FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 No. 2-8381-NY
ARISTA INVESTORS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2957684
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
116 John Street, New York, N.Y. 10038
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212)964-2150
Indicate by check mark whether the registrant 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 |_|
The aggregate number of Registrant's outstanding shares on August 12, 1999 was
2,570,100 shares of Class A Common Stock, $0.01 par value (excluding 10,000
shares of treasury stock), $0.01 par value.
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<PAGE>
ARISTA INVESTORS CORP.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance sheets at June 30,
1999(Unaudited) and December 31, 1998 3
Consolidated Statements of Income and
Comprehensive Income (Unaudited) for
the six months ended June 30, 1999
and 1998 5
Consolidated Statements of Changes in Stock-
holders' Equity for the six months ended
June 30, 1999 (Unaudited) and the year
ended December 31, 1998 6
Consolidated Statements of Cash Flows
(Unaudited for the six months ended June
30, 1999 and 1998 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operat-
tions 13
PART II. OTHER INFORMATION
Item 1 through Item 6 16
Signatures 18
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1999 1998
---- ----
(unaudited)
ASSETS
Investments:
Held-to-maturity securities:
Bonds and long-term U. S. Treasury
obligations at amortized cost (market
value $538,425 at June 30, 1999 and
$2,676,995 at December 31, 1998) $ 536,942 $ 2,618,068
Available-for-sale securities:
Redeemable preferred stocks, at market value
(amortized cost of $31,524 at December 31, 1998) 0 3,552
Trading securities, at market value (cost of $279 at
December 31, 1998) 0 87
---------- -----------
Total investments 536,942 2,621,707
Cash and equivalents 344,516 6,330,909
Receivables from related parties 553,200 557,902
Receivables from third party administration 1,429,930 7,802
Furniture and equipment, at cost, net of
accumulated depreciation of $850,999 at June 30,
1999 and $831,754 at December 31, 1998 56,461 75,707
Prepaid and refundable income taxes 217,417 0
Deferred income taxes, net 3,436 759,310
Prepaid expenses 559,372 140,687
Other assets 145,987 148,987
---------- -----------
Total assets $3,847,261 $10,643,011
========== ===========
(Continued)
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED BALANCE SHEETS
(Continued)
June 30, December 31,
1999 1998
---- ----
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Commissions payable 0 43,841
Accounts payable and accrued expenses 2,769,410 3,083,415
Income taxes payable 0 580,319
----------- ------------
Total liabilities 2,769,410 3,707,575
----------- ------------
Commitments and contingencies: (Note 2)
Stockholders' equity:
Class A common stock, $.01 par value;
9,950,000 shares authorized; 2,580,100
shares issued 25,801 25,801
Class B convertible common stock, $.01 par
value; 50,000 shares authorized, 47,400
shares issued 0 474
Additional paid-in capital 258,286 5,989,609
Retained earnings 1,464,442 1,468,780
Accumulated comprehensive income (loss):
Net unrealized investment loss (Note 4) 0 (22,488)
----------- ------------
1,748,529 7,462,176
Secured promissory note from shareholder 0 (500,000)
Cost of 10,000 shares Class A and 47,400 shares of
Class B common stocks held in treasury (670,678) (26,740)
----------- ------------
Total stockholders' equity 1,077,851 6,935,436
----------- ------------
Total liabilities and stockholders' equity 3,847,261 10,643,011
=========== ============
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Third-party administrative services $ 752,169 $ 103,761 $ 1,631,764 $ 198,790
Net realized investment gains or (losses) (10,602) 0 (10,602) 0
Net unrealized investment gains (21) 54 192 360
Net investment income 50,535 135,224 135,122 264,507
Other income 8,098 5,998 8,156 16,714
----------- ---------- ----------- -----------
Total revenue 800,179 245,037 1,764,632 480,371
Expenses:
General and administrative expenses 917,711 70,000 1,850,255 140,000
----------- ---------- ----------- -----------
Income (loss) from continuing operations before
income tax provision (benefit) (117,532) 175,037 (85,623) 340,371
Income taxes:
Provision for income taxes (benefit) (19,160) 159,600 (81,285) 223,600
----------- ---------- ----------- -----------
Income (loss) from continuing operations (98,372) 15,437 (4,338) 116,771
Discontinued operations: (Note 8)
Income (loss) from operations of disposed segment
(net of income taxes) 0 86,216 0 (50,534)
----------- ---------- ----------- -----------
Net income (loss) (98,372) 101,653 (4,338) 66,237
----------- ---------- ----------- -----------
Other comprehensive income (loss):
Unrealized gain (loss) on securities during period 2,146 518 0 (296)
Reclassification of losses included in revenue 29,822 0 29,822 0
Income tax effect (6,604) 177 (7,334) (100)
----------- ---------- ----------- -----------
Other comprehensive income (loss) net 25,364 341 22,488 (196)
----------- ---------- ----------- -----------
Total comprehensive income (loss) (73,008) 101,994 18,150 66,041
=========== ========== =========== ===========
Net income (loss) per common share:
Basic and diluted
Continuing operations ($0.04) $0.01 ($0.00) $0.04
Discontinued operations 0.00 0.03 0.00 (0.02)
----------- ---------- ----------- -----------
Net income (loss) ($0.04) $0.04 ($0.00) $0.03
=========== ========== =========== ===========
Weighted average number of common shares:
Basic and diluted 2,570,100 2,617,500 2,570,100 2,617,500
=========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Six months ended June 30, 1999 (unaudited) and year ended December 31, 1998
<TABLE>
<CAPTION>
Class A Convertible Class B Paid-in
capital
------------------ ------------------- attributed
Number Par Number Par Additional to
of value of value paid-in detachable
Shares $.01 Shares $.01 capital warrants
--------- ------- -------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1998 2,580,100 $25,801 47,400 $ 474 $ 5,839,609 $ 150,000
Net income - - - - - -
Unrealized securities loss, net - - - - - -
Expiration of option - - - - 150,000 (150,000)
--------- ------- ------- ----- ----------- ---------
Balance - December 31, 1998 2,580,100 $25,801 47,400 $ 474 $ 5,989,609 $ 0
Net income (loss) (unaudited) - - - - - -
Acquisition of Convertible Class B Common Stock (unaudited) - - (47,400) (474) - -
Cancellation (unaudited) - - - - - -
Partial liquidating distribution (unaudited) - - - - (5,731,323) -
Unrealized securities loss, net (unaudited) - - - - - -
--------- ------- ------- ----- ----------- ---------
Balance - March 31, 1999 (unaudited) 2,580,100 $25,801 0 $ 0 $ 258,286 $ 0
========= ======= ======= ===== =========== =========
</TABLE>
<TABLE>
<CAPTION>
Class A
common
stock
Accumulated Secured held in
other promissory treasury
Retained comprehensive note (10,000
earnings income receivable shares) Total
----------- ------------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Balance - January 1, 1998 $ 1,035,985 ($18,727) ($500,000) ($ 26,740) $ 6,506,402
Net income 432,795 - - - 432,795
Unrealized securities loss, net - (3,761) - - (3,761)
Expiration of option - - - - -
----------- -------- --------- --------- -----------
Balance - December 31, 1998 1,468,780 (22,488) (500,000) (26,740) 6,935,436
Net income (loss) (unaudited) (4,338) - - - (4,338)
Acquisition of Convertible Class B Common Stock (unaudited) - - - (643,938) (644,412)
Cancellation (unaudited) - - 500,000 - 500,000
Partial liquidating distribution (unaudited) (5,731,323)
Unrealized securities loss, net (unaudited) - 22,488 - - 22,488
----------- -------- --------- --------- -----------
Balance - March 31, 1999 (unaudited) $ 1,464,442 $ 0 $ 0 ($670,678) $ 1,077,851
=========== ======== ========= ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (4,338) $ 66,237
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 19,246 23,865
Amortization of deferred acquisition costs 0 155,376
Amortization of discount on surplus note 0 7,500
Loss on sale of investments 10,602 0
Deferred income taxes 757,810 (23,916)
(Increase) decrease in operating assets:
Premiums receivable 0 (520,400)
Prepaid and refundable income taxes (217,417) (113,284)
Receivable from related parties 4,702 (4,368)
Receivable from third party administators (1,422,128) 0
Prepaid expenses (418,685) 13,051
Other assets 3,000 (90,501)
Increase (decrease) in operating liabilities:
Payable to reinsurer 0 405,169
Claims liabilities 0 (687,750)
Unearned premiums 0 41,800
Commissions payable (43,841) 24,955
Income taxes payable (580,319) 0
Accounts payable and accrued expenses (314,005) 650,419
----------- -----------
Net cash provided by (used in) operating activities 2,096,651 (51,847)
----------- -----------
Cash flows from investing activities:
Furniture and equipment acquired 0 (9,999)
Proceeds from sale of investments and amortization of premiums 2,096,651 5,832
Purchases of investments 0 0
----------- -----------
Net cash provided by (used in) investing activities 2,096,651 (4,167)
----------- -----------
Cash flows from financing activities:
Issuance of Class A common stock 0 0
Exercise option to acquire Class B common stock (146,348) 0
Partial liquidating distribution (5,731,323) 0
----------- -----------
Net cash provided by (used in) financing activities (5,877,671) 0
----------- -----------
Net increase (decrease) in cash and equivalents (5,986,393) (56,014)
Cash and equivalents:
Beginning of year 6,330,909 8,296,943
----------- -----------
June 30, $ 344,516 $ 8,240,929
=========== ===========
Supplemental cash flow disclosure:
Cash paid during the period for income taxes $ 57,496 $ 263,459
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
ARISTA INVESTORS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
Note 1 - Basis of presentation
The accompanying consolidated financial statements are prepared on the basis of
generally accepted accounting principles ("GAAP"). Certain information normally
included in annual financial statements prepared in accordance with GAAP has
been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the management of Arista
Investors Corp. (the "Registrant"), all adjustments (consisting of normal
recurring accruals only) have been reflected for a fair presentation of the
unaudited financial position as of June 30,1998 and results of operations for
the six-month and three-month periods ended June 30, 1999 and 1998. The
operating results for the periods are not necessarily indicative of the results
to be expected for the entire year.
Note 2 - Reinsurance
The Registrant and its wholly owned subsidiary, Arista Insurance Company
("Arista"), sometimes hereinafter individually or collectively referred to as
the "Company", entered into an Assumption Reinsurance Agreement, dated September
23, 1998 (the "Treaty") with The Guardian Life Insurance Company of America
("The Guardian"). Pursuant to this Treaty, all of Arista's liabilities under
each and every policy of New York State and voluntary disability benefits
insurance, (collectively the "Insurance"), were ceded to The Guardian. The
cession of the Insurance to The Guardian, deemed effective July 1, 1998, was
consummated on November 12, 1998. Arista discontinued writing the Insurance
effective November 12, 1998.
From January 1, 1998 to June 30, 1998, Arista had a Quota Share Reinsurance
Treaty with The Guardian, pursuant to which Arista ceded by way of reinsurance,
a 50% participation in the Insurance, both for business in force as of January
1, 1998 and for business written or acquired after January 1, 1998.
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<PAGE>
ARISTA INVESTORS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
A contingent liability exists with respect to reinsurance ceded which would
become a liability to Arista in the event that the reinsurer is unable to meet
its proportionate share of the obligations assumed under the reinsurance
agreement.
Note 3 - Transactions with related parties
At June 30, 1999 and December 31, 1998, Bernard Kooper, Chairman of the Boards
of Directors of the Company and Arista and a Director of The Collection Group,
Inc., beneficially owns 20.4% of the outstanding shares of Class A common stock,
par value $.01 per share (the "Class A Common Stock"). At December 31, 1998 Mr.
Kooper also owned 100% of the outstanding shares of Class B common stock, par
value $.01 per share (the "Class B Common Stock"). Mr. Kooper is also the owner
of Bernard Kooper Life Agency, Inc. (the "Agency"), one of the general agents
marketing the Insurance. During the six months ended June 30, 1999 and 1998, the
Agency received approximately $95,000 and $100,000, respectively, in commissions
based on the premiums collected under the Treaty's Insurance. Of this amount,
the Agency paid approximately $70,000 and $77,000, respectively, during the six
months ended June 30, 1999 and 1998 to brokers, which included certain members
of the Board of Directors of the Company and Arista. The amount paid to members
of the Board of Directors of the Company and Arista by the Agency was
approximately $10,000 and $8,000 for the six months ended June 30, 1999 and
1998, respectively.
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<PAGE>
ARISTA INVESTORS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
Note 4 - New Accounting Standards
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130 (SFAS No. 130) "Reporting Comprehensive Income". This pronouncement requires
entities to make certain disclosures about all types of income, expenses, gains
and losses arising during the period in addition to net income from operations.
SFAS No.130 is effective for years beginning after December 15,1997. SFAS No.
130 did not have a material effect on the Company's financial position or
results of operations for the six-month periods ended June 30, 1999 and June 30,
1998. Note 5 - Segment Information
Adminis-
Discontinued trative
Insurance Service
Segment Segment Total
------- ------- -----
1999
Revenues from outside customers $ 0 $ 1,631,764 $ 1,631,764
Major customers $ 0 $ 0 $ 0
Profit or (loss) $ 0 $ (85,623) $ (85,623)
1998
Revenues from outside customers $ 9,511,264 $ 198,790 $ 9,710,054
Major customers $ 0 $ 0 $ 0
Profit or (loss) $ (147,334) $ 340,371 $ 193,037
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<PAGE>
ARISTA INVESTORS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999 and 1998
(Unaudited)
Note 7 - Third Party Administration
The Registrant entered into an administrative service agreement dated September
23, 1998 (the "TPA Agreement") with The Guardian. The TPA Agreement was
consummated on November 12, 1998 and deemed effective as of July 1, 1998. As a
third party administrator under the TPA Agreement, the Registrant performs
various services relating to the Insurance underwritten by The Guardian,
including, but not limited to pricing of risk, underwriting new and renewal
business, investigation, and calculation and payment of claims. In addition, the
Registrant acts as a third party administrator for the statutory disability
benefits book of business of the United States Life Insurance Company in the
City of New York and the temporary disability insurance book of business of
Hartford Life and Health Insurance Company. Previously, Arista acted as the
third party administrator for these three books of business.
Note 8 - Discontinued Operations
In November 1998, the Company completed the cession of the Insurance, previously
conducted by Arista, to The Guardian. The summary of operating results of the
discontinued operations at June 30, 1999 and 1998 is as follows:
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<PAGE>
ARISTA INVESTORS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Gross premiums earned $ 0 $ 4,606,940 $ 0 $ 9,511,264
Ceded premiums earned 0 2,303,470 0 4,630,632
------ ----------- ------ -----------
Net premiums earned 0 2,303,470 0 4,880,632
------ ----------- ------ -----------
Expenses:
Underwriting:
Gross claims incurred 0 2,003,530 0 4,980,660
Ceded claims incurred 0 1,001,765 0 2,490,330
------ ----------- ------ -----------
Net claims incurred 0 1,001,765 0 2,490,330
------ ----------- ------ -----------
Gross commissions incurred 0 938,509 0 1,887,456
Ceded commissions incurred 0 735,041 0 1,482,436
------ ----------- ------ -----------
Net commissions incurred 0 203,468 0 405,020
------ ----------- ------ -----------
Total underwriting expenses 0 1,205,233 0 2,895,350
General and administrative expenses 0 1,050,821 0 2,132,616
------ ----------- ------ -----------
Total expenses 0 2,256,054 0 5,027,966
Income (loss) before income tax provision (benefit) 0 47,416 0 (147,334)
Net income tax provision (benefit) 0 (38,800) 0 (96,800)
------ ----------- ------ -----------
Net income (loss) $ 0 $ 86,216 $ 0 ($ 50,534)
====== =========== ====== ===========
</TABLE>
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<PAGE>
ARISTA INVESTORS CORP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements (unaudited) of the Company and the notes
thereto appearing elsewhere in this Form 10-Q. Except for the historical
information contained herein, the following discussion contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those projected in the forward-looking statements
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in this section, as well as
in other sections herein.
Results of Operations
Six-Month And Three-Month Periods Ended June 30, 1999 VS.
June 30, 1998 (unaudited)
Consolidated revenues from continuing third-party administrative service
operations during the six months ended June 30, 1999 and 1998 were approximately
$1,632,000 and $199,000, respectively. For the second quarters of 1999 and 1998,
such income was approximately $752,000 and $104,000, respectively. During the
first six months of 1999, the Company operated only as full-time third party
administrative service provider. In comparison, for the first six months of
1998, the Company operated as a part-time third party administrative service
provider as well as a full-time New York State statutory disability carrier.
Consolidated total revenue from continuing operations for the first six months
of 1999 was approximately $1,765,000, resulting in a net loss of approximately
$4,000. This compares to total revenue of approximately $480,000 and net income
of approximately $117,000 for the same period of 1998. For the second quarters
of 1999 and 1998, the consolidated total revenue was approximately $800,000 and
$245,000, respectively. The net loss for the second quarter of 1999 was
approximately $98,000 as compared to net income of approximately $15,000 for the
same period of 1998. The decrease in net income for the first six months of 1999
and the second quarter of 1999 when compared to the same periods of 1998 were
due to a reduction in investment income and to the expenses allocated to
discontinued operations for 1998.
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<PAGE>
ARISTA INVESTORS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(continued)
Consolidated investment income for the first six months of 1999 and 1998 was
approximately $135,000 and $265,000, respectively. For the second quarters of
1999 and 1998, consolidated investment income were approximately $51,000 and
$135,000, respectively. The decreases during the first six months of 1999 and
the second quarter of 1999 are attributable to investment income earned in 1998
on the proceeds received by Arista from the issuance of a $3,000,000 surplus
note that was repaid during the fourth quarter of 1998.
The consolidated general and administrative expenses for the first six months of
1999 and 1998, from continuing and discontinued operations, were approximately
$1.9 million and $2.3 million, respectively. Reductions in the following
expenses attributed to this $400,000 decrease: $126,000 in interest expenses,
$95,000 in New York State premium taxes, $73,000 in loss adjustment expenses,
and $51,000 in salaries and benefits due to a reduction in employees. For the
second quarters of 1999 and 1998, consolidated general and administrative
expenses, from continuing and discontinued operations, were approximately
$907,000 and $1,121,000, respectively. Reductions in interest expenses, in loss
adjustment expenses and in salaries and benefits also contributed to the
decrease in general and administrative expenses.
Liquidity and Capital Resources
Retained earnings decreased slightly from $1,468,780 at December 31, 1998 to
$1,464,442 at June 30, 1999 as a result of the Company's net loss.
Since the consummation of the cession of Arista's Insurance business to The
Guardian, Arista has reduced its capital and paid in surplus to the minimum
amount permitted by the New York State Insurance Department and is reviewing its
plans to sell Arista's charter and license.
On May 4, 1999, the Class A Directors of the Board of Directors of the
Registrant exercised an option to acquire the 47,400 shares of Class B Common
Stock, beneficially owned by Mr. Kooper. These 47,400 shares of
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<PAGE>
ARISTA INVESTORS CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(continued)
Class B Common Stock represented all of the issued and outstanding shares of the
Class B Common Stock. Upon the exercise of the option, Mr. Kooper received an
amount equal to $146,347.50, the Fair Market Value of the Registrant's Class A
Common Stock and the cancellation of the $500,000.00 outstanding principal
amount under a secured promissory note.
On May 28, 1999, the Registrant issued a partial liquidating distribution in the
amount of $2.23 per share to stockholders of record on May 19th of the Class A
Common Stock.
Year 2000
The Company has completed the conversion and testing of its systems and
applications and determined that the systems are Year 2000 compliant. The cost
of compliance to date totaled approximately $22,900.
Inflation and Seasonality
The Company does not anticipate that inflation will significantly impact its
business nor does it believe that its business is seasonal.
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<PAGE>
ARISTA INVESTORS CORP.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Nothing to report.
Item 2. Changes in Securities
Nothing to report
Item 3. Defaults Upon Senior Securities
Nothing to report.
Item 4. Submission of Matters to a Vote of Security Holders
Nothing to report.
Item 5. Other Information
On May 4, 1999, the Class A Directors of the Board of Directors of the
Registrant exercised an option (the "Transaction") granted to the Registrant
pursuant to a letter agreement, dated June 14, 1996 (the "Letter Agreement"), by
Mr. Kooper. Mr. Kooper is the beneficial owner of 47,400 shares of the
Registrant's Class B Common Stock, representing all of the issued and
outstanding shares of the Class B Common Stock. The Transaction closed on May
18, 1999. As a result of the Transaction, there are no longer any shares of the
Class B Common Stock outstanding.
Pursuant to the Letter Agreement, the Registrant acquired 47,400 shares of Class
B Common Stock beneficially owned by Mr. Kooper in consideration for (i) an
amount equal to $146,347.50, the Fair Market Value (as defined in the Letter
Agreement) of the Registrant's Class A Common Stock and (ii) the cancellation of
the $500,000 outstanding principal amount under the Note (as defined in the
Letter Agreement). The source of such funds paid by the Registrant to Mr. Kooper
was working capital. Prior to the Transaction and pursuant to the Registrant's
Certificate of Incorporation and By-laws, Mr. Kooper had the right to elect a
majority of the Registrant's Board of Directors. In addition, the holder of the
Class B Common Stock had the right to
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<PAGE>
ARISTA INVESTORS CORP.
PART II. OTHER INFORMATION
(continued)
vote as a separate class upon any merger, reorganization, recapitalization,
liquidation, dissolution, or winding-up, sale, transfer or hypothecation of all
or a substantial portion of the assets of the Company, and with regard to any
amendment to the certificate of incorporation which affects the number or par
value, or adversely alters or changes powers, preferences, voting power or
special rights of the shares of the Class B Common Stock. Notwithstanding the
Transaction, Mr. Kooper continues to beneficially own 525,200 shares of the
Registrant's Class A Common Stock (including 30,400 shares of Class A Common
Stock owned by Mr. Kooper's wife).
Item 6. Exhibits and Reports on Form 8-K
a. Exhibit 27 - Financial Data Schedule
b. Reports on Form 8-K: None
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<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.
Arista Investors Corp. (Registrant)
BY: /S/ STANLEY S. MANDEL
-------------------------------------
STANLEY S. MANDEL, President and
Chief Executive Officer (principal
executive officer)
BY: /S/ SUSAN J. HALL
-------------------------------------
SUSAN J. HALL, Senior Vice President
and Treasurer (principal financial
and accounting officer)
August 13, 1999
-18-
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 536,942
<DEBT-MARKET-VALUE> 538,425
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 536,942
<CASH> 344,516
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
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0
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