<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported):
May 17, 2000
BORON, LePORE & ASSOCIATES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 000-23093 22-2365997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
17-17 Route 208 North, Fair Lawn, NJ 07410
(Address of principal executive offices and zip code)
(210) 791-7272
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------ ------------------------------------------------------------------
(a) Financial Statements of Business Acquired
(i) Report of Independent Public Accountants
(ii) Balance Sheets of Consumer2Patient Inc. as of December 31, 1999
and 1998.
(iii) Statements of Operations for the period from inception to
December 31, 1998 and for the year ended December 31, 1999.
(iv) Statements of Stockholders' Deficit as of December 31, 1998 and
December 31, 1999.
(v) Statements of Cash Flows for the period from inception to
December 31, 1998 and for the year ended December 31, 1999.
(vi) Notes to the financial statements.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholder of
Consumer 2 Patient, Inc.:
We have audited the accompanying balance sheets of Consumer 2 Patient, Inc. (a
North Carolina corporation) as of December 31, 1999 and 1998, and the related
statements of operations, stockholder's equity and cash flows for the years 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 audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 audits provide 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 Consumer 2 Patient, Inc. as of
December 31, 1999 and 1998 and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
July 27, 2000
<PAGE>
CONSUMER 2 PATIENT, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
December 31
-------------------
1999 1998
------- ------
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $1,489,791 $ --
Accounts receivable, net of allowance of $50,000
in 1999 208,673 --
Prepaid expenses 470,606 --
----------- --------
Total current assets 2,169,070 --
----------- --------
PROPERTY AND EQUIPMENT:
Computer and other equipment 2,475 --
Furniture and fixtures 38,529 --
----------- --------
41,004 --
Less - Accumulated depreciation (8,201) --
----------- --------
Net property and equipment 32,803 --
GOODWILL, Net of accumulated amortization of $24,000
in 1999 216,000 240,000
OTHER ASSETS 2,500 --
----------- --------
Total assets $ 2,420,373 $240,000
=========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and other current liabilities $ 272,766 $ --
Accrued liabilities 2,289 --
Deferred revenue 1,116,698 --
Due to shareholder 750,000 --
Related party note payable 160,000 240,000
----------- --------
Total current liabilities 2,301,753 240,000
----------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, 100,000 shares authorized, no par value,
100 shares issued and outstanding -- --
Paid in Capital 20,507 --
Retained Earnings 98,113 --
----------- --------
Total stockholder's equity 118,620 --
----------- --------
Total liabilities and stockholder's equity $ 2,420,373 $240,000
=========== ========
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
<PAGE>
CONSUMER 2 PATIENT, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
For the Years Ended
December 31
---------------------
1999 1998
---------- ------
<S> <C> <C>
REVENUE $6,873,333 $ --
COST OF SALES 4,720,333 --
---------- -----
Gross profit 2,153,000 --
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,060,744 --
---------- -----
(Loss) income from operations 1,092,256 --
---------- -----
INTEREST INCOME (EXPENSE), NET 6,114 --
---------- -----
Net (loss) income $1,098,370 $ --
========== =====
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
CONSUMER 2 PATIENT, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Common Stock
------------- Additional
Par Paid-In Retained
Shares Value Capital Earnings Total
------ ----- ---------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1998 100 $ - $ - $ - $ -
Net income - - - 1,098,370 1,098,370
Distributions to stockholder - - - (1,000,257) (1,000,257)
Capital contributions - - 20,507 - 20,507
--- ---- ------- ----------- -----------
BALANCE, December 31, 1999 100 $ - $20,507 $ 98,113 $ 118,620
=== ==== ======= =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
CONSUMER 2 PATIENT, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
For the Years Ended
December
-------------------------
1999 1998
--------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,098,370 $ --
Adjustments to reconcile net
income to net cash provided by operating
activities-
Depreciation and amortization 32,201 --
Changes in operating assets and liabilities-
Increase in accounts receivable (208,673) --
Increase in other assets (2,500) --
Increase in prepaid expenses (470,606) --
Increase in accounts payable
and accrued liabilities 275,055 --
Increase in deferred revenue 1,116,698 --
----------- -------
Net cash provided by
operating activities 1,840,545 --
----------- -------
CASH FLOWS FROM INVESTING ACTIVITIES --
Purchases of property and equipment (41,004) --
----------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions made to shareholder (250,257) --
Proceeds from capital contributions 20,507 --
Repayment of related party note payable (80,000) --
----------- -------
Net cash used in financing activities (309,750) --
Net increase in cash
and cash equivalents 1,489,791 --
----------- -------
CASH AND CASH EQUIVALENTS, beginning of period -- --
----------- -------
CASH AND CASH EQUIVALENTS, end of period $ 1,489,791 $ --
=========== =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 19,920 $ --
=========== =======
Note issued for intangible acquired -- 240,000
=========== =======
Distributions declared 750,000 --
=========== =======
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
CONSUMER 2 PATIENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
1. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
-------------------
Description of Business
-----------------------
Consumer 2 Patient, Inc. (the "Company") was incorporated on January 12, 1998 in
North Carolina. The Company did not commence operations until January of 1999.
The Company provides healthcare, research, educational and training services
principally to large pharmaceutical companies.
Cash and Cash Equivalents
-------------------------
The Company considers all money market accounts and investment instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation and amortization are
provided by the use of the straight-line method over the estimated useful lives
of the related assets, generally a five to seven year period.
Revenue Recognition
-------------------
Revenue is recognized as services are performed. For conferencing services,
revenue is recognized upon completion of the meeting or symposia. Revenue for
multiple-meeting projects is attributed to individual meetings, based on an
average amount per meeting, and is recognized as individual meetings are
completed.
Customers are invoiced according to agreed-upon billing terms. Items which are
invoiced prior to performance of the related services are recorded as deferred
revenue and are not recognized as revenue until the required service is
provided, in accordance with the Company's revenue recognition policy.
Income Taxes
------------
The Company has elected S Corporation status for Federal and state income tax
purposes. Consequently, taxable income flows through and is taxed to the
stockholder on the individual tax return. Accordingly, no provision for Federal
and state income taxes is included in the accompanying financial statements.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. While actual results could
differ from those estimates, management believes that the estimates are
reasonable.
<PAGE>
CONSUMER 2 PATIENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Long-Lived Assets
-----------------
The Company reviews its long-lived assets and certain related intangibles for
impairment whenever changes in circumstances indicate that the carrying amount
of an asset may not be fully recoverable. The measurement of impairment losses
to be recognized is based on the difference between the fair values and the
carrying amounts of the assets. Impairment would be recognized in operating
results if a diminution in value occurred. The Company does not believe that any
such events or changes in circumstances have occurred.
New Accounting Pronouncements
-----------------------------
In June, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivatives and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. In July 1999, the FASB
approved SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date for FASB Statement No. 133," which
amends SFAS No. 133 to be effective for all quarters of all fiscal years
beginning after June 15, 2000. The impact of the adoption of this Standard on
the Company's results of operations, financial position or cash flow will not be
material.
2. FINANCIAL INSTRUMENTS AND
CONCENTRATION OF CREDIT RISK
----------------------------
Fair Value of Financial Instruments
-----------------------------------
The carrying amounts of cash and cash equivalents, trade receivables, and trade
payables approximate fair value.
Concentration of Credit Risk
----------------------------
The Company's customers are concentrated in the pharmaceutical/health care
industry. During the years ended December 31, 1999 and 1998, the Company's top
customer represented 82% and 0% of its revenue, respectively. Accounts
receivable for this customer, approximated, $136,566 and $0 as of December 31,
1999 and 1998, respectively.
3. PROPERTY AND EQUIPMENT
----------------------
Property and equipment consists of the following:
December 31
------------------
1999 1998
-------- -------
Computer and other equipment $ 2,475 $ -
Furniture and fixtures 38,529 -
------- -------
41,004 -
Less - Accumulated depreciation (8,201) -
------- -------
Net property and equipment $32,803 $ -
======= =======
<PAGE>
CONSUMER 2 PATIENT, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
Depreciation expense for the years ended December 31, 1999 and 1998 was $8,201
and $0, respectively.
4. INTANGIBLE ASSETS
-----------------
Intangible assets consists of the following:
December 31
----------------------
1999 1998
--------- --------
Goodwill $240,000 $240,000
Less - Accumulated amortization (24,000) -
-------- --------
$216,000 $240,000
======== ========
Amortization expense for the years ended December 31, 1999 and 1998 was $24,000
and $0, respectively.
5. COMMITMENTS AND CONTINGENCIES
-----------------------------
Litigation
----------
The Company, from time to time, is involved in legal proceedings incurred in the
normal course of business. The Company believes none of these proceedings will
have a material adverse effect on the financial condition or liquidity of the
Company.
6. RELATED PARTY NOTE PAYABLE
--------------------------
Prior to the Company's incorporation in January of 1998, the sole shareholder
was an employee of Boron, LePore and Associates, Inc. ("BLP"). During 1999, the
Company had receivables from BLP of $26,958 and payables to BLP of $99,920. In
addition, the Company has debt of $160,000 that is due to BLP on which interest
is payable at 8% per annum. Both the principal and accrued interest are to be
paid in the amount of $80,000 (plus interest) on December 15, 2000 and $80,000
(plus interest) on December 15, 2001.
7. SUBSEQUENT EVENT
----------------
On May 17, 2000 the substantially all of the assets and certain liabilities of
the Company that are used in their continuing promotional and educational
services for the medical industry were sold to BLP for $2 million in cash. As
part of the purchase agreement the related party debt of $160,000 as of March
31, 2000, was forgiven.
<PAGE>
(b) Pro Forma Financial Information
(i) Pro Forma Unaudited Condensed Balance Sheet as of March 31,
2000.
(ii) Pro Forma Unaudited Condensed Statements of Operations for the
three months ended March 31, 2000 and the year ended December
31, 1999.
(iii) Notes to the Unaudited Pro Forma Condensed Financial Statements.
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements give
effect to the acquisition of Consumer2Patient, Inc. (C2P) by Boron, LePore &
Associates, Inc. (BLP) (the Transaction). These unaudited pro forma condensed
financial statements are presented for illustrative purposes only, and therefore
are not necessarily indicative of the operating results and financial position
that might have been achieved had the Transaction occurred on an earlier date,
nor are they necessarily indicative of operating results and financial position
which may occur in the future.
The condensed historical financial statements of operations for the periods
presented are derived from the historical financial statements of BLP and C2P.
These condensed financial statements should be read in conjunction with the BLP
December 31, 1999 Annual Report on Form 10-K and the quarterly report as of
March 31, 2000 on Form 10-Q in addition to the historical financial statements
of C2P, attached hereto. The historical financial statements as of March 31,
2000 and for the three months ended March 31, 2000 are unaudited and have been
prepared in accordance with generally accepted accounting principles applicable
to interim financial information and, in the opinion of BLP's and C2P's
management, includes all adjustments necessary for a fair presentation of
information for such periods.
A pro forma unaudited condensed balance sheet is provided as of March 31, 2000
giving effect to the Transaction as though it had been consummated on that date.
Pro forma unaudited condensed statements of operations are provided for the
three months ended March 31, 2000 and the year ending December 31, 1999, giving
effect to the Transaction as though it had occurred at the beginning of the
earliest period presented.
<PAGE>
Pro Forma Unaudited Condensed Balance Sheets
As of March 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Historical
-----------------------------------------
Boron, LePore & Pro Forma Condensed
Associates, Inc. Consumer2Patient, Inc. Pro Forma Adjustments BLP and C2P
---------------- ---------------------- --------------------- -------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 38,745 $ 1,320 $ (2,000) (b) $ 38,065
Accounts receivable, net 37,253 488 37,741
Prepaid expenses and other current assets 2,013 574 2,587
--------- -------- --------
Total current assets 78,011 2,382 78,393
Furniture, fixtures and equipment, at cost,
net of accumulated depreciation 6,887 34 6,921
Intangible assets, net 35,979 210 $ 1,951 (b) 38,140
Other assets 728 14 $ (160) (c) 582
--------- -------- --------
Total assets $ 121,605 $ 2,640 $124,036
========= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,233 11 $ 4,244
Accrued payroll 2,533 - 2,533
Accrued expenses 9,133 - 9,133
Deferred revenue 10,142 1,770 11,912
Due to shareholder - 650 650
Note payable - 160 $ (160) (c) -
--------- -------- --------
Total current liabilities 26,041 2,591 28,472
--------- -------- --------
Commitments and contingencies
Stockholders' equity:
Common stock 169 - 169
Treasury stock (27,189) - (27,189)
Additional paid-in capital 118,789 21 $ (21) (a) 118,789
Retained earnings 3,795 28 $ (28) (a) 3,795
--------- -------- --------
Total stockholders' equity 95,564 49 95,564
--------- -------- --------
Total liabilities and stockholders' equity $ 121,605 $ 2,640 $124,036
========= ======== ========
</TABLE>
<PAGE>
Pro Forma Unaudited Condensed Statements of Operations
For the three months ended March 31, 2000
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical
------------------------------------------
Boron, LePore & Pro Forma combined
Associates, Inc. Consumer2Patient, Inc. Pro Forma Adjustments BLP and C2P
---------------- ---------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Revenues $ 37,114 $ 397 $ 37,511
Cost of Sales 27,453 286 27,739
-------- -------- --------
Gross profit 9,661 111 9,772
Selling, general and administrative expenses 8,581 194 $ 56 (e) 8,831
-------- -------- --------
Operating income (loss) 1,080 (83) 941
Interest income 694 13 707
-------- -------- --------
Income (loss) before provision for income taxes 1,774 (70) 1,648
Provision for income taxes 710 - (51)(g) 659
-------- -------- --------
Net income (loss) $ 1,064 $ (70) $ 989
======== ======== ========
Earnings per share-basic $ 0.09 $ 0.08
======== ========
Weighted average common shares
outstanding-basic 12,300 12,300
======== ========
Earnings per share-diluted $ 0.09 $ 0.08
======== ========
Weighted average common shares
outstanding-diluted 12,475 12,475
======== ========
</TABLE>
<PAGE>
Pro Forma Condensed Statements of Operations
For the year ended December 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical
------------------------------------------
Boron, LePore & Pro Forma Pro Forma combined
Associates, Inc. Consumer2Patient, Inc. Adjustments BLP and C2P
---------------- ---------------------- ----------- ------------------
<S> <C> <C> <C> <C>
Revenues $ 149,448 $ 6,873 $ 156,321
Cost of Sales 109,678 4,720 114,398
---------------- ---------------------- ------------------
Gross profit 39,770 2,153 41,923
---------------- ---------------------- ------------------
Selling, general and administrative expenses 38,942 1,061 $ 225 (d) 40,228
Provision for restructuring and other severance 2,920 - 2,920
Goodwill impairment charge 754 - 754
---------------- ---------------------- ------------------
Total operating expenses 42,616 1,061 43,902
---------------- ---------------------- ------------------
Operating income (loss) (2,846) 1,092 (1,979)
Net interest income 1,873 6 1,879
---------------- ---------------------- ------------------
Income (loss) before provision
(benefit) for income taxes (973) 1,098 (100)
Provision (benefit) for income taxes (390) - 350 (f) (40)
---------------- ---------------------- ------------------
Net income (loss) $ (583) $ 1,098 $ (60)
================ ====================== ==================
Earnings per share-basic $ (0.05) $ (0.00)
================ ==================
Weighted average common shares
outstanding-basic 12,633 12,633
================ ==================
Earnings per share-diluted $ (0.05) $ (0.00)
================ ==================
Weighted average common shares
outstanding-diluted 12,633 12,633
================ ==================
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited pro forma condensed financial statements are presented for
illustrative purposes only, giving effect to the Transaction. In accordance
with SEC reporting rules, the pro forma unaudited condensed statements of
income, and the historical statements from which they are derived, present only
income from continuing operations and, therefore, do not include discontinued
operations, extraordinary items and the cumulative effect of accounting changes,
as applicable.
The pro forma unaudited condensed balance sheet as of March 31, 2000 includes,
in accordance with SEC reporting rules, the impact of all transactions, whether
of a recurring or nonrecurring nature, that can be reasonably estimated and
should be reflected at that date.
The accompanying unaudited pro forma condensed financial statements give effect
to the acquisition of Consumer2Patient, Inc. (C2P) by Boron LePore & Associates,
Inc. (BLP). The purchase price was $2 million in cash. In addition BLP may be
required to pay up to an additional $2 million in contingent cash payments based
on certain operating goals during the subsequent twelve month period. Such
contingent payments have been excluded from the pro forma presentation due to
the uncertainty of their payout.
2. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the unaudited condensed
statements of operations and balance sheet, as applicable-
(a) As the Transaction has been accounted for as a purchase,
entry is to eliminate the historical equity accounts of C2P
and record the resulting intangible assets.
(b) To record the purchase of C2P for $2 million in cash. The
resulting goodwill and non-compete agreements will be
amortized over 10 years and 3 years, respectively.
(c) To eliminate the note payable from C2P to BLP.
(d) To record the amortization of goodwill and the non-compete
agreement for the year ended December 31, 1999.
(e) To record the amortization of goodwill and the non-compete
agreement for the three months ended March 31, 2000.
(f) To adjust the pro forma tax provision for the pro forma
combined company. The tax rate utilized was approximately
40.0%, BLP's effective tax rate for the year ended
December 31, 1999.
(g) To adjust the pro forma tax benefit for the pro forma
combined company. The tax rate utilized was approximately
40%, BLP's effective tax rate for the three months ended
March 31, 2000.
(c) Exhibits
Exhibit No. Description
----------- -----------
2.1 Asset Purchase Agreement, dated as of May 4, 2000, by and among
Boron, LePore & Associates, Inc., C2P Acquisition Corp.,
Consumer2Patient, Inc., Physician2Physician, LLC, Alternative
Media Solutions, LLC and the sole stockholder of C2P
(incorporated by reference to the Boron LePore & Associates, Inc.
current report on Form 8-K, filed with the Securities and
Exchange Commission on June 1, 2000).
23.1 Consent of Arthur Andersen LLP.
<PAGE>
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.
Dated: July 31, 2000 BORON, LePORE & ASSOCIATES INC.
By: /s/ Anthony J. Cherichella
------------------------------
Anthony J. Cherichella
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Asset Purchase Agreement, dated as of May 4, 2000, by and among
Boron LePore & Associates, Inc., C2P Acquisition Corp.,
Consumer2Patient, Inc., Physician2Physician, LLC, Alternative
Media Solutions, LLC and the sole stockholder of C2P.
(incorporated by reference to the Boron, Lepore, & Associates
Inc. current report on form 8-K, filed with the Securities and
Exchange Commission on June 1, 2000)
23.1 Consent of Arthur Andersen LLP.
