| Wheels Sports Group, Inc. | |||
| Ticker: | WHEL | 1368 Salisbury Road | |
| Exchange: | NASDAQ-Small Cap Market | Mocksville, NC 27028 | |
| Industry: | Manufacturing (SIC Code 2759) | (704) 634-3000 | |
| Type of Shares: | Common Shares | Filing Date: | 1/27/97 | |
| U.S. Shares: | 900,000 | Offer Date: | 4/16/97 | |
| Non-U.S. Shares: | 0 | Filing Range: | $6.00 - $6.50 | |
| Primary Shares: | 900,000 | Offer Price: | $5.90 | |
| Secondary Shares: | 0 | Gross Spread: | $0.59 | |
| Offering Amount: | $5,625,000 | Selling: | $0.29 | |
| Expenses: | $590,000 | Reallowance: | ||
| Shares Out After: | 3,400,000 |
| Manager | Tier | Phone |
| Schneider Securities, Inc. | Lead Manager | (303) 837-9200 |
| Issuer's Law Firm: | Berliner Zisser Walter & Gallegos |
| Bank's Law Firm: | Faegre & Benson |
| Auditor: | Coopers & Lybrand |
| Registrar/Transfer Agent: | American Securities Transfer, Inc |
Dollar amounts in U.S. millions except for per share data | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 12/31/96 | 12/31/96 | ||||
| Revenue: | $4.78 | Assets: | $3.27 | ||
| Net Income: | $0.83 | Curr Assets: | |||
| EPS: | $0.39 | Liabilities: | $2.24 | ||
| Prior EPS: | Curr Liabilities: | ||||
| Cash Flow/Oper: | $0.03 | Equity: | $1.03 | ||
| Cash Flow/Fin: | Cash: | ||||
| Cash Flow/Inv: | |||||
| Business Description |
| The company designs, markets and distributes premium quality collectible sports trading cards primarily featuring the race drivers, team owners and crew chiefs active in NASCAR-sanctioned racing events. The company's premium quality collectible sports trading cards are generally produced in limited issues between three and four times each year and are sold to a network of distributors, brokers and approximately 1,500 specialty hobby dealers located principally throughout the southeast United States. The company estimates that customers in the hobby channel such as distributors and hobby dealers, sports memorabilia shops, sports trading card stores and toy stores account for approximately 85% of sales, with the remaining 15% of sales accounted for by the retail channel, which consists of distributors and brokers who resell collectible sports trading cards to mass merchandisers, wholesale clubs and variety stores. The company also sells its collective sports trading cards to members of the Wheels Club, a membership club organized by the company consisting of approximately 800 members, and to businesses for use in corporate promotions. |
| Competition |
| Competition in the collectively sports trading card market is intense and is based primarily on collectibility, brand recognition, product features, pricing, customer service, quality and creativity. The company currently views three of the four national competitors in the collectible sports trading card market, Fleer/Sky Box, Upper Deck and Pinnacle Brands, as its primary competition. Each of these firms is significantly larger than the company and has a longer operating history, better name recognition, and greater financial, marketing and other resources than the company. The fourth national competitor, Topps, does not currently produce NASCAR-related collectible sports trading cards. The company is also subject to competition from at least one strong regional competitor, Press Pass. Although the number of competitors active in the collectible sports trading card market has recently declined due to the industry consolidation that is underway, the company does not believe that competition in its industry has lessened. The NASCAR race drivers, team owners and crew chiefs with whom the company has licenses also have the ability to grant additional licenses, thereby increasing the number of firms active in the company's primary market. The company believes that the limited number of licenses for collectively sports trading cards granted by NASCAR race drivers, team owners and crew chiefs represents a barrier to competition, to a limited degree, because the right to use the photo, likeness and image of a NASCAR personality in a collective sports trading card is dependent upon the grant of licensed rights to do so. The company believes that its ability to compete effectively in the future will be based more on collectibility, creative design and quality, as opposed to price. The company's ability to compete based on these factors will depend to some extent on its ability to gauge demand and respond to market trends, identify consumer preferences and maintain product innovation. |
| Business Plan |
| The company's strategy is to enhance its position as a niche designer and marketer of premium collectible sports trading cards and to expand into additional NASCAR-related markets to capitalize on the growth now being experienced in the NASCAR racing market. Key elements of the company's strategy include: (I) Increase Sales by Expanding Distribution, (ii) Diversify into Other NASCAR-Related Activities, (iii) Emphasize Product Differentiation, (iv) Continue Commitment to Creative Design and Latest Production Technologies, (v) Maintain and Support Network of Distributors and Dealers. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used for Fantasy World Racing, a Wheels Sports game where race fans choose a team of NASCAR drivers and chart their performance in actual races, similar to Rotisserie baseball, for the construction of an office and warehouse, and other corporate purposes which could include marketing and acquisitions of other trading card companies. |
| Name of Shareholder | % Owned Before | % Owned After |
| Howard L. Correll, Jr. | 27.60% | 20.30% |
| W. Conrad Powell | 20.70% | 15.20% |
| Terry J. Powell | 20.70% | 15.20% |
| Timothy M. Tyler | 9.60% | 7.10% |
| Richard A. Strauss | 7.90% | 5.80% |
| Officer Name | Title | Age |
| Howard L. Correl, Jr. | Chairman of the Board, Chief Executive Officer and President | 43 |
| F. Scott M. Chapman | Chief Financial Officer | 50 |
| W. Conrad Powell | Executive Vice President, Treasurer and Director | 56 |
| # of Units: | 900,000 | |||
| Unit Ticker: | WHELU | Unit Price: | ||
| Warrant Ticker: | WHELW | Warrant Price: | ||
| Warrant Exercise Date: | Warrant Exercise Price: | |||
| Warrant Expiration Date: | ||||
| Warrant Detachable: | Yes | Warrant Detach Date: | ||
| Warrant Callable: | No |
| Unit Composition: 1 Common Share + 1 Warrant |
| Warrant Entitlement: 1 Common Share |