EXHIBIT 99.1
FIRSTPLUS
F i n a n c i a l
Business Summary for the Calendar Year 2004
FIRST QUARTER, 2004
During the first quarter of 2004, FirstPlus Financial Group, Inc. ("FPFG")
undertook an effort to sell a small investment and realize a small yield on the
investment. While the return was not anticipated to provide a significant
return, the yield would allow FPFG to have a number of options that otherwise
would not be available due to constraints on cash.
The primary matters addressed in the quarter included taking steps to regain
compliance with Securities and Exchange Commission filing requirements, becoming
up to date in corporate filing fees for Nevada and franchise taxes in Texas.
Previously, these reports and filings were delinquent due to cash constraints
and the inability of FPFG to obtain audited financial statements. The securities
filings and the franchise taxes both require audited financial statements. The
filing fees for Nevada are fixed based on authorized shares and the fees are
already established.
During the quarter, FPFG began to analyze the extent of its creditors and
potential creditors, so as to make sure it had as accurate of information
regarding its obligations as reasonably possible. This analysis was expected to
be ongoing. Also, an analysis of what monies Capital Lending has paid on behalf
of FPFG was undertaken.
The D&O insurance policy was paid, however at the time it was not known how many
premium installment payments were made by Capital Lending. The installment
agreement provided for a down payment of $5,132.29 with 11 consecutive
installments of equal amounts, which provides FPFG coverage for two years.
Continued follow up on this matter was directed.
The liquidation of the 401k plans continued to progress during the quarter. As
of 12-1-03, there were 417 participants in the plan with a fund balance of $
878,214.63. FPFG has now contacted 136 participants representing $ 617,079.34 or
70.27% of the fund. To date, 80 participants have closed their accounts and the
fund has paid out a total of $ 434,556.40, or 49.48% of the fund.
SECOND QUARTER, 2004
During the second quarter, the transaction discussed in the first quarter where
FPFG would sell its investment was consummated. The completion of this
transaction provided FPFG with some amount of much needed capital. The
transaction resulted in an influx of capital, allowing FPFG to pay a number of
its outstanding debts. FPFG ended the second quarter with $724,673 in cash.
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Financial Statements
There remain several areas of concern that revolve around the need to obtain
audited financial statements. It is necessary to obtain financial statements
before FPFG would be able to file for reinstatement of our Texas charter. FPFG
had not been in compliance with the annual Texas franchise tax and the FPFG
charter had been subject to an administrative revocation by the state. The
charter may be reinstated following the filing of the delinquent franchise
report. During the second quarter, the accountants were working on gathering
data for the financial statement.
FPFG also is required to file an annual report with Nevada. This report is past
due and the corporate charter will be revoked if the annual report is not filed
and the fee paid by October 2004. The annual fee is based on the number of
shares authorized, and the annual fee for FPFG is $11,175.00. FPFG owes fees for
2003 and 2004.
Taking additional steps to regaining compliance with federal securities filings
remained a high priority during the quarter. FPFG had not filed a quarterly
report on Form 10-Q or annual report on Form 10-K report since 1998.
Our accountants would not estimate the expense or time involved with receiving
an audited financial statement, but FPFG would expect to incur a significant
expense for the audit. The accountants estimated the audit would take several
months to complete.
D&O Insurance
The D&O Insurance remained in force during the quarter. The installment
agreement provided for a down payment of $5,132.29, with 11 consecutive
installments of equal amount. FPFG ended the second quarter with the down
payment and four installments being paid and seven installments remaining.
401K Retirement Plans
Continued effort was made in the liquidation of the two 401(k) plans that FPFG
offered to its employees. The recordkeeper for the first plan has been very
helpful with the termination of the plan. At the close of the second quarter
more than $632,000.00, representing over 72% of the fund, was distributed to
participants. There are still remaining over 280 participants with an aggregate
just over $266,000.00, most of whom were not able to be contacted. The next
stage of attempting to contact participants is through the "Letter Forwarding
Program" with the Internal Revenue Service. The cost of utilizing this program
is $1,750.00.
Internal Revenue Service
FPFG has an outstanding debt to the IRS in the amount of $19,600.00. This amount
was due before July 3, 2004 and is for tax year 2000. With additional penalties
and interest, this amount is expected to exceed $20,000. Also, an extension was
filed for the tax year 2003.
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Mellon Investor Services
Mellon Investor Services is the transfer agent for FPFG. The monthly fee from
Mellon generally is around $2,700, with an annual fee of approximately
$2,500.00. On May 28, 2004, FPFG reimbursed United Lending Partners $37,681.18,
for payments it made to Mellon on behalf on FPFG. FPFG is now making these
payments itself.
THIRD QUARTER, 2004
During the third quarter, FPFG paid a number of additional debts that were known
to FPFG, cleared a regulatory hurdle and continued progress on liquidating the
401(k) plans. FPFG ended the third quarter with an aggregate of liquid assets,
short term investments and outstanding loans in excess of $613,000.
Financial Statements
The need for audited financial statements remained a goal for the third quarter.
FPFG was informed by its accountant that he needed to review the checkbook
registry before he would refer the matter for a formal statement.
The areas that are awaiting financial statements include the annual Texas
franchise reports (due for 2003 and 2004) and federal securities law compliance.
Nevada did not require an audited financial statement. As a result, FPFG was
able to make the appropriate filing and is now in good standing. However, in
October, 2004, a renewal filing will be required to stay in good standing. The
fee for that filing will be $11,000.
D&O Insurance
The D&O Insurance remained in force during the quarter. The installment
agreement provided for a down payment of $5,132.29, with 11 consecutive
installments of equal amount. FPFG ended the second quarter with the down
payment and four installments being paid and seven installments remaining.
401K Retirement Plans
Continued effort was made in the quarter to liquidate both 401(k) plans. The
first plan has participants with unknown current addresses. FPFG has contracted
with the IRS to utilize their "Letter Forwarding Program" in a final attempt to
contact those participants. FPFG has met the requirements of the IRS to attempt
to contact the participants for the purposes within their guidelines. Allowing
time for this program to run its course, FPFG anticipates that by early 2005 it
should be able to instruct the recordkeeping firm to send the retirement account
for any non-responsive participants to the participant's respective state and
place the funds in an unclaimed status.
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Internal Revenue Service
With further research, FPFG determined that the amounts previously reported as
owing to the IRS were previously paid by FPFG.
The other IRS matter is the tax filing for tax year 2003. FPFG had an extension
which expired in September. When the financial statements are reviewed, FPFG
will forward them to the tax firm for completion of the 2003 filing.
Outstanding Loans
On August 26, 2004, FPFG loaned $100,000 to a mortgage lending company in
exchange for a promissory note. The term of the note is for 60 days at a rate of
15%, maturing on October 19, 2004. The note calls for repayment of the loan from
the closing and funding of certain mortgage loans.
Residuals
During the quarter, FPFG learned from the trustee of the FPFI Creditor Trust
(the "Creditor Trust") that a disbursement from the residuals was expected for
November 2004. The actual amount was unknown, although it is expected to be
several million dollars.
Fourth Quarter, 2004
During the quarter, FPFG fulfilled its annual license requirement in Nevada and
is in good standing for the year.
Events occurring during the quarter include: (1) FPFG appointed two additional
trustees to the FIRSTPLUS Residual Grantor Trust (the "Grantor Trust"); (2) FPFG
received a disbursement from the Creditor Trust; (3) a director resigned; (4)
FPFG conducted a mass mailing to 401k participants whose current address was
unknown (via the IRS); and (4) FPFG made continued progress with the financial
statements.
At the end of the fourth quarter, FPFG had aggregate of liquid assets, short
term investments and outstanding loans in excess of $543,000.
Financial Statements
During the quarter, efforts were conducted to reinstate FPFG's charter in Texas.
When the charter is reinstated, FPFG believes that it may apply for unclaimed
funds being held in connection with its account.
Corporate Charter
During the fourth quarter, FPFG paid the annual filing fees for the corporate
charter in Nevada. The annual fee is $11,000 and is due before October of the
filing year. With this payment, FPFG has paid $22,000 in fees over the past year
and is current with the filing requirements for Nevada.
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D&O Coverage
The D&O insurance remained in force during the quarter. The fourth quarter
concluded with only one installment payment remaining. After the final
installment is paid in January, along with a small late fee, FPFG will have paid
for coverage through the end of 2005.
401K Retirement Plans
The Letter Forwarding Program through the IRS for the most part has been
successful. The fourth quarter ended with 89% of the participants responding.
These participants are either paid out or in various stages of being paid out.
During the quarter, FPFG communicated with the recordkeeping company and trust
company and each appeared prepared to transfer accounts with a balance to the
trust company. Once that occurs, the 401(k) plan will be closed. FPFG believes
it may effectuate this transfer in the first part of 2005.
Internal Revenue Service
During the fourth quarter of 2003, FPFG received a tax refund from the IRS. FPFG
paid its remaining tax liability of in excess of $20,000 in January 2005. FPFG
also opened discussions regarding the possible abatement or waiver of any
penalties and interest.
Grantor Trust
In November 2004, the FPFG appointed two additional trustees to the Grantor
Trust. This action was taken to preserve the value of residual assets for the
benefit of creditors and shareholders. Prior to this time, additional trustees
were not necessary due to inactivity with the residual assets. With the expected
distribution of funds from the Creditor Trust, FPFG believed it was now prudent
to appoint the additional trustees. The appointment of additional trustees had
been the original intent of the board of directors. The trustees then began
analyzing the creditors of FPFG and other potential claims that may be required
to be paid from the Grantor Trust.
This action was opposed by George Davis. Partially as a result of a dispute
between FPFG, George Davis and the trustee of the Creditor Trust, the trustee of
the Creditor Trust petitioned the Bankruptcy Court to intervene and decide this
matter. The trustee of the Creditor Trust filed a Complaint for Interpleader and
Declaratory Relief and named the trustees of the Grantor Trust and FPFG as
defendants.
Mr. Davis felt that this action put him at odds with the board of directors. Mr.
Davis informed FPFG that he had decided to resign as a director. On December 30,
2004, the board of directors accepted his resignation.
The Creditor Trust has distributed funds to some of the recipients of beneficial
interest of the inter-company claim assigned by FPFG totaling $7,306,297. The
trustee of the Creditor Trust has paid its bondholders and Paine Webber (now
known as UBS) $1,826,574 and $1,607,385, respectively. Additional funds were
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deposited with the Bankruptcy Court, with the distribution earmarked for the
Grantor Trust. This amount was $3,872,337.
Shareholder Relations
The office of Vice President for Shareholder Relations was eliminated in
November 2004. This move was precipitated as a cost cutting measure and to
centralize responsibilities. The only officer affected by this action was George
Davis.
Outstanding Loans
FPFG continued to have a $100,000 receivable outstanding that relates to a short
term loan FPFG made to a mortgage lending company. The term of the loan is for
60 days at a rate of 15%, and was renewed on December 20, 2004. The original
note was executed on August 26, 2004 and was first renewed on October 19, 2004.
The December renewal was the second renewal in the series.
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