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: June 7, 2000
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(Date of earliest event reported)
YELLOWAVE CORPORATION
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(Exact name of Registrant as specified in its charter)
New York 000-05223 11-1771806
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification Number)
11777 San Vicente Blvd., Suite 505, Los Angeles, California 90049
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(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 979-8055
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ITEM 2. Acquisition or Disposition of Assets
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On March 9, 2000, Registrant agreed to sell all the hair salon
franchise assets, subject to shareholders approval which was obtained at the
Special Shareholders Meeting June 7, 2000, to a wholly owned subsidiary of Regis
Corporation ("Regis") a Minneapolis based owner/franchisor of hair care and
retail product salons, pursuant to the terms of an agreement for Purchase and
Sale of Assets dated March 7, 2000 by and between Regis and Registrant.
The total purchase price was approximately $3.6 million. Under the
terms of the sale arrangements, Registrant has agreed not to compete with Regis
in the ownership or management of hair care salons within the United States. The
sale was an arms length transaction to a non-affiliate of the Registrant. No
brokers or finders fees were paid in regard to the sale. Approximately a $1.8
million gain was recognized net of related tax effect upon closing.
Registrant intends to use the net proceeds from this sale for working
capital and to pursue its previously announced strategy of acquiring companies
and products involved in high technology industries.
ITEM 5. Other Events
---------------------
On June 7, 2000 the shareholders of the Registrant voted to reincorporate
in Nevada through a merger with Yellowave Corporation, a Nevada Corporation. To
accomplish the reincorporation in Nevada the Registrant will file Articles of
Merger with the Secretary of State for Nevada forthwith.
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ITEM 7. Financial Statements and Exhibits
-----------------------------------------
(b) Pro Forma Financial Information.
The following pro forma financial statements of Registrant are filed as
part of this Current Report on Form 8-K:
Pro forma consolidated balance sheet (unaudited) of Registrant as of March
31, 2000.
Pro forma consolidated statement of operations (unaudited) of Registrant
for the year ended June 30, 1999.
Pro forma consolidated statement of operations (unaudited) of Registrant
for the nine months ended March 31, 2000.
Notes (unaudited) to pro forma financial statements.
(c) Exhibits:
Exhibit No. Description
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2.1 Agreement for Purchase and Sale of Assets
dated as of March 7, 2000 between Regis
Corporation and Registrant.
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.
Dated: June 22, 2000 YELLOWAVE CORPORATION
(Registrant)
By: /s/ Laura Ballegeer
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Laura Ballegeer
Secretary
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<TABLE>
<CAPTION>
YELLOWAVE CORPORATION AND SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
ASSETS
CONSOLIDATED
HISTORICAL PRO FORMA PRO FORMA
AMOUNTS ADJUSTMENTS AS ADJUSTED
----------- --------------- ------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 4,506,967 $ 4,506,967
Marketable securities 0 0
Accounts receivable, net 340,000 (300,000)(1) 40,000
Note receivable -- related party 1,385,000 1,385,000
----------- --------------- ------------
Total current assets 6,231,967 (300,000) 5,931,967
Property and equipment:
Furniture, fixtures and equipment 21,990 21,990
Accumulated depreciation (2,356) (2,356)
----------- --------------- ------------
19,634 19,634
158,000 (2)
Assets from Discontinued Operations 583,000 (741,000) (3) 0
----------- --------------- ------------
(583,000)
Other assets:
Deposits 6,790 6,790
----------- --------------- ------------
$ 6,841,391 $ (883,000) $ 5,958,391
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</TABLE>
See notes to unaudited pro forma statements
(Continued)
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<TABLE>
<CAPTION>
YELLOWAVE CORPORATION AND SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET - (CONTINUED)
MARCH 31, 2000
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY
CONSOLIDATED
HISTORICAL PRO FORMA PRO FORMA
AMOUNTS ADJUSTMENTS AS ADJUSTED
----------- --------------- ------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable and accrued expenses $ 97,740 $ (53,390) (2) $ 44,350
Regis Corporation deposit 3,300,000 (3,300,000) (1) 0
Income taxes payable 1,000 649,000 (3) 650,000
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Total current liabilities $ 3,398,740 $ (2,704,390) $ 694,350
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Shareholders' Equity:
Common stock, $.03 par value; authorized
15,000,000 shares; issued 2,827,486 shares 84,825 84,825
Additional paid-in capital 1,411,579 1,411,579
Retained earnings 1,946,247 1,821,390 (3) 3,767,637
----------- --------------- ------------
Total Equity: 3,442,651 1,821,390 5,264,041
----------- --------------- ------------
$ 6,841,391 $ (883,000) $ 5,958,391
=========== ============= ===========
</TABLE>
See notes to unaudited pro forma statements
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<TABLE>
<CAPTION>
YELLOWAVE CORPORATION AND SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
CONSOLIDATED
HISTORICAL PRO FORMA PRO FORMA
AMOUNTS ADJUSTMENTS AS ADJUSTED
----------- --------------- ------------
<S> <C> <C> <C>
Revenues:
Interest and dividend Income $ 94,001 $ 94,001
Other Income 14,135 14,135
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$ 108,136 $ 108,136
Costs and expenses:
General and Administrative expenses (762,926) 94,590 (3) (668,336)
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Loss from continuing operations before
income taxes (654,790) 94,590 560,200)
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Income taxes (1,000) (1,000)
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Loss from continuing operations (655,790) 94,590 (561,200)
Gain on disposal of franchising operation 1,821,390 (3) 1,821,390
(300,000) (1)
Income from discontinuing operations 708,000 (183,200) (3) 224,800
----------- --------------- ------------
Net Income 52,210 1,432,780 (3) 1,484,990
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Basic Loss per common share -- continuing
operations $ (0.26) $ (0.22)
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Basic Earnings per common share --
discontinuing operations $ 0.27 $ 0.82
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Basic Loss per common share $ 0.01 $ 0.60
=========== =============== ============
</TABLE>
See notes to unaudited pro forma statements
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<TABLE>
<CAPTION>
YELLOWAVE CORPORATION AND SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENTS
OF OPERATIONS
YEAR ENDED JUNE 30, 1999
(UNAUDITED)
CONSOLIDATED
HISTORICAL PRO FORMA PRO FORMA
AMOUNTS ADJUSTMENTS AS ADJUSTED
----------- --------------- ------------
<S> <C> <C> <C>
Revenues:
Owned retail stores $ 4,468,853 $ (4,468,853) $ 0
Sales of equipment and products 235,237 (235,237) 0
Royalties and service fees 1,351,723 (1,351,723) 0
Franchise fee income 157,303 (157,303) 0
----------- --------------- ------------
6,213,116 (6,213,116) (1) 0
----------- --------------- ------------
Costs and Total Expenses:
Direct costs of owned retail stores 4,260,741 (4,260,741)
Cost of equipment and products sold 192,388 (192,388)
Depreciation and amortization 186,408 (183,408) 3,000
Selling, general and administrative expenses 1,693,266 (1,100,000) 593,266
Provision for doubtful accounts
and notes receivable 33,406 (33,406) 0
----------- --------------- ------------
Total 6,366,209 (5,769,943) (2) 596,266
----------- --------------- ------------
Loss from operations (153,093) (443,173) (596,266)
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Other income:
Investment income 121,530 121,530
Gain on sale of assets-franchising and
retail operations 753,756 1,821,390 (3) 2,575,146
Other income 95,182 95,182
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970,468 1,821,390 2,791,858
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Income before income taxes 817,375 1,378,217 2,195,592
Income tax provision (42,308) 41,308 (4) (1,000)
----------- --------------- -----------
Net income $ 775,067 $ 1,419,525 $ 2,194,592
=========== =============== ===========
Basic net income per common share $ 0.96 $ 2.72
=========== =============== ===========
</TABLE>
See notes to financial statements
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<PAGE>
YELLOWAVE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED PRO FORM FINANCIAL STATEMENTS
A. UNAUDITED PRO FORMA ADJUSTMENTS
A description of the adjustments included in the unaudited pro forma
financial statements are as follows:
Pro Forma Consolidated Balance Sheet and Statement of Operations ended-March 31,
2000:
(1) Recognition of $300,000 closing payment and $3.3 million deposit by
buyer.
(2) Recognition at final sale of $158,000 additional assets sold and
reduction of previous accrual by $53,390.
(3) Recognition of $2,859,000 gain on sale, net of $388,610 cost of
disposal and $649,000 tax provision for $1,821,390 increase in equity.
Approximately $95,000 in expenses were reclassified to discontinued
operations at closing.
Consolidated Pro Forma Statement of Operations
for the Year Ended June 30, 1999:
(1) Elimination of all franchising revenues and retail store revenues
(2) Elimination of all costs related to franchising and retail store
operations
(3) Inclusion of gain on sale of franchising operations - June 2000
(4) Adjustments of tax provision
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