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 earliest event reported - January 20, 1999
Market Guide Inc.
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(Exact name of Registrant as specified in its charter)
New York 291525-NY 11-2646081
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2001 Marcus Avenue, Suite S200
Lake Success, New York 11042-1011
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(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (516) 327-2400
<PAGE>
On December 29, 1998, Market Guide Inc. ("MGI") and New Generation Foods, Inc.
("NGF") executed an Asset Purchase Agreement (the "Agreement") and on January
15, 1999 the Agreement was amended and restated and the closing contemplated
pursuant to the Agreement was consummated. The Agreement provided for the sale
of the Credit Risk Monitor ("CRM") product-line, which provides, among other
things, on-line information and news of U.S. publicly held companies (the
"Credit Monitoring Business"). This was achieved through the purchase by NGF and
the sale by MGI of the "CRM Assets," as described as follows:
(a) Office equipment, computers and computer related
peripherals, machinery, supplies, and other tangible personal property used in
the operation of the Credit Monitoring Business (the "Equipment"), and as listed
in Schedule 1.1(a) of the Agreement;
(b) Books, records and documents or true and correct copies of
said books, records and documents, currently in possession of Seller or under
its control, or which Seller can obtain without undue expense, related to,
derived from or used in the operation of the Credit Monitoring Business, such as
subscriber lists, supplier lists, information supplier web sites, subscriber
price lists, internet web addresses, advertising materials and marketing plans,
CRM internet web pages, business files, regulatory files and approvals, business
plans, financial data, operations manuals, and other data related to the Credit
Monitoring Business, to the extent listed in Schedule 1.1(b);
(c) Permits, licenses, orders, consents and approvals of any
governmental or regulatory authority related to the operation of the Credit
Monitoring Business, including without limitation those listed in Schedule
1.1(c);
(d) All rights of Seller in and to the name "Credit Risk
Monitor" and "on-line, on-time, on-target" and all variations thereof, and all
intellectual property rights related to, or derived from their use in the
operation of the Credit Monitoring Business (the "Intellectual Property"),
including trade names, trademarks, service names, service marks, copyrights,
private labels, logos or designs, whether registered or not, including, without
limitation, the Registration No. 2,148,954:
"On-line, on-time, on-target.";
(e) All Accounts Receivable (hereinafter defined) of the
Credit Monitoring Business as of January 14, 1999;
(f) All General Intangibles (as defined in the UCC) of or
relating to the Credit Monitoring Business;
(g) All existing and prospective business relationships,
reputation, and other intangibles which may be characterized as "goodwill" or
"going concern value" of the Credit Monitoring Business;
(h) The licenses, Contracts and subscriptions for software and
information sources used in the Credit Monitoring Business (collectively
referred to as "Licenses") and listed in Schedule 1.1 (h) of the Agreement;
(i) All rights under Contracts and agreements to which Seller
is a party relating to the Credit Monitoring Business, as listed in Schedule
7.16 of the Agreement, excluding the Contract and agreements described in
Schedule 7.16(d) of the Agreement;
(j) All programs developed by Seller to deliver CRM to a
Subscriber (including object and source code in machine readable and listing
form), the current version of which is stored on a back-up tape dated January
11, 1999 which is being held in escrow by the firm of Ruskin, Moscou, Evans &
Faltischek, P.C., and any existing documentation relating to the programs
(including internal documentation and training materials), source code notes,
software tools, compilers, and all revisions, release levels and versions of the
foregoing, developed by Seller (hereinafter collectively referred to as
"Software"); and
(k) All Equipment and Software acquired or developed by
Seller, all Contracts entered into by Seller, and other CRM Assets acquired by
Seller, and used in or applicable to the operation of the Credit Monitoring
Business after the date of execution of the Option Agreement and prior to the
Closing Date, as provided in the Option Agreement, or which the Parties
otherwise agree in writing to include as CRM Assets.
The purchase price for the "CRM Assets" was Two Million Five Hundred Thousand
Dollars ($2,500,000), subject to adjustments and was
paid as follows:
One Million Two Hundred Thirty-Three Thousand One Hundred Eighty Seven Dollars
($1,233,187) was wire transferred to an MGI account, which represents One
Million Five Hundred Thousand Dollars ($1,500,000) owed at closing by NGF minus
adjustments in the amount of Two Hundred Sixty-Six Thousand Eight Hundred
Thirteen Dollars ($266,813). Adjustments to the purchase price included a credit
to NGF of Sixty Thousand Dollars ($60,000) for the Option Price, and a credit to
NGF of Five Hundred Fifty Thousand Six Hundred Eighty Dollars ($550,680) for
Unfulfilled Subscriptions for the Credit Risk Monitor Service. Adjustments in
favor of MGI included an Accounts Receivable adjustment of Two Hundred Thirty
One Thousand Seven Hundred Five Dollars ($231,705), Negative Cash Flow of Ninety
Four Thousand Six Hundred Sixty Dollars ($94,660) and miscellaneous adjustments
of Seventeen Thousand Five Hundred Two Dollars ($17,502).
In addition to the money wire transferred on the closing date, NGF executed a
Secured Promissory Note in the amount of One Million Dollars ($1,000,000) with
interest on the outstanding principal amount from July 1, 2001 at the rate of
six (6.0%) percent per annum calculated on the basis of a 360-day year for the
actual number of days elapsed, payable in twenty-four (24) successive equal
monthly installments of principal and interest in the amount of $44,320.61 each
commencing July 31, 2001, and continuing on the last day of each month
thereafter until June 30, 2003 when the entire balance of principal and interest
is due and payable.
Additionally, a Secured Expense Note was executed in the amount of Ninety-Eight
Thousand One Hundred Sixty-Two Dollars ($98,162), together with interest on the
principal amount accruing from January 15, 1999 at the rate of eight and
one-half (8.5%) per cent per annum calculated on the basis of a 360 day year for
the actual number of days elapsed. All interest will accrue from February 1,
1999 through January 31, 2001 and shall be added to the outstanding principal
amount of this Note. The principal and accrued interest shall be payable in
twenty-four (24) monthly installments of principal and interest in the amount of
Five Thousand Two Hundred Eighty-Five and 69/100 ($5,285.69) Dollars, commencing
February 28, 2001 and shall continue until the last day of each month thereafter
until January 31, 2003 when all principal and interest shall be due and payable.
As part of the transactions contemplated by the Agreement, NGF employed the
following former MGI employees to continue the work they performed on behalf of
MGI in connection with the "CRM Assets:"
NAME POSITION
Burrows, John D. Financial Analyst
Fensterstock, Albert Managing Director
Fensterstock, David Salesman
Fensterstock, Lawrence Senior V.P. - Financial Analysis
Fensterstock, Samuel V.P. - Sales and Marketing
Gordon, Hedy E. Saleswoman
Menos, Farrah M. Assistant
Sheppard, Robert Salesman
Spiegel, Joel Network Support
Talmor, Shlomo Programmer/Analyst
Teisch, Wendy Sales Assistant
Additionally, the Chairman and President of NGF, Jerome S. Flum, was retained as
a consultant to MGI pursuant to the terms and conditions set forth in the Option
and Consulting Agreement dated August 27, 1998 by and among MGI, NGF and Jerome
S. Flum. The term of Jerome S. Flum's consulting agreement expired on the
closing of the transactions contemplated by the Agreement. Jerome S. Flum
currently maintains his positions as Chairman and President of NGF.
There remains a continuing relationship between MGI and NGF whereby MGI licenses
a portion of the MGI W290 suite in the premises 2001 Marcus Avenue, Lake
Success, New York to NGF (the "Real Property License"). The Real Property
License terminates on October 31, 1999, subject to sooner termination pursuant
to said agreement. NGF shall pay MGI monthly for the Real Property License fifty
percent (50%) of the occupancy costs, which MGI pays for Suite W290, including
but not limited to rent, utilities, maintenance, and tax escalation.
Furthermore, NGF continues to license data from MGI pursuant to the Market Guide
Database License Agreement executed on January 15, 1999 by and between MGI and
NGF.
See attached press release:
<PAGE>
[COMPANY LETTERHEAD]
NEWS RELEASE
AT MARKET GUIDE INC.
Jeffrey S. Geisenheimer
Vice President
Chief Financial Officer
(516) 327-2400 ext. 105
FOR IMMEDIATE RELEASE
MARKET GUIDE COMPLETES SALE OF CREDITRISK MONITOR DIVISION
Restated Earnings from Continuing Operations Rise 107%
Lake Success, New York, January 20, 1999 --- Market Guide Inc. (Nasdaq:
MARG), today announced the completion of the sale of its CreditRisk Monitor
division to New Generation Foods, Inc. (OTCBB: NGNF). After customary
adjustments to the contract price of $2.5 million, Market Guide received cash
proceeds of approximately $1.23 million at the closing and $1.1 million in
secured promissory notes, payable in installments ending in June 2003.
Management expects the sale of the CreditRisk Monitor division to eliminate more
than $800,000 in annualized operating losses. Cash proceeds of the sale will be
used to accelerate new product development and to expand sales and marketing
efforts.
Commenting on the sale, Homi M. Byramji, President and CEO of Market Guide,
said, "Investors can now appreciate just how profitable the Company's core
operations are. These profits can now be reinvested into the future growth of
our business. We wish CreditRisk Monitor and New Generation Foods every success
and look forward to a long relationship with them as a distributor of our
information."
In its 10Q filing dated January 14, 1999, Market Guide reclassified the
CreditRisk Monitor division as a discontinued operation. Restated revenues for
the nine months ended November 30, 1998 increased 35% to $6,357,262, compared to
$4,713,500 in the same period ended November 30, 1997.
Market Guide's restated income from continuing operations, reflecting the just
concluded sale of CreditRisk Monitor, increased 107% to $1,344,877 for the nine
months ended November 30, 1998 compared to $650,346 in the nine months ended
November 30, 1997. The Company's reported earnings per share from continuing
operations of $0.28 per share for the nine months ended November 30, 1998
compares to $0.14 per share in the comparable period ended November 30, 1997.
<PAGE>
Restated income statements for the third quarter and nine months periods ending
November 30, 1998 and November 30, 1997 are as follows:
<PAGE>
<TABLE>
<CAPTION>
Statement of Operations
(Unaudited)
For the 3 Months Ended For the 9 Months Ended
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Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1998 1997 1998 1997
(Restated) (Restated)
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<S> <C> <C> <C> <C>
Revenues:
Database vendors $ 1,473,390 $ 1,229,699 $ 4,322,432 $ 3,682,997
Market Guide products 733,296 405,414 2,000,639 990,319
Print product 11,929 11,014 34,191 40,184
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Total revenues 2,218,615 1,646,127 6,357,262 4,713,500
Expenses:
Salaries & employee benefits 981,554 788,318 2,850,218 2,451,368
Database and product costs 230,360 91,772 520,723 279,069
General and administrative 285,393 218,925 839,698 661,985
Depreciation 117,916 86,994 327,637 244,014
Amortization 98,084 92,971 287,539 263,784
Advertising and promotion 41,113 34,882 115,991 116,644
-------------- --------------- ------------- -------------
Total expenses 1,754,420 1,313,862 4,941,806 4,016,864
-------------- --------------- ------------- -------------
Income from continuing operations 464,195 332,265 1,415,456 696,636
Interest income 7,331 4,373 19,716 16,937
Interest expense 21,465 21,975 71,175 61,227
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Income before income taxes 450,061 314,663 1,363,997 652,346
Provision for income taxes 7,201 -0- 19,120 2,000
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Income from continuing operations 442,860 314,663 1,344,877 650,346
Income from discontinued operations (233,810) (297,170) (757,447) (756,571)
Net income $ 209,050 $ 17,493 $ 587,430 $ (106,225)
Earnings per share - Basic:
Continuing operations
0.09 0.07 0.28 0.14
Discontinued operations (0.05) (0.07) (0.16) (0.16)
Total $ 0.04 $ 0.00 $ 0.12 $ (0.02)
Earnings per share - Diluted:
Continuing operations 0.09 0.07 0.27 0.14
Discontinued operations (0.05) (0.07) (0.15) (0.16)
Total 0.04 0.00 0.12 (0.02)
Weighted average number of shares outstanding:
Basic 4,769,487 4,713,709 4,754,247 4,710,560
Diluted 4,969,587 4,753,709 4,965,964 4,741,287
</TABLE>
<PAGE>
In an unrelated occurrence, Newsday, the Times-Mirror newspaper serving the New
York Metropolitan area, in an article published on January 18, 1999 on the "Top
100 Long Island Public Companies", cited Market Guide's 1998 total investor
return of 352.4% as number one of all companies on Long Island for the year.
Market Guide Inc., the benchmark for quality financial information, is the
leader in providing the broadest coverage of professional grade financial data
over the Internet. Market Guide supplies more professional Web sites with
quality investment data than any other database and software company. Market
Guide specializes in the compilation, integration, display and delivery of a
superior quality database of descriptive and analytic information on over 11,000
publicly traded domestic and foreign corporations. Well known to professional
investors for 15 years, the company distributes its services through more than
90 on-line vendors and independent finance oriented websites including, ADP,
AltaVista, America Online (NYSE: AOL), Bridge Information Systems, Briefing.com,
CNNfn, DBC (Nasdaq: DBCC), FactSet Research Systems, Individual Investor Group
(Nasdaq: INDI), One Source, PC Quote (Amex: PQT), Pointcast, Quote.com, Reuters
(Nasdaq: RTRSY), The Motley Fool, Track Data (Nasdaq: TRAC), Wall Street Source,
Waterhouse Securities and Yahoo! (Nasdaq: YHOO), as well as through its own web
site - The Market Guide Investment Center (http://www.marketguide.com).
Safe Harbor Statement: Certain statements in this press release, including
statements prefaced by the words "anticipates", "estimates", "believes",
"expects" or words of similar meaning, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
# # #
<PAGE>
Safe Harbor Statement: Certain statements in this report and the attached press
release, including statements prefaced by the words "anticipates," "estimates,"
"believes," "expects," or words of similar meaning, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risk,
uncertainties and other factors which may cause the actual results, performance
or achievements of the MGI to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
