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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended December 31, 1999.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to __________________
Commission File Number 000-15379
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Park Pharmacy Corporation
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(Exact Name of Small Business as Specified in its Charter)
Colorado 841029701
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
10711 Preston Road, Suite 250, Dallas, Texas 75230
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Address of Principal Executive Offices
(214) 692-9921
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Issuer's Telephone Number, Including Area Code
Power-Cell, Inc. 660 Preston Forest Center #200, Dallas, Texas 75230
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,419,551
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Transitional Small Business Disclosure Format (check one): Yes No
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
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Page
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Item 1. Financial Statements
Balance sheet - December 31, 1999 (unaudited)
Unaudited condensed statements of operations - three and six
month periods ended December 31, 1999 and 1998.
Unaudited condensed statements of cash flows - three and six
month periods ended December 31, 1999 and 1998.
Notes to condensed financial statements
Item 2. Management's Discussion and Analysis or Plan of Operation -4-
PART II - OTHER INFORMATION -7-
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders -11-
Item 6. Exhibits and Reports on Form 8-K -11-
Signature Page
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PARK PHARMACY CORPORATION
BALANCE SHEET
(Unaudited)
DECEMBER 31, 1999
ASSETS
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CURRENT ASSETS:
Cash $ 516,470
Accounts receivable 2,280,700
Inventories 1,402,806
Prepaid expenses 20,778
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Total current assets 4,220,754
FIXED ASSETS, net of accumulated depreciation 828,255
GOODWILL 1,283,815
PROPRIETARY SOFTWARE RIGHTS 1,000,000
OTHER 2,670
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Total assets $ 7,335,494
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,326,809
Notes payable 329,011
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Total current liabilities 2,655,820
SHAREHOLDERS' EQUITY:
Preferred stock 2,993
Common stock 442
Additional paid-in capital 4,959,874
Accumulated deficit (283,635)
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Total shareholders' equity 4,679,674
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Total liabilities and shareholders' equity $ 7,335,494
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SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
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PARK PHARMACY CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
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THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1999 1998 1999 1998
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GENERAL AND ADMINISTRATIVE
EXPENSES $ 43,977 $ 18,900 $ 102,033 $ 37,843
MERGER AND ACQUISITION COSTS 38,680 7,500 71,731 15,020
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NET LOSS $ (82,657) $ (26,400) $ (173,764) $ (52,863)
============ ============ ============ ============
NET LOSS PER SHARE (Basic and
diluted) $ (.02) $ (.01) $ (.04) $ (.02)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 4,419,000 4,419,100 4,419,000 4,419,000
============ ============ ============ ============
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SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
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PARK PHARMACY CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
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SIX MONTHS ENDED
DECEMBER 31,
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1999 1998
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CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (173,764) $ (52,863)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation 1,184 1,184
Increase in accounts payable and accrued expenses 181,000 62,980
Other (4,850) (10,301)
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Net cash provided by operating activities 3,570 1,000
CASH FLOW FROM INVESTING ACTIVITIES:
Expenditures on behalf of subsequently acquired subsidiary (124,000) --
Cash acquired in acquisition 511,900 --
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Net cash provided by investing activities 387,900 --
CASH FLOW FROM FINANCING ACTIVITIES -
Proceeds from note payable 124,000 --
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NET DECREASE IN CASH 515,470
CASH, beginning of period 1,000 --
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CASH, end of period $ 516,470 $ 1,000
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SUPPLEMENTAL INFORMATION REGARDING NON-CASH INVESTING ACTIVITY - In December
1999 the Company acquired two companies by issuing preferred stock, as described
in Note 3.
SEE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS.
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PARK PHARMACY CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. UNAUDITED INFORMATION
The balance sheet as of December 31,1999 and the statements of operations
for the three and six month periods ended December 31, 1999 and 1998 were
taken from the Company's books and records without audit. However, in the
opinion of management, such information includes all adjustments
(consisting only of normal recurring accruals) which are necessary to
properly reflect the financial position of the Company as of December 31,
1999 and the results of its operations for the three and six months ended
December 31, 1999 and 1998.
2. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying financial statements are those of Park Pharmacy
Corporation ("the Company") the shareholders of which acquired Power-Cell,
Inc. in a reverse acquisition in October 1999. This transaction was
accounted for as acquisition by the Company of Power-Cell's net assets and
a reorganization under Power-Cell's capital structure. In the transaction
2,567,816 shares of Series A Preferred Stock were issued the Park
shareholders and 50,000 shares of such stock was issued to satisfy an
outstanding liability of Power-Cell. Each share of the Series A Preferred
Stock is convertible into ten shares of the Company's common stock any time
after June 30, 2001.
3. ACQUISITIONS
In December 1999, the Company acquired RXPro.Com, Inc. ("RX Pro") and
Dougherty's Pharmacy, Inc. ("Dougherty's"). Each acquisition has been
accounted for by the purchase method. For accounting purposes, each
acquisition is considered to be effective as of December 31, 1999, and the
results of operations of the acquired entities will be consolidated with
the Company beginning on January 1, 2000. The assets and liabilities of the
acquired entities are consolidated with the Company as of December 31,
1999.
RX Pro was acquired on December 21, 1999 for 97,500 shares of the Company's
Series A Preferred Stock. The acquisition was recorded based on the quoted
value of the underlying common stock. Identifiable assets and liabilities
were recorded at their estimated fair values. The excess of the cost of the
acquisition over the fair value of the net assets of $1,283,815 has been
recorded as goodwill. RX Pro was owned by three directors of the Company,
one of whom is also a significant shareholder of the Company.
Dougherty's was acquired on December 30, 1999 by issuance of 45,000 shares
of Series A Preferred Stock. Dougherty's assets and liabilities were
recorded at their historical cost basis due to common control between
Dougherty's and the Company.
The following pro forma information has been prepared as if the
acquisitions of RX Pro and Dougherty's had occurred at the beginning of the
respective periods. Such information is not necessarily reflective of the
actual results that would have occurred had the acquisitions occurred on
those dates.
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PARK PHARMACY CORPORATION
NOTES TO FINANCIAL STATEMENTS
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THREE MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, 1999 DECEMBER 31, 1999
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Revenues $ 5,074,000 $ 9,555,000
Net income 122,000 17,000
Net income per share -- --
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995: Statements in this report that are not historical facts, including
statements about plans and expectations regarding businesses and opportunities,
demand and acceptance of new and existing businesses, capital resources and
future financial condition and results are forward-looking. Forward-looking
statements involve risks and uncertainties, which may cause the Company's actual
results in future periods to differ materially and adversely from those
expressed. Forward-looking statements involve risks and uncertainties, which may
cause the Company's actual results in future periods to differ materially and
adversely from those expressed. These uncertainties and risks include
competition, changing consumer preferences, lack of success of new businesses,
and other factors discussed from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1999.
Except as otherwise indicated, references to the "Company" refer to
Park Pharmacy Corporation, a Colorado corporation ("Park (CO)"), and its wholly
owned subsidiaries, Rx-Pro.Com, Inc. ("Rx-Pro"), a Texas corporation (formerly
Park Pharmacy Corporation ("Park (TX)"), and Dougherty's Pharmacy, Inc., a Texas
corporation ("Dougherty's"). The terms "fiscal year" and "fiscal" refer to the
Company's fiscal year which is the year ending June 30 of the following calendar
year mentioned (e.g., a reference to fiscal 1999 is a reference to the fiscal
year ending June 30, 2000).
The Reverse Acquisition
On October 19, 1999, the reverse acquisition (the "Reverse
Acquisition") of the registrant by the shareholders of Park (TX) was completed.
The Reverse Acquisition was consummated pursuant to the terms of that certain
Stock Purchase Agreement dated as of March 9, 1999 (the "Stock Purchase
Agreement"), by and among the registrant, Park (TX), and Joe B. Park, Thomas R.
Baker and David W. Frauhiger (the "Selling Shareholders").
Pursuant to the Stock Purchase Agreement, which was approved by the
shareholders of the registrant at a special meeting of shareholders held on
October 12, 1999, (i) the registrant acquired all of the stock of Park (TX) with
Park (TX) becoming a wholly-owned subsidiary of the registrant, and (ii) the
registrant issued to the Selling Shareholders shares of newly designated Series
A Preferred Stock, par value $.001 per share ("Series A Preferred Stock"), of
the registrant in exchange for their shares of Park (TX). As part of the
transaction, the registrant filed Articles of Amendment to its Articles of
Incorporation which created a new class of "blank check" Preferred Stock and
changed the registrant's corporate name to "Park Pharmacy Corporation." The
Articles of Amendment were approved by the shareholders of the registrant at the
October 12, 1999 meeting.
Effective October 19, 1999, Messrs. Brewer Newton and H. Don Gill
resigned from all officer and director positions they held with the registrant
and Mr. James C. Rambin resigned from all officer positions he held with the
registrant. On that date, the following persons were elected to the registrant's
Board of Directors and to serve as officers:
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Name: Position:
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Joe B. Park Chairman of the Board, Director
Thomas R. Baker Chief Executive Officer & President, Director
Gwendolyn Park Vice President, Secretary & Treasurer, Director
Jack R. Munn Director
John A. Blomgren Director
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In addition to the above, Mr. Rambin continues to serve on the Board of
Directors of the registrant. Furthermore, although not set forth in a written
agreement, the parties have agreed that Mr. Rambin will serve as a consultant to
the Company on a retainer basis. The specific terms of such consulting
arrangement will be determined by the parties and will be subject to approval by
the Board of Directors of the registrant.
Subsequent Acquisitions
Acquisition of Rx-Pro
On December 21, 1999, the registrant acquired Rx-Pro.Com, Inc., a Texas
corporation ("Pre-Merger Rx-Pro"). The acquisition was structured as a merger
pursuant to which Pre Merger Rx-Pro was merged with and into Park (TX), a
wholly-owned subsidiary of the registrant. Pursuant to the terms of the merger,
Park (TX) was the surviving company in the merger and continues to be a
wholly-owned subsidiary of the registrant after the merger. Park (TX) changed
its name to "Rx-Pro.Com, Inc." in the merger. The shareholders of Pre-Merger
Rx-Pro, Messrs. Joe B. Park, Jack R. Munn, and John A. Blomgren, received an
aggregate of 97,500 shares of Series A Preferred Stock in the merger.
Pre-Merger Rx-Pro was formed on March 19, 1999, and was the successor
company to Hospice Pharmacy Alliance LLC, a Texas limited liability company.
Pre-Merger Rx-Pro acquired all of the assets and assumed all of the liabilities
of Hospice Pharmacy Alliance LLC in a transaction that closed on April 8, 1999.
Rx-Pro currently operates two on-line pharmacy Web sites, <<www.hospicerx.com>>
("Hospice Rx.Com") and <<www.rx-pro.com>> ("Rx-Pro.Com").
The HospiceRx.Com Web site is an online service that contracts with
member pharmacies to process orders for prescription drugs, non-prescription
drugs and other health related products, from hospice companies. The hospice
companies place orders over the HospiceRx.Com Web site, or by
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facsimile or telephone, on behalf of their hospice patients, which orders are
then forwarded to the member pharmacy located nearest to the hospice patient.
Orders are filled and delivered to the hospice patient by the member pharmacy.
Rx-Pro receives a processing fee from the member pharmacies for hospice company
orders originating through Rx-Pro.
Rx-Pro.Com is an Internet-based information source for health
professionals and patients. Doctors, nurses, pharmacists and other health
professionals and institutions can have partial or full access to Rx-Pro's
extensive databases. Complete drug information including indications,
contra-indications and side effects are available on the Web site. There is also
full and partial patient charting available through this highly secured Web
site. The Company plans for Rx-Pro.Com to incorporate an online pharmacy store
which will offer online shopping and information for consumers (including
physicians, other health care providers and patients) in the following product
categories: (i) prescription drugs, (ii) non-prescription drugs, (iii) durable
medical equipment, (iv) personal care products, (v) disease state management
books, and (vi) other health and beauty products customarily sold by retail
pharmacies. Both the HospiceRx.Com and Rx-Pro.Com Web sites are currently in the
testing phase and are not fully operational.
Dougherty's Pharmacy, Inc.
On December 30, 1999, the registrant acquired all of the issued and
outstanding stock of Dougherty's Pharmacy, Inc., a privately held Texas
corporation ("Dougherty's"). The acquisition was closed pursuant to the terms of
that certain Share Exchange Agreement between the registrant and The Park Family
Limited Partnership, a Texas limited partnership and the sole shareholder of
Dougherty's (the "Partnership"), which was executed on December 30, 1999. In the
acquisition, the Partnership received an aggregate of 45,000 shares of Series A
Preferred Stock in exchange for all of the issued and outstanding shares of
Dougherty's. As a result of the transaction, Dougherty's is now a wholly-owned
subsidiary of the registrant.
Messrs. Joe B. Park and Jay H. Park are the sole limited partners of
the Partnership, with Joe B. Park owning a 54.45% interest in the Partnership
and Jay H. Park owning a 44.55% interest in the Partnership. The sole general
partner of the Partnership is Park GP, Inc., a Texas corporation, which owns a
1% interest in the Partnership. Park GP, Inc. is owned by Messrs. Joe B. Park
and Jay H. Park. Messrs. Joe B. Park and Jay H. Park are brothers.
Dougherty's, founded in 1929, operates two retail pharmacies in the
Dallas, Texas, area. In addition to prescription drugs and services, Dougherty's
retail pharmacies offer a broad range of over-the-counter medications, supplies
and equipment, health and beauty aids, cosmetics, gifts, greeting cards and
other general merchandise.
Plan of Operation
Prior to the closing of the Reverse Acquisition, the registrant had
virtually no assets or ongoing operations since 1997. As a result of the closing
of the Reverse Acquisition, the business
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of the Company is the acquisition, development and operation of both
Internet-based and non Internet-based retail pharmacies. The Company plans to
satisfy its cash requirements for the next twelve months principally with
revenue from operations. The Company also anticipates that it will obtain a line
of credit for working capital requirements and a term loan to fund acquisitions.
The Company may seek additional funding from private sources. The Company is
currently engaged in preliminary discussions with a financial institution
concerning such loans.
As a result of the acquisitions of Rx-Pro and Dougherty's, to date the number of
employees of the Company has increased significantly, from none to approximately
105. Furthermore, the number of Company employees may have further significant
increases in the event the Company is able to make additional acquisitions of
retail pharmacies. There can be no assurances that the Company will be able to
acquire any retail pharmacies in the next twelve months or thereafter or that
there will be any significant increases in the current number of employees.
Year 2000 Compliance
The Company depends on computer systems and other chip-based devices
for the continuing conduct of its business. To date, the Company is not aware of
any material Year 2000 ("Y2K") problems within the Company, or with any third
party upon which the Company depends in any significant way, that will result in
any material impact on the Company's results of operations and financial
position. The Company, however, will continue to monitor computer systems and
other chip-based devices to ensure that Y2K issues, if any, are detected and
corrected in a timely manner. In addition, due diligence with any potential
acquisition candidate will include a review of any Y2K issues.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Authorization, Designation and Issuance of Preferred Stock
On October 12, 1999, at the registrant's special meeting of
shareholders, the shareholders approved an amendment to the registrant's
Articles of Incorporation to increase the number of authorized shares of capital
stock from 750,000,000 to 1,000,000,000 and create a new class of 250,000,000
shares of Preferred Stock having a par value of $.001 per share (the "Preferred
Stock"), with respect to which the Board shall have authority to issue such
Preferred Stock in series and to fix, from time to time, the number,
designation, powers, preferences, and rights of the shares of Preferred Stock in
each series. The amendment was filed with the Colorado Secretary of State on
October 19, 1999. The number of authorized shares of the registrant's Common
Stock, par value $.0001 per share ("Common Stock"), remains 750,000,000 shares
pursuant to the amendment.
In connection with the Reverse Acquisition of the registrant by the
Selling Shareholders, the registrant issued shares of newly designated Series A
Preferred Stock. The rights and preferences of the Series A Preferred Stock are
as follows:
(i) Holders of the Series A Preferred Stock may convert one share
of Series A Preferred Stock for ten (10) shares of the
registrant's $.0001 par value Common Stock, at any
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time after June 30, 2001, upon delivery of the preferred
shares certificate, duly endorsed, to the offices of the
registrant's transfer agent;
(ii) Holders of the Series A Preferred Stock will not be entitled
to receive any dividends;
(iii) In case of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the registrant,
the holders of the Series A Preferred Stock will be entitled
to receive out of the assets of the registrant which are
available for payment to shareholders, before any amount is
paid or distributed among the holders of Common Stock,
liquidating distributions in the amount of $10.00 per share.
If, upon any liquidation, dissolution or winding up of the
registrant, the amount payable with respect to the Series A
Preferred Stock, and any other stock ranking as to any such
distribution on a parity with the Series A Preferred Stock is
not paid in full, the holders of the Series A Preferred Stock,
and of such other stock, will share ratably in any such
distribution of assets in proportion to the full respective
preferential amounts to which they are entitled. After payment
of the full amount of the liquidating distribution to which
they are entitled, the holders of the shares of Series A
Preferred Stock will not be entitled to any further right or
claim to any of the remaining assets of the registrant;
(iv) In the event that the registrant shall at any time subdivide
or combine in a greater or lesser number of shares, the
outstanding shares of Common Stock, the number of shares of
Common Stock issuable upon conversion of the Series A
Preferred Stock shall be proportionately increased in the case
of subdivision or decreased in the case of a combination,
effective in either case at the close of business on the date
when such subdivision or combination shall become effective;
(v) In the event that the registrant shall be recapitalized,
consolidated with or merged into any other corporation, or
shall sell or convey to any other corporation all or
substantially all of its property as an entirety, provision
shall be made as part of the terms of such recapitalization,
consolidation, merger, sale or conveyance so that any holder
of Series A Preferred Stock may thereafter receive in lieu of
the Common Stock otherwise issuable to him upon conversion of
his Series A Preferred Stock or the same kind and amount of
securities or assets as may be distributable upon such
recapitalization, consolidation, merger, sale or conveyance,
with respect to the Common Stock of the registrant;
(vi) In the event the registrant shall at any time pay to the
holders of Common Stock a dividend in Common Stock, the number
of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock shall be proportionately increased,
effective at the close of business on the record date for
determination of the holders of Common Stock entitled to such
dividend;
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(vii) In the event that the registrant shall at any time pay any
dividend or make any other distribution on its Common Stock in
property, other than in cash or in Common Stock of the
registrant, then provision shall be made as part of the terms
of such dividend or distribution that the holder of any Series
A Preferred Stock surrendered for conversion after the record
date for determination of holders of Common Stock entitled to
such dividend or distribution shall be entitled to receive the
same kind and the same proportionate share of such property
which he would have been entitled to receive had such Series A
Preferred Stock been converted immediately prior to such
record date;
(viii) Such adjustments shall be made successively if more than one
event listed in the preceding paragraphs (iv), (v), (vi), and
(vii) shall occur;
(ix) The registrant is not obligated to redeem the Series A
Preferred Stock;
(x) At every meeting of the shareholders of the registrant,
holders of the Series A Preferred Stock shall be entitled to
ten (10) votes for each share of Series A Preferred Stock
standing in their name on the books of the registrant;
(xi) The Series A Preferred Stock and any other stock having voting
rights, including without limitation the Common Stock, shall
vote together as one class; and
(xii) The holders of the Series A Preferred Stock have no preemptive
rights.
The Selling Shareholders received in the aggregate 2,567,816 shares of
Series A Preferred Stock in the Reverse Acquisition. In addition, (i) each of
the Marich Family Trust and the Rambin Family Trust exchanged 1,000,000 shares
of Common Stock owned by such trusts for 100,000 shares of Series A Preferred
Stock, respectively, and (ii) Mr. James C. Rambin, a former officer and current
director of the registrant, received 50,000 shares of Series A Preferred Stock
in satisfaction of a contingent bonus granted by the registrant during the 1998
fiscal year. Furthermore, the registrant issued: (i) 20,000 shares of Series A
Preferred Stock to a former attorney of the registrant for past services
rendered (unrelated to the Reverse Acquisition) in full satisfaction of an
option granted to the attorney for 200,000 shares of the registrant's Common
Stock, and (ii) 2,750 shares of Series A Preferred Stock to a consultant of the
registrant who provided consulting services in connection with the registrant's
evaluation of various business strategies after the registrant's operations
ceased in fiscal 1997.
The registrant issued in the aggregate 152,500 shares of Series A
Preferred Stock in connection with the acquisition of Pre-Merger Rx-Pro and
Dougherty's (the "Subsequent Acquisitions"). The information set forth in "Item
2 - Management's Discussion and Analysis or Plan of Operation -- Subsequent
Acquisitions" is incorporated herein by reference. As of the date hereof, there
currently are 2,993,066 shares of Series A Preferred Stock issued and
outstanding and 4,419,551 shares of Common Stock issued and outstanding.
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The issuance and sale of the Series A Preferred Stock in connection
with the Reverse Acquisition and the Subsequent Acquisitions have had the
following effects on the holders of Common Stock. As an initial matter, the
voting power held by the holders of Common Stock immediately prior to the
Reverse Acquisition has been substantially diluted. As a result of the Reverse
Acquisition and the Subsequent Acquisitions, the holders of the Series A
Preferred Stock currently own approximately 87% of the votes entitled to be cast
at any meeting of shareholders and the voting power of the holders of Common
Stock has been reduced from 100% to approximately 13%.
As an additional matter, in light of the liquidation preference of the
Series A Preferred Stock, the holders of Common Stock will not be entitled to
share in the registrant's assets upon liquidation, dissolution or winding up of
the assets of the registrant until the Series A Preferred Stock preference has
been fully satisfied as to all outstanding shares of Series A Preferred Stock.
It should also be noted that, although the Series A Preferred Stock is not
entitled to any dividends, such shares may be converted into shares of Common
Stock at any time after June 30, 2001, and will then be entitled to share in any
dividends declared and paid by the registrant.
The issuances of the Series A Preferred Stock to the Selling
Shareholders in the Reverse Acquisition and the shareholders of Pre Merger
Rx-Pro and Dougherty's in the Subsequent Acquisitions (the "Sellers") were made
by the registrant in reliance on the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933, as amended. The registrant believes
the Section 4(2) exemption from registration was available for each of such
transactions based upon the established criteria for effecting a private
offering by virtue of the following facts, among others: (i) the Sellers had
access to the type of information that would be included in a registration
statement, (ii) the Sellers have adequate financial means to bear the risk of an
investment in the registrant and can be described as sophisticated, (iii) the
Sellers were the only offerees in the transactions, (iv) the definitive
transaction documents in each of such transactions contain restrictions on
resale of the Series A Preferred Stock issued by the registrant to the Sellers,
and (v) no underwriters were involved nor were any underwriters' commissions
paid in connection with the transactions.
Because the Articles of Incorporation currently authorize the Board of
Directors to issue preferred stock in series and to fix the designation, powers,
preferences and rights of shares in each series, sometimes referred to as "blank
check" authority, the Board has discretion to tailor the terms of any series of
Preferred Stock to fit the particular needs of the Company at the time of the
stock's issuance. In other words, each series may differ substantially from the
others with respect to rights regarding dividends, voting, convertibility,
preferences upon liquidation, and redemption. It is not possible to state the
precise effects of the authorization of "blank check" authority over Preferred
Stock upon the rights of holders of Common Stock until the Board of Directors
determines the respective preferences, limitations and relative rights of the
holders of one or more series of new Preferred Stock that are actually issued in
the future. However, such effects might include (i) a reduction of the amount
otherwise available for payment of any dividends on Common Stock, to the extent
dividends are payable on any issued shares of a new series of Preferred Stock,
and restrictions on dividends on Common Stock if dividends on then outstanding
shares of any new series of Preferred Stock are in arrears; (ii) further
dilution of the voting power of the Common Stock to the extent that any issued
series of any new series of Preferred Stock has voting rights as may be
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determined by the Board; and (iii) the holders of Common Stock not being
entitled to share in the Company's assets upon liquidation until satisfaction of
any liquidation preference granted to then outstanding shares of any new series
of Preferred Stock.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant held a special meeting of shareholders on October 12,
1999. At that meeting, the shareholders were presented with proposals with
respect to: (i) the approval and ratification of the Stock Purchase Agreement
and the transactions contemplated thereunder, and (ii) the approval of the
amendment to the registrant's Articles of Incorporation to (a) change the name
of the registrant to "Park Pharmacy Corporation", and (b) to increase the number
of authorized shares of capital stock from 750,000,000 to 1,000,000,000 and
create a new class of Preferred Stock having a par value of $.001 per share,
with the number of authorized shares of Common Stock to remain 750,000,000
shares and the number of authorized shares of Preferred Stock to be 250,000,000.
The results of the vote of the shareholders at the special meeting are set forth
below with respect to each of the proposals presented.
(i) With respect to the proposal to approve and ratify the Stock Purchase
Agreement and the transactions contemplated thereunder, shares of Common Stock
were voted as follows: the number of votes cast for such proposal was 4,288,873;
the number of votes cast against such proposal was 1,920; the number of votes
abstaining was 5,632; and the number of broker non-votes was 2,123,126.
(ii) With respect to the proposal to amend the Articles of Incorporation to (a)
change the name of the registrant to "Park Pharmacy Corporation", and (b) to
increase the number of authorized shares of capital stock from 750,000,000 to
1,000,000,000 and create a new class of Preferred Stock having a par value of
$.001 per share, with the number authorized shares of Common Stock to remain
750,000,000 shares and the number of authorized shares of Preferred Stock to be
250,000,000, shares of Common Stock were voted as follows: the number of votes
cast for such proposal was 4,286,834; the number of votes cast against such
proposal was 3,427; the number of votes abstaining was 6,164; and the number of
broker non-votes was 2,123,126.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
The information required by this Item 6(a) is set forth in the
Index to Exhibits accompanying this quarterly report and is
incorporated herein by reference.
(b) Reports Submitted on Form 8-K:
(1) A report on Form 8-K was filed on October 27, 1999,
reporting on the closing of the Reverse Acquisition
of the Company by the Selling Shareholders.
(2) A report on Form 8-K was filed on January 5, 2000,
reporting on the closing of the acquisition of
Rx-Pro.Com, Inc.
(3) A report on Form 8-K was filed on January 14, 2000,
reporting on the closing of the acquisition of
Dougherty's Pharmacy, Inc.
-11-
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PARK PHARMACY CORPORATION
Date: February 14, 2000 /s/ THOMAS R. BAKER
--------------------------------------------------------------------------
Thomas R. Baker, President and
Chief Executive Officer
Date: February 14, 2000 /s/ GWENDOLYN PARK
--------------------------------------------------------------------------
Gwendolyn Park, Secretary and Treasurer
-12-
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2,10(1) Stock Purchase Agreement dated March 9, 1999, among the Company,
Park Pharmacy Corporation, Joe B. Park, Thomas R. Baker and David
W. Frauhiger
2.1,10.1(2) Agreement and Plan of Merger among Park Pharmacy Corporation, a
Colorado corporation, Park Pharmacy Corporation, a Texas
corporation, Rx-Pro.Com, Inc., a Texas corporation, and the
Selling Shareholders identified therein
2.2,10.2(3) Share Exchange Agreement between Park Pharmacy Corporation and
The Park Family Limited Partnership
3.1.1(4) Articles of Incorporation and Amendment to Articles of
Incorporation
3.1.2(5) Articles of Amendment to Articles of Incorporation
3.1.3(6) Articles of Amendment to Articles of Incorporation
3.2(7) Bylaws
27(8) Financial Data Schedule
</TABLE>
(1) Incorporated herein by reference to Annex A in the Company's Definitive
Proxy Statement filed on September 7, 1999, with the Securities and
Exchange Commission.
(2) Incorporated herein by reference to Exhibit 10.1 in the Company's Form
8-K filed on January 5, 2000, with the Securities and Exchange
Commission.
(3) Incorporated herein by reference to Exhibit 10.1 in the Company's Form
8-K filed on January 14, 2000, with the Securities and Exchange
Commission.
(4) Incorporated herein by reference to Exhibit 3(a) in the Company's
Registration Statement on Form S-18 filed on August 8, 1986, with the
Securities and Exchange Commission.
(5) Incorporated herein by reference to Exhibit 3.1.2 in Amendment No. 2 to
the Company's Annual Report on Form 10-KSB filed on August 4, 1999,
with the Securities and Exchange Commission.
(6) Incorporated herein by reference to Annex B in the Company's Definitive
Proxy Statement filed on September 7, 1999, with the Securities and
Exchange Commission.
(7) Incorporated herein by reference to Exhibit 3(b) in the Company's
Registration Statement on Form S-18 filed on August 8, 1986, with the
Securities and Exchange Commission.
(8) Filed herewith.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 516,470
<SECURITIES> 0
<RECEIVABLES> 2,280,700
<ALLOWANCES> 0
<INVENTORY> 1,402,806
<CURRENT-ASSETS> 4,220,754
<PP&E> 828,255
<DEPRECIATION> 3,848
<TOTAL-ASSETS> 7,335,494
<CURRENT-LIABILITIES> 2,655,820
<BONDS> 329,011
0
2,993
<COMMON> 442
<OTHER-SE> 4,959,874
<TOTAL-LIABILITY-AND-EQUITY> 7,335,494
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (82,657)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (82,657)
<INCOME-TAX> 0
<INCOME-CONTINUING> (82,657)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (82,657)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
