<PAGE>
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) June 28, 1996
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Grand Prix Association of Long Beach, Inc.
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(Exact name of registrant as specified in its charter)
California 1-11837 95-2945353
- ---------------------- ----------- --------------
(State or other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
3000 Pacific Avenue, Long Beach, California 90806
- -------------------------------------------- ---------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (310) 981-2600
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N.A.
----
(Former name or former address, if changed since last report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
On June 28, 1996, concurrently with the closing of its initial
public offering of securities ("Initial Public Offering"), Grand Prix
Association of Long Beach, Inc. (the "Company"), acquired substantially all of
the assets (the "Assets") of Memphis International Motorsports Park, Inc.
("Seller"). The Assets were acquired pursuant to an Agreement of Purchase and
Sale of Assets, dated as of May 6, 1996, as amended, entered into by and between
the Company and the Seller.
The purchase price paid by the Company for the Assets was
$5,000,000, payable in the form of $2,500,000 in the assumption of liabilities
of Seller, which liabilities were paid off by the Company at the closing of the
acquisition out of the proceeds from the Company's Initial Public Offering, and
$2,500,000 in the form of the newly authorized Series B Convertible Preferred
Stock of the Company, which stock was valued at the same price as the offering
price of the Company's common stock in its Initial Public Offering, or $10.00
per share. The purchase price paid for the Assets was arrived at by arms' length
negotiations between the parties.
The Assets acquired by the Company, which comprise the Memphis
International Motosports Park, a motorsports facility located in Millington,
Tennessee, inlcude approximately 375 acres of land (acquired by the Company in
fee simple), together with all buildings and structures thereon, and certain
furniture, fixtures and equipment located thereon, including a drag strip, oval
track and road course and approximately 14,000 portable grandstand seats, 5,000
permanent grandstand seats and two sets of bleachers. The Company intends to
continue to use the Assets in the operation of a motorsports park and, in
addition, the Company intends to use an additional approximately $2,500,000 from
the proceeds of its Initial Public Offering to make improvements to this
motorsports facility in order to turn it into a modern multi-purpose motorsports
facility capable of hosting a wide assortment of motorsports events.
2
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Item 7. FINANCIAL STATEMENTS, PRO-FORMA FINANCIAL INFORMATION AND EXHIBITS.
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Exhibits.
- --------
(a) Financial Statements
The following Consolidated Financial Statements are incorporated
by reference herein from pages F-18 through F-26 of the Company's Pre-Effective
Amendment No. 2 to its Registration Statement on Form SB-2 (No. 333-4834- LA)
filed with the Commission on June 28, 1996, which pages are included as Exhibit
99.1 to this report.
-- Independent Auditors' Report
-- Balance Sheet as of December 31, 1995 and March 31, 1996
(Unaudited)
-- Statements of Income (Loss) for the Years Ended December 31,
1994 and 1995 and the Three Months ended March 31, 1995
and 1996 (Unaudited)
-- Statements of Shareholders' Equity (Deficit) for the Years
Ended December 31, 1994 and 1995 and the Three Months
Ended March 31, 1996 (Unaudited)
-- Statements of Cash Flows for the Years Ended December 31, 1994
and 1995 and the Three Months Ended March 31, 1995 and
1996 (Unaudited)
-- Notes to Financial Statements
(b) Pro-Forma Financial Information
The following Pro Forma Condensed Combining Financial Statements
are incorporated by reference herein from pages PF-1 through PF-6 of the
Company's Pre-Effective Amendment No. 2 to its Registration Statement on Form
SB-2 (No. 333-4834 - LA) filed with the Commission on June 28, 1996, which pages
are included as Exhibit 99.2 to this report.
-- Introduction
-- Pro Forma Condensed Combining Balance Sheet as of March 31,
1996
-- Pro Forma Condensed Combining Statement of Operations: For the
Year Ended June 30, 1995 and for the Nine Months Ended
March 31, 1996
-- Notes to Pro Forma Condensed Combining Financial Statements
(c) Exhibits
The following exhibits required by Item 601 of Regulation S-B are filed
herewith:
Exhibit # Description
- --------- -----------
10.8 Agreement dated as of May 6, 1996 ("Memphis Acquisition
Agreement") between Grand Prix Association of Long Beach, Inc.
and Memphis International Motorsports Park, Inc. (Incorporated by
reference to Exhibit 10.8 to the Company's Pre-Effective
Amendment No. 2 to its Registration
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Statement on Form SB-2 (No. 333-4834 - LA), filed with the
Commission on June 28, 1996 ("Amendment No. 2").
10.29 First Amendment dated June 28, 1996 to Memphis Acquisition
Agreement by and among Grand Prix Association of Long Beach,
Inc., Automotive Safety & Transportation Systems, Inc. and
Memphis International Motorsports Park, Inc.
99.1 Pages F-18 through F-26 of Amendment No. 2 (containing Financial
Statements of Memphis International Motorsports Park, Inc. as set
forth in Item 5(a) of this report).
99.2 Pages PF-1 through PF-6 of Amendment No. 2 (containing Pro-Forma
Financial Information as set forth in Item 5(b) of this report).
4
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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.
GRAND PRIX ASSOCIATION OF
LONG BEACH, INC.
Date: July 10, 1996 By: /s/ Christopher R. Pook
-----------------------
Christopher R. Pook
Chairman of the Board
5
<PAGE>
EXHIBIT 10.29
FIRST AMENDMENT TO
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This First Amendment (the "Amendment") is made as of June 28, 1996 by and
among GRAND PRIX ASSOCIATION OF LONG BEACH, INC. ("Grand Prix"), a California
corporation, having its principal office at 3000 Pacific Ave., Long Beach,
California 90806, AUTOMOTIVE SAFETY & TRANSPORTATION SYSTEMS, INC. (hereinafter
referred to as the "Buyer" or "AST"), a California corporation and a wholly
owned subsidiary of Grand Prix, having its principal place of business at 3000
Pacific Avenue, Long Beach, CA 90806, and MEMPHIS INTERNATIONAL MOTORSPORTS
PARK, INC. (hereinafter referred to as the "Seller"), a Tennessee corporation,
having its principal office at 5500 Taylor Forge Drive, Millington, Tennessee
38053.
WHEREAS, the Seller and Grand Prix entered into an Agreement For Purchase
And Sale Of Assets dated May 6, 1996 (the "Agreement") pursuant to which the
Seller agreed to transfer and sell substantially all of the Seller's assets to
Grand Prix in exchange for shares of the voting convertible preferred stock of
Grand Prix on the terms and subject to the conditions of the Agreement;
WHEREAS, the Seller and Grand Prix desire to amend the Agreement in
accordance with the terms and provisions of this Amendment.
THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this Amendment, the parties agree
as follows:
I. ARTICLE ONE: PURCHASE AND SALE OF ASSETS
A. Article I(A) of the Agreement, entitled Sale and Transfer of Assets, is
---------------------------
hereby amended by deleting all of the terms and provisions thereof and
substituting in lieu thereof the following as Article I(A):
"A. Sale and Transfer of Assets. Subject to the terms and conditions set
---------------------------
forth in the Agreement, Seller agrees to sell, convey, transfer, assign, and
deliver to Buyer, and Buyer agrees to purchase from Seller, the following
described assets:
1. approximately 375 acres of land (outlined on Exhibit "A" hereto)
together with all buildings and structures thereon (the "Real
Property"), and the furniture, fixtures, and equipment located therein
(including, but not limited to, concession stands and equipment
(excluding fuel pumps and USTs which are being removed as described
herein), maintenance facility and maintenance
1
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equipment) which are listed on Exhibit "B" hereto, situated in Shelby
County, Tennessee, which is improved with, among other things, a 1/4
mile regulation NHRA approved drag strip with 14,238 grandstand seats,
accompanying support facilities, a 5/8 mile oval with approximately
5,500 permanent grandstand seats and 10 corporate suites, an SCCA
approved road course, and a 1/8 mile dirt oval with two sets of
bleachers accommodating approximately 1,000 seats (the "Park"),
2. Seller's contractual rights and powers under the contracts and
agreements of Seller as described on Exhibit "C" hereto, subject to
the obligations of Seller contained therein (the "Contracts");
3. the name "Memphis International Motorsports Park", and
4. the unregistered trademark/servicemark (including any
trademark/servicemark that Seller may register with the Tennessee
Secretary of State after the date hereof) consisting of a checkered
flag and wavy "M" depicted on Exhibit "D" hereto.
All of which assets are sometimes collectively referred to as the
"Assets"."
B. Article I(B) of the Agreement, entitled Consideration, Assumption of
----------------------------
Certain Liabilities, is hereby amended by deleting all of the terms and
- -------------------
provisions thereof and substituting in lieu thereof the following as Article
I(B):
"B. Consideration, Assumption of Certain Liabilities. In consideration
-------------------------------------------------
for the Assets, Grand Prix and Buyer agree as follows:
1. On the Closing Date, Seller will receive from Grand Prix a number of
shares of Grand Prix's Series B voting preferred convertible shares, as
hereinafter described, (the "Preferred Stock"), having an aggregate stated value
of Two Million Five Hundred Thousand and no/100 Dollars ($2,500,000.00), such
value and number of shares to be based upon the offering price per share of the
shares of common stock of Grand Prix offered by Grand Prix to secure financing
for acquisition of the Assets (the "IPO"). The shares of Preferred Stock shall
be convertible at any time and from time to time on and after June 30, 1997 into
shares of Grand Prix's common stock, which will have the same rights,
preferences and privileges as the common stock being issued in the IPO, (the
"Common Stock") on a 1 share for 1 share basis subject to adjustment to reflect
any and all stock splits, stock dividends, recapitalizations, options issued
allowing for purchase of Common Stock for less than fair market value, or
similar events, so that the Preferred Stock and conversion rights into Common
Stock with
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respect thereto are not diluted in any manner whatsoever after the Closing Date
and prior to conversion into Common Stock.
The Preferred Stock will bear an aggregate annual cumulative dividend
rate equal to 4.185% of $2,500,000.00 (calculable and payable on a per share
basis on or before each anniversary of Closing or upon conversion of all
remaining Preferred Stock prior to such anniversary) until the date converted.
Dividends shall cease on the date of conversion, or December 31, 1998 or upon
payment of the unassumed indebtedness of Seller referred to below, whichever
shall be earliest.
If Seller does not convert any of the Preferred Stock into Common
Stock on or prior to December 31, 1998, then Grand Prix shall, at any time
during the month of January, 1999, call and redeem all of the Preferred Stock at
a $.01 per share redemption price and the Buyer shall assume, pay and indemnify
Seller, its shareholders and their legal representatives and heirs from and
against all unpaid loan indebtedness of Seller not assumed by Buyers at Closing
(as set forth on Exhibit "G" hereto) not to exceed the total sum of One Million
Five Hundred Thousand Dollars ($1,500,000.00). If Seller exercises its right to
convert any of the Preferred Stock, then Buyer shall have no obligation with
respect to such unpaid loan indebtedness of Seller not assumed by Buyer at
Closing. When used herein, the phrase "loan indebtedness of Seller not assumed
by Buyer" or "unassumed indebtedness of Seller" shall mean that part of the
total loan or other indebtednesses of Seller (as the same may be restructured in
accordance with this Agreement), which may fluctuate from time to time in the
ordinary course of Seller's business, which is not assumed by Buyer, and shall
not mean any loan indebtedness of Seller incurred after Closing. Any amendments,
modifications, renewals, extensions or other changes to such unassumed
indebtedness of Seller made after Closing shall be subject to approval by Buyer.
Notwithstanding any other provision of this Agreement to the contrary, Grand
Prix consents to the pledge of the Preferred Stock by Seller as collateral with
respect to such loan indebtedness of Seller not assumed by Buyer.
2. Buyer agrees to assume, pay and perform all of Seller's agreements,
duties and obligations (including, but not limited to, the assumption and
payment of $2,500,000.00 of Seller's loan indebtedness) under only those
contracts listed and as provided in Exhibit "E" (the "Assumed Liabilities"). It
is expressly understood and agreed that Buyer shall not be liable for any of the
obligations or liabilities of Seller of any kind and nature other than those
specifically assumed by Buyer under this Agreement."
C. Article I(C) of the Agreement, entitled Instruments of Conveyance, is
-------------------------
hereby amended by deleting all of the terms and provisions thereof and
substituting in lieu thereof the following as Article I(C):
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"C. Instruments of Conveyance. Seller shall deliver assignments, bills of
-------------------------
sale, deeds and such other instruments of conveyance as shall be effective to
vest in the Buyer, or at the Buyer's direction Memphis International Motorsports
Corporation, Inc. ("MIMC"), a Tennessee corporation and a wholly owned
subsidiary of Buyer, all right, title and interest of the Seller in and to the
Assets on the dates set forth below."
D. Article I(D) of the Agreement, entitled Further Assurances, is hereby
------------------
amended by deleting all of the terms and provisions thereof and substituting in
lieu thereof the following as Article I(D):
"D. Further Assurances. Seller, at any time after the Closing Date, will
------------------
execute, acknowledge, and deliver any further deeds, assignments, conveyances,
and other documents, and instruments of transfer, reasonably requested by Buyer
or at Buyer's direction MIMC, and will take any other action consistent with the
terms of this Agreement that may reasonably be requested by Buyers or at Buyer's
direction MIMC for the purpose of assigning, transferring, granting, conveying,
and confirming to Buyer or at Buyer's direction MIMC, or reducing to possession,
any or all property to be conveyed and transferred under this Agreement. If
requested by Buyer or at Buyer's direction MIMC, Seller further agrees to
prosecute or otherwise enforce in its own name for the benefit of Buyer any
claims, rights, or benefits that are transferred to Buyer or at Buyer's
direction MIMC under this Agreement and that require prosecution or enforcement
in Seller's name. Any such action or prosecution or enforcement of claims,
rights, or benefits under this paragraph shall be solely at Buyer's expense or
at Buyer's direction MIMC's expense, unless the action, prosecution or
enforcement is made necessary by a breach of this Agreement by the Seller."
II. ARTICLE TWO: CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
Each of the conditions precedent to Seller's performance as set forth in
Article VII of the Agreement as they relate to Grand Prix shall also relate to
each of the Buyer as applicable.
III. ARTICLE THREE: THE CLOSING
All references in Article VIII of the Agreement, entitled The Closing, to
-----------
the "Buyer" or "Grand Prix" shall relate to the Buyer as applicable. Article
VIII(C)(4) to the Agreement shall also apply to Grand Prix.
IV. ARTICLE FOUR: OBLIGATIONS OF GRAND PRIX AND BUYER AFTER CLOSING
Article X of the Agreement, entitled Obligations of Grand Prix and Buyer
-----------------------------------
after Closing, is hereby amended by deleting all of the
- -------------
4
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terms and provisions thereof and substituting in lieu thereof the following as
Article X:
"A. Employment of Key Personnel. Buyer agrees that one of them will
---------------------------
continue to employ for a period of at least nine (9) months from and after the
Closing Date the following persons (the "Employees") at not less than the salary
they were receiving and in the position they occupied on December 31, 1995 and
each such Employee will be paid severance equal to three (3) months salary if
employment is terminated by Buyer who employs Employee at or after the
expiration of such nine (9) month period: Bill Whitten, Janet Newman, John
Graham and Pete Wickham. If Buyer terminates any Employee without cause prior
to the expiration of such nine (9) month period, then Buyer shall pay such
Employee all salary due plus salary for the balance of such nine (9) month
----
period plus such severance pay equal to three (3) months salary. Buyer shall
----
provide to each of the Employees at or before the Closing letters signed by
Buyer who employs Employee confirming the foregoing employment agreement of such
Buyer.
B. Grand Prix's and Buyer's Indemnity. Grand Prix and the Buyer, jointly
----------------------------------
and severally, shall indemnify, defend, and hold harmless Seller, its
shareholders and their legal representatives and heirs against and in respect of
any and all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including interest, penalties, and
reasonable attorneys' fees, that Seller or its shareholders or legal
representatives or heirs shall incur or suffer, that arise, result from, or
relate to (1) any breach of, or failure by Grand Prix or either of the Buyer to
perform, any of Grand Prix's or Buyer representations, warranties, covenants, or
agreements in this Agreement or in any certificate, exhibit, or other instrument
furnished or to be furnished by Grand Prix or Buyer under this Agreement,
including, but not limited to, the failure to pay when due (a) any of the
Assumed Liabilities or (b) any liability required by this Agreement to be
assumed by Grand Prix or Buyer after the Closing, and (2) Grand Prix's or the
Buyer's use, possession and operation of the Assets from and after the
Acquisition Date.
Seller and such other indemnified parties shall promptly notify Grand
Prix or Buyer of the existence of any claim, demand, or other matter to which
Grand Prix's and the Buyer's indemnification and obligations would apply, and
shall give Grand Prix and Buyer a reasonable opportunity to defend the same at
their own expense and with counsel of their own selection; provided that Seller
and such other indemnified parties shall at all times also have the right to
fully participate in the defense at its own expense. If Grand Prix or Buyer,
within a reasonable time after this notice, fail to defend, Seller and such
other indemnified parties shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle (exercising reasonable
5
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business judgment), the claim or other matter on behalf of, for the account, and
at the risk, of Grand Prix and Buyer. If the claim is one that cannot by its
nature be defended solely by Grand Prix or Buyer (including, without limitation,
any federal or state tax proceedings), then Seller and such other indemnified
parties shall make available all information and assistance that Grand Prix and
Buyer may reasonably request."
V. ARTICLE FIVE: SELLER'S INDEMNITY REGARDING UST'S AND CLINE
LAWSUIT
In the event that the Closing takes place, Seller shall indemnify, defend,
and hold harmless Buyer (or MIMC rather than Buyer if the Assets are transferred
to MIMC pursuant to Article I(C)) against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages, recoveries,
and deficiencies, including interest, penalties, and reasonable attorneys' fees,
that Grand Prix and Buyer shall incur or suffer, that arise, result from, or
relate to (a) the removal of the seven (7) underground storage tanks located in
the Real Property (the "UST's") to be removed after the Closing and the costs of
remediation of any contamination of the Real Property resulting from the use by
Seller of any of such UST's on or prior to the Closing Date, except that Seller
shall not be obligated to indemnify Buyer or MIMC for any acts or omissions of
the Buyer or MIMC or their employees, agents or contractors, and (b) any
liability of Seller that may arise in the lawsuit Richard F. Cline et al. v.
--------------------------
Memphis International Motorsports Park, Inc. et al., Docket No. 69328 T.D.-7,
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Circuit Court of Tennessee for the Thirtieth Judicial District at Memphis.
VI. ARTICLE SIX: SELLER'S COVENANT NOT TO COMPETE
Article IX(E) of the Agreement, entitled Covenant Not To Compete, is hereby
-----------------------
amended by deleting the words "fifty (50) mile radius" at the end of the first
paragraph and substituting the words "one hundred fifty (150) mile radius" in
lieu thereof.
VII. ARTICLE SEVEN: TAX TREATMENT
The acquisition of the Assets pursuant to this Agreement is intended to
qualify as a reorganization under Section 368(a)(1)(C) and (a)(2)(C) of the
Code. All references in the Agreement to "Section 368(a)(1)(c)" shall be
amended to refer to such "Section 368(a)(1)(C) and (a)(2)(C)". Grand Prix and
Buyer covenant and, if the Assets are transferred to MIMC pursuant to Article
I(C) MIMC also covenants, that they will report the acquisition of the Assets as
a tax-free reorganization under Sections 368 (a)(1)(C) and (a)(2)(C) of the
Code.
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VIII. ARTICLE EIGHT: REPRESENTATIONS AND WARRANTIES OF
GRAND PRIX AND BUYER
A. Grand Prix and Buyer, jointly and severally, represent and warrant
that:
1. Corporate Existence. Buyer is a Corporation duly organized, existing,
-------------------
and in good standing under the laws of California.
2. Authority; No Consents Required. Buyer has the right, power, legal
-------------------------------
capacity and authority to enter into, and perform its obligations under, this
Agreement. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement by the Buyer has
been duly authorized, and no further corporate action or authorization is
necessary on the part of Buyer and this Agreement is a legal, valid and binding
obligation of the Buyer. No consent, approval, or authorization of, or
declaration, filing, or registration with, any United States federal or state
governmental or regulatory authority is required to be made or obtained by the
Buyer in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement except for the registration statement with respect to any Common Stock
issuable with respect to the Preferred Stock becoming effective pursuant to
Article XX of the Agreement.
3. No default. The execution of this Agreement by the Buyer and the
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performance of its obligations will not violate or result in a breach of or
constitute a default under the Buyer's Certificate of Incorporation or by-laws,
as amended, or any agreement or order to which the Buyers is a party or by which
it is bound.
4. Voting, Convertible Preferred Stock. The shares of Preferred Stock to
-----------------------------------
be delivered pursuant to this Agreement will be duly authorized and will, when
so authorized by the Board of Directors of Grand Prix and issued in accordance
with the terms hereof, be validly issued and outstanding, fully paid and
nonassessable, and will possess, in addition to the dividend rights described in
Article I of the Agreement, the same voting rights and all other rights,
preferences and privileges as Grand Prix's common stock and upon conversion into
Common Stock, such Common Stock will have been duly authorized and will be
validly issued and outstanding, fully paid and nonassessable, and will possess
all of the rights, preferences and privileges as the Grand Prix's common stock
being issued in the IPO. Buyer further covenants that it shall comply with all
applicable securities laws and regulations in connection with the issuance of
the Preferred Stock.
5. Tax Reporting. Grand Prix and Buyer covenant that they will report
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the acquisition of the Assets contemplated by this
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Agreement as a tax-free reorganization under Section 368(a)(1)(C) and (a)(2)(C)
of the Internal Revenue Code of 1986 (as amended) (herein the "Code"). Buyer
shall cooperate as reasonably requested by Seller in connection with such tax
treatment.
6. Capital Stock. The authorized, issued and outstanding capital stock
-------------
of Grand Prix as of the date hereof is as follows:
<TABLE>
<CAPTION>
Class Authorized Outstanding
----- ---------- -----------
<S> <C> <C>
Common Stock 20,000,000 3,590,590
Preferred Stock 10,000,000
Series A 343,750 343,750
Series B 280,000 -0-
</TABLE>
7. Parent Subsidiary Relationship. Buyer is a wholly owned subsidiary of
------------------------------
Grand Prix and is controlled by Grand Prix within the meaning of Section 368 of
the Code. MIMC is a wholly owned subsidiary of Buyer and is controlled by Buyer
within the meaning of Section 368 of the Code.
8. Full Disclosure. None of the representations and warranties made by
---------------
Buyer in this Agreement, or made in any certificate furnished or to be furnished
by Buyer or on its behalf pursuant to this Agreement, contains or will contain
any untrue statement of a material fact, or omits to state a material fact
necessary to make the statements made, in the light of the circumstances under
which they were made, not misleading.
IX. ARTICLE NINE: REMEDIES
All references in Article XV of the Agreement, entitled Remedies, to "Grand
--------
Prix" shall also be interpreted to include the Buyer.
X. ARTICLE TEN: NOTICES
All notices, requests, demands and other communications to the Buyer under
this Agreement shall be given in the same manner as provided in Article XVII of
the Agreement to the Buyer at either the address/fax given for Grand Prix or at:
5500 Taylor Forge Road
Millington, Tennessee 38053
FAX: (901) 358-7274
XI. ARTICLE ELEVEN: AMENDMENT
All references to the "Agreement" in the Agreement and this Amendment shall
mean the Agreement as amended by this Amendment. All references to the "Buyer"
in the Exhibits to the Agreement shall also include AST. The terms and
provisions of this Amendment
8
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shall control in the event of any conflict between the terms and provisions of
the Agreement and this Amendment.
XII. ARTICLE TWELVE: ENVIRONMENTAL PHASE I REPORT AND
CLEAN-UP
The Seller agrees to be responsible for the cost of clean-up of the
environmental matters recommended for clean-up in the ASI Envrironmental Phase I
dated June ,1996 which are described and set forth on Exhibit A hereto (the
"Clean-Up"). The Seller will initiate such Clean-Up as soon as is reasonably
practical after the Closing Date and proceed to diligently complete such Clean-
Up subject to any delays resulting from contingencies beyond its reasonable
control.
XIII. ARTICLE THIRTEEN: SIGNATURES
IN WITNESS WHEREOF, the parties to this Amendment have duly executed it as
of the day and year first above written.
GRAND PRIX ASSOCIATION OF
LONG BEACH, INC. (Grand Prix)
By: /s/ Marlene A. Davis
---------------------
Print Name: Marlene A. Davis
Title: Chief Financial Officer
AUTOMOTIVE SAFETY & TRANSPORTATION
SYSTEMS, INC. (AST)
By: /s/ Marlene A. Davis
--------------------
Print Name: Marlene A. Davis
Title: Chief Financial Officer
MEMPHIS INTERNATIONAL MOTORSPORTS
PARK, INC. (Seller)
By: /s/ Ed Gatlin
-------------------
Ed Gatlin, President
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EXHIBIT 99.1
INDEPENDENT AUDITORS' REPORT
To the Officers and Directors
Memphis International Motorsports Park, Inc.
Memphis, Tennessee
We have audited the accompanying balance sheet of Memphis International
Motorsports Park, Inc. as of December 31, 1995, and the related statements of
income (loss), changes in stockholders' equity (deficit), and cash flows for
the years ended December 31, 1994 and 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Memphis International
Motorsports Park, Inc. as of December 31, 1995, and the results of its
operations and its cash flows for the years ended December 31, 1994 and 1995,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 6 to the
financial statements, the Company has suffered recurring losses from
operations which has raised substantial doubt about its ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
LAMON, ALSOBROOK & ASSOCIATES,
Certified Public Accountants
February 22, 1996
F-18
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MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND MARCH 31, 1996
<TABLE>
<CAPTION>
DECEMBER MARCH 31,
31, 1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................... $ 22,264 $ 30,662
Cash--restricted................................... -- 137,471
Accounts receivable--trade......................... 2,308 85,780
--employees................................ 3,962 15,005
Merchandise inventory.............................. 15,303 15,136
Prepaid expenses................................... 11,941 14,662
----------- -----------
Total current assets............................. 55,778 298,716
Property and equipment:
Land............................................... 981,993 981,993
Racing facilities and equipment.................... 5,661,172 5,661,172
Furniture and fixtures............................. 47,210 47,210
----------- -----------
6,690,375 6,690,375
Less: accumulated depreciation..................... 2,756,529 2,833,777
----------- -----------
Total property and equipment..................... 3,933,846 3,856,598
Other assets:
Deposits........................................... 1,786 1,786
----------- -----------
Total assets................................... $ 3,991,410 $ 4,157,100
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt.................. $ 664,644 $ 841,267
Accounts payable................................... 15,680 6,495
Accrued interest................................... 36,124 37,588
Accrued taxes...................................... 30,650 17,201
Commissions payable................................ -- 6,995
Deferred income.................................... 5,885 309,635
----------- -----------
Total current liabilities........................ 752,983 1,219,181
Long-term debt, less current portion................. 3,255,002 3,206,859
----------- -----------
Total liabilities.............................. 4,007,985 4,426,040
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $1.00 par value; 5,000,000 shares
authorized; 1,743,302 issued and outstanding...... 1,743,302 1,743,302
Additional paid-in capital......................... 3,889,068 3,889,068
Retained earnings (deficit)........................ (5,648,945) (5,901,310)
----------- -----------
Total stockholders' equity (deficit)........... (16,575) (268,940)
----------- -----------
Total liabilities and stockholders' deficit.... $ 3,991,410 $ 4,157,100
=========== ===========
</TABLE>
See accountants' report and notes to financial statements.
F-19
<PAGE>
MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
STATEMENTS OF INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS ENDED
31, MARCH 31,
--------------------- --------------------
1994 1995 1995 1996
--------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Major event revenues
Admissions..................... $ 970,112 $1,198,377 $ 5,902 $ --
Sponsorships................... 83,500 84,500 18,125 17,500
Ancillary...................... 1,163,989 1,213,039 34,009 --
--------- ---------- --------- ---------
Total major event revenues... 2,217,601 2,495,916 58,036 17,500
Other operating revenues........ 256,249 355,825 73,050 50,791
--------- ---------- --------- ---------
Total revenues............... 2,473,850 2,851,741 131,086 68,291
--------- ---------- --------- ---------
Expenses:
Major event expenses........... 1,565,683 1,831,718 31,166 9,769
Other operating expenses....... 62,841 87,138 9,409 9,103
General and administrative
expenses...................... 507,260 621,516 137,309 143,282
Depreciation and amortization.. 303,731 309,451 76,662 77,248
--------- ---------- --------- ---------
2,439,515 2,849,823 254,546 239,402
--------- ---------- --------- ---------
Income (loss) from operations.... 34,335 1,918 (123,460) (171,111)
--------- ---------- --------- ---------
Other income (expense):
Interest expense............... (321,555) (319,164) (81,598) (79,337)
Gain (loss) on sale of
equipment..................... -- (1,336) -- --
Gain (loss) on destruction of
fixed assets.................. (38,464) -- -- --
Other, net..................... 36,717 17,196 296 453
--------- ---------- --------- ---------
Total other income
(expense)................... (323,302) (303,304) (81,302) (78,884)
--------- ---------- --------- ---------
Income (loss) before provision
for income taxes................ (288,967) (301,386) (204,762) (249,995)
(Provision) benefit for income
taxes........................... (9,708) (9,170) (2,250) (2,370)
--------- ---------- --------- ---------
Net income (loss)................ $(298,675) $ (310,556) $(207,012) $(252,365)
========= ========== ========= =========
Income (loss) per share:
Continuing operations.......... $ (.22) $ (.20) $ (.13) $ (.14)
========= ========== ========= =========
Weighted average number of common
and common equivalent shares
outstanding..................... 1,388,367 1,586,002 1,571,702 1,743,302
========= ========== ========= =========
</TABLE>
See accountants' report and notes to financial statements.
F-20
<PAGE>
MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
-------------------- PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
--------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31,
1993................... 1,371,700 $1,371,700 $3,889,068 $(5,039,714) $ 221,054
Shares purchased........ 200,002 200,002 -- -- 200,002
Net loss................ -- -- -- (298,675) (298,675)
--------- ---------- ---------- ----------- ---------
BALANCE, December 31,
1994................... 1,571,702 1,571,702 3,889,068 (5,338,389) 122,381
Shares purchased........ 171,600 171,600 -- -- 171,600
Net loss................ -- -- -- (310,556) (310,556)
--------- ---------- ---------- ----------- ---------
BALANCE, December 31,
1995................... 1,743,302 1,743,302 3,889,068 (5,648,945) (16,575)
Net loss for the three
months ended March 31,
1996................... -- -- -- (252,365) (252,365)
--------- ---------- ---------- ----------- ---------
BALANCE, March 31, 1996
(unaudited)............ 1,743,302 $1,743,302 $3,889,068 $(5,901,310) $(268,940)
========= ========== ========== =========== =========
</TABLE>
See accountants' report and notes to financial statements.
F-21
<PAGE>
MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS ENDED
31, MARCH 31,
-------------------- --------------------
1994 1995 1995 1996
--------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)................. $(298,675) $(310,556) $(207,012) $(252,365)
Adjustments to reconcile net
income (loss) to cash provided by
(used in) operating activities:
Depreciation and amortization... 303,731 309,451 76,662 77,248
Loss on sale of equipment....... -- 1,336 -- --
Loss on destruction of fixed
assets......................... 38,464 -- -- --
Changes in assets and
liabilities:
Cash -- restricted............ -- -- (49,800) (137,471)
Accounts receivable........... 7,371 2,181 (107,868) (83,472)
Accounts receivable --
employees................... (4,506) 3,025 (2,167) (11,043)
Inventory..................... (8,209) 8,038 (4,915) 167
Prepaid expenses.............. 2,411 (3,517) -- (2,721)
Deferred costs................ -- -- (27,498) --
Accounts payable.............. (4,019) 14,755 57,216 (9,185)
Accrued interest.............. 14,012 22,112 304 1,464
Accrued taxes................. (8,104) (16,082) (36,481) (13,449)
Accrued salaries.............. 11,220 (11,220) (11,220) --
Commissions payable........... -- -- -- 6,995
Deferred income............... 9,180 (3,295) 369,762 303,750
--------- --------- --------- ---------
Net cash provided by (used in)
operating activities........... 62,876 16,228 56,983 (120,082)
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures............ (197,509) (77,136) (49,239) --
--------- --------- --------- ---------
Net cash used in investing
activities................... (197,509) (77,136) (49,239) --
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from long-term debt.... 96,500 187,000 -- 170,000
Repayment of long-term debt..... (136,935) (308,489) (40,805) (41,520)
Proceeds from sale of stock..... 200,002 171,600 -- --
--------- --------- --------- ---------
Net cash provided by (used in)
financing activities......... 159,567 50,111 (40,805) 128,480
--------- --------- --------- ---------
Net increase (decrease) in cash... 24,934 (10,797) (33,061) 8,398
Cash at beginning of year......... 8,127 33,061 33,061 22,264
--------- --------- --------- ---------
Cash at end of year............... $ 33,061 $ 22,264 $ 0 $ 30,662
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest...................... $ 307,543 $ 297,049 $ 81,401 $ 77,876
Income taxes.................. $ 9,944 $ 9,708 $ 9,708 $ 9,148
Cash received during the year
for:
Interest...................... $ 877 $ 1,587 $ 708 $ 1,288
</TABLE>
See accountants' report and notes to financial statements.
F-22
<PAGE>
MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(INFORMATION AT MARCH 31, 1996 AND FOR THE THREE
MONTHS ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS ACTIVITY
Memphis International Motorsports Park, Inc. ("Memphis") was organized under
the laws of the State of Tennessee on July 25, 1985 for the purpose of owning
and operating a motorsports complex. Prior to 1987 it had been in the
development stage and its activities consisted primarily of acquiring land and
constructing racing facilities.
CASH
Memphis considers all highly liquid investments with a maturity of three
months or less, when purchased, to be "cash equivalents". Memphis held no
"cash equivalents" at December 31, 1995.
ACCOUNTS RECEIVABLE
Bad debt expense totaled $6,350 for the year ended December 31, 1995. In the
opinion of management, there are no other significant accounts considered to
be uncollectable at year end.
DEPRECIATION
Property and equipment is stated at cost for financial reporting purposes.
Depreciation is provided on the straight line method using useful lives
assigned to the asset.
METHOD OF ACCOUNTING
Memphis utilizes the accrual method of accounting whereby revenue is
recognized when earned and expenses are recognized when incurred.
INVENTORIES
Merchandise inventory is priced at cost including freight.
INCOME TAXES
Memphis has elected to be taxed under the provisions of Subchapter S of the
Internal Revenue Code. Under these provisions, Memphis' taxable income or loss
is passed through to the individual shareholders and they include their
respective shares of these amounts in their personal tax return. Therefore, no
provision for Federal income taxes is includable in the financial statements.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
UNAUDITED INFORMATION AS OF MARCH 31, 1996 AND 1995
The accompanying unaudited financial statements as of March 31, 1996 and
1995 reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial statements of such interim
periods. Such adjustments consist only of normal recurring items. Interim
results are not necessarily indicative of results for a full year.
F-23
<PAGE>
MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(INFORMATION AT MARCH 31, 1996 AND FOR THE THREE
MONTHS ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)
NOTE 2 -- PROPERTY AND EQUIPMENT:
Major classifications of property and equipment and their respective
depreciable lives are summarized below.
<TABLE>
<CAPTION>
ORIGINAL DEPRECIABLE
COST LIVES
----------- -----------
<S> <C> <C>
Land................................................... $ 981,993
Land improvements...................................... 750,901 15 years
Buildings.............................................. 1,715,185 31.5 years
Track and grandstand................................... 2,336,830 15 years
Equipment.............................................. 858,256 7-15 years
Furniture and fixtures................................. 47,210 7 years
-----------
6,690,375
Accumulated depreciation............................... (2,756,529)
-----------
Total property and equipment......................... $ 3,933,846
===========
</TABLE>
Depreciation expense amounted to $309,451 for 1995.
F-24
<PAGE>
MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(INFORMATION AT MARCH 31, 1996 AND FOR THE THREE
MONTHS ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)
NOTE 3 -- LONG-TERM DEBT:
Long-term debt at March 31, 1996 and December 31, 1995 consists of the
following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Note payable to First Commercial Bank, due October 2,
1996, bearing interest at prime, currently 8.75%,
unsecured but guaranteed by certain shareholders.... $ 425,619 $ 425,619
Mortgage note payable to Boatmen's Bank due in
monthly installments of $33,500, including interest
at 7.75% to December 15, 1998 with the remaining
principal balance together with accrued interest
payable on February 15, 1999. Note is secured by a
deed of trust on real property owned by the
corporation and limited guarantees of certain
shareholders........................................ 3,371,908 3,337,129
Note payable to John Deere Credit in monthly
installments of $426, including interest at 11.4% to
April 10, 1999. Secured by equipment................ 15,375 14,450
Note payable to Xerox Corporation in monthly
installments of $314, including interest at 8.9% to
April 10, 1997. Secured by copier................... 4,725 3,884
Note payable to First Tennessee Bank in monthly
installments of $1,728, including interest at 8.5%
to May 10, 1999. Secured by certain track facilities
and guaranteed by certain shareholders.............. 61,142 57,245
Note payable to Tennessee Bank & Trust in monthly
installments of $405, including interest at 10.25%
to December 6, 1997. Secured by equipment........... 8,877 7,799
Note payable to Tennessee Bank & Trust under a line
of credit arrangement. Interest payable monthly at
9.25%. Due December 31, 1996. Unsecured............. -- 170,000
Note payable to Linda Gatlin, spouse of a corporate
shareholder, due upon demand. Interest payable at
9.5% semiannually on the last day of June and
December. Unsecured................................. 32,000 32,000
---------- ----------
3,919,646 4,048,126
Less: current portion................................ 664,644 841,267
---------- ----------
Long-Term Debt................................... $3,255,002 $3,206,859
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
DEBT MATURITIES ARE AS FOLLOWS: 1995 1996
- ------------------------------- ------------ -----------
(UNAUDITED)
<S> <C> <C>
1996................................................... $ 664,644 $ --
1997................................................... 196,183 841,267
1998................................................... 205,385 197,739
1999................................................... 2,853,434 3,006,481
2000................................................... -- 2,639
---------- ----------
Total................................................ $3,919,646 $4,048,126
========== ==========
</TABLE>
F-25
<PAGE>
MEMPHIS INTERNATIONAL MOTORSPORTS PARK, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(INFORMATION AT MARCH 31, 1996 AND FOR THE THREE
MONTHS ENDED MARCH 31, 1995 AND 1996 IS UNAUDITED)
NOTE 4 -- DEFERRED INCOME:
Deferred income consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Sponsorships........................................ $ -- $ 52,500
Billboard and suite rentals......................... -- 108,965
Track rentals....................................... -- 11,073
Advance ticket sales -- 1996 NHRA Mid-South
Nationals.......................................... 5,885 137,097
------ --------
$5,885 $309,635
====== ========
</TABLE>
Deferred income from sponsorships and season rentals of suites and
billboards are recognized as revenue monthly during the calendar year on a
straight line basis. All other sources of deferred income are recognized as
revenue as the applicable event is held. Funds received from advance ticket
sales for the NHRA Mid-South Nationals are deposited in a separate bank
account at Tennessee Bank and Trust. As of March 31, 1996, $137,471 was held
in this account, and is designated on the balance sheet as Cash -- restricted.
The NHRA Mid-South Nationals are scheduled to be held in June of 1996.
NOTE 5 -- SEASONAL FLUCTUATIONS:
Memphis' primary business is the operation of a motorsports complex from
April 1 to October 31 each year. Memphis generally derives its revenue during
this period. The financial statements for the three months ended March 31,
1996 and 1995, therefore, reflect results of operations during part of
Memphis' off-season, during which it incurs expenses in preparation for its
operating season.
NOTE 6 -- GOING CONCERN:
Memphis has incurred continuing net operating losses resulting in a
significant accumulated deficit and negative working capital which create
substantial uncertainty concerning Memphis' ability to continue as a going
concern. The ability of Memphis to continue as a going concern and realize its
assets and discharge its liabilities in the normal course of business is
dependent upon obtaining profitable operations, a continuation of present
financing, and the provision of additional capital by shareholders as
required.
F-26
<PAGE>
EXHIBIT 99.2
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
The following unaudited pro forma condensed combining balance sheet as of
March 31, 1996, pro forma statements of operations for the nine months ended
March 31, 1996 and for the year ended June 30, 1995 illustrate the effect of
the acquisition by the Company of substantially all of the net assets of the
Memphis Motorsports Facility (including, but not limited to cash, prepaid
expenses, property and equipment, certain accrued liabilities and deferred
revenues) which is currently anticipated to occur in late June 1996, in
exchange for the assumption of approximately $2,500,000 in liabilities of the
seller which will be repaid by the Company at the closing of the initial
public offering and issuance of $2,500,000 of the Company's Series B
Convertible Preferred Stock as described elsewhere herein (Note 3), the
private placement of 312,500 shares of the Company's Series A Convertible
Preferred Stock for net proceeds of $2,300,000 which private placement closed
concurrently with the Municipal Bond Offering on June 21, 1996 (Note 1), the
issuance in late June 1996 of $21,500,000 in principal amount of Bonds issued
by SWIDA (Note 2), and the issuance of 1,350,000 shares of Common Stock in
this offering for net proceeds estimated to be $12,065,500 (Note 4). The
Memphis Motorsports Facility acquisition is being accounted for as a purchase,
with the assets acquired and liabilities assumed being recorded at estimated
fair market value. The unaudited pro forma combining balance sheet assumes
that each of these transactions occurred on March 31, 1996 and the unaudited
pro forma combining statements of operations assumes that each of these
transactions occurred at the beginning of the periods presented.
The pro forma adjustments are based upon currently available information and
upon certain assumptions that the Company believes are reasonable. The
acquisition of the Memphis Motorsports Facility has been recorded based upon
the estimated fair market value of the tangible assets acquired at the date of
acquisition. The adjustments included in the unaudited pro forma combining
financial statements represents the Company's preliminary determination of
these adjustments based upon available information. There can be no assurance
that the actual adjustments will not differ significantly from the pro forma
adjustments reflected in the pro forma financial information.
The unaudited pro forma combining financial statements are not necessarily
indicative of either future results of operations or results that might have
been achieved if the foregoing transactions had been consummated as of the
indicated dates. The unaudited pro forma combining financial statements should
be read in conjunction with the historical financial statements of the Company
and the Memphis Motorsports Facility, together with the related notes thereto,
included elsewhere in this Prospectus.
PF-1
<PAGE>
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
INITIAL
PRIVATE BOND MEMPHIS PUBLIC ADJUSTED
THE COMPANY MEMPHIS (11) PLACEMENT (1) OFFERING (2) ACQUISITION (3) OFFERING (4) PRO FORMA
----------- ------------ ------------- ------------ --------------- ------------ ---------
ASSETS (NOT COVERED BY ACCOUNTANTS' REPORTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Current
Cash and cash
equivalents........... $ 1,696 $ 168 $ (100) $ -- $ -- $9,565 $11,329
Accounts receivable.... 274 101 -- -- (101) -- 274
Notes receivable....... 15 -- -- -- -- -- 15
Prepaid expenses and
other assets.......... 1,626 16 -- -- -- -- 1,642
Deferred major event
expenses.............. 3,102 -- -- -- -- -- 3,102
Deferred income taxes,
current............... 29 -- -- -- -- -- 29
Inventories............ 93 15 -- -- -- -- 108
------- ------- ------ ------- ------ ------ -------
Total Current Assets... 6,835 300 (100) -- (101) 9,565 16,499
Restricted cash--
redevelopment fund.... -- -- -- 18,127 -- -- 18,127
Restricted cash--debt
service fund.......... -- -- 2,400 2,550 -- -- 4,950
Property and equipment,
net................... 3,573 3,857 -- -- 1,143 -- 8,573
Deferred loan costs,
net................... 132 -- -- 823 -- -- 955
Intangible assets,
net................... 29 -- -- -- 636 -- 665
Deferred income taxes,
noncurrent............ 169 -- -- -- -- -- 169
------- ------- ------ ------- ------ ------ -------
TOTAL ASSETS........... $10,738 $ 4,157 $2,300 $21,500 $1,678 $9,565 $49,938
======= ======= ====== ======= ====== ====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable, current. $ 230 $ 841 $ -- $ -- $ (841) $ -- $ 230
Accounts payable....... 294 6 -- -- -- -- 300
Accrued liabilities.... 119 22 -- -- -- -- 141
Income taxes payable... -- 2 -- -- -- -- 2
Accrued interest....... -- 38 -- -- -- -- 38
Deferred revenue....... 6,341 310 -- -- -- -- 6,651
Notes payable to former
Memphis shareholders.. -- -- -- -- 2,500 (2,500) --
------- ------- ------ ------- ------ ------ -------
Total Current
Liabilities............ 6,984 1,219 -- -- 1,659 (2,500) 7,362
Long-term debt, less
current maturities
Notes payable.......... 1,585 3,207 -- -- (3,207) -- 1,585
Other liabilities...... -- -- -- -- -- -- --
Deferred income taxes.. -- -- -- -- 457 -- 457
Bonds payable, long
term.................. -- -- -- 21,500 -- -- 21,500
------- ------- ------ ------- ------ ------ -------
Total Liabilities...... 8,569 4,426 -- 21,500 (1,091) (2,500) 30,904
------- ------- ------ ------- ------ ------ -------
Series B Mandatorily
Redeemable Convertible
Preferred Stock........ -- -- -- -- 2,500 -- 2,500
------- ------- ------ ------- ------ ------ -------
Preferred stock, Series
A..................... -- -- 2,300 -- -- (2,300) --
Common stock, no par
value................. 1,281 1,743 -- -- (1,743) 14,365 15,646
Paid-in capital........ 129 3,889 -- -- (3,889) -- 129
Retained earnings
(deficit)............. 1,150 (5,901) -- -- 5,901 -- 1,150
Shareholder notes...... (391) -- -- -- -- -- (391)
------- ------- ------ ------- ------ ------ -------
2,169 (269) 2,300 -- 269 12,065 16,534
------- ------- ------ ------- ------ ------ -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY... $10,738 $ 4,157 $2,300 $21,500 $1,678 $9,565 $49,938
======= ======= ====== ======= ====== ====== =======
</TABLE>
PF-2
<PAGE>
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995(12)
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRIVATE BOND MEMPHIS ADJUSTED
THE COMPANY MEMPHIS PLACEMENT OFFERING ACQUISITION PRO FORMA
----------- ------- --------- -------- ----------- ---------
(NOT COVERED BY ACCOUNTANTS' REPORTS)
<S> <C> <C> <C> <C> <C> <C>
Major event revenues:
Admissions............ $ 4,271 $2,025 $-- $ -- $-- $ 6,296
Sponsorships.......... 2,523 209 -- -- -- 2,732
Ancillary............. 2,988 512 -- -- -- 3,500
--------- ------ ---- ------- ---- ---------
Total major event
revenues............... 9,782 2,746 -- -- -- 12,528
Other operating
revenues............. 1,845 105 -- -- -- 1,950
--------- ------ ---- ------- ---- ---------
Total revenues.......... 11,627 2,851 -- -- -- 14,478
--------- ------ ---- ------- ---- ---------
Expenses:
Major event expenses.. 5,638 1,832 -- -- -- 7,470
Other operating
expenses............. 1,458 86 -- -- -- 1,544
General and
administrative
expenses............. 2,250 597 -- -- -- 2,847
Depreciation &
amortization......... 371 309 -- -- 45 (7) 725
--------- ------ ---- ------- ---- ---------
9,717 2,824 -- -- 45 12,586
--------- ------ ---- ------- ---- ---------
Income (loss) from
operations............. 1,910 27 -- -- (45) 1,892
(55)(5)
Other income (expense).. (133) (336) 72 (6) (1,960)(6) 319 (8) (2,093)
--------- ------ ---- ------- ---- ---------
Income (loss) before
taxes.................. 1,777 (309) 72 (2,015) 274 (201)
Benefit (provision) for
income taxes........... (735) -- (30)(9) 771 (9) 14 (9) 20 (9)
--------- ------ ---- ------- ---- ---------
Net income (loss)....... $ 1,042 $ (309) $ 42 $(1,244) $288 $ (181)
========= ====== ==== ======= ==== =========
Pro forma earnings
(loss) per share....... $ 0.51 $ (0.05)(10)
========= =========
Weighted average number
of common shares
outstanding............ 2,026,640 3,959,340 (10)
========= =========
</TABLE>
PF-3
<PAGE>
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1996(12)
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRIVATE BOND MEMPHIS ADJUSTED
THE COMPANY MEMPHIS PLACEMENT OFFERING ACQUISITION PRO FORMA
----------- ------- --------- -------- ----------- ----------
(NOT COVERED BY ACCOUNTANTS' REPORTS)
<S> <C> <C> <C> <C> <C> <C>
Major event revenues:
Admissions............ $ -- $ 451 $-- $ -- $-- $ 451
Sponsorships.......... -- 103 -- -- -- 103
Ancillary............. -- 176 -- -- -- 176
---------- ----- ---- ------- ---- ----------
Total major event
revenues............... -- 730 -- -- -- 730
Other operating
revenues............. 2,116 77 -- -- -- 2,193
---------- ----- ---- ------- ---- ----------
Total revenues.......... 2,116 807 -- -- -- 2,923
---------- ----- ---- ------- ---- ----------
Expenses:
Major event expenses.. -- 391 -- -- -- 391
Other operating
expenses............. 1,376 55 -- -- -- 1,431
General and
administrative
expenses............. 2,200 400 -- -- -- 2,600
Depreciation &
amortization......... 300 231 -- -- 33 (7) 564
---------- ----- ---- ------- ---- ----------
3,876 1,077 -- -- 33 4,986
---------- ----- ---- ------- ---- ----------
Income (loss) from
operations............. (1,760) (270) -- -- (33) (2,063)
(41)(5)
Other income (expense).. (134) (275) 54 (6) (1,470)(6) 239 (8) (1,627)
---------- ----- ---- ------- ---- ----------
Income (loss) before
taxes.................. (1,894) (545) 54 (1,511) 206 (3,690)
Benefit (provision) for
income taxes........... 784 -- (22)(9) 578 (9) 140 (9) 1,480 (9)
---------- ----- ---- ------- ---- ----------
Net income (loss)....... $ (1,110) $(545) $ 32 $ (933) $346 $ (2,210)
========== ===== ==== ======= ==== ==========
Pro forma earnings
(loss) per share....... $ (0.55) $ (0.56)(10)
========== ==========
Weighted average number
of common shares
outstanding............ 2,029,806 3,959,340 (10)
========== ==========
</TABLE>
PF-4
<PAGE>
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. Represents the net proceeds of approximately $2,300,000 received in a
private placement of 312,500 shares of the Company's Series A Convertible
Preferred Stock, which private placement closed concurrently with the
closing of the Municipal Bond Offering on June 21, 1996. These shares of
Series A Convertible Preferred Stock have an $8.00 liquidation and
redemption value and will automatically be converted into shares of Common
Stock upon completion of this offering at the lower of $8.00 per share or
80% of the initial public offering price. The net proceeds from the
private placement will be used by the Company to establish the debt
service reserve fund required with respect to the Municipal Bond Offering
(see Note 2).
2. Represents proceeds from the borrowing of $21,500,000 pursuant to the
SWIDA Loan net of issuance costs estimated to be $823,000. The SWIDA Loan
bears interest at varying rates ranging from 8.35% to 9.25% with an
effective yield of approximately 9.1% with interest only payable through
August 1999, with debt service payments beginning in February 2000 through
February 2017. The net proceeds from the SWIDA Loan are to be used to fund
the redevelopment and expansion of the Gateway Raceway Facility and debt
service as required under the terms of the SWIDA Loan. See "Description of
Securities -- the Bonds."
3. Represents the acquisition of substantially all of the net assets of the
Memphis Motorsports Facility by the Company in June 1996, allocated as
follows:
<TABLE>
<S> <C> <C>
Cash paid at closing of initial public offering to
pay notes payable to former Memphis shareholders.. $2,500,000
Series B Mandatorily Reedemable Convertible
Preferred Stock issued............................ 2,500,000
----------
Total consideration 5,000,000
Net deficit of Memphis as of March 31, 1996...... (268,940)
add--Notes payable paid at closing of initial
public offering................................. 2,500,000
add--Notes payable not assumed................... 1,548,126
less--Accounts receivable, not purchased......... (100,785)
---------
Net assets acquired.............................. 3,678,401
----------
Excess of cost over net book value of assets
acquired.......................................... $1,321,599
==========
</TABLE>
The Series B Mandatorily Reedemable Convertible Preferred Stock has been
valued at $10.00 per share (the issuance price of the Common Stock in this
offering). An aggregate of 250,000 shares of Series B Mandatorily
Convertible Preferred Stock will be issued upon the closing of the
acquisition of the Memphis Motorsports Facility based on the initial price
to the public of the shares sold in this offering. See "Description of
Securities -- Preferred Stock." The Series B Mandatorily Reedemable
Convertible Preferred Stock will bear a cumulative 4.185% dividend rate and
is convertible on a one-for-one basis at the option of the holders on or
after June 30, 1997 into the Company's Common Stock. If the Series B
Mandatorily Redeemable Convertible Preferred Stock has not been converted
into Common Stock by December 31, 1998, the Company is obligated to redeem
any outstanding Series B Mandatorily Redeemable Convertible Preferred Stock
at a nominal consideration plus unpaid dividends and assume specified
liabilities of the seller not to exceed $1,500,000. The excess of cost over
fair value of assets acquired has been allocated to fixed assets (including
land) and intangible assets in the pro forma balance sheet as of March 31,
1996 based upon management's preliminary estimates. The Company is in the
process of working with independent consultants to obtain valuations of
individual assets and the excess purchase price will be determined based
upon these valuations. Deferred tax liabilities have been recorded for the
basis
PF-5
<PAGE>
differential of the assets, as this acquisition has been structured as a
non-taxable transaction. This transaction will be accounted for using the
purchase method.
4. Represents the estimated net proceeds of $12,065,500 in connection with
the issuance of 1,350,000 shares of Common Stock offered in this offering
together with the payment of the note payable to the former Memphis
shareholders and mandatory conversion of the Series A Convertible
Preferred Stock (See Note 1) into Common Stock.
5. Represents the amortization of the debt issuance costs related to the
Bonds.
6. Represents Bond interest expense, net of interest earned on restricted
cash in the debt service fund.
7. Represents the depreciation of fixed assets over ten years (except land)
and amortization of the intangible assets over a 20 year life obtained in
the acquisition of the Memphis Motorsports Facility.
8. Represents the elimination of the interest expense of Memphis notes
payable paid at closing of the initial public offering and not assumed by
the Company.
9. To adjust tax provision to the Company's historical effective rate.
10. Computes earnings (loss) per share as if all transactions occurred as of
the beginning of the periods presented computed as follows:
<TABLE>
<S> <C>
Common Stock outstanding as of March 31, 1996..................... 1,978,090
Shares issued in initial public offering.......................... 1,350,000
Series A Convertible Preferred Stock, as converted................ 312,500
Series B Convertible Preferred Stock, as converted................ 250,000
---------
3,890,590
Dilutive impact of Series A Convertible Stock, issued below
initial public offering price.................................... 68,750
---------
3,959,340
Dilutive impact of stock options.................................. 321,909
---------
4,281,249
=========
</TABLE>
Stock options and warrants have not been included as they would be anti-
dilutive.
The pro forma earnings (loss) per share calculated assuming that the Series
B Convertible Preferred Stock is not converted and deducting dividends
related to the Series B Convertible Preferred Stock ($105,000 for the year
ended June 30, 1995 and $78,000 for the nine months ended March 31, 1996)
would be $(0.08) per share for the year ended June 30, 1995 and $(0.62) per
share for the nine months ended March 31, 1996.
11. Certain balances in the Memphis Motorsports Facility historical financial
statements have been reclassified to conform to the Company's financial
statement presentation.
12. The proforma condensed combining statement of operations for the nine
months ended March 31, 1996 combines the unaudited statement of operations
of the Company for the nine months ended March 31, 1996 with the unaudited
results of operations of the Memphis Motorsports Facility for the nine
months ended March 31, 1996. The proforma condensed combining statement of
operations for the year ended June 30, 1995 combines the audited statement
of operations of the Company for the year ended June 30, 1995 with the
audited statement of operations of the Memphis Motorsports Facility for
the year ended December 31, 1995. The revenues and net loss for the six
months ended December 31, 1995 (unaudited) that are included both as part
of the fiscal year and the subsequent interim period for the Memphis
Motorsports Facility are $780,000 and $(292,000), respectively.
PF-6
