Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
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 0-24928
THE SOLOMON-PAGE GROUP LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 51-0353012
---------------------------------------- ------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
1140 AVENUE OF THE AMERICAS, NEW YORK, NY 10036
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 764-9200
-----------------------------
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: At August 12, 1996, there were
outstanding 5,933,429 shares of the Registrant's Common Stock, $.001 par value
(which number of shares includes an aggregate of 794,136 shares subject to
escrow under compensation arrangements with certain officers of the Registrant).
Transitional Small Business Disclosure Format:
Yes / / No /X/
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
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FORM 10-QSB
QUARTERLY REPORT
FOR THE NINE MONTHS ENDED JUNE 30, 1996
INDEX
PART I: FINANCIAL INFORMATION
ITEM 1: Financial Statements Page Number
-----------
Consolidated Balance Sheet as of June 30, 1996 (Unaudited).................1...2
Consolidated Statements of Operations for the three months and nine months
ended June 30, 1996 and 1995 (Unaudited).................................3...
Consolidated Statements of Cash Flows for the nine months
ended June 30, 1996 and 1995 (Unaudited).................................4...5
Notes to Consolidated Financial Statements (Unaudited) ....................6....
ITEM 2: Management's Discussion and Analysis or
Plan of Operation.................................................7..10
Part II: OTHER INFORMATION
ITEM 1: Legal Proceedings....................................................11
ITEM 6: Exhibits and Reports on Form 8-K.....................................11
SIGNATURES....................................................................12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996 (UNAUDITED)
ASSETS:
Current Assets:
Cash and Cash Equivalents $547,891
Accounts Receivable - (Net of Allowance for
Doubtful Accounts of $70,000) 4,098,373
Due from Related Parties 171,882
Investments 1,556,046
Other Current Assets 231,400
---------------
TOTAL CURRENT ASSETS 6,605,592
---------------
PROPERTY AND EQUIPMENT (NET OF ACCUMULATED
DEPRECIATION AND AMORTIZATION OF $356,447) 873,551
---------------
OTHER ASSETS:
Restricted Investment 34,466
Intangible Assets - (Net of Accumulated
Amortization of $34,000) 386,000
Investments 1,019,066
Security Deposits 86,384
---------------
TOTAL OTHER ASSETS 1,525,916
---------------
TOTAL ASSETS $9,005,059
===============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996 (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses $684,817
Accrued Salaries and Commissions 1,034,680
Current Portion of Obligations Under Capital Leases 119,740
Other Current Liabilities 146,067
---------------
TOTAL CURRENT LIABILITIES 1,985,304
---------------
LONG-TERM LIABILITIES:
Obligations Under Capital Leases 129,368
Deferred Credit 216,022
---------------
TOTAL LONG-TERM LIABILITIES 345,390
---------------
STOCKHOLDERS' EQUITY:
Preferred Stock - Par Value $.001 Per Share; Authorized
2,000,000 Shares; None Issued or Outstanding --
Common Stock - Par Value $.001 Per Share;
Authorized 20,000,000 Shares; Issued and
Outstanding 5,139,285 Shares (Excluding 794,136
Escrow Shares) 5,139
Additional Paid-in Capital 8,488,247
Accumulated (Deficit) (1,819,021)
---------------
TOTAL STOCKHOLDERS' EQUITY 6,674,365
---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,005,059
===============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE $5,070,172 $2,106,839 $11,542,554 $5,184,207
--------------- --------------- ---------------- ----------------
SELLING EXPENSES 3,753,760 1,868,918 8,511,410 4,340,383
GENERAL AND ADMINISTRATIVE 932,672 858,808 2,740,098 2,021,991
DEPRECIATION AND AMORTIZATION 59,662 31,666 172,558 95,511
--------------- --------------- ---------------- ----------------
TOTAL OPERATING EXPENSES 4,746,094 2,759,392 11,424,066 6,457,885
--------------- --------------- ---------------- ----------------
INCOME (LOSS) FROM OPERATIONS 324,078 (652,553) 118,488 (1,273,678)
--------------- --------------- ---------------- ----------------
OTHER INCOME (EXPENSES):
Interest Income 29,895 81,374 105,520 201,436
Interest Expense (11,590) (12,182) (38,677) (55,733)
Realized Gain on Sale of Investments 26,794 -- 114,961 --
Unrealized Gain on Investments 4,177 -- 19,049 --
Amortization of Deferred Financing Costs -- -- -- (60,000)
--------------- --------------- ---------------- ----------------
TOTAL OTHER INCOME (EXPENSES) 49,276 69,192 200,853 85,703
--------------- --------------- ---------------- ----------------
INCOME (LOSS) BEFORE
INCOME TAXES 373,354 (583,361) 319,341 (1,187,975)
INCOME TAX (BENEFIT) EXPENSE -- (1,129) -- (31,765)
--------------- --------------- ---------------- ----------------
NET INCOME (LOSS) $373,354 ($582,232) $319,341 ($1,156,210)
=============== =============== ================ ================
INCOME (LOSS) PER COMMON
SHARE $0.07 ($0.12) $0.06 ($0.24)
=============== =============== ================ ================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 5,228,525 4,834,615 5,228,525 4,834,615
=============== =============== ================ ================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
------------------------
1996 1995
---- ----
OPERATING ACTIVITIES:
<S> <C> <C>
Net Income (Loss) $319,341 ($1,156,210)
----------------- ----------------
Adjustments to Reconcile Net Income (Loss)
to Net Cash (Used for) Operating Activities:
Depreciation and Amortization 172,558 95,511
Provision for losses on Accounts Receivable 39,000 --
Deferred Taxes -- (30,448)
Amortization of Deferred Financing Costs -- 60,000
Deferred Credit 2,169 2,169
Change in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (2,686,969) (380,284)
Other Current Assets (110,471) (45,492)
Security Deposits (8,637) (79,926)
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 1,009,737 127,410
Income Tax Payable -- (2,589)
Other Current Liabilities 115,703 --
----------------- ----------------
Total Adjustments ($1,466,910) ($253,649)
----------------- ----------------
NET CASH - OPERATING ACTIVITIES-
FORWARD ($1,147,569) ($1,409,859)
----------------- ----------------
INVESTING ACTIVITIES:
Capital Expenditures (157,607) (341,235)
Acquisition of Trade Name -- (35,000)
Purchase of Investments (2,575,112) (5,392,576)
Advances to Related Parties (28,487) (89,000)
Transfer from Restricted Investment 90,043 127,191
----------------- ----------------
NET CASH - INVESTING ACTIVITIES -
FORWARD ($2,671,163) ($5,730,620)
----------------- ----------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
1996 1995
---- ----
<S> <C> <C>
NET CASH - OPERATING ACTIVITIES -
FORWARD ($1,147,569) ($1,409,859)
----------------- ----------------
NET CASH - INVESTING ACTIVITIES -
FORWARD ($2,671,163) ($5,730,620)
----------------- ----------------
FINANCING ACTIVITIES:
Principal Payments Under Capital
Lease Obligations (83,538) (80,050)
Net Proceeds from Public Offering -- 7,925,814
Repayment of Bridge Loans -- (400,000)
Cash Paid to Related Parties -- (54,201)
Payments from Related Parties 5,000 --
----------------- ----------------
NET CASH - FINANCING ACTIVITIES ($78,538) $7,391,563
----------------- ----------------
NET (DECREASE) INCREASE IN CASH (3,897,270) 251,084
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIODS 4,445,161 35,789
----------------- ----------------
CASH AND CASH EQUIVALENTS - END OF PERIODS $547,891 $286,873
================= ================
SUPPLEMENTAL DISCLOSURES FOR CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest $38,677 $55,733
Income Taxes -- --
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) BASIS OF REPORTING
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
In the opinion of management, such statements include all adjustments
(consisting only of normal recurring items) which are considered necessary for a
fair presentation of the financial position of the Company at June 30, 1996 and
the results of its operations for the three and nine month periods ended June
30, 1996 and 1995 and cash flows for nine month period ended June 30, 1996 and
1995. The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements include the
accounts of The Solomon-Page Group Ltd. and its wholly-owned subsidiary. All
significant intercompany balances and transactions have been eliminated in
consolidation.
It is suggested that these financial statements be read in conjunction with the
financial statements and notes for the period ended September 30, 1995 included
in The Solomon-Page Group Ltd. Form 10-KSB.
(2) INCOME (LOSS) PER SHARE
Income (Loss) per share of common stock is based on the weighted average number
of common shares outstanding for each period presented. Common Stock equivalents
are included if dilutive. The 794,136 escrow shares are excluded from the
calculation as they are not antidilutive. (See Management's Discussion and
Analysis)
(3) RECLASSIFICATION
Certain prior period figures have been reclassified to conform with the current
period presentation.
6
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- --------------------------------------------------------------------------------
OVERVIEW
The Company is primarily engaged in the business of providing personnel
placement services in three sectors: executive search, contingency recruitment
and professional interim staffing. Executive search services are furnished in
three industry-specific categories in the publishing, capital markets and
managed health care markets. The contingency recruitment sector of the Company's
business consists of four functional and one industry-specific practices. The
functional practices provide contingency recruitment services to all companies
seeking personnel in the legal, human resources, information systems and
accounting areas. The industry-specific practice provides contingency
recruitment services to the fashion services industry. Professional interim
staffing services are provided to the information systems and technology
marketplace by Information Technology Partners, Inc. (ITP), a wholly-owned
subsidiary of the Company.
The following is a summary of the Company's consolidated financial and
operating data.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- -------------------
Statement Of Operations Data: 1996 1995 1996 1995
- ----------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $5,070,172 $2,106,839 $11,542,554 $5,184,207
Income (Loss) from Operations 324,078 (652,553) 118,488 (1,273,678)
Net Income (Loss) 373,354 (582,232) 319,341 (1,156,210)
Income (Loss) Per Common Share $0.07 ($0.12) $0.06 ($0.24)
</TABLE>
Balance Sheet Data: June 30, 1996
- ------------------- -------------
Working Capital $4,620,288
Total Assets 9,005,059
Long-term Debt, Net of Current Maturities 129,368
Stockholders' Equity 6,674,365
RESULTS OF OPERATIONS
The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and notes
thereto appearing elsewhere in this document.
Revenue increased to approximately $5,070,000 for the three month
period ended June 30, 1996 from approximately $2,107,000 for the three month
period ended June 30, 1995, an increase of approximately $2,963,000 or 141%.
Revenues from the Company's executive search and contingency recruitment
business were approximately $2,960,000 for the three month period ended June 30,
1996 compared to approximately $1,677,000 for the same period in 1995 and
revenues from the professional interim staffing business were approximately
$2,110,000 for the three month period ended June 30, 1996 compared to
approximately $430,000 for the same period in 1995. Revenue increased to
approximately $11,543,000 for the nine month period ended June 30, 1996 from
approximately $5,184,000 for the nine month period ended June 30, 1995, an
increase of approximately $6,359,000 or 123%. Revenues from the Company's
executive search and contingency recruitment business were approximately
$7,545,000 for the nine month period ended June 30, 1996 compared to
approximately $4,355,000 for the same period in 1995 and revenues from the
professional temporary staffing business were approximately $3,998,000 for the
nine month period ended June 30, 1996 compared to approximately $829,000 for the
same period in 1995.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)
- --------------------------------------------------------------------------------
The increase in revenues for the three and nine month periods ended
June 30, 1996 compared to the three and nine month periods ended June 30, 1995
for the Company's executive search and contingency recruitment sector can be
attributed to the expansion of its client base, strong demand for personnel from
existing clients and hiring of additional experienced counselors. In addition,
during 1995 the Company expanded into providing executive search services to
clients in the publishing industry and augmented its presence in the managed
health care area through the expansion of executive search services to managed
health care clients on the West Coast. These expanded operations also
contributed to the increase in revenues for the three and nine month periods
ended June 30, 1996. The Company's professional interim staffing business, which
commenced operations in November, 1994, experienced significant increases in
revenues for three and nine month periods ended June 30, 1996 compared to the
same periods in 1995. The increases were attributable to the retention of
experienced sales and recruiting personnel, establishment of various customer
relationships as well as the expansion into new geographical markets.
Selling expenses for the three month period ended June 30, 1996 totaled
approximately $3,754,000 (74% of revenues) compared with approximately
$1,869,000 (89% of revenues) for the three month period ended June 30, 1995.
Selling expenses for the nine month period ended June 30, 1996 totaled
approximately $8,511,000 (74% of revenues) compared with approximately
$4,340,000 (84% of revenues) for the nine month period ended June 30, 1995. The
improvements as a percentage of revenues relates to operating efficiencies and
economies of scale associated with increased revenues. The increase in selling
expenses is directly related to the Company's subsidiary ITP which contributed
approximately $1,613,000 and $3,413,000 of the increased costs for the three and
nine month periods ended June 30, 1996, respectively. Such costs consist
primarily of payroll relating to temporary staffing requirements, salaries and
commissions of sales and recruiting personnel, employee benefits, advertising.
General and Administrative expenses increased to approximately $933,000
(18% of revenues) and $2,740,000 (24% of revenues) for the three and nine month
periods ended June 30, 1996 from approximately $859,000 (41% of revenues ) and
$2,022,000 (39% of revenues) for the three and nine month period ended June 30,
1995. The improvements as a percentage of revenues relates to operating
efficiencies and economies of scale associated with increased revenues. The
increase in general and administrative expenses is primarily a result of the
Company's planned business expansion through the retention of additional
administrative personnel, leasing additional office space and professional fees.
Depreciation and Amortization for the three and nine month periods
ended June 30, 1996 totaled approximately $60,000 and $173,000 compared to
approximately $32,000 and $96,000 for same periods in 1995. The increase is due
to amortization of intangible assets related to the acquisition of trade names
along with the acquisition of capital assets, such as computer equipment,
furniture and fixtures and leasehold improvements.
Due to the factors mentioned above net income was approximately
$373,000 for the three month period ended June 30, 1996 compared to a net loss
of approximately $582,000 for the three month period ended June 30, 1995. Net
income was approximately $319,000 for the nine month period ended June 30, 1996
compared to a net loss of approximately $1,156,000 for the nine month period
ended June 30, 1995.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996 the Company's sources of liquidity included
approximately $2,104,000 in cash and cash equivalents and short-term investments
as well as approximately $1,019,000 in long-term investments. In addition, the
Company had working capital of approximately $4,620,000 at June 30, 1996.
Capital expenditures for the remainder of fiscal 1996 are expected to be
approximately $50,000. The Company is currently in negotiations with a lender to
establish credit facilities.
Cash flows used in operating activities were approximately $1,148,000
for the nine months ended June 30, 1996. The primary use of cash for operating
activities was to fund the increase in accounts receivable related to higher
revenues. Accounts receivable increased approximately $2,687,000 compared to
September 30, 1995. Cash used in investing activities for the nine months ended
June 30, 1996 totaled approximately $2,671,000, most of which was used for the
purchase of investments.
The Company anticipates that it may incur a charge to earnings in one
or more of the fiscal years ending on or prior to September 30, 1999 in
connection with the possible release from escrow shares of Common Stock to the
Company's principal executive officers pursuant to the terms of their employment
agreements with the Company. Three officers of the Company have placed an
aggregate of 794,136 shares of Common Stock of the Company in escrow pending the
Company's attainment of certain minimum earnings thresholds. In the event the
Company attains any of the earnings thresholds required for the release of the
escrowed shares, the release of the escrowed shares to the officers of the
Company (an aggregate of 794,136 shares) will be deemed additional compensation
expense to the Company. The criteria for releasing such shares from escrow is as
follows: (i) if pre-tax net income for any fiscal year ending on or prior to
September 30, 1999 equals or exceeds $1,000,000, 264,712 shares of Common Stock
shall be released to such officers; (ii) if pre-tax net income for any fiscal
year ending on or prior to September 30, 1999 equals or exceeds $2,000,000,
264,712 shares of Common Stock shall be released to such officers (iii) if
pre-tax net income for any fiscal year ending on or prior to September 30, 1999
equals or exceeds $3,000,000, 264,712 shares of Common Stock shall be released
to such officers. For purposes of determining satisfaction of the above
criteria, each of such criteria may only be satisfied in one of the measuring
years and only one of such criteria may be satisfied in any year. Pre-tax net
income for each year shall be determined, and the right to receive shares shall
vest, on the December 31 following each fiscal year. In computing pre-tax net
income for purposes of determining whether the above criteria have been
satisfied, any charges to earnings arising solely as a result of the release of
escrowed shares shall be excluded. Because of the compensatory nature of the
arrangement, each release of escrowed shares pursuant to such arrangement will
result in a non-cash charge to the Company's earnings. The amount of such
compensation charge will be equal to the fair market value of the shares
released from escrow at the date of release. While the amount of such future
charges to earnings, if any, and the timing of such charges cannot be estimated
at this time due to the uncertainty as to the future satisfaction of the
earnings criteria and the future value of the Common Stock, any such future
charge to earnings can be expected to be substantial.
The Company believes that its current cash position and investment balances will
be sufficient to support current working capital requirements for the next
twelve months.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (Continued)
- --------------------------------------------------------------------------------
NEW AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" in March of 1995
(SFAS) No. 121 establishes accounting standards for the impairment of long lived
assets, certain identifiable intangibles, and goodwill related to those assets
to be held and used, and for long-lived assets and certain identifiable
intangibles to be disposed of. (SFAS) No. 121 is effective for financial
statements issued for fiscal years beginning after December 15, 1995. Adoption
of SFAS No. 121 is not expected to have a material impact on the Company's
financial statements.
The FASB has also issued SFAS No. 123, "Accounting for Stock-Based
Compensation," in October of 1995. SFAS No. 123 uses a fair value based method
of accounting for stock options and similar equity instruments as contrasted to
the intrinsic valued based method of accounting prescribed by Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.
The Company has not decided if it will adopt SFAS No. 123 or continue to apply
APB Opinion No. 25 for financial reporting purposes. SFAS No. 123 will have to
be adopted for financial note disclosure purposes in any event. The accounting
requirements of SFAS No. 123 are effective for transactions entered into in
fiscal years that begin after December 15, 1995; the disclosure requirements of
SFAS No. 123 are effective for financial statement for fiscal year beginning
after December 15, 1995.
On December 30, 1994, the American Institute of Certified Public
Accountants issued Statement of Position (SOP) 94-6, Disclosure of Certain
Significant Risks and Uncertainties, the provisions of which are effective for
financial statements issued for fiscal years ending after December 15, 1995. In
general, (SOP) 94-6 requires disclosures about the nature of a company's
operations and the use of estimates in the preparation of financial statements.
The Company does not anticipate a significant expansion of its financial
statement note disclosure as a result of SOP 94-6.
10
<PAGE>
Part II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Item 1. Legal Proceedings of the Company's
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 1995 and June
30, 1995 and Item 3. Legal Proceedings of the Company's Annual Report on Form
10-KSB for the year ended September 30, 1995, and to the description therein of
a purported class action commenced on or about May 1, 1995 in the United States
District Court, Southern District of New York against the Company, four of its
current directors and others. On July 10, 1996, the judge in the action issued a
Decision and Order dismissing the complaint against the Company in its entirety
with prejudice.
On July 3, 1996, Information Technology Partners, Inc., a wholly-owned
subsidiary of the Company ("ITP"), commenced an action in the Supreme Court of
the State of New York, County of New York against Eastbourne Loss Prevention,
Inc. ("Eastbourne") seeking damages for breach of contract for Eastbourne's
failure to pay for services provided by ITP. Subsequently, on July 9, 1996,
Eastbourne commenced an action in the same court against the Company, ITP, Lloyd
Solomon, the Vice Chairman of the Board and a director of the Company, Eric
Davis, the Chief Financial Officer and a director of the Company, and Martin
Cook, the President of ITP, (a) alleging in connection with products and
services provided to Eastbourne by ITP (i) breach of contract, (ii) breach of
contract under the Uniform Commercial Code (the "UCC"), (iii) breach of warranty
of merchantability under the UCC, (iv) breach of implied warranty under the UCC,
(v) fraud and (vi) breach of implied covenant of good faith and fair dealing and
(b) seeking a declaratory judgment that Eastbourne is not required to pay any
money to the Company for such products and services and to enjoin the Company
from making any statements to the effect that Eastbourne has any obligations to
the Company. Eastbourne is seeking damages in excess of $3,050,000.
On or about April 25, 1996, Leveraged Technology, Inc. ("LTI")
commenced an action in the Supreme Court of the State of New York, County of New
York, against William Tompkins and ITP, (a) seeking to enjoin Tompkins, a former
employee of LTI and a current employee of ITP, from working for ITP and
providing technology or services to ITP or divulging to ITP LTI's trade secrets,
confidential information, agreements, business methods or operational procedures
and from providing such services or information to clients of LTI or others to
whom he was introduced as an employee of LTI, (b) alleging (i) breach of
contract, (ii) tortious interference with prospective contractual relationships,
(iii) misappropriation of trade secrets and confidential information, (iv)
unjust enrichment and constructive trust, (v) unfair competition and (vi)
slander. LTI is seeking damages in excess of $4,500,000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
27: Financial Data Schedule
(B) REPORTS ON FORM 8-K: NONE
11
<PAGE>
THE SOLOMON-PAGE GROUP LTD.
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.
The Solomon-Page Group Ltd.
----------------------------------
(Registrant)
Date: August 12, 1996 /s/ Lloyd B. Solomon
-----------------------------------
Lloyd B. Solomon, Chief Executive Officer
Date: August 12, 1996 /s/ Eric M. Davis
------------------------------------
Eric M. Davis, Chief Financial Officer
Vice President - Finance
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-QSB for the quarter ended June 30, 1996 and is qualified
in its entirety by reference to such Financial Statements and Notes, thereto.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 547,891
<SECURITIES> 2,575,112
<RECEIVABLES> 4,168,373
<ALLOWANCES> 70,000
<INVENTORY> 0
<CURRENT-ASSETS> 6,605,592
<PP&E> 873,551
<DEPRECIATION> 59,662
<TOTAL-ASSETS> 9,005,059
<CURRENT-LIABILITIES> 1,985,304
<BONDS> 0
0
0
<COMMON> 5,139
<OTHER-SE> 6,669,226
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</TABLE>
