Firstplus Financial 10QSB 2007 Q2 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

(Mark One)

x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: March 31, 2007

o Transition report under Section 13 or 15(d) of the Exchange Act

For the transition period from ____________ to ____________

Commission File Number: 0-27750

FirstPlus Financial Group, Inc.

(Exact name of small business issuer as specified in its charter)

Nevada	75-2561085
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

5100 North O'Connor Blvd., 6th Floor

Irving, Texas

(Address of principal executive offices)

(214) 496-1266

(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of common stock outstanding as of: May 10, 2007 was 48,245,090.

Transitional Small Business Disclosure Format (Check one): Yes o No x

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Except where otherwise stated, references in this document to “us,” “we,” “FPFG” or “the Company” refer to FIRSTPLUS Financial Group, Inc. (“FIRSTPLUS”). This Form 10-QSB contains forward-looking statements within the meaning of the “safe harbor” provisions under Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The Company uses forward-looking statements in its description of its plans and objectives for future operations and assumptions underlying these plans and objectives, as well as in its expectations, assumptions, estimates and projections about its business and industry. These forward-looking statements involve risks and uncertainties. The Company’s actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors as more fully described in this Report and other risks and factors identified from time to time in the Company’s reports filed with the Securities and Exchange Commission.

Forward-looking terminology includes the words “may”, “expects”, “believes”, “anticipates”, “intends”, “projects” or similar terms, variations of such terms or the negative of such terms. These forward-looking statements are based upon the Company’s current expectations and are subject to factors and uncertainties which could cause actual results to differ materially from those described in such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Report to reflect any change in the Company’s expectations or any changes in events, conditions or circumstances on which any forward-looking statement is based.

INDEX

	Page
Part I. Financial Information	1
Item 1. Financial Statements	1
Consolidated Balance Sheet at March 31, 2007 (unaudited)	1
Consolidated Statements of Operations for the Three Months and Nine Months Ended March 31, 2007 and 2006 (unaudited)	2
Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2007 and 2006 (unaudited)	3
Notes to Consolidated Financial Statements (unaudited)	4
Item 2. Management's Discussion and Analysis or Plan of Operations	10
Item 3. Controls and Procedures	13
Part II Other Information	14
Item 1. Legal Proceedings	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3. Defaults Upon Senior Securities	14
Item 4. Submission of Matters to a Vote of Security Holders	14
Item 5. Other Information	14
Item 6. Exhibits	14

FIRSTPLUS Financial Group, Inc.

Consolidated Balance Sheet

	March 31, 2007
	(Unaudited)
ASSETS:
Cash and cash equivalents	$	12,917,658
Accounts receivable (net of allowance for doubtful accounts of $169,782)		962,102
Inventory		978,125
Prepaid expenses		11,929
Furniture, fixtures and equipment (net of accumulated depreciation of $4,704)		574,514
Land		1,040,000
Note receivable Capital Lending Strategies, LLC		71,184
Notes receivable		425,725
Security deposits		32,500
Deferred tax asset		93,300
Investment in Capital Lending Strategies, LLC		71,150
Total assets	$	17,178,187
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable	$	134,671
Income taxes payable		93,300
Accrued expenses		423,268
Notes payable		104,000
Total liabilities		755,239
Commitments and contingencies (see note 9)		3,450,000
Stockholders' equity:
Common stock, $.01 par value, 100,000,000 shares authorized; 48,245,090 shares issued and outstanding		482,451
Additional paid in capital		17,306,122
Accumulated defict since December 31, 2002 when a deficit of $312,527,864 was eliminated in connection with a quasi-reorganization		(4,815,625	)
Total stockholders' equity		12,972,948
Total liabilities and stockholders' equity	$	17,178,187

The accompanying notes are an integral part of these financial statements

1

FIRSTPLUS Financial Group, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended
	March 31,
	2007			2006
Revenues	$	1,430,783		$	-
Cost of goods sold		952,499			-
Gross profit		478,284			-
Operating expenses :
General and administrative		742,608			320,066
Total operating expenses		742,608			320,066
Operating income (loss )		(264,324	)		(320,066	)
Non-operating income:
Interest, net		183,265			70,729
Income (loss) before provision for income taxes		(81,059	)		(249,337	)
Provision for income taxes		-			-
Net income (loss )	$	(81,059	)	$	(249,337	)
Earnings (loss ) per share	$	-		$	(0.01	)
Weighted average of common shares outstanding		48,245,090			45,340,090

The accompanying notes are an integral part of these financial statements

2

FIRSTPLUS Financial Group, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the Three Months Ended
	March 31,
	2007			2006
Cash flow from operating activities:
Net income (loss)	$	(81,059	)	$	(249,337	)
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Accrued interest income		-			(62,031	)
Depreciation		3,987			-
Changes in operating assets and liabilities:
Accounts receivable		(962,102	)		-
Inventory		(411,980	)		-
Prepaid expenses		17,714			(64,583	)
Notes receivable		55,748			-
Security deposits		(9,500	)		-
Accounts payable		(37,068	)		-
Accrued expenses		402,704			(161,210	)
Net cash provided (used) by operating activities		(1,021,556	)		(537,161	)
Cash flows from investing activities:
Purchase of furniture, fixtures, and equipment		(553,923	)		-
Advance to Versatile Consulting LLC		-			(250,000	)
Purchase of land		(1,040,000	)		-
Collection on bankruptcy estate claim		2,341,761			-
Commitment on bankruptcy estate claim		366,240			-
Collection on note receivable Capital Lending Strategies, LLC		11,159			10,500
Net cash provided (used) by investing activities		1,125,237			(239,500	)
Cash flows from financing activities:
Note payable - Olé Auto Group		(208,000	)		-
Net cash used by financing activities		(208,000	)		-
Net increase (decrease) in cash		(104,319	)		(776,661	)
Cash at the beginning of the period		13,021,977			1,304,396
Cash at the end of the period	$	12,917,658		$	527,735
Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	-		$	-
Taxes	$	-		$	-

The accompanying notes are an integral part of these financial statements

3

FIRSTPLUS Financial Group, Inc.

Notes to Consolidated Financial Statements

Note 1.Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. In the opinion of management, such statements include all adjustments consisting only of normal, recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows at the dates and for the periods indicated. Pursuant to accounting requirements of the Securities and Exchange Commission (the “SEC”) applicable to Quarterly Reports on Form 10-QSB, the accompanying financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America for audited financial statements. While the Company believes that the disclosures presented are adequate to make the information not misleading, these financial statements should be read in conjunction with the financial statements and related notes for the year ended December 31, 2006 which are contained in the Company’s Annual Report on Form 10-KSB. The results for the three month period ended March 31, 2007 are not necessarily indicative of the results to be expected for the full fiscal year.

Note 2.Organization and Business

FIRSTPLUS Financial Group, Inc. ("FPFG") (together with its subsidiaries, the "Company") was a specialized consumer finance company that originated, purchased, serviced and sold consumer finance receivables. The Company's principal loan product was a debt consolidation or home improvement loan secured by a second lien on real property ("High LTV Loans"). The Company sold substantially all of its High LTV Loans through its securitization program and retained rights to service those loans.

The Company's operations required continued access to financing sources. The Company's primary operating cash requirements included the funding of (i) loan originations, (ii) reserve accounts, overcollateralization requirements, fees and expenses incurred in connection with its securitization transactions, (iii) television, radio and direct mail advertising and other marketing and (iv) administrative and other operating expenses.

Due to numerous market factors beyond the Company’s control during the fourth quarter of 1998, the Company’s access to those financing sources was unavailable. As a result, the subsidiaries filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code in 1999. As part of the plan of reorganization accepted by the bankruptcy court on April 7, 2000, holders of the Company's 7.25% Convertible Subordinated Notes Due 2003 received a Certificated Interest representing Obligations under the plan of reorganization. FPFG also retained an unsecured interest in monies that it had advanced to its subsidiaries. As payments are made from the former subsidiaries to the creditor trust which administers the bankruptcy estate (the “Creditor Trust”), the Obligations to the Certificated Interests are paid by the Creditor Trust.

As the settlor and sole beneficiary of the FIRSTPLUS Financial Group Grantor Residual Trust (the “Grantor Trust”), the Company has treated the Grantor Trust as a variable interest entity in accordance with accounting pronouncement FIN46(R). Accordingly, the Company has consolidated the entity and eliminated all intercompany transactions. (See note 9.)

As of December 1, 2006, the Company, through its wholly owned subsidiary Olé Auto Group, Inc. began operating an automotive sales lot and finance operations in Fort Worth, Texas, that focuses exclusively on the Buy Here-Pay Here segment of the used car market. The Company’s sales lot features a variety of makes and models and a range of sales prices. There were no auto sales during 2006. The Company also purchased receivables as part of the formation of the Olé Auto Group, Inc. (See note 3).

4

Note 2.Organization and Business (continued)

The sub-prime segment of the independent used car sales and finance market is serviced primarily by numerous small independent used car dealerships that sell and finance the sale of used cars to individuals with limited or damaged credit histories. Many independent used car dealers are not able to obtain debt financing from traditional lending sources such as banks, credit unions, or major finance companies. Many of these dealers typically finance their operations through the sale of contract receivables at a discount. Buy Here-Pay Here dealers sell and finance used cars to individuals with limited credit histories or past credit problems. The Buy Here-Pay Here industry focuses on customers, collectively referred to as “sub-prime or ‘D’ Borrowers”, who (1) do not have traditional bank accounts or do not rely on traditional financial services relationships, or “un-banked” consumers, or (2) do not have the ability to obtain credit from traditional sources such as banks and credit unions due to limited credit histories, low income, past credit problems, or “credit-impaired” borrowers. Buy Here-Pay Here payment arrangements are often construed to be within the “sub-prime” category of financing and lending.

The Company will provide financing for substantially all of its vehicle sales using retail installment loan contracts. As a Buy-Here Pay-Here dealer, the Company offers the customer certain advantages over more traditional financing sources including: broader underwriting guidelines, flexible payment terms including structuring loan payment due dates as weekly or biweekly, often coinciding with the customer’s payday, and the ability to make payments in person at the dealerships.

Note 3.Notes Receivable

As part of the formation of Olé Auto Group, Inc., the Company acquired receivables and is accounting for its interest in the outstanding receivables under SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer, (“SOP 03-3”). Under SOP 03-3, future cash proceeds on the outstanding receivables are split between their accretable yield, which represents the difference between the estimated cash collections and the carrying value of the receivables, and the non-accretable yield, which represents the excess of contractual cash flows over the estimated cash collections. The accretable yield is recognized as interest income, within other income on the Company’s statement of operations, using the effective interest method over the expected term of the receivables. Future decreases in estimated cash flows will be recognized as an impairment charge and corresponding valuation allowance against the outstanding receivables. Subsequent increases in the estimated cash flows, if any, will be recognized prospectively as an adjustment to the receivables’ accretable yield over the remaining life of the receivables, after first reversing any previously recorded valuation allowance.

As of the acquisition date for purposes of accounting under SOP 03-3, the Company calculated the accretable yield related to the outstanding financing receivables as follows:

Accretable yield:
Cash flows expected to be collected as of acquisition date	$	576,144
Less: Carrying value as of acquisition date		520,000
Accretable yield as of acquisition date	$	56,144

The net cash flows expected to be collected is net of an expected default amount of $64,250. The Company recognized $7,018 of accretable yield during the three months ended March 31, 2007 as revenues from operations.

Note 4.Property, Plant & Equipment

The Company’s fixed assets consist of buildings, furniture and computers in its operations at Olé Auto Group. The useful lives are estimated between forty years for the building and five to seven years for the computers and equipment. The assets are being depreciated on the straight-line method.

5

Note 5.Concentration of Credit Risk

FPFG at times during operations has cash deposits that exceed $100,000 in one account in individual banks. The Federal Deposit Insurance Corporation (FDIC) insures only the first $100,000 of funds at member banks. FPFG has not incurred losses related to its cash.

Note 6.Income Taxes

Deferred taxes are recognized for net operating losses that are available for carryback to offset prior taxable income. Based on the March 31, 2007 loss, FPFG will have a net operating loss carryforward available of approximately $3,500,000. A valuation allowance is provided against the deferred tax asset for future taxable income as realization is uncertain.

Income tax benefit is recorded net of any penalties and interest.

Note 7.Quasi-reorganization

The Company’s Board of Directors approved a plan to affect a quasi-reorganization effective December 31, 2002. A quasi-reorganization is an accounting procedure that eliminates an accumulated deficit in retained earnings and permits a company to proceed on much the same basis as if it had been legally reorganized. A quasi-reorganization involves adjusting a company’s assets and liabilities to their fair values. Any remaining deficit in retained earnings is then eliminated by a transfer of amounts from paid-in capital and capital stock, if necessary, giving a company a “fresh start” and a zero balance in retained earnings.

Note 8.Other Assets

FPFG retains a claim against the bankruptcy estate of its former subsidiaries for monies advanced to them. On March 23, 2007 the bankruptcy trustee made a distribution of $2,708,000 to the Company, bringing the aggregate amount of funds designated for the benefit of FPFG to $21,819,193. Neither FPFG, nor the bankruptcy trustee, can estimate the amount or timing of any future payments. (See Note 9.)

FPFG owns a minority equity interest in Capital Lending Strategies, LLC (“CLS”). During 2004, it sold approximately 60% of its holdings, retaining the interest assigned on behalf of the claimants in the class action lawsuit, in CLS for $796,580 which provided FPFG’s working capital. The investment (less than 20%) is recorded on the books at the cost basis of $71,150.

Note 9.Commitments and Contingencies

The Company entered into agreements with various parties regarding the assignment of a portion of the Intercompany Claim in connection with the bankruptcy filing of its subsidiary FirstPlus Financial, Inc. (FPFI) in order to satisfy some of FPFG’s obligations. The Company has recorded a contingent liability of $3,450,000 based on the funds received by the Grantor Trust from the FPFI Creditor Trust. No creditors have initiated a claim against FPFG.

The Company leases its operating facilities for various terms under long-term, operating lease agreements. The leases expire at various dates through 2011 and provide for renewal options. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties. The leases provide for increases in future minimum annual rental payments.

6

Note 9.Commitments and Contingencies (continued)

The following is a schedule by year of future minimum rental payments required under the operating lease agreements:

Year Ending December 31	Amount
2007	$ 231,578
2008	251,578
2009	267,078
2010	169,408
2011	137,500
Thereafter	0
	$ 1,057,142

Total minimum lease payments do not include contingent rentals that may be paid under certain leases because of use in excess of specified amounts.

Note 10.Stockholders’ Equity

Holders of the Company's 7.25% Convertible Subordinated Notes Due 2003 (amended by a supplemental indenture entered into by the Company and the trustee for the notes pursuant to a plan of reorganization under Chapter 11 of the Bankruptcy Code dated April 7, 2000) received a Certificated Interest payable from residual funds of the subsidiaries after the secured interests have been paid. Two of the former noteholders received rights to convert a portion of their Certificated Interests into shares of the FPFG's common stock. On August 3, 2006, the remaining Certificated Interest holder with conversion rights converted the balance of its conversion rights into 2,905,000 shares of the Company.

In July 2006, the Company instructed the Grantor Trust to make a distribution to holders of the Company’s common stock on a pro rata basis as of August 3, 2006, in an aggregate amount equal to fifty percent (50%) of the funds received, after reserves and expenses incurred on behalf of the trust, by the Grantor Trust from the registry of the court in the Grantor Trust Lawsuit in accordance with the Company’s Settlement Agreement with Danford L. Martin, individually, on behalf of the FPFX Shareholder Value Committee and the FPFX Steering Committee and as attorney-in-fact for all of the Petitioners in the Election Suit (as defined therein). The Company distributed $3,618,864. The Company has determined that the distribution was a return of capital since the Company did not have any current or accumulated earnings and profits.

In addition, the Company has agreed not to issue any shares of its common stock prior to the initial distribution and for a period of one year following the distribution, to not issue any shares of its common stock equal to 30% of the then outstanding shares unless the Company obtains a fairness opinion with respect to such transaction.

Note 11.Stock Option Plan

Effective January 1, 2006, under the modified prospective method, the Company adopted the provisions of SFAS 123(R), Share-Based Payment, a replacement of SFAS No. 123, Accounting For Stock-Based Compensation, and rescission of APB Opinion No. 25, Accounting for Stock Issued to Employees. This statement applies to all awards granted after the effective date and to modifications, repurchases or cancellations of existing awards.

On December 12, 2006, the registrant’s board of directors approved the Stock Option Plan for FIRSTPLUS Financial Group, Inc. (the “Plan”). The Plan made 4,500,000 shares of the registrant’s common stock available for issuance as awards under the Plan. Officers, director and employees of the registrant, and employees of the registrant’s wholly-owned subsidiary, Olé Auto Group, Inc., are eligible to receive awards under the Plan.

7

Note 11.Stock Option Plan (continued)

Awards under the Plan may consist of a stock option or a restricted share award. Stock options may take the form of an incentive stock option or a non-qualified stock option. The Plan will be administered, including determination of the recipients of, and the nature and size of, awards granted under the Plan, by the committee of the board of directors meeting the criteria set forth in the Plan. If the board of directors has not appointed such a committee, the Plan will be administered by the board of directors.

The exercise price of an option shall not be less than the fair market value, as defined under the Plan, on the date of grant. Unless otherwise provided in an option agreement, options granted under the Plan will vest as follows:

· one-third of the options will vest on the date of the grant;

· one-third of the options will vest on the first anniversary of the date of the grant; and

· one-third of the options will vest on the second anniversary of the date of the grant.

Unless the terms of an option agreement provide for a different date of termination, the unexercised portion of an option award shall automatically and without notice terminate and become null and void at the time of the earliest to occur of the following:

· immediately upon termination of employment (or termination of service as a director) with the registrant as a result, in whole or in material part, of a discharge for cause;

· the 60th day following optionee’s termination of employment (or termination of service as a director) with the registrant for any reason except cause; provided, however, that if the optionee shall die during such sixty (60) day period, he or she will be deemed to have terminated employment (or termination of service as a director) as a result of death, and the termination of the option will be governed by the previous clause; or

· on the 180th day following a termination of employment (or termination of service as a director) by reason of death or disability; or

· the tenth (10th) anniversary of the date of grant.

The restricted stock awards will be subject to the restrictions and the restriction period determined by the board of directors. Each grant of restricted stock may be subject to a different restriction period. The holders of restricted stock will have the right to vote the shares but will not have the right to receive any dividends declared or paid with respect to the shares. The recipient of a restricted stock award will be required to purchase the restricted stock from the registrant at a purchase price equal to the greater of (a) the aggregate par value of the shares represented by such restricted stock, or (b) the purchase price, if any, specified in a restricted stock agreement. Upon the expiration or termination of the restriction period and the satisfaction of any other conditions prescribed by the Board, having properly paid the purchase price, the restrictions applicable to shares of restricted stock shall lapse, and, unless otherwise provided in restricted stock agreement, the shares shall be delivered, free of all such restrictions, to the holder.

The fair value of the option grants is estimated as of the date of the grant using the Black-Scholes option pricing model with the following assumptions:

	2006
Risk Free Interest Rate		4.28	%
Expected Dividend Yield		32.82	%
Expected Lives (years)		2.00
Expected Volatility		61.00	%
Forfeiture Rate		-

8

Note 11.Stock Option Plan (continued)

The risk-free interest rate is based on the U.S. Treasury Bill rates. The dividend yield reflects the expected dividend to be paid in accordance with the Settlement Agreement (See note 10). Expected volatility was based on a market-based implied volatility. The expected term of the options is based on what the Company believes will be representative of future behavior. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from the estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as previously required under EITF Issue No. 00-15, Classification in the Statement of Cash Flows of the Income Tax Benefit Received by a Company upon Exercise of a Nonqualified Employee Stock Option. This requirement does not affect the Company’s net operating cash flows or its net financing cash flows in the three month period ended March 31, 2007.

Note 12.Related Party Transactions

The Company’s executive offices are shared with the facilities leased by Capital Lending Strategies, LLC, which incurs the cost and full responsibility of the lease. There is no formal agreement between the Company and Capital Lending Strategies, LLC with respect to the lease arrangement. Daniel T. Phillips, FPFG’s Director, is a Manager and Member of Capital Lending Strategies, LLC.

The Company has loaned to Capital Lending Strategies, LLC since 2002 approximately $275,000. The loan balance at March 31, 2007 was $71,184. The line of credit bears interest at the prime rate of interest as established by the Wall Street Journal plus 1% and matures on the second anniversary of any advance on the line of credit.

FPFG has a liability insurance policy with American Financial Services covering its directors and officers. The total premium for the policy is $77,500. Dexter & Company was the broker for the policy. John R. Fitzgerald, FPFG’s Director, is Executive Vice President of Dexter & Company.

Note 13. Recent Accounting Pronouncements

In June 2006, FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition and will become effective for the Company for fiscal years beginning after December 15, 2006. The Company has not yet determined the effect of FIN 48 on its financial position, operations or cash flows.

9

Item 2.Management’s Discussion and Analysis or Plan of Operation

General

FIRSTPLUS Financial Group, Inc. (the “Company”) was a diversified consumer finance company that originated, serviced, and sold consumer finance receivables. The Company operated through various subsidiaries until 1998 when macroeconomic factors adversely affected financial markets and largely destroyed the industry’s access to the capital markets. Without access to working capital, the Company’s ability to provide consumer-based products evaporated and, like virtually all its competitors, it saw its business liquidated to satisfy obligations. The Company’s principal operating subsidiary, FIRSTPLUS Financial, Inc. (“FPFI”), engaged in the business of originating, purchasing, marketing and servicing home equity loans. Prior to the collapse of the financial markets, its primary loan product was a credit consolidation or home improvement loan, which was generally secured by a second lien on real property (commonly referred to as a “high loan to value” or “HLTV” loan). In March 1999, two wholly-owned subsidiaries then owned by the Company, including FPFI, filed for reorganization under Chapter 11 of the United States Bankruptcy Code. Neither the Company, nor any of its other subsidiaries, sought bankruptcy protection.

FPFI’s plan of reorganization was confirmed on April 7, 2000 by the United States Bankruptcy Court, Northern District of Texas, Dallas Division. The plan of reorganization provided for the creation of the FPFI Creditor Trust (the “Creditor Trust”) to facilitate implementation of the plan of reorganization, to hold trust assets for the benefit of the beneficiaries, to resolve claims, to make distributions in accordance with the plan of reorganization and to provide various administrative services related to the Creditor Trust and the implementation of the plan of reorganization. Under the plan of reorganization, the Company still owned FPFI but could not transfer its interest in FPFI until the Creditor Trust terminates. However, the Creditor Trust trustee is the sole officer and director of FPFI. The stock was then transferred to a voting trust whereby the voting trust would have the sole power to hold and vote the stock. As a result, the Company has no interest in FPFI or the Creditor Trust’s assets other than its interest in the FPFI Intercompany Claim.

In the plan of reorganization, the Company was able to resolve many of its own creditor claims through the plan of reorganization. In addition, the Company received the FPFG Intercompany Claim as a general unsecured claim defined in the plan of reorganization to be in an amount that was not to be less than $50 million. By being a holder of the FPFG Intercompany Claim, the Company became a beneficiary of the Creditor Trust. Under the plan of reorganization, the Company would only receive distributions as a beneficiary of the Creditor Trust from payments on the FPFG Intercompany Claim based on a previous series of securitized loan pools that had been sold in the marketplace. At that time, the amount and timing of cash flow from residuals were completely unknown. The Company has no operations with respect to, or any control over, the securitized loans.

To settle other claims asserted against it, the Company assigned portions of the FPFG Intercompany Claim to various creditors. Consistent with the plan of reorganization, in settlement of the claims of the holders of the Company’s 7.25% Convertible Subordinated Notes due 2003 (the “Bondholders”), the Bondholders received an instrument representing the right to receive an assignment of 25% of the FPFG Intercompany Claim, permitting the Bondholders to become a direct beneficiary of the Creditor Trust, and an agreement to instruct the Creditor Trust to make two payments to the Bondholders of $1,428,000 based on certain conditions. The Bondholder settlement was consummated in June 2001. Two of the Bondholders also received agreements allowing them to convert portions of their new interest into an aggregate of 5,555,000 shares of the Company’s common stock, and the conversion rights have been fully executed. In 2006, the Company received a reassignment of a 444,440 units of the interests, out of 33,212,000 units initially issued, from the Bondholders with conversion rights.

The Company has agreed to pay 1.86% of the distributions it receives, up to an aggregate amount of $931,000, on the FPFG Intercompany Claim to Thaxton Investment Corporation (“Thaxton”). The amounts payable to Thaxton are based on a settlement of disputes concerning the purchase price paid by Thaxton to FirstPlus Consumer Finance, Inc. (“Consumer Finance”), then a subsidiary of the Company, pursuant to the sale of all of the assets of Consumer Finance to Thaxton in 1999. The Company has previously discussed with other creditors settlement of various claims by assignment of portions of the FPFG Intercompany Claim. For example, the Company had agreed to assign a 7.6% interest in the distributions to its former landlord in connection with amendments to the Company’s then existing lease for its executive and administrative offices. However, negotiations with this landlord and other parties have been dormant in recent years. There is no assurance that these parties will not assert claims in excess of the Company’s current estimate of the value of these claims or that there are no additional parties who may assert claims with respect to the FPFG Intercompany Claim.

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Since the bankruptcy proceedings, the FPFG Intercompany Claim had been the only substantial asset of the Company and the only source of potential payment for its obligations. The Company has recorded an allowance since any claim would be dependent on the receipt of funds from the bankruptcy estate of the Company’s former subsidiaries. The Company has recorded a contingent liability of approximately $3.5 million based on the funds received by the Grantor Trust from the Creditor Trust. There can be no assurance as to the ultimate value of the FPFG Intercompany Claim or the timing of distributions on the FPFG Intercompany Claim.

Primarily due to lack of funds, the Company had for the most part been in a dormant capacity from 1999 to 2006. The Company has maintained that one of its strategies has been to create value in the Company so that its prospects are enhanced for the future. The Company has been active in seeking a platform for operations and has pursued several opportunities. During 2006, the Company began analyzing an opportunity to enter the “Buy-Here Pay-Here” auto finance industry. Based on this analysis, the Company determined to make a concerted effort to enter this business, initially focusing on the Dallas and Fort Worth, Texas market. In November 2006, the Company formed Olé Auto Group, Inc. (“Olé”) in order to carry out this activity and acquired a pool of motor vehicle retail installment sale contracts and security agreements. Initially, the Company intends to open auto dealership operations in the Dallas-Fort Worth area and purchase cars and offer financing to its customers, typically marketing to customers with limited credit history or past credit problems.

As of March 31, 2007, the Company had approximately $12.9 million in cash and cash equivalents which management believes will be sufficient to cover operating expenses for the next twelve months. The Company does not believe it will have to raise additional funds in the next twelve months, although future growth may require the Company to raise additional funds.

Strategic Plan

Olé’s initial efforts have been concentrated on the major metropolitan markets in Texas. The two principal components of the Company’s business are the selling and financing of used automobiles. The Company believes that its vertically integrated structure is its most critical distinguishing characteristic from other sub prime indirect auto lenders because it aligns the sales and underwriting process and facilitates collaboration toward achieving mutually shared objectives.

The Company will utilize a “hub and spoke” approach as its template for growth. Under this approach, Olé performs specific functions on a centralized basis such as vehicle acquisition, accounting, marketing, training, and management information systems, polices, compliance and general corporate oversight, while decentralizing the sales, service, collections, and payment processing functions at the branch level.

As the Company grows its dealerships in a concentrated geographic area, it will explore the cost efficiency of centralizing the reconditioning, underwriting and advanced collections components of its operations. As the Company expands to multiple cities, the configuration would provide for multiple hubs and with a centralized corporate structure.

Results of Operations

Three months ended March 31, 2007 compared to the three months ended March 31, 2006

The Company has had virtually no liquidity and no operations for several years. The Company’s main asset has been the FPFG Intercompany Claim. The timing and amounts to be received on the FPFG Intercompany Claim are based on the performance of underlying loans in asset backed securitizations, and subject to many uncertainties. The FPFG Intercompany Claim began producing cash flow to the Company in 2005 and 2006, but due to the lawsuit styled FirstPlus Financial Group, Inc., Michael Montgomery, Jack Draper and The FirstPlus Financial Group Grantor Residual Trust v. George T. Davis and The FPFI Creditor Trust; Civil Action No. 05-02962; in the 298th District Court of Dallas County, Texas, the funds were held in the registry of the court. In May 2006, over the objections of George Davis, the court authorized the release of approximately $10 million to the Grantor Trust.

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As noted above, the Company had no operations during 2006 until November 2006. The Company’s activities during 2006 were primarily focused on responding to litigation and trying to preserve liquidity in order to emerge from operational dormancy and to develop new business opportunities.

During 2006, with a portion of the funds from the FPFG Intercompany Claim, the Company began to explore business opportunities. The Company determined to enter into the Buy-Here Pay-Here automobile sales and finance business, and operations began in 2007. However, the Company purchased an automobile receivable portfolio in November of 2006 for a purchase price of $520,000.

During the quarter ended March 31, 2007, Olé opened 3 auto sales and finance locations. The first location was opened on January 1, 2007 in Fort Worth, Texas. The other two locations were opened in Dallas, Texas during March of 2007.

Revenues were generated from the auto sales and finance operations and consisted of gross revenues from auto sales of approximately $1.38 million, interest income of approximately $13 thousand and other income of approximately $40 thousand.

Olé sold 117 vehicles during its first quarter of operations for a gross profit margin of approximately 33.7% on financed sales. For these sales, Olé collected approximately $160 thousand in cash down payments and recorded approximately $1.1 million in finance receivables. An allowance for uncollectible accounts was provided for against the finance receivables at a rate of 15%, which at March 31, 2007, the recorded allowance was approximately $170 thousand. The weighted average interest rate on the receivable portfolio is approximately 17.9% at March 31, 2007.

As of March 31, 2007, no receivables were greater than 60 days past due, however one vehicle was repossessed during the quarter then ended.

Olé had 137 vehicles in inventory as of March 31, 2007 in the amount of approximately $978 thousand. This inventory is located at the three sales locations. The inventory consists of a mix of 47% cars, 26% trucks, 21% SUVs , and, 7% vans.

Operating expenses for the three months ended March 31, 2007 include expenses for the Olé operations as well as for the Company, and consist of a provision for loan losses of approximately $170 thousand, salaries of approximately $171 thousand related to Olé, facility rents of approximately $57 thousand, and other overhead of approximately $344 thousand. During the three months ended March 31, 2006, the Company had no operations other than responding to various litigation actions. Accordingly, the operating expenses were approximately $320 thousand during the quarter ended March 31, 2006, which consisted primarily of legal and professional fees.

Additionally, the Company earned approximately $70 thousand in non-operating interest income on investments owned during the quarter ended March 31, 2006.

Off-balance Sheet Arrangements.

The Company does not have any off-balance-sheet arrangements.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the “safe harbor” provisions under Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. The Company uses forward-looking statements in its description of its plans and objectives for future operations and assumptions underlying these plans and objectives, as well as in its expectations, assumptions, estimates and projections about the Company’s business and industry. These forward-looking statements involve risks and uncertainties. The Company’s actual results could differ materially from those anticipated in such forward-looking statements as a result of certain factors as more fully described in this report.

Forward-looking terminology includes the words “may”, “expects”, “believes”, “anticipates”, “intends”, “projects” or similar terms, variations of such terms or the negative of such terms. These forward-looking statements are based upon the Company’s current expectations and are subject to factors and uncertainties which could cause actual results to differ materially from those described in such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this report to reflect any change in its expectations or any changes in events, conditions or circumstances on which any forward-looking statement is based.

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Item 3.Controls and Procedures

The Company’s management, with the participation of its Principal Executive Officer and Principal Accounting Officer, has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Principal Executive Officer and Principal Accounting Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

Because the Company had been in a dormant capacity for the past several years and only recently began operations, the Company had only three officers and employees as of March 31, 2007. Therefore, management’s assessment has concluded that, as of March 31, 2007, the Company’s shortage of personnel is not sufficient to constitute effective disclosure controls and procedures in light of the resources required for the functions described under Part I, Item 2, Plan of Operation, particularly if unforeseen circumstances arise, such as litigation.

There were no changes in the Company’s internal controls over financial reporting during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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PART IIOther Information

Item 1.Legal Proceedings

None

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.Defaults Upon Senior Securities

None

Item 4.Submission of Matters to a Vote of Security Holders

None

Item 5.Other Information

None

Item 6.Exhibits

Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Accounting Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Accounting Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

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SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Issuer caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRSTPLUS Financial Group, Inc.
Dated: May 21, 2007		/s/ Daniel T. Phillips
		President and Chief Executive Officer
		(Principal Executive Officer)

Dated: May 21, 2007	By:	/s/ James Roundtree
		Chief Financial Officer
		(Principal Accounting Officer)

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EXHIBIT INDEX

Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Accounting Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Accounting Officer of Periodic Report Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

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