<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 Number 0-16886
Semele Group Inc.
-----------------
(Name of Small Business Issuer in its charter)
Delaware 36-3465422
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Canterbury Green, Stamford, Connecticut 06901
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code : (203) 363-0849
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X . NO .
Shares of common stock outstanding as of August 14, 1998: 1,179,636
Transitional Small Business Disclosure Format: YES . NO X .
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SEMELE GROUP INC.
Consolidated Balance Sheets
June 30, 1998 and December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------- -----------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents.......................................... $ 7,446,844 $ 7,884,593
Interest Receivable on Loans....................................... -- 3,565
Loans Receivable................................................... 225,000 475,000
Foreclosed Real Estate Held for Sale, Net.......................... 9,961,991 9,961,991
Other Assets....................................................... 69,155 --
---------------- ----------------
Total Assets....................................................... $ 17,702,990 $ 18,325,149
---------------- ----------------
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Note Payable - Affiliate........................................... $ 4,419,500 $ 4,419,500
Accrued Expenses - Affiliate....................................... 36,977 49,166
Accounts Payable and Accrued Expenses.............................. 816,303 404,358
---------------- ----------------
Total Liabilities.................................................. 5,272,780 4,873,024
---------------- ----------------
Stockholders' Equity
Shares of Common Stock, $0.01 Par Value,
5,000,000 Authorized, 2,080,185 and 2,125,327 Shares Issued at...
June 30, 1998 and December 31, 1997, respectively............... 170,663,365 171,019,463
Accumulated Deficit................................................ (142,378,948) (141,713,131)
Deferred Compensation, 32,436 and 15,483 Shares at
June 30, 1998 and December 31, 1997, respectively............... (551,412) (263,204)
Treasury Stock at Cost, 900,549 and 917,502 Shares at
June 30, 1998 and December 31, 1997, respectively............... (15,302,795) (15,591,003)
---------------- ----------------
Total Stockholders' Equity........................................ 12,430,210 13,452,125
---------------- ----------------
Total Liabilities and Stockholders' Equity........................ $ 17,702,990 $ 18,325,149
---------------- ----------------
---------------- ----------------
Book Value Per Share of Common Stock
(1,179,636 and 1,207,825 Shares Outstanding at
June 30, 1998 and December 31, 1997, respectively............... $ 10.54 $ 11.14
---------------- ----------------
---------------- ----------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
SEMELE GROUP INC.
Consolidated Statements of Operations
For the Six Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---------------- ----------
<S> <C> <C>
INCOME
Income From Lending and Investing Activities:
Interest on Loans Receivable......................................... $ 24,705 $ 24,694
Income on Investments ............................................... 196,704 19,411
---------------- ---------------
Total Income From Lending and Investing Activities..................... 221,409 44,105
---------------- ---------------
EXPENSES
Expenses From Property Operating Activities:
Net Loss From Operations of Foreclosed Real Estate Held for Sale..... 357,893 332,880
Net Loss From Disposition of Foreclosed Real Estate Held for Sale.... -- 32,612
Net Income From Operations of Real Estate Venture ................... -- (45,033)
---------------- ---------------
Total Expenses From Property Operating Activities...................... 357,893 320,459
---------------- ---------------
Other Expenses:
Stockholder Expenses ................................................ 34,924 39,120
Directors' Fees, Expenses, and Insurance ............................ 103,369 111,094
Other Professional Fees ............................................. 61,692 250,780
General and Administrative .......................................... 139,890 462,758
Administrative Reimbursement - Affiliate ............................ 75,431 --
Interest Expense - Affiliate ........................................ 222,203 --
Recovery of Losses on Loans, Notes and Interest Receivable........... (108,176) --
---------------- ---------------
Total Other Expenses .................................................. 529,333 863,752
---------------- ---------------
Total Expenses ........................................................ 887,226 1,184,211
---------------- ---------------
Net Loss .............................................................. $ (665,817) $ (1,140,106)
---------------- ---------------
---------------- ---------------
Net Loss Per Share of Common Stock Basic
(Based on the Weighted Average Number of Shares
Outstanding of 1,215,472 and 1,061,705, respectively)................ $ (0.55) $ (1.07)
---------------- ---------------
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
SEMELE GROUP INC.
Consolidated Statements of Operations
For the Three Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
<S> <C> <C>
INCOME
Income From Lending and Investing Activities:
Interest on Loans Receivable......................................... $ 1,109 $ 5,000
Income on Investments ............................................... 98,076 18,967
---------------- ---------------
Total Income From Lending and Investing Activities..................... 99,185 23,967
---------------- ---------------
EXPENSES
Expenses From Property Operating Activities:
Net Loss From Operations of Foreclosed Real Estate Held for Sale..... 92,977 198,122
Net Loss From Disposition of Foreclosed Real Estate Held for Sale.... -- 32,612
Net Income From Operations of Real Estate Venture ................... -- (18,108)
---------------- ---------------
Total Expenses From Property Operating Activities...................... 92,977 212,626
---------------- ---------------
Other Expenses:
Stockholder Expenses ................................................ 19,670 22,941
Directors' Fees, Expenses, and Insurance ............................ 50,916 56,514
Other Professional Fees ............................................. 39,394 145,986
General and Administrative .......................................... 68,650 348,712
Administrative Reimbursement - Affiliate ............................ 36,977 --
Interest Expense - Affiliate ........................................ 111,715 --
---------------- ---------------
Total Other Expenses .................................................. 327,322 574,153
---------------- ---------------
Total Expenses ........................................................ 420,299 786,779
---------------- ---------------
Net Loss .............................................................. $ (321,114) $ (762,812)
---------------- ---------------
---------------- ---------------
Net Loss Per Share of Common Stock Basic
(Based on the Weighted Average Number of Shares
Outstanding of 1,219,374 and 1,129,020, respectively)................ $ (0.26) $ (0.68)
---------------- ---------------
---------------- ---------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
SEMELE GROUP INC.
Consolidated Statement of Stockholders' Equity
For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Accumulated Deferred
Shares Amount Deficit Compensation
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Stockholder's Equity,
December 31, 1997................. 2,125,327 $ 171,019,463 $ (141,713,131) $ (263,204)
Deferred Compensation
16,953 Shares of Stock............ -- -- -- (288,208)
Net Loss............................ -- -- (665,817) --
1-for-300 reverse stock split and
30-for-1 forward stock split
(including $356,098 paid for
fractional shares).................. (45,142) (356,098) --
--------------- ---------------- --------------- --------------
Stockholder's Equity,
June 30, 1998..................... 2,080,185 $ 170,663,365 $ (142,378,948) $ (551,412)
--------------- ---------------- --------------- --------------
--------------- ---------------- --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
Treasury
Stock Total
----------- -----------
<S> <C> <C>
Stockholder's Equity,
December 31, 1997................. $ (15,591,003) $ 13,452,125
Deferred Compensation
16,953 Shares of Stock............ 288,208 --
Net Loss............................ -- (665,817)
1-for-300 reverse stock split and
30-for-1 forward stock split
(including $356,098 paid for
fractional shares).................. -- (356,098)
--------------- ----------------
Stockholder's Equity,
June 30, 1998..................... $ (15,302,795) $ 12,430,210
--------------- ----------------
--------------- ----------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
SEMELE GROUP INC.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss...................................................................... $ (665,817) $ (1,140,106)
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:
Net Loss From Disposition of Foreclosed Real Estate Held For Sale........... -- 32,612
Net Income From Operations of Real Estate Venture........................... -- (45,033)
Net Change In:
Interest Receivable on Investments.......................................... -- (16,929)
Interest Receivable on Loans................................................ 3,565 (14,694)
Other Assets................................................................ (69,155) (24,932)
Accrued Expenses - Affiliate................................................ (12,189) --
Accounts Payable and Accrued Expenses....................................... 55,847 18,122
Accrued Real Estate Taxes................................................... -- (32,715)
--------------- ---------------
Net Cash Used In Operating Activities......................................... (687,749) (1,223,675)
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection of Loans Receivable.............................................. 250,000 --
Distributions from Investment in Real Estate Venture........................ -- 859,583
Proceeds from Sale of Foreclosed Real Estate Held For Sale.................. -- 617,388
Investment in Real Estate Venture........................................... -- 22,242
--------------- ---------------
Net Cash Provided By Investing Activities..................................... 250,000 1,499,213
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Stock, Net...................................................... -- 2,655,500
--------------- ---------------
Net Cash Provided By Financing Activities..................................... -- 2,655,500
--------------- ---------------
Net Increase (Decrease) in Cash and Cash Equivalents.......................... (437,749) 2,931,038
Cash and Cash Equivalents at Beginning of Period.............................. 7,884,593 145,335
--------------- ---------------
Cash and Cash Equivalents at End of Period.................................... $ 7,446,844 $ 3,076,373
--------------- ---------------
--------------- ---------------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest.................................... $ 222,203 $ --
--------------- ---------------
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
SEMELE GROUP INC.
Notes To Consolidated Financial Statements
June 30, 1998
(Unaudited)
Readers of this quarterly report should refer to the audited consolidated
financial statements of Semele Group Inc. (the "Company"), formerly known as
Banyan Strategic Land Fund II, for the year ended December 31, 1997, which are
included in the Company's 1997 Annual Report on Form 10-KSB, as certain footnote
disclosures which would substantially duplicate those contained in such audited
statements have been omitted from this report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at June 30, 1998 and December 31, 1997 and results of operations for
the three and six month periods ended June 30, 1998 and 1997 have been made and
are reflected.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries and consolidated ventures which
hold title to the Company's property. In April 1996, the Company acquired 100%
of the outstanding shares of BMC Banden Corp. The acquired assets had no value,
so consolidation had no effect on respected amounts. All intercompany balances
and transactions have been eliminated in consolidation. The Company's 47%
interest in the H Street Assemblage was accounted for under the equity method
and was reported as an investment in real estate venture (see Note 6 for
discussion of sale).
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which was required to be adopted on December 31,
1997. This statement establishes standards for computing and presenting earnings
per share. The statement replaces primary earnings per share with basic earnings
per share. Basic earnings per share excludes all dilution and is computed by
dividing income available to common stockholders by the weighted average number
of common shares outstanding for the period. Diluted earnings per share is
computed similarly to fully diluted earnings per share. Diluted earnings per
share reflects the potential dilution that could occur if stock options and
stock award grants were exercised. All prior year amounts have been restated to
conform to SFAS No. 128.
CASH EQUIVALENTS
At June 30, 1998, the Company had $6,685,941 invested in federal agency
discount notes and reverse repurchase agreements secured by U.S. Treasury Bills
or interests in U.S. Government securities.
RECLASSIFICATION
Certain 1997 balances have been reclassified to conform to the 1998
presentation.
2. DISPOSITION OF FORECLOSED REAL ESTATE HELD FOR SALE
The Lindfield Tract D property is an 8.5-acre parcel of land zoned for
commercial use within a multi-use planned unit development, located in
Kissimmee, Florida. On June 23, 1997, the Company sold the Lindfield Tract D
property to an unaffiliated third party for a purchase price of $675,000. The
Company's carrying value for this property at the time of the sale was $650,000.
Cash proceeds received, net of transaction costs, were $617,388, resulting in a
net loss on disposition of $32,612 for financial reporting purposes.
7
<PAGE>
SEMELE GROUP INC.
Notes To Consolidated Financial Statements
(Continued)
3. FORECLOSED REAL ESTATE HELD FOR SALE
Rancho Malibu is a 274-acre parcel of undeveloped land north of Malibu,
California. On July 1, 1992, a joint venture (the "Venture") between the Company
and Legend Properties, Inc. (f/k/a Banyan Mortgage Investment Fund) ("Legend")
acquired title to the property pursuant to a deed in lieu of foreclosure
agreement. The Company owns a 98.6% general partner interest in the Venture
while Legend holds the remaining 1.4% interest as a limited partner. The
Venture's results are consolidated in the accompanying financial statements.
From the acquisition date, the Venture has engaged in zoning and entitlement
activities that have been opposed by the City of Malibu and various citizen
groups. The city initiated two separate legal actions intended to preclude the
issuance of a Coastal Development Permit, both of which were ultimately resolved
in favor of the Venture.
Concurrent with the aforementioned litigation, the Venture pursued
entitlements before the Board of Supervisors for the County of Los Angeles. In
September 1995, the Los Angeles County Regional Planning Commission, by a 3 to 2
vote, approved a revised plan to develop a fifty-one unit housing community on
the Rancho Malibu property. The Los Angeles County Regional Planning
Commission's approval was appealed to the Los Angeles County Board of
Supervisors. On May 14, 1996, the Los Angeles County Board of Supervisors
approved a compromise project (the "Project") to create forty-six single family
lots. These approvals are specified in Los Angeles County CUP No. 91-315(3), Oak
Tree Permit No. 91-315(3) and Tentative Tract No. 46277 (revised), approved May
14, 1996. On June 17, 1996, a neighboring homeowners association filed an action
entitled La Chusa Highlands Property Owners Association, Inc. v. Los Angeles
County, et al., Los Angeles County Superior Court Case No. BS039789 (the "La
Chusa Litigation"), challenging the aforesaid approvals. The Company, Legend and
the Venture are named as real parties in interest.
The La Chusa Litigation was tried before a Court on January 27, 1997. On
February 5, 1997, the Court issued its ruling, granting the Petitioner's Writ
and remanding the matter to the County Board of Supervisors for further action
on three separate grounds: (i) the Supervisors' analyses and findings relating
to the consistency of the Projects' cul de sacs and streets within certain
County of Los Angeles Code provisions restricting the length of cul de sacs to
1,000 feet were deemed inadequate; (2) a proposed deed restriction requiring the
Venture to "diligently seek" approval for a second living unit on five of the
forty-six lots was held to be too abstract to comply with the low income housing
requirement of state law and (3) the Court found that the County acted
improperly when it approved the Project in January of 1996 and later approved a
Supplemental Environmental Impact Report ("SEIR") in May of 1996.
The Court's order specifically rejected challenges to the Project's
entitlements predicated on (i) the adequacy of the Supervisors' analyses of the
environmental impacts of the Project under the SEIR; (ii) the consistency of the
Project with the County General Plan; (iii) the approval of a sewage treatment
plant and (iv) the density of the Project under the Hillside Management
Ordinance.
The Court entered a final judgment in the La Chusa Litigation on March 25,
1997. The Venture filed a notice of appeal of this judgment on April 25, 1997
and is seeking further action by the Supervisors to address the three issues
specified by the Court in order to reinstate the entitlements set aside by the
Court. The Venture appeared before the Supervisors at a public hearing on
November 6, 1997. The matter was heard and continued with no action taken. On
January 27, 1998, the Supervisors held a continued public hearing and directed
County staff to present the Final SEIR and environmental finding at a future
meeting (scheduled for February 24, 1998) for review and consideration for
approval. On February 24, 1998, the Supervisors certified the Final SEIR and
adopted environmental findings for the Project. The public hearing was continued
for the Board to review and consider approval of Project entitlements. On March
31, 1998, the Supervisors considered the Project entitlements. The Supervisors
directed the Venture to revise the proposed tract map to relocate lots 23 and 24
from the eastern ridge to the main development cluster and present the revised
tract map to the Supervisors for their review and consideration at a future
meeting. On June 9, 1998, the Supervisors approved Tentative Tract Map No. 46277
(revised), CUP No. 91-315(3) and Oak Tree Permit No. 91-315(3) for a 46
residential lot and 5 second unit project ("1998 Project"). Pursuant to the
Board's direction, the new tract map relocates former lots 23 and 24 to the
northeastern portion of the main development cluster. The statute of limitations
to challenge the environmental review for the 1998 Project under the California
Environmental Quality Act
8
<PAGE>
SEMELE GROUP INC.
Notes To Consolidated Financial Statements
(Continued)
expired on July, 16, 1998. Neither the County nor the Venture have been served
with a lawsuit at this time and the Venture is not aware of any lawsuit having
being filed. The statute of limitations to challenge the Project entitlements
themselves will expire on September 9, 1998.
On August 6, 1998, in compliance with the trial court's order, the County
and Venture filed a motion seeking a court finding that the 1998 Project is in
compliance with the court writ and discharging the writ. The motion is scheduled
to be heard on August 21, 1998.
On April 29, 1997, counsel for La Chusa Highlands Property Owners
Association, Inc., presented a petition for an award of attorney's fees in
connection with the Court's judgment of March 25, 1997. The Court heard argument
on the petition and on April 30, 1997 awarded the petitioner's counsel the sum
of $126,711 in attorney's fees and related costs. An appeal of this order has
been incorporated into the Company's appeal of the March 25, 1997 judgment
discussed above. The Company's initial brief was filed on October 9, 1997. The
petitioner's response was filed on February 9, 1998. On March 2, 1998, the
Company filed its reply brief. The Court has not set the hearing date on this
matter.
In an earlier action, the Venture challenged the General Plan and the
Environmental Impact Report adopted by the City of Malibu on November 20, 1995
in a lawsuit entitled BMIF/BSLFII Rancho Malibu Limited Partnership v. City of
Malibu, Los Angeles County Superior Court Case No. SS006374. On July 31, 1996,
the Venture and the City of Malibu executed and delivered a settlement agreement
which, among other things, resulted in a dismissal of the lawsuit challenging
the City's General Plan and which precludes the City from challenging the
Venture's entitlements before any public body (in the absence of a significant
requested change). The City is also precluded by the settlement agreement from
participating in the La Chusa Litigation.
During the six months ended June 30, 1998, the Venture incurred
approximately $358,000 in costs in connection with Rancho Malibu relating to
entitlement activities, holding costs and litigation. These costs, treated as
capital contributions to the Venture by the Company, were included in total
expenses from property operating activities on the Company's consolidated
statements of operations. At June 30, 1998, the Company's carrying balance for
the property is $9,961,991.
4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The Company executed and delivered an Exchange Agreement dated April 30,
1997 (amended as of August 7, 1997, the "Agreement") among the Company, Equis
Exchange L.L.C., a Massachusetts limited liability company ("Equis"), Equis
Financial Group Limited Partnership ("EFG") and certain partnerships managed by
EFG ("the Partnerships"). Pursuant to the Agreement, on April 30, 1997, the
Company issued to the Partnerships 198,700 shares of the Company's common stock
at the price of $15.00 per share. Cash proceeds received by the Company,
$2,480,500, were net of related costs of $500,000. In addition, the Partnerships
made a three-year loan (the "Loan") to the Company in the amount of $4,419,500.
The Loan has an interest rate of 10% per annum with mandatory principal
reductions, if and to the extent net proceeds are received from the sale or
refinancing of the Rancho Malibu property. At June 30, 1998, the carrying value
of the note payable approximates fair value.
Pursuant to the Agreement, the Administrative Services Agreement between the
Company and Banyan Management Corp. ("BMC") was amended to provide, among other
things, for the immediate payment to BMC of a termination fee in the amount of
$251,823 and the transfer of the Company's ownership interest in BMC to BMC's
designee. Effective May 6, 1997, EFG entered into an Administrative Services
Agreement to provide administrative services to the Company, replacing BMC.
Administrative costs, primarily salaries and general and administrative
expenses, were incurred on the Company's behalf by EFG during the six months
ended June 30, 1998 and by BMC during the six months ended June 30, 1997 and
were reimbursed at cost by the Company. During the six months ended June 30,
1998 and 1997, the Company incurred administrative costs for services provided
by EFG and BMC of $75,431 and $90,835, respectively. The costs incurred by EFG
on behalf of the Company are reflected as
9
<PAGE>
SEMELE GROUP INC.
Notes To Consolidated Financial Statements
(Continued)
Administrative Reimbursement - Affiliate on the Consolidated Statement of
Operations for the three and six months ended June 30, 1998.
5. RECOVERY OF LOSSES ON LOANS, NOTES AND INTEREST RECEIVABLE
During the first quarter of 1998, the Company received cash distributions of
$18,423 related to its interest in a liquidating trust established for the
benefit of the unsecured creditors (including the Company) of VMS Realty
Partners and its affiliates. In addition, the Company received $89,753 from its
interest in Springtown Partners, a California limited partnership formed by
three land owners, including the Company, for the purpose of merging land
parcels in order to option them to a third party for use as a wetland mitigation
bank. The Company acquired the land from Anden Group as a result of a loan
default, but fully reserved for the asset as the land was determined to be
"undevelopable" due to certain environmental issues. Since 1993, the Company has
sought to realize value from this asset. The Company has treated both amounts as
a recovery of amounts previously charged to losses on loans, notes and interest
receivable on its consolidated statement of operations for the six months ended
June 30, 1998.
6. DISPOSITION OF INVESTMENT IN REAL ESTATE VENTURE
On October 22, 1990, the Company acquired title to the property known as the
H Street Assemblage located in Washington, D.C. pursuant to an agreement with
Banyan Strategic Realty Trust ("BSRT"). On June 5, 1992, the Company and BSRT
formed a joint venture (the "Venture") to pursue its development rights. The
Company had a 47% interest in the Venture while BSRT owned the remaining 53%.
This property consisted of 36,100 square feet of undeveloped land in downtown
Washington D.C. plus an approximately 55,900 square foot office building. The
entire property was zoned for office development.
On March 20, 1997, the Venture sold approximately 3,500 square feet of the
Venture's land to the United States General Services Administration ("GSA") for
a purchase price of $1,680,000. GSA also paid the Venture $150,000 as
reimbursement of expenses that the Venture incurred in anticipation of this
transaction. The Venture received net sales proceeds of $1,828,900. During the
six months ended June 30, 1997, the Company received aggregate distributions
from the Venture of $859,583, representing its allocation of such sales
proceeds. The Company recognized no gain or loss on this sale.
On July 29, 1997, the Venture sold the remaining land and office building to
an unaffiliated third party for $9,000,000 and received additional net sale
proceeds of $8,469,821. The Venture has no further ownership interest in the H
Street Assemblage property.
7. DEFERRED COMPENSATION
In December 1997, the Company established an incentive compensation plan
(the "Plan") for Messrs. Engle and Coyne (the "Participants"). The Plan provides
for all or some of the Participants' salary to be deferred. All such deferred
compensation is held subject to the claims of creditors of the Company in a
"rabbi" trust until paid to the Participants following the Participants'
termination of employment. The amounts deferred are invested in common stock of
the Company. Pursuant to the Plan, the Participants deferred $120,000 of
compensation during the six months ended June 30, 1998 which represented 16,953
shares of common stock. The number of shares of common stock was determined by
dividing the dollar amount of the salary deferred each month by the average of
the closing prices of the Company's common stock for the last ten trading days
of the month. The deferred amount was expensed by the Company during 1998 and is
included in general and administrative expenses on the consolidated statement of
operations for the six months ended June 30, 1998. Future compensation will be
deferred and invested in common stock which will be issued on a monthly basis to
the trust for the benefit of the Participants.
10
<PAGE>
SEMELE GROUP INC.
Notes To Consolidated Financial Statements
(Continued)
8. STOCK SPLITS
Effective June 30, 1998, the stockholders approved a 1-for-300 reverse stock
split followed by a 30-for-1 forward stock split. As a result of the reverse
stock split, each stockholder of record who owned less than 300 shares of common
stock immediately prior to the reverse stock split received in lieu of the
fractional share resulting from the reverse split, cash in the amount of
$.790625 per share (the average daily closing price per share of common stock on
the Nasdaq Stock Exchange for the ten trading days prior to effective date)
multiplied by the number of shares of common stock owned by such stockholder
immediately prior to the reverse stock split. Immediately after the reverse
stock split, the number of shares of common stock of each holder (excluding
stockholders who held less than 300 shares immediately prior to the reverse
split) was converted in a forward split into multiple shares of common stock on
the basis of 30 shares of common stock for each share or fraction thereof then
held. The Company paid $356,098 to fractional stockholders on July 17, 1998 as a
result of the reverse stock split. All share and per share data for prior
periods presented have been restated to reflect the stock splits.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition or Plan of
Operation
General
Certain statements in this quarterly report that are not historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Without limiting the foregoing, words
such as "anticipates", "expects", "intends", "plans" and similar expressions are
intended to identify forward-looking statements. These statements are subject to
a number of risks and uncertainties including the Company's ability to
successfully implement a new growth-oriented business plan and favorably resolve
certain litigation (see Note 3 to the consolidated financial statements). Actual
results could differ materially from those projected in the forward-looking
statements.
The Company, formerly known as Banyan Strategic Land Fund II, was originally
established to invest primarily in short-term, junior, pre-development and
construction mortgage loans. The borrowers subsequently defaulted on these
mortgage loan obligations, adversely affecting the Company. As a result of these
defaults, the Company suspended the making of new loans, except for advances of
additional funds under circumstances in which it was deemed necessary to
preserve the value of existing collateral, including instances where the Company
had foreclosed upon or taken title, directly or indirectly, to the collateral.
In 1990, the Company implemented a plan designed to preserve its assets and
manage its properties acquired through foreclosure or otherwise until they would
be disposed of in an orderly manner. On February 25, 1997, the Directors of the
Company authorized management to engage an investment banking firm for purposes
of evaluating strategic alternatives for maximizing stockholder value. The
Company executed and delivered an Exchange Agreement dated April 30, 1997
(amended as of August 7, 1997, the "Agreement") among the Company, Equis
Exchange L.L.C., a Massachusetts limited liability company ("Equis"), Equis
Financial Group Limited Partnership ("EFG") and certain partnerships affiliated
with EFG (the "Partnerships"). Pursuant to the Agreement, the Company issued to
the Partnerships 198,700 shares of the Company's common stock at the price of
$15.00 per share. Cash proceeds received by the Company, $2,480,500, were net of
related costs of $500,000. In addition, the Partnerships made a three-year loan
to the Company in the amount of $4,419,500. These transactions are intended to
provide capital to assist the Company in a new growth-oriented business plan,
which includes the development of the Company's property known as Rancho Malibu.
The transaction also called for a one time $2.00 per share cash dividend to
be paid in the event the stockholder proposals were approved. The Company
solicited its stockholders for proxies in connection with proposed changes in
the Company's Certificate of Incorporation and By-laws. Among the principal
changes requested were: (i) the election of new Directors nominated by EFG for
terms of up to 3 years and an increase in size of the Board of Directors (the
"Board") to as many as nine members, provided a majority of the Board shall
consist of members independent of the Company, EFG or any affiliate; (ii) an
amendment extending the Company's life to perpetual and changing its name and
(iii) an amendment designed to restrict or deter, to the extent legally
permissible, the acquisition of more than 4.9% of the common stock of the
Company by any person in such a manner as would cause such person to become a 5%
stockholder within the meaning of Section 382 (g) of the Internal Revenue Code.
The Consent of the stockholders was obtained and proposals including the changes
described in (i) through (iii) above were adopted on October 21, 1997.
Pursuant to the Agreement, the Administrative Services Agreement between the
Company and Banyan Management Corp. ("BMC") was amended to provide, among other
things, for the immediate payment to BMC of a termination fee in the amount of
$251,823 and the transfer of the Company's ownership interest in BMC to BMC's
designee. Pursuant to the Agreement, the Company also entered into a new
Administrative Services Agreement with EFG (see Note 4 to the consolidated
financial statements).
The Company currently holds an ownership interest in a 274 acre land parcel
located in Southern California known as the Rancho Malibu property. The Company
also holds a 0.3% beneficial interest in a liquidating trust, established for
the benefit of a group of unsecured creditors of a previous borrower of the
Company, which holds interests in various assets. In addition, the Company has
one loan referred to as Hemet IV.
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. EFG's computer
programs were designed and written using four digits to define the applicable
year. As a result, EFG does not anticipate system failure or miscalculations
causing disruptions of operations.
12
<PAGE>
Based on recent assessments, EFG determined that minimal modification of
software is required so that its network operating system will function properly
with respect to dates in the year 2000 and thereafter. EFG believes that with
these modifications to the existing operating system, the Year 2000 Issue will
not pose significant operational problems for its computer systems.
EFG will utilize internal resources to upgrade software for Year 2000
modifications and anticipates completing the Year 2000 project by December 31,
1998, which is prior to any anticipated impact on its operating system. The
total cost of the Year 2000 project is expected to be insignificant and have no
effect on the results of operations of the Company.
Liquidity and Capital Resources
Cash and cash equivalents consist of cash and short-term investments. The
Company's cash and cash equivalents balance at June 30, 1998 and December 31,
1997 was $7,446,844 and $7,884,593, respectively. The decrease in total cash and
cash equivalents of $437,749 is the result of cash used for operating
activities.
Cash Flow From Operating Activities: Net cash used in operating activities
decreased by $535,926 for the period ended June 30, 1998 to $687,749 from
$1,223,675 for the same period in 1997.
Cash Flow From Investing Activities: For the six months ended June 30, 1998
net cash provided by investing activities was $250,000 resulting from a
principal repayment on the Lindfield Tract A loan (see below). For the six
months ended June 30, 1997, net cash provided by investing activities was
$1,499,213 resulting from distributions from the Company's investment in a real
estate venture and proceeds received from the sale of foreclosed real estate of
$617,388 (see below). The Company had a 47% interest in a real estate venture
known as the H Street Venture (the "Venture"). On March 20, 1997, the Venture
sold approximately 3,500 square feet of the Venture's land to the United States
General Services Administration ("GSA") for a purchase price of $1,680,000. GSA
also paid the Venture $150,000 as reimbursement of expenses that the Venture
incurred in anticipation of this transaction. The Venture received net sales
proceeds of $1,828,900. During the six months ended June 30, 1997, the Company
received aggregate distributions from the Venture of $859,583, representing its
allocation of such sales proceeds. See Note 6 to the consolidated financial
statements for additional information regarding the sale of this property and
subsequent distribution from the Venture.
Cash Flow From Financing Activities: During the six months ended June 30,
1997, net cash provided by financing activities was $2,655,500 resulting from
the issuance of stock pursuant to the Exchange Agreement described above.
The Company's future liquidity needs are dependent upon, among other things:
(i) the level of liquidity required to successfully implement a new
growth-oriented business plan (ii) the Company's ability to favorably resolve
the La Chusa litigation which impacts the Rancho Malibu property; and (iii) the
Company's ability to control its property level and Company level operating
expenses.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share", which was required to be adopted on December 31,
1997. This statement establishes standards for computing and presenting earnings
per share. The statement replaces primary earnings per share with basic earnings
per share. Basic earnings per share excludes all dilution and is computed by
dividing income available to common stockholders by the weighted average number
of common shares outstanding for the period. Diluted earnings per share is
computed similarly to fully diluted earnings per share. Diluted earnings per
share reflects the potential dilution that could occur if stock options and
stock award grants were exercised. All prior year amounts have been restated to
conform to SFAS No. 128.
As of June 30, 1998 and December 31, 1997, the Company's mortgage loan
portfolio consisted of loans with a carrying value totaling $225,000 and
$475,000, respectively. During the six months ended June 30, 1998 the Company
received final principal and interest payments on its Lindfield Tract A loan
totaling $278,270. During the six months ended June 30, 1997, the Company
received interest payments of $10,000 on the Lindfield Tract A loan.
13
<PAGE>
Results of Operations
Six months ended June 30, 1998 compared to the six months ended June 30, 1997:
Total income from lending and investing activities for the six months ended
June 30, 1998 increased to $221,409 from $44,105 for the six months ended June
30, 1997. This increase is due primarily to an increase in income earned on
investments. The increase in income on investments reflects an increase in cash
available for investment resulting primarily from the issuance of stock (see
above) and cash distributions received related to the Company's investment in
the real estate venture (see Note 6 to the consolidated financial statements).
Total expenses for the six months ended June 30, 1998 decreased to $887,226
from $1,184,211 for the six months ended June 30, 1997. This decrease of
$296,985 is due primarily to a decrease in total other expenses. The decrease in
total other expenses is due to a decrease in other professional fees and general
and administrative expenses and an offset in 1998 of $108,176 reflecting a
recovery of amounts previously charged to losses on loans, notes and interest
receivable. Other professional fees were higher during 1997 due to legal costs
related to the Winding River litigation as discussed below and costs incurred to
engage an investment banking firm for purposes of evaluating strategic
alternatives for maximizing shareholder value. General and administrative
expenses were higher in 1997 due to a termination fee of $251,823 paid to BMC in
connection with the Exchange Agreement (see Note 4 to the financial statements).
Other expenses in 1998 also include interest expense of $222,203 related to the
loan from the Partnerships discussed above.
On June 23, 1997, the Company sold the Lindfield Tract D property, having a
carrying value of $650,000, to an unaffiliated third party for a purchase price
of $675,000. Cash proceeds received, net of transaction costs, were $617,388
resulting in a loss on disposition of $32,612 for financial reporting purposes.
The above discussed changes resulted in a decrease in the net loss for the
six months ended June 30, 1998 to $665,817 ($0.55 per share) from $1,140,106
($1.07 per share) for the six months ended June 30, 1997. On April 30, 1997, the
Company issued 198,700 shares of stock. In addition, the Company issued 15,483
shares of common stock on December 30, 1997 and 16,953 shares of common stock
during 1998 in connection with the incentive compensation plan (see Note 7 to
the consolidated financial statements). As a result, the net loss per share for
the six months ended June 30, 1998 is based on the weighted average number of
shares outstanding during the period of 1,215,472 as compared to 1,061,705 for
the same period in 1997.
Three months ended June 30, 1998 compared to the three months ended June 30,
1997:
Total income from lending and investing activities for the three months
ended June 30, 1998 increased to $99,185 from $23,967 for the three months ended
June 30, 1997. This increase is due primarily to an increase in income earned on
investments. The increase in income on investments reflects an increase in cash
available for investment resulting primarily from the issuance of stock (see
above) and cash distributions received related to the Company's investment in
the real estate venture (see Note 6 to the consolidated financial statements).
Total expenses for the three months ended June 30, 1998 decreased to
$420,299 from $786,779 for the three months ended June 30, 1997. This decrease
of $366,480 is due to a decrease of $119,649 in total expenses from property
operating activities and a decrease of $246,831 in total other expenses. The
decrease in total property operating expenses reflects a decline in costs
associated with the Rancho Malibu property relating to entitlement activities,
holding costs and litigation. The decrease in total other expenses is due to a
decrease in other professional fees and general and administrative expenses.
Other professional fees were higher during 1997 due to legal costs related to
the Winding River litigation as discussed below and costs incurred to engage an
investment banking firm for purposes of evaluating strategic alternatives for
maximizing shareholder value. General and administrative expenses were higher in
1997 due to a termination fee of $251,823 paid to BMC in connection with the
Exchange Agreement (see Note 4 to the financial statements). Other expenses in
1998 also include interest expense of $111,715 related to the loan from the
Partnerships discussed above.
On June 23, 1997, the Company sold the Lindfield Tract D property, having a
carrying value of $650,000, to an unaffiliated third party for a purchase price
of $675,000. Cash proceeds received, net of transaction costs, were $617,388
resulting in a loss on disposition of $32,612 for financial reporting purposes.
14
<PAGE>
The above discussed changes resulted in a decrease in the net loss for the
three months ended June 30, 1998 to $321,114 ($0.26 per share) from $762,812
($0.68 per share) for the three months ended June 30, 1997. On April 30, 1997,
the Company issued 198,700 shares of stock. In addition, the Company issued
15,483 shares of common stock on December 30, 1997 and 16,953 shares of common
stock during 1998 in connection with the incentive compensation plan (see Note 7
to the consolidated financial statements). As a result, the net loss per share
for the three months ended June 30, 1998 is based on the weighted average number
of shares outstanding during the period of 1,219,374 as compared to 1,129,020
for the same period in 1997.
On a quarterly basis, management reviews the mortgage loans in the Company's
portfolio and records appropriate loss provisions. The provisions are based upon
a number of factors, including management's analyses of the value of the
collateral and, in certain cases, ongoing negotiations regarding disposition of
this collateral, as well as consideration of the general business conditions
affecting the Company's portfolio. Management also reviews the investment
properties held by the Company on a quarterly basis and, when it has been
determined that a permanent impairment in the value of a given property has
occurred, the carrying value of the property is then written down to its fair
market value. Management has determined that no reductions are necessary for the
three and six months ended June 30, 1998.
Litigation
In connection with the Company's interest in a joint venture which owns the
Rancho Malibu property (the "Venture"), the Venture has been engaged in zoning
and entitlement activities which have been opposed by the City of Malibu and
various citizen groups. During the six months ended June 30, 1998, the Venture
incurred approximately $358,000 in costs in connection with Rancho Malibu
relating to entitlement activities, holding costs and litigation. These costs,
treated as capital contributions to the Venture by the Company, were included in
total expenses from property operating activities on the Company's consolidated
statements of operations. See Note 3 to the consolidated financial statements.
The Company continues to be engaged in litigation involving a real estate
development project known as "Winding River". The ultimate outcome of this
matter cannot be determined at this time. However, in the opinion of management
of the Company, the eventual outcome of this matter will not have a material
adverse effect on the financial position of the Company. The financial
statements do not include any adjustments for liability, if any, arising from
this matter.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 3 to the consolidated financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
The Registrant's annual meeting of stockholders was held on June 30, 1998. At
the Meeting the following proposals were approved:
1. Election of James A. Coyne as a Director:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C>
7,863,238 271,357
</TABLE>
2. Amend Company's Charter to effect a 1-for-300 reverse stock split followed by
a 30-for-1 forward stock split of the Company's Common Stock:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
7,306,493 603,201 224,901
</TABLE>
3. Amend Company's Stock Option Plan:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
6,865,509 990,227 278,859
</TABLE>
4. Approve terms of Incentive Compensation Plan:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
6,753,513 1,104,752 276,330
</TABLE>
5. Concur in selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year 1998:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
7,899,368 62,519 172,708
</TABLE>
Item 5. Other Information
Stockholders who wish to present a stockholder proposal at the 1999 Annual
Meeting but who do not seek to have the proposal included in the Company's proxy
statement for the 1999 Annual Meeting must notify the Company of the proposal on
or prior to April 16, 1999.
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) A list of exhibits filed or incorporated by reference is as follows:
<TABLE>
<S> <C>
3.1 Certificate of Amendment to Amended and Restated Certificate of
Incorporation (filed herewith)
3.2 Restated Certificate of Incorporation (filed with the Securities and
Exchange Commission as Exhibit (3)(i) to the Registrant's Report on
Form 8-K dated October 21, 1997 and incorporated by reference)
3.3 Amended and Restated By-Laws (filed with the Securities and Exchange
Commission as Exhibit (3)(ii) to the Registrant's Report on Form 8-K
dated October 21, 1997 and incorporated by reference)
4 Form of new stock certificate (filed with the Securities and Exchange
Commission as Exhibit (4) to the Registrant's Quarterly Report on Form
10-QSB for the quarter ended September 30, 1997 and incorporated by
reference)
10.1 Executive Employment Agreement for Gary D. Engle (filed with the
Securities and Exchange Commission as Exhibit 10.1 to the Registrant's
Annual Report on Form 10-KSB for the year ended December 31, 1997 and
incorporated by reference)
10.2 Executive Employment Agreement for James A. Coyne (filed with the
Securities and Exchange Commission as Exhibit 10.2 to the Registrant's
Annual Report on Form 10-KSB for the year ended December 31, 1997 and
incorporated by reference)
10.3 Amended 1994 Executive and Director Stock Option Plan (filed with the
Securities and Exchange Commission as Exhibit 10.3 to the Registrant's
Annual Report on Form 10-KSB for the year ended December 31, 1997 and
incorporated by reference)
10.4 Incentive Compensation Plan (filed with the Securities and Exchange
Commission as Exhibit 10.4 to the Registrant's Annual Report on Form
10-KSB for the year ended December 31, 1997 and incorporated by
reference)
10.5 Trust under Semele Group Inc. Incentive Compensation Plan (filed with
the Securities and Exchange Commission as Exhibit 10.5 to the
Registrant's Annual Report on Form 10-KSB for the year ended December
31, 1997 and incorporated by reference)
10.6 Qualified Stock Option Agreement Executive Option Grant Program dated
December 30, 1997 between Semele Group Inc. and Gary D. Engle (filed
with the Securities and Exchange Commission as Exhibit 10.6 to the
Registrant's Annual Report on Form 10-KSB for the year ended December
31, 1997 and incorporated by reference)
10.7 Qualified Stock Option Agreement Executive Option Grant Program dated
December 30, 1997 between Semele Group Inc. and James A. Coyne (filed
with the Securities and Exchange Commission as Exhibit 10.7 to the
Registrant's Annual Report on Form 10-KSB for the year ended December
31, 1997 and incorporated by reference)
10.8 Director Stock Option Agreement Director Option Grant Program (filed
with the Securities and Exchange Commission as Exhibit 10.8 to the
Registrant's Annual Report on Form 10-KSB for the year ended December
31, 1997 and incorporated by reference)
10.9 Amendment to Director Stock Option Agreement Director Option Grant
Program dated December 30, 1997 between Semele Group Inc. and Gerald L.
Nudo (filed with the Securities and Exchange Commission as Exhibit 10.9
to the Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1997 and incorporated by reference)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.10 Amendment to Director Stock Option Agreement Director Option Grant
Program dated December 30, 1997 between Semele Group Inc. and Robert M.
Ungerleider (filed with the Securities and Exchange Commission as
Exhibit 10.10 to the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1997 and incorporated by reference)
10.11 Amendment to Director Stock Option Agreement Director Option Grant
Program dated December 30, 1997 between Semele Group Inc. and Walter E.
Auch (filed with the Securities and Exchange Commission as Exhibit
10.11 to the Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 1997 and incorporated by reference)
10.12 Third Amended and Restated Employment Agreement for Leonard G. Levine
dated May 1, 1997 (filed with the Securities and Exchange Commission as
Exhibit (10)(i) to the Registrant's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1997 and incorporated by reference)
10.13 Amendment No. 1 to Exchange Agreement dated August 7, 1997 (filed with
the Securities and Exchange Commission as Exhibit (10)(ii) to the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended June
30, 1997 and incorporated by reference)
10.14 Exchange Agreement dated April 30, 1997 by and among AFG Hato Arrow
Limited Partnership, AFG Dove Arrow Limited Partnership, AIP/Larkfield
Limited Partnership, Equis Exchange LLC, Equis Financial Group Limited
Partnership and the Registrant and related exhibits (filed with the
Securities and Exchange Commission as Exhibit (10)(i) to the
Registrant's Quarterly Report on Form 10-QSB for the quarter ended June
30, 1997 and incorporated by reference)
10.15 Directors Stock Option Agreement dated July 15, 1994
10.16 Executive Stock Option Agreements dated July 1, 1994, July 11, 1995 and
April 16, 1996
21 Subsidiaries of the Company
27 Financial Data Schedule (such schedule is not deemed filed as part of
this report)
99.1 Press Release dated October 21, 1997 (filed with the Securities and
Exchange Commission as Exhibit (99)(i) to the Registrant's Report on
Form 8-K dated October 21, 1997 and incorporated by reference)
</TABLE>
(b) No Reports on Form 8-K were filed during the quarter ended June 30, 1998.
18
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SEMELE GROUP INC.
The Amended and Restated Certificate of Incorporation of Semele Group Inc.,
a Delaware corporation, is hereby amended by deleting Article 4 thereof in its
entirety and inserting in place thereof the following new Article 4:
4. (a) At 6:00 p.m. (Eastern Time) on the effective date of the
amendment inserting this new Article 4 (the "Effective Date"),
each share of Common Stock held of record as of 6:00 p.m. (Eastern
Time) on the Effective Date shall be automatically reclassified
and converted, without further action on the part of the holder
thereof, into one-three hundredth (1/300) of one share of Common
Stock. No fractional share of Common Stock shall be issued to any
Fractional Holder (as defined below) upon such reclassification
and conversion. Except as set forth in the immediately following
sentence, from and after 6:00 p.m. on the Effective Date, each
Fractional Holder shall have no further interest as a stockholder
in respect of any such fractional share and, in lieu of receiving
such fractional share, shall be entitled to receive, upon
surrender of the certificate or certificates representing such
fractional share, the cash value of such fractional share based on
the average daily closing price per share of the Common Stock on
the Nasdaq National Market for the ten trading days immediately
preceding the Effective Date, without interest. Appraisal rights
under Section 262 of the GCL shall be available for each such
fractional share of a Fractional Holder who has complied with the
provisions of said Section 262. As used herein, the term
"Fractional Holder" shall mean a holder of record of less than 300
shares of Common Stock as of 6:00 p.m. (Eastern Time) on the
Effective Date, who would be entitled to less than one whole share
of Common Stock in respect of such shares as a result of the
reclassification and conversion provided for herein.
(b) At 7:00 p.m. (Eastern Time) on the Effective Date, each share of
Common Stock and any fraction thereof (excluding any interest in
the Company held by a Fractional Holder converted into cash
pursuant to the immediately preceding paragraph) held by a holder
of record of one or more shares of Common Stock as of 7:00 p.m.
(Eastern Time) on the Effective Date shall be automatically
reclassified and converted, without further action on the part of
the holder thereof, into multiple shares of Common Stock on the
basis of 30 shares of Common Stock for each share of Common Stock
then held. No fractional share of Common Stock will be issued to
any such holder upon such reclassification and conversion.
Instead, each such holder who would otherwise be entitled to
receive a fractional share shall have the right to receive one
share for a fractional share of 0.5 or greater; no fractional
shares shall be issued for fractional shares of less than 0.5.
Appraisal rights under Section 262 of the GCL shall not be
available for any such holder.
19
<PAGE>
(c) From and after 7:00 p.m. (Eastern Time) on the Effective Date, the
Corporation is authorized to issue 5,000,000 shares of Common
Stock, each share having a par value of $.01.
I, the undersigned, being the President of Semele Group Inc., do hereby
declare and certify that this Amendment was duly adopted and accordingly have
hereunto set my hand this 30th day of June, 1998.
SEMELE GROUP INC.
By:/s/James A. Coyne
-------------------------
James A. Coyne, President
20
<PAGE>
SIGNATURES
PURSUANT to the requirements of the Exchange Act, the Issuer has duly caused
this Report to be signed on its behalf by the undersigned thereunto duly
authorized.
SEMELE GROUP INC.
By: /s/ Gary D. Engle Date: August 14, 1998
Gary D. Engle, Chairman, Chief Executive
Officer and Director
By: /s/ Gary M. Romano Date: August 14, 1998
Gary M. Romano, Vice President and
Chief Financial Officer
21
<PAGE>
SIGNATURES
PURSUANT to the requirements of the Exchange Act, the Issuer has duly caused
this Report to be signed on its behalf by the undersigned thereunto duly
authorized.
SEMELE GROUP INC.
By: ----------------------------------------- Date: August 14, 1998
Gary D. Engle, Chairman, Chief Executive
Officer and Director
By: ----------------------------------------- Date: August 14, 1998
Gary M. Romano, Vice President and
Chief Financial Officer
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Semele Group
Inc.'s Form 10QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,446,844
<SECURITIES> 0
<RECEIVABLES> 225,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,515,999
<PP&E> 9,961,991
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,702,990
<CURRENT-LIABILITIES> 853,280
<BONDS> 4,419,500
0
0
<COMMON> 12,430,210
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,702,990
<SALES> 0
<TOTAL-REVENUES> 221,409
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 887,226
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (665,817)
<INCOME-TAX> 0
<INCOME-CONTINUING> (665,817)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (665,817)
<EPS-PRIMARY> (.55)
<EPS-DILUTED> (.55)
</TABLE>
