-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GRHQ1lRJmEMvm17TFI0Ozn/JkkoqS8rTts8VgFtAEfm9s3cLJBUtjTiPsFFFg4b4 qCiqiUoQ6WJnz0ZTUQwelg== 0000948830-02-000133.txt : 20020419 0000948830-02-000133.hdr.sgml : 20020419 ACCESSION NUMBER: 0000948830-02-000133 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20020419 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTERPOINT CORP CENTRAL INDEX KEY: 0001004650 STANDARD INDUSTRIAL CLASSIFICATION: MOTORCYCLES, BICYCLES & PARTS [3751] IRS NUMBER: 133853272 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22813 FILM NUMBER: 02615070 BUSINESS ADDRESS: STREET 1: 299 PARK AVE STREET 2: 16TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10171 BUSINESS PHONE: 2124864444 MAIL ADDRESS: STREET 1: 375 PARK AVE STREET 2: STE 1606 CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: MOTO GUZZI CORP /DE/ DATE OF NAME CHANGE: 19990611 FORMER COMPANY: FORMER CONFORMED NAME: ORION ACQUISITION CORP I DATE OF NAME CHANGE: 19951221 FORMER COMPANY: FORMER CONFORMED NAME: NORTH ATLANTIC ACQUISITION CORP DATE OF NAME CHANGE: 19970515 10-Q 1 center331q.txt CENTERPOINT CORPORATION 3-31-01 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 [ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from ______________ to ________________ Commission file number - 000-22813 CENTERPOINT CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 13-3853272 ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 18 East 50th St. 10 Floor New York, New York 10022 -------------------------------------------------- (Address of principal executive offices - Zip code) Registrant's telephone number, including area code: (212) 758-6622 Former name, former address and former fiscal year, if changed since last report. Indicate by checkmark 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 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ___ No X APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by checkmark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ____ No ____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, par value $.01 per share, 6,005,339 shares outstanding as of April 9, 2002. TABLE OF CONTENTS Page Part I - Financial Information 2 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS 3 ASSETS 3 LIABILITIES 3 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS 4 COMPREHENSIVE INCOME/(LOSS) 5 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW 6 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 7-12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13-14 Part II - Other Information 15 Item 1. Legal Proceedings 15 Item 2. Changes in Securities 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 SIGNATURES 17 1 CENTERPOINT CORPORATION March 31, 2001 Part I - Financial Information 2 CENTERPOINT CORPORATION UNAUDITED CONSOLIDATED BALANCE SHEETS March 31, 2001
Mar. 31 Mar. 31 Dec. 31 2001 2001 2000 ASSETS US$'000 Lit. m Lit. m Cash and cash equivalents $ 1,151 Lit. 2,536 Lit. 2,411 Short-term marketable securities held to maturity, at cost 12,872 28,351 28,351 Prepaid expenses 57 125 154 ------- ------ ------ TOTAL CURRENT ASSETS 14,080 31,012 30,916 ------- ------ ------ TOTAL ASSETS $14,080 Lit. 31,012 Lit. 30,916 ======= ====== ====== LIABILITIES Accounts payable 9 19 91 Amounts due to related and affiliated parties 106 233 390 Accrued expenses and other payables 189 418 361 ------- ------ ------ TOTAL CURRENT LIABILITIES 304 670 842 ------- ------ ------ SHAREHOLDERS' EQUITY 13,776 30,342 30,074 Common stock, par value $0.01 per share: Authorised 20,250,000 shares; 5,999,089 (2000 - 5,999,089) shares outstanding 49 108 108 Additional paid-in capital 18,393 40,510 40,510 Accumulated other comprehensive income 115 254 242 Accumulated deficit (4,781) (10,530) (10,786) ------- ------ ------ LIABILITIES & SHAREHOLDERS' EQUITY $14,080 Lit. 31,012 Lit. 30,916 ======= ====== ======
Note: The balance sheet as 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 generally accepted accounting principles. See Notes to Consolidated Financial Statements 3 CENTERPOINT CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS 3 Months ended March 31, 2001 and 2000
Mar. 31 Mar. 31 Mar. 31 2001 2001 2000 US $'000 Lit. m Lit. m Interest income $ 162 Lit. 356 Lit. - Selling, general and administrative expenses (45) (100) - ---------- --------- --------- Profit from continuing operations 117 256 - Discontinued operations: Loss from disposed motorcycle operations (after tax of Lit. 92) (US$ 42) - - (3,494) ---------- --------- --------- Net profit/(loss) 117 256 (3,494) Preferred stock dividends - - (168) ---------- --------- --------- Profit/(loss) attributable to common shareholders $ 117 Lit. 256 Lit. (3,662) ========== ========= ========= BASIC EARNINGS/(LOSS) PER SHARE: US $ Lit. Lit. Continuing operations $ 0.02 Lit. 43 Lit. (30) Discontinued operations $ - Lit. - Lit. (625) DILUTED EARNINGS/(LOSS) PER SHARE: Continuing operations $ 0.02 Lit. 43 Lit. (30) Discontinued operations $ - Lit. - Lit. (625) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD Basic 5,999,089 5,999,089 5,589,089 ========== ========= ========= Diluted 5,999,089 5,999,089 5,688,858 ========== ========= =========
See Notes to Consolidated Financial Statements 4 CENTERPOINT CORPORATION UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY/(DEFICIT); AND COMPREHENSIVE INCOME/(LOSS) March 31, 2001
Accumulated Additional Other SHARE- Common Stock Paid-In Comprehensive Accumulated HOLDERS Comprehensive Shares Amount Capital Income Deficit EQUITY Income/(Loss) At January 1, 2001 Lit.m 5,999,089 108 40,510 242 (10,786) 30,074 Net profit - - - - 256 256 256 Translation adjustment - - - 12 - 12 12 -------------------------------------------------------------------------------- At March 31, 2001 Lit.m 5,999,089 108 40,510 254 (10,530) 30,342 268 ================================================================================ At March 31, 2001 $'000 49 18,393 115 (4,781) 13,776 122 ================================================================================
Accumulated Other Comprehensive Income relates to translation differences from the conversion of Balance Sheets of non-Italian entities. See Notes to Consolidated Financial Statement 5 CENTERPOINT CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW March 31, 2001
Mar. 31 Mar. 31 Mar. 31 2001 2001 2000 US $'000 Lit. m Lit. m Net profit from continuing operations $ 117 Lit. 256 Lit. - Adjustments to reconcile net loss to net cash used by operating activities: Other operating activities 1 3 (32) Changes in operating assets and liabilities: Related party receivables - - 108 Prepaid expenses 18 38 21 Accounts payable and accrued expenses (21) (43) (829) Related party payables (80) (176) 74 ------ ----- ------ Net cash (used in)/provided by operating activities 35 78 (658) ------ ----- ------ Financing activities Proceeds from issuance of preferred stock - - 18,329 ------ ----- ------ Net cash provided by financing activities - - 18,329 ------ ----- ------ Increase in cash from continuing activities 35 78 17,671 Net cash (used in)/provided by discontinued motorcycle operations - - (16,454) Exchange movement on opening cash 21 47 - Cash, beginning of period 1,095 2,411 3 ------ ----- ------ Cash, end of period $1,151 Lit. 2,536 Lit. 1,220 ====== ===== ======
Supplemental information on non-cash activities Advances to the Company, made in 1999, in an aggregate amount of $1.25 million (Lit. 2,479 million at the then prevailing exchange rate) by Wheatley Partners, LP and Wheatley Foreign Partners, LP (each of which is an affiliate of Barry Fingerhut, a Director of the Company) and William Spier, a director of the Company and a US$ 1.6 million (Lit. 3,174 million) loan due to OAM, respectively, were applied to subscribe to the Company's Series B preferred stock on February 25, 2000. The Company issued 10,000 shares with a fair value of Lit. 91 million in connection with its purchase of the 75% of MGI Motorcycle GmbH that it did not already own. MGI Motorcycle GmbH was disposed as part of the sale of motorcycle operations. See Notes to Financial Statements 6 CENTERPOINT CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001 1. Basis of Presentation The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. For a summary of the Registrant's accounting principles, and other footnote information, reference is made to the Form 10-K, dated March 15, 2002. All adjustments necessary for the fair presentation of the results of operations for the interim periods covered by this report have been included. All of such adjustments are of a normal and recurring nature. The results of operations for the three months ended March 31, 2001 are not necessarily indicative of the operating results for the full year. The Company was originally incorporated in Delaware on August 9, 1995 under the name of North Atlantic Acquisition Corp. to serve as a vehicle to effect a merger, exchange of capital stock, asset acquisition or other business combination with an operating business. On August 27, 1997 the Company consummated an initial public offering consisting of 800,000 Units and 150,000 shares of Class B Common Stock, with each Unit consisting of one share of Class A Common Stock and one warrant to purchase shares of Class A Common Stock, which resulted in net proceeds to the Company of approximately $8,000,000. On August 18, 1998, the Company and Trident Rowan Group, Inc. ("TRG") entered into a definitive agreement and plan of merger and reorganization, as amended (the "Merger Agreement"), pursuant to which Moto Guzzi Corp. merged with and into the Company, with the Company as the surviving corporation (the "Merger"). Prior to the Merger, TRG and its majority-owned subsidiary, OAM S.p.A. ("OAM"), together owned all the outstanding common stock of Moto Guzzi Corp. The Merger, which occurred on March 5, 1999, was treated as a reverse acquisition of the Company. Following the Merger, the Company changed its name to Moto Guzzi Corporation, adopted the December 31 financial reporting year of Moto Guzzi Corp. and financial statements are prepared using the accounting principles of Moto Guzzi Corp. In September 2000, the Company sold all its operating subsidiaries to Aprilia S.p.A. and changed its name to Centerpoint Corporation. The primary financial statements are shown in Italian lire because all of the Company's material operating entities were based and operated in Italy. At March 31, 2001 the Company's freely available cash and other significant assets were all denominated in lire (or euros). The Company will evaluate if its functional currency will continue to be the lire, based on decisions to be taken as to its future activities. Translation of lire amounts into U.S. Dollar amounts is included solely for the convenience of the readers of the financial statements and has been made at the rate of Lire 2,202 to U.S. $1, the approximate exchange rate at March 31, 2001. It should not be construed that the assets and liabilities, expressed in U.S. dollar equivalents, can actually be realized in or extinguished by U.S. dollars at that or any other rate. 7 2. Earnings/(Loss) from continuing operations per share The numerator for the calculation of earnings/(loss) per common share have been calculated as follows: Three months ended Mar 31 Mar 31 Mar 31 2001 2001 2000 $'000 Lit. m Lit. m Profit from continuing operations 117 256 - Preferred Stock dividends - - (168) ----- ----- ----- Earnings (Loss) from continuing operations attributable to common shareholders 117 256 (168) ===== ===== ===== 3. Outstanding Claims Aprilia Claims under the Share Purchase Agreement; Request for Arbitration Pursuant to the terms, and subject to the conditions, of the Share Purchase Agreement and the Escrow Agreement relating to the sale of Moto Guzzi's operating subsidiaries, Lit. 9,375 million of the proceeds of the sale were placed into escrow. By letter dated December 21, 2000, legal counsel for Aprilia filed a claim against Centerpoint under the Share Purchase Agreement alleging (i) that it had failed to receive a resignation and release from Mr. Roeth, an executive and director of MGI Motorcycle GmbH, a subsidiary of the Company before the sale to Aprilia, and (ii) that the campaign recall with respect to certain Moto Guzzi motorcycles was more critical than that forecast in the Management Date Financial Statements and August 3, 2000 letter. By letter dated February 5, 2001 Centerpoint's Italian legal counsel responded to the December 21, 2000 letter specifically denying the alleged claims and requesting that the parties meet to negotiate a release of the escrow funds, as provided for in the August 3, 2000 letter. On June 4, 2001 Aprilia's legal counsel sent a letter to Centerpoint which reiterated the claims in its December 21, 2000 letter and alleged the following: (i) that the cost of the recall campaign was estimated by Aprilia to be approximately Lit. 4,500 million, which exceeded the Management Date Financial Statement amount with respect to the recall campaign by Lit. 2,676 million, (ii) that technical problems related to various motorcycles were likely to cost Aprilia approximately Lit. 5,308 million, and that such technical problems had not been disclosed to Aprilia in connection with the sale of the Moto Guzzi operations to Aprilia, and that Aprilia was entitled to reimbursement of such costs, (iii) that Aprilia was entitled to reimbursement of Lit. 148.5 million incurred by Aprilia in connection with the termination of Mr. Roeth, an executive of MGI Motorcycle GmbH, (iv) that Aprilia was 8 entitled to reimbursement of Lit. 378 million in respect of unjustified credit notes issued by MGI Motorcycle GmbH in favor of dealers and distributors, and (v) that breaches of accounting principles by Moto Guzzi North America entitled it to claims against Centerpoint in the amount of Lit. 1,100 million (collectively with (i), (ii), (iii) and (iv), the "Alleged Claims"). On July 13, 2001 Centerpoint's Italian counsel sent a letter to Aprilia's counsel contesting all of the Alleged Claims. By letter dated July 13, 2001 Aprilia requested that IMI, the escrow agent under the Escrow Agreement, pay them Lit. 7,611 million in respect of the Alleged Claims. On July 26, 2001, in spite of being aware of Centerpoint contesting of each of the Alleged Claims and its intention to seek arbitration, IMI advised Centerpoint that it had paid Lit. 7,611 million from the escrow account to Aprilia in respect of the Alleged Claims. Pursuant to the Share Purchase Agreement and Escrow Agreement, each of which provides that disputes among the parties be arbitrated, the Company filed with the International Arbitration Court of the International Chamber of Commerce a Request for Arbitration in Accordance with Article 4 of the ICC Rules of Arbitration relating to the Alleged Claims and the payment by IMI. Subsequent to the Company's filing, a committee was formed in Milano, Italy to hear the case. The Company is requesting restitution of the Lit. 7,610 million (approximately US$3,692,000) paid to Aprilia, plus interest and costs. The Arbitration committee was constituted on November 16, 2001, and a decision is expected to be rendered within twelve to eighteen months of the original filing date. Dispute with IMI Regarding its Fee IMI, the Company's investment adviser in connection with the sale of the motorcycle operations to Aprilia, acted as fiduciary for the closing. At the Closing, but without the prior approval, knowledge or consent of the Company, IMI was paid Lit. 11,401 million, in respect of fees and expenses claimed by IMI to be due it under its engagement letter with TRG and OAM. Since early July 2000, the Company and TRG have disputed IMI's interpretation of the calculation of the fee due it under its engagement letter, following indication by IMI of its basis of calculation. The dispute relates to the respective interpretations of the Company, TRG and IMI of the term "Total Transaction Value" as that term is used in the engagement letter. Since that time, the Company and TRG discussed and sought to negotiate with IMI concerning its alleged amount of the fee. IMI refused to engage in negotiations and did not present any calculation of the fee to the Company or TRG prior to the closing. After the closing and actual payment to IMI of the alleged fee, IMI then presented a calculation and an invoice to the Company for fees and expenses alleged by IMI to be due it under the engagement letter in the amount of Lit. 11,401 million. In addition to disputing the amount of the fee paid to IMI, the Company believes that IMI had no right to cause its fee to be deducted from the sale proceeds, as the Company was not a party to the engagement letter, and did not consent to any such deduction. On February 11, 2002 the Company brought a suit against IMI before the Civil Section of the Court of Milano, seeking reimbursement of Lit. 8,766 million (approximately US$4,253,000) of the Lit. 11,401 million (US$5,532,000) paid to IMI at the closing. The first hearing in the case is scheduled for May 27, 2002 and as at March 11, 2002 IMI has not yet filed its defenses. 9 4. Subsequent Events Loan to TRG Inc On June 13, 2001 the Company, TRG and OAM entered into the TRG Loan Agreement wherein subject to the terms and certain conditions set forth therein Centerpoint agreed to lend TRG US$4,200,000. The loan bears interest at a rate of 5 % per annum, is repayable in full on the earlier of June 13, 2002 and the date on which TRG causes or permits a liquidation of the Company, and was secured by the 300,000 shares of the Company's common stock currently owned by the TRG and 1,200,000 of the shares of Centerpoint common stock owned by OAM. In connection with the TRG Loan, OAM also entered into the OAM Guaranty wherein it guaranteed TRG's obligations under the TRG Loan Agreement. OAM's liability to the Company under the OAM Guaranty is limited to the value of the Company's shares pledged by OAM, as that term is used in the OAM pledge agreement. The TRG Promissory Note was used by the Company as partial consideration in its acquisition of the Bion shares (see below), and in Bion's acquisition of the Company's shares from OAM, each of which is described below. Bion transaction - change of control of the Company In December 2001, the Board of the Company met to evaluate the alternative strategies and investments available to the Company. Investec Ernst & Co., who had been hired in June 2001 to assist in this process, presented to the Board their conclusions on a number of potential investments. After review of the possible investments, the Board resolved to approve the acquisition of 19,000,000 shares of Bion Environmental Technologies, Inc., a publicly held Colorado corporation ("Bion"). Bion is an environmental service company focused on the needs of confined animal feeding operations. Bion is engaged in two main areas of activity: waste stream remediation and organic soil and fertilizer production. Bion's waste remediation service business provides confined animal feeding operations (primarily in the swine and dairy industries) with treatment for the animal waste outputs. In this regard, Bion treats their entire waste stream in a manner which cleans and reduces the waste stream thereby mitigating pollution of the air, water (both ground and surface) and soil, while creating value-added organic soil and fertilizer products. Bion's soil and fertilizer products are being used for a variety of applications including school athletic fields, golf courses and home and garden applications. On January 15, 2002, the Company closed the transaction with Bion by purchasing 19,000,000 shares of restricted stock of Bion in exchange for approximately US$8.5 million in cash (substantially all of the Company's cash), the US$4.2 million TRG Promissory Note (including accrued interest), and the assignment of 65% of the Company's claims with respect to the escrow accounts and claims against IMI. Unrestricted stock of Bion is traded on the OTC/BB market under the ticker "BION". The 65% of the claims that were assigned to Bion from Centerpoint are Centerpoint claims against Aprilia, S.p.A., an Italian corporation, the purchaser of Centerpoint's motorcycle operations ("Aprilia") and Banca di Intermediazione Mobiliare IMI S.p.A., an Italian corporation ("IMI"), the investment banker for Centerpoint in the transaction. The Aprilia claim is for funds paid to Aprilia, though disputed by the Company, from an escrow 10 account set up for contingent liabilities for the sale of the motorcycle operations. The claim against IMI is with regard to a dispute in calculating the fee they received as investment banker in the sale of the motorcycle operations to Aprilia. The total of these two claims is approximately $7,945,000. The 65% that Bion received for the sale of its shares of common stock to Centerpoint was valued in the Bion transaction at $2,487,000. This represents a 52% discount from the full amount of the claim for an aggregate discounted value of $3,826,000. The $3,826,000 value ascribed to the claim was arrived at through an internal allocation made by Bion management based on its own evaluation of the relevant facts and circumstances and its review of a fairness opinion that was provided by an investment banking firm with regard to the transaction as a whole, and there is no assurance that this, or any, amount will ever be recovered. Bion utilized the 65% claim with a deemed value of $2,487,000 as part of the consideration paid to OAM for the purchase of 57.7% of Centerpoint's common stock. Centerpoint retained 35% of these claims. While these claims are carried on Centerpoint's books at $0 value at March 31, 2001, Centerpoint booked a gain of $2,487,000 for the sale of 65% of the claim at January 15, 2002, and will evaluate the value of the remaining 35% of the claim for the first quarter ending March 31, 2002 financial statements. It should be noted that court and arbitration hearings in respect of the claims are scheduled for the first half of 2002 and such hearings may provide better indications as to the likely value of the claims before Bion's fiscal year end at June 30, 2002. In addition, an escrow account that was set up for contingent liabilities for the sale of the motorcycle operations and eventual rights to the balance of these funds amounting to approximately $875,000 is valued on Centerpoint's books as $0. No value was ascribed to any potential claims for funds held in this escrow account as it was not considered at the time negotiations took place. Immediately upon consummation of this transaction, Bion purchased a 57.7% majority interest in the Company from OAM. The total consideration paid by Bion consisted of (i) US$3,700,000 in cash, (ii) the assignment of the US$4.2 million TRG Promissory Note (including accrued interest) and related loan guarantees, (iii) the assignment of the 65% interest in the Company's claims with respect to the escrow accounts and claims against IMI, (iv) the issuance of 1,000,000 shares of Bion's common stock, and (v) the issuance of a warrant to acquire 1,000,000 shares of Bion's common stock at a price of US$0.90, with expiration date of January 10, 2007. Under the Subscription Agreement and related Registration Rights Agreement, Bion agreed among other things (i) file with the SEC a Registration Statement with respect to the Bion Shares, as soon as practicable, and within 90 days of the Company's filing with the SEC of its December 31, 2001 Form 10-K, and to use its best efforts to cause such Registration Statement to be declared effective as soon as practicable thereafter, (ii) to use its best efforts to cause the Bion Shares to be distributed to the Company's common stockholders in a tax efficient manner in accordance with applicable law, and (iii) to use its best efforts to hold an Annual Meeting of Bion Shareholders during 2002, in accordance with its by-laws and applicable law. It is expected that the distribution will occur during the second half of calendar 2002. When that distribution occurs, approximately 11,000,000 of Bion's shares will be distributed back to Bion. Bion has advised the Company that it intends to cancel such shares. 11 David Mitchell, a director of the Company, is the Chairman, President, Board member and a principal stock and warrant holder of Bion. Additionally a portion of the proceeds of the Bion Investment were used to pay off US$718,485 of indebtedness of Bion owed to Mr. Mitchell. On January 24, 2002, David Mitchell was elected as the Company's President and CEO. David Mitchell is a founder, stockholder, option holder, former CEO of the Company and currently is the only director of the Company. Following the Bion Investment and Bion acquisition of Centerpoint Shares, all of the Company's directors, other than David Mitchell, resigned from their positions on the Company's Board of Directors. Bill Spier, one of the Company's Directors until he resigned on January 24, 2002, sits on Bion's advisory board. On January 21, 2002, Howard Chase, a director of the Company until he resigned on January 15, 2002, joined the Board of Directors of Bion. On March 14, 2002, the Company and Bion entered in an agreement effective January 15, 2002 where the Company will pay $12,000 a month for management services, support staff and office space. In addition, Bion will advance to the Company sums needed to cure its delinquencies with the SEC, distribute Bion shares to its shareholders, to locate and acquire new business opportunities and for on-going expenses. Bion shall have no obligation to make any advances in excess of $500,000. All sums due Bion shall be evidenced by a convertible revolving promissory note. As additional consideration, Bion shall receive a warrant to purchase 1,000,000 shares of the Company's common stock at $3.00 per share until March 14, 2007. 12 CENTERPOINT CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Three Months Ended March 31, 2001 2000 Lit. m Lit. m Interest income 356 - Selling, general and administrative expenses (100) - ----- ------ Net profit from continuing operations before income taxes 256 - Discontinued operations: Loss from discontinued operations - (3,494) Preferred Stock dividends - (168) ----- ------ Net profit attributable to common shareholders 256 (3,662) ===== ====== On September 7, 2000, the Company completed the sale of its operating subsidiaries to Aprilia S.p.A. This sale represents the discontinuance of motorcycle operations which were the company's only activities and have been accounted for as discontinued operations. The effective accounting date for the sale is July 1, 2000, reflecting the last date for which financial information on the subsidiaries is available. The Company has recorded interest income of Lit. 356 million principally on Euro denominated fixed interest securities and selling general and administrative expenses of Lit. 100 million principally in respect of compliance costs on continuing operations for the three months ending March 31, 2001. In the corresponding period in 2000, the Company had no income or expenses from continuing operations as all its activities related to the disposed motorcycle business. In the first quarter of 2001 the Company has no profit or loss for the discontinued motorcycle operations. In the comparison first quarter of 2000, losses from the discontinued motorcycle operations were Lit. 3,494 million. Liquidity and Financial Resources The Company has Lit. 30.887 billion in cash and marketable securities of which Lit. 28.4 billion of the cash is invested in short-term fixed interest securities denominated in Euros pending evaluation of the alternatives available to the Company with respect to such future activities. 13 Future cash needs; application of liquidity after March 31, 2001 * In June 2001, the Company engaged the investment banking firm of Investec Ernst & Co. to assist the Company in its evaluation of strategic alternatives. As virtually all investments being examined were in the United States and none were in Europe, the Company sold its short-term fixed interest Euro denominated securities and transferred all its funds - approximately US$ 13.1 million - to the United States where they were held in U.S. Dollars. * On June 13, 2001, the Company made a loan of US$ 4.2 million to TRG. See Note 4 - Subsequent Events. * In January 2002, as described above in Note 4 - Subsequent Events, the Company used $8.5 million - the major part of its remaining funds at that date - as part of the consideration for the subscription of 19,000,000 shares of Bion. * Currently the Company has approximately US$10,000. In order to meet future operating cost, loans from Bion will be made to the Company. 14 Part II - Other Information Item 1. Legal Proceedings Pursuant to the Share Purchase Agreement and the Escrow Agreement relating to the sale of Moto Guzzi's operating subsidiaries, Lit. 9,375 million of the proceeds of the sale were placed into escrow. In December 21, 2000 and June 2001, legal counsel for Aprilia filed claims against the Company under the Share Purchase Agreement alleging various breaches of representations and warranties by Company. On July 23, 2001, in spite of being aware of the Company contesting of each of the alleged claims and its intention to seek arbitration, IMI advised the Company that it had paid Lit. 7,610 million from the escrow account to Aprilia in respect of the alleged claims. Pursuant to the Share Purchase Agreement and Escrow Agreement, each of which provides that disputes among the parties be arbitrated, the Company filed with the International Arbitration Court of the International Chamber of Commerce a Request for Arbitration in Accordance with Article 4 of the ICC Rules of Arbitration relating to the Alleged Claims and the payment by IMI. Subsequent to the Company's filing, a committee was formed in Milano, Italy to hear the case. The company is requesting restitution of the Lit. 7,610 million (approximately US$3,692,000) paid to Aprilia, plus interest and costs. The Arbitration committee was constituted on November 16, 2001, and a decision is expected to be rendered within twelve to eighteen months of the original filing date. Further details concerning the alleged claims and proceedings are set forth under "Aprilia Claims Under the Stock Purchase Agreement" above, which is incorporated herein by reference. At the September 7, 2000 closing of the sale of the subsidiaries, in accordance with an invoice previously submitted to them by IMI, but without the prior approval, knowledge or consent of the Company, IMI was paid Lit. 11,401 million, in respect of fees and expenses claimed by IMI to be due it under its engagement letter with TRG and OAM. Since early July 2000, the Company and TRG have disputed IMI's interpretation of the calculation of the fee due it under its engagement letter, following initial indication by IMI of its basis of calculation. On February 11, 2002 the Company brought a suit against IMI before the Civil Section of the Court of Milano, seeking reimbursement of Lit. 8,766 million (approximately US$4,253,000) of the Lit. 11,401 million (US$5,532,000) paid to IMI at the closing. The first hearing in the case is scheduled for May 27, 2002 and as at March 11, 2002 IMI has not yet filed its defenses 15 Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K None 16 SIGNATURES 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. CENTERPOINT CORPORATION April 18, 2002 By: /s/ David Mitchell ------------------------------ David Mitchell President April 18, 2002 By: /s/ David Fuller ------------------------------ David Fuller Principal Accounting Officer 17 -----END PRIVACY-ENHANCED MESSAGE-----