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): May 1, 1996
BAB Holdings, Inc.
(Name of small business issuer in its charter)
Illinois 0-27068 36-3857339
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
8501 West Higgins Road, Suite 320, Chicago, Illinois 60631
(Address of principal executive offices) Zip Code)
Issuer's telephone number (312) 380-6100
(Former name, former address and former fiscal year,
if changed since last report.)
TABLE OF CONTENTS
Page
Item 1. Changes in Control of Registrant.................................. 1
Item 2. Acquisition or Disposition of Assets.............................. 1
Item 3. Bankruptcy or Receivership........................................ 1
Item 4. Changes in Registrant's Certifying Accountant..................... 1
Item 5. Other Events...................................................... 2
Item 6. Resignation of Registrant's Directors............................. 2
Item 7. Financial Statements and Exhibits................................. 2
Item 8. Change in Fiscal Year............................................. 2
SIGNATURE 2
INDEX TO EXHIBITS............................................................ 3
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 1, 1996, BAB Systems, Inc. (Systems), a wholly owned subsidiary
of BAB Holdings, Inc. (Holdings or the Company), exercised its option to
purchase substantially all of the assets of Bagels Unlimited, Inc. (BUI), a
Wisconsin corporation. This option was acquired in January 1996 in connection
with a revolving line of credit extended to BUI by Systems. BUI, a franchisee of
Systems, was engaged in the business of owning and operating five Big Apple
Bagels stores and had the development rights for one additional store in the
Milwaukee, Wisconsin area.
The assets acquired by Systems included all inventory, furniture,
equipment, signage and improvements of the five Big Apple Bagels stores in
operation. Additionally, Systems acquired all franchise and area development
rights and other contractual rights owned by BUI, including BUI's interest in
the leases for the five existing stores and the lease for the sixth store which
is currently under construction.
The purchase of assets was completed in exchange for the following
consideration: (a) approximately $643,000 representing the original purchase
price of $772,000, adjusted for the outstanding principal and interest owed on
the January 31, 1996 revolving line of credit issued by Systems to BUI,
(excluding monies borrowed in connection with the development of the fifth Big
Apple Bagels store which opened in April 1996) and BUI's inventory on hand at
cost, (b) 50,000 shares of Holdings' common stock, no par value, and (c) an
option to purchase 100,000 shares of Holdings' common stock exerciseable for 5
years commencing on May 1, 1996 at a $4.00 per share price.
Additionally, Holdings entered into a non-competition agreement with
the two principals of BUI in exchange for total consideration of $100,000. Other
than their employment with Holdings or its affiliates, these two individuals
shall not be involved in the retail or wholesale sale of bagels within a four
mile radius of any existing franchised or Company-owned Big Apple Bagels store
for a period of 6 years from the closing of this transaction.
The Company financed this transaction using a portion of the net
proceeds from its November 27, 1995 initial public offering of securities.
Systems will be assigning its rights in the existing five Big Apple
Bagels stores and the sixth store which is in development to BAB Operations,
Inc., a wholly owned subsidiary of Holdings, which owns and operates
Company-owned stores. The acquired stores and related assets will continue to be
operated as Big Apple Bagels stores, but will be Company-owned rather than
franchised stores.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
None.
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The financial statements of BUI do not conform to generally accepted
accounting principles. The principals of BUI have engaged independent
accountants to audit the balance sheet of BUI as of February 28, 1996 and the
related statements of operations, stockholders' equity and cash flows for the
two years then ended and to express an opinion thereon. The audited financial
statements of BUI and the pro forma financial information relative to BUI will
be filed under Form 8-K/A not later than July 12, 1996.
EXHIBITS
The following exhibits are filed herewith.
Exhibit
No. Description of Exhibit
10.17 Asset Purchase Agreement by and among BAB Systems, Inc., Bagels
Unlimited, Inc. and Donald Nelson and Mary Ann Varichak dated May 1,
1996 (without schedules)
10.18 Non Competition Agreement by and among BAB Holdings, Inc. and Donald
Nelson and Mary Ann Varichak dated May 1, 1996
10.19 Stock Option Agreement between BAB Holdings, Inc. and Bagels Unlimited,
Inc. dated May 1, 1996
10.20 Registration Rights Agreement between BAB Holdings, Inc. and Bagels
Unlimited, Inc. dated May 1, 1996
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
SIGNATURE
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.
BAB HOLDINGS, INC.
Dated: May 15, 1996 By: /s/ Sally A. Sullivan
Sally A. Sullivan, Chief Financial Officer,
Treasurer and Secretary (Principal accounting
and financial officer)
INDEX
NUMBER DESCRIPTION PAGE #
10.17 Asset Purchase Agreement by and among BAB Systems, Inc.,
Bagels Unlimited, Inc. and Donald Nelson and Mary Ann
Varichak dated May 1, 1996 (filed without schedules and
exhibits)
10.18 Non Competition Agreement by and among BAB Holdings,
Inc. and Donald Nelson and Mary Ann Varichak dated May
1, 1996
10.19 Stock Option Agreement between BAB Holdings, Inc. and
Bagels Unlimited, Inc. dated May 1, 1996
10.20 Registration Rights Agreement between BAB Holdings, Inc. and Bagels
Unlimited, Inc. dated May 1, 1996