Exhibit 1 NAVARRE CORPORATION CONSOLIDATED UNAUDITED PRO FORMA BALANCE SHEET (IN THOUSANDS, EXCEPT SHARE AMOUNTS) PRO FORMA PRO FORMA MARCH 31, 1998 ADJUSTMENTS MARCH 31, 1998 ----------------------------------------- (Unaudited) (Unaudited) ASSETS Current assets: Cash $ 23 $ 23 Accounts receivable, less allowance for doubtful accounts, and sales returns of $2,412 52,556 52,556 Inventories 23,188 23,188 Note receivable, officer 234 234 Prepaid expenses and other current assets 961 961 Refundable Income Taxes 2,265 2,265 ----------------------------------------- Total current assets 79,227 79,227 Property and equipment, net of accumulated depreciation of $3,647 2,957 2,957 Other assets: Goodwill 1,174 1,174 Other assets 331 331 ----------------------------------------- Total assets 83,689 83,689 ========================================= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Note payable to bank 32,445 (19,002) 13,443 Current maturities of long-term debt 162 162 Accounts payable 45,554 45,554 Accrued expenses 1,129 1,129 ----------------------------------------- Total current liabilities 79,290 (19,002) 60,288 Minority interest in subsidiaries (110) (110) Long-term debt, less current maturities 181 181 Shareholders' equity: Convertible Preferred stock, no par value: Authorized shares - 5,000,000, Issued and outstanding shares - None -- outstanding shares - 1,523,810 19,002 19,002 Common stock, no par value: Authorized shares - 20,000,000, Issued and outstanding shares - 7,009,170 8,113 8,113 Retained (deficit) (3,558) (3,558) Unearned compensation (227) (227) ----------------------------------------- Total shareholders' equity 4,328 19,002 23,330 ----------------------------------------- Total liabilities and shareholders' equity 83,689 -- 83,689 ========================================= (1) This Consolidated Unaudited Pro Forma Balance Sheet at March 31, 1998 has been adjusted to reflect the issuance by the Company of 1,523,810 shares of Class A Convertible Preferred Stock ("Preferred Stock") on, May 1, 1998 in a private placement to a group of investors for aggregate consideration of $20.0 million and the application of the net proceeds to reduce the borrowings under the Company's working capital credit facility. Apart from these adjustments, this Consolidated Unaudited Pro Forma Balance Sheet does not reflect any other changes occurring subsequent to March 31, 1998,