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 earliest event reported: MARCH 1, 1996
MIAMI SUBS CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 0-19623 65-0249329
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
6300 N.W. 31ST AVENUE, FORT LAUDERDALE, FLORIDA 33309
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954) 973-0000
Page 1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
The following unaudited financial statements of LoneStar Hospitality
Corporation and Subsidiary are filed as a part of this Form 8-K/A:
Consolidated Balance Sheet as of December 31, 1995
Consolidated Statement of Operations for the nine months ended December
31, 1995
Consolidated Statement of Cash Flows for the nine months ended December
31, 1995
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information.
The following unaudited pro forma financial statements are filed as a
part of this Form 8-K/A:
Miami Subs Corporation Pro Forma Consolidated Balance Sheet as of May
31, 1995
Miami Subs Corporation Pro Forma Consolidated Statement of Operations
for the Year Ended May 31, 1995
Miami Subs Corporation Pro Forma Consolidated Balance Sheet as of
February 29, 1996
Miami Subs Corporation Pro Forma Consolidated Statement of Income for
the Nine Months ended February 29, 1996
(c) Exhibits.
EXHIBIT
NO. DESCRIPTION
*2.1 Purchase and Sale Agreement dated March 1, 1996, by and
among Miami Subs U.S.A., Inc., LoneStar Hospitality
Corporation, and LS Holding Corp.
*99(a) Press Release dated March 5, 1996
* Incorporated by reference to the exhibit of the same number included in the
Registrant's Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 15, 1996.
Page 2
PRO FORMA FINANCIAL INFORMATION
The following pro forma financial statements set forth certain
unaudited pro forma financial information giving effect to the acquisition of
five existing Miami Subs Grill restaurants from LoneStar Hospitality Corporation
("LoneStar") by Miami Subs U.S.A., Inc., a wholly-owned subsidiary of Miami Subs
Corporation (the "Company"). Additional details concerning the acquisition are
contained in the Company's Form 8-K that was filed with the Securities and
Exchange Commission on March 15, 1996. The pro forma information gives effect to
the issuance of 1,325,000 shares of the Company's Common Stock, the assumption
of indebtedness on the restaurants at the time of acquisition of $1,467,000, and
the fair value of the restaurants and assets acquired. The pro forma financial
information presented for the balance sheets as of May 31, 1995 and February 29,
1996 assumes that the acquisition occurred on each of those dates. The pro forma
financial information presented for the results of operations for the fiscal
year ended May 31, 1995 and the nine months ended February 29, 1996 assumes that
the acquisition occurred at beginning of the fiscal year ended May 31, 1995, and
reflects actual operations of the restaurants by LoneStar. The pro forma
financial information presented is not necessarily indicative of the results
that actually would have occurred had the acquisition been consummated on the
date indicated or that may be obtained in the future.
Page 3
<TABLE>
<CAPTION>
MIAMI SUBS CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MAY 31, 1995
(UNAUDITED)
Miami Subs Pro Forma
Corporation Pro Forma Consolidated
ASSETS Consolidated Adjustments(1) Balance Sheet
- - ------ ------------ -------------- -------------
CURRENT ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 3,145,000 $ 133,000 $ 3,278,000
Notes and accounts receivable - net 1,437,000 1,311,000 2,748,000
Food and supplies inventories 289,000 49,000 338,000
Other 309,000 309,000
------------ ------------ ------------
Total Current Assets 5,180,000 1,493,000 6,673,000
Notes receivable 3,530,000 3,530,000
Property and equipment - net 14,592,000 1,836,000 16,428,000
Intangible assets - net 9,227,000 50,000 9,277,000
Other 513,000 10,000 523,000
------------ ------------ ------------
TOTAL $ 33,042,000 $ 3,389,000 $ 36,431,000
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 5,298,000 $ 98,000 $ 5,396,000
Current portion of debt and capitalized lease obligations 1,487,000 444,000 1,931,000
------------ ------------ ------------
Total Current Liabilities 6,785,000 542,000 7,327,000
------------ ------------ ------------
Long-term portion of debt and capitalized lease obligations 6,249,000 1,023,000 7,272,000
Deferred franchise fees and other deferred income 2,241,000 (97,000) 2,144,000
Accrued liabilities and other 2,714,000 2,714,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Series A Convertible Preferred Stock 13,000 13,000
Common stock 257,000 13,000 270,000
Additional paid-in capital 22,993,000 1,908,000 24,901,000
Accumulated deficit (7,647,000) (7,647,000)
------------ ------------ ------------
15,616,000 1,921,000 17,537,000
Less note receivable from sale of stock (563,000) (563,000)
------------ ------------ ------------
Total Shareholders' Equity 15,053,000 1,921,000 16,974,000
------------ ------------ ------------
TOTAL $ 33,042,000 $ 3,389,000 $ 36,431,000
============ ============ ============
</TABLE>
(1) To reflect the fair value of five restaurants and related assets
acquired from LoneStar, a short term non-interest bearing note received
by the Company from LoneStar on the date of acquisition, the Company's
assumption of existing indebtedness on the restaurant's acquired, and
the issuance of Common Stock by the Company.
Page 4
MIAMI SUBS CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED MAY 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Miami Subs LoneStar Consolidated
Corporation Hospitality Pro Forma Statement of
Consolidated Corporation(7) Adjustments Operations
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
- - --------
Restaurant sales $ 27,148,000 $ 5,898,000 $ (782,000)(1) $ 32,264,000
Revenues from franchised restaurants 3,920,000 (196,000)(2) 3,724,000
Net gain from sales of restaurants and other 112,000 112,000
Interest income 477,000 46,000 (3) 523,000
Other revenues 239,000 491,000 (491,000)(6) 239,000
------------ ------------ ------------ ------------
Total 31,896,000 6,389,000 (1,423,000) 36,862,000
------------ ------------ ------------ ------------
EXPENSES
- - --------
Restaurant operating costs 23,942,000 5,960,000 (732,000)(1) 28,974,000
(196,000)(2)
General, administrative and franchise costs 6,390,000 1,018,000 (911,000)(6) 6,497,000
Depreciation and amortization 1,544,000 199,000 (59,000)(4) 1,684,000
Interest expense - net of capitalized interest 581,000 9,000 130,000(5) 720,000
Loss on sale of restaurant 286,000 (286,000)(6)
Other 784,000 (784,000)(6)
------------ ------------ ------------ ------------
Total 32,457,000 8,256,000 (2,838,000) 37,875,000
------------ ------------ ------------ ------------
Net (loss) $ (561,000) $ (1,867,000) $ (1,415,000) $ (1,013,000)
============ ============ ============ ============
Net (loss) per common and common share
equivalents $ (.02) $ (.04)
============ ============
Weighted average number of common and
common share equivalents outstanding 26,026,000 27,351,000
============ ============
</TABLE>
(1) To eliminate restaurant sales and restaurant operating costs associated
with the operation of a restaurant by LoneStar which was not acquired
by the Company in this transaction.
(2) To eliminate franchise fees between the Company and LoneStar.
(3) To reflect interest income on cash received at the time of acquisition
and from assumed payoff of note receivable in accordance with its
terms.
(4) To reflect depreciation by the Company on the assets acquired.
(5) To reflect interest expense on debt assumed at the time of acquisition.
(6) To eliminate revenue and expenses of LoneStar which are not expected to
have a continuing impact.
(7) Represents LoneStar's operations for the fiscal year ended March 31,
1995.
Page 5
MIAMI SUBS CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Miami Subs Pro Forma
Corporation Pro Forma Consolidated
ASSETS Consolidated Adjustments(1) Balance Sheet
- - ------ ------------ ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,681,000 $ 133,000 $ 1,814,000
Notes and accounts receivable 1,863,000 1,311,000 3,174,000
Food and supplies inventories 289,000 49,000 338,000
Other 338,000 338,000
------------ ------------ ------------
Total Current Assets 4,171,000 1,493,000 5,664,000
Notes receivable 3,483,000 3,483,000
Property and equipment 15,195,000 1,836,000 17,031,000
Intangible assets 8,873,000 50,000 8,923,000
Other 532,000 10,000 542,000
------------ ------------ ------------
TOTAL $ 32,254,000 $ 3,389,000 $ 35,643,000
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 5,191,000 $ 98,000 $ 5,289,000
Current portion of notes payable and capitalized lease obligations 986,000 444,000 1,430,000
------------ ------------ ------------
Total Current Liabilities 6,177,000 542,000 6,719,000
------------ ------------ ------------
Long-term portion of notes payable and capitalized lease obligations 6,303,000 1,023,000 7,326,000
Deferred franchise fees and other deferred income 1,791,000 (97,000) 1,694,000
Accrued liabilities and other 2,684,000 2,684,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Series A Convertible Preferred Stock 10,000 10,000
Common stock 259,000 13,000 272,000
Additional paid-in capital 23,007,000 1,908,000 24,915,000
Accumulated deficit (7,414,000) (7,414,000)
------------ ------------ ------------
15,862,000 1,921,000 17,783,000
Less note receivable from sale of stock (563,000) (563,000)
------------ ------------ ------------
Total Shareholders' Equity 15,299,000 1,921,000 17,220,000
------------ ------------ ------------
TOTAL $ 32,254,000 $ 3,389,000 $ 35,643,000
============ ============ ============
</TABLE>
(1) To reflect the fair value of five restaurants and related assets
acquired from LoneStar, a short term non-interest bearing note received
by the Company from LoneStar on the date of acquisition, the Company's
assumption of existing indebtedness on the restaurant's acquired, and
the issuance of Common Stock by the Company.
Page 6
MIAMI SUBS CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED FEBRUARY 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Miami Subs LoneStar Consolidated
Corporation Hospitality Pro Forma Statement of
REVENUES Consolidated Corporation(6) Adjustments Operations
- - -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Restaurant sales $ 22,896,000 $ 3,284,000 $ 26,180,000
Revenues from franchised restaurants 3,525,000 $ (150,000)(1) 3,375,000
Net gain from sale of restaurants 110,000 110,000
Interest income 361,000 54,000 (2) 415,000
Other 199,000 199,000
------------ ------------ ------------ ------------
Total 27,091,000 3,284,000 (96,000) 30,279,000
------------ ------------ ------------ ------------
EXPENSES
- - --------
Restaurant operating costs 20,275,000 3,106,000 (122,000)(1) 23,259,000
General, administrative and franchise costs 4,641,000 586,000 (506,000)(5) 4,721,000
Depreciation and amortization 1,413,000 175,000 (65,000)(3) 1,523,000
Interest expense - net of capitalized interest 529,000 82,000 (4) 611,000
Other 25,000 (25,000)(5)
------------ ------------ ------------ ------------
Total 26,858,000 3,892,000 (636,000) 30,114,000
------------ ------------ ------------ ------------
Net income (loss) $ 233,000 $ (608,000) $ (540,000) $ 165,000
============ ============ ============ ============
Net income (loss) per common and common share equivalents $ .01 $ .01
============ ============
Weighted average number of common and common share
equivalents outstanding 26,904,000 28,229,000
============ ============
</TABLE>
(1) To eliminate franchise fees between the Company and LoneStar.
(2) To reflect interest income on cash received at the time of acquisition
and from assumed payoff of note receivable in accordance with its
terms.
(3) To reflect adjustment of depreciation on the assets acquired.
(4) To reflect interest expense on debt assumed at the time of acquisition.
(5) To eliminate expenses of LoneStar which are not expected to have a
continuing impact.
(6) Represents LoneStar's operations (before extraordinary item) for the
nine months ended December 31, 1995.
Page 7
LONESTAR HOSPITALITY CORPORATION AND SUBSIDIARY
FINANCIAL STATEMENT
DECEMBER 31, 1995
Page 8
LoneStar Hospitality Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS
December 31, 1995 March 31, 1995
----------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 100,398 $ 52,494
Accounts receivable 103,063 141,155
Inventories 47,920 47,770
Prepaid expenses and other current assets 108,507 85,663
----------- -----------
Total current assets 359,888 327,082
Property and equipment-net 3,575,311 3,396,966
Other assets-net 820,773 500,350
----------- -----------
$ 4,755,972 $ 4,224,398
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 970,560 $ 2,261,401
Current maturities of long-term debt 141,811 --
Notes payable 96,251 397,125
----------- -----------
Total current liabilities 1,208,622 2,658,526
Long-term debt 1,336,338 --
Stockholders' equity
Common stock 82,998 475,609
Additional contributed capital 5,322,295 4,161,089
Accumulated deficit (3,194,281) (3,070,826)
----------- -----------
2,211,012 1,565,872
----------- -----------
$ 4,755,972 $ 4,224,398
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page 9
LoneStar Hospitality Corporations and Subsidiary
CONSOLIDATED STATEMENT OF OPERATIONS
For the nine months ended December 31,
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Sales
Restaurant sales $ 3,284,026 $ 4,719,112
Broadcast sales -- 407,190
----------- -----------
Total sales 3,284,026 5,126,302
Cost of sales
Food and beverages 1,131,794 1,755,828
Restaurant labor 1,046,009 1,557,241
Restaurant operating expenses 928,039 1,079,807
Broadcast operating expenses -- 421,714
Broadcast development costs -- 296,024
Depreciation and amortization 174,542 237,291
----------- -----------
3,280,384 5,347,905
----------- -----------
Gross profit (loss) 3,642 (221,603)
General and administrative 586,381 539,936
Provision for loss on sale of assets -- 286,945
----------- -----------
586,381 826,881
----------- -----------
(582,739) (1,048,484)
Other (25,600) --
----------- -----------
Net loss before extraordinary credit (608,339) (1,048,484)
Extraordinary income from debt forgiveness 484,884 --
----------- -----------
Net loss $ (123,455) $(1,048,484)
=========== ===========
Per share data
Before extraordinary credit $ (.10) $ (.35)
Extraordinary credit .08 --
----------- -----------
Net loss $ (.02) $ (.35)
=========== ===========
Weighted average shares outstanding 6,195,188 3,020,040
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 10
LoneStar Hospitality Corporation and Subsidiary
CONSOLIDATED STATEMENT OF CASH FLOWS
For the nine months ended December 31,
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net (income) loss $ (123,455) $(1,048,484)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
Depreciation and amortization 174,542 237,291
Extraordinary credit (473,981) --
Provision for loss on sales of assets -- 286,945
Noncash compensation -- 156,750
Change in operating assets and liabilities
Inventories (150) (7,437)
Prepaid expenses and other current assets 15,248 (514,888)
Accounts payable and accrued expenses (673,835) 1,342,169
Deposits and other assets (332,623) (136,675)
----------- -----------
Net cash provided by (used in) operating activities (1,414,254) 315,671
Cash flows from investing activities
Purchase of property and equipment (352,887) (1,241,447)
----------- -----------
Net cash used in investing activities (352.887) (1,241,447)
Cash flows from financing activities
Proceeds from sale of common stock 475,570 69,375
Debt payments (328,349) (95,673)
New borrowings 1,655,624 367,415
----------- -----------
Net cash provided by financing activities 1,802,845 341,117
----------- -----------
Net increase (decrease) in cash 35,704 (584,659)
Cash at beginning of period 52,494 649,583
=========== ===========
Cash at end of period $ 88,198 $ 64,924
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The financial information presented herein should be read in conjunction with
the financial statements and footnotes included in the Company's Annual Report
on Form 10-K for the year ended March 31, 1995. The balance sheet as of March
31, 1995 has been derived from the audited financial statement at that date.
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation, consisting of those of a normal recurring nature, are reflected in
the accompanying financial statements.
NOTE B - RESTRUCTURED DEBT
Effective June 30, 1995, the Company entered into a loan agreement to obtain
financing of $1,500,000. This loan bears interest at 13.4% through October 1,
2000, and at a lender standard rate thereafter. Payment of interest only is
required on October 1, 1995 followed by sixty monthly installments of $27,615
with the balance due in twenty four additional monthly installments to be
determined on November 1, 2000. The entire balance is due on October 1, 2002.
This loan is secured by substantially all assets of the Company.
The loan was guaranteed by the Franchisor who entered into a Forbearance and
Restructuring Agreement with the Company. This agreement contains several
covenants and conditions which, among other things, require the Company to
maintain working capital of $100,000, a current ratio of 1.0 to 1.0 and cash
flow of 1.1 times debt service. Working capital convents are effective September
30, 1995 and the cash flow covenants are effective for the year ending March 31,
1996. (See Note C)
As a condition of the loan, the Company renegotiated amounts due to creditors
resulting in extraordinary income of $473,981 through December 31, 1995.
NOTE C - PROPOSED SALE OF RESTAURANTS
The Company has reached an agreement in principle to sell its five operating
restaurants as well as its franchise rights to its Franchisor, Miami Subs Grill,
for approximately $2,650,000 of common stock of the Franchisor. However, the
sale is subject to a number of conditions as well as the execution of a
definitive sale agreement. Should this transaction be consummated, a loss of
approximately $1,600,000 will be realized.
NOTE D - STOCK SPLIT AND STOCK DIVIDEND
On December 11, 1995 the Company effected a one-for-five reverse stock split of
its common stock and reduced its par value from $.04 per share to $.01 per
share. Subsequent to December 31, 1995 the Company declared a stock dividend of
one share for each two shares outstanding for shareholders of record on February
2, 1996. Average shares outstanding and per share amounts reflect the split and
the dividend for all periods presented.
Page 12
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.
MIAMI SUBS CORPORATION
By: /s/ Jerry W. Woda
Jerry W. Woda
Senior Vice President of Finance
and Chief Financial Officer
Dated: May 9, 1996
Page 13
