AUTOMOBILE PROTECTION CORP APCO, S-3, 1996-05-10

AUTOMOBILE PROTECTION CORP APCO
S-3, 1996-05-10
MANAGEMENT SERVICES

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<PAGE>
As filed with the Securities and Exchange Commission on May 10, 1996.
Registration No. 33-
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
Form S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
------------
AUTOMOBILE PROTECTION CORPORATION - APCO
(Exact name of registrant as specified in its charter)

Georgia 58-1582432
----------------------------------------- -------------------------------
(State or jurisdiction of incorporation or (I.R.S. Employer Identification
organization) Number)

15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
(770) 394-7070
(Address of principal executive offices)
-----------
Larry I. Dorfman, President
Automobile Protection Corporation - APCO
15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
(770) 394-7070
(Name, address and telephone number, including area code, of agent for service)
with a copy to:
ANDREW D. HUDDERS, Esq.
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016-2097
(212) 818-8800
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------
Proposed Proposed
maximum maximum
Title of Securities Amount to be offering price aggregate Amount of
to be registered registered per share(1) offering price(2) registration fee
<S> <C> <C> <C> <C>
Common Stock, par value
$.OO1 per share 1,388,000 shares(3) $4.1875 $5,812,250 $2,004.22

(1) Based upon the market price of the Common Stock, as reported by The Nasdaq
Stock Market, on May 6, 1996, in accordance with Rule 457(c) promulgated
under the Securities Act of 1933, as amended ("Securities Act").

(2) The proposed maximum aggregate offering price, based upon the market price
of the Common Stock, as reported by The Nasdaq Stock Market, on May 6,
1996, in accordance with Rules 457(c) and (g) under the Securities Act.

(3) Pursuant to Rule 416, there are also being registered additional shares of
Common Stock as may become issuable pursuant to the anti-dilution
provisions in the option and warrant agreements under which the shares of
Common Stock registered hereon are issuable.

The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a) may determine.

The Registration Statement, including all exhibits and attachments, contains 26 pages.

</TABLE>

Preliminary Prospectus dated May 10, 1996
Subject to Completion
PROSPECTUS
AUTOMOBILE PROTECTION CORPORATION - APCO

1,388,000 Shares of Common Stock

This Prospectus relates to up to 1,388,000 shares ("Shares") of
Common Stock, par value $.001 per share, of Automobile Protection
Corporation - APCO ("Company") that may be offered for sale for the account
of certain shareholders of the Company as stated herein under the heading
"Selling Shareholders." No period of time has been fixed within which the
Shares covered by this Prospectus may be offered or sold. The Company has
agreed to keep the Registration Statement, of which this Prospectus is a
part, effective until all the Shares are sold.

All 1,388,000 Shares offered hereby are being registered for the
account of the Selling Shareholders. The Company will not receive any of
the proceeds from the sale of the Shares. However, all the Shares being
offered hereby are issuable upon exercise of outstanding options and
warrants of the Company. If such warrants and options are fully exercised,
the Company will receive an aggregate of $3,236,620 in gross proceeds. See
"Capitalization," "Use of Proceeds" and "Selling Shareholders."

All costs, expenses and fees in connection with the registration of
the Shares offered by this Prospectus will be borne by the Company. Such
expenses are estimated at $17,000. Brokerage commissions and discounts, if
any, attributable to the sale of the Shares for the accounts of the Selling
Shareholders will be borne by them.

The Common Stock of the Company is quoted in the Nasdaq SmallCap
Market under the symbol "APCO."

SEE "RISK FACTORS." THIS OFFERING INVOLVES SIGNIFICANT RISKS, INCLUDING
THE FOLLOWING:

The introduction into the market of the Shares offered hereby may
have an adverse effect on the market price and liquidity of the
Common Stock.

The Company has had a history of losses in fiscal years prior to
1994.

The operations of the Company are dependent on the availability of
insurance coverage at favorable rates for dealers.

The Company's success is substantially dependant on the abilities and
services of its two principal executive officers.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is May __, 1996

<PAGE>
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this
Prospectus in connection with the offer described in this Prospectus and,
if given or made, such information and representations must not be relied
upon as having been authorized by the Company or any of the Selling
Shareholders. Neither the delivery of this Prospectus nor any sale made
under this Prospectus shall under any circumstances create any implication
that there has been no change in the affairs of the Company since the date
hereof or since the date of any documents incorporated herein by reference.
This Prospectus does not constitute an offer or solicitation in any state
to any person to whom it is unlawful to make such offer in such state.

TABLE OF CONTENTS
Page

Available Information. . . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference. . . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . 7
Capitalization . . . . . . . . . . . . . . . . . . . . . . . 7
Selling Shareholders . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . 9
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . 9
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Indemnification. . . . . . . . . . . . . . . . . . . . . . . 9

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission
("Commission"), in Washington, D.C., a Registration Statement on Form S-3
("Registration Statement") under the Securities Act of 1933, as amended
("Securities Act") with respect to the Shares offered hereby. This
Prospectus does not contain all of the information set forth in the
Registration Statement and exhibits thereto. For further information with
respect to the Company and the Shares, reference is hereby made to the
Registration Statement and exhibits. The statements contained in this
Prospectus as to the contents of any contract or other document filed as an
exhibit are not complete and the description of such contract or document
is qualified in its entirety by reference to such contract or document.
The Registration Statement, together with the exhibits, may be inspected at
the Commission's principal office in Washington, D.C. and copies may be
obtained upon payment of the fees prescribed by the Commission.

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Commission. Copies of such information, reports, proxy statements
and other information filed by the Company under the Exchange Act may be
examined without charge at the public reference facilities of the
Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the following Regional Offices: 7 World Trade Center,
New York, NY 10048; and 500 West Madison Street, Suite 1400, Chicago, IL
60661-2511. Copies can also be obtained at prescribed rates from the
Commission's Public Reference Section, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549.

<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated by reference into this Prospectus:

(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 filed with the Commission pursuant to
Section 13(a) of the Exchange Act;

(b) All other reports filed by the Company with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act; and

(c) The description of the Company's Common Stock, par value $.001
per share (the "Common Stock"), contained in the Registrant's
8-A Registration Statement filed with the Commission pursuant
to Section 12(b) of the Exchange Act, including any subsequent
amendment(s) or report(s) filed for the purpose of updating
such description.

All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all Shares offered have been
sold or which de-registers all Shares then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and
to be a part hereof from the respective date of filing of such documents.
Any statement contained in a document incorporated by reference herein is
modified or superseded for all purposes to the extent that a statement
contained in this Registration Statement or in any other subsequently filed
document which is incorporated by reference modifies or replaces such
statement.

The Company will furnish without charge, upon oral or written
request, to each person to whom this Prospectus is delivered, a copy of any
or all of the documents incorporated by reference herein other than
exhibits to such documents not specifically incorporated by reference
thereto. Such request should be directed to Automobile Protection
Corporation - APCO, 15 Dunwoody Park Drive, Atlanta, Georgia 30338,
telephone number (770) 394-7070, Attention: Investor Relations.

THE COMPANY

General

The Company and its subsidiaries are engaged principally in the
marketing and administration of extended vehicle service contracts and
extended vehicle warranty programs sold by automobile dealers of new and
used vehicles (hereinafter referred to as "Dealers") located throughout the
United States. The Company also offers insurance brokerage services to the
automotive industry.

Extended Vehicle Service Contracts and Extended Vehicle Warranties

The Company derives the majority of its revenues from the marketing
and administration of extended vehicle service contracts and extended
vehicle warranties (hereinafter referred to as "VSCs"). A consumer
purchases a VSC from a Dealer to provide for the repair or replacement of
designated parts of a vehicle for the term of the agreement, which can
extend to seven years and 100,000 miles depending on vehicle eligibility.
A VSC augments and enhances the original warranty provided by the
manufacturer of the vehicle and is available on new, used and leased
vehicles.

Dealers often engage a third party administrator, such as the
Company, to design a VSC program, arrange for insurance to limit their
financial risk, and to perform all of the related administrative functions
associated therewith. A principal function of the Company is to arrange
for insurance to cover the Dealer's obligations to pay all future claims.
Since 1991, coverage has been provided primarily by certain Underwriters at

3
<PAGE>
Lloyd's of London ("Lloyd's). The Company's wholly-owned subsidiary, The
Aegis Group, Inc. ("Aegis"), has been appointed by Lloyd's as the
administrator of VSCs insured by Lloyd's. Aegis' duties include, but are
not limited to the following: (a) Collection of revenues from Dealers; (b)
Disbursement and reporting of premiums and taxes to Lloyd's, brokers and
state agencies; (c) Product design; (d) Production of contract forms and
advertising materials; (e) Record keeping; (f) Claims adjusting and
payment; and (g) Appointment of sales agents to market such programs to
Dealers.

During 1995, the Company obtained insurance agreements with Greenwich
Insurance Company and Indian Harbor Insurance Company, both of which are
subsidiaries of NAC Re Corporation, which currently is rated "A"
(Excellent) by A.M. Best. These insurers will provide insurance coverage
for certain Dealer programs starting in 1996. The agreements expire on
December 31, 1999.

The Company markets its products under the trade name, EasyCare
- -Registered Trademark-. There are EasyCare products for new, used and leased
vehicles, which provide either total mechanical breakdown coverage or stated
coverage. EasyCare products include various benefits such as trip interruption,
rental reimbursement and emergency roadside assistance. The Company also
offers limited warranties, powertrain warranties, and administers programs
under private labels for large customers such as American Honda Finance
Corporation.

The Company's price of the VSC to the Dealer includes: (a) the
Company's fee for its administrative services, and (b) the cost of
insurance obtained for the Dealer, brokerage fees and taxes. The
underlying insurance cost is determined by the VSC term and coverage, in
addition to the repair profile of the specific vehicle. The Company also
receives a fee for each claim processed, which is paid by the insurer.

Insurance Brokerage Services Division

In addition to being a third party administrator for VSCs, Aegis
includes an Insurance Brokerage Services Division which markets and
administers automotive related insurance products. This division markets
its products through Dealers, financial institutions and leasing companies.

Seasonality

The VSC industry is subject to the seasonality of the automobile
industry. It is anticipated that the Company's revenue will be lower
during the first and fourth quarters due to lower sales of motor vehicles
during the winter months as compared to other times of the year.

Company

The Company was incorporated in Georgia on September 10, 1984, and
has its executive offices at 15 Dunwoody Park Drive, Atlanta Georgia
30338. The Company's telephone number is (770) 394-7070.

RISK FACTORS

The Shares being offered hereby are speculative and should not be
purchased by anyone who cannot afford a loss of their entire investment.
Before making an investment in the Company, prospective investors should
give careful consideration to the following risk factors inherent in and
affecting the business of the Company and this offering.

1. History of Revenues, Profits and Losses. The Company's
revenues for the twelve months ended August 31, 1994 (the Company's
previous year end) and December 31, 1995 (the Company's new year end) were
$26,553,554 and $49,210,774, respectively. For the same periods the
Company's net income was $912,528 and $1,525,582, respectively. In fiscal
years prior to these periods, the Company experienced fluctuating revenues
and net income and losses. Although the Company has experienced a
substantial increase in revenues and has net income for each of the twelve
months ended August 31, 1994 and December 31, 1995, no assurance can be

4
<PAGE>
given that this trend will continue over the long term. A decline in the
sale of motor vehicles or VSCs and unexpected changes in insurance carriers
willing to insure VSCs on favorable terms, or at all, would have a material
adverse impact on the business of the Company and on the revenues and net
income of the Company.

2. Dependence on Independent Dealers and Sales Agents. The
Company utilizes a number of independent agents to develop its Dealer base.
Many of the agents have substantial contacts among and long established
relationships with Dealers apart from activities related to the Company.
To the extent any of these agents decide to no longer represent the
Company, Dealers may decide to terminate their relationship with the
Company, the result of which could be a material, adverse impact on the
Company's business and financial position. The Company has entered into
non-exclusive administrative service agreements with a large number of
Dealers. The Company, however, derives revenues under such agreements only
in the event and to the extent that such entities enter into a VSC with a
vehicle consumer that is administered by the Company. The Dealers are
under no obligation to market the Company's VSCs. Accordingly, the
Company's revenues are dependent upon the ability of Dealers to
successfully market these VSCs. The successful marketing of VSCs by
Dealers depends upon many factors beyond the Company's control, including,
among other things, economic factors affecting foreign or domestic motor
vehicle sales, the availability of insurance covering claims under these
contracts and the existence of competitive programs.

3. Dependence on Availability of Insurance Coverage and Insurance
Available at Favorable Rates. A principal obligation of the Company as
administrator is to assist the Dealer in obtaining insurance to limit the
Dealer's financial risk on a VSC. Although the Company believes there are
a number of insurance companies which provide this type of coverage,
typically the Company maintains a primary relationship with only one or two
insurance companies at a time. There can be no assurance given that the
Company will be able to continue to obtain the required insurance coverage
for the Dealers from the insurance companies with which it currently does
business or any other insurance company in the future, in which case the
Company's business would be materially, adversely affected. Even if the
Company locates a new insurance carrier, the transition from one insurance
carrier to another requires the Company to expend effort and capital for
new documentation and additional marketing. Moreover, any transition is
often accompanied by a loss of Dealers unwilling to issue VSCs insured by
the new insurance carrier. Thus, if the Company cannot enter into new
agreements with the Dealers who have ended the services of the Company or
with Dealers to replace them, the business and revenues of the Company may
be materially, adversely affected. Further, the Company's profitability
depends to a great extent on the availability of insurance coverage at
favorable rates for the VSCs it administers. From time to time there may
be increases in these rates, which could have adverse impact on the
Company's gross margin and net income if the Company for competitive or
other reasons is unable to increase its fees to compensate for the
increased cost of insurance. To the extent that the Company is unable to
obtain favorable insurance rates or pass on rate increases, its business
and net income will be materially, adversely affected.

4. Competition. The VSC industry is highly competitive and is
dominated by the major automobile manufacturers and several large third
party administrators. Management believes the Company is competitive
against both the factory products and other third party administrators. In
order to be competitive, the Company designs products which enhance a
Dealer's Customer Satisfaction Index, provides training to Dealer personnel
and obtains insurance for the Dealers to provide comprehensive coverage at
reasonable prices.

5. Government Regulation. Although the Company does not operate
as an insurance company, the sale of VSCs by Dealers is regulated by the
insurance laws of most states and the Company's ability to market and
perform its services is affected by such insurance laws. It is possible
that some states in which the Company now conducts business free of
regulation may change their laws to regulate the activities of the Company.
In such event, the Company would have to comply with the regulatory
requirements of those states or cease its business activities in those
states. The Company is not aware of any proposed legislative change which
will materially affect its business as it is currently conducted.

6. Dependence on Key Personnel. The success of the Company is
largely dependent on the efforts of Messrs. Larry I. Dorfman and Martin J.

5
<PAGE>
Blank and certain other key personnel. Should any of these persons cease
to be affiliated with or employed by the Company before qualified
replacements are found, there could be a material, adverse effect on the
Company's business and prospects. The Company's continued growth is also
dependent upon its ability to hire additional qualified marketing and
service personnel. There can be no assurance given that the Company will
be able to hire or retain necessary personnel. The Company does not have
written employment agreements with either of Messrs. Dorfman or Blank and
has key-man life insurance only on Mr. Dorfman.

7. Broad Discretion in Application of Proceeds. Any proceeds
received by the Company from the exercise of the outstanding options and
warrants by the Selling Shareholders will be applied to the working capital
and general corporate purposes of the Company. Accordingly, the management
of the Company will have broad discretion as to the application of such
proceeds. See "Use of Proceeds."

8. Control of the Company by Management. As of the date of this
Prospectus, the current directors and officers of the Company and their
affiliates, in the aggregate, own beneficially approximately 22.3% of the
Common Stock. In addition Messrs. Dorfman and Blank own the 300 shares of
Class C Preferred Stock currently outstanding. The holders of the Class C
Preferred Stock are entitled only to vote in the election of directors and
are entitled to elect the smallest number of directors that will constitute
a majority of the Board of Directors through September 11, 1998. As a
result of this stock ownership, for the foreseeable future Messrs. Dorman
and Blank will be able to influence the Company's management, policies and
operations.

9. Effect of Authorization and Discretionary Issuance of Preferred
Stock on Holders of Common Stock and as an Anti-Takeover Measure. The
Company's Certificate of Incorporation authorizes the issuance of "blank
check" preferred stock with such designations, rights and preferences as
may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights that could affect adversely the voting power or
other rights of the holders of the Company's Common Stock. In the event of
issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change
in control of the Company. Although the Company has no present intention
to issue any additional shares of its preferred stock, there can be no
assurance that the Board of Directors of the Company will not do so in the
future.

10. Shares Eligible for Future Sale. Other than the Shares offered
herein, 1,713,336 of the 9,687,238 shares of Common Stock currently issued
and outstanding are "restricted securities," as that term is defined under
Rule 144 promulgated under the Securities Act. All of these shares of
Common Stock are eligible for public sale under Rule 144 subject to the
volume limitations described below. In general, under Rule 144, a person
who has owned restricted shares of Common Stock for at least two years is
entitled to sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares
of Common Stock or the average weekly trading volume during the four
calendar weeks preceding the sale. A person who has not been an affiliate
of a company for at least three months immediately preceding the sale and
who beneficially has owned shares of common stock for at least three years
is entitled to sell such shares under Rule 144 without regard to any of the
limitations described above. No prediction can be made as to the effect,
if any, that sales of such shares of Common Stock of the Company or the
availability of such shares for sale will have on the market prices of the
Company's securities prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the
public market may affect adversely prevailing market prices for the
securities of the Company and could impair the Company's ability to raise
capital through the sale of its equity securities.

USE OF PROCEEDS

The Company is unable to estimate the number of outstanding options
and warrants that may be exercised. The Company believes that the exercise
of options and warrants primarily will be dependent on the market price of
a share of Common Stock at the time of exercise and its relation to the
option and warrant exercise price.
6
<PAGE>
All 1,388,000 Shares offered hereby are being registered for the
account of the Selling Shareholders. The Company will not receive any of
the proceeds from the sale of the Shares. However, all the Shares being
offered hereby are issuable upon exercise of outstanding options and
warrants of the Company. If such warrants and options are fully exercised,
the Company will receive an aggregate of $3,236,620 in gross proceeds. See
"Capitalization" and "Selling Shareholders."

The Company intends to use the net proceeds from the exercise of any
options and warrants for working capital and general corporate purposes.
Pending application of the proceeds, the Company intends to place the funds
in interest-bearing investments such as bank accounts, certificates of
deposit and United States government obligations.

CAPITALIZATION

The following table sets forth the Company's capitalization as of
December 31, 1995. It has been adjusted on a pro forma basis to reflect
the issuance of the Shares which are the subject of this Prospectus upon
exercise of all the outstanding options and warrants by the Selling
Shareholders
<TABLE>
<CAPTION>

December 31, 1995
-----------------------------
Pro forma as
Actual adjusted(1)(2)
----------- --------------
<S> <C> <C>
Shareholders' equity
Common Stock, $.OO1 par value, 40,000,000
authorized, 9,614,616 and 11,075,238 issued
and outstanding............................ $ 9,614 $ 11,075
Additional paid-in capital..................... 12,102,172 15,421,809
Retained earnings.............................. 2,582,220 2,582,220
---------- ----------
Total shareholders' equity................. $14,694,006 $18,015,104
=========== ===========
</TABLE>

(1) Adjusted to reflect the exercise of all the outstanding options and
warrants of the Selling Shareholders the Shares of which are
registered under the Registration Statement of which this Prospectus
is a part and the receipt of proceeds therefrom.

(2) Includes 72,622 shares of Common Stock issued between January 1, 1996
and April 30, 1996, upon exercise of outstanding options.

7
<PAGE>
SELLING SHAREHOLDERS

The 1,388,000 Shares offered hereby consist of Common Stock currently
outstanding or issuable upon exercise of various options and warrants
granted by the Company from time to time in the past. The following table
sets forth certain information as of May 10, 1996, and is adjusted to
reflect the issuance of the Shares upon exercise of the outstanding options
and warrants and the sale of all of the Shares offered hereby. Unless
otherwise indicated, the Selling Shareholders each possess sole voting and
investment power with respect to the Shares shown.
<TABLE>
<CAPTION>
Before Offering After Offering
-------------------------------- Number -------------------------
- --
Number of of Shares Number of
Shares Percentage Offered Shares
Percentage
------------- ----------- ----------- ------------ ---------
- --
<S> <C> <C> <C> <C> <C>
Rodger Anderson 21,000 21,000
Jack Atkin 12,000 12,000
Automotive Development Group 21,000 21,000
Bix Brown 15,000 15,000
Cartel Marketing 21,000 21,000
John Clarke (2) 60,000 60,000
Corporate Securities Group, Inc. 50,000 50,000
David Cowherd (2) 60,000 60,000
The Dealer Group 21,000 21,000
The Equity Group, Inc. 200,000 2.0% 200,000
Robert Flaherty 10,000 10,000
Frank Follari 12,000 12,000
Joe Gibbs 50,000 50,000
David Golden 12,000 12,000
Jerry Henley 12,000 12,000
John Jameson 30,000 30,000
Joe Kuboff 12,000 12,000
Bobby Labonte 5,000 5,000
Ladenburg Thalmann & Co. 27,500 27,500
Marshall Leeds (l) 175,000 1.8% 175,000
Charles Mann 12,000 12,000
Paul Mannion (2) 60,000 60,000
Cory McClenathan 5,000 5,000
Max Morgulis (2) 20,000 20,000
Cruz Pedregon 5,000 5,000
The Providence Group 21,000 21,000
Frank Shoop 37,500 37,500
Josephine Shoop 37,500 37,500
Leonard J. Sokolow 275,000 2.8% 275,000
Sutherland, Asbill & Brennan,
as escrow agent for John
Clarke, Paul Mannion, David
Cowherd and Max Morgulis (4) 50,000 50,000
TASA 12,000 12,000
Mark Wachs 4,000 4,000
Ronnie Wohl(3) 22,500 22,500
------------- -----------
1,388,000 1,388,000

(1) Officer, director and principal of Corporate Securities Group, Inc., a Selling Shareholder.

(2) Employee and affiliate of Corporate Securities Group, Inc., a Selling Shareholder.

(3) Employee, director and affiliate of Ladenburg Thalmann & Co., a Selling Shareholder.

(4) Each of the beneficial owners is an employee and affiliate of Corporate Securities Group, Inc., a Selling
Shareholder.
</TABLE>
8
<PAGE>
The registration rights granted to certain of the Selling
Shareholders generally provide that the Company and the Selling
Shareholders indemnify each other against certain liabilities, including
liabilities under the Securities Act. In the opinion of the Commission,
such indemnification is against public policy and is, therefore
unenforceable. See "Indemnification."

PLAN OF DISTRIBUTION

The Selling Shareholders have advised the Company that sales of the
Shares may be effected from time to time in transactions (which may include
block transactions) on the Nasdaq SmallCap Market, in negotiated
transactions, or a combination of such methods of sale, at fixed prices
which may be changed, at market prices prevailing at the time of sale, or
at negotiated prices. The Selling Shareholders have advised the Company
that they have not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of
their Shares. The Selling Shareholders may effect such transactions by
selling their Shares directly to purchasers or through broker-dealers,
which may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions, or commissions from the
Selling Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Selling Shareholders and any broker-dealers
that act in connection with the sale of the Shares might be deemed to be
"underwriters' within the meaning of Section 2(11) of the Securities Act.
The Selling Shareholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the
securities against certain liabilities, including liabilities arising under
the Securities Act.

The Company has agreed to keep the Registration Statement, of which
this Prospectus is a part, effective until all the Shares are sold.

LEGAL MATTERS

Certain matters with respect to the legality of the issuance and sale
of the Shares offered hereby will be passed upon for the Company by
Graubard Mollen & Miller, New York, New York.

EXPERTS

The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-K of Automobile Protection Corporation -
APCO for the year ended December 31, 1995 have been so incorporated in
reliance on the report of Price Waterhouse, LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

INDEMNIFICATION

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the provisions described
above, or otherwise, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a
claim for indemnification against such liabilities is asserted by such
director, officer or controlling person in connection with the registration
of the Shares, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

9
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. Other Expenses of Issuance and Distribution.

The table below sets forth the estimated expenses (except the SEC
registration fee which is an actual expense) of the Registrant in
connection with the offer and sale of the shares of Common Stock covered by
this Registration Statement.

SEC registration fee. . . . . . . . . . . . . . . .$2,004.22
Accountant's fees and expenses. . . . . . . . . . . 5,000.00
Legal fees and expenses . . . . . . . . . . . . . . 5,000.00
Printing and engraving expenses . . . . . . . . . . 2,500.00
Miscellaneous . . . . . . . . . . . . . . . . . . . 2,495,78
---------
TOTAL. . . . . . . . . . . . . . . . . . . . $17,004.22
==========

ITEM 15. Indemnification of Directors and Officers.

Article VII of the Registrant's Restated Articles of Incorporation
provides that directors of the Registrant will not be liable to the
Registrant or the Registrant's stockholders for monetary damages for breach
of duty of care or other duty as a director, other than liability for any
misappropriation of any business opportunity of the Registrant, for acts or
omissions not in good faith which involve intentional misconduct or a
knowing violation of law, for the types of liabilities set forth in Section
14-2-202(4) (formerly 14-2-134) of the Georgia Business Corporation Code,
and for a transaction from which the director derived an improper personal
benefit.

Article VI of the Registrant's By-Laws sets forth the extent to which
the Registrant's directors and officers may be indemnified by the
Registrant against liabilities which they may incur in such capacities.
Such indemnification is authorized by Sections 14-2-851 and 14-2-857 of the
Georgia Business Corporation Code. These provisions generally provide that
an officer or director of the Registrant may be indemnified by the
Registrant against liability and expenses arising in connection with any
action, suit or proceeding related to his service in such capacity if he
acted in a manner he reasonably believed to be in good faith in or not
opposed to the best interest of the Registrant, and, with respect to any
criminal action or proceeding, if he had no reasonable cause to believe his
conduct was unlawful. Such person shall be entitled to such
indemnification if he is successful on the merits. In the event of a
settlement of any such action, suit or proceeding, such person shall be
entitled to indemnification only upon a determination that indemnification
is proper under the circumstances because the person has met the applicable
standard of conduct. Such determination shall be made by a majority vote
of a quorum consisting of disinterested directors or, if such quorum is not
obtainable by majority vote of a committee duly designated by the board of
directors (in which designation directors who are parties to the proceeding
may participate) consisting solely of two or more directors not at the time
parties to the proceeding, by the Registrant's independent legal counsel in
a written opinion, or by the affirmative vote of a majority of the shares
entitled to vote thereon.

The Registrant maintains directors' and officers' liability insurance
policies covering claims made against its directors and officers for
certain wrongful acts done in such capacity and providing reimbursement to
the Registrant for its indemnification of its directors and officers in
respect of such claims.

ITEM 16. Exhibits.

Exhibit No. Description
- ----------- -----------

5.1 Opinion of Graubard Mollen & Miller

II-1
<PAGE>
Exhibit No. Description
- ----------- -----------

10.1 Consulting Agreement and Option and
Registration Rights Agreement dated
March 29, 1994 between the Registrant
and Corporate Management Group, Inc.
(incorporated by reference to Exhibit
10(g) to the Registrant's Post
Effective Amendment No. 2 to Form S-1
(file number 33-22279) filed with the
Commission on May 17, 1994).

10.2 Consulting Agreement and Option and
Registration Rights Agreement dated
January 2, 1996 between the Registrant
and John R. Clarke (incorporated by
reference to Exhibit 10(h) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.3 Consulting Agreement and Option and
Registration Rights Agreement dated
January 2, 1996 between the Registrant
and Paul T. Mannion (incorporated by
reference to Exhibit 10(i) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.4 Consulting Agreement and Option and
Registration Rights Agreement dated
January 2, 1996 between the Registrant
and David Cowherd (incorporated by
reference to Exhibit 10(j) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.5 Consulting Agreement and Option and
Registration Rights Agreement dated
January 2, 1996 between the Registrant
and Max Morgulis (incorporated by
reference to Exhibit 10(k) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.6 Consulting Agreement and Option and
Registration Rights Agreement dated
January 2, 1996 between the Registrant
and John Clarke, Paul Mannion, David
Cowherd, Max Morgulis and Sutherland,
Asbill & Brennan, as escrow agent
(incorporated by reference to Exhibit
10(l) to the Registrant's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1995 - File
No. 0-17231).

10.7 Consulting Agreement and Option and
Registration Rights Agreement dated
October 6, 1994 between the Registrant
and Ronnie Wohl and Ladenburg Thalmann
& Co., Inc. (incorporated by reference
to Exhibit 10(m) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

II-2

<PAGE>
Exhibit No. Description
- ----------- -----------

10.8 Consulting Agreement and Option and
Registration Rights Agreement dated
October 6, 1994 between the Registrant
and Marshall Leeds (incorporated by
reference to Exhibit 10(n) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.9 Consulting Agreement and Option and
Registration Rights Agreement dated
October 6, 1994 between the Registrant
and Leonard J. Sokolow (incorporated
by reference to Exhibit 10(o) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.10 Option Agreement dated October 10,
1995 between the Registrant and Joe
Gibbs (incorporated by reference to
Exhibit 10(p) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.11 Option Agreement dated December 18,
1995 between the Registrant and Bobby
Labonte (incorporated by reference to
Exhibit 10(q) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.12 Option Agreement dated November 30,
1995 between the Registrant and Cruz
Pedregon (incorporated by reference to
Exhibit 10(r) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.13 Option Agreement dated November 30,
1995 between the Registrant and Cory
McClenathan (incorporated by reference
to Exhibit 10(s) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.14 Warrant Agreement dated September 1,
1994 between the Registrant and Bix
Brown (incorporated by reference to
Exhibit 10(t) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.15 Warrant Agreement dated September 1,
1994 between the Registrant and Frank
Shoop (incorporated by reference to
Exhibit 10(u) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

II-3
<PAGE>
Exhibit No. Description
- ----------- -----------

10.16 Warrant Agreement dated September 1,
1994 between the Registrant and
Josephine Shoop (incorporated by
reference to Exhibit 10(v) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.17 Option Agreement dated August 31, 1995
between the Registrant and Mark Wachs
(incorporated by reference to Exhibit
10(w) to the Registrant's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1995 - File
No. 0-17231).

10.18 Option Agreement dated February 1,
1996 between the Registrant and Mark
Wachs (incorporated by reference to
Exhibit 10(x) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.19 Option Agreement dated August 31, 1995
between the Registrant and John
Jameson (incorporated by reference to
Exhibit 10(y) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.20 Option Agreement dated August 31, 1995
between the Registrant and The
Providence Group (incorporated by
reference to Exhibit 10(z) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.21 Option Agreement dated August 31, 1995
between the Registrant and The Dealer
Group (incorporated by reference to
Exhibit 10(aa) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.22 Option Agreement dated August 31, 1995
between the Registrant and Automotive
Development Group (incorporated by
reference to Exhibit 10(bb) to the
Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1995 - File No. 0-17231).

10.23 Option Agreement dated August 31, 1995
between the Registrant and Rodger
Anderson (incorporated by reference to
Exhibit 10(cc) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

II-4
<PAGE>
Exhibit No. Description
- ----------- -----------

10.24 Option Agreement dated August 31, 1995
between the Registrant and Cartel
Marketing (incorporated by reference
to Exhibit 10(dd) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.25 Option Agreement dated August 31, 1995
between the Registrant and Joe Kuboff
(incorporated by reference to Exhibit
10(ee) to the Registrant's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1995 - File
No. 0-17231).

10.26 Option Agreement dated August 31, 1995
between the Registrant and Frank
Follari (incorporated by reference to
Exhibit 10(ff) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.27 Option Agreement dated August 31, 1995
between the Registrant and David
Golden (incorporated by reference to
Exhibit 10(gg) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.28 Option Agreement dated August 31, 1995
between the Registrant and Jerry
Henley (incorporated by reference to
Exhibit 10(hh) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.29 Option Agreement dated August 31, 1995
between the Registrant and Jack Atkin
(incorporated by reference to Exhibit
10(ii) to the Registrant's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1995 - File
No. 0-17231).

10.30 Option Agreement dated August 31, 1995
between the Registrant and Charles
Mann (incorporated by reference to
Exhibit 10(jj) to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 -
File No. 0-17231).

10.31 Option Agreement dated August 31, 1995
between the Registrant and TASA
(incorporated by reference to Exhibit
10(kk) to the Registrant's Annual
Report on Form 10-K for the fiscal
year ended December 31, 1995 - File
No. 0-17231).

23.1 Consent of Price Waterhouse LLP,
independent accountants for Registrant

II-5
<PAGE>
Exhibit No. Description
- ----------- -----------

23.2 Consent of Graubard Mollen & Miller
(Included in Exhibit 5.1)

24.1 Power of Attorney (included on
signature page to the Registration
Statement as originally filed)

Item 17. Undertakings.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;

(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;

(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the Registration Statement.

(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate

II-6
<PAGE>
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

II-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Atlanta, Georgia, on this 10th
day of May, 1996.

AUTOMOBILE PROTECTION CORPORATION- APCO

By: /s/ Larry I. Dorfman
----------------------------------------
Larry I. Dorfman, President

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Martin J. Blank and Larry I. Dorfman
his true and lawful attorneys-in-fact and agents, each acting alone, with
full power of substitution and re-substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments
to this Registration Statement, including post-effective amendments, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

Signatures Title Date
- ---------- ----- ----
[S] [C] [C]

/s/ Larry I. Dorfman
--------------------
Larry I. Dorfman President, Chief Executive
Officer and Director May 10, 1996

/s/ Martin J. Blank
-------------------
Martin J. Blank Chairman of the Board,
Chief Operating Officer,
Secretary and Director May 10, 1996

/s/ Anthony Levinson
--------------------
Anthony Levinson Chief Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer) May 10, 1996

/s/ Howard C. Miller
--------------------
Howard C. Miller Director May 10, 1996

/s/ Mechlin D. Moore
---------------------
Mechlin D. Moore Director May 10, 1996

II-8
<PAGE>
EXHIBIT INDEX

Exhibit No. Description Page No
- ----------- ----------- ---------

5.1 Opinion of Graubard Mollen & Miller

1
<PAGE>
Exhibit No. Description Page No
- ----------- ----------- -------

2
<PAGE>
Exhibit No. Description Page No
- ----------- ----------- --------

3
<PAGE>
Exhibit No. Description Page No
- ----------- ----------- --------

4
<PAGE>
Exhibit No. Description Page No
- ----------- ----------- --------

23.1 Consent of Price Waterhouse LLP,
independent accountants for Registrant

23.2 Consent of Graubard Mollen & Miller
(Included in Exhibit 5.1)

24.1 Power of Attorney (included on
signature page to the Registration
Statement as originally filed)

<PAGE>
Exhibit 5.1

Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016-2097
Telephone (212) 818-8800
Facsimile (212) 818-8881

May 8, 1996

Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Suite 100
Atlanta, Georgia 30338

Dear Sirs:

Reference is made to the Registration Statement on
Form S-3 ("Registration Statement") filed by Automobile
Protection Corporation - APCO ("Company") under the Securities
Act of 1933, as amended ("Act"), with respect to an aggregate
of 1,388,000 shares of common stock, par value $.001 per share
("Common Stock") to be issued by the Company to certain persons
listed in the Registration Statement as Selling Shareholders
("Selling Shareholders"). All of such Common Stock is to be
issued upon exercise of various warrants and options previously
entered into between the Selling Shareholders and the Company
(collectively, "Options").

We have examined such documents and considered such
legal matters as we have deemed necessary and relevant as the
basis for the opinion set forth below. With respect to such
examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents
submitted to us as reproduced or certified copies, and the
authenticity of the originals of those latter documents. As to
questions of fact material to this opinion, we have, to the
extent deemed appropriate, relied upon certain representations
of certain officers and employees of the Company.

Based upon the foregoing, it is our opinion that the
shares of Common Stock to be issued by the Company upon
exercise of the Options has been duly authorized and, when sold
to the Selling Shareholders and paid for in the manner provided
in the Registration Statement and the various agreements
governing the Options between each of the Selling Shareholders
and the Company, will be legally issued, fully paid and non-
assessable.

In giving this opinion, we have assumed that all
certificates for the Company's shares of Common Stock, prior to
their issuance, will be duly executed on behalf of the Company
by the Company's transfer agent and registered by the Company's
registrar, if necessary, and will conform, except as to
denominations, to specimens which we have examined.

We hereby consent to the use of this opinion as an
exhibit to the Registration Statement, to the use of our name
as your counsel, and to all references made to us in the
Registration Statement and in the Prospectus forming a part
thereof. In giving this consent, we do not hereby admit that
we are in the category of persons whose consent is required
under Section 7 of the Act, or the rules and regulations
promulgated thereunder.

Very truly yours,

GRAUBARD MOLLEN & MILLER

<PAGE>
Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the
Prospectus constituting part of this Registration Statement on
Form S-3 of our report dated March 7, 1996, appearing on page
10 of Automobile Protection Corporation - APCO's Annual Report
on Form 10-K for the year ended December 31, 1995. We also
consent to the reference to us under the heading "Experts" in
such Prospectus.

PRICE WATERHOUSE LLP
Atlanta, Georgia
May 8, 1996