<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 33-00412-NY
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FIRST PRIORITY GROUP, INC
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(Exact name of small business issuer as specified in its charter)
New York 11-2750412
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
270 Duffy Avenue
Hicksville, New York 11801
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(Address of principal executive offices)
(516) 938-1010
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(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed
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by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes No .
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Page 1 of 12 pages.
Exhibit Index starts on page 10
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of August 14, 1995: 4,883,883 shares of common stock
---------------------------------
Transitional Small Business Format (check one)
Yes No
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THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
2
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INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements.
Condensed Consolidated Balance Sheet as at June 30, 1995 4
Condensed Consolidated Statements of Operations for the three months
ended June 30, 1995 and 1994 5
Condensed Consolidated Statements of Operations for the six months
ended June 30, 1995 and 1994 6
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1995 and 1994 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of Operation. 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 10
(b) Reports on Form 8-K. 10
3
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, 1995
Unaudited
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<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 389,882
Accounts receivable 756,062
Other current assets 41,025
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Total current assets 1,186,969
Property and equipment - net 69,159
Other assets 48,591
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Total Assets $1,304,719
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 921,175
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Total current liabilities 921,175
Shareholders' equity:
Common stock $.015 par value;
Authorized 8,000,000 shares;
Issued 5,150,550 77,258
Additional paid in capital 1,509,310
Deficit (1,113,024)
Treasury stock (90,000)
Total shareholders' equity 383,544
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Total $1,304,719
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</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
June 30, June 30,
1995 1994
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(Unaudited) (Unaudited)
<S> <C> <C>
Revenue from operations $2,259,662 $2,159,712
Costs of revenue (principally charges
by repair facilities for services) 1,862,213 1,740,259
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Gross profit 397,449 419,453
Operating expenses:
Selling, general and administration 396,039 354,592
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Income from operations 1,410 64,861
Interest and other income 1,394 318
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Net income $ 2,804 $ 65,179
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Income per share NIL $ .01
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Weighted average shares outstanding
during the period 4,883,883 4,883,883
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</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
June 30, June 30,
1995 1994
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Revenue from operations $4,922,927 $3,955,805
Costs of revenue (principally charges
by repair facilities for services) 4,003,697 3,230,079
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Gross profit 919,230 725,726
Operating expenses:
Selling, general and administration 761,394 635,280
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Income from operations 157,836 90,446
Interest and other income 2,180 1,231
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Income before income taxes 160,016 91,677
Provision for income taxes 1,000 0
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Net income $ 159,016 91,677
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Income per share $ .03 $ .02
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Weighted average shares outstanding
during the period 4,883,883 4,883,883
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---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS ENDED
June 30, June 30,
1995 1994
---- ----
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 159,016 $ 91,677
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 12,647 16,668
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable (11,354) (136,599)
Decrease (increase) in other current
assets (26,870) (7,843)
Increase (decrease) in accounts payable
and accrued expenses 185,497 177,119
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Net cash provided by operating
activities 318,936 141,022
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Cash flows from investing activities:
Additions to property and equipment (17,956) (21,339)
Deposits on property and equipment (38,016) 0
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Net increase in cash 262,964 119,683
Cash at beginning of period 126,918 44,161
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Cash at end of period $ 389,882 $163,844
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</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. UNAUDITED FINANCIAL STATEMENTS
The information contained in the condensed consolidated financial
statements for the period ended June 30, 1995 is unaudited, but includes
all adjustments, consisting of normal recurring adjustments, which the
Company considers necessary for a fair presentation of the financial
position and the results of operations for these periods.
The financial statements and notes are presented as permitted by Form 10-
QSB, and do not contain certain information included in the Company's
annual statements and notes. These financial statements should be read in
conjunction with the Company's annual financial statement as reported in
its most recent annual report on Form 10-KSB.
2. BUSINESS OF THE COMPANY
First Priority Group, Inc. (the "Company"), a New York corporation formed
in October 1983, is engaged directly and through its wholly-owned
subsidiaries in automotive fleet management and administration of
automotive repairs for businesses, insurance companies and members of
affinity groups. The services provided by the Company include the
computerized compilation and analysis of vehicle usage and maintenance data
and the repair and maintenance of vehicles through approximately 3,000
independently contracted repair facilities nationwide. The Company's
office is located at 270 Duffy Avenue, Hicksville, New York 11801 and its
telephone number is (516) 938-1010.
3. RESULTS OF OPERATIONS
The unaudited results of operations for the three and six months ended June
30, 1995 and 1994 are not necessarily indicative of the results to be
expected for the full year.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
For the three months ended June 30, 1995 the Company's revenues from
operations increased by $99,950 (4.6%) to $2,259,662 from $2,159,712 for the
three months ended June 30, 1994. The gross profit as a percentage decreased
1.8% for the three months ended June 30, 1995 to 17.6% from 19.4% for the same
period of 1994. The decreased gross profit percentage is mainly due to fee
based programs offered to large companies at a reduced rate as an incentive to
sign on long term contracts. This business practice has dramatically reduced
the company's attrition rate.
For the six months ended June 30, 1995 the Company's revenues from
operations increased by $967,122 (24.4%) to $4,922,927 from $3,955,805 for the
six months ended June 30, 1994. The gross profit as a percentage increased .4%
for the six months ended June 30, 1995 to 18.7% from 18.3% for the same period
of 1994.
Selling, general and administrative expenses increased $41,447 (11.7%) to
$396,039 for the second quarter of 1995 from $354,592 during the same period of
1994. Selling, general and administrative expenses increased $126,114 (19.9%) to
$761,394 for the first six months of 1995 from $635,280 during the same period
of 1994. The increased selling, general, and administrative costs is due to
increased advertising, personnel, and benefit costs.
The Company has recently expanded its program of providing automobile
collision repair services to the insurance industry. Under its Direct Repair
and Appraisal Program, the Company provides appraisal services on a per accident
fee basis to insurance companies. Additionally, the Company offers, to the
insured, to repair the damaged vehicle through the Company's extensive shop
repair network. The Company believes that the provision of such services to
insurance companies may become an important source of revenues for the Company
because of the high volume of collision appraisal and repair referrals that
insurance companies provide as compared with the Company's corporate fleet
management clients. The Company has taken steps to obtain several insurance
companies as clients.
The Company has recently begun marketing consumer oriented auto club
programs through a network of outside marketing agents. The Company has
recently entered into agreements with several marketing agencies and affinity
groups and will be providing fee based services. Several of these agreements
provide for the clients to meet certain minimum guarantees. At least three of
these clients have already begun to pay fees to the Company.
The Company completed the replacement of its telephone system with a more
technologically advanced system in July 1995. As a result of this, the Company
expects lower per call costs and improved customer service efficiency. The
Company financed $41,600 of the cost of the system through a bank loan.
The Company believes that it has adequate liquidity to support its cost of
operations for the foreseeable future.
9
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) LIST OF EXHIBITS
Exhibit No. Description
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3.1 Certificate of incorporation of the Company, as amended,
incorporated by reference to Exhibit 19.1 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1991.
3.2 By-laws of the Company, incorporated by reference to Exhibit 19.2
to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1991.
(b) REPORTS ON FORM 8-K
None
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
FIRST PRIORITY GROUP, INC.
Date: August 14, 1995 By: /s/ Michael Karpoff
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Michael Karpoff
Co-Chairman of the Board
of Directors, President and
Director (Principal Executive
Officer)
Date: August 14, 1995 By: /s/ Barry Siegel
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Barry Siegel
Co-Chairman of the Board
of Directors, Treasurer,
Secretary and Director
(Principal Financial
and Accounting Officer)
11
<PAGE>
INDEX OF EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE
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3.1 Certificate of incorporation of the Company, as
amended, incorporated by reference to Exhibit 19.1
to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1991.
3.2 By-laws of the Company, incorporated by reference
to Exhibit 19.2 to the Company's Quarterly Report
on Form 10-Q for the quarterly period ended March
31, 1991.
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AT 6/30/95, INCOME STATEMENT FOR THE 3 MONTHS ENDED 6/30/95, INCOME
STATEMENT FOR THE 6 MONTHS ENDED 6/30/95, CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOW AT 6/30/95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> APR-01-1995 JAN-01-1995
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 389,882 389,882
<SECURITIES> 0 0
<RECEIVABLES> 756,062 756,062
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,186,969<F1> 1,186,969<F1>
<PP&E> 225,251 225,251
<DEPRECIATION> 156,092 156,092
<TOTAL-ASSETS> 1,304,719 1,304,719
<CURRENT-LIABILITIES> 921,175 921,175
<BONDS> 0 0
<COMMON> 77,258 77,258
0 0
0 0
<OTHER-SE> 306,286 306,286
<TOTAL-LIABILITY-AND-EQUITY> 1,304,719 1,304,719
<SALES> 2,259,662 4,922,927
<TOTAL-REVENUES> 2,261,056<F2> 4,925,107<F2>
<CGS> 0 0
<TOTAL-COSTS> 1,862,213 4,003,697
<OTHER-EXPENSES> 396,039 761,394
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 2,804 160,016
<INCOME-TAX> 0 1,000
<INCOME-CONTINUING> 2,804 159,016
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,804 159,016
<EPS-PRIMARY> 0 .03
<EPS-DILUTED> 0 .03
<FN>
<F1>INCLUDES OTHER CURRENT ASSETS OF $41,025.
<F2>INCLUDES INTEREST AND OTHER INCOME OF $1,394 FOR THE 3 MONTHS ENDED JUNE 30,
1995 AND $2,180 FOR THE 6 MONTHS ENDED JUNE 30, 1995.
</FN>
</TABLE>
