<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
-------------------------------------------
Date: June 23, 1997
NORTH AMERICAN INTEGRATED MARKETING, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
33-27603 22-2942013
(Commission File No.) (IRS Employer Identification No.)
3 Garret Mountain Plaza
Suite 202A
West Paterson, New Jersey 07424
(Address of principal executive offices)
(Zip Code)
(201) 890-7330
(Registrant's telephone number, including area code)
PORTIONS AMENDED
----------------
Item 2 of the Current Report on Form 8-K dated September 30, 1996 is amended by
including an explanation of the merger being effective October 1, 1996 and
Item 7 is amended by including the pro forma financial information and the
reviewed financial statements of Color Graphics for the three month period
ending September 30, 1994.
<PAGE>
Item 2. Acquisition or Disposition of Assets.
------
Effective October 1, 1996, pursuant to a Stock
Purchase Agreement dated September 30, 1996, the
Company acquired 82% of the outstanding common
stock of Color Graphics, Inc. from General Business
Forms, Inc. for a total consideration of
$1,746,806. This consideration consisted of
$1,000,00 in cash paid by the Company, $286,000 in
cash paid by Color Graphics, Inc., the assumption
of liabilities totaling $250,000 and the transfer
of a life insurance policy valued at $210,806 by
Color Graphics, Inc. In addition, Color Graphics,
Inc. assigned an accounts receivable of $464,000
which Color Graphics, Inc. had previously been
written off. No value has been assigned to this
receivable by the Company.
Registrant's Board based the consideration upon its
good faith valuation of Color Graphics, Inc. There
are no material relationships between General
Business Forms, Inc. and Registrant or any of its
affiliates, a director or officer of Registrant or
any association of such director or officer of
Registrant. Registrant obtained the $1,000,00 from
North American Communications, Inc. ("NAC"), a
related party. Color Graphics is engaged in
printing promotional material for direct mail
distribution. Color Graphics will become a
subsidiary of Registrant and continue to engage in
printing promotional material for direct mail
distribution through its existing facilities and
equipment.
Item 7. Financial Statements and Exhibits.
------
(a) Financial Statements of Businesses Acquired.
Filed as part of this report are the reviewed
financial statements for Color Graphics for the
three month period ending September 30, 1994.
(b) Pro Forma Financial Information. Filed as part
of this report is the unaudited pro forma condensed
consolidated financial statement that gives effect
to the acquisition of Color Graphics, Inc., by the
Registrant pursuant to the Stock Purchase Agreement
dated September 30, 1996.
-2-
<PAGE>
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 thereunto duly authorized.
NORTH AMERICAN INTEGRATED
MARKETING, INC.
(REGISTRANT)
/s/Robert W. Paltrow
-------------------------
(signature)
Name: Robert W. Paltrow
Title: Secretary/Treasurer
-3-
<PAGE>
[LETTERHEAD OF VENABLE APPEARS HERE]
June 23, 1997
Mr. Marc Thomas
Securities and Exchange Commission
450 Fifth Street
Mail Stop 7-5
Washington, DC 20549
Re: North American Integrated Marketing, Inc.
Form 10-K for the year ended 12/31/95
Forms 10-Q filed during Fiscal 1996
File No. 33-27603
-------------------------------------------------------------------
Dear Mr. Thomas:
On behalf of North American Integrated Marketing, Inc. (the "Company"),
this letter supplements our January 16, 1997 letter to provide the remaining
responses to the SEC's November 29, 1996 comment letter. The numbered
paragraphs below correspond to the numbered paragraphs in that comment letter.
1. The company has made the requested change commencing with the Form
10-K for the period ended December 31, 1996.
2. The Company has provided the disclosures required by paragraph 49
of SOP 93-7 for advertising expenses under Note 2 - Summary of Significant
Accounting Policies in its Form 10-K for the period ended December 31, 1996.
5. Concurrently with the filing of this response the Company is filing
an amended 8-K to include the audited financial statements of Color Graphics for
the year ended September 30, 1996 and the pro forma financial statements for the
year ended December 31, 1995 and the nine months ended September 30, 1996.
6. The Company has included an explanation in the amended Form 8-K
filed concurrently with this response to explain that the acquisition of Color
Graphics by the Company was not effective until October 1, 1996 despite the
Stock Purchase Agreement being dated September 30, 1996.
<PAGE>
[LETTERHEAD OF VENABLE APPEARS HERE]
Mr. Marc Thomas
June 23, 1997
Page 2
7. The amended Form 8-K filed concurrently with this response letter
explains why the Company has been able to make an acquisition of Color Graphics
at a price which is apparently less than book value.
8. Concurrently with the filing of this response letter, the Company
is filing an amended 8-K to include the reviewed financial statements for Color
Graphics for the three month period ending September 30, 1994.
If you have any questions or need any additional information, please
contact me.
Sincerely,
/s/ Ernest M. Stern
Ernest M. Stern
EMS:bpt
Enclosures
cc: Nicholas Robinson (w/enclosures)
Robert Krebs (w/enclosures)
<PAGE>
COLOR GRAPHICS, INC.
--------------------
STATEMENT OF FINANCIAL POSITION
-------------------------------
SEPTEMBER 30, 1994
------------------
ASSETS
------
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 13,685
Accounts Receivable--Net of Allowance
for Doubtful Accounts of $95,183 (2,7) 2,787,143
Inventories (3) 714,204
Prepaid Expenses 55,991
Deferred Income Taxes (11) 118,192
-----------
Total Current Assets $ 3,689,215
PROPERTIES (4,8,9):
<CAPTION>
Accumulated Undepreciated
Cost Depreciation Cost
----------- ------------ -------------
<S> <C> <C> <C> <C>
Machinery and Equipment $ 5,863,516 $ 2,948,056 $ 2,915,460
Leased Property Under Capital
Lease 1,931,216 1,430,561 500,655
Office Furniture and Equipment 404,013 359,348 44,665
Vehicles 61,088 57,212 3,876
Construction in Progress 52,225 - 52,225
----------- ----------- -----------
Totals 8,312,058 4,795,177 3,516,881
----------- -----------
Unamortized Leasehold Improvements 125,227 3,642,108
-----------
OTHER ASSETS:
Unamortized Computer Software Costs (5) 4,401
Cash Surrender Value of Life Insurance (6) 205,859
Deposits 59,592
Lease Refinancing Charges (5) 45,838
Life Insurance Surrender Charges (5) 116,872
Loan Acquisition Costs (5) 99,404
-----------
Total Other Assets 531,966
-----------
Total Assets (7,8) $ 7,863,289
===========
</TABLE>
<PAGE>
EXHIBIT A
---------
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Note Payable--Bank (7) $ 33,691
Current Maturities of Long-Term Indebtedness (1,8,9) 941,405
Customer Deposits 686,872
Accounts Payable (1) 1,184,113
Accrued Payroll and Expenses 248,547
Accrued Profit-Sharing Plan Contribution (10) 82,890
Accrued Income Taxes (11) 114,543
-----------
Total Current Liabilities $ 3,292,061
LONG-TERM INDEBTEDNESS:
Notes Payable and Obligation under
Capital Lease (1,8,9) 3,056,239
Deferred Rent (9) 126,557
Deferred Income Taxes (11) 339,789
-----------
Total Long-Term Indebtedness 3,522,585
-----------
Total Liabilities 6,814,646
STOCKHOLDERS' EQUITY:
Common Stock--2,500 Shares Authorized;
333 1/3 Shares Issued an Outstanding;
No Par Value 35,000
Retained Earnings:
Balance--Beginning of Period $ 1,151,411
Add--Not Income for the Three Months
Ended September 30, 1994 (Exhibit B) 137,232
-----------
Balance End of Period 1,288,643
Less--Treasury Stock (50 Shares at Cost) (275,000)
-----------
Total Stockholders' Equity 1,048,643
-----------
Total Liabilities and Stockholders' Equity $ 7,863,289
===========
</TABLE>
See qualifications contained in Accountant's Review Report.
The accompanying notes are an integral part of this statement.
-2-
<PAGE>
EXHIBIT B
---------
COLOR GRAPHICS, INC.
--------------------
STATEMENT OF INCOME
-------------------
THREE MONTHS ENDED SEPTEMBER 30, 1994
-------------------------------------
<TABLE>
<CAPTION>
Precent
Amount to Sales
----------- --------
<S> <C> <C>
Net Sales (2) $ 3,350,010 100.00
Cost of Sales (1) 2,372,048 70.81
----------- ------
Gross Profit on Sales 977,962 29.19
----------- ------
Operating Expenses:
Selling Expenses 310,226 9.26
Administrative Expenses 249,715 7.45
----------- ------
Total Operating Expenses 559,941 16.71
----------- ------
Income from Operations 418,021 12.48
----------- ------
Other (Income) and Expenses:
Scrap Income (31,008) (.93)
Miscellaneous Income (4,817) (.14)
Gain on Sale of Properties (9,000) (.27)
Interest Expense (1,7,8,9) 101,358 3.03
Profit-Sharing Plan Contribution (10) 82,853 2.47
----------- ------
Total Other (Income) and Expenses 139,386 4.16
----------- ------
Income before Provision for Income Taxes 278,635 8.32
Provision for Income Taxes (11) 141,403 4.22
----------- ------
Net Income (Exhibit A) $ 137,232 4.10
=========== ======
</TABLE>
See qualifications contained in Accountant's Review Report.
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
EXHIBIT
-------
COLOR GRAPHICS, INC.
--------------------
STATEMENT OF CASH FLOWS
-----------------------
THREE MONTHS ENDED SEPTEMBER 30, 1994
-------------------------------------
<TABLE>
<CAPTION>
Cash Flows from Operating Activities:
<S> <C> <C>
Net Income $ 137,23X
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization $ 179,026
(Gain) on Sale of Properties (9,000)
Provision for Bad Debts 12,000
Increase in Deferred Income Taxes 59,597
(Increase) Decrease in Assets:
Account Receivable 681,351
Inventories (290,743)
Prepaid Expenses 10,558
Deposits 35,864
Increase (Decrease) in Liabilities:
Customer Deposits 686,872
Accounts Payable 127,864
Accrued Payroll and Expenses (203,541)
Accrued Profit-Sharing Plan Contribution (212,110)
Accrued Income Taxes (167,912)
Deferred Rent (8,804)
---------
Total Adjustments 901,02X
----------
Net Cash Provided by Operating Activities 1,038,25X
Cash Flows from Investing Activities:
Proceeds from Sale of Properties 9,000
Purchase of Properties (75,299)
Increase in Cash Surrender Value of Life Insurance (2,827)
---------
Net Cash (Used In) Investing Activities (69,12X)
Cash Flows from Financing Activities:
Decrease in Note Payable--Bank (635,770)
Principal Payments of Long-Term Indebtedness (333,862)
---------
Net Cash (Used In) Financing Activities (969,6XX)
----------
Net (Decrease) in Cash and Cash Equivalents (5X)
Cash and Cash Equivalents, Beginning of Period 14,1XX
----------
Cash and Cash Equivalents, End of Period $ 13,6XX
==========
</TABLE>
See qualifications contained in Accountant's Review Report.
The accompanying notes are an integral part of this statement.
-4-
<PAGE>
North American Integrated Marketing, Inc. and Subsidiary
Introduction To The Unaudited Pro Forma
Condensed Consolidated Financial Statement
The following unaudited pro forma condensed consolidated financial statement
gives effect to the acquisition of Color Graphics, Inc. by the Company pursuant
to the Stock Purchase Agreement dated September 30, 1996. The pro forma
financial statements has been prepared utilizing the historical financial
statements of North American Integrated Marketing, Inc. and the historical
financial statements of Color Graphics, Inc. The pro forma condensed financial
information is based on the estimates and assumptions set forth in the notes to
the pro forma financial information.
The unaudited pro forma information is provided only for comparative purposes
and does not purport to be indicative of the results of operations that actually
would have been obtained if the purchase had been consummated on the dates
indicated or the results of operations that may be obtained in the future.
The unaudited pro forma condensed consolidated balance sheets assume that the
transaction had occurred on September 30, 1996 with respects to Color Graphics,
Inc.. The transaction was accounted for under the purchase method of accounting.
Under the purchase accounting method, assets acquired and liabilities assumed
are recorded at their estimated fair value at the date of the purchase.
The unaudited pro forma condensed consolidated statement of income represents
the historical net income of the Company for the year ended December 31, 1995
and the nine months ended September 30, 1996, adjusted to reflect the
transactions as if they had occurred at the beginning of the period.
<PAGE>
North American Integrated Marketing, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
September 30, 1996
<TABLE>
<CAPTION>
North American Pro Forma Pro Forma
ASSETS Integrated Marketing Color Graphics Adjustments (A) Combined
-------------------- ---------------- ------------------------ ---------------
<S> <C> <C> <C> <C>
Current Assets
Cash $ 521,306 $ 964,594 $ - $ 1,485,900
Accounts receivable, net 871,689 3,194,122 40,238 1 4,106,049
Inventories - 523,619 9,969 2 533,588
Prepaid and other current assets 174,188 843,087 (505,038) 3 512,237
Furniture and equipment, net 337,120 3,965,613 (314,876) 4 3,987,857
Other assets - 497,872 (409,283) 5 88,589
-------------------- -------------- ----------------- --------------
TOTAL ASSETS $ 1,904,303 $ 9,988,907 $ (1,178,990) $ 10,714,220
-------------------- -------------- ----------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ - $ 2,029,523 $ - $ 2,029,523
Note payable related party - - 1,000,000 6 1,000,000
Current maturities of long-term debt 11,539 202,443 - 213,982
Accounts payable 110,722 412,164 - 522,886
Accounts payable - related companies 145,360 - - 145,360
Income taxes payable 242,112 - - 242,112
Accrued expenses and other current liabilities 151,638 812,683 1,415 7 965,736
Deferred revenue - - - -
-------------------- -------------- ----------------- --------------
Total Current Liabilities 661,371 3,456,813 1,001,415 5,119,599
LONG-TERM DEBT - 2,999,357 2,999,357
DEFERRED RENT - 56,117 314,063 8 370,180
DEFERRED INCOME TAXES - 538,000 (71,600) 9 466,400
MINORITY INTEREST 515,752 10 515,752
SHAREHOLDER'S EQUITY
Common stock 372 35,000 (35,000) 11 372
Paid - in capital 499,843 - - 499,843
Retained earnings 747,717 3,178,620 (3,178,620) 11 747,717
-------------------- -------------- ----------------- --------------
1,247,932 3,213,620 (3,213,620) 1,247,932
Less treasury stock, at cost (5,000) (275,000) 275,000 11 (5,000)
-------------------- -------------- ----------------- --------------
1,242,932 2,938,620 (2,938,620) 1,242,932
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,904,303 $ 9,988,907 $ (1,178,990) $ 10,714,220
-------------------- -------------- ----------------- --------------
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>
North American Integrated Marketing, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Period Ended September 30, 1996
<TABLE>
<CAPTION>
North American Pro Forma Pro Forma
Integrated Marketing Color Graphics Adjustments (B) Combined
---------------------- ------------------ ----------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Database $ 5,792,918 $ - $ - $ 5,792,918
Printing - 16,067,034 - 16,067,034
--------------- -------------- -------------- --------------
Total revenues 5,792,918 16,067,034 - 21,859,952
COST OF REVENUE
Database - related company 2,900,837 - - 2,900,837
Database - other 1,132,655 - - 1,132,655
Printing - 13,165,185 - 13,165,185
--------------- -------------- ------------- --------------
Total cost of revenue 4,033,492 13,165,185 - 17,198,677
Selling, general and administrative expense 938,252 1,362,937 (92,967) 1 2,208,222
Provision for doubtful accounts 9,000 698,559 - 707,559
Interest expense 1,150 356,030 - 357,180
Depreciation and amortization 73,608 572,855 - 646,463
--------------- -------------- ------------- --------------
Total costs and expenses 5,055,502 16,155,567 (92,967) 21,118,102
--------------- -------------- ------------- --------------
Income from continuing operations before
income taxes and minority interest 737,416 (88,533) 92,967 741,850
Provision for Income taxes 239,530 - 829 2 240,359
Minority interest in income of subsidiary - - 433 3 433
--------------- -------------- ------------- -------------
Net income $ 497,886 $ (88,533) $ 91,705 $ 501,058
--------------- -------------- ------------- -------------
EARNINGS PER SHARE $ 0.02 $ 0.02
--------------- -------------
WEIGHTED AVERAGE COMMON SHARES
USED IN COMPUTING EARNINGS PER SHARE 24,710,128 24,710,128
--------------- -------------
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
North American Integrated Marketing, Inc.
<PAGE>
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
North American Pro Forma Pro Forma
Integrated Marketing Color Graphics Adjustments (B) Combined
-------------------- ------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
REVENUES
Database $ 4,665,599 $ - $ - $ 4,665,599
Printing - 34,771,099 - 34,771,099
-------------------- ------------------- ------------------- ----------------
Total revenues 4,665,599 34,771,099 - 39,436,698
COST OF REVENUE
Database - related company 1,974,938 - - 1,974,938
Database - other 1,256,791 - - 1,256,791
Printing - 27,933,032 - 27,933,032
-------------------- ------------------- ------------------- ----------------
Total cost of revenue 3,231,729 27,933,032 - 31,164,761
Selling, general and administrative expense 1,134,075 2,918,627 (108,032) 1 3,944,670
Provision for doubtful accounts 53,564 48,000 - 101,564
Interest expense 2,935 489,153 - 492,088
Depreciation and amortization 80,374 706,120 - 786,494
-------------------- ------------------- ------------------- ----------------
Total cost of revenue 4,502,677 32,094,932 (108,032) 36,489,577
-------------------- ------------------- ------------------- ----------------
Income from continuing operations before
income taxes and minority interest 162,922 2,676,167 108,032 2,947,121
Provision for income taxes 60,340 1,208,414 48,722 2 1,317,476
Minority interest in income of subsidiary - - 183,248 3 183,248
-------------------- ------------------- ------------------- ----------------
Net income $ 102,582 $ 1,467,753 $ (123,938) $ 1,446,397
-------------------- ------------------- ------------------- ----------------
EARNINGS PER SHARE $ 0.01 $ 0.10
-------------------- ----------------
WEIGHTED AVERAGE COMMON SHARES
USED IN COMPUTING EARNINGS PER SHARE 14,120,073 14,120,073
-------------------- ----------------
</TABLE>
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>
North American Integrated Marketing, Inc.
Notes to Pro Forma Condensed Consolidated Financial Statements
(A) The following pro forma adjustments reflect North American Integrated
Marketing, Inc. purchase of 82% of the stock of Color Graphics, Inc. and
reflects estimated fair value adjustments.
1. Reflects the adjustment to net realizable value of accounts receivable
acquired at acquisition.
2. Represents the adjustment to net realizable inventory acquired.
3. Primarily reflects the reclassification from prepaid and other assets of the
non-compete agreement ($500,000) to the cost of the acquisition.
4. Reflects the adjustment to fair market value of furniture & equipment
acquired of $125,380 and the excess of fair value of net tangible asset
acquired over the cost of the acquisition of $$440,256.
5. Represents the value of consideration given by Color Graphics, Inc in
connection with the acquisition.
6. Represents the related party indebtedness incurred in connection with the
acquisition.
7. Represents the net effect of certain current liabilities assumed and not
assumed in connection with the acquisition.
8. Represents rental obligations assumed in connection with the acquisition.
9. Represents the net adjustment to deferred taxes as a result of the
acquisition
10. Represents minority interest of 12%.
11. Adjustment to reflect the elimination of Color Graphics stock holder's
equity.
(B) The following pro forma adjustments are incorporated in the pro forma
condensed consolidated statements of operations and are expected to have a
continuing impact on the Company.
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, September 30,
1995 1996
-----------------------------------------------------
<S> <C> <C>
1. Decrease in directors fee $ 47,000 $35,250
Decrease in officer's life 61,032 57,717
------ ------
$ 108,032 $92,967
========= =======
2. Taxes at effective rate $ 48,722 $ 829
--------- -------
3. Minority interest $ 183,248 $ 433
--------- -------
</TABLE>
<PAGE>
[LETTERHEAD OF VENABLE APPEARS HERE]
January 16, 1997
Mr. Marc Thomas
Securities and Exchange Commission
450 Fifth Street
Mail Stop 7-5
Washington, DC 20549
Re: North American Integrated Marketing, Inc.
Form 10-K for the year ended 12/31/95
Forms 10-Q filed during Fiscal 1996
File No. 33-27603
----------------------------------------------------------------------
Dear Mr. Thomas:
On behalf of North American Integrated Marketing, Inc. (the "Company"),
this letter responds to the comments in the SEC's November 29, 1996 letter. The
numbered paragraphs below correspond to the numbered paragraphs in that letter.
We have enclosed a copy of the first page of this letter, along with a
stamped, self-addressed envelope. Please date stamp the copy of the first page
of this letter and return it to us to verify receipt.
1. The Company will make the requested change and will round earnings per
share amounts to the nearest penny in future filings.
2. The Company has not included the disclosure required by paragraph 49
of SOP 93-7 in prior filings because:
a. The Company has always expensed advertising costs as incurred.
b. The Company has no significant amount of direct-response advertising.
c. Advertising costs for the years ended December 31, 1995, 1994 and 1993
were approximately $47,000, $110,000 and $125,000, respectively, which
were not considered significant.
<PAGE>
[LETTERHEAD OF VENABLE APPEARS HERE]
Mr. Marc Thomas
January 16, 1997
Page 2
3. The Company's Pasadena, California operations were treated as a
separate division of the Company and provided substantially all of the
production services of the Company. Separate segment reporting was not included
in the Business section of the Form 10-K pursuant to Item 101 of Regulation S-K
since, with the exception of revenue and the related costs and expenses, the
segment information was not significant. However, because of the significance of
the revenue and the related costs and expenses the Company felt that accounting
for the closing of this division as discontinued operations was appropriate.
Revised financial statements for the years ended December 31, 1994 and 1993 are
attached as Exhibit A.
4. The Company reviews its quarterly closings and the report of its
financial results to ensure that all appropriate adjustments are included. The
quarterly information in Note 15 represents some adjustments which could have
affected prior quarterly results. However, because the amounts involved were not
considered significant, the Company did not consider it necessary to restate the
prior quarters but felt that the disclosures of the adjustments were
appropriate.
The Company uses the allowance method to account for uncollectable accounts
receivable. The allowance for bad debts accounts is based upon prior years'
experience and management's analysis of possible bad debt. This accounting
policy has not been included in Note 2 "Summary of Significant Accounting
Policies" because the Company's provision for doubtful accounts has not been
significant. The provision for the years ending December 31, 1995, 1994 and 1993
was approximately $53,600, $41,400 and $19,000, respectively.
With regard to the allocation of the officer's salary, the staff's
assumption that the allocation (as described in Note 4) is made ratably
throughout the year is correct. However, in this instance, the decision to
allocate the $60,000 was not made until the fourth quarter of 1996.
The additional depreciation expense was due primarily to additional book
depreciation related to the Company's automobiles.
5. The Company will file an amended 8-K which will include the audited
financial statements of Color Graphics, Inc. for the year ended September 30,
1996, and
<PAGE>
[LETTERHEAD OF VENABLE APPEARS HERE]
Mr. Marc Thomas
January 16, 1997
Page 3
the pro forma financial statements for the year ended December 31, 1995 and the
nine months ended September 30, 1996. We had expected the final audit of Color
Graphics to be completed by early December 1996, but we are informed that it is
not yet complete.
6. The Company undertakes to insert the following paragraph in Item 2 in
the amended Form 8-K:
Effective October 1, 1996, pursuant to a Stock Purchase Agreement dated
September 30, 1996, the Company acquired 82% of the outstanding common stock of
Color Graphics, Inc. from General Business Forms, Inc. for a total consideration
of $1,746,806. This consideration consisted of $1,000,00 in cash paid by the
Company, $286,000 in cash paid by Color Graphics, Inc., the assumption of
liabilities totaling $250,000 and the transfer of a life insurance policy valued
at $210,806 by Color Graphics, Inc. In addition, Color Graphics, Inc. assigned
an accounts receivable of $464,000 which Color Graphics, Inc. had previously
been written off. No value has been assigned to this receivable by the Company.
Registrant's Board based the consideration upon its good faith valuation of
Color Graphics, Inc. There are no material relationships between General
Business Forms, Inc. and Registrant or any of its affiliates, a director or
officer of Registrant or any association of such director or officer of
Registrant. Registrant obtained the $1,000,00 from North American
Communications, Inc. ("NAC"), a related party. Color Graphics is engaged in
printing promotional material for direct mail distribution. Color Graphics will
become a subsidiary of Registrant and continue to engage in printing promotional
material for direct mail distribution through its existing facilities and
equipment.
7. See the response to paragraph 6, above.
8. In 1994, Color Graphics, Inc. changed its fiscal year from June 30 to
September 30, to consolidate with the parent company, General Business Forms,
Inc. The financial information for the three month period ending September 30,
1994 was reviewed, but not audited. The Company will file an amended 8-K which
will include the reviewed financial statements of Color Graphics, Inc. for the
three month period ending September 30, 1994.
<PAGE>
[LETTERHEAD OF VENABLE APPEARS HERE]
Mr. Marc Thomas
January 16, 1997
Page 4
9. The independent accountant who audited Color Graphics, Inc.'s
financial statement for the period ended September 30, 1995 is no longer the
auditor of record. Although the required statement of changes in stockholders'
equity was not included in the audited financial statements of Color Graphics,
Inc., the only change in stockholders' equity during the period was in retained
earnings which increased by the net income reflected in the audited statements.
10. As described in Note 4 the debenture was not purchased by a
related company. The Company supplementally responds that no expense was
recognized under ETIF 84-3. The Company believes that the current language of
Note 4 accurately reflects the conversion.
11. The Company considers the related company payable a trade payable
which should be paid during the normal course of business. Item 2.(c) in MD&A
discusses the source of funds used to reduce the related party payable.
If you have any questions or need any additional information, please
contact me.
Sincerely,
/s/ Ernest M. Stern
Ernest M. Stern
EMS:bpt
Enclosure
cc: Nicholas Robinson (w/enclosure)
Robert Krebs (w/enclosure)
<PAGE>
[LETTERHEAD OF VENABLE, BAETJER, HOWARD & CIVILETTI LLP APPEARS HERE]
January 17, 1997
Mr. Marc Thomas
Securities and Exchange Commission
450 Fifth Street
Mail Stop 7-5
Washington, DC 20549
Re: North American Integrated Marketing, Inc.
Form 10-K for the year ended 12/31/95
Forms 10-Q filed during Fiscal 1996
File No. 33-27603
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Dear Mr. Thomas:
Enclosed is the letter that was sent to you yesterday with an Exhibit A
that was inadvertently not included with yesterday's letter.
Sincerely,
/s/Ernest M. Stern
Ernest M. Stern
EMS:bpt
Enclosure
