ALJ Regional Holdings Inc. (fka ALJJ)

[10 bagger]

ALJJ.. $1.55.. ALJ Regional Holdings

Unaudited Pro Forma Results of Operations and Financial Condition of Faneuil

Faneuil, on a pro forma basis adjusted to eliminate certain assets retained by Harland Clarke, had revenue of $93,557,830 for
the twelve months ended December 31, 2012 and $79,652,807 for the nine months ended September 30, 2013. Adjusted
operating income was $3,376,347 and $6,438,301 with depreciation and amortization of $2,388,915 and $1,776,117 for the
twelve months ended December 31, 2012 and for the nine months ended September 30, 2013, respectively.
On a pro forma adjusted basis, Faneuil had current assets of $27,255,560 and $29,318,146, current liabilities of $7,682,693
and $9,826,059 and long-term liabilities of $3,958,130 and $4,127,900 with stockholders’ equity of $38,322,098 and
$42,474,510 as of December 31, 2012 and September 30, 2013, respectively. The foregoing unaudited pro forma financial
information does not give effect to the $25 million Harland Clarke Note.
The foregoing unaudited pro forma financial information includes adjustments which are preliminary and may be revised.
There can be no assurance that such revisions will not result in material changes. The unaudited pro forma financial data is
not necessarily indicative of results that actually would have occurred had the acquisition of Faneuil been completed on the
dates indicated or that may occur in the future.


http://www.otcmarkets.com/financialReportViewer?symbol=ALJJ&id=115109




Contact:

T. Robert Christ
Phone: [phone]
Email: [e-mail]


ALJ Regional Holdings is a holding Company, who conducts their business through its majority owned subsidiary, Faneuil.

Faneuil’s Business

Faneuil provides multi-channel contact center solutions for an extensive client portfolio focusing on high profile, highly regulated clients, managing more than 425 million customer interactions each year. Utilizing advanced applications and a workforce of approximately 3,000 service professionals, Faneuil delivers broad outsourcing support, ranging from customer care centers, fulfillment operations, and IT services, to manual and electronic toll collection, toll violation processing, health insurance enrollment assistance and forms processing and medical device tracking.


Products and Services

Contact Center Operations
Faneuil operates multi-channel customer care centers staffed by 50 to 500 employees in several states. Contact center clients include several toll authorities, a health benefit exchange, a multi-state utility, municipalities, an agency that operates two major airports serving the Washington, D.C. area and several other government and commercial entities.

Toll Collection Services

Faneuil has been retained by many state and municipal transportation authorities to conduct manual and electronic toll operations. Faneuil’s role in outsourced operations of electronic tolling extends beyond the traditional call center capabilities with expertise in violation processing, violation court support, fulfillment, front counter support and transponder sales and inventory. Faneuil’s complement of automated services range from turn-key operations in which Faneuil assumes complete responsibility for every aspect, including management, staffing, systems, customer care, and transponder sales and distribution, to targeted applications in which Faneuil supplies specific components to supplement a client’s own operation. Enforcement is also a key component of Faneuil’s toll operations, which currently process more than 2 million violations each month. As the nation’s largest outsource provider of manual toll collection, Faneuil deploys over 1,800 specialists across multiple states providing face-to-face customer service.

Healthcare

In January 2013, Faneuil was chosen to support the Washington State Health Benefit Exchange by providing contact center services and CRM development. The operation was opened on September 3, 2013 and includes a dedicated operation in Spokane, Washington and overflow operations in a multi-client site in Virginia. In October 2013, the State of Tennessee announced the selection of Faneuil to operate its TennCare member services center. Faneuil also operates a Medical Device Tracking (“MDT”) program that enables manufacturers of implantable medical devices to comply with United States Food and Drug Administration (“FDA”) requirements that they maintain continuous worldwide tracking of patients. To assist customers in meeting FDA tracking requirements, MDT provides document capture and image storage, data entry and investigation processes, inbound customer contact call center services and an aggressive quality assurance program. MDT’s proprietary solution includes the systems, processes and expertise to track patients over the life of any medical device and during each stage of product development, from initial start-up and testing to commercial availability. MDT staff members are in daily contact with physicians and other medical professionals to provide relevant patient and device data that is important in the treatment of long-term illness and disease. MDT processes more than 100,000 transactions per month, maintaining and safeguarding data on more than 20 million patients, devices, physicians, facilities, records and images.

Chairman of the Board and Executive Chairman - Jess M. Ravich

Mr. Ravich has served as a director of the Company since June 26, 2006 and the Chairman of the Board since August 31, 2006. Mr. Ravich joined Houlihan Lokey as Managing Director in December 2009. Prior to that, Mr. Ravich was Chairman and Chief Executive Officer of Libra Securities, a Los Angeles based investment banking firm that focuses on capital raising and financial advisory services for middle market corporate clients and the sales and trading of debt and equity securities for institutional investors. Prior to founding Libra Securities in 1991, Mr. Ravich was an Executive Vice President at Jefferies & Co., Inc. and a Senior Vice President at Drexel Burnham Lambert. Mr. Ravich serves on the board of directors, audit committee and compensation committee of Cherokee Inc. (Nasdaq GS: CHKE). In addition to his professional responsibilities, Mr. Ravich is also on the Undergraduate Executive Board of the Wharton School and the Board of Trustees of the Archer School for Girls. Mr. Ravich has both a B.S and M.S. from the Wharton School and a J.D. from Harvard University.

CFO - T. Robert Christ

Mr. Christ has served as the Chief Financial Officer and Secretary of the Company since July 2008. Mr. Christ was previously Chief Financial Officer for Electronic Recyclers International, Inc., a nationwide recycler of e-waste. From 1999 to 2006, Mr. Christ served as Chief Operating Officer and Chief Financial Officer for Aristotle International Inc., a political software company and age and identity verification company. From 1997 to 1999, Mr. Christ served as Chief Financial Officer for Pulsar Data Systems, a government contractor that merged with Litronic Inc. and went public in 1999. From 1994 to 1997, Mr. Christ served as controller for the Centech Group Inc., a government contractor, and from 1991 to 1993, Mr. Christ held various positions with Rubino and McGeehin, Chtd. a public accounting firm. Mr. Christ holds a B.B.A. degree in Accounting from James Madison University and passed the C.P.A. exam in 1991.

Director - Hal G. Byer

Mr. Byer has served as a director of the Company since January 30, 2003. Mr. Byer joined Houlihan Lokey, as a Vice President in their Financial Sponsors Coverage Group in December 2009. From May 2001 to November 2009 Mr. Byer was a Senior Vice President of Libra Securities, LLC ("Libra Securities"), a broker-dealer registered with the Securities and Exchange Commission and an NASD member. From 1995 to 2003, Mr. Byer was Chief Executive Officer of Byer Distributing Co., a snack food distribution company. From 2000 to 2003, Mr. Byer was also the Chief Operating Officer of eGreatcause.com, an internet start-up involved in fundraising for charitable and non-profit organizations that is no longer active.

Director - John Scheel

Mr. Scheel has served as the Director of the Company since September 13, 2006. Mr. Scheel also currently serves as the Chief Operating Officer of Pinnacle Steel, LLC ("Pinnacle") and, pursuant to the Management Agreement between the Company's subsidiary, KES and Pinanacle, as plant manager of the Mill. Mr. Scheel has been plant manager of the Mill since January of 2004 and has been Chief Operating Officer of Pinnacle since September 2002. Prior to joining Pinnacle, Mr. Scheel was the Vice President of Operations for Birmingham Steel Management from July 2001 to September 2002. Mr. Scheel holds both B.S. and M.S. degrees in Metallurgical Engineering from Purdue University and a Master of Business Administration in Finance and International Business from Xavier University.

Director - Olimpio Lee Squitieri

Mr. Squitieri has served as a director of the Company since June 2008. Since January 2001, Mr. Squitieri has served as a partner at Squitieri & Fearon, LLP. From 1988 through January 2001, Mr. Squitieri was a partner at the firm formerly known as Abbey, Gardy & Squitieri, LLP. Since December 2006, Mr. Squitieri has served as a director and vice president of Sixty Sutton Corp. Mr. Squitieri also serves as a director of SCAN New York, a non-profit organization. Mr. Squitieri has a B.A. from Rutgers University and a J.D. from New York Law School.

Director - Robert Scott Fritz

Mr. Fritz has served as a director of the Company since January 30, 2003. Since May 2002, Mr. Fritz has served as the president of Robert Fritz and Sons Sales Company, a food broker and paper distributor that he owns in New Jersey. Mr. Fritz holds a B.S. in Business from Fairleigh Dickinson University.

Director - Anna Van Buren

Ms. Van Buren was appointed President and Chief Executive Officer of Faneuil, in April 2009, after previously serving as President and Chief Operating Officer from 2007 to 2009, as Vice President and Managing Director of Faneuil’s Government Services Division from 2005 to 2007, and as its Vice President of Business Development from 2004 to 2005. Prior to her association with Faneuil, Ms. Van Buren founded Capital Initiatives, a consulting service for clients seeking visibility among federal lawmakers with the objective of encouraging legislative action, and operated numerous government services and marketing companies. Ms. Van Buren has served in leadership roles for many civic and business organizations including chairmanship of the United Way of the Virginia Peninsula, the Peninsula Chamber of Commerce, and the NASA Aeronautics Support Team. She is the recipient of numerous awards including the Women in Business Achievement Award by Inside Business Magazine, the Presidential Citizenship Award from Hampton University and the NCCJ Humanitarian Award. Ms. Van Buren holds a degree from Hollins University and the University of Virginia Executive School.

Director - Michael Borofsky

Mr. Borofsky is Senior Vice President of MacAndrews & Forbes. Prior to joining MacAndrews & Forbes in 2003, Mr. Borofsky was with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, where he specialized in mergers & acquisitions, and before that he was an analyst in the treasury group of Goldman Sachs Group, Inc.
========================================================

ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30,
2013
September 30,
2012
ASSETS
Current assets:
Cash and cash equivalents $ 7,680,274 $ 2,823,576
Short term investments
Accounts receivable, less allowance for doubtful accounts of
$534,447 at September 30, 2012
20,231,865
-
-
11,548,624
Inventories - 24,005,885
Prepaid expenses and other current assets
Other receivables
57,708
-
1,252,102
71,701
Dividend receivables 47,919 -
Deferred taxes - 6,285,599
Discontinued operations – current assets
Total current assets 28,017,766 45,987,487
Property, plant and equipment - 5,177,477
Less accumulated depreciation and amortization - (2,934,624)
Property, plant and equipment, net - 2,242,853
Other assets:
Deposits - 224,460
Deferred loan costs, net of amortization - 274,494
Investment in Bellator 102,077 90,228
Total other assets 102,077 589,182
Total assets $ 28,119,843 $ 48,819,522
(continued)
pa-1573739 5
ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(continued)
June 30,
2013
September 30,
2012
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIENCY)
Current liabilities:
Accounts payable $ - $ 7,619,591
Accrued expenses - 4,522,920
Income taxes payable - 50,485
Current portion of term loans - 4,000,000
Liabilities related to discontinued operations 298,466 298,466
Total current liabilities $ 298,466 $ 16,491,462
Non-current liabilities:
Secured line of credit - 7,167,015
8% subordinated term loans - 18,998,213
Series A Preferred stock of subsidiary subject to mandatory
redemption; 13% cumulative, non-convertible, redeemable
preferred stock, mandatory redemption and liquidation value of
$1,000 per share; 0 shares issued and outstanding at June 30,
2013 plus cumulative dividends of $0, 5,936 shares issued and
outstanding at September 30, 2012 plus cumulative dividends
of $5,867,750
-
11,803,750
Deferred tax liability - 403,746
Minority interest – related parties - 7,266,179
Total liabilities $ 298,466 $ 62,130,365
Commitments and contingencies
Stockholders’ equity (deficiency):
Common stock, $0.01 par value; authorized - 100,000,000
shares; 26,684,998 issued and outstanding at June 30, 2013
and 57,246,598 issued and outstanding at September 30,
2012
266,850
572,466
Additional paid-in capital 262,694,052 288,426,728
Accumulated deficit (234,967,466) (301,405,879)
Accumulated comprehensive loss (143,032) -
Treasury stock – 25,000 shares, at cost (29,027) (904,158)
Total stockholders’ equity (deficiency) 27,821,377 (13,310,843)
Total liabilities and stockholders’ equity (deficiency) $ 28,119,843 $ 48,819,522
See accompanying notes to condensed consolidated financial statements.
pa-1573739 6
ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine months Ended
June 30, June 30,
2013 2012 2013 2012
NET SALES $ 0 $ 0 $ 0 $ 0
COSTS AND EXPENSES
Cost of sales 0 0 0 0
Selling 0 0 0 0
General and administrative 107,904 136,880 457,122 385,868
Total cost of operations 107,904 136,880 457,122 385,868
(Loss) Income from operations (107,904) (136,880) (457,122) (385,868)
OTHER INCOME (EXPENSE)
Interest and dividend income 240,245 6,853 451,289 12,145
Gain on sale of KES 0 0 76,806,891 0
Gain on settlement of Minority Interest 0 0 10,029,058 0
Total other income (expense) 240,245 6,853 87,287,238 12,145
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES, DISCONTINUED
OPERATIONS AND MINORITY INTEREST
INCOME TAXES ON CONTINUING OPERATIONS
INCOME BEFORE DISCONTINUED OPERATIONS
AND MINORITY INTEREST
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS
INCOME TAXES ON DISCONTINUED
OPERATIONS
INCOME FROM DISCOUNTINUED OPERATIONS,
NET OF TAXES
INCOME BEFORE MINORITY INTEREST
132,341
0
132,341
0
0
0
132,341
(130,027)
0
(130,027)
3,322,790
(238,125)
3,084,665
2,954,638
86,830,116
(7,240,430)
79,589,686
(159,164)
0
(159,164)
79,430,522
(373,723)
0
(373,723)
9,751,282
(645,550)
9,105,732
8,732,009
MINORITY INTEREST
NET INCOME
0
132,341
(435,725)
2,518,910
(12,992,109)
66,438,413
(1,382,356)
7,349,653
NET INCOME (LOSS) PER COMMON SHARE -
Basic $0.00 $0.04 $1.57 $0.13
Dilutive $0.00 $0.04 $1.49 $0.12
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 27,057,648 57,090,319 41,957,648 57,090,319
Dilutive 29,257,648 59,390,319 44,257,648 59,490,319
See accompanying notes to condensed consolidated financial statements.
pa-1573739 7
ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)
NINE MONTHS ENDED JUNE 30, 2013
Common Stock
Additional
Paid-in
Comprehensive
(Loss) Accumulated Treasury
Shares Amount Capital Income Deficit Stock Total
Balances at September
30, 2012
57,246,598 $ 572,466 $ 288,426,728 $ 0 $ (301,405,879) $ (904,158) $ (13,310,843)
Share-based
compensation:
Exercise of stock
options
200,000 2,000 44,000 46,000
Repurchase and
retirement of
Common Stock
through Tender
Offer
(30,000,000) (300,000) (24,900,000) (25,200,000)
Net income 66,438,413 66,438,413
Comprehensive (Loss) $ (143,032) (143,032)
Repurchase of Treasury
Stock
(761,600) (7,616) (876,676) $ 875,131 (9,161)
Balances at June 30,
2013
26,684,998 $ 266,850 $ 262,694,052 $ (143,032) $ (234,967,466) $ (29,027) $ 27,821,377
See accompanying notes to condensed consolidated financial statements
==========================================================

ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31,
2013
September 30,
2012
ASSETS
Current assets:
Cash and cash equivalents $ 7,569,571 $ 2,823,576
Short term investments
Accounts receivable, less allowance for doubtful accounts of $534,447
at September 30, 2012
19,867,439
-
-
11,548,624
Inventories - 24,005,885
Prepaid expenses and other current assets
Other receivables – Optima
108,708
1,944,476
1,252,102
71,701
Dividend receivables 154,615 -
Deferred taxes - 6,285,599
Discontinued operations – current assets
Total current assets 29,644,809 45,987,487
Property, plant and equipment - 5,177,477
Less accumulated depreciation and amortization - (2,934,624)
Property, plant and equipment, net - 2,242,853
Other assets:
Deposits - 224,460
Deferred loan costs, net of amortization - 274,494
Investment in Bellator 102,077 90,228
Total other assets 102,077 589,182
Total assets $ 29,746,886 $ 48,819,522
(continued)
pa-1573739 5
ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(continued)
March 31,
2013
September 30,
2012
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIENCY)
Current liabilities:
Accounts payable $ 139,652 $ 7,619,591
Accrued expenses - 4,522,920
Income taxes payable 1,650,000 50,485
Current portion of term loans - 4,000,000
Liabilities related to discontinued operations 298,466 298,466
Total current liabilities $ 2,088,118 $ 16,491,462
Non-current liabilities:
Secured line of credit - 7,167,015
8% subordinated term loans - 18,998,213
Series A Preferred stock of subsidiary subject to mandatory
redemption; 13% cumulative, non-convertible, redeemable
preferred stock, mandatory redemption and liquidation value of
$1,000 per share; 0 shares issued and outstanding at March 31,
2013 plus cumulative dividends of $0, 5,936 shares issued and
outstanding at September 30, 2012 plus cumulative dividends
of $5,867,750 - 11,803,750
Deferred tax liability - 403,746
Minority interest – related parties - 7,266,179
Total liabilities $ 2,088,118 $ 62,130,365
Commitments and contingencies
Stockholders’ equity (deficiency):
Common stock, $0.01 par value; authorized - 100,000,000
shares; 27,446,598 issued and outstanding at March 31,
2013 and 57,246,598 issued and outstanding at September
30, 2012 274,466 572,466
Additional paid-in capital 263,570,728 288,426,728
Accumulated deficit (235,099,808) (301,405,879)
Accumulated comprehensive loss (173,299) -
Treasury stock – 786,600 shares, at cost (913,319) (904,158)
Total stockholders’ equity (deficiency) 27,658,768 (13,310,843)
Total liabilities and stockholders’ equity (deficiency) $ 29,746,886 $ 48,819,522
See accompanying notes to condensed consolidated financial statements.
pa-1573739 6
ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
March 31, March 31,
2013 2012 2013 2012
NET SALES $ 0 $ 0 $ 0 $ 0
COSTS AND EXPENSES
Cost of sales 0 0 0 0
Selling 0 0 0 0
General and administrative 211,248 130,962 349,217 248,989
Total cost of operations 211,248 130,962 349,217 248,989
(Loss) Income from operations (211,248) (130,962) (349,217) (248,989)
OTHER INCOME (EXPENSE)
Interest and dividend income 201,172 2,393 211,042 5,292
Gain on sale of KES 76,806,891 0 76,806,891 0
Gain on settlement of Minority Interest 10,029,058 0 10,029,058 0
Total other income (expense) 87,037,121 2,393 87,046,991 5,292
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES, DISCONTINUED
OPERATIONS AND MINORITY INTEREST
INCOME TAXES ON CONTINUING OPERATIONS
INCOME BEFORE DISCONTINUED OPERATIONS
AND MINORITY INTEREST
INCOME (LOSS) FROM DISCONTINUED
OPERATIONS
INCOME TAXES ON DISCONTINUED
OPERATIONS
INCOME FROM DISCOUNTINUED OPERATIONS,
NET OF TAXES
INCOME BEFORE MINORITY INTEREST
86,825,873
(7,230,430)
79,595,443
1,423,802
(5,602)
1,418,200
81,013,643
(128,569)
0
(128,569)
3,994,603
(121,472)
3,873,131
3,744,562
86,697,774
(7,240,430)
79,457,344
(159,164)
0
(159,164)
79,298,180
(243,697)
0
(243,697)
6,428,493
(407,425)
6,021,068
5,777,371
MINORITY INTEREST
NET INCOME
(13,198,066)
67,815,577
(637,585)
3,106,977
(12,992,109)
66,306,071
(946,628)
4,830,743
NET INCOME (LOSS) PER COMMON SHARE -
Basic $1.60 $0.05 $1.57 $0.08
Dilutive $1.52 $0.05 $1.49 $0.08
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 42,446,598 56,934,040 42,346,598 56,934,040
Dilutive 44,646,598 59,534,040 44,646,598 59,434,040
See accompanying notes to condensed consolidated financial statements.
pa-1573739 7
ALJ REGIONAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 2013
Common Stock
Additional
Paid-in
Comprehensive
(Loss) Accumulated Treasury
Shares Amount Capital Income Deficit Stock Total
Balances at September
30, 2012 57,246,598 $ 572,466 $ 288,426,728 $ 0 $ (301,405,879) $ (904,158) $ (13,310,843)
Share-based
compensation:
Exercise of stock
options 200,000 2,000 44,000 46,000
Repurchase and
retirement of
Common Stock
through Tender
Offer (30,000,000) (300,000) (24,900,000) (25,200,000)
Net income 66,306,071 66,306,071
Comprehensive (Loss) $ (173,299) (173,299)
Repurchase of Treasury
Stock $ (9,161) (9,161)
Balances at March 31,
2013 27,446,598 $ 274,466 $ 263,570,728 $ (173,299) $ (235,099,808) $ (913,319) $ 27,658,768
See accompanying notes to condensed consolidated financial statements