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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K\A2
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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
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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.)
149 GASOLINE ALLEY
MOORESVILLE, NORTH CAROLINA 28115
(Address of principal executive offices)
(704) 662-6442
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 3, 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, as amended October 24, 1997, November 26, 1997
and December 17, 1997, 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 was
obligated to make an additional cash payment of $3.25 million at the time of
closing (the "Final Cash Payment"). Effective as of December 17, 1997, the
Final Cash Payment date was extended to April 30, 1998 in consideration of an
agreement by certain principal shareholders of Wheels (the "Pledgors") to pay
the former High Performance shareholders (the "Sellers") an additional $250,000
(the "Extension Consideration") plus certain expenses incurred by Sellers in
connection with the transaction. The Pledgors also pledged certain shares of
the Company's Common Stock owned by them to secure the Final Cash Payment. The
parties are currently negotiating an additional extension of 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 order to fund the Initial Cash Payment, the Company obtained a
$1,672,000 unsecured bank loan on October 24, 1997. As disclosed in the
Company's Form 8-K as filed on January 15, 1998, the Company has obtained a
long- term financing and a portion of the proceeds refinanced the short-term
bank loan. Morgan Keegan & Company, Memphis, Tennessee, served as an advisor
to the Company in obtaining the financing.
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 year. Forward
looking
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statements involve a number of risks and uncertainties. Among other factors
that would cause actual results to differ materially are the following: 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 no
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 7. FINANCIAL STATEMENTS AND EXHIBITS.
This amendment to Form 8-K is being filed subsequent to the date which
it was required to be filed. As a result of such delay, the Registrant is able
to include historical financial statements and pro forma financial information
which are as of December 31, 1997 and for the year then ended. (If this
Amendment had been timely filed, the Registrant believes that financial
statements and pro forma information and for the period September 30, 1997
would have been filed.)
(a) In accordance with Item 7(a) of Form 8-K, the Registrant hereby files
the audited financial statements of High Performance Sports Marketing,
Inc.
(b) In accordance with Item 7(b), the Registrant hereby files unaudited
proforma financial information with respect to the Registrant and High
Performance Sports Marketing, Inc. The proforma information also
includes the acquisition of Press Pass Partners ("Press Pass") which
was completed on December 31, 1997.
(c) The following exhibits are furnished herewith in accordance with the
provisions of Item 601 of Regulation S-B:
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
+ 2.4 Agreement and Plan of Reorganization among Wheels Sports 2
Group, Inc., High Performance Acquisition Company, High
Performance Sports Marketing, Inc., Randy C. Baker and
David W. Dupree dated October 3, 1997.
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* 2.5.1 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.
# 2.5.2 Second 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 November 26, 1997.
# 2.5.3 Third Amendment to Agreement and Plan of Reorganization among 2
Wheels Sport Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated December 17, 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 24, 1997, from the Company to Randy C. Baker.
* 10.15.2 Promissory Note in the principal amount of $150,000 dated 10
October 24, 1997, from the Company to David W. Dupree.
* 10.15.3 Promissory Note in the principal amount of $1,672,000 from 10
the Company to Peoples Bank.
# 99.3 Financial Statements of High Performance Sports Marketing, 99
Inc.
# 99.4 Proforma Financial Information of High Performance Sports 99
Marketing, Inc. and the Registrant.
+ Filed with the Company's Form 8-K on October 17, 1997.
* Filed with the Company's Form 8-K on November 7, 1997.
# Filed herewith.
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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: April 22, 1998 By: /s/ F. Scott M. Chapman
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F. Scott M. Chapman,
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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+ 2.4 Agreement and Plan of Reorganization among Wheels Sports Group,
Inc., High Performance Acquisition Company, High Performance
Sports Marketing, Inc., Randy C. Baker and David W. Dupree
dated October 3, 1997.
* 2.5.1 First Amendment to Agreement and Plan of Reorganization among
Wheels Sports Group, Inc., High Performance Acquisition
Company , High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated October 24, 1997.
# 2.5.2 Second Amendment to Agreement and Plan of Reorganization among
Wheels Sports Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated November 26, 1997.
# 2.5.3 Third Amendment to Agreement and Plan of Reorganization among
Wheels Sports Group, Inc., High Performance Acquisition
Company, High Performance Sports Marketing, Inc., Randy C.
Baker and David W. Dupree dated December 17, 1997.
* 10.1.8 Employment Agreement dated October 3, 1997, by and between
Randy C. Baker and the Company.
* 10.1.9 Employment Agreement dated October 3, 1997, by and between
David W. Dupree and the Company.
* 10.9.4 Lease Agreement dated March 1, 1997, by and between 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
October 24, 1997, from the Company to Randy C. Baker.
* 10.15.2 Promissory Note in the principal amount of $150,000 dated
October 24, 1997, from the Company to David W. Dupree.
* 10.15.3 Promissory Note in the principal amount of $1,672,000 from the
Company to Peoples Bank.
# 99.3 Financial Statements of High Performance Sports Marketing, Inc.
# 99.4 Proforma Financial Statements of High Performance Sports
Marketing, Inc. and the Registrant.
+ Filed with the Company's Form 8-K on October 17, 1997.
* Filed with the Company's Form 8-K on November 7, 1997.
# Filed herewith.