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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 29, 1997
REGENCY AFFILIATES, INC.
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(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
Delaware 1-7949 72-0888772
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(State or Other Jurisdiction of Incor- (Commission File No.) (IRS Employer
poration or Organization) Identification Number)
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3340 S.E. Federal Hwy., Suite 210 34997
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(Address of Principal Executive Offices) (Zip Code)
10842 Old Mill Rd., #5B, Omaha, NB 68154
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(Address of Administrative Offices) (Zip Code)
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<S> <C>
Registrant's Telephone Number (executive office), including Area Code: (561) 398-0082
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Registrant's Telephone Number (administrative office), including Area Code: (402) 330-8750
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The accompanying pro forma consolidated balance sheet as of
December 31, 1996, and the related consolidated pro forma statement of
operations for the year then ended include the combined results of Regency
Affiliates, Inc. (the "Company") and Rustic Crafts Co., Inc. ("Rustic") as
required by Item 7(b).
On March 17, 1997, the Registrant purchased substantially all the
assets of Rustic Crafts Co., Inc., a Pennsylvania corporation ("Rustic"),
through a new wholly-owned subsidiary, Rustic Crafts International, Inc.
("RCI"), a Delaware corporation. The purchase price for the acquisition
consisted of a cash payment of $1,100,000 plus the issuance of 100,000 shares of
the common stock, $0.40 par value, of the Registrant. In addition, the Company
paid approximately $201,000 to discharge bank debt of the Seller, and the
Company assumed trade payable obligations of the Seller. Prior to the
acquisition, selling persons had no relationship with the Company, any of its
affiliates, any director or officer of the Company, or any associate of such
director or officer. Funds used by the Company for the acquisition were taken
from the Company's existing bank deposits.
Rustic manufactured and sold specialty electric fireplaces, decorative
wood and marble fireplace mantels, fireplace accessories and other home
furnishings. In connection with the purchase, RCI acquired all of the inventory,
plant, equipment, and other fixed assets of the Seller. The Company intends to
continue using the assets to operate the acquired business.
The pro forma consolidated balance sheet shows the financial position
of the Company and Rustic assuming the transactions had occurred on that date.
The balance sheet reflects the fair market value of the assets of Rustic and
the goodwill which results from the excess of the purchase price over the fair
market value of the assets.
The pro forma statements of operations present the financial results of
operations of the Company assuming the acquisition of Rustic was made at the
beginning of the year. The pro forma statements reflect adjustments for
depreciation and amortization resulting from valuation of assets. Adjustments
have been made to delete certain expenses associated with the former
shareholders of Rustic which the Company believes are nonrecurring expenses.
Adjustments have been made to recognize additional interest expense on funds
required to purchase Rustic and reduce the expense by virtue of the Company's
net operating loss carryforward.
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<CAPTION>
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1996
AS REPORTED RUSTIC CRAFTS ADJUSTMENTS
12/31/96 12/31/96 DEBIT CREDIT PRO FORMA
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<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and Cash
Equivalents $ 2,303,655 $ 68,173 $ $1,100,000(2) $ 1,271,828
Accounts Receivable 519,365 519,365
Inventories 485,416 485,416
Prepaid Expenses 4,415 36,261 40,676
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Total 2,308,070 1,109,215 0 1,100,000 2,317,285
INVESTMENTS
Partnership interest 8,233,731 0 8,233,731
Rental Property 50,884 0 50,884
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8,284,615 0 0 0 8,284,615
PROPERTY & 0 77,466 39,214(1) 116,680
EQUIPMENT, NET
OTHER ASSETS
Aggregate Inventory 850,000 850,000
Other 123,993 123,993
Goodwill 0 28,124 679,579(2) 39,214(1) 668,489
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973,993 28,124 679,579 39,214 1,642,482
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$11,566,678 $1,214,805 $718,793 $1,139,214 $12,361,062
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LIABILITIES & EQUITY
Current Liabilities
Notes Payable $ 0 $ 295,000 $ $ $ 295,000
Accounts Payable 79,906 263,442 343,348
Accrued Expenses 58,176 118,717 176,893
Current Maturities 0 25,300 25,300
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138,082 702,459 0 0 840,541
LONG-TERM DEBT 4,199,940 31,925 4,231,865
MINORITY INTEREST 101,110 0 101,110
SERIAL PREFERRED
STOCK 401,054 0 401,054
SHAREHOLDERS' EQUITY
Mandatory Redeemable
Serial Preferred Stock 1,052,988 0 1,052,988
Common Stock 4,549,642 1,000 1,000(2) 60,000(2) 4,609,642
Add'l. Paid in Capital 140,000 0 140,000
Readjustment from
reorganization (1,670,596) 0 (1,670,596)
Retained Earnings 2,654,458 479,421 479,421(2) 2,654,458
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6,726,492 480,421 480,421 60,000 6,786,492
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$11,566,678 $1,214,805 $480,421 $ 60,000 $12,361,062
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Pro Forma Adjustments to Balance Sheet:
(1) Increase the book value of assets acquired to their fair market value
at date of acquisition.
(2) Record purchase of assets of Rustic for $1,000,000 in cash and 100,000
shares of Common Stock, and eliminate Rustic Common Stock and retained
earnings and record goodwill for amounts paid in excess of fair market
value.
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1996
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<CAPTION>
AS REPORTED RUSTIC CRAFTS ADJUSTMENTS
12/31/96 12/31/96 DEBIT CREDIT PRO FORMA
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<S> <C> <C> <C> <C> <C>
NET SALES $ 6,100 $2,808,300 $ $ $2,814,400
COSTS AND EXPENSES 1,907,600
Cost of goods sold 87,500(1) 1,820,100
General &
Administrative 920,800 745,700 65,900(3) 159,900 1,572,500
Other 15,900 15,900
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INCOME (LOSS) FROM (914,700) 139,100 (65,900) (247,400) (594,100)
OPERATIONS
INCOME FROM EQUITY
INVESTMENT IN
PARTNERSHIP 4,268,900 4,268,900
INTEREST INCOME 74,100 74,100
INTEREST EXPENSE (404,800) (40,600) 77,000(4) (522,400)
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INCOME BEFORE INCOME TAX
EXPENSE AND MINORITY
INTEREST 3,023,500 98,500 11,100 (247,400) 3,226,500
INCOME TAX EXPENSE 226,400 31,100 27,000(5) 230,500
MINORITY INTEREST 5,400 0 5,400
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NET INCOME $ 2,802,500 $ 67,400 $ 11,100 $(274,400) $3,001,400
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NET INCOME FOR
COMMON STOCK $ 2,688,523 $2,887,500
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EARNINGS PER SHARE
Primary $ 0.24 $ 0.25
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Fully Diluted $ 0.20 $ 0.21
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Pro Forma Adjustments to Statement of Operations:
Year Ended December 31, 1996
(1) $ 87,500 Eliminate nonrecurring costs associated with expenses
allocated to Rustic by sellers.
(2) 159,900 Eliminate nonrecurring general and administrative expenses
allocated to Rustic by sellers.
(3) 65,900 Increase amortization of goodwill recorded as a result of
purchase cost in excess of fair market value. Increase
depreciation as a result of the increase of the recorded
value to reflect fair market value of fixed assets purchased
on date of acquisition.
(4) 77,000 To reflect interest expense on cash required for purchase
from January 1, 1996, to June 20, 1996, when proceeds from
borrowings were available to the Company.
(5) 27,000 Decrease income tax expense resulting from the ability of the
consolidated group to utilize the Company's net operating loss
carryforward.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
________REGENCY AFFILIATES, INC.________
(Registrant)
5/29/97 By: /s/ Pamlyn Kelly, Ph.D.
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Date
Pamlyn Kelly, Ph.D., President
