THIS DOCUMENT IS A COPY OF THE FORM 8-K/A FILED ON JULY 2, 1996 PURSUANT TO A
RULE 201 TEMPORARY HARDSHIP EXEMPTION.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) JANUARY 31, 1996
CLASSIC RESTAURANTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
COLORADO 033-33556-D 84-1122431
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3091 GOVERNORS LAKE DRIVE, BUILDING 100, SUITE 500, NORCROSS, GA 30071
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 729-9010
NOT APPLICABLE
(Former name or former address, if changed since last report)
Exhibit Index on page __ Page 1 of __ pages
1
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
See Item 2. below.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective upon the close of business January 31, 1996, the registrant
acquired (the "Share Exchange") all of the issued and outstanding capital stock
of Classic Restaurants International, Inc., a Florida corporation
("Classic-Florida"), in exchange for 2,520,665 restricted shares of the
registrant's Class A Common Stock (prior to the exercise of dissenters' rights)
and 200,000 restricted shares of the registrant's Class B Common Stock.
Classic-Florida operates as a wholly-owned subsidiary of the registrant.
The registrant filed an amendment to its Articles of Incorporation
which changed the name of the registrant to Classic Restaurants International,
Inc. effective January 31, 1996.
All of the registrant's former officers and directors resigned.
Officers and directors of Classic- Florida were appointed to fill the vacancies
created by the resignations as follows:
James R. Shaw - President, Treasurer and director
Caroline P. Anderson - Executive Vice President, Secretary and
director
Jerry W. Carter - director
Daniel Howell - director
Carolyn A. Shaw - director
The registrant's new principal place of business is 3091 Governors Lake
Drive, Building 100, Suite 500, Norcross, Georgia 30071.
Classic-Florida was organized under the laws of the State of Florida on
April 7, 1992, for the purpose of developing and operating restaurants using a
dinner theater concept. On December 1, 1992, Classic- Florida opened Musicana
Supper Club in Boca Raton, Florida. Classic-Florida opened Musicana Dinner
Theater in Clearwater, Florida on May 14, 1994.
Classic-Florida also provides entertainment production services for a
dinner theater in Naples, Florida. Management hopes to increase this line of
business and provide entertainment production services for other restaurants and
cruise lines.
Classic-Florida intends to pursue other acquisition opportunities for
restaurant theme formats. Management believes that having consummated the Share
Exchange, it now has the flexibility to acquire assets or businesses using
stock, as well as cash.
The exchange rate for the Share Exchange was determined by arm's-length
negotiation between the two companies. Among the factors considered in the
negotiation were an evaluation of the assets, liabilities, and overall financial
condition of each company; the results of operations of Classic-Florida since
its inception; the future potential of the business conducted by
Classic-Florida; and the market price of the registrant's Class A Common Stock.
2
<PAGE>
Simultaneous with the effectiveness of the Share Exchange, the
registrant transferred all of the issued and outstanding shares of common stock
of Great American Casinos, Inc., a Nevada corporation, to Great American
Resorts, Inc. ("Great American"). Great American Casinos, Inc. was a
wholly-owned subsidiary of the registrant. The sole asset of Great American
Casinos, Inc. is the Cheers Hotel and Casino in Reno, Nevada. The registrant's
common stock interest in Great American Casinos, Inc. constituted substantially
all of its assets. The consideration for the transfer of the common stock of
Great American Casinos, Inc. to Great American is (1) the return for
cancellation by Great American and by officers of the registrant of all of their
stock in the registrant, which consisted of 7,578,075 shares of Class A Common
Stock and 300,000 shares of Class B Common Stock; (2) the cancellation of any
indebtedness owed by the registrant to Great American, which amount was
approximately $1,567,389 as of December 31, 1995; and (3) the mutual release of
any claims between Great American and the registrant.
After the transfer of stock and assets described above and the Share
Exchange (but without giving effect to the exercise of dissenters' rights),
Classic-Florida's former shareholders and the registrant's existing shareholders
own 2,520,665 shares (82.4%) and 538,967 shares (17.6%) of the registrant's
outstanding Class A Common Stock, respectively, and Classic-Florida's former
shareholder owns 200,000 shares (100%) of the registrant's outstanding Class B
Common Stock. Accordingly, 3,059,632 shares of the registrant's Class A Common
Stock and 200,000 shares of the registrant's Class B Common Stock are now
outstanding.
There was no relationship between the registrant and Classic-Florida
prior to the Share Exchange.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Not applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired: filed
herewith
(b) Pro forma financial information: filed herewith
3
<PAGE>
(c) Exhibits:
<TABLE>
<CAPTION>
REGULATION SEQUENTIAL
S-K NUMBER EXHIBIT PAGE NUMBER
<S> <C> <C>
3.1 Articles of Amendment to Articles of Incorporation (previously N/A
filed)
27 Financial Data Schedule 25
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
4
<PAGE>
[Letterhead of James Moore & Co.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Classic Restaurants International, Inc.:
We have audited the accompanying balance sheet of Classic Restaurants
International, Inc. as of December 31, 1995, and the related statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1995 and 1994. 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 finanacial statements are free of
material mistatement. 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 Classic Restaurants
International, Inc. as of December 31, 1995, and the results of its operations
and its cash flows for the years ended December 31, 1995 and 1994, 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 shown in the accompanying financial
statements, the Company incurred a net loss of $1,247,695 for 1995 and has
incurred substantial net losses since inception. At December 31, 1995, current
liabilities exceed current assets by $1,415,432 and total liabilities exceed
total assets by $804,564. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
/s/James Moore & Co.
Gainesville, Florida
March 20, 1996
6
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
BALANCE SHEET
DECEMBER 31, 1995
<CAPTION>
December 31,
1995
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $ 19,666
Inventory 15,971
Prepaid expenses 13,133
Due from officer and stockholders 51,735
Employee advances and other receivables 6,882
---------
Total current assets 107,387
---------
PROPERTY AND EQUIPMENT, NET 539,437
---------
OTHER ASSETS
Deposits 47,598
Intangibles assets, net of accumulated amortization
of $6,167 23,833
-------
Total other assets 71,431
--------
TOTAL ASSETS $ 718,255
========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<S> <C>
CURRENT LIABILITIES
Bank overdraft $ 35,035
Accounts payable 275,663
Accrued expenses 309,987
Notes and loans payable 441,455
Due to stockholder 351,911
Advance banquet deposits 31,591
Deferred revenue 41,175
Deferred rent 36,002
------
Total current liabilities 1,522,819
---------
CONTINGENCIES (Notes 11 and 14)
STOCKHOLDERS' EQUITY (DEFICIT)
Convertible preferred stock Class A; no par value;
authorized 375,000 shares; issued and oustanding
273,483 shares ($1,093,932 liquidation preference) 1,093,932
Common stock Class A; no par value; authorized
6,000,000 shares; issued and outstanding 1,905,903 657,355
Common stock Class B; no par value; authorized
1,000,000 shares; issued and outstannding 200,000 shares -
Accumulated deficit (2,555,851)
----------
Total stockholders' equity (deficit) (804,564)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 718,255
========
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement
7
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------------
1995 1994
--------------------------
<S> <C> <C>
SALES $ 2,632,151 $ 1,902,543
----------- -----------
DIRECT EXPENSES
Food and bar 620,383 471,487
Personnel costs 1,446,693 1,145,830
Production costs 137,533 107,118
----------- -----------
Total direct expenses 2,204,609 1,724,435
----------- -----------
GROSS PROFIT 427,542 178,108
OPERATING EXPENSES
Advertising 273,146 174,891
Automobile expense 2,367 4,820
Deposits forfeited - 25,000
Office expense 93,781 70,140
Travel and entertainment 53,502 71,215
Telephone and utilities 89,562 88,790
Insurance 21,274 25,030
Laundry and uniforms 36,998 28,591
Rent 256,922 229,655
Consulting 136,893 47,906
Taxes and licenses 40,860 15,756
Legal and accounting 126,817 86,784
Repairs and maintenance 58,346 52,288
Depreciation and amortization 142,291 99,535
Other 100,760 64,268
Salaries 225,000 -
----------- -----------
Total operating expenses 1,658,519 1,084,669
----------- -----------
LOSS FROM OPERATIONS (1,230,977) (906,561)
=========== ===========
OTHER INCOME (EXPENSE)
Interest income-shareholder - 4,357
Interest expense (16,718) (6,483)
----------- -----------
Total other income (expense) (16,718) (2,126)
----------- -----------
NET LOSS $(1,247,695) $ (908,687)
=========== ===========
NET LOSS PER COMMON SHARE $ (.66) $ (.56)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,883,204 1,615,013
=========== ===========
The accompanying notes to financial statements
are an integral part of these statements
8
</TABLE>
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<CAPTION>
TOTAL
COMMON STOCK STOCK-
PREFERRED STOCK ------------------------------ TREASURY STOCK HOLDERS'
--------------------- CLASS A CLASS B ACCUMULATED ----------------- EQUITY
SHARES AMOUNT SHARES SHARES AMOUNT DEFICIT SHARES AMOUNT (DEFICIT)
--------- ----------- --------- --------- -------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993 273,983 $781,420 1,330,838 200,000 $ 420 $(399,469) - $ - $382,371
Net proceeds from
sale of stock - 13,178 78,852 - 208,510 - - - 221,688
Issuance of stock,
no consideration - - 39,013 - - - - - -
Issuance of stock in partial
satisfaction of amounts
due to shareholder - 300,000 93,750 - - - - - 300,000
Purchase of treasury stock - - - - - - (3,750) (16,166) (16,166)
Sale of treasury stock 1,334 - - - - 3,750 16,166 17,500
Net loss - - - - - (908,687) - - (908,687)
--------- --------- --------- --------- -------- ---------- -------- -------- ----------
BALANCE, December 31, 1994 273,983 1,095,932 1,542,453 200,000 208,930 (1,308,156) - - (3,294)
Net proceeds from
sale of stock - - 133,400 - 223,425 - - - 223,425
Issuance of stock,
no consideration - - 5,050 - - - - - -
Issuance of stock
for services - - 225,000 - 225,000 - - - 225,000
Shares canceled by
stockholder (500) (2,000) - - - - - - (2,000)
Net loss - - - - - (1,247,695) - - (1,247,695)
--------- --------- --------- --------- -------- ---------- -------- -------- ----------
BALANCE, December 31, 1995 273,483 $1,093,932 1,905,903 200,000 $657,355 $(2,555,851) - $ - $ (804,564)
========= ========= ========= ========= ======== ========== ======== ======== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
9
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------------------
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,247,695) $ (908,687)
Adjustments to reconcile net loss
to net cash used for
operating activities:
Depreciation and amortization 142,291 99,535
(Increase) decrease in inventory 1,854 (7,995)
(Increase) decrease in prepaid expenses (12,507) 9,458
(Increase) decrease in employee advances and other receivables (3,605) 15,333
(Increase) decrease in deposits (11,168) 17,595
Increase in accounts
payable and accrued expenses 230,859 259,139
Decrease in advance banquet deposits (891) (1,345)
Increase (decrease) in deferred revenue (14,602) 40,777
Increase (decrease) in deferred rent (908) 36,910
Decrease in deferred costs - 15,000
Stock issued for services 225,000 -
------- -------
Total adjustments 556,323 484,407
------- --------
Net cash used for operating activities (691,372) (424,280)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (5,436) (672,691)
Advances to stockholders (36,735) -
(Advances) repayments on note receivable - stockholder (15,000) 309,550
-------- --------
Net cash used for investing activities (57,171) (363,141)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of
stock 223,425 223,022
Proceeds from notes and loans payable 347,506 93,949
Advances from stockholder 177,483 474,428
Principal payments on notes payable - (5,313)
Refund of canceled stock (2,000) -
Increase in bank overdraft 19,901 959
------- ---------
Net cash provided by financing
activities 766,315 787,045
------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17,772 (376)
CASH AND CASH EQUIVALENTS, beginning of year 1,894 2,270
------ ------
CASH AND CASH EQUIVALENTS, end of year $ 19,666 $ 1,894
========== =========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
10
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(CONTINUED)
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------------------
1995 1994
------------ -----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Issuance of stock in partial repayment of
amount due to shareholder $ - $ 300,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest 9,506 3,698
Income Taxes - -
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
11
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
The following is a summary of the more significant accounting policies and
practices of Classic Restaurants International, Inc. which affect the
accompanying financial statements:
(a) ORGANIZATION AND OPERATIONS--Classic Restaurants International,
Inc. (the Company) operates two dinner theaters, the Musicana Supper
Club. The Company was organized on April 7, 1992, and began operating
its first dinner theater in December, 1992, located in Boca Raton,
Florida, and its second in May 1994, located in Clearwater, Florida.
(b) CASH AND CASH EQUIVALENTS--For the purpose of reporting cash flows,
the Company considers all highly liquid investments with an original
maturity date of three months or less to be cash equivalents.
(c) PROPERTY AND EQUIPMENT--Property and equipment consists primarily
of restaurant equipment and leasehold improvements and are recorded at
cost. Depreciation on furniture and equipment is computed using the
straight-line method over the estimated useful lives of the assets.
Leasehold improvements are depreciated using the straight-line method
over the lesser of the term of the related lease or the estimated
useful lives of the assets. Depreciation expense charged to operations
was $140,291 and $97,535 for the years ended December 31, 1995 and
1994, respectively.
Periodically, management evaluates the estimated useful life of its
property and equipment to determine whether intervening economic events
and circumstances have affected the remaining useful lives. In light of
the current conditions noted in Note 14, it is reasonably possible that
the Company's estimate that it will recover the carrying amount of its
property and equipment from future operations will change in the near
term.
(d) INTANGIBLE ASSETS AND AMORTIZATION--Intangible assets include
amounts paid for the Musicana tradename and music library. Amortization
is computed using the straight-line method over fifteen years.
Amortization expense charged to operations was $2,000 for the years
ended December 31, 1995 and 1994.
(e) DEFERRED RENT--The lease agreement for a restaurant building
contains provisions for no initial monthly rent and for scheduled rent
increases (see Note 8). The deferred rent amount represents the
difference between amounts paid and rental expense computed on a
straight-line basis over the entire lease term.
(f) REVENUE RECOGNITION--Revenues are recognized in the period when the
customer attends the dinner theater and receives the service. Revenues
collected in advance are recorded as advance banquet deposits and
deferred revenue.
(g) INVENTORY--Inventory is recorded at cost and consists of food and
bar items. Cost is determined on the first-in, first-out (FIFO) method.
12
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
------------------------------------------
(h) ESTIMATES--Management uses estimates and assumptions in preparing
financial statements. Those estimates and assumptions affect the
reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported revenues and
expenses. Actual results could differ from those estimates.
(i) ADVERTISING--The Company expenses the production costs of
advertising the first time the advertising takes place.
(2) PROPERTY AND EQUIPMENT:
----------------------
Leasehold improvements $ 519,946
Equipment 251,987
Furniture 22,694
-------
794,627
Less: Accumulated depreciation 255,190
--------
$ 539,437
=========
The Company has granted a security interest in all its furniture, fixtures and
equipment to a vendor. As of December 31, 1995, the vender was owed $10,598.
(3) NOTES AND LOANS PAYABLE:
-----------------------
Notes and loans payable consist of the following:
8% convertible promissory notes
to stockholders, interest due
monthly, principal due June
30, 1995. Convertible at
anytime into Class A common
stock at $3.20 per share by
the holder. Payment of notes
is guaranteed personally by
the Company's president, James
R. Shaw $ 113,949
=============
The noteholders granted an extension of the due date on the above notes to
December 31, 1995; however, as of March 20, 1996, the notes remained unpaid. One
note for $7,149 was subsequently called by the noteholder.
Noninterest bearing loan
payable to Casinos
International, Inc., due on
demand made in connection with
agreement and plan of share
exchange (see Note 12) $ 327,506
=============
13
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(4) CONCENTRATIONS OF CREDIT RISK:
-----------------------------
Significant concentrations of credit risk for all financial instruments owned by
the Company as of December 31, 1995, are as follows:
(a) DEMAND DEPOSITS--The Company has demand deposits with local banks
in Atlanta, Georgia; Clearwater, Florida and Boca Raton, Florida, with
bank balances of $29,465 at December 31, 1995. The Company has no
policy requiring collateral or other security to support its deposits
although all demand deposits with banks are federally insured up to
$100,000 by the FDIC.
(b)DEPOSITS--The Company's deposits are comprised of amounts held by
various lessors of real property for security, last month's rent and
utilities. The Company has no policy requiring collateral or other
security to support its deposits.
(c) DUE FROM OFFICER AND STOCKHOLDERS--The Company has short-term
receivables due from three stockholders totaling $51,735 as of December
31, 1995. These receivables are uncollateralized. The Company's policy
of requiring collateral or other security on loans made to officers or
stockholders is determined on a case-by-case basis.
(5) INCOME TAXES:
------------
At December 31, 1995, the Company has a net operating loss carryforward totaling
approximately $2,400,000 that may be offset against future taxable income
through 2010. No tax benefit has been reported in the 1994 or 1995 financial
statements, however, because the Company believes there is at least a 50% chance
that the carryforward will expire unused. Accordingly, the $816,000 tax benefit
of the loss carryforward has been offset by a valuation allowance of the same
amount. The expected tax benefit of $816,000 that would result from applying
federal statutory tax rates to the pre-tax loss differs from amounts reported in
the financial statements because of the increase in the valuation allowance.
(6) CONVERTIBLE PREFFERED STOCK:
---------------------------
During 1992, the Company authorized 375,000 shares of Class A, nonvoting
preferred stock. The Class A preferred stock is convertible at any time, after
twenty-four months from the date of issuance, into an equal number of Class A
common shares. The Class A preferred stock is redeemable for cash at the option
of the Company at any time after issuance for $12.00 per share. The preferred
stock is entitled to a preference in the amount of $4.00 per share in the event
of liquidation or dissolution of the Company. The Class A preferred stockholders
are entitled to receive up to $4.00 dividend per share per annum if declared by
the Board of Directors before any dividends shall be declared or paid on the
common stock for that year.
(7) CAPITAL STOCK TRANSACTIONS:
--------------------------
The Company has authorized 6,000,000 shares of Class A common stock and
1,000,000 shares of Class B common stock. The Class A common stock is entitled
to 1/20th of a vote per share and the Class B common stock is entitled to one
vote per share.
14
<PAGE>
CLASIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(7) CAPITAL STOCK TRANSACTIONS: (Continued)
--------------------------
Commencing January 1994, the Company offered its common stock for sale at $4.00
(pre-split) per unit. Each unit consisted of five shares of the Company's Class
A common stock. The Company received a total of $221,688 from this offering, net
of related costs.
The Company allocated all amounts raised up to $1,093,932 to preferred stock
since those shareholders have various rights superior to the common
stockholders, including a liquidation preference of $4.00 per share for a total
of $1,093,932.
In September 1994, the shareholders of the Company approved a 1 for 4 reverse
stock split for its Class A common stock and Class A preferred stock. The
Company also adjusted its Class A preferred redemption price from $3.00 to
$12.00 per share and both the liquidation and dividend preference from $1.00 to
$4.00 per share.
In September 1994, the Company issued 93,750 shares of Class A common stock at a
price of $3.20 per share to its majority shareholder, Crown Resources, Inc.
(Crown), as partial repayment of amounts due to Crown.
The Company has an option to acquire 100,000 shares of the Company's Class A
common stock from a shareholder for $53,000.
At December 31, 1995, shares of common stock were reserved for the following
reason:
Conversion of promissory notes 35,600
In January 1995, the Company agreed to reserve for future granting to those
individuals who may agree to serve as directors of the Corporation, an aggregate
of 1,000,000 stock options to purchase up to 1,000,000 shares of the Class A
common stock at a price of $3.20 per share. No stock options were exercised
during the year ended December 31, 1995.
During 1995, the Company sold 133,400 shares of its Class A common stock. Net
proceeds received for these shares was $223,425.
In August 1995, the Compay issued 200,000 shares of Class A common stock to its
President, and 25,000 shares of Class A common stock to its Executive Vice
President and Secretary, for services rendered. These shares were valued at
$225,000 based on other stock sales during the month of August 1995.
(8) LEASES:
------
The Company entered into a noncancellable operating lease on a building in
November 1992. The lease expires in November 1997 with an option to renew for an
additional five years. The Company also had a nonrefundable $25,000 option to
purchase the building for $1,300,000 which expired June 1, 1994. The Company did
not exercise the option and recorded an expense of $25,000 in 1994.
15
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO FINANACIAL STATEMENTS
(8) LEASES: (Continued)
------
In addition, the Company entered into a noncancellable operating lease on a
building in December 1993. The lease expires August 31, 1999, with an option to
renew for an additional five years. The lease provides that no rent is to be
paid in the initial six months. Thereafter, the monthly rental amount will be
$6,000, increasing to $6,500 and $7,000 in the nineteenth and thirty-first month
of the lease, respectively. The Company is also responsible for its share of
related property taxes and common area maintenance costs.
Minimum future rental payments under noncancellable operating leases having
remaining terms in excess of one year as of December 31, 1995, for the next five
years and in the aggregate are as follows:
YEAR ENDING
DECEMBER 31, AMOUNT
------------ ----------
1996 $ 164,000
1997 161,000
1998 84,000
1999 56,000
2000 -
Thereafter -
----------
Total $ 465,000
==========
The Company also rents various apartments under one year operating leases.
(9) RELATED PARTY TRANSACTIONS:
--------------------------
During 1994, the Company's majority shareholder, Crown, repaid $309,550 on a
promissory note owed to the Company. Crown also made $474,428 in advances to the
Company during 1994, of which $300,000 was repaid with the issuance of Company
stock (see Note 7). During 1995, Crown advanced the Company an additional
$177,483. The balance due Crown at December 31, 1995, of $351,911 is unsecured
and has no set interest or repayment terms.
(10) OTHER MATTERS:
-------------
During 1994, the Company abandoned its plans to pursue a successful public
offering. Consequently, the Company charged $15,000 in deferred costs related to
the proposed offering to operations during 1994.
(11) CONTINGENCIES:
-------------
The Company conducted the offering of its securities during 1994 as described in
Note 7, pursuant to certain claimed exemptions from registration under federal
and state securities laws. The sale of these shares may have constituted
violations of federal and state securities laws. The offering memorandum dated
January 6, 1994, that was used in connection with these sales was inaccurate in
that it described a maximum offering of Company shares of $100,000. A total of
$252,320 of securities were sold by the Company. Persons purchasing shares as
part of this offering may have a claim against the
16
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TOFINANCIAL STATEMENTS
(11) CONTINGENCIES: (Continued)
-------------
Company for the purchase of their shares, plus interest. The outcome of this
matter cannot be determined, however, the Company does not anticipate any
adverse effects on its financial position or results of operations due to this
matter.
(12) MERGER:
------
In June 1995, the Board of Directors of the Company entered into an agreement
and plan of share exchange with two unrelated corporations, Casinos
International, Inc. (Casinos) and Great American Resorts, Inc. The parties
agreed that the Company will be merged with and into Casinos, with Casinos
continuing its corporate existence and being the corporation surviving the share
exchange. The effective date of the agreement will be the date the Articles of
Share Exchange are filed with the Secretaries of State, which will be subsequent
to a shareholder meeting where approval and authorization of shareholders
holding a majority of the outstanding shares of common stock is received. At the
effective date, the Company will become a wholly owned subsidiary of Casinos,
Casinos will change its name to Classic Restaurants International, Inc. and the
existing members of the Board of Directors of Casinos shall resign and be
replaced by existing members of the Board of Directors of the Company. On the
effective date, Casinos shall issue shares of its Casinos common stock to all
nondissenting shareholders of the Company in exchange for all of the issued and
outstanding Company stock at an exchange rate of: one share of Casino Class A
common stock for each one share of Company Class A common stock; one share of
Casino Class B common stock for each one share of Company Class B common stock;
and one share of Casino Class A common stock for each one share of Company class
A preferred stock. Shareholders of the Company shall have the right to dissent
from the share exchange provided in this agreement and to obtain payment for
their shares. The agreement and plan of share exchange was approved and
authorized by a majority of the stockholders on January 31, 1996.
(13) FAIR VALUE OF FINANCIAL INSTRUMENTS:
-----------------------------------
The fair value of the Company's cash and cash equivalents, employee advances and
other receivables, deposits, accounts payable, accrued expenses and advance
banquet deposits, approximates carrying value due to the short-term maturity of
the instruments.
It was not practicable to estimate the fair value of the asset "Due from officer
and stockholders" of $51,735 since these instruments are with related parties
and have no set repayment terms. Additionally, it was not practicable to
estimate the fair value of the liabilities "Notes and loans payable" of $441,455
and "Due to stockholder" of $351,911 for the same reasons. See Notes 3 and 9 for
the terms of these liabilities.
(14) GOING CONCERN:
-------------
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. However, the Company has sustained substantial
operating losses in recent years. In addition, the Company has used substantial
amounts of working capital in its operations. Further, at December 31, 1995,
current liabilities exceed current assets by $1,415,432 and total liabilities
exceed total assets by $804,564.
17
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
(14) GOING CONCERN: (Continued)
-------------
These factors create an uncertainty about the Company's ability to continue as a
going concern. Management is planning to raise additional equity capital by
undertaking a private offering of its common stock under Regulation D of the
Securities Act of 1933 and raising up to $5,000,000. Management also is
currently working on increasing revenues and reducing expenses.
In view of these matters, realization of a major portion of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financing requirements, and the success of its future operations. Management
believes that actions presently being taken to raise capital and improve
operating results provide the opportunity for the Company to continue as a going
concern.
(15) SUBSEQUENT EVENT:
----------------
Subsequent to the completion of the agreement and plan of share exchange
discussed in Note 12, the Company filed a Form 8-A registration statement to
register its common stock under Section 12(g) of the Securities Exchange Act of
1934.
18
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined balance sheet and statement of
operations for the year ended December 31, 1995 gives effect to the combination
of the companies indicated. The pro forma statement of operations assumes that
the combination took place at the beginning of the period presented. The pro
forma information is based on the historical financial statements of Classic
Restaurants International, Inc. and Casinos International, Inc.
The pro forma statements have been prepared by management of Classic Restaurants
International, Inc. based upon the financial statements of the Company and
Casinos International, Inc. These pro forma statements may not be indicative of
the results that actually would have occurred if the combination had been effect
on the dates indicated or which may be obtained in the future.
The pro forma financial statements give effect to the acquisition by Casinos
International, Inc. (Registrant) of all of the issued and outstanding stock of
Classic Restaurants International, Inc. in exchange for 2,373,886 shares of the
Registrant's Class A common stock and 200,000 shares of the Registrant's Class B
common stock. The transaction has been accounted for as a recapitalization of
Classic Restaurants International, Inc.
Simultaneous with the effectiveness of the exchange of shares the Registrant
transferred all of the issued and outstanding shares of is subsidiary Great
American Casinos, Inc. to Great American Resorts, Inc.
19
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1995
(UNAUDITED)
<CAPTION>
Classic
Restaurants Casinos
INTERNATIONAL INTERNATIONAL ADJUSTMENTS TOTAL
ASSETS
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $ 19,666 $ 2,390 $ (2,352) $ 19,704
Accounts receivable - 3,142 (3,142) -
Inventory 15,971 - 15,971
Prepaid expenses 13,133 - 13,133
Due from officer and stockholders 51,735 402,158 453,893
Other assets - 35,317 35,317
Employee advances and
other receivables 6,882 - 6,882
------ ------ ----- ------
Total current assets 107,387 443,007 (5,494) 544,900
Property and Equipment, net 539,437 4,197,314 (4,197,314) 539,437
Other assets
Advances receivable - 327,507 327,507
Deposits 47,598 - 47,598
Intangible assets (net of
accumulated amortization) 23,833 6,273 (6,273) 23,833
------- ------ ------- -------
Total assets $718,255 $4,974,101 $(4,209,081) $1,483,275
======= ========= ========== =========
</TABLE>
See notes to unaudited pro forma financial statements.
20
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1995
(UNAUDITED)
<CAPTION>
Classic
Restaurants Casinos
INTERNATIONAL INTERNATIONAL ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank overdraft $ 35,035 $ - $ $ 35,035
Accounts payable 275,663 56,490 (53,772) 278,381
Accrued expenses 309,987 27,567 (27,567) 309,987
Notes and loans payable 441,455 2,856,800 (2,856,800) 441,455
Due to stockholder 351,911 1,567,389 (1,567,389) 351,911
Advance banquet deposits 31,591 37,500 (37,500) 31,591
Deferred revenue 41,175 - 41,175
Deferred rent 36,002 - 36,002
------- ------ ----- -------
Total current liabilities 1,522,819 4,545,746 (4,543,028) 1,525,537
Stockholders' equity
Convertible preferred stock 1,093,932 - (1,093,932) -
Preferred stock, no par value,
100,000,000 shares authorized - - - -
Common stock - Class A no par value,
1,800,000,000 shares authorized 657,355 979,664 1,093,732
2,912,853 shares outstanding (217,362) 2,513,389
Common stock - Class B, no par value
200,000,000 shares authorized
200,000 shares outstanding 200 200
Accumulated earnings (deficit) (2,555,851) (551,309) 551,309 (2,555,851)
--------- --------- -------- ---------
(804,564) 428,355 333,947 (42,262)
--------- -------- -------- --------
Total liabilities and stockholders'
equity $ 718,255 $4,974,101 $4,209,081 $1,483,275
======== ========= ========= =========
See notes to unaudited pro forma financial statements.
21
</TABLE>
<PAGE>
<TABLE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
<CAPTION>
Classic
Restaurants Casinos
INTERNATIONAL INTERNATIONAL ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C>
Revenue $ 2,632,151 $ 277,650 $(277,650) $2,632,151
Costs and expenses 3,879,846 497,749 (468,713) 3,908,882
--------- -------- --------- ---------
Income (loss) from
operations (1,247,695) (220,099) 191,063 (1,276,731)
Interest expense - (122,549) 122,549
------- --------- -------- ------
Net income (loss) $(1,247,695) $ (342,648) $ 313,612 $(1,276,731)
========= ========= ======== =========
Per share data:
Average common shares outstanding 3,112,853
Net loss per common share $ (0.41)
======
</TABLE>
See notes to unaudited pro forma financial statements.
22
<PAGE>
CLASSIC RESTAURANTS INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO-FORMA FINANCIAL STATEMENTS
A. The pro-forma statements of operations included herein include the
accounts of Classic Restaurants International, Inc. and Casinos
International, Inc. for the year ended December 31, 1995. The
information is presented pursuant to the Company's combination with
Casinos International, Inc. completed in January 1996.
B. Pro-forma earnings per common share is computed using the number of
common shares outstanding after adjustment for shares issued for the
recapitalization, as though all shares issued had been outstanding for
the entire period presented.
C. Pro-forma adjustments:
Pro-forma adjustments to the balance sheet relate to the disposition of
the subsidiary described in the Form 8-K and the restatement of
stockholders' equity to reflect the capital structure of the public
entity.
Pro-forma adjustments to the income statement relate to the disposition
of the subsidiary described in the Form 8-K.
23
<PAGE>
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 thereunto duly authorized.
CLASSIC RESTAURANTS INTERNATIONAL, INC.
Date: July 2, 1996 By: /S/ CAROLINE P. ANDERSON
-------------------------
Caroline P. Anderson,
Executive Vice President
24
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, STATEMENTS OF OPERATIONS, STATEMENTS OF STOCKHOLDERS
EQUITY (DEFICIT), STATEMENTS OF CASH FLOWS, AND THE NOTES THERETO, FOUND ON ON
PAGES 7 TO 18 OF THE COMPANY'S F0RM 8-K/A DATED JANUARY 1, 1996 , AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-START> JAN-01-1995 JAN-01-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<EXCHANGE-RATE> 1 1
<CASH> 19,666 0
<SECURITIES> 0 0
<RECEIVABLES> 58,617 0
<ALLOWANCES> 0 0
<INVENTORY> 15,971 0
<CURRENT-ASSETS> 107,387 0
<PP&E> 794,627 0
<DEPRECIATION> 255,190 0
<TOTAL-ASSETS> 718,255 0
<CURRENT-LIABILITIES> 1,522,819 0
<BONDS> 0 0
0 0
0 0
<COMMON> 1,751,287 0
<OTHER-SE> (2,555,851) 0
<TOTAL-LIABILITY-AND-EQUITY> 718,255 0
<SALES> 0 0
<TOTAL-REVENUES> 2,632,151 1,902,543
<CGS> 0 0
<TOTAL-COSTS> 3,863,128 2,809,104
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 16,718 6,483
<INCOME-PRETAX> (1,247,695) (908,687)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,247,695) (908,687)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,247,695) (908,687)
<EPS-PRIMARY> (.61) (.56)
<EPS-DILUTED> (.61) (.56)
</TABLE>
