<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
--------
Date of Report (date of earliest event reported): December 30, 1997
--------
SFORZA ENTERPRISES INC.
(Exact name of registrant as specified in its charter)
--------
<TABLE>
<S> <C> <C>
FLORIDA 000-23251 65-0705377
(State or other jurisdiction ) (Commission File Number) (I.R.S. Employer
of incorporation Identification No.)
</TABLE>
490 EAST PALMETTO ROAD, SUITE 110
BOCA RATON, FLORIDA 33432
(Address of principal executive offices)
Registrant's telephone number, including area code: (561) 392-0611
--------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 30, 1997, Sforza Enterprises Inc. (the "Company" or "Sforza")
acquired a fifty-one percent (51%) equity interest in each of four limited
partnerships, each of which owns (or will own) a Max's Grille Restaurant located
in South Florida. Contemporaneously with these transactions, each partnership
entered into a license agreement with Unique Restaurant Concepts, Inc. for the
right to use the name "Max's Grille" and the right to use the Max's Grille
Restaurant concept. Further, each limited partnership has entered into a
management agreement with Unique Restaurant Concepts, Inc., setting forth the
terms and conditions for the operation and management of the four restaurants.
The foregoing transactions are those contemplated by the Company and previously
disclosed in the definitive prospectus dated November 13, 1997 and contained in
the Company's Registration Statement filed on Form 424(B)(4) (as amended) with
the Securities and Exchange Commission on November 17, 1997 (the "Registration
Statement").
ITEM 7. FINANCIAL STATEMENTS.
(a) The following financial statements and pro forma financial information
concerning the Company are provided in accordance with the instruction
to this Item.
On December 30, 1997, the Company acquired 51% limited partnership
interests in each of four limited partnerships for an aggregate of
$3,000,000 pursuant to a Partnership Interest Subscription Agreement.
Each of the limited partnerships operates or is planned to operate
Max's Grille Restaurants at a separate location in South Florida.
Max's Beach Grill, Ltd., one of the limited partnerships, began
operating its Max's Grille Restaurant in May 1997. The Max's Grille
Restaurants to be operated by the other three limited partnerships are
expected to open during 1998. The Company's investment in Max's Beach
Grill, Ltd. was $936,000 and its investments in the other three
limited partnerships aggregated $2,064,000.
The audited financial statements for Max's Beach Grill, Ltd. as of
December 31, 1997 and for the year then ended are submitted herewith
as Attachment 7(a).
(b) Pro Forma financial information is submitted herewith as Attachment
7(b).
(c) Exhibits:
2.1 Partnership Interest Subscription Agreement (incorporated by
reference to Exhibit 2.1 on Form 8-K filed with the Securities
and Exchange Commission on January 14, 1998, File
No. 000-33251).
1
<PAGE>
10.1 Unique Brickell, Ltd. Amended and Restated Limited Partnership
Agreement (incorporated by reference to Exhibit 10.1 on Form 8-K
filed with the Securities and Exchange Commission on January 14,
1998, File No. 000-33251).
10.2 Unique Weston, Ltd. Amended and Restated Limited Partnership
Agreement (incorporated by reference to Exhibit 10.2 on Form 8-K
filed with the Securities and Exchange Commission on January 14,
1998, File No. 000-33251).
10.3 Unique TBA, Ltd. Amended and Restated Limited Partnership
Agreement (incorporated by reference to Exhibit 10.3 on Form 8-K
filed with the Securities and Exchange Commission on January 14,
1998, File No. 000-33251).
10.4 Max's Beach Grille, Ltd. Amended and Restated Limited
Partnership Agreement (incorporated by reference to Exhibit 10.4
on Form 8-K filed with the Securities and Exchange Commission on
January 14, 1998, File No. 000-33251).
10.5 License Agreement by and between Unique Restaurant Concepts,
Inc. and Unique Brickell, Ltd. (incorporated by reference to
Exhibit 10.5 on Form 8-K filed with the Securities and Exchange
Commission on January 14, 1998, File No. 000-33251).
10.6 License Agreement by and between Unique Restaurant Concepts,
Inc. and Unique Weston, Ltd. (incorporated by reference to
Exhibit 10.6 on Form 8-K filed with the Securities and Exchange
Commission on January 14, 1998, File No. 000-33251).
10.7 License Agreement by and between Unique Restaurant Concepts,
Inc. and Unique TBA, Ltd. (incorporated by reference to Exhibit
10.7 on Form 8-K filed with the Securities and Exchange
Commission on January 14, 1998, File No. 000-33251).
10.8 License Agreement by and between Unique Restaurant Concepts,
Inc. and Max's Beach Grille, Ltd. (incorporated by reference to
Exhibit 10.8 on Form 8-K filed with the Securities and Exchange
Commission on January 14, 1998, File No. 000-33251).
10.9 Management Agreement by and among Unique Restaurant Concepts,
Inc., Max's Beach Grille, Ltd., Unique Brickell, Ltd., Unique
Weston, Ltd. and Unique TBA, Ltd. (incorporated by reference to
Exhibit 10.9 on Form 8-K filed with the Securities and Exchange
Commission on January 14, 1998, File No. 000-33251).
99.1 Press Release of the Company dated January 8, 1998 (incorporated
by reference to Exhibit 99.1 on Form 8-K filed with the
Securities and Exchange Commission on January 14, 1998, File
No. 000-33251).
2
<PAGE>
ATTACHMENT 7(A)
MAX'S BEACH GRILL, LTD.
REPORT ON AUDIT OF FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
Page #
------
Report of independent accountants 4
Financial statements:
Balance sheet 5
Statement of operations 6
Statement of cash flows 7
Notes to financial statements 8-12
3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
Max's Beach Grill, Ltd.
We have audited the accompanying balance sheet of Max's Beach Grill, Ltd. (a
limited partnership) as of December 31, 1997, and the related statements of
operations and cash flows for the year then ended. These financial statements
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit 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 the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Max's Beach Grill, Ltd. as of December 31,
1997, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.
TEMPLETON & COMPANY, P.A.
Royal Palm Beach, Florida
March 10, 1998
4
<PAGE>
MAX'S BEACH GRILL, LTD.
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents $ 76,906
Receivables 8,790
Inventories 39,737
Other current assets 120,147
----------
Total current assets 245,580
Property and equipment, net 881,090
Other assets 44,967
----------
Total assets $1,171,637
==========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable $ 101,210
Accrued expenses 122,772
Due to affiliate 40,000
Current portion of obligation
under capital leases 42,170
----------
Total current liabilities 306,152
Obligation under capital leases, net 200,292
----------
Total liabilities 506,444
Partners' equity 665,193
----------
Total liabilities and partners' equity $1,171,637
==========
</TABLE>
See accompanying notes.
5
<PAGE>
MAX'S BEACH GRILL, LTD.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Net sales $2,197,604
----------
Cost and expenses:
Cost of sales 1,152,891
Operating expenses 1,251,942
Depreciation and amortization 78,790
Interest expense, net 63,280
----------
Total cost and expenses 2,546,903
----------
Loss before other income (349,299)
Other income, net 530
----------
Net loss $ (348,769)
==========
</TABLE>
See accompanying notes.
6
<PAGE>
MAX'S BEACH GRILL, LTD.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (348,769)
Adjustments to reconcile net (loss to net cash
used in operating activities:
Depreciation and amortization 78,790
Increase in receivables (8,690)
Increase in inventories (39,737)
Increase in other current assets (84,262)
Increase in accounts payable 36,660
Increase in accrued expenses 122,772
----------
Net cash used in operating
activities (243,236)
----------
Cash flows from investing activities:
Purchase of property and equipment (567,379)
Increase in other assets (49,954)
----------
Net cash used in investing activities (617,333)
----------
Cash flows from financing activities:
Proceeds from partnership interest
subscribed and capital contributions 1,013,862
Borrowings from affiliate 40,000
Proceeds from bank loan 700,000
Repayment of bank loan (700,000)
Repayment of note payable (250,000)
Principal payments on obligation
under capital leases (26,545)
----------
Net cash provided by financing activities 777,317
----------
Net decrease in cash and cash equivalents (83,252)
Cash and cash equivalents, beginning of
year 160,158
----------
Cash and cash equivalents, end of year $ 76,906
==========
</TABLE>
See accompanying notes.
7
<PAGE>
MAX'S BEACH GRILL, LTD.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Max's Beach Grill, Ltd. (the Partnership) operates Max's Beach Grill, an up-
scale restaurant located on the beach in Fort Lauderdale, Florida, which opened
for business on April 29, 1997. Accordingly, the accompanying financial
statements present results of operations from the inception of operations.
The Partnership was formed as a Florida limited partnership and is governed by
an agreement of limited partnership. Such agreement vests the overall
management and control of all aspects of the business and affairs of the
Partnership exclusively in the general partner. The Partnership will terminate
upon the occurrence of certain specified events or on January 31, 2027.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies used in preparing the
accompanying financial statements follows:
Cash Equivalents
----------------
For purposes of the statement of cash flows, the Partnership considers all
temporary cash investments with maturities of three months or less, when
purchased, to be cash equivalents.
Inventories
-----------
Inventories consist of various food and beverage items which are stated at
the lower of cost or market using the first-in, first-out method.
Restaurant Start-up Costs
-------------------------
The Partnership defers certain restaurant start-up costs associated with the
opening of new restaurants (included in other current assets) and amortizes
such costs ratably over twelve months.
Property and Equipment
----------------------
Property and equipment is stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, which
range from three to ten years. Leasehold improvements are amortized using
the straight-line method over the estimated useful lives of the improvements
or the term of the lease, whichever is shorter. Equipment leased under
capital leases is amortized over the lives of the respective leases.
8
<PAGE>
MAX'S BEACH GRILL, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Organization Costs
------------------
Organization costs (included in other assets) are amortized by the straight-
line method over five years.
Income Taxes
------------
Federal income taxes are not payable by, or provided for, the Partnership.
Partners are taxed on their proportionate share of the Partnership's taxable
income or loss.
Management Estimates
--------------------
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.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1997:
<TABLE>
<S> <C>
Operating properties:
Leasehold improvements $525,838
Equipment leased under capital
equipment leases 269,007
Furniture and fixtures 137,830
China, glassware and silver 22,218
--------
954,893
Less accumulated depreciation and
amortization (73,803)
--------
$881,090
========
</TABLE>
Depreciation and amortization of property and equipment totaled $73,803 for the
year ended December 31, 1997.
The Partnership capitalizes interest on qualifying expenditures in accordance
with Statement of Financial Accounting Standards Number 34. Total interest
incurred and capitalized for the year ended December 31, 1997 are presented as
follows:
<TABLE>
<S> <C>
Interest incurred $ 80,653
Interest capitalized 17,373
--------
Interest expense, net $ 63,280
========
</TABLE>
9
<PAGE>
MAX'S BEACH GRILL, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 4 - DESCRIPTION OF LEASING ARRANGEMENTS
The Partnership operates primarily in facilities leased from an entity owned by
a third party. The lease has specified monthly payments over a ten-year term
and requires the Partnership to pay specified percentages of sales in excess of
certain levels as additional rent. During 1997, the landlord contributed
$450,000 toward the construction of leasehold improvements which was recorded as
a reduction of property and equipment. The Partnership also leases certain
equipment under various operating leases.
In addition, the Partnership leases certain equipment from an unrelated party
under capital leases. The balance sheet at December 31, 1997 includes the
following regarding equipment leased under capital lease:
<TABLE>
<S> <C>
Equipment leased under capital leases $ 269,007
Accumulated amortization (25,620)
---------
$ 243,387
=========
</TABLE>
Minimum annual rentals for leases in effect at December 31, 1997 follow:
<TABLE>
<CAPTION>
Equipment
Year Ending Under Capital Operating
December 31, Leases Leases
------------ ------------- ----------
<S> <C> <C>
1998 $ 80,491 $ 282,973
1999 80,491 293,976
2000 80,491 301,772
2001 80,491 301,616
2002 21,445 301,616
Thereafter - 1,181,329
--------- ----------
Total minimum rentals 343,409 $2,663,282
==========
Less interest portion (100,947)
---------
Present value of net
minimum rentals $ 242,462
=========
</TABLE>
Total rent expense under operating leases for the year ended December 31, 1997
amounted to $279,687, including $3,724 in contingent rentals.
10
<PAGE>
MAX'S BEACH GRILL, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Agreement
--------------------
Unique Restaurant Concepts, Inc. (URCI) provides management and accounting
services to the Partnership pursuant to a management agreement dated December
30, 1997. Prior to such date, URCI managed the Partnership pursuant to an
informal arrangement. Certain of URCI's principals are also principals in
entities which hold ownership interests in the Partnership.
Under the informal arrangement, the Partnership was charged management fees
based on 3% of gross revenue which approximated $66,400 during 1997. In
addition, URCI charged the Partnership for certain common office and
administrative expenses aggregating $41,329 for 1997. Accrued expenses at
December 31, 1997 includes a balance of $9,577 due to URCI.
Under the new management agreement, URCI was delegated the general partner's
powers and authority to manage the Partnership's business and affairs (see
Note 1). The new agreement requires a base management fee equal to 1.5% of
gross revenue with an additional amount payable to URCI of up to 2.5% of
gross revenue for reimbursement of certain direct and common expenses.
Construction Services
---------------------
The Partnership contracted the construction of leasehold improvements for its
restaurant from an entity controlled by a principal of certain entities which
hold ownership interests in the Partnership. Payments to the entity during
1997 for construction services performed totaled $958,465 (see Note 4).
Due to Affiliate
----------------
The amount due to affiliate at December 31, 1997 results from short-term cash
borrowings for working capital purposes. Such advances are uncollateralized,
non-interest bearing and payable upon demand. The Partnership also has an
account payable to an affiliated entity of $14,352 as of December 31, 1997.
11
<PAGE>
MAX'S BEACH GRILL, LTD.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 6 - CHANGES IN PARTNERS' EQUITY
The changes in partners' equity for the year ended December 31, 1997 are
presented as follows:
<TABLE>
<S> <C>
Balance, January 1, 1997 $ 100
Additional capital
contributions 77,862
Partnership interest
subscribed 936,000
Net loss for 1997 (348,769)
---------
Balance, December 31, 1997 $ 665,193
=========
</TABLE>
NOTE 7 - SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION
Supplemental statement of cash flows information for the year ended December 31,
1997 follows:
<TABLE>
<S> <C>
Non-cash investing and financing
activities:
Equipment recorded under capital
leases $269,007
========
Cash payments for:
Interest $ 80,653
========
</TABLE>
12
<PAGE>
ATTACHMENT 7(B)
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet information
presents the Company's unaudited consolidated condensed balance sheet at
September 30, 1997, as adjusted; a pro forma adjustment to reflect the
investments in the limited partnerships assuming the acquisition had occurred on
September 30, 1997; and the pro forma unaudited consolidated condensed balance
sheet at September 30, 1997.
<TABLE>
<CAPTION>
September 30, September 30,
1997, as Pro Forma 1997,
Adjusted(1) Adjustment(2) Pro Forma
---------------- -------------- -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents $3,653,722 $(3,000,000) $ 653,722
Other current assets 256,962 - 256,962
---------- ----------- ----------
Total current assets 3,910,684 (3,000,000) 910,684
Investments in
unconsolidated
affiliates - 3,000,000 3,000,000
Property and equipment,
net 895,597 - 895,597
Other assets, net 283,033 - 283,033
---------- ----------- ----------
Total assets $5,089,314 $ - $5,089,314
========== =========== ==========
</TABLE>
13
<PAGE>
ITEM 7.(B) - PRO FORMA FINANCIAL INFORMATION, CONTINUED
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C>
Current liabilities:
Accounts payable $ 132,126 $ - $ 132,126
Other current
liabilities 134,651 - 134,651
---------- ------- ----------
Total current
liabilities 266,777 - 266,777
Long-term obligations 53,882 - 53,882
Deferred income taxes 7,515 - 7,515
---------- ------- ----------
Total liabilities 328,174 - 328,174
Common shareholders'
equity 4,761,140 - 4,761,140
---------- ------- ----------
Total liabilities
and shareholders'
equity $5,089,314 $ - $5,089,314
========== ======= ==========
</TABLE>
(1) As adjusted to give effect to the following transactions set forth in
the Company's Registration Statement:
(i) the sale of 650,000 units pursuant to the Registration Statement,
(ii) the conversion of 80,000 Series A Preferred Shares into 40,000
shares of the Company's common stock,
(iii) the redemption of 80,000 shares of the Company's Series A Preferred
Shares, and
(iv) the repayment of a $125,000 note payable.
(2) The proforma adjustment reflects the Company's aggregate investment in the
limited partnerships, assuming the acquisition had occurred on September
30, 1997, using the equity method of accounting.
The following unaudited pro forma condensed income statement information for the
nine months ended September 30, 1997 presents the Company's unaudited
consolidated condensed statement of operations for the nine months ended
September 30, 1997; a pro forma adjustment to reflect the Company's equity in
the unaudited combined loss of Max's Beach Grill, Ltd. and the other three non-
operating limited partnerships for the nine months ended September 30, 1997; and
the pro forma unaudited consolidated condensed statement of operations for the
nine months ended September 30, 1997.
14
<PAGE>
ITEM 7.(B) - PRO FORMA FINANCIAL INFORMATION, CONTINUED
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1997
------------------------------------------
Pro Forma
Historical(1) Adjustment(2) Pro Forma
------------- ------------- -----------
<S> <C> <C> <C>
Net sales $3,439,127 $ - $3,439,127
---------- -------- ----------
Cost and expenses:
Cost of sales 1,973,898 - 1,973,898
Operating expenses 1,610,793 - 1,610,793
Interest expense, net 30,873 - 30,873
---------- -------- ----------
Total cost and
expenses 3,615,564 - 3,615,564
---------- -------- ----------
Operating loss (176,437) - (176,437)
Other income (expense):
Compensatory earnings
charge for stock
options granted (206,250) - (206,250)
Equity in loss of
unconsolidated
affiliate - (92,983) (92,983)
Other, net (9,509) - (9,509)
---------- --------- ----------
Loss before income
taxes (392,196) (92,983) (485,179)
Income tax benefit (60,000) - (60,000)
---------- -------- ----------
Net loss $ (332,196) $(92,983) $ (425,179)
========== ======== ==========
Net loss per common share(3):
Primary $ (.32) $ (.41)
========== ==========
Fully diluted $ (.32) $ (.41)
========== ==========
</TABLE>
(1) The historical unaudited consolidated condensed statement of operations was
derived from the Company's unaudited consolidated statement of operations
for the nine months ended September 30, 1997 included in the Registration
Statement.
(2) The pro forma adjustment reflects the Company's proportionate share of the
loss of Max's Beach Grill, Ltd. assuming the acquisition had occurred on
January 1, 1997. Certain interest expense incurred by Max's Beach Grill,
Ltd. was
15
<PAGE>
ITEM 7.(B) - PRO FORMA FINANCIAL INFORMATION, CONTINUED
eliminated and investment interest on assumed funds held for the three
Max's Grille Restaurants which were in the planning stages during 1997 was
added based on the Company's assumed investments. The Max's Grille
Restaurant owned by Max's Beach Grill, Ltd. began operating in May 1997;
therefore, the equity in loss was attributable to approximately five months
of operating results.
(3) The computations of primary and fully diluted net loss per common share are
explained in the Company's Registration Statement.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SFORZA ENTERPRISES INC.
(Registrant)
Date: March 13, 1998 By: /s/ Gerald J. Visconti, Jr.
---------------------------------
Gerald J. Visconti, Jr.
Vice President, Chief Financial Officer,
Treasurer and Secretary
17
