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): February 6, 1997
NAVARRE CORPORATION
(Exact name of Registrant as specified in its charter)
Minnesota 41-1704319
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
0-22982
(Commission File Number)
7400 49th Avenue North
New Hope, Minnesota 55428
(Address of principal executiv (Zip Code)
offices)
Registrant's telephone number, including area code: (612) 535-8333
Item 5. Other Information.
Net Radio Corporation.
In a letter dated March 7, 1997, Navarre Corporation
("Navarre" or the "Company") announced that it has entered into a
series of agreements under which Net Radio Corporation, a Nevada
corporation ("Net Radio (Nevada)") would be merged into and with
a wholly-owned subsidiary of the Company, Net Radio Corporation,
a Minnesota corporation ("Net Radio (Minnesota)"). Net Radio
(Nevada) owns and operates Net Radio Network, an Internet-only radio
network. Under the terms of the proposed transaction, the
Company would issue up to 2,100,000 of its common stock to the
former shareholders of Net Radio (Nevada). The exact number
of shares to be issued to former shareholders of Net Radio
(Nevada) depends upon the achievement by Net Radio (Minnesota)
of sales and operating profit goals in the two years after the
closing date of the merger.
The Company also indicated in the letter that in connection
with the acquisition of Net Radio (Nevada), that ValueVision
International, Inc. ("ValueVision") would acquire fifteen percent
(15%) of Net Radio (Minnesota) after the transaction in exchange
for an investment of $3.0 million consisting of $1.0 million in
cash at closing, with an additional $2.0 million to be
contributed to future advertising. Once Net Radio (Minnesota)
achieves sales revenue of $3.0 million in any rolling, consecutive
four quarter
period, (i) Net Radio (Minnesota), at its option, may require
ValueVision to purchase an additional 4.95 percent of Net Radio
(Minnesota) for $500,000 in cash and (ii) ValueVision, at its option,
may invest $500,000 in cash and receive 4.95 percent of Net Radio
(Minnesota). In the event that either Net Radio (Minnesota) or
ValueVision exercises its option, the other party's option expires.
ValueVision also has the right to convert its Net Radio (Minnesota)
shares into shares of Navarre's Common Stock in the future upon the
occurrence of certain events. A copy of the Company's Letter to
Shareholders is attached as Exhibit 99.1 to this Form 8-K. Exhibit A
to the shareholder letter sets forth the circumstances under which the
shares will be issued to the shareholders of Net Radio (Nevada).
Exhibit B sets forth the terms of the ValueVision investment and the
circumstances under which the ValueVision shares are convertible
into shares of the common stock of Navarre Corporation.
Musicland Stores Corporation
In February 1997, Musicland Stores Corporation ("Musicland")
announced that it had entered into oral arrangements with
substantially all of its major vendors, including the Company,
under which Musicland agreed that it would cease making
additional payments on outstanding accounts payable in existence
as of February 6, 1997. In connection with this announcement
Musicland agreed that future invoices would be paid on each
Thursday for the prior week's invoices. On February 6, 1997,
Musicland believed that the accounts payable to Navarre, net of
adjustments, to be approximately $5.2 million. The Company is
continuing to ship Musicland product per the agreement and has
been receiving payment within the terms set forth. The Company
believes that as long as this arrangement continues, it will not
have a material adverse effect on the Company's cash flow
position. Musicland has not yet indicated the circumstances
under which it intends to pay the outstanding balance on its
accounts payable, including the accounts payable with respect to
the Company. The Company continues to work with Musicland to try
to facilitate its continued operations. In the event that
Musicland was to cease operations or were unable to pay all or
significant portions of the Company's current receivable for
Musicland, it could have an adverse effect on the Company.
Item 7. Exhibits
Exhibit 99.1 March 7, 1997 Letter to Shareholders
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.
NAVARRE CORPORATION
Dated: March 19, 1997
By: /S/ Eric H. Paulson
Chief Executive Officer