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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB/A
Amendment 1
(Mark One)
[x] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to ______________
Commission File Number 0-21467
FIRST PRIORITY GROUP, INC.
(Name of small business issuer in its charter)
NEW YORK 11-2750412
-------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 East Bethpage Road
Plainview, New York 11803
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (516) 694-1010
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock par value $.015 per share
Preferred Stock Purchase Rights par value $.01 per share
Check whether the issuer (1) 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
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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 ___
Check if there is no disclosure of delinquent filers pursuant to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State the issuer's revenues for its most recent fiscal year $14,558,474
The aggregate market value of the issuer's voting stock held by
non-affiliates of the issuer as of April 13, 1999, based upon the closing price
on the date thereof is $9,332,348.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of April 30, 1999, the issuer had outstanding a total of 8,331,800
common shares.
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format (check one):
Yes No X
THE REMAINING PORTION OF THIS PAGE WAS INTENTIONALLY LEFT BLANK.
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
Barry Siegel 47
Barry Siegel has served as a director of the Corporation since its
inception. In January 1998, Mr. Siegel again assumed the position of Treasurer
of the Corporation. Mr. Siegel became Chief Executive Officer of the Corporation
in November 1997, and continued to serve as Chairman of the Board and Secretary
to the Corporation. Previously, he served as Chairman of the Board of Directors,
Co-Chief Executive Officer, Treasurer and Secretary of the Corporation from
August 1997 through November 1997. From October 1987 through August 1997, he
served as Co-Chairman of the Board of Directors, Co-Chief Executive Officer,
Treasurer and Secretary to the Corporation. He has served as Treasurer and
Secretary of National Fleet Service, Inc. for more than five years. Mr. Siegel
is married to Lisa Siegel.
Barry J. Spiegel 50
Barry J. Spiegel has served as President of the Corporation's Affinity
Services Division since September 1996. Previously, he served as President of
American International Insurance Associates, Inc. from January 1996 through
August 1996. For more than five years prior thereto, Mr. Spiegel served as
Senior Vice President at American Bankers Insurance Group, Inc.
Gerald M. Zutler 61
Gerald M. Zutler was appointed President and Chief Operating Officer in
March 1998. Between 1997 and 1998, Mr. Zutler was a private consultant. From
1993 through 1996, Mr. Zutler was President of Lockheed Martin Canada.
Lisa Siegel
Lisa Siegel was appointed Vice President Administration in July 1998.
From January 1998 through June 1998, Ms. Siegel was Manager-Subrogation. Prior
thereto, Ms. Siegel served as Vice President Operation for the past five years.
Ms. Siegel is married to Barry Siegel.
Kenneth J. Friedman 45
Kenneth J. Friedman was elected to the Board of Directors in October
1998. For more than five years, Mr. Friedman has been President of the Primary
Group, Inc., an
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executive search consultant.
Compliance With Section 16(a) of the Exchange Act
Barry Siegel held stock options for the right to purchase 400,000
shares and 100,000 shares that were repriced on October 22, 1998. He did not
file a Form 4 on a timely basis. Instead, he reported these option grants in the
Form 5 filed in February 1999.
Barry J. Spiegel held stock options for the right to purchase 250,000
shares that were repriced on October 22, 1998. He did not file a Form 4 on a
timely basis. Instead, he reported these option grants in the Form 5 filed in
February 1999.
Gerald M. Zutler held stock options for the right to purchase 300,000
shares that were repriced on October 22, 1998. He did not file a Form 4 on a
timely basis. Instead, he reported these option grants in the Form 5 filed in
February 1999.
Lisa Siegel held stock options for the right to purchase 100,000 shares
that were repriced on October 22, 1998. She did not file a Form 4 on a timely
basis. Instead, she reported these option grants in the Form 5 filed in February
1999.
Kenneth J. Friedman exercised a stock option and purchased 100,000
shares in December 1998 He did not file a Form 4 on a timely basis. Instead, he
reported this transaction in Form 5 in February 1999.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has the responsibility to serve as the
representative of the Shareholders. The Board establishes broad corporate
policies and oversees the overall performance of the Company. However, the Board
is not involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business activities through discussion with the Chief
Executive Officer, by reviewing analyses and reports sent to them by management
and by participating in board meetings. At present, the Board of Directors has
one standing committee, the Audit Committee. Presently, the members of the Audit
Committee are Kenneth J. Friedman and Barry J. Spiegel. The Audit Committee did
not meet in 1998.
During 1998 there eight meetings of the Board of Directors which was
attended by members of the Board either in person or via telephone, and the
Board approved resolutions with unanimous written consent in lieu of a meeting
on three occasions in 1998. Directors received no compensation for their service
on the Board of Directors. However, non-employee directors receive an annual
stock option grant of 15,000 shares of the Company's common stock.
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Item 10. Executive Compensation
(b) Summary Compensation Table
SUMMARY COMPENSATION TABLE
Annual Compensation
(a) (b) (c) (d)
Name
and
Principal
Position Year Salary($) Bonus($)
- --------- ---- --------- --------
Barry Siegel 1998 $279,423 $0
Chairman 1997 $198,846 $0
of the Board 1996 $175,000 $0(1)
of Directors,
Treasurer,
Secretary and
Chief Executive
Officer
Barry J. Spiegel 1998 $104,499 $0
President, 1997 $ 89,730 $0
Affinity Services 1996 $ 0 $0
Division
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(1) Incentive compensation for the year ended December 31, 1996 was waived.
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(c) Options/SAR Grants Table
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
- ----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Barry Siegel 100,000 6.08% $1.925 9/07/02
Barry Siegel 400,000 24.3% $1.925 10/08/03
Barry J. Spiegel 250,000 15.2% $1.75 6/30/03
</TABLE>
(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Barry Siegel None None 433,333/466,667 $291,000/$0
Barry J. Spiegel None None 50,000/250,000 $48,500/$0
</TABLE>
(f) Compensation of Directors
No compensation is paid to the directors in consideration of the
director's service on the board. However, the 1995 Stock Incentive Plan provides
that non-employee directors of the Company shall be granted nonstatutory stock
options for 15,000 shares of the Company's common stock on the date of election
to the Board and upon every successive anniversary date of his or her initial
election.
(g) Employment contracts and termination of employment and change in control
arrangements.
The Company has employment agreements with its two principal officers,
Barry Siegel and Gerald M. Zutler. Mr. Siegel's employment agreement commenced
on July 1, 1998 and expires on December 31, 2001. The agreement provides for an
annual salary of $300,000. Mr. Zutler's employment agreement commenced on July
1, 1998 and expires on June 30, 2001. Mr. Zutler's annual base salary is
$150,000. Both executives participate in the Company's Corporate Compensation
Program.
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Mr. Siegel's employment agreement contains a change in control
provision whereby Mr. Siegel, following a change of control as defined in the
agreement, would receive: (a) a severance payment of 300 percent of the average
annual salary for the past five years, less $100; (b) the cash value of the
outstanding, but unexercised stock options, and (c) other perquisites, should
the executive be terminated for various reasons as defined in the agreement. The
agreements provide that in no event, shall the severance payment exceed the
amount deductible by the Company under the provisions of the Internal Revenue
Code.
Mr. Zutler's employment agreement contains a change in control
provision whereby Mr. Siegel, following a change of control as defined in the
agreement, would receive: (a) a severance payment of 200 percent of the average
annual salary for the past five years, less $100; (b) the cash value of the
outstanding, but unexercised stock options, and (c) other perquisites, should
the executive be terminated for various reasons as defined in the agreement. The
agreements provide that in no event, shall the severance payment exceed the
amount deductible by the Company under the provisions of the Internal Revenue
Code.
The Company entered into an employment agreement with Barry J. Spiegel
that commenced on July 1, 1998 and expires on June 30, 2001. The agreement
provides for a base salary of $130,000 per annum. Additionally, Mr. Spiegel
participates in the Company's Corporate Compensation Program. Mr. Spiegel's
employment agreement provides that should a "Change in Control" occur, as
defined in the agreement, all stock options previously granted shall immediately
become fully exercisable.
In early 1999, several executives agreed to a voluntary reduction in
their annual salaries (without changing the terms of their employment contracts.
Mr. Siegel reduced his salary by $100,000, Mr. Zutler by $15,000 and Mr. Spiegel
by $30,000. In consideration for these salary reductions, the Company granted
Mr. Siegel a stock option for 100,000 shares, Mr. Zutler a stock option for
15,000 shares and Mr. Spiegel a stock option of 30,000 shares.
(h) Report on repricing of options/SARs
The Company repriced all employee stock options that had an exercise price
greater than the fair market value of the Company's stock on October 22, 1998,
$1.75. The Company canceled the existing options and re-granted and repriced
them with the lower exercise price. The term and the exercise schedule of the
new repriced option was identical to the option that it replaced. Mr. Siegel
held stock options for the right to purchase up to 500,000 shares that were
canceled, re-granted and repriced with an exercise price of $1.92, 110% of the
fair market value on the date of grant. Mr. Spiegel held a stock option for the
right to purchase 250,000 shares that was canceled, re-granted and repriced with
an exercise price of $1.75. Mr. Zutler held a stock option for the right to
purchase 200,000 shares that was canceled, re-granted and repriced with an
exercise price of $1.75.
The Board of Directors decided to re-price all outstanding employee stock
options that had exercise prices higher than the fair market value on October
22, 1998. The Board of Directors believes that
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stock options are an integral component of executive compensation and must offer
the executive the opportunity to benefit from appreciation of the stock price as
the Company grows.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following information is as of April 30, 1999.
(a) Security ownership of certain beneficial owners.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and Amount and
Title Address of Nature of Percent of
of Class Beneficial Owner Beneficial Owner Common Stock(1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Kirlin Holding Corp. 1,140,000 (2) 13.10%
6901 Jericho Turnpike
Syosset, NY. 11791
Common Kirlin Securities, Inc. 1,140,000 (3) 13.10%
6901 Jericho Turnpike
Syosset, NY. 11791
Common Frances Giarraputo 663,333 (4) 7.82%
6 Fox Hunt Court
Huntington, NY 11743
Common Leonard Giarraputo 663,333 (5) 7.82%
6 Fox Hunt Court
Huntington, NY 11743
Common Fourteen Hill Capital, L.P. 889,000 10.67%
1700 Montgomery Street
Suite 250
San Francisco, CA. 94920
Common The Golddonet Group 1,295,000 (6) 15.01%
221 Main Street
Suite 250
San Francisco, CA 94105
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The percentages set forth in this Information Statement have been
calculated in accordance with Instruction 3 to Item 403 of Regulation S-B.
(2) Includes common stock purchase warrants for 340,000 shares held by Kirlin
Securities, Inc., a
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wholly owned subsidiary of Kirlin Holding Corp.
(3) Includes common stock purchase warrants for 340,000 shares and 800,000
shares held by Kirlin Holding Corp., parent to Kirlin Securities, Inc.
(4) Includes 13,333 shares owned directly or as custodian for others by Leonard
Giarraputo, and 145,000 shares representing options that are exercisable
within sixty days by Leonard Giarraputo to purchase the common stock of the
Company. Leonard and Frances Giarraputo are husband and wife. Each
disclaims beneficial ownership of shares held by the other.
(5) Includes 13,333 shares owned directly or as custodian for others by Leonard
Giarraputo, and 145,000 shares representing options that are exercisable
within sixty days by Leonard Giarraputo to purchase the common stock of the
Company. Includes 505,000 shares held by Frances Giarraputo. Leonard and
Frances Giarraputo are husband and wife. Each disclaims beneficial
ownership of shares held by the other. Information obtained from Schedule
13D/A filed by holder.
(6) Includes 50,000 shares which it has agreed to purchase on January 3, 2000,
subject to certain conditions, and 1,045,000 shares underlying options
granted to it by a present shareholder under a purchase agreement.
(b) Security ownership of management.
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and Amount and
Title Address of Nature of Percent of
Class Beneficial Owner Beneficial Owner Common Stock(1)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Barry Siegel 1,885,067(2) 20.02%
8 Indian Well Court
Huntington, NY 11743
Common Lisa Siegel 1,885,067(3) 20.02%
8 Indian Well Court
Huntington, NY 11743
Common Barry J. Spiegel 650,000(4) 7.75%
Common Kenneth J. Friedman 125,000(5) 1.49%
Common Directors and officers
as a group 2,660,067 28.06%
</TABLE>
- ----------------------------------------
(1) The percentages set forth in this Annual Report on Form 10-KSB have been
calculated in accordance with Instruction 3 to Item 403 of Regulation S-B.
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(2) Includes options exercisable by Barry Siegel within sixty days to purchase
908,333, 3,334 shares held by Barry Siegel as custodian for two nephews, 67
shares held directly by Barry Siegel's wife, Lisa Siegel, and 175,000
shares representing options held by her that are exercisable within sixty
days. Both Barry and Lisa Siegel disclaim beneficial ownership of shares
held by the other.
(3) Includes options exercisable by Barry Siegel within sixty days to purchase
908,333 shares , 3,334 shares held by Barry Siegel as custodian for two
nephews, includes 798,333 held by Barry Siegel and 175,000 shares
representing options held by her that are exercisable within sixty days.
Both Barry and Lisa Siegel disclaim beneficial ownership of shares held by
the other.
(4) Includes options exercisable to purchase 50,000 shares within sixty (60)
days.
(5) Includes options exercisable to purchase 15,000 shares within sixty (60)
days.
(c) Changes in control. None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST PRIORITY GROUP, INC.
By: /s/ Barry Siegel
-------------------------
Barry Siegel
Chairman of the Board of Directors,
Treasurer, Secretary,
Chief Executive Officer,
Principal Accounting Officer
Date: April 30, 1999
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Barry Siegel
-------------------------
Barry Siegel
Chairman of the Board of Directors,
Treasurer, Secretary,
Chief Executive Officer,
Principal Accounting Officer
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Date: April 30, 1999
By: /s/ Barry J. Spiegel
-------------------------
Barry J. Spiegel
President. Affinity Services Division
Director
Date: April 30, 1999
By: /s/ Kenneth J. Friedman
---------------------------
Kenneth J. Friedman
Director
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