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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
Amendment No. 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, 1999
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
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FIRST PRIORITY GROUP, INC.
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(Name of small business issuer in its charter)
NEW YORK 11-2750412
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
51 East Bethpage Road
Plainview, New York 11803
(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
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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 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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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 $12,135,578
The aggregate market value of the issuer's voting stock held by
non-affiliates of the issuer as of April 28, 2000, based upon the closing price
on the date thereof is $18,238,162.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of April 28, 2000, the issuer had outstanding a total of 8,806,999
shares.
DOCUMENTS INCORPORATED BY REFERENCE:
Transitional Small Business Disclosure Format (check one):
Yes No X
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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 48
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 51
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 62
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.
Kenneth J. Friedman 46
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 executive search consultant.
R. Frank Mena
R. Frank Mena was elected to the Board of Directors on May 13, 1999. Mr. Mena is
both a technologist and developer by background. He was a founder and Executive
Vice President and Chief Technology Officer of Cheyenne Software. Presently, he
acts as a consultant in the computer systems industry.
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Compliance With Section 16(a) of the Exchange Act
Barry Siegel held stock options for the right to purchase an aggregate of
1,100,000 shares of the Company's common stock that were repriced on October 4,
1999. He did not file a Form 4 on a timely basis. Instead, he reported these
option grants in the Form 5.
Barry J. Spiegel held stock options for the right to purchase 330,000 shares
that were repriced on October 4, 1999. He did not file a Form 4 on a timely
basis. Instead, he reported these option grants in the Form 5.
Gerald M. Zutler held stock options for the right to purchase 415,000 shares
that were repriced on October 4, 1999. He did not file a Form 4 on a timely
basis. Instead, he reported these option grants in the Form 5.
Lisa Siegel held stock options for the right to purchase 175,000 shares that
were repriced on October 4, 1999. She did not file a Form 4 on a timely basis.
Instead, she reported these option grants in the Form 5.
Kenneth J. Friedman held stock options for the right to purchase up to 30,000
shares and stock options for the right to purchase up to 100,000 shares through
his ownership and control of the Primary Group, Inc., all that were repriced on
October 4, 1999. He did not file a Form 4 on a timely basis. Instead, he
reported these option grants in the Form 5.
R. Frank Mena held stock options for the right to purchase up to 15,000 shares
that were repriced on October 4, 1999. Additionally, Mr. Mena was granted stock
options for the right to purchase up to 60,000 shares in lieu of cash for
consulting services provided to the Company. He reported these options grants in
Form 5.
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, R. Frank Mena and Barry J. Spiegel. The Audit
Committee did not meet in 1999.
During 1999 the Board of Directors did not hold any meetings that were
attended by members of the Board either in person or via telephone, but the
Board approved resolutions with unanimous written consent in lieu of a meeting
on seven occasions in 1999. 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
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of the Company's common stock.
Item 10. Executive Compensation
(b) Summary Compensation Table
SUMMARY COMPENSATION TABLE
Annual Compensation
(a) (b) (c) (d)
Name
and
Principal
Position Year Salary($) Bonus($)
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Barry Siegel 1999 $215,385 $0
Chairman 1998 $279,423 $0
of the Board 1997 $198,846 $0
of Directors,
Treasurer,
Secretary and
Chief Executive
Officer
Gerald Zutler 1999 $137,211 $0
President 1998 $98,340 $0
1997 $0 $0
Barry J. Spiegel 1999 $104,249 $0
President, 1998 $104,499 $0
Affinity Services 1997 $89,730 $0
Division
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(c) Options/SAR Grants Table
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Option/SAR Grants in Last Fiscal Year
Individual Grants
<TABLE>
<CAPTION>
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(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
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<S> <C> <C> <C>
Barry Siegel (1) 300,000 12.4% $.825 9/30/00
Barry Siegel (1) 100,000 4.1% $.825 9/7/02
Barry Siegel (1) 200,000 8.2% $.825 3/4/04
Barry Siegel (1) 400,000 16.5% $.825 10/8/03
Barry Siegel (1) 100,000 4.1% $.825 3/4/04
Gerald M. Zutler (1) 300,000 12.4% $.75 6/30/03
Gerald M. Zutler (1) 100,000 4.1% $1.25 11/23/04
Gerald M. Zutler (1) 15,000 .6% $.75 3/4/04
Barry J. Spiegel (1) 250,000 10.3% $.75 6/30/03
Barry J. Spiegel (1) 50,000 2.1% $.75 8/18/01
Barry J. Spiegel (1) 30,000 1.2% $.75 3/4/04
</TABLE>
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(1) Options terminated and re-granted at new exercise price.
(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
<TABLE>
<CAPTION>
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(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
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Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
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<S> <C> <C> <C> <C>
Barry Siegel None None 899,333/300,667 $1,506,382/$503,617
Gerald M. Zutler None None 215,000/200,000 $376,250/$350,000
Barry J. Spiegel None None 163,333/166,167 $285,832/$290,792
</TABLE>
(f) Compensation of Directors
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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 non-statutory 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.
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
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market value of the Company's stock on October 4, 1999, $.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 1,100,000 shares that were canceled, re-granted and
repriced with an exercise price of $.825, 110% of the fair market value on the
date of grant. Mr. Spiegel held stock options for the right to purchase 330,000
shares that was canceled, re-granted and repriced with an exercise price of
$.75. Mr. Zutler held stock options for the right to purchase 415,000 shares
that was canceled, re-granted and repriced with an exercise price of $.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 4,
1999. The Board of Directors believes that 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 28, 2000.
(a) Security ownership of certain beneficial owners.
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<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)
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<S> <C> <C> <C>
Common Kirlin Holding Corp. 1,121,217 (2) 12.4%
6901 Jericho Turnpike
Syosset, NY. 11791
Common Kirlin Securities, Inc. 1,121,217 (3) 12.4%
6901 Jericho Turnpike
Syosset, NY. 11791
Common The Golddonet Group 845,000 (4) 9.3%
221 Main Street
Suite 250
San Francisco, CA 94105
</TABLE>
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(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 321,217 shares held by Kirlin Securities, Inc., a wholly owned
subsidiary of Kirlin Holding Corp.
(3) Includes 800,000 shares held by Kirlin Holding Corp., parent to Kirlin
Securities, Inc.
(4) Includes 150,000 actually owned and an option to purchase an additional
695,000 shares
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from two shareholders of the Company in a private sale.
(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)
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<S> <C> <C> <C>
Common Barry Siegel 1,884,400 (2) 18.5%
c/o First Priority Group, Inc.
51 East Bethpage Road
Plainview, NY 11803
Common Lisa Siegel 1,884,400 (3) 18.5%
c/o First Priority Group, Inc.
51 East Bethpage Road
Plainview, NY 11803
Common Gerald Zutler 215,000 (4) 2.3%
c/o First Priority Group, Inc.
51 East Bethpage Road
Plainview, NY 11803
Common Barry J. Spiegel 763,333 (5) 8.26%
c/o First Priority Group, Inc.
51 East Bethpage Road
Plainview, NY 11803
Common Kenneth J. Friedman 140,000 (6) 1.53%
c/o First Priority Group, Inc.
51 East Bethpage Road
Plainview, NY 11803
Common R. Frank Mena 75,000 (7) .82%
c/o First Priority Group, Inc.
51 East Bethpage Road
Plainview, NY 11803
Common Directors and officers
as a group 2,660,067 28.91%
</TABLE>
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(1) The percentages set forth in this Annual Report on Form 10-KSB have
been calculated in
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accordance with Instruction 3 to Item 403 of Regulation S-B.
(2) Includes options exercisable by Barry Siegel within sixty days to
purchase 899,333, 3,334 shares held by Barry Siegel as custodian for
two nephews, 67 shares held directly by Barry Siegel's wife, Lisa
Siegel, and 183,333 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 899,333, 3,334 shares held by Barry Siegel as custodian for
two nephews, 67 shares held directly by Barry Siegel's wife, Lisa
Siegel, and 183,333 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 215,000 shares within sixty
(60) days
(5) Includes options exercisable to purchase 163,333 shares within sixty
(60) days.
(6) Includes options exercisable to purchase 30,000 shares within sixty
(60) days.
(7) Includes options to exercise 75,000 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
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Barry Siegel
Chairman of the Board of Directors,
Treasurer, Secretary,
Chief Executive Officer,
Principal Accounting Officer
Date: May 1, 2000
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
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Barry Siegel
Chairman of the Board of Directors,
Treasurer, Secretary,
Chief Executive Officer,
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Principal Accounting Officer
Date: May 1, 2000
By: /s/ Barry Siegel
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Barry J. Spiegel
President. Affinity Services Division Director
Date: May 1, 2000
By: /s/ Kenneth J. Friedman
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Kenneth J. Friedman
Director
By: _____________________
R. Frank Mena
Director
