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U.S. Securities and exchange commission
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 9, 1999
Date of Report (Date of earliest event reported)
Commission file number : 0-27556
Network Event Theater, Inc.
(Name of Small Business Issuer in Its Charter)
Delaware ` 13-3864111
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification No.)
529 Fifth Avenue, New York, NY 10017
(Address of Principal Executive Offices) (Zip code)
212-622-7300
(Issuer's Telephone Number, Including Area Code)
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
1. The audited financial statements of Trent Graphics, Inc. for the
years ended December 31, 1998 and 1997 are contained in the Form
8-K filed on June 24, 1999.
2. The unaudited interim financial statements of Trent Graphics,
Inc. as of and for the three months ended March 31, 1999 and
1998.
(b) Pro Forma Information
o Unaudited Pro Forma Consolidated Statement of Operations for the
Twelve Months Ended June 30, 1998.
o Unaudited Pro Forma Consolidated Statement of Operations for the
Nine Months Ended March 31,1999.
o Unaudited Pro Forma Consolidated Balance Sheet at March 31, 1999
o Notes to Unaudited Pro Forma Consolidated Statements of
Operations and Balance Sheet
Trent Graphics, Inc.
Balance Sheets
March 31, 1999 and 1998
(Unaudited)
1999 1998
-------- --------
ASSETS
Current Assets:
Cash $251,418 $159,090
Accounts receivable, net 83,018 37,339
Inventory 275,220 257,287
Prepaid expenses & deposits 32,263 15,589
-------- --------
Total current assets 641,919 469,305
PROPERTY, PLANT & EQUIPMENT
Machinery and equipment 389,613 289,265
Leasehold improvements 37,119 37,119
-------- --------
426,732 326,384
Less: accumulated depreciation 227,710 203,440
-------- --------
Property, plant and equipment, net 199,022 122,944
-------- --------
Total assets $840,941 $592,249
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 76,060 212,349
Accrued wages 33,075 37,486
Accrued taxes 63,124 45,612
Current portion of long-term debt 38,946 54,215
-------- --------
Total current liabilities 211,205 349,662
Long-term debt 121,644 5,029
-------- --------
Total liabilities 332,849 354,691
-------- --------
Stockholders' Equity:
Capital stock 3,250 3,250
Retained earnings 504,842 234,308
-------- --------
Total stockholders' equity 508,092 237,558
-------- --------
Total liabilities and stockholders' equity $840,941 $592,249
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Trent Graphics, Inc.
Statements of Operations and Retained Earnings
For the three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
--------- ---------
Sales $ 849,054 $ 694,642
--------- ---------
Cost of goods sold:
Beginning inventory 405,352 256,834
Purchases 93,667 177,863
Wages 12,532 14,825
Subcontracting 1,130 2,265
--------- ---------
512,681 451,787
Less: ending inventory 275,220 257,287
--------- ---------
Total cost of goods sold 237,461 194,500
--------- ---------
Gross profit 611,593 500,142
Total expenses 797,841 690,478
--------- ---------
Net loss $(186,248) $(190,336)
Retained earnings - beginning of year 727,090 424,644
Distributions (36,000) --
--------- ---------
Retained earnings - end of period $ 504,842 $ 234,308
========= =========
Trent Graphics, Inc.
Statements of Cash Flows
For the three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
--------- ---------
Cash flows from operating activities
Net loss $(186,248) $(190,336)
--------- ---------
Adjustments to reconcile net cash used in
operating activities:
Depreciation & amortization 12,795 12,795
Change in assets and liabilities
(Increase) decrease in:
Accounts receivable (70,988) (28,516)
Inventory 130,132 (453)
Prepaids & deposits (440) 2,688
Increase (decrease) in:
Accounts payable (30,607) 80,637
Accrued taxes 2,082 1,935
Accrued wages 16,092 --
--------- ---------
Net cash used in operating activities (127,182) (121,250)
--------- ---------
Cash flows from investing activities
Capital expenditures (23,044) (8,710)
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Net cash used in investing activities (23,044) (8,710)
--------- ---------
Cash flows from financing activities
Long-term financing -- 50,000
Payment on debt (12,328) (1,269)
Stockholder distributions (36,000) --
--------- ---------
Net cash (used in) provided by financing activities (48,328) 48,731
--------- ---------
Net decrease in cash (198,554) (81,229)
Cash - at beginning of period 449,972 240,319
--------- ---------
Cash - at end of period $ 251,418 $ 159,090
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Supplemental Disclosure
Interest paid in cash $ 3,313 $ 499
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1. Organization and Basis of Presentation
Since 1974, Trent Graphics has been a wholesaler and retailer of prints
and posters. Prints are sold both unframed and framed (by-in-house
framing). Their major customers are college students and college book
stores throughout the United States. Trent also operates retail
stores throughout the United States. The corporate headquarters and
warehouse are located in Stroudsburg, PA.
On January 1, 1991, a change of entity was made from a partnership to
a corporation. The operations are now in Trent Graphics, Inc.,
("Trent") a Pennsylvania subchapter "S" corporation.
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results
for an interim period are not necessarily indicative of the results
that may be expected for the full fiscal year. Trent earns most of its
revenues during the start of the academic year (August- September), and
as such, generally reflects a higher level of revenues in the third
quarter then earned in any other quarter. For further information,
refer to Trent's audited financial statements and footnotes
thereto.
UNAUDITED PRO FORMA Consolidated FINANCIAL INFORMATION
On June 9, 1999, Network Event Theater, Inc. (the "Company") acquired Trent
pursuant to a Merger Agreement (the "Merger Agreement"), dated June 9, 1999
among the Registrant, Trent, Trent Acquisition Co. Inc., a wholly-owned
subsidiary of the Registrant ("Acquisition"), and Charles Sirolly, Thomas
Sirolly, Daniel Sirolly and William Sirolly, the stockholders of Trent (the
"Stockholders"). The acquisition was accomplished by the merger of Trent into
Acquisition, which then changed its name to Trent Graphics, Inc. The purchase
price for Trent was $3.5 million in cash and $3.5 million in shares of the
Company's common stock. In addition, if Trent's EBITDA (as defined in the Merger
Agreement) for the two years ending June 30, 2001 exceeds certain targets, the
Company will pay to the Stockholders up to an additional $600,000 in cash and
issue to the Stockholders up to an additional $600,000 in shares of the
Company's common stock.
The Unaudited Pro Forma Consolidated Statements of Operations for the twelve
months ended June 30, 1998 and the nine months ended March 31, 1999 presents the
consolidated statements of operations of the Company as if (i) the acquisition
of substantially all of the assets of Trent and (ii) the issuance of common
stock by the Company to Trent had occurred on July 1, 1997. The Unaudited Pro
Forma Consolidated Balance Sheet at March 31, 1999 presents the balance sheet of
the Company as if the Trent acquisition had occurred on March 31, 1999.
The Trent acquisition has been accounted for using the purchase method of
accounting. The total cost of the acquisition has been allocated to the tangible
and intangible assets acquired and liabilities assumed based on their respective
fair values. The allocation of the purchase price assumed in the unaudited pro
forma consolidated financial statements is preliminary. The Company does not
expect that the final allocation of the purchase price will materially differ
from the preliminary allocation.
The pro forma adjustments are based on available information and on certain
assumptions that the Company believes are reasonable under the circumstances.
The unaudited pro forma consolidated financial statements should be read in
conjunction with the Company's financial statements and notes thereto, as well
as the financial statements and notes thereto of Trent Graphics, Inc. (included
in the Form 8K filed June 24, 1999). The unaudited pro forma consolidated
statements of operations are not necessarily indicative of the results that
would have occurred if the Trent acquisition, and the issuance of common stock
had occurred on the date indicated, nor are they indicative of the Company's
future results of operations.
Network Event Theater, Inc.
Unaudited Pro Forma Consolidated Statements of Operations
(In thousands)
Twelve months ended June 30, 1998
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Network Event Trent Pro Forma
Theater, Inc. Graphics, Inc.(a) Adjustments Pro Forma
------------- ----------------- ----------- ---------
Net Revenues $ 11,188 $ 5,679 $ -- $ 16,867
Operating Expenses:
Cost of goods sold -- 1,701 -- 1,701
Selling, general and administrative expenses 12,953 3,803 -- 16,756
Corporate expenses 3,088 -- -- 3,088
Depreciation and amortization 1,779 45 433(b) 2,257
-------- ------- -------- --------
Total operating expenses 17,820 5,549 433 23,802
(Loss) income from operations (6,632) 130 (433) (6,935)
Interest Income 156 -- -- 156
Interest Expense (564) (19) -- (583)
-------- ------- -------- --------
(Loss) income before provision for income taxes (7,040) 111 (433) (7,362)
Provision for income taxes 191 22 -- 213
-------- ------- -------- --------
Net (loss) income $ (7,231) $ 89 $ (433) $ (7,575)
======== ======= ======== ========
Net loss per basic and diluted common share $ (0.69) $ (0.70)
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Weighted average basic and diluted common
shares outstanding 10,508 242(c) 10,750
======== ======== ========
Network Event Theater, Inc.
Unaudited Pro Forma Consolidated Statements of Operations
(In thousands)
Nine months ended March 31, 1999
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Network Event Trent Pro Forma
Theater, Inc. Graphics, Inc.(a) Adjustments Pro Forma
------------- ----------------- ----------- ---------
Net Revenues $ 10,979 $ 6,224 $ -- $ 17,203
Operating Expenses:
Cost of goods sold -- 1,740 -- 1,740
Selling, general and administrative expenses 10,785 3,701 -- 14,486
Corporate expenses 3,111 -- -- 3,111
Depreciation and amortization 1,500 38 325(b) 1,863
-------- ------- -------- --------
Total operating expenses 15,396 5,479 325 21,200
(Loss) income from operations (4,417) 745 (325) (3,997)
Interest Income 257 -- -- 257
Interest Expense (878) (22) -- (900)
-------- ------- -------- --------
(Loss) income before provision for income taxes (5,038) 723 (325) (4,640)
Provision for income taxes 125 31 -- 156
-------- ------- -------- --------
Net (loss) income $ (5,163) $ 692 $ (325) $ (4,796)
======== ======= ======== ========
Net loss per basic and diluted common share $ (0.42) $(0.39)
======== ========
Weighted average basic and diluted common
shares outstanding 12,207 242(c) 12,449
======== ======== ========
Network Event Theater, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
(In thousands)
March 31, 1999
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Network Event Trent Pro Forma
Theater, Inc. Graphics, Inc. Adjustments(d) Pro Forma
------------- -------------- -------------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 13,242 $252 $(3,500) $ 9,994
Accounts receivable, net 3,120 83 -- 3,203
Inventory -- 275 -- 275
Prepaid expenses 758 2 -- 760
Deposits and other current assets 231 30 -- 261
-------- ---- ------- --------
Total current assets 17,351 642 (3,500) 14,493
Property and equipment, net 5,188 199 -- 5,387
Deferred financing costs, net 928 -- -- 928
Intangible assets, net 6,034 -- 6,492 12,526
-------- ---- ------- --------
Total assets $ 29,501 $841 $ 2,992 $ 33,334
======== ==== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 469 76 -- $ 545
Accrued employee compensation 539 33 -- 572
Other accrued expenses 972 63 -- 1,035
Deferred revenues 358 -- -- 358
Current portion of long-term debt 842 39 -- 881
-------- ---- ------- --------
Total current liabilities 3,180 211 -- 3,391
Long-term debt 6,906 122 -- 7,028
Commitments and contingencies -- -- -- --
Stockholders' Equity:
Preferred stock, $.01 par value, 1,000 shares
authorized,no shares issued and outstanding -- -- -- --
Common stock, $.01 par value, 32,000 shares
authorized, 14,605 shares issued and outstanding 146 3 (1) 148
Additional paid-in capital 43,200 -- 3,498 46,698
Accumulated deficit (23,931) 505 (505) (23,931)
-------- ---- ------- --------
Total stockholders' equity 19,415 508 2,992 22,915
-------- ---- ------- --------
Total liabilities and stockholders' equity $ 29,501 $841 $ 2,992 $ 33,334
-------- ---- ------- --------
Notes to Unaudited Pro Forma Consolidated Statements and Balance Sheet
(a) Reflects the historical statement of operations of Trent Graphics, Inc.
("Trent"). Trent operated on a calendar year end. The historical statement
of operations included in the unaudited pro forma consolidated statements
of operations, however, have been prepared on a June 30th fiscal year end
basis based on the unaudited quarterly financial statements of Trent.
(b) To reflect increased amortization from goodwill related to the Trent
acquisition amortized over 15 years on a straight-line basis.
Consideration:
Cash $3,500,000
Company common stock - 242,003 shares, based on the
market price of the Company's common stock at the date
of the Trent acquisition 3,500,000
----------
7,000,000
Fair value of net assets acquired 508,000
----------
Goodwill $6,492,000
(c) To reflect the issuance of 242,003 shares of the Company's common stock to
Trent Graphics Inc.
(d) To reflect the purchase of Trent for $3.5 million in cash and the issuance
of $3.5 million in shares of the Company's common stock.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
August 23, 1999 Network Event Theater, Inc.
By:/s/ Harlan D. Peltz
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Harlan D. Peltz
Chairman of the Board
Chief Executive officer