U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO __________
COMMISSION FILE NUMBER 1-14082
SMART CHOICE AUTOMOTIVE GROUP, INC.
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-1469577
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
5200 S. WASHINGTON AVENUE, TITUSVILLE, FLORIDA 32780
----------------------------------------
(Address of principal executive offices)
(Zip Code)
(407) 269-9680
------------------------------------------------
(Registrant's telephone number, including area code)
ECKLER INDUSTRIES, INC.
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate number or shares outstanding of each of the Issuer's classes of common
stock as of the latest practicable date:
As of May 15, 1997, 8,938,088 shares of the Registrant's Common Stock were
issued and outstanding.
<PAGE>
SMART CHOICE AUTOMOTIVE GROUP, INC.
INDEX TO FORM 10-Q
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<S> <C>
SMART CHOICE AUTOMOTIVE GROUP, INC.
Condensed Consolidated Balance Sheet as of
March 31, 1997 (unaudited) and December 31, 1996 5
Condensed Consolidated Statement of Operations for the
Three Months Ended March 31, 1997 (unaudited) 7
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1997 (unaudited) 8
Notes to Condensed Consolidated Financial Statements 10
LIBERTY FINANCE COMPANY, INC. AND AFFILIATES
Condensed Combined Balance Sheet as of
December 31, 1996 14
Condensed Combined Statement of Operations for the
Period January 1, 1997 to February 12, 1997 (unaudited) 16
Condensed Combined Statement of Cash Flows for the
Period January 1, 1997 to February 12, 1997 (unaudited) 17
Condensed Combined Statement of Income for the
Three Months Ended March 31, 1996 (unaudited) 18
Condensed Combined Statement of Cash Flows for the
Three Months Ended March 31, 1996 (unaudited) 19
-Continued-
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
SMART CHOICE AUTOMOTIVE GROUP, INC.
INDEX TO FORM 10-Q
(CONTINUED)
<S> <C>
FLORIDA FINANCE GROUP, INC., SUNCOAST AUTO BROKERS, INC.
AND SUNCOAST AUTO BROKERS ENTERPRISES, INC.
Condensed Combined Balance Sheet as of
December 31, 1996 20
Condensed Combined Statement of Operations for the
Period January 1, 1997 to January 28, 1997 (unaudited) 22
Condensed Combined Statement of Cash Flows for the
Period January 1, 1997 to January 28, 1997 (unaudited) 23
Condensed Combined Statement of Income for the
Three Months Ended March 31, 1996 (unaudited) 24
Condensed Combined Statement of Cash Flows for the
Three Months Ended March 31, 1996 (unaudited) 25
TWO TWO FIVE NORTH MILITARY TRAIL CORPORATION D/B/A MIRACLE MILE
MOTORS AND PALM BEACH FINANCE COMPANY, INC.
Condensed Combined Balance Sheet as of
December 31, 1996 26
Condensed Combined Statement of Income for the
Period January 1, 1997 to February 14, 1997 (unaudited) 28
Condensed Combined Statement of Cash Flows for the
Period January 1, 1997 to February 14, 1997 (unaudited) 29
Condensed Combined Statement of Income for the
Three Months Ended March 31, 1996 (unaudited) 30
Condensed Combined Statement of Cash Flows for the
Three Months Ended March 31, 1996 (unaudited) 31
ECKLER INDUSTRIES, INC.
Condensed Balance Sheet as of December 31, 1996 (unaudited) 32
Condensed Statement of Operations for the
Period January 1, 1997 to January 28, 1997 (unaudited) 34
Condensed Statement of Cash Flows for the
Period January 1, 1997 to January 28, 1997 (unaudited) 35
Condensed Statement of Operations for the
Three Months Ended March 31, 1996 (unaudited) 36
Condensed Statement of Cash Flows for the
Three Months Ended March 31, 1996 (unaudited) 37
</TABLE>
2
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<TABLE>
<CAPTION>
SMART CHOICE AUTOMOTIVE GROUP, INC.
INDEX TO FORM 10-Q
(CONTINUED)
<S> <C>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 38
PART II-OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS 45
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 46
</TABLE>
3
<PAGE>
PART I
SMART CHOICE AUTOMOTIVE GROUP, INC.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
4
<PAGE>
<TABLE>
<CAPTION>
SMART CHOICE AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
As of March 31, 1997 As of December 31, 1996
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 1,657,404 $ -
Accounts Receivable 747,144 25,000
Finance Receivables
Principal Balances, Net 23,710,066 -
Less: Allowance for Credit Losses (3,736,512) -
- --------------------------------------------------------------------------------------------------------------
19,973,554 -
Inventories, at Cost 4,087,013 -
Land Held for Resale 1,050,000 -
Property and Equipment, Net 2,944,782 22,454
Notes Receivable 1,542,596 400,000
Deferred Tax Asset 330,610 -
Deferred Acquisition Costs 54,511 194,101
Deferred Debt Costs 266,952 24,735
Goodwill 16,084,555 -
Prepaid Expenses 1,375,202 -
Deposits 477,300 50,000
Other Assets 142,036 -
- -------------------------------------------------------------------------------------------------------------
$ 50,733,658 $ 716,290
- -------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
<TABLE>
<CAPTION>
SMART CHOICE AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
As of March 31, 1997 As of December 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Bank Overdraft $ - $ 82,884
Accounts Payable 3,150,748 438,890
Accrued Expenses 1,170,041 183,314
Deferred Income 150,879 -
Floorplan Payable 1,085,396 -
Customer Deposits 348,296 -
Notes Payable 28,373,529 60,000
Deferred Income Taxes 402,814 -
Convertible Debt 562,000 262,000
Acquisition Debt 4,418,609 -
Other Liabilities 1,657,444 -
- -------------------------------------------------------------------------------------------------------------------
Total Liabilities 41,319,756 1,027,088
- -------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Preferred Stock 3,950 1,983
Common Stock 8,939 5,488
Additional Paid In Capital 18,073,826 385,519
Deficit (7,606,124) (703,788)
Unearned Compensation (1,066,688) -
- -------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 9,413,903 (310,798)
- --------------------------------------------------------------------------------------------------------------------
$ 50,733,659 $ 716,290
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
<TABLE>
<CAPTION>
SMART CHOICE AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31, 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
VEHICLE AND RELATED REVENUES:
Sales of Used Vehicles $ 4,785,077
Income on Finance Receivables 522,939
Income from Insurance & Training 262,280
Income from Parts & Accessories 2,498,753
- ----------------------------------------------------------------------------------------------------------------
8,069,049
- ----------------------------------------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Used Vehicles Sold 3,390,292
Cost of Insurance & Training 13,565
Cost of Parts & Accessories Sold 1,561,922
Provision for Credit Losses 1,049,680
- ----------------------------------------------------------------------------------------------------------------
6,015,459
- ----------------------------------------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE
RELATED ACTIVITIES 2,053,590
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Operating Expenses 5,081,660
Compensation Expense Related to Employee Stock Options 3,125,877
- ----------------------------------------------------------------------------------------------------------------
8,207,537
- ----------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (6,153,947)
- -----------------------------------------------------------------------------------------------------------------
OTHER EXPENSE (INCOME):
Interest Expense 692,617
Other Income (9,173)
Miscellaneous Expense 64,944
- ----------------------------------------------------------------------------------------------------------------
748,388
- ----------------------------------------------------------------------------------------------------------------
NET LOSS $ (6,902,335)
- -----------------------------------------------------------------------------------------------------------------
NET LOSS PER SHARE $ (0.87)
- -----------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF SHARES
AND SHARE EQUIVALENTS OUTSTANDING 7,853,134
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7
<PAGE>
<TABLE>
<CAPTION>
SMART CHOICE AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,902,335)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Provision for credit losses 681,435
Common stock and options issued for consulting fees 150,000
Loss on disposal of fixed assets 1,151
Stock option compensation 3,125,877
Depreciation and amortization 245,530
Cash provided by (used for), net of effect of acquisitions:
Accounts receivable (70,894)
Inventory (442,499)
Prepaid expenses (18,974)
Other assets (1,453)
Accounts payable 964,984
Accrued expenses 950,891
Deferred income 20,772
Other liabilities 1,657,444
Customer deposits (116,099)
Floorplan payable 224,876
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 470,706
- -----------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in finance receivables (1,153,486)
Cash for acquisition, net of cash acquired (2,797,310)
Issuance of notes receivable (565,896)
Increase in deposits (477,300)
Increase in deferred acquisition costs (15,400)
Purchase of property and equipment (56,379)
Decrease in other assets 40,435
- -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (5,025,336)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
CONTINUED ON NEXT PAGE
8
<PAGE>
<TABLE>
<CAPTION>
SMART CHOICE AUTOMOTIVE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
- -----------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31, 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable $ (1,835,310)
Proceeds from issuance of Sirrom debt 3,500,000
Proceeds from issuance of notes payable 3,996,722
Increase in deferred debt costs (256,494)
Proceeds from issuance of preferred stock 590,000
Proceeds from issuance of convertible debentures 300,000
Bank overdraft (82,884)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 6,212,034
- -----------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,657,404
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 0
- -----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,657,404
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9
<PAGE>
SMART CHOICE AUTOMOTIVE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
===============================================================================
NOTE 1 - BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements presented herein have
been prepared in accordance with the instructions to Form 10-Q, and do not
include all of the information and disclosures required by generally accepted
accounting principles. These statements should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 1996. The
accompanying financial statements have not been audited by an independent
accountant in accordance with generally accepted auditing standards, but in the
opinion of management, such financial statements include all adjustments,
consisting only of normal recurring adjustments and accruals, to fairly report
the Company's financial position and results of operations. The results of
operations for the interim periods shown in this report are not necessarily
indicative of results to be expected for the fiscal year.
NOTE 2 - ACQUISITIONS
Smart Choice Automotive Group, Inc. (the "Company"), formerly named "Eckler
Industries, Inc.", operates a network of self-financed used vehicle dealerships
in Florida and underwrites, finances, and services retail installment contracts
generated from the sale of used cars by its dealerships. The Company also
operates automobile dealers training and insurance divisions as well as
Eckler's, one of the largest suppliers of Corvette parts and accessories in the
world. On January 28, 1997, pursuant to an Agreement and Plan of Merger by and
among Eckler Industries, Inc. ("EII"), Eckler Acquisition Corporation, Ralph H.
Eckler, Smart Choice Holdings, Inc. ("SCHI"), Thomas E. Conlan and Gerald C.
Parker, dated December 30, 1996 (the "Agreement"), EII acquired all of the
issued and outstanding shares of common stock of SCHI in exchange for 2,927,939
shares of EII Class A and 1,576,324.5 shares of EII Class B, common stock. Under
the terms of the Agreement, the shareholders of SCHI obtained approximately 64%
of the voting rights of EII. Although EII is the parent of SCHI following the
transaction, the transaction was accounted for as a purchase of EII by SCHI (a
reverse acquisition in which SCHI is considered the acquirer for accounting
purposes), since the shareholders of SCHI obtained a majority of the voting
rights in EII as a result of the transaction. Accordingly, the financial
statements of the Company for the periods prior to January 28, 1997 are those of
SCHI, the assets and liabilities of EII are recorded at their estimated fair
values and the accounts of EII are included in the consolidated financial
statements from the date of acquisition (January 28, 1997).
SCHI was incorporated on June 21, 1996 and was a development stage corporation
prior to January 28, 1997. On August 16, 1996, SCHI acquired the stock of First
Choice Auto Finance, Inc. ("FCAF"). On January 28, 1997, in addition to the
acquisition of EII, SCHI acquired the stock of Florida Finance Group, Inc.
("FFG"), Dealer Insurance Services, Inc.
10
<PAGE>
SMART CHOICE AUTOMOTIVE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
================================================================================
("DIS"), and Dealer Development Services, Inc. ("DDS"). FFG underwrites,
finances and services automobile retail installment contracts and was based in
St. Petersburg, Florida prior to moving to the Company headquarters in
Titusville, Florida. FCAF was incorporated on March 22, 1994 and had no
significant operations or assets until it acquired the assets of Suncoast Auto
Brokers, Inc. ("SAB"), and Suncoast Auto Brokers Enterprises, Inc. ("SABE") on
January 28, 1997. FCAF, based at the Company headquarters in Titusville,
Florida, now operates the three used vehicle lots in St. Petersburg and Tampa,
previously operated by SAB and SABE. DIS is based in Tampa, Florida and provides
insurance services for automobile dealers. DDS is based in Tampa and provides
consulting services and training programs to automobile dealers. The assets and
liabilities of FFG, FCAF, DIS and DDS are recorded at their estimated fair
values and their accounts are included in the consolidated financial statements
from the date of acquisition (January 28, 1997).
On February 12, 1997, the Company acquired the stock of Liberty Finance Company
("Liberty"). On the same date, FCAF acquired the stock of Wholesale
Acquisitions, Inc. ("WA"), and Team Automobile Sales and Finance, Inc. ("Team").
Liberty underwrites, finances and services automobile retail service contracts
and was based in Orlando, Florida prior to moving to the Company headquarters in
Titusville, Florida. WA and Team operate five self-financed used vehicle lots in
Orlando, Florida. The assets of Liberty, WA, and Team are recorded at their
estimated fair values and their accounts are included in the consolidated
financial statements from the date of acquisition (February 12, 1997).
On February 14, 1997, FCAF acquired the assets of Palm Beach Finance and
Mortgage Company ("PBF") and Two Two Five North Military Corp. d/b/a Miracle
Mile Motors ("MMM"). FFG services the receivables purchased from PBF, and FCAF
operates the used vehicle lot previously operated by MMM located in West Palm
Beach, Florida. The assets of PBF and MMM are recorded at their estimated fair
values and their accounts are included in the consolidated financial statements
from the date of acquisition (February 14, 1997).
NOTE 3 - SUMMARY OF FINANCE RECEIVABLES
The following is a summary of principal balances, net as of March 31, 1997:
March 31, 1997
-------------
Contractually Scheduled Payments $ 30,270,134
Less: Unearned Finance Charges (6,560,068)
------------
Principal Balances, Net $ 23,710,066
============
11
<PAGE>
SMART CHOICE AUTOMOTIVE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
===============================================================================
NOTE 4 - PRESENTATION OF DEALERSHIP REVENUES AND COST OF REVENUES
Revenues from Company dealership operations consist of Sales of Used Cars,
Income on Finance Receivables, Income from Insurance and Training, and Income
from Parts and Accessories. Cost of Revenues of Dealership operations is
comprised of Cost of Used Cars Sold, the Provision for Credit Losses, Costs of
Insurance and Training Income and Cost of Parts and Accessories Sold.
The prices at which the Company sells its cars and the interest rate that it
charges to finance these sales take into consideration that the Company's
primary customers are high-risk borrowers, many of whom ultimately default. The
Provision for Credit Losses reflects these factors and is treated by the Company
as a cost of both the future finance income derived on the contract receivables
originated at Company dealerships as well as a cost of the sale of the cars
themselves. Accordingly, unlike traditional car dealerships, the Company does
not present gross profit/margin in its Statement of Operations calculated as
Sales of Used Cars less Cost of Used Cars Sold.
NOTE 5 - EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is based upon the weighted average number of common
shares outstanding during each period. Common stock equivalents have not been
included since the effect would be antidillutive.
NOTE 6 - SUPPLEMENTAL CASH FLOW INFORMATION
In connection with the acquisition described in Note 2, the Company issued the
following securities:
Common Stock 3,781,084 shares, valued at $12,761,161
===========
Promissory Notes $ 4,904,183
===========
Cash paid for interest $ 400,139
===========
NOTE 7 - AMENDMENT TO FORM 10-Q
This document is an amended Form 10-Q of the Company for the quarterly period
ended March 31, 1997. The Company is amending that form 10-Q to reflect
additional costs pursuant to Statement of Financial Accounting Standards No.
123. The costs are primarily associated with the issuance or exchange of stock
and options in connection with mergers and acquisitions during the quarters. The
Company identified the issue late in 1997 and included the cumulative effects in
its Form 10-Q for the period ended September 30, 1997. Due to turnover in
12
<PAGE>
accounting personnel familiar with the matter, the Company was unaware of the
need to amend Form 10-Q until it prepared to file Form 10-Q for the quarter
ended March 31, 1998.
13
<PAGE>
LIBERTY FINANCE COMPANY, INC. & AFFILIATES
CONDENSED COMBINED BALANCE SHEET
- --------------------------------------------------------------------------------
As of December 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Cash and Cash Equivalents $ 163,184
Finance Receivables:
Principal Balances, Net 12,283,431
Less: Allowance for Credit Losses (900,000)
- -------------------------------------------------------------------------------
11,383,431
Inventories, at Cost 2,861,848
Land Held for Resale 1,050,000
Property and Equipment, Net 272,543
Other Assets 87,908
- -------------------------------------------------------------------------------
$ 15,818,914
- -------------------------------------------------------------------------------
14
<PAGE>
LIBERTY FINANCE COMPANY, INC. & AFFILIATES
CONDENSED COMBINED BALANCE SHEET
- -------------------------------------------------------------------------------
As of December 31, 1996
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable $ 473,088
Accrued Expenses 116,077
Floorplan Payable 1,378,601
Notes Payable 13,059,981
Related Party Payable 197,237
Other Liabilities 113,781
- -------------------------------------------------------------------------------
Total Liabilities 15,338,765
- -------------------------------------------------------------------------------
Stockholders' Equity:
Common Stock 700
Stock Subscriptions (600)
Additional Paid In Capital 703,044
Deficit (222,995)
- -------------------------------------------------------------------------------
Total Stockholders' Equity 480,149
- -------------------------------------------------------------------------------
$ 15,818,914
- -------------------------------------------------------------------------------
15
<PAGE>
LIBERTY FINANCE COMPANY, INC. & AFFILIATES
CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
- -------------------------------------------------------------------------------
Period January 1, 1997
to February 12, 1997
- -------------------------------------------------------------------------------
VEHICLE AND RELATED REVENUES:
Sales of Used Vehicles $ 1,296,130
Income on Finance Receivables 458,028
Income from Insurance & Training 3,724
Income from Parts & Accessories 55,708
- -------------------------------------------------------------------------------
1,813,590
- -------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Used Vehicles Sold 1,394,719
Cost of Insurance & Training 2,524
Cost of Parts & Accessories Sold 49,173
Provision for Credit Losses 65,315
- -------------------------------------------------------------------------------
1,511,731
- -------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE
RELATED ACTIVITIES 301,859
- -------------------------------------------------------------------------------
OPERATING EXPENSES 434,243
- -------------------------------------------------------------------------------
LOSS FROM OPERATIONS (132,384)
- -------------------------------------------------------------------------------
OTHER EXPENSE:
Interest Expense 176,585
- -------------------------------------------------------------------------------
176,585
- -------------------------------------------------------------------------------
NET LOSS $ (308,969)
- -------------------------------------------------------------------------------
16
<PAGE>
LIBERTY FINANCE COMPANY, INC. & AFFILIATES
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Period January 1, 1997
to February 12, 1997
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (308,969)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 27,846
Cash provided by (used for):
Accounts receivable (35,150)
Inventory 691,586
Prepaid expenses (25,498)
Other assets 46,244
Accounts payable 218,244
Accrued expenses 28,174
Floorplan payable (518,081)
- -------------------------------------------------------------------------------
Net cash provided by operating activities 124,396
- -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in finance receivables 234,795
Purchase of property and equipment (2,410)
Increase in other assets (45,375)
- -------------------------------------------------------------------------------
Net cash used in investing activities 187,010
- -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments from related party (197,237)
Principal payments on notes payable (241,697)
Distribution to stockholder (5,000)
- --------------------------------------------------------------------------------
Net cash used in financing activities (443,934)
- --------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (132,528)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 163,184
- -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,656
- -------------------------------------------------------------------------------
17
<PAGE>
LIBERTY FINANCE COMPANY, INC. & AFFILIATES
CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- -------------------------------------------------------------------------------
VEHICLE AND RELATED REVENUES:
Sales of Used Vehicles $ 4,305,092
Income on Finance Receivables 697,416
Income from Insurance & Training 139,295
Income from Parts & Accessories 382,849
- -------------------------------------------------------------------------------
5,524,652
- -------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Used Vehicles Sold 3,440,621
Cost of Insurance & Training 66,363
Cost of Parts & Accessories Sold 216,957
Provision for Credit Losses 26,387
- -------------------------------------------------------------------------------
3,750,328
- -------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE RELATED ACTIVITIES 1,774,324
- -------------------------------------------------------------------------------
OPERATING EXPENSES 1,087,700
- -------------------------------------------------------------------------------
INCOME FROM OPERATIONS 686,624
- -------------------------------------------------------------------------------
OTHER EXPENSE (INCOME):
Interest Expense 298,072
Other Income (11,664)
Miscellaneous Expense 2,574
- -------------------------------------------------------------------------------
288,982
- -------------------------------------------------------------------------------
NET INCOME $ 397,642
- -------------------------------------------------------------------------------
18
<PAGE>
LIBERTY FINANCE COMPANY, INC. & AFFILIATES
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 397,642
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 16,685
Cash provided by (used for):
Accounts receivable (133,959)
Inventory 284,055
Other assets 31,714
Accounts payable 308,910
Accrued expenses (13,759)
Floorplan payable (365,771)
- -------------------------------------------------------------------------------
Net cash provided by operating activities 525,517
- -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in finance receivables (1,297,537)
Purchase of property and equipment (30,909)
- -------------------------------------------------------------------------------
Net cash used in investing activities (1,328,446)
- -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments to related party (182,096)
Distribution to stockholder (90,973)
Proceeds from issuance of notes payable 1,150,275
- -------------------------------------------------------------------------------
Net cash provided by financing activities 877,206
- -------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 74,277
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,368
- -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 82,645
- -------------------------------------------------------------------------------
19
<PAGE>
FLORIDA FINANCE GROUP, INC.
SUNCOAST AUTO BROKERS, INC.
SUNCOAST AUTO BROKERS ENTERPRISES, INC.
CONDENSED COMBINED BALANCE SHEET
- -------------------------------------------------------------------------------
As of December 31, 1996
- -------------------------------------------------------------------------------
ASSETS
Cash and Cash Equivalents $ 20,272
Finance Receivables:
Principal Balances, Net 5,479,404
Less: Allowance for Credit Losses (1,095,645)
- -------------------------------------------------------------------------------
4,383,759
Inventories, at Cost 440,317
Property and Equipment, Net 111,950
Prepaid Expenses 44,705
Other Assets 2,360
- -------------------------------------------------------------------------------
$ 5,003,363
- -------------------------------------------------------------------------------
20
<PAGE>
FLORIDA FINANCE GROUP, INC.
SUNCOAST AUTO BROKERS, INC.
SUNCOAST AUTO BROKERS ENTERPRISES, INC.
CONDENSED COMBINED BALANCE SHEET
- -------------------------------------------------------------------------------
As of December 31, 1996
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Accounts Payable $ 95,093
Accrued Expenses 16,505
Deferred Income 134,571
Notes Payable 5,018,343
Stockholder Loans 345,250
Related Party Payable 811,600
- -------------------------------------------------------------------------------
Total Liabilities 6,421,362
- -------------------------------------------------------------------------------
Stockholders' Deficit:
Common Stock 1,600
Additional Paid In Capital 220,129
Deficit (1,639,728)
- -------------------------------------------------------------------------------
Total Stockholders' Deficit (1,417,999)
- -------------------------------------------------------------------------------
$ 5,003,363
- -------------------------------------------------------------------------------
21
<PAGE>
<TABLE>
<CAPTION>
FLORIDA FINANCE GROUP, INC.
SUNCOAST AUTO BROKERS, INC.
SUNCOAST AUTO BROKERS ENTERPRISES, INC.
CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
- ---------------------------------------------------------------------------------------
Period January 1, 1997
to January 28, 1997
- ---------------------------------------------------------------------------------------
<S> <C>
VEHICLE AND RELATED REVENUES:
Sales of Used Vehicles $ 225,599
Income on Finance Receivables 162,203
Income from Parts & Accessories 1,235
- ----------------------------------------------------------------------------------------
389,037
- ----------------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Used Vehicles Sold 272,312
Cost of Parts & Accessories Sold 8,970
Provision for Credit Losses 8,538
- ----------------------------------------------------------------------------------------
289,820
- ----------------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE RELATED ACTIVITIES 99,217
- ----------------------------------------------------------------------------------------
OPERATING EXPENSES 152,053
- ----------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (52,836)
- -----------------------------------------------------------------------------------------
OTHER EXPENSE:
Interest Expense 64,061
- ----------------------------------------------------------------------------------------
64,061
- ----------------------------------------------------------------------------------------
NET LOSS $ (116,897)
- -----------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
FLORIDA FINANCE GROUP, INC.
SUNCOAST AUTO BROKERS, INC.
SUNCOAST AUTO BROKERS ENTERPRISES, INC.
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Period January 1, 1997
to January 28, 1997
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (116,897)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 2,750
Cash provided by (used for):
Inventory 221,697
Prepaid expenses 650
Accounts payable (67,993)
Accrued expenses 87,749
Deferred income (4,464)
- -------------------------------------------------------------------------------
Net cash provided by operating activities 123,492
- -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in finance receivables (25,306)
Increase in other assets (750)
- -------------------------------------------------------------------------------
Net cash used in investing activities (26,056)
- -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable (93,087)
- -------------------------------------------------------------------------------
Net cash used in financing activities (93,087)
- -------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,349
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,272
- ------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,621
- ------------------------------------------------------------------------------
23
<PAGE>
FLORIDA FINANCE GROUP, INC.
SUNCOAST AUTO BROKERS, INC.
SUNCOAST AUTO BROKERS ENTERPRISES, INC.
CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- -------------------------------------------------------------------------------
VEHICLE AND RELATED REVENUES:
Sales of Used Vehicles $ 1,710,002
Income on Finance Receivables 370,143
- -------------------------------------------------------------------------------
2,080,145
- -------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Used Vehicles Sold 1,292,762
Provision for Credit Losses 91,238
- -------------------------------------------------------------------------------
1,384,000
- -------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE
RELATED ACTIVITIES 696,145
- -------------------------------------------------------------------------------
OPERATING EXPENSES 442,667
- -------------------------------------------------------------------------------
INCOME FROM OPERATIONS 253,478
- -------------------------------------------------------------------------------
OTHER EXPENSE:
Interest Expense 124,200
- -------------------------------------------------------------------------------
124,200
- -------------------------------------------------------------------------------
NET INCOME $ 129,278
- -------------------------------------------------------------------------------
24
<PAGE>
FLORIDA FINANCE GROUP, INC.
SUNCOAST AUTO BROKERS, INC.
SUNCOAST AUTO BROKERS ENTERPRISES, INC.
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 129,278
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 8,300
Cash provided by (used for):
Accounts receivable (25,731)
Inventory (94,758)
Prepaid expenses (24,254)
Accounts payable (70,375)
Accrued expenses (43,751)
Deferred income 60,639
- --------------------------------------------------------------------------------
Net cash used in operating activities (60,652)
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in finance receivables (507,451)
Purchase of property and equipment (3,806)
Decrease in other assets 2,520
- --------------------------------------------------------------------------------
Net cash used in investing activities (508,737)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments to related party (32,046)
Proceeds from issuance of notes payable 566,731
- --------------------------------------------------------------------------------
Net cash provided by financing activities 534,685
- --------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (34,704)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 50,701
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,997
- --------------------------------------------------------------------------------
25
<PAGE>
TWO TWO FIVE NORTH MILITARY TRAIL CORPORATION
D/B/A MIRACLE MILE MOTORS
PALM BEACH FINANCE COMPANY, INC.
CONDENSED COMBINED BALANCE SHEET
- -------------------------------------------------------------------------------
As of December 31, 1996
- -------------------------------------------------------------------------------
ASSETS
Cash and Cash Equivalents $ 192,999
Finance Receivables:
Principal Balances, Net 5,041,682
Less: Allowance for Credit Losses (984,000)
- --------------------------------------------------------------------------------
4,057,682
Inventories, at Cost 799,358
Property and Equipment, Net 10,086
Other Assets 48,275
- -------------------------------------------------------------------------------
$ 5,108,400
- -------------------------------------------------------------------------------
26
<PAGE>
TWO TWO FIVE NORTH MILITARY TRAIL CORPORATION
D/B/A MIRACLE MILE MOTORS
PALM BEACH FINANCE COMPANY, INC.
CONDENSED COMBINED BALANCE SHEET
- -------------------------------------------------------------------------------
As of December 31, 1996
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable $ 220,887
Accrued Expenses 128,206
Notes Payable 300,000
- -------------------------------------------------------------------------------
Total Liabilities 649,093
- -------------------------------------------------------------------------------
Stockholders' Equity:
Common Stock 800
Additional Paid In Capital 20,000
Retained Earnings 4,438,507
- -------------------------------------------------------------------------------
Total Stockholders' Equity 4,459,307
- -------------------------------------------------------------------------------
$ 5,108,400
- -------------------------------------------------------------------------------
27
<PAGE>
<TABLE>
<CAPTION>
TWO TWO FIVE NORTH MILITARY TRAIL CORPORATION
D/B/A MIRACLE MILE MOTORS
PALM BEACH FINANCE COMPANY, INC.
CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
- --------------------------------------------------------------------------------------
Period January 1, 1997
to February 14, 1997
- --------------------------------------------------------------------------------------
<S> <C>
VEHICLE AND RELATED REVENUES:
Sales of Used Vehicles $ 1,334,472
Income on Finance Receivables 178,098
- ---------------------------------------------------------------------------------------
1,512,570
- ---------------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Used Vehicles Sold 942,541
Provision for Credit Losses 118,273
- ---------------------------------------------------------------------------------------
1,060,814
- ---------------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE RELATED ACTIVITIES 451,756
- ---------------------------------------------------------------------------------------
OPERATING EXPENSES 207,336
- ---------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 244,420
- ---------------------------------------------------------------------------------------
OTHER EXPENSE:
Interest Expense 3,694
- ---------------------------------------------------------------------------------------
3,694
- ---------------------------------------------------------------------------------------
NET INCOME $ 240,726
- ---------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
TWO TWO FIVE NORTH MILITARY TRAIL CORPORATION
D/B/A MIRACLE MILE MOTORS
PALM BEACH FINANCE COMPANY, INC.
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Period January 1, 1997
to February 14, 1997
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 240,726
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 306
Cash provided by (used for):
Inventory 16,202
Other assets 10,184
Accounts payable 9,858
Accrued expenses 9,311
- -------------------------------------------------------------------------------
Net cash provided by operating activities 286,587
- -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in finance receivables (363,699)
- -------------------------------------------------------------------------------
Net cash used in investing activities (363,699)
- -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to stockholder (61,618)
Proceeds from issuance of notes payable 100,000
- -------------------------------------------------------------------------------
Net cash provided by financing activities 38,382
- -------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (38,730)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 192,999
- -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 154,269
- -------------------------------------------------------------------------------
29
<PAGE>
TWO TWO FIVE NORTH MILITARY TRAIL CORPORATION
D/B/A MIRACLE MILE MOTORS
PALM BEACH FINANCE COMPANY, INC.
CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- -------------------------------------------------------------------------------
VEHICLE AND RELATED REVENUES:
Sales of Used Vehicles $ 3,281,562
Income on Finance Receivables 292,867
- --------------------------------------------------------------------------------
3,574,429
- --------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Used Vehicles Sold 2,531,535
Provision for Credit Losses 270,857
- --------------------------------------------------------------------------------
2,802,392
- --------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE
RELATED ACTIVITIES 772,037
- --------------------------------------------------------------------------------
OPERATING EXPENSES 445,057
- --------------------------------------------------------------------------------
NET INCOME $ 326,980
- --------------------------------------------------------------------------------
30
<PAGE>
TWO TWO FIVE NORTH MILITARY TRAIL CORPORATION
D/B/A MIRACLE MILE MOTORS
PALM BEACH FINANCE COMPANY, INC.
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 326,980
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for credit losses 64,000
Depreciation and amortization 120
Cash provided by (used for):
Accounts receivable (42,000)
Inventory 62,414
Prepaid expenses (9,138)
Accounts payable (103,713)
Accrued expenses 19,207
- --------------------------------------------------------------------------------
Net cash provided by operating activities 317,870
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in finance receivables (256,138)
Decrease in other assets 17,139
- --------------------------------------------------------------------------------
Net cash used in investing activities (238,999)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 155,000
Profit distributions (67,233)
- --------------------------------------------------------------------------------
Net cash provided by financing activities 87,767
- --------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 166,638
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 304,914
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 471,552
- --------------------------------------------------------------------------------
31
<PAGE>
ECKLER INDUSTRIES, INC.
CONDENSED BALANCE SHEET
(UNAUDITED)
- -------------------------------------------------------------------------------
As of December 31, 1996
- -------------------------------------------------------------------------------
ASSETS
Cash and Cash Equivalents $ 241,652
Accounts Receivable 153,285
Inventories, at Cost 1,307,525
Property, Plant and Equipment, Net 2,512,645
Deferred Tax Asset 330,610
Prepaid Expenses 1,385,398
Other Assets 108,693
- -------------------------------------------------------------------------------
$ 6,039,808
- -------------------------------------------------------------------------------
32
<PAGE>
ECKLER INDUSTRIES, INC.
CONDENSED BALANCE SHEET
(UNAUDITED)
- -------------------------------------------------------------------------------
As of December 31, 1996
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable $ 545,765
Accrued Expenses 309,613
Notes Payable 2,706,206
Deferred Income Taxes 402,814
- -------------------------------------------------------------------------------
Total Liabilities 3,964,398
- -------------------------------------------------------------------------------
Stockholders' Equity:
Class A Common Stock: $.01 Par Value; 10,000,000 17,367
shares authorized; 1,736,750 issued and outstanding
Class B Common Stock: $.01 Par Value; 5,000,000 5,104
shares authorized; 510,375 issued and outstanding
Additional Paid In Capital 3,419,251
Note Receivable Class A Common Stock (326,700)
Deficit (1,039,612)
- -------------------------------------------------------------------------------
Total Stockholders' Equity 2,075,410
- -------------------------------------------------------------------------------
$ 6,039,808
- -------------------------------------------------------------------------------
33
<PAGE>
ECKLER INDUSTRIES, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
- -------------------------------------------------------------------------------
Period January 1, 1997
to January 28, 1997
- -------------------------------------------------------------------------------
VEHICLE AND RELATED REVENUES:
Income from Parts & Accessories $ 853,881
- ------------------------------------------------------------------------------
853,881
- ------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Parts & Accessories Sold 582,117
- ------------------------------------------------------------------------------
582,117
- ------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE
RELATED ACTIVITIES 271,764
- ------------------------------------------------------------------------------
OPERATING EXPENSES 432,006
- ------------------------------------------------------------------------------
LOSS FROM OPERATIONS (160,242)
- ------------------------------------------------------------------------------
OTHER EXPENSE (INCOME):
Interest Expense 23,728
Other Income (6,412)
- -----------------------------------------------------------------------------
17,316
- -----------------------------------------------------------------------------
NET LOSS $ (177,558)
- -----------------------------------------------------------------------------
34
<PAGE>
ECKLER INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Period January 1, 1997
to January 28, 1997
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (177,558)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 37,332
Cash provided by (used for):
Accounts receivable (9,325)
Inventory (113,614)
Prepaid expenses 56,229
Accounts payable 125,680
Accrued expenses 637
- -------------------------------------------------------------------------------
Net cash used in operating activities (80,619)
- -------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (21,911)
Increase in other assets (24,687)
- -------------------------------------------------------------------------------
Net cash used in investing activities (46,598)
- -------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable (14,136)
Proceeds from issuance of notes payable 10,750
- -------------------------------------------------------------------------------
Net cash used in financing activities (3,386)
- -------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (130,603)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 241,652
- ------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 111,049
- ------------------------------------------------------------------------------
35
<PAGE>
<TABLE>
<CAPTION>
ECKLER INDUSTRIES, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C>
VEHICLE AND RELATED REVENUES:
Income from Parts & Accessories $ 3,273,125
- --------------------------------------------------------------------------------------------------------------
3,273,125
- --------------------------------------------------------------------------------------------------------------
COST OF VEHICLE AND VEHICLE RELATED REVENUES:
Cost of Parts & Accessories Sold 2,142,041
- --------------------------------------------------------------------------------------------------------------
2,142,041
- --------------------------------------------------------------------------------------------------------------
NET REVENUES FROM VEHICLE SALES AND VEHICLE RELATED ACTIVITIES 1,131,084
- --------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES 1,301,222
- --------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (170,138)
- ---------------------------------------------------------------------------------------------------------------
OTHER EXPENSE (INCOME):
Interest Expense 81,215
Other Income (33,237)
- --------------------------------------------------------------------------------------------------------------
47,978
- --------------------------------------------------------------------------------------------------------------
LOSS BEFORE INCOME TAX BENEFIT (218,116)
BENEFIT FROM INCOME TAXES 77,500
- -------------------------------------------------------------------------------------------------------------
NET LOSS $ (140,616)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
ECKLER INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
- -------------------------------------------------------------------------------
Three Months Ended
March 31, 1996
- -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (140,616)
Adjustments to reconcile net loss to
net cash used in operating activities:
Deferred income taxes (62,400)
Issuance of common stock for consulting fees 27,125
Loss on disposal of fixed assets 517
Depreciation and amortization 59,207
Cash provided by (used for):
Accounts receivable (37,993)
Inventory (558,064)
Prepaid expenses (838,774)
Accounts payable 1,225,607
Accrued expenses 49,535
- ------------------------------------------------------------------------------
Net cash used in operating activities (275,856)
- ------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (17,107)
Proceeds of sale of property and equipment 4,350
Decrease in other assets 24,800
- -----------------------------------------------------------------------------
Net cash provided by investing activities 12,043
- -----------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable (131,910)
Payments on capital leases (11,869)
- ------------------------------------------------------------------------------
Net cash used in financing activities (143,779)
- ------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (407,592)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 541,991
- -----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 134,399
- -----------------------------------------------------------------------------
37
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING ANALYSIS OF THE COMPANY'S FINANCIAL CONDITION AS OF MARCH
31, 1997 AND THE COMPANY'S RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1996 SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
BACKGROUND
Smart Choice Automotive Group, Inc. (the "Company"), formerly named "Eckler
Industries, Inc.", operates a network of self-financed used vehicle dealerships
in Florida and underwrites, finances, and services retail installment contracts
generated from the sale of used cars by its dealerships. The Company also
operates automobile dealers training and insurance divisions as well as
Eckler's, one of the largest suppliers of Corvette parts and accessories in the
world. On January 28, 1997, pursuant to an Agreement and Plan of Merger by and
among Eckler Industries, Inc. ("EII"), Eckler Acquisition Corporation, Ralph H.
Eckler, Smart Choice Holdings, Inc. ("SCHI"), Thomas E. Conlan and Gerald C.
Parker, dated December 30, 1996 (the "Agreement"), EII acquired all of the
issued and outstanding shares of common stock of SCHI in exchange for 2,927,939
shares of EII Class A and 1,576,324.5 shares of EII Class B, common stock. Under
the terms of the Agreement, the shareholders of SCHI obtained approximately 64%
of the voting rights of EII. Although EII is the parent of SCHI following the
transaction, the transaction was accounted for as a purchase of EII by SCHI (a
reverse acquisition in which SCHI is considered the acquirer for accounting
purposes), since the shareholders of SCHI obtained a majority of the voting
rights in EII as a result of the transaction. Accordingly, the financial
statements of the Company for the periods prior to January 28, 1997 are those of
SCHI, the assets and liabilities of EII are recorded at their estimated fair
values and the accounts of EII are included in the consolidated financial
statements from the date of acquisition (January 28, 1997).
SCHI was incorporated on June 21, 1996 and was a development stage corporation
prior to January 28, 1997. On August 16, 1996, SCHI acquired the stock of First
Choice Auto Finance, Inc. ("FCAF"). On January 28, 1997, in addition to the
acquisition of EII, SCHI acquired the stock of Florida Finance Group, Inc.
("FFG"), Dealer Insurance Services, Inc. ("DIS"), and Dealer Development
Services, Inc. ("DDS"). FFG underwrites, finances and services automobile retail
installment contracts and was based in St. Petersburg, Florida prior to moving
to the Company headquarters in Titusville, Florida. FCAF was incorporated on
March 22, 1994 and had no significant operations or assets until it acquired the
assets of Suncoast Auto Brokers, Inc. ("SAB"), and Suncoast Auto Brokers
Enterprises, Inc. ("SABE") on January 28, 1997. FCAF, based at the Company
headquarters in Titusville, Florida, now operates the three used vehicle lots in
St. Petersburg and Tampa, previously operated by SAB and SABE. DIS is based in
Tampa, Florida and provides insurance services for automobile dealers. DDS is
based in Tampa and provides consulting services and training programs to
automobile dealers. The assets and liabilities of FFG, FCAF, DIS and DDS are
recorded at their estimated fair values and their accounts are included in the
consolidated financial statements from the date of acquisition (January 28,
1997).
38
<PAGE>
On February 12, 1997, the Company acquired the stock of Liberty Finance Company
("Liberty"). On the same date, FCAF acquired the stock of Wholesale
Acquisitions, Inc. ("WA"), and Team Automobile Sales and Finance, Inc. ("Team").
Liberty underwrites, finances and services automobile retail service contracts
and was based in Orlando, Florida prior to moving to the Company headquarters in
Titusville, Florida. WA and Team operate five self-financed used vehicle lots in
Orlando, Florida. The assets of Liberty, WA, and Team are recorded at their
estimated fair values and their accounts are included in the consolidated
financial statements from the date of acquisition (February 12, 1997).
On February 14, 1997, FCAF acquired the assets of Palm Beach Finance and
Mortgage Company ("PBF") and Two Two Five North Military Corp. d/b/a Miracle
Mile Motors ("MMM"). FFG services the receivables purchased from PBF, and FCAF
operates the used vehicle lot previously operated by MMM located in West Palm
Beach, Florida. The assets of PBF and MMM are recorded at their estimated fair
values and their accounts are included in the consolidated financial statements
from the date of acquisition (February 14, 1997).
RESULTS OF OPERATIONS
The following table sets forth revenues and expenses in aggregate
dollars and as a percentage of total revenue for the Company and its
predecessors, EII, FFG and affiliates, Liberty and affiliates, and PBF and
affiliate, for the three months ended March 31, 1997 and 1996. As a result of
the acquisitions discussed above, and the related differences in cost basis of
the assets and liabilities of the Company after the acquisitions and the cost
bases of the predecessors, the results of operations for the past two years are
not comparable. Such lack of comparability is explained in the discussion below.
<TABLE>
<CAPTION>
1997 1996
---------------------------------------------- -----------------
(Dollars in Thousands)
Company(1) Predecessors(2) Combined(3) Combined(3) Combined(4)
<S> <C> <C> <C> <C> <C>
Vehicle and Related Revenues $ 8,069 $ 4,569 $ 12,638 100.0% $ 14,452 100.00%
Cost of Vehicle and Related Revenues 6,015 3,444 9,459 74.85% 10,079 69.74%
----- ----- ----- ------- ------ ------
Net Revenues from Vehicles Sales and
Vehicle Related Revenues 2,053 1,125 3,178 25.15% 4,373 30.26%
Operating Expenses 8,207 1,226 9,433 74.64% 3,277 22.68%
----- ----- ------- ------ ----- ------
(6,154) (101) (6,255) -49.49% 1,096 7.58%
Interest Expense 693 268 961 7.60% 503 3.48%
Other Expense (Income) 55 (6) 49 0.39% (42) -0.29%
----- ----- ----- ------ ------ ------
Net Income (Loss) $ (6,902) $ (363) $ (7,265) -57.49% $ 635 4.39%
===== ===== ===== ====== ====== ======
</TABLE>
(1) The financial data for 1997 was derived from the unaudited consolidated
financial statements of the Company which includes the unaudited combined
financial statements of the four predecessors from the date of acquisition
to March 31, 1997. Because the financial data for 1997 includes data of the
Company and its predecessors which are presented on different cost bases,
such data are not comparable to the financial data for 1996.
(2) The financial data for 1997 was derived from the unaudited combined
financial statements included herein of the four predecessors from January
1, 1997 to the date of acquisition.
39
<PAGE>
(3) The combined financial data is the sum of the actual results for the
Company and its predecessors.
(4) The financial data for 1996 is the sum of the actual results of the four
predecessors included herein. Because the financial data of the
predecessors are presented on cost bases different from those of the
Company after the acquisitions, the 1996 data is not comparable to the
financial data for 1997.
COMPARISON OF COMBINED THREE MONTHS ENDED MARCH 31, 1997 TO COMBINED THREE
MONTHS ENDED MARCH 31, 1996.
VEHICLE AND RELATED REVENUES. The Company (combined with its predecessors)
experienced a 12.6% decrease in revenues for the three months ended March 31,
1997 compared to the combined results of its predecessors for the same period in
1996. The decrease resulted primarily from lower used vehicle sales. Due to the
merger, the floorplan financing arrangements for the predecessors had to be
restructured, and the Company's access to floorplan financing was curtailed for
approximately forty-five days, resulting in reduced levels of inventory
available for sale, which resulted in decreased sales. The Company was unable to
replenish inventory and therefore sales decreased accordingly.
COST OF VEHICLE AND RELATED REVENUES. Cost of vehicle and related
revenues was $9,459,654 for the three months ended March 31, 1997 compared to
$10,078,761 for the predecessors during the same period in 1996, a decrease of
$617,107. The decrease was primarily the result of two major elements. Cost of
used vehicles sold decreased by $1,055,461 due to the decrease in sales
discussed above. Provision for credit losses increased $853,324 due to
management's assessment of the risk associated with the increase in finance
receivables.
OPERATING EXPENSES. Operating expenses consist of selling and
marketing, general and administrative expenses, and depreciation and
amortization. Operating expenses were $9,433,537 for the three months ended
March 31, 1997 compared to $3,276,646 for the predecessors for the same period
in 1996 an increase of 188%. This increase was primarily due to recognition of
compensation expense of $3,125,877 from the issuance of stock options in the
first quarter to attract key management personnel. In addition, the Company
recognized expense of approximately $1,668,000 to settle various consulting
agreements and employment contracts of the predecessors. The increase also
reflects increased corporate infrastructure resulting from the merger, offset
only partially by certain decreases in costs resulting from the consolidation of
the acquired companies' management functions.
INTEREST EXPENSE. Interest expense totaled $960,617 for the three
months ended March 31, 1997 compared to $503,487 for the predecessors during the
same period in 1996, an increase of 91%. This resulted primarily from interest
on subordinated debt attributable to the merger and related acquisitions. In
addition, the Company accrued interest on a $3,500,000 note more fully discussed
in "Liquidity and Capital Resources".
40
<PAGE>
ALLOWANCE FOR CREDIT LOSSES. The allowance for credit losses on finance
receivables (the "Allowance") at the Company's used vehicle dealerships was
15.8% of the outstanding principal balance as of March 31, 1997. The following
table reflects activity in the Allowance, as well as information regarding
charge off activity, on finance receivables originated at the Company
dealerships for the three months ended March 31, 1997.
Three Months Ended
March 31, 1997
------------------
ALLOWANCE ACTIVITY:
Balance, beginning of period $ 2,979,645
Provision for credit losses 1,049,680
Net charge offs (292,813)
-----------------
Balance, end of period $ 3,736,512
=================
CHARGE OFF ACTIVITY:
Principal Balances:
Collateral Repossessed $ (258,432)
Other (36,637)
-----------------
Total Principal Balances (295,069)
Recoveries, net 2,256
-----------------
Net Charge Offs $ (292,813)
=================
Analysis of the portfolio delinquencies is considered in evaluating the adequacy
of the Allowance. The following table reflects the principal balances of current
and delinquent finance receivables as a percentage of total outstanding finance
receivable principal balances as of March 31, 1997.
March 31, 1997
--------------
AGING PERCENTAGES:
Principal balances current 88.7%
Principal balances 31 to 60 days 6.3%
Principal balances over 60 days 5.0%
41
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES.
The following table sets forth the major components of the increase
(decrease) in the Company's cash and cash equivalents:
<TABLE>
<CAPTION>
1997 1996
------------------------------------- -------------
COMPANY (1) PREDECESSORS (2) COMBINED (3) COMBINED (4)
------- ------------ -------- --------
<S> <C> <C> <C> <C>
Net cash provided by operating activities $ 471 $ 453 $ 924 $ 506
Net cash used in investing activities (5,026) (250) (5,276) (2,064)
Net cash provided by (used in)
financing activities 6,212 (502) 5,710 1,356
-------- ---- ------ -----
Net increase (decrease) in cash and
cash equivalents $ 1,657 $ (299) $ 1,358 $ (202)
======== ==== ====== =====
</TABLE>
(1) The financial data for 1997 was derived from the unaudited consolidated
financial statements of the Company which includes the unaudited
combined financial statement of the four predecessors from the date of
acquisition to March 31, 1997. Because the financial data for 1997
includes data of the Company and its predecessors which are presented
on different cost bases, such data are not comparable to the financial
data for 1996.
(2) The financial data for 1997 was derived from the unaudited combined
financial statements included herein of the four predecessors from
January 1, 1997 to the date of acquisition.
(3) The combined financial data is the sum of the actual results for the
Company and its predecessors.
(4) The financial data for 1996 is the sum of the actual results of the
four predecessors included herein. Because the financial data of the
predecessors are presented on costs bases different from those of the
Company after the acquisitions, the 1996 data is not comparable to the
financial data for 1997.
The Company requires capital to support increases in its finance receivables,
and vehicle inventory, parts and accessories inventory, property and equipment,
and working capital for general corporate purposes. Funding sources available to
the Company include operating cash flow, third party investors, financial
institution borrowings and borrowings against finance receivables.
Net cash provided by operating activities of $924,562 in 1997 is primarily due
to increases in stock option compensation, accounts payable, accrued expenses,
other liabilities and provision for credit losses. The cash provided by
operating activities of the predecessor companies of $506,879 in 1996 can be
attributed to increases in net earnings, inventory, provision for credit losses
and accounts payable.
Net cash used in investing activities of $5,275,679 in 1997 is the result of the
increase in finance receivables, use of cash in the acquisition of the
predecessors, issuance of notes receivable and deposits paid. The cash used in
investing activities of the predecessor companies of $2,064,139 in 1996 is
primarily due to increases in the finance receivables.
Net cash provided by financing activities of $5,710,009 in 1997 is the result of
borrowings from Sirrom Capital Corporation ("Sirrom"), notes payable on finance
receivables, preferred stock and convertible debentures. Net cash provided by
financing activities of the predecessor companies of
42
<PAGE>
$1,355,879 in 1996 is primarily due to the issuance of notes payable and notes
payable on finance receivables.
Management of the Company has developed strategies to meet future liquidity
needs. These strategies include: (1) increasing the Company's revolving facility
with Finova Capital Corporation ("Finova") from $20 million to $35 million (2)
obtaining additional funding on May 13, 1997, from Sirrom in the amount of
$4,000,000, and (3) tighter control on overall costs. The Company's management
believes that these actions, in addition to the working capital position at
March 31, 1997, will allow the Company to meet its future liquidity needs.
REVOLVING CREDIT FACILITY. The revolving credit facility (the
"Revolving Facility") with Finova has a maximum commitment of up to $35.0
million. Under the Revolving Facility, the Company may borrow up to 70.0% of the
principal balance of eligible finance contracts. The Revolving Facility expires
on December 31, 1999, at which time the Company has the option to renew the
Revolving Facility. The Revolving Facility is secured by substantially all of
the Company's assets. As of March 31, 1997, the Company's borrowing capacity
under the Revolving Facility was approximately $8.7 million and the aggregate
principal amount outstanding under the Revolving Facility was $8.7 million. The
Revolving Facility bears interest at the governing rate (currently the prime
rate) plus 3%.
CONVERTIBLE NOTE. The Company has outstanding $7.5 million in
convertible notes from Sirrom. These notes are convertible into common stock at
varying amounts per share.
NOTES PAYABLE. EII has a $1.0 million line of credit with a bank that
had an outstanding balance of approximately $344,000 at March 31,1997. Advances
on the credit line carry an interest rate of prime plus 1.5% and are
collateralized by accounts receivable and inventory. Effective April 16, 1997,
modifications to the terms of the line of credit agreement with the lender were
effected whereby no further advances under the line of credit were to be made
and EII would begin making principal reductions according to a schedule provided
by the bank. This schedule calls for a principal reduction of $50,000 on or
before May 30, 1997, with a second principal reduction of $100,000 on or before
June 30, 1997, and a third principal reduction of $100,000 on or before July 30,
1997 and payment of all remaining amounts due under the line of credit on or
before August 30, 1997.
MORTGAGE LOAN. EII also has a long term mortgage payable to a bank with
a current principal balance of approximately $2.3 million. The mortgage loan is
collateralized by substantially all property and equipment of EII and guaranteed
by a stockholder of the Company. Effective April 16, 1997, modifications to the
terms of the original mortgage loan agreement with the lender were completed.
Under the modified mortgage loan agreement, the original payment schedule
remains but the maturity date is modified to provide for a maturity date of July
1, 1998 rather than September 30, 1999.
ACQUISITION DEBT. On the closing of the acquisitions during the three
months ended March 31, 1997, the Company incurred debt to certain stockholders
of the acquired companies. The payable balance as of March 31, 1997 for the
acquisition debt totaled $4.4 million. The notes mature at the earlier of
December 31, 1997 or when the Company successfully completes a secondary
offering of its common stock to the public.
43
<PAGE>
SEASONALITY. Historically, the Company's predecessors, except for EII,
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 its
customers receive income tax refunds during the first half of the year, which
are a primary source of down payments on used car purchases.
EII's business is also subject to seasonal fluctuations. Historically,
EII's business has realized a higher portion 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 EII 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.
INFLATION. Increases in inflation generally result in higher interest
rates. Higher interest rates on the Company's borrowings would decrease the
profitability of the Company's existing portfolio. The Company will seek to
limit this risk, to the extent market conditions permit, for the Company's
finance receivables, either by increasing the interest rate charged, or the
profit margin on the cars sold. To date, inflation has not had a significant
impact on the Company's operations.
44
<PAGE>
PART II
SMART CHOICE AUTOMTOVE GROUP, INC.
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
On March 21, 1997, the Company held its 1997 annual meeting of
shareholders (the "Annual Meeting"). At the Annual Meeting directors were
elected as set forth below and the shareholders of the Company approved the
following matters by the votes indicated:
1. Approval of changing the Company's name to "Smart Choice
Automotive Group, Inc." For - 6,679,245; against - 16,675;
abstain - 6,910.
2. Approval of an amendment to the Company's Articles of
Incorporation to effect a recapitalization. For - 6,627,076;
against - 46,930; abstain - 28,824; Class Votes: Class A
Common Stock, For - 3,091,547; against 46,930; abstain -
7,557; Class B Common Stock, For - 1,767,764.5; against -
none; abstain - none.
3. Appointment of BDO Seidman, LLP as independent certified
public accountants for the Company. For - 6,678,253;
against - 10,500; abstain - 14,077.
4. The following persons were elected to serve as directors of
the Company:
WITHHOLD
FOR AUTHORITY
--- ---------
Robert J. Abrahams 6,692,640 10,190
David E. Bumgardner 6,696,140 6,690
Ralph H. Eckler 6,695,140 7,690
Gary R. Smith 6,696,130 6,700
Donald A. Wojnowski, Jr. 6,696,140 6,690
Joseph Yossifon 6,692,630 10,200
45
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT EXHIBIT DESCRIPTION FILING STATUS-INCORPORATED BY
NO. REFERENCE TO
-- ------------
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of the Exhibit 3.1 to Form SB-2 Registration
Company. Statement, filed on September 1, 1995,
File No. 33-96520-A
3.2 Articles of Amendment to Articles of Incorporation of the Exhibit 3.2 to Form 10-Q, filed May 20, 1997,
Company. File No. 1-14082.
4.1 First Amended and Restated Loan and Security Agreement Exhibit 4.1 to Form 10-Q, filed May 20, 1997,
between Florida Finance Group, Inc. ("FFG") and Finova File No. 1-14082.
Capital Corporation ("Finova"), dated February 4, 1997.
4.2 Warrant to Purchase Common Stock of the Company between Exhibit 4.2 to Form 10-Q, filed May 20, 1997,
the Company and Finova, dated January 13, 1997. File No. 1-14082.
4.3 Sixth Amended and Restated Promissory Note dated May 7, Exhibit 4.3 to Form 10-Q, filed May 20, 1997,
1997, $35,000,000 principal amount, FFG and Liberty File No. 1-14082.
Finance Company, makers, Finova, payee.
4.4 First Amended and Restated Schedule to Amended and Exhibit 4.4 to Form 10-Q, filed May 20, 1997,
Restated Loan and Security Agreement, FFG, borrower, File No. 1-14082.
Finova, lender, dated April 22, 1997.
4.5 Guaranty to Finova from the Company dated January 13, Exhibit 4.5 to Form 10-Q, filed May 20, 1997,
1997. File No. 1-14082.
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
4.6 Security Agreement between Manheim Automotive Financial Not filed pursuant to Item
Services, Inc. and First Choice Auto Finance, Inc., dated 601(b)(4)(iii) of Regulation S-K. The
March 21, 1997, and related documents. Company agrees to furnish a copy to the
commission on request.
4.7 Loan Agreement dated March 13, 1997 between the Company Not filed pursuant to Item
and Sirrom Capital Corporation ("Sirrom") and related 601(b)(4)(iii) of Regulation S-K. The
documents. Company agrees to furnish a copy to the
commission on request.
4.8 Loan Agreement dated May 13, 1997 between the Company and Not filed pursuant to Item
Sirrom and related documents. 601(b)(4)(iii) of Regulation S-K. The
Company agrees to furnish a copy to the
commission on request.
4.9 Loan Agreement dated May 13, 1997 between the Company and Not filed pursuant to Item
Bankers Credit Insurance Services, Inc., and related 601(b)(4)(iii) of Regulation S-K. The
documents. Company agrees to furnish a copy to the
commission on request.
4.10 12% Convertible Debentures of Smart Choice Holdings, Inc. Not filed pursuant to Item
("SCHI") and related documents. 601(b)(4)(iii) of Regulation S-K. The
Company agrees to furnish a copy to the
commission on request.
4.11 Promissory Note dated February 12, 1997 by the Company in Not filed pursuant to Item
favor of R.C. Hill, II. 601(b)(4)(iii) of Regulation S-K. The
Company agrees to furnish a copy to the
commission on request.
10.1 Stock Purchase Agreement dated January 28, 1997 between Exhibit 10.1 to Form 10-Q, filed May 20, 1997,
SCHI and Gary Smith. File No. 1-14082.
10.2 Promissory Note dated January 28, 1997, First Choice Auto Exhibit 10.2 Form 10-Q, filed May 20, 1997,
Finance, Inc. ("FCAF"), maker, Gary Smith, payee, in the File No. 1-14082.
principal amount of $1,031,008.
10.3 Asset Purchase Agreement dated January 28, 1997 between Exhibit 10.3 to Form 10-Q, filed May 20, 1997,
FCAF and Gary Smith. File No. 1-14082.
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.4 Asset Purchase Agreement dated December 19, 1996 among Exhibit to Form 10-Q, filed May 20, 1997,
FCAF, Jack Winters Enterprises, Inc., Jack Winters, and File No. 1-14082.
F. Craig Clemens.
10.5 Addendum to Asset Purchase Agreement dated March 24, 1997 Exhibit to Form 10-Q, filed May 20, 1997,
among FCAF, Jack Winters Enterprises, Inc., Jack Winters, File No. 1-14082.
and F. Craig Clemens.
10.6 Merger Agreement dated February 12, 1997 among the Exhibit 10.1 to Form 8-K of the Company
Company, R.C. Hill Acquisition, Inc., and R.C. Hill, II. dated February 12, 1997 filed with the
Commission on February 26, 1997 (the
"2/12/97 8-K").
10.7 Stock Purchase Agreement dated February 12, 1997 among Exhibit 10.10 to the 2/12/97 8-K
the Company, FCAF, and R.C. Hill, II.
10.8 Corporate Guaranty of the Company in favor of R.C. Hill, Exhibit 10.12 to the 2/12/97 8-K
II, dated February 12, 1997.
10.9 Registration Rights Agreement between the Company and Exhibit 4.1 to the 2/12/97 8-K
R.C. Hill, II, dated February 12, 1997.
10.10 Asset Purchase Agreement among FCAF, Palm Beach Finance Exhibit 10.17 to the 2/12/97 8-K
and Mortgage Company ("PBF"), Two Two Five North Military
Corp. ("225"), and David Bumgardner, and Amendment
thereto.
10.11 Loan and Security Agreement between 225 and FCAF dated Exhibit 10.18 to the 2/12/97 8-K
February 14, 1997.
10.12 9% Secured Convertible Note of FCAF to 225 and PBF. Exhibit 10.20 to the 2/12/97 8-K
10.13 9% Convertible Debenture of SCHI to PBF. Exhibit 10.21 to the 2/12/97 8-K
10.14 Executive Employment Agreement between the Company and Exhibit 10.14 to Form 10-Q, filed May 20, 1997,
Fred E. Whaley. File No. 1-14082.
10.15 Executive Employment Agreement between the Company and Exhibit 10.15 to Form 10-Q, filed May 20, 1997,
Gary Smith. File No. 1-14082.
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.16 Executive Employment Agreement between the Company and Exhibit 10.16 to Form 10-Q, filed May 20, 1997,
Robert Abrahams. File No. 1-14082.
10.17 Merger Agreement dated December 30, 1996 between the Exhibit 10.1 to the Form 8-K of the Company
Company, SCHI, et al. dated January 28, 1997, filed with the
Commission on February 12, 1997.
10.18 Convertible Senior Promissory Note dated March 31, 1997, Exhibit 10.18 to Form 10-Q, filed May 20, 1997,
the Company, maker, Sirrom, payee. File No. 1-14082.
10.19 Convertible Senior Promissory Note dated May 13, 1997, Exhibit 10.19 to Form 10-Q, filed May 20, 1997,
the Company, maker, Sirrom, payee. File No. 1-14082.
10.20 Amended and restated Registration Rights Agreement Exhibit 10.20 to Form 10-Q, filed May 20, 1997,
between the Company and Sirrom, dated May 13, 1997. File No. 1-14082.
27 Financial Data Schedules
</TABLE>
(B) REPORTS ON FORM 8-K
A CURRENT REPORT ON FORM 8-K ITEM 5 WAS FILED BY
SMART CHOICE AUTOMOTIVE GROUP, INC. ON FEBRUARY 12,
1997.
A CURRENT REPORT ON FORM 8-K ITEM 5 WAS FILED BY
SMART CHOICE AUTOMOTIVE GROUP, INC. ON FEBRUARY 26,
1997.
A CURRENT REPORT ON FORM 8-K/A ITEM 7 WAS FILED BY
SMART CHOICE AUTOMOTIVE GROUP, INC. ON APRIL 14,
1997.
49
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized on May 22, 1998.
SMART CHOICE AUTOMOTIVE GROUP, INC.
By: /S/ GARY R. SMITH
-----------------
Gary R. Smith
President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signatures Title Date
---------- ----- -----
/S/ GARY R. SMITH President, Chief Executive May 22, 1998
- ------------------------ Officer and Director
Gary R. Smith
/S/ JOSEPH E. MOHR Executive Vice President, May 22, 1998
- ----------------------- and (Chief Financial Officer)
Joseph E. Mohr
50
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXH
- ---
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation of the Exhibit 3.1 to Form SB-2 Registration
Company. Statement, filed on September 1, 1995,
File No. 33-96520-A
3.2 Articles of Amendment to Articles of Incorporation of the Exhibit 3.2 to Form 10-Q, filed May 20, 1997
Company. File No. 1-14082
4.1 First Amended and Restated Loan and Security Agreement Exhibit 4.1 to Form 10-Q, filed May 10, 1997
between Florida Finance Group, Inc. ("FFG") and Finova File No. 1-14082
Capital Corporation ("Finova"), dated February 4, 1997.
4.2 Warrant to Purchase Common Stock of the Company between Exhbiit 4.2 to Form 10-Q, filed May 20, 1997
the Company and Finova, dated January 13, 1997. File No. 1-14082
4.3 Sixth Amended and Restated Promissory Note dated May 7, Exhibit 4.3 to Form 10-Q, filed May 20, 1997,
1997, $35,000,000 principal amount, FFG and Liberty File No. 1-14082
Finance Company, makers, Finova, payee.
4.4 First Amended and Restated Schedule to Amended and Exhibit 4.4 to Form 10-Q, filed May 20, 1997,
Restated Loan and Security Agreement, FFG, borrower, File No. 1-14082
Finova, lender, dated April 22, 1997.
4.5 Guaranty to Finova from the Company dated January 13, Exhibit 4.5 to Form 10-Q, filed May 20, 1997,
1997. File No. 1-14082
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
4.6 Security Agreement between Manheim Automotive Financial Not filed pursuant to Item
Services, Inc. and First Choice Auto Finance, Inc., dated 601(b)(4)(iii) of Regulation S-K. The
March 21, 1997, and related documents. Company agrees to furnish a copy to the
commission on request.
4.7 Loan Agreement dated March 13, 1997 between the Company Not filed pursuant to Item
and Sirrom Capital Corporation ("Sirrom") and related 601(b)(4)(iii) of Regulation S-K. The
documents. Company agrees to furnish a copy to the
commission on request.
4.8 Loan Agreement dated May 13, 1997 between the Company and Not filed pursuant to Item
Sirrom and related documents. 601(b)(4)(iii) of Regulation S-K. The
Company agrees to furnish a copy to the
commission on request.
4.9 Loan Agreement dated May 13, 1997 between the Company and Not filed pursuant to Item
Bankers Credit Insurance Services, Inc., and related 601(b)(4)(iii) of Regulation S-K. The
documents. Company agrees to furnish a copy to the
commission on request.
4.10 12% Convertible Debentures of Smart Choice Holdings, Inc. Not filed pursuant to Item
("SCHI") and related documents. 601(b)(4)(iii) of Regulation S-K. The
Company agrees to furnish a copy to the
commission on request.
4.11 Promissory Note dated February 12, 1997 by the Company in Not filed pursuant to Item
favor of R.C. Hill, II. 601(b)(4)(iii) of Regulation S-K. The
Company agrees to furnish a copy to the
commission on request.
10.1 Stock Purchase Agreement dated January 28, 1997 between Exhibit 10.1 to Form 10-Q, filed May 20, 1997,
SCHI and Gary Smith. File No. 1-14082
10.2 Promissory Note dated January 28, 1997, First Choice Auto Exhibit 10.2 to Form 10-Q, filed May 20, 1997,
Finance, Inc. ("FCAF"), maker, Gary Smith, payee, in the File No. 1-14082
principal amount of $1,031,008.
10.3 Asset Purchase Agreement dated January 28, 1997 between Exhibit 10.3 to Form 10-Q, filed May 20, 1997,
FCAF and Gary Smith. File No. 1-14082
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.4 Asset Purchase Agreement dated December 19, 1996 among Exhibit 10.4 to Form 10-Q, filed May 20, 1997,
FCAF, Jack Winters Enterprises, Inc., Jack Winters, and File No. 1-14082
F. Craig Clemens.
10.5 Addendum to Asset Purchase Agreement dated March 24, 1997 Exhibit 10.5 to Form 10-Q, filed May 20, 1997,
among FCAF, Jack Winters Enterprises, Inc., Jack Winters, File No. 1-14082
and F. Craig Clemens.
10.6 Merger Agreement dated February 12, 1997 among the Exhibit 10.1 to Form 8-K of the Company
Company, R.C. Hill Acquisition, Inc., and R.C. Hill, II. dated February 12, 1997 filed with the
Commission on February 26, 1997 (the
"2/12/97 8-K").
10.7 Stock Purchase Agreement dated February 12, 1997 among Exhibit 10.10 to the 2/12/97 8-K
the Company, FCAF, and R.C. Hill, II.
10.8 Corporate Guaranty of the Company in favor of R.C. Hill, Exhibit 10.12 to the 2/12/97 8-K
II, dated February 12, 1997.
10.9 Registration Rights Agreement between the Company and Exhibit 4.1 to the 2/12/97 8-K
R.C. Hill, II, dated February 12, 1997.
10.10 Asset Purchase Agreement among FCAF, Palm Beach Finance Exhibit 10.17 to the 2/12/97 8-K
and Mortgage Company ("PBF"), Two Two Five North Military
Corp. ("225"), and David Bumgardner, and Amendment
thereto.
10.11 Loan and Security Agreement between 225 and FCAF dated Exhibit 10.18 to the 2/12/97 8-K
February 14, 1997.
10.12 9% Secured Convertible Note of FCAF to 225 and PBF. Exhibit 10.20 to the 2/12/97 8-K
10.13 9% Convertible Debenture of SCHI to PBF. Exhibit 10.21 to the 2/12/97 8-K
10.14 Executive Employment Agreement between the Company and Exhibit 10.14 to Form 10-Q, filed May 20, 1997,
Fred E. Whaley. File No. 1-14082
10.15 Executive Employment Agreement between the Company and Exhibit 10.15 to Form 10-Q, filed May 20, 1997,
Gary Smith. File No. 1-14082
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.16 Executive Employment Agreement between the Company and Exhibit 10.16 to Form 10-Q, filed May 20, 1997,
Robert Abrahams. File No. 1-14082
10.17 Merger Agreement dated December 30, 1996 between the Exhibit 10.1 to the Form 8-K of the Company
Company, SCHI, et al. dated January 28, 1997, filed with the
Commission on February 12, 1997.
10.18 Convertible Senior Promissory Note dated March 31, 1997, Exhibit 10.18 to Form 10-Q, filed May 20, 1997,
the Company, maker, Sirrom, payee. File No. 1-14082
10.19 Convertible Senior Promissory Note dated May 13, 1997, Exhibit 10.19 to Form 10-Q, filed May 20, 1997,
the Company, maker, Sirrom, payee. File No. 1-14082
10.20 Amended and restated Registration Rights Agreement Exhibit 10.20 to Form 10-Q, filed May 20, 1997,
between the Company and Sirrom, dated May 13, 1997. File No. 1-14082
27 Financial Data Schedules
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FORM 10-Q FOR THE QUARTERLY PERIOD ENDING MARCH 31, 1997
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,657
<SECURITIES> 0
<RECEIVABLES> 23,710
<ALLOWANCES> 3,737
<INVENTORY> 4,087
<CURRENT-ASSETS> 26,465
<PP&E> 8,428
<DEPRECIATION> 4,433
<TOTAL-ASSETS> 50,734
<CURRENT-LIABILITIES> 5,406
<BONDS> 34,440
0
4
<COMMON> 9
<OTHER-SE> 9,401
<TOTAL-LIABILITY-AND-EQUITY> 50,734
<SALES> 8,069
<TOTAL-REVENUES> 8,069
<CGS> 6,015
<TOTAL-COSTS> 6,015
<OTHER-EXPENSES> 8,208
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 692
<INCOME-PRETAX> (6,902)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,902)
<EPS-PRIMARY> (0.87)
<EPS-DILUTED> (0.87)
</TABLE>
