FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 2000
PARAMARK ENTERPRISES, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-23026 22-3261564
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
One Harmon Plaza
Secaucus, New Jersey 07094
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (201) 422-0910
N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On December 15, 2000, Paramark Enterprises, Inc. (the "Company")
completed the sale of assets pursuant to an asset purchase agreement (the "Rich
Products Agreement") with Rich Products Manufacturing Corporation ("Rich
Products"), pursuant to which the Company sold substantially all of the assets
of its bakery operations located in El Cajon, California which represented a
majority of the Company's operating assets. These assets included leasehold
improvements, machinery and equipment, inventory, recipes, formulations,
customer lists, etc. The Rich Products Agreement provided for a purchase price
aggregating $2,182,750, inclusive of a payment for inventory. The aggregate
purchase price was paid as follows: $182,750 on October 16, 2000, $1,000,000 on
December 15, 2000, and $1,000,000 payable in semiannual installments over a
period of four (4) years. Rich Products is also assumed approximately $285,000
in equipment lease related debt. In addition, pursuant to the terms of the Rich
Products Agreement, Rich Products entered into consulting agreements with
Charles Loccisano, Alan Gottlich and Wayne Sorensen, the Company's Chairman and
CEO, President and CFO, and Bakery General Manager, respectively. These
consulting agreements provide for compensation to Messrs. Loccisano, Gottlich
and Sorensen over a four year term in an annual amount of $50,000, $30,000 and
$20,000, respectively. No relationship exists between Rich Products and the
Company, its directors officers or affiliates.
On December 15, 2000, the Company completed a asset purchase and sale
agreement (the "Brooks Street Agreement") with Brooks Street Companies, Inc.
("Brooks Street"), pursuant to which the Company sold the remainder of the
assets of its bakery operations to Brooks Street. These assets included certain
equipment, inventory, recipes, formulations, customer lists relating to its
pull-apart cake products.
The Brooks Street Agreement provided for a purchase price in the form
of the assumption by Brooks Street of approximately $75,000 in equipment lease
related debt, the purchase of inventory by Brooks Street in the amount of
$12,500 and the agreement by Brooks Street to make royalty payments to the
Company, over a period of four (4) years, equal to 5% of net sales of pull-apart
cakes to existing customers of the Company plus 1 1/2% of net sales of
pull-apart cakes to new customers of Brooks Street. No relationship exists
between Brooks Street and the Company, its directors officers or affiliates.
The amount of consideration for both the Rich Products transaction and
the Brooks Street transaction were determined based on arms length negotiations,
and the Company obtained a fairness opinion regarding the terms of these
transactions. The foregoing summaries of the Rich Products Agreement and the
Brooks Street Agreement are only a brief description of the agreements and are
qualified in their entirety by the detailed provisions of the agreements which
are filed as exhibits to the Company's Proxy Statement and are incorporated
herein by reference.
Prior to implementing a plan of liquidation previously approved by the
Company's stockholders, the Company is exploring various strategic options
available to the Company to enhance the value to its stockholders, including a
possible sale of the public shell.
Certain statements contained in this Current Report regarding matters
that are not historical facts are forward-looking statements. These statements
relate to future events or the Company's future performance. These statements
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are only predictions. Because such forward-looking statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, the risk factors
listed in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999. Any of these risks and uncertainties could cause the
Company's actual results to differ materially from historical earnings and those
presently anticipated or projected. As a result, potential investors are
cautioned not to place undue reliance on any such forward-looking statements,
which speak only as of the date made.
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Item 7. Financial Statements and Exhibits.
(b) Pro forma financial information
On December 15, 2000, the Company completed the sale of assets pursuant
to an asset purchase agreement with Rich Products to sell substantially all of
the tangible and intangible operating assets of its bakery located in El Cajon,
California, and on December 15, 2000, the Company completed the asset purchase
and sale agreement with Brooks Street to sell the remaining tangible and
intangible operating assets of its bakery located in El Cajon, California.
Together these transactions represent the sale of substantially all of the
operating assets of the Company.
The following Unaudited Pro Forma Financial Statements are based upon
the historical statements of the Company adjusted to give effect to the Rich
Products transaction and the Brooks Street transaction.
The Unaudited Pro Forma Balance Sheet as of September 30, 2000 gives
effect to the elimination of the disposed assets assuming that the disposition
had taken place on September 30, 2000 and the cash proceeds had been received at
that time.
The Unaudited Pro Forma Statements of Operations for the year ended
December 31, 1999 and the nine months ended September 30, 2000 give effect to
the elimination of the disposed business assuming the disposition of the assets
had taken place at the beginning of the periods presented.
The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable. The Unaudited Pro
Forma Financial Statements may not be indicative of the results of operations or
financial position that actually would have been achieved or which may be
obtained in the future.
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<CAPTION>
Paramark Enterprises, Inc.
UNAUDITED PRO FORMA BALANCE SHEET AT SEPTEMBER 30, 2000
Historical Adjustment Pro Forma
ASSETS (1)
Current Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalent $34,586 $1,070,250 (1) $ 0
(1,104,836) (3)
Accounts receivable, less allowance for doubtful accounts 654,850 (654,850) (3) 0
Contracts receivable 0 1,000,000 (1) 1,000,000
Royalty receivable 0 200,000 (1) 200,000
Inventories 305,131 (305,131) (1) 0
Prepaid expenses and other current assets 60,952 (60,952) (1) 0
---------- --------- ----------
Total current assets 1,055,519 144,481 1,200,000
Property and Equipment, less accumulated
depreciation and amortization 913,048 (913,048) (1) 0
21,704
Deferred Income Tax Asset, net of valuation allowance -- 0
---------- --------- ----------
Total Assets $1,968,567 $(768,567) $ 1,200,000
========== ========= ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts payable and accrued expenses $1,436,836 464,846 (2) $466,996
(1,434,686) (3)
Current maturities of long-term debt 405,822 (80,822) (1) 0
(325,000) (3)
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Total current liabilities 1,842,658 (1,375,662) 466,996
Long Term Debt, net of current maturities 262,555 (262,555) (1) 0
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Total liabilities 2,105,213 (1,638,217) 466,996
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STOCKHOLDERS' EQUITY
Preferred Stock -- --
Common Stock 36,135 36,135
Additional paid-in capital 6,848,982 6,848,982
Accumulated deficit (6,982,656) 1,334,496 (1) (6,113,006)
(464,846) (2)
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Stockholders' equity (97,539) 869,650 772,111
Less: treasury stock at cost (39,107) (39,107)
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Total stockholders' equity (136,646) 869,650 733,004
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Total Liabilities and Stockholders' Equity $1,968,567 ($768,567) $1,200,000
========== ========= ==========
See Notes to Unaudited Pro Forma Financial Statements
</TABLE>
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<TABLE>
<CAPTION>
Paramark Enterprises, Inc.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
Minus Pro
Forma of
Disposed
Historical Assets Pro Forma
(4 + 5)
Revenue:
<S> <C> <C> <C>
Sales $ 5,454,685 (5,454,685) $0
Royalties and other 0 0
----------- ---------- ---------
Total revenue 5,454,685 (5,454,685) 0
Operating expenses:
Cost of goods sold 4,650,957 (4,650,957) 0
Selling, general and administrative 1,916,631 (1,376,785) 539,846
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Total operating expenses 6,567,588 (6,027,742) 539,846
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Loss from operations (1,112,903) 573,057 (539,846)
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Other income (expense):
Interest expense, net (108,218) 108,218 0
Other income 52,118 1,282,378 1,334,496
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Total other income (expense) (56,100) 1,390,596 0
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Net loss ($1,169,003) $1,963,653 $794,650
=========== ========== =========
Net loss per common share ($0.34) ($0.23)
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Weighted average number of
common shares outstanding 3,405,471 3,405,471
=========== =========
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements
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<TABLE>
<CAPTION>
Paramark Enterprises, Inc.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
Minus Pro
Forma of
Disposed
Historical Assets Pro Forma
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(4 +5)
Revenue:
<S> <C> <C> <C>
Sales $ 4,392,570 ($4,392,570) $0
Royalties and other 0 0 0
Total revenue 4,392,750 (4,392,750) 0
Operating expenses:
Cost of goods sold 3,481,847 (3,481,847) 0
Selling, general and administrative 1,977,526 (1,412,680) 564,846
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Total operating expenses 5,459,373 (4,896,527) (564,846)
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Loss from operations (1,066,803) 501,957 (564,846)
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Other income (expense):
Interest expense, net (18,232) 18,232 0
Other income 68,341 1,266,155 1,334,496
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Total other income (expense) 50,109 1,284,387 1,334,496
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Net loss ($1,016,694) $1,786,344 $769,650
=========== ========== =========
Net loss per common share ($0.30) ($0.23)
=========== =========
Weighted average number of
common shares outstanding 3,390,925 3,390,925
=========== =========
See Notes to Unaudited Pro Forma Financial Statements
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NOTES TO THE UNAUDITED PRO FORMA BALANCE SHEET AT SEPTEMBER 30, 2000 AND FOR THE
UNAUDITED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 2000
Balance Sheet
(1) Reflects receipt of the estimated net proceeds and related gain (net of
expenses) from the Rich Products transaction and the Brooks Street transaction,
the elimination of the assets sold and the elimination of the liabilities
assumed.
(2) Reflects the termination of employment agreements.
(3) Reflects repayments of certain debts and trade accounts payable.
Statement of Operations
(4) Reflects the elimination of revenue and operating expenses of the disposed
assets for the year ended December 31, 1999 and the nine months ended September
30, 1999. Such expenses include all corporate and administrative costs.
(5) The Company has not recorded any estimated income from the investment of the
estimated proceeds from the Transaction. In addition, no tax liability has been
recorded resulting from the tax benefit available to the Company from the
available carry forward of operating losses.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Paramark Enterprises, Inc.
(Registrant)
By: /s/ Alan S. Gottlich
Alan S. Gottlich
President
Dated: December 22, 2000
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