1
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):
OCTOBER 24, 1997
WHEELS SPORTS GROUP, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 0-22321 56-2007717
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
1368 SALISBURY ROAD
MOCKSVILLE, NORTH CAROLINA 27028
(Address of principal executive offices)
(704) 634-3000
(Registrant's telephone number, including area code)
2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 24, 1997, Wheels Sports Group, Inc. (the "Company") entered
into an Agreement and Plan of Reorganization (the "Agreement") with High
Performance Sports Marketing, Inc., a North Carolina corporation ("High
Performance"). The Agreement provides for the merger of High Performance with
and into a wholly-owned subsidiary of the Company formed for the sole purpose
of completing the merger (the "HP Subsidiary"). The merger was completed on
October 24, 1997, on the terms set forth below (substantially as disclosed in
the Company's Form 8-K as filed on October 17, 1997).
The consideration paid by the Company pursuant to the Agreement
consisted of cash in the amount of $1,672,000 (the "Initial Cash Payment");
444,445 shares of the Company's Common Stock; and promissory notes in the
aggregate principal amount of $1 million (the "Notes"). The Company is
obligated to make an additional cash payment of $3.25 million on or before
November 28, 1997 (the "Final Cash Payment").
All principal and accrued interest under the Notes are due on October
24, 1998, subject to prepayment at the Company's option. The Notes are
unsecured and bear interest at the rate of 10% per annum. The shares of Common
Stock were issued without registration under the Act, and the Company granted
"piggyback" registration rights to the holders of the Common Stock. The Company
has entered into employment agreements with two High Performance officers,
Randy C. Baker and David W. Dupree. In addition, Mr. Baker was appointed to the
Company's Board of Directors effective as of the closing.
In order to fund the Initial Cash Payment, the Company obtained a
$1,672,000 unsecured bank loan on October 24, 1997. The loan bears interest at
the lender's prime rate and is due and payable on December 1, 1997. The Company
intends to obtain long-term financing in order to refinance the short-term bank
loan and to fund the Final Cash Payment. Morgan Keegan & Company, Memphis,
Tennessee, is serving as an advisor to the Company in its efforts to obtain the
financing required in connection with the High Performance merger. However,
there can be no assurance that the Company will obtain the financing required
to fund the Final Cash Payment or to refinance the short-term bank debt. The
Agreement provides that in the event the Company fails to make the Final Cash
Payment on or before November 28, 1997, the High Performance shareholders shall
have a right to return the 444,445 shares of Common Stock, the Initial Cash
Payment and the Notes to the Company in exchange for all of the issued and
outstanding capital stock of the HP Subsidiary. In such event, the High
Performance shareholders would also be entitled to be reimbursed by the Company
for costs and expenses incurred by them in connection with the Agreement.
2
3
FORWARD LOOKING STATEMENTS
The statements contained in this report that are not purely historical
are forward looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements regarding the Company's expectations, hopes, intentions or
strategies regarding the future. Forward looking statements include
expectations of trends to continue through the remainder of the forthcoming
year. Forward looking statements involve a number of risks and uncertainties.
Among other factors that would cause actual results to differ materially are
the following: the inability to obtain the long-term financing described above;
the inability to close other acquisitions which may be undertaken by the
Company, including but not limited to the previously announced acquisition of
Press Pass Partners; business conditions and growth in the markets for
collectible sports trading cards and other NASCAR related merchandise;
competitive factors, such as the entry of new competitors into the NASCAR
trading card and merchandise markets; the loss of license agreements with
certain NASCAR drivers or team owners; inventory risks due to shifts in market
demand; changes in product mix; and the risk factors listed from time to time
in the Company's SEC reports, including but not limited to the Company's
reports on Form 10-QSB, 8-K, 10-KSB, Annual Reports to Shareholders, and
reports or other documents filed pursuant to the Securities Act of 1933 or the
Securities Exchange Act of 1934. All forward looking statements included herein
are based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward looking statements. It
is important to note that the Company's actual results could differ materially
from those in such forward looking statements due to the factors cited above.
As a result of these factors, there can be assurance the Company will not
experience material fluctuations in future operating results on a quarterly or
annual basis, which would materially and adversely affect the Company's
business, financial condition and results of operations.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
3
4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) It is impracticable to provide the required financial
statements for High Performance Sports Marketing, Inc. at this time. In
accordance with Item 7(a)(1) of Form 8-K, the Company will file the required
financial statements as an amendment to this Form 8-K as soon as practicable,
but not later than 60 days after the date on which this report on Form 8-K must
be filed.
(b) It is impracticable to provide the required pro forma
financial information for High Performance Sports Marketing, Inc. and the
Company at this time. In accordance with Item 7(b)(2) of Form 8-K, the Company
will file the required pro forma financial information as an amendment to this
Form 8-K as soon as practicable, but not later than 60 days after the date on
which this report on Form 8-K must be filed.
(c) The following exhibits are furnished herewith in
accordance with the provisions of Item 601 of Regulation S-K:
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
* 2.4 Agreement and Plan of Reorganization among Wheels 2
Sport Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc.,
Randy C. Baker and David W. Dupree dated October 3,
1997.
2.5 First Amendment to Agreement and Plan of Reorganization 2
among Wheels Sport Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated October 24, 1997.
10.1.8 Employment Agreement dated October 3, 1997, by and between 10
Randy C. Baker and the Company.
10.1.9 Employment Agreement dated October 3, 1997, by and between 10
David W. Dupree and the Company.
10.9.4 Lease Agreement dated March 1, 1997, by and between 10
Beale Street Realty, LLC as landlord and High
Performance Sports Marketing, Inc. as tenant.
10.15.1 Promissory Note in the principal amount of $850,000 dated 10
October 3, 1997, from the Company to Randy C. Baker.
10.15.2 Promissory Note in the principal amount of $150,000 dated 10
October 3, 1997, from the Company to David W. Dupree.
10.15.3 Promissory Note in the principal amount of $1,672,000 from the 10
Company to Peoples Bank.
4
5
* Previously filed with the Company's Form 8-K filed on October 17, 1997.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
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.
WHEELS SPORTS GROUP, INC.
Date: November 7, 1997 By: /s/ Howard L. Correll, Jr.
----------------------------
Howard L. Correll, Jr., Chairman
of the Board, Chief Executive
Officer and President
5
6
EXHIBIT INDEX
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
* 2.4 Agreement and Plan of Reorganization among Wheels 2
Sport Group, Inc., High Performance Acquisition Company,
High Performance Sports Marketing, Inc., Randy C. Baker
and David W. Dupree dated October 3, 1997.
2.5 First Amendment to Agreement and Plan of Reorganization 2
among Wheels Sport Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated October 24, 1997.
10.1.8 Employment Agreement dated October 3, 1997, by and between 10
Randy C. Baker and the Company.
10.1.9 Employment Agreement dated October 3, 1997, by and between 10
David W. Dupree and the Company.
10.9.4 Lease Agreement dated March 1, 1997, by and between 10
Beale Street Realty, LLC as landlord and High
Performance Sports Marketing, Inc. as tenant.
10.15.1 Promissory Note in the principal amount of $850,000 dated 10
October 3, 1997, from the Company to Randy C. Baker.
10.15.2 Promissory Note in the principal amount of $150,000 dated 10
October 3, 1997, from the Company to David W. Dupree.
10.15.3 Promissory Note in the principal amount of $1,672,000 from the 10
Company to Peoples Bank.
* Previously filed with the Company's Form 8-K filed on October 17, 1997.