U.S. 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, 1997
|_| 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 1-10932
INDIVIDUAL INVESTOR GROUP, INC.
(Exact name of small business issuer 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 quarter, 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, 1997, issuer had
outstanding 6,610,776 shares of Common Stock, $.01 par value per share.
EXHIBIT INDEX - Page 16
Page 1 of 54 pages
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
June 30, 1997
ASSETS
Current assets:
Cash and cash equivalents $2,798,430
Accounts receivable (net of allowances of $575,368) 2,119,370
Prepaid expenses and other current assets 297,034
-----------
Total current assets 5,214,834
Deferred subscription expense 624,565
Investment in affiliate (Note 2) 2,516,330
Property and equipment - net 704,707
Other assets 387,540
===========
Total assets $9,447,976
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,497,917
Accrued expenses 647,219
Deferred revenue 302,103
------------
Total current liabilities 2,447,239
Deferred subscription revenue 2,732,522
------------
Total liabilities 5,179,761
------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value, authorized 2,000,000 shares -
Common stock, $.01 par value; authorized
18,000,000 shares; issued and outstanding 6,610,776 66,107
Additional paid-in capital 16,307,186
Deficit (12,105,078)
------------
Total stockholders' equity 4,268,215
------------
============
Total liabilities and stockholders' equity $9,447,976
============
See Notes to Consolidated Condensed Financial Statements
2
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------------------------------------------------------
1997 1996 1997 1996
---------------- ---------------- ---------------- ----------------
Revenues:
Financial Information Services:
Circulation $940,469 $1,443,666 $2,119,711 $2,831,691
Advertising 2,032,030 984,323 4,361,742 1,901,987
List rental and other 246,775 333,062 583,436 670,470
---------------- ---------------- ---------------- ----------------
Total financial information services revenues 3,219,274 2,761,051 7,064,889 5,404,148
Investment management services (Note 3) 176,019 378,449 297,193 511,710
Equity in net income (loss) of affiliate (Note 2) 134,147 998,227 (1,531,170) 291,957
---------------- ---------------- ---------------- ----------------
Total revenues 3,529,440 4,137,727 5,830,912 6,207,815
---------------- ---------------- ---------------- ----------------
Operating expenses:
Editorial, production and distribution 2,168,385 1,429,859 4,324,876 2,818,513
Promotion and selling 1,520,067 1,048,096 2,996,192 2,103,568
General and administrative 1,110,537 1,016,714 2,143,124 1,802,436
Depreciation and amortization 67,172 46,183 132,597 81,035
---------------- ---------------- ---------------- ----------------
Total operating expenses 4,866,161 3,540,852 9,596,789 6,805,552
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Operating (loss) income (1,336,721) 596,875 (3,765,877) (597,737)
---------------- ---------------- ---------------- ----------------
Interest and other income 20,246 55,321 31,189 128,411
---------------- ---------------- ---------------- ----------------
Net (loss) income ($1,316,475) $652,196 ($3,734,688) ($469,326)
---------------- ---------------- ---------------- ----------------
Dividends paid - - - -
(Loss) earnings per weighted average common
and equivalent shares ($0.21) $0.09 ($0.59) ($0.07)
Weighted average number of common
shares outstanding during the period 6,403,673 7,629,074 6,279,607 6,289,306
See Notes to Consolidated Condensed Financial Statements
3
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
------------------------------------------------
1997 1996
--------------------- ---------------------
Cash flows from operating activities:
Net loss ($3,734,688) ($469,326)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 132,597 81,035
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable 461,902 (397,784)
Prepaid expenses and other assets (152,288) (286,209)
Deferred subscription expense 332,849 156,494
Increase (decrease) in:
Accounts payable and accrued expenses (592,755) (934,460)
Deferred revenue 302,103 -
Deferred subscription revenue (596,215) 243,198
--------------------- ---------------------
Net cash used in operating activities (3,846,495) (1,607,052)
--------------------- ---------------------
Cash flows from investing activities:
Purchase of property and equipment (118,925) (257,197)
Decrease in investment in affiliate 2,431,170 908,043
--------------------- ---------------------
Net cash provided by investing activities 2,312,245 650,846
--------------------- ---------------------
Cash flows from financing activities:
Proceeds from exercise of stock options 538,229 91,245
Proceeds from issuance of Common Stock 2,250,000 -
Common Stock Repurchased - (2,453,335)
--------------------- ---------------------
Net cash provided by (used in) financing activities 2,788,229 (2,362,090)
--------------------- ---------------------
Net increase (decrease) in cash and cash equivalents 1,253,979 (3,318,296)
Cash and cash equivalents, beginning of period 1,544,451 6,276,987
===================== =====================
Cash and cash equivalents, end of period $2,798,430 $2,958,691
===================== =====================
See Notes to Consolidated Condensed Financial Statements
4
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of
Individual Investor Group, Inc. and its subsidiaries (the "Company").
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, 1997 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997. 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, 1996 on Form 10-KSB.
Reclassifications. Equity in net loss of affiliate for the six
months ended June 30, 1997 has been recorded in operating revenues to
reflect such earnings and losses as part of the Company's core
operations. The equity in net loss of affiliate for the period ended
June 30, 1996 has been reclassified to conform with the current period
presentation.
2. INVESTMENT IN AFFILIATE
A wholly-owned subsidiary, WisdomTree Capital Management, Inc.
("WTCM"), serves as general partner of a domestic private investment
fund. The Company is also a limited partner in the fund. The value of
the Company's investment in the fund decreased from $4,947,500 at
December 31, 1996 to $2,516,330 at June 30, 1997. This decrease
resulted from net losses on the Company's investment in the fund and
from a withdrawal of $900,000 by the Company in February 1997. Selected
unaudited financial information for the fund (which is deemed to be an
affiliate) as of June 30, 1997 and for the six months then ended is as
follows:
Assets (at fair value) $58,814,851
Liabilities 26,006,423
Partners' Capital 32,808,428
Net loss for the fund ($13,480,913)
3. INVESTMENT MANAGEMENT SERVICES
The Company, through WTCM, provides investment management
services to the domestic fund referred to in Note 2, and to an offshore
private investment fund, which commenced operations in January 1996.
5
The Company has no investment in the offshore fund. The Company is
entitled to receive a management fee equal to 1/4 of 1% of the net
asset value of the domestic fund, calculated as of the last business
day of each quarter, and a management fee equal to 1/8 of 1% of the net
asset value of the offshore fund, calculated monthly. Total management
fees for the six months ended June 30, 1997 were $178,203, as compared
to $317,922 in 1996.
WTCM is also entitled to receive a special allocation equal
to 20% of the net income, if any, of each of the funds (not including
income earned on its own investment), subject to certain limitations,
calculated at year end, which is December 31st for the domestic fund
and June 30th for the offshore fund. The special allocation for the
fiscal period ended June 30, 1997 and 1996, relating to the offshore
fund, totaled $61,617 and $149,788, respectively.
Total equity under management by the Company as of June 30,
1997 for both the domestic and offshore funds totaled approximately
$38.9 million.
4. STOCK OPTIONS
During the six months ended June 30, 1997, the Company granted
307,000 options to purchase the Company's common stock; 108,483 options
were exercised (providing proceeds of $538,229), and 142,167 options
were canceled. Of the total granted, all options were granted under the
Company's stock option plans which expire at various dates through June
2007.
5. RECENTLY ISSUED ACCOUNTING STANDARDS
Earnings per share. In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
128, "Earnings per Share" ("SFAS No. 128") which simplifies the
standards for computing earnings per share previously required by
Accounting Principles Board Opinion No. 15 and establishes a new
standard for presenting earnings per share. The Company will begin
reporting earnings (loss) per share according to this new standard for
the year ended December 31, 1997, requiring all prior period earnings
per share data (including interim periods) to be restated to conform
with the provisions of the new statement. (Loss) earnings per share
amounts for the three and six months ended June 30, 1997 and 1996,
computed under this new standard are not expected to be materially
different from the per share disclosed in the accompanying financial
statements.
Disclosure of Information about Capital Structure. In February
1997, the Financial Accounting Standards Board issued SFAS No. 129,
"Disclosure of Information about Capital Structure", which requires an
entity to explain the pertinent rights and privileges of its various
securities outstanding. Management of the Company believes that
adoption of Statement No. 129 will not have a significant impact on the
Company's present disclosure.
6
Reporting Comprehensive Income. In June 1997, the Financial
Accounting Standards Board issued SFAS No. 130, "Reporting
Comprehensive Income", which becomes effective for the Company's 1998
consolidated financial statements. SFAS No. 130 requires the disclosure
of comprehensive income, defined as the change in equity of a business
enterprise from transactions and other events and circumstances from
nonowner sources, in the Company's consolidated financial statements.
In the opinion of the Company's management, it is not anticipated that
the adoption of this new accounting standard will have a material
effect on the consolidated financial statements of the Company.
Disclosure about Segments of an Enterprise and Related
Information. In June 1997, the Financial Accounting Standards Board
issued SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", which becomes effective for the Company's 1998
consolidated financial statements. SFAS No. 131 requires that a public
business enterprise report certain financial and descriptive
information about its reportable operating segments. In the opinion of
the Company's management, it is not anticipated that the adoption of
this new accounting standard will have a material effect on the
consolidated financial statements of the Company.
6. SALE OF COMMON STOCK
On May 1, 1997 the Company entered into Stock Purchase
Agreements with two parties unrelated to the Company, providing in the
aggregate for the private sale of 328,678 shares of Common Stock for a
total purchase price of $2,000,000. These shares were sold pursuant to
an exemption from registration under the Securities Act of 1933. On
June 30, 1997 the Company entered into a Stock Purchase Agreement with
Wise Partners, L.P. providing for the sale of 31,496 shares of Common
Stock for an aggregate purchase price of $250,000. The Company granted
each of these investors registration rights in respect of the shares.
Wise Partners, L.P. is a limited partnership of which the Chief
Executive Officer of the Company, Jonathan L. Steinberg, is the General
Partner.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
When used in this Form 10-QSB and in future filings by the Company with
the Securities and Exchange Commission, the words or phrases "will likely
result," "management expects," or "the Company expects," "will continue," "is
anticipated," "estimated" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance
on any such forward-looking statements, each of which speak only as of the date
made. Such statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical earnings and those
presently anticipated or projected. The Company has no obligation to publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect anticipated events or circumstances occurring after the
date of such statements.
Results of Operations
Total revenues for the three and six months ended June 30, 1997 were
$3,529,440 and $5,830,912, respectively, a 15% and 6% decrease from the
corresponding periods of the previous fiscal year.
Revenues from financial information services were $3,219,274 and
$7,064,889, respectively, which represents an increase of 17% for the three
months and 31% for the six months ended June 30, 1997.
Circulation revenues for the three and six months ended June 30, 1997
were $940,469 and $2,119,711, respectively, a 35% and 25% decrease from the
corresponding periods of the previous fiscal year. Subscription revenues for the
Company's flagship magazine, Individual Investor, decreased by 37% and 33%,
respectively, for the quarter and year to date. Newsstand revenues for the
magazine increased by 7% and 29%, respectively. Subscription revenues for the
Company's newsletter, Special Situations Report, decreased 47% and 24%,
respectively, for the quarter and year to date. Management attributes the
decreases in circulation revenues of Individual Investor and Special Situations
Report to the reduction of direct mail and television campaigns in favor of
other sources for subscribers that will provide for continuing numbers of new
subscribers with lower marketing expenses but less subscription revenue.
Individual Investor had average paid circulation of over 441,000 in the second
quarter of 1997, as compared to average paid circulation of over 336,000 in the
second quarter of 1996. As of June 1997, Special Situations Report had
approximately 10,000 paid subscribers as compared to 21,000 in June 1996. This
decrease is a direct result of the reduction of television campaign promotions.
Advertising revenues for the three and six months ended June 30, 1997
were $2,032,030 and $4,361,742, respectively, a 106% and 129% increase over the
corresponding periods of the previous fiscal year. This is a result of both a
greater number of advertising pages sold and increased advertising rates per
page. As a result of the increase in paid circulation of Individual Investor,
8
effective June 1996 the Company increased its advertising rates for Individual
Investor by approximately 43%, and introduced an additional rate increase of
approximately 40% in November 1996. Management anticipates, but can give no
assurance, that in the near term there will be advertising revenue growth from
the rate increases implemented in 1996, and that the number of advertising pages
sold will continue to increase. Management also expects to continue to attract
higher margin consumer advertisers. The Company also launched a new publication,
Ticker (sm), in October 1996. Ticker, with a controlled circulation of 75,000
brokers and financial advisers, has sold advertising space to a number of
leading advertisers, resulting in revenues of $190,626 and $486,612 for the
quarter and year to date, respectively.
List rental and other revenues for the three and six months ended June
30, 1997 were $246,775 and $583,436, respectively, a 26% and 13% decrease from
the corresponding periods of the previous fiscal year. This decrease is a direct
result of changes in the mix of subscribers to Individual Investor with less
reliance on direct mail and television marketing efforts.
Investment management services revenues for the three and six months
ended June 30, 1997 were $176,019 and $297,193, respectively, a 53% and 42%
decrease from the corresponding periods of the previous fiscal year. Revenues
from investment management services are a combination of management fees, being
1 to 1-1/2 percent of assets under management, and a special profit allocation,
being 20% of defined performance, with additional revenues being contributed as
a result of the Company's portfolio consulting activities. Because total equity
managed by the Company was approximately $38.9 million as of June 30, 1997 as
compared to $69.9 million as of June 30, 1996, management fees earned by the
Company decreased for the quarter and six months ended June 30, 1997. In
addition, the special profit allocation relating to the offshore fund, which is
recognized annually in the second quarter, declined to $61,617 in 1997 from
$149,788 in 1996. During the three months ended June 30, 1997 investors in the
funds made net additional investment contributions in excess of withdrawals of
approximately $7.2 million and for the six months made net withdrawals of
approximately $11.2 million. The net decrease in assets under management in 1997
will mean lower management fees in 1997 as compared to 1996 and will negatively
impact the Company's potential revenues from special profit allocation revenues.
The Company also anticipates that investment management services revenues will
vary from period to period, because the managed funds are invested primarily in
the relatively volatile small-cap market. For the three months ended June 30,
1997, the managed funds experienced positive performance, which followed
significant negative performance in the first quarter of 1997, resulting in a
net loss for the six months. If negative performance continues, the Company's
special profit allocation will be adversely affected, and additional withdrawals
can be anticipated, which would in turn further impact the Company's management
fees and potential special profit allocation income. There can be no assurance
as to the funds' performance for 1997 or that each of the managed fund's asset
bases will be maintained at current levels by the investors participating in
such funds.
Equity in net income of affiliate totaled $134,147 for the quarter
ended June 30, 1997 as compared to net income of $998,227 in 1996. For the year
to date, equity in net loss of affiliate totaled $1,531,169 as compared to
equity in net income of affiliate of $291,957 in 1996. Equity in net income or
loss of affiliate directly relates to the realized and unrealized earnings of
the amount invested by the Company in the domestic fund's portfolio which,
9
because of the nature of the investments as described above, 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.
Total operating expenses for the three and six months ended June 30,
1997 were $4,866,161 and $9,596,789, respectively, a 37% and 41% increase from
the corresponding periods of the previous fiscal year.
Editorial, production and distribution expenses for the three and six
months ended June 30, 1997 increased 52% and 53%, to $2,168,385 and $4,324,876,
respectively. The increase for the three and six months relates to additional
production and distribution expenses for Individual Investor, due to additional
copies printed for newsstand sales, and a larger subscriber base. These costs
include $311,853 and $626,180 for the three and six months, respectively, that
were incurred for the production, printing, editing, fulfillment and
distribution of the Company's new publication, Ticker, which mailed two issues
in the second quarter of 1997. The Company has also incurred expenses totaling
$181,242 and $284,570 during the three and six months, respectively, related to
the establishment of an online service. Management anticipates expenses relating
to online services to increase as development continues. While additional
investment is necessary to complete its development, management intends to incur
these expenses in a controlled manner to help achieve the Company's ultimate
goal of profitability. In addition, editorial, production and research salaries
and related expenses have increased because of the addition of personnel.
Staffing levels have been increased to aid growth in the Company's current
publications as well as to support the launch of Ticker and the online service.
Promotion and selling expenses for the three and six months ended June
30, 1997 increased 45% and 42%, to $1,520,067 and $2,996,192, respectively.
Advertising salaries, payroll taxes and commissions have increased as a result
of higher advertising revenues and new sales personnel added in 1997 in an
attempt to further increase advertising revenues, and to develop advertising for
Ticker. Additionally, there have been corresponding increases in sales related
travel, promotion, research and sales aids.
General and administrative expenses for the three and six months ended
June 30, 1997 increased 9% and 19%, to $1,110,537 and $2,143,124, respectively.
General and administrative salaries, payroll taxes, and employee benefits
increased for the three and six months ended June 30, 1997 as compared to the
corresponding periods of the previous year. These increases related to the
addition of personnel, as well as increases in compensation. Also, as a result
of hiring additional personnel, postage, telephone, office supplies and related
office expenses have increased.
Depreciation and amortization expense for the three and six months
ended June 30, 1997 increased 45% and 64%, to $67,172 and $132,597,
respectively. The increase in 1997 is primarily attributable to depreciation of
office furniture and computer equipment purchased for additional personnel.
Interest and other income for the three and six months ended June 30,
1997 decreased to $20,246 and $31,189, respectively, as compared to $55,321 and
$128,411 for the corresponding periods of the previous year. This decrease is
primarily due to reduced levels of cash invested by the Company.
10
The Company's net losses for the three and six months ended June 30,
1997 were $1,316,475 and $3,734,668 as compared to net income of $652,196 for
the second quarter of 1996 and a net loss of $469,326 for the first half of
1996. No income taxes were provided in 1997 or 1996 due to the net loss and/or
the availability of loss carryforwards. The net loss per common and equivalent
share for the three and six months were $0.21 and $0.59, respectively, as
compared to net income per common and equivalent share of $0.09 for the second
quarter of 1996 and a net loss per common and equivalent share of $0.07 for the
first half of 1996.
Liquidity and Capital Resources
As of June 30, 1997, the Company had working capital of $2,767,595 and
cash and cash equivalents totaling $2,798,430. This represents an increase in
working capital of $999,784 and an increase in cash and cash equivalents of
$1,253,979 since December 31, 1996.
As of June 30, 1997, the total value of the Company's investment in the
domestic private investment fund was $2,516,330. This investment is available,
subject to market fluctuations and liquidity, to provide working capital to fund
the Company's operations. In February 1997, the Company redeemed $900,000 from
this investment. No assurance can be given that the Company's investment will
increase in value, and it may decline in value.
On May 1, 1997 the Company entered into Stock Purchase Agreements with
two parties unrelated to the Company, providing in the aggregate for the private
sale of 328,678 shares of Common Stock for a total purchase price of $2,000,000.
These shares were sold pursuant to an exemption from registration under the
Securities Act of 1933. On June 30, 1997 the Company entered into a Stock
Purchase Agreement with Wise Partners, L.P. providing for the sale of 31,496
shares of Common Stock for an aggregate purchase price of $250,000. The Company
granted each of these investors registration rights in respect of the shares.
Wise Partners, L.P. is a limited partnership of which the Chief Executive
Officer of the Company, Jonathan L. Steinberg, is the General Partner. In
addition, in 1997 the Company received proceeds from the exercise of stock
options totaling $538,229.
The Company will incur ongoing expenses in the development of its
business operations, which are expected to be funded by the Company's working
capital. Nevertheless, 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 financial information services, and the fluctuations in
performance of the private investment funds, the Company anticipates that it
will continue to incur net losses in its quarterly results in the near-term.
The Company has retained the investment banking firm of Bear, Stearns &
Co. Inc. To assist the Company in exploring strategic initiatives to enhance
shareholder value. With the assistance of Bear Stearns, the Company will focus
on alternatives including identifying and evaluating potential strategic
partners seeking minority investment positions in the Company's businesses.
11
INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES
PART II- OTHER INFORMATION
ITEM 1 - Legal Proceedings
On July 31, 1997 , Richard and Sandra Tarlow, former limited partners
of WisdomTree Associates, L.P., the domestic private investment fund managed by
a subsidiary of the Company, initiated an action in the Supreme Court of the
State of New York against WisdomTree Associates, L.P. and each of Robert Schmidt
and Jonathan Steinberg individually. The Summons gives notice that the action is
"for breach of contract, breach of fiduciary duties owed by defendants to the
plaintiffs, conversion and fraud" and prays for money damages in excess of one
million dollars; but because the Summons was filed without a Complaint
plaintiffs have yet to set forth their claim with any definition or
particularity. Based on allegations made by the plaintiffs' attorney in a letter
dated June 3, 1997, WisdomTree Associates, L.P. believes plaintiffs' allegations
to be incorrect, without merit, and contrary to agreements signed by plaintiffs.
Moreover, because plaintiffs' net loss from their investment in WisdomTree
Associates, L.P. was $32,276.02, WisdomTree Associates, L.P. believes the amount
claimed in damages to be wholly excessive no matter what theory of claim is
presented. WisdomTree Associates, L.P. will vigorously defend against this
action.
ITEM 2 - Sales of Unregistered Securities
- ----------------------------------------------------------------------------------------------------------------------------
Consideration received and Exemption If option, warrant or
Date of sale Title of security Number description of underwriting from convertible security,
Sold or other discounts to registration terms of exercise or
market price afforded to claimed conversion
purchasers
- ----------------------------------------------------------------------------------------------------------------------------
4/97 -6/97 options to purchase 223,100 options granted - no Section 4(2) vesting over a period of
common stock granted consideration received by three to five years from
to employees, Company until exercise date of grant, subject to
directors and certain conditions of
consultants continued service;
exercisable for a period
lasting ten years from
date of grant at exercise
prices ranging from $5.88
to $8.50
- ----------------------------------------------------------------------------------------------------------------------------
05/01/97 Sales of Securities 328,678 The Company received Section 4(2)
$2,000,000 in consideration
for these shares
- ----------------------------------------------------------------------------------------------------------------------------
06/30/97 Sales of Securities 31,496 The Company received Section 4(2)
to Wise Partners, $250,000 in consideration
L.P. for these shares.
- ----------------------------------------------------------------------------------------------------------------------------
12
ITEM 4 - Submission of Matters to a Vote of Security Holders
On June 18, 1997, the Company held the annual meeting of stockholders for
the following proposals: a) to elect Mr. Jonathan Steinberg and Mr. Scot
Rosenblum as directors of the Company for a term of three years, b) to amend the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock and Preferred Stock, and c) to approve and adopt the 1996
Management Incentive Plan.
The shares of Common Stock voted on the election of Mr. Jonathan Steinberg
and Mr. Scot Rosenblum were as follows: 5,689,403 shares were cast in favor and
33,070 shares were withheld for the election of Mr. Steinberg and 5,689,703
shares were cast in favor of and 32,570 shares were withheld for the election of
Mr. Rosenblum.
The shares of Common Stock voted on the matter to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock to 18,000,000 and the number of authorized shares of Preferred
Stock to 2,000,000 were as follows:
For Against Abstention Broker Non-Votes
3,377,297 143,594 21,000 2,180,582
The shares of Common Stock voted on the matter to approve the 1996
Management Incentive Plan were as follows:
For Against Abstention Broker Non-Votes
3,384,836 136,905 20,150 2,180,582
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Certificate of Amendment
10.1 Stock Purchase Agreement, dated May 1, 1997, for 164,339 shares
of the Company's Common Stock.
10.2 Stock Purchase Agreement, dated May 1, 1997, for 164,339 shares
of the Company's Common Stock.
10.3 Stock Purchase Agreement, dated June 30, 1997, between
Registrant and Wise Partners L.P.
10.4 Form of Stock Option Agreement, dated May 9, 1997, between
Registrant and each of Jonathan Steinberg, Robert Schmidt,
Scot Rosenblum and Michael Kaplan.
13
27 Financial Data Schedule June 30, 1997
(b) Reports on Form 8-K filed during the Quarter Ended June 30,
1997. On May 1, 1997, the Company filed a report on Form
8-K to report under Item 5, Other Events, the sale of an
aggregate 328,678 shares of Common Stock for a total purchase
price of $2,000,000. The sale was pursuant to an exemption from
regulation under the Securities Act of 1933. In connection
with the report of the sale of shares, the Company filed
unaudited, proforma, consolidated condensed financial
statements as of April 30, 1997.
14
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 13, 1997
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)
15
EXHIBIT INDEX
Exhibit No. Description Page
3.1 Certificate of Amendment 17
10.1 Stock Purchase Agreement, dated May 1, 1997 18
for 164,339 shares of the Company's Common Stock.
10.2 Stock Purchase Agreement, dated May 1, 1997 26
for 164,339 shares of the Company's Common Stock.
10.3 Stock Purchase Agreement, dated June 30, 1997 34
between Registrant and Wise Partners L.P.
10.4 Form of Stock Option Agreement, dated May 9, 1997, 41
between Registrant and each of Jonathan Steinberg,
Robert Schmidt, Scot Rosenblum and Michael Kaplan.
27 Financial Data Schedule June 30, 1997 54
16