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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1995
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from __________ to __________
Commission File Number 0-12113
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TIGERA GROUP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 94-2691724
- ------------------------ --------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)
730 FIFTH AVENUE, 9TH FLOOR, NEW YORK, NY 10019-4105
- ----------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212-333-8664
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 X No .
--- ---
Number of shares of Common Stock, $.01 par value, outstanding as of June 30,
1995: 21,286,301.
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TIGERA GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
PART I. Financial Information Number
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<S> <C>
Item 1. Financial Statements
Condensed Consolidated Financial
Statements 3
Condensed Consolidated Balance Sheet --
June 30, 1995 4
Condensed Consolidated Statements of
Operations -- For the Three Months
Ended June 30, 1995 and 1994 5
Condensed Consolidated Statements of
Operations -- For the Six Months
Ended June 30, 1995 and 1994 6
Condensed Consolidated Statements of
Cash Flows -- For the Six Months
Ended June 30, 1995 and 1994 7
Notes to Condensed Consolidated Financial
Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-13
PART II. Other Information
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Item 1. Legal Proceedings 14
Item 2. Exhibits and Reports on Form 8-K 14
SIGNATURE 15
</TABLE>
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PART I. Financial Information
Item 1. Tigera Group, Inc. -- Financial Statements
Condensed Consolidated Financial Statements
(Unaudited)
The Condensed Consolidated Financial Statements included
herein have been prepared by Tigera Group, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes the disclosures which are made are adequate to make the
information presented not misleading. Further, the Condensed Consolidated
Financial Statements have been prepared in accordance with generally accepted
accounting principles for interim financial information, the instructions to
Form 10-QSB and Regulation S-B (including Item 310(b) thereof) and reflect, in
the opinion of management, all adjustments necessary to present fairly the
financial position and results of operations as of and for the periods
indicated.
It is suggested that these Condensed Consolidated Financial
Statements be read in conjunction with the Consolidated Financial Statements and
the Notes thereto for the year ended December 31, 1994, included in the Tigera
Group, Inc. Form 10-KSB Annual Report to the Securities and Exchange Commission.
The results of operations for the three and six months ended
June 30, 1995 are not necessarily indicative of results to be expected for the
entire year ending December 31, 1995.
See Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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TIGERA GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS
Cash, Cash Equivalents and Treasury Bills $ 11,179,000
Other Assets, including restricted cash of $1,000,000 1,019,000
-------------
Total Assets $ 12,198,000
=============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 89,000
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Total Liabilities 89,000
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Commitments & Contingencies
Stockholders' Equity:
Preferred Stock - par value $.01 per share;
authorized 10,000,000 shares, none issued
Series B Common Stock - par value $.01 per share;
authorized 750,000 shares, none issued
Common Stock - par value $.01 per share;
authorized 40,000,000 shares, outstanding
21,286,301 shares, net of 826,405 shares
held in treasury 213,000
Additional Paid-in Capital 108,742,000
Accumulated Deficit (96,846,000)
-------------
Total Stockholders' Equity 12,109,000
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Total Liabilities and Stockholders' Equity $ 12,198,000
=============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TIGERA GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JUNE 30,
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1995 1994
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<S> <C> <C>
Operating Expenses:
General and Administrative $ (236,000) $ (193,000)
Loss on Disposition of Revenue-Earning
Vehicles --- (194,000)
----------- -----------
Operating Loss (236,000) (387,000)
Other Income:
Interest Income 183,000 108,000
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Net Loss $ (53,000) $ (279,000)
=========== ===========
Net Loss Per Share --- $(.01)
=========== ===========
Weighted Average Number of Common
Shares Outstanding 21,286,301 21,286,301
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TIGERA GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
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1995 1994
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<S> <C> <C>
Lease Revenue $ --- $ 190,000
Depreciation of Revenue-Earning Vehicles --- (123,000)
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Gross Profit --- 67,000
Operating Expenses:
General and Administrative (453,000) (410,000)
Loss on Disposition of Revenue-Earning
Vehicles --- (194,000)
----------- -----------
Operating Loss (453,000) (537,000)
Other Income:
Interest Income 354,000 197,000
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Net Loss $ (99,000) $ (340,000)
=========== ===========
Net Loss Per Share --- $(.02)
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Weighted Average Number of Common
Shares Outstanding 21,286,301 21,286,301
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TIGERA GROUP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
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1995 1994
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<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (99,000) $ (340,000)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Depreciation of Revenue-Earning Vehicles --- 123,000
Loss on Disposition of Revenue-Earning Vehicles --- 194,000
Change in Assets and Liabilities:
(Increase)/Decrease in Other Assets 112,000 (60,000)
Increase/(Decrease) in Accounts Payable and
Accrued Liabilities (62,000) 4,000
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Net Cash Used in Operating Activities (49,000) (79,000)
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Cash Flows from Investing Activities:
Sales of Revenue-Earning Vehicles --- 1,600,000
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Net Cash Provided by Investing Activities --- 1,600,000
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Net Increase/(Decrease) in Cash,
Cash Equivalents and Treasury Bills (49,000) 1,521,000
Cash, Cash Equivalents and Treasury Bills at
Beginning of Period 11,228,000 9,753,000
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Cash, Cash Equivalents and Treasury Bills at
End of Period $11,179,000 $11,274,000
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</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
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TIGERA GROUP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1995
Note 1 - Condensed Consolidated Financial Statements:
The Condensed Consolidated Financial Statements included herein have
been prepared by Tigera Group, Inc. (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes the disclosures which are made are adequate to make the
information presented not misleading. Further, the Condensed Consolidated
Financial Statements have been prepared in accordance with generally accepted
accounting principles for interim financial information, the instructions to
Form 10-QSB and Regulation S-B (including Item 310(b) thereof) and reflect, in
the opinion of management, all adjustments necessary to present fairly the
financial position and results of operations as of and for the periods
indicated.
It is suggested that these Condensed Consolidated Financial Statements
be read in conjunction with the Consolidated Financial Statements and the Notes
thereto for the year ended December 31, 1994, included in the Tigera Group, Inc.
Form 10-KSB Annual Report to the Securities and Exchange Commission.
Note 2 - Net Loss per Share:
Net loss per share is based on the weighted average number of common
shares outstanding during each period. Common share equivalents (common stock
options and warrants) have not been included in the calculation because the
effect would decrease the loss per share.
Note 3 - Income Taxes:
The Company files a consolidated federal income tax return. The Company
recognizes certain expenses for income tax purposes in years different from
those in which they are provided for in financial reporting.
As of December 31, 1994, the Company has net operating loss
carryforwards of approximately $91,000,000 and $89,000,000 for financial
reporting and tax purposes, respectively, which are available to offset future
taxable income expiring from 1995 through 2009. The Company also has available
investment and research and development credits of
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approximately $2,000,000 expiring in 1995 through 2000. The ability of the
Company to utilize these carryforwards in future years may be limited, or even
eliminated.
Specifically, the Internal Revenue Code of 1986, as amended (the
"Code"), imposes substantial limitations under certain circumstances on the use
of net operating loss carryforwards upon the occurrence of an "ownership change"
(as defined in Section 382 of the Code). An "ownership change" can result from
issuances of equity securities by the Company, purchases of the Company's
securities by the Company, purchases of the Company's securities in the
secondary market by existing or new stockholders or a combination of the
foregoing. The Company's desire to issue new equity securities could be limited
in order to prevent such an "ownership change" from occurring. Alternatively,
certain shareholders could occasion an ownership change if they substantially
increased their ownership of the Company's Common Stock.
As of December 31, 1994, the deferred tax assets related to the net
operating loss carryforwards and investment and research and development credit
carryforwards totaling approximately $36,000,000 have been fully offset by
valuation allowances, since the utilization of such amounts is uncertain.
Note 4 - Investment in Revenue-Earning Vehicles:
During the three months ended June 30, 1994, the Company sold its
remaining ownership in certain leased trucks to Lend Lease Trucks, Inc. ("Lend
Lease"), simultaneously with Lend Lease's sale of its operating assets and
contracts to Ryder System Inc. As a result of this transaction, the Company
recognized a loss of approximately $194,000, in addition to the allowance of
$530,000 recorded as of December 31, 1993.
Note 5 - Derivative Lawsuit:
On December 3, 1991, Civil Action No. 12374, Smith vs. Gilinski, et al,
was filed in the Court of Chancery of the State of Delaware by a stockholder as
a derivative action against eleven former officers and directors of the Company
and the Company as a nominal defendant. The complaint asserts several claims,
among them, that certain individual defendants caused the Company to be in
violation of the Investment Company Act of 1940, made equity and debt
investments without adequate investigation, wasted corporate assets, usurped a
corporate opportunity by failing to provide to the Company the opportunity to
purchase the Company's stock from a shareholder and breached their fiduciary
duties by entering into a truck leasing joint venture with Lend Lease. The
plaintiff has requested, against each defendant, damages in favor of the Company
in an unspecified amount as a result of their breaches of fiduciary duties and
waste of corporate assets. The Company believes that it has meritorious defenses
and although the Company cannot predict how the litigation will be resolved, it
is the Company's opinion that the litigation will not have a material adverse
effect on its financial condition or results of operations.
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The Company and the defendants have filed motions to dismiss and briefs
in support of their motions, and the plaintiff has filed responses thereto. No
discovery has occurred in this action.
On June 27, 1995, plaintiff presented a settlement demand for
$1,100,000. The outside insurance carrier for the named officers and directors
has not responded to this demand.
Note 6 - Subsequent Event:
Beverly Hills Bancorp ("BHBA") and Albert M. Zlotnick, Chairman of the
Board of the Company, own 22.5% and 12.1%, respectively, of the Company's common
stock. Mr. Zlotnick, as BHBA's principal shareholder, has the power to vote
BHBA's shares of the Company's common stock.
On July 10, 1995, BHBA and Albert M. Zlotnick reached an agreement with
A-Mark Financial Corporation ("A-Mark") under which A-Mark will acquire all the
issued and outstanding shares of BHBA. Upon the completion of the acquisition by
A-Mark, the BHBA directors who are also directors of the Company, six in number,
will resign and be replaced by nominees of A-Mark. Mr. Zlotnick has agreed to
vote with BHBA for three years the shares of the Company's common stock that he
owns.
A-Mark is a privately held Santa Monica-based company which, through
its wholly owned subsidiaries, is primarily engaged in the businesses of
wholesaling, brokering, marketing, auctioning and financing precious metals,
rare coins, stamps, manuscripts and other collectibles.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
June 30, 1995
General
The principal activity of Tigera Group, Inc. (the "Company" or
the "Registrant"), formerly named Fortune Systems Corporation, consists of
seeking and evaluating candidates for acquisition. The Company has established
strategic and financial criteria. The major consideration is that the candidate
for acquisition be in the position of availing itself of the Company's tax loss
carryforwards. Therefore, its profitability, both present and future, is a
priority consideration in evaluating potential acquisitions. The Company
identifies potential acquisition candidates through communications with
investment banking and brokerage firms, newspaper advertisements and responses
to classified advertisements. Other criteria include positive cash flow, a
competent management team, strong product and market position and good growth
potential. Although helpful to the acquisition process, the Company's criteria
are not intended to be definitive, but rather reflect priorities and objectives.
The Company competes for acquisitions against domestic and international
companies, financial groups and other entities, many of which may have greater
financial resources and borrowing capacity than the Company. The Company
continues to review potential acquisitions, but none have been deemed
acceptable. While there can be no assurances as to the timing of any particular
acquisition, the Company's goal is to consummate an acquisition as soon as
possible.
Beverly Hills Bancorp ("BHBA") and Albert M. Zlotnick, Chairman
of the Board of the Company, own 22.5% and 12.1%, respectively, of the Company's
common stock. Mr. Zlotnick, as BHBA's principal shareholder, has the power to
vote BHBA's shares of the Company's common stock.
On July 10, 1995, BHBA and Albert M. Zlotnick reached an
agreement with A-Mark Financial Corporation ("A-Mark") under which A-Mark will
acquire all the issued and outstanding shares of BHBA. Upon the completion of
the acquisition by A-Mark, the BHBA directors who are also directors of the
Company, six in number, will resign and be replaced by nominees of A-Mark. Mr.
Zlotnick has agreed to vote with BHBA for three years the shares of the
Company's common stock that he owns.
A-Mark is a privately held Santa Monica-based company which,
through its wholly owned subsidiaries, is primarily engaged in the businesses of
wholesaling, brokering, marketing, auctioning and financing precious metals,
rare coins, stamps, manuscripts and other collectibles.
-11-
<PAGE> 12
Results of Operations
In 1994, the Company sold its remaining ownership interest in
certain leased trucks to Lend Lease Trucks, Inc. ("Lend Lease"), simultaneously
with Lend Lease's sale of its operating assets and contracts to Ryder System
Inc. As a result of this transaction, the Company recognized a loss of
approximately $194,000, in addition to the allowance of $530,000 recorded as of
December 31, 1993, and had no lease revenue, depreciation of revenue-earning
vehicles or gross profit during the three and six months ended June 30, 1995.
General and administrative expenses, including expenses relating
to the Company's search for acquisition candidates, day-to-day operational costs
and professional fees, were $236,000 and $453,000, respectively, for the three
and six months ended June 30, 1995, and $193,000 and $410,000, respectively, for
the three and six months ended June 30, 1994. During 1995, the Company incurred
increased legal expenses relating to a lawsuit regarding the scheduling of the
Annual Meeting of Shareholders and expenses for the holding of such Annual
Meeting, which were partially offset by reduced expenses relating to the move of
the Company's headquarters to a less expensive location and a reduction in
personnel.
Interest income increased to $183,000 and $354,000, respectively,
for the three and six months ended June 30, 1995, from $108,000 and $197,000,
respectively, for the three and six months ended June 30, 1994. The increase is
attributable to higher average cash and cash-equivalent balances as a result of
the Company's revenue from and sale of revenue-earning equipment and an increase
in interest rates.
If the Company is unable to acquire control of an operating
business or businesses, it may be required to register as an investment company
under the Investment Company Act of 1940, as amended ("Act"). The Company is
unable to predict what effect registration under such Act would have, but it
believes that its ability to pursue its current business plan could be adversely
affected as a result. The most significant difference with respect to financial
statement presentation and disclosure requirements for companies registered
under the Act would require the investments held by the Company to be adjusted
to market value at the balance sheet date. Given the nature of the investments
held by the Company, the Company believes that the financial statement reporting
and disclosure requirements would not be materially different from those
presented herein.
As of December 31, 1994, the Company has net operating loss
carryforwards of approximately $91,000,000 and $89,000,000 for financial
reporting and tax purposes, respectively, which are available to offset future
taxable income expiring from 1995 through 2009. The Company also has available
investment and research and development credits of approximately $2,000,000
expiring in 1995 through 2000. The ability of the Company to utilize these
carryforwards in future years may be limited, or even eliminated.
Specifically, the Internal Revenue Code of 1986, as amended (the
"Code"), imposes substantial limitations under certain circumstances on the use
of net
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operating loss carryforwards upon the occurrence of an "ownership change"
(as defined in Section 382 of the Code). An "ownership change" can result from
issuances of equity securities by the Company, purchases of the Company's
securities by the Company, purchases of the Company's securities in the
secondary market by existing or new stockholders or a combination of the
foregoing. The Company's desire to issue new equity securities could be limited
in order to prevent such an "ownership change" from occurring. Alternatively,
certain shareholders could occasion an ownership change if they substantially
increased their ownership of the Company's Common Stock.
Liquidity and Capital Resources
Cash and cash equivalent balances decreased to $11,179,000 as of
June 30, 1995, including United States Treasury Bills of $10,808,000, compared
with $11,228,000 as of December 31, 1994, including United States Treasury Bills
of $11,014,000. The decrease is primarily attributable to the payment of general
and administrative expenses.
As of June 30, 1995, the Company's principal source of funds
consisted of $11,179,000 in cash and cash equivalents, including United States
Treasury Bills of $10,808,000. Near-term capital requirements for operating
expenses and payment of liabilities are expected to be financed through cash
flow from interest income and existing cash balances. The Company may finance
future acquisitions from a number of sources, including but not limited to
existing cash balances, bank debt, the use of promissory notes and the issuance
of additional debt or equity.
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PART II. Other Information
Item 1. Legal Proceedings
Reference is made to Notes 6 and 7 in the Notes to
Consolidated Financial Statements for the year ended December 31, 1994, included
in the Tigera Group, Inc. Form 10-KSB Annual Report to the Securities and
Exchange Commission.
Item 2. Exhibits and Reports on Form 8-K
(a) Exhibits - None.
(b) Reports on Form 8-K: No reports were filed on Form
8-K during the three months ended June 30, 1995.
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SIGNATURE
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.
TIGERA GROUP, INC.
(Registrant)
By: /s/ Robert E. Kelly
----------------------------
Robert E. Kelly
Senior Vice President,
Chief Financial Officer and
Principal Accounting Officer
Dated: August 4, 1995
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EXHIBIT INDEX
Exhibit No. Description Page No.
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EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 11,179,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,198,000
<CURRENT-LIABILITIES> 89,000
<BONDS> 0
<COMMON> 213,000
0
0
<OTHER-SE> 11,896,000
<TOTAL-LIABILITY-AND-EQUITY> 12,198,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 453,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (99,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (99,000)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
