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U.S. 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): April 5, 1999
GILMAN & CIOCIA, INC.
(Name of small business issuer in its charter)
Delaware 000-22996 11-2587324
(State or jurisdiction Commission (I.R.S.Employer
of incorporation or file Identification
organization) number No.)
475 Northern Boulevard, Great Neck, NY 11021
(Address of principal executive offices) (Zip Code)
(516) 482-4860
(Issuer's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 5, 1999, Gilman & Ciocia, Inc., a Delaware corporation (the
"Company"), consummated the acquisition of all of the issued and outstanding
capital stock of Prime Capital Services, Inc., a New York corporation ("PCSI"),
and Asset & Financial Planning, Ltd., a New York corporation ("AFPL"), and
simultaneously Prime Financial Services, Inc., a Delaware corporation and a
newly-formed and wholly-owned subsidiary of the Company ("PFSI"), consummated
the acquisition of certain assets of Prime Financial Services, Inc., a New York
corporation ("Oldco"), (collectively, the "Acquisition"), pursuant to a Stock
and Asset Purchase Agreement (the "Agreement") among the Company, PFSI, Oldco,
Michael Ryan ("Ryan"), and Ralph Porpora ("Porpora").
PCSI is a registered securities broker/dealer and a member of the
National Association of Securities Dealers, Inc. The principal assets of PCSI as
of April 30, 1998 consisted of $933,124 in commissions receivable; $86,197 in
marketable securities, $158,144 due from Oldco, $5,576 in corporate income tax
receivable, and $47,667 in loans receivable.
AFPL provides investment management services. The principal assets of
AFPL as of April 30, 1998 consisted of $12,057 in cash, $1,950 in accounts
receivable, $9,055 in interest income receivable, and $120,739 in loans to
officers.
PFSI was organized February 17, 1999. PFSI will perform management
services for PCSI and AFPL and conduct an insurance brokerage business. The
principal assets acquired by PFSI are
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equipment and furniture valued on the balance sheet of Oldco as of November 30,
1998 at $248,583 and advances to registered representatives of PCSI (the
"Representative Advances") valued at Closing (hereinafter defined) at $216,367.
For all the outstanding shares of the common stock of PCSI and PFSI and
for the assets acquired by PFSI (except the Representative Advances), the
Company delivered at the closing (the "Closing") of the Acquisition 588,506
shares of the common stock of the Company, par value $.01 per share (the "Common
Stock"), and placed an additional 147,126 shares of the Common Stock in escrow,
or total consideration of 735,632 shares of Common Stock (the "Purchase
Shares"). The amount of Purchase Shares may be adjusted downward, if the 1999
adjusted pre-tax profits of PCSI, PFSI, and AFPL fail to meet certain targets
set forth in the Purchase Agreement. The Common Stock placed in escrow at
Closing shall be released, except to the extent of such adjustment, thirty (30)
days after the final determination of such adjustment.
Within thirty (30) days after the Closing, the Company will deliver
15,372 shares of the Common Stock as consideration for the purchase of the
Representative Advances. The consideration for the purchase of the
Representative Advances may be reduced to the extent that the Representative
Advances are amortized and are found not to be collectible.
At the Closing, the Company entered into a Noncompetition Agreement
with Ryan and Porpora dated April 5, 1999, restricting them from, among other
activities, competing with the Company for
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a period of five years from the Closing.
At the Closing, the Company entered into a Limited Liability Company
Interest Option Agreement with Oldco dated April 5, 1999, granting to the
Company an option (the "Option") to purchase Oldco's 50% limited liability
company interest in Healthvest LLC, a Delaware limited liability company
("Healthvest"), at an exercise price of $1.00 and exercisable any time during a
period extending from the Closing to the 5th anniversary of the Closing.
Healthvest markets and sells, pursuant to a joint marketing agreement, financial
services to certain customers of Oldco, PCSI, Henry Schein, Inc. ("Schein") and
Henry Schein Financial Services, Inc. ("Schein Financial") who are in-office
healthcare practitioners. Oldco's participation in such joint marketing
agreement was assigned to and assumed by PFSI as part of the Acquisition. Schein
is a direct marketer of healthcare products and services to office-based
healthcare practitioners. Schein is the owner of the 50% limited liability
company interest in Healthvest not subject to the Option.
At the Closing, the Company entered into a Registration Rights
Agreement with Oldco, Ryan and Porpora (the "Stockholders") dated April 5, 1999,
providing rights to the Stockholders to have their Purchase Shares included in
any registration statement covering the sale of the Company's Common Stock. In
addition, in the event that the Stockholders are unable within one year after
the Closing to register any of the Purchase Shares, the Stockholders may make
one demand on the Company to use reasonable commercial efforts to
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register such Purchase Shares.
The amount of consideration paid by the Company as set forth above was
determined by arms-length negotiations between the parties involved.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
To be filed by amendment.
(b) Pro-Forma Financial Information.
To be filed by amendment.
(c) Exhibits.
Exhibit No. Description
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1 Stock and Asset Purchase Agreement dated
April 5, 1999, by and among Gilman & Ciocia,
Inc., a Delaware corporation, Prime
Financial Services, Inc., a Delaware
corporation, Prime Financial Services, Inc.,
a New York corporation, Michael Ryan and
Ralph Porpora.
2 Non-competition Agreement dated as of April
5, 1999 by and among Gilman & Ciocia, Inc.,
a Delaware corporation, Prime Financial
Services, Inc., a New York corporation,
Michael Ryan and Ralph Porpora.
3 Registration Rights Agreement dated April 5,
1999, by and among Gilman & Ciocia, Inc., a
Delaware corporation, Prime Financial
Services, Inc., a New York corporation,
Michael Ryan and Ralph Porpora.
4 Limited Liability Company Interest Option
Agreement dated April 5, 1999, by and
between Gilman & Ciocia, Inc. a Delaware
corporation, and Prime Financial Services,
Inc., a New York corporation.
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SIGNATURE
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, thereunto duly authorized.
Dated: April 20, 1999
GILMAN & CIOCIA, INC.
By:/s/ James Ciocia
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James Ciocia
President (authorized signatory)
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