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):
JUNE 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)
<PAGE>
ITEM 5. OTHER EVENTS
California Pro Sports, Inc. (the "Registrant") has sold 1,400 shares of
Series B Convertible Preferred Stock to a group of accredited investors for
$1,400,000 cash, being held in escrow, pursuant to a written escrow agreement.
The terms of the escrow agreement require that the Registrant receive a written
confirmation from Nasdaq that the Registrant currently meets the new continuing
Nasdaq SmallCap Market inclusion requirements before the funds are released from
escrow. Additionally, the Registrant is negotiating a separate transaction with
other accredited investors to sell 500,000 unregistered shares of the
Registrant's common stock for $400,000. The Registrant believes it will be able
to conclude this transaction subsequent to concluding the Series B Convertible
Preferred Stock transaction. Moreover, two officers/stockholders of the
Registrant have agreed to purchase the shares of USA Skate Corporation ("Skate
Corp.") owned by the Registrant from the Registrant for $90,000. The purchase
price is based on the net book value of the Registrant's investment in Skate
Corp. Management believes that these transactions will provide the Registrant
with sufficient working capital to meet its current obligations, allow the
Registrant to pursue possible merger or other transactions and provide the
Registrant with approximately $2,300,000 of net tangible assets which will be
sufficient to satisfy the continuing Nasdaq SmallCap Market inclusion
requirements. This amount excludes the $400,000 described above which will
further increase the Registrant's net tangible assets.
Separately, The Company is negotiating (through ImaginOn Acquisition Corp.,
a newly formed, wholly owned subsidiary of the Registrant) to merge with
ImaginOn, Inc. a privately owned development stage enterprise. Under the
proposed merger transaction, 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 Registrant (without giving
effect to the possible exercise of certain currently outstanding options and
warrants of the Registrant).
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 April 30, 1998, giving effect to the
transactions (other than the proposed merger) as if they had
occurred on April 30, 1998.
(c) EXHIBITS
Exhibit
Number Description
------- -----------
None
<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.
CALIFORNIA PRO SPORTS, INC.
Date: June 25, 1998 By /s/ Barry S. Hollander
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Chief Financial Officer
<PAGE>
CALIFORNIA PRO SPORTS, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
California Pro Sports, Inc. (the "Company") has received in escrow from a
group of accredited investors $1,400,000 for the purchase of 1,400 shares of
Series B Convertible Preferred Stock. Each share of the Series B Convertible
Preferred stock is convertible, at the option of its holder, at any time, into a
number of shares of common stock equal to $1,000 divided by the lower of (i)
sixty-five percent (65%) of the average market price of the Common Stock for the
five trading days immediately prior to the conversion or (ii) the closing price
on the conversion date, increased proportionally for any reverse stock split and
decreased proportionally for any forward stock split or dividend. For purposes
of the Series B Convertible Preferred Stock, market price for any date shall be
the closing bid price of the Common Stock, on such date, as reported by the
National Association of Securities Dealers Automated Quotation System
("Nasdaq").
Two officers/stockholders of the Company have agreed to purchase the shares
of USA Skate Corporation ("Skate Corp.") owned by the Company from the Company
for $90,000 (the net book value of the Company's investment in Skate Corp.) with
no conversion rights. This results in the elimination of minority interest,
goodwill, and previously consolidated assets and liabilities of Skate Corp.
The accompanying unaudited pro forma condensed consolidated balance sheet
as of April 30, 1998 gives effect to these transactions as if they had occurred
on April 30, 1998, as well as the Company having received Nasdaq written
confirmation on that date.
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 April 30,
1998.
<PAGE>
CALIFORNIA PRO SPORTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
APRIL 30, 1998
<TABLE>
<CAPTION>
California Pro
Sports, Inc. and Pro Forma Pro Forma
ASSETS Subsidiaries Adjustments Consolidated
------ ---------------- ----------- ------------
(unaudited)
<S> <C> <C> <C>
Current Assets:
Cash $ (4,315) (1,3) $ 1,601,990 $ 1,597,675
Accounts Receivable 297,690 (2) 90,000 387,690
Due to/from affiliated company 142,037 142,037
Prepaid & other 134,875 134,875
Assets held for sale 945,520 (2) (945,520)
------------ ------------ ------------
Total current assets 1,515,806 746,470 2,262,276
------------ ------------ ------------
Property, plant and equipment, net 96,502 96,502
Licenses and trademarks, net 528,284 528,284
Goodwill and other intangible
assets, net 99,070 (2) (99,070)
------------ ------------ ------------
Total assets $ 2,239,662 $ 647,400 $ 2,887,062
============ ============ ============
Current liabilities:
Notes payable:
Officers/shareholders 13,600 13,600
Accounts payable and accrued exp.
Accounts payable, trade 187,683 (1) 300,000 487,682
Liabilities held for sale 1,331,923 (2) (1,331,923)
------------ ------------ ------------
Total current liabilities 1,533,207 (1,031,923) 501,282
------------ ------------ ------------
Minority Interest 405,088 (2) (405,088)
------------ ------------ ------------
Shareholders' equity 301,368 (1) 2,084,411 2,385,779
------------ ------------ ------------
Total liabilities
& shareholders' equity $ 2,239,662 $ 647,400 $ 2,887,068
============ ============ ============
</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
APRIL 30, 1998
(1) To record cash of $1,400,000 received in escrow for sale of 1,400 shares of
Series B Convertible Preferred stock for $1,400,000. The escrow is to be
released upon receipt of written confirmation from Nasdaq regarding the
Company meeting the new Nasdaq SmallCap Market inclusion requirements.
(2) To record a $90,000 note receivable from two officers/stockholders of the
Company to purchase the shares of USA Skate Corporation owned by the
Company resulting in the elimination of minority interest, goodwill and
previously consolidated assets and liabilities related to USA Skate
Corporation.
(3) To record cash received in May and June 1998 from the exercises of options
and warrants.
