SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K/A
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AMENDMENT NO. 1
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 5, 1998
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Date of Report (Date of earliest event reported)
DATAMARK HOLDING, INC.
(exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
0-20771 87-0461856
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(Commission File Number) (I.R.S. Employer
Identification No.)
448 E. Winchester Street, Suite 400
Salt Lake City, Utah 84107
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(Address of principal executive offices) (Zip Code)
(801) 268-2202
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(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) The unaudited pro forma condensed consolidated financial data
relating to the disposition of the assets as described on Form 8-K dated March
5, 1998 and in accordance with Article 11 of Regulation S-X are filed herewith.
(b) The following exhibits are filed herewith:
(1) Pro Forma Financial Data
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.
DATAMARK HOLDING, INC.
Date May 1,1998 /s/ Michael D. Bard
---------------------------
Michael D. Bard
Chief Financial Officer
2
<PAGE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial data
is based upon the historical consolidated financial statements of DataMark
Holding, Inc. and subsidiaries ("DataMark") as adjusted to give effect to the
sale of certain net assets associated with its direct mail advertising business
as if the sale had occurred on December 31, 1997 for purposes of the unaudited
pro forma condensed consolidated balance sheet as of December 31, 1997 and July
1, 1996 for purposes of the unaudited pro forma condensed consolidated
statements of operations for the year ended June 30, 1997 and for the six months
ended December 31, 1997.
The pro forma adjustments are based upon information set out in the
asset purchase agreement and information from the Company's books and records
that management of the Company believes are reasonable and accurate. The
unaudited pro forma condensed consolidated balance sheet as of December 31, 1997
and the unaudited pro forma condensed consolidated statements of operations for
the year ended June 30, 1997 and for the six months ended December 31, 1997, are
not necessarily indicative of the results of operations of DataMark, or its
financial position, had the sale actually occurred on December 31, 1997 or July
1, 1996. The unaudited pro forma results of operations of DataMark for the six
months ended December 31, 1997 are not necessarily indicative of the results of
operations that may be generated for the entire fiscal 1998 year. The unaudited
pro forma adjustments are described in the accompanying notes to unaudited pro
forma condensed consolidated financial data.
This unaudited pro forma condensed consolidated financial data should
be read in conjunction with the consolidated financial statements of DataMark
and the related notes thereto, included in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1997 and Quarterly Report on Form 10-Q
for the period ended December 31, 1997.
3
<PAGE>
<TABLE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
<CAPTION>
Historical Pro Forma
DataMark Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $2,417,125 $6,900,000 (a) $9,317,125
Trade accounts receivable, net 940,024 (854,522) (b) 85,502
Inventory 218,697 (126,698) (b) 91,999
Other current assets 245,815 (3,756) (b) 242,059
----------- ---------- -----------
Total current assets 3,821,661 5,915,024 9,736,685
----------- ---------- -----------
PROPERTY AND EQUIPMENT:
Computer and office equipment 6,036,403 (273,731) (b) 5,762,672
Furniture, fixtures and leasehold
improvements 859,878 (122,232) (b) 737,646
Printing equipment 681,111 (681,111) (b) --
Vehicles 11,466 (11,466) (b) --
----------- ---------- -----------
7,588,858 (1,088,540) 6,500,318
Less accumulated depreciation
and amortization (1,813,468) 517,707 (b) (1,295,761)
----------- ---------- -----------
Net property and equipment 5,775,390 (570,833) 5,204,557
----------- ---------- -----------
INVESTMENT 750,000 750,000
OTHER ASSETS 51,139 800,000 (a) 851,139
----------- ---------- -----------
Total assets $10,398,190 $6,144,191 $16,542,381
=========== ========== ===========
CURRENT LIABILITIES:
Accounts payable $1,044,969 $(605,408) (b) $439,561
Current portion of capital lease
obligation 866,816 866,816
Accrued liabilities 616,079 (173,269) (b) 442,810
Notes payable 17,597 17,597
Other current liabilities 75,000 -- 75,000
----------- ---------- -----------
Total current liabilities 2,620,461 (778,677) 1,841,784
----------- ---------- -----------
CAPITAL LEASE OBLIGATION, net of current
portion 1,658,495 1,658,495
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock 861 861
Additional paid-in capital 22,736,779 22,736,779
Accumulated deficit (16,618,406) 6,922,868 (c) (9,695,538)
----------- ---------- -----------
Total stockholders' equity 6,119,234 6,922,868 13,042,102
----------- ---------- -----------
Total liabilities and stockholders' equity $10,398,190 $6,144,191 $16,542,381
=========== ========== ===========
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial data.
4
<PAGE>
<TABLE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Year Ended June 30, 1997
<CAPTION>
Historical Pro Forma
DataMark Adjustments Pro Forma
------------ ------------ ------------
NET SALES:
<S> <C> <C> <C>
Direct mail marketing $ 6,448,156 $ (6,448,156) (e) $ --
Computer online marketing 350,654 -- 350,654
------------ ------------ ------------
Total net sales 6,798,810 (6,448,156) 350,654
------------ ------------ ------------
COST OF SALES:
Postage 2,419,652 (2,419,652) (e) --
Materials and printing 2,133,448 (2,133,448) (e) --
Computer online operations 436,306 -- 436,306
------------ ------------ ------------
Total cost of sales 4,989,406 (4,553,100) 436,306
------------ ------------ ------------
GROSS MARGIN (DEFICIT) 1,809,404 (1,895,056) (85,652)
------------ ------------ ------------
OPERATING EXPENSES:
Research and development 6,357,157 (263,716) (e) 6,093,441
General and administrative 3,026,323 (978,750) (e) 2,047,573
Selling 2,258,978 (177,272) (e) 2,081,706
------------ ------------ ------------
Total operating expenses 11,642,458 (1,419,738) 10,222,720
------------ ------------ ------------
LOSS FROM OPERATIONS (9,833,054) (475,318) (10,308,372)
------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest and other income 501,733 501,733
Interest expense (9,495) 540 (e) (8,955)
------------ ------------ ------------
Other income, net 492,778 540 (e) 492,238
------------ ------------ ------------
NET LOSS BEFORE INCOME TAXES (9,340,816) (474,778) (9,815,594)
------------ ------------ ------------
BENEFIT FROM INCOME TAXES 2,581,475 (d) 2,581,475
------------ ------------
NET LOSS BEFORE DISCONTINUED
OPERATIONS (9,340,816) 2,106,697 (7,234,119)
------------ ------------ ------------
DISCONTINUED OPERATIONS:
Gain on sale of direct mail marketing
operations, net of income taxes of
$2,581,475 -- 4,302,459 (d) 4,302,459
------------ ------------ ------------
NET LOSS $ (9,340,816) $ 6,409,156 $ (2,931,660)
============ ============ =============
NET LOSS PER COMMON SHARE (Basic
and Diluted):
Continuing operations $ (1.12) $ (0.87)
------------ ------------
Net loss $ (1.12) $ (0.35)
============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,309,467 8,309,467
============ ============
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial data.
5
<PAGE>
<TABLE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1997
<CAPTION>
Historical Pro Forma
DataMark Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
NET SALES:
Direct mail marketing $ 5,479,759 $(5,479,759) (e) $ --
Computer online marketing 431,200 -- 431,200
----------- ----------- -----------
Total net sales 5,910,959 (5,479.759) 431,200
----------- ----------- -----------
COST OF SALES:
Postage 2,187,574 (2,187,574) (e) --
Materials and printing 1,623,661 (1,623,661) (e) --
Computer online operations
342,141 -- 342,141
----------- ----------- -----------
Total cost of sales 4,153,376 (3,811,235) 342,141
----------- ----------- -----------
GROSS MARGIN 1,757,583 (1,668,524) 89,059
----------- ----------- -----------
OPERATING EXPENSES:
General and administrative 3,092,560 (809,206) (e) 2,283,354
Selling 1,576,522 (562,094) (e) 1,014,428
Research and development 847,067 -- 847,067
----------- ----------- -----------
Total operating expenses 5,516,149 (1,371,300) 4,144,849
----------- ----------- -----------
LOSS FROM OPERATIONS (3,758,566) (297,224) (4,055,790)
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest and other income 91,121 (24,804) (e) 66,317
Interest expense (61,822) -- (61,822)
----------- ----------- -----------
Other income, net 29,299 (24,804) 4,495
----------- ----------- -----------
NET LOSS $(3,729,267) $ (322,028) $(4,051,295)
=========== =========== ===========
NET LOSS PER COMMON SHARE (Basic
and Diluted) $ (0.43) $ (0.47)
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 8,605,767 8,605,767
=========== ===========
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated financial data.
6
<PAGE>
DATAMARK HOLDING, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL DATA
DESCRIPTION OF THE TRANSACTION
- ------------------------------
On March 5, 1998, DataMark Systems, Inc. ("DMS"), a wholly-owned
subsidiary of DataMark Holding, Inc. (the "Company") sold its direct mail
advertising business to Focus Direct, Inc., a Texas corporation. Pursuant to an
Asset Purchase Agreement, Focus Direct, Inc. purchased all assets, properties,
rights, claims and goodwill, of every kind, character and description, tangible
and intangible, real and personal, wherever located of DMS, DataMark Printing,
Inc. ("Printing") and DataMark Lists, Inc., ("Lists") and WorldNow Online
Network, Inc. (all wholly-owned subsidiaries of the Company) used in DMS's
direct mail business. Focus Direct, Inc. also agreed to assume certain
liabilities of DMS, Printing, and Lists. Focus Direct, Inc. is not affiliated
with the Company.
Pursuant to the Agreement, Focus Direct, Inc. agreed to pay the Company
$7,700,000 for the above described assets. Focus Direct, Inc. paid the Company
$6,900,000 at closing and will pay the additional $800,000 on or about June 30,
1999. The total purchase price is to be adjusted for the difference between the
assets acquired and liabilities assumed at November 30, 1997 and those as of the
date of closing.
The foregoing discussion is qualified in its entirety by reference to
the Agreement, which was filed as an exhibit to Form 8-K dated March 5, 1998.
(1) BASIS OF PRESENTATION
---------------------
The accompanying unaudited pro forma condensed consolidated balance
sheet has been prepared assuming that the net asset sale occurred on December
31, 1997. The unaudited pro forma condensed consolidated statements of
operations have been prepared assuming that the net asset sale occurred on July
1, 1996, the first day of the Company's most recent fiscal year.
(2) PRO FORMA ADJUSTMENTS
---------------------
(a) Adjustment to record the total amount to be received from the
sale of net assets as follows:
Total sales price $7,700,000
Less: Payment deferred
until June 1999 800,000
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Net cash received
at closing $6,900,000
==========
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<PAGE>
(b) Adjustments to eliminate net assets sold in accordance with
the asset purchase agreement.
(c) Adjustment to record the gain from the sale of net assets as
if sale had occurred on December 31, 1997 calculated as
follows:
Total sales price $7,700,000
Less: Pro forma net assets
sold at December 31, 1997 (777,132)
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Net gain on sale $6,922,868
==========
The gain from the sale has not been reduced for income taxes
due to the Company's previously recorded valuation allowance
for deferred tax assets resulting from tax net operating loss
carryforwards.
(d) Adjustment to record the gain from the sale of net assets as
if sale had occurred on July 1, 1996 calculated as follows:
Total sales price $7,700,000
Less: Pro forma net assets
sold at July 1, 1996` (816,066)
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$6,883,934
Less: Estimated income taxes
at 37.5 percent (2,581,475)
----------
Net gain on sale $4,302,459
==========
(e) Adjustments to eliminate sales and expenses related to the
Company's direct mail marketing operations. All overhead
included in the eliminated expenses were those expenses
incurred only for the benefit of DataMark Systems, Inc.
8
