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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JANUARY 31, 1996
(DATE OF EARLIEST EVENT REPORTED)
PC ETCETERA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 0-17419 13-3260705
(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF INCORPORATION) IDENTIFICATION NUMBER)
462 SEVENTH AVENUE, NEW YORK, NEW YORK 10018
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 736-5870
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to a Stock Purchase Agreement dated as of January 31, 1996 (the
"Agreement"), PC Etcetera, Inc. (the "Company") sold all of the outstanding
stock of PC Etcetera Inc., a Quebec corporation ("PC Canada"), to Training
Holdings L.L.C. (the "Purchaser") for a purchase price of $605,000 (inclusive of
approximately $55,000 paid to the Company prior to the closing). Simultaneously
with such sale, the Purchaser paid to the Company the sum of $200,000 as a non-
refundable license payment in consideration of the license by the Company to PC
Canada of certain computer software (such payment being in addition to the
royalty amounts due pursuant to the license described below). Of the total
proceeds received, approximately $500,000 was to be used to repay certain
indebtedness incurred by the Company in December 1995. To date, $250,000 has
been repaid.
Pursuant to the Agreement, the parties agreed to negotiate in good faith
the terms of a three year license agreement between the Company and PC Canada
which would provide for the grant of a license by the Company to PC Canada to
use certain intellectual property, including the right to use certain computer
software, in consideration of the payment of certain royalty amounts to the
Company as follows: (i) 20% of the gross billings for all custom computer-based
training ("CBT") projects developed by PC Canada and (ii) 30% of the gross
billings for all CBT titles sold or licensed by PC Canada. In addition,
concurrently with the execution of the Agreement, in consideration of certain
services to be performed by the Company with respect to certain leases to which
PC Canada is a party, the Purchaser agreed to pay to the Company a fee based
upon reductions in rents and other costs required to be paid by PC Canada
pursuant to such leases.
The Company had been exploring the terms of a transaction pursuant to which
its United States instructor-led training operations would be sold to the
Purchaser or an affiliate thereof. In lieu thereof, in April 1996, the Company
sold all of the operating assets relating to its San Francisco training center
and Boise, Idaho business location to an affiliate of the Purchaser. The assets
sold were not "significant" within the meaning of the rules and regulations of
the Securities and Exchange Commission. In addition, such operations were not
significant to the Company as a whole.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
(i) Pro Forma Consolidated Balance Sheet of the Company as
of December 31, 1995;
(ii) Pro Forma Consolidated Statement of Operations of the
Company for the year ended December 31, 1995.
(c) EXHIBITS.
(i) Stock Purchase Agreement dated as of January 31, 1996 by
and between Training Holdings L.L.C. and PC Etcetera, Inc.,
as amended.
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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.
PC ETCETERA, INC.
Dated: June 14, 1996
By: /s/ Terry I. Steinberg
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Terry I. Steinberg, President
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ITEM 7(b) PRO FORMA FINANCIAL INFORMATION
The following Pro Forma Consolidated Balance Sheet as of December 31, 1995 and
Pro Forma Consolidated Statement of Operations for the year then ended have been
prepared to reflect the sale of all of the outstanding stock of PC Etcetera
Inc., the Company's wholly-owned Canadian subsidiary, and the adjustments
described in the accompanying notes. The pro forma financial information is
based on the historical consolidated financial statements of PC Etcetera, Inc.
and its subsidiaries (the "Company"). The Pro Forma Consolidated Balance Sheet
was prepared as if the sale occurred on December 31, 1995. The Pro Forma
Consolidated Statement of Operations for the year ended December 31, 1995 was
prepared assuming the transaction occurred on January 1, 1995.
The pro forma financial information is unaudited and not necessarily indicative
of what the actual financial position of the Company would have been as of
December 31, 1995 or what the consolidated results of operations would have been
if the sale transaction had been consummated at January 1, 1995, nor does it
purport to represent the future financial position or results of operations for
future periods.
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PC ETCETERA, INC. AND SUBSIDIARIES
NOTES AND MANAGEMENT'S ASSUMPTIONS
TO PRO FORMA FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
1. BASIS OF PRESENTATION
The Company entered into a Stock Purchase Agreement dated as of January 31, 1996
to sell all of the outstanding stock of its wholly-owned Canadian subsidiary, PC
Etcetera Inc., a Quebec corporation, to Training Holdings L.L.C.
The accompanying unaudited Pro Forma Consolidated Balance Sheet is presented as
if the sale transaction occurred on December 31, 1995. Certain amounts have
been reclassified to conform with the current presentation. All references
herein to numbers of shares of Common Stock and per share amounts, and all
references herein to dollar amounts that are based upon the number of shares of
Common Stock that are issued, give retroactive effect to the one-for-five
reverse split of the shares of Common Stock effectuated as of April 19, 1995.
The accompanying unaudited Pro Forma Consolidated Statement of Operations is
presented as if the sale transaction occurred on January 1, 1995.
These pro forma financial statements should be read in conjunction with the
historical financial statements and notes thereto of the Company as of December
31, 1995 and for the year then ended. In management's opinion, all material
adjustments necessary to reflect the effect of the transaction by the Company
have been made.
The unaudited pro forma consolidated financial statements are not necessarily
indicative of what the actual financial position of the Company would have been
as of December 31, 1995, or what the consolidated results of operations would
have been for the year then ended had the sale transaction occurred on January
1, 1995 nor are they necessarily indicative of the financial position or results
of operations for future periods.
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PC ETCETERA, INC. AND SUBSIDIARIES
NOTES AND MANAGEMENT'S ASSUMPTIONS
TO PRO FORMA FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
2. ADJUSTMENTS TO PRO FORMA CONSOLIDATED BALANCE SHEET:
(A) The Company converted intercompany advances in the amount of $384,378 from
the Company to its subsidiary into paid-up capital in the subsidiary.
(B) To reflect the elimination of the balances of the Company's wholly-owned
subsidiary, which was sold, from the Company's consolidated financial
statements.
(C) To reflect the $718,574 cash received (net of brokers and legal fees of
$86,426) and the $134,196 gain on the sale of the subsidiary. The $805,000
gross cash received represents $605,000 as the purchase price for the
transferred assets plus a $200,000 nonrefundable license payment, which is
reflected as deferred revenue and other liabilities.
(D) In December 1995, the Company obtained a loan from certain related parties
in the amount of $500,000. The terms of the loan provide that the Company would
repay the notes from the proceeds of the sale of assets such as the shares of
the Canadian subsidiary. To date, only $250,000 of the loan has been repaid
from the proceeds.
3. ADJUSTMENTS TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS:
(A) To reflect the elimination of the results of operations of the Company's
wholly-owned subsidiary, which was sold, from the Company's consolidated
financial statement.
(B) To reflect the elimination of the management fees charged to the subsidiary
during the year ended December 31, 1995. Management fees represented the
subsidiary's share of corporate allocated charges for system management and
fiscal support. Such amounts were eliminated in the consolidation historical
results.
As a result of the above transactions, the Company would recognize a gain on the
sale of the Canadian subsidiary in the amount of $134,196. The $200,000 license
fee will be recognized over the three year life of the agreement. The Company
does not believe there will be any income tax payable as a result of this gain
due to the operating losses incurred, along with significant net operating loss
carryforwards.
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PC ETCETERA, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL PCE NOTE PRO FORMA AS
CONSOLIDATED PRO FORMA ADJUSTMENTS 2 ADJUSTED
DISPOSITION USE OF PROCEEDS
ASSETS:
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $183,019 718,574 (250,000) C,D $651,593
Accounts Receivable 1,304,891 (448,172) B 856,719
Inventory 32,467 32,467
Prepaid Expenses and other Current Assets 109,629 (31,299) B 78,330
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Total Current Assets 1,630,006 239,103 (250,000) 1,619,109
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Property and Equipment 1,734,072 (250,395) B 1,483,677
Leasehold Improvements 41,128 (35,296) B 5,832
Less: Accumulated Depreciation and
Amortization (916,573) 142,913 B (773,660)
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858,627 (142,778) 715,849
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OTHER ASSETS:
Security Deposits 62,034 (5,037) B 56,997
Other Assets (Net) 16,000 0 16,000
Investment in Canadian Subsidiary 384,378 A
(384,378) C
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Total Other Assets 78,034 (5,037) 72,997
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TOTAL ASSETS $2,566,667 $91,288 ($250,000) $2,407,955
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LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses $1,709,718 ($148,779) B $1,560,939
Payroll Taxes Payable 104,754 (28,132) B 76,622
Deferred Revenue 53,140 (22,758) B 97,049
66.667 C
Loans Payable - Bank - Current Portion 265,481 0 265,481
Loans Payable - Other - Current Portion 354,569 0 354,569
Loans Payable - Affiliate 535,707 (250,000) D 285,707
Capital Equipment Payable - Current Portion 163,970 (43,239) B 120,731
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Total Current Liabilities 3,187,339 (176,241) (250,000) 2,761,098
OTHER LIABILITIES:
Capital Equipment Obligations 109,726 0 109,726
Loans Payable - Bank 39,702 0 39,702
Other Liabilities 0 133,333 C 133,333
Intercompany Payables (384,378) B 0
384,378 A
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TOTAL LIABILITIES 3,336,767 (42,908) (250,000) 3,043,859
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STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock 31,275 0 29,275
Preferred Stock 1,000 0 1,000
Paid In Capital 5,284,283 0 5,286,283
Retained Earnings (Deficit) (6,086,658) 134,196 C (5,952,462)
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Total Stockholders' Equity (Deficit) (770,100) 134,196 (635,904)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,566,667 $91,288 (250,000) $2,407,955
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</TABLE>
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PC ETCETERA, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL PCE PRO FORMA NOTE PRO FORMA
CONSOLIDATED ADJUSTMENTS 3 AS ADJUSTED
<S> <C> <C> <C> <C>
Revenues $11,148,929 $3,335,460 A $7,813,469
Cost of Revenues 7,231,364 2,007,871 A 5,223,493
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Gross Profit 3,917,565 1,327,589 2,589,976
Selling, General and 5,521,837 1,343,032 A 4,358,805
Administrative Expenses
(180,000) B
Research and Development Expenses 891,686 891,686
Loss on Software Investment 1,202,100 1,202,100
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Operating Income (Loss) (3,698,058) 164,557 (3,825,273)
Other (Expenses) (Net) (147,917) 7,663 A (140,254)
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Net Income (Loss) ($3,845,975) $156,894 ($4,002,869)
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Earnings Per Share:
Net (Loss) ($1.36) ($1.42)
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Weighted Average Number of Shares 2,827,462 2,827,462
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</TABLE>
