HAVANA GROUP INC
8-K, 2000-08-17
CATALOG & MAIL-ORDER HOUSES
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                                  UNITED STATES
                       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): August 4, 2000





                             THE HAVANA GROUP, INC.
             (Exact name of registrant as specified in its charter)




<TABLE>
<CAPTION>
<S>                                                <C> <C>                                       <C>
              Delaware                             000-24269                                     34-1454529
------------------------------------------------------------------------------------------------------------------
    (State or other jurisdiction                  (Commission                                  (IRS Employer
          of incorporation)                      File Number)                                  Identification No.)
</TABLE>



                   5701 Mayfair Road, North Canton, Ohio 44720
               (Address of principal executive offices) (Zip Code)



       Registrant's telephone number, including area code: (330) 492-8090

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<PAGE>
         Item 2.           Acquisition or Disposition of Assets.

         On August 4, 2000, the  Registrant  entered into an agreement with John
S. Parker,  Priscilla H. Parker,  Jerold E. Christensen and Linda L. Christensen
(the  "Sellers")  and  acquired  100% of the  capital  stock of  Phillips & King
International,  Incorporated  ("P&K") in  exchange  for (i)  450,000  restricted
shares of the Registrant's  Common Stock with piggy- back  registration  rights,
(ii) $900,000 in cash which was paid  directly to P&K on behalf of Sellers,  and
(iii)  assumption  of  liabilities   estimated  at   approximately   $1,960,000.
Contemporaneous  with the acquisition of P&K, the Registrant entered into 90 day
transitional  consulting contracts with John S. Parker and Jerold E. Christensen
and agreements not to compete for a period of two years.

         The final  purchase  price was  arbitrarily  determined  based upon the
payment  of  approximately  one dollar of  consideration  for each one dollar of
assets owned by P&K as of June 30, 2000, with closing  combined assets to be not
less than  $3,000,000  without the  Registrant's  consent and liabilities not to
exceed  $1,960,000.  This  transaction  will be accounted for under the purchase
method of accounting.

         The cash utilized by the  Registrant as part of the purchase  price was
paid from the  Registrant's  working  capital.  Prior to the  completion  of the
Registrant's  acquisition  of P&K, there was no prior  relationship  between the
persons affiliated with P&K and persons  affiliated with the Registrant,  except
that the Registrant purchased a portion of its inventory from P&K.

         P&K was  organized  in 1906 by Mr. Harry  Phillips.  P&K is a wholesale
distributor of tobacco,  cigar,  pipe and related  smoking  products.  P&K sells
tobacco products to retail shops and it has  approximately  3,000 accounts.  The
method of sale is by direct  contact and P&K employs nine sales  representatives
in its business.  The assets of P&K acquired by the Registrant  will continue to
be  utilized  in the  same  line  of  business  as  that  conducted  before  the
transaction.  P&K's principal assets include,  without limitation,  inventories,
customer lists and accounts receivable.

         During the 1997-1998 peak in premium cigars, Cuba Libre Humidors,  Inc.
("Cuba   Libre")   claimed  to  have  received  a  verbal   purchase  order  for
humidification  devices for continuous monthly sale to P&K. This did not happen,
Cuba Libre  filed a law suit and was  awarded a judgment  of $1.8  million.  P&K
responded by filing for protection  under Chapter 11 of the Bankruptcy  Code and
began defensive  actions.  This action was settled on August 4, 2000 and as part
of the Plan of  Reorganization,  P&K paid  $300,000 in cash and issued  notes in
favor  of Cuba  Libre  including:  (a) an  unsecured  note for  $400,000  in the
principal  amount  with  interest  at 7% per  annum  and  payable  in  quarterly
installments with the balance due on or before May 1, 2005; and (b) an unsecured
Note in the amount of $125,000 in  principal  amount  without  interest  for the
first two years and to bear  interest  at 7%  beginning  on the third year to be
paid in quarterly installments with the balance due on or before May 1, 2005.

                                        2
<PAGE>
         Until its Chapter 11 filing, P&K operated as a subchapter S corporation
under the United States Tax Code of 1986, as amended.  Prior to the Registrant's
acquisition  of  P&K  received  a  Confirmation   Order  confirming  a  Plan  of
Reorganization which has become a final Order and no timely Order has been filed
as of August 4, 2000,  the closing  date and the  effective  date of the Plan of
Reorganization.


Item 7.  Financial Statements and Exhibits

     (a) - (b) The financial  statements of P&K for the two years ended December
31, 1999 and the pro-forma  financial  statements of P&K and the Registrant will
be filed  within 60 days of the due date of this Form 8-K.  The  Registrant  has
engaged Stonefield Josephson, Inc., as independent auditors to perform the audit
of P&K.

     (c) Exhibits.  The following  exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-B.
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<CAPTION>

         Exhibit No.                Description

               <S>                  <C>
               2                    Stock Purchase Agreement dated August 4, 2000 by and
                                    among the Registrant and John S. Parker, Priscilla H. Parker,
                                    Jerold E. Christensen and Linda L. Christensen
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<PAGE>
                                   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.

                                      THE HAVANA GROUP, INC.


                              By: /s/ William L. Miller
                                      William L. Miller, Chief Executive Officer

Date: August 16, 2000




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