SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999 Commission file number 0-23484
STANDARD FUNDING CORP.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
New York 11-2523559
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
335 Crossways Park Drive, Woodbury, New York 11797
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip code)
(516) 364-0200
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
----------
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 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 |_|
----------
Common Stock, $.001 par value, outstanding as of May 19, 1999: 2,760,000 shares
Transitional Small Business Disclosure Format: Yes |_| No |X|
<PAGE>
STANDARD FUNDING CORP.
- --------------------------------------------------------------------------------
Quarterly Report on Form 10-QSB
for the period ended March 31, 1999
TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
BALANCE SHEETS AT MARCH 31, 1999 AND
DECEMBER 31, 1998.............................................. 3
STATEMENTS OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND MARCH 31, 1998........................ 4
STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
ENDED MARCH 31, 1999 AND MARCH 31, 1998........................ 5
NOTES TO FINANCIAL STATEMENTS..................................... 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 8
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K.................................. 12
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
STANDARD FUNDING CORP.
BALANCE SHEETS
March 31, 1999 December 31, 1998
-------------- -----------------
(unaudited)
ASSETS:
Cash ........................................ $ 145,272 $ 223,031
------------ ------------
Installment loans receivable
under premium finance agreements ......... 48,708,353 47,887,880
Less: Unearned Interest ..................... (1,032,157) (1,072,689)
Allowance for possible credit losses .. (310,000) (310,000)
------------ ------------
Installment loans receivable
under premium finance agreements - net ... 47,366,196 46,505,191
Due from officers ........................... 148,867 146,049
Property and equipment - net ................ 217,705 228,102
Other assets ................................ 570,430 532,345
------------ ------------
Total .................................... $ 48,448,470 $ 47,634,718
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Notes payable to financial institutions ..... $ 30,300,000 $ 29,900,000
Commercial paper issued ..................... 2,030,024 3,408,424
Amounts due to insurance companies .......... 2,698,448 1,166,526
Accrued expenses and other .................. 379,919 311,000
Deferred income taxes payable ............... 343,600 267,076
------------ ------------
Total, exclusive of subordinated debt .... 35,751,991 35,053,026
Subordinated debt ........................... 5,053,000 5,053,000
------------ ------------
Total Liabilities ........................ 40,804,991 40,106,026
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.001 per share:
1,000,000 authorized, none issued ........ -- --
Common stock, par value $.001 per share:
4,000,000 authorized, 2,760,000 shares
issued and outstanding ................... 2,760 2,760
Additional paid-in capital .................. 3,991,501 3,991,501
Retained earnings ........................... 3,649,218 3,534,431
------------ ------------
Total Shareholders' Equity ............... 7,643,479 7,528,692
------------ ------------
Total ................................. $ 48,448,470 $ 47,634,718
============ ============
See notes to financial statements.
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<PAGE>
STANDARD FUNDING CORP.
STATEMENTS OF INCOME (UNAUDITED)
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
NET INTEREST INCOME:
Finance charge income and other .............. $1,738,180 $1,661,236
Less: Interest and other expenses on
borrowings ................................... 673,635 684,386
---------- ----------
Net Interest Income ...................... 1,064,545 976,850
---------- ----------
OTHER EXPENSES:
Operating expenses ........................... 613,802 507,141
Selling expenses ............................. 224,442 194,787
Provisions for possible credit losses
(Note 2) .................................... 34,990 86,507
---------- ----------
Total ..................................... 873,234 788,435
---------- ----------
INCOME BEFORE PROVISION FOR
INCOME TAXES ................................. 191,311 188,415
PROVISION FOR INCOME TAXES ...................... 76,524 75,366
---------- ----------
NET INCOME ...................................... $ 114,787 $ 113,049
========== ==========
NET INCOME PER SHARE (Note 1)
BASIC ..................................... $ .04 $ .04
========== ==========
DILUTED ................................... $ .04 $ .04
========== ==========
AVERAGE NUMBER OF
SHARES OUTSTANDING ............................ 2,760,000 2,760,000
========== ==========
See notes to financial statements.
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<PAGE>
STANDARD FUNDING CORP.
STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................... $ 114,7879 $ 113,049
Adjustments to reconcile net income to
net cash provided by operating
activities:
Provision for possible credit losses ..... 34,990 86,507
Deferred income taxes .................... 76,524 75,366
Depreciation and amortization ............ 46,339 30,347
Changes in assets and liabilities:
Due from officers and other assets ..... (40,903) (82,356)
Accrued expenses and other amounts
due to insurance companies ........... 1,600,841 1,509,936
Funds due-accounts receivable
participation program ................ -- --
------------ ------------
Net cash provided by operating
activities ........................... 1,832,578 1,732,849
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Installment loans receivable originated ...... (28,549,576) (28,367,739)
Collections of installment loans receivable .. 27,629,946 25,039,164
Purchase of equipment ........................ (12,307) (5,107)
------------ ------------
Net cash used in investing
activities ........................... (931,937) (3,333,682)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank notes - net ............... 400,000 1,475,000
Proceeds (Repayment) of commercial
paper issued - net.......................... (1,378,400) 47,788
Proceeds of subordinated debt ................ -- --
------------ ------------
Net cash provided by financing
activities ........................... (978,400) 1,522,788
------------ ------------
INCREASE (DECREASE) IN CASH .................... (77,759) (78,045)
CASH AT BEGINNING OF YEAR ...................... 223,031 203,014
------------ ------------
CASH AT END OF PERIOD .......................... $ 145,272 $ 124,969
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION:
Income taxes paid ........................... $ 21,423 $ --
============ ============
Interest paid ............................... $ 520,029 $ 501,297
============ ============
See notes to financial statements.
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<PAGE>
STANDARD FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS
For the three months ended March 31, 1999 and 1998 (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Business - Standard Funding Corp. (the "Company") is a financial service
Company engaged in the business of financing the payment of insurance
premiums. The Company finances substantially all forms of property,
casualty and liability premiums on policies, which are written through
independent insurance agents and brokers.
Interim Financial Statements - The financial statements for the three
month periods ended March 31, 1999 and 1998 are unaudited. In the opinion
of management, the accompanying unaudited financial statements contain all
the adjustments necessary for a fair presentation of the financial
condition and results of operations for the three month periods ended
March 31, 1999 and 1998. The interim financial results are not necessarily
indicative of the results to be expected for a full year.
Revenue Recognition - Unearned interest on installment loans receivable
under premium finance agreements is recognized as income using a method
which approximates the results which would be obtained using the interest
method.
The Company has entered into an agreement to transfer, on a non-recourse
basis, interests in its installment loans receivable under premium finance
agreements to financial institutions. The differential of stated interest
to be recorded over the course of the finance period and interest to be
paid to the financial institution is recognized as interest expense over
the course of the outstanding transfer. As of March 31, 1999 the Company
had no outstanding borrowings under these agreements.
Loan processing costs incurred are deferred and amortized on the
straight-line method over the term of the related installment loans
receivable under premium finance agreements. Cancellation fees and late
charges are recognized as income when received.
Allowance for Possible Credit Losses - The balance in the allowance for
possible credit losses are based on management's assessment of risk in the
installment loan portfolio. The Company writes off receivables upon
determination that no further collections are probable.
Property and Equipment - net - Property and equipment are stated at cost.
Depreciation is provided on the straight-line basis over such assets'
estimated useful service lives which range from three to five years.
Leasehold improvements are amortized over the shorter of their estimated
useful lives or the remaining term of the lease.
Revenue and Credit Concentration - The Company receives substantially all
of its revenues from financing arrangements made within New York, New
Jersey, Connecticut, Pennsylvania and Massachusetts. Accordingly, at March
31, 1999, substantially all of the Company's installment loans outstanding
were from this geographic region.
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<PAGE>
STANDARD FUNDING CORP.
NOTES TO FINANCIAL STATEMENTS - (Continued)
Income Taxes - The Company accounts for income taxes pursuant to Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS No. 109"). SFAS No. 109 requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that
have been included in the Company's financial statements or tax returns.
Under this method, deferred tax assets and liabilities are determined
based on the differences between the financial accounting and tax bases of
assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse.
Stock-based Compensation - The Company accounts for stock-based awards to
employees using the intrinsic value method in accordance with APB No. 25,
"Accounting for Stock Issued to Employees" ("APB 25").
Impairment of Long-Lived Assets - In accordance with Statement of
Financial Accounting Standards No. 121, "Accounting For the Impairment of
Long-Lived Assets and Four Long-Lived Assets To Be Disposed Of" ("SFAS No.
121"), the Company reviews its long-lived assets, including property and
equipment, and other assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be
fully be recoverable. To determine recoverability of its long-lived
assets, the Company evaluates the probability that future undiscounted net
cash flows, without interest charges, will be less than the carrying
amount of the assets. Impairment is measured at fair value. SFAS No. 121
had no effect on the Company's financial statement.
Earnings Per Share - The Company has adopted Financial Accounting
Standards No. 128 "Earnings per Share" ("SFAS No. 128") which requires
dual presentation of basic and diluted earnings per share on the face of
the income statement.
Basic earnings per share are based on the weighted average number of
shares of common stock outstanding during the period. Diluted earnings per
share are based on the weighted average number of shares of common stock
and common stock equivalents (options and warrants) outstanding during the
period, computed in accordance with the treasury stock method.
2. INSTALLMENT LOANS RECEIVABLE UNDER PREMIUM FINANCE AGREEMENTS
Substantially all installment loans receivable under premium finance
agreements are repayable in less than one year. In the event of default by
a borrower, the Company is entitled to cancel the underlying insurance
policy financed and receive a refund from the insurance carrier for the
premium in respect of the unused term of such policy.
The Company entered into financing agreements with two financial
institutions with an aggregate borrowing limit of $4,000,000 during 1997.
Under terms of these agreements, the Company remitted each financial
institution's share of the monthly installment loans receivable collected.
Interest was payable monthly based upon the average outstanding balance
under this agreement at a rate equal to LIBOR (at the time of purchase)
plus 200 or 225 basis points as stipulated in these agreements.
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<PAGE>
During 1997, the Company adopted the provision of Statement of Financial
Accounting Standards No. 125, "Accounting For Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities" ("SFAS No. 125").
Installment loans receivables under this agreement were classified as
securitized loan payable. As of March 31, 1999 the Company had no
outstanding borrowings under these agreements. The agreements with the
other financial institutions do not stipulate a termination date.
A summary of activity in the allowance for possible credit losses is as
follows:
Three Months
Ended Year Ended
March 31, 1999 December 31, 1998
-------------- -----------------
Balance, beginning of period ................ $ 310,000 $ 310,000
Provision ................................... 34,990 352,835
Charge-offs - net of recoveries of
$52,506 and $121,122, respectively .......... (34,990) (352,835)
--------- ---------
Balance, end of period ...................... $ 310,000 $ 310,000
========= =========
-8-
<PAGE>
STANDARD FUNDING CORP.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Comparison of Three Months Ended March 31, 1999 to Three Months Ended
March 31, 1998
Finance charge income increased by 4.6% to $1,738,180 in the first three
months of 1999 from $1,661,236 in the first three months of 1998 primarily
because of an increase in total installment loans financed during the respective
periods. Total installment loans financed increased .6% to $28,549,576 from
$28,367,739. The Company's average receivables for the period ended March 31,
1999 increased 6.9% to $47,836,585 from $44,732,819 for the period ended March
31, 1998. This increase in installment loans receivable is consistent with the
increase in financing activity. Interest expense for the period ended March 31,
1999 decreased 1.6% to $673,635 from $684,386 for the period ended March 31,
1998, a decrease of $10,751. Selling and operating expenses increased during the
period ended March 31, 1999 to $838,244 from $701,928 in the period ended March
31, 1998. This increase was primarily attributable to staff additions and
expenses. Due to the 4.6% increase in finance charge income, compared to a 1.6%
decrease in interest expense, there was a 9% increase in the "spread" to
$1,064,545 for the period ended March 31, 1999 from $976,850 for the period
ended March 31, 1998.
The provision for possible credit losses decreased to $34,990 for the
period ended March 31, 1999 from $86,507 for the period ended March 31, 1998.
This decrease of $51,517 is due primarily to the curtailment of financing
assigned risk automobile policies.
Merger
On January 28, 1999, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Atlantic Bank and Atlantic Premium,
pursuant to which Atlantic Premium will be merged with the Company. For each
share of the Company's common stock, provided it is 20% or less of the Company's
issued and outstanding common stock at the time of the Merger Agreement,
shareholders will receive $3.50 in cash. Shareholders owning more than 20% of
the outstanding common stock at the time of the Merger Agreement will receive
$2.97479 per share in cash and a note having a principal amount of $0.52521 per
share. After the transaction, which will be accounted for as a purchase, the
Company will be a subsidiary of Atlantic Bank. The merger is subject to
shareholder and regulatory approval. The Company expects to consummate the
merger during the second quarter of 1999, assuming all of the conditions to the
merger, as outlined in the Merger Agreement, are met or waived prior to that
date.
Liquidity and Capital Resources
The Company's operations are dependent upon the continued availability of
funds on satisfactory terms and rates. The Company uses such funds principally
to finance the origination of installment loans under premium finance
agreements. The Company obtains required funds from a variety of sources,
including internal generation of funds, unsecured borrowings under lines of
credit, direct issuance of commercial paper, placement of subordinated debt, the
transfer of accounts receivable participation program
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<PAGE>
and the sale of common equity.
As the Company increases the size of its business, it originates more
installment loans receivable than it collects, resulting in a larger outstanding
balance of installment loans receivable. For the three month periods ended March
31, 1999 and 1998, the Company originated installment loans receivable of
$28,549,576 and $28,367,739, respectively, compared to installment loans
collected for each period of $27,629,946 and $25,039,164, respectively. The
result was an increase in outstanding installment loan receivables to
$48,154,333 from $45,966,577 at March 31, 1999 and 1998, respectively.
The growth in the Company's loan portfolio has been the single largest
factor influencing the Company's cash flow from operations. The determining
factor influencing the growth in the loan portfolio has been the extent to which
the Company has been able to leverage its capital into subordinated debt and
then into short-term senior debt. For the three month periods ended March 31,
1999 and 1998, net cash provided by operating activities was $1,832,578 and
$1,732,849, respectively, which amounts were comprised primarily of net
earnings, loss provisions, depreciation and amortization and other changes in
assets and liabilities. For the three month periods ended March 31, 1999 and
1998, net cash provided by financing activities was $(978,400) and $1,522,788
respectively, comprised primarily of proceeds from bank notes and repayment of
bank notes, net proceeds from sales and repayments of commercial paper.
The following table sets forth the amounts of installment loans receivable
originated and the collections of installment loans receivable for the periods
indicated.
For the Three Month Period
Ended March 31,
--------------------------
1999 1998
---- ----
Installment loans originated.................... $28,549,576 $28,367,739
Installment loans collected..................... $27,629,946 $25,039,164
The Company has no present plans related to significant capital
expenditures but does intend to add marketing locations in order to increase its
volume of new business. The Company does not expect that such additional
marketing locations will require any significant capital expenditures. The
Company is not aware of any pending legislation that would have a material
effect on its capital requirements or business prospects.
The Company is subject to minimum capital requirements imposed by certain
of the states in which it is licensed. In addition, the Company is prohibited
from declaring or paying any dividends on its capital stock (other than
dividends payable solely in shares of Common Stock) pursuant to one of the
Company's subordinated debt arrangements which matures on December 27, 2000.
The sources of funds (other than internal generation of funds) which are
presently available or have been utilized by the Company are described below.
Management believes that the sources of funds presently available to the Company
are adequate for the conduct of its business at its present level. To the extent
that the Company in the future expands its business and increases its total
installment receivables outstanding beyond its present levels, funding may not
be available or, if available, may not be on terms acceptable to the Company.
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<PAGE>
Lines of Credit
At March 31, 1999, the Company had a revolving credit agreement with a
consortium of banks aggregating $45,000,000 under which $30,300,000 was
outstanding. Amounts outstanding under this agreement bear interest at prime or
1.15% over LIBOR. The Company pays commitment fees to the consortium in
connection with this agreement. The borrowing is unsecured and there are no
compensating balance agreements. This revolving credit agreement expires January
2001, although there can be no assurance that these lines will not be revoked,
suspended or reduced at any time. None of the banks in the consortium is
contractually obliged to renew any such line. During the period ending March 31,
1999 and 1998, the maximum aggregate amount outstanding under these lines at any
time was $30,800,000 and $27,975,000, respectively.
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<PAGE>
Commercial Paper
The Company directly issues its own commercial paper with maturities of up
to 270 days, which is unsecured and is unrated by commercial paper rating
agencies. Commercial paper outstanding at March 31, 1999 bore interest at fixed
annual rates ranging from 5.18% to 6.53%. During the three month periods ended
March 31, 1999 and 1998, the maximum outstanding commercial paper at any month
end was $2,409,456 and $2,486,339, respectively. Such commercial paper is
generally sold to officers of the Company and their affiliates and to
non-affiliated investors. The Company has obtained no commitments from any
purchaser of its commercial paper regarding additional or future purchases. It
is the Company's policy to maintain unused short-term bank lines of credit in an
amount in excess of the amount of commercial paper outstanding. The interest
rate on the Company's commercial paper has been and will continue to be
determined by reference to prevailing interest rates in the commercial paper
market. The Company does not anticipate any change in the level of financing
provided by affiliates of the Company or any changes in the costs of financing
provided by such affiliates. There can be no assurance, however, that such
levels of financing will be maintained in the future.
Subordinated Debt
The Company has obtained unsecured senior subordinated debt in the amount
of $4,150,000 and unsecured junior subordinated debt of $903,000 from outside
investors. The notes bear interest at fixed rates from 10% to 14.25% and are due
from June 27, 1999 to December 31, 2003. The notes restrict the Company's
ability, among other things, to merge, pay dividends and permit its business to
be heavily concentrated with a single broker or agency. Several of the
underlying agreements also contain various covenants requiring the Company to
meet certain financial ratios and other restrictions on acquisitions and
investments. The Company may, at its option, prepay the loans in whole or in
part. However, with respect to several of the notes, the Company must reimburse
the investors for any loss of margin on reemployment of the funds so repaid. The
Company does not currently anticipate prepaying or otherwise refinancing its
existing senior subordinated debt prior to its maturity. In addition, the
Company has obtained unsecured junior subordinated debt from various investors.
The interest rates are fixed and vary in term. The following table indicates
amounts, rates and maturity dates as at March 31, 1999.
Rate Due Date Amount
---- -------- ------
14.25% 06/30/2001 $ 810,000
14.00% 11/01/2000 500,000
14.00% 06/27/1999 400,000
14.00% 12/27/1999 400,000
14.00% 06/27/2000 400,000
14.00% 12/27/2000 1,000,000
12.50% 03/31/2001 510,000
12.00% 02/16/2001 50,000
11.25% 09/30/2001 43,000
10.95% 12/31/2003 850,000
10.00% 03/31/2002 90,000
----------
$5,053,000
==========
Subordinated debt is generally sold to officers and directors of the
Company and their affiliates and to non-affiliated investors. The Company has
obtained no commitments from any holder of its subordinated debt regarding
additional or future purchases.
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<PAGE>
Other Sources
In addition to the sources of funds described above, pursuant to certain
financing agreements the Company has transferred to banks participating
interests in certain receivables. The interests in these receivables have been
transferred on a pari passu basis without any recourse to the Company. As of
March 31, 1999 there was a zero balance with these institutions.
The Company continually engages in discussions with both current and
prospective lenders regarding obtaining increases in, extensions of or additions
to, both its short-term lines of credit, its subordinated borrowings and its
participation program. The Company is currently engaged in such discussions with
several lenders, but can give no assurance as to whether or when such
discussions will be favorably consummated.
Year 2000 Matters
The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary liability to process transactions, invoices, or engage
in similar normal business activities.
In 1997, the Company initiated a conversion from its then existing
accounting software to programs that are year 2000 compliant. Management has
determined that the year 2000 issue will not pose significant operational
problems for its computer systems. The Company will utilize both internal and
external resources to reprogram, or replace, and test all of its operating
software for Year 2000 modifications. The Company has retained a consulting firm
to assist it in the conversion of its operating systems. The Company anticipates
completing the Year 2000 project during the second quarter of 1999, which is
prior to any anticipated impact on the operating systems. The total cost of the
Year 2000 project is estimated at $25,000, of which $9,000 has been spent to
date and is being funded through operating cash flow. The total project cost is
attributable to the reengineering of current software and such costs will be
expensed as incurred.
The costs of the project and the date on which the Company believes it
will complete the Year 2000 modifications are based on management's best
estimates, which are derived utilizing numerous assumptions of future events,
including the continued availability of certain resources, third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved, and actual results could differ materially
from those anticipated. Specific factors that might cause such material delays
or difficulties in implementing the project include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
In the merger agreement with Atlantic Bank, the Company has ensured that
any software products or services owned, provided or otherwise developed by the
Company, or used in the conduct of its business as presently conducted and as it
is expected to be conducted after the date of the merger agreement, will, on the
effective date of the merger, provide, among other things, the following
functionality: (i) accurate processing of date-related information before,
during and after January 1, 2000, including accepting the date input, providing
the date output, and performing calculations on dates or portions of dates; (ii)
accurate functioning without interruption before, during and after January 1,
2000, without any change in operation associated with the advent of the new
century; (iii) ability to respond to two-digit input in a way that resolves any
ambiguity as to century in a disclosed, defined and predetermined manner; and
(iv) the ability to store and provide output date information in ways that are
unambiguous as to the century.
The Company has initiated formal communications with all of its
significant suppliers and large customers to determine the extent to which the
Company's interface systems are vulnerable to those third parties' failure to
remediate their own Year 2000 issues. There can be no guarantee that the systems
of
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<PAGE>
other companies on which the Company's system rely will be timely converted or
that the failure to make such a conversion will not have an adverse effect on
the Company's systems.
However, there can be no guarantee that other companies upon which the
Company relies will be able to timely address the Year 2000 compliance issues,
the effects of which may have an adverse impact on the Company's results of
operations. At this stage of the process, the Company believes that it is
difficult to specifically identify the cause of the most reasonable worst case
Year 2000 scenario.
A worst case Year 2000 scenario would be the failure of key vendors to
have corrected the own Year 2000 issues which could cause disruption of the
Company's operations and have a material adverse effect on the Company's
financial conditions. The impact of such disruption cannot be estimated at this
time. In the event the Company believes that any of its key vendors are unlikely
to be able to resolve their Year 2000 issues, it will seek alternative sources.
Inflation
The moderate rate of U.S. inflation during the past two years has not
significantly affected the Company.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K
None.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
STANDARD FUNDING CORP.
Date: May 19, 1999 /s/ Alan J. Karp
--------------------------------------
Alan J. Karp
President and Chief Executive Officer
Date: May 19, 1999 /s/ David E. Fisher
--------------------------------------
David E. Fisher
Treasurer and Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from March 31,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 145,272
<SECURITIES> 0
<RECEIVABLES> 47,366,196
<ALLOWANCES> 310,000
<INVENTORY> 0
<CURRENT-ASSETS> 48,230,765
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0
0
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</TABLE>
