THCG, Inc. Announces Third Quarter Results
NEW YORK--(BUSINESS WIRE)--Nov. 9, 2000--
For the Nine Month Reporting Period, Company Posts 764% Increase in
Revenues; Excluding Non-Cash Charges, Realizes Income Before
Discontinued Operations of $4.7 Million, or $0.37 Per Share
THCG, Inc. (Nasdaq/NM:THCG), an international merchant banking firm actively engaged in building and supporting its global portfolio of industry leading technology companies, today announced its operating results for the three and nine month periods ended September 30, 2000.
For the three and nine month periods ended September 30, 2000, revenues increased 884% and 764%, respectively, to $3,167,000 and $19,673,000, respectively, compared with $322,000 and $2,278,000, respectively, in the same periods last year.
During the three and nine month periods under review, the Company's net loss before discontinued operations amounted to $4,509,000, or ($0.36) per share, and $1,865,000, or ($0.16) per share, respectively, fully diluted, as compared with net losses of $638,000, or ($0.17) per share, and $228,000, or $(0.06) per share, respectively in the comparable periods of 1999. For the nine months, net loss after discontinued operations totaled $6,816,000, or ($0.55) per share, fully diluted. There were no discontinued operations during the third quarter of 2000.
The Company's financial results for the three and nine months ended September 30, 2000 include over $2,144,000 and $7,144,000, respectively, in non-cash expenses associated with equity-based compensation charges in connection with the growth and expansion of the "V3 team," the amortization of acquired intangibles in the amount of $994,000 and $2,776,000, respectively, related to the merger with Walnut Financial Services, the acquisition of Mercury Coast, the acquisition of Zinook Ltd. and the purchase of an interest in Global Credit Services, and the equity in losses of company accounted for on the equity method of $253,000 and $745,000, respectively. Excluding these non-cash charges, THCG realized a loss of $604,000, or ($0.05) per share, and net income of $4,685,000, or $0.37 per share, respectively, for the three and nine month periods under review.
Well-Positioned for Growth and Profitability:
"The successful integration of THCG's matrix of V3 service offerings (Venture Banking, Venture Funding and Venture Development) generate significant and growing revenue streams for the Company," stated Joseph D. Mark, THCG Co-Chairman and Chief Executive Officer. For the three and nine month periods ended September 30, 2000, THCG venture service revenues reached $2,469,000 and $5,788,000, respectively, up substantially from $312,000 and $2,250,000, respectively, in the comparable periods last year. "In spite of dislocations in the capital markets, particularly in the technology sector, THCG has successfully continued to deliver its value-added V3 service offerings to build and support the financing of our global partner companies. For example, THCG raised approximately $26.65 million in several transactions for five of our partner companies during the third quarter alone. Moreover, we continue to develop our third party (non-partner companies) fee-for-service business, which has also started to achieve traction in the market," stated Mark.
Significant Capital Appreciation and Strong Liquidity Position:
Despite the overall volatility of technology and financial markets, 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 equal to $698,000 and $13,885,000, respectively in the three and nine month periods ended September 30, 2000. This reflects dramatic increases over $10,000 and $28,000, respectively, recorded during the same three and nine month periods last year. Other private equity positions not held by THCG's broker/dealer subsidiary are accounted for on a lower-of-cost or market basis.
"THCG enjoys a strong liquidity position," emphasized Adi Raviv, THCG Co-Chairman and Chief Financial Officer, and added that "as of October 31, 2000, the Company's liquidity position, including cash, cash equivalents and marketable securities, stood at more than $17.0 million."
During October 2000, the Company began to sell its non-core shareholdings in webMethods, Inc. (Nasdaq:WEBM), and to date has sold approximately half of its holdings in webMethods in open market transactions that have generated approximately $5.8 million in cash. In addition, pursuant to THCG's previously announced share buy-back program, in October 2000, the Company purchased 19,700 shares of its common stock in open market transactions. In November 2000, the Company continues to reduce its webMethods shareholdings and to buy back its shares as planned.
Accounting Changes:
Following a review by the U.S. Securities and Exchange Commission ("SEC") of THCG's Form S-3 Registration Statement filed on August 31, 2000, and comments thereon, and in consultation with its auditors, Arthur Andersen, LLP, the Company will promptly revise its 1999 and 2000 financial statements. As a result, the Company intends to file amended Forms 10-Q for the first and second quarters of 2000 and an amended Form 10-K for 1999. The results for the third quarter of 2000 already reflect the accounting changes and revisions made for previous periods. Such revisions will have the effect of reducing "acquired intangibles," a non-cash item, related to the merger with Walnut Financial Services and the acquisition of Mercury Coast. Accordingly, the Company's goodwill asset has been reduced by approximately $12.8 million at December 31, 1999. Consequently, expenses for the periods under review and future reporting periods through 2005 shall be reduced by approximately $0.64 million each quarter. Revenues and cash expenditures have not been changed.
Third Quarter THCG Highlights include:
-- THCG raised an aggregate $26.65 million for five partner companies
during the quarter.
-- THCG committed to the first investment originated by its Zinook
subsidiary in Xtend Networks, Ltd.
-- THCG commenced open market sales of its shareholdings in
webMethods, Inc.
-- THCG announced plans to buy back up to 500,000 shares from
time-to-time in open market transactions.
-- THCG continued to expand its executive management team.
-- THCG moved into its new headquarters in New York City.
-- Zinook launched IVC-Online, its proprietary Research and Data
Center, the most comprehensive information source focused on
Israeli technology companies and the Israeli venture capital
industry.
Third Quarter THCG Partner Companies Highlights include:
Al-Bawaba (www.albawaba.com) closed a $5.15 million strategic investment arranged by THCG from European and Middle Eastern institutional investors, including TFG Venture Capital AG (Germany) and Middle East Internet Holdings Corporation (Jordan). Al-Bawaba is the most comprehensive news, entertainment and e-Commerce portal for the 21 countries of the region, featuring more than 10 channels of content in Arabic and English.
Convergence MediaGroup, Inc., (www.cmg-us.com) the leading youth-focused experiential marketing company whose client roster includes Levi's Jeans, Pepsi-Cola and Virgin Records, announced a strategic partnership with Upoc, the fastest-growing mobile community platform for the youth market.
EnJewel, Inc., an online marketing joint venture among premier jewelry manufacturers, designers and retailers, launched its commercial site (www.enjewel.com). THCG delivered extensive V3 services to Enjewel, including development of its innovative e-commerce engine. The company provides consumers with the convenience of the Internet ("clicks") coupled with the support, selection, trust and integrity of established retailers ("bricks").
Globecom Interactive, Inc. (www.globecom-interactive.com) closed a $2.5 million financing round arranged by THCG with YVC-Yozma Management and Investments, Ltd. The Company, a developer of end-to-end broadband solutions for the creation, management and delivery of rich dynamic media over multiple platforms, established headquarters in Northern Virginia and its R&D center in Herzalia, Israel.
IT Utility, Inc. (www.itutility.com) offers small- and mid-sized businesses enterprise-wide computing services delivered over the Internet. IT Utility's services replace hardware, software, networking, communications, service and support with a comprehensive computing service billed on a monthly per-user basis.
Test University, Inc. (www.testu.com) closed $15 million in private equity financing arranged by THCG from investors that included Vertex Management and SCP Private Equity, an investment affiliate of Safeguard Scientifics (NYSE:SFE). TestU is a leading online standardized test preparation company, providing high-quality, accessible and affordable test preparation services. TestU also announced its free "Gift to America," offering free SAT test preparation services to all students in the country. TestU's strategic partners include the National High School Association, the California League of High Schools, the Research and Education Association, Barron's Educational Series, Merriam-Webster and U.S. News and World Report, among others.
Xtend Networks, Ltd. received $2.0 million in financing arranged by THCG and venture development services from THCG and its Zinook subsidiary to further its growth plans involving high-speed broadband transmission over cable infrastructure. Xtend's core technology significantly expands the bandwidth of existing satellite and cable TV links, allowing expansion of bandwidth without major infrastructure investment.
Conference Call:
Details regarding the Company's financial performance and operating results will be discussed in a conference call open to the public. The conference call is scheduled for simulcast via telephone and the Internet tomorrow, Friday, November 10, 2000 at 10:30 A.M. Eastern Standard 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. (NASDAQ/NM:THCG) is an international merchant banking firm actively engaged in building and supporting its global portfolio of industry leading technology companies. THCG helps its partner companies succeed through an integrated matrix of financial, business and technology development services consisting of Venture Funding, Venture Banking and Venture Development ("V3 Services"). Within the technology sector, THCG's V3 service offerings are targeted in key segments, including Internet-enabling technologies, broadband, wireless, telecommunications and telecom infrastructure, among others. THCG Giza Israel, through its Zinook unit, serves as one of THCG's global technology "Centers of Excellence," sourcing, screening and developing promising early-stage technology companies.
For more information, please visit the Company's Web site at www.thcg.com.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except per share data)
Sept. 30, Dec. 31,
2000 1999
(unaudited) (audited)
----------- ---------
ASSETS
Cash and cash equivalents $4,635 $1,592
Marketable securities 14,763 2,812
Nonmarketable securities, partnership,
limited liability company and other
interests 10,032 7,104
Ownership interest in company accounted
for on the equity method 4,281 ----
Fees and other receivables, net of
allowance 2,737 352
Prepaid expenses and other assets 637 279
Loans receivable, related parties 415 312
Furniture, fixtures and equipment - net 1,743 104
Goodwill and other intangible assets, net
of accumulated amortization 22,425 16,610
Assets of discontinued operations
(See Note 3) ---- 6,537
----------- ---------
Total Assets $61,668 $35,702
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable, accrued expenses and
other current liabilities $4,347 $1,933
Loan payable ---- 565
Notes payable ---- 600
Liabilities of discontinued operations 853 ----
Deferred income taxes payable ---- 495
----------- ---------
Total Liabilities 5,200 3,593
----------- ---------
Stockholders' equity:
Cumulative preferred stock - variable
rate, $1,000 par value, 5,000 shares
issued and outstanding at Sept. 30, 2000 5,000 ----
Common stock, $.01 par value, 50,000,000
shares authorized; 13,404,169 and
11,751,113 issued and outstanding at
Sept. 30, 2000 and Dec. 31,1999,
respectively 134 118
Additional paid-in capital 89,060 68,777
Deferred compensation (21,337) (27,294)
Accumulated deficit (16,389) (9,492)
----------- ---------
Total Stockholders' Equity 56,468 32,109
----------- ---------
Total Liabilities and Stockholders'
Equity $61,668 $35,702
=========== =========
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Nine Months Ended Three Months Ended
----------------------- ------------------------
September September September September
30, 30, 30, 30,
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited) (unaudited)
------------ ----------- ----------- -------------
Revenues
Venture service
fees $5,788 $2,250 $2,469 $312
Realized and un-
realized gain
(loss) in invest-
ments, net, and
interest income 13,885 28 698 10
------------ ----------- ----------- -------------
Total Revenues 19,673 2,278 3,167 322
Expenses
Selling, general
and administra-
tive 10,970 2,506 4,285 960
Equity-based
compensation 7,144 ----- 2,144 -----
Amortization of
acquired
intangibles 2,776 ----- 994 -----
------------ ----------- ----------- -------------
Total Expenses 20,890 2,506 7,423 960
Income (loss) from
continuing
operations (1,217) (228) (4,256) (638)
Provision for in-
come taxes
(tax benefit) (97) ----- ----- -----
------------ ----------- ----------- -------------
Income (loss) be-
fore discontinued
operations and
equity in losses
of company ac-
counted for on
the equity method (1,120) (228) (4,256) (638)
Equity in losses
of company ac-
counted for on
the equity method (745) ----- (253) -----
------------ ----------- ----------- -------------
Net income (loss)
before discon-
tinued operations (1,865) (228) (4,509) (638)
Net (loss) from
discontinued
operations (4,951) ----- ----- -----
------------ ----------- ----------- -------------
Net income (loss) (6,816) (228) (4,509) (638)
Dividend on
preferred stock 81 ----- 81 -----
------------ ----------- ----------- -------------
Net income (loss)
available for
common stock ($6,897) ($228) ($4,590) ($638)
============ =========== =========== =============
Basic and Diluted
Earnings Per Share
Basic income
(loss) per share
from continuing
operations ($0.16) ($0.06) ($0.36) ($0.17)
Basic (loss) per
share from dis-
continued
operations (0.39) ----- ----- -----
------------ ----------- ----------- -------------
Basic income
(loss) per share ($0.55) ($0.06) ($0.36) ($0.17)
============ =========== =========== =============
Basic weighted
average common
shares out-
standing 12,543,681 3,723,000 12,890,039 3,723,000
============ =========== =========== =============
Diluted weighted
average common
shares out-
standing 12,543,681 3,723,000 12,890,039 3,723,000
============ =========== =========== =============
"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 B. Handy, 407/682-2001
dodi@insidewallstreet.com
or
THCG, Inc., New York
Daniel A. Halpern, Vice President,
Corporate Development and Investor Relations
212/223-0440
dhalpern@thcg.com
or
THCG Giza Israel
Ori Birnbaum, Vice President, Marketing
972-3-640-2350
orib@zinook.com |
