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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ________________ TO _________________
COMMISSION FILE NUMBER - 0-28104
JAKKS PACIFIC, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4527222
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
24955 PACIFIC COAST HWY., B202
MALIBU, CALIFORNIA 90265
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 456-7799
----------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
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The number of shares outstanding of the Issuer's common stock is 4,782,969 (as
of May 12, 1997).
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
QUARTER ENDED MARCH 31, 1997
ITEMS IN FORM 10-QSB
<TABLE>
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Page
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Facing page
Part I FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheet -
March 31, 1997 (Unaudited) 3
Condensed Consolidated Statements of Operations -
Three months ended March 31, 1997
and 1996 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1997 (Unaudited) 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. 10
Part II OTHER INFORMATION
Item 1. Legal Proceedings and Claims. None
Item 2. Changes in Securities. 13
Item 3. Default Upon Senior Securities. None
Item 4. Submission of Matters to
a Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. 14
Signatures. 16
</TABLE>
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
March 31, 1997 (Unaudited)
Assets
<TABLE>
<CAPTION>
<S> <C>
Current assets
Cash $ 5,543,287
Accounts receivable 3,417,759
Inventory 1,842,023
Prepaid expenses and other 2,753,559
-----------
Total current assets 13,556,628
-----------
Property and equipment, at cost 2,393,150
Less accumulated depreciation and amortization 455,752
-----------
Net property and equipment 1,937,398
-----------
Deferred offering costs, net 902,392
Goodwill, net 11,540,924
Other 197,296
-----------
Total assets $28,134,638
===========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 2,226,827
Reserve for returns and allowances 375,000
Acquisition debt 5,705,119
Income taxes payable 364,563
-----------
Total current liabilities 8,671,509
-----------
Convertible Debentures 6,000,000
-----------
Total liabilities 14,671,509
-----------
Commitments
Stockholders' equity
Preferred stock, $.001 par value; 5,000 shares
authorized, no shares issued --
Common stock, $.001 par value; 25,000,000 shares authorized;
4,182,969 shares issued and outstanding 4,183
Additional paid-in capital 11,821,247
Retained earnings 1,819,557
-----------
13,644,987
Less unearned compensation from stock option grants 181,858
-----------
Net stockholders' equity 13,463,129
-----------
Total liabilities and stockholders' equity $28,134,638
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
<S> <C> <C>
Net sales $5,235,196 $ 834,740
Cost of sales 3,323,955 443,905
---------- ----------
Gross profit 1,911,241 390,835
Selling, general and administrative expenses 1,738,247 403,856
---------- ----------
Income (loss) from operations 172,994 (13,021)
Other (income) and expense:
Interest expense 152,720 29,491
Interest income (103,516) (383)
---------- ----------
Income (loss) before benefit from income taxes 123,790 (42,129)
Benefit from income taxes 79,627 61,941
---------- ----------
Net income $ 203,417 $ 19,812
========== ==========
Net income per share $ 0.05 $ 0.01
========== ==========
Weighted average number of common and common
equivalent shares outstanding 4,330,513 2,193,579
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 203,417 $ 19,812
---------- ------------
Adjustments to reconcile net income to net cash used
by operating activities:
Depreciation and amortization 294,279 61,739
Change in accounts receivable (997,289) 406,914
Change in inventory (1,701,918) (45,173)
Net change in other operating assets and liabilities (688,841) (1,015,526)
---------- -----------
Total adjustments (3,093,769) (592,046)
---------- -----------
Net cash used by operating activities (2,890,352) (572,034)
--------- -----------
Cash flows from investing activities:
Purchase of property and equipment (916,088) (1,474)
Excess of cost over toy business assets acquired (goodwill) (7,555,604) --
Increase in other assets (107,854) (668)
---------- -----------
Net cash used by investing activities (8,579,546) (2,142)
---------- -----------
Cash flows from financing activities:
Payment of acquisition debt - Justin (191,555) (202,485)
Proceeds from issuance of convertible debentures 6,000,000 1,300,000
Offering costs - convertible debentures (528,532) (199,430)
Offering costs - common stock (327,107) --
Proceeds from notes payable to officers -- 51,954
Proceeds from acquisition debt - Road Champs 5,705,119 --
---------- ----------
Net cash provided by financing activities 10,657,925 950,039
---------- ----------
Net increase (decrease) in cash (811,973) 375,663
Cash, beginning of period 6,355,260 81,752
---------- ----------
Cash, end of period $5,543,287 $ 457,415
========== ==========
Supplemental disclosure of cash flow information (Note 4):
Cash paid during the period for:
Income taxes $ -- $ 9,100
========== ==========
Interest $ 121,319 $ --
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
JAKKS PACIFIC, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 1997
Note 1 - Basis of presentation
The accompanying 1997 and 1996 unaudited interim condensed consolidated
financial statements included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. However, the Company believes that the disclosures are adequate to
prevent the information presented from being misleading. These financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the Company's Form SB-2, which contains financial
information for the year ended December 31, 1996 and the nine month period from
April 1, 1995 (inception) through December 31, 1995, as declared effective by
the SEC (file number 333-22583) on May 1, 1997.
The information provided in this report reflects all adjustments (consisting
solely of normal recurring accruals) that are, in the opinion of management,
necessary to present fairly the results of operations for this period. The
results for this period are not necessarily indicative of the results to be
expected for the full year.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, JAKKS Acquisition Corp., a Delaware corporation,
J-X Enterprises, Inc., a New York corporation, Road Champs, Inc., a
Pennsylvania corporation, and JP (HK) Limited, JAXXS (HK) Limited and Road
Champs Limited, all of which are Hong Kong corporations. In consolidation, all
significant intercompany balances and transactions are eliminated.
Earnings per share has been computed using the weighted average number of
common shares and common share equivalents (which consists of Warrants and
Options, to the extent they are dilutive). The difference between primary and
fully diluted earnings per share is immaterial.
6
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
March 31, 1997
Note 2 -- Issuance of convertible debentures
On January 8, 1997, the Company issued two $3,000,000 convertible
debentures for a total of $6,000,000. Interest on the principal amounts
outstanding will accrue at 9.0% per annum with the first monthly installment
payable on February 1, 1997. If not sooner redeemed or converted into common
stock, the debentures shall mature on December 31, 2003. Commencing on December
31, 1999, and the first day of each successive month thereafter prior to
maturity, mandatory principal redemption installments must be made, each of such
installments to be in the amount of $10 per $1,000 of the then remaining
principal amount of the debenture. Such debentures are convertible at $5.75 per
share into 1,043,478 shares of the Company's common stock, subject to reset and
anti-dilution provisions. A stock pledge agreement has been entered into with
the Company pledging as security all outstanding shares of the Company's
wholly-owned subsidiaries. In addition, all marketing and manufacturing licenses
acquired or to be acquired, and all machinery and equipment to the extent
assignable by the Company have also been pledged as security. As compensation
paid to an investment banker, 6% of the gross proceeds was paid in cash and
warrants for the purchase of 150,000 shares of common stock, exercisable at
$8.00 per share, were sold for $0.001 per share.
Note 3 - Acquisition
On February 6, 1997, the Company acquired all of the stock of Road Champs,
Inc. and all of the operating assets of an affiliated company for approximately
$12,045,000. Consideration paid at closing was approximately $4,619,000 in cash
plus the issuance of $1,500,000 (198,020 shares) of the Company's common stock.
The balance of the adjusted purchase price of approximately $2,937,000 is to be
paid in three equal
7
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
March 31, 1997
installments, with the third installment payable one year after the closing of
the transactions all of which will carry interest at a rate of 7.0% per annum.
In addition, the payment for inventory of approximately $1,988,000, without
interest, is payable within 30 days of shipment to customers and the balance is
payable no later than August 6, 1997, and a payment of $1,001,000 is due the
earlier of ninety days after the closing of the transaction or seven
days after the close of an additional public offering of the Company's common
stock, which occurred on May 6, 1997. Outstanding balances are secured by
all acquired shares and assets, however, they are subordinate to the
security interest for the convertible debentures noted above.
Note 4 -- Supplemental information to statements of cash flows
198,020 shares of common stock were issued as partial consideration for toy
business assets acquired totalling $1,500,000 in 1997. The excess of cost over
toy business assets acquired (goodwill) is reflected in the consolidated
statement of cash flows net of the stock issued.
Note 5 -- Recent accounting pronouncements
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share" which
is required to be implemented for fiscal years ending after December 15, 1997
and earlier application is not permitted. SFAS No. 128 replaces current
"primary earnings per share" ("primary EPS") and "fully diluted earnings per
share" ("fully diluted EPS") with "basic earnings per share" ("basic EPS") and
"diluted earnings per share" ("diluted EPS"). Unlike the calculation of primary
EPS which includes, in the denominator, the sum of (1) actual weighted shares
outstanding and (2) "common stock equivalents" as that term is defined in the
authoritative accounting literature, basic EPS is calculated using only the
actual weighted average shares outstanding during the relevant periods. Diluted
EPS is very similar to fully diluted EPS, differing only in technical ways which
do not currently affect the Company.
The FASB issued a new standard, SFAS No. 123 "Accounting for Stock-Based
Compensation," which contains a fair value-based method for valuing stock-based
compensation that entities may use, which measures compensation cost at the
grant date based on the fair value of the award. Compensation is then recognized
over the service period, which is usually the vesting period. Alternatively, the
standard permits entities to continue accounting for employee stock option and
similar equity instruments under APB Opinion No. 25, " Accounting for Stock
Issued to Employees." Entities that continue to account for stock options using
APB Opinion No. 25 are required to make pro forma disclosures of net income and
earnings per share, as if the fair value-based method of accounting defined in
SFAS No. 123 had been applied. Management accounts for options under APB Opinion
No. 25. If the alternative accounting-related provisions of SFAS No. 123 had
been adopted as of the beginning of 1995, the effect on 1997 and 1996 net income
and earnings per share would have been immaterial.
8
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
March 31, 1997
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of". SFAS No. 121
addresses the accounting for the impairment of long-lived assets, certain
identifiable intangible assets and goodwill related to those assets to be held
and used. It also addresses the accounting for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS No. 121 establishes guidance
for recognizing and measuring impairment losses and requires that the carrying
amount of impaired assets be reduced to fair value. SFAS No. 121 was effective
for fiscal years beginning after December 15, 1995. The impact of the adoption
of SFAS No. 121 did not have a material adverse effect on the Company's
financial condition or results of operations.
Note 6 - Subsequent event
On May 6, 1997, the Company issued 600,000 shares of its Common Stock at a
price of $5.75 per share in connection with its public offering.
9
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JAKKS PACIFIC, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
The following discussion and analysis should be read together with the Company's
Condensed Consolidated Financial Statements and Notes thereto which appear
elsewhere herein.
Overview
The Company commenced operations July 1, 1995 through the acquisition of
substantially all of the assets comprising the toy business of Justin Products
Limited ("Justin"), a Hong Kong Corporation, and the Company has included the
results of the operations acquired from Justin in its consolidated financial
statements from the effective date of the acquisition, July 1, 1995.
In 1996, the Company expanded its product lines to include products based on
licensed characters and properties such as World Wrestling Federation action
figures and Power Rangers ZEO and Turbo mini vehicles.
Effective February 1, 1997, the Company acquired Road Champs, Inc., a
developer, manufacturer and marketer of die cast toy and collectible vehicles.
Results of Operations
Three Months Ended March 31, 1997 and 1996
Net income for the three months ended March 31, 1997 totaled $203,417, or
$.05 per share, compared to net income of $19,812, or $.01 per share, for the
comparable period in 1996. This variance is attributable to the following:
Net Sales. Net sales were $5,235,196 in 1997 and $834,740 in 1996, an increase
of $4,400,456 or 527.2%. This increase in net sales was primarily the result of
continued sales of the World Wrestling Federation action figures and the Power
Rangers Turbo products which were not sold in the first quarter of 1996, and the
sales of the recently acquired Road Champs product line from February 1, 1997,
which amounted to $1,544,123.
Gross Profit. Gross profit decreased as a percentage of net sales to 36.5% in
1997 from 46.8% in 1996. This decrease as a percentage of net sales was due to
a higher proportion of sales generated in the first quarter of 1996 by
third-party developed and manufactured products with nominal development and
tooling costs incurred by the Company.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $1,738,247 in 1997 and $403,856 in 1996,
constituting 33.2% and 48.4% of net sales, respectively. The decrease as a
percentage of net sales was due primarily to the significant increase in net
sales. The overall dollar increase of $1,334,391 was due to the
increase in variable selling
10
<PAGE> 11
expenses, including freight, sales commission and travel expenses, which is
attributable to the significant increase in net sales, as well as to staffing
and infrastructure additions for the Company in addition to such expenses
related to the operations of Road Champs which was acquired as of February 1,
1997.
Interest, Net. The Company had various interest-bearing instruments outstanding
during 1997 and 1996. Such instruments included those issued pursuant to private
offerings. In 1997, the total principal and average outstanding balance of such
instruments was significantly higher than in 1996 resulting in an increase in
interest expense, which was partially offset because of interest income received
on the Company's average cash balance. The average cash balance in 1997 was
significantly higher than in 1996 due to the receipt of net proceeds from the
convertible debentures issued in January 1997 resulting in a significant
increase in interest income.
Income Taxes. In 1997 and 1996, the Company experienced a tax benefit related
to its U.S. operations while the earnings arising in, or derived from, Hong
Kong benefited from a favorable effective tax rate of 16.5% compared to
approximately 45% combined U.S. effective tax rate. The tax benefit is fully
expected to turn around commencing in the second quarter of 1997.
11
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Liquidity and Capital Resources
As of March 31, 1997 the Company had working capital of $4,885,119 as compared
to $7,824,155 at December 31, 1996. The change was due to the issuance of the
convertible debentures pursuant to a private offering and the purchase of Road
Champs, the consideration of which consisted of cash, common stock and debt.
During the three months ended March 31, 1997, operating activities of the
Company used cash of $2,890,352, which resulted from an increase of $997,289 in
accounts receivable due to higher sales at the end of the first quarter of 1997
as compared to the end of fourth quarter of 1996 as well as from the increase in
inventory of $1,701,918 acquired primarily in connection with the Road Champs
acquisition, offset by net income and non-cash charges to income of $203,417 and
$294,279, respectively.
Financing activities for the three month period ended March 31, 1997 provided
cash of $10,657,925, due primarily to the issuance of convertible debentures in
the principal amount of $6,000,000 and the issuance of debt in the amount of
$5,705,119 as part of the purchase price for the Company's acquisition of Road
Champs. Offsetting the proceeds of these issuances were offering costs related
to the debentures as well as a public offering of the Company's common stock and
the payment of acquisition debt related to the Justin acquisition.
The Company's investing activities for the three month period ended March 31,
1997 were primarily related to the purchase of molds and tooling ($916,088) and
goodwill ($7,555,604 net of $1,500,000 in common stock issued) in connection
with the acquisition of Road Champs. The Company, in keeping with its strategy
to develop and market new products using entertainment properties and
characters, is continually pursuing licenses for such usage and expects to
continue to invest in this area.
Management believes that the existing cash resources and working capital and
cash expected to be provided from operations will be sufficient to meet the cash
needs of the Company for the foreseeable future. Although operating activities
are expected to provide cash, to the extent the Company grows significantly in
the future, its operating and investing activities may use cash and,
consequently, such growth may require the Company to obtain additional sources
of financing. The foregoing forward-looking statements and information relating
to the Company are based on the beliefs of Management, as well as assumptions
made by and information currently available to the Company. When used in this
paragraph, or elsewhere in this document, the words "anticipate," "believe,"
"estimate," and "expect" and similar expressions, as they relate to the
Company, are intended to identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future events and are
subject to certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those described herein
as anticipated, believed, estimated or expected. The Company does not intend to
update these forward-looking statements.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(c) Recent Sales of Unregistered Securities
On February 6, 1997, the Company acquired all of the
outstanding shares of Road Champs, Inc., a Pennsylvania corporation ("RC Inc.").
In partial consideration therefore, the Company issued to the shareholders of RC
Inc. 198,020 shares of the Company's Common Stock, with a market value at the
time of issuance of $1,500,000.
In connection with certain financing provided to the Company, effective
January 8, 1997, the Company issued $6,000,000 in the aggregate, of 9%
seven-year convertible debentures to Renaissance Capital Growth Income Fund III,
Inc. and Renaissance US Growth & Income Trust PLC (together "Renaissance"). The
debentures are convertible into 1,043,478 shares of the Company's Common Stock
based on a conversion price of $5.75 per share. When any shares of Common Stock
are issued by the Company for consideration per share less than the then
existing conversion price of such convertible debentures, then in each such case
the conversion price will be reduced to a new conversion price equal to the
consideration per share received by the Company for such additional shares of
Common Stock; provided however, that prior to such issuance, the Company may
request the holders to waive the right to an adjustment of the conversion price
and in the event such waiver is not granted by the holders, the Company will
have the right, prior to the issuance of such additional shares, to redeem the
convertible debenture at 120% of face value. The number of shares of Common
Stock into which the debentures are convertible are also subject to adjustment
for certain changes in capital structure and other events. The indebtedness must
be repaid in part each month beginning December 1999, in the amount of 1% of the
then unpaid balance and in full at December 31, 2003. The Company has the right
to prepay all or part of such indebtedness in certain events at 120% of their
original $6,000,000 face value.
For its assistance with the Renaissance financing, the Company issued
to Joseph Charles & Associates, Inc. a warrant to purchase an aggregate of
150,000 shares of Common Stock at an exercise price of $8.00 per share. Such
warrant expires on January 8, 2002. Holders of such warrants possess certain
demand and incidental registration rights that may require the Company to
register for public resale the shares of Common Stock issuable thereunder.
Exemption from registration under the Securities Act is claimed for the
sale of all of the securities set forth above in
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reliance upon the exemption afforded by Section 4(2) of the Securities Act for
transactions not involving a public offering. Each certificate evidencing such
shares of Common Stock, warrants and convertible debentures originally bore, and
some continue to bear, an appropriate restrictive legend, and "stop transfer"
orders were originally maintained (or are still maintained) on the Company's
stock transfer records for such shares of Common Stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No.
3.1 Restated Certificate of Incorporation of the Company(1)
3.2.1 By-Laws of the Company(1)
3.2.2 Amendment to By-Laws of the Company(2)
4.1 JAKKS Pacific, Inc. 9.00% Convertible Debenture issued
to Renaissance Capital Growth & Income Fund III, Inc.,
dated December 31, 1996(2)
4.2 JAKKS Pacific, Inc. 9.00% Convertible Debenture issued
to Renaissance US Growth & Income Trust PLC, dated
December 31, 1996(2)
10.1 Employment Agreement by and between the Company and
Jack Friedman dated January 1, 1997(2)
10.2 Employment Agreement by and between the Company and
Stephen G. Berman dated January 1, 1997(2)
10.3 Convertible Loan Agreement by and between the Company
and Renaissance Capital Growth & Income Fund III, Inc.
and Renaissance US Growth & Income Trust PLC dated
December 31, 1996(2)
10.4 Purchase Agreement among JAKKS Pacific, Inc. and JAKKS
Acquisition Corp. and Road Champs, Inc., Road Champs
Ltd. and Die Cast Associates, Inc. and the shareholders
of Road Champs, Inc., for the purchase of all of the
shares of stock of Road Champs, Inc. and Road Champs
Ltd. and the operating assets of Die Cast Associates,
Inc. dated January 21, 1997(3)
10.5.1 Amendments to License Agreement with Titan Sports, Inc.
dated April 22, 1996 and January 21, 1997(2)
10.5.2 International License Agreement with Titan Sports, Inc.
dated February 24, 1997(2)
*27 Financial Data Schedule
_________________________
* Filed herewith.
(1) Filed previously as an exhibit to the Company's Registration Statement
on Form SB-2 (File No. 333-2048-LA), dated May 1, 1996, and incorporated
herein by reference.
(2) Filed previously as an exhibit to the Company's Registration Statement
on Form SB-2 (File No. 333-22583) which became effective on April 24,
1997, and incorporated herein by reference.
(3) Filed previously as an exhibit to the Company's Current Report on
Form 8-K, filed February 21, 1997.
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<PAGE> 15
(b) Report on Form 8-K
On February 21, 1997, the Company filed a Current Report on Form 8-K
with respect to the February 6, 1997 purchase of all of the shares of RC Inc.,
which owned all of the shares of Road Champs, Ltd. ("RC Ltd."), a Hong Kong
corporation, and the operating assets of Die Cast Associates, Inc. ("Die Cast"),
a related Florida corporation (collectively referred to herein as "Road
Champs"), pursuant to the terms of a purchase agreement between the Company, its
wholly owned subsidiary, JAKKS Acquisition Corp., a Delaware corporation, RC
Inc., RC Ltd., Die Cast, and the stockholders of RC Inc. (the "Agreement"). As
permitted by Item 7 of Form 8-K, such Form 8-K was filed without the financial
statements and pro forma financial information required by Items 310(c) and (d)
of Regulation S-B, as it was impractical to include such financial information
at the time of filing. On April 18, 1997, the Company filed a Current Report on
Form 8-K/A, providing such required financial information through incorporation
by reference.
(a) Financial Statements of the Business Acquired.
The combined balance sheets of Road Champs, Inc., its subsidiary and
Die Cast Associates, Inc. as of December 31, 1996 and 1995, and the related
combined statements of operations, stockholders' equity and cash flows for the
years then ended, were filed as part of the Company's Registration Statement on
Form SB-2 (File No. 333-22583), filed with the Securities and Exchange
Commission on February 28, 1997.
(b) Pro Forma Financial Information
The Company's Pro Forma Consolidated Balance Sheet and Statement of
Operations, adjusted for the acquisition of Road Champs, Inc. as of and for the
year ended December 31, 1996, were filed as part of the Company's Registration
Statement on Form SB-2 (File No. 333-22583), filed with the Securities and
Exchange Commission on February 28, 1997.
No other Current Reports on Form 8-K were filed during the first
quarter of 1997.
15
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
Registrant:
JAKKS PACIFIC, INC.
Date: May 15, 1997 By: /s/ Jack Friedman
---------------------------------
President
(Principal Executive Officer)
Date: May 15, 1997 By: /s/ Joel M. Bennett
---------------------------------
Chief Financial Officer
(Principal Financial and
Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,543,287
<SECURITIES> 0
<RECEIVABLES> 3,417,759
<ALLOWANCES> 0
<INVENTORY> 1,842,023
<CURRENT-ASSETS> 13,556,628
<PP&E> 2,393,150
<DEPRECIATION> 455,752
<TOTAL-ASSETS> 28,134,638
<CURRENT-LIABILITIES> 8,671,509
<BONDS> 6,000,000
0
0
<COMMON> 4,183
<OTHER-SE> 13,458,946
<TOTAL-LIABILITY-AND-EQUITY> 28,134,638
<SALES> 5,235,196
<TOTAL-REVENUES> 5,235,196
<CGS> 3,323,955
<TOTAL-COSTS> 3,323,955
<OTHER-EXPENSES> 1,738,247
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 152,720
<INCOME-PRETAX> 123,790
<INCOME-TAX> (79,627)
<INCOME-CONTINUING> 203,417
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 203,417
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
