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U.S. Securities and Exchange Commission Washington, D.C. 20549 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, 2001 ------------- ___ 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.) 125 Broad Street, 14th Floor, New York, New York 10004 (Address of principal executive offices) (212) 742-2277 --------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer 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 August 13, 2001, issuer had outstanding 8,987,083 shares of Common Stock, $.01 par value per share. INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES INDEX Part I Financial Information Page ------ ---- Item 1. Financial Statements Consolidated Condensed Balance Sheets as of June 30, 2001 (Unaudited) and December 31, 2000 3 Consolidated Condensed Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2001 and 2000 4 Consolidated Condensed Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2001 and 2000 5 Notes to Consolidated Condensed Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 6. Exhibits and Reports on Form 8-K ------ Signatures INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS June 30, December 31, ASSETS 2001 2000 UNAUDITED ---------- ------------ Current assets: Cash and cash equivalents $ 486,846 $ 4,694,476 Accounts receivable (net of allowances of $379,776 in 2001 and $552,609 in 2000) 760,831 1,754,200 Investment in discontinued operations (Note 3) 49,302 49,302 Prepaid expenses and other current assets 950,801 1,036,996 ------------ ------------ Total current assets 2,247,780 7,534,974 ------------ ------------ Investments (Note 2) 2,678,546 2,678,546 Deferred subscription expense 193,482 337,245 Property and equipment - net 1,687,622 1,479,105 Security deposits 374,466 375,580 Other assets 101,046 300,810 ------------ ------------ Total assets $7,282,942 $12,706,260 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,216,598 $ 2,534,027 Accrued expenses 492,543 462,800 Deferred advertising revenue 1,446,839 1,987,067 ------------ ------------ Total current liabilities 4,155,980 4,983,894 ------------ ------------ Deferred advertising revenue 147,668 532,653 Deferred subscription revenue 2,525,580 2,607,407 ------------ ------------ Total liabilities 6,829,228 8,123,954 ------------ ------------ Commitments and contingencies Stockholders' Equity: Preferred stock, $.01 par value, authorized 2,000,000 shares, 7,880 issued and outstanding in 2001 and in 2000 79 79 Common stock, $.01 par value; authorized 40,000,000 shares, 9,173,083, issued and outstanding in 2001 and; 8,972,886 issued and outstanding in 2000 91,731 89,729 Additional paid-in capital 33,669,806 33,576,719 Warrants 770,842 872,052 Deferred compensation (80,383) (29,490) Accumulated deficit (33,998,361) (29,926,783) ------------ ------------ Total stockholders' equity 453,714 4,582,306 ------------ ------------ Total liabilities and stockholders' equity $7,282,942 $12,706,260 ============ ============ See Notes to Consolidated Condensed Financial Statements INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS UNAUDITED 3 Months Ended June 30, 6 Months Ended ,June 30, ------------------------------- ------------------------------ 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Revenues: Print Publications $ 1,562,638 $ 4,251,157 $ 4,185,298 $ 9,190,288 Online Services 240,510 981,134 850,233 2,254,653 ------------ ------------ ------------ ------------ Total revenues 1,803,148 5,232,291 5,035,531 11,444,941 ------------ ------------ ------------ ------------ Operating expenses: Editorial, production and distribution 1,972,618 3,495,011 4,265,898 6,964,807 Promotion and selling 1,278,967 2,292,358 2,779,568 5,106,559 General and administrative 607,845 1,234,868 1,533,646 2,688,437 Depreciation and amortization 186,163 143,223 338,320 283,189 ------------ ------------ ------------ ------------ Total operating expenses 4,045,593 7,165,460 8,917,432 15,042,992 ------------ ------------ ------------ ------------ Operating loss from continuing operations (2,242,445) (1,933,169) (3,881,901) (3,598,051) Investment and other income (95,163) 58,518 (110,877) 126,817 ------------ ------------ ------------ ------------ Net loss ($2,337,608) ($1,874,651) ($3,992,778) ($3,471,234) ============ ============ ============ ============ Basic and dilutive net loss per common share (Note 5): ($0.26) ($0.19) ($0.45) ($0.34) ============ ============ ============ ============ Average number of common shares used in computing basic and dilutive loss per common share 9,093,775 10,392,173 9,032,697 10,378,082 See Notes to Consolidated Condensed Financial Statements INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS UNAUDITED Six Months Ended June 30, 2001 2000 ------------ ----------- Cash flows from operating activities: Net loss ($3,992,778) (3,471,234) Reconciliation of net loss to net cash used in operating activities: Depreciation and amortization 338,320 283,189 Stock option and warrant transactions (47,213) 115,646 Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable 1,286,097 147,255 Prepaid expenses and other current assets 86,206 (176,507) Security deposits 1,114 (3,720) Other assets 189,060 126,560 Deferred subscription expense 143,763 (83,201) Increase (decrease) in: Accounts payable and accrued expenses (287,686) 277,617 Deferred advertising revenue (925,214) (1,325,556) Deferred subscription revenue (81,827) 439,678 ------------ ----------- Net cash used in operating activities (3,290,158) (3,670,273) ------------ ----------- Cash flows from investing activities: Purchase of property and equipment (545,943) (217,976) ------------ ----------- Net cash provided by investing activities (545,943) (217,976) ------------ ----------- Cash flows from financing activities: Proceeds from exercise of stock options - 59,845 Receivables financing (292,729) - Preferred stock dividends (78,800) (100,000) ------------ ----------- Net cash provided by financing activities (371,529) (40,155) ------------ ----------- Net decrease in cash and cash equivalents (4,207,630) (3,928,404) Cash and cash equivalents, beginning of period 4,694,476 6,437,542 ------------ ----------- Cash and cash equivalents, end of period $486,846 $2,509,138 ============ =========== See Notes to Consolidated Condensed Financial Statements INDIVIDUAL INVESTOR GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated condensed financial statements include the accounts of Individual Investor Group, Inc. and its subsidiaries (collectively, the "Company"). Such financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes as required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary in order to make the financial statements not misleading have been included. Operating results for the three and six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report for the year ended December 31, 2000 on Form 10-K. The Company on January 01, 2001, adopted Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities," which is effective for fiscal years beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. Under SFAS 133, certain contracts that were not formally considered derivatives may now meet the definition of a derivative. The adoption of SFAS 133 did not have a significant impact on the financial position, results of
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