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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 Report (Date of earliest event reported): June 20, 1996
ADVANTAGE MARKETING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 33-25701 33-0296193
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2601 Northwest Expressway, Suite 1210W
Oklahoma City, Oklahoma 73112-7293
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405) 842-0131
1
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ITEM 2. Acquisiton or Disposition of Assets
Pursuant to a Stock Purchase Agreement having an effective date of May
31, 1996 (the "Purchase Agreement"), the Advantage Marketing Systems, Inc. (the
"Company") acquired all of the issued and outstanding capital stock of Miracle
Mountain International, Inc., a Colorado corporation ("MMI"), and MMI became a
wholly-owned subsidiary of the Company (the "MMI Acquisition"). The MMI
Acquisition was closed on June 20, 1996. MMI is a multi-level marketer of
various third-party manufactured nutritional supplement products. Pursuant to
the Purchase Agreement and in connection with the MMI Acquisition, the Company
issued and delivered to the shareholders of MMI 160,000 shares of Common Stock.
In addition, the Company agreed to issue and deliver an additional 40,000 shares
of Common Stock to the shareholders of MMI on or before October 18, 1996,
pending determination of certain liabilities.
ITEM 7. Financial Statements and Exhibits
(A) Financial Statements and Exhibits
The following financial statements of Miracle Mountain International,
Inc. are incorporated by reference to the Company's Amendment No. 1 to the
Registration Statement on Form SB-2 (No.33-80629), as filed with the Commission
on July 1, 1996, appearing at the indicated pages of the Prospectuses contained
in such Registration Statement:
MIRACLE MOUNTAIN INTERNATIONAL, INC. AUDITED FINANCIAL STATEMENTS:
<TABLE>
<S> <C>
Independent Auditors' Report...................................................................F-18
Balance Sheet as of December 31, 1995..........................................................F-19
Statement of Operations for the Year Ended December 31, 1995...................................F-20
Statement of Stockholders' Deficiency for the Year Ended December 31, 1995.....................F-21
Statement of Cash Flows for the Year Ended December 31, 1995...................................F-22
Notes to Financial Statements for the Year Ended December 31, 1995.............................F-23
MIRACLE MOUNTAIN INTERNATIONAL, INC. UNAUDITED FINANCIAL STATEMENTS:
Balance Sheets as of March 31, 1996 and December 31, 1995 (Unaudited)..........................F-25
Statements of Operations for the Three Months Ended March 31, 1996 and 1995 (Unaudited)........F-26
Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 (Unaudited)........F-27
Notes to Financial Statements for the Year Ended December 31, 1995 (Unaudited).................F-28
</TABLE>
(B) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information related to the acquisition of the
assets purchased by the Company from Miracle Mountain International, Inc. filed
begin at page F-1.
(C) EXHIBITS.
--------
2.1 Stock Purchase Agreement having an effective date of May 31,
1996, between Advantage Marketing Systems, Inc., Miracle
Mountain International, Inc., Richard Seaton, Gene Burson, Kaye
Jennings, Daryl Burson, and James Rogers is incorporated by
reference to Exhibit 4.13 of the Company's Amendment No. 1 to
the Registration Statement on Form SB-2 (No.33-80629), as filed
with the Commission on July 1, 1996.
2
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<TABLE>
<CAPTION>
ADVANTAGE MARKETING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
HISTORICAL
------------------------------------
ADVANTAGE
MARKETING MIRACLE MOUNTAIN
SYSTEMS, INC. INTERNATIONAL ,INC.
-------------- --------------------
MARCH 31, MARCH 31, PRO FORMA PRO FORMA
1996 1996 ADJUSTMENTS COMBINED
-------------- -------------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash............................................ $ 223,775 $ - $ - $ 223,775
Receivables - net of allowance of $27,434....... 22,365 - - 22,365
Receivable from affiliate....................... 59,757 - - 59,757
Inventory....................................... 160,572 3,193 - 163,765
Prepaid expenses................................ 4,810 - - 4,810
---------- ---------- ----------
Total current assets....................... 471,279 3,193 - 474,472
---------- ---------- ---------- ----------
COMMISSION ADVANCES TO RELATED
PARTIES - NONCURRENT........................... 1,790 - - 1,790
RECEIVABLES - NONCURRENT........................... 20,972 - - 20,972
PROPERTY AND EQUIPMENT, net........................ 159,136 37,807 - 196,943
OTHER ASSETS........................................ 84,148 725 - 84,873
GOODWILL............................................ - - 124,559 (a) 124,559
---------- ---------- ---------- ----------
TOTAL ASSETS........................................ $ 737,325 $ 41,725 $ 124,559 $ 903,609
========== ========== ========== ==========
LIABILITIES & STOCKHOLDERS'
- ---------------------------
EQUITY (DEFICIENCY)
- -----------------------
CURRENT LIABILITIES:
Bank overdrafts................................. $ - $ 513 $ (513)(b) $ -
Accounts payable................................ 145,187 8,238 (8,238)(b) 145,187
Accrued expenses................................ 225,318 16,284 241,602
Accrued interest expense........................ - 2,584 (2,584)(b) -
Accrued promotion expense....................... 108,990 - - 108,990
Notes payable:
Stockholder................................. 64,648 62,174 (62,174)(c) 64,648
Other....................................... 12,370 - - 12,370
Current obligations under capital lease......... 23,839 - - 23,839
----------- ---------- ---------- ----------
Total current liabilities............... 580,352 89,793 (73,509) 596,636
LONG-TERM LIABILITIES:
Notes payable - other........................... 26,232 - - 26,232
Capital lease................................... 74,265 - - 74,265
----------- ---------- ---------- ----------
Total long-term liabilities............. 100,497 - - 100,497
----------- ---------- ---------- ----------
TOTAL LIABILITIES................................... 680,849 89,793 (73,509) 697,133
----------- ---------- ---------- ----------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock - $.0001 par value; authorized
5,000,000 shares; none issued............... - - - -
Common stock - $.0001 par value; authorized
495,000,000 shares; 16,985,524 shares
issued and outstanding...................... 1,698 92,655 62,174 (c)
(154,829)(a)
20 (d) 1,718
Paid-in capital................................. 1,858,396 - 149,980 (d) 2,008,376
Accumulated deficit............................. (1,803,618) (140,723) 140,723 (a) (1,803,618)
----------- ---------- ---------- ----------
Total stockholders' equity (deficiency)..... 56,476 (48,068) 198,068 206,476
----------- ---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY............................ $ 737,325 $ 41,725 $ 124,559 $ 903,609
=========== ========== ========== ==========
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
F-1
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<TABLE>
<CAPTION>
ADVANTAGE MARKETING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
HISTORICAL
---------------------------------------
ADVANTAGE MIRACLE
MARKETING MOUNTAIN
SYSTEMS, INC. INTERNATIONAL, INC. PRO FORMA PRO FORMA
DECEMBER 31, 1995 DECEMBER 31, 1995 ADJUSTMENTS COMBINED
----------------- -------------------- ------------ -----------
Note 2
<S> <C> <C> <C> <C>
REVENUES:
Programs..................................... $ 4,382,935 $ 277,366 $ - $ 4,660,301
Promotional material......................... 109,733 - - 109,733
Other........................................ 25,535 - - 25,535
----------- --------- ---------- -----------
Total revenues..................... 4,518,203 277,366 - 4,795,569
----------- --------- ---------- -----------
COSTS AND EXPENSES:
Programs..................................... 1,094,157 103,217 - 1,197,374
Promotional material......................... 92,087 - - 92,087
Selling...................................... 2,201,510 145,650 - 2,347,160
General and administration................... 857,743 157,725 17,794 (e) 1,033,262
Interest expense............................. 22,998 1,403 - 24,401
----------- --------- --------- -----------
Total expenses..................... 4,268,495 407,995 17,794 4,694,284
----------- --------- --------- -----------
NET INCOME (LOSS).............................. $ 249,708 $(130,629) $ (17,794) $ 101,285
=========== ========= ========= ===========
Weighted average common shares outstanding..... 21,301,441 200,000 21,501,441
Net income per common share.................... $ 0.01 NIL
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
F-2
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<TABLE>
<CAPTION>
ADVANTAGE MARKETING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Three MOnths Ended March 31, 1996
HISTORICAL
------------------------------------
ADVANTAGE MIRACLE
MARKETING MOUNTAIN
SYSTEMS, INC. INTERNATIONAL, INC. PRO FORMA PRO FORMA
MARCH 31, 1996 MARCH 31, 1996 ADJUSTMENTS COMBINED
-------------- -------------------- ------------ -----------
Note 2
<S> <C> <C> <C> <C>
REVENUES:
Programs.................................. $ 1,255,889 $ 122,248 $ - $ 1,378,137
Promotional material...................... 62,684 - - 62,684
Other..................................... 13,876 - - 13,876
----------- --------- ------- -----------
Total revenues.................. 1,332,449 122,248 - 1,454,697
----------- --------- ------- -----------
COSTS AND EXPENSES:
Programs.................................. 302,879 39,602 - 342,481
Promotional material...................... 35,745 - - 35,745
Selling................................... 683,164 67,343 - 750,507
General and administration................ 221,598 24,131 4,449 (e) 250,178
Interest expense.......................... 7,359 1,266 - 8,625
----------- --------- ------- -----------
Total expenses.................. 1,250,745 132,342 4,449 1,387,536
----------- --------- ------- -----------
NET INCOME (LOSS)........................... $ 81,704 $ (10,094) $(4,449) $ 67,161
=========== ========= ======== ===========
Weighted average common shares outstanding.. 24,588,424 200,000 24,788,424
Net income per common share.................. NIL NIL
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
F-3
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ADVANTAGE MARKETING SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BASIS FOR PRESENTATION
The pro forma balance sheet and statement of income present the pro
forma effects of the acquisition by the Company of the issued and
outstanding capital stock of Miracle Mountain International, Inc., a
Colorado corporation ("MMI"), and MMI became a wholly-owned subsidiary
of the Company (the "MMI Acquisition"), pursuant to a Stock Purchase
Agreement with an effective date of May 31, 1996, (the "Purchase
Agreement"). MMI is a multi-level marketer of various third-party
manufactured nutritional supplement products. Pursuant to the Purchase
Agreement and in connection with the MMI Acquisition, the Company issued
and delivered to the shareholders of MMI 160,000 shares of Common Stock.
In addition, the Company agreed to issue and deliver an additional
40,000 shares of Common Stock to the shareholders of MMI on or before
October 18, 1996, pending determination of certain liabilities.
The accompanying unaudited pro forma statement of income is presented
assuming the MMI Acquisition occurred or was consummated on the first
day of the period presented. The unaudited pro forma consolidated
balance sheet as of March 31, 1996, is presented assuming the MMI
Acquisition occurred or was consummated on such date. The historical
information presented for the Company and MMI as of December 31, 1995,
is derived from the audited financial statements of the Company and MMI
as of such date.
The pro forma financial information presented in the unaudited pro forma
financial statements is not necessarily indicative of the financial
position and results of operations that would have been achieved had the
assets and liabilities been owned by a single corporate entity. The
results of operations presented in the unaudited pro forma statement of
income are not necessarily indicative of the consolidate results of
future operations of the Company following consummation of the MMI
Acquisition.
2. ADJUSTMENTS
The accompanying unaudited pro forma consolidated financial statements
have been adjusted to record and give effect to the following:
(a) Goodwill equal to the excess of the $150,000 purchase price over
the $25,441 fair market value of assets of MMI, net of
liabilities, amortizable over a seven-year period;
(b) Elimination of accounts payable, accrued interest payable and
bank overdrafts of MMI in the aggregate sum of $11,335, which
were not assumed by the Company;
(c) Conversion of $62,174 shareholder note payable to common stock
of MMI prior to consummation of the MMI Acquisition;
(d) Issuance of 200,000 shares of Common Stock of the Company in
exchange for the issued and outstanding capital stock of MMI;
(e) Amortization of goodwill over seven years, $17,794 and $4,449
for the year ended December 31, 1995, and for the three months
ended March 31, 1996, respectively.
3. NET INCOME PER SHARE
Pro forma per share calculations for the Company are based upon the number
of shares of Common Stock to be outstanding after giving effect to the MMI
Acquisition.
F-4
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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.
ADVANTAGE MARKETING SYSTEMS, INC.
(Registrant)
By: /S/ ROGER P. BARESEL
-------------------------------
Roger P. Baresel. President
Date: July 10, 1996
