<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, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 33-00412-NY
FIRST PRIORITY GROUP, INC
(Exact name of small business issuer as specified in its charter)
New York 11-2750412
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
270 Duffy Avenue
Hicksville, New York 11801
(Address of principal executive offices)
(516) 938-1010
(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
State the number of shares outstanding of each of the issuer's classes
of common equity, as of August 14, 1996: 5,883,883 shares of common stock
Transitional Small Business Format (check one)
Yes[ ] No[ X ]
<PAGE>
Part I Financial Information
Item 1. Financial Statements
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
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FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
ASSETS
Current Assets:
Cash and cash equivalents $814,047
Accounts receivable, less allowance for
doubtful accounts of $11,500 987,189
Other current assets 16,942
----------
Total current assets 1,818,178
Property and equipment, net 130,509
Security deposits 10,750
----------
$1,959,437
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 889,328
----------
Total current liabilities 889,328
----------
Shareholders' equity:
Common stock, $.015 par value, authorized
8,000,000 shares; issued 6,150,550 shares 92,258
Additional paid-in capital 1,929,310
Deficit (861,459)
----------
1,160,109
Less common stock held in treasury, at
cost, 266,667 shares (90,000)
----------
Total shareholders' equity 1,070,109
----------
$1,959,437
==========
The accompanying notes are an integral part of these
financial statements.
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<Captions>
THREE MONTHS ENDED
June 30, June 30,
1996 1995
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenue from operations $ 2,870,207 $ 2,259,662
Costs of revenue (principally charges
incurred at repair facilities for
services) 2,349,742 1,862,213
----------- -----------
Gross profit 520,465 397,449
Operating expenses:
Selling, general and administration 462,406 396,039
----------- -----------
Income from operations 58,059 1,410
Interest and other income 9,247 1,394
----------- -----------
Income before income taxes 67,306 2,804
500
----------- -----------
Provision for income taxes
Net income $ 66,806 $ 2,804
=========== ===========
Income per common share 0.01 NIL
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
June 30, June 30,
1996 1995
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenue from operations $ 6,050,986 $4,922,927
Costs of revenue (principally charges incurred
at repair facilities for services) 4,938,914 4,003,697
----------- -----------
Gross profit 1,112,072 919,230
Operating expenses:
Selling, general and administration 946,611 761,394
----------- -----------
Income from operations 165,461 157,836
Interest and other income 15,785 2,180
----------- -----------
Income before income taxes 181,246 160,016
Provision for income taxes 1,500 1,000
----------- -----------
Net income $ 179,746 $ 159,016
=========== ===========
Income per common share 0.02 0.03
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
SIX MONTHS ENDED
June 30, June 30,
1996 1995
-------- --------
Cash flows from operating activities:
Net income $180,246 $159,016
-------- --------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 18,086 12,647
Changes in assets and liabilites:
Accounts receivable 82,597 (11,354)
Other current assets (6,002) (26,870)
Security Deposits (175)
Accounts payable and
accrued expenses (169,960) 185,497
-------- --------
Total adjustments (75,454) 159,920
-------- --------
Net cash provided by operating
activities 104,792 318,936
-------- --------
Cash flows from investing activities,
additions to property and equipment (32,555) (17,956)
deposits on property and equipment (38,016)
-------- --------
Cash flows used in financing activities,
repayment of notes payable (37,264) 0
-------- --------
Net increase (decrease) in cash and
cash equivalents 34,973 262,964
Cash and cash equivalents at beginning of period 779,074 126,918
-------- --------
Cash and cash equivalents at end of period $814,047 $389,882
======== ========
The accompanying notes are an integral part of these financial statements.
<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, 1996 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 June 28, 1985, 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 and over 5,000
nationally recognized 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 six months ended June 30,
1996 are not necessarily indicative of the results to be expected for the full
year.
4. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
The computation of earnings per common and common equivalent share is
based upon the weighted average number of outstanding common shares during the
period plus, when their effect is dilutive, common shares subject to stock
options and warrants.
The number of common and common equivalent shares utilized in the per
share computations were 7,747,504 and 4,883,883 in the six months ended June 30,
1996 and June 30, 1995, respectively.
7
<PAGE>
Item 2. Management's Discussion and Analysis on Plan of Operation.
For the three months ended June 30, 1996 the Company's revenues from
operations increased by $610,545 (27%) to $2,870,207 from $2,259,662 for the
three months ended June 30, 1995. Gross profit increased $123,016 to $520,465
for the second quarter of 1996 from $397,449 during the same period of 1995. For
the six months ended June 30, 1996 the Company's revenues from operations
increase by $1,128,059 (22.9%) to $6,050,986 from $4,922,927 for the six months
ended June 30, 1995.
The gross profit percentage increased .5% to 18.1% for the three months
ended June 30, 1996 as compared to 17.6% for the same period of 1995. For the
six months ended June 30, 1996 the gross profit percentage decreased .3% to
18.7% from 18.4% for the same period of 1995. Fluctuations in gross profit is
attributable to the revenue derived from the sales mix of fleet repair, direct
appraisal and repair, and consumer oriented auto club programs.
Selling, general and administrative expenses increased $66,367 (16.8%)
to $462,406 for the second quarter of 1996 from $396,039 during the same period
of 1995. For the first six months of 1996 selling, general and administrative
expenses increased $185,217 (24.3%) to $946,611 from $761,394 during the same
period of 1995. The increase in selling, general, and administrative expenses is
related to increased salary expenses due to contractual agreements, wage
increases and an increase in labor force necessary to prepare the Company to
manage its increased business activities.
The Company believes that it has adequate liquidity to support its cost
of operations for the foreseeable future. In July, 1996, the Company received
approval from its bank for a one million dollar working capital line of capital.
The line provides for borrowings at an interest rate of one half of one percent
above the prime lending rate. The line is collateralized by substantially all of
the assets of the Company.
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
8
<PAGE>
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
None
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, 1996 By: /s/ Michael Karpoff
-------------------
Michael Karpoff
Co-Chairman of the Board
of Directors, President and
Co-Chief Executive Officer
Date: August 14, 1996 By: /s/ Barry Siegel
----------------
Barry Siegel
Co-Chairman of the Board
of Directors, Co-Chief
Executive Officer,
Treasurer, Secretary and
Principal Financial and
Accounting Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 814,047
<SECURITIES> 0
<RECEIVABLES> 987,189
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,813,178
<PP&E> 286,506
<DEPRECIATION> 155,997
<TOTAL-ASSETS> 1,959,437
<CURRENT-LIABILITIES> 889,328
<BONDS> 0
0
0
<COMMON> 92,258
<OTHER-SE> 977,851
<TOTAL-LIABILITY-AND-EQUITY> 1,959,437
<SALES> 6,050,986
<TOTAL-REVENUES> 6,066,771
<CGS> 0
<TOTAL-COSTS> 4,938,914
<OTHER-EXPENSES> 946,611
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 181,246
<INCOME-TAX> 1,500
<INCOME-CONTINUING> 179,746
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 179,746
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.02
</TABLE>
