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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 March 31, 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 May 14, 1996: 5,883,883 shares of common stock
Transitional Small Business Format (check one)
Yes [ ] No [X]
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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
MARCH 31, 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 771,767
Accounts receivable, less allowance for
doubtful accounts of $11,500 1,152,936
Other current assets 14,462
-----------
Total current assets 1,939,165
Property and equipment, net 128,334
Security deposits 10,575
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$ 2,078,074
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 1,075,272
-----------
Total current liabilities 1,075,272
Shareholders' equity:
Common stock, $.015 par value, authorized
8,000,000 shares; issued 6,150,550 shares 92,258
Additional paid-in capital 1,929,310
Deficit (928,766)
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1,092,802
Less common stock held in treasury, at
cost, 266,667 shares (90,000)
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Total shareholders' equity 1,002,802
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$ 2,078,074
===========
The accompanying notes are an integral part of these financial statements.
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FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
March 31, March 31,
1996 1995
----------- -----------
(Unaudited) (Unaudited)
Revenue from operations $3,180,779 $2,663,265
Costs of revenue (principally charges incurred
at repair facilities for services) 2,589,172 2,141,484
---------- ----------
Gross profit 591,607 521,781
Operating expenses:
Selling, general and administration 484,205 365,354
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Income from operations 107,402 156,427
Interest and other income 6,538 785
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Income before income taxes 113,940 157,212
Provision for income taxes 1,000 1,000
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Net income $ 112,940 $ 156,212
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Income per common share 0.01 0.03
========== ==========
5,883,883 4,883,883
The accompanying notes are an integral part of these financial statements.
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FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
THREE MONTHS ENDED
March 31, March 31,
1996 1995
-------- --------
Cash flows from operating activities:
Net income 112,940 156,212
-------- --------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 8,887 6,146
Changes in assets and liabilites:
Accounts receivable (83,150) (168,115)
Other current assets (3,522) (14,471)
Accounts payable and
accrued expenses 15,983 179,327
-------- --------
Total adjustments (61,802) 2,887
-------- --------
Net cash provided by operating
activities 51,138 159,099
-------- --------
Cash flows from investing activities,
additions to property and equipment (21,181) (3,812)
-------- --------
Cash flows used in financing activities,
repayment of notes payable (37,264) 0
-------- --------
Net increase (decrease) in cash and cash equivalents (7,307) 155,287
Cash and cash equivalents at beginning of period 779,074 126,918
-------- --------
Cash and cash equivalents at end of period 771,767 282,205
======== ========
The accompanying notes are an integral part of these financial statements.
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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 March 31, 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 three months ended March 31,
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 7,775,377 and 4,883,883 in the three months ended March
31, 1996 and March 31, 1995, respectively.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
For the three months ended March 31, 1996 the Company's revenues from
operations increased by $517,514 (19.4%) to $3,180,779 from $2,663,265 for the
three months ended March 31, 1995. Gross profit increased $69,826 to $591,607
for the first quarter of 1996 from $521,781 during the same period of 1995. The
gross profit percentage was 18.6% for the three months ended March 31, 1996 as
compared to 19.6% for the same period of 1995. 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 long term contracts. This business practice
has reduced the Company's attrition rate.
Selling, general and administrative expenses increased $118,851 (32.5%) to
$484,205 for the first quarter of 1996 from $365,354 during the same period of
1995. Of the $118,851 increase in selling, general, and administrative expenses,
approximately $88,000 was related to increased salary expense due to contractual
agreements, wage increases and an increase in labor force necessary to prepare
the Company to manage anticipated increases in its business activities. The
remaining increase was directly related to the increase in revenue.
The Company believes that it has adequate liquidity to support its cost of
operations for the foreseeable future.
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
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Part II Other Information
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K
None
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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: May 14, 1996 By: /s/ Michael Karpoff
-------------------
Michael Karpoff
Co-Chairman of the Board
of Directors, President and
Co-Chief Executive Officer
Date: May 14, 1996 By: /s/ Barry Siegel
----------------
Barry Siegel
Co-Chairman of the Board
of Directors, Treasurer,
Secretary and Principal
Financial and Accounting
Officer
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Index of Exhibits
Exhibit No. Description Page
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10.1 Amendment of Lease dated June, 1995, between 11
the Company, American Auto Trading and LBA
Properties, Inc., of original lease dated September
12, 1990 for the Company's headquarters.
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AMENDMENT TO LEASE
AMENDMENT made this day of June, 1995, between LBA PROPERTIES, INC., a
domestic corporation with offices at 575 Underhill Boulevard, Syosset, New York
11791 (hereinafter referred to as "Landlord") and FIRST PRIORITY GROUP, INC. and
AMERICAN AUTO TRADING, INC., successor-in-interest to FIRST PRIORITY GROUP,
INC., a domestic corporation having an office at 270 Duffy Avenue, Hicksville,
New York 11801, (hereinafter referred to as "Tenant").
W I T N E S S E T H:
WHEREAS, the Landlord and the Tenant herein are parties to a lease dated
September 12, 1990, (the "Lease") with respect to premises ("Premises") at 270
Duffy Avenue, Hicksville, New York 11801; and
WHEREAS, the Lease shall expire on January 31, 1996; and
WHEREAS, Tenant and Landlord are desirous of further extending the term of
the Lease.
NOW, THEREFORE, in consideration of $1.00 to each in hand paid and other
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, it is mutually agreed that the Lease is further extended and
modified as follows:
l. The term of the Lease is extended for three (3) additional years
commencing on February 1, 1996 and ending on January 31, 1999, both dates
inclusive (The "Extended Term").
2. The rental schedule during the Extended Term shall be as follows:
TERM MONTHLY ANNUALLY
---- ------- --------
2/1/96 - 1/31/99 $6,185.63 $74,227.52
3. Tenant does hereby waive its Option To Renew contained in Schedule "A"
of the Lease.
4. Notwithstanding anything to the contrary herein, Tenant shall have the
right and option to cancel the Lease effective the dates listed below
("Effective Date") subject to the conditions described below in paragraph 4(b),
provided that the Tenant shall serve a written notice to such effect upon
Landlord on or before the corresponding notice date listed below. If Tenant
shall exercise such option, the Lease and the term thereof shall expire and
terminate on such Effective Date with the same effect as if that were the date
originally set forth herein for the expiration of the term of the Lease, and
Tenant shall vacate and surrender the Premises to Landlord, in the manner
required by the Lease, on or before such date as if such date were the date
originally set forth herein for the expiration of the term thereof.
NOTICE DATE EFFECTIVE DATE
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1/31/97 7/31/97
9/1/97 1/31/98 2/1/98 7/31/98
(b) The above described rights of cancellation shall be effective and binding
on Landlord if and only if:
(i) any such notice is sent certified mail, return receipt requested
on or before the Notice Date corresponding to the Effective Date listed above,
time being of the essence.
(ii) such notice is sent by the Tenant named herein, such right being
personal to such Tenant and not transferable to any assignee or subtenant.
(iii) Tenant shall not be in default under any of the terms,
covenants, conditions, and provisions of the Lease at the time of any such
Notice or at the corresponding Effective Date.
5. Except as modified by this Amendment to Lease, all of the remaining
provisions of the Lease are ratified and approved and shall continue in full
force and effect.
6. This Amendment to Lease shall not be binding on Landlord until a duly
executed original thereof is delivered to Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have signed this Amendment to
Lease as of the date first-written above.
LBA PROPERTIES, INC.
By:______________________
11
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FIRST PRIORITY GROUP, INC.
By:_______________________
AMERICAN AUTO TRADING, INC.
By:________________________
12
