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). The closing of the transaction between Eckler and SCHI occurred on
January 28, 1997. Based on the controlling interest in Eckler obtained by SCHI
as a result of this transaction, the transaction was 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 other companies. Prior to the Eckler
transaction, SCHI had previously entered into agreements to acquire the
outstanding capital stock or net assets of other companies. 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. In addition,
on June 27, 1997, Smart Choice Automotive Group, Inc. acquired certain assets
and assumed certain liabilities of Strata Holding, Inc. and Ready Finance, Inc.,
which were under common ownership. The acquisition of Eckler and the other
companies were accounted for as a purchase, with the assets acquired and
liabilities assumed recorded at their estimated fair values. These transactions
are reflected in the pro forma, as previously reported column on the pro forma
consolidated balance sheet as of December 31, 1996 and the pro forma
consolidated statements of operations for the year ended December 31, 1996 and
the six months ended June 30, 1997. These previously reported pro forma
financial statements were filed as Exhibit 99.2 in the Company's 8-K/A dated
June 27, 1997.
On August 29, 1997, Smart Choice Automotive Group, Inc. acquired the
outstanding capital stock of B&B Florida Enterprises, Inc. d/b/a Stuart Nissan.
This acquisition will be accounted for as a purchase, with the assets acquired
and liabilities assumed recorded at their estimated fair values.
The pro forma consolidated balance sheet as of December 31, 1996 assumes the
transaction was consummated as of December 31, 1996, and the pro forma
consolidated statements of operations for the year ended December 31, 1996 and
the six months ended June 30, 1997 assumes the transaction was consummated as of
January 1, 1996.
The pro forma consolidated financial statements may not be indicative of the
actual results of the transactions. In particular, the pro forma consolidated
financial statements are 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.
F-1
Acquisition of B&B Florida Enterprises, Inc.
The outstanding capital stock of B&B Florida Enterprises, Inc. d/b/a Stuart
Nissan was acquired for 86,546 shares of restricted common stock valued at
$6.3125 per share ($546,322) and $55,385 in acquisition costs.
The purchase price for Stuart Nissan is anticipated to be allocated as follows:
Fair value of assets acquired $ 3,686,691
Excess of cost over net assets acquired 2,786,076
-----------
6,472,767
Fair value of liabilities assumed (5,871,060)
===========
Total purchase price of net assets acquired $ 601,707
===========
F-2
Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Pro Forma Consolidated Balance Sheet
(Unaudited)
Consolidated
Pro Forma, SCHI
as Previously Pro Forma Stuart Eliminating Consolidated
December 31, 1996 Reported (1) Adjustments Nissan Entries Pro Forma
------------- ----------- ------ ------------- --------------
Assets:
Cash $ 714,287 $ $ 94,628 $ $ 808,915
Accounts receivable 450,684 162,203 612,887
Notes receivable 726,700 726,700
Finance receivables 24,293,541 24,293,541
Inventories 6,939,301 2,163,593 9,102,894
Prepaid expenses 1,417,723 11,100 1,428,823
Land held for sale 1,050,000 1,050,000
Deferred tax asset 330,610 330,610
Property and equipment, net 3,042,877 436,641 3,479,518
Investment in subsidiaries 601,707 (3) (601,707)
Excess of cost over net
assets acquired 17,909,929 2,786,076 20,696,005
Debt issue costs, net of
accumulated amortization 28,889 28,889
Deferred acquisition costs 39,110 (55,385)(3) 39,110
55,385 (2)
Other assets 245,651 10,300 255,951
----------- -------- ---------- --------- -----------
$57,189,302 $601,707 $2,878,465 $2,184,369 $62,853,843
=========== ======== ========== ========== ===========
See accompanying headnote and notes to pro forma consolidated
financial statements (unaudited).
F-3
Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Pro Forma Consolidated Balance Sheet
(Unaudited)
Consolidated
Pro Forma, SCHI
as Previously Pro Forma Stuart Eliminating Consolidated
December 31, 1996 Reported (1) Adjustments Nissan Entries Pro Forma
--------------- ----------- --------- ---------- -----------
Liabilities and Stockholders'
Equity
Accounts payable $ 2,306,186 $ 55,385(2) $ 837,742 $ $ 3,199,313
Bank overdraft 82,884 82,884
Notes payable 40,317,517 3,990,771 44,308,288
Advance from related parties 197,237 166,557 363,794
Accrued expenses 963,555 412,750 1,376,305
Deferred income 134,571 134,571
Customer deposits 409,675 409,675
Deferred income taxes 402,814 402,814
Convertible debentures 262,000 262,000
----------- -------- ---------- -------- ----------
Total liabilities 45,076,439 55,385 5,407,820 50,539,644
Stockholders' equity
(deficit) 12,112,863 546,322(3) (2,529,355) 2,184,369 12,314,199
----------- -------- ---------- --------- ----------
$57,189,302 $601,707 $2,878,465 $2,184,369 $62,853,843
=========== ======== ========== ========== ===========
See accompanying headnote and notes to pro forma
consolidated financial statements (unaudited).
F-4
Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Pro Forma Consolidated Statement of Operations (Unaudited)
Year Ended December 31, 1996
Consolidated Stuart
Pro Forma, Nissan
as Previously Stuart Pro Forma Consolidated
Reported (1) Nissan Adjustments Pro Forma
-------------- --------- ----------- ------------
Revenues $ 67,196,368 $24,473,010 $ $91,669,378
Costs and expenses:
Cost of sales 44,894,454 22,294,117 67,188,571
Operating expenses 22,188,479 3,667,704 69,652(4) 25,925,835
------------ ---------- -------- -----------
67,082,933 25,961,821 69,652 93,114,406
------------ ---------- -------- -----------
Income (loss) from operations 113,435 (1,488,811) (69,652) (1,445,028)
Other income (expense):
Interest expense (3,940,104) (389,000) (4,329,104)
Other 101,042 546,611 -- 647,653
------------ ---------- -------- -----------
(3,839,062) 157,611 -- (3,681,451)
------------ ---------- -------- -----------
Net income (loss) $ (3,725,627) $(1,331,200) $ (69,652) $(5,126,479)
============ =========== ========= ===========
Income (loss) per share $ (57)
===========
Weighted average number of common shares outstanding 8,924,634
===========
See accompanying headnote and notes to pro forma
consolidated financial statements (unaudited).
F-5
Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Pro Forma Consolidated Statement of Operations (Unaudited)
Six Months Ended June 30, 1997
Consolidated Stuart
Pro Forma, Nissan
as Previously Stuart Pro Forma Consolidated
Reported (1) Nissan Adjustments Pro Forma
-------------- --------- ------------ -----------
Revenues $ 33,770,697 $ 10,786,548 $ $ 44,557,245
Costs and expenses:
Cost of sales 22,517,391 9,535,333 32,052,724
Operating expense 15,596,791 1,410,934 34,826(4) 17,042,551
------------ ------------ ---------- ------------
38,114,182 10,946,267 34,826 49,095,275
------------ ------------ ---------- ------------
Income (loss)
from operations (4,343,485) (159,719) (34,826) (4,538,030)
------------ ------------ ---------- ------------
Other income (expense):
Interest expense (2,410,188) (112,758) (2,522,946)
Other 50,945 227,974 278,919
------------ ------------ ---------- ------------
(2,359,243) 115,216 -- (2,244,027)
------------ ------------ ---------- ------------
Net income (loss) $ (6,702,728) $ (44,503) $ (34,826) $ (6,782,057)
============ ============ ========== =============
Loss per share $ (.75)
=============
Weighted average number of common shares outstanding 9,023,739
=============
See accompanying headnote and notes to pro forma
consolidated financial statements (unaudited).
F-6
Smart Choice Automotive Group, Inc.
(Formerly Eckler Industries, Inc.)
Notes to Pro Forma Consolidated Financial Information
(Unaudited)
1. Pro Forma Financial Information
The consolidated pro forma, as previously reported column represents the pro
forma consolidated balance sheet as of December 31, 1996 and the pro forma
consolidated statements of operations for the year ended December 31, 1996 and
the six months ended June 30, 1997 which were filed as Exhibit 99.2 in the
Company's 8-K/A dated June 27, 1997.
The pro forma consolidated balance sheet as of December 31, 1996 assumes the
Stuart Nissan acquisition and the other acquisitions previously reported were
consummated as of December 31, 1996 and the pro forma consolidated statements of
operations for the year ended December 31, 1996 and the six months ended June
30, 1997 assumes the Stuart Nissan acquisition and the other acquisitions
previously reported were consummated as of January 1, 1996.
2. Deferred Acquisition Costs
Reflects the accrual of acquisition costs incurred after December 31, 1996.
3. Acquisition of B&B Florida Enterprises, Inc.
The outstanding capital stock of B&B Florida Enterprises, Inc. d/b/a Stuart
Nissan was acquired for 86,546 shares of restricted common stock valued at
$6.3125 per share ($546,322) and $55,385 in acquisition costs.
The purchase price for Stuart Nissan is anticipated to be allocated as follows:
Fair value of assets acquired $ 3,686,691
Excess of cost over net assets acquired 2,786,076
-----------
6,472,767
Fair value of liabilities assumed (5,871,060)
-----------
Total purchase price of net assets acquired $ 601,707
===========
4. 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 40 years.
F-7