SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 17, 1995
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Spectrum Information Technologies, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-15596 75-1940923
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2700 Westchester Avenue, Purchase, New York 10577
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(Address of principal executive offices)
Registrant's telephone number, including area code (914) 251-1800
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(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On September 11, 1995, Spectrum Information Technologies,
Inc. ("Spectrum") entered an agreement (the "Plan") to sell all
of the capital stock of its wholly owned subsidiary Spectrum
Global Services, Inc. ("Global") to The Lori Corporation and
COMFORCE Corporation (collectively, "Purchaser") for $6 million,
plus a closing adjustment related primarily to the allocation of
salaries and benefits of certain Spectrum and Global employees.
Other members of the purchasing group included ARTRA Group
Incorporated, a corporation organized under the laws of the State
of Pennsylvania, Peter R. Harvey, Marc L. Werner, James L.
Paterek, Michael Ferrentino and Christopher P. Franco. The sale
of Global was subject to bankruptcy court approval and receipt of
higher and better offers. A hearing regarding the transaction
(and any higher and better offers) was held on October 17, 1995
before the United States Bankruptcy Court for the Eastern
District of New York, following which the court approved the
sale. The Purchaser paid cash for Global's stock at the October
17th closing, the purchase price of which was based on a multiple
of Global's earnings before interest and taxes for fiscal 1995
and accounted for Global's cash and accounts receivable.
In July 1995, Mr. Paterek, president of Global, Mr.
Ferrentino, a vice president of Global, and Mr. Franco,
Spectrum's vice president and former general counsel, notified
Spectrum that they wished to pursue an opportunity independent of
Spectrum and intended to accept positions with the Purchaser if
its bid for Global was successful. Following the sale, Mr.
Ferrentino and Mr. Franco assumed senior management positions
with the Purchaser, and the Purchaser announced that Mr. Paterek
would become a consultant to COMFORCE Corporation.
A copy of the Plan is attached as an exhibit hereto
and is incorporated by reference herein. The foregoing summary
of such document is qualified in its entirety by reference to
the actual document.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(b) Pro Forma Financial Information.
The following unaudited consolidated pro forma financial
statements give effect to the October 17, 1995 sale of all of the
capital stock of Spectrum Global Services, Inc. ("Global") to The
Lori Corporation and COMFORCE Corporation (the "Transaction")(See
Item 2 - Acquisition or Disposition of Assets). The unaudited pro
forma balance sheet as of June 30, 1995 gives effect to the
Transaction as if it occurred on June 30, 1995. The unaudited pro
forma statements of income (loss) for the year ended March 31, 1995
and the three months ended June 30, 1995 represent the consolidated
results of operations of Spectrum Information Technologies, Inc.
("Spectrum") assuming the Transaction occurred on April 1, 1994.
These financial statements have been prepared utilizing the historical
financial statements of Spectrum. This information should be
read in conjunction with the audited financial statements and
accompanying notes in Spectrum's annual report on Form 10-K for
the fiscal year ended March 31, 1995 and the unaudited financial
statements and accompanying notes in Spectrum's quarterly
report on Form 10-Q for the fiscal quarter ended June 30, 1995.
The unaudited pro forma consolidated financial statements are
provided for comparative purposes only and do not purport to be
indicative of the financial position or results of operations that
would have occurred and actually have been reported if the
Transaction had been effected on the dates indicated or results
which may be obtained in the future. Pro forma adjustments are
described in the accompanying notes.
SPECTRUM INFORMATION TECHNOLOGIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 30, 1995
Condensed
Historical Pro forma Pro forma
Assets Statements Adjustments Results
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(Amounts in thousands)
Current assets:
Cash and cash equivalents $ 2,725 $5,377(1) $8,102
Marketable securities 942 - 942
Accounts receivable, net 7,950 (1,692)(1) 6,258
Inventories 375 - 375
Prepaid expenses and other current
assets 341 (13)(1) 328
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Total current assets 12,333 3,672 19,677
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Net property and equipment 1,191 (102)(1) 1,089
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Notes receivable-related parties 91 - 91
Other assets 450 - 450
Intangible assets, net 3,667 (2,191)(1) 1,476
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Total assets $17,732 $1,379 $19,111
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SPECTRUM INFORMATION TECHNOLOGIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
JUNE 30, 1995
Condensed
Historical Pro forma Pro forma
Liabilities and Stockholders' Equity Statements Adjustments Results
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(Amounts in thousands)
Current liabilities:
Accounts payable $ 484 (262)(1) $ 222
Accrued liabilities 1,835 (94)(1) 1,741
Other current liabilities 6,000 - 6,000
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Total current liabilities 8,319 (356) 7,963
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Deferred income 450 - 450
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Total liabilities subject to compromise 9,078 - 9,078
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Total liabilities 17,847 (356) 17,491
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Stockholders'equity:
Common Stock, $.001 par value, 110,000
shares authorized; 76,675 issued as of
June 30, 1995 and March 31, 1995 77 - 77
Paid-in capital 63,961 - 63,961
Accumulated deficit (63,802) 1,735 (62,067)
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236 1,735 1,971
Treasury stock, 100 shares at cost (300) - (300)
Unrealized loss on marketable securities (51) - (51)
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Total stockholders' equity (115) 1,735 1,620
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Total liabilities and stockholders'
equity $17,732 $1,379 $19,111
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SPECTRUM INFORMATION TECHNOLOGIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Fiscal Year Ended March 31, 1995
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Condensed
Historical Pro forma Pro forma
Statements Adjustments Results
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(Amounts in thousands,
except per share amounts)
REVENUES:
Merchandise sales, net $10,296 $9,003 $ 1,293
Licensing fees and royalties 1,331 - 1,331
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Total revenues 11,627 9,003 2,624
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OPERATING COSTS AND EXPENSES:
Cost of revenues 7,227 6,705 522
Selling, general and administrative 13,342 1,387 11,955
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Total operating costs and expenses 20,569 8,092 12,477
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Operating Income (loss) (8,942) 911 (9,853)
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Professional fees in connection with
Chapter 11 filings (425) - (425)
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OTHER INCOME (EXPENSE):
Total other income (expense) (386) 9 (395)
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Net Income (Loss) from
continuing operations (9,753) 920 (10,673)
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NET INCOME (LOSS) PER COMMON SHARE:
Income (Loss) from continuing operations $ (.13) $ .01 $ (.14)
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SPECTRUM INFORMATION TECHNOLOGIES, INC. AND SUBSIDIARIES
(Debtors-in-Possession)
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
Three Months Ended June 30, 1995
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Condensed
Historical Pro forma Pro forma
Statements Adjustments Results
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(Amounts in thousands,
except per share amounts)
REVENUES:
Merchandise sales, net $3,164 $2,963(2) $ 201
Licensing fees and royalties 829 - 829
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Total revenues 3,993 2,963 1,030
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OPERATING COSTS AND EXPENSES:
Cost of revenues 2,331 2,208(2) 123
Selling, general and administrative 2,596 469(2) 2,127
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Total operating costs and expenses 4,927 2,677 2,250
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Operating loss (934) 286 (1,220)
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Professional fees in connection with
Chapter 11 filings (890) - (890)
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OTHER INCOME (EXPENSE):
Total other income (expense) (74) (15)(2) (59)
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Loss from continuing operations (1,898) 271 (2,169)
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NET INCOME (LOSS) PER COMMON SHARE:
Loss from continuing operations $ (.02) $ (.03)
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Notes to the pro forma consolidated financial statements:
(1) The gross and net proceeds of the Transaction are approximately
$6,000,000 and $4,572,000, respectively. The pro forma consolidated
balance sheet reflects the addition of net proceeds of $4,572,000
and the removal of the net assets (liabilities) of Global of
$4,803,000.
(2) The pro forma consolidated statements of loss reflect the
removal of the operations of Global as though the Transaction
had occurred on April 1, 1994. The gain reflected on the pro
forma balance sheet is not incorporated in the pro forma
consolidated statements of loss as it is a nonrecurring
credit, and the related expenses in the amount of $325,000 are
not reflected on the pro forma consolidated statements of
loss as they are nonrecurring charges. The impact on selling,
general and administrative expenses associated with the
transfer of salaries and benefits of certain employees has
not been reflected on the pro forma consolidated statements
of loss as the expenses were not material.
(c) Exhibits.
Exhibit No. Description
2.1 The Plan (including the exhibits
thereto).
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.
SPECTRUM INFORMATION
TECHNOLOGIES, INC.
Dated: November 1, 1995 By: /s/ Barry J. Hintze
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Name: Barry J. Hintze
Title: Controller and
Principal Accounting Officer
Exhibit Index
Exhibit No. Description
2.1 The Plan (including exhibits thereto).