<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) MAY 17, 1999
PLENUM COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
MINNESOTA
(State or Other Jurisdiction of
Incorporation)
0-25159 91-1524747
(Commission File Number) (IRS Employer Identification Number)
PLENUM COMMUNICATIONS, INC.
3003 - 80TH AVENUE SE
MERCER ISLAND, WA 98040
(Address of Principal Executive Offices)
(206) 236-1995
(Registrant's Telephone, Including Area Code)
1
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PLENUM COMMUNICATIONS, INC.
This 8-K/A filing amends an 8-K filed on June 1, 1999. Item 7 is hereby
amended to state as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of IMark.
(1) Audited Financial Statements of IMark, LLC as of
December 31, 1998 and for the years ended December 31,
1998 and 1997 and the financial position as of March
31, 1999 (unaudited) and the results of operations for
the three months ended March 31, 1999 and 1998
(unaudited).
(b) Pro Forma Financial Information.
(1) Unaudited Pro Forma Combined Condensed Financial
Statements of Plenum Communications, Inc. and IMark,
LLC for the three months ended March 31, 1999 and the
year ended December 31, 1998 and the financial position
as of March 31, 1999.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.5 Asset Purchase Agreement dated as of May 17, 1999, among
Plenum Communications, Inc., LION, Inc., IMark, Inc., IMark
Design Group, and the principal shareholders of IMark (1)
99 Press release dated May 20, 1999, announcing the Company's
acquisition of the IMark assets (1)
- -------------------------------------------
</TABLE>
(1) Incorporated by reference to the same Exhibit numbers to the Company's
Form 8-K as filed with the Securities and Exchange Commission on June
1, 1999, File No. 0-25159.
2
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IMARK, LLC
Financial Statements and Report
of Independent Certified Public Accountants
March 31, 1999 (unaudited) and
December 31, 1998
Report of independent certified public accountants
Financial statements
Balance Sheets
Statements of Earnings and Members' Equity
Statements of Cash Flows
Notes to Financial Statements
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Members of the Firm
IMark, LLC
We have audited the accompanying balance sheet of IMark, LLC (a Colorado
Limited Liability Company) as of December 31, 1998, and the related
statements of earnings and members' equity, and cash flows for each of the
two years in the period ended December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IMark, LLC as of December
31, 1998, and the results of its operations and its cash flows for each of
the two years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Seattle, Washington
June 24, 1999
3
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IMark, LLC
BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------------ -----------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 47,002 $ 14,887
Accounts receivable 48,871 23,444
Prepaid expenses - 1,726
------------------ -----------------
Total current assets 95,873 40,057
PROPERTY AND EQUIPMENT - net 39,361 23,422
OTHER ASSETS 1,800 640
------------------ -----------------
$ 137,034 $ 64,119
------------------ -----------------
------------------ -----------------
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 1,730 $ -
Accrued payroll liabilities 13,758 -
Deferred revenue 12,277 9,903
------------------ ------------------
Total current liabilities 27,765 9,903
COMMITMENTS - -
MEMBERS' EQUITY 109,269 54,216
------------------ ------------------
$ 137,034 $ 64,119
------------------ -----------------
------------------ -----------------
</TABLE>
The accompanying notes are an integral part of these statements.
4
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IMark, LLC
STATEMENTS OF EARNINGS AND MEMBERS' EQUITY
<TABLE>
<CAPTION>
Three months ended March 31, Year ended December 31,
-------------------------------- ------------------------------
1999 1998 1998 1997
------------- ------------- ------------ -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ 143,357 $ 27,148 $ 168,351 $ 39,916
Expenses
Marketing and administrative 32,659 5,933 46,589 15,573
Salaries and payroll taxes 28,470 1,000 19,312 -
Depreciation and amortization 2,867 683 3,587 2,744
------------- ------------- ------------ -------------
63,996 7,616 69,488 18,317
------------- ------------- ------------ -------------
Operating profit 79,361 19,532 98,863 21,599
Other income (expense)
Interest expense (49) (134) (281) -
Interest income 269 - 14 177
------------- ------------- ------------ -------------
NET EARNINGS 79,581 19,398 98,596 21,776
------------- ------------- ------------ -------------
Members' equity at beginning of year 54,216 11,098 11,098 171
Members' draws and distributions during the year (24,528) (11,098) (55,478) (10,849)
------------- ------------- ------------ -------------
Members' equity at end of year $ 109,269 $ 19,398 $ 54,216 $ 11,098
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of these statements.
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IMark, LLC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended March 31, Year ended December 31,
----------------------------------- -------------------------------
1999 1998 1998 1997
-------------- -------------- ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Net earnings $ 79,581 $ 19,398 $ 98,596 $ 21,776
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation and amortization 2,867 683 3,587 2,744
Changes in assets and liabilities
Accounts receivable (25,427) (6,308) (21,239) (2,205)
Prepaid expenses and other assets 566 - (2,366) -
Deferred revenue 2,374 - 9,903 -
Accounts payable 1,730 (1,000) (2,342) 2,342
Accrued payroll liabilities 13,758 - - -
-------------- -------------- ------------ ------------
Net cash provided by
operating activities 75,449 12,773 86,139 24,657
Cash flows from investing activities
Purchase of property and equipment (18,806) (1,538) (19,758) (7,624)
-------------- -------------- ------------ ------------
Net cash used in
investing activities (18,806) (1,538) (19,758) (7,624)
Cash flows from financing activities
Payments on capital leases - (1,030) (1,651) (720)
Members' draws, net (24,528) (11,098) (55,478) (10,849)
-------------- -------------- ------------ ------------
Net cash used in
financing activities (24,528) (12,128) (57,129) (11,569)
-------------- -------------- ------------ ------------
Net increase (decrease) in cash and cash equivalents 32,115 (893) 9,252 5,464
Cash and cash equivalents at beginning of period 14,887 5,635 5,635 171
-------------- -------------- ------------ ------------
Cash and cash equivalents at end of period $ 47,002 $ 4,742 $ 14,887 $ 5,635
-------------- -------------- ------------ ------------
-------------- -------------- ------------ ------------
Non-cash investing and financing activities:
Property and equipment purchased
under capital leases $ - $ - $ - $ 2,371
-------------- -------------- ------------ ------------
-------------- -------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
IMark, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (unaudited) and December 31, 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES
IMark, LLC (the Company), a Colorado Limited Liability Corporation, provides
web design, a mortgage directory service, and mortgage tools through the
Internet to numerous brokers and consumers throughout the United States. On
April 16, 1999, the Company filed its Articles of Incorporation in the State
of Colorado and became a Colorado Corporation. On May 17, 1999, the Company
entered into an agreement to sell all of the Company's assets to LION, Inc.,
a wholly-owned subsidiary of Plenum Communications, Inc.
A summary of significant accounting polices consistently applied in the
preparation of the accompanying financial statements follows.
1. CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly-liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
2. REVENUE RECOGNITION
Subscription and service fees are recognized as revenue over the respective
subscription periods or at the time the services are provided.
3. ACCOUNTS RECEIVABLE
The Company considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is provided. If amounts
become uncollectible, they will be charged to operations when that
determination is made.
4. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives, principally on a straight-line basis. Estimated
service lives of property and equipment range from three to five years.
5. INCOME TAXES
Income taxes on the net earnings for the year are payable personally by the
members and, accordingly, are not reflected in the financial statements.
6. MEMBERS' DRAWS AND DISTRIBUTIONS
Distributions to members are considered a reduction from retained earnings to
the extent that the Company has retained earnings. Distributions to members
in excess of retained earnings are accounted for as a reduction in each
member's equity account.
7
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IMark, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (unaudited) and December 31, 1998
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
7. USE OF ESTIMATES
In preparing the Company's financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
8. ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising expense was $7,059
and $197 for the three months ended March 31, 1999 and 1998 (unaudited),
respectively, and $6,480 and $1,292 for the years ended December 31, 1998 and
1997, respectively.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- ------------
(unaudited)
<S> <C> <C>
Computer equipment $ 27,193 $ 14,511
Computer software 13,918 9,605
Equipment 1,804 1,804
Furniture 5,644 3,833
------------- -------------
48,559 29,753
Less accumulated depreciation and amortization 9,198 6,331
------------- -------------
$ 39,361 $ 23,422
------------- -------------
------------- -------------
</TABLE>
8
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IMark, LLC
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (unaudited) and December 31, 1998
NOTE C - COMMITMENTS
The Company conducts a portion of its operations utilizing leased facilities
and equipment. The following is a schedule by years of approximate minimum
rental payments under such operating leases, which expire at various dates
through December 2001.
<TABLE>
<CAPTION>
Year ending March 31, December 31,
-------------- ------------
(unaudited)
<S> <C> <C>
1999 $ 26,000 $ 22,600
2000 2,500 8,300
2001 1,500 2,100
-------------- ------------
Total minimum payments required $ 30,000 $ 33,000
-------------- ------------
-------------- ------------
</TABLE>
The leases provide for payment of taxes and other expenses by the Company. Rent
expense for leased facilities totaled approximately $2,486 and $0 for the three
months ended March 31, 1999 and 1998 (unaudited), respectively, and $1,351 and
$0 for the years ended December 31, 1998 and 1997, respectively.
9
<PAGE>
PRO FORMA FINANCIAL INFORMATION
On May 17, 1999, Plenum Communications, Inc. (the "Company"), LION, Inc.
("LION"), IMark, Inc., a Colorado corporation and IMark Design Group, a
Colorado limited liability company (IMark, Inc. and IMark Design Group
collectively referred to as "IMark"), and the principal shareholders of
IMark, entered into an Asset Purchase Agreement pursuant to which the Company
acquired substantially all of the assets of IMark, including its mortgage
industry Internet sites, and assumed certain liabilities and obligations for
a purchase price of $600,000 payable in shares of common stock of the Company
(the "Acquisition").
The accompanying unaudited pro forma combined condensed financial statements
have been derived from the historical results of operations of Plenum
Communications, Inc. and LION, Inc., collectively referred to as Plenum, and
IMark for the three months ended March 31, 1999 and the year ended December
31, 1998 and the financial position as of March 31, 1999.
The unaudited pro forma combined condensed financial statements are presented
for informational purposes only and do not purport to be indicative of the
operating results that actually would have occurred if the Acquisition had
been consummated on January 1, 1998, nor which may result from future
operations. The pro forma adjustments are based on available information and
certain assumptions that the Company believes are reasonable. The purchase of
assets has been accounted for using the purchase method of accounting. These
pro forma financial statements should be read in conjunction with the
Company's December 31, 1998 financial statements and notes thereto contained
in its Form 10-KSB dated March 30, 1999, the IMark audited financial
statements included in this filing and the Asset Purchase Agreement.
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<PAGE>
Plenum Communications, Inc.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
March 31, 1999
------------------------------ Pro Forma Pro Forma
Plenum IMark Adjustments Combined
-------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 551,024 $ 47,002 $ - $ 598,026
Accounts receivable, less allowance for
doubtful accounts of $18,408 144,931 48,871 - 193,802
Prepaid expenses and other 85,479 - - 85,479
-------------- -------------- ------------- -----------
Total current assets 781,434 95,873 - 877,307
PROPERTY AND EQUIPMENT - net 337,676 39,361 - 377,037
OTHER ASSETS
Intangible assets, net - - 425,101(1) 425,101
Other - 1,800 - 1,800
-------------- -------------- ------------- -----------
$1,119,110 $ 137,034 $ 425,101 $ 1,681,245
-------------- -------------- ------------- -----------
-------------- -------------- ------------- -----------
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 133,088 $ 1,730 $ - $ 134,818
Accrued liabilities 267,936 13,758 - 281,694
Deferred revenue 129,024 12,277 - 141,301
Convertible debentures 131,188 - - 131,188
-------------- -------------- ------------- -----------
Total current liabilities 661,236 27,765 - 689,001
COMMITMENTS AND CONTINGENCIES - - - -
STOCKHOLDERS' EQUITY 457,874 109,269 425,101(1) 992,244
-------------- -------------- ------------- -----------
$1,119,110 $ 137,034 $ 425,101 $ 1,681,245
-------------- -------------- ------------- -----------
-------------- -------------- ------------- -----------
</TABLE>
See notes to pro forma combined condensed financial statements.
11
<PAGE>
Plenum Communications, Inc.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999
------------------------------- Pro Forma Pro Forma
Plenum IMark Adjustments Combined
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 710,278 $ 143,357 $ - $ 853,635
Expenses
Marketing and administrative 383,777 32,659 - 416,436
Salaries and payroll taxes 605,726 28,470 15,000 (2) 649,196
Depreciation and amortization 27,344 2,867 28,340 (1) 58,551
--------------- --------------- --------------- ---------------
1,016,847 63,996 43,340 1,124,183
--------------- --------------- --------------- ---------------
Operating (loss) income (306,569) 79,361 (43.340) (270,548)
Other income (expense)
Interest expense (46,345) (49) - (46,394)
Interest income 9,231 269 - 9,500
--------------- --------------- --------------- ---------------
NET (LOSS) EARNINGS $ (343,683) $ 79,581 $ (43,340) $ (307,442)
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Loss per common share $ (.01) $ (.01)
--------------- ---------------
--------------- ---------------
Weighted average shares outstanding 25,068,256 25,421,198
--------------- ---------------
--------------- ---------------
</TABLE>
See notes to pro forma combined condensed financial statements.
12
<PAGE>
Plenum Communications, Inc.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31, 1998
------------------------------------ Pro Forma Pro Forma
Plenum IMark Adjustments Combined
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues $ 1,856,336 $ 168,351 $ - $ 2,024,687
Expenses
Marketing and administrative 1,234,236 46,589 - 1,280,825
Salaries and payroll taxes 1,575,393 19,312 60,000 (2) 1,654,705
Depreciation and amortization 81,013 3,587 113,360 (1) 197,960
----------------- ---------------- ---------------- ----------------
2,890,642 69,488 (173,360) 3,133,490
----------------- ---------------- ---------------- ----------------
Operating (loss) income (1,034,306) 98,863 (173,360) (1,108,803)
Other income (expense)
Interest expense (203,604) (281) - (203,885)
Interest income 10,192 14 - 10,206
----------------- ---------------- ---------------- ----------------
NET (LOSS) EARNINGS $(1,227,718) $ 98,596 $ (173,360) $(1,302,482)
----------------- ---------------- ---------------- ----------------
----------------- ---------------- ---------------- ----------------
Loss per common share $ (.06) $ (.06)
----------------- ----------------
----------------- ----------------
Weighted average shares outstanding 22,190,181 22,543,123
----------------- ----------------
----------------- ----------------
</TABLE>
See notes to pro forma combined condensed financial statements.
13
<PAGE>
Plenum Communications, Inc.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(1) Intangible assets represent goodwill associated with the purchase of
assets from IMark. Goodwill will be amortized over a period of 5 years.
The assets purchased from IMark totaling $64,782 were acquired for
approximately $600,000 of Plenum's common stock, plus acquisition costs
of $31,582. The excess purchase price over the fair value of assets
purchased from IMark totaled $556,801 and was allocated to goodwill.
(2) Adjustments to record salaries and payroll taxes related to five-year
employment agreements entered into by IMark's two shareholders with
LION.
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.
PLENUM COMMUNICATIONS, INC.
(Registrant)
By: /s/ Allen Ringer
---------------------------------
Allen Ringer
President and Chief Executive Officer
DATE: JULY 30, 1999
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.5 Asset Purchase Agreement dated as of May 17, 1999, among
Plenum Communications, Inc., LION, Inc., IMark, Inc., IMark
Design Group, and the principal shareholders of IMark (1)
99 Press release dated May 20, 1999, announcing the Company's
acquisition of the IMark assets (1)
</TABLE>
- -------------------------------------------
(1) Incorporated by reference to the same Exhibit numbers to the Company's
Form 8-K as filed with the Securities and Exchange Commission on June
1, 1999, File No. 0-25159.
15
