UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
Period: Fiscal year ended December 31, 2003
Registrant: GIANT GROUP, LTD.
Address: 9440 Santa Monica Boulevard, Suite 407
Beverly Hills, California 90210
Telephone number: (310) 273-5678
Commission File Number: 1-4323
I.R.S. Employer Identification Number: 23-0622690
State of Incorporation: Delaware
| Title of each class |
Name of each exchange on which registered | |||
| Securities registered pursuant to 12(b) of the Securities Exchange Act of 1934, as amended: | $.01 par value Common stock, with Preferred stock purchase rights | None | ||
| Securities registered pursuant to 12(g) of the Securities Exchange Act of 1934, as amended: | None | None | ||
Indicate by X whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. x
Indicate by X if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by X whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended).
As of the most recent completed second fiscal quarter, the aggregate market value of the Registrant’s $.01 par value Common stock held by non-affiliates, based on the last trade reported was approximately $2,028,000.
On March 29, 2004, 2,735,854 shares of the Registrant’s Common stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required in Part III of the Registrant’s Annual Report on Form 10-K for December 31, 2003, is incorporated herein by reference to portions of the Registrant’s definitive proxy statement for the Registrant’s 2004 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after the end of the fiscal year ended December 31, 2003.
Exhibit Index is located on page 15
1
| Page | ||||
| PART I |
||||
| Item 1. |
3 | |||
| Item 2. |
6 | |||
| Item 3. |
6 | |||
| Item 4. |
8 | |||
| PART II |
||||
| Item 5. |
Market for the Registrant’s common equity and related stockholder matters |
9 | ||
| Item 6. |
10 | |||
| Item 7. |
Management’s discussion and analysis of financial condition and results of operations |
11 | ||
| Item 7a. |
14 | |||
| Item 8. |
14 | |||
| Item 9. |
Changes in and disagreements with accountants on accounting and financial disclosure |
14 | ||
| Item 9a. |
15 | |||
| PART III |
||||
| Item 10. |
Directors and executive officers of the Registrant |
15 | ||
| Item 11. |
Executive compensation |
15 | ||
| Item 12. |
Security ownership of certain beneficial owners and management |
15 | ||
| Item 13. |
Certain relationships and related transactions |
15 | ||
| Item 14. |
Principal accounting fees and services |
15 | ||
| PART IV |
||||
| Item 15. |
Exhibits, financial statement schedules and reports on Form 8-K |
15 | ||
| 18 | ||||
2
FORWARD-LOOKING STATEMENTS
GIANT GROUP, LTD’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 includes forward-looking statements containing management’s strategies, plans or intentions, based on current events and estimates and forecasts based on management’s expectations of future events.
Forward-Looking statements may be identified by words such as “believes”, “considers”, “expects”, “predicts” or “could”. Risks and uncertainties, many outside GIANT’s control, may cause actual results to differ materially from those discussed in forward-looking statements. These risks and uncertainties include, but are not limited to (1) availability of adequate working capital, (2) changing market value of investments, (3) outcome of litigation, (4) development and implementation of a business plan and (5) changes in federal or state tax laws.
GIANT is not under any obligation to revise or update any forward-looking statement.
PART I
| Item 1. | Business. |
The Company
GIANT GROUP, LTD. (“Company” or “GIANT”) is a corporation, organized under the laws of the State of Delaware in 1913. Currently, the Company owns 978,000 shares of common stock of Checkers Drive-In Restaurants, Inc. (“Checkers”), which is 8% of the total outstanding common shares. GIANT’s Chief Executive Officer, Vice-Chairman and Audit Committee Chairman serve on the Checkers’ board of directors.
The Company technically falls within the definition of an Investment Company under the Investment Company Act of 1940 (“Investment Act”). However, the Company is not engaged in the business of investing, re-investing or trading of securities and has, therefore, filed for an exemption from the Securities and Exchange Commission so as not to fall under the Investment Act. The Board of Directors continues to review various courses of action with respect to the Company including but not limited to an extraordinary corporate transaction such as a merger, reorganization or liquidation. There can be no assurances that GIANT will receive a favorable ruling on the exemption request or that the Company will undertake an extraordinary corporate transaction.
Double Drive-Thru Restaurant Operations
Checkers is a Delaware corporation and is the single largest chain of double drive-thru restaurants in the United States. The company is a combination of two similar quick-service restaurant chains, Checkers and Rally’s Hamburgers (Rally’s), which were merged in August 1999. Checkers’ common stock is quoted on the National Market System of the NASDAQ Stock Market under the symbol “CHKR”.
Checkers has developed and owns a comprehensive system for developing and operating double drive-thru restaurants, which includes trademarks, building designs and layouts, equipment, ingredients, recipes and specifications for authorized food products, methods of inventory control and certain operational and business standards.
At December 29, 2003, there were 784 restaurant locations, consisting of 222 company-owned restaurants and 562 franchisee-owned restaurants. Of the 784 locations, 379 are Rally’s restaurants operating in 17 different states and 405 are Checkers restaurants operating in 20 different states, the District of Columbia and the West Bank. Ten states have both Checkers and Rally’s restaurants.
Merged Subsidiary
In December 2002, the Board of Directors approved the merger of the Company’s wholly owned subsidiary, KCC Delaware Company (“KCC”) into GIANT. The effective date of the merger was December 31, 2002. On this date, KCC’s investment of 704,000 shares of Checkers common stock and net operating loss carryforward for Federal and State income tax purposes were transferred to GIANT.
Tender Offer
In April 2001, the Company sought to become a private company by deregistering its shares of $.01 par value Common stock, with preferred stock purchase rights. The Company offered to purchase all its outstanding shares of Common stock for $.50 per share (“Tender Offer”).
3
In May 2001, the Tender Offer expired. The Company purchased a total of 484,000 shares of Common stock. Because the remaining number of stockholders continued to exceed 300, the Company was not able to deregister its Common stock and remained a public company. Currently, the total number of stockholders exceeds 1,400.
Discontinued Operations
Periscope Sportswear, Inc. (“Periscope”), the Company’s former wholly owned subsidiary, designed and marketed clothing for women and children. The following points outline the material events related to the Company’s investment in Periscope:
| • | In December 1998, Periscope was acquired for $35.2 million, consisting primarily of 953,000 shares of Common stock held in treasury valued at $6.7 million and a cash advance of $28.5 million. In addition, the Company paid legal and accounting fees of $.2 million. |
| • | In May 1999, the Board of Directors approved the capitalization of the $28.5 million advance. |
| • | In September 1999, the former Periscope stockholders received an additional 62,500 shares of Common stock held in treasury, valued at $.4 million. |
| • | For the year ended December 31, 1999, the Board approved the write-off of the Company’s entire investment in Periscope. |
| • | In April 2000, Periscope terminated the employment of Glenn Sands and certain other employees. GIANT provided a guarantee for $2 million of Periscope’s liabilities to Century Business Credit Corporation (“Century”) and also advanced $3 million (“Cash Collateral Deposit”) to Century. |
| • | In May 2000, Mr. Sands and Jeffrey W. Sirchio filed separate civil lawsuits against GIANT and other parties for wrongful termination of their employment with Periscope. The Company filed a counter claim against Mr. Sands which asserted, among other things, that he violated his employment agreement. |
| • | In July 2000, the civil lawsuits involving Mr. Sands and Mr. Sirchio were resolved in the Company’s favor. Mr. Sands, among other things, assigned to Century for the benefit of Periscope, $1.97 million; paid $1 million to Periscope; returned 769,000 shares of Common stock to GIANT valued at $.70 per share or $.5 million; obtained a general release from Mr. Sirchio and agreed to pay approximately $.5 million. |
| • | In August 2000, the Company effectively lost control of Periscope’s operations to Century. In addition Periscope had been in default of its factoring agreement with Century. |
| • | In September 2000, Periscope began to lay off employees and moved its New Jersey operations to its New York showroom. In addition, the Company’s Board of Directors approved a plan for the disposition of the operations. |
| • | In October 2000, Periscope executed and delivered a letter to Century delivering peaceful possession of its assets, including its trademarks. Century released the Company from its $2 million guarantee. |
| • | In October 2000, Century licensed certain Periscope trademarks to Alarmex Holdings, LLC (“Alarmex”) for the purpose of the manufacture and sale of Periscope products. Among other things, Century receives a royalty equal to a percentage of net sales of these products until Century has received $7 million from Alarmex. Century will pay GIANT a percentage of these net sales until the Company has recovered the Cash Collateral Deposit. |
| • | In October 2000, GIANT commenced an action in federal court against Mr. Sands, Arthur Andersen LLP, L.H. Friend and other parties. The Company alleged that it was fraudulently induced by a series of misrepresentations and concealments by the defendants to purchase Periscope. |
| • | In November 2000, Periscope filed a Voluntary Petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. |
| • | In May 2001, the federal court dismissed the Company’s October 2000 action on the grounds that the relevant statute of limitations for securities fraud had expired and that the court did not have jurisdiction over the remaining state law claim. |
4
| • | In May 2001, the Company and Mr. Sands agreed on the repayment of the remaining balance of $528,000. Mr. Sands had previously paid $150,000 million in 2000, leaving a balance due of $378,000. Mr. Sands made a lump sum payment of $140,000 and promised to pay the remaining balance of $238,000 in 10 equal quarterly installments, including 9% interest per annum. |
| • | In June 2001, the Company filed a lawsuit in the New York State Supreme Court against Mr. Sands, Arthur Andersen LLP, Richard Salute, L.H. Friend, Greg Presson and other parties as a result of the dismissal of the Company’s action commenced in October 2000. |
| • | In January 2002, the Company received cash proceeds of $483,000 from Century towards the recovery of the Cash Collateral Deposit. |
| • | In April 2002, the New York State Supreme Court dismissed certain defendants in the June 2001 lawsuit, including L.H. Friend and Greg Presson. |
| • | In May 2002, the Trustee administering the bankruptcy of Periscope filed an adversary action in the United States Bankruptcy Court for the Southern District of New York against the Company, Burt Sugarman and David Gotterer. |
| • | In December 2002, Mr. Sands defaulted on the December quarterly installment. The balance due at the time of the default was $129,000. |
| • | In December 2002, the Company filed suit against L.H. Friend, Gregory Presson and Robert Campbell in the Superior Court of the State of California for the County of Los Angeles. This action resulted from the New York State Supreme Court’s dismissal of the counts against L.H. Friend and Greg Presson. |
| • | In January 2003, the Bankruptcy court approved a settlement between the Trustee and the defendants. As part of this settlement, Century was ordered by GIANT to transfer $1.3 million to the Trustee for the benefit of the Estate of Periscope, as the funds became available per the October 2000 agreements between the companies. In addition, GIANT filed a Proof of Claim of up to $1.05 million as to amounts paid to the Trustee under this settlement. During the year ended December 31, 2003, the Trustee received $965,000 from Century and the Company received $177,000 from the Trustee. |
| • | In January 2003, the Company and Mr. Sands settled the December 2002 default. Mr. Sands paid $100,000 in January 2003, $50,000 in February 2003 and $25,000 in March 2003. The amount paid in excess of the $129,000 due at the time of the default represented accrued interest from December 1, 2002 and the reimbursement of legal fees incurred by the Company to collect the balance owed. |
| • | In December 2003, the appellate court reversed the New York State Supreme Court to the extent of reinstating the dismissed claims for professional negligence and breach of contract against L.H. Friend and Greg Presson. |
| • | In December 2003, a payment of $2 million was made by Arthur Andersen LLP to settle all claims asserted and that could have been asserted by the Company, Arthur Andersen LLP and Richard Salute. |
| • | For the year ended December 31, 2003, the Company received cash proceeds of $335,000 from Century. |
Employees
At December 31, 2003, the Company’s relationship with its 5 full-time employees is considered good.
Executive Officers
Burt Sugarman (65) is the Chairman of the Board, President and Chief Executive Officer. Mr. Sugarman has been Chairman since 1983 and President and Chief Executive Officer since May 1985. Mr. Sugarman is a director of Checkers.
Pasquale A. Ambrogio (51) is the Vice President, Chief Financial Officer and Secretary. Mr. Ambrogio joined the Company in June 1995 and served as Controller for approximately five years. He was appointed to his present position in May 2000.
5
| Item 2. | Properties. |
Corporate Office
The Company’s corporate office is located in Beverly Hills, CA. The office is 1,700 square feet, including 300 square feet for storage and is suitable for the Company’s needs. The Company moved into its corporate office on April 1, 2000.
The lease term for the office and storage area is 60 months, beginning on July 1, 2000 and ending on June 30, 2005. The lease provides for an annual rent increase of 3% and contains one, five-year renewal option. Annual base rent for the office and storage area for 2003 was $63,000, which includes the Company’s share of its estimated common area maintenance for the building.
In January 2004, the Building’s management agreed to the Company’s request to terminate the lease for the storage area. The effective date for the termination is January 1, 2004. This will result in cost savings of $10,000 over the remaining term of the lease. The Company’s office lease was not affected.
| Item 3. | Legal proceedings. |
Mittman, et al. vs. Rally’s Hamburgers, Inc., et al. (Civ. No.C-94-0039-L (CS))
In March 1994, this consolidated class action lawsuit was filed in the United States Western District Court of Kentucky (“the Court”) as a result of the consolidation of Jonathan Mittman, Steven Horowitz, Dina Horowitz and John Hannan vs. Rally’s Hamburgers, Inc., GIANT GROUP, LTD., Wayne M. Albritton, Donald C. Moore, Edward C. Binzel, Gena L. Morris, Burt Sugarman, Patricia L. Glaser and Arthur Andersen & Co., and Edward L. Davidson and Rick Sweeney vs. Rally’s Hamburgers, Inc., GIANT GROUP, LTD., Wayne M. Albritton, Donald C. Moore, Edward C. Binzel, Gena L. Morris, Burt Sugarman, Patricia L. Glaser and Arthur Andersen & Co. The Mittman, et al. action asserts causes of action for certain violations of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This consolidated class action lawsuit alleges that inaccurate public statements about Rally’s Hamburgers, Inc. (“Rally’s”) were issued in order to arbitrarily inflate the price of Rally’s common stock. Rally’s merged with Checkers Drive-In Restaurants, Inc. (“Checkers”) in 1999. Plaintiffs seek an unspecified amount of damages, including punitive damages.
In April 1994, Ms. Glaser and the Company filed a motion to dismiss the consolidated class action lawsuit for lack of personal jurisdiction. The remaining defendants filed motions to dismiss for failure to state a claim upon which relief can be granted. The Court denied these motions. In addition, the Court struck plaintiffs’ punitive damages allegations and required plaintiffs to amend their claims under section 20 of the Exchange Act, but otherwise the Court let stand the most recent version of plaintiffs’ complaint at this juncture. The Court granted Mr. Sugarman’s motion to strike certain scurrilous and irrelevant allegations, and directed plaintiffs to amend their complaint to conform to the Court’s order. Finally, the Court denied plaintiffs’ motion for class certification, “until such time as the issue of typicality of claims is further developed and clarified.”
In June 1995, the plaintiffs filed their second amended complaint, joining additional plaintiffs pursuant to stipulation of the parties. In July 1995, the plaintiffs renewed their motion for class certification. In October 1995, defendants filed their opposition to plaintiffs’ motion. In April 1996, the Court granted plaintiffs’ motion, certifying a class from July 20, 1992 to September 29, 1993.
In October 1995, plaintiffs filed a motion to disqualify Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro LLP (“Christensen Miller”) as counsel for defendants based on a purported conflict of interest allegedly arising from the representation of multiple defendants as well as Ms. Glaser’s association with Christensen Miller. The Court denied the motion and refused to disqualify Christensen Miller.
Fact discovery was completed in the summer of 1999. Expert discovery was completed in early Spring 2000.
In August 2000, defendants filed motions for summary judgment against the plaintiffs for failure to show a genuine issue of material facts supporting its claims of securities fraud under Sections 10(b) and 20(a) of the Exchange Act and negligent representations under common law. The plaintiffs filed oppositions to the defendants’ motions for summary judgment. The defendants filed reply briefs in support of their summary judgment motions.
In April 2002, the Court granted Arthur Andersen & Co.’s motion for summary judgment. In January 2003, a settlement conference took place before Magistrate Judge Gambill. The plaintiffs and defendants have met before to attempt to reach a settlement; however, no settlements have ever been reached.
6
In August 2003, the Court granted the motion for summary judgment of all of the remaining defendants. In September 2003, the plaintiffs filed notice of their intent to appeal. Briefing is presently pending before the 6th Circuit Court.
The Company denies all wrongdoing. The Company intends to vigorously defend itself against any future action brought by the plaintiffs and cannot predict the effect, if any, the plaintiff’s action will have on the summary judgment.
GIANT GROUP, LTD., Plaintiff v. Glenn Sands; Arthur Andersen LLP; Richard Salute; L.H. Friend, Weinress, Frankson & Presson, LLC a/k/a L.H. Friend, Weinress, Frankson & Presson, Inc.; Greg Presson; Friedman, Alpren & Green, LLP and Harriett Greenberg, Defendants
In June 2001, the Company filed a lawsuit in the New York State Supreme Court (the “Court”) against Glenn Sands, former principal of Periscope Sportswear, Inc. (“Periscope”); Arthur Andersen LLP, Richard Salute, Friedman, Alpren & Green LLP (“Friedman”) and Harriett Greenberg, former Periscope auditors; L.H. Friend, Weinress, Frankson & Presson LLC a/k/a L.H. Friend, Weinress, Frankson & Presson, Inc. (“L.H.Friend”), GIANT’s former investment banking advisor and Greg Presson, L.H. Friend’s chief executive officer. In the complaint, the Company alleged that it was fraudulently induced by and through a series of misrepresentations and concealments by the defendants to purchase Periscope in December 1998. The Company quantified its loss at approximately $40 million. All defendants moved to dismiss the complaint.
This lawsuit was filed as a result of the dismissal of a similar action that commenced in October 2000 in federal court for the Southern District of New York. The federal court dismissed the action on the stated grounds that the relevant statute of limitations for securities fraud had expired and the court lacked jurisdiction over the remaining state law claims.
In April 2002, the Court issued an opinion on the motions to dismiss the complaint. The Court denied Mr. Sands’ motion and Arthur Andersen and Mr. Salute’s motion to dismiss related to the Company’s allegations of breach of contract and professional malpractice. However, the Court granted Arthur Andersen LLP and Mr. Salute’s motion to dismiss related to the Company’s allegations of fraud, constructive fraud and negligent misrepresentation. In addition, the Court granted the motions to dismiss for L.H. Friend, Mr. Presson, Friedman and Ms. Greenberg.
In May 2002, the Company filed a motion to reargue the dismissal of claims against such defendants. The Company also filed a motion for permission to file a first amended complaint. In July 2002, Arthur Andersen LLP filed a counterclaim against GIANT alleging nonpayment of certain fees of $105,000 that related to alleged services provided in 2000. The Company moved to dismiss the counterclaim.
In February 2003, the Company perfected its appeal of the Court’s April 2002 ruling in respect of Arthur Andersen LLP, Richard Salute, L.H. Friend and Greg Presson.
In April 2003, the Court issued an opinion denying the Company’s May 2002 motions to reargue the dismissal of the defendants and permission to file a first amended complaint. In addition, the Court denied the Company’s motion to dismiss Arthur Andersen LLP’s counterclaim. In May 2003, GIANT appealed these rulings.
In November 2003, the Company, Arthur Andersen LLP and Richard Salute (Arthur Andersen LLP and Salute are collectively referred to as the “Andersen Parties”) signed a settlement agreement (“Agreement”). As a result of the Agreement, a payment of $2 million was made by Arthur Andersen LLP on December 3, 2003 to settle all claims asserted and that could have been asserted by the Company and the Andersen Parties, inclusive of any attorneys’ fees and costs claimed by either the Company or the Andersen Parties. Neither party admitted any liability or fault. The Agreement provided that its terms would not be disclosed, except as stated in the Agreement. The Company did not discharge its claims against Glenn Sands, L.H. Friend or any other parties in this legal action and intends to continue to pursue the remaining defendants.
In December 2003, the appellate court reversed the Court to the extent of reinstating the dismissed claims for professional negligence and breach of contract against L.H. Friend and Greg Presson. Both such defendants currently have a motion to stay this action pending the outcome of the California case, which was filed in December 2003. Discovery continues against the remaining defendants. Management is unable to predict the outcome of this matter.
Gregory Messer, Esq. As Trustee of the Estate of Periscope Sportswear, Inc. vs. GIANT GROUP, LTD., Burt Sugarman and David Gotterer
In May 2002, Gregory Messer (“Trustee”) filed an adversary action on behalf of the Estate of Periscope Sportswear, Inc. (“Periscope”) in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”) against GIANT, Burt Sugarman and David Gotterer (“GIANT et al.”). This action sought the recovery of certain allegedly inappropriate payments made before and after Periscope’s November 2000 bankruptcy filing. The total sum sought in this
7
action was approximately $4 million. GIANT et al. filed an answer to this action in July 2002 denying the allegations and demanding strict proof thereof.
On January 2003, the Bankruptcy Court approved a settlement of all filed or unfiled claims against the parties in this action. Under this settlement, GIANT did not admit nor concede any wrongdoing. GIANT also directed Century Business Credit Corporation (“Century”) to transfer $1.3 million to the Trustee for the benefit of the Estate of Periscope, as the funds become available per the October 2000 agreements between the companies. During the year ended December 31, 2003, the Trustee received $965,000 from Century. In addition, GIANT filed a Proof of Claim of up to $1.05 million as to amounts paid to the Trustee under this settlement. During the year ended December 31, 2003, the Company received $177,000 from the Trustee. GIANT is unable to predict what additional amount, if any, the Trustee will pay to the Company under its proof of claim.
Management believes this settlement will not have any material adverse effect on the Company’s Financial Position and Results of Operations.
GIANT GROUP, LTD. vs. L.H. Friend, Gregory Presson and Robert Campbell
In December 2002, the Company filed a lawsuit against L.H. Friend, Gregory Presson and Robert Campbell (“LH Friend”) in the California Superior Court for the County of Los Angeles (“the Court”). This action resulted from the New York State Supreme Court’s dismissal of the counts against L.H. Friend and Mr. Presson, and to preserve any and all claims GIANT has against LH Friend. This lawsuit asserts causes of action for breach of contract, breach of fiduciary duty, constructive fraud and professional negligence arising from L H Friend’s services provided to the Company related to the Periscope acquisition. The amount sought in this lawsuit is $35.2 million.
LH Friend sought to transfer venue of this case to the California Superior Court for Orange County (“Orange County Court”) and also sought a stay of the case pending the disposition of the Company’s appeal of the denial of motions to reargue the dismissal of the defendants and permission to file a first amended complaint by the New York State Supreme Court in the June 2001 action. The Orange County Court denied both motions. Discovery is ongoing. A trial date is scheduled for June 30, 2004.
Management is unable to predict the outcome of this matter.
| Item 4. | Submission of matters to a vote of security holders |
None.
8
PART II
| Item 5. | Market for Registrant’s common equity and related stockholder matters |
Market for common stock
The Company’s common stock trades on the OTC Bulletin Board under symbol “GPOL”. The high and low bid prices for the Company’s common stock during 2003 and 2002 are set forth in the table presented. Currently, there is no market for the Company’s Common stock. On March 4, 2004, there were approximately 1,400 registered holders.
High and low bid prices for the common stock
For 2003 and 2002, the following table shows the high and low bid prices for the Company’s common stock reflecting inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.
| 2003 |
2002 | |||||||||||
| Quarter |
High |
Low |
High |
Low | ||||||||
| First |
$ | 1.15 | $ | 1.00 | $ | 1.10 | $ | 0.45 | ||||
| Second |
1.40 | 1.01 | 1.26 | 0.85 | ||||||||
| Third |
2.30 | 1.30 | 1.30 | 0.82 | ||||||||
| Fourth |
2.21 | 1.75 | 1.00 | 0.83 | ||||||||
Related stockholder matters
No cash dividends were paid on the Company’s Common stock in the past two fiscal years. Management does not expect to pay cash dividends on its Common stock for the foreseeable future.
The following table contains information on Common stock related to the equity compensation plans approved by the Company’s stockholders for the fiscal year ended December 31, 2003. See Note 11 to the Company’s Financial Statements beginning on page F-1 of this Form 10-K for a description of the plans.
| Plan |
Number of shares of common stock to be issued upon the exercise of outstanding options |
Weighted-average exercise price of outstanding options |
Number of common shares remaining available for future issuance under equity compensation plans | ||||
| Amended 1996 Employee Stock Option Plan |
914,000 | $ | 0.50 | 87,000 | |||
| Amended Stock Option Plan for Non-Employee Directors |
251,000 | 0.65 | 107,000 | ||||
| 1,165,000 | 0.50 | 194,000 | |||||
9
| ITEM 6. | SELECTED FINANCIAL DATA |
The following table sets forth selected financial data of the Company for the five years ended December 31, 2003. The data is derived from the Company’s audited Financial Statements for 2003, 2002 and 2001. The data is also derived from the Company’s unaudited financial statements for 2000 and 1999, except for the 2000 Balance Sheet which is audited. The Statements of Operations have been restated to present the Company’s apparel operations as discontinued for 1999 and 2000. Certain prior year income and expense items have been reclassified to conform to the 2003 presentation. This information should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and the Results of Operations and the Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003.
| Year Ended December 31, |
||||||||||||||||||||
| 2003 |
2002 |
2001 |
2000 |
1999 |
||||||||||||||||
| $ in thousands, except per share data | ||||||||||||||||||||
| Statements of Operations Data: |
||||||||||||||||||||
| General and administrative expenses (*1) |
$ | (1,113 | ) | $ | (1,208 | ) | $ | (1,278 | ) | $ | (1,885 | ) | $ | (4,643 | ) | |||||
| Repricing of stock options |
(1,246 | ) | (584 | ) | — | — | — | |||||||||||||
| Tender Offer (* a) |
— | — | (81 | ) | — | — | ||||||||||||||
| Loss on investments in affiliates (* b) |
— | — | — | (2,981 | ) | |||||||||||||||
| Litigation settlement, net of legal fee |
1,500 | — | — | — | — | |||||||||||||||
| Investment and other income (* 2) |
696 | 202 | 847 | 229 | 1,593 | |||||||||||||||
| Loss before income tax expense (benefit) |
(163 | ) | (1,590 | ) | (512 | ) | (1,656 | ) | (6,031 | ) | ||||||||||
| Income tax (expense) benefit |
(90 | ) | — | — | 608 | 307 | ||||||||||||||
| Loss from continuing operations |
(253 | ) | (1,590 | ) | (512 | ) | (1,048 | ) | (5,724 | ) | ||||||||||
| Discontinued operations: |
||||||||||||||||||||
| Loss from apparel operations, net of income tax effect (* 3) |
— | — | — | (3,798 | ) | (40,540 | ) | |||||||||||||
| Gain on disposition of apparel operations, net of income tax expense (* 4) |
— | — | — | 6,208 | — | |||||||||||||||
| Net income (loss) |
$ | (253 | ) | $ | (1,590 | ) | $ | (512 | ) | $ | 1,362 | $ | (46,264 | ) | ||||||
| Basic and diluted income (loss) per common share (* c): |
||||||||||||||||||||
| Loss from continuing operations |
$ | (0.09 | ) | $ | (0.59 | ) | $ | (0.18 | ) | $ | (0.29 | ) | $ | (1.45 | ) | |||||
| Net income (loss) |
(0.09 | ) | (0.59 | ) | (0.18 | ) | 0.37 | (11.71 | ) | |||||||||||
| Weighted average common shares outstanding (* c) |
2,730,000 | 2,714,000 | 2,881,000 | 3,651,000 | 3,951,000 | |||||||||||||||
| * 1: |
||||||||||||||||||||