(x)
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR
THE FISCAL YEAR ENDED DECEMBER 31,
2008
|
( )
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR
THE TRANSITION PERIOD FROM TO
|
Delaware
|
36-2476480
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification
No.)
|
1158 Broadway, Hewlett, New
York
|
11557
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(516) 374-7600
|
(Registrant’s
telephone number, including area
code)
|
Title of each class
|
Name of
each exchange on which registered
|
Common
Stock
|
NASDAQ
|
Large
accelerated filer __
|
Accelerated
filer __
|
Non-accelerated
__ (Do not check if a smaller reporting company)
|
Smaller
reporting company X
|
Page No.
|
||
Forward-Looking
Statements
|
1
|
|
PART
I
|
||
Item
1.
|
Business.
|
2
|
Item
1A.
|
Risk
Factors.
|
9
|
Item
1B.
|
Unresolved
Staff Comments.
|
9
|
Item
2.
|
Properties.
|
10
|
Item
3.
|
Legal
Proceedings.
|
10
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
10
|
PART
II
|
||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
11
|
Item
6.
|
Selected
Financial Data.
|
12
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
12
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
27
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
27
|
Item
9.
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
27
|
Item
9A.
|
Controls
and Procedures.
|
27
|
Item
9B.
|
Other
Information.
|
29
|
PART
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance.
|
30
|
Item
11.
|
Executive
Compensation.
|
33
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
35
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
37
|
Item
14.
|
Principal
Accountant Fees and Services.
|
40
|
PART
IV
|
||
Item
15.
|
Exhibits
and Financial Statement Schedules.
|
41
|
Signatures
|
|
Recent
Developments
|
|
The
following developments have occurred since January 1,
2009:
|
·
|
On
March 30, 2009, an asset purchase agreement (the “Purchase Agreement”) was
fully executed pursuant to which our wholly-owned subsidiaries, Barry
Scott Agency, Inc. and DCAP Accurate, Inc., agreed to sell substantially
all of their assets, including the book of business, of the 16 Retail
Business locations that we own in New York State (the “Assets”). The
closing of the sale of the Assets is subject to a number of conditions.
The purchase price for the Assets is approximately $2,337,000, of which
approximately $1,786,000 is to be paid to us at closing, and the remainder
of the purchase price is to be satisfied by the delivery of promissory
notes in the aggregate principal amount of $551,000. As additional
consideration, we will be entitled to receive through September 2010 an
amount equal to 60% of the net commissions derived from the book of
business of six New York retail locations that were closed during
2008.
|
·
|
On
February 1, 2008, our wholly-owned subsidiary, Payments Inc., sold its
outstanding premium finance loan portfolio. The purchase price for the net
loan portfolio was approximately $11,845,000, of which approximately
$268,000 was paid to Payments Inc. The remainder of the
purchase price was satisfied by the assumption of liabilities, including
the satisfaction of Payments Inc.’s premium finance revolving credit line
obligation to Manufacturers and Traders Trust Company (“M&T”). As
additional consideration, Payments Inc. received an amount based upon the
net earnings generated by the loan portfolio as it was collected. The
purchaser of the portfolio also agreed that, during the five year period
ending January 31, 2013 (subject to automatic renewal for successive two
year terms under certain circumstances), it will purchase, assume and
service all eligible premium finance contracts originated by Payments Inc.
in the states of New York and Pennsylvania. In connection with
such purchases, Payments Inc. will be entitled to receive a fee generally
equal to a percentage of the amount
financed.
|
·
|
In
April 2008, the holder of our Series B preferred shares exchanged such
shares for an equal number of Series C preferred shares. The
Series C preferred shares provided for dividends at the rate of 10% per
annum (as compared to 5% per annum for the Series B preferred shares) and
an outside mandatory redemption date of April 30, 2009 (as compared to
April 30, 2008 for the Series B preferred shares). Effective
August 23, 2008, the outside mandatory redemption date for the preferred
shares was further extended to July 31, 2009 through the issuance of
Series D preferred shares in exchange for the Series C preferred shares.
The outside mandatory redemption date was previously extended in March
2007 from April 30, 2007 to April 30, 2008. See Item 13 of this
Annual Report.
|
·
|
In
August 2008, the holders of $1,500,000 outstanding principal amount of
notes payable (the “Notes Payable”) agreed to extend the maturity date of
the debt from September 30, 2008 to the earlier of July 10, 2009 or 90
days following the conversion of Commercial Mutual to a stock property and
casualty insurance company and the issuance to us of a controlling
interest in Commercial Mutual (subject to acceleration under certain
circumstances). In exchange for this extension, the holders are
entitled to receive an aggregate incentive payment equal to $10,000 times
the number of months (or partial months) the debt is outstanding after
September 30, 2008 through the maturity date. If a prepayment of principal
reduces the debt below $1,500,000, the incentive payment for all
subsequent months will be reduced in proportion to any such reduction to
the debt. The aggregate incentive payment is due upon full repayment of
the debt. The maturity date of the Notes Payable was previously
extended during 2007 from September 30, 2007 to September 30,
2008. See Items 1(b), 7 and 13 of this Annual
Report.
|
·
|
On
October 23, 2008, Michael R. Feinsod became a member of the board of
directors.
|
·
|
On
December 5, 2008, Morton L. Certilman retired from the board of
directors.
|
·
|
In
December 2008, we entered into a plan to restructure our Retail Business.
The plan of restructuring called for the closing of seven of our least
profitable locations during December 2008 and the sale of the remaining 19
Retail Business locations. See Item 1(b) of this Annual
Report.
|
·
|
In
March 2007, Commercial Mutual Insurance Company’s Board of Directors
adopted a resolution to convert Commercial Mutual from an advance premium
insurance company to a stock property and casualty insurance
company. We hold surplus notes of Commercial Mutual in the
aggregate principal amount of $3,750,000. We purchased such
surplus notes in January 2006. Based upon the amount payable on
the surplus notes and the statutory surplus of Commercial Mutual, the plan
of conversion provides that, in the event of a conversion by Commercial
Mutual into a stock corporation, in exchange for our relinquishing our
rights to any unpaid principal and interest under the surplus notes, we
would receive 100% of the stock of Commercial Mutual. See Items
1(b), 7 and 13 of this Annual
Report.
|
(b)
|
Business
|
·
|
marketing,
sales and underwriting
|
·
|
office
and logistics
|
·
|
computer
information
|
·
|
assistance
with regard to the hiring of
employees
|
·
|
assistance
with regard to the writing of local
advertising
|
·
|
advice
regarding potential carriers for certain
customers
|
·
|
regulating
the interest rates, fees and service charges we may charge our
customers
|
·
|
imposing
minimum capital requirements for our premium finance subsidiary or
requiring surety bonds in addition to or as an alternative to such capital
requirements
|
·
|
governing
the form and content of our financing
agreements
|
·
|
prescribing
minimum notice and cure periods before we may cancel a customer’s policy
for non-payment under the terms of the financing
agreement
|
·
|
prescribing
timing and notice procedures for collecting unearned premium from the
insurance company, applying the unearned premium to our customer’s premium
finance account, and, if applicable, returning any refund due to our
customer
|
·
|
requiring
our premium finance company to qualify for and obtain a license and to
renew the license each year
|
·
|
conducting
periodic financial and market conduct examinations and investigations of
our premium finance company and its
operations
|
·
|
requiring
prior notice to the regulating agency of any change of control of our
premium finance company
|
Number of Shares
|
||
For
|
Withheld
|
|
Barry
B. Goldstein
|
2,519,847
|
160,443
|
Morton
L. Certilman
|
1,097,249
|
939,126
|
Michael
R. Feinsod
|
2,520,079
|
160,221
|
Jay
M. Haft
|
1,351,726
|
939,126
|
David
A. Lyons
|
2,520,039
|
160,251
|
Jack
D. Seibald
|
2,520,089
|
160,211
|
For
|
2,074,823
|
Against
|
6,137
|
Abstentions
|
167,470
|
Broker
Non-Votes
|
0
|
ITEM
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY
SECURITIES.
|
High
|
Low
|
|
2008
Calendar Year
|
||
First
Quarter
|
$1.75
|
$1.21
|
Second
Quarter
|
1.67
|
.95
|
Third
Quarter
|
1.20
|
.80
|
Fourth
Quarter
|
.80
|
.25
|
High
|
Low
|
|
2007
Calendar Year
|
||
First
Quarter
|
$3.05
|
$2.33
|
Second
Quarter
|
2.70
|
2.18
|
Third
Quarter
|
2.75
|
1.95
|
Fourth
Quarter
|
2.39
|
1.15
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
December
31,
|
||||||||||||||||
Change
|
||||||||||||||||
2008
|
2007
|
$
|
% | |||||||||||||
Commissions
and fee revenue
|
$ | 911 | $ | 649 | $ | 262 | 40 | % | ||||||||
General
and administrtaive expenses
|
1,860 | 2,275 | (415 | ) | (18 | ) % | ||||||||||
Interest
expense
|
271 | 432 | (161 | ) | (37 | ) % | ||||||||||
Interest
income - notes receivable
|
765 | 1,288 | (523 | ) | (41 | ) % | ||||||||||
(Loss)
from continuing operations before taxes
|
(587 | ) | (885 | ) | 298 | 34 | % | |||||||||
(Benefit
from) income taxes
|
(391 | ) | (419 | ) | 28 | 7 | % | |||||||||
(Loss)
from continuing operations
|
(196 | ) | (465 | ) | 269 | 58 | % |
Years
ended
|
||||||||||||||||
December
31,
|
||||||||||||||||
Change
|
||||||||||||||||
2008*
|
2007
|
$
|
% | |||||||||||||
Premium
finance revenue
|
$ | 225 | $ | 3,167 | $ | (2,942 | ) | (93 | ) % | |||||||
Operating
Expenses:
|
||||||||||||||||
General
and administrative expenses
|
182 | 1,432 | (1,250 | ) | (87 | ) % | ||||||||||
Provision
for finance receivable losses
|
89 | 472 | (383 | ) | (81 | ) % | ||||||||||
Depreciation
and amortization
|
47 | 100 | (53 | ) | (53 | ) % | ||||||||||
Interest
expense
|
45 | 646 | (601 | ) | (93 | ) % | ||||||||||
Total
operating expenses
|
363 | 2,650 | (2,287 | ) | (86 | ) % | ||||||||||
(Loss)
income from operations
|
(138 | ) | 517 | (655 | ) | (127 | ) % | |||||||||
Loss
on sale of premium financing portfolio
|
(102 | ) | - | (102 | ) | - | % | |||||||||
(Loss)
income before provision for income taxes
|
(240 | ) | 517 | (757 | ) | (146 | ) % | |||||||||
Provision
for income taxes
|
69 | 246 | (177 | ) | (72 | ) % | ||||||||||
(Loss)
income from discontinued operations
|
$ | (309 | ) | $ | 271 | $ | (580 | ) | (214 | ) % |
Years
ended
|
||||||||||||||||
December
31,
|
||||||||||||||||
Change
|
||||||||||||||||
2008
|
2007
|
$
|
% | |||||||||||||
Commissions
and fee revenue
|
$ | 4,042 | $ | 5,096 | $ | (1,054 | ) | (21 | ) % | |||||||
Operating
Expenses:
|
||||||||||||||||
General
and administrative expenses
|
3,895 | 4,479 | (584 | ) | (13 | ) % | ||||||||||
Depreciation
and amortization
|
212 | 204 | 8 | 4 | % | |||||||||||
Interest
expense
|
41 | 44 | (3 | ) | (7 | ) % | ||||||||||
Impairment
of goodwill and intangibles
|
394 | 95 | 299 | 315 | % | |||||||||||
Total
operating expenses
|
4,542 | 4,822 | (280 | ) | (6 | ) % | ||||||||||
(Loss)
income from operations
|
(500 | ) | 274 | (774 | ) | (282 | ) % | |||||||||
Gain
on sale of book of business
|
- | 66 | (66 | ) | (100 | ) % | ||||||||||
(Loss)
income before provision for income taxes
|
(500 | ) | 340 | (840 | ) | (247 | ) % | |||||||||
(Benefit
from) provision for income taxes
|
(28 | ) | 193 | (221 | ) | (115 | ) % | |||||||||
(Loss)
income from discontinued operations
|
$ | (472 | ) | $ | 147 | $ | (619 | ) | (421 | ) % | ||||||
Years
ended
|
||||||||||||||||
December
31,
|
||||||||||||||||
Change
|
||||||||||||||||
2008
|
2007
|
$
|
% | |||||||||||||
Loss
from continuing operations
|
$ | (196 | ) | $ | (465 | ) | $ | 269 | 58 | % | ||||||
(Loss)
income from discontinued operations, net of taxes
|
(781 | ) | 418 | (1,199 | ) | (287 | ) % | |||||||||
Net
loss
|
$ | (977 | ) | $ | (47 | ) | $ | (930 | ) | 1,979 | % |
·
|
Net
cash used in operating activities during 2008 was $753,000 due primarily
to the net loss of $977,000. Non-cash items totaling $820,000
increased the net cash used in operating activities to
$1,797,000. These non-cash items included depreciation and
amortization, bad debt expense, accretion of discount on notes receivable,
amortization of warrants, stock-based payments, and deferred income taxes.
The use of cash was offset by: (i) the receipt of a $368,000
Federal tax refund claim resulting from the carry-back of our 2007 net
operating loss, (ii) an increase in accounts payable and accrued expenses
of $252,000, and (iii) cash provided by the operating activities of our
discontinued operations of
$498,000.
|
·
|
Net
cash provided by investing activities during 2008 was $1,034,000 primarily
due to the $1,008,000 cash flow from finance contracts receivable included
in discontinued operations.
|
·
|
Net
cash used in financing activities during 2008 was $1,169,000 due to: (i) a
$562,000 decrease in our revolving credit line utilized in our
discontinued operations prior to the sale of our premium finance portfolio
on February 1, 2008, and (ii) principal payments on long-term debt and
lease obligations of $607,000.
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
|
·
|
We
did not maintain effective design of controls over access to financial
reporting applications and data. Controls did not limit access to programs
and data to only authorized users. In addition, controls lack the
requirement of periodic reviews and monitoring of such
access.
|
·
|
We
did not maintain effective controls to communicate policies and procedures
governing information technology security and access. Furthermore, we did
not maintain effective logging and monitoring of servers and databases to
ensure that access was both appropriate and
authorized.
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE.
|
Name
|
Age
|
Positions and Offices
Held
|
Barry
B. Goldstein
|
56
|
President,
Chairman of the Board, Chief Executive Officer, Treasurer and
Director
|
Michael
R. Feinsod
|
38
|
Director
|
Jay
M. Haft
|
73
|
Director
|
David
A. Lyons
|
59
|
Director
|
Jack
D. Seibald
|
48
|
Director
|
Name
and
Principal Position
|
Year
|
Salary
|
Option
Awards
|
All
Other
Compensation
|
Total
|
|
Country
Club Dues
|
Other
|
|||||
Barry
B. Goldstein
Chief
Executive Officer
|
2008
|
$275,000
|
-
|
-
|
$15,770
|
$290,770
|
2007
|
$350,000
|
$148,070
|
$21,085
|
$15,770
|
$534,925
|
|
|
||||||
Curt
Hapward (1)
President,
DCAP Management Corp.
|
2008
|
$115,107
|
-
|
-
|
$6,000
|
$121,107
|
2007
|
$82,374
|
$84,122
|
-
|
$4,430
|
$170,926
|
Option
Awards
|
|||||||||||||
Name
|
Number
of Securities Underlying
Unexercised Options
|
Number
of Securities Underlying
Unexercised Options
|
Option
Exercise
Price
|
Option
Expiration Date
|
|||||||||
Exercisable
|
Unexercisable
|
||||||||||||
Barry
B. Goldstein
|
65,000 | 65,000 | (1) | $ | 2.06 |
10/16/12
|
|||||||
Curt
Hapward
|
- | - | - |
-
|
Name
|
Fees
Earned or
Paid in Cash
|
Stock Awards
|
Option Awards
|
Total
|
Morton
L. Certilman(1)
|
$4,271
|
$10,125
|
-
|
$14,396
|
|
||||
Michael
R. Feinsod
|
$2,822
|
-
|
-
|
$2,822
|
Jay
M. Haft
|
$4,475
|
$7,500
|
-
|
$11,975
|
David
A. Lyons
|
$5,725
|
$10,125
|
-(2)
|
$15,850
|
Jack
D. Seibald
|
$6,225
|
$12,750
|
-
|
$18,975
|
(1)
|
Mr.
Certilman retired as a director effective December 5,
2008.
|
(2)
|
As
of December 31, 2008, Mr. Lyons held options for the purchase of 20,000
common shares.
|
·
|
$8,333
per annum (1)
|
·
|
additional
$3,500 per annum for committee chair (1)
|
·
|
$350
per Board meeting attended ($175 if telephonic)
|
·
|
$200
per committee meeting attended ($100 if
telephonic)
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER
MATTERS.
|
Name
and Address
of Beneficial Owner
|
Number
of Shares
Beneficially Owned
|
Approximate
Percent of Class
|
Barry
B. Goldstein
1158
Broadway
Hewlett,
New York
|
763,078
(1)(2)
|
25.1
%
|
Michael
R. Feinsod
Infinity
Capital Partners, L.P.
767
Third Avenue, 16th Floor
New
York, New York
|
487,495
(1)(3)
|
16.4%
|
AIA
Acquisition Corp
6787
Market Street
Upper
Darby, Pennsylvania
|
361,600
(4)
|
11.0%
|
Jack
D. Seibald
1336
Boxwood Drive West
Hewlett
Harbor, New York
|
238,065
(1)(5)
|
8.0%
|
Morton
L. Certilman
90
Merrick Avenue
East
Meadow, New York
|
179,829
(1)
|
6.0%
|
Jay
M. Haft
69
Beaver Dam Road
Salisbury,
Connecticut
|
165,797
(1)(6)
|
5.6%
|
David
A. Lyons
252
Brookdale Road
Stamford,
Connecticut
|
29,581
(7)
|
1.0%
|
All
executive officers
and
directors as a group
(5
persons)
|
1,684,016
(1)(2)(3)(5)(6)(7)
|
55.1%
|
(1)
|
Based
upon Schedule 13D filed under the Securities Exchange Act of 1934, as
amended, and other information that is publicly
available.
|
(2)
|
Includes
(i) 8,500 shares held by Mr. Goldstein’s children, (ii) 11,900 shares held
in a retirement trust for the benefit of Mr. Goldstein and (iii) 65,000
shares issuable upon the exercise of options that are
currently exercisable. Excludes shares beneficially owned by
AIA Acquisition Corp. (“AIA ”) of which members of Mr. Goldstein’s family
are principal stockholders. Mr. Goldstein disclaims beneficial
ownership of the shares held by his children and retirement trust and the
shares owned by AIA.
|
(3)
|
Shares
are owned by Infinity Capital Partners, L.P. (“Partners”). Each of (i)
Infinity Capital, LLC (“Capital”), as the general partner of Partners,
(ii) Infinity Management, LLC (“Management”), as the Investment Manager of
Partners, and (iii) Michael Feinsod, as the Managing Member of Capital and
Management, the General Partner and Investment Manager, respectively, of
Partners, may be deemed to be the beneficial owners of the shares held by
Partners. Pursuant to the Schedule 13D filed under the Securities Exchange
Act of 1934, as amended, by Partners, Capital, Management and Mr. Feinsod,
each has sole voting and dispositive power over the
shares.
|
(4)
|
Based
upon Schedule 13G filed under the Securities Exchange Act of 1934, as
amended, and other information that is publicly available. Includes
312,000 shares issuable upon the conversion of preferred shares that are
currently convertible.
|
(5)
|
Includes
(i) 113,000 shares owned jointly by Mr. Seibald and his wife, Stephanie
Seibald; (ii) 100,000 shares owned by SDS Partners I, Ltd., a limited
partnership (“SDS”); (iii) 3,000 shares owned by Boxwood FLTD Partners, a
limited partnership (“Boxwood”); (iv) 3,000 shares owned by Stewart
Spector IRA (“S. Spector”); (v) 3,000 shares owned by Barbara Spector
IRA Rollover (“B. Spector”); and (vi) 4,000 shares owned by Karen
Dubrowsky IRA (“Dubrowsky”). Mr.
Seibald has voting and dispositive power over the shares
owned by SDS, Boxwood, S. Spector, B. Spector and
Dubrowsky.
|
(6)
|
Includes
3,076 shares held in a retirement trust for the benefit of Mr.
Haft.
|
(7)
|
Includes
20,000 shares issuable upon the exercise of currently exercisable
options.
|
·
|
All
compensation plans previously approved by security holders;
and
|
·
|
All
compensation plans not previously approved by security
holders.
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
(a)
|
Weighted
average exercise price of outstanding options, warrants and
rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|
Equity
compensation plans approved by security holders
|
177,400
|
$2.40
|
367,724
|
Equity
compensation plans not approved by security holders
|
-0-
|
-0-
|
-0-
|
Total
|
177,400
|
$2.40
|
367,724
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE.
|
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND
SERVICES.
|
Fee
Category
|
Fiscal
2008 Fees
|
Fiscal
2007 Fees
|
||||||
Audit
Fees(1)
|
$ | 110,000 | $ | 116,000 | ||||
Audit-Related
Fees(2)
|
- | - | ||||||
Tax
Fees(3)
|
47,600 | 28,000 | ||||||
All
Other Fees(4)
|
8,910 | 8,419 | ||||||
Total
Fees
|
$ | 166,510 | $ | 152,419 |
(1)
|
Audit
Fees consist
of aggregate fees billed
for professional services rendered for the audit of
our annual financial statements and review of the interim financial
statements included in quarterly reports or services that
are normally provided by
the independent auditors
in connection with statutory and
regulatory filings or engagements for the fiscal years ended
December 31, 2008 and December 31, 2007,
respectively.
|
(2)
|
Audit-Related
Fees consist of aggregate fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of
our financial statements and are not reported under “Audit
Fees.”
|
(3)
|
Tax
Fees consist of aggregate fees billed for preparation of our federal and
state income tax returns and other tax compliance
activities.
|
(4)
|
All
Other Fees consist of aggregate fees billed for products and services
provided by Holtz Rubenstein Reminick LLP, other than those disclosed
above. These fees related to the review of the Uniform Franchise Offering
Circular of our wholly-owned subsidiary, DCAP Management Corp., and other
general accounting services.
|
Exhibit
Number
|
Description of Exhibit
|
2(a)
|
Amended
and Restated Purchase and Sale Agreement, dated as of February 1, 2008, by
and among Premium Financing Specialists, Inc., Payments Inc. and DCAP
Group, Inc. (1)
|
2(b)
|
Asset
Purchase Agreement, dated as of March 27, 2009, by and among NII BSA LLC,
Barry Scott Agency, Inc., DCAP Accurate, Inc. and DCAP Group,
Inc.
|
3(a)
|
Restated
Certificate of Incorporation (2)
|
3(b)
|
Certificate
of Designations of Series A Preferred Stock (3)
|
3(c)
|
Certificate
of Designations of Series B Preferred Stock (4)
|
3(d)
|
Certificate
of Designations of Series C Preferred Stock (5)
|
3(e)
|
Certificate
of Designations of Series D Preferred Stock (6)
|
3(f)
|
By-laws,
as amended (7)
|
10(a)
|
1998
Stock Option Plan, as amended (8)
|
10(b)
|
Unit
Purchase Agreement, dated as of July 2, 2003, by and among DCAP Group,
Inc. and the purchasers named therein (9)
|
10(c)
|
Form
of Secured Subordinated Promissory Note, dated July 10, 2003, issued by
DCAP Group, Inc. with respect to indebtedness in the original aggregate
principal amount of $3,500,000 (9)
|
10(d)
|
Letter
agreement, dated May 25, 2005, between DCAP Group, Inc. and Jack Seibald
as representative and attorney-in-fact with respect to the outstanding
debt (6)
|
10(e)
|
Letter
agreement, dated March 23, 2007, between DCAP Group, Inc. and Jack Seibald
as representative and attorney-in-fact with respect to the outstanding
debt (6)
|
10(f)
|
Letter
agreement, dated September 30, 2007, between DCAP Group, Inc. and Jack
Seibald as representative and attorney-in-fact with respect to the
outstanding debt (10)
|
10(g)
|
Letter
agreement, dated August 13, 2008, between DCAP Group, Inc. and Jack
Seibald as representative and attorney-in-fact with respect to the
outstanding debt (6)
|
10(h)
|
Registration
Rights Agreement, dated July 10, 2003, by and among DCAP Group, Inc. and
the purchasers named therein (9)
|
10(i)
|
2005
Equity Participation Plan (11)
|
10(j)
|
Surplus
Note, dated April 1, 1998, in the principal amount of $3,000,000 issued by
Commercial Mutual Insurance Company to DCAP Group, Inc.
(11)
|
10(k)
|
Surplus
Note, dated March 12, 1999, in the principal amount of $750,000 issued by
Commercial Mutual Insurance Company to DCAP Group, Inc.
(11)
|
10(l)
|
Employment
Agreement, dated as of October 16, 2007, between DCAP Group, Inc.
and Barry B. Goldstein (12)
|
10(m)
|
Amendment
No. 1, dated as of August 25, 2008, to Employment Agreement between DCAP
Group, Inc. and Barry B. Goldstein (6)
|
10(n)
|
Stock
Option Agreement, dated as of October 16, 2007, between DCAP Group, Inc.
and Barry B. Goldstein (12)
|
14
|
Code
of Ethics (13)
|
21
|
Subsidiaries
|
23
|
Consent
of Holtz Rubenstein Reminick LLP
|
31(a)
|
Rule
13a-14(a)/15d-14(a) Certification of Principal Executive Officer as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31(b)
|
Rule
13a-14(a)/15d-14(a) Certification of Principal Financial Officer as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
(1)
|
Denotes
document filed as an exhibit to our Current Report on Form 8-K for an
event dated February 1, 2008 and incorporated herein by
reference.
|
(2)
|
Denotes
document filed as an exhibit to our Quarterly Report on Form 10-QSB for
the period ended September 30, 2004 and incorporated herein by
reference.
|
(3)
|
Denotes
document filed as an exhibit to our Current Report on Form 8-K for an
event dated May 28, 2003 and incorporated herein by
reference.
|
(4)
|
Denotes
document filed as an exhibit to our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2006 and incorporated herein by
reference.
|
(5)
|
Denotes
document filed as an exhibit to our Quarterly Report on Form 10-QSB for
the period ended March 31, 2008 and incorporated herein by
reference.
|
(6)
|
Denotes
document filed as an exhibit to our Quarterly Report on Form 10-Q for the
period ended September 30, 2008 and incorporated herein by
reference.
|
(7)
|
Denotes
document filed as an exhibit to our Current Report on Form 8-K for an
event dated December 26, 2007 and incorporated herein by
reference.
|
(8)
|
Denotes
document filed as an exhibit to our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2002 and incorporated herein by
reference.
|
(9)
|
Denotes
document filed as an exhibit to Amendment No. 1 to our Current Report on
Form 8-K for an event dated May 28, 2003 and incorporated herein by
reference.
|
(10)
|
Denotes
document filed as an exhibit to our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2007 and incorporated herein by
reference.
|
(11)
|
Denotes
document filed as an exhibit to our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2005 and incorporated herein by
reference.
|
(12)
|
Denotes
document filed as an exhibit to our Current Report on Form 8-K for an
event dated October 16, 2007 and incorporated herein by
reference.
|
(13)
|
Denotes
document filed as an exhibit to our Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2003 and incorporated herein by
reference.
|
Consolidated
Financial Statements
|
|
|
|
Report of Independent Registered Public Accounting Firm |
F-2
|
Consolidated Balance Sheets |
F-3
|
Consolidated Statements of Operations |
F-4
|
Consolidated Statement of Stockholders' Equity |
F-5
|
Consolidated Statements of Cash Flows |
F-6 - F-7
|
Notes to Consolidated Financial Statements |
F-8 -
F-29
|
DCAP
GROUP, INC. AND
|
||||||||
SUBSIDIARIES
|
||||||||
Consolidated
Balance Sheets
|
||||||||
December
31,
|
2008
|
2007
|
||||||
Assets
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 142,949 | $ | 1,030,822 | ||||
Accounts
receivable, net of allowance for doubtful accounts of
|
||||||||
$40,000
at December 31, 2008 and $50,000 at December 31, 2007
|
201,787 | 215,179 | ||||||
Prepaid
expenses and other current assets
|
130,457 | 290,885 | ||||||
Assets
from discontinued operations
|
2,913,147 | 16,352,308 | ||||||
Total
current assets
|
3,388,340 | 17,889,194 | ||||||
Property
and equipment, net
|
90,493 | 155,679 | ||||||
Notes
receivable
|
5,935,704 | 5,170,804 | ||||||
Deposits
and other assets
|
6,096 | 29,649 | ||||||
Total
assets
|
$ | 9,420,633 | $ | 23,245,326 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 822,350 | $ | 570,449 | ||||
Current
portion of long-term debt
|
1,593,210 | 2,098,989 | ||||||
Other
current liabilities
|
154,200 | 154,200 | ||||||
Liabilities
from discontinued operations
|
213,685 | 12,682,268 | ||||||
Mandatorily
redeemable preferred stock
|
780,000 | 780,000 | ||||||
Total
current liabilities
|
3,563,445 | 16,285,906 | ||||||
Long-term
debt
|
415,618 | 499,065 | ||||||
Deferred
income taxes
|
184,000 | 303,000 | ||||||
Commitments
|
||||||||
Stockholders'
Equity:
|
||||||||
Common
stock, $.01 par value; authorized 10,000,000 shares;
issued
|
||||||||
3,788,771
at December 31, 2008 and 3,750,447 shares at December 31,
2007
|
37,888 | 37,505 | ||||||
Preferred
stock, $.01 par value; authorized
|
||||||||
1,000,000
shares; 0 shares issued and outstanding
|
- | - | ||||||
Capital
in excess of par
|
11,962,512 | 11,850,872 | ||||||
Deficit
|
(5,522,448 | ) | (4,545,242 | ) | ||||
6,477,952 | 7,343,135 | |||||||
Treasury
stock, at cost, 816,025 shares at December 31, 2008 and
|
||||||||
781,423
shares at December 31, 2007
|
(1,220,382 | ) | (1,185,780 | ) | ||||
Total
stockholders' equity
|
5,257,570 | 6,157,355 | ||||||
Total
liabilities and stockholders' equity
|
$ | 9,420,633 | $ | 23,245,326 |
DCAP
GROUP, INC. AND
|
||||||||
SUBSIDIARIES
|
||||||||
Consolidated
Statements of Operations
|
||||||||
Years
Ended December 31,
|
2008
|
2007
|
||||||
Commissions
and fee revenue
|
$ | 911,225 | $ | 649,246 | ||||
Operating
expenses:
|
||||||||
General
and administrative expenses
|
1,860,485 | 2,275,441 | ||||||
Depreciation
and amortization
|
69,624 | 84,422 | ||||||
Total
operating expenses
|
1,930,109 | 2,359,863 | ||||||
Operating
loss
|
(1,018,884 | ) | (1,710,617 | ) | ||||
Other
(expense) income:
|
||||||||
Interest
income
|
4,338 | 9,633 | ||||||
Interest
income - notes receivable
|
764,899 | 1,287,819 | ||||||
Interest
expense
|
(270,646 | ) | (432,351 | ) | ||||
Interest
expense - mandatorily redeemable preferred stock
|
(66,625 | ) | (39,000 | ) | ||||
Total
other income
|
431,966 | 826,101 | ||||||
Loss
from continuing operations before benefit from income
taxes
|
(586,918 | ) | (884,516 | ) | ||||
Benefit
from income taxes
|
(391,225 | ) | (419,232 | ) | ||||
Loss
from continuing operations
|
(195,693 | ) | (465,284 | ) | ||||
(Loss)
income from discontinued operations, net of income taxes
|
(781,513 | ) | 417,839 | |||||
Net
loss
|
$ | (977,206 | ) | $ | (47,445 | ) | ||
Basic
and Diluted Net (Loss) Income Per Common Share:
|
||||||||
Loss
from continuing operations
|
$ | (0.07 | ) | $ | (0.16 | ) | ||
(Loss)
income from discontinued operations
|
$ | (0.26 | ) | $ | 0.14 | |||
Loss
per common share
|
$ | (0.33 | ) | $ | (0.02 | ) | ||
Number
of weighted average shares used in computation
|
||||||||
of
basic and diluted loss per common share
|
2,972,597 | 2,963,036 | ||||||
DCAP
GROUP, INC. AND
|
||||||||||||||||||||||||||||||||||||
SUBSIDIARIES
|
||||||||||||||||||||||||||||||||||||
Consolidated
Statement of Stockholders' Equity
|
||||||||||||||||||||||||||||||||||||
Years
Months Ended December 31, 2007 and 2008
|
||||||||||||||||||||||||||||||||||||
Capital
|
||||||||||||||||||||||||||||||||||||
Common
Stock
|
Preferred
Stock
|
in
Excess
|
Treasury
Stock
|
|||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
of
Par
|
(Deficit)
|
Shares
|
Amount
|
Total
|
||||||||||||||||||||||||||||
Balance,
December 31, 2006
|
3,672,947 | $ | 36,730 | - | $ | - | $ | 11,633,884 | $ | (4,497,797 | ) | 776,923 | $ | (1,178,555 | ) | $ | 5,994,262 | |||||||||||||||||||
Exercise
of stock options
|
74,500 | 745 | - | - | 111,455 | - | - | - | 112,200 | |||||||||||||||||||||||||||
Stock-based
payments
|
3,000 | 30 | - | - | 105,533 | - | - | - | 105,563 | |||||||||||||||||||||||||||
Return
of stock as settlement of liability
|
- | - | - | - | - | - | 4,500 | (7,225 | ) | (7,225 | ) | |||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (47,445 | ) | - | - | (47,445 | ) | |||||||||||||||||||||||||
Balance,
December 31, 2007
|
3,750,447 | 37,505 | - | - | 11,850,872 | (4,545,242 | ) | 781,423 | (1,185,780 | ) | 6,157,355 | |||||||||||||||||||||||||
Stock-based
payments
|
38,324 | 383 | - | - | 111,640 | - | - | - | 112,023 | |||||||||||||||||||||||||||
Return
of stock as settlement of liability
|
- | - | - | - | - | - | 34,602 | (34,602 | ) | (34,602 | ) | |||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (977,206 | ) | - | - | (977,206 | ) | |||||||||||||||||||||||||
Balance,
December 31, 2008
|
3,788,771 | $ | 37,888 | - | $ | - | $ | 11,962,512 | $ | (5,522,448 | ) | 816,025 | $ | (1,220,382 | ) | $ | 5,257,570 |
DCAP
GROUP, INC. AND
|
||||||||
SUBSIDIARIES
|
||||||||
Consolidated
Statements of Cash Flows
|
||||||||
Years
Ended December 31,
|
2008
|
2007
|
||||||
Cash
Flows from Operating Activities:
|
|
|||||||
Net
loss
|
$ | (977,206 | ) | $ | (47,445 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation
and amortization
|
69,624 | 121,555 | ||||||
Bad
debt expense
|
44,091 | 37,070 | ||||||
Accretion
of discount on notes receivable
|
(576,228 | ) | (987,818 | ) | ||||
Amortization
of warrants
|
17,731 | 40,120 | ||||||
Stock-based
payments
|
112,023 | 105,563 | ||||||
Deferred
income taxes
|
(487,000 | ) | (34,000 | ) | ||||
Changes
in operating assets and liabilities:
|
||||||||
Decrease
(increase) in assets:
|
||||||||
Accounts
receivable
|
(104,221 | ) | 41,382 | |||||
Prepaid
expenses and other current assets
|
7,500 | (208,622 | ) | |||||
Deposits
and other assets
|
23,553 | (26,990 | ) | |||||
Increase
(decrease) in liabilities:
|
||||||||
Accounts
payable, accrued expenses and taxes payable
|
251,901 | 126,180 | ||||||
Other
current liabilities
|
- | (11,946 | ) | |||||
Deferred
taxes payable
|
368,000 | - | ||||||
Net
cash used in operating activities of continuing operations
|
(1,250,232 | ) | (844,951 | ) | ||||
Operating
activities of discontinued operations
|
497,592 | 470,575 | ||||||
Net
Cash Used in Operating Activities
|
(752,640 | ) | (374,376 | ) | ||||
Cash
Flows from Investing Activities:
|
||||||||
Decrease
in notes and other receivables - net
|
3,176 | 2,374 | ||||||
Purchase
of property and equipment
|
(4,438 | ) | (58,937 | ) | ||||
Net
cash used in investing activities of continuing operations
|
(1,262 | ) | (56,563 | ) | ||||
Investing
activities of discontinued operations
|
1,035,163 | 2,190,386 | ||||||
Net
Cash Provided by Investing Activities
|
1,033,901 | 2,133,823 | ||||||
Cash
Flows from Financing Activities:
|
||||||||
Principal
payments on long-term debt
|
(606,957 | ) | (570,589 | ) | ||||
Proceeds
from exercise of options and warrants
|
- | 112,200 | ||||||
Net
cash used in financing activities of continuing operations
|
(606,957 | ) | (458,389 | ) | ||||
Financing
activities of discontinued operations
|
(562,177 | ) | (1,466,648 | ) | ||||
Net
Cash Used in Financing Activities
|
(1,169,134 | ) | (1,925,037 | ) |
DCAP
GROUP, INC. AND
|
||||||||
SUBSIDIARIES
|
||||||||
Consolidated
Statements of Cash Flows (continued)
|
||||||||
Years
Ended December 31,
|
2008
|
2007
|
||||||
Net
Decrease in Cash and Cash Equivalents
|
(887,873 | ) | (165,590 | ) | ||||
Cash
and Cash Equivalents, beginning of year
|
1,030,822 | 1,196,412 | ||||||
Cash
and Cash Equivalents, end of year
|
$ | 142,949 | $ | 1,030,822 | ||||
Supplemental
Schedule of Non-Cash Investing and Financing Activities:
|
||||||||
Liabilties
assumed by purchaser of premium finance portfolio
|
$ | 11,229,060 | $ | - | ||||
Computer
equipment acquired under capital leases
|
$ | - | $ | 89,819 |
December
31,
|
Useful
Lives
|
2008
|
2007
|
||||||
Furniture,
fixtures & equipment
|
5
years
|
$ | 186,889 | $ | 184,581 | ||||
Leasehold
improvements
|
3
- 5 years
|
61,465 | 60,227 | ||||||
Computer
hardware, software and office equipment
|
2
- 5 years
|
526,595 | 487,097 | ||||||
Entertainment
facility
|
20
years
|
200,538 | 200,538 | ||||||
975,487 | 932,443 | ||||||||
Less
accumulated depreciation
|
884,994 | 776,764 | |||||||
$ | 90,493 | $ | 155,679 |
December
31,
|
2008
|
2007
|
||||||
Accounts
payable
|
$ | 314,249 | $ | 257,710 | ||||
Interest
|
115,903 | 85,902 | ||||||
Payroll
and related costs
|
26,032 | 16,978 | ||||||
Professional
fees
|
366,166 | 209,859 | ||||||
$ | 822,350 | $ | 570,449 | |||||
December
31,
|
2008
|
2007
|
||||||
Note
payable, Accurate acquisition
|
$ | 450,695 | $ | 517,113 | ||||
Term
loan from Manufacturers & Traders Trust Co.
|
- | 520,000 | ||||||
Capitalized
lease
|
58,133 | 78,672 | ||||||
Notes
payable
|
1,500,000 | 1,500,000 | ||||||
Unamortized
value of stock purchase warrants issued in connection with notes
payable
|
- | (17,731 | ) | |||||
2,008,828 | 2,598,054 | |||||||
Less
current maturities
|
1,593,210 | 2,098,989 | ||||||
$ | 415,618 | $ | 499,065 | |||||
Years
ended December 31,
|
||||
2009
|
$ | 1,593,210 | ||
2010
|
134,031 | |||
2011
|
129,041 | |||
2012
|
126,471 | |||
2013
|
26,075 | |||
$ | 2,008,828 |
Years
ended December 31,
|
2008
|
2007
|
||||||
Current:
|
||||||||
Federal
|
$ | - | $ | (306,000 | ) | |||
State
|
95,775 | (79,232 | ) | |||||
95,775 | (385,232 | ) | ||||||
Deferred:
|
||||||||
Federal
|
(390,000 | ) | (27,000 | ) | ||||
State
|
(97,000 | ) | (7,000 | ) | ||||
(487,000 | ) | (34,000 | ) | |||||
$ | (391,225 | ) | $ | (419,232 | ) | |||
Years
ended December 31,
|
2008
|
2007
|
||||||
Computed
expected tax expense
|
(34.00 | ) % | (34.00 | ) % | ||||
State
taxes, net of Federal benefit
|
(5.48 | ) | (5.79 | ) | ||||
Tax
benefit from current year loss of discontinued operations
|
(56.78 | ) | - | |||||
Permanent
differences
|
29.60 | (7.61 | ) | |||||
Total
tax (benefit)
|
(66.66 | ) % | (47.40 | ) % |
December
31,
|
2008
|
2007
|
||||||
Deferred
tax assets:
|
||||||||
Net
operating loss carryovers subject to Annual Limitation
|
$ | 544,000 | $ | 544,000 | ||||
Other
net operating loss carryovers
|
846,000 | 452,000 | ||||||
Provision
for doubtful accounts
|
16,000 | 20,000 | ||||||
Depreciation
|
21,000 | - | ||||||
Stock
compensation expense
|
67,000 | 39,000 | ||||||
Gross
deferred tax assets
|
1,494,000 | 1,055,000 | ||||||
Deferred
tax liabilities:
|
||||||||
Interest
on note
|
1,144,000 | 838,000 | ||||||
Depreciation
|
- | 8,000 | ||||||
Prepaid
expenses
|
41,000 | 16,000 | ||||||
Gross
deferred tax liabilities
|
1,185,000 | 862,000 | ||||||
Net
deferred tax assets before valuation allowance
|
309,000 | 193,000 | ||||||
Less
valuation allowance due to Annual Limitation of net operating loss
carryover
|
(493,000 | ) | (496,000 | ) | ||||
Net
deferred tax liability
|
$ | (184,000 | ) | $ | (303,000 | ) |
Years
ended December 31,
|
||||
2009
|
$ | 383,376 | ||
2010
|
221,539 | |||
2011
|
136,734 | |||
2012
|
36,493 | |||
2013
|
37,200 | |||
Thereafter
|
74,400 | |||
$ | 889,742 |
Years
ended December 31,
|
2008
|
2007
|
||||||||||||||
Class
|
Number
of shares granted
|
Valuation
|
Number
of shares granted
|
Valuation
|
||||||||||||
Directors
|
38,324 | $ | 40,500 | - | $ | - | ||||||||||
Consultants
|
- | - | 3,000 | 8,820 | ||||||||||||
38,324 | $ | 40,500 | 3,000 | $ | 8,820 |
Dividend
Yield
|
0.00%
|
|
Volatility
|
60.79%
|
|
Risk-Free
Interest Rate
|
5.00%
|
|
Expected
Life
|
5
years
|
Stock
Options
|
Number
of Shares
|
Weighted
Average Exercise Price per Share
|
Weighted
Average Remaining Contractual Term
|
Aggregate
Intrinsic Value
|
||||||||||||
Outstanding
at January 1, 2008
|
268,624 | $ | 2.55 | - | - | |||||||||||
Forfeited
|
(91,224 | ) | $ | 2.84 | - | - | ||||||||||
Outstanding
at December 31, 2008
|
177,400 | $ | 2.40 | 3.35 | $ | - | ||||||||||
Vested
and Exercisable at December 31, 2008
|
112,921 | $ | 2.60 | 3.11 | $ | - | ||||||||||
Options
|
Weighted
Average Grant Date Fair Value
|
|||||||
Nonvested
at December 31, 2007
|
142,756 | $ | 1.21 | |||||
Vested
|
(44,854 | ) | 1.16 | |||||
Forfeited
|
(33,423 | ) | 1.41 | |||||
Nonvested
at December 31, 2008
|
64,479 | $ | 1.10 |
Years
Ended December 31,
|
2008
|
2007
|
||||||||||||||||||||||
Retail
|
Premium
|
Retail
|
Premium
|
|||||||||||||||||||||
Business
|
Finance
|
Total
|
Business
|
Finance
|
Total
|
|||||||||||||||||||
Commissions
and fee revenue
|
$ | 4,042 | $ | - | $ | 4,042 | $ | 5,096 | $ | - | $ | 5,096 | ||||||||||||
Premium
finance revenue
|
- | 225 | 225 | - | 3,167 | 3,167 | ||||||||||||||||||
Total
revenue
|
4,042 | 225 | 4,267 | 5,096 | 3,167 | 8,263 | ||||||||||||||||||
Operating
Expenses:
|
||||||||||||||||||||||||
General
and administrative expenses
|
3,895 | 182 | 4,077 | 4,479 | 1,432 | 5,911 | ||||||||||||||||||
Provision
for finance receivable losses
|
- | 89 | 89 | - | 472 | 472 | ||||||||||||||||||
Depreciation
and amortization
|
212 | 47 | 259 | 204 | 100 | 304 | ||||||||||||||||||
Interest
expense
|
41 | 45 | 86 | 44 | 646 | 690 | ||||||||||||||||||
Impairment
of intangibles
|
394 | - | 394 | 95 | - | 95 | ||||||||||||||||||
Total
operating expenses
|
4,542 | 363 | 4,905 | 4,822 | 2,650 | 7,472 | ||||||||||||||||||
(Loss)
income from operations
|
(500 | ) | (138 | ) | (638 | ) | 274 | 517 | 791 | |||||||||||||||
(Loss)
gain on sale of business
|
- | (102 | ) | (102 | ) | 66 | - | 66 | ||||||||||||||||
(Loss)
income before (benefit) provision
|
||||||||||||||||||||||||
for
income taxes
|
(500 | ) | (240 | ) | (740 | ) | 340 | 517 | 857 | |||||||||||||||
(Benefit
from) provision for
|
||||||||||||||||||||||||
income
taxes
|
(28 | ) | 69 | 41 | 193 | 246 | 439 | |||||||||||||||||
(Loss)
income from discontinued
|
||||||||||||||||||||||||
operations,
net of income taxes
|
$ | (472 | ) | $ | (309 | ) | $ | (781 | ) | $ | 147 | $ | 271 | $ | 418 |
December
31,
|
2008
|
2007
|
||||||||||||||||||||||
Retail
|
Premium
|
Retail
|
Premium
|
|||||||||||||||||||||
Business
|
Finance
|
Total
|
Business
|
Finance
|
Total
|
|||||||||||||||||||
Accounts
receivable
|
$ | 404 | $ | - | $ | 404 | $ | 587 | $ | - | $ | 587 | ||||||||||||
Finance
contracts receivable, net
|
- | - | - | - | 12,499 | 12,499 | ||||||||||||||||||
Due
from purchaser of premium
|
||||||||||||||||||||||||
finance
portfolio
|
- | 18 | 18 | - | - | - | ||||||||||||||||||
Other
current assets
|
32 | - | 32 | 5 | 32 | 37 | ||||||||||||||||||
Deferred
income taxes
|
- | - | - | - | 69 | 69 | ||||||||||||||||||
Property
and equipment, net
|
145 | - | 145 | 309 | 3 | 312 | ||||||||||||||||||
Goodwill
|
2,208 | - | 2,208 | 2,601 | - | 2,601 | ||||||||||||||||||
Other
intangibles, net
|
75 | - | 75 | 151 | - | 151 | ||||||||||||||||||
Other
assets
|
31 | - | 31 | 48 | 48 | 96 | ||||||||||||||||||
Total
assets
|
$ | 2,895 | $ | 18 | $ | 2,913 | $ | 3,701 | $ | 12,651 | $ | 16,352 | ||||||||||||
Revolving
credit line
|
$ | - | $ | - | $ | - | $ | - | $ | 9,488 | $ | 9,488 | ||||||||||||
Accounts
payable and accrued expenses
|
137 | - | 137 | 60 | 140 | 200 | ||||||||||||||||||
Premiums
payable
|
- | - | - | - | 2,889 | 2,889 | ||||||||||||||||||
Deferred
income taxes
|
77 | - | 77 | 105 | - | 105 | ||||||||||||||||||
Total
liabilities
|
$ | 214 | $ | - | $ | 214 | $ | 165 | $ | 12,517 | $ | 12,682 |
December
31,
|
2008
|
2007
|
||||||
Balance,
beginning of year
|
$ | 173,612 | $ | 205,269 | ||||
Provision
for finance receivable losses
|
85,672 | 472,266 | ||||||
Charge-offs
|
(52,920 | ) | (503,923 | ) | ||||
Sale
of portfolio
|
(206,364 | ) | - | |||||
Balance,
end of year
|
$ | - | $ | 173,612 | ||||
December
31,
|
2008
|
2007
|
||||||
Customer
lists
|
$ | 554,425 | $ | 554,425 | ||||
Accumulated
amortization
|
479,425 | 403,515 | ||||||
Balance,
end of year
|
$ | 75,000 | $ | 150,910 | ||||
Years
Ending December 31,
|
||
2009
|
75,000
|
Carrier
|
%
of Total Revenue
|
|
A
|
33%
|
|
B
|
17%
|
Carrier
|
%
of Total Revenue
|
|
A
|
40%
|
|
B
|
14%
|
Years
Ended December 31,
|
2008
|
2007
|
||||||
Interest
|
$ | 375,883 | $ | 463,305 | ||||
Income
Taxes
|
$ | 23,350 | $ | 3,033 |
DCAP
GROUP, INC.
|
|
Dated: April
13, 2009
|
By:
/s/ Barry B.
Goldstein
Barry B.
Goldstein
Chief Executive Officer
|
Signature
|
Capacity
|
Date
|
/s/ Barry B. Goldstein
Barry
B. Goldstein
|
President,
Chairman of the Board, Chief Executive Officer, Treasurer and Director
(Principal Executive Officer)
|
April
13, 2009
|
/s/ Victor
Brodsky
Victor
Brodsky
|
Chief
Accounting Officer
(Principal
Financial and Accounting Officer) and Secretary
|
April
13, 2009
|
/s/ Michael R. Feinsod
Michael
R. Feinsod
|
Directors
|
April
13, 2009
|
/s/ Jay M.
Haft
Jay
M. Haft
|
Director
|
April
13, 2009
|
/s/ David A.
Lyons
David
A. Lyons
|
Director
|
April
13, 2009
|
/s/ Jack D.
Seibald
Jack
D. Seibald
|
Director
|
April
13,
2009
|