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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-3
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
COMMISSION FILE NUMBER 1-14082
SMART CHOICE AUTOMOTIVE GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-146957
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
5200 S. WASHINGTON AVENUE, TITUSVILLE, FLORIDA 32780 (407) 269-9680
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (ISSUER'S
TELEPHONE NUMBER)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:
COMMON STOCK
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
(TITLE OF CLASS)
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<PAGE>
Smart Choice Automotive Group, Inc., the Registrant, hereby amends Item 5
of its Annual Report on Form 10-K for 1997 as set forth in the pages attached
hereto.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET PRICE OF COMMON EQUITY
The Company's Common Stock, $.01 par value per share ("Common Stock"), and
Redeemable Common Stock Purchase Warrants ("Public Warrants") are listed on the
Nasdaq SmallCap Market and the Boston Stock Exchange. There were approximately
1,418 beneficial holders of the Common Stock and 258 beneficial holders of the
Public Warrants. The following table sets forth the high and low closing sale
prices of Common Stock and the Public Warrants, as reported by the Nasdaq
SmallCap Market, for the periods indicated.
1996 HIGH LOW
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COMMON STOCK
First Quarter 5-1/8 3
Second Quarter 4-13/16 3-3/8
Third Quarter 4-1/2 2-7/8
Fourth Quarter 6-1/4 3
PUBLIC WARRANTS
First Quarter 15/16 3/8
Second Quarter 13/16 9/16
Third Quarter 15/16 1/2
Fourth Quarter 1-3/16 7/16
1997
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COMMON STOCK
First Quarter 6-1/8 4-5/8
Second Quarter 6-3/4 4
Third Quarter 7 4-3/16
Fourth Quarter 6-1/4 3-1/2
PUBLIC WARRANTS
First Quarter 1-5/16 3/4
Second Quarter 1-7/8 3/4
Third Quarter 1-1/2 3/4
Fourth Quarter 1-5/32 1/2
1998
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COMMON STOCK
First Quarter 4-9/16 1-15/16
PUBLIC WARRANTS
First Quarter 23/32 5/16
Continued inclusion of the Common Stock and Public Warrants on the Nasdaq
SmallCap Market requires the Company to maintain certain criteria such as market
value, public float, capital and surplus. As of February 23, 1998, the Company
was not in compliance with certain listing criteria which became applicable to
SmallCap Market listed companies on that date. Nasdaq has notified the Company
that the Common Stock and Public Warrants would be scheduled for delisting
unless the Company requested a hearing for an exception from these listing
criteria. The Company has requested a hearing which has stayed the delisting.
The Company has not paid dividends on its Common Stock since its initial
public offering of Common Stock in 1995. The Company has no present plans to pay
cash dividends in the foreseeable future and intends to retain earnings for the
future operation and expansion of the business. Any determination to declare or
pay dividends in the future will be at the discretion of the Company's Board of
Directors and will depend on the Company's results of operations, financial
condition, any contractual restrictions, considerations imposed by applicable
law and other factors deemed relevant by the Board of Directors. The Company's
current obligations to Finova Capital Corporation, Huntington National Bank, and
Sirrom Capital Corporation restrict the Company's ability to declare or pay
dividends.
RECENT SALES OF UNREGISTERED SECURITIES
Described below are all sales of securities by the Company during the
fourth quarter of 1997 that were not registered under the Securities Act of
1933, as amended (the "1933 Act"). On the issuance of these securities the
Company relied on the exemption from registration under the 1933 Act set forth
in Section 4(2) thereof, based on established criteria for effecting a private
offering, including the number of offerees for each transaction, access to
information regarding the Company, disclosure of information by the Company,
restrictions on resale of the securities offered, investment representations by
the purchasers, and the qualification of offerees as "accredited investors."
On September 30, 1997, the Company completed an offering of 300 units of
Series A redeemable convertible preferred stock and warrants at $10,000 per
unit. Proceeds from the offering, net of offering costs, were approximately
$2,965,000. Each unit consists of one share of Series A redeemable convertible
preferred stock and one warrant to acquire 300 shares of common stock for each
preferred share purchased at a price equal to $8.10 per share. The warrants
expire five years after the date of issuance. The preferred stock is convertible
into shares of common stock at a conversion price which, at the option of the
buyer, is either fixed at a rate of 135% of the market price of common stock on
the date of issuance of the preferred stock, or floating at a rate of 100% of
the market price of the common stock if converted during the period 90 days
after the issuance of the preferred stock and 90% of the market price if
converted at any time after that 90-day period. Accordingly, since none of the
preferred stock was converted 90 days after issuance, a preferred stock dividend
of $333,333 ($.04 per share) has been recorded for the year ended December 31,
1997 for the difference between the discounted conversion price of the preferred
stock and the fair market value of the Company's common stock at the time of
issuance. The preferred stock is redeemable at the option of the buyer upon the
occurrence of certain events at a price per share that is also dependent upon
the occurrence of certain events.
On December 10, 1997, the Company issued an additional 100 units of the
Series A redeemable convertible preferred stock and associated warrants for net
proceeds of $1,000,000. Each unit consists of one share of Series A redeemable
convertible preferred stock and one warrant to acquire 300 shares of common
stock for each preferred share purchased at a price equal to $5.23 per share.
The warrants expire five years after the date of issuance. The preferred stock
has features identical to that of the Series A redeemable convertible preferred
stock issued on September 30, 1997.
Subsequent to December 31, 1997, the holders of the preferred stock
converted 245 shares of preferred stock into 1,265,827 shares of common stock.
On December 16, 1997, the Company issued 7,008 shares of Common Stock to
Robert Eckler on the exercise of a stock option held by him for $2.50 per share.
The Company entered into an agreement dated December 24, 1997 (the "Letter
Agreement") with Sands Brothers & Co., Ltd. ("Sands") under which Sands agreed
to provide the Company with certain financial and advisory services and the
Company agreed to issue to Sands warrants (the "Warrants") to purchase 90,000
shares of Common Stock for an exercise price of $4.00 per share, 40,000 of which
were to vest on December 24, 1997 and 50,000 of which were to vest on January
23, 1998. The Letter Agreement provides that the Warrants are exercisable until
December 24, 2002.
On December 29, 1997, the Company issued 600 shares of Common Stock to
Richard Bogani on exercise of a warrant to purchase Common Stock for $3.00 per
share held by him.
On December 30, 1997 the Company issued the following shares of Common
Stock to the following persons in cancellation of debt owed by the Company to
such persons as indicated:
Debt
Name No. of Shares Cancelled
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Lawrence O'Blander 99,096 $396,385
Albert Klopf 21,200 84,800
Ellen Deane 5,968 23,870
R.C. Hill, II 316,250 1,265,000
On December 31, 1997, the Company issued 5,500 shares of Common Stock to
Greenberg Traurig, a law firm, in payment of $22,000 of legal services.
On the following dates, the Company issued, as compensation to employees,
options to purchase Common Stock for the exercise prices indicated:
No. of Exercise
Employee Date Shares Price
-------- -------- -------- --------
John Zurenda 10/29/97 9,000 $5.63
Erin Burke 10/29/97 12,000 $5.63
Michael Passaro 10/27/97 45,000 $5.88
Jeannette Frazier 11/14/97 10,000 $5.63
Ted Wilhite 11/14/97 10,000 $5.63
All Employees of
the Company at
year end 12/31/97 41,700* $4.00
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* 100 shares to each employee for 41,700 shares in the aggregate.
On the following dates, the Company issued warrants to purchase Common
Stock for $3.00 per share to the following holders of debentures issued by a
subsidiary of the Company on maturity of such debentures, pursuant to a
contractual requirement under such debentures:
No. of Shares
Person Date Covered by Warrants
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Robert Raw, II 11/19/97 800
Leon J. Cort Trust 11/19/97 800
John S. Petit 11/19/97 800
Robert Lanteri 11/19/97 1,200
Charles S. Joy 11/19/97 1,200
John Thatch 11/19/97 1,200
Edgar J. Rosenberry 11/19/97 16,800
Lee R. Bohner Trust 11/19/97 1,200
John Ward 12/31/97 2,400
Carl A. Alfrey 11/19/97 1,200
Robert O. Baratta 11/19/97 1,320
Charles V. Ditoro 11/19/97 1,200
Michael F. Ciferri 11/19/97 600
Douglas Sampson 11/19/97 1,200
Nicholas Diterlizzi 11/19/97 1,200
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this Amendment No. 3 to Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized on August __, 1998.
SMART CHOICE AUTOMOTIVE GROUP, INC.
By:
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Joseph E. Mohr
Chief Financial Officer
