8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) February 15, 2008

Fog Cutter Capital Group Inc.

(Exact Name of Registrant as Specified in Charter)

Maryland	0-23911	52-2081138
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

1410 SW Jefferson Street, Portland, OR 97201

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (503) 721-6500

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 203.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01.  Completion of Disposition of Assets.

On February 15, 2008, Fog Cutter Capital Group Inc. (the “Company”) (OTCBB: FCCG) completed the sale of 100% of the membership interests in its wholly owned subsidiary, Fog Cap Retail Investors LLC (“FCRI”) to an unrelated entity, SBN FCCG LLC.

FCRI owns leasehold interests in 72 freestanding retail buildings throughout the United States.  The buildings are approximately 4,500 square feet each and were originally developed during the 1970’s and 1980’s.  The buildings are sub-leased to a variety of tenants including convenience stores, video rental outlets, shoe stores and other small businesses.  Thirty-three of the leases are accounted for as capital leases and the remaining 39 properties are accounted for as operating leases.  The Company will continue to manage the lease portfolio under a Management Services Agreement.

The sales price for the FCRI membership interests was $8.5 million and was paid in cash.  A portion of the proceeds were used to repay $4.2 million of existing debt.

The Company also entered into an option agreement with SBN FCCG LLC which gives the Company the right, but not the obligation, to re-acquire all of the membership interests in FCRI.  The option period is for two years beginning February 15, 2008.  Under certain circumstances after December 31, 2008, SBN FCCG LLC may accelerate the termination of the option period with thirty days notice.   The exercise price increases over the option period from approximately $9.7 million to $11.3 million.  The option commitment fee was $850,000 and is payable by the Company in installments over the option period.   The Company has determined that the exercise prices are significantly higher than the expected value during the option period.  Therefore, the option has been assigned no value as it is not anticipated that it will provide a future economic benefit to the Company. The $850,000 option commitment fee has been recorded as a reduction of the gain on sale.

Item 9.01.Financial Statements and Exhibits.

(d)Exhibits.

The following exhibits are filed as part of this report:

99.1  Pro forma Consolidated Statements of Financial Condition as of September 30, 2007 as if the disposition of FCRI had occurred on that date.

99.2  Pro forma Consolidated Statements of Operation for the nine months ended September 30, 2007 as if the disposition of FCRI had occurred on December 31, 2006.  The pro forma income statements do not include a gain on the sale of approximately $4.1 million.

99.3  Pro forma Consolidated Statements of Operation for the year ended December 31, 2006 as if the disposition of FCRI had occurred on December 31, 2005.  The pro forma income statements do not include a gain on the sale of approximately $4.1 million.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, Fog Cutter Capital Group Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 29, 2008
	FOG CUTTER CAPITAL GROUP INC.
	By:	/s/ R. Scott Stevenson
		R. Scott Stevenson
		Senior Vice President and Chief
		Financial Officer

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Exhibit Index

Exhibit Number	Description
99.1	Pro forma Consolidated Statements of Financial Condition as of September 30, 2007 as if the disposition of FCRI had occurred on that date.
99.2	Pro forma Consolidated Statements of Operation for the nine months ended September 30, 2007 as if the disposition of FCRI had occurred on December 31, 2006. The pro forma income statements do not include a gain on the sale of approximately $4.1 million.
99.3	Pro forma Consolidated Statements of Operation for the year ended December 31, 2006 as if the disposition of FCRI had occurred on December 31, 2005. The pro forma income statements do not include a gain on the sale of approximately $4.1 million.

4

EX-99.1

EXHIBIT 99.1

FOG CUTTER CAPITAL GROUP INC.

PRO FORMA CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands, except share data)

	September 30, 2007
	(unaudited)
	As Reported			Pro forma Adjustments			Pro forma
Assets
Current Assets:
Cash and cash equivalents	$	712		$	4,025		$	4,737
Accounts receivable	1,743			(77		)	1,666
Notes receivable, current portion	556						556
Loans to senior executives	1,129						1,129
Inventories	3,435						3,435
Investments in real estate, held for sale, net	8,830						8,830
Other current assets	401						401
Total current assets	16,806			3,948			20,754
Investments in real estate, net	11,270			(11,270		)	—
Notes receivable	50						50
Property, plant and equipment, net	10,475						10,475
Intangible assets, net	5,055						5,055
Goodwill	10,526						10,526
Other assets held for sale	—						—
Other assets	1,951			(27		)	1,924
Total assets	$	56,133		$	(7,349	)	$	48,784
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued liabilities	$	13,068		$	1,950		$	15,018
Sales deposits	1,821						1,821
Borrowings and notes payable, current portion	11,886			(3,287		)	8,599
Obligations under capital leases, current portion	584			(441		)	143
Total current liabilities	27,359			(1,778		)	25,581
Borrowings and notes payable	6,511						6,511
Obligations under capital leases	11,594			(9,670		)	1,924
Deferred income	5,111						5,111
Total liabilities	50,575			(11,448		)	39,127
Commitments and contingencies:
Minority interests in consolidated subsidiaries	893						893
Stockholders’ Equity:
Preferred stock, $.0001 par value; 25,000,000 shares authorized; no shares issued and outstanding	—						—
Common stock, $.0001 par value; 200,000,000 shares authorized; 11,757,073 shares issued as of September 30, 2007 and December 31, 2006; 7,957,428 shares outstanding as of September 30, 2007 and December 31, 2006	170,397						170,397
Accumulated deficit	(153,723		)	4,099			(149,624		)
Treasury stock, 3,799,645 common shares as of September 30, 2007 and December 31, 2006, at cost	(12,009		)				(12,009		)
Total stockholders’ equity	4,665			4,099			8,764
Total liabilities and stockholders’ equity	$	56,133		$	(7,349	)	$	48,784

EX-99.2

EXHIBIT 99.2

FOG CUTTER CAPITAL GROUP INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(dollars in thousands, except share data)

	Nine Months Ended September 30, 2007
	As Reported			Pro forma Adjustment			Pro forma
Revenue:
Restaurant and manufacturing sales	$	29,816					$	29,816
Restaurant franchise and royalty fees	1,706						1,706
Real estate rental income	2,851			(2,851		)	—
Total revenue	34,373			(2,851		)	31,522
Operating costs and expenses:
Restaurant and manufacturing cost of sales	17,010						17,010
Real estate operating expense	1,022			(1,022		)	—
Engineering and development	1,091						1,091
Depreciation and amortization	1,684			(335		)	1,349
Total operating costs and expenses	20,807			(1,357		)	19,450
General and administrative expenses:
Compensation and employee benefits	9,366						9,366
Professional fees	2,647						2,647
Fees paid to related parties	—						—
Other	12,539			(292		)	12,247
Total general and administrative expenses	24,552			(292		)	24,260
Non-operating income (expense):
Gain on sale of real estate	13			(13		)	—
Gain on sale of notes receivable	—						—
Interest income	197			(18		)	179
Interest expense	(2,704		)	1,109			(1,595		)
Other income (loss), net	(1,086		)	(20		)	(1,106		)
Total non-operating income (expense)	(3,580		)	1,058			(2,522		)
Loss before provision for income taxes, minority interests, and equity in income of equity investees	(14,566		)	(144		)	(14,710		)
							—
Minority interest in losses	676						676
Equity in earnings of equity investees	—						—
Income tax benefit	4,385						4,385
Income (loss) from continuing operations	(9,505		)	(144		)	(9,649		)
Basic earnings (loss) per share from continuing operations	$	(1.19	)	$	(0.02	)	$	(1.21	)
Basic weighted average shares outstanding	7,957,428						7,957,428
Diluted earnings (loss) per share from continuing operations	$	(1.19	)	$	(0.02	)	$	(1.21	)
Diluted weighted average shares outstanding	7,957,428						7,957,428

EX-99.3

EXHIBIT 99.3

FOG CUTTER CAPITAL GROUP INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except share data)

	Year Ended December 31, 2006
	As Reported			Pro forma Adjustments			Pro forma
				(Unaudited)			(Unaudited)
Revenue:
Restaurant and manufacturing sales	$	38,252					$	38,252
Restaurant franchise and royalty fees	2,779						2,779
Real estate rental income	3,909			(3,706		)	203
Total revenue	44,940			(3,706		)	41,234
Operating costs and expenses:
Restaurant and manufacturing cost of sales	21,570						21,570
Real estate operating expense	1,486			(1,331		)	155
Engineering and development	1,556						1,556
Depreciation and amortization	1,915			(448		)	1,467
Total operating costs and expenses	26,527			(1,779		)	24,748
General and administrative expenses:
Compensation and employee benefits	11,911						11,911
Professional fees	3,819						3,819
Fees paid to related parties	426						426
Other	15,562			(210		)	15,352
Total general and administrative expenses	31,718			(210		)	31,508
Non-operating income (expense):
Gain on sale of real estate	2,905			(505		)	2,400
Gain on sale of notes receivable	496						496
Interest income	283			(25		)	258
Interest expense	(2,833		)	1,058			(1,775		)
Other income (loss), net	191			(6		)	185
Total non-operating income (expense)	1,042			522			1,564
Loss before provision for income taxes, minority interests, and equity in income of equity investees	(12,263		)	(1,195		)	(13,458		)
							—
Minority interest in losses	109						109
Equity in earnings of equity investees	748						748
Income tax benefit	1,176						1,176
Income (loss) from continuing operations	(10,230		)	(1,195		)	(11,425		)
Basic earnings (loss) per share from continuing operations	$	(1.28	)	$	(0.16	)	$	(1.44	)
Basic weighted average shares outstanding	7,957,428						7,957,428
Diluted earnings (loss) per share from continuing operations	$	(1.28	)	$	(0.16	)	$	(1.44	)
Diluted weighted average shares outstanding	7,957,428						7,957,428