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 6, 2000
Sporting Magic, Inc.
(Exact name of issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-25247 95-4675095
(Commission File Number) (IRS Employer Identification No.)
17337 Ventura Boulevard, Suite 224, Encino, CA 91316
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 784-0040
10-6-8K 1
<PAGE>
Item 1. CHANGES IN CONTROL OF REGISTRANT.
--------------------------------
Effective at noon, Friday, October 6, 2000, the March 20, 2000, acquisition
agreement between registrant, Sporting Magic, Inc., a Delaware corporation
(under its former name Advanced Knowledge, Inc., hereinafter "Sporting Magic")
and Soccer Magic Inc., a privately owned Ontario corporation ("Soccer
Magic")(the "Acquisition Agreement") was rescinded pursuant to its terms. These
terms, including the rescission provisions have been previously reported in
Sporting Magic's prior filings.
As an immediate result of the rescission of the Acquisition Agreement,
Sporting Magic's Board of Directors, its officers and majority shareholder
reverted to the same as just prior to the Acquisition Agreement.
The resignations of Manny Gross, as a Director and the Chief Executive
Officer, Myron Grunberg, as a Director and President, and Brian Rattenbury, as a
Director, Secretary and Chief Financial were being held in escrow pending, among
other things, Sporting Magic's completion of private placement of common stock
raising $2.7 million (the "Private Placement"). The Private Placement deadline
was waived up to noon, Friday, October 6, 2000 and when Soccer Magic, Mr. Gross,
Mr. Grunberg and Mr. Rattenbury, failed to satisfy the Private Placement
Deadline, Mr. Buddy Young, acting for the benefit of the Sporting Magic
shareholders, gave notice to the escrow agent of rescission. The rescission is
immediate, binding, and final.
Concurrently, Sporting Magic's former officers and directors (members of
the board and officers prior to the March 20, 2000 close of the Acquisition
Agreement) were automatically reinstated. Their election and acceptance of the
officer and director positions were also held in escrow and became effective at
noon, Friday, October 6, 2000.
Accordingly, Buddy Young is now a Director, President, Chief Executive
Officer and Chief Financial Officer of Registrant, L. Stephen Albright is now a
Director and the Secretary and Dennis Spiegelman is a Director.
As of July 31, 2000, Sporting Magic had 16,800,000 shares of common stock
issued and outstanding. 10,000,000 of these shares were issued to the
shareholders of Soccer Magic in exchange for 100% of the issued and outstanding
shares of Soccer Magic. As a consequence of the rescission, the escrow holder
will return 100% of the Soccer Magic shares to the Soccer Magic shareholders and
return the 10,000,000 Sporting Magic shares to Sporting Magic. Sporting Magic
will then cancel the 10,000,000 shares.
Prior the execution of the Acquisition Agreement, Mr. Buddy Young
beneficially owned 1,976,147 shares of Sporting Magic's common stock, which
represented 32.94% of the 6,000,000 shares then outstanding. Effective at the
closing of the Acquisition Agreement, Sporting Magic issued 10,000,000 shares of
its common stock to the former shareholders of Soccer Magic. As a
10-6-8K 2
<PAGE>
consequence, Mr. Young's beneficial ownership was reduced to 12.35% of the
16,000,000 shares now outstanding. Subsequent thereto, Sporting Magic issued
another 800,000 shares of common stock, which will remain issued and outstanding
following the recission of the Acquisition Agreement. Thus, as of July 31, 2000,
Mr. Young beneficial's ownership percentage in Sporting Magic was reduced to
11.76%.
With the return and cancellation of the 10,000,000 that were issued to
Soccer Magic's shareholders, the total number of issued and outstanding shares
of Sporting Magic, after the October 6, 2000 rescission, was 6,800,000. Mr.
Young's beneficial ownership percentage in Sporting Magic as of October 6, 2000
is 29%.
As a group, Mr. Grunberg, Mr. Gross and Mr. Rattenbury owned a collective
6,351,668 shares in Sporting Magic, all of which were cancelled effective upon
the October 6, 2000 rescission. Consequently, these former directors and
officers, as a group, had a total of 6,351,668 shares, or 39.70% of Sporting
Magic's shares, cancelled as part of the rescission.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
------------------------------------
The rescission of the Acquisition Agreement resulted in the reversal of the
transaction under which Soccer Magic became a wholly owned subsidiary of
Sporting Magic. Consequently, the assets and liabilities of Sporting Magic shall
be returned to Soccer Magic as it severs its relationship with Sporting Magic as
Soccer Magic returns to becoming a corporation totally independent of Sporting
Magic. As a result of the rescission, Soccer Magic is no longer a wholly owned
subsidiary of, related to or an affiliate of Sporting Magic.
As further required by the rescission, all the Soccer Magic shares acquired
by Registrant will be returned to the current Soccer Magic shareholders, and the
Sporting Magic shares issued to the Soccer Magic shareholders will be returned
to Sporting Magic for cancellation.
Item 3. BANKRUPTCY OR RECEIVERSHIP.
--------------------------
NOT APPLICABLE
Item 4. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANTS
(a) Effective upon the filing of this report, Sporting Magic has engaged
Farber & Hass, LLP ("Farber & Hass") as its new principal accountants. Prior to
the filing of this report, Farber & Hass was not consulted on any of the matters
requiring disclosure under Item 304(a)(2) of Regulation S-B.
Farber & Hass has been requested to review this disclosure and has been
given the opportunity to furnish a letter addressed to the Commission as
required by Regulation S-B, but has
10-6-8K 3
<PAGE>
informed Sporting Magic that it does not plan to provide such a letter.
(b) Upon Sporting Magic's acquisition of Soccer Magic on March 20, 2000,
Sporting Magic engaged Grant Thornton, LLP ("Grant Thornton") to serve as
Sporting Magic's principal accountants and to audit Sporting Magic's financial
statements. Prior to March 20, 2000, Farber & Hass were Sporting Magic's
principal accountants.
None of the reports of Farber & Hass on Sporting Magic's financial
statements for the past two years contained an adverse opinion or disclaimer of
opinion, nor were any modified as to uncertainty, audit scope, or accounting
principles. During the period of March 20, 2000 through October 6, 2000 (the
"Interim Period"), Grant Thornton did not revise any of Sporting Magic's
financial statements for the past two years, nor did Grant Thornton modify any
of the reports as to uncertainty, audit scope, or accounting principles. Also
during the Interim Period, Grant Thornton did not issue any audited reports.
However, Grant Thornton did review the financial statements/information provided
by Sporting Magic in its April 30, 2000 and July 31, 2000 quarterly reports on
Form 10-QSB.
The decision to dismiss Grant Thornton was approved by the board of
directors of Sporting Magic on October 10, 2000. There were no disagreements
with Grant Thornton on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to such firm's satisfaction, would have caused it to make reference to
the subject matter of the disagreement in connection with its report.
Sporting Magic has provided Grant Thornton with a copy of this disclosure
and has requested that they furnish Sporting Magic with a letter addressed to
the Commission stating whether they agree with this disclosure and, if not,
stating the respects in which they do not agree. Grant Thornton has informed
Sporting Magic verbally that it does agree with this disclosure. However, as of
the date of this filing, Grant Thornton has not provided Sporting Magic with a
letter to the Commission confirming its agreement. Should Grant Thornton provide
such a letter in the future, Sporting Magic will file an amended Form 8-K and
include the letter as an exhibit.
Item 5. OTHER EVENTS.
------------
As reported elsewhere in this Form 8-K, the March 20, 2000 Acquisition
Agreement between Sporting Magic and Soccer Magic has been rescinded. The
results of such rescission include, among other things, a change in management,
directors, Sporting Magic's accountants and the total number of issued and
outstanding shares of Sporting Magic.
Item 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
--------------------------------------
Effective upon the October 6, 2000 rescission, Sporting Magic's Board of
Directors changed. Mr. Grunberg, Mr. Gross and Mr. Rattenbury all resigned as
officers and directors of Sporting Magic
10-6-8K 4
<PAGE>
and Mr. Buddy Young, Mr. Steve Albright and Mr. Dennis Spiegelman were
automatically appointed to Sporting Magic's Board of Directors. These
resignations and appointments were held in escrow pending Sporting Magic's
satisfaction of certain post acquisition requirements. When Sporting Magicfailed
to satisfy these requirements, the rescission became effective and the escrow
released the resignations and appointments, all of which became effective upon
notice of rescission.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
---------------------------------
NOT APPLICABLE
Item 8. CHANGE IN FISCAL YEAR.
---------------------
NOT APPLICABLE
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.
SPORTING MAGIC, INC.
(Registrant)
Date: October 13, 2000 By: /s/ Buddy Young
----------------
Buddy Young,
President
10-6-8K 5
