As filed with the Securities Exchange Commission on March 6, 1998
Registration No. _______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SMART CHOICE AUTOMOTIVE GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
FLORIDA
(State or Other Jurisdiction of Incorporation or Organization)
59-1469577
(I.R.S. Employer Identification Number)
5200 South Washington Avenue
Titusville, Florida 32780
(407) 269-9680
(Address, Including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
GARY R. SMITH
President and Chief Executive Officer
Smart Choice Automotive Group, Inc.
5200 South Washington Avenue
Titusville, Florida 32780
(407) 269-9680
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Copies to:
JAMES NEAL HUTCHINSON, JR., ESQ.
Corporate Counsel
5200 S. Washington Avenue
Titusville, Florida 32780
Telephone: (407) 269-0834
Telecopier: (407) 264-0376
Approximate date of commencement of proposed
sale to the public: As soon as practicable after this
Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<PAGE>
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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Proposed Proposed
Title of Each Class Amount Maximum Maximum Amount
of Securities to be to be Offering Aggregate of
Registered Registered(1) Price per Offering Registration
Share(2) Price(2) Fee
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Common Stock, par 3,300,225 $2.419 $7,982,584 $1,596.52
value $.01 per share
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(1)Pursuant to Rule 416 under the Securities Act of 1933, as amended (the
"Securities Act"), this Registration Statement also covers such
indeterminable additional shares of Common Stock as may become issuable as a
result of any future anti-dilution adjustment, conversion price or interest
rate fluctuations in accordance with the terms of any warrants, stock
options, preferred stock, and convertible notes, the underlying shares of
which are included for registration herein.
(2)Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act.
Represents the average of the closing price reported by the NASDAQ SmallCap
Market for the five days ending March 3, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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<PAGE>
PROSPECTUS
3,300,225 SHARES
SMART CHOICE AUTOMOTIVE GROUP, INC.
COMMON STOCK
This Prospectus relates to an offering (the "Offering") of up to 3,300,225
shares (the "Shares") of common stock, par value $.01 per share (the "Common
Stock"), of Smart Choice Automotive Group, Inc., a Florida corporation formerly
known as Eckler Industries, Inc. (the "Company"), which may be offered (the
"Offering") for sale by persons (the "Selling Shareholders") who have acquired
such Shares (or instruments exercisable for or convertible into Shares) in
certain transactions not involving a public offering. This Prospectus also
relates to the offer and sale by certain Selling Shareholders, in accordance
with Rule 416 under the Securities Act of 1933, as amended (the "Securities
Act"), of such presently indeterminate number of additional Shares as may be
issuable pursuant to anti-dilution provisions related to shares covered by this
Prospectus or upon conversion of shares of the Company's Series A Redeemable
Convertible Preferred Stock (the "Series A Preferred Shares") held by certain of
the Selling Shareholders, based on fluctuations of the conversion price of the
Series A Preferred Shares.
The Shares are being registered under the Securities Act on behalf of the
Selling Shareholders in order to permit the public sale or other distribution of
the Shares. The Shares are being registered pursuant to (i) registration rights
granted by the Company in connection with financings; and (ii) registration
rights granted by the Company for Common Stock issuable on conversion of
convertible securities.
The Shares may be sold or distributed from time to time by or for the
account of the Selling Shareholders or their pledgees through dealers, brokers
or other agents, or directly to one or more purchasers, including pledgees, at
market prices prevailing at the time of sale or at prices otherwise negotiated.
This Prospectus also may be used, with the Company's prior consent, by other
persons acquiring Shares and who wish to offer and sell such Shares under
circumstances requiring or making desirable its use. In addition, any securities
covered by this Prospectus which qualify for sale pursuant to Rule 144 of the
Securities Act, may be sold under Rule 144 rather than pursuant to this
Prospectus. See "Selling Shareholders" and "Plan of Distribution."
The Company will receive no portion of the proceeds from the sale of the
Shares offered hereby, and will pay all of the expenses, estimated to be
approximately $6,596.52 in connection with this Offering, other than brokerage
commissions, discounts, fees and counsel fees and expenses incurred by the
Selling Shareholders. See "Use of Proceeds," "Selling Shareholders," and "Plan
of Distribution."
The Company's Common Stock is currently quoted on the Nasdaq SmallCap
Market ("Nasdaq") under the symbol "SMCH." On March 3, 1998 the last reported
sale price of the Common Stock as quoted on Nasdaq was $2.50 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 HEREOF FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED
IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH 6, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such materials can be obtained upon written request from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Quotations relating to the Company's Common Stock
appear on the NASDAQ SmallCap Market and such reports and proxy statements and
other information concerning the Company can also be inspected at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information, reference is hereby made to the
Registration Statement. Each statement made in this Prospectus concerning a
document filed as part of the Registration Statement is qualified in its
entirety by reference to such document for a complete statement of its
provisions. Copies of the Registration Statement may be inspected, without
charge, at the offices of the Commission, or obtained at prescribed rates from
the Public Reference Section of the Commission, at the address set forth above,
or on the World Wide Web through the Commission's Internet address at
"http://www.sec.gov."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-14082)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1996;
2. All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since September 30, 1996, consisting
of (i) the Company's Quarterly Reports on Form 10-QSB and Form
10-Q for the fiscal quarters ended December 31, 1996, March 31,
1997, June 30, 1997, and September 30, 1997, respectively, (ii)
the Company's Current Reports on Form 8-K dated October 28, 1996,
December 30, 1996, January 28, 1997, February 12, 1997, March 20,
1997, June 27, 1997, June 30, 1997, August 21, 1997, August 29,
1997, September 24, 1997, and December 10, 1997 and (iii) the
Company's Amendments on Form 8-K/A to its Current Reports on Form
8-K dated February 12, 1997, June 27, 1997, August 21, 1997 and
August 29, 1997;
3. The Company's definitive Proxy Statement filed on February 27,
1997; and
4. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, filed on April 16, 1997.
All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the Offering shall be deemed incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified shall not
be deemed to constitute a part of this Prospectus except as so modified, and any
statement so superseded shall not be deemed to constitute a part of this
Prospectus.
The Company will provide, without charge, to each person, including any
beneficial owner of securities, to whom a copy of this Prospectus is delivered,
upon the written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference (other than exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to the Company's
principal executive offices: Shareholder Relations Department, Smart Choice
Automotive Group, Inc., 5200 South Washington Avenue, Titusville, Florida 32780,
telephone: (407) 269-9680.
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the detailed information
and consolidated financial statements, including the notes thereto, appearing
elsewhere in this prospectus or incorporated herein by reference.
The Company. Smart Choice Automotive Group, Inc. (the "Company"), acquires
new and used car dealerships and their related used car finance companies in the
southeastern United States. The Company currently operates in several major
markets in Florida and intends to expand into the southeastern United States.
The Company targets its used car products and services to the sub-prime segment
of the automobile financing industry, which focuses on selling and financing the
sale of used cars to persons who have limited credit histories, low incomes, or
past credit problems ("Sub-Prime Borrowers"). In connection with its sale of
used cars, the Company underwrites, finances, and services retail installment
contracts that it generates ("Finance Contracts"). At December 31, 1997 the
Company operated two new car dealerships and 22 used car dealerships, held and
serviced approximately $55.3 million in gross Finance Contracts, and intends to
continue its expansion through acquisitions and internal growth. The Company
also operates insurance and dealer consulting divisions, as well as Eckler
Industries, Inc. ("Eckler's"), one of the nation's leaders in Corvette parts and
accessories sales with more than 95,000 customers.
Dealership Operations. The Company operates two new car dealerships in
Florida that have franchises to sell Nissan and Volvo vehicles. The Company
sells used cars through its used car dealerships in Florida, and finances such
sales primarily through Finance Contracts that the Company originates and
services. The Company's competition for its used car dealerships primarily
consists of the numerous independent used car dealerships that sell and finance
sales of used cars to Sub-Prime Borrowers ("Dealer/Financers"). The Company
distinguishes its dealerships from those of typical Dealer/Financers by
providing multiple locations, upgraded facilities, large inventories of used
automobiles, a captive finance company, centralized purchasing, value-added
marketing programs, and dedication to customer service. The Company's
dealerships maintain inventories that feature a wide selection of makes and
models (with ages generally ranging from three to six years). The Company has
developed underwriting guidelines and techniques that combine established
underwriting criteria with managerial discretion, to facilitate prompt credit
decisions and utilizes networked computer systems to monitor and service large
volumes of Finance Contracts.
The Company is seeking to develop widespread name recognition for its
"First Choice" used cars through extensive television, radio, and billboard
advertising. The Company emphasizes its network of dealerships, its wide
selection of quality used cars, and its ability to finance many Sub-Prime
Borrowers.
The Company's strategy has been to increase sales revenue and finance
income by opening additional used car dealerships and acquiring existing new and
used car dealerships and Dealer/Financers, in selected markets. To facilitate
inventory quality, the Company opened used car reconditioning facilities in
Lakeland and West Palm Beach, Florida. The Company expects to finance its
expansion through operating cash flow, supplemental borrowings, and capital
markets transactions. Although the Company believes its current management team,
monitoring and collection operations, and corporate infrastructure are capable
of supporting the planned expansion of its operations and services, the start-up
costs and incremental overhead created by such expansion could adversely affect
the Company's results of operations.
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RISK FACTORS
IN CONSIDERING THE MATTERS SET FORTH IN THIS PROSPECTUS, PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH BELOW AS WELL AS
OTHER INFORMATION SET FORTH AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
Forward Looking Statements
This Prospectus and/or certain documents incorporated herein by reference
contain certain "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), which
represent the Company's expectations or beliefs and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
statements by their nature involve substantial risks and uncertainties, certain
of which are beyond the Company's control, and actual results may differ
materially depending on a variety of important factors, including the level of
acquisition opportunities available to the Company and the Company's ability to
efficiently price and negotiate such acquisitions on a favorable basis, sources
for sufficient additional capital to meet the Company's growth and operations,
the financial condition of the Company's customers, the failure to properly
manage growth and successfully integrate acquired companies and operations,
changes in economic conditions, demand for the Company's products and changes in
the competitive environment.
The Company cautions that the factors described above could cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statements of the Company made by or on behalf of the Company.
Any forward-looking statement speaks only as of the date on which such statement
is made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for
management to predict all of such factors. Further, management cannot assess the
effect of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
Limited Combined Operating History and Losses
The Company began operations as a combined business unit with Eckler's in
January of 1997 and incurred a loss of $17.7 million for 1997, reflecting
startup costs, development of its infrastructure, and expansion of its
operations. In addition, for the year ended September 30, 1996 and for the three
months ended December 31, 1996, Eckler's sustained losses of $866,568 and
$196,209, respectively. There can be no assurance that the Company will not
continue to incur losses in the results of its operations.
No Proceeds to the Company from the Offering
The Company will not receive any proceeds from Common Stock sold by the
Selling Shareholders; however, the Company will bear the expense of the
registration of the Common Stock pursuant to certain registration obligations of
the Company.
Risks Associated With Acquisitions
A significant component of the Company's recent growth has come through
acquisitions of existing car dealerships and related businesses, including used
car Dealer/Financers lending primarily to Sub-Prime Borrowers. The Company's
future growth will depend in large part on its ability to acquire additional
dealerships, manage expansion, control costs in its operations and consolidate
acquisitions into existing operations. The Company will have to review acquired
dealership operations, management infrastructure and systems and financial
controls, and make those adjustments or complete reorganizations as appropriate.
Unforeseen capital and operating expenses, or other difficulties, complications
and delays frequently encountered in connection with the expansion and
integration of acquired operations could inhibit the Company's growth. The full
benefits of a significant acquisition will require the integration of
administrative, finance, sales and marketing organizations, as well as the
coordination of common sales and marketing efforts and the implementation of
appropriate operational, financial and management systems and controls.
Acquisitions and related integration issues will require substantial attention
from the Company's senior management team, whose acquisition experience to date
has consisted primarily of dealerships at single locations. The diversion of
management attention required by the acquisition and integration of multiple
dealerships, as well as any other difficulties which may be encountered in the
transition and integration process, could have an adverse effect on the revenue
and operating results of the Company. There can be no assurance that the Company
will identify suitable acquisition candidates, that manufacturers' consents will
be obtained (if required), that acquisitions will be consummated on acceptable
terms or that the Company will be able to integrate successfully the operations
of any acquisition. The Company's ability to continue to grow through the
acquisition of additional dealerships will also be dependent upon the
availability of suitable candidates, the Company's ability to attract and retain
competent management, and the availability of capital to complete the
acquisitions. The Company intends to finance acquisitions through a combination
of its available cash resources, borrowings from financial institutions and, in
<PAGE>
appropriate circumstances, the issuance of equity and/or debt securities.
Acquiring additional dealerships and Dealer/Financers will have a significant
effect on the Company's financial position, and could cause substantial
fluctuations in the Company's quarterly and yearly operating results.
Acquisitions are also likely to result in the recording of significant goodwill
and intangible assets on the Company's financial statements, the amortization of
which would reduce reported earnings in subsequent years. In addition, the
issuance of additional shares of Common Stock in connection with acquisitions
may substantially dilute the interests of existing shareholders.
Risks Associated With Entering New Industries
Although the Company has an operating history since 1973, it has a limited
history of operating car dealerships and financing the sales of used-vehicles
and related services, particularly to Sub-Prime Borrowers. Consequently, the
Company is subject to a variety of risks associated with entering a new
business, such as the lack of prior operating history in the Sub-Prime lending
and new and used car sales markets, integrating the new businesses into the
Company, and hiring the necessary personnel. There can be no assurance that the
Company will achieve profitability in the future. The Company's ability to
become and remain profitable as it pursues its business strategy will depend
upon its ability to: (i) assimilate and manage its acquisitions; (ii) expand its
revenue generating operations while not proportionately increasing its
administrative overhead; (iii) originate Finance Contracts with an acceptable
level of credit risk; (iv) locate sufficient financing with acceptable terms to
fund the expansion of car sales and the origination of additional Finance
Contracts; (v) adapt to the increasingly competitive market in which it
operates; and (vi) obtain and purchase adequate supplies of cars. Outside
factors, such as the economic, regulatory, and judicial environments in which it
operates, also will have an effect on the Company's business. The Company's
inability to achieve or maintain any or all of its goals could have a material
adverse effect on the Company's operations, profitability, and growth.
Need for Additional Capital
In order to grow its business, the Company will require significant capital
resources, both to fund acquisitions and for working capital. In the past, the
Company has utilized borrowings from financial institutions and its Common Stock
as a currency for acquiring businesses. Depending on the value of an acquired
business, the Company may be required to issue a large number of additional
shares of Common Stock, thereby diluting existing shareholders.
Potential sources of capital for the Company include existing and proposed
credit facilities as well as public and private offerings of the Company's
capital stock. There can be no assurance that the proceeds from these sources of
capital will be sufficient to satisfy all of the Company's cash requirements or
fund combined operating losses, should they occur, beyond the next 12 months.
Moreover, there can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all. To the extent the
Company is not able to generate sufficient cash flow or obtain additional
financing and its cash requirements were to exceed its available capital and
financing, the Company would be forced to reduce or delay additional
expenditures or otherwise delay, curtail or discontinue some or all of its
operations. Further, if the Company is able to access such capital through
borrowing, such debt will increase the already substantial obligations of the
Company, which could have a material adverse effect on the Company's financial
condition and results of operations.
The operation of automobile dealerships and Dealer/Financers is capital
intensive. The Company requires capital to acquire and maintain inventories of
vehicles and parts, to originate Finance Contracts, to purchase and maintain
service equipment, to maintain its facilities and, in the case of new car
dealerships, to satisfy manufacturers' minimum capital requirements. The Company
finances the purchase of all of its new and used car inventory and leases all of
the properties underlying its dealerships. Consequently, the Company incurs
significant operating, borrowing and fixed occupancy costs. Should the Company's
expansion plans require additional funding or should its capital requirements
exceed current estimates, the Company could be required to seek additional
financing in the future. There can be no assurance that the Company will be able
to raise such financing when needed or on acceptable terms. As a result, the
Company may be unable to achieve its goals, including anticipated growth.
Creditworthiness of Sub-Prime Borrowers
The Sub-Prime Borrower automobile finance market is comprised of
customers who are deemed to be relatively high credit risk due to various
factors, including, among other things, the manner in which they have handled
previous credit, the absence or limited extent of their prior credit history
and/or their limited financial resources. Consequently, the Company's Finance
Contracts have a higher probability of delinquency and default and greater
servicing costs than loans made to consumers who pose lesser credit risks. The
Company's profitability depends in part upon its ability to evaluate properly
the creditworthiness of Sub-Prime Borrowers and efficiently service its loans.
There can be no assurance that satisfactory credit performance of Sub-Prime
Borrowers will be maintained or that the rate of future defaults and/or losses
will be consistent with prior experience or at levels that will allow the
<PAGE>
Company to achieve profitability. Most borrowers' ability to remit payments in
accordance with the terms of the loans is dependent on their continued
employment. An economic downturn resulting in increased unemployment could cause
a significant rise in delinquencies and defaults, which could materially
adversely affect the Company's financial condition and results of operations.
Moreover, increases in the delinquency and/or loss rates in the Company's loan
portfolio could adversely affect the Company's ability to obtain or maintain its
financing sources.
Competition and Market Conditions
The Company's competitors include local, regional and national automobile
dealers, Dealer/Financers and service and repair shops, many of which are larger
and have greater financial and marketing resources than the Company. The Company
also competes with private market buyers and sellers of used cars, used car
dealers, franchised dealers, service center chains and independent shops for
service, repair and parts business. Industry wide gross profit margins on sales
of new vehicles, used-vehicles and sales and service generally have been
declining since 1980, and the new and used car market faces increasing
competition from non-traditional sources such as independent leasing companies,
brokers, buying services, internet companies and used car "superstores." Some of
the recent market entrants may be capable of operating on smaller gross margins
than the Company. The Company expects that there will be increasing competition
in the acquisition of other dealerships as industry participants become larger.
There can be no assurance that the Company will be able to maintain or increase
its size relative to its competitors or to increase profit margins in the face
of increased competition.
The Sub-Prime Borrower automobile finance market is highly competitive. The
level of competition has increased significantly in recent years and this trend
is expected to continue. Historically, commercial banks, savings and loan
associations, credit unions, captive finance subsidiaries of automobile
manufacturers and other consumer lenders, many of which have significantly
greater resources than the Company, have not competed for Sub-Prime Borrower
business. To the extent that such lenders expand their activities in the
Sub-Prime Borrower market, the Company's financial condition and results of
operations could be materially adversely affected. During the past two years,
several companies have devoted considerable resources to the Sub-Prime Borrower
market, including large, well-capitalized public companies.
The Company, through Eckler's, sells parts and accessories for Corvettes.
Under a Reproduction and Service Part Tooling License Agreement (the "GM
Agreement") between the Company and General Motors Corporation ("GM"), the
Company is permitted to manufacture Corvette parts under the GM Restoration
Parts label and to acquire additional inventory from GM. However, the GM
Agreement does not prohibit the Company's competitors from manufacturing and
selling parts that are comparable to those manufactured and sold by the Company.
General Economic Conditions
The Company's business is directly related to sales of used cars, which is
affected by employment rates, prevailing interest rates, and other general
economic conditions. A future economic slowdown or recession could lead to
increased delinquencies, repossessions, and credit losses that could hinder the
Company's business and planned expansion. Because of the Company's focus on
Sub-Prime Borrowers, its actual rate of delinquencies, repossessions, and credit
losses on Finance Contracts could be higher under adverse conditions than those
experienced in the used car sales and finance industry in general. Economic
changes are uncertain, and sluggish sales of used cars and weakness in the
economy could have an adverse effect on the Company's business.
Changing Nature of Automotive Retailing
The automobile retailing industry has experienced significant change in the
past several years. A number of dealership groups have conducted, or are in the
process of conducting, public offerings of capital stock to enhance their
capital structures and their ability to issue capital stock in acquisitions.
These companies and other well-capitalized dealership groups have begun to
acquire a significant number of other dealers, including dealers in the
Company's markets, in a trend toward the consolidation of the retail automobile
industry. In addition, several companies have opened chains of used car
"superstores" that offer a large variety and number of used cars at each of
their locations. A common goal for each of these groups is to create a
recognized national dealership brand. Further, several large, well capitalized
dealer groups are utilizing "one price" and other marketing strategies to
attract consumers away from smaller, more traditional dealers. Other dealers
have formed auto malls and multi-brand dealerships in which multiple makes and
models are sold side by side. Dealers also face increased competition in the
sale of new vehicles from independent brokers and leasing companies, on-line
purchasing services and warehouse clubs. In recent years the number of vehicles
coming off leases has increased significantly, resulting in an increased supply
of high-quality used vehicles available for resale. These vehicles and vehicles
from other sources have become available to franchised new car dealers and
<PAGE>
non-franchised dealers of used cars, resulting in increased competition in the
used car market. Automobile dealers are also facing new forms of competition in
the sale of service and parts. In the 1980s, several new national chains of
service and repair shops and aftermarket parts stores appeared, offering faster
service and lower prices. The Company expects that the automobile retailing
industry will continue to experience significant change in the next several
years as new and stronger sources of competition affect the industry. There can
be no assurance that the Company will be able to respond effectively to changes
in the industry.
Geographic Concentration
The Company's car sales and financing operations are presently concentrated
in the central and southeast areas of Florida. An economic slowdown or
recession, or a change in the regulatory or legal environment in Florida could
have a material adverse effect on the Company's financial condition and results
of operations.
High Leverage
The Company is highly leveraged. At December 31, 1997 the Company's total
indebtedness was approximately $62.1 million. A substantial portion of such debt
is collateralized by the Company's Finance Contracts, new and used car inventory
and certain property, plant and equipment. The Company's substantial leverage
could have important consequences, including limiting its ability to obtain
additional financing, requiring the Company to use substantial portions of
operating cash flow to meet interest and principal repayment obligations,
exposing the Company to interest rate fluctuations due to floating interest
rates, increasing the Company's vulnerability to changes in general economic
conditions and competitive pressures, and limiting the Company's ability to
realize some or all of the benefits of significant business opportunities. In
addition, various loan agreements for the Company's obligations contain
financial covenants and various other covenants that limit, among other things,
the Company's ability to engage in certain mergers and acquisitions, incur
additional indebtedness or further encumber its assets, or pay dividends or make
other distributions without the prior consent of the lender(s). The covenants
also require the Company to meet certain financial tests. Although the Company
believes that it is currently in compliance with the terms and conditions of its
borrowing arrangements, a default thereunder could have a material adverse
effect on the Company's financial condition and results of operations.
Sensitivity to Interest Rates; Effect of Usury Laws
A substantial portion of the Company's Finance Contract income results from
the difference between the rate of interest it pays on the funds it borrows and
the rate of interest it earns under the Finance Contracts in its portfolio.
While the Finance Contracts the Company services bear interest at a fixed rate,
the Company's indebtedness and other credit arrangements bear interest at
floating rates. In the event the Company's interest expense increases, it would
seek to compensate for such increases by raising the interest rates on its
Finance Contracts, or raising the retail sales price of its cars. To the extent
the Company were unable to do so, the Company's net margins would decrease,
thereby adversely affecting the Company's results of operations.
Currently, the Company's used car sales activities are conducted, and a
majority of the Finance Contracts the Company services are originated, in
Florida, which imposes limits on the rate which a lender may charge.
Seasonality
Historically, the Company's dealerships that sell and finance cars to
Sub-Prime Borrowers have experienced higher revenues in the first two quarters
of the calendar year than in the latter half of the year. Management believes
that these results are due to seasonal buying patterns resulting in part from
the fact that many of the Company's customers receive income tax refunds during
the first half of the year, which are a primary source of down payments on used
car purchases.
Eckler's, the Company's Corvette parts and accessories business, also is
subject to seasonal fluctuations. Historically, Eckler's business has realized a
higher portion of its revenues (on average, in excess of 55% of its revenues) in
the second and third quarters of the calendar year and the lowest portion of its
revenues in the fourth quarter. The business of Eckler's is particularly
dependent on sales to Corvette enthusiasts during the spring and summer months.
This is the time of year that Corvette enthusiasts are preparing for upcoming
car shows that are held in the late summer and early fall.
Cyclicality
Sales of motor vehicles, particularly new vehicles, historically have been
cyclical, fluctuating with general economic cycles. During economic downturns,
the automotive retailing industry tends to experience similar periods of decline
and recession as the general economy. The Company believes that the industry is
influenced by general economic conditions and particularly by consumer
confidence, the level of personal discretionary spending, interest rates and
credit availability. There can be no assurance that the industry will not
experience sustained periods of decline in vehicle sales in the future. Any such
decline would have a material adverse effect on the Company.
Regulation and Litigation
The Company's business is subject to extensive federal, state and local
regulation and supervision. Such regulation, among other things, requires the
Company to obtain and maintain licenses and qualifications, to limit interest
rates, fees and other charges related to Finance Contracts, require specified
disclosures by dealers to consumers and to limit rights to repossess and sell
collateral. Such regulations exist primarily for the benefit of consumers,
rather than for the protection of dealers or Dealer/Financers, and could limit
the Company's discretion in operating its business. Various federal, state and
local regulatory agencies, such as the Occupational Safety & Health
Administration ("OSHA"), the Federal Trade Commission ("FTC") and their state
counterparts, have jurisdiction over the Company's operations with respect to
such matters as worker's safety and consumer protection. Future acquisitions by
the Company may also be subject to regulation, including antitrust review.
Noncompliance with any applicable statutes or regulations could result in
suspension or revocation of any license or registration at issue, as well as the
imposition of civil fines and criminal penalties. To the extent that the rates
charged by the Company are limited by the application of maximum allowable
interest rates that may be lower than those currently charged by the Company,
the Company will suffer adverse effects on its results of operations. In
addition, due to the consumer-oriented nature of the automobile finance
industry, Dealer/Financers are frequently named as defendants in litigation
involving alleged violations of federal and state consumer lending or other laws
and regulations. There can be no assurance that the Company will not become
subject to such litigation in the future. A significant judgment against the
Company could have a material adverse effect on the Company's financial
condition and results of operations.
Dependence Upon Key Personnel
The Company's future success will depend upon the continued services of the
Company's key management personnel as well as the Company's ability to attract
additional members to its management team with experience in the new and used
car sales and used car financing industries. The Company has employment
agreements with certain key management personnel, including Gary R. Smith, the
Company's President and Chief Executive Officer; however, the unexpected loss of
the services of any of the Company's key management personnel or its inability
to attract new management when necessary, could have a material adverse effect
upon the Company.
Control By Majority Shareholders
As of December 31, 1997, the Company's management beneficially owned and/or
had voting control of approximately 49.4% of the issued and outstanding Common
Stock of the Company. Further, assuming exercise of all of the Company's
1,200,000 outstanding public warrants ("Public Warrants"), management would
control approximately 44.1% of the voting stock. Consequently, management may be
able to direct the election of the Company's directors, effect significant
corporate events and generally direct the affairs of the Company. Investors will
have only limited participation in the management of the Company. The
concentration of ownership by such holders may have the effect of preventing a
sale or takeover of the Company.
No Assurance of Continued Market for Securities; "Penny Stock" Regulations
Although the Company's Common Stock and Public Warrants are listed on
the Nasdaq SmallCap Market, there can be no assurance that a public trading
market for the securities will be sustained. If for any reason the Company fails
to maintain sufficient qualifications for continued listing on the Nasdaq
SmallCap Market, purchasers of the securities may have difficulty in selling
their securities should they desire to do so because certain restrictions (the
"penny stock" rules) may be placed upon the sale of securities unless the
securities qualify for an exemption from the "penny stock" rules. The Commission
has adopted regulations which generally define "penny stock" to be any equity
security that has a market price of less than $5 per share or an exercise price
of less than $5 per share, subject to certain exceptions. Since the Common Stock
and Public Warrants are quoted on Nasdaq, they are exempt from the definition of
"penny stock." If they are later removed from listing by Nasdaq and are traded
at a price below $5 per share, the securities may become subject to the "penny
stock" rules that impose burdensome sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and institutional accredited investors. The "penny stock" rules may
restrict the ability or desirability of broker-dealers to sell the Company's
Common Stock. Some brokerage firms will not effect transactions in the
securities if they trade below $5 per share and it is unlikely that any bank or
financial institution will accept the securities as collateral, which could have
an adverse effect in developing or sustaining any market for the securities and
may affect the ability of purchasers in this Offering to sell the Common Stock
in the secondary market.
Listing Maintenance Criteria For Nasdaq System
The Company's Common Stock and Public Warrants are listed on the Nasdaq
SmallCap Market. Continued inclusion on the Nasdaq SmallCap Market requires the
Company to maintain certain criteria such as among others market value, public
<PAGE>
float, capital and surplus. If the Company fails to maintain the Nasdaq minimum
threshold requirements in the future, it would lose Nasdaq listing and trading
in the securities would be conducted in the over-the-counter market known as the
NASD OTC Electronic Bulletin Board, or the "pink sheets", whereupon trading in
the Company's securities will be subject to the "penny stock" regulations. As a
result, an investor may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value, of the Company's Common Stock if it
were to lose its Nasdaq SmallCap Market listing.
Potential Volatility of Stock Price
The market price of the Common Stock has been and may continue to be highly
volatile, and could in the future be subject to wide fluctuations in response to
the timing and size of acquisitions, quarter to quarter variations in operating
results, changes in earnings estimates by analysts, market conditions in the
industry, and general economic conditions. Investors in the Common Stock must be
willing to bear the risk of such fluctuations in earnings and stock price.
Environmental Matters
The Company is subject to federal, state and local laws, ordinances and
regulations which establish various health and environmental quality standards,
and liability related thereto, and provide penalties for violations of those
standards. Under certain laws and regulations, a current or previous owner or
operator of real property may be liable for the cost of removal and remediation
of hazardous or toxic substances or wastes on, under, in or emanating from such
property. Such laws typically impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of such hazardous or
toxic substances or wastes. Certain laws, ordinances and regulations may impose
liability on an owner or operator of real property where onsite contamination
discharges into waters of the state, including groundwater. Under certain other
laws, generators of hazardous or toxic substances or wastes that send such
substances or wastes to disposal, recycling or treatment facilities may be
liable for remediation of contamination at such facilities. Other laws,
ordinances and regulations govern the generation, handling, storage,
transportation and disposal of hazardous and toxic substances or wastes, the
operation and removal of underground storage tanks, the discharge of pollutants
into surface waters and sewers, emissions of certain potentially harmful
substances into the air and employee health and safety. The business operations
of the Company are subject to such laws, ordinances and regulations including
the use, handling and contracting for recycling or disposal of hazardous or
toxic substances or wastes, including environmentally sensitive materials such
as motor oil, transmission fluid, antifreeze, freon, waste paint and lacquer
thinner, batteries, solvent, lubricants, degreasing agents, gasoline and diesel
fuels. The Company is subject to other laws, ordinances and regulations as the
result of the past or present existence of underground storage tanks at many of
the Company's properties.
Certain laws and regulations, including those governing air emissions and
underground storage tanks, have been amended to require compliance with new or
more stringent standards as of future dates. The Company cannot predict what
other environmental legislation or regulations will be enacted in the future,
how existing or future laws or regulations will be administered or interpreted
or what environmental conditions may be found to exist in the future. Compliance
with new or more stringent laws or regulations, stricter interpretation of
existing laws or the future discovery of environmental conditions may require
expenditures by the Company, some of which may be material.
Anti-Takeover Considerations
Certain provisions of Florida law and the Company's Articles of
Incorporation ("Articles") could, together or separately, discourage potential
acquisition proposals, delay or prevent a change in control of the Company, and
limit the price that certain investors might be willing to pay in the future for
the Company's Common Stock. The Company is subject to the "affiliated
transactions" and "control share acquisition" provisions of the Florida Business
Corporation Act and pursuant to its Articles. Those provisions require, subject
to certain exceptions, that an "affiliated transaction" be approved by the
holders of two-thirds of the voting shares other than those beneficially owned
by an "interested shareholder" or by a majority of disinterested directors.
Voting rights must also be conferred on "control shares" acquired in specified
control share acquisitions, generally only to the extent conferred by resolution
approved by the shareholders, excluding holders of shares defined as "interested
shares." In addition, the Company's Articles, among other things, provide that
(i) any action required or permitted to be taken by the shareholders of the
Company may be effected only at an annual or special meeting of shareholders,
and not by written consent of the shareholders, (ii) any special meeting of the
shareholders may be called only by the Chairman of the Board, the President or
Chief Executive Officer, or upon the written demand of the holders of not less
than 25% of the votes entitled to be cast at a special meeting, (iii) an advance
notice procedure must be followed for nomination of directors and for other
shareholder proposals to be considered at annual shareholders' meetings, and
(iv) a director may be removed only for cause upon approval of holders of not
less than 66-2/3% of the Company's voting stock. In addition, the Company is
<PAGE>
authorized to issue up to five million shares of preferred stock in one or more
series, having terms fixed by the Board of Directors without shareholder
approval, including voting, dividend or liquidation rights that could be greater
than or senior to the rights of holders of Common Stock. Issuance of additional
shares of Common Stock or new shares of preferred stock could also be used as an
anti-takeover device. Although the Company has no present intentions or plans to
issue preferred stock other than in connection with acquisitions, there can be
no assurance that the Company will not do so in the future.
No Anticipated Dividends
The Company does not intend to pay any dividends on its Common Stock for
the foreseeable future. Any earnings which the Company may realize in the
foreseeable future will be retained to finance the development and expansion of
its business. In addition, under certain loan covenants, the Company is
prohibited from paying dividends without the prior consent of the lender.
USE OF PROCEEDS
This Prospectus relates to Shares being offered and sold for the accounts
of the Selling Shareholders. The Company will not receive any proceeds from the
sale of the Shares but will pay all expenses related to the registration of the
Shares. See "Plan of Distribution."
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to persons
for whom the Company is registering the Common Stock for resale to the public.
The Company will not receive any of the proceeds from the sale of Common Stock
by the Selling Shareholders.
<TABLE>
<CAPTION>
Number
of
Shares
Ownership Offered Ownership
Name Prior to Offering(1) Hereby(2) After Offering(1)
- ----------------------------- ---------------------- ---------- -------------------
Shares Shares Percentage
-------- ------- ----------
<S> <C> <C> <C> <C>
AG Super Fund
International Partners, L.P. 2,250(4) 54,234 (3) -- --
Apple, Phillip (5) 13,500 2,250 11,250 --
Berman, Louis & Barbara (6) 34,750 4,500 30,250 --
The Bridge Fund, N.V. (6) 31,579 10,094 21,485 --
Commander, Howard (6) 63,158 20,188 42,970 --
Cook, Don (5) 129,500 15,750 78,750 --
Coombes, Charles E. (5) 150,400 22,500 112,500 1.0
Flagel, George (5) 40,500 6,750 33,750 --
GAM Arbitrage Investments, Inc. 2,250(4) 54,234 (3) -- --
Garber, Steven & Alfred E. (6) 63,158 20,188 42,970 --
Garshott, Andrew (5) 87,500 11,250 56,250 --
Goodson, Larry (5) 32,250 27,000 8,250 --
Guyton, Jr. Robert P. (5) 67,500 11,250 56,250 --
Guyton, Randall T.(5) 67,500 11,250 56,250 --
Halifax Fund, L.P. 188,032(4) 542,344 (3) -- --
Hart, Mary L. (6) 126,316 40,376 85,940 --
Heracles Fund 148,589(4) 361,563 (3) -- --
Herskovits, David H. & Joan S. (6) 31,579 10,094 21,485 --
High Capital Funding, LLC (5)(7) 368,289 100,940 267,349 3.4
Jenkins, Douglas (5) 13,500 2,250 11,250 --
Johnston, Lamar L. (5) 52,950 6,750 46,200 --
Katz, Wendy Revocable Family Trust (5) 87,750 14,625 73,125 --
Lau, Alan Cheung Tat (5) 15,500 2,250 13,250 --
Lear, Joseph M.(5) 33,750 5,625 28,125 --
Leonardo, L.P. 537,831(4) 686,969 (3) -- --
Medema, Michael (5) 27,000 4,500 22,500 --
Medema, Sr. Roger (5) 95,000 42,750 52,250 --
Noonan, James E. (6) 31,579 10,094 21,485 --
Ramius Fund, Ltd. 198,979(4) 433,875 (3) -- --
Raphael, L.P. 169,841(4) 216,938 (3) -- --
Seelie, Max R. (5) 34,000 4,500 29,500 --
Themis Partners, L.P. 252,470(4) 542,344 (3) -- --
3,300,225
</TABLE>
=========
- -------------------------------
* Less than 1%.
(1) The share and percentage calculations are as of February 27, 1998, and
in accordance with Rule 13d-3 promulgated under the Exchange Act were
made on the basis of the amount of outstanding securities plus, for
each person or group, any securities that person or group has the right
to control the disposition or voting of, or to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.
(2) Pursuant to Rule 416 under the Securities Act of 1933, this
Registration Statement also covers such indeterminable additional
shares of Common Stock as may become issuable as a result of any future
anti-dilution adjustment or other adjustments in accordance with the
terms of common stock purchase warrants, stock options, convertible
debt and convertible preferred stock held by certain Selling
Shareholders.
(3) Represents the number of shares of Common Stock that the Company
has agreed to register under the Registration Rights Agreement among
the Company and the holders of the Series A Preferred Shares. This
Prospectus also covers the resale of such presently indeterminate
number of additional shares as may be issuable on conversion of the
Series A Preferred Shares, based on fluctuations in the conversion
price of the Series A Preferred Shares.
(4) Includes the number of shares of Common Stock issuable upon conversion
of the Series A Preferred Shares calculated using an assumed conversion
price of $1.9125 (which represents 90% of the lowest closing bid price
of the Common Stock for the seven consecutive trading days ended
<PAGE>
February 26, 1998) per share with respect to the stated value of the
Series A Preferred Shares plus an accretion of 7% per year, based on
certain conversion provisions of the Series A Preferred Shares (which
conversion price could fluctuate from time to time based on changes in
the market price of the Common Stock). Also includes shares of Common
Stock issuable on the exercise of warrants to purchase Common Stock
issued in connection with the Series A Preferred Shares (the "Series A
Warrants"). Pursuant to the terms of the Series A Preferred Shares and
the Series A Warrants, no holder thereof can convert or exercise any
portion of such Series A Preferred Shares or Series A Warrants,
respectively, if, subject to certain conditions, such conversion or
exercise would increase such holder's beneficial ownership of the
Common Stock (other than shares owned through ownership of the Series
A Preferred and the Series A Warrants) to in excess of 4.9%.
(5) The shares offered by this Selling Shareholder are shares issuable on
the exercise of conversion rights granted to this Selling Shareholder
in connection with this Selling Shareholders' ownership of preferred
stock issued by a subsidiary of the Company.
(6) Represents shares issuable upon conversion of outstanding convertible
notes, as may be adjusted in accordance with certain anti-dilution and
conversion price adjustment provisions contained therein.
(7) Includes 52,500 shares issuable upon exercise of common stock purchase
warrant.
<PAGE>
PLAN OF DISTRIBUTION
This Prospectus relates to the offering of shares of Common Stock
beneficially held by certain shareholders of the Company.
Since the Selling Shareholders may offer all or part of the shares of
Common Stock which they hold pursuant to this Prospectus or may hold upon
exercise of options or warrants, and since this Offering is not being
underwritten on a firm commitment basis, no estimate can be given as to the
amount of shares of Common Stock to be offered for sale by the Selling
Shareholders.
The Selling Shareholders may sell or distribute some or all of the Shares
from time to time through underwriters or dealers or brokers or other agents or
directly to one or more purchasers, including pledgees, in transactions (which
may involve block transactions) on the Nasdaq SmallCap Market, privately
negotiated transactions (including sales pursuant to pledges) or in the
over-the-counter market, or in a combination of such transactions (including to
cover short sales). Such transactions may be effected by the Selling
Shareholders at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at negotiated prices, or at fixed prices,
which may be changed. Brokers, dealers, agents or underwriters participating in
such transactions as agent may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders (and, if they act as
agent for the purchaser of such shares, from such purchaser). Such discounts,
concessions or commissions as to a particular broker, dealer, agent or
underwriter might be in excess of those customary in the type of transaction
involved. This Prospectus also may be used, with the Company's consent, by
donees of the Selling Shareholders, or by other persons acquiring shares and who
wish to offer and sell such shares under circumstances requiring or making
desirable its use. In addition, any securities covered by this Prospectus which
qualify for sale pursuant to Rule 144 of the Securities Act, may be sold under
Rule 144 rather than pursuant to this Prospectus.
The Selling Shareholders and any such underwriters, brokers, dealers or
agents that participate in such distribution may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
Neither the Company nor the Selling Shareholders can presently estimate the
amount of such compensation. The Company knows of no existing arrangements
between any Selling Shareholders and any other Selling Shareholder, underwriter,
broker, dealer or other agent relating to the sale or distribution of the
shares.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of any of the shares may not simultaneously engage in
market activities with respect to the Common Stock for a period of five business
days prior to the commencement of such distribution. In addition and without
limiting the foregoing, the Selling Shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including Regulation M, which provisions may limit the timing of purchases and
sales of any of the shares by the Selling Shareholders. All of the foregoing may
affect the marketing of the Common Stock.
The Company will pay substantially all of the expenses incident to this
Offering of the shares by the Selling Shareholders to the public other than
commissions and discounts of underwriters, brokers, dealers or agents. Each
Selling Shareholder may indemnify any broker, dealer, agent or underwriter that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act.
In order to comply with certain states' securities laws, if applicable, the
shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the Common Stock may not be
sold unless the Common Stock has been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with.
The Company will receive no portion of the proceeds from the sale of the
shares of Common Stock and will bear all expenses related to the registration of
this offering of the shares of Common Stock. The Selling Shareholders will also
be indemnified by the Company against certain civil liabilities, including
certain liabilities which may arise under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by James Neal Hutchinson, Jr., Vice President and Corporate Counsel of
the Company who beneficially owns 79,094 shares of Common Stock.
<PAGE>
EXPERTS
The financial statements incorporated by reference in this Prospectus have
been audited by BDO Seidman, LLP, Osburn, Henning and Company, Certified Public
Accountants, P.A. and Spence, Marston, Bunch, Morris & Co., independent
certified public accountants, to the extent and for the periods set forth in the
respective reports of such firms incorporated herein by reference, and are
incorporated herein in reliance upon such reports given upon the authority of
such firms as experts in auditing and accounting.
<PAGE>
===============================================================================
No dealer, salesperson or other person is authorized to give any information or
to make any representation not contained in this Prospectus in connection with
this offering, and any information or representation not contained herein must
not be relied upon as having been authorized by the Company or any other person.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the registered securities to which it
relates or an offer to or solicitation of any person in any jurisdiction where
such an offer or solicitation would be unlawful. Neither the delivery of this
Prospectus at any time nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein contained is
correct as of any time subsequent to the date of this Prospectus.
-------------
TABLE OF CONTENTS
AVAILABLE INFORMATION...............................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.....2
SUMMARY.............................................4
RISK FACTORS........................................5
USE OF PROCEEDS....................................12
SELLING SHAREHOLDERS...............................13
PLAN OF DISTRIBUTION...............................15
LEGAL MATTERS......................................16
EXPERTS............................................16
================================================================================
3,300,225 SHARES
SMART CHOICE
AUTOMOTIVE GROUP, INC.
COMMON STOCK
--------------------------
PROSPECTUS
--------------------------
March 6, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company estimates that expenses in connection with the offering
described in this registration statement (other than underwriting and brokerage
discounts, commissions and fees and legal fees incurred by the Selling
Shareholders, if any, shall be payable by such Selling Shareholders) will be as
follows:
Securities and Exchange Commission registration fee..... $ 1,596.52
Legal fees and expenses................................. 2,500.00*
Accounting fees and expenses............................ 1,500.00*
Printing Expenses....................................... 1,000.00*
------------
Total................................. $ 6,596.52
*All amounts shown, except the Securities and Exchange Commission registration
fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has authority under the Florida Business Corporation Act to
indemnify its directors and officers to the extent provided in such statute. The
Registrant's Bylaws provide for indemnification of its executive officers,
directors, agents and employees to the fullest extent permitted by Florida law.
The Registrant also entered into agreements with its directors and certain of
its officers wherein it agreed to indemnify each of them to the fullest extent
permitted by law. In general, Florida law permits a Florida corporation to
indemnify its directors, officers, employees and agents, and persons serving at
the corporation's request in such capacities for another enterprise against
liabilities arising from conduct that such persons reasonably believed to be in,
or not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of the
criminal law, unless the director had reasonable cause to believe his conduct
was not unlawful or had no reasonable cause to believe his conduct was unlawful,
(b) deriving an improper personal benefit from a transaction, (c) voting for or
assenting to an unlawful distribution, and (d) willful misconduct or a conscious
disregard for the best interests of the Company in a proceeding by or in the
right of the Company to procure a judgment in its favor or in a proceeding by or
in the right of a shareholder. The statute does not affect a director's
responsibilities under any other law, such as the Federal securities laws or
state or Federal environmental laws.
<PAGE>
ITEM 16. EXHIBITS
EXHIBIT DESCRIPTION
5.1 Opinion of James Neal Hutchinson, Jr., Vice President and Corporate
Counsel of the Registrant *
23.1 Consent of BDO Seidman, LLP.*
23.2 Consent of BDO Seidman LLP.*
23.3 Consent of Spence, Marston, Bunch, Morris & Co.*
23.4 Consent of Spence, Marston, Bunch, Morris & Co.*
23.5 Consent of Osburn, Henning and Company.*
23.6 Consent of James Neal Hutchinson, Jr., Vice President and Corporate
Counsel of the Registrant (included in Exhibit 5.1)
- --------------------
* Filed herewith.
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Titusville, State of Florida on this 5th day of
March, 1998.
SMART CHOICE AUTOMOTIVE GROUP, INC.
By: /s/ Gary R. Smith
---------------------
Gary R. Smith,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Gary R. Smith and James Neal Hutchinson,
Jr., his true and lawful attorneys-in-fact, each acting alone, with full powers
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this registration statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact or their substitutes, each acting alone, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below on March 5, 1998 by the
following persons in their capacities.
SIGNATURE TITLE
/s/ Robert J. Abrahams Director (Chairman)
- -----------------------------
Robert J. Abrahams
/s/ Gary R. Smith President and Chief Executive Officer,
- ----------------------------- and a Director (Principal Executive
Gary R. Smith Officer)
/s/ Joseph E. Mohr
- ----------------------------- Chief Financial Officer (Principal
Joseph E. Mohr Financial and Accounting Officer)
/s/ Joseph Yossifon Director
- -----------------------------
Joseph Yossifon
Director
- -----------------------------
David E. Bumgardner
/s/ Donald A. Wojnowski, Jr. Director
- -----------------------------
Donald A. Wojnowski, Jr.
/s/ Gerald C. Parker Director
- -----------------------------
Gerald C. Parker
/s/ Craig Macnab Director
- -----------------------------
Craig Macnab
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
5.1 Opinion of James Neal Hutchinson, Jr., Vice President and Corporate
Counsel of the Registrant
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of BDO Seidman LLP.
23.3 Consent of Spence, Marston, Bunch, Morris & Co.
23.4 Consent of Spence, Marston, Bunch, Morris & Co.
23.5 Consent of Osburn, Henning and Company.
23.6 Consent of James Neal Hutchinson, Jr., Vice President and Corporate
Counsel of the Registrant (included in Exhibit 5.1).
March 5, 1998
Smart Choice Automotive Group, Inc.
5200 South Washington Avenue
Titusville, Florida 32780
Gentlemen:
You have requested the opinion of the undersigned in connection with
the Registration Statement on Form S-3 (the "Registration Statement") of Smart
Choice Automotive Group, Inc. (the "Company") relating to shares of Common Stock
(the "Common Stock") registered under the Registration Statement that (i) have
been issued to the Selling Shareholders named in the Registration Statement or
(ii) are issuable to the Selling Shareholders on the exercise of rights to
acquire Common Stock.
The undersigned has made such examination of the corporate records and
proceedings of the Company and has taken such further action deemed necessary or
appropriate to the rendering of the opinion herein.
Based on the foregoing, the undersigned is of the opinion that Common
Stock described in clause (i) above is legally issued, fully paid and
non-assessable. Further, the Common Stock described in clause (ii) above, when
paid for and issued as contemplated by the respective governing instruments,
will be legally issued, fully paid and non-assessable. Therefore, the purchasers
acquiring Common Stock upon subsequent resale as contemplated in the
Registration Statement will receive shares that, as applicable, have been or
will be legally issued, fully paid and non-assessable by the Company.
The undersigned hereby consents to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
and to the reference to the undersigned under the heading "Legal Matters"
therein.
Very truly yours,
/s/ James Neal Hutchinson, Jr.
------------------------------
James Neal Hutchinson, Jr.
Vice President and Corporate Counsel
EXHIBIT 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Eckler Industries, Inc.
Titusville, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated November
19, 1996, except for Note 13, which is as of December 30, 1996, relating to the
financial statements of Eckler Industries, Inc. appearing in the Company's
Annual Report on Form 10-KSB for the year ended September 30, 1996.
We also consent to the reference to us under the caption "Experts" in
the Prospectus.
/s/ BDO Seidman, LLP
--------------------
BDO Seidman, LLP
Orlando, Florida
March 4, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Smart Choice Holdings, Inc.
Titusville, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated April 3,
1997 relating to the financial statements of Smart Choice Holdings, Inc. for the
period ended December 31, 1996 appearing in Form 8-K/A dated February 12, 1997
filed by Smart Choice Automotive Group, Inc. (formerly Eckler Industries, Inc.).
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
--------------------
BDO Seidman, LLP
Orlando, Florida
March 4, 1998
EXHIBIT 23.3
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Smart Choice Holdings, Inc.
Titusville, Florida
We hereby consent to the incorporation by reference in this Form S-3
Registration Statement, which is being filed by Smart Choice Automotive Group,
Inc., of our report dated March 28, 1997 relating to the financial statements of
Florida Finance Group, Inc., Suncoast Auto Brokers, Inc. and Suncoast Auto
Brokers Enterprises, Inc. which are incorporated by reference in that
Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ Spence, Marston, Bunch, Morris & Co.
----------------------------------------
Spence, Marston, Bunch, Morris & Co.
Certified Public Accountants
Clearwater, Florida
March 2, 1998
EXHIBIT 23.4
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Smart Choice Automotive Group, Inc.
Titusville, Florida
We hereby consent to the incorporation by reference in the Form S-3
Registration Statement, which is being filed by Smart Choice Automotive Group,
Inc., of our report dated April 10, 1997 relating to the financial statements of
225 North Military Corporation, d/b/a Miracle Mile Motors and Palm Beach Finance
Company, Inc. which are incorporated by reference in that Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ Spence, Marston, Bunch, Morris & Co.
----------------------------------------
Spence, Marston, Bunch, Morris & Co.
Certified Public Accountants
Clearwater, Florida
March 2, 1998
EXHIBIT 23.5
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Smart Choice Automotive Group, Inc. on Form S-3 of our report dated March 26,
1997, except for Note 6, as to which the date is April 12, 1997, on our audit of
the combined balance sheets of Liberty Finance company, Inc. and Affiliates
(consisting of Liberty Finance Company, Inc.; Wholesale Acquisitions, Inc.; and
Team Automobile Sales & Finance, Inc.), as of December 31, 1996 and 1995, and
the related combined statements of operations, stockholders' equity, and cash
flows for the two years then ended, which is included in Smart Choice Automotive
Group, Inc.'s Current Report on Form 8K/A filed April 14, 1997.
We also consent to the reference to us under the caption "Experts" in the
prospectus which is a part of this registration statement.
/s/ OSBURN, HENNING AND COMPANY
-------------------------------
OSBURN, HENNING AND COMPANY
Orlando, Florida
March 5, 1998
