SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 30, 1997
(Date of earliest event reported)
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SMART CHOICE AUTOMOTIVE GROUP, INC.
(Exact name of registrant as specified in its charter)
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Florida 1-14082 59-1469577
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
5200 South Washington Avenue, Titusville, Florida 32780
(Address of principal executive offices, zip code)
(407) 269-9680
(Registrant's telephone number, including area code)
Item 5. Other Events
(a) Following is pro forma consolidated financial information for the
six months ended June 30, 1997 together with accompanying discussion
pertaining to various acquisitions.
Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Pro Forma Consolidated Financial Information
Explanatory Headnote (Unaudited)
Introduction
On October 28, 1996, Eckler Industries, Inc. (Eckler) entered into an Agreement
and Plan of Reorganization (the "Agreement") with Smart Choice Holdings, Inc.,
(SCHI). SCHI had previously entered into agreements to acquire the
outstanding capital stock or net assets of other companies. The closing of the
transaction between Eckler and SCHI occurred on January 28, 1997. The
transactions between SCHI and the other companies closed on January 28, 1997
(prior to the Eckler and SCHI closing), February 12, 1997 and February 14, 1997.
Based on the controlling interest in Eckler obtained by SCHI as a result of this
transaction, the transaction will be accounted for as an acquisition of Eckler
by SCHI (a reverse acquisition in which SCHI is considered the acquirer for
accounting purposes).
SCHI was incorporated on June 21, 1996 and had no significant operations or
assets until it acquired Eckler and the other companies. The acquisition of
Eckler and the other companies will be accounted for as a purchase, with the
assets acquired and liabilities assumed recorded at their estimated fair values.
The pro forma condensed consolidated statement of operations for the six months
ended June 30, 1997 assumes the transactions were consummated as of January 1,
1997.
The pro forma condensed consolidated financial statement may not be indicative
of the actual results of the transactions. In particular, the pro forma
condensed consolidated financial statement is based on management's current
estimate of the allocations of purchase price, the actual allocation of which
may differ.
In the opinion of management, all adjustments have been made that are necessary
to present fairly the pro forma data.
Acquisition of Liberty Finance Company, Inc. and Affiliates
The outstanding capital stock of Liberty was acquired for $1,500,000 in notes
due to the seller, 352,156 shares of restricted common stock valued at $3.375
per share ($1,188,527) and $54,026 in acquisition costs. Prior to the
acquisition, the selling stockholder converted debt amounting to $628,941 to
the capital of Liberty.
The purchase price for Liberty is anticipated to be allocated as follows:
Fair value of assets acquired $ 15,818,914
Excess of cost over net assets acquired 1,633,463
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17,452,377
Fair value of liabilities assumed 14,709,824
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Total purchase price of
net assets acquired $ 2,742,553
==============
Acquisition of Florida Finance Group, Inc. and Affiliates
The outstanding capital stock of Florida Finance and the net assets of its
affiliated companies were acquired for $892,722 in notes due to the seller, the
issuance of 285,714 shares of restricted common stock valued at $3.375 per share
($964,285) and $40,643 in acquisition costs.
The purchase price for Florida Finance is anticipated to be allocated as
follows:
Fair value of assets acquired $ 5,015,224
Excess of cost over net assets acquired 3,238,721
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8,253,945
Fair value of liabilities assumed 6,356,295
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Total purchase price of
net assets acquired $ 1,897,650
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Acquisition of 225 North Military Trail Corporation and Affiliate
The net assets of 225 North Military Trail and Affiliate were acquired for
$3,000,000 cash, $1,250,000 in notes due to the seller, 285,714 shares of
restricted common stock valued at $3.375 per share ($964,286) and $53,299 in
acquisition costs.
The purchase price for 225 North Military Trail is anticipated to be allocated
as follows:
Fair value of assets acquired $ 5,108,400
Excess of cost over net assets acquired 808,278
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5,916,678
Fair value of liabilities assumed 649,093
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Total purchase price of
net assets acquired $ 5,267,585
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Acquisition of Dealer Development Services, Inc.
The outstanding capital stock of Dealer Development Services, Inc. was acquired
for $384,615 in notes due to the seller and $3,934 in acquisition costs.
The purchase price for Dealer Development Services is anticipated to be
allocated as follows:
Fair value of assets acquired $ 101,116
Excess of cost over net assets acquired 892,426
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993,542
Fair value of liabilities assumed 604,993
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Total purchase price of
net assets acquired $ 388,549
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Acquisition of Dealer Insurance Services, Inc.
The outstanding capital stock of Dealer Insurance Services, Inc. was acquired
for $365,385 in notes due to the seller and $20,627 in acquisition costs.
The purchase price for Dealer Insurance Services is anticipated to be allocated
as follows:
Fair value of assets acquired $ 132,461
Excess of cost over net assets acquired 421,485
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553,946
Fair value of liabilities assumed 167,934
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Total purchase price of
net assets acquired $ 386,012
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Acquisition of Eckler Industries, Inc.
The acquisition of Smart Choice Holdings, Inc. by Eckler will be accounted for
as an acquisition of Eckler by SCHI (a reverse acquisition in which SCHI is
considered the acquirer for accounting purposes). The purchase price for Eckler
is computed by valuing the outstanding shares of common stock of Eckler (the
equivalent of 2,757,500 shares) at $3.375 or $9,306,563 and acquisition costs of
$100,119.
The purchase price for Eckler is anticipated to be allocated as follows:
Fair value of assets acquired $ 6,366,508
Excess of cost over net assets acquired 7,004,572
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13,371,080
Fair value of liabilities assumed 3,964,398
______________
Total purchase price of
net assets acquired $ 9,406,682
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Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Pro Forma Consolidated Statement of Operations (Unaudited)
Six Months Ended June 30, 1997
225 North Dealer
Florida Military Develop- Dealers Pro Forma Consolidated
SCHI(1) Liberty(2) Finance(2) Trail(2) ment(2) Insurance(2) Eckler(2) Adjustments Pro Forma
---------- ---------- ---------- --------- ---------- ----------- --------- ----------- ---------
Revenues $22,904,591 $1,813,590 $ 389,037 $1,512,570 $ 104,630 $57,640 $853,881 $ $27,635,939
----------- ---------- ---------- ---------- --------- ------- -------- --------- -----------
Costs and expenses:
Cost of sales 15,206,441 1,511,731 289,820 1,060,814 582,117 18,650,923
Operating expenses 12,172,252 434,243 152,053 207,336 47,940 60,924 432,006 75,798(2) 13,582,552
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27,378,693 1,945,974 441,873 1,268,150 47,940 60,924 1,014,123 75,798 32,233,475
---------- ---------- ---------- --------- -------- ------- --------- -------- -----------
Income(loss)from
operations (4,474,102) (132,384) (52,836) 244,420 56,690 (3,284) (160,242) (75,798) (4,597,536)
Other income (expense):
Interest expense (1,623,500) (176,585) (64,061) (3,694) (122) (171) (23,728) (73,723)(3) (1,965,584)
Other 43,531 1,002 6,412 50,945
---------- ---------- ---------- -------- -------- ------- ------- --------- -----------
1,579,969) (176,585) (64,061) (3,694) 880 (171) $ (17,316) (73,723) (1,914,639)
---------- ---------- ---------- -------- -------- ------- --------- ---------- -----------
Net income (loss) $(6,054,071) $ (308,969) $(116,897) $ 240,726 $57,570 $(3,455) $(177,558) $(149,521) $(6,512,175)
=========== ========== ========== ========= ======== ======= ========= ========== ===========
Loss per share $ (.73)
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Weighted average number of common shares outstanding 8,937,193
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(1) The financial data includes the results of operations
of the four predecessors from the date of acquisition
to June 30, 1997.
(2) The financial data is the results of operations from
January 1, 1997 to the date of acquisition.
See accompanying headnote and notes to pro forma
consolidated financial statement (unaudited).
Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Notes to Pro Forma Consolidated Financial Information
(Unaudited)
1. Pro Forma Adjustments
The pro forma condensed consolidated statement of operations for the six months
ended June 30, 1997 assumes the transactions were consummated as of January 1,
1997. The results of operations of the acquired companies after the dates of
acquisition are included in the results of operations of SCHI.
2. Amortization of Excess Cost over Fair Value of Assets Acquired
This adjustment reflects the amortization of excess cost over fair value of
assets acquired over 20 years.
3. Interest Expense
This adjustment reflects the net additional interest expense on the indebtedness
incurred as partial payment of the purchase price of the acquired companies,
reduced by the interest expense incurred on debt converted to capital by the
sellers of one of the acquired companies.
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(b) On May 13, 1997, the Company closed on an additional $4,000,000 loan (the
"May Loan") from Sirrom Capital Corporation ("Sirrom"). The Company executed a
convertible promissory note in the principal amount of $4,000,000 which bears
interest at 12% per annum, with interest only, payable quarterly, and which
matures on May 12, 2002. The note is convertible at any time into Common Stock
at the conversion rate of $7.50, subject to adjustments. Further, Sirrom has
certain registration rights for the shares issuable upon conversion of the
Company's obligations to Sirrrom. The May Loan brings the aggregate borrowings
from Sirrom to $7,500,000, all of which is secured by the Company's real and
personal property.
Item 7. Exhibits.
10.55 Loan Agreement dated May 13, 1997 Filed herewith
between the Company and Sirrom
Capital Corporation ("Sirrom")
10.56 $4,000,000 Convertible Senior Exhibit 10.19 to Form 10-Q,
Promissory Note dated May 13, 1997, filed May 20, 1997, File No.
the Company, maker, Sirrom, payee 1-14082
10.57 Amended and Restated Registration Exhibit 10.20 to Form 10-Q,
Rights Agreement between the Company filed May 20, 1997, File No.
and Sirrom, dated May 13, 1997 1-14082
SIGNATURES
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.
Smart Choice Automotive Group, Inc.
By:/s/ Gary R. Smith
August 28, 1997 Gary R. Smith, President