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) December 10, 1999
GROW BIZ INTERNATIONAL, INC.
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(Exact Name of Issuer as Specified in Charter)
Minnesota 0-22012 41-1622691
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(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation or Organization) Number) Identification Number)
4200 Dahlberg Drive, Golden Valley, MN 55422-4837
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(Address of Principal Executive Offices)
(612) 520-8500
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(Registrant's Telephone Number, Including Area Code)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
On December 10, 1999 Grow Biz International, Inc. completed the sale of the
assets of the Company's It's About Games(TM) concept as previously disclosed in
Form 8K Item 5 dated October 14, 1999. Subsequent to that filing, the Company
undertook an orderly liquidation of the inventory and other assets by conducting
a liquidation sale. Approximately fifty percent of the assets were disposed of
in three main transactions.
The first sale to Times Two, LLC, an unrelated party, of substantially all of
the assets of fourteen stores in Kentucky, Maryland, Ohio and Pennsylvania for
$114,200 plus inventory valued at 40% of cost to be received in cash and a
promissory note. The second sale to Crescent Marketing, Inc, an unrelated party,
of substantially all of the assets of fourteen stores in Ohio for $42,000 plus
inventory at 40% of cost to be received in cash and a promissory note. The third
a bulk inventory sale to L.A. Closeout, Inc., an unrelated party, for $140,000
cash. The remaining assets of the It's About Games(TM) concept were disposed of
by abandonment or liquidation sale.
ITEM 7. Financial Statements and Exhibits
The following pro forma financial statements reflect the operating results that
would have been reported for the fiscal year ended December 26, 1998 and nine
months ended September 25, 1999 if the disposition of the It's About Games(TM)
concept assets had been consummated prior to those periods. Certain corporate
general and administrative expenses have not been adjusted since definite plans
for those costs have not been made.
No pro forma balance sheet is presented since the assets disposed were reflected
in the September 25, 1999 balance sheet previously issued on Form 10-Q as a
one-line asset held for sale.
<PAGE>
GROW BIZ INTERNATIONAL, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 26, 1998
<TABLE>
<CAPTION>
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As Reported Adjustments (a) Pro Forma
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<S> <C> <C> <C>
REVENUE
Merchandise sales $ 73,306,000 $ 17,304,800 $ 56,001,200
Royalties 19,472,800 10,000 19,462,800
Franchise fees 2,986,400 60,000 2,926,400
Advertising and other 585,700 1,900 583,800
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Total revenue 96,350,900 17,376,700 78,974,200
COST OF MERCHANDISE SOLD 60,324,600 11,528,200 48,796,400
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 29,105,000 6,109,500 22,995,500
GAIN ON SALE OF DISC GO ROUND 5,231,500 -- 5,231,500
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Income from operations 12,152,800 (261,000) 12,413,800
INTEREST EXPENSE (710,500) -- (710,500)
INTEREST INCOME 471,700 -- 471,700
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Income before income taxes 11,914,000 (261,000) 12,175,000
PROVISION FOR INCOME TAXES 4,670,200 (102,300) 4,772,500
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NET INCOME $ 7,243,800 $ (158,700) $ 7,402,500
============ ============ ============
BASIC EARNINGS PER SHARE $ 1.28 $ 1.31
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BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING 5,664,000 5,664,000
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DILUTED EARNINGS PER SHARE $ 1.24 $ 1.27
============ ============
DILUTED WEIGHTED AVERAGE SHARES
OUTSTANDING 5,832,700 5,832,700
============ ============
RETAINED EARNINGS, DECEMBER 26, 1998 $ 10,164,900 $ (158,700) $ 10,323,600
============ ============ ============
</TABLE>
(a) Reflects the elimination of It's About Games(TM) operations for the
respective period.
<PAGE>
GROW BIZ INTERNATIONAL, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 25, 1999
<TABLE>
<CAPTION>
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As Reported Adjustments (a) Adjustments (b) Pro Forma
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<S> <C> <C> <C> <C>
REVENUE:
Merchandise sales $ 34,165,600 $ 11,204,800 -- $ 22,960,800
Royalties 14,391,100 26,300 -- 14,364,800
Franchise fees 1,478,800 2,500 -- 1,476,300
Advertising and other 438,200 800 -- 437,400
------------ ------------ ------------ ------------
Total revenue 50,473,700 11,234,400 -- 39,239,300
COST OF MERCHANDISE SOLD 29,195,400 8,533,900 -- 20,661,500
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 21,541,100 6,171,100 -- 15,370,000
RESTRUCTURING CHARGE 11,575,300 -- 11,575,300 --
------------ ------------ ------------ ------------
Income from operations (11,838,100) (3,470,600) (11,575,300) 3,207,800
INTEREST INCOME 284,000 -- -- 284,000
INTEREST EXPENSE (1,171,900) -- -- (1,171,900)
------------ ------------ ------------ ------------
Income before income taxes (12,726,000) (3,470,600) (11,575,300) 2,319,900
(BENEFIT) PROVISION FOR INCOME TAXES (4,988,600) (1,360,500) (4,537,500) 909,400
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NET INCOME (LOSS) $ (7,737,400) $ (2,110,100) $ (7,037,800) $ 1,410,500
============ ============ ============ ============
NET INCOME (LOSS) PER COMMON SHARE
- - BASIC $ (1.50) $ .27
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WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC 5,159,200 5,159,200
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NET INCOME (LOSS) PER COMMON SHARE
- - DILUTED $ (1.50) $ .27
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED 5,159,200 5,183,600
============ ============
RETAINED EARNINGS, SEPTEMBER 25, 1999 $ 3,851,300 $ (2,268,800)(c) $ (7,037,800) $ 13,157,900
============ ============ ============ ============
</TABLE>
(a) Reflects the elimination of It's About Games(TM) operations for the
respective period.
(b) Reflects the elimination of the restructuring charge relating to It's About
Games(TM) previously reported.
(c) Cumulative effect for the twelve and nine month periods ended December 26,
1998 and September 25, 1999, respectively.
<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 thereunto duly authorized.
GROW BIZ INTERNATIONAL, INC.
Date: December 22, 1999 By: /s/ K. Jeffrey Dahlberg
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K. Jeffrey Dahlberg
Chairman and Chief Executive
Officer
Date: December 22, 1999 By: /s/ David J. Osdoba, Jr.
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David J. Osdoba, Jr.
Vice President of Finance and Chief
Financial Officer
