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
June 18, 1996
__________________________________________________
(Date of Report - Date of earliest event reported)
THE L.L. KNICKERBOCKER CO., INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
California 0-25488 33-0230641
_______________________ ________________________ _______________________
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation )
30055 Comercio, Rancho Santa Margarita, California 92688
___________________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 858-3661
Page 1 of 153 pages
The Exhibit Index Appears on Page 5
ITEM 2. ACQUISITION OF ASSETS
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On June 18, 1996, the registrant acquired the business, assets and properties of
the Krasner Group, Inc., a Delaware corporation ("TKG"), a manufacturer and
wholesaler of costume jewelry and women's fashion accessories. TKG was acquired
pursuant to an Agreement of Purchase and Sale dated June 18, 1996 (the
"Agreement") by and among TKG, TKG's stockholders: Martin P. Krasner and Ina
Ostrow, as Trustees U/I DTD 2/5/85 FBO Martin P. Krasner, Martin and Stephanie
Krasner, as Trustees U/I DTD June 15, 1970, Joan Glaser, as Executor of the
Estate of Murray Glaser, F. William Graham, Consumer Venture Partners I, L.P.,
Donald F. Swanson, as Trustee, Donald F. Swanson Revocable Trust U/A Dated
December 22, 1988, and the registrant. Pursuant to the Agreement, the registrant
acquired from the above named stockholders all of the capital stock of TKG.
Following the acquisition, the registrant intends to operate TKG as a subsidiary
of the registrant, and TKG shall continue to operate under its current name in
its current line of business.
The consideration for the acquisition consisted of (a) $1,375,000 payable in
value of common stock purchase warrants of the registrant's Common Stock to the
holders of preferred stock of TKG in equal installments of $275,000 payable on
June 18, 1996, September 30, 1996, December 31, 1996, March 31, 1997, and June
30, 1997, (b) $358,489 payable on June 18, 1996 in value of common stock
purchase warrants of the registrant's Common Stock to the holders of common
stock of TKG, (c) a contingent amount of $330,000 payable in value of common
stock purchase warrants of the registrant's Common Stock to the holders of the
preferred stock of TKG upon the future liquidation of the first $300,000 of
closing inventory of TKG, (d) a contingent amount equal to approximately
$2,000,000 payable quarterly to Martin P. Krasner, as Trustee of the above-
referenced trusts, in value of common stock purchase warrants of the
registrant's Common Stock upon the future liquidation of the closing inventory
of TKG, (e) the guarantee by the registrant of the repayment of TKG's line of
credit with its lending institution, IBJ Schroder Bank & Trust Company, which
totaled approximately $1,800,000 on April 28, 1996; in connection with the
guarantee, the registrant will provide a $500,000 deposit to IBJ Schroder for
the purpose of collateralizing the line of credit; such account shall bear
interest at market rates and belong to the registrant, (f) the registrant will
arrange substitute financing of the line of credit for TKG no later than
September 30, 1996, (g) the registrant will pay to an unrelated individual,
Jason Workman, a finders fee in connection with the acquisition in the amount of
$275,000 payable in value of common stock purchase warrants of the registrant's
Common Stock payable on June 18, 1996, (h) the registrant will grant to Richard
Ogust, an aggregate of $308,000 payable in value of common stock purchase
warrants of the registrant's Common Stock to be delivered in installments on
June 18, 1996 ($198,000) and June 18, 1997 ($110,000) in connection with a
liability owed to Richard Ogust by TKG, and (i) the registrant will deliver to
key employees of TKG warrants to purchase 20,987 shares of the Common Stock of
registrant at the exercise price of $7.75 per share. With respect to the
contingent amounts above, warrants will be issued on a basis of $1 in warrant
value of the registrant's Common Stock per $1 in cash received by the registrant
from the liquidation of the closing inventory of TKG. Value in connection with
each share of common stock covered by a warrant means the difference between the
average closing bid price of registrant's common shares for the five trading
days immediately preceding the date of delivery of the warrant and the exercise
price of the warrant.
Martin P. Krasner, as president of TKG, signed a 5 year employment contract with
TKG with annual compensation of $225,000 and eligibility to participate in the
stock plan of the registrant and a bonus program to be determined. In addition,
Mr. Krasner received warrants to purchase 64,706 shares of the Common Stock of
registrant at the exercise price of $7.75 per share.
The assets acquired by the registrant include the operating lease for the TKG
office in New York City, the operating lease for a manufacturing facility in
Providence, Rhode Island, the fixtures, furnishings, equipment and leasehold
improvements located in the office and manufacturing facilities, and various
trademarks and contracts with celebrities for endorsement of products. All such
assets were used by TKG in the operation of the costume jewelry and fashion
accessory manufacturing and wholesaling business and registrant intends to
continue the use of such assets in the operation of the costume jewelry and
fashion accessory manufacturing and wholesaling business.
The transaction will be accounted for as a purchase.
Neither registrant nor any affiliate thereof had any preexisting relationship
with the sellers.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) Financial statements of business acquired:
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It is impracticable to provide the required financial statements for TKG
for this Form 8-K at this time. The required financial statements for TKG will
be filed as an amendment to this Form 8-K as soon as practicable but not later
than 60 days after this Form 8-K is filed. To be included by amendment to this
Form 8-K are audited financial statements of TKG for the fiscal years ended
January 28, 1996 and January 29, 1995, and unaudited financial statements for
the partial fiscal year ended April 30, 1996.
(b) Pro forma financial information:
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It is impracticable to provide the required pro forma financial information
in this Form 8-K at this time. The required pro forma financial information will
be filed as an amendment to this Form 8-K as soon as practicable but not later
than 60 days after this form 8-K is filed. To be included by amendment to this
Form 8-K are a pro forma condensed statement of income of the registrant for the
fiscal year ended December 31, 1995 and a pro forma balance sheet and statement
of income for the partial fiscal year ended March 31, 1996.
(c) Exhibits:
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Included as part of this Form 8-K are the exhibits listed on the Exhibit
Index appearing on page 5.
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.
Date: July 3, 1996
THE L.L. KNICKERBOCKER CO., INC.,
a California corporation
By: /s/Anthony P. Shutts
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Anthony P. Shutts
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Item Sequential
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2.1 Agreement of Purchase and 6
Sale dated as of June 18, 1996
by and among the Registrant,
Krasner Group, Inc., Martin P.
Krasner and Ina Ostrow, as
Trustees U/I DTD 2/5/85 FBO
Martin P. Krasner, Martin
and Stephanie Krasner, as
Trustees U/I DTD June 15,
1970, Joan Glaser, as Executor
of the Estate of Murray Glaser,
F. William Graham, Consumer
Venture Partners I, L.P.,
Donald F. Swanson, as Trustee,
Donald F. Swanson Revocable
Trust U/A Dated December 22,
1988.