SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: MARCH 31, 1996
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(Date of earliest event reported)
FOODQUEST, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 0-20718 65-0343280
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
11900 Biscayne Boulevard Suite 509 Miami, FL 33181
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(Address of principal executive offices) (Zip Code)
(305)899-2585
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(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information - filed herewith.
Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended March 31, 1996, and Pro Forma Condensed Consolidated
Balance Sheet as of March 31, 1996.
(c) Exhibits
10.1 Purchase and Sale Agreement dated March 31, 1996, between
the Registrant and Atlanta Foodquest, LLC - previously
filed.
10.2 Purchase and Sale Agreement dated March 31, 1996, between
the Registrant and Roasters Corp. - previously filed.
10.3 Management Agreement dated March 31, 1996, between the
Registrant and Roasters Corp. - previously filed.
FOODQUEST, INC.
INTRODUCTION TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
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The accompanying unaudited pro forma condensed consolidated statement of
operations for the year ended March 31, 1996 and pro forma condensed
consolidated balance sheet as of March 31, 1996 present the sale to Atlanta
FOODQUEST, LLC of the Company's two Atlanta area restaurants (the "Atlanta
Restaurants"), and the contract to sell its Dade County restaurants to Roasters
Corp. ( the "Dade Restaurants") as if the transactions had taken place at March
27, 1995 for the pro forma condensed consolidated statement of operations and
March 31, 1996 for the pro forma condensed consolidated balance sheet.
The pro forma adjustments described in the notes to the pro forma consolidated
financial information reflect a preliminary estimated allocation of the sale
price to net assets and are subject to final determination.
The pro forma financial information does not purport to be indicative of the
results which would have actually been obtained had the transactions been
consummated as of the assumed dates and for the period presented or which may be
obtained in the future. The pro forma financial information should be read in
conjunction with the historical consolidated financial statements of FOODQUEST.
FOODQUEST,INC.
PRO FORMA CONDENSED BALANCE SHEET
March 31, 1996
(Unaudited)
FOODQUEST FOODQUEST
Historical Pro Forma Consolidated
March 31, Adjustments Pro Forma
1996 Dr (Cr) Condensed
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ASSETS
Current assets:
Cash and cash equivalents $ 176,299 $ 490,395 k, l $ 666,894
Receivables and refundable deposits 96,940 (19,324) k, l 77,416
Inventory 54,341 (50,033) k, l 4,308
Prepaid expenses, and other current assets 75,187 (18,627) k, l 56,560
Due from joint venture 5,734 - 5,734
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Total current assets 408,501 402,411 810,912
Property and equipment 4,393,622 (3,710,090) k, l 683,532
Intangible assets 275,789 (275,789) k, l -
Notes receivable, net of allowance for doubtful account - 795,459 k, l, m 795,459
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Total assets 5,077,912 (2,788,009) 2,289,903
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 911,156 (24,952) k, l 886,204
Accrued liabilities 672,412 (190,639) k, l 481,773
Notes payable, current portion 567,326 (343,018) k, l 224,308
Other current liabilities 269,558 - k, l 269,558
Due to affiliate 685,320 (685,320) k, l -
Capital leases, current portion 127,566 (99,996) k, l 27,570
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Total current liabilities 3,233,338 (1,343,925) 1,889,413
Notes payable, net of current portion 1,628,514 (1,483,402) k, l 145,112
Capital leases, net of current portion 452,654 (326,446) k, l 126,208
Deferred rent 3,218 - 3,218
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Total liabilities 5,317,724 (3,153,773) 2,163,951
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Common stock 32,183 - 32,183
Additional paid-in capital 12,065,258 365,764 k, l 12,431,022
Accumulated deficit (12,337,253) - (12,337,253)
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Total shareholders' equity (239,812) 365,764 125,952
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Total liabilities and shareholders' equity $ 5,077,912 $ (2,788,009) $ 2,289,903
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See notes to unaudited pro forma statements
FOODQUEST, INC.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
for the year ended March 31, 1996
(Unaudited)
FOODQUEST
Historical FOODQUEST
Year ended Pro Forma Consolidated
March 31, Adjustments Pro Forma
1996 Dr (Cr) Condensed
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Restaurant revenues $ 7,652,030 $ (6,047,457) a,b $ 1,604,573
Franchise revenues 421,795 - 421,795
Management fee income 76,188 (76,188) n -
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Total revenues 8,150,013 (6,123,645) 2,026,368
Restaurant operating expenses 7,676,205 (5,740,335) c,d 1,935,870
General and administrative 1,325,170 - 1,325,170
Other expense 2,360,747 - 2,360,747
Depreciation and amortization 491,591 (370,112) e,f,g 121,479
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Total operating expenses 11,853,713 (6,110,447) 5,743,266
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Operating loss (3,703,700) (13,198) (3,716,898)
Interest expense, net (277,573) 233,773 h,i,j (43,800)
Equity in loss of joint venture (103,392) - (103,392)
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Net loss before income tax benefit (4,084,665) 220,575 (3,864,090)
Income tax (provision)/benefit - - -
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Net loss $ (4,084,665) $ 220,575 $ (3,864,090)
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Net loss per common share $ (1.27) $ (1.20)
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Weighted average number of 3,218,271 3,218,271
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common shares outstanding
See notes to unaudited pro forma statements
NOTES TO CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
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1. Basis of presentation
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The accompanying unaudited pro forma condensed balance sheet as of March 31,
1996 and pro forma condensed statement of operations for the year ended March
31, 1996 is presented as if the Company had completed the sale of the Atlanta
Restaurants and Dade Restaurants, on March 27, 1995 for the pro forma condensed
statement of operations and on March 31, 1996 for the pro forma condensed
balance sheet.
The historical pro forma condensed balance sheet as of March 31, 1996 was
derived from the Company's unaudited financial statements dated March 31, 1996.
The historical pro forma statement of operations for the year ended March 31,
1996 was derived from the Company's unaudited financial statements dated March
31, 1996.
2. Unaudited Pro Forma Adjustments
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A description of the adjustments included in the unaudited pro forma
consolidated statement of operations are as follows:
a. To reflect a reduction in restaurant sales of $4,350,253 in conjunction
with the Company's contract to sell the Dade Restaurants.
b. To reflect a reduction in restaurant sales of $1,697,204 in conjunction
with the Company's agreement to sell the Atlanta Restaurants.
c. To reflect a reduction in restaurant operating expenses of $4,013,647 in
conjunction with the Company's contract to sell Dade Restaurants.
d. To reflect a reduction in restaurant operating expenses of $1,726,688 in
conjunction with the Company's agreements to sell the Atlanta
Restaurants.
e. To reflect a reduction in depreciation expense of $244,148 in conjunction
with the Company's contract to sell the Dade Restaurants.
f. To reflect a reduction in depreciation expense of $114,597 in conjunction
with the Company's agreement to sell the Atlanta Restaurants.
g. To reflect a reduction in goodwill amortization expense of $11,367 in
conjunction with the Company's contract to sell the Dade Restaurants.
h. To reflect a reduction in interest expense from the elimination of the
following notes payable in conjunction with the Company's contract to sell
the Dade Restaurants:
(1) a note payable principal amount $139,542, with interest payable
at 7%.
(2) a note payable principal amount $161,672, with interest payable
at 9%.
(3) a note payable principal amount $146,000, with interest payable
at the prime rate plus 2%.
(4) a note payable principal amount $1,153,657, with interest payable
at 10%.
(5) a note payable principal amount $180,164, with interest payable
at 12%.
(6) a note payable principal amount $45,296, with interest payable at
10%.
i. To reflect a reduction in interest expense from the elimination of the
following capital leases in conjunction with the Company's contract to sell
the Dade Restaurants:
(1) a capital lease principal amount $170,697 with interest payable
at 13.4%.
(2) a capital lease principal amount $155,958 with interest payable
at 13%.
(3) a capital lease principal amount $155,958 with interest payable
at 13%.
j. To reflect a reduction in interest expense from the elimination of the
following capital leases in conjunction with the Company's agreement to
sell the Atlanta Restaurants:
(1) a capital lease principal amount $139,510 with interest payable
at 13.3%.
(2) a capital lease principal amount $119,394 with interest payable
at 10%.
k. To reflect the sale of the Dade Restaurants in accordance with the terms of
the contract by and between the Company and Roasters Corp. The Company will
sell its Dade Restaurants for $3,393,918 comprised of cash, the assumption
of third party debt and the cancellation of debt owed by the Company to
Roasters Corp. In accordance with the terms of the contract the Company
issued to Roasters a note payable principal amount $500,000 to be repaid at
the time of the contract closing. This is a preliminary allocation of the
sale price and is subject to final determination.
l. To reflect the sale of the Atlanta Restaurants in accordance with the terms
of the agreement by and between the Company and Atlanta FOODQUEST, LLC. The
Company sold its interest in the Atlanta Restaurants on March 31, 1996 for
approximately $1,300,000, to Atlanta FOODQUEST in exchange for a 49.9%
interest in that partnership. The purchase price is comprised of a note
receivable principal amount $1,011,423, the assumption of amounts owed to
Roasters Corp., and the assumption of third party debt.
m. To reflect a valuation allowance of $215,964 on the note receivable,
principal amount $1,011,423, received in the sale of the Atlanta
Restaurants to Atlanta FOODQUEST.
n. To reflect a reduction in management fee income of $76,188 in accordance
with the terms of the contract to sell the Dade Restaurants.
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 hereto duly authorized.
Date: May 29, 1996 FOODQUEST, INC.
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By:/s/ Ronald T. Linares
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Ronald T. Linares
Vice President and
Chief Financial Officer