U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
----------
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1996
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the
transition period from _________ to _________
Commission file number 1-10932
INDIVIDUAL INVESTOR GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3487784
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1633 Broadway, 38th Floor, New York, New York 10019
(Address of principal executive offices)
(212) 843-2777
(Issuer's telephone number)
(Former name, former address and former
fiscal year, if changed since last report)
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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of July 31, 1996 issuer had
outstanding 6,090,119 shares of Common stock, $.01 par value per share.
EXHIBIT INDEX - Page 15
Page 1 of 16 pages
<PAGE>
PART I - FINANCIAL INFORMATION
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
June 30, 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 2,958,691
Accounts receivable (net of allowances of $181,681) 1,887,738
Prepaid expenses and other current assets 494,972
------------
Total current assets 5,341,401
------------
Deferred subscription expense 1,140,112
Investment in affiliate (notes 2 and 3) 5,594,686
Property and equipment - net 572,064
Other assets 183,111
------------
Total assets $ 12,831,374
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 827,449
Accrued expenses 761,546
------------
Total current liabilities 1,588,995
Deferred subscription revenue 3,617,454
------------
Total liabilities 5,206,449
------------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $.01 par value,
authorized 2,000,000 shares --
Common stock, $.01 par value; authorized
10,000,000 shares, issued 6,075,619 60,756
Additional paid-in capital 13,201,490
Deficit (5,650,264)
Unrealized gain on marketable securities 12,943
------------
Total stockholders' equity 7,624,925
------------
------------
Total liabilities and stockholders' equity $ 12,831,374
============
See Notes to Consolidated Condensed Financial Statements
2
<PAGE>
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Circulation $ 1,443,666 $ 948,036 $ 2,831,691 $ 1,841,562
Advertising 984,323 518,082 1,901,987 1,116,155
Investment management services (note 3) 378,449 40,774 511,710 61,374
List rental and other 333,062 266,549 670,470 492,357
----------- ----------- ----------- -----------
Total Revenues 3,139,500 1,773,441 5,915,858 3,511,448
----------- ----------- ----------- -----------
Operating Expenses:
Editorial, production and distribution 1,429,859 980,725 2,818,513 1,854,948
Promotion and selling 1,048,096 854,517 2,103,568 1,508,109
General and administrative 1,016,714 503,997 1,802,436 981,559
Depreciation and amortization 46,183 20,387 81,035 42,516
----------- ----------- ----------- -----------
Total Operating Expenses 3,540,852 2,359,626 6,805,552 4,387,132
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Operating Loss (401,352) (586,185) (889,694) (875,684)
----------- ----------- ----------- -----------
Interest and other income 55,321 6,726 128,411 26,215
Equity in net income of affiliate (note 2) 998,227 298,534 291,957 497,327
----------- ----------- ----------- -----------
Net income (loss) before taxes 652,196 (280,925) (469,326) (352,142)
Income taxes (note 7) -- -- -- --
----------- ----------- ----------- -----------
Net income (loss) $ 652,196 ($ 280,925) ($ 469,326) ($ 352,142)
=========== =========== =========== ===========
Dividends paid -- -- -- --
Earnings (loss) per common and equivalent share:
Primary $ 0.09 ($ 0.06) ($ 0.07) ($ 0.08)
----------- ----------- ----------- -----------
Fully diluted $ 0.09 ($ 0.06) ($ 0.07) ($ 0.08)
----------- ----------- ----------- -----------
Weighted average number of common and equivalent
shares outstanding during the period:
Primary 7,629,074 4,671,173 6,289,306 4,668,388
----------- ----------- ----------- -----------
Fully diluted 7,629,074 4,671,173 6,289,306 4,668,388
----------- ----------- ----------- -----------
</TABLE>
See Notes to Consolidated Condensed Financial Statements
3
<PAGE>
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($ 469,326) ($ 352,142)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 81,035 42,516
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable (397,784) (80,172)
Prepaid expenses and other current assets (286,209) (119,137)
Deferred subscription expense 156,494 (505,258)
Increase (decrease) in:
Accounts payable and accrued expenses (934,460) 167,830
Deferred subscription revenue 243,198 502,929
----------- -----------
Net cash used in operating activities (1,607,052) (343,434)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (257,197) (84,828)
Decrease in investment in affiliate 908,043 74,673
Increase (decrease) in other assets -- 8,107
----------- -----------
Net cash provided by (used in) investing activities 650,846 (2,048)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of warrants and options-net 91,245 80,611
Common stock repurchased (2,453,335) --
----------- -----------
Net cash (used in) provided by financing activities (2,362,090) 80,611
----------- -----------
Net decrease in cash and cash equivalents (3,318,296) (264,871)
Cash and cash equivalents, beginning of period 6,276,987 1,677,497
----------- -----------
Cash and cash equivalents, end of period $ 2,958,691 $ 1,412,626
=========== ===========
</TABLE>
See Notes to Consolidated Condensed Financial Statements
4
<PAGE>
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes as
required by generally accepted accounting principles for annual financial
statements. In the opinion of management, all adjustments (consisting only
of normal recurring adjustments) considered necessary in order to make the
financial statements not misleading have been included. Operating results
for the six months ended June 30, 1996 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1996. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report for the fiscal
year ended December 31, 1995 on Form 10-KSB.
2. INVESTMENT IN AFFILIATE
The Company, through a wholly-owned subsidiary, WisdomTree Capital
Management, Inc. ("WTCM"), serves as general partner of (and investor in) a
domestic private investment fund for accredited investors, whereby it makes
investment decisions for the fund. The value of the Company's investment in
the fund decreased from $6,502,729 at December 31, 1995 to $5,594,686 at
June 30, 1996. This decrease resulted from a withdrawal of $1,200,000 by
the Company in February, 1996, partially offset by an increase in equity in
net income of affiliate totaling $291,957. For the month of July, 1996, the
value of investments held by the fund declined by approximately 21%.
Selected unaudited financial information for the affiliate as of June 30,
1996 and for the six months then ended is as follows:
Assets (at fair value) $101,490,194
Liabilities 37,880,844
Partners' Capital 63,609,350
Net Income $ 4,894,836
3. MANAGEMENT AND CONSULTING SERVICES
The Company, through WTCM and its majority-owned affiliate, WisdomTree
Capital Advisors, LLC, provides investment management services to the fund
referred to in note 2, and is entitled to receive a management fee equal to
1/4 of 1% of the net asset value of the fund, calculated as of the last
business day of each quarter. The management fee for the six months period
ended June 30, 1996 totaled $282,589, as compared to $61,374 in 1995. WTCM
is also entitled to receive a special allocation equal to 20% of the net
income, if any, of the fund (not including income earned on its own
investment), subject to certain limitations, calculated at year end.
5
<PAGE>
WisdomTree Capital Advisors, LLC also provides investment management
services to WisdomTree Offshore, LTD, an offshore private investment fund
for accredited investors, which commenced operations in January, 1996. The
Company is entitled to receive a management fee equal to .125% of the net
asset value of the fund per month, calculated as of the last business day
of each month. The management fee for the six month period ended June 30,
1996 totaled $35,333. The Company has no investment in this fund. WTCM
makes all investment decisions for WisdomTree Offshore, LTD. WTCM is
entitled to a profit incentive equal to 20% of the net income, if any, of
WisdomTree Offshore, LTD, subject to certain limitations, calculated on
June 30th of each year, the fund's fiscal year end. The profit incentive
for the fiscal period ended June 30, 1996 totaled $149,788. Assets under
management by the Company as of June 30, 1996 for both the domestic and
offshore funds totaled approximately $111 million. The Company, through its
wholly owned subsidiary, I.I. Strategic Consultants, Inc., also earned
$44,000 in the first six months of 1996 providing consulting services to a
unit investment trust.
4. STOCK OPTIONS
During the six months ended June 30, 1996, the Company granted 352,000
options to purchase the Company's common stock. Of this total, 107,000
options were granted and 51,606 options were canceled under the Company's
1993 Stock Option Plan. 115,000 options were granted under the Company's
1996 Performance Equity Plan ("1996 Plan") and 130,000 were granted outside
the Company's stock option plans. All options granted in 1996 expire at
various dates through June, 2006.
5. RECENTLY ISSUED ACCOUNTING STANDARDS
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation," which requires adoption of disclosure provisions
for fiscal years beginning after December 15, 1995 and adoption of the
measurement and recognition provisions for non-employee transactions after
December 15, 1995. This statement defines a fair value method of accounting
for the issuance of stock options and other equity instruments. Pursuant to
SFAS No. 123, companies are encouraged, but not required, to adopt the fair
value method of accounting for employee stock-based transactions. The
Company has determined that it will continue to apply APB Opinion 25 and
related interpretations in accounting for issuance of employee stock
options. The impact of adopting this statement for non-employee
transactions has not had a material impact on the Company's results of
operations or financial position.
6. REPURCHASE OF COMMON STOCK
The Company, at the direction of its Board of Directors, repurchased
250,000 shares of Common Stock on the open market, at a total cost of
$2,453,335, in the second quarter of 1996. The Company has retired and
canceled these shares and 31,822 shares of Common Stock previously held as
Treasury shares. The cost of repurchased shares in excess of par value has
been charged to additional paid-in capital.
6
<PAGE>
7. INCOME TAXES
Income before taxes for the quarter ended June 30, 1996 was $652,196.
However, the second quarter earnings were more than offset by the first
quarter loss, resulting in a net loss for the six months ended June 30,
1996 of $469,326. Due to the availability of net operating loss
carryforwards, if the Company had reported income for the six months ended
June 30, 1996, no tax would have been provided on such earnings. However,
the Company's deferred tax asset would have been appropriately reduced.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
Certain statements in this Quarterly Report on Form 10-QSB set forth
management's intentions, plans, beliefs, expectations or predictions of the
future based on current facts and analyses. Actual results may differ materially
from those indicated in such statements. Additional information on factors that
may affect the business and financial results of the Company can be found in the
other filings of the Company with the Securities and Exchange Commission.
Six Months Ended June 30, 1996 as Compared to the Six Months Ended June 30, 1995
Total revenues increased 68%, to $5,915,858 for the six months ended June
30, 1996, as compared to $3,511,448 for the six months ended June 30, 1995.
The Company's circulation revenues increased 54%, to $2,831,691 for the six
months ended June 30, 1996, as compared to $1,841,562 in 1995. Subscription
revenues for the Company's flagship magazine, Individual Investor, increased
49%, while newsstand revenues for the magazine increased by 167%. Paid
circulation for Individual Investor has increased 83%, to approximately 340,000
compared to 186,000 in 1995. At the same time, subscription revenues for the
Company's newsletter, Special Situations Report, increased 41%. Management
attributes the increases in circulation of Individual Investor to the redesign
of the magazine in the second quarter of 1995, as well as to promotional
efforts.
Advertising revenues increased 70%, to $1,901,987 for the six months ended
June 30, 1996, as compared to $1,116,155 in 1995. This is a result of both a
greater number of advertising pages sold and increased advertising rates per
page. As a result of the recent increase in paid circulation, effective June
1996 the Company increased its advertising rates per page by 43%. Management
anticipates further advertising revenue growth as rates per page and the number
of advertising pages sold continue to increase, and with the launch of the
Company's new publication in the Fall of 1996.
Investment management services revenues were $511,710 for the six months
ended June 30, 1996, as compared to $61,374 in 1995. This increase is the result
of a greater asset base to which the Company provides management services,
including a new fund, WisdomTree Offshore LTD, which commenced operations in
January 1996. The Company also earned a profit incentive totaling $149,788 based
on the income earned by WisdomTree Offshore, LTD for the period ended June 30,
1996. Additionally, the Company, through its wholly owned subsidiary, I.I.
Strategic Consultants, Inc., earned consulting services revenue in the first six
months of 1996. Management anticipates future growth of the asset base to which
it provides consulting services and the resultant revenue derived therefrom,
although no assurance can be given that the asset base will continue to grow
since market conditions may influence the decision of investors to commit
additional funds for management.
List rental and other revenues increased 36%,to $670,470 in the six months
ended June 30, 1996 as compared to $492,357 for the six months ended June 30,
1995. For the first six months of 1996, list rental revenue totaled $570,279, as
compared to $214,869 in 1995. The 165% increase in list rental
8
<PAGE>
revenue is attributable to increased demand for rental of the Company's
subscriber lists, as well as the increased size of the lists. If the Company's
efforts to promote circulation growth for its publications are successful,
management anticipates accompanying growth in list rental revenues. Revenue
earned in the six months ended June 30, 1995 also includes $202,911 from the
Company's telemarketing subsidiary, Advanced Marketing Ventures ("AMV"). Late in
1995, however, the Company ceased operations of this subsidiary. Therefore,
there are no telemarketing revenues in 1996.
Total operating expenses increased 55%, to $6,805,552 in the six months
ended June 30, 1996 as compared to $4,387,132 in 1995. This increase is
attributable to necessary expenditures relating to the growth of Individual
Investor as well as the development of an on-line financial service and the
launch of a new publication in the Fall of 1996.
Editorial, production and distribution expenses increased 52%, to
$2,818,513 in 1996 from $1,854,948 in 1995. Printing costs for Individual
Investor have increased 77% in the first six months of 1996 as compared to the
same period in 1995. The magazine was printed on inexpensive newsprint in the
first four months of 1995, prior to its redesign; it has been printed on glossy
high quality paper stock for every month since May 1995. As the redesign has
resulted in rapid circulation growth, fulfillment and distribution costs have
increased 35% and 34%, respectively. The Company has also incurred expenses in
the first six months of 1996 related to the establishment of an on-line
division. Management anticipates significant increased expenses in this area as
development continues. The third primary increase in editorial, production and
distribution expenses has been an increase in salaries related to the addition
of personnel. Staffing levels have been increased to aid growth in the Company's
current publications as well as to develop a new publication scheduled to begin
circulation in the Fall of 1996.
Promotion and selling expenses increased 39%, to $2,103,568 in the first
six months of 1996 from $1,508,109 in 1995. Advertising salaries and commissions
have increased 103% as a result of higher revenues and new sales personnel added
in 1996 in an attempt to further increase advertising revenues, and to develop
advertising for the Company's new publication scheduled to launch later in 1996.
Additionally, there have been corresponding increases in advertising travel,
promotion, research and sales aids.
General and administrative expenses increased 84%, to $1,802,436 in the
first six months of 1996 as compared to $981,559 in 1995. The Company relocated
to new offices within New York City in January, 1996, resulting in an increase
in its rent expense totaling $187,987. The Company believes the move was
necessary to facilitate increasing staffing levels to achieve further growth.
Secondly, general and administrative salaries, payroll taxes and recruiting fees
increased $253,091 in the six months ended June 30, 1996 as compared to 1995.
These increases related to the addition of personnel to support the Company's
growth, as well as increases in compensation. Also, as a result of hiring
additional personnel, postage, office supplies and related office expenses have
increased. Finally, public relations, legal, accounting and other professional
service fees have also increased in the six months ended June 30, 1996 as
compared to 1995.
Depreciation and amortization expense increased 91%, to $81,035 in 1996
from $42,516 in 1995. The increase in 1996 is primarily attributable to
amortization of leasehold improvements incurred to prepare the Company's new
offices for occupancy and depreciation of office furniture and computer
equipment purchased for additional personnel.
9
<PAGE>
Equity in net income of affiliate totaled $291,957 in the first six months
of 1996 as compared to $497,327 in 1995. Equity in net income of affiliate
directly relates to the realized and unrealized earnings of the amount invested
by the Company in the domestic fund's portfolio which, because of the nature of
the investments, will vary significantly from period to period and may result in
losses as well as income. No assurance can be given that the Company will record
income from its investments in future periods.
The Company's net loss for the first six months of 1996 totaled $469,326 as
compared to a loss of $352,142 for the same period of the prior year. The net
loss per common and equivalent share for the six months was $0.07 as compared to
a loss per common and equivalent share of $0.08 in 1995.
Quarter Ended June 30, 1996 as Compared to the Quarter Ended June 30, 1995
Total revenues increased 77%, to $3,139,500 for the quarter ended June 30,
1996, as compared to $1,773,441 for the quarter ended June 30, 1995.
The Company's circulation revenues increased 52%, to $1,443,666 for the
quarter ended June 30, 1996, as compared to $948,036 in 1995. Subscription
revenues for the Company's flagship magazine, Individual Investor, increased 50%
while newsstand revenues for the magazine increased by 104%. At the same time,
subscription revenues for the Company's newsletter, Special Situations Report,
increased 43%. Management attributes the increases in circulation of Individual
Investor to the redesign of the magazine in the second quarter of 1995, and to
promotional efforts.
Advertising revenues increased 90%, to $984,323 in 1996 from $518,082 in
1995. This is a result of both a greater number of advertising pages sold and
increased advertising rates per page. As a result of the recent increase in paid
circulation, effective June 1996 the Company increased its advertising rates per
page by 43%. Management anticipates further advertising revenue growth as rates
per page and the number of advertising pages sold continue to increase, and with
the launch of the Company's new publication in the Fall of 1996.
Investment management services revenues were $378,449 for the quarter ended
June 30, 1996, as compared to $40,774 for the quarter ended June 30, 1995. This
increase is attributable primarily to three factors: an increase in the asset
base managed, a profit incentive earned from managing an offshore fund, and
consulting services revenue earned by the Company's wholly owned subsidiary,
I.I. Strategic Consultants, Inc. Management anticipates future growth of the
asset base for which it provides services and the resultant revenue derived
therefrom, although no assurance can be given that the asset base will continue
to grow since market conditions may influence the decision of investors to
commit additional funds for management. Management also anticipates providing
further consulting services through its subsidiary, I.I. Strategic Consultants,
Inc.
List rental and other revenues increased 25%, to $333,062 for the quarter
ended June 30, 1996 from $266,549 in the second quarter of 1995. For the second
quarter of 1996, list rental revenue totaled $292,199, as compared to only
$138,569 in the second quarter of 1995. The 165% increase in list rental revenue
is attributable to increased demand for rental of the Company's subscriber
lists, as well as the increased size of the lists. If the Company's efforts to
promote circulation growth for its publications are successful, management
anticipates accompanying growth in list rental revenues. Revenue earned in 1995
includes $117,584 from the Company's telemarketing subsidiary, Advanced
Marketing Ventures
10
<PAGE>
("AMV"). Late in 1995, however, the Company ceased operations of this
subsidiary. Therefore, in the second quarter of 1996, there were no
telemarketing revenues.
Total operating expenses increased 50%, to $3,540,852 for the quarter ended
June 30, 1996 as compared to $2,359,626 in 1995. This increase is attributable
to necessary expenditures relating to the growth of Individual Investor as well
as the development of an on-line financial service and the launch of a new
publication in the Fall of 1996.
Editorial, production and distribution expenses increased 46%, to
$1,429,859 in 1996 from $980,725 in 1995. As a result of the redesign of
Individual Investor, printing costs have increased. Additionally, as the
redesign has resulted in greater circulation, fulfillment and distribution costs
have increased. During the first six months of 1996, the Company has also added
personnel to accommodate further growth of its existing publications, the
launching of a new publication in the Fall of 1996 and the development of an
on-line business information product. Management anticipates significant
increased expenses as it continues development of its on-line business.
Promotion and selling expenses increased 23%, to $1,048,096 in the second
quarter of 1996 from $854,517 in 1995. Advertising salaries and commissions have
increased 231% in the second quarter of 1996 as compared to 1995, as a result of
higher revenues and new sales personnel added in 1996 in an attempt to further
increase advertising revenues, and to develop advertising for the Company's new
publication scheduled to launch later in 1996. Additionally, there have been
corresponding increases in advertising travel, promotion, research and sales
aids.
General and administrative expenses increased 102%, to $1,016,714 in the
second quarter of 1996 as compared to $503,997 in 1995. The Company relocated to
new offices within New York City in January, 1996, resulting in an increase in
its rent expense for the quarter totaling $97,213. The Company believes the move
was necessary to facilitate increasing staffing levels to achieve further
growth. Secondly, general and administrative salaries, payroll taxes, and
recruiting fees increased $164,116 in the second quarter of 1996 as compared to
the same quarter in the prior year. These increases relate to the addition of
personnel to support the Company's growth, as well as increases in compensation.
Also, as a result of hiring additional personnel, postage, office supplies, and
related office expenses have also increased. Finally, public relations, legal,
accounting and other professional service fees have also increased in the second
quarter of 1996 as compared to 1995.
Depreciation and amortization expense increased 127%, to $46,183 in 1996
from $20,387 in 1995. The increase in 1996 is primarily attributable to
amortization of leasehold improvements incurred to prepare the Company's new
offices for occupancy and depreciation of office furniture and computer
equipment purchased for additional personnel.
Equity in net income of affiliate amounted to a gain of $998,227 in 1996 as
compared to $298,534 in 1995. Equity in net income of affiliate directly relates
to the realized and unrealized earnings and losses of the amount invested by the
Company in the domestic fund's portfolio which, because of the nature of the
investments, will vary significantly from period to period and may result in
losses as well as income. No assurance can be given that the Company will record
income from its investments in future periods.
11
<PAGE>
The Company's net income for the second quarter of 1996 totaled $652,196 as
compared to a loss of $280,925 in same quarter of the prior year. No income
taxes were provided due to the availability of net operating loss carryforwards.
Net income per common and equivalent share for the quarter was $0.09, as
compared to a loss per common and equivalent share of $0.06 in 1995.
Liquidity and Capital Resources
As of June 30, 1996, the Company had working capital of $3,752,406 and cash
and cash equivalents totaling $2,958,691. This represents a decrease in working
capital of $1,712,786 and a decrease in cash and cash equivalents of $3,318,296
since December 31, 1995. In February, 1996, the Company redeemed $1,200,000 from
its investment in an affiliate. In the second quarter of 1996, however, the
Company repurchased, retired and canceled 250,000 shares of Common Stock, at a
total cost of $2,453,335, as directed by the Board of Directors. Additionally,
the Company decreased its accounts payable and accrued expenses by $934,460
during the first six months of 1996 and purchased property and equipment at a
total cost of $257,197 during the same period.
As of June 30, 1996, the total value of the Company's investment in the
private investment fund was $5,594,686. This investment is available, subject to
market fluctuations, to provide working capital to fund the Company's
operations. The Company believes that further investments in the fund may be
made from time to time because, to date, it has provided a significant return.
However, no assurance can be given that the Company's investment will continue
to generate the rate of return that it has historically generated. For the month
of July, 1996, the value of investments held by the fund declined approximately
21% from the value on June 30, 1996.
The Company believes that its cash, working capital and investments will be
sufficient to fund its operations and capital requirements for the foreseeable
future.
As a result of the current levels of expenses, the operating losses
incurred by the publishing operations, and the fluctuations in performance of
the private investment funds, the Company anticipates that it will incur losses
in its quarterly results in the near-term and from time to time thereafter.
Additionally, the Company will incur significant expenses in the development of
its on-line division and the launching of its new publication.
12
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INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
PART II- OTHER INFORMATION
ITEM 4 - Submission of Matters to a Vote of Security Holders
On June 19, 1996, the Company held the annual meeting of stockholders for
the purpose of electing Mr. Robert Schmidt as a director of the Company for a
term of three years and of adopting the 1996 Performance Equity Plan.
The shares of Common Stock voted on the election of Mr. Schmidt were as
follows: 5,383,470 shares were cast in favor of the election of Mr. Schmidt and
4,720 shares withheld authority to vote for Mr. Schmidt.
The shares of Common Stock voted on the matter to approve the 1996
Performance Equity Plan were as follows:
For Against Abstention Broker Non-Votes
--------- ------- ---------- ----------------
3,068,836 108,342 14,220 2,196,792
ITEM 6 - Exhibits and reports on Form 8-K
(a) Exhibits
Financial Data Schedule June 30, 1996
(b) The Company did not file any reports on Form 8-K during the Quarter Ended
June 30, 1996
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
DATE: August 14, 1996
INDIVIDUAL INVESTOR GROUP, INC.
By: /s/ Jonathan L. Steinberg
----------------------------------
Jonathan Steinberg, CEO and
Chairman of the Board
By: /s/ Scot A. Rosenblum
----------------------------------
Scot Rosenblum, Vice President and
Chief Financial officer
By: /s/ Henry G. Clark
----------------------------------
Henry G. Clark, Controller
(Principal Accounting Officer)
14
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
27 Financial Data Schedule June 30, 1996 16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,958,691
<SECURITIES> 0
<RECEIVABLES> 2,069,419
<ALLOWANCES> 181,681
<INVENTORY> 0
<CURRENT-ASSETS> 5,341,401
<PP&E> 777,437
<DEPRECIATION> 205,373
<TOTAL-ASSETS> 12,831,374
<CURRENT-LIABILITIES> 1,588,995
<BONDS> 0
0
0
<COMMON> 60,756
<OTHER-SE> 7,564,169
<TOTAL-LIABILITY-AND-EQUITY> 12,831,374
<SALES> 5,404,148
<TOTAL-REVENUES> 5,915,858
<CGS> 2,818,513
<TOTAL-COSTS> 6,805,552
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (469,326)
<INCOME-TAX> 0
<INCOME-CONTINUING> (469,326)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (469,326)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> 0
</TABLE>
