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: MAY 1, 1998
NAVARRE CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-22982 41-1704319
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
7400 49TH AVENUE NORTH, NEW HOPE, MN 55428
(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 535-8333
Items 1, 2 3, 4, 6 and 8 are not applicable and therefore omitted.
Item 5. Other Events.
ISSUANCE OF CLASS A CONVERTIBLE PREFERRED STOCK
On May 1, 1998, the Company issued 1,523,810 shares of Class A
Convertible Preferred Stock in a private placement to a group of investors for
aggregate consideration of $20.0 million. The Class A Convertible Preferred
Stock was issued at a price of $13.125 per share and is convertible into five
shares of Navarre common stock at any time after June 30, 1998. In additional,
for each share of Class A Convertible Preferred Stock acquired, each investor
received a five-year warrant to purchase five shares of Navarre common stock at
a price $3.50 per share. The Class A Convertible Preferred Stock has a
cumulative quarterly dividend of ten percent (10%) payable beginning June 30,
1998. The Company has the right to call the Class A Convertible Preferred Stock
at any time after June 30, 1998 if the price of the Company's Common Stock is at
least 200% of the effective conversion price for ten consecutive trading days,
subject to certain other conditions. The Company cannot call more one-third of
the original aggregate Class A Convertible Preferred Stock in any six-month
period. The Company also has the right to call the warrant in certain
circumstances.
COMPLIANCE WITH NASDASQ STOCK MARKET RULES
Under the rules of the Nasdaq Stock Market, the Company must
maintain net tangible assets (assets, excluding goodwill, less liabilities) of
at least $4,000,000. On December 31, 1997 the Company had shareholders' equity
of $5.2 million, but because of it had goodwill from acquisitions of
approximately $1,254,000, the Company had net tangible assets of $3,963,000,
which was $37,000 less than the $4.0 million required by the Nasdaq Stock
Market. On March 31, 1998, on an unaudited basis, the Company had shareholders'
equity of $4,328,559 angible assets of $3,154.693.
After giving effect to the sale of 1,523,811 Shares of the
Company's Class A Preferred Convertible Stock on May 1, 1998 the Company's pro
forma shareholders equity at March 31, 1998 (unaudited) was $23,330,146 and its
net tangible assets of were $22,156,280. As a result of the offering, the
Company is in compliance with the Nasdaq net tangible asset requirement.
Item 7. Financial Statements and Exhibits
Exhibit 1. Unaudited Pro forma Balance Sheet at March 31, 1998.
Exhibit 2. Certificate of Rights and Preferences of Class A
Convertible Preferred Stock
Exhibit 3. Registration Rights of Class A Preferred Stock.
Exhibit 4. Form of Warrant.
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.
NAVARRE CORPORATION
By /s/ Charles. Cheney
------------------------------------------------
Charles E. Cheney
Executive Vice President, Chief
Financial Officer and Secretary
May 14, 1998