SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
Form 8-K/A No. 1
CURRENT REPORT
Pursuant to Section 113 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 15, 1997
----------
RED HOT CONCEPTS, INC.
[Exact name of registrant as specified in its charter]
Delaware 33-86166 52-1887105
(State of Organization) (Commission File Number) (IRS Employer
Identification Number)
6701 Democracy Boulevard, Suite 300
Bethesda, Maryland 20817
(Address of Principle Executive Offices)
(301) 493-4553
(Registrant's telephone number, including area code)
<PAGE>
This Current Report on Form 8-K/A No. 1 amends the Current Report on
Form 8-K filed by Red Hot Concepts, Inc. on December 19, 1997 solely to
add the financial statements required by item 7(a) and the pro forma
financial information required by Item 7(b).
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements.
(i) Condensed Consolidated Balance sheet for the Celebrated
Group Plc as of September 29, 1997.
(ii) Audited financial statements for the Celebrated Group Plc as
of March 30, 1996 and March 31, 1997.
(iii)Condensed Consolidated Balance Sheet for the Company as of
November 30, 1997.
(b) Pro Forma Financial Information
(i) Pro Forma Consolidated Balance Sheet as of September 29,
1997 giving effect to the merger of Restaurant House,
Limited with the Celebrated Group Plc and Red Hot Concepts
Inc.'s acquisition of 45.6% of the outstanding equity of the
merged entities and the sale of Chili's Texas Grill Plc to
Brinker International, Inc. as if both transactions took
place on September 29, 1997.
(ii) Pro Forma Condensed Consolidated Statement of Operations for
the Thirty-Nine Week Period ended September 29, 1997 giving
effect to the merger of Restaurant House, Limited with the
Celebrated Group Plc and Red Hot Concepts Inc.'s acquisition
of 45.6% of the outstanding equity of the merged entities
and the sale of Chili's Texas Grill Plc to Brinker
International, Inc. as if both transactions took place on
January 1, 1997.
(iii)Pro Forma Condensed Consolidated Statement of Operations
for the Fifty-Two Week Period ended December 29, 1996 1997
giving effect to the merger of Restaurant House, Limited
with the Celebrated Group Plc and Red Hot Concepts Inc.'s
acquisition of 45.6% of the outstanding equity of the merged
entities and the sale of Chili's Texas Grill Plc to Brinker
International, Inc as if both transactions occurred on
January 1, 1996.
(iv) Pro Forma Condensed Consolidated Balance Sheets of November
30, 1997 giving effect to the merger of Restaurant House
Limited with The Celebrated Group Plc and Red Hot Concept,
Inc.'s acquisition of 45.6% of the outstanding equity of the
merged entities as if such transaction took place on
November 30, 1997.
(v) Pro Forma Consolidated Balance Sheet as of November 30, 1997
giving effect to the sale of Chili's Texas Grill Plc to
Brinker International as if the sale took place on November
30, 1997.
(vi) Pro Forma Consolidated Balance Sheet as of November 30,1997
giving effect to the merger of Restaurant House, Limited
with the Celebrated Group Plc and Red Hot Concepts Inc.'s
acquisition of 45.6% of the outstanding equity of the merged
entities and the sale of Chili's Texas Grill Plc to Brinker
International, Inc. as if both transactions took place on
November 30, 1997.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Red Hot Concepts, Inc.
By: /s/Colin Halpern
Colin Halpern
President
Date: February 17, 1998
3
<PAGE>
EXHIBITS
Exhibit Number and Description
(a) Financial Statements.
(i) Condensed Consolidated Balance sheet for the Celebrated
Group Plc as of September 29, 1997.
(ii) Audited financial statements for the Celebrated Group Plc as
of March 30, 1996 and March 31, 1997.
(iii)Condensed Consolidated Balance Sheets for the Company as of
November 30, 1997.
(b) Pro Forma Financial Information
(i) Pro Forma Consolidated Balance Sheet as of September 29,
1997 giving effect to the merger of Restaurant House,
Limited with the Celebrated Group Plc and Red Hot Concepts
Inc.'s acquisition of 45.6% of the outstanding equity of the
merged entities and the sale of Chili's Texas Grill Plc to
Brinker International, Inc. as if both transactions took
place on September 29, 1997.
(ii) Pro Forma Condensed Consolidated Statement of Operations for
the Thirty-Nine Week Period ended September 29, 1997 giving
effect to the merger of Restaurant House, Limited with the
Celebrated Group Plc and Red Hot Concepts Inc.'s acquisition
of 45.6% of the outstanding equity of the merged entities
and the sale of Chili's Texas Grill Plc to Brinker
International, Inc. as if both transactions took place on
January 1, 1997.
(iii)Pro Forma Condensed Consolidated Statement of Operations
for the Fifty-Two Week Period ended December 29, 1996 giving
effect to the merger of Restaurant House, Limited with the
Celebrated Group Plc and Red Hot Concepts Inc.'s acquisition
of 45.6% of the outstanding equity of the merged entities
and the sale of Chili's Texas Grill Plc to Brinker
International, Inc. as if both transactions occurred on
January 1, 1996.
(iv) Pro Forma Condensed Consolidated Balance Sheets of November
30, 1997 giving effect to the merger of Restaurant House
Limited with The Celebrated Group Plc and Red Hot Concept,
Inc.'s acquisition of 45.6% of the outstanding equity of the
merged entities as if such transaction took place on
November 30, 1997.
(v) Pro Forma Consolidated Balance Sheet as of November 30, 1997
giving effect to the sale of Chili's Texas Grill Plc to
Brinker International as if the sale took place on November
30, 1997.
(vi) Pro Forma Consolidated Balance Sheet as of November 30,1997
giving effect to the merger of Restaurant House, Limited
with the Celebrated Group Plc and Red Hot Concepts Inc.'s
acquisition of 45.6% of the outstanding equity of the merged
entities and the sale of Chili's Texas Grill Plc to Brinker
International, Inc. as if both transactions took place on
November 30, 1997.
4
<PAGE>
CELEBRATED GROUP PLC
BALANCE SHEET [UNAUDITED] AS OF
SEPTEMBER 29, 1997
As of
September 29, 1997
CURRENT ASSETS
Cash and Cash Equivalents $370,125
Accounts Receivable 837,305
Inventories 320,775
TOTAL CURRENT ASSETS 1,528,205
FURNITURE & EQUIPMENT - NET 22,172,955
TOTAL ASSETS 23,701,160
CURRENT LIABIITIES 3,229,135
TOTAL CURRENT LIABILITIES 3,229,135
LONG TERM LIABILITIES
Notes Payable 6,119,400
Obligations Under Capital Leases 963,970
TOTAL LONG TERM LIABILITIES 7,083,370
Shareholders Equity
Common Stock 10,098,655
Additional Paid In Capital 3,521,945
Retained Earnings [231,945]
Revaluation Reserve 0
Total Shareholders Equity 13,388,655
TOTAL LIABILITIES & SHAREHOLDERS EQUITY 23,701,160
Balance Sheets were converted at an exchange rate of 1.645 US dollars to
1 British pound.
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
5
<PAGE>
CELEBRATED GROUP PLC
BALANCE SHEET [AUDITED] AS OF
MARCH 30, 1997 and March 31, 1996
March 30, 1997 March 31, 1996
CURRENT ASSETS
Cash and Cash Equivalents $495,145 $1,541,980
Accounts Receivable 582,330 673,216
Inventories 368,480 94,900
TOTAL CURRENT ASSETS 1,445,955 2,438,571
FURNITURE & EQUIPMENT - NET 15,833,125 6,607,386
TOTAL ASSETS 17,279,080 9,045,957
CURRENT LIABIITIES 3,039,960 1,905,728
TOTAL CURRENT LIABILITIES 3,039,960 1,905,728
LONG TERM LIABILITIES
Notes Payable 6,269,095 1,069,094
Obligations Under Capital Leases 149,695 0
TOTAL LONG TERM LIABILITIES 6,418,790 1,069,094
Shareholders Equity
Common Stock 5,492,655 4,827,090
Additional Paid In Capital 1,630,195 1,238,173
Retained Earnings 8,225 5,873
Revaluation Reserve 689,255 0
Total Shareholders Equity 7,820,330 6,071,136
TOTAL LIABILITIES & SHAREHOLDERS
EQUITY 17,279,080 9,045,957
Balance Sheets were converted at an exchange rate of 1.645 US dollars to 1
British pound.
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
6
<PAGE>
THE CELEBRATED GROUP PLC
STATEMENT OF OPERATIONS
FOR THE THIRTY-NINE WEEK PERIOD ENDED
SEPTEMBER 29, 1997
PERIOD ENDED
SEPTEMBER 29, 1996
REVENUES $9,462,040
Cost of Revenues
Cost of Revenues 2,933,232
Restaurant Expense 6,107,688
Total Cost of Revenues 9,040,920
Gross Profit 421,120
Fixed Restaurant Expense 0
General and Administrative Expense [125,020]
Depreciation & Amortization 0
Operating Income of Celebrated Group Plc
Operating Profit [Loss] 546,140
Minority Interest in Net Loss of Subsidiary 0
Other Income/[Expense]
Interest Expense [355,320]
Interest Income 19,740
Total Interest Expense [335,580]
Extraordinary Items [988,645]
Taxes Payable 121,730
Net Loss [656,355]
The Celebrated Group Plc financial year concludes on March 31, 1997.
This Statement of Operations was calculated by using the audited financial
periods of December 30, 1996 to March 31, 1997 and the unaudited financial
results of April 1, 1997 to September 29, 1997.
7
<PAGE>
CELEBRATED GROUP PLC
STATEMENT OF OPERATIONS [AUDITED]
FOR THE FIFTY-TWO WEEK PERIODS ENDED
MARCH 31, 1997 and MARCH 30, 1996
Period Ended Period Ended
March 31,1997 March 30,1996
REVENUES 12,271,700 8,322,055
Cost of Revenues
Cost of Revenues 3,804,227 2,579,837
Restaurant Expense 6,504,988 1,919,238
Total Cost of Revenues 10,309,215 4,499,075
Gross Profit 1,962,485 3,822,980
General and Administrative Expense 1,131,760 2,998,835
Operating Profit [Loss] 830,725 824,145
Other Income/[Expense]
Interest Expense [310,905] [215,166]
Interest Income 16,450 7,820
Total Interest Expense [294,455] [207,346]
Extraordinary Items [75,670] 244,825
Taxes Payable [210,560] [60,865]
Net Income 250,040 800,760
8
<PAGE>
CELEBRATED GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
[AUDITED]
<TABLE>
<CAPTION>
For the Fifty-Two For the Fifty-Two Week
Week Period Ended Period Ended
March 31, 1997 March 30, 1996
Operating Activities:
<S> <C> <C>
Net Cash - Operating Activities 1,625,260 942,585
Adjustments to Operating Activities:
Interest Income 16,450 8,225
Interest Expense [302,680] [194,110]
Interest Element on Finance Lease Payments [8,225] [6,580]
Taxes Paid [199,045] [125,020]
Net Adjustments [493,500] [317,485]
Investing Activities:
Purchase of Capital Expenditures [3,755,535] [1,496,950]
Proceeds from Sale of Fixed Assets 166,145 0
Proceeds from Sale of Business Operations 796,180 1,171,240
Purchase of Business Operations [3,788,435] 0
[6,581,645] [325,710]
Financing Activities:
Dividends Paid [235,235] [115,150]
New Bank Loans 4,349,380 1,291,325
Repayment of Bank Loans [753,410] [2,803,080]
Proceeds from Issue of Common Stock [14,805] 3,286,710
Redemption of Preference Shares 1,057,735 [625,100]
Net Cash - Financing Activities 4,403,665 911,330
Increase (Decrease} in Cash and Cash Equivalents [1,046,220] 1,210,720
Cash and Cash Equivalents - Beginning of Periods 1,541,365 331,260
Cash and Cash Equivalents - End of Periods 495,145 1,541,980
</TABLE>
9
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES (RHC)
CONDENSED CONSOLIDATED BALANCE SHEET AS OF NOVEMBER 30, 1997 [UNAUDITED]
<TABLE>
<CAPTION>
December 29, 1996
November 30, 1997 [Audited]
Assets:
<S> <C> <C>
Cash and Cash Equivalents $ 22,566 $ 534,145
Restricted Cash 556,596 490,718
Due From Related Parties 13,232 29,785
Accounts Receivable and Other Receivables 0 34,545
Inventories 154,648 201,755
Prepaid Expenses and Accrued Income 134,806 224,630
Total Current Assets 881,848 1,515,578
Furniture and Equipment - Net 4,379,472 4,302,773
Other Assets:
Development and License Agreements - Net 641,270 670,281
Store Development and Unit Pre-opening Costs 719,524 662,000
Deferred Lease Guarantee 472,322 472,322
Loan to Officers 51,547 134,183
Total Other Assets 1,884,663 1,938,786
Total Assets $ 7,145,983 7,757,137
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable and Accrued Expenses $ 2,470,398 $ 3,553,078
Current Portion of long-term Debt 1,571,165 937,051
Accrued Interest Payable - Related Parties 0 125,065
Total Current Liabilities 4,041,563 4,615,194
Long Term Liabilities:
Notes Payable 1,276,197 717,180
Obligations under Capital Leases 289,406 0
Due to Related Parties 837,994 1,195,302
Total Long Term Liabilities 2,403,597 1,912,482
Minority Interest (22,004) 3,123
Stockholders' Equity:
Common Stock, $.01 Par Value,
19,275,000 Shares Authorized,
10,262,347 Shares Issued and Outstanding 102,623 92,623
Preferred Stock, $1.00 Par Value,
100,000 Shares Authorized,
0 Issued and Outstanding 0 0
Preferred Stock, $2.00 Par Value,
725,000 Shares Authorized,
725,000 Shares Issued and Outstanding 1,450,000 0
Additional Paid-in Capital 8,874,040 8,884,040
Retained Earnings (9,654,672) (7,693,155)
Cumulative Foreign Currency Translation (49,163) (57,170)
Adjustment
Total Stockholders' Equity 722,828 1,226,338
Total Liabilities and Stockholders' Equity $ 7,145,984 $ 7,757,137
</TABLE>
10
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
[UNAUDITED]
The following pro forma condensed combined statement of operations for
the fifty-two week period ended December 29, 1996 and for the thirty-nine week
period ending September 29, 1997 and the Balance Sheet as of September 29, 1997
gives effect to the sale of the assets of its Australian Subsidiary [Chili's
Texas Grill Pty LTD] to Brinker International for gross proceeds of $2.68
million and the merger of the wholly owned United Kingdom Subsidiary [Restaurant
House] with a UK public company [Celebrated Group Plc] in which Red Hot Concepts
received 28 million shares in Celebrated Group Plc or 45.6% of the outstanding
shares. The pro forma information is based on the historical financial
statements of Celebrated Group Plc and Red Hot Concepts giving effect to the
transaction under the equity method of accounting and assumptions and
adjustments in the accompanying notes to the pro forma financial statements.
Red Hot Concepts sold the Australian subsidiary on December 18, 1997.
Red Hot Concepts sold the UK subsidiary for shares in Celebrated Group Plc on
December 15, 1997. The pro forma statement of operations gives effect to these
transactions as if all had occurred on January 1, 1996. The pro forma Balance
Sheet assumes the transaction occurred on the Balance Sheet date.
The pro forma statements have been prepared by Red Hot Concepts, Inc.
management based upon the historical financial statements of the Celebrated
Group and Red Hot Concepts, Inc. These pro forma statements may not be
indicative of the results that actually would have occurred if the combination
had been in effect on the dates indicated or which may be obtained in the
future. The pro forma financial statement should be read in conjunction with the
financial statements and notes of Red Hot Concepts, Inc., as filed under forms
10-K and 10-Q.
11
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED
BALANCE SHEET [UNAUDITED] AS OF
SEPTEMBER 29, 1997
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Adjustments
Adjustments Sale of Australia Pro Forma
RHC Celebrated Combined
CURRENT ASSETS
<S> <C> <C> <C> <C>
Cash and Cash Equivalents 175,577 [236,904][G] 885,276 823,949
Restricted Cash 462,107 [274,388][G] [87,719][H] 100,000
Investment in Celebrated Group Plc 0 6,082,723 [F] 0 6,082,723
Investment in Restaurant House 0 0 0 0
Accounts Receivable 13,650 0 [13.650][H] 0
Inventories 158,881 [98,524][G] [60,357][H] 0
Prepaid Expenses 177,722 [100,587][G] [57,659][H] 19,476
TOTAL CURRENT ASSETS 987,937 5,372,320 [G] 665,891 7,026,148
FURNITURE & EQUIPMENT - NET 4,404,458 [3,422,643][G] [974,069][H] 7,746
OTHER ASSETS
Development Agreement - Net 652,675 [127,450][G] [525,225][H] 0
Store Development Costs 779,663 [43,048][G] [736,615][H] 0
Deferred Lease Guarantees 472,322 0 [472,323][H] [1]
Loan to Officers 51,547 0 0 51,547
TOTAL OTHER ASSETS 1,956,207 [170,498] [1,734,163] 51,546
TOTAL ASSETS 7,348,602 1,779,179 [2,042,341] 7,085,440
CURRENT LIABIITIES
Accounts Payable & Accrues Expenses 2,554,744 [2,480,766][G] 28,087 [H] 102,065
Current Portion of Long Term Debt 1,251,906 0 [1,251,906][H] 0
Accrued Interest Payable - Related Party 0 0 0 0
TOTAL CURRENT LIABILITIES 3,806,650 [2,480,766] [1,233,819] 102,065
LONG TERM LIABILITIES
Notes Payable 1,495,807 [927,381][G] [568,426][H] 0
Obligations Under Capital Leases 411,037 0 [411.037][H] 0
Due to Related Parties 407,534 [116,596][G] 145,247 [H] 436,185
TOTAL LONG TERM LIABILITIES 2,314,378 1,043,977] [834,216] 436,185
Minority Interest [23,997] 0 23,997 [H] 0
Shareholders Equity
Common Stock 102,623 0 0 102,612
Preferred Stock 1,450,000 0 0 1,450,000
Additional Paid In Capital 8,874,040 0 0 8,874,040
Retained Earnings [9,228,070] 5,293,223 [I] 55,373 [J] [3,879,474]
Cumulative Translation Adjustment 52,978 10,699 [G] [63,677][H] 0
Total Shareholders Equity 1,251,571 5,303,922 [8,304] 6,547,189
TOTAL LIABILITIES &
SHAREHOLDERS EQUITY 7,348,602 1,779,179 [2,042,342] 7,085,440
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
12
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES ("RHC")
PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS [UNAUDITED]
FOR THE THIRTY-NINE WEEK PERIOD ENDED
SEPTEMBER 29, 1997
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Adjustments
Adjustments Sale of Pro Forma
RHC Celebrated Australia Combined
<S> <C> <C> <C> <C>
REVENUES $ 8,667,596 [3,804,058][B] [4,863,538][D] 0
Cost of Revenues
Cost of Revenues 2,663,676 [1,172,658][B] [1,491,018][D] 0
Restaurant Expense 3,778,515 [1,590,123][B] [2,188,392][D] 0
Total Cost of Revenues 6,442,191 [2,762,781][B] [3,679,410][D] 0
Gross Profit 2,225,405 [1,041,277][B] [1,184,128][D] 0
Fixed Restaurant Expense 1,562,348 [746,525][B] [815,823][D] 0
General and Administrative Expense 1,508,814 13,594 [B] [559,442][D] 962,966
Depreciation & Amortization 443,987 [192,687][B] [251,300][D] 0
Operating Loss of Celebrated Group Plc 0 299,298 [A] 299,298
Operating Profit [Loss] [1,289,744] [414,957] 442,437 [1,262,264]
Minority Interest in Net Loss of Subsidiary 23,997 0 [B] [23,997][D] 0
Other Income/[Expense]
Interest Expense [272,073] 112,187 [B] 37,503[D] [122,383]
Interest Income 2,904 0 [B] 0[D] 2,904
Total Interest Expense [269,169] 112,187 [B] 37,503[D] [119,479]
Taxes Payable 0
Net Loss [1,534,916] [302,770] 455,963 [1,381,743]
Net [Loss] Per Share [$0.15] [$0.22]
Weighted Average Common Share Outstanding 10,262,347 10,262,347
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
13
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS [UNAUDITED]
FOR THE FIFTY-TWO WEEK PERIOD ENDED
DECEMBER 29, 1996
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Adjustments
Adjustments Sale of Australia Pro Forma
RHC Celebrated Combined
<S> <C> <C> <C> <C>
REVENUES $9,438,739 [$4,111,276][B] [5,327,463][D] 0
Cost of Revenues
Cost of Revenues 3,045,620 [1,446,243][B] [1,599,377][D] 0
Restaurant Expense 6,543,899 [3,437,163][B] [3,106,736][D] 0
Total Cost of Revenues 9,589,519 [4,883,406][B] [4,706,113][D] 0
Gross Profit [150,780] 772,130 [B] [621,350][D] 0
Fixed Restaurant Expense 0 0 0 0
General and Administrative Expense 2,778,986 [1,122,141][B] [417,119][D] 1,239,726
Depreciation & Amortization 805,279 [647,826][B] [157,453][D] 0
Operating Income of Celebrated Group Plc 470,763 [A] 470,763
Operating Profit [Loss] [3,735,045] 3,012,860 [B] [46,776][D] [768,963]
Minority Interest in Net Loss of Subsidiary [634] 0 [B] 634 [D] 0
Other Income/[Expense]
Interest Expense [384,325] 155,443 [B] 8,774 [D] [220,108]
Interest Income 23,627 [9,228][B] [449][D] 13,950
Total Interest Expense [360,698] 146,215 [B] 8,325 [D] [206,158]
Closure of Restaurant [2,198,452] 2,198,452 0 0
Taxes Payable 0 0 0 0
Net Loss [6,294,829] 5,357,527 [37,819] [975,121]
Net [Loss] Per Share [$0.91] [$0.14]
Weighted Average Common Share Outstanding 6,929,929 6,929,929
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
14
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES (RHC)
PRO FORMA CONSOLIDATED BALANCE SHEET [UNAUDITED]
The following Pro Forma Consolidated Balance Sheet as of November 30, 1997 gives
effect to the merger of Restaurant House Ltd. (RHC's UK subsidiary) with the
Celebrated Group and RHC's acquisition of 45.6% of the outstanding equity of the
merged entities as if such transaction occurred on November 30, 1997.
Historical Pro Forma
As of November 30, 1997
Assets:
Cash and Cash Equivalents $ 22,566 $ (13,814)
Restricted Cash 556,596 178,596
Due From Related Parties 13,232 13,232
Investment in The Celebrated Group PLC 0 6,266,126
Accounts Receivable and Other Receivables 0 0
Inventories 154,648 51,876
Prepaid Expenses and Accrued Income 134,806 56,427
Total Current Assets 881,848 6,552,443
Furniture and Equipment - Net 4,379,472 966,052
Other Assets:
Development and License Agreements - Net 641,270 305,223
Store Development and Unit Pre-opening Costs 719,524 676,012
Deferred Lease Guarantee 472,322 472,322
Loan to Officers 51,547 51,547
Total Other Assets 1,884,663 1,505,104
Total Assets $ 7,145,983 $ 9,023,598
15
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES (RHC)
PRO FORMA CONSOLIDATED BALANCE SHEET [UNAUDITED]
The following Pro Forma Consolidated Balance Sheet as of November 30, 1997 gives
effect to the merger of Restaurant House Ltd. (RHC's UK subsidiary) with the
Celebrated Group and RHC's acquisition of 45.6% of the outstanding equity of the
merged entities as if such transaction occurred on November 30, 1997.
<TABLE>
<CAPTION>
Historical Pro Forma
As of November 30, 1997
Liabilities and Stockholders' Equity:
Current Liabilities:
<S> <C> <C>
Accounts Payable and Accrued Expenses $ 2,470,398 $ 703,776
Current Portion of long-term Debt 1,571,165 1,415,165
Accrued Interest Payable - Related Parties 0 0
Total Current Liabilities 4,041,563 2,118,941
Long Term Liabilities:
Notes Payable 1,276,197 574,197
Obligations under Capital Leases 289,406 289,406
Due to Related Parties 837,994 476,073
Total Long Term Liabilities 2,403,597 1,339,676
Minority Interest (22,004) (22,004)
Stockholders' Equity:
Common Stock, $.01 Par Value,
19,275,000 Shares Authorized,
10,262,347 Shares Issued and Outstanding 102,623 102,623
Preferred Stock, $1.00 Par Value,
100,000 Shares Authorized,
0 Issued and Outstanding 0 0
Preferred Stock, $2.00 Par Value,
725,000 Shares Authorized,
725,000 Shares Issued and Outstanding 1,450,000 1,450,000
Additional Paid-in Capital 8,874,040 8,874,040
Retained Earnings (9,654,672) (4,882,120)
Cumulative Foreign Currency Translation Adjustment (49,163) 42,443
Total Stockholders' Equity 722,828 5,586,986
Total Liabilities and Stockholders' Equity $ 7,145,984 $ 9,023,599
</TABLE>
16
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES (RHC)
PRO FORMA CONSOLIDATED BALANCE SHEET [UNAUDITED]
The following Pro Forma Consolidated Balance Sheet as of November 30, 1997 gives
effect to the sale of Chili's Texas Grill PLC (RHC's Australian subsidiary) to
Brinker International as if the sale took place on November 30, 1997.
Historical Pro Forma
As of November 30, 1997
Assets:
Cash and Cash Equivalents $ 22,566 $ 918,213
Restricted Cash 556,596 478,000
Due From Related Parties 13,232 13,232
Accounts Receivable and Other Receivables 0 0
Inventories 154,648 102,772
Prepaid Expenses and Accrued Income 134,806 96,856
Total Current Assets 881,848 1,609,073
Furniture and Equipment - Net 4,379,472 3,421,167
Other Assets:
Development and License Agreements - Net 641,270 336,047
Store Development and Unit Pre-opening Costs 719,524 43,512
Deferred Lease Guarantee 472,322 0
Loan to Officers 51,547 51,547
Total Other Assets 1,884,663 431,106
Total Assets $7,145,983 $5,461,346
17
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES (RHC)
PRO FORMA CONSOLIDATED BALANCE SHEET [UNAUDITED]
The following Pro Forma Consolidated Balance Sheet as of November 30, 1997 gives
effect to the sale of Chili's Texas Grill PLC (RHC's Australian subsidiary) to
Brinker International as if the sale took place on November 30, 1997.
<TABLE>
<CAPTION>
Historical Pro Forma
As of November 30, 1997
Liabilities and Stockholders' Equity:
Current Liabilities:
<S> <C> <C>
Accounts Payable and Accrued Expenses $ 2,470,398 $ 2,491,106
Current Portion of long-term Debt 1,571,165 156,000
Accrued Interest Payable - Related Parties 0 0
Total Current Liabilities 4,041,563 2,647,106
Long Term Liabilities:
Notes Payable 1,276,197 762,283
Obligations under Capital Leases 289,406 0
Due to Related Parties 837,994 807,534
Total Long Term Liabilities 2,403,597 1,569,816
Minority Interest (22,004) 0
Stockholders' Equity:
Common Stock, $.01 Par Value,
19,275,000 Shares Authorized,
10,262,347 Shares Issued and Outstanding 102,623 102,623
Preferred Stock, $1.00 Par Value,
100,000 Shares Authorized,
0 Issued and Outstanding 0 0
Preferred Stock, $2.00 Par Value,
725,000 Shares Authorized,
725,000 Shares Issued and Outstanding 1,450,000 1,450,000
Additional Paid-in Capital 8,874,040 8,874,040
Retained Earnings (9,654,672) (9,166,450)
Cumulative Foreign Currency Translation Adjustment (49,163) (15,790)
Total Stockholders' Equity 722,828 1,244,423
Total Liabilities and Stockholders' Equity $ 7,145,984 $ 5,461,346
</TABLE>
18
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES (RHC)
PRO FORMA CONSOLIDATED BALANCE SHEET [UNAUDITED]
The following Pro Forma Consolidated Balance Sheet as of November 30, 1997 gives
effect to both the sale of Chili's Texas Grill PLC (RHC's Australian subsidiary)
to Brinker International and the merger of Restaurant House Ltd. (RHC's UK
subsidiary) with the Celebrated Group and RHC's acquisition of 45.6% of the
outstanding equity of the merged entities as if such transactions occurred on
November 30, 1997.
<TABLE>
<CAPTION>
Net Change
Net Change from from
Historical Brinker Celebrated Pro Forma
As of As of November As of As of November
November 30, 30, 1997 November 30, 30, 1997
1997 1997
Assets:
<S> <C> <C> <C> <C>
Cash and Cash Equivalents 22,566 895,646 (36,380) 881,832
Restricted Cash 556,596 (78,596) (378,000) 100,000
Due From Related Parties 13,232 0 0 13,232
Investment in Celebrated Group 0 0 6,266,126 6,266,126
Accounts Receivable and Other Receivables 0 0 0 0
Inventories 154,648 (51,876) (102,772) 0
Prepaid Expenses and Accrued Income 134,806 (37,950) (78,379) 18,477
Total Current Assets 881,848 727,225 5,670,595 7,279,668
Furniture and Equipment - Net 4,379,472 (958,306) (3,413,421) 7,746
Other Assets:
Development and License Agreements - Net 641,270 (305,223) (336,047) 0
Store Development and Unit Pre-Opening Costs 719,524 (676,012) (43,512) 0
Deferred Lease Guarantee 472,322 (472,322) 0 0
Loan to Officers 51,547 0 0 51,547
Total Other Assets 1,884,663 (1,453,557) (379,559) 51,547
Total Assets $ 7,145,983 $(1,684,638) $ 1,877,615 $ 7,338,961
</TABLE>
19
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES (RHC)
PRO FORMA CONSOLIDATED BALANCE SHEET [UNAUDITED]
The following Pro Forma Consolidated Balance Sheet as of November 30, 1997 gives
effect to both the sale of Chili's Texas Grill PLC (RHC's Australian subsidiary)
to Brinker International and the merger of Restaurant House Ltd. (RHC's UK
subsidiary) with the Celebrated Group and RHC's acquisition of 45.6% of the
outstanding equity of the merged entities as if such transactions occurred on
November 30, 1997.
<TABLE>
<CAPTION>
Net Change
Net Change from from
Historical Brinker Celebrated Pro Forma
As of As of November As of As of November
November 30, 30, 1997 November 30, 30, 1997
1997 1997
Liabilities:
Current Liability:
<S> <C> <C> <C> <C>
Accounts Payable and Accrued Expenses 2,470,398 20,708 (1,766,622) 724,485
Current Portion of Long-Term Debt 1,571,165 (1,394,457) (156,000) 0
Accrued Interest Payable - Related Party 0 0 0 0
Total Current Liability 4,041,563 (1,394,457) (1,922,621) 724,485
Long-Term Liabilities:
Notes Payable 1,276,197 (513,914) (702,000) 60,283
Obligations under Capital Leases 289,406 (289,406) 0 0
Due to Related Parties 837,994 (30,461) (361,922) 445,612
Total Long-Term Liabilities 2,403,597 (833,781) (1,063,921) 505,895
Minority Interest (22,004) 22,004 0 0
Shareholders' Equity
Common Stock, $.01 Par Value,
19,275,000 Shares Authorized,
10,262,347 Shares Issued and Outstanding 102,623 0 0 102,623
Preferred Stock, $1.00 Par Value,
100,000 Shares Authorized,
0 Shares Issued and Outstanding 0 0 0 0
Preferred Stock, $2.00 Par Value,
725,000 Shares Authorized,
725,000 Shares Issued and Outstanding 1,450,000 1,450,000
Additional Paid-in-Capital 8,874,040 0 0 8,874,040
Retained Earnings (9,654,672) 488,223 4,772,552 (4,393,898)
Cumulative Foreign Currency Translation Adjustment
(49,163) 33,373 91,606 75,816
Total Stockholders' Equity 722,828 521,596 4,864,158 6,108,581
Total Liabilities and Stockholders' Equity 7,145,984 (1,684,638) 1,877,615 7,338,961
</TABLE>
20
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
[UNAUDITED]
[A] Reflects the effect of 45.6% of Celebrated Group Plc operating [loss]
for the thirty-nine week period ended September 29, 1997 and the net
income for he fifty-two week period ended December 29, 1996..
<TABLE>
<CAPTION>
<S> <C>
Net [Loss] for the Thirty-Nine Week
Period Ended September 29, 1997 [$656,355]
% Acquired by Red Hot Concepts, Inc. 45.6%
Equity in [Loss] of Celebrated [$299,298]
Net Income for the Fifty-Two Week Period
Ended December 29, 1996 $1,032,375
% Acquired by Red Hot Concepts, Inc. 45.6%
Equity in Income of Celebrated $470,763
</TABLE>
[B] Reflects the reversal of the income items recognized in the Red Hot
Concepts statement of operations for the 39 week period ending
September 29, 1997 which were attributed to the UK subsidiary,
Restaurant House.
[C] Loss on the sale of the UK subsidiary to Celebrate Group Plc.
<TABLE>
<CAPTION>
<S> <C>
Investment in Restaurant House by Red Hot
Concepts $6,788,081
Equity Acquired at Sale of Celebrated
Group Plc 6,082,723
[Loss] Recorded on Transaction [$705,358]
</TABLE>
This loss will be included in the operations of the registrant within
the 12 month period following the transaction, but it is not included
in the pro forma income statements.
[D] Reflects the reversal of the income items recognized in the Red Hot
Concepts statement of operations for the 39 week period ending
September 29, 1997 which were attributed to the Australian subsidiary,
Chili's Texas Grill Pty LTD.
[E] Gain on the sale of the Australian subsidiary to Brinker International.
<TABLE>
<CAPTION>
<S> <C>
Investment in Chili's Texas Grill Pty LTD
by Red Hot Concepts $1,426,511
Proceeds net of liabilities not assumed
by Brinker International 2,160,421
Gain on Sale of Subsidiary $733,910
</TABLE>
This gain will be included in the operations of the registrant within
the 12 month period following the transaction, but it is not included
in the pro forma income statements.
21
<PAGE>
RED HOT CONCEPTS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS [UNAUDITED]
[F] Reflects the equity acquired in Celebrated Group Plc based on the sale
of the UK subsidiary and the receipt of 45.6% of the
outstanding shares in the combined group.
<TABLE>
<CAPTION>
<S> <C>
Equity Before Combined Group $6,890,905
Restaurant House 6,448,400
Equity After Combination 13,339,305
Red Hot Concepts Ownership 45.6%
Equity Acquired $6,082,723
</TABLE>
[G] Reflects the reversal of the balance sheet items included in the Red
Hot Concepts balance sheet which are attributed to the UK subsidiary,
Restaurant House.
[H] Reflects the reversal of the balance sheet items included in the Red
Hot Concepts balance sheet which are attributed to the Australian
subsidiary, Chili's Texas Grill Pty LTD.
[I] Reverses the retained earnings of Restaurant House and includes the
charge to retained earnings for the loss on the merger of Restaurant
House with Celebrated Group Plc.
<TABLE>
<CAPTION>
<S> <C>
Reversal of Retained Earnings of
Restaurant House $5,998,581
Record Loss on Merger of Restaurant House [705,358]
Total $5,293,223
</TABLE>
[J] Reverses the retained earnings of Chili's Texas Grill Pty LTD. And
includes the credit to retained earnings for the gain on the sale of
the Australian subsidiary to Brinker International.
<TABLE>
<CAPTION>
<S> <C>
Reversal of Retained Earnings of Chili's
Texas Grill [$678,537]
Record Gain on Sale of Chili's Texas Grill 733,910
Total $55,375
</TABLE>
22
