1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2001
or
[ ] 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: 0-27077
TREMONT ADVISERS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 06-1210532
(State or other jurisdiction or (I.R.S. Employer
incorporation or organization) Identification No)
555 Theodore Fremd Avenue, Rye, New York 10580
(Address of principal executive offices) (Zip Code)
(914) 925-1140
(Issuer's telephone number)
(Former name, former address and former fiscal year,
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 issuer was required to file such reports, and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE
PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the Registrant's Class A Common Stock, $0.01
par value, as of the close of business on May 1, 2001 was 1,734,386, and the
number of shares outstanding of the Registrant's Class B Common Stock, $0.01 par
value, was 5,127,990 as of the same date. Shares outstanding have been restated
to reflect the impact of a five-for-four stock split paid on August 8, 2000 to
shareholders of record on July 31, 2000.
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INDEX
TREMONT ADVISERS, INC.
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS. (Unaudited)
Condensed Consolidated Balance Sheets -
March 31, 2001 (unaudited) and December 31, 2000 (audited)......... 1
Condensed Consolidated Statements of Income -
three months ended March 31, 2001 and 2000......................... 2
Condensed Consolidated Statements of Cash Flows -
three months ended March 31, 2001 and 2000......................... 3
Notes to Condensed Consolidated Financial Statements................. 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS........................... 8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................... 12
SIGNATURE............................................................... 12
3
ITEM 1. FINANCIAL STATEMENTS
Tremont Advisers, Inc.
Condensed Consolidated Balance Sheets
MARCH 31 DECEMBER 31
2001 2000
(UNAUDITED) (NOTE A)
--------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,128,200 $ 3,481,600
Accounts receivable, less allowance for
bad debts of $60,000 and $35,000 4,274,100 5,163,800
Income taxes receivable -- 130,300
Due from officers 200,000 --
Prepaid expenses and other current assets 343,200 178,800
--------------------------
Total current assets 6,945,500 8,954,500
Investments (cost $7,726,300 and $4,992,200) 9,684,100 6,677,000
Investments in joint ventures (cost $631,700
and $ 526,000) 1,239,000 1,368,200
Fixed assets, net 1,028,100 998,800
Goodwill, net 1,727,300 1,781,800
Other assets 258,400 98,000
--------------------------
Total assets $20,882,400 $19,878,300
==========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 1,972,300 $ 3,013,300
Deferred revenue 1,081,900 1,000,300
Accounts payable 472,500 375,500
Income taxes payable 346,300 --
--------------------------
Total current liabilities 3,873,000 4,389,100
Deferred income taxes payable 1,992,500 1,550,500
Revolving note payable 1,075,000 1,075,000
Deferred revenue 172,200 239,300
Shareholders' equity:
Preferred Stock, $1 par value, 350,000 shares
authorized; issued and outstanding - none -- --
Class A Common Stock, $0.01 par value, 5,000,000
shares authorized; 1,984,386 and 1,985,418 shares
issued and outstanding, including 250,000 shares
held in treasury 19,800 19,900
Class B Common Stock, $0.01 par value, 10,000,000
shares authorized; 5,155,240 and 5,154,208 shares
issued and outstanding, including 27,250 shares
held in treasury 51,600 51,500
Additional paid in capital 8,405,800 8,405,800
Retained earnings 7,836,600 6,685,500
Cumulative foreign currency translation adjustment 1,200 7,000
Common stock held in treasury, at cost (2,545,300) (2,545,300)
--------------------------
Total shareholders' equity 13,769,700 12,624,400
--------------------------
Total liabilities and shareholders' equity $20,882,400 $19,878,300
==========================
See notes to condensed consolidated financial statements.
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Tremont Advisers, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
THREE MONTHS ENDED
MARCH 31
2001 2000
------------------------
REVENUES
Proprietary investment funds $3,792,500 $2,622,400
Advisory fees 2,100,400 1,623,100
Information sales 459,000 394,300
Performance fees 26,300 82,000
Other 93,700 132,500
------------------------
Total revenues 6,471,900 4,854,300
EXPENSES
Compensation 2,443,000 1,875,700
General and administrative 1,288,300 963,200
Advisory expenses 710,500 529,200
Depreciation 136,800 85,300
Amortization of intangibles 62,400 51,700
------------------------
Total expenses 4,641,000 3,505,100
Equity earnings of investments 288,700 235,700
Loss from operations of joint ventures (235,000) (59,600)
Other income, net 15,500 5,700
Income before income taxes 1,900,100 1,531,000
Provision for income taxes 749,000 605,900
------------------------
Net income $1,151,100 $ 925,100
========================
Net income per common share - basic $ 0.17 $ 0.13
------------------------
Net income per common share - diluted $ 0.15 $ 0.13
========================
See notes to condensed consolidated financial statements.
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Tremont Advisers, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
THREE MONTHS ENDED
MARCH 31
2001 2000
-------------------------
OPERATING ACTIVITIES
Net income $ 1,151,100 $ 925,100
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 136,800 85,300
Amortization of intangibles 62,400 51,700
Equity earnings of investments (288,700) (235,700)
Losses from operations of joint ventures 235,000 59,600
Deferred income taxes payable 442,000 268,300
Foreign currency translation adjustment 5,800 1,100
Changes in operating assets and liabilities:
Accounts receivable, net 889,700 (277,500)
Due from officers (200,000) --
Dividend receivable -- 31,000
Prepaid expenses and other current assets (164,400) (51,200)
Other assets (168,300) --
Accounts payable 97,000 (182,500)
Accrued expenses (1,041,000) (287,200)
Deferred revenue 14,500 (95,600)
Income taxes, net 476,600 30,600
-------------------------
Net cash provided by operating activities 1,648,500 323,000
INVESTING ACTIVITIES
Purchase of fixed assets (162,100) (190,500)
Cash paid for investments (2,734,100) (300,000)
Withdrawal from investments -- 193,000
Investments in joint ventures (105,700) (74,400)
-------------------------
Net cash used by investing activities (3,001,900) (371,900)
FINANCING ACTIVITIES
Borrowing from revolving note payable 1,000,000 --
Repayment of borrowing from revolving note payable (1,000,000) --
-------------------------
Net cash (used) provided by financing activities -- --
Net decrease in cash and cash equivalents (1,353,400) (48,900)
Cash and cash equivalents at beginning of period 3,481,600 2,879,300
-------------------------
Cash and cash equivalents at end of period $ 2,128,200 $2,830,400
=========================
See condensed consolidated financial statements.
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Tremont Advisers, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001.
The balance sheet at December 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 2000.
Certain prior year balances have been reclassified to conform with the current
period presentation.
NOTE B - INVESTMENTS
The following table sets forth summary financial information pertaining to the
Company's domestic proprietary investment funds at March 31, 2001.
AMERICAN AMERICAN
AMERICAN MASTERS MASTERS
MASTERS BROAD MARKET MARKET
BROAD MARKET PRIME FUND, NEUTRAL FUND,
FUND, L.P. L.P. L.P.
---------------------------------------------------
Total assets $333,333,000 $614,201,300 $35,140,000
Total liabilities 365,500 153,198,000 5,591,300
Net investment income (loss) $ 1,803,100 $ 375,900 $ (83,900)
Realized and unrealized gains 9,399,800 17,178,200 968,400
---------------------------------------------------
Net income $ 11,202,900 $ 17,554,100 $ 884,500
===================================================
General Partner TPI TPI TFI
GP investment in partnership-at market
value $ 1,328,400 $ 595,500 $ 318,900
GP investment in partnership-at cost 729,100 455,000 105,000
Proportionate share of earnings (*) 32,400 14,500 13,400
Proportionate share of fund's net assets 0.40% 0.13% 1.08%
* Proportionate share of earnings is included in equity earnings of investments
in the condensed consolidated statements of income.
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Tremont Advisers, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
NOTE B - INVESTMENTS (CONTINUED)
AMERICAN
AMERICAN AMERICAN MASTERS
MASTERS MASTERS OPPORTUNITY
OPPORTUNITY MULTI-TECH INSURANCE
FUND, L.P. FUND, L.P. FUND, L.P.
----------------------------------------------------
Total assets $24,832,600 $25,284,700 $80,078,500
Total liabilities 6,768,700 5,276,600 58,600
Net investment income (loss) $ 29,200 $ (16,200) $ (24,900)
Realized and unrealized gains (487,500) (587,300) 478,500
----------------------------------------------------
Net income (loss) $ 458,300 $ (603,500) $ 453,600
====================================================
General Partner TPI TPI TPI
GP investment in partnership-at
market value $ 2,192,600 $ 19,400 $ 50,300
GP investment in partnership-at cost 2,000,000 25,000 50,000
Proportionate share of earnings (*) 92,200 (6,000) 300
Proportionate share of fund's net assets 12.14% 0.10% 0.06%
* Proportionate share of earnings is included in equity earnings of investments
in the condensed consolidated statements of income.
The following table sets forth summary financial information for the offshore
proprietary investment funds for which the Company is a sponsor or co-sponsor at
March 31, 2001:
AMERICAN MASTERS
TREMONT BROAD FUND
MARKET FUND, "AG ABSOLUTE THE TREMONT
LDC SERIES" LIMITED MASTERS FUND
-------------------------------------------------
Total assets $178,163,700 $115,133,500 $613,400
Total liabilities 5,642,600 2,151,400 -
Net investment income (loss) $ 685,900 $ (319,300) $ -
Realized and unrealized gains 5,254,500 10,537,300 24,300
-----------------------------------------------
Net income $ 5,940,400 $ 10,218,000 $ 24,300
===============================================
Sponsor TBL TBL TIMI
Investment at market value $ 3,788,100 $ 82,200 $613,400
Investment at cost 3,450,000 60,000 500,100
Proportionate share of earnings(*) 103,800 6,300 24,300
Proportionate share of fund's net assets 2.20% 0.07% 100%
* Proportionate share of earnings is included in equity earnings of investments
in the condensed consolidated statements of income.
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Tremont Advisers, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
NOTE C - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:
THREE MONTHS ENDED
MARCH 31
2001 2000
--------------------------
(UNAUDITED)
Numerator:
Net Income - numerator for basic and diluted
earnings per share (income available to
shareholders) $1,151,100 $ 925,100
Denominator:
Denominator for basic earnings per share -
weighted average shares 6,862,376 7,019,334
Effect of dilutive securities:
Employee stock options 617,059 412,461
--------------------------
Denominator for diluted earnings per share -
adjusted weighted-average shares and assumed
conversions 7,479,435 7,431,795
==========================
Basic earnings per share $ 0.17 $ 0.13
==========================
Diluted earnings per share $ 0.15 $ 0.13
==========================
All prior year per share and share outstanding data have been restated to
reflect the impact of the five-for-four stock split distributed on August 8,
2000.
During April 2001, an executive officer of the Company exercised options and
purchased 114,375 shares of the Company's Class B Common Stock at an exercise
price of $1.12 per share.
NOTE D - SEGMENT AND GEOGRAPHIC DATA
The Company is a holding company having three principal areas of business:
developing and managing proprietary investment funds, providing investment
advisory services and retrieving and selling information.
The Company's proprietary investment funds, generally offered under the
"American Masters" name, are domestic and off-shore single and multi-manager
investment funds from which the Company earns monthly or quarterly management
fees based upon net assets.
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Tremont Advisers, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
NOTE D - SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
Investment advisory activities include counseling clients about the organization
and management of their investment portfolios or programs and providing
specialized investment services to investment management firms and individual
investment advisers. Advisory fees are generally based upon the amount of assets
in the clients' investment vehicles.
The research conducted by the Company on domestic and foreign investment
advisors is critical to all aspects of its business. The Company has developed a
proprietary program which reviews and evaluates this information. Certain
aspects of the program are sold to large institutions such as banks, foundations
and government agencies, among others, as well as to high net worth individuals.
Generally, these sales are made for a fixed fee and recorded as information
sales.
The following table provides a summary of the types of fees earned with respect
to each of the Company's principal business areas:
THREE MONTHS ENDED MARCH 31
2001 2000
---------------------------
Proprietary investment funds $3,792,500 $2,622,400
Advisory services
Asset-based fees 1,127,200 788,800
Fixed fees 225,400 282,900
Administration fees 477,700 255,500
Traditional fees 270,100 295,900
Performance Fees 26,300 82,000
Other 93,700 132,500
---------------------------
2,220,400 1,837,600
Information sales 459,000 394,300
---------------------------
Total consolidated revenues $6,471,900 $4,854,300
===========================
The following table provides a summary of fees earned for the first quarter of
2001 and 2000 by geographic location:
THREE MONTHS ENDED MARCH 31
2001 2000
---------------------------
United States $3,664,100 $2,881,900
Bermuda 2,345,300 1,598,300
United Kingdom 455,100 374,100
Canada 7,400 --
---------------------------
Consolidated total $6,471,900 $4,854,300
===========================
Revenues are attributed to countries based on the location of the subsidiary
performing the services. Long-lived assets are substantially all located in the
United States and the United Kingdom.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's first quarter 2001 results showed basic earnings per share growth
of 30.8% versus the first quarter of 2000 and a totalrevenue increase of 33.3%
over the first quarter of 2000. Compared to the overall 24.4% increase in net
income for the first quarter of 2001 over the first quarter of 2000, earnings
per share realized a more significant increase primarily as a result of the
Company acquiring 277,250 shares of treasury stock subsequent to the end of the
first quarter of 2000. The revenue growth was primarily driven by increased
investor contributions into the Company's proprietary investment funds and an
increase in advisory fees derived from the continued development of new
asset-based fee client relationships. Total expenses increased 32.4% in the
first quarter of 2001 versus the first quarter of 2000 primarily as a result of
continued investments made by the Company in its people and its technology
infrastructure. The Company continues to believe that its proprietary funds and
advisory clients will contribute significantly to future growth in earnings in
future periods.
Results of Operations
The following table presents the percentage of consolidated revenue attributable
to each area of business for the first quarter 2001 compared to the first
quarter 2000:
2001 2000
---------------------------------------------------
% OF TOTAL % OF TOTAL
REVENUE SOURCE REVENUES REVENUES REVENUES REVENUES
- ------------------ ---------- ---------- ---------- ----------
Proprietary funds $3,792,500 58.6 $2,622,400 54.0
Advisory fees 2,100,400 32.4 1,623,100 33.4
Information sales 459,000 7.2 394,300 8.1
Performance fees 26,300 0.4 82,000 1.7
Other 93,700 1.4 132,500 2.8
----------------------------------------------------
Total revenues $6,471,900 100.0 $4,854,300 100.0
====================================================
Proprietary Investment Funds Fees
Fees from the Company's proprietary investment funds increased 44.6% in the
first quarter of 2001 to $3,792,500, up $1,170,100 over the first quarter of
2000, due to the growth of the funds' net assets caused by additional investor
capital contributions and positive investment performance.
The following table presents the revenues from the proprietary investment funds
responsible for a majority of the increase for the first quarter of 2001 as
compared to the first quarter of 2000:
THREE MONTHS ENDED
MARCH 31
----------------------- CHANGE CHANGE
2001 2000 ($) (%)
--------------------------------------------
American Masters Broad Market Prime Fund, L.P. $1,511,100 $ 864,700 $ 646,400 74.8
Kingate Global Fund Class B Shares 873,800 697,900 175,900 25.2
American Masters Broad Market Fund, L.P. 713,200 691,500 21,700 3.1
Tremont Broad Market Fund, LDC 502,100 298,300 203,800 68.3
American Masters Market Neutral Fund, L.P. 52,200 22,500 29,700 132.0
American Masters Opportunity Insurance Fund, L.P. 48,100 -- 48,100 (a)
(a) commenced operations March 1, 2001.
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During the first quarter of 2001, significant proprietary investment funds of
which the Company was the sole sponsor or general partner had net investor
contributions as follows:
American Masters Broad Market Prime Fund, L.P. $81,906,000
American Masters Opportunity Insurance Fund, L.P. 79,566,300
Tremont Broad Market Fund, LDC 39,414,600
American Masters Broad Market Fund, L.P. 31,806,100
American Masters Opportunity Fund, L.P. 10,027,400
American Masters Market Neutral Fund, L.P. 8,368,300
American Masters Multi-Tech Fund, L.P. 6,345,000
Advisory Fees
Advisory fees are earned from unaffiliated clients and are based upon the
underlying net asset value of their investment vehicles. Advisory fees consist
of asset-based fees, fixed-fee arrangements, traditional (i.e. non-alternative)
investment advisory fees and administration fees.
The following table presents advisory fee revenues attributable to each type of
fee in the first quarter of 2001 compared to the first quarter of 2000:
2001 2000
----------------------------------------------
% OF % OF
ADVISORY ADVISORY
TYPE OF FEE FEES FEES FEES FEES
- -------------------------------------------------------------------------
Asset-based $1,127,200 53.7 $ 788,800 48.6
Fixed 225,400 10.7 282,900 17.4
Traditional 270,100 12.9 295,900 18.3
Administration 477,700 22.7 255,500 15.7
----------------------------------------------
Total advisory fees $2,100,400 100.0 $1,623,100 100.0
==============================================
Overall, advisory fees increased 29.4% in the first quarter of 2001 to
$2,100,400, up $477,300 over the first quarter of 2000. This increase was due to
the growth of the net asset value of clients' investment funds arising from
additional capital contributions by investors and positive investment
performance.
Asset-based fees increased significantly during the first quarter of 2001
primarily because the Company obtained two new significant unaffiliated clients
subsequent to March 31, 2000. Asset-based fees also increased as a result of the
continued growth of other clients' investment vehicles. The Company has also
entered into sub-advisory arrangements relative to one new client that is
discussed below under the heading "Advisory Expenses."
Fixed fees decreased during the first quarter of 2001 in comparison to the first
quarter of 2000, because of the termination of a client relationship and as a
result of TASS performing certain non-recurring consulting services during the
first quarter of 2000.
Traditional advisory fees decreased 8.7% to $270,100 for the first quarter of
2001, down $25,800 from the first quarter of 2000 primarily as a result of poor
market performance of the underlying mutual fund investment vehicles of the
Company's traditional consulting clients' portfolio's.
Administration fees continue to grow almost primarily from increases in the net
assets of one of the Company's significant unaffiliated administration clients.
In addition, the Company continues to experience growth in fees from certain of
its proprietary products as well as other unaffiliated administration clients.
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Information Sales
Information sales increased 16.4% in the first quarter of 2001 to $459,000, up
$64,700 over the first quarter of 2000, due to an increase in sales of the
Company's information database products. Information sales for the first quarter
of 2001 and 2000 include approximately $62,500 from the grant of a license to
FITX in December 1999.
Compensation Expenses
Compensation expenses increased 30.2% in the first quarter of 2001 to
$2,443,000, up $567,300 over the first quarter of 2000 due to the Company's
continuing efforts to attract and retain qualified employees to fill positions
primarily within its marketing, client services and database management
departments.
General and Administrative Expenses
General and administrative expenses, consisting primarily of rent,
telecommunications, travel and entertainment, professional fees and other
related expenses, increased 33.8% in the first quarter of 2001 to $1,288,300, up
$325,100 over the first quarter of 2000 as a result of the Company's continued
growth. In addition, the Company completed various upgrades and enhancements to
existing computer systems and software applications.
Advisory Expenses
Advisory expenses, which are fees paid to other advisers or consultants as
introducer or agent fees (including performance fees) and as commission rebates
earned from soft-dollar related transactions, increased 34.3% in the first
quarter of 2001 to $710,500, up $181,300 over the first quarter of 2000 due to
increased revenues from the underlying investment vehicles of the applicable
client arrangements. The increases in the underlying investment vehicles were
due largely to additional investor contributions. In addition, as discussed
above under the caption "Advisory Fees", subsequent to the first quarter of
2000, the Company entered into a new advisory agreement of which the portion of
revenues shared is higher than under other agreements. In addition, the Company
shares a portion of its management fees earned from American Masters Opportunity
Insurance Fund, L.P., its newest proprietary fund that was launched effective
March 1, 2001.
Depreciation
Depreciation increased 60.4% in the first quarter of 2001 to $136,800, up
$51,500 over the first quarter of 2000 as a result of fixed asset purchases made
subsequent to March 31, 2000. These assets included computer equipment for new
employees, software updates for the Company's information database and hardware
upgrades for its worldwide computer network system.
Equity Earnings of Investments
Equity earnings of investments increased 22.5% in the first quarter of 2001 to
$288,700, up $53,000 over the first quarter of 2000 as a result of overall
positive investment performance and additional capital investments of the
Company in its proprietary investment funds. For instance, the Company invested
$2,000,000 in the American Masters Opportunity Fund, L.P., which was launched
June 1, 2000. During the first quarter of 2001, the Company invested additional
monies into its proprietary funds as follows: Tremont Broad Market Fund, LDC
($1,500,000), American Masters Broad Market Fund, L.P. ($729,100), American
Masters Broad Market Prime Fund, L.P. ($455,000), and American Masters
Opportunity Insurance Fund, L.P. ($50,000).
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Loss from Operations of Joint Ventures
Joint venture operations resulted in net losses of $235,000 in the first quarter
of 2001 as a result of the continued planned losses of FITX ($287,600). These
losses were offset by the positive performance of Tremont MRM Services Limited
($52,600). The Company anticipates that FITX will continue to operate at a loss
for the remainder of 2001.
Liquidity and Capital Resources
At March 31, 2001, the Company had $2,128,200 in cash and cash equivalents and
working capital of $3,072,500, as compared to cash and cash equivalents of
$3,481,600 and working capital of $4,565,400 at December 31, 2000.
Cash flow provided by operating activities was $1,648,500 for the first quarter
of 2000, compared to $323,000 for the first quarter of 2001. This increase
resulted from increases in net income, deferred income taxes payable, income
taxes payable, as well as a decrease in accounts receivable and losses from
operations of joint ventures. Cash used by operations offsetting the above
increases resulted from increases in prepaid expenses and other current assets,
the advancement of loans to certain executive officers and a decrease in accrued
expenses. In addition, equity earnings of investments resulted in a reduction of
cash provided by operating activities.
Cash flow used by investing activities was $3,001,900 for the first quarter of
2001, compared to $371,900 for the first quarter of 2000. The uses of cash
resulted from additional investments into certain of the Company's onshore and
offshore proprietary investment funds, purchases of computer equipment and
furniture to support the continued growth of the Company's personnel base and
technology infrastructure, and additional investments in the Company's joint
venture with FITX.
During April 2001, the Company advanced a loan to an executive officer of
$370,000 that matures on April 1, 2002.
The Company entered into an employment agreement with its Chief Financial and
Administrative Officer dated as of January 31, 2001 which provides for a base
annual salary of $250,000 and an annual bonus payment as determined by the Board
of Directors. The contract expires December 31, 2002.
The Company believes that it has adequate capital resources and working capital
to bring the products it developed in late 2000 and those it expects to develop
in early 2001 to market and that the revenue stream from these products, as well
as from existing products, will be sufficient to support future growth. The
Company has no material short or long term debt obligations, other than as noted
above.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
The following exhibit is included herein:
Exhibit 10.72 - Employment agreement, dated as of January 31, 2001,
between the Company and Stephen T. Clayton, Chief Financial and
Administrative Officer.
b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the three
months ended March 31, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Tremont Advisers, Inc.
Date: May 11, 2001 /s/ Stephen T. Clayton
-------------------------------------------
Stephen T. Clayton
Chief Financial and Administrative Officer
(Duly authorized Officer and
Principal Financial and Accounting Officer)
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