SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 6, 1995
AUTOINFO, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-14786 13-2867481
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1600 ROUTE 208, FAIR LAWN, NEW JERSEY 07410
(Address of principal executive office) (Zip Code)
(201) 703-0500
Registrant's telephone number, including area code:
N/A
(Former name or former address, if changed since last report)
<PAGE>
The Registrant hereby amends its report on Form 8-K to include the following
financial statements
Item 7: Financial Statements, Pro Forma Financial Information
(a) Audited Financial Statements of Falk Finance Company, Inc.
1. Independent Auditors' Report
2. Balance Sheets as of December 31, 1993 and 1994
3. Statements of Income (Loss) and Retained Earnings (Deficit) for
the period from October 19, 1992 (inception) to December 31, 1992
and for the Years Ended December 31, 1993 and 1994
4. Statements of Changes in members' Capital and Shareholders Equity
for the period from October 19, 1992 (inception) to December 31,
1992 and for the Years Ended December 31, 1993 and 1994
5. Statements of Cash Flows for the period from October 19, 1992
(inception) to December 31, 1992 and for the Years Ended December
31, 1993 and 1994
6. Notes to Financial Statements
(b) Unaudited Financial Statements of Falk Finance Company, Inc.
1. Balance Sheet as of November 30, 1995
2. Statement of Loss and Retained Earnings (Deficit) for the Eleven
Month Period ended November 30, 1995
3. Statement of Cash Flows for the Eleven Month Period ended
November 30, 1995
(c) Unaudited Pro Forma Financial Information
1. Condensed Pro Forma Consolidated Balance Sheets of AutoInfo, Inc.
as of November 30, 1995
2. Condensed Pro Forma Consolidated Statement of Operations for the
Year Ended May 31, 1995
3. Condensed Pro Forma Consolidated Statement of Operations for the
Six Month Period Ended November 30, 1995
4. Notes to Condensed Pro Forma Consolidated Financial Statements
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Financial Statements
For the Period from October 19, 1992 (inception)
to December 31, 1992 and for the Years ended
December 31, 1993 and 1994
(With Independent Auditors' Report Thereon)
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report 1
Balance Sheets as of December 31, 1993 and 1994 2
Statements of Income (Loss) and Retained Earnings (Deficit)
for the period from October 19, 1992 (inception) to
December 31, 1992 and for the Years Ended
December 31, 1993 and 1994 3
Statements of Changes in Members' Capital and Shareholders' Equity
for the period from October 19, 1992 (inception) to December 31,
1992 and for the Years ended December 31, 1993 and 1994 4
Statements of Cash Flows for the period from October 19, 1992
(inception) to December 31, 1992 and for the Years Ended
December 31, 1993 and 1994 5
Notes to Financial Statements 7
<PAGE>
KPMG Peat Marwick LLP
2100 Dominion Tower
999 Waterside Drive
Norfolk, VA 23510
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Falk Finance Company, Inc.:
We have audited the accompanying balance sheets of Falk Finance Company, Inc.
(formerly known as Falk Finance Company, L.C.) as of December 31, 1993 and 1994
and the related statements of income (loss) and retained earnings (deficit),
statements of changes in members' capital and shareholders' equity and cash
flows for the period from October 19, 1992 (inception) to December 31, 1992 and
for the years ended December 31, 1993 and 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Falk Finance Company, Inc. as
of December 31, 1994 and 1993, and the results of its operations and its cash
flows for the period from October 19, 1992 (inception) to December 31, 1992 and
for the years ended December 31, 1993 and 1994, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
November 30, 1995
1
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Balance Sheets
December 31, 1993 and 1994
<TABLE>
<CAPTION>
Assets 1993 1994
---- ----
<S> <C> <C>
Cash $ 1,225,862 2,034,404
Finance receivables, net (notes 2 and 5) 16,267,772 21,633,842
Other receivables including receivables from
related parties (notes 3 and 9) 1,074,622 2,508,478
Prepaid income taxes -- 159,692
Repossessed assets -- 820,753
Property and equipment, net (note 4) 236,778 466,937
Organization and debt issuance costs (at cost,
less accumulated amortization of $12,815
and $40,823, respectively) 69,409 323,642
Deferred income taxes (note 8) 10,000 390,000
Other assets 11,381 17,802
----------- ----------
Total assets $18,895,824 28,355,550
=========== ==========
Liabilities and Shareholders' Equity
Notes payable (note 5) 13,904,269 19,613,025
Accounts payable and accrued liabilities (note 9) 82,156 483,751
Income taxes payable (note 8) 289,614 --
Convertible subordinated debt (note 6) -- 4,900,000
----------- ----------
Total liabilities 14,276,039 24,996,776
----------- ----------
Shareholders' equity:
Common stock, class A nonvoting, no par value,
20,000,000 shares authorized, 3,200,000
shares outstanding (note 7) 3,788,023 3,788,023
Common stock, class B voting, no par value,
1,000,000 shares authorized, 500,000 shares
outstanding (note 7) 357,894 357,894
Retained earnings (deficit) 473,868 (787,143)
----------- ----------
Total shareholders' equity 4,619,785 3,358,774
Commitments, contingencies and subsequent
events (notes 10 and 11)
----------- ----------
Total liabilities and shareholders' equity $18,895,824 28,355,550
=========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Statements of Income (Loss) and Retained Earnings (Deficit)
For the Period from October 19, 1992 (inception) to December 31, 1992
and for the Years Ended December 31, 1993 and 1994
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Interest income:
Interest and fee income $ 183,305 4,102,182 6,288,891
Interest expense 10,074 708,634 2,026,265
---------- --------- ---------
Interest income before provision
for credit losses 173,231 3,393,548 4,262,626
Provision for credit losses (note 2) 15,075 773,377 2,632,227
---------- --------- ---------
Net interest income 158,156 2,620,171 1,630,399
---------- --------- ---------
Insurance commissions and other income, net -- 47,971 26,385
---------- --------- ---------
Other expenses:
Salaries and fringe benefits (note 9) 62,939 700,149 1,424,225
Advisory fees (note 9) 25,106 467,992 647,161
General and administrative (note 9) 29,961 426,970 794,841
Depreciation and amortization 1,533 40,351 86,842
---------- --------- ---------
Total other expenses 119,539 1,635,462 2,953,069
---------- --------- ---------
Income (loss) before income taxes 38,617 1,032,680 (1,296,285)
Income tax expense (benefit) (note 8) -- 279,614 (279,474)
---------- --------- ---------
Net income (loss) 38,617 753,066 (1,016,811)
Retained earnings, beginning of year -- 15,447 473,868
Distributions declared to members 23,170 -- --
Dividends declared to shareholders -- 294,645 244,200
---------- --------- ---------
Retained earnings (deficit), end of year $ 15,447 473,868 (787,143)
========== ========= =========
Per share information:
Weighted average number of common
shares outstanding $3,000,000 3,274,000 3,700,000
========== ========= =========
Earnings (loss) per share $ .01 .23 (.27)
========== ========= =========
Pro forma income data:
Income before income taxes 38,617 1,032,680
Pro forma provision for income
taxes (unaudited) (note 8) 14,659 392,005
---------- ---------
Pro forma net income (unaudited) $ 23,958 640,675
========== =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Statements of Changes in Members' Capital and Shareholders' Equity
For the Period from October 19, 1992 (inception)
to December 31, 1992 and for the Years Ended December 31, 1993 and 1994
<TABLE>
<CAPTION>
Common Common
Contributed Stock Stock Retained
Capital Class A Class B Earnings Total
----------- ---------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at October 19, 1992 $ -- -- -- -- --
Capital contribution from members 1,789,474 -- -- -- 1,789,474
Net income -- -- -- 38,617 38,617
Dividends declared to members -- -- -- (23,170) (23,170)
----------- ---------- ------- ---------- ----------
Balance at December 31, 1992 1,789,474 -- -- 15,447 1,804,921
Exchange of members' capital to common stock (1,789,474) 1,431,580 357,894 -- --
Common stock issued in a private stock offering, net -- 3,448,443 -- -- 3,448,443
Common stock redeemed -- (1,092,000) -- -- (1,092,000)
Net income -- -- -- 753,066 753,066
Dividends declared to shareholders -- -- -- (294,645) (294,645)
----------- ---------- ------- ---------- ----------
Balance at December 31, 1993 -- 3,788,023 357,894 473,868 4,619,785
Net loss -- -- -- (1,016,811) (1,016,811)
Dividends declared to shareholders -- -- -- (244,200) (244,200)
----------- ---------- ------- ---------- ----------
Balance at December 31, 1994 $ -- 3,788,023 357,894 (787,143) 3,358,774
=========== ========== ======= ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Statements of Cash Flows
For the Period from October 19, 1992 (inception)
to December 31, 1992 and for the Years Ended December 31, 1993 and 1994
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 38,617 753,066 (1,016,811)
----------- ----------- -----------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,533 40,351 86,842
Provision for credit losses 15,075 773,377 2,632,227
Changes in assets and liabilities relating to
operating activities:
Other receivables -- (931,333) (1,433,856)
Repossessed assets -- -- (820,753)
Prepaid income taxes -- -- (159,692)
Other assets (33,500) (60,106) (288,661)
Deferred income taxes -- (10,000) (380,000)
Accounts payable and accrued liabilities 57,149 25,006 401,595
Income taxes payable -- 289,614 (289,614)
----------- ----------- -----------
Total adjustments 40,257 126,909 (251,912)
----------- ----------- -----------
Net cash provided by (used in) operating
activities 78,874 879,975 (1,268,723)
----------- ----------- -----------
Cash flows from investing activities:
Finance receivables acquired (1,393,157) (18,223,848) (21,055,884)
Principal collected on finance receivables -- 3,536,165 8,552,499
Proceeds for repurchased finance receivables and
sale of repossessed vehicles -- 2,388,431 4,496,299
Purchases of property and equipment -- (264,297) (300,555)
----------- ----------- -----------
Net cash used in investing activities (1,393,157) (12,563,549) (8,307,641)
----------- ----------- -----------
Cash flows from financing activities:
Net proceeds from revolving loans 1,013,286 10,742,331 5,708,756
Issuance of convertible subordinated debt -- -- 4,900,000
Capital contributed in cash by members 429,474 -- --
Net proceeds from private stock offering -- 3,448,443 --
Payment for redemption of common stock -- (1,092,000) --
Dividends and distributions paid to members (20,069) (297,746) (223,850)
----------- ----------- -----------
Net cash provided by financing
activities 1,422,691 12,801,028 10,384,906
----------- ----------- -----------
Net increase in cash 108,408 1,117,454 808,542
Cash at beginning of period -- 108,408 1,225,862
----------- ----------- -----------
Cash at end of period $ 108,408 1,225,862 2,034,404
=========== =========== ===========
Supplemental disclosure of cash flow information --
Cash paid during the period for interest $ 10,074 708,634 1,854,077
=========== =========== ===========
Cash paid during the period for income taxes $ -- -- 549,832
=========== =========== ===========
</TABLE>
(Continued)
5
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Statements of Cash Flows, Continued
Supplemental disclosures of noncash investing and financing activities:
During the period ended December 31, 1992, certain members contributed to
capital finance receivables with a net value of $1,360,000.
During the year ended December 31, 1993, the Company acquired certain
finance receivables from Charlie Falk's Auto Wholesale, Incorporated
(CFAW) at a net value of $2,148,652 in exchange for the assumption of a
revolving loan of $2,102,335. The balance of $46,317 was paid to CFAW in
cash.
During the year ended December 31, 1993, Falk Finance Company, L.C. merged
into Falk Finance Company, Inc. and $1,789,474 of members' contributed
capital was exchanged for $1,431,580 of Class A common stock and $357,894
of Class B common stock.
See accompanying notes to financial statements.
6
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
(1) Description of Business and Summary of Significant Accounting Policies
(a) Description of Business
Falk Finance Company, Inc. was formed on March 31, 1993 as the result
of a merger of Falk Finance Company, L.C. with and into Falk
Finance, Inc., collectively referred to as the Company. The
Company is a special financial services company that primarily
purchases from Charlie Falk's Auto Wholesale, Incorporated (CFAW)
on a nonrecourse basis retail installment contracts (installment
contracts) secured by automobiles and other vehicles along with
unsecured down payment loans (down payment loans) and tax, title
and tag loans (TTT loans). Installment contracts, down payment
loans and TTT loans are collectively referred to as finance
receivables. CFAW buys used passenger cars and light trucks
(collectively, "cars") and sells them to purchasers predominately
located in the Hampton Roads area of Virginia who have limited
access to traditional sources of consumer credit. Because of the
Company's dependence upon purchasers located in Hampton Roads, a
decline in regional economic conditions could result in fewer
contracts available for purchase by the Company and affect
consumers' ability to honor contracts. Operations of the Company
effectively commenced on October 19, 1992.
(b) Income Recognition
Interest income from finance receivables is recognized for financial
reporting purposes using the interest method. Interest continues
to accrue until a loan is charged off.
Commissions received on the sale of credit life insurance and
warranty policies which are underwritten by third parties, are
taken into income on the straight-line method over the estimated
term of the related policies.
Late charges are recorded as income when collected.
(c) Organization and Debt Issuance Costs
Costs incurred in organizing the Company and in connection with the
issuance of the subordinated debt are being amortized on a
straight-line basis.
(d) Allowance for Finance Credit Losses and Acquisition Discount
As part of the Company's agreement with CFAW, the Company has the
right of first refusal to purchase installment contracts generated
by CFAW at 80% of the installment contract's face value, without
recourse to CFAW. This nonrefundable acquisition discount is
retained by the Company and is available to absorb potential
credit losses.
The Company maintains an allowance for finance credit losses at a
level which, in management's opinion, is adequate to cover losses
expected to occur in the existing finance receivable portfolio
over and above the amounts in the acquisition discount account.
Management evaluates allowance requirements by considering the
nature of finance receivables, their aging status and the value of
the underlying collateral. A provision for credit losses is
charged to income in an amount sufficient to maintain the
allowance.
7
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
Effective January 1, 1994, the Company began allocating a portion of
unearned interest income to the acquisition discount account in
order to reflect more accurately the credit risk and the potential
for future losses. This was accounted for as a change in estimate.
Whereas the acquisition discount account is the primary account
against which losses in the finance receivable portfolio are
charged, the Company's allowance for finance credit losses
provides further coverage in the event the entire acquisition
discount is insufficient to absorb such losses in their entirety.
In March 1993, the Company also began purchasing down payment loans
and TTT loans from CFAW at 80% of such loans' face value. These
loans are without recourse to CFAW and the acquisition discount is
retained by the Company and is available to absorb potential
credit losses.
Installment contracts are charged off against the acquisition
discount at the earlier of the date of repossession and sale of
collateral or the date at which they become three months
contractually delinquent. Any related down payment loan or TTT
loan is also charged off after repossession unless payments are
being received. Recoveries on losses previously charged to the
acquisition discount are credited to the acquisition discount at
the time the recovery is made.
(e) Repossessed Assets
Repossessed collateral is valued at the lower of cost or market.
(f) Property and Equipment
Property and equipment are carried at cost. Depreciation is
calculated using the straight-line method over the estimated
useful lives of the assets.
(g) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. The Company
has accounted for income taxes in this manner since it became a C
corporation on March 31, 1993.
Prior to March 31, 1993, the Company operated as a limited liability
company and, as such, earnings of the Company were taxable to the
individual members rather than to the Company. Accordingly, income
taxes were not provided for in the financial statements for
December 31, 1992. Distributions were paid to members in amounts
sufficient to pay their individual income tax liabilities
attributable to their pro rata share of the Company's taxable
income. The income tax effect of the change in corporate tax
status was recognized in the 1993 statement of income and retained
earnings.
(h) Earnings Per Share Information
Earnings (loss) per share was computed by dividing net income (loss)
by the pro forma weighted average number of common shares
outstanding, as if the capitalization and issuance of 3,000,000
shares that occurred on March 31, 1993 when Falk Finance Company,
8
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
Inc. was formed had been consummated as of October 19, 1992 (see
note 7).
(2) Finance Receivables
Finance receivables at December 31 consist of the following:
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Retail installment contracts $ 27,510,576 38,582,607
Down payment loans - installment and short term 872,117 592,974
Tax, title and tag loans 413,418 36,406
------------ ----------
Gross finance receivables 28,796,111 39,211,987
Unearned interest and fee income (9,016,976) (8,888,794)
Unearned insurance and warranty commissions (31,900) (26,658)
------------ -----------
Finance receivables 19,747,235 30,296,535
------------ -----------
Credit loss allowances:
Acquisition discount (2,691,011) (5,242,014)
Allowance for finance credit losses (788,452) (3,420,679)
------------ -----------
Total credit loss allowances (3,479,463) (8,662,693)
------------ -----------
Finance receivables, net $16,267,772 21,633,842
============ ===========
</TABLE>
Contractual maturities of finance receivables by year are not readily
available at December 31, 1993 and 1994, but experience has shown that
such information is not meaningful in that receivables may be paid off
or charged off prior to actual maturity.
Principal cash collections (excluding finance charges earned) for the
years ended December 31, 1993 and 1994 were as follows:
1993 1994
---- ----
Principal cash collections $3,536,165 8,552,499
Percent of average principal balances 31% 34%
A summary of changes in acquisition discount follows:
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $ - 708,225 2,691,011
Additions applicable to new volume 711,600 4,265,593 4,385,268
Allocation of unearned interest - - 4,500,126
Loans charged off, net of recoveries (3,375) (2,282,807) (6,334,391)
----------- ------------ -------------
Balance at end of year $ 708,225 2,691,011 5,242,014
=========== ============= =============
</TABLE>
Effective January 1, 1994, the Company began allocating a portion of
unearned interest to the acquisition discount account in order to
reflect more accurately credit risk and the potential for future
losses. For calendar year 1994, $1,896,608 of the $4,500,126 was
9
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
charged against interest income, thereby reducing the average effective
rate on the related retail installment contracts from 31% to 24%.
A summary of changes in the allowance for finance credit losses follows:
1992 1993 1994
---- ---- ----
Balance at beginning of year $ - 15,075 788,452
Provision for credit losses 15,075 773,377 2,632,227
---------- ----------- ------------
Balance at end of year $ 15,075 788,452 3,420,679
========== =========== ============
(3) Other Receivables
Other receivables at December 31 consist of the following:
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Receivable from CFAW for floor plan advances
under a revolving credit facility $ 614,713 429,096
Receivable from CFAW for reimbursement of repair
costs, operating expenses and property and
equipment purchases - 753,102
Receivable from CFAW for purchase of
repossessed vehicles 254,372 90,452
Receivable from CFAW for certain finance contracts
agreed to be repurchased 184,432 1,073,500
Amounts due from employees, insurance claims
and other 21,105 162,328
---------- ---------
$1,074,622 2,508,478
========== =========
</TABLE>
(4) Property and Equipment
Property and equipment at December 31 consists of the following:
1993 1994
---- ----
Equipment $ 186,866 419,998
Leasehold improvements 77,432 144,855
--------- ---------
264,298 564,853
Less accumulated depreciation and amortization 27,520 97,916
--------- ---------
Net property and equipment $ 236,778 466,937
========= =========
10
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
(5) Notes Payable
Notes payable at December 31 consist of the following:
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Revolving loan with a savings bank, interest payable monthly at the
rate of prime plus 2%, secured by motor vehicle retail installment
contracts, maximum amount of $6,000,000, initial term through
October 2002, automatically renewable for subsequent one-year terms
thereafter. Paid off in 1994. $ 6,000,000 -
Revolving loan with a finance company, interest payable monthly at
LIBOR plus 5.85%, secured by motor vehicle retail installment
contracts, maximum amount of $10,000,000, initial term through July
1994, automatically renewable for subsequent one-year terms
thereafter, guaranteed by majority shareholder. Paid off in 1994. 7,904,269 -
Revolving loan with a finance company, interest payable monthly at
prime plus 1.75% secured by motor vehicle retail installment
contracts, maximum amount of $42,000,000, initial term through
September 1999, guaranteed by Charles E. Falk, Sr. - 19,613,025
------------ ----------
$ 13,904,269 19,613,025
============ ===========
</TABLE>
The outstanding loan agreement with the finance company contains
various covenants including the maintenance of certain ratios and
restrictions on dividends.
As of December 31, 1994, the Company failed to meet certain of the
financial covenants as required under its outstanding loan agreement;
however, as of November 30, 1995, the lender has not demanded repayment
of the loan.
(6) Convertible Subordinated Debt
During March 1994, the Company sold $4,900,000 of unsecured subordinated
convertible notes in a private placement which was intended to qualify
as a nonpublic offering under Regulation D promulgated by the SEC under
the Securities Act of 1933. The subordinated notes bear interest at the
rate of 12% per annum, payable monthly.
These subordinated notes mature on May 1, 1999, however, the Company may
request annual extensions, subject to noteholder approval, until
May 1, 2009.
The subordinated notes are convertible into the Company's Class A
nonvoting common stock at the conversion price of $6.00 per share
commencing on May 1, 1995 and increasing by $1.00 per share on each
anniversary date thereafter until May 1, 2009.
11
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
(7) Members' Capital and Shareholders' Equity
At December 31, 1992, the financial statements reflect an initial capital
contribution from members of $1,789,474. Of this amount, $429,474 was
contributed in cash and $1,360,000 was contributed by CFAW on behalf of
certain members in the form of finance receivables consisting of down
payment loans (installment and short-term noninterest bearing) and TTT
loans with a combined principal face value of approximately $1,700,000
reduced by a 20% discount of $340,000. Through December 31, 1992 and
until February 28, 1993, CFAW effectively received all principal
payments collected on these $1,700,000 of finance receivables and, in
turn, replaced paid down receivables with new down payment loans and
TTT loans or cash to maintain the face value of contributed finance
receivables and cash at $1,700,000. In addition, CFAW paid the Company
all interest earned on these receivables until February 28, 1993.
Effective March 1, 1993, the Company took complete control over these
contributed receivables and began receiving all payments related to
these receivables directly. As of March 1, 1993, CFAW agreed to
reimburse the Company for any future losses of principal (that existed
as of March 1, 1993) in excess of $396,000 ($340,000 plus an additional
acquisition discount of $56,000) on the $1,700,000 of loans
contributed. As of December 31, 1994, no reimbursement is due from
CFAW.
On March 31, 1993, Falk Finance Company, L.C. merged into Falk Finance
Company, Inc. On that date Falk Finance Company, Inc. had authorized
20,000,000 Class A common shares and 1,000,000 Class B common shares.
In connection with the merger, each member of Falk Finance Company,
L.C. received for their respective initial capital contributions,
proportionate shares of 2,500,000 Class A nonvoting no par value common
shares and 500,000 Class B voting no par value common shares. The
remainder of the members' capital account balances were carried over as
beginning retained earnings of the Company.
On August 4, 1993, the Company issued 1,000,000 shares at $4.00 per share
of its Class A nonvoting common stock in a private offering memorandum.
The net proceeds to the Company of $3,448,443 were primarily used to
redeem 300,000 shares of Class A Non-Voting Common Stock at $3.64 per
share, for repayment of two demand notes with original principal
amounts of $450,000 and $300,000 and to purchase finance receivables
from CFAW.
At December 31, 1994, the Company had warrants outstanding for the
purchase of an aggregate 465,000 shares of Class A Common Stock at an
exercise price of $4.00 per share. These warrants are exercisable at
various times through 2004.
(8) Income Taxes
As discussed in note 1, the Company changed its tax status from a limited
liability company to a C corporation on March 31, 1993. The resulting
income tax benefit of $72,253 has been reflected in the income tax
expense in the statement of income and retained earnings for the year
ended December 31, 1993.
12
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
Components of income tax expense (benefit) for the period from
October 19, 1992 (inception) to December 31, 1992 and for the years
ended December 31, 1993 and 1994 are as follows:
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
As Reported:
Federal - Current $ - 243,650 86,822
Federal - Deferred - (8,234) (320,266)
State - Current - 45,964 13,704
State - Deferred - (1,766) (59,734)
----------- -------- --------
Total income tax expense (benefit) $ - 279,614 (279,474)
=========== ======== =========
</TABLE>
The unaudited pro forma provision for income taxes presented on the income
statements for the years ended December 31, 1992 and 1993 represents
the estimated taxes that would have been recorded had the Company been
a C corporation for the entire year for each of the years presented.
The pro forma provision for income taxes for the years ended December
31, 1992 and 1993 consists of the following:
1992 1993
---- ----
Pro forma (unaudited):
Federal $ 12,342 330,044
State 2,317 61,961
------- --------
Total pro forma $ 14,659 392,005
======== ========
Income tax expense (benefit) differed from the amount computed by
applying the U.S. Federal income tax rate of 34 percent to pretax
income (loss) as a result of the following:
<TABLE>
<CAPTION>
Years ended December 31
--------------------------------------------
1992 1993 1993 1994
Pro Forma As Reported Pro Forma As Reported
--------- ----------- --------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Computed "expected" tax expense (benefit) $ 13,130 351,111 351,111 (440,736)
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal
income tax effect 1,529 41,140 40,894 (29,078)
Income tax expense attributable to
operations from January 1, 1993
to March 31, 1993 before change
in corporate tax status - (42,500) - -
Recognition of net deferred income tax
asset as a result of March 31, 1993
change in corporate tax status - (72,253) - -
Change in the balance of the valuation
allowance - - - 177,690
Other, net - 2,116 - 12,650
--------- ---------- ----------- -------------
$ 14,659 279,614 392,005 (279,474)
========= ========== =========== ==============
</TABLE>
13
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
The significant components of deferred income tax benefit are as follows:
<TABLE>
<CAPTION>
Years ended December 31
-----------------------
1993 1994
---- ----
<S> <C> <C>
Deferred tax benefit (exclusive of the effects of other
components listed below) - (579,946)
Deferred income tax expense attributable to C corporation
operations from April 1, 1993 to December 31, 1993 62,253 -
Recognition of net deferred income tax assets as a result
of March 31, 1993 change in corporate tax status (72,253) -
Increase in the balance of the valuation allowance for
deferred tax assets - 199,946
----------- ---------
$ (10,000) (380,000)
============ ==========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1993 and 1994 are presented below:
<TABLE>
<CAPTION>
1993 1994
---- ----
<S> <C> <C>
Deferred tax asset - finance receivable, due to acquisition
discount and allowance for finance credit losses $ 55,343 635,280
Less valuation allowance (37,334) (237,280)
------------ -----------
Net deferred tax asset 18,009 398,000
Deferred tax liability - property and equipment due to
depreciation (8,009) (8,000)
------------ -----------
Net deferred tax asset $ 10,000 390,000
=========== ===========
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all
of the deferred taxes will not be realized. Based upon the
availability of carrybacks of future deductible amounts to 1993 and
1994 taxable income, management believes the existing net deductible
temporary differences will reverse during periods in which carrybacks
are available.
(9) Related Party Transactions and Balances
Related party transactions and balances consist of approximately the
following:
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Rent expense paid to CFAW (see description below) $ 7,500 42,500 61,500
Salaries, fringe benefits, and general and
administrative expenses reimbursed to CFAW 89,000 323,000 334,000
Advisory fees paid to related parties
(see description below) 25,000 468,000 647,000
</TABLE>
14
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Net finance receivables purchased from CFAW $ 1,371,000 17,600,000 19,160,000
Finance receivables contributed by CFAW 1,360,000 - -
Advances to and repayment from member 66,000 - -
Repossessed vehicles sold to CFAW 4,000 1,324,000 2,630,000
Net contracts repurchased by CFAW (see description below) - 1,773,000 1,226,000
Receivables from CFAW (see description below) N/A 439,000 1,917,000
Property and equipment purchased from CFAW - 152,000 301,000
Amounts advanced and repaid under notes receivable
from CFAW - 600,000 -
Receivables from CFAW for floor plan advances under a
revolving credit facility (see description below) N/A 615,000 429,000
Organizational costs reimbursed to CFAW - 43,500 -
Amounts owed to CFAW included in accounts payable N/A 39,000 180,000
</TABLE>
The Company is related to CFAW through common control of Falk Holding
Corp., the parent company of CFAW and the majority shareholder of the
Company.
In March 1993, the Company signed a formal lease agreement with CFAW
for office facilities. The initial term was for one year at $60,000
with automatic renewals thereafter.
Receivables due from CFAW primarily represent amounts due to the Company
for repossessed vehicles sold to CFAW, for certain finance receivables
agreed to be repurchased by CFAW and for certain cash disbursements
agreed to be reimbursed by CFAW.
The Company has extended a revolving credit facility to CFAW in an amount
not to exceed $2,500,000 which is secured by certain motor vehicles.
The agreement expires December 31, 2004 with interest accruing at 18%
annually which is due monthly. At December 31, 1994, $429,096 was
outstanding.
The Company has entered into agreements with three of the shareholders and
the placement agent for the private offering to compensate these
parties for their efforts in developing financing facilities and
increasing and managing the finance receivables portfolios. These
advisory fees were based on a percentage of assets until the
shareholders' agreements were amended on October 26, 1994, to provide
for warrants to be granted monthly commencing October 1, 1994, to
purchase 55,000 shares of Class A Common Stock at an exercise price of
$4.00 per share. See note 10 for a description of future commitments
related to such advisory fees, including those which are part of
certain employment agreements. The agreement with the placement agent
was terminated as of October 1, 1994 for a cancellation fee of
$170,079.
15
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
In 1994, in general, defaulted installment contracts with less than 10%
paid by the customer as a down payment in cash, cash value of a
trade-in or payments made pursuant to a down payment loan, were
repurchased by CFAW from the Company at 80% of the finance receivables'
face values, provided that the repurchase price did not exceed the
amount originally paid to CFAW by the Company.
In 1993, in general, if a borrower failed to pay off his down payment
loan, CFAW agreed to repurchase the related finance receivables from
the Company at 80% of finance receivables' face values. In 1994 and
1993, contracts repurchased by CFAW were approximately $1,226,000 and
$1,773,000, respectively.
(10) Commitments and Contingencies
The Company has employment agreements with two of its executive officers
who are also shareholders. One agreement has an initial term through
1998 and calls for the officer to be paid an annual base salary in
addition to an annual amount equal to .5% of the assets of the Company,
calculated monthly plus an amount payable monthly for asset growth
equal to .5% of the difference between the assets on the last day of
the preceding month and the assets on the last day of the current
month. The other employment agreement has an initial term through 2003
and stipulates the officer to be paid an annual amount equal to 1.5% of
the assets of the Company, calculated monthly. Both agreements were
amended on October 26, 1994 to provide for monthly compensation to be
provided in the form of warrants to purchase 35,000 shares of Class A
Common Stock during the period from October 1, 1994 through September
30, 1995. Subsequent to September 30, 1995, the salary computations
will revert to the pre-October 1, 1994 calculation; however, the
agreement expiring in 1998 cannot exceed $5,000 per month and the
agreement expiring in 2003 cannot exceed $30,000 per month.
In addition to the fees included in the employment agreements discussed
above, the Company is committed to pay a shareholder an annual advisory
fee of 1% of the assets of the Company calculated quarterly through
1998, except during the period from October 1, 1994 through September
30, 1995, the shareholder will receive monthly consideration for
services in the form of warrants to purchase 20,000 shares of Class A
Common Stock. Subsequent to September 30, 1995, the advisory fee will
revert to the pre-October 1, 1994 calculation; however, such fee cannot
exceed $20,000 per month.
(11) Subsequent Events
(a) Sale of Company
On December 6, 1995, the Company is expected to sign an agreement
with a wholly owned subsidiary of AutoInfo, Inc. (AutoInfo),
whereby AutoInfo will acquire substantially all of the assets of
the Company and a covenant not to compete (excluding certain
receivables from CFAW) for $3,625,000, payable in cash of
$2,025,000 and a Junior Subordinated Note in the principal amount
of $1,600,000, plus the assumption of specified liabilities,
including all notes payable and convertible subordinated debt.
Immediately prior to the closing, all of the shares of stock of the
Company not owned by Falk Holding Corp. will be redeemed by the
Company in exchange for liabilities of $5,251,000 which will also
be assumed by AutoInfo.
16
<PAGE>
FALK FINANCE COMPANY, INC.
(formerly known as Falk Finance Company, L.C.)
Notes to Financial Statements
(b) Threatened Shareholder Litigation
Contemporaneously with the completion of the Company's private
placement of its Class A nonvoting common stock in 1993, the
Company entered into a number of agreements which, among other
things, provided for the manner in which the Company would
purchase automobile finance receivables from CFAW and restricted
the ability of the Company to engage in transactions with
affiliates.
Certain shareholders of the Company disagreed with CFAW and other
affiliates as to whether defaults have occurred under such
agreements, and the amount of financial damage, if any, caused by
such defaults. On August 31, 1995, in an effort to avoid the
expense that would be associated with litigation, the Company
entered into a Standstill Agreement with CFAW and certain other
affiliates and certain shareholders of the Company.
Under the terms of the Standstill Agreement, the parties acknowledged
and agreed that it was their intention for the Company to enter
into a sale transaction (see note 11(a)) and until the earlier of
December 16, 1995 or the date of final closing, certain
shareholders agreed to forebear in the commencement of litigation
against any of the other parties to the agreement. In addition,
simultaneously with the final closing on the sale of substantially
all assets of the Company, all parties to the Standstill Agreement
will execute mutual releases and waivers regarding any legal
action.
17
<PAGE>
FALK FINANCE COMPANY, INC.
Balance Sheet
November 30, 1995
(Unaudited)
Assets
Cash $ 36,706
Finance receivables 26,281,856
Other receivables 1,445,861
Repossessed assets 746,908
Property and equipment 633,815
Organization and debt issuance costs 305,172
Defferred income taxes 704,793
Other assets 386,674
------------
Total assets $ 30,541,785
============
Liabilities and Shareholders' Equity
Notes payable $ 23,175,615
Accounts payable and accrued liabilities 816,720
Convertible subordinated debt 4,900,000
------------
Total liabilities 28,892,335
------------
Shareholders' equity
Common stock, class A non-voting, no par value,
20,000,000 shares authorized, 3,200,000
shares outstanding 3,788,023
Common stock, class B voting, no par value,
1,000,000 shares authorized, 500,000 shares
outstanding 357,894
Retained earnings (deficit) (2,496,467)
------------
Total shareholders' equity 1,649,450
------------
Total liabilities and shareholders' equity $ 30,541,785
============
18
<PAGE>
FALK FINANCE COMPANY, INC.
Statement of Loss and Retained Earnings (Deficit)
For the Eleven Month Period Ended November 30, 1995
(Unaudited)
Interest income:
Interest and fee income $6,513,732
Interest Expense 2,695,021
----------
Interest income before provision for credit loses 3,818,711
Provision for credit losses 2,672,618
----------
Net interest income 1,146,093
----------
Insurance commission and other income, net 71,581
----------
Other expenses:
Salaries and fringe benefits 1,625,843
General and administrative 1,139,518
Depreciation and amortization 120,937
----------
Total other expenses 2,886,298
----------
Loss before income taxes (1,668,624)
Income taxes --
----------
Net loss (1,668,624)
Deficits, beginning of year (787,143)
Dividends declared to shareholders 40,700
----------
Deficit, end of year ($ 614,124)
----------
Per share information:
Weighted average number of common shares
outstanding 3,700,000
----------
Loss per share ($ .45)
----------
19
<PAGE>
FALK FINANCE COMPANY, INC.
Statement of Cash Flows
For the Eleven Months Ended November 30, 1995
(Unaudited)
Cash Flows from operating activities
Net loss ($ 1,668,624)
------------
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 120,937
Provision for credit losses 2,672,618
Changes in assets and liabilities relating to
Operating activities:
Other receivables 1,062,617
Repossessed assets 73,845
Other assets (368,872)
Deferred income taxes (155,101)
Accounts payable and accrued liabilities 332,969
------------
Total Adjustments 3,739,013
------------
Net cash provided by (used in) operating activites 2,070,389
------------
Cash flows from investing activities:
Finance receivables acquired (18,017,092)
Principal collected on finance receivables 7,239,987
Proceeds from repurchased finance receivables and sale of
repossessed vehicles 3,456,473
Purchase of property and equipment (269,345)
------------
Net cash used in investing activities: (7,589,977)
------------
Cash flows fron financing activities:
Net proceeds from revolving loans 3,562,590
Dividend and distributions paid to members (40,700)
------------
Net cash provided by financing activities 3,521,890
------------
Net increase in cash (1,997,698)
Cash at beginning of year 2,034,404
------------
Cash at end of year $ 36,706
============
20
<PAGE>
AUTOINFO, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
---------- ----------- ---------
(1)
<S> <C> <C> <C>
Assets
Current Assets
Cash $ 185,913 $ 421,716 $ 607,629
Short-term investments 33,413,474 (5,999,650) 27,413,824
Accounts receivable 54,744 24,409,269 24,464,013
Other current assets 261,345 561,486 822,831
------------ ------------ ------------
Total current assets 33,915,476 19,392,821 53,308,297
Property and equipment, net 39,893 200,000 239,893
Goodwill and other
intangibles, net 0 13,916,520 13,916,520
------------ ------------ ------------
$ 33,955,369 $ 33,509,341 $ 67,464,710
------------ ------------ ------------
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt $ 54,159 $ 22,919,778 $ 22,973,937
Accounts payable and
accrued liabilities 1,072,941 558,563 1,631,504
------------ ------------ ------------
Total current liabilities 1,127,100 23,478,341 24,605,441
Long-term debt 2,000,000 10,031,00 12,031,000
Stockholders' equity 30,828,269 -- 30,828,269
------------ ------------ ------------
$ 33,955,369 $ 33,509,341 $ 67,464,710
------------ ------------ ------------
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
AUTOINFO, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1995
Minus Add
Pro Forma Pro Forma
Disposed Acquired
Historical Business Business Pro Forma
------------ ------------ ------------ ------------
(A) (E) (B) (F)
<S> <C> <C> <C> <C>
Revenues $ 4,797,531 ($ 3,767,103) $ 6,543,285 $ 7,573,713
------------ ------------ ------------ ------------
Operating Expenses:
Interest espense -- -- 2,417,001 2,417,001
Provision for loan losses -- -- 2,735,465 2,735,465
System and support costs 1,992,881 (1,992,881) 0 0
Salaries and employee benefits 2,057,496 (1,351,968) 1,524,671 2,230,199
Selling, general and administrative 1,657,672 (499,421) 1,421,825 2,580,076
Depreciation and amortization 413,926 (388,768) 920,444 945,602
------------ ------------ ------------ ------------
Total operating expenses 6,121,975 (4,233,038) 9,019,406 10,908,343
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income (loss) from operations (1,324,444) 465,935 (2,476,121) (3,334,630)
------------ ------------ ------------ ------------
Other (income) expenses:
Interest income (568,449) 182 -- (568,267)
Interest expense 315,908 0 -- 315,908
Write-off Computerlogic 1,804,256 0 -- 1,804,256
Minority interest in net loss of partnership (67,133) 67,133 -- 0
------------ ------------ ------------ ------------
Total other (income) and expenses 1,484,582 67,315 0 1,551,897
------------ ------------ ------------ ------------
Income (loss) before income taxes (2,809,026) 398,620 (2,476,121) (4,886,527)
Provision for (benefit from) income taxes (634,623) 302,343 (990,448) (1,322,728)
------------ ------------ ------------ ------------
Income (loss) from continuing operations (2,174,403) 96,277 (1,485,673) (3,563,799)
Income from discontinued operations, net 1,614,936 -- -- 1,614,936
Gain on sale of discontinued operations, net 8,885,688 -- -- 8,885,688
------------ ------------ ------------ ------------
Net income (loss) $ 8,326,221 $ 96,277 ($ 1,485,673) $ 6,936,825
============ ============ ============ ============
Net income (loss) per share
Continuing operations ($0.29) ($0.48)
Discontinued operations 0.22 0.22
Gain on sale of discontinued operations 1.19 1.19
------------ ------------
$1.12 $0.94
------------ ------------
Weighted average number of common and
common equivalent shares 7,410,548 7,410,548
------------ ------------
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
AUTOINFO, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
Add
Pro Forma
Acquired
Historical Business Pro Forma
----------- ----------- -----------
(C) (D)
<S> <C> <C> <C>
Revenues $ 382,843 $ 3,725,939 $ 4,108,782
----------- ----------- -----------
Operating Expenses:
Interest expense 1,460,008 1,460,008
Provision for loan losses 672,618 672,618
Salaries and employee benefits 376,594 931,970 1,308,564
Selling, general and administrative 648,812 558,861 1,207,673
Depreciation and amortization 7,499 482,390 489,889
----------- ----------- -----------
Total operating expenses 1,032,905 4,105,847 5,138,752
----------- ----------- -----------
Loss from operations (650,062) (379,908) (1,029,970)
Other (income) expenses:
Interest income (773,202) (773,202)
Interest expense (134,467) (134,467)
Write-off Computerlogic 118,964 118,964
----------- ----------- -----------
Total other (income) and expenses (788,705) 0 (708,705)
----------- ----------- -----------
Income (loss) before income taxes 138,643 (379,908) (241,265)
Provision for (benefit from) income taxes (233,485) (151,963) (385,448)
----------- ----------- -----------
Income (loss) from continuing operations 372,128 (227,945) 144,183
Income (loss) from discontinued operations, net (28,190) (28,190)
Gain on sale of discontinued operations, net 296,839 296,839
----------- ----------- -----------
----------- ----------- -----------
Net income (loss) $ 640,777 $ (227,945) $ 412,832
=========== =========== ===========
Net income per share
Continuing operations $0.05 $0.02
Discontinued operations -- --
Gain on sale of discontinued operations 0.03 0.03
----------- -----------
$0.08 $0.05
----------- -----------
Weighted average number of common and
common equivalent shares 7,768,953 7,768,953
----------- -----------
See notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
</TABLE>
23
<PAGE>
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS AT NOVEMBER 30, 1995 AND FOR THE YEAR ENDED MAY 31, 1995 AND THE
SIX MONTHS ENDED NOVEMBER 30, 1995.
Balance Sheet
(1) To record the use of Cash for the Transaction (including related direct
costs and expenses) and to record the assets purchased and liabilities assumed
by the Company.
Statements of Operations
(A) To eliminate Revenue and Operating expenses relating to the disposition in
July 1995 of the operating assets of the Company's Insurance Inspection Division
for the period June 1, 1994 to May 31, 1995. Such expenses have been limited to
direct operating expenses attributable to such business and do not include any
allocation of corporate or administrative costs.
(B) To record Revenue and Operating Expenses of the acquired business and the
amortization of Goodwill and other intangible assets associated with the
Transaction for the period June 1, 1994 to May 31, 1995.
(C) To record Revenue and Operating Expenses of the acquired business and the
amortization of Goodwill and other intangible assets associated with the
Transaction for the period June 1, 1995 to November 30, 1995.
(D) The Company has not recorded the estimated reduction in income from the use
of Cash for the Transaction for the period June 1, 1994 to November 30, 1995.
(E) The Company has not recorded the estimated reduction in income from the use
of Cash for the Transaction for the period June 1, 1995 to November 30, 1995.
(F) The Company has not recorded any estimated income from the investment of the
proceeds from the disposition of the operating assets of its Insurance
Inspection Division for the period June 1, 1994 to May 31, 1995.
24
<PAGE>
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 hereunto duly authorized.
AUTOINFO, INC.
Date: February 16, 1996 By: /s/ WILLIAM WUNDERLICH
-------------------------------------------
William Wunderlich, Chief Financial Officer
