SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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):
MARCH 25, 1998
CALIFORNIA PRO SPORTS, INC.
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(Exact Name of registrant as specified in its charter)
DELAWARE 0-25114 84-121773
- ---------------------------- ------------------------ ----------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) identification number)
1221-B SOUTH BATESVILLE ROAD
GREER, SOUTH CAROLINA 29650
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(864) 848-5160
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
California Pro Sports, Inc. (the "Registrant") has negotiated with a
group of accredited investors, whereby the investors will purchase the existing
shares of common stock of USA Skate Corporation (its majority owned subsidiary)
that are currently owned by the Registrant along with an option to acquire
shares of the Registrant in exchange for the purchased shares of USA Skate, for
$1,400,000 in cash. The options allow the investors to exchange each share of
USA Skate common for 1.5 shares of the Registrant's common stock. If the
investors exercise their option to exchange the USA Skate common shares for
Registrant's common shares, Registrant would seek other purchasers for the USA
Skate stock. Management believes that these transactions will provide Registrant
with sufficient working capital to meet its current obligations and allow the
Company to pursue possible merger or other transactions and provide the Company
with approximately $2,200,000 of net tangible assets which will be sufficient to
maintain its continuing Nasdaq SmallCap Market inclusion requirements.
Separately, the Company has signed, effective January 30, 1998 (through
ImaginOn Acquisition Corp., a newly formed, wholly owned subsidiary of the
Company) to merge with a privately owned development stage enterprise. Under the
merger agreement, there would be an exchange of 100% of the outstanding shares
of the privately owned enterprise for an amount equal to 60% of the outstanding
post-merger common stock of the Company (without giving effect to the possible
exercise of certain currently outstanding options and warrants of the Company).
The contemplated merger is subject to a stockholder vote which will be held at
the earliest possible date.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL STATEMENTS
Included with this report are the following pro forma financial
statements:
(1) The Registrant's unaudited pro forma condensed consolidated
balance sheet as of February 28, 1998, giving effect to the
transaction (other than the proposed merger) as if they had
occurred on February 28, 1998.
(c) EXHIBITS
Exhibit
Number Description
------- -----------
None
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.
CALIFORNIA PRO SPORTS, INC.
Date: March 25, 1998 By /s/ Barry S. Hollander
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Chief Financial Officer
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CALIFORNIA PRO SPORTS, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
California Pro Sports, Inc. (the "Company") has negotiated with a group
of accredited investors whereby the investors will purchase for approximately
$1,400,000 in cash, existing shares of USA Skate Corporation ("USA Skate")
common shares that are currently owned by the Company with an option to acquire
2,763,000 California Pro shares in exchange for the USA Skate common shares.
The accompanying unaudited pro forma condensed consolidated balance sheet as of
February 28, 1998 gives effect to these transactions as if they had occurred on
February 28, 1998.
The unaudited pro forma condensed consolidated balance sheet should be read in
conjunction with the historical financial statements of the Company. The
unaudited pro forma consolidated balance sheet does not purport to be indicative
of the financial position of the company had the sale occurred on February 28,
1998.
<PAGE>
CALIFORNIA PRO SPORTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
FEBRUARY 28, 1998
<TABLE>
<CAPTION>
California Pro
Sports, Inc. and Pro Forma Pro Forma
ASSETS Subsidiaries Adjustments Consolidated
------ ---------------- ----------- ------------
(unaudited)
<S> <C> <C> <C>
Current Assets:
Cash $ 4,937 (1) $ 1,394,737 $ 1,399,674
Accounts Receivable 489,432 (1) (297,525) 191,907
Escrow Receivable 497,127 (1) (497,127)
Due to/from affiliated company 400,000 (1) (346,060) 53,940
Prepaid & other 197,955 (1) (190,066) 7,889
Investment in parent 1,632,133 (1) (1,632,133)
------------ ------------ ------------
Total current assets 3,221,584 (1,568,174) 1,653,410
------------ ------------ ------------
Property, plant and equipment, net 139,465 0 139,465
Licenses and trademarks, net 490,151 490,151
Goodwill and other intangible
assets, net 570,598 (1) (570,598)
------------ ------------ ------------
Total assets $ 4,421,798 $ (2,138,772) $ 2,283,026
============ ============ ============
Current liabilities:
Notes payable:
Convertible promissory notes $ 1,070,150 (1) $ (1,074,150) $
Other 421,280 (1) (421,280)
Officers/shareholders 100 100
Accounts payable and accrued exp.
Accounts payable, trade 205,667 (1) (93,027) 112,640
------------ ------------ ------------
Total current liabilities 1,697,197 (1,584,457) 112,740
------------ ------------ ------------
Deferred income taxes 60,149 (1) (60,149)
------------ ------------
Minority Interest 498,985 (1) (498,985)
------------ ------------
Shareholders' equity 2,165,467 (1) 4,819 2,170,286
------------ ------------ ------------
Total liabilities
& shareholders' equity $ 4,421,798 $ (2,138,772) $ 2,283,026
============ ============ ============
</TABLE>
See notes to unaudited pro forma condensed consolidated balance sheet.
<PAGE>
CALIFORNIA PRO SPORTS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
BALANCE SHEET
DECEMBER 31, 1997
(1) To record the cash of $1,400,000 received for the sale of 1,842,000 shares
of USA Skate Corporation common stock owned by the Company with an option
to acquire 2,763,000 California Pro shares in exchange for the USA Skate
Corporation common stock. This would result in the elimination of minority
interest, goodwill and previously consolidated assets and liabilities
related to USA Skate Corporation
