UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission file number - 000-22813
CENTERPOINT CORPORATION
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3853272
----------------------------------------------- --------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
299 PARK AVENUE, 16th FLOOR, NEW YORK, NEW YORK 10167
-----------------------------------------
(Address of principal executive offices - Zip code)
Registrant's telephone number, including area code: (212) 644-4441
Former name, former address and former fiscal year, if changed since last
report.
MOTO GUZZI CORPORATION
Indicate by checkmark 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 reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by checkmark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes No
---- ------
<PAGE>
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date.
Common stock, par value $.01 per share, 5,999,092 shares outstanding as of
November 20, 2000.
2
<PAGE>
TABLE OF CONTENTS
PAGE
Part I - Financial Information.................................................3
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS................................4
ASSETS.........................................................................4
LIABILITIES....................................................................4
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS................................5
Nine Months to September 30, 2000 and 1999.....................................6
COMPREHENSIVE INCOME/(LOSS)....................................................7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW.......................8
1. Basis of Presentation................................................10
2. Discontinued motorcycle operations...................................12
3. Execution and Delivery of Share Purchase Agreement...................13
4. Issuance of Series B Preferred Stock.................................15
5. Accumulated Other Comprehensive Income...............................16
5. Earnings/loss from continuing operations per share...................16
Management's Discussion and Analysis of Financial Condition and Results
of Operations.................................................................18
Liquidity and Financial Resources.............................................19
Part II - Other Information.................................................20
Item 1. Legal Proceedings....................................................20
Item 2. Changes in Securities................................................20
Item 3. Defaults Upon Senior Securities......................................20
Item 4. Submission of Matters to a Vote of Security Holders..................20
Item 5. Other Information....................................................20
SIGNATURES....................................................................21
CENTERPOINT CORPORATION
(MOTO GUZZI CORPORATION THROUGH SEPTEMBER 19, 2000)
Part I - Financial Information
3
<PAGE>
CENTERPOINT CORPORATION
(MOTO GUZZI CORPORATION THROUGH SEPTEMBER 19, 2000)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
<TABLE>
<CAPTION>
SEPT. 30 SEPT. 30 DEC. 31
2000 2000 1999
US$'000 LIT. M LIT. M
<S> <C> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 14,713 LIT. 32,221 LIT. 3
MARKETBALE SECURITIES 12,784 27,998 -
RECEIVABLES 3,196 7,000 196
RECEIVABLES FROM RELATED PARTIES - - 196
ESCROW RECEIVABLE 3,196 7,000 -
PREPAID EXPENSES 100 220 128
--------- --------- ----------
TOTAL CURRENT ASSETS 30,793 67,439 327
--------- --------- ----------
ESCROW RECEIVABLE IN 2007 1,084 2,375 -
--------- --------- ----------
TOTAL ASSETS $ 31,877 LIT. 69,814 LIT. 327
========= ========= ==========
LIABILITIES
ACCOUNTS PAYABLE 458 1,005 898
AMOUNTS DUE TO RELATED AND AFFILIATED PARTIES 253 556 80
PAYABLE FOR REDEMPTION OF SERIES B PREFERRED STOCK 12,350 27,044 -
ACCRUED EXPENSES AND OTHER PAYABLES 880 1,930 252
--------- --------- ----------
TOTAL CURRENT LIABILITIES 13,941 30,535 1,230
--------- --------- ----------
NET LIABILITIES OF DISCONTINUED OPERATIONS - - 11,932
ADVANCES FOR REDEEMABLE PREFERRED STOCK SUBSCRIPTION - - 2,405
SHAREHOLDERS' EQUITY/(DEFICIT) 17,936 39,279 (15,240)
COMMON STOCK, PAR VALUE $0.01 PER SHARE:
AUTHORISED 20,250,000 SHARES;
5,599,092 (1999 - 5,589,092) SHARES OUTSTANDING 49 108 100
ADDITIONAL PAID-IN CAPITAL 16,970 37,163 39,834
ACCUMULATED OTHER COMPREHENSIVE INCOME (184) (402) 133
ACCUMULATED DEFICIT 1,101 2,410 (55,307)
--------- --------- ----------
LIABILITIES & SHAREHOLDERS' DEFICIT $ 31,877 LIT. 69,814 LIT. 327
========= ========= ==========
</TABLE>
Note: The balance sheet as at December 31, 1999 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
CENTERPOINT CORPORATION
(MOTO GUZZI CORPORATION THROUGH SEPTEMBER 19, 2000)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months to September 30, 2000 and 1999
<TABLE>
<CAPTION>
SEPT. 30 SEPT. 30 SEPT. 30
2000 2000 1999
US $'000 LIRE M. LIRE M.
<S> <C> <C> <C>
INTEREST INCOME $ 49 LIT. 108 LIT. -
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (7) (16) -
INTEREST EXPENSE (5) (11) -
OTHER INCOME, NET 281 616 -
----------- --------- ----------
PROFIT FROM CONTINUING OPERATIONS 318 697 -
DISCONTINUED OPERATIONS:
LOSS FROM DISPOSED MOTORCYCLE OPERATIONS - - (3,753)
(AFTER TAX OF LIT. 514 AND LIT. 165)
GAIN ON DISPOSAL OF MOTORCYCLE OPERATIONS 30,325 66,411 -
----------- --------- ----------
NET PROFIT/(LOSS) 30,643 67,108 (3,753)
PREFERRED STOCK DIVIDENDS (209) (458) -
----------- --------- ----------
PROFIT/LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 30,434 LIT. 66,650 LIT. (3,753)
=========== ========= ==========
BASIC EARNINGS/(LOSS) PER SHARE: US LIRE LIRE
CONTINUING OPERATIONS $ 0.0 LIT. 41 LIT. -
DISCONTINUED OPERATIONS $ 5.1 LIT. 11,325 LIT. (667)
DILUTED EARNINGS/(LOSS) PER SHARE:
CONTINUING OPERATIONS $ 0.0 LIT. 41 LIT. -
DISCONTINUED OPERATIONS $ 5.1 LIT. 11,325 LIT. (667)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD
BASIC 5,864,309 5,864,309 5,625,125
=========== ========== ==========
DILUTED 5,864,309 5,864,309 5,632,658
=========== ========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
CENTERPOINT CORPORATION
(MOTO GUZZI CORPORATION THROUGH SEPTEMBER 19, 2000)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS TO SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
SEPT. 30 SEPT. 30 SEPT. 30
2000 2000 1999
US $'000 LIRE M. LIRE M.
<S> <C> <C> <C>
INTEREST INCOME $ 49 LIT. 108 LIT. -
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (7) (16) -
INTEREST EXPENSE . (5) (11) -
OTHER INCOME, NET 281 616 -
----------- ----------- -----------
PROFIT FROM CONTINUING OPERATIONS 318 697 -
DISCONTINUED OPERATIONS:
LOSS FROM DISPOSED MOTORCYCLE OPERATIONS (3,801) (8,324) (14,152)
(AFTER TAX OF LIT. 514 AND LIT. 165)
GAIN ON DISPOSAL OF MOTORCYCLE OPERATIONS 30,325 66,411 -
----------- ----------- -----------
NET PROFIT/(LOSS) 26,842 58,784 (14,152)
PREFERRED STOCK DIVIDENDS (487) (1,067) -
----------- ----------- -----------
PROFIT/LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 26,355 LIT. 57,717 LIT. (14,152)
=========== =========== ===========
BASIC EARNINGS/(LOSS) PER SHARE: US $ LIRE LIRE
CONTINUING OPERATIONS $ (0.03) LIT. (65) LIT. -
DISCONTINUED OPERATIONS $ 4.67 LIT. 10,218 LIT.
(2,985)
DILUTED EARNINGS /(LOSS) PER SHARE:
CONTINUING OPERATIONS $ (0.03) LIT. (65) LIT. -
DISCONTINUED OPERATIONS $ 4.67 LIT. 10,218 LIT. (2,985)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING DURING THE PERIOD
BASIC 5,684,895 5,684,895 4,741,409
=========== =========== ===========
DILUTED 5,684,895 5,684,895 4,901,065
=========== =========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
CENTERPOINT CORPORATION
(MOTO GUZZI CORPORATION THROUGH SEPTEMBER 19, 2000)
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
AND COMPREHENSIVE INCOME/(LOSS)
September 30, 2000
<TABLE>
<CAPTION>
ACCUMU- COMPRE-
LATED HENSIVE
CLASS B ADDI- OTHER INCOME/
COMMON STOCK PREFERRED TIONAL COMPRE- ACCUMU- SHARE- LOSS
STOCK PAID-IN HENSIVE LATED HOLDERS -------
SHARES AMOUNT SHARES AMOUNT CAPITAL INCOME DEFICIT EQUITY
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AT JANUARY 1, 2000 LIT.M 5,589,092 100 - - 39,834 133 (55,307) (15,240)
Net profit - - - - - - 57,717 (8,933) 57,717
Translation adjustment - - - - - (535) - (535) (535)
Issuance of Series B Preferred Stock - - 123,500 2 23,980 - - 23,982 -
Reclassification for redemption of - - - - (23,982) - - (23,982) -
preferred stock
Accretion expense for preferred stock
redemption and related exchange movements - - - - - (3,062) - (3,062) (3,062)
Redemption of Series B Preferred Stock - - (123,500) - (3,060) 3,062 - - -
Issuance of shares for MGI purchase 10,000 - - - 91 - - 91 -
Issuance of shares for OAM warrant exercise 100,000 2 - - - - - 2 -
Issuance of shares to TRG 300,000 6 - - (6) - - - -
Amortization of non-cash finance charges - - - - 306 - - (306) -
--------------------------------------------------------------------------------
AT SEPETMBER 30, 2000 LIT.M 5,999,092 108 - - 37,163 (402) 2,410 39,279 54,120
===============================================================================
AT JUNE 30, 2000 $'000 49 - 16,970 (184) 1,101 17,936 24,715
========== ======================================================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENT
7
<PAGE>
CENTERPOINT CORPORATION AND SUBSIDIARIES
(MOTO GUZZI CORPORATION THROUGH SEPTEMBER 19, 2000)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
September 30, 2000 and 1999
<TABLE>
<CAPTION>
SEP. 30 SEP. 30 SEP. 30
2000 2000 1999
US$'000 LIT. M LIT. M
<S> <C> <C> <C>
NET PROFIT FROM CONTINUING OPERATIONS $ 318 LIT. 697 LIT. -
PREFERRED STOCK DIVIDENDS (487) (1,067) -
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED BY OPERATING ACTIVITIES:
AMORTIZATION OF WARRANT ISSUANCE FOR FINANCE EXPENSE 158 347 609
OTHER OPERATING ACTIVITIES (1,094) (2,397) (519)
CHANGES IN OPERATING ASSETS AND LIABILITIES:
RELATED PARTY RECEIVABLES 90 196 80
PREPAID EXPENSES (32) (69) (93)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (280) (613) (1,195)
RELATED PARTY PAYABLES 217 476 (1,174)
----------- ----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (1,110) (2,430) (2,292)
----------- ----------- -----------
INVESTING ACTIVITIES
INVESTMENT IN MARKETABLE SECURITIES (12,028) (26,339) -
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES (12,028) (26,339) -
----------- ----------- -----------
FINANCING ACTIVITIES
PROCEEDS FROM MERGER WITH NAAC - - 16,006
PROCEEDS FROM ISSUANCE OF PREFERRED STOCK 8,370 18,329 -
ADVANCE FOR SUBSCRIPTION TO PREFERRED STOCK - 2,274
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,370 18,329 18,280
----------- ----------- -----------
INCREASE/(DECREASE) IN CASH FROM CONTINUING ACTIVITIES (4,768) (10,440) 15,988
NET CASH FROM/(USED BY) DISCONTINUED MOTORCYCLE OPERATIONS 19,480 42,658 (15,711)
EXCHANGE MOVEMENT ON OPENING CASH - - -
CASH, BEGINNING OF PERIOD 1 3 -
----------- ----------- -----------
CASH, END OF PERIOD $ 14,713 LIT. 32,221 LIT. 277
=========== =========== ===========
NET CASH FROM/(USED BY) DISCONTINUED MOTORCYCLE OPERATIONS
NET CASH PROCEEDS FROM SALE 27,534 60,293 -
FINANCING OF DISPOSED OPERATIONS (7,280) (15,941) (13,863)
OTHER EXPENDITURE ALLOCATED TO DISCONTINUED OPERATIONS (774) (1,694) (1,848)
----------- ----------- -----------
19,480 42,658 (15,711)
----------- ----------- -----------
</TABLE>
8
<PAGE>
SUPPLEMENTAL INFORMATION ON NON-CASH ACTIVITIES
Advances to the Company in an aggregate amount of $1.25 million (Lit. 2,479
million at the then prevailing exchange rate) by Wheatley Partners, LP and
Wheatley Foreign Partners, LP (each of which is an affiliate of Barry Fingerhut,
a Director of the Company) and William Spier, a director of the Company and a
US$ 1.6 million (Lit. 3,174 million) loan due to OAM, respectively, were applied
to subscribe to the Series B preferred stock on February 25, 2000 - See Notes to
financial statements.
The Company issued 10,000 shares with a fair value of Lit. 91 million in
connection with its purchase of the 75% of MGI Motorcycle GmbH that it did not
already own. MGI Motorcycle GmbH was disposed as part of the sale of motorcycle
operations.
The Company issued 100,000 shares to OAM S.p.A. upon exercise of a warrant held
by OAM issued in 1999. The exercise price of $1,000 was settled by reduction of
balances due by the Company to OAM. The fair value of this warrant at the date
of issuance of Lit. 1,220 million been amortized from April 1, 1999 through
March 31, 2000 as finance expense.
The Company redeemed all issued and outstanding shares of its Series B Preferred
Stock effective September 30, 2000 with payment being made on the first business
day of October 2000. The amount payable for the redemption of lit. 27,044
million ($12,350,000) is shown as a separate line item in the balance sheet at
September 30, 2000.
9
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. For a summary of the Registrant's accounting principles, and other
footnote information, reference is made to the Form 10-K, dated April 26, 2000.
All adjustments necessary for the fair presentation of the results of operations
for the interim periods covered by this report have been included. All of such
adjustments are of a normal and recurring nature. The results of operations for
the three and nine months ended September 30, 2000 are not necessarily
indicative of the operating results for the full year.
The Company was originally incorporated in Delaware on August 9, 1995 under the
name of North Atlantic Acquisition Corp. to serve as a vehicle to effect a
merger, exchange of capital stock, asset acquisition or other business
combination with an operating business. On August 27, 1997 the Company
consummated an initial public offering consisting of 800,000 Units and 150,000
shares of Class B Common Stock, with each Unit consisting of one share of Class
A Common Stock and one warrant to purchase shares of Class A Common Stock, which
resulted in net proceeds to the Company of approximately $8,000,000.
On August 18, 1998, the Company and TRG entered into a definitive agreement and
plan of merger and reorganization, as amended (the "Merger Agreement"), pursuant
to which Moto Guzzi Corp. merged with and into the Company, with the Company as
the surviving corporation (the "Merger"). Prior to the Merger, TRG and its
majority-owned subsidiary, OAM, together owned all the outstanding common stock
of Moto Guzzi Corp. The Merger, which occurred on March 5, 1999, was treated as
a reverse acquisition of the Company. The results of operations and cash flows
prior to the date of the merger are those of Moto Guzzi Corp. As the Company had
no operating activities prior to the Merger, the Merger was not considered as a
business combination as defined by APB16 and no pro forma information is shown.
Following the Merger, the Company adopted the December 31 financial reporting
year of Moto Guzzi Corp. and financial statements are prepared using the
accounting principles of Moto Guzzi Corp.
In September 2000, the Company sold all its operating subsidiaries to Aprilia
S.p.A. and changed its name to Centerpoint Corporation pursuant to the sale of
its motorcycle operations to Aprilia. See below Note 2 - Discontinued Operations
and Note 3 - Execution and Delivery of Share Purchase Agreement.
The primary financial statements are shown in Italian lire because all of the
Company's material operating entities were based and operated in Italy. At
September 30, the Company's freely available cash and other significant assets
were all denominated in lire (or euros). The Company will evaluate if its
functional currency will continue to be the lire, based on decisions to be taken
as to its future activities. Translation of lire amounts into U.S. Dollar
amounts is included solely for the convenience of the readers of the financial
statements and has been made at the rate of Lire 2,190 to U.S. $1, the
approximate exchange rate at September 30, 2000. It should not be construed that
the assets and
10
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
liabilities, expressed in U.S. dollar equivalents, can actually be realized in
or extinguished by U.S. dollars at that or any other rate.
11
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
2. DISCONTINUED MOTORCYCLE OPERATIONS
In September 2000, the Company closed its sale of all "Moto Guzzi" motorcycle
operations to Aprilia. From May 2, 2000 through the date of sale, Moto Guzzi's
operations were under the control of Aprilia management. The measurement date of
the disposal is July 1, 2000, reflecting the latest date prior to sale for which
the Company has complete financial information. Net proceeds from the disposal
exceeded the net assets of the operations sold and the Company has recorded a
gain on sale in the third quarter of 2000 of Lit. 66,411 million. The Company
changed its name to Centerpoint Corporation on September 19, 2000 pursuant to
the sale, which is discussed in more detail in Note 3, below.
Results of the disposed motorcycle operations through the effective disposal
date of July 1, 2000 and for the nine months to September 30, 2000 were as
follows:
<TABLE>
<CAPTION>
SEP. 30
2000 2000 1999
US$'000 LIT.M LIT.M
<S> <C> <C> <C>
Net sales ................................................ 23,287 50,994 62,923
Loss before taxes ........................................ (3,566) (7,810) (13,987)
Provisions for taxes ..................................... (235) (514) (165)
----------- ----------- -----------
Net loss from discontinued operations of
Motorcycle operations .................................. $ (3,801) Lit. (8,324) Lit. (14,152)
=========== =========== ===========
</TABLE>
Net assets/(liabilities) of the discontinued motorcycle operations at the
effective date of disposal of July 1, 2000 and at December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
JULY 1 JULY 1 DEC. 31
2000 2000 1999
$'000 LIT.M LIT.M
<S> <C> <C> <C> <C>
Current assets ........................................... 31,218 68,361 61,926
Property, plant and equipment ............................ 5,842 12,792 14,638
Other assets ............................................. 1,146 2,510 889
Current liabilities ...................................... (33,265) (72,844) (79,385)
Other liabilities ........................................ (4,344) (9,512) (10,000)
----------- ----------- -----------
Net assets/liabilities of discontinued operations......... $ 597 Lit. 1,307 Lit. (11,932)
=========== =========== ===========
</TABLE>
In 2000 the Company provided the disposed motorcycle subsidiaries with cash, in
the form of capital and advances, of Lit. 15,941 million (1999 - 13,863 million)
to finance operations through disposal.
12
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
3. EXECUTION AND DELIVERY OF SHARE PURCHASE AGREEMENT
On September 7, 2000, the Company closed on the sale of all its operating
subsidiaries, Moto Guzzi S.p.A., Moto Guzzi North America Inc, Moto Guzzi France
Sarl, and MG Motorcycle GmbH, to Aprilia S.p.A. in accordance with the
Preliminary Purchase and Sale Agreement dated April 14, 2000 as modified and
integrated by the Letter Agreement of August 3, 2000. On August 11, 2000, at a
Special Meeting of Stockholders, the Company's stockholders approved the sale of
the operating subsidiaries and the change of the Company's corporate name to
Centerpoint Corporation, with stockholders holding in excess of two-thirds of
all outstanding shares of Class A common stock voting for the sale and the name
change.
Total proceeds from the sale were Lit. 79,500 million. In accordance with the
Share Purchase Agreement Aprilia S.p.A. also paid the Company Lit. 2,074 million
on behalf of the operating subsidiaries, representing the amount owed to the
Company by the operating subsidiaries pursuant to loans made by the Company to
them. In accordance with the Share Purchase Agreement, Lit. 9,375 million of the
total proceeds was placed in escrow to cover any claims Aprilia S.p.A. might
have in the future in respect of representations and warranties made by the
Company in the Share Purchase Agreement. Subject to any claims Aprilia may have
in respect of the Company's representations and warranties, funds from the
escrow account will be released to the Company in two tranches: Lit. 7,000
million is to be released on September 8, 2001; and Lit. 2,375 is to be released
on September 8, 2007. Aprilia has undertaken to evaluate, on a best efforts
basis, an earlier resolution of any future claims it may have to funds in the
escrow account.
SIREF S.p.A. and San Paolo Finanziaria S.p.A., each of which is an affiliate of
Banca d'Intermediazione Mobiliare IMI S.p.A. ("IMI"), acted as fiduciary agents
for the closing. In accordance with invoices submitted to them, they paid IMI,
the Company's financial advisor, 11,401 million, in respect of fees and expenses
claimed by IMI to be due it under their engagement letter, paid Lit. 505 million
to Carnelutti, the Company's Italian counsel, and paid the balance of the
proceeds of Lit. 60,293 million to the Company.
As noted in the Company's Proxy Statement dated July 22, 2000, the Company has
disputed IMI's interpretation of the fee calculation provisions of their
engagement letter, since being advised of this in July of this year. Since that
time the Company has discussed and sought and negotiate with IMI an agreement as
to the proper interpretation of the fee calculation provisions, and the amount
of the IMI fee, but was unable to come to agreement with IMI concerning these
items prior to the closing. Although it appears that each of the fiduciary
agents was aware of the fee dispute, the Company was advised by the fiduciary
agents at the closing that IMI had previously submitted an invoice to them for
fees and expenses alleged by IMI to be due to them under the engagement letter
in the amount of Lit. 11,401 million and that the fiduciary agents had paid such
amount to IMI out of amounts held in escrow by them. The Company is currently
evaluating possible courses of action against IMI and the
13
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
fiduciary agents, including initiating legal proceedings in Italy and the United
States, to the extent the same are available.
On September 19, 2000, pursuant to the Share Purchase Agreement and stockholder
approval, the Company filed an amendment to its Certificate of Incorporation to
change its name to Centerpoint Corporation, effective at the time of filing.
The Lit. 60,293 million received by the Company has been and will be applied
firstly to payment of amounts due for transaction expenses and other payables
and obligations estimated in the aggregate to be approximately Lit. 3 billion
and to redeem all outstanding shares of Series B Preferred Stock for a price
equal to $100 per share plus accrued dividends thereon, for a total principal of
approximately US$ 12.35 million (approximately Lit. 27.0 billion at the
prevailing exchange rate). This will leave the Company with approximately Lit.
29.7 billion in cash and marketable securities plus rights to amounts due to it
from the escrow account at the time of release of the Lit. 9,375 million being
held in escrow, as described above, and whatever it realizes on its claims
against IMI described above. Cash will be invested in short-term fixed interest
securities pending our evaluation of the alternatives available to the Company
with respect to such funds.
In connection with the execution and delivery of the Share Purchase Agreement
described above, the Company agreed with OAM, SpA and Trident Rowan Group, Inc.
by letter dated April 14, 2000 (as amended), that it will, as promptly as
practicable after the closing of the sale of the operating subsidiaries, but in
no event later than 90 days following the closing, hold a meeting of
stockholders to consider and vote upon a proposal to liquidate all the Company's
assets and dissolve the Company. This outside date for such shareholders meeting
was subsequently extended by 60 days, to February 7, 2000.
All holders of Class A common stock will have an opportunity to vote on any
proposal that the Company be liquidated. However, because OAM owns 58% of the
Class A common stock, it can approve a liquidation even if no other stockholders
vote in favor of it. Conversely, any proposed liquidation will not be approved
unless OAM votes in favor of it. Although OAM and Trident Rowan insisted that
the Company agree to submit a liquidation proposal to the Company's
stockholders, OAM is not committed to vote its shares of Class A common stock
for the liquidation proposal. It is also possible that OAM, Trident and the
Company may amend the April 14th letter to modify or remove the requirement that
we hold a stockholder meeting to consider and vote upon the liquidation
proposal.
OAM has advised the Company that they have not, at this time, decided how they
will vote with respect to any liquidation proposal.
During the period between the closing of the sale and any stockholder meeting
relating to a liquidation proposal, the Company intends to seek to find one or
more other companies in which to invest proceeds from the sale. If the Company
is able to do so, it may propose the acquisition of, or
14
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
an investment in, another company or companies as an alternative to liquidation
at any stockholder meeting called to consider a liquidation proposal.
15
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
4. ISSUANCE OF SERIES B PREFERRED STOCK
On February 25, 2000, the Company issued 123,500 shares of a new Series B
Preferred Stock to Fineco, and affiliates of Fineco, TRG, OAM, the majority
stockholder of the Company, and Barry Fingerhut and William Spier, Directors of
the Company, for $100 per share (an aggregate price of $12,350,000). Fineco and
its affiliates purchased 60,000 shares and TRG purchased 35,000 shares, for
cash. Messrs. Fingerhut and Spier received a total of 12,500 shares in
satisfaction of advances they had made to the Company in August 1999 and 16,000
shares were issued to OAM in partial satisfaction of outstanding loans due to
it.
The holders of the Series B Preferred Stock are entitled to receive dividends at
the rate of $7 per share per year before any dividends may be paid with regard
to the Class A Common Stock, and to receive distribution of $100 per share in
liquidation of the Company before any liquidation distributions are made with
regard to the Class A Common Stock. The Company was required to redeem the
Series B Preferred Stock for $100 per share plus accrued dividends on December
28, 2001. Holders of Series B Preferred Stock do not have voting rights, except
that they must approve issuance of securities which would affect the Series B
Preferred Stock and the incurrence of debt, other than refinancing of existing
debt or lines of credit used by the Company to finance its day-to-day
operations.
Each share of Series B Preferred Stock was convertible into Class A Common Stock
at a conversion price of $5.00, based upon the liquidation preference of the
Series B Preferred Stock ($100, plus accrued dividends, per share), meaning each
share of Series B Preferred Stock is convertible into approximately 20 shares of
Class A Common Stock.
The Company agreed with the Series B preferred stockholders that, following the
sale to Aprilia, we would redeem the Series B preferred stock on September 30,
2000 and they agreed not to convert their Series B stock if we redeem the stock
by this date. Such redemption was effected, with redemption payments made on the
first business day of October 2000.
The Company received Lit. 18,329 million in cash, net of Lit. 516 million of
expenses in respect of the issue of the Series B Preferred Stock and also
recorded Lit. 2,479 million in respect of the William Spier and Barry Fingerhut
advances and Lit. 3,174 million in respect of the OAM loan for a total of Lit.
23,982 million.
Upon issuance, the Company reclassified the Series B preferred stock outside of
shareholders equity and recorded accretion expense of Lit. 3,060 million in
respect of amortization of costs and exchange differences which arose as the
Company's obligation is denominated in U.S. Dollars.
In connection with issuance of the Series B preferred stock, the Company agreed
to issue 300,000 shares of Class A common stock to TRG for a purchase price of
$.01 per share, in consideration of Trident Rowan's participation in the Series
B financing and their successful efforts to get Fineco, S.p.A. to subscribe for
Series B shares. These 300,000 shares were issued in July 2000. Additionally, in
connection with Fineco's purchase of the Series B shares the Company paid a
commission of $180,000 to Andrea delle Valle, a director of TRG, and paid
$80,000 to Investec Ernst, where Mark Segall, a director of TRG, is an executive
officer.
16
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
5. ACCUMULATED OTHER COMPREHENSIVE INCOME
In 1997, the Financial Accounting Standards Board (the "FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income", which establishes standards for reporting comprehensive income and its
components in annual and interim financial statements. In the Company's case
comprehensive income includes net income, translation difference from the
conversion of balance sheets of non-Italian entities and accretion expense and
related exchange differences related to the potential redemption of its Series B
preferred stock. The Company has chosen to disclose comprehensive income in the
Consolidated Statements of Stockholders' Equity.
Changes in components of accumulated other comprehensive income in the nine
months to September 30, 2000 are as follows.
<TABLE>
<CAPTION>
Accretion Accumulated
Cumulative expense and other
translation related exchange comprehensive
difference movements income
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance January 1, 2000 133 - 133
Movement for period (535) (3,062) (3,597)
Redemption of Series B Preferred Stock - 3,062 3,062
--------------- --------------- ---------------
Balance September 30, 2000 (402) - (402)
=============== =============== ===============
</TABLE>
5. EARNINGS/LOSS FROM CONTINUING OPERATIONS PER SHARE
The numerator for the calculation of earnings/(loss) per common share have been
calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS TO SEPTEMBER 30, 2000 SEP 30 SEP 30 SEP. 30
2000 2000 1999
$'000 LIT.M LIT.M
<S> <C> <C> <C>
Profit from continuing operations ........................ 318 697 -
Preferred Stock dividends ................................ (209) (458) -
----------- ----------- -----------
Earnings from continuing operations attributable
to common shareholders .................................. 109 239 -
=========== =========== ===========
</TABLE>
17
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000
<TABLE>
<CAPTION>
NINE MONTHS TO SEPTEMBER 30, 2000 SEP 30 SEP 30 SEP. 30
2000 2000 1999
$'000 LIT.M LIT.M
<S> <C> <C> <C>
Profit from continuing operations ........................ 318 697 -
Preferred Stock dividends ................................ (487) (1,067) -
----------- ----------- -----------
Loss from continuing operations attributable to
common shareholders (169) (370) -
=========== =========== ===========
</TABLE>
Preferred stock - See Note 4 - was not dilutive for the three months to
September 30, 2000.
18
<PAGE>
MOTO GUZZI CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SIGNIFICANT MATERIAL EVENTS WITH RESPECT TO THE COMPANY THAT IMPACT THE COMPANY
AND THE DISCUSSION SET FORTH BELOW IS SUBJECT TO AND QUALIFIED BY THE
INFORMATION SET FORTH BELOW IN THE NOTES TO THE INTERIM FINANCIAL STATEMENTS
UNDER NOTE 3 - EXECUTION AND DELIVERY OF SHARE PURCHASE AGREEMENT AND NOTE 4 -
ISSUANCE OF SERIES B PREFERRED STOCK.
RESULTS OF OPERATIONS FOR THE 3 MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO 1999
<TABLE>
<CAPTION>
SEP. 30 SEP. 30
2000 1999
LIRE M. LIRE M.
<S> <C> <C>
INTEREST INCOME 108 -
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (27) -
OTHER INCOME, NET 616 -
------------ ------------
NET PROFIT FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 697 -
DISCONTINUED OPERATIONS:
LOSS FROM OPERATIONS OF MOTORCYCLE BUSINESS - (3,753)
(AFTER INCOME TAX OF LIT. 99 IN 1999)
GAIN ON DISPOSAL OF MOTORCYCLE BUSINESS 66,411 -
(AFTER INCOME TAX OF LIT. 0)
PREFERRED STOCK DIVIDENDS (458) -
------------ ------------
NET PROFIT/LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS 66,650 (3,753)
============ ============
</TABLE>
On September 7, 2000, the Company completed the sale of its operating
subsidiaries to Aprilia S.p.A. This sale represents the discontinuance of
motorcycle operations which were the company's only activities and have been
accounted for as discontinued operations. The effective accounting date for the
sale is July 1, 2000, reflecting the last date for which financial information
on the subsidiaries is available.
Accordingly, in the third quarter of 2000, the Company has recorded interest
income of Lit. 108 million, selling general and administrative expenses of Lit.
27 million and positive exchange differences of Lit. 616 million as continuing
operations, representing the period from September 8, 2000. The exchange
differences relate to the effects of exchange rates on cash balances and escrow
receivables in lire from the date of sale through September 30, 2000. In the
corresponding period in 1999, the Company had no income or expenses from
continuing operations as all its activities related to the disposed motorcycle
business.
In respect of the discontinued motorcycle operations, in the third quarter of
2000 the Company has recorded a gain on sale of Lit. 66,411 million. There are
no taxes payable as the Company believes that the proceeds received are less
than the tax base of the subsidiaries sold. There is no loss from operations of
the discontinued activities in the third quarter of 2000 as the effective
accounting date
19
<PAGE>
was July 1, 2000. In the comparison third quarter of 1999, losses from the
discontinued motorcycle operations were Lit. 3,753 million.
In the third quarter of 2000, Lit. 458 million is included in respect of
dividends payable on the Company's Series B Preferred Stock, issued in February
2000 to provide bridge finance to the sold subsidiaries. Such Series B Preferred
Stock was redeemed effective September 30, 2000.
RESULTS OF OPERATIONS FOR THE 9 MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO 1999
Results for the 9 months to September 2000 compared to 1999 reflect the same
factors as discussed above for the third quarter.
Losses from operations of the discontinued motorcycle operations of Lit. 8,324
million reflect results through the first two quarters of 2000 as the effective
date of the disposal was July 1, 2000.
LIQUIDITY AND FINANCIAL RESOURCES
The Lit. 60,293 million received by the Company from the sale to Aprilia will be
applied firstly to payment of amounts due for transaction expenses and other
payables and obligations estimated in the aggregate to be approximately Lit. 3.0
billion and to redeem all outstanding shares of Series B Preferred Stock for a
price equal to $100 per share plus accrued dividends thereon, for a total
principal of approximately US$ 12.35 million (approximately Lit. 27.0 billion).
This will leave the Company with approximately Lit. 29.7 billion in cash and
marketable securities plus rights to amounts due to it from the escrow account
at the time of release of the Lit. 9,375 million being held in escrow, as
described above, and whatever it realizes on its claims against IMI described in
Note 3 to the interim financial statements. Lit. 28.0 billion of the cash has
been invested in short-term fixed interest securities denominated in Euros
pending evaluation of the alternatives available to the Company with respect to
such future activities.
20
<PAGE>
PART II - .......OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 11, 2000, at a Special Meeting of Stockholders, the Company's
stockholders approved the sale of the Company's operating subsidiaries to
Aprilia SpA and the change of the Company's corporate name to Centerpoint
Corporation, with stockholders holding in excess of two-thirds of all
outstanding shares of Class A common stock voting for the sale and the name
change.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Current report on Form 8-K dated August 11, 2000.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MOTO GUZZI CORPORATION
November 30, 2000. /s/ Mark S. Hauser
-------------------
Mark S. Hauser
Executive Chairman
November 30, 2000. /s/ Nick Speyer
--------------------
Nick Speyer
Chief Financial officer
22
