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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20459
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) October 24, 1997
CREDIT DEPOT CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-19420 58-1909265
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(State or other (Commission file (I.R.S. Employer
jurisdiction of number) Identification No.)
incorporation or
organization)
700 Wachovia Center
Gainesville, Georgia
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(Address of principal executive offices)
30501
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(Zip code)
(770) 531-9927
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
At a Special Meeting of Shareholders held on October 24, 1997, a
majority of the common shareholders of Credit Depot Corporation (the "Company")
approved an Amendment to the Certificate of Incorporation effecting a reverse
stock split in which each five shares of issued common stock, par value $.001
per share, of the Company, whether issued and outstanding or held in treasury,
was reclassified and changed into one share of common stock, par value $.001
per share, of the Company. This reverse stock split was effected on October 29,
1997. The Company's Common Stock, adjusted for the reverse split, will trade
under the ticker symbol LENDD for 20 days, at which time the stock will again
trade under the LEND symbol.
At a Board of Directors Meeting held October 24, 1997, the Company
accepted conversion offers tendered by holders of 10% Convertible Secured Notes
(the "Notes") and 9% Convertible Preferred Stock (the "Preferred Stock"). Of
the $8,140,000 of Notes outstanding, holders representing $6,970,000 of Notes
elected to convert their security to Common Stock of the Company at a
conversion rate of $0.50 per share. Of the $6,300,000 or 315,000 shares of
Preferred Stock outstanding, holders representing $6,233,320 or 311,666 shares
of Preferred Stock elected to convert their security to Common Stock of the
Company at a conversion rate of $0.65 per share.
The conversion of Notes and Preferred Stock will add 23,529,723 shares
of Common Stock to the 4,072,861 existing shares of Common Stock outstanding,
resulting in a total of 27,602,584 shares issued and outstanding, which amounts
to 5,520,517 shares of Common Stock after giving effect to the reverse stock
split. The effect on the Company's financial statements is estimated to be as
follows:
Statements of Cash Flows - No additional cash was received as a result
of the conversion of securities. Estimated cash expenses of $125,000 in
the form of legal fees and conversion agent fees incurred in tendering
of the conversion offer will be charged to paid-in capital as a cost of
issuing additional common stock.
Income Statement - A non-cash charge of $5,576,000 will be recorded as
a "Debt Conversion Expense" pursuant to the guidelines of Financial
Accounting Standards Board Statement No. 84 "Induced Conversions of
Convertible Debt". The calculation of this figure assumes a market
price of the common stock at conversion of $.50 per share. Pursuant to
the guidelines, this charge is credited to "Paid-In Capital". Also,
approximately $843,000 of deferred financing charges incurred during
the original issuance of the Notes will be charged to expense as a
result of the conversion of the Notes.
Balance Sheet - Cash will decrease by $125,000 for expenses incurred
for the conversion. The asset "Deferred Financing Costs" will be
reduced by approximately $843,000. Convertible Debt will be reduced by
$6,970,000. The Preferred Stock and Common Stock accounts will be
adjusted a nominal amount to reflect the changes in the respective par
values of the outstanding securities. The net impact on Stockholder's
Equity is estimated to be an increase of $6,000,000 as a result of the
conversion.
The Company has received $1,350,000 as a bridge loan, due October 31, 1997, in
anticipation of receiving additional financing in the form of preferred stock.
While the Company believes that the successful approval of the reverse stock
split and significant acceptance of the conversion offer will allow the
placement of additional financing to proceed, there can be no assurance that
the additional financing transaction can be consummated or the maturity date of
the bridge loan can be extended until the financing can be completed.
Additionally, the Company has received correspondence from the Nasdaq Stock
Market allowing the Company until November 14, 1997, to demonstrate compliance
with minimum stock bid price and minimum net worth requirements for continued
listing on the Nasdaq SmallCap Market. While the Company believes the reverse
stock split and conversion of debt will allow the Company to achieve technical
compliance with the requirements, there can be no assurance that the minimum
bid price of the Company's common stock will remain above $1.00 or that
officials with the Nasdaq Stock market will accept the Company's plan for
continued compliance with the requirements, in which case the Company's stock
could be delisted, causing the stock to be traded in the over-the-counter
market.
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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 thereunto duly authorized.
CREDIT DEPOT CORPORATION
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(Registrant)
Date: October 29, 1997 /s/ Charles D. Farrahar
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Charles D. Farrahar
(Vice President and Chief Financial Officer)
