8-K

UNITED STATES

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

Date of Report (Date of earliest event reported) December 26, 2006

DREAMS, INC.

(Exact name of registrant as specified in its charter)

Utah	000-30310	87-0368170
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2 South University Drive, Plantation, Florida	33324
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (954) 377-0002

Registrant’s facsimile number, including area code: (954) 475-8785

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01 Entry into a Material Definition Agreement

ITEM 2.01 Completion of Acquisition or Disposition of Assets

ITEM 3.02 Unregistered Sales of Equity Securities

On December 26, 2006, Dreams, Inc. (the “Company”) acquired the assets and assumed certain liabilities of ProStars, Inc., a Utah corporation (“Seller”), pursuant to the terms of an Asset Purchase Agreement entered into by the parties (the “Agreement”).

The assets acquired by the Company under the Agreement include, without limitation, (i) a majority equity interest in four entities that operate three Field of Dreams® retail stores that offer unique sports and entertainment memorabilia products to consumers (the “Business”), (ii) up to $2 million of inventory used in the Business, (iii) substantially all other assets used by Seller in the operation of the Business, and (iv) a marketing venture know as “Stars Live 365 (collectively the “Assets”).

The purchase price for the Assets includes nine million shares of restricted common stock of the Company (the “Shares”), issuable as follows: (i) six million Shares at closing; (ii) one million Shares to be held in escrow (the “Indemnity Shares”) to satisfy any Seller obligations arising under the indemnification provisions of the Agreement, and (iii) two million shares (the “Rio Shares”) to be held in escrow to secure Seller’s obligation to obtain and assign to the Company a lease with respect to Seller’s operations at the Rio Hotel in Las Vegas Nevada (the “Rio Lease”). The number of Shares is subject to adjustment in the event certain payables of Seller being assumed by the Company exceed $500,000 or certain debt Seller owes the Company exceeds $1,418,000.

The Company has agreed to assume certain liabilities of Seller, including, but not limited to, notes payable in the amount of approximately $1,422,000, and an additional note payable to Sam Battistone, a principal and shareholder of Seller and a member of the Company’s Board of Directors, in the amount of $1,029,000 which shall be satisfied through the issuance by the Company of 1 million shares of the Company’s common stock (with 500,000 shares issued at closing and 500,000 shares held together with the Rio Shares to secure Seller’s obligation to provide the Company with the Rio Lease) and the transfer of all interests of Seller in and to that certain NBA litho project.

The Agreement provides the Company with certain rights of first refusal with respect to post closing sales of the Shares by Seller and/or certain of Seller’s shareholders, and the right to obtain lock up agreements from certain of Seller’s shareholders upon their receipt of Shares in a distribution by Seller.

The shares of the Company’s common stock issued under the Agreement were not registered under the Securities Act of 1933 (the “Act”) and were issued pursuant to an exemption from registration under Section 4(2) of the Act.

ITEM 9.01 Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

The Financial Statements required by Item 9.01(a) of Form 8-K shall be filed by amendment to this Form 8-K within the time limits proscribed by the rule.

(b) Pro Forma Financial Information.

The Financial Statements required by Item 9.01(b) of Form 8-K shall be filed by amendment to this Form 8-K within the time limits proscribed by the rule.

(d) Exhibits.

99.1 Press Release dated January 3, 2007.

99.2 Asset Purchase Agreement between Dreams, Inc. and ProStars, Inc. dated December 26, 2006 *

* To be filed by amendment.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: January 3, 2007	DREAMS, INC.
	BY:	/s/ ROSS TANNENBAUM
		Chief Executive Officer

Exhibit Index

Exhibit No.	Description
99.1	Press Release dated January 3, 2007.

EX-99.1

Exhibit 99.1

DREAMS GOES TO VEGAS!

COMPANY ACQUIRES 3 FIELD OF DREAMS® STORES IN LAS VEGAS

Plantation, FL: Dreams, Inc. (DRMS.OB) announced today that the company has acquired the Field of Dreams® Las Vegas market, which includes three Field of Dreams® stores and the Stars Live 365 autograph concept from Pro Stars, Inc. The acquisition will serve as a launching platform for Dreams to expand company owned stores into an area that has historically been the highest volume and most profitable market in the country for the marketing of authentic sports and celebrity memorabilia.

Dreams, Inc. President, Ross Tannenbaum, stated, “The desirability of the Las Vegas market, which provides millions of tourists that turnover in population every three days, bringing customers from all over the world who are seeking entertainment, great restaurants and excellent shopping is our demographic. We intend to increase our presence of Field of Dreams® stores and live appearances of athletes and celebrities to other high profile hotels and desirable venues in Las Vegas. We believe this city offers unlimited potential for our concepts and products.”

Field of Dreams®, the brick-and-mortar retail division of the company, founded in 1990, offers the finest selection of sports and celebrity memorabilia and collectibles in an upscale, state-of-the-art environment. The company plans to continue driving both business models, looking for more franchise owners as well as developing new locations for company-owned stores.

Jorge Salvat, President of Dreams Franchise Corp. exclaimed, “This was an investment in the future for Dreams. We enjoy seeing our franchise owners develop new ideas that can be used throughout the chain, and Pro Stars did a tremendous job with these locations. Now it’s time for Dreams to take it to a new level.”

In addition to the stores, Dreams plans to expand the Stars Live 365 operation. Originally, in January 2005, Dreams licensed this unique concept to Pro Stars. This model features Baseball’s all-time hit leader, Pete Rose, appearing 15 days a month at the Field of Dreams store in the Forum Shops at Caesar’s Palace. Pete Rose can be seen interacting with patrons who can take photographs, engage in conversation with the celebrity and get personalized autographs on numerous items. Other stars including Dan Marino, Joe Montana, Roger Clemens, Magic Johnson, Pete Sampras, Ernie Banks and Joe Frazier have also made appearances at this intimate and unique venue.

Tannenbaum said, “It was natural that with the acquisition of the stores, the company would buy back the marketing concept. With the assets we have in Las Vegas, we foresee driving significant growth by offering a host of new athletes and celebrities to the locale, he said. Tannenbaum also indicated that the flagship store may act as a signing location for top athletes who ink deals with Dreams, Inc.’s manufacturing division, Mounted Memories. It would be a great treat for fans to see today’s superstars signing items with the opportunity to get up-close and personal”, he concluded.

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DREAMS, INC. trades under the ticker symbol: DRMS.OB

For more information on Dreams, Inc. and its subsidiaries, please visit: www.dreamscorp.com

Dreams, Inc. Investor Relations Contact Info:

David M. Greene, Senior Vice-President

Phone: 954-377-0002

Fax: 954-475-8785

dgreene@dreamscorp.com

Public Relations for Dreams, Inc.:

Boardroom Communications

Jennifer Clarin and/or Caren Berg

Phone: (954) 370-8999, Fax: (954) 370-8892

Email: jclarin@boardroompr.com

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Statements contained in this press release, which are not historical facts, are forward looking statements. The forward-looking statements in this press release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements made herein contain a number of risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, specific factors impacting the Company’s business including increased competition; the ability of the company to expand its operations and attract and retain qualified personnel, the uncertainty of consumer’s desires for sports and celebrity memorabilia; the availability of product; availability of financing; the ability to sell additional franchises; and general economic conditions.