SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-1
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: December 22, 1997
-----------------
PACIFIC RIM ENTERTAINMENT, INC.
(Exact name of registrant as specified in charter)
Delaware 0-22808 95-4374983
(State or other (Commission (IRS Employer
jurisdiction of File Number) identification no.)
incorporation)
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
(Address of principal executive offices)
(602) 274-1299
(Registrant's telephone number, including area code)
<PAGE>
General Explanation
The purpose of this Report is to amend the Registrant's Current Report on Form
8-K dated December 22, 1997 relative to the merger of Pacific Rim Entertainment,
Inc. and Osage Computer Group, Inc. This Report amends the information provided
under item 7(b) and supplements the Financial Statements provided therewith.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information - The required pro forma financial
information is set forth below:
On December 22, 1997, Pacific Rim Entertainment, Inc. (the "Company") acquired
Osage Computer Group, Inc. ("Osage") pursuant to the terms of a Merger Agreement
dated November 5, 1997 (the "Merger Agreement"), in a transaction that resulted
in a change in control of the Company. Upon the closing of the Merger, through a
wholly-owned subsidiary, the Company acquired 100% of the outstanding capital
stock of Osage in exchange for Merger consideration paid to the former
stockholders of Osage (the "Osage Stockholders") consisting of: (i) $500,000 in
cash; (ii) 900,000 newly-issued shares of Common Stock (subject to upward
adjustment in the event the trading price of the Company's Common Stock is below
$2.00 per share during an eighteen (18) month period following the Merger);
(iii) 200,000 newly-issued shares of Common Stock; (iv) $1.5 million of Series B
$3.00 Convertible Preferred Stock (the "Series B Shares"), which are convertible
into 500,000 shares of Common Stock (subject to adjustment in the event that
certain performance criteria are not achieved subsequent to the Merger); and (v)
options with a term of six years that permit the purchase of 800,000 shares of
Common Stock, subject to a $3.00 exercise price subject to adjustment.
Contemporaneous with the Merger, the Company completed a private placement
offering to accredited investors (the "Offering") of $3,660,000, consisting of
122 shares of Series A $3.00 Convertible Preferred Stock (the "Series A
Shares"). The net proceeds of the Offering were used by the Company to: (i)
retire approximately $450,000 principal amount of bridge indebtedness; (ii) pay
the $500,000 cash component of the Merger consideration to the Osage
Stockholders; and (iii) finance the Company's strategic acquisition strategy.
The unaudited pro forma combined balance sheet at September 30, 1997 combines
historical financial information of the Company and Osage as if the acquisition
had occurred on September 30, 1997. The unaudited pro forma combined statement
of operations data for the year ended December 31, 1996 and the nine months
ended September 30, 1997 combine historical statements of operations data for
the Company and the acquired company, Osage, as if the acquisition had occurred
on January 1, 1996. Since the Osage shareholders retained voting and operating
control of the combined entity for financial accounting purposes, the Merger is
considered a reverse acquisition. Accordingly, although the Company was treated
as the acquiror in the Merger, for financial accounting purposes, the business
combination will be viewed as a recapitalization of Osage as the accounting
acquiror.
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<PAGE>
The detailed assumptions used to prepare the unaudited pro forma combined
financial information are contained herein. The unaudited pro forma combined
financial information reflects the use of the purchase method of accounting for
the acquisition. The purchase price allocation used in the preparation of the
pro forma financial information is preliminary and subject to change based upon
final evaluations being performed.
The unaudited pro forma combined financial information assumes the acquisition
was funded from currently available cash funded from the private placement of
the Series A Shares and through the issuance of common stock and the Series B
Shares.
The unaudited pro forma data are not necessarily indicative of the financial
position or results of operations which would have actually been reported had
the transaction been consummated at the date mentioned above or which may be
reported in the future.
The unaudited pro forma data should be read in conjunction with the notes to the
Unaudited Pro Forma Combined Financial Information and the separate financial
statements and notes thereto of the Company and Osage. Also refer to Form 8-K
filed on January 6, 1998 relating to the Merger between the Company and Osage.
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<PAGE>
Pacific Rim Entertainment, Inc.
Unaudited Pro Forma Combined Balance Sheet
September 30, 1997
(in thousands)
<TABLE>
<CAPTION>
PROFORMA
PACIFIC PROFORMA CONSOLIDATED
OSAGE RIM ADJUSTMENTS BALANCE
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 251 $ 12 $ 2,550 (a) $ 2,813
Accounts receivable 2,345 -- -- 2,345
Inventories 6 -- -- 6
Prepaid expenses
and other current assets 160 35 -- 195
-------- -------- -------- --------
Total current assets 2,762 47 2,550 5,359
PROPERTY AND EQUIPMENT 60 -- -- 60
-------- -------- -------- --------
Total assets $ 2,822 $ 47 $ 2,550 $ 5,419
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Notes payable -- $ 450 $ (450)(a) --
Accounts payable $ 1,990 25 -- $ 2,015
Accrued expenses 161 -- -- 161
Deferred revenue 149 -- -- 149
Income taxes payable 55 -- -- 55
Due to former shareholders 129 -- -- 129
-------- -------- -------- --------
Total current liabilities 2,484 475 (450) 2,509
SHAREHOLDERS' EQUITY (DEFICIT):
Common Stock 5 1 42 48
Series A preferred stock -- -- 12 (c) 12
Series B preferred stock -- -- 5 5
Additional paid-in-capital -- 12,939 (12,939)(d) 2,905
3,488 (c) --
(583)(f) --
Retained earnings (deficit) 440 (13,368) (500)(b) (60)
13,368 (d) --
Treasury stock (107) -- 107 (e) --
-------- -------- -------- --------
Total shareholders' equity (deficit) 338 (426) 3,000 2,910
-------- -------- -------- --------
Total liabilities and shareholders' equity
(deficit) $ 2,822 $ 47 $ 2,550 $ 5,419
======== ======== ======== ========
</TABLE>
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<PAGE>
Pacific Rim Entertainment, Inc.
Unaudited Pro Forma Combined Statement of Operations
Nine Month Period Ended September 30, 1997
(in thousands)
<TABLE>
<CAPTION>
PROFORMA
PACIFIC PROFORMA CONSOLIDATED
OSAGE RIM ADJUSTMENTS BALANCE
<S> <C> <C> <C> <C>
REVENUES $ 8,465 -- -- $ 8,465
COST OF SALES 6,693 -- -- 6,693
------- ------- -------- -------
Gross profit 1,772 0 -- 1,772
OPERATING EXPENSES:
Selling, general and administrative 1,496 $ 191 -- 1,687
Investment losses -- 700 -- 700
------- ------- -------- -------
Total operating expenses 1,496 891 -- 2,387
------- ------- -------- -------
INCOME (LOSS) FROM OPERATIONS 276 (891) -- (615)
INTEREST INCOME (EXPENSE) 3 (18) -- (15)
------- ------- -------- -------
NET INCOME (LOSS) $ 279 $ (909) -- $ (630)
======= ======= ======== =======
BASIC EPS $ 0.06 $ (0.19) -- $ (0.13)
======= ======= ======== =======
SHARES USED IN PER SHARE CALCULATION
4,820 4,820 -- 4,820
======= ======= ======== =======
DILUTED EPS $ 0.04 $ (0.14) -- $ (0.10)
======= ======= ======== =======
SHARES USED IN PER SHARE CALCULATION
6,540 6,540 -- 6,540
======= ======= ======== =======
</TABLE>
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<PAGE>
Pacific Rim Entertainment, Inc.
Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 1996
(in thousands)
<TABLE>
<CAPTION>
PROFORMA
PACIFIC PROFORMA CONSOLIDATED
OSAGE RIM ADJUSTMENTS BALANCE
<S> <C> <C> <C> <C>
REVENUES $ 9,855 -- -- $ 9,855
COST OF SALES 7,641 -- -- 7,641
------- -------- -------- -------
Gross profit 2,214 0 -- 2,214
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 2,144 $ 101 -- 2,245
------- -------- -------- -------
INCOME (LOSS) FROM OPERATIONS 70 (101) -- (31)
INTEREST INCOME (EXPENSE) (26) (24) -- (50)
------- -------- -------- -------
INCOME (LOSS) BEFORE INCOME
TAXES 44 (125) -- (81)
INCOME TAXES 9 2 -- --
------- -------- -------- -------
NET INCOME (LOSS) $ 35 $ (127) -- $ (81)
======= ======== ======== =======
BASIC EPS $ 0.01 $ (0.03) -- $ (0.02)
======= ======== ======== =======
SHARES USED IN PER SHARE
CALCULATION 4,820 4,820 -- 4,820
======= ======== ======== =======
DILUTED EPS $ 0.01 $ (0.02) -- $ (0.01)
======= ======== ======== =======
SHARES USED IN PER SHARE
CALCULATION 6,540 6,540 -- 6,540
======= ======== ======== =======
</TABLE>
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<PAGE>
PRO FORMA ADJUSTMENT LEGEND:
(a) Represents the following adjustments to cash:
Gross proceeds from issuance of the Series A Shares $3,660
Series A Shares issuance costs (160)
Repayment of notes payable (450)
Merger consideration to Osage shareholders (500)
------
Total $2,550
======
(b) Amount represents $500 paid to Osage shareholders and is treated as a
distribution of capital and, accordingly, a reduction of shareholders'
equity.
(c) Amount represents net proceeds received from the issuance of the Series A
Shares after deducting $160 of issuance costs.
(d) Amount represents elimination of Pacific Rim's equity.
(e) Amount represents retirement of treasury stock.
(f) Amount represents entry to finalize recapitalization of Osage.
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<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 hereunto duly authorized.
PACIFIC RIM ENTERTAINMENT, INC.
By: /s/ Jack Leadbeater
----------------------------
Jack Leadbeater
Chief Executive Officer
By: /s/ John Iorillo
----------------------------
John Iorillo
Principal Accounting Officer
Date: March 3, 1998
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