U.S. SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C., 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
Commission file number 0-25714
THE AEGIS CONSUMER FUNDING GROUP, INC.
Delaware 22-3008867
(State of Incorporation) (I.R.S. Employer Identification No.)
525 Washington Blvd.
Jersey City, NJ 07310
(Address of principal executive offices)
Telephone number: (201)418-7300
Securities registered under Section 12(b) of the Exchange Act: None Securities
registered under Section 12(g) of the Exchange Act:
Title of class Name of exchange on which registered
Common Stock, The Nasdaq National Market
$.01 par value
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 reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes___ No_X_.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [X]
The aggregate market value of the Registrant's Common Stock held by
non-affiliates on November 14, 1997 (based upon the average of the high and low
sales prices of such stock as of such date) was approximately $2,616,000.
As of November 14, 1997, 17,677,217 shares of the Registrant's Common Stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE AEGIS CONSUMER FUNDING GROUP, INC.
By: s/Matthew B. Burns
----------------------------
Matthew B. Burns
Date: November 18, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
s/Matthew B. Burns
- - ---------------------- Chief Executive Officer November 19, 1997
Matthew B. Burns
s/Dina L. Penepent
- - --------------------- Chief Financial Officer, November 19, 1997
Dina L. Penepent Executive Vice President,
Secretary, Principal
Financial and
Accounting Officer
s/Felice Cutler
- - --------------------- Director November 19, 1997
Felice Cutler
s/Carl Frischling
- - --------------------- Director November 19, 1997
Carl Frischling
s/Paul Fitzpatrick
- - --------------------- Director November 19, 1997
Paul Fitzpatrick
s/Angelo R. Appierto
- ----------------------- Director November 19, 1997
Angelo R. Appierto
To Our Stockholders:
The Aegis Consumer Funding Group, Inc., a Delaware corporation (Referred to as
either the "Company" or "Aegis"), is a sub-prime finance company that has been
involved in purchasing loans from automobile dealers, nationally, for the past
five years. In fiscal year 1995, the Company's loan portfolio rapidly
accelerated as the sub-prime automobile finance market swelled. Aegis emerged as
a market leader, acquiring over 12,000 retail installment sales contracts in
fiscal year 1995 with a face value in excess of $160 million. As Aegis' loan
volume continued to expand Aegis, experienced increased competition from other
lenders in the sub-prime finance market. Beginning in 1996, a variety of factors
impacted Aegis, as well as the sub-prime industry in general, resulting in
substantial deterioration to Aegis' loan portfolio. In response, Aegis took
substantial write downs on its retained yield assets in securitized receivables
which adversely affected its financial condition.
As a result, and in direct response to the Company's substantial loss in
earnings, the Company underwent a massive restructuring of its operations and
programs, beginning in late October 1997. I was offered the position of
President and Chief Executive Officer, and along with my newly appointed senior
management team, set about to restructure the Company and restore it to
profitability while producing quality loans. My senior management team consists
of: Cyril Means as General Counsel and Executive Vice President, Robert
Micalizzi as Vice President in charge of Production and Troy Cavallaro as Vice
President in charge of New Business Development.
Senior management immediately set about implementing plans to cut existing
overhead and create a profitable platform for the future of the Company. In
order to accomplish these goals, it was necessary to downsize and consolidate
the operations of the Company. By November 1997, the production facility in
California was closed while the production facility in New Jersey was
consolidated to the Company's existing production facility in Georgia. In
December 1997, the executive offices located in New Jersey were also
consolidated with the Company's facility in Georgia. By January 1998, the
Company had reduced personal by 66% and no longer had any presence in the State
of New Jersey. The Company continues to retain a small office in California from
which collections on certain older securitizations are carried out and an office
in Kansas where the Company's state of the art computer networks are maintained.
The changes I have implemented with the help of my senior management team have
resulted in savings to the Company of roughly $2.6 million per month. Today,
operating expenses run at approximately $1.2 million per month, of which
$900,000 is for actual current operating overhead (the remaining $300,000 per
month is used to satisfy past creditors inherited by senior management). The
Company has revamped its programs with a strong emphasis on producing quality
loans while retaining a competitive position in the marketplace. The tightening
of the program's underwriting guidelines has had the effect of significantly
reducing loan acquisition volume, although the loans that are purchased perform
at levels superior to the loans produced prior to 1998. It is now senior
management's task to focus the Company on the reaffirmation of past
relationships with good automobile dealers and the development of new
relationships with other dealers along the lines of the Company's current
philosophy of purchasing only quality loans.
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in the past two years, twelve of the fourteen major sub-prime finance companies
have suffered losses from overstated retained yield valuations. These losses
have prompted some finance companies to leave the sub-prime field (i.e., The
Money Store), while others have declared bankruptcy (i.e., Jayhawk Acceptance
Corp., Mercury Finance, First Enterprise Financial Group, Inc., First Merchants
Acceptance, Corp.).
The Company continues to see opportunities in the sub-prime automobile finance
industry. Senior management believes that the hasty retreat of many of its
competitors from the sub-prime market should restore the market share and
profits of those few Companies that remain. Secondly, there are a number of
portfolios originated by companies that have left the industry that are now
available at a discount. The Company has begun to explore the possibility of
purchasing some of the better portfolios currently available with the assistance
of its credit source.
I believe that a great deal is owed to our main credit source, warehouse
provider and primary shareholder for its continuing support of the Company
through these tumultuous times and for continuing to share our vision of the
Company's future. I also want to extend, on behalf of the Company, senior
management and employees, our thanks for your continued support in our struggle
to restore Aegis as a leader in the sub-prime finance arena.
There is still much that needs to be accomplished in order to turn around Aegis
and make it a profitable platform to carry it into the next century. In this
endeavor, I believe we will succeed. There is a feeling that permeates through
Aegis' workforce which has not existed for some time; that feeling is one of
hope and aspirations and a communal drive to work as a well organized team. For
the first time in a long time we can see the future and it looks bright.
Sincerely,
/s/ Matthew B. Burns
Matthew B. Burns
President and Chief Executive Officer
