with an investment banker who is a member of the
Company's board of directors. The Company intends to obtain an independent
opinion concerning the appropriate discount and believes that the discount may
be greater because 1) the "lock-up" period for the majority of the shares is
greater than two years, 2) the Company's common stock is not actively traded,
and 3) larger discounts are appropriate for large blocks of stock.
The remaining 250,000 of the 750,000 shares are subject to cancellation if CDP's
net pre-tax income, as defined in the merger agreement, over a three-year period
commencing January 1, 1997 do not aggregate at least $1,875,000. On April 20,
2000 that portion of the 250,000 shares which are not cancelled may be sold or
transferred. In accordance with APB No. 16, the 250,000 shares subject to
cancellation are considered contingent consideration based upon future earnings.
When the contingency is resolved on April 20, 2000 the Company shall record as
additional cost of the acquisition the then-current fair value of any shares not
cancelled. Any additional cost shall be added to goodwill and amortized over
the remaining portion of the amortization period.
Of the additional sums to be paid to CDP's two stockholders based on the net
pre-tax income of CDP, these amounts likewise are considered contingent
consideration based upon future earnings and shall be recorded as additional
cost of the acquisition when resolved and distributable. The additional cost,
if any, shall be added to goodwill and amortized over the remaining portion of
the amortization period.
Goodwill is being amortized on a straightline basis over twenty years.
Property and equipment of CDP is shown at net book value in the following
unaudited pro forma condensed balance sheets. Management does not believe there
would be any material change in the financial statements taken as a whole if
another method of assessing fair value were obtained and used.
CDP's business is highly seasonal; the great majority of its revenues will be
recognized in the fourth quarter of the year, with most of the balance in the
third quarter, and very little in the first or second quarters. Accordingly,
the Company's results of operations are expected to be positively affected in
the fourth quarter; the impact in the third quarter may vary from year to year
and, beginning in 1998, the Company's results of operations in the first half of
the year will be negatively affected by this wholly-owned subsidiary. The
Company expects that results going forward will begin to reflect this
seasonality, making quarter-to-quarter comparisons over the next year difficult
at best.
PF-2
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
PRO FORMA FINANCIAL INFORMATION (CONTINUED)
The following unaudited pro forma condensed balance sheets as of December 31,
1996 and as of June 30, 1997 give effect to the acquisition as if it had
occurred as of the balance sheet dates. The following unaudited pro forma
condensed statements of operations for the year ended December 31, 1996 are
presented as if the transaction had occurred as of January 1, 1996, except that
the charge to income for amortization of goodwill is based upon the amount of
goodwill reflected on the pro forma balance sheet as of December 31, 1996. The
following unaudited pro forma condensed statements of operations for the six
months ended June 30, 1997 are presented as if the transaction had occurred as
of January 1, 1997, except that the charge to income for amortization of
goodwill is based upon the amount of goodwill reflected on the pro forma balance
sheet as of June 30, 1997.
NOTES TO THE ADJUSTMENTS IN THE PRO FORMA CONDENSED FINANCIAL STATEMENTS:
A) A cash payment of $300,000 was made by the Company to CDP's two
stockholders.
B) The Goodwill as shown is the excess of the purchase price over the net
assets acquired.
C) The adjustment to Common shares (paid-in capital) is 500,000 shares
(750,000 total shares paid less 250,000 subject to cancellation based upon
future earnings) times a fair value of $2.75 per share times a discount of
50%, less the $6,000 showing as paid-in capital for CDP. See the
discussion above for more information.
D) The accumulated deficit of CDP does not carry forward and, hence, must be
reversed. CDP's accumulated deficit at June 30, 1997 includes $269,000 of
distributions to shareholders made during the six months then-ended.
E) At June 30, 1997 the Company had recorded as Other Assets $15,436 of legal
fees directly related to the merger transaction. The Company estimates
that the total legal and accounting fees directly related to the
acquisition will be approximately $80,000. These costs will be recorded as
a cost of the acquisition and will increase the amount of goodwill
accordingly.
F) For the unaudited pro forma condensed statement of operations for the year
ended December 31, 1996, an adjustment is made for amortization of goodwill
based upon the amount of goodwill reflected on the pro forma balance sheet
as of December 31, 1996. For the unaudited pro forma condensed statement
of operations for the six months ended June 30, 1997, an adjustment is made
for amortization of goodwill based upon the amount of goodwill reflected on
the pro forma balance sheet as of June 30, 1997.
G) Of the 750,000 shares issued to CDP's two stockholders, 250,000 shares are
subject to cancellation based upon the net pre-tax income of CDP over a
three-year period commencing January 1, 1997. Inclusion of this
contingent consideration is to be made when it is evident that results are
being obtained. Based upon CDP's loss for the first six months of 1997, it
is not determinable if results are being obtained; hence, these 250,000
shares are not included in the shares used in the computation of net income
per share.
PF-3
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO
FORMA
ASSETS PCNA CDP ADJ'S COMBINED
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $1,760,831 $ 451,454 ($300,000) A $1,912,285
Available-for-sale securities 2,477,500 0 2,477,500
Accounts receivable, net 228,997 499,453 728,450
Directories in progress 144,823 4,795 149,618
Refundable income taxes 72,068 0 72,068
Other current assets 17,544 0 17,544
---------- ---------- --------- ----------
Total current assets 4,701,763 955,702 (300,000) 5,357,465
Property and equipment, net 1,329,783 22,851 1,352,634
Goodwill 0 0 1,030,402 B 1,030,402
Other assets 66,417 3,846 70,263
---------- ---------- ---------- ----------
Total assets $6,097,963 $ 982,399 $ 730,402 $7,810,764
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $234,334 $718,017 $ 0 $ 952,351
Accrued expenses 205,670 283,308 488,978
Deferred revenue 460,434 23,976 484,410
Mortgage payable 48,889 0 48,889
---------- ---------- ---------- ----------
Total current liabilities 949,327 1,025,301 0 1,974,628
Mortgage payable after one year 751,111 0 0 751,111
---------- ---------- ---------- ----------
Total liabilities 1,700,438 1,025,301 0 2,725,739
SHAREHOLDERS' EQUITY:
Common shares 5,137,565 6,000 681,500 C 5,825,065
Unrealized loss on avail.-for-sale securities (13,024) 0 (13,024)
Accumulated deficit (691,495) (48,902) 48,902 D (691,495)
Unearned compensation, net (35,521) 0 (35,521)
---------- ---------- ---------- ----------
Total shareholders' equity 4,397,525 (42,902) 730,402 5,085,025
---------- ---------- ---------- ----------
Total liabilities and shareholders' equity $6,097,963 $ 982,399 $ 730,402 $7,810,764
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-4
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO
FORMA
ASSETS PCNA CDP ADJ'S COMBINED
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $2,102,367 $ 12,652 ($300,000) A $1,815,019
Available-for-sale securities 1,909,262 0 1,909,262
Accounts receivable, net 387,833 26,401 414,234
Directories in progress 217,778 309,310 527,088
Refundable income taxes 72,068 0 72,068
Other current assets 102,779 0 102,779
---------- ---------- ---------- ----------
Total current assets $4,792,087 348,363 (300,000) 4,840,450
Property and equipment, net 1,353,821 32,568 1,386,389
Goodwill 0 0 1,855,116 B 1,855,116
Other assets 119,398 2,596 (15,436) E 106,558
---------- ---------- ---------- ----------
Total assets $6,265,306 $383,527 $1,539,680 $8,188,513
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $268,852 $ 82,792 $ 0 $ 351,644
Bank line of credit 0 450,000 450,000
Accrued expenses 219,878 254,236 474,114
Deferred revenue 542,404 438,608 981,012
Capitalized leases 0 3,571 3,571
Mortgage payable 53,333 0 53,333
---------- ---------- ---------- ----------
Total current liabilities 1,084,467 1,229,207 0 2,313,674
Capitalized leases 0 6,500 0 6,500
Mortgage payable after one year 720,000 0 720,000
---------- ---------- ---------- ----------
Total liabilities 1,804,467 1,235,707 0 3,040,174
SHAREHOLDERS' EQUITY:
Common shares 5,152,698 6,000 681,500 C 5,840,198
Unrealized loss on avail.-for-sale securities (3,694) 0 (3,694)
Accumulated deficit (661,727) (858,180) 858,180 D (661,727)
Unearned compensation, net (26,438) 0 (26,438)
---------- ---------- ---------- ----------
Total shareholders' equity 4,460,839 (852,180) 1,539,680 5,148,339
---------- ---------- ---------- ----------
Total liabilities and shareholders' equity $6,265,306 $ 383,527 $1,539,680 $8,188,513
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-5
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO
FORMA
PCNA CDP ADJ'S COMBINED
<S> <C> <C> <C> <C>
Net sales $3,332,612 $2,535,695 $ 0 $5,868,307
Costs and expenses:
Salaries and commissions 1,957,318 607,216 2,564,534
Materials and printing 573,635 956,342 1,529,977
Royalties 0 428,378 428,378
Depreciation and amortization 93,055 9,411 51,520 F 153,986
Marketing and selling 406,647 148,545 555,192
General and administrative 1,020,868 359,942 1,380,810
---------- ---------- --------- ----------
4,051,523 2,509,834 51,520 6,612,877
---------- ---------- --------- ----------
Income (loss) from operations (718,911) 25,861 (51,520) (744,570)
Other income (expense) 27,416 (17,488) 9,928
---------- ---------- --------- ----------
Income (loss) before provision
for income taxes (691,495) 8,373 (51,520) (734,642)
Provision for income taxes 0 0 0
---------- ---------- --------- ----------
Net income (loss) ($691,495) $ 8,373 ($51,520) ($734,642)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Net income (loss) per share ($0.19) ($0.18)
---------- ----------
---------- ----------
Shares used in computation of
net income (loss) per share 3,681,233 500,000 G 4,181,233
---------- --------- ----------
---------- --------- ----------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-6
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO
FORMA
PCNA CDP ADJ'S COMBINED
<S> <C> <C> <C> <C>
Net sales $3,058,093 $ 23,976 $ 0 $3,082,069
Costs and expenses:
Production 787,983 4,500 792,483
Marketing and selling 1,172,843 257,769 1,430,612
Depreciation and amortization 81,703 5,160 46,378 F 133,241
General and administrative 1,046,635 283,502 1,330,137
---------- ---------- --------- ----------
3,089,164 $ 550,931 46,378 3,686,473
---------- ---------- --------- ----------
Loss from operations (31,071) (526,955) (46,378) (604,404)
Other income (expense) 60,840 (13,323) 47,517
---------- ---------- --------- ----------
Income (loss) before provision
for income taxes 29,769 (540,278) (46,378) (556,887)
Provision for income taxes 0 0 0
---------- ---------- --------- ----------
Net income (loss) $ 29,769 ($540,278) ($46,378) ($556,887)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Net income (loss) per share $ 0.01 ($0.12)
---------- ----------
---------- ----------
Shares used in computation of
net income (loss) per share 4,130,912 500,000 G 4,630,912
---------- --------- ----------
---------- --------- ----------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-7
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K/A - SEPTEMBER 16, 1997
EXHIBITS TO FORM 8-K/A No. 1
Exhibit Index
2. Agreement and Plan of Merger (1)(2)
(1) Contained in the Report on Form 8-K filed by the registrant with
the Securities and Exchange Commission on July 18, 1997.
(2) Confidential treatment has been requested for an exhibit to this
Agreement and Plan of Merger.
Exh-1
