sec document
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 1, 2002
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SPORTING MAGIC, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-25247 95-4675095
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6430 Cobble Lane, Harrison, Tennessee 37341
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Address of principal executive offices
Registrant's telephone number, including area code: 423-344-9955
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(Former name or former address, if changed since last report.)
Item 1. Changes in Control of Registrant.
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On February 1, 2002, the Registrant, Next, Inc., a Delaware
Corporation, ("Next"), Buddy Young, previously the largest stockholder of the
Registrant, Danny F. Cooke, William B. Hensley and the William B. III and Cindy
S. Hensley Living Trust, previously the sole common stockholders of Next
(together, the "Next Stockholders"), consummated a reverse acquisition pursuant
to an Exchange Agreement, whereby the Registrant issued 6,000,000 shares of its
common stock to the Next Stockholders in exchange for 6,000,000 shares of Next's
common stock, par value $0.0001 per share, representing all of Next's issued and
outstanding common equity (the "Exchange"). The Registrant also agreed to seek
stockholder approval to create blank check preferred stock and then promptly
create a series of voting preferred stock into which each 100 outstanding shares
of Next's Series A Preferred Stock, par value $0.0001 per share, shall
automatically convert.
Upon the closing of the Exchange (the "Closing"), the Registrant's
then existing Board of Directors, consisting of Buddy Young, L. Stephen Albright
and Dennis Spiegelman, resigned and caused Danny F. Cooke, William B. Hensley,
Ronald Metz, G. Michael Cross and Salvatore Geraci to succeed them in such
capacity. In addition, Mr. Young and Mr. Albright also resigned as executive
officers of the Registrant.
As a result of the reverse acquisition, the Next Stockholders now
control more than 74% of the Registrant's voting securities. The pre- and
post-Closing percentages of voting securities of the Registrant beneficially
owned by (i) each person who, to the knowledge of the Registrant, beneficially
owns more than 5% of the Registrant's common stock and (ii) the Registrant's
directors and executive officers, was previously reported on the Registrant's
Rule 14f-1 Information Statement that was filed with the Securities and Exchange
Commission, and mailed to its stockholders, on January 22, 2002.
As a result of this reverse acquisition, the Registrant is now a
holding company whose principal asset is the outstanding common equity of Next,
a designer, developer, marketer and distributor of branded promotional products
and imprinted sportswear.
Item 4. Change in Registrant's Certifying Accountant.
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On February 13, 2002, the Registrant dismissed Farber & Hass LLP
("FH") as its independent accountants. The reports of FH on the Registrant's
financial statements for the years ended August 31, 2000 and 2001 each contain a
going concern opinion. A going concern opinion indicates that the Registrant's
independent accounts believe that substantial doubt exists regarding the
Registrant's ability to continue to remain in business.
The Registrant's Board of Directors approved the dismissal of FH on
February 13, 2002. During the fiscal years ended August 31, 2000 and 2001 and
during the subsequent interim period through February 13, 2002, there were no
disagreements with FH on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedures which
disagreements if not resolved to the satisfaction of FH would have caused them
to make reference thereto in their report on the financial statements for such
years. During the fiscal
2
years ended August 31, 2000 and 2001 and during the subsequent interim period
through February 13, 2002, there were no reportable events (as defined in Item
304(a)(1)(v) of Regulation S-K).
The Registrant provided FH with a copy of the disclosures it is
making herein prior to the filing of this Current Report on Form 8-K with the
Securities and Exchange Commission ("SEC") and requested that FH furnish the
Registrant a letter addressed to the SEC stating whether FH agrees with the
statements made by the Registrant herein and, if not, stating the respects in
which it does not agree. FH's letter, dated February 13, 2002 is attached as
Exhibit 16.1 hereto.
Simultaneously with the dismissal of its former auditors, the
Registrant engaged Marcum & Kliegman ("MK") as the Registrant's independent
public auditors, replacing its former auditor, FH. The Board of Directors of the
Registrant approved the appointment of MK as the Registrant's independent
accountants and auditors on February 13, 2002. During the two most recent fiscal
years and subsequent interim periods, the Registrant has not consulted with MK
regarding (i) either the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on its financial statements, or (ii) any matter that was
either the subject of disagreement on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures or a
reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a)-(b) The Registrant shall file all required
financial statements with regards to the
reverse acquisition by way of an amendment
to this form 8-K no later than April 2,
2002.
(c) Exhibits.
Exhibit Number Description
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2.2 The Exchange Agreement, dated December 21,
2001, by and among Sporting Magic, Inc.,
Buddy Young, Next, Inc., Danny F. Cooke,
William B. Hensley and the William B. III
and Cindy S. Hensley Living Trust.
2.3 Amendment No. 1 to the Exchange Agreement,
dated July 18, 2002, by and among Sporting
Magic, Inc., Buddy Young, Next, Inc., Danny
F. Cooke, William B. Hensley and the William
B. III and Cindy S. Hensley Living Trust.
2.4 Amendment No. 2 to the Exchange Agreement,
dated February 1, 2002, by and among
Sporting Magic, Inc., Buddy Young, Next,
Inc., Danny F. Cooke, William B. Hensley and
the William B. III and Cindy
3
S. Hensley
Living Trust.
16.1 Letter of Farber & Hass LLP regarding
termination as certifying accountant.
SIGNATURE
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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.
SPORTING MAGIC, INC.
Dated: February 19, 2002 By: /s/ Danny F. Cooke
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Name: Danny F. Cooke
Title: Chairman