THCG, Inc. Announces Second Quarter Financial Performance
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NEW YORK--(BUSINESS WIRE)--Aug. 14, 2000--
For The Six Month Reporting Period, Company Posts 745% Increase In
Revenue And 200% Gain In Net Income Before Discontinued Operations
THCG, Inc. (NASDAQ:THCG), a leading architect and builder of
global Internet and technology enterprises, today announced that
revenue for the six month reporting period, ended June 30, 2000,
jumped 745% to $16,506,000 over revenue of $1,954,000 reported for the
comparable six month period, ended June 30, 1999. Net income before
discontinued operations for the first six months of the year totaled
$759,000, or $0.06 per share ($0.05 per share, fully diluted), a 200%
increase compared to net income of $253,000, or $0.07 per share,
achieved for the same six month period in the prior year. It is
noteworthy to mention that THCG's results for the six months ended
June 30, 2000 were impacted by over $8.5 million in non-cash expenses
associated with equity-based compensation charges related to its
aggressive "V3 team" expansion program, and the amortization of
acquired intangibles related to the merger with Walnut Financial
Services, the acquisition of Mercury Coast and the purchase of an
interest in Global Credit Services, Inc. Excluding these non-cash
charges, THCG realized net income before discontinued operations of
$6,393,000, or $0.52 per share ($0.42 per share, fully diluted) for
the current six month reporting period. After factoring in accrued
losses of $4,347,000 realized in the first quarter 2000 from the
discontinuance of two non-core, non-strategic subsidiaries, net losses
for the current six month period were $3,588,000, or $0.29 loss per
share ($0.23 loss per share, fully diluted), compared to net income of
$253,000, or $0.07 per share, reported for the comparable six month
period in 1999.
For the three months ended June 30, 2000, THCG reported that
revenue from venture services increased to $1,836,000 compared to
venture service revenue of $1,672,000 posted for the three months
ended June 30, 1999. Despite the technology sell-off which adversely
impacted the overall financial markets during the second quarter, as
well as the Company's accounting practices which provide for "marking
to market" securities held by THCG's wholly-owned broker/dealer
subsidiary, the Company nonetheless generated a net gain on its
portfolio holdings of $375,000. Consequently, total revenue for the
current three-month period was $2,211,000, a 31% increase over revenue
of $1,688,000 reported in the comparable three-month period in the
previous year. Net losses for the current second quarter totaled
$5,910,000, or $0.47 loss per share, compared to net earnings of
$502,000, or $0.13 per share, reported for the second quarter in 1999.
Losses for the current three-month period were primarily attributable
to over $4.9 million in non-cash expenses. Excluding these non-cash
charges, net losses for the quarter ended June 30, 2000 totaled
$973,000, or a $0.08 loss per share.
Joseph Mark, Co-Chairman and Chief Executive Officer of THCG,
stated, "During the second quarter, THCG invested in the aggressive
expansion of its V3 team with the addition of a dozen professionals to
our US operations. Each of these individuals enhances the reputation
THCG has already earned and adds notable depth to our capabilities.
Attracting such outstanding talent and expertise confirms the
confidence that THCG, Inc. inspires and the reputation it enjoys
within our industry. Our human capital resources clearly widen the
differentiating gap between THCG and its peers. Mobilizing our V3 team
on behalf of our promising venture partner companies has resulted in
THCG realizing higher valuations on subsequent rounds of venture
fundings with external capital partners, as evidenced by the recently
announced capital raises benefiting Al-bawaba and TestU. Each of these
sizable equity private placements, with leading institutional
investors, was completed at a valuation considerably higher than
THCG's cost basis and represents a successful financing in a market
otherwise discouraging such activity. THCG, quite frankly, is not
experiencing any insurmountable difficulty in this regard and is
rapidly gaining the reputation as a proven Internet accelerator that
can get the job done."
According to Adi Raviv, Co-Chairman and Chief Financial Officer,
"Although THCG did not escape the tremendous market fluctuation and
downward pressure suffered by technology related companies during the
second quarter, conservative accounting practices that we adopted
early on resulted in the Company successfully achieving a net gain on
its portfolio holdings. Moreover, by way of our strategic focus on the
development and implementation of our "V3" fee-for-service platform,
the Company has readily demonstrated that it has established a strong
foundation for a recurring revenue stream that should result in
significant revenue growth as we move forward. To illustrate, venture
service fees for the six months ended June 30, 2000 were $3,319,000- a
74% increase over approximately $1,938,000 realized in the prior
year's first six month reporting period. This is a direct reflection
of our emphasis on providing services designed to accelerate the
evolutionary process of turning emerging and start-up situations into
successful global Internet and technology enterprises."
"In order to capitalize on our successful formula for building
global Internet and technology businesses, early in the second quarter
we agreed to acquire The Giza Group in Israel," Mark added. "In
addition, we recently launched Zinook (www.zinook.com), a wholly-owned
subsidiary of THCG, to bring together a wide range of resources
focused on investing in and furthering the development of early-stage,
Israel-based technology companies. Israel is rapidly emerging as a
center of technology excellence and a wonderful proving ground for
THCG to introduce its own global expansion initiatives. These
initiatives include launching eco-net models similar to Zinook in Asia
and Europe, and identifying promising opportunities for investment in
early-stage technology companies. Buoyed by our affiliation with
Microsoft Israel and other high profile sponsors, and aided by a
targeted ad campaign in the Israeli market, Zinook has realized
immediate success and industry acceptance. In fact, we are currently
receiving on average 100 to 125 new business plans per month and
expect to make our first equity investment in an exciting technology
company within the next several weeks."
Concluding, Raviv stated, "The second quarter of 2000 marked a
critical turning point for THCG. We enter the second half of the year
with a strong balance sheet; over $10 million in cash, cash
equivalents and marketable securities plus an additional $5 million
raised recently in our previously announced private placement with
Castle Creek Technology Partners. This is subject to further
enhancement with the equity interest in webMethods (NASDAQ:WEBM)
having recently been freed from lock-up restrictions; increasing cash
flow from key V3 projects and venture banking activities; improving
market conditions; and compelling opportunities originating from
Zinook and THCG Giza Israel. By perpetuating the considerable success
we've enjoyed year-to-date, we are confident that THCG will continue
to build positive momentum in the global marketplace and to deliver to
our shareholders increasingly enhanced value in the process."
Details regarding the Company's financial results will be
discussed in a conference call open to the public. The earnings call
is scheduled for simulcast via telephone and the Internet today at
4:15 P.M. Eastern Daylight Time and may be accessed by dialing
1-888-689-9341 and requesting the "THCG Conference Call," or by
visiting the Internet conference center at www.vcall.com.
About THCG, Inc.
Based in New York City, THCG, Inc. is a leading architect and
builder of global Internet and technology enterprises that is rapidly
building a portfolio of partnership and fee-for-service activities.
Its incubation and acceleration efforts center around Web
technologies, wireless, communications, network security, and supply
chain and customer relationship management sectors. In addition, the
Company, which is also pursuing e-Commerce and Web-content
transactions with a "bricks and clicks" focus, has equity positions in
several early-stage partner companies including Convergence
MediaGroup, Inc. (www.cmg-us.com); ENJEWEL (www.enjewel.com); Global
Credit Services, Inc. (www.globalcreditservices.com); Globecom
Interactive, Inc.; IT Utility, Inc. (www.itutility.com); and Test
University, Inc. (www.testu.com).
THCG also holds investments in over 10 Internet and technology
businesses it acquired through direct investment, equity for services
or acquisitions, including iBeauty.com (www.ibeauty.com);
insci-statements.com, Corp. (NASDAQ:INSI), (www.insci.com);
Marketplayer.com, Inc. (www.marketplayer.com); Passport New Media,
Inc. (www.yourownworld.com); RealTimeImage, Inc.
(www.realtimeimage.com); SoftWatch, Ltd. (www.softwatch.com); Sunshine
Media Corporation (www.bikini.com); TechOnLine, Inc.
(www.techonline.com); and, webMethods, Inc. (NASDAQ:WEBM),
(www.webmethods.com).
THCG shortly expects to complete the formation of THCG Giza Israel
as a THCG wholly-owned subsidiary. THCG Giza Israel will serve as the
Company's global technology "center of excellence" and is focused on
sourcing, screening and developing promising companies in the areas of
Broadband, Wireless, Internet Enabling Technologies and Telecom
Infrastructure.
For more information, please visit the Company's Web site at
www.thcg.com.
*T
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except per share data)
June 30, December 31,
2000 1999
(unaudited) (audited)
----------- -----------
ASSETS
Cash and cash equivalents $ 4,226 $ 1,592
Marketable and nonmarketable
securities 6,203 7,863
Partnership, limited liability
company and other interests
(See Note 2) 15,673 2,053
Ownership interest in company
accounted for on the equity
method (See Note 4,533 --
Fees and other receivables, net
of allowance 2,257 352
Prepaid expenses and other assets 346 279
Loan receivable, related parties 375 312
Furniture, fixtures and equipment -
at cost, less accumulated
depreciation 200 104
Excess of cost over fair value
of net assets acquired, net of accumulated 26,203 29,266
Assets of discontinued operations
(See Note 3) -- 6,537
-------- --------
Total Assets $ 60,016 $ 48,358
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable, accrued expenses
and others $ 2,207 $ 131
Liabilities of discontinued
operations 889 2,967
Deferred income taxes payable -- 495
-------- --------
Total Liabilities 3,096 3,593
-------- --------
Stockholders' equity:
Common stock, $.01 par value,
50,000,000 shares authorized;
12,651,669 and 127 118
Additional paid-in capital 93,690 81,601
Accumulated deficit (13,248) (9,660)
Unearned compensation (23,649) (27,294)
-------- --------
Total Stockholders' Equity 56,920 44,765
-------- --------
Total Liabilities and Stockholders'
Equity $ 60,016 $ 48,358
======== ========
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
(unaudited) (unaudited)
Revenues
Venture service fees $3,319 $1,938 $1,836 $1,672
Realized and unrealized
gain (loss) in securities,
net, and interest income 13,187 16 375 16
--------- -------- -------- -------
Total Revenues 16,506 1,954 2,211 1,688
Expenses
Selling, general
and administrative 6,685 1,531 3,679 1,028
Equity-based compensation 5,000 ----- 2,913 -----
Amortization of acquired
intangibles 3,064 ----- 1,532 -----
--------- -------- -------- -------
Total Expenses 14,749 1,531 8,124 1,028
Income (loss) from
continuing operations 1,757 423 (5,913) 660
Provision for income
taxes (tax benefits) 506 170 (495) 158
--------- -------- -------- -------
Income (loss) before
discontinued operations
and equity in losses of
company accounted for
on the equity method 1,251 253 (5,418) 502
Equity in losses of
company accounted for
on the equity method (492) ----- (492) -----
--------- -------- -------- -------
Net income (loss) before
discontinued operations 759 253 (5,910) 502
Net (loss) from discontinued
operations (4,347) ----- ----- -----
--------- -------- -------- -------
Net income (loss) ($3,588) $253 ($5,910) $502
========= ======== ======== =======
Basic Earnings Per Share
Basic income (loss)
per share from
continuing operations $0.06 $0.07 ($0.47) $0.13
Basic (loss) per share
from discontinued
operations (0.35) ----- ----- -----
--------- -------- -------- -------
Basic income (loss)
per share ($0.29) $0.07 ($0.47) $0.13
========= ======== ======== =======
Diluted Earnings Per Share
Diluted income (loss)
per share from
continuing operations $0.05 $0.07 ($0.47) $0.13
Diluted (loss) per
share from
discontinued operations (0.28) ----- ----- -----
--------- -------- -------- -------
Diluted income (loss)
per share ($0.23) $0.07 ($0.47) $0.13
========= ======== ======== =======
Basic weighted
average common
shares outstanding 12,368,839 3,723,000 12,635,592 3,723,000
========== ========= ========== =========
Diluted weighted
average common
shares outstanding 15,387,539 3,723,000 12,635,592 3,723,000
========== ========= ========== =========
*T
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: The statements contained in this release which are
not historical facts are forward-looking statements that are subject
to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by such forward-looking
statements. These risks and uncertainties include the Company's entry
into new commercial businesses, the risk of obtaining financing, risks
associated with startup or early stage enterprises, the effect of
demand for public securities, activity in the secondary securities
markets, general economic, political and market conditions, and other
risks described in the Company's Securities and Exchange Commission
filings.
CONTACT: Continental Capital & Equity Corporation, Longwood, Fla.
Dodi Handy, 407/682-2001
dodi@insidewallstreet.com |
