Morrow Snowboards, Inc.’s (“Company”) wholly-owned subsidiary, Westbeach Canada ULC, a Nova Scotia unlimited liability company (“Westbeach”), on November 12, 1999, sold substantially all its assets, including its remaining two retail stores in Vancouver and Whistler, British Columbia, and its apparel line, together with the Westbeach trademarks, to Westbeach Sports, Inc., a British Columbia corporation, not affiliated with either the Company or Westbeach.
The purchase price for the assets was $2,450,000 (US$). The sale was pursuant to an Asset Purchase Agreement that contained certain representations and warranties by Westbeach to the buyer and indemnification of the Buyer by Westbeach in certain events for certain liabilities or any inaccuracies in such representations and warranties. The sale price is subject to adjustment, based on the final inventory and accounts receivable counts, and there was a $100,000 holdback to fund certain adjustments. As previously reported, Westbeach’s Bellevue, Washington store has been sold. Additional information regarding this transaction will be included in a future Form 8-K or other filing with the Securities and Exchange Commission.
Following the sale, Westbeach will no longer continue in the apparel business, including the winter sports apparel business. The Company’s and Morrow’s Boards of Directors are reviewing the reinvestment of any excess funds, after providing for payment of the Company’s liabilities, litigation funding costs for the remaining pending litigation reported in the Company’s Form 10-Q for the third quarter ended September 25, l999, operating expenses and other reasonably anticipated expenses.