<PAGE>
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): June 10, 1998
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
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(Exact Name of Registrant as Specified in its Charter)
Florida 0-27994 59-3203301
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
186 P.C.N.A. Parkway, Lake Helen, FL 32744-0280
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 228-1000
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THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
Item 2. Acquisition or Disposition of Assets.
- ----------------------------------------------
(a) On June 10, 1998, The Publishing Company of North America,
Inc. (the "Company"), sold 100% of its wholly-owned
subsidiary, College Directory Publishing, Inc. ("CDP") to a
group headed by the executive management of CDP in exchange
for (i) $1,400,000 (including $1,100,000 in loans made to
CDP by the Company; (ii) a $100,000 note from the
corporation acquiring CDP (the "Acquiror") due upon the
earlier of December 15, 1999 or completion of the
Acquiror's initial public offering ("IPO"); $200,000 in
preferred stock of the Acquiror convertible into $1,000,000
of common stock upon completion of an IPO by the Acquiror;
and (iv) 750,000 shares of the Company's common stock that
it issued when it acquired CDP in July 1997.
Mr. Michael Paul, a director of the Company (until he
resigned on June 22, 1998), is chief executive officer of
the Acquiror and CDP, and Mr John Rafanello is president of
the Acquiror and CDP. Prior to the acquisition of CDP by
the Company in July 1997, Mssrs. Paul and Rafanello held
the same positions for CDP that they currently occupy.
Item 7. Financial Statements and Exhibits
- ------------------------------------------
(a) Financial Statements of Businesses Acquired. Not applicable.
(b) Pro Forma Financial Information. Filed herewith are the
following unaudited pro forma condensed financial statements
with a description of the transaction and other related
information:
Condensed Balance Sheet as of December 31, 1997
Condensed Balance Sheet as of March 31, 1998
Condensed Statement of Operations for the year ended
December 31, 1997
Condensed Statement of Operations
for the quarter ended March 31, 1998
(c) Exhibits.
1. Exhibit 2 - Agreement to sell College Directory
Publishing, Inc.*
* Contained in the Form 10-KSB filed on April 15,1998.
1
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
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
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James M. Koller, Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: June 25, 1998
2
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
Pro forma Financial Information
On June 10, 1998, The Publishing Company of North America, Inc. (the
"Company"), sold 100% of its wholly-owned subsidiary, College Directory
Publishing, Inc. ("CDP") to a group headed by the management team of CDP in
exchange for (i) $1,400,000 (which includes $1,100,000 in loans made to CDP by
the Company; (ii) a $100,000 note from the corporation acquiring CDP (the
"Acquiror") due upon the earlier of December 15, 1999 or completion of the
Acquiror's initial public offering ("IPO"); $200,000 in preferred stock of the
Acquiror convertible into $1,000,000 of common stock upon completion of an IPO
by the Acquiror; and (iv) 750,000 shares of the Company's common stock that it
issued when it acquired CDP in July 1997.
The Pro Forma Condensed Financial Statements filed herewith have been
prepared from the historical consolidated financial statements of the Company
and should be read in conjunction therewith. The historical consolidated
financial statements are contained in the Company's annual report on Form 10-KSB
for the year ended December 31, 1997, and in the Company's interim report on
Form 10-QSB for the quarter ended March 31, 1998. 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 sale of CDP occurred on the dates indicated
below, nor is it intended to project future financial positions or results of
operations.
The following unaudited pro forma condensed balance sheets as of
December 31, 1997 and as of March 31, 1998 give effect to the sale 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, 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 December 31, 1997. The
following unaudited pro forma condensed statements of operations for the three
months ended March 31, 1998 are presented as if the transaction had occurred as
of January 1, 1998, 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 March 31, 1998.
PF-1
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THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
Pro forma Financial Information (continued)
Notes to the Adjustments in the Pro forma Condensed Financial Statements:
a) All adjustments in the column captioned "Adjust's for CDP" reflect the sale
of all assets and transfer of all liabilities of CDP to the Acquiror, and
the elimination of all of CDP's revenues and expenses as of the date of
the related pro forma condensed financial statement.
b) As part of the consideration, the Company received a cash payment of
$1,400,000.
c) At December 31, 1997, $20,972 was owed by the Company to CDP for various
expenses and is included in CDP's balance of accounts receivable and the
Company's balance of accounts payable.
d) The Goodwill as shown is the excess of the purchase price over the net
assets acquired when CDP was acquired by the Company in July 1997, less the
amortization which had been recognized as of the date of the pro forma
condensed balance sheet.
e) As part of the consideration, the Company received a $100,000 note from the
Acquiror due upon the earlier of December 15, 1999 or completion of the
Acquiror's IPO.
f) As part of the consideration, the Company received $200,000 in preferred
stock of the Acquiror convertible into $1,000,000 of common stock upon
completion of an IPO by the Acquiror.
g) The cash consideration (see note "b" above) included payment in full of
loans by the Company under which CPD owed the Company $747,679 at
December 31, 1997 and $1,100,000 at March 31, 1998.
h) The management fee and overhead allocation of $180,000 assessed by the
Company to CDP and owing as of December 31, 1997 and March 31, 1998 was
regarded by the Company as satisfied through the sale consideration.
i) As part of the consideration, the Company received the 750,000 shares of
the Company's common stock that it issued when it acquired CDP in July
1997, of which 250,000 shares which were subject to cancellation based upon
future earnings and, therefore, were contingent consideration. The
valuation of the shares returned is based upon 500,000 shares times the
closing price as reported by Nasdaq ($2.25 per share on December 31, 1997
and $0.969 on March 31, 1998).
j) The accumulated deficit is adjusted according to the pro forma gain or loss
which the Company would have reported as of the respective date of the pro
forma condensed balance sheet.
k) Had the transaction occurred at the beginning of the period for which each
pro forma statement of operations reports, the Company would not have
incurred the expense of the amortization of the goodwill.
l) The shares used in the computation of net income (loss) per share are
adjusted to remove the effect of the shares issued July 3, 1997 as
consideration in the acquisition of CDP.
PF-2
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THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Historical Adjust's Other Pro Forma
Consolidated for CDP Adjust's PCNA
Assets (see note a)
--------------- ------------------------------ ---------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $1,710,304 ($364,303) $1,400,000 b $2,746,001
Available-for-sale securities 1,007,050 1,007,050
Accounts receivable, net 1,308,884 (1,054,469) 20,932 c 275,347
Directories in progress 463,414 (103,933) 359,481
Other current assets 65,010 (2,500) 62,510
--------------- -------------- ------------- ---------------
Total current assets 4,554,662 (1,525,205) 1,420,932 4,450,389
Property and equipment, net 1,481,549 (40,152) 1,441,397
Goodwill, net (Investment in subsidiary) 1,898,680 (469,875) (1,428,805) d 0
Promissory note due no later than Dec. 15, 1999 100,000 e 100,000
Convertible preferred stock in Acquiror 200,000 f 200,000
Other assets 116,786 (18,152) 98,634
--------------- -------------- ------------- ---------------
Total assets $8,051,677 ($2,053,384) $292,127 $6,290,420
--------------- -------------- ------------- ---------------
--------------- -------------- ------------- ---------------
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $1,013,787 ($687,526) $20,932 c $347,193
Accrued expenses 552,529 (372,104) 180,425
Income taxes payable 50,000 (50,000) 0
Deferred revenue 894,109 894,109
Loans from parent (747,679) 747,679 g 0
Mgt fee / overhead alloc'n due to parent (180,000) 180,000 h 0
Capitalized leases 5,358 (5,358) 0
Mortgage payable 53,333 53,333
--------------- -------------- ------------- ---------------
Total current liabilities 2,569,116 (2,042,667) 948,611 1,475,060
Capitalized leases payable after one year 10,717 (10,717) 0
Mortgage payable after one year 693,333 693,333
--------------- -------------- ------------- ---------------
Total liabilities 3,273,166 (2,053,384) 948,611 2,168,393
Shareholders' equity:
Common shares 5,834,698 0 5,834,698
Treasury stock (1,125,000) i (1,125,000)
Unrealized loss on avail.-for-sale securities (3,033) 0 (3,033)
Accumulated deficit (1,037,737) 0 468,516 j (569,221)
Unearned compensation, net (15,417) 0 (15,417)
--------------- -------------- ------------- ---------------
Total shareholders' equity 4,778,511 0 (656,484) 4,122,027
--------------- -------------- ------------- ---------------
Total liabilities and shareholders' equity $8,051,677 ($2,053,384) $292,127 $6,290,420
--------------- -------------- ------------- ---------------
--------------- -------------- ------------- ---------------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-3
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Historical Adjust's Other Pro Forma
Consolidated for CDP Adjust's PCNA
Assets (see note a)
--------------- ------------------------------ ---------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $860,667 ($223,966) $1,400,000 b $2,036,701
Available-for-sale securities 1,021,171 1,021,171
Accounts receivable, net 833,807 (455,419) 378,388
Directories in progress 724,476 (431,596) 292,880
Other current assets 232,229 (2,486) 229,743
--------------- -------------- ------------- ---------------
Total current assets 3,672,350 (1,113,467) 1,400,000 3,958,883
Property and equipment, net 1,466,275 (61,434) 1,404,841
Goodwill, net (Investment in subsidiary) 1,874,339 (666,819) (1,207,520) d 0
Promissory note due no later than Dec. 15, 1999 100,000 e 100,000
Convertible preferred stock in Acquiror 200,000 f 200,000
Other assets 100,905 (2,595) 98,310
--------------- -------------- ------------- ---------------
Total assets $7,113,869 ($1,844,315) $492,480 $5,762,034
--------------- -------------- ------------- ---------------
--------------- -------------- ------------- ---------------
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $349,014 ($30,042) $318,972
Accrued expenses 473,019 (241,196) 231,823
Income taxes payable 50,000 (50,000) 0
Deferred revenue 950,335 (227,815) 722,520
Loans from parent (1,100,000) 1,100,000 g 0
Mgt fee / overhead alloc'n due to parent (180,000) 180,000 h 0
Capitalized leases 5,358 (5,358) 0
Mortgage payable 53,333 53,333
--------------- -------------- ------------- ---------------
Total current liabilities 1,881,059 (1,834,411) 1,280,000 1,326,648
Capitalized leases payable after one year 9,904 (9,904) 0
Mortgage payable after one year 680,000 680,000
--------------- -------------- ------------- ---------------
Total liabilities 2,570,963 (1,844,315) 1,280,000 2,006,648
Shareholders' equity:
Common shares 5,834,698 0 5,834,698
Treasury stock (13,117) 0 (484,375) i (497,492)
Unrealized gain on avail.-for-sale 11,142 0 11,142
securities
Accumulated deficit (1,276,588) 0 (303,145) j (1,579,733)
Unearned compensation, net (13,229) 0 (13,229)
--------------- -------------- ------------- ---------------
Total shareholders' equity 4,542,906 0 (787,520) 3,755,386
--------------- -------------- ------------- ---------------
Total liabilities and shareholders' equity $7,113,869 ($1,844,315) $492,480 $5,762,034
--------------- -------------- ------------- ---------------
--------------- -------------- ------------- ---------------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-4
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Historical Adjust's Other Pro Forma
Consolidated for CDP Adjust's PCNA
(see note a)
--------------- ------------------------------- ------------------
<S> <C> <C> <C> <C>
Net sales $9,618,958 ($3,693,757) $5,925,201
Costs and expenses:
Production 2,788,054 (1,062,613) 1,725,441
Marketing and selling 3,793,874 (933,653) 2,860,221
Royalties 513,211 (513,211) 0
Depreciation 159,987 (9,536) 150,451
Amortization 76,020 0 (48,602) k 27,418
General and administrative 2,693,623 (728,297) 180,000 h 2,145,326
--------------- -------------- ------------- ------------------
10,024,769 (3,247,310) 131,398 6,908,857
--------------- -------------- ------------- ------------------
Income (loss) from operations (405,811) (446,447) (131,398) (983,656)
Other income (expense) 109,569 14,142 123,711
--------------- -------------- ------------- ------------------
Income (loss) before provision
for income taxes (296,242) (432,305) (131,398) (859,945)
Provision for income taxes 50,000 (50,000) 0 0
--------------- -------------- ------------- ------------------
Net income (loss) ($346,242) ($382,305) ($131,398) ($859,945)
--------------- -------------- ------------- ------------------
--------------- -------------- ------------- ------------------
Net income (loss) per share - basic ($0.08) ($0.21)
--------------- ------------------
--------------- ------------------
Shares used in computation of
net income (loss) per share 4,366,431 (252,055) l 4,114,376
--------------- ------------- ------------------
--------------- ------------- ------------------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-5
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 8-K - June 10, 1998
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Historical Adjust's Other Pro Forma
Consolidated for CDP Adjust's PCNA
(see note a)
--------------- ------------------------------- ------------------
<S> <C> <C> <C> <C>
Net sales $1,957,733 $0 $1,957,733
Costs and expenses:
Production 446,761 0 446,761
Marketing and selling 1,065,143 (64,968) 1,000,175
Royalties 0 0 0
Depreciation 45,480 (5,261) 40,219
Amortization 30,902 0 (24,341) k 6,561
General and administrative 600,332 (113,793) 486,539
--------------- -------------- ------------- ------------------
2,188,618 (184,022) (24,341) 1,980,255
--------------- -------------- ------------- ------------------
Income (loss) from operations (230,885) 184,022 24,341 (22,522)
Other income (expense) (7,966) 12,922 4,956
--------------- -------------- ------------- ------------------
Income (loss) before provision
for income taxes (238,851) 196,944 24,341 (17,566)
Provision for income taxes 0 0 0 0
--------------- -------------- ------------- ------------------
Net income (loss) ($238,851) $196,944 $24,341 ($17,566)
--------------- -------------- ------------- ------------------
--------------- -------------- ------------- ------------------
Net income (loss) per share - basic ($0.05) ($0.00)
--------------- ------------------
--------------- ------------------
Shares used in computation of
net income (loss) per share 4,864,537 (500,000) l 4,364,537
--------------- ------------- ------------------
--------------- ------------- ------------------
</TABLE>
See accompanying discussion of Pro Forma Financial Information.
PF-6
