UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 0-14888
PRIME CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3347311
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification no.)
10275 West Higgins Road, Suite 200, Rosemont, Illinois 60018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 294-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
As of September 30, 1999, there were 4,467,840 shares of common stock
outstanding.
PRIME CAPITAL CORPORATION AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations --
Three and Nine Months Ended
September 30, 1999 and 1998 3
Consolidated Balance Sheets --
September 30, 1999 and December 31, 1998 4
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-11
PART II. OTHER INFORMATION 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 6. Exhibits & Reports on 8-K 12
Exhibit Index 12
Reports on Form 8-K 12
SIGNATURE 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PRIME CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
Revenues:
Fee income 1,600,725 1,558,960 6,227,163 3,991,913
Direct financing
leases and loans 19,239 487,457 734,473 1,760,411
Rentals on
operating leases 875,500 1,067,993 2,602,530 2,372,117
Interest income 713,856 226,111 1,611,989 707,648
Other income 157,032 104,684 559,286 2,189,462
---------- ---------- ---------- ----------
Total revenues 3,366,352 3,445,205 11,735,441 11,021,551
Expenses:
Depreciation on leased
equipment 679,725 864,720 2,010,755 1,915,389
Interest 681,262 771,730 2,223,639 2,278,680
Provision for credit losses 650,001 - 750,001 150,000
Selling, general and
administrative 2,329,483 2,221,497 7,178,389 6,807,347
---------- ---------- ---------- ----------
Total expenses 4,340,471 3,857,947 12,162,784 11,151,416
Income (loss) before income
taxes (974,119) (412,742) (427,343) (129,865)
Income taxes - - - -
---------- ---------- ---------- ----------
Net loss (974,119) (412,742) (427,343) (129,865)
========== ========== ========== ==========
Basic earnings per share: $ (0.24) (0.11) (0.14) (0.07)
========== ========== ========== ==========
Dilutive earnings per share:$ (0.24) (0.11) (0.14) (0.07)
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
PRIME CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, December 31,
ASSETS 1999 1998
(Unaudited) (Audited)
Cash and cash equivalents $ 519,916 2,265,780
Receivables:
Operating lease rentals 78,363 143,371
Inventory finance receivables 8,157,283 5,659,700
Other 6,170,283 4,386,922
Net investment in direct financing
leases and loans 6,198,363 26,712,504
Investment in securitized receivables,
including restricted cash 16,787,619 12,388,932
Leased equipment, net of accumulated
depreciation 9,374,369 10,217,831
Deposits on equipment - 91,082
Equipment and furniture, net of accumulated
depreciation 553,363 715,326
Other assets 1,673,151 1,554,105
----------- ----------
Total assets $ 49,512,710 64,135,553
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 19,032,051 27,645,329
Accounts payable for equipment 5,396,741 16,106,095
Accrued expenses and other liabilities 15,675,450 11,586,839
Deposits and advances 3,579,664 2,455,803
Subordinated debt 4,590,670 5,000,000
----------- ----------
Total liabilities 48,274,576 62,794,066
----------- ----------
Stockholders' equity
Preferred stock, $100 par value:
authorized 250,000 shares, issued 25,000 2,500,000 2,500,000
Common stock, $0.05 par value:
authorized 10,000,000 shares; issued
4,467,840 and 4,447,098 shares in
1999 and 1998, respectively 223,392 223,392
Additional paid-in capital 10,012,967 9,518,356
Accumulated deficit (11,198,425) (10,600,461)
Treasury stock, at cost, 94,200 shares
at September 30, 1999 and 1998 (299,800) (299,800)
----------- ----------
Total stockholders' equity 1,238,134 1,341,487
----------- ----------
Total liabilities and stockholders' equity $ 49,512,710 64,135,553
=========== ==========
See accompanying notes to consolidated financial statements.
PRIME CAPITAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (427,343) (129,865)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation of leased equipment 2,010,756 1,915,389
Other depreciation and amortization 665,379 190,082
Amortization of debt financing fees 91,172 91,172
Non-cash gain on securitization of receivables (237,283) (1,165,196)
Provision for credit losses 750,001 150,000
Changes in assets and liabilities:
Other receivables (6,558,605) (3,624,747)
Other assets (931,020) 156,502
Accrued expenses and other liabilities 1,196,638 3,545,930
----------- ---------
Net cash provided by (used in) operating activities (3,440,305) 1,129,267
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of equipment acquired for lease (140,532,580)(115,125,964)
Customer deposits and payments on direct
finance leases and loans 6,297,081 8,131,210
Purchase of equipment and furniture (51,821) (147,231)
Investment in inventory finance receivables (2,497,583) (2,499,403)
Other investing activities (1,732,962) -
Proceeds from sales of finance receivables 146,366,190 91,879,557
----------- ----------
Net cash provided by (used in)
investing activities 7,848,325 (17,761,831)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options - 9,249
Preferred stock dividends (170,625) (168,750)
Other liabilities 2,630,018 (2,056,194)
Net increase (decrease) in notes payable (8,613,277) 17,175,993
------------ ----------
Net cash provided by (used in) financing activities (6,153,884) 14,960,298
Decrease in cash and cash equivalents (1,745,864) (1,672,266)
Cash and cash equivalents:
Beginning of period 2,265,780 3,572,553
------------ ----------
End of period $ 519,916 1,900,287
============ ==========
Cash paid during the year for interest $ 1,942,345 2,208,327
============ ==========
See accompanying notes to consolidated financial statements.
PRIME CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The interim financial statements have been prepared by Prime Capital
Corporation ("the Company" or "Prime Capital"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission
applicable to quarterly reports on Form 10-QSB. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations. In the opinion of
management, all adjustments which are of a normal recurring nature and are
necessary for a fair presentation have been included. However, results for
interim periods are not necessarily indicative of the results that may be
expected for a full year. It is suggested that these financial statements be
read in conjunction with the consolidated financial statements and related
notes and schedules included in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1998.
Certain reclassifications have been made to the 1998 financial statements to
conform to the classifications used in the September 30, 1999 financial
statements. These reclassifications had no effect on net income or
stockholders' equity as previously reported.
Item 2. Management's Discussion and Analysis of Financial Condition and
===============================================================
Results of Operations
=====================
Prime Capital Corporation is a diversified specialty finance company that
originates, aggregates and services loans, installment purchase agreements and
leases ("Financial Contracts") primarily in the software, specialty vehicle,
communications and medical industries. Prime Capital Corporation principally
operates through its wholly-owned subsidiary, Prime Leasing, Inc. and has
several wholly-owned subsidiaries including special purpose bankruptcy remote
corporations that have been organized in order to complete the sale of certain
asset-backed securities (collectively referred to as "Prime" or the "Company").
Prime develops new business through formal vendor finance programs with
equipment manufacturers, dealers and distributors and, to a lesser degree,
directly with end users. Prime seeks to become an effective business partner
with its clients by creating comprehensive programs and structures to develop,
promote and administer customer financing programs. Prime funds its loan and
lease receivables primarily by issuing asset-backed securities to institutional
investors.
Headquartered in Rosemont, Illinois, Prime's target markets are those which are
underserved and underdeveloped, with the objective of developing niche markets
that combine high growth potential with credit and collateral characteristics
consistent with Prime's underwriting standards. Currently, management believes
that the specialty vehicle and communications industries offer strong
opportunity for accelerated growth.
Prime originates business through formal alliances with major vendors,
distributors and others. As part of a re-engineering program that was initiated
in 1997, Prime strengthened its operating platform processes by implementing
a Time Based Response ("TBR") strategy that allows Prime to provide rapid and
efficient execution of transactions. Also in 1997, Prime began its Inventory
Floorplan and Leasing Programs for the specialty vehicle industry, with a
division known as Capital Alliance Financial Services ("Capital Alliance").
The specialty vehicle industry includes hearses, limousines, and shuttle buses,
among other commercial vehicles.
In order to continue to meet its on-going short-term and long-term liquidity
requirements, the Company needs to increase its capital base. Prime has hired
Tucker Anthony Cleary Gull "Tucker Cleary") to provide advisory investment
banking services to the Company in its capital raising efforts. The outcomes
of Tucker Cleary's activities may include the sale of certain assets of the
Company, or other strategic alternatives.
The operating results of Prime Capital are primarily affected by the following
factors: (1) the volume of Financial Contract activations, (2) the amount and
timing of Financial Contract sales, (3) the level of operating expenditures
required to originate and service the volume of Financial Contract activations
and sales, and (4) credit losses.
Sales and Securitizations of Finance Receivables During the Nine Months
=======================================================================
Ended September 30, 1999 and 1998
================================
The following table summarizes the sale and securitization of Financial
Contracts completed during the nine months ended September 30, 1999 and 1998.
Nine Months Ended September 30,
(Amounts in thousands)
Description Date 1999 1998
- --------------------- --------------- --------- ---------
True Sale Facility Various $ 96,041 42,053
Prime Finance
Corporation 1999-A-1
and 1999-A-2 May, 1999 12,014 -
Prime Finance
Corporation 1998-A-1
and 1998-A-2 March, 1998 - 38,937
-------- --------
Subtotal 108,055 80,990
Other sale transactions 37,989 15,865
-------- --------
Total $ 146,044 96,855
======== ========
In May 1999, the Company completed the sale of Financial Contracts by issuing
asset-backed notes. The notes were issued through the Company's wholly-
owned subsidiaries, Prime Finance Corporation 1999-A-1 and Prime Finance
Corporation 1999-A-2.
The initial principal amount of the notes issued by PFC 1999A totaled $74.0
million, which included $57.9 million of receivables related to Financial
Contracts previously sold through the Company's true sale facility and
$4.1 million of proceeds from the assignment of rentals and residual values
of operating leases. Proceeds attributable to operating lease contracts
are reported as debt in the Company's financial statements.
In March 1998, equipment lease-receivables backed pay through notes were
jointly issued by Prime Finance Corporation 1998-A-1 and Prime Finance
Corporation 1998-A-2 (collectively referred as "PFC-1998A"), both wholly
owned subsidiaries of the Company.
The initial principal amount of the notes issued by PFC 1998A totaled $106.1
million, which included $62.2 million of receivables related to the
consolidation of certain securitizations completed in prior years, $5.0
million that represents the pre-funding of finance receivables that are to be
sold at a later date, and $1.8 million of proceeds from the assignment of
rentals and residual values of operating leases. Proceeds attributable to
operating lease contracts are reported as debt in the Company's financial
statements.
In the fourth quarter of 1999, the Company has reached capacity on its credit
facilities and is not able to originate all of the Financial Contracts
available to it. Several sales of Financial Contracts are planned for the
fourth quarter, which, when completed will provide the Company with sufficient
warehouse capacity.
Results of Operations For The Nine Months Ended September 30, 1999 and 1998
===========================================================================
The Company activated Financial Contracts totaling $135.0 million in 1999,
an increase from the $116.3 million activated in 1998.
Fee income increased $2.2 million, or 56%, to $6.2 million in 1999 from
$4.0 million in 1998. Fee income includes gain from the sale and securitization
of Financial Contracts of $4.5 million in 1999 and $2.7 million in 1998. The
1998 gain from sale of contracts has been reduced by a $745,000 loss
attributable to the $62.2 million of receivables related to the consolidation
of certain securitizations completed in prior years, and excludes any gain or
loss attributable to the $5.0 million of prefunded receivables.
Direct financing lease income decreased $1.0 million, or 58.3%, to $0.7
million in 1999 from $1.8 million in 1998. The decrease is due to shorter
holding period of Financial Contracts and lower average contract balances
held in the warehouse.
Rentals on leased equipment increased $0.2 million, or 9.7%, to $2.6
million in 1999 from $2.4 million in 1998. Depreciation of leased equipment
increased $0.1 million, or 5.0%, to $2.0 million in 1999 from $1.9 million in
1998.
Interest income increased $0.9 million, or 127.8%, to $1.6 million in 1999 from
$0.7 million in 1998. This increase primarily relates to higher average
investment in securitized receivables.
Other income decreased $1.6 million, or 74.5%, to $0.6 million in 1999 from
$2.2 million in 1998. Other income for 1998 includes a $1.9 million gain
from the sale of warrants that were received by the Company in connection with
originating a lease transaction.
Interest expense decreased $0.1 million, or 2.4%, to $2.2 million in 1999 from
$2.3 million in 1998.
Provision for credit losses was $750,000 and $150,000 in 1999 and 1998,
respectively. (See "Credit Losses").
Selling, general and administrative expenses increased $0.4 million, or 5.5%,
to $7.2 million in 1999 from $6.8 million in 1998. Employee compensation and
related costs, including commissions, accounted for 67.4% and 62.2% of total
selling, general and administrative expenses in 1999 and 1998, respectively.
Selling, general and administrative expenses have increased, however the rate
of increase has declined. The increase is primarily due to an increase in the
serviced Financial Contract portfolio partially offset by a reduction in the
number of employees. At September 30, 1999, the Company had 68 employees
compared with 74 at June 30, 1999 and 75 at September 30, 1998.
Results of Operations For The Three Months Ended September 30, 1999 and 1998
============================================================================
The Company activated Financial Contracts totaling $42.0 million in 1999, an
increase of 8.8% from the $38.6 million activated in 1998.
Fee income remained constant at $1.6 million in 1999 as compared to 1998.
Fee income includes gain from the sale and securitization of financial
contracts of $0.9 million in 1999 and $1.0 million in 1998.
Direct financing lease income decreased $468,000, or 96.1%, to $19,000
in 1999 from $487,000 in 1998. The decrease is due to shorter holding period
of Financial Contracts and lower average contract balances held in the
warehouse.
Rentals on leased equipment decreased $0.2 million, or 18.0%, to $0.9 million
in 1999 from $1.1 million in 1998. Depreciation of leased equipment decreased
$185,000, or 21.4%, to $680,000 in 1999 from $865,000 in 1998.
Interest income increased $488,000 to $714,000 in 1999 from $226,000 in 1998.
The increase primarily relates to higher average investment in securitized
receivables.
Other income increased $52,000, or 50.0%, to $157,000 in 1999 from $105,000
in 1998.
Interest expense decreased $91,000, or 11.7%, to $681,000 in 1999 from
$772,000 in 1998, primarily due to lower average borrowings under the
Company's warehouse credit facilities.
Selling, general and administrative expenses increased $0.1 million, or
4.9%, to $2.3 million in 1999 from $2.2 million in 1998. Employee
compensation and related costs, including commissions, accounted for 67.0% and
63.6% of total selling, general and administrative expenses in 1999 and 1998,
respectively.
Selling, general and administrative expenses have increased, however the rate
of increase has declined. The increase is primarily due to an increase in the
serviced Financial Contract portfolio partially offset by a reduction in the
number of employees. At September 30, 1999, the Company had 68 employees
compared with 74 at June 30, 1999 and 75 at September 30, 1998.
Credit Losses
=============
An Allowance for credit losses is initially established when Financial
Contracts are sold or securitized in transactions where the Company retains
recourse for losses, partial or otherwise. This initial estimate of future
losses reduces the gain recorded at the time sale. If necessary, a Provision
for credit losses is charged against earnings to maintain the Allowance for
credit losses at an amount management believes necessary to absorb potential
losses in the finance contract portfolio.
Management evaluates the adequacy of the Allowance for credit losses by
reviewing credit loss experience, delinquencies, the value of the underlying
collateral, including third party guarantees or insurance recoveries, the
level of finance contract portfolio, as well as, general economic conditions.
The Company has incurred charge-offs totaling $2,675,000 and $8,178,000
during the years ended December 31, 1998 and 1997, respectively. Charge-offs
totaled $1.8 million during the nine months ended September 30, 1999. During
1997, the charge-offs were caused by a small number of customers that
represented a relatively significant investment in the Company's various pools
of securitized receivables. During 1999 and 1998, the charge-offs predominately
stemmed from contracts that had been originated by third-party broker-business
originated between May 1996 through May 1997.
When recording charge-offs, legal fees and other costs reduce estimated
recoveries. However, salaries paid to employees directly associated
with pursuing recoveries are expensed as incurred.
The Company has recorded additional Provisions for credit losses totaling
$750,001, $4,300,000, and $7,000,000 during the nine months ended September 30,
1999 and the years ended December 31, 1998 and 1997, respectively. These
provisions were recorded to replenish the Allowance for credit losses, and are
exclusive of the Company's policy to record provisions against current period
new business originations. As of September 30, 1999, the Company has an
Allowance for credit losses of $6.2 million, which is 2.25% of its portfolio
after taking into consideration the current quarter Provision of $650,001.
The Allowance credit losses totaled $5.7 million at December 31, 1998.
Estimated recoveries are included in other receivables and totaled $5.2 million
and $3.1 million at September 30, 1999 and December 31, 1998, respectively.
Liquidity and Capital Resources
===============================
Prime conducts its business in a manner designed to conserve its working
capital and minimize its credit exposure. The Company does not purchase
equipment or disburse funds until: (1) it has received an executed lease
or loan agreement from its customer, and (2) it has determined that the
lease or loan agreement (a) can be discounted with a bank or financial
institution on a non-recourse basis, or (b) meets the origination standards
established for a securitized pool.
At December 31, 1998 and September 30, 1999, the Company had credit available
totaling $188.0 million and $110.0 million, respectively under its credit
facilities which are used to fund Financial Contracts that arise during the
normal course of business. In October 1999, $100.0 million of these facilities
were renewed until March 31, 2000. During the first and second calendar
quarters of 1999, $78.0 million of these facilities expired. The Company plans
to negotiate the replacement of these facilities.
During November 1999, the Company had fully utilized its credit facilities
and suffered an interruption in its ability to fund all of its flow of new
Financial Contracts. Several sales of Financial Contracts are planned for the
fourth quarter, which, when completed, will provide the Company with sufficient
warehouse capacity. In the event that these sales of Financial Contracts do not
close, fourth quarter results will be negatively impacted.
On May 4, 1999, the Company completed the sale of Financial Contracts by issuing
asset-backed notes. The notes were issued through the Company's wholly-owned
subsidiaries, Prime Finance Corporation 1999-A-1 and Prime Finance Corporation
1999-A-2. The initial aggregate principal amount of the notes was $74.0
million. Proceeds from the issuance of the notes were used to reduce borrowings
under several of the Company's warehouse credit facilities and to increase
working capital.
During May 1999, the Company amended certain terms and conditions of its 1996
subordinated debt agreement. One of the amended terms adjusted the exercise
price of the warrants issued in connection with the subordinated debt. The
Company agreed to change the exercise price of the warrants to purchase 499,606
shares of common stock from $1.00 per share to $0.01 per share. As a result
of this amendment, $494,610 has been credited to additional paid-in capital
and a corresponding charge for deferred interest has reduced subordinated
debt. The deferred interest is being amortized over the remaining term of
the subordinated debt.
Management believes that in order to meet its short-term and long-term liquidity
needs, the Company will require additional capital resources to supplement the
expected cash flows of its operating activities and anticipated borrowings under
its warehouse financing facilities. The Company expects to complete one or more
sales of Financial Contracts before the end of the year, which, when completed,
will cure its current warehouse capacity shortage. The Company is also
exploring other sources of liquidity to satisfy its need for additional capital
resources. The Company has hired an investment banking firm to explore
financial and strategic capital alternatives.
Year 2000 Compliance
====================
Year 2000 compliance refers to the ability of computer hardware and software
to respond to the problems posed by the fact that computer programs have
traditionally been written using two digits rather than four to define the
applicable year. As a consequence, unless modified, computer systems will not
be able to differentiate between the year 2000 and 1999. Failure to address
this problem could result in system failures and the generation of erroneous
data.
The Company believes that its information technology ("IT") systems are year
2000 compliant. The Company also has several non-IT systems, including voice
mail and phone systems, which use dates electronically that have been reviewed
and are compliant. The Company believes that significant third parties in which
the Company conducts business with, including parties to the Company's credit
facilities, are or will be year 2000 compliant by January 1, 2000.
The Company has not prepared estimates of costs for the correction of year 2000
issues. Based on information available at this time, including the year 2000
compliance status of information technology systems as well as the anticipated
replacement costs for non-compliant systems, the Company does not believe that
the cost will have a material adverse effect on the Company's results of
operations or financial condition. However, there can be no assurance of
unforeseen problems in its own computer systems or computer systems of third
parties with which the Company conducts business. Such problems, depending on
the extent and nature, could materially and adversely effect the Company's
operations and financial condition. For each primary counterparty upon which
the Company relies, there are alternate providers of such services in the
marketplace. Based on its assessment of the year 2000 issue to date, the
Company has not developed a contingency plan. However, the Company continues
to evaluate the impact of year 2000 issues and will create a contingency plan
if considered warranted.
Forward-Looking Statements
==========================
This Form 10-QSB contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Form 10-QSB, the
words and phrases "expects", "intends", "believes", "will seek", and
"will realize" and similar expressions as they relate to the Company
or its management are intended to identify such forward-looking statements.
The Company's actual results, performance or achievements could differ
materially from the results, performance or achievements expressed in,
or implied by, these forward-looking statements.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit Index
Exhibit No. Description
11 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
b) Reports on Form 8-K
On November 1, 1999, the Company reported the resignation of its public
accountants, KPMG LLP. Form 8-K was amended on November 11, 1999 to
incorporate a letter furnished by KPMG LLP agreeing with the statements made
by the Company in the original filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME CAPITAL CORPORATION
(Registrant)
November 22, 1999 /s/ Vern E. Landeck__________________
Vern E. Landeck, Chief Financial Officer
Vern E. Landeck is
the Principal Financial and Accounting
Officer and has been duly authorized to
sign on behalf of the Registrant
November 22, 1999 /s/ James A. Friedman-------------------
James A. Friedman, Chief Executive Officer
EXHIBIT 11
PRIME CAPITAL CORPORATION
Computation of Earnings Per Share
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
------------------------ ---------------------
Numerator:
Net loss $ (974,119) (412,742) (427,343) (129,865)
Preferred dividends (57,500) (55,625) (170,625) (168,750)
--------- --------- -------- --------
Numerator for basic
and diluted earnings
per share-income
(loss) available to
common shareholders $(1,031,619) (468,367) (597,968) (298,615)
========= ========= ========= ========
Denominator:
Denominator for basic
earnings per share-
weighted average shares 4,373,648 4,351,016 4,357,801 4,343,869
Effect of dilutive securities:
Options and warrants 859,307 527,991 684,580 570,330
--------- --------- --------- ---------
Denominator for diluted
earnings per share-
adjusted weighted
average shares and
assumed conversions 5,232,955 4,879,007 5,042,381 4,914,199
========= ========= ========= =========
Basic earnings per share $ (0.24) (0.11) (0.14) (0.07)
========= ========= ========= =========
Diluted earnings per share $ (0.24) (0.11) (0.14) (0.07)
========= ========= ========= =========
In 1999 and 1998, the weighted average shares under the diluted computations
have an anti-dilutive effect, therefore diluted earnings per share will be
shown equal to basic earnings per share.
Options to purchase an average of 94,500 shares of common stock at prices
between $2.02 and $6.00 per share in 1999 were outstanding but were not included
in the computation of diluted earnings per share because the options' exercise
price was greater than the average market price of the common shares and,
therefore, the effect would be antidilutive. Options to purchase an average of
190,000 shares of common stock at prices between $4.25 and $6.00 per share in
1998 were outstanding but were not included in the computation of diluted
earnings per share because the options' exercise price was greater than
the average market price of the common shares and, therefore, the effect
would be antidilutive.
This schedule contains summary financial information extracted from SEC
Form 10QSB and is qualified in its entirety by reference to such financial
statements. Individual data items on this schedule may not add up due to
rounding.
[ARTICLE]5
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-START] JAN-01-1999
[PERIOD-END] SEPT-30-1999
[CASH] 519,916
[SECURITIES] 0
[RECEIVABLES] 49,465,248
[ALLOWANCES] (6,227,761)
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 2,354,455
[DEPRECIATION] (1,801,091)
[TOTAL-ASSETS] 49,512,710
[CURRENT-LIABILITIES] 0
[BONDS] 4,590,670
[PREFERRED-MANDATORY] 0
[PREFERRED] 2,500,000
[COMMON] 223,392
[OTHER-SE] (1,485,258)
[TOTAL-LIABILITY-AND-EQUITY] 49,512,710
[SALES] 0
[TOTAL-REVENUES] 11,735,441
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 9,189,144
[LOSS-PROVISION] 750,001
[INTEREST-EXPENSE] 2,223,639
[INCOME-PRETAX] (427,343)
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (427,343)
[EPS-BASIC] (0.14)
[EPS-DILUTED] (0.14)