10-Q 1 a2049249z10-q.txt 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2001 -------------- 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 No. 2-8381-NY ARISTA INVESTORS CORP. ---------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-2957684 ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 116 John Street, New York, N.Y. 10038 ---------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 964-2150 Indicate by check mark whether the registrant 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____ --- The aggregate number of Registrant's outstanding shares on March 11, 2001 was 2,570,100 shares of Class A Common Stock, $0.01 par value. -1- ARISTA INVESTORS CORP. TABLE OF CONTENTS

-2- ARISTA INVESTORS CORP. CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these financial statements. 3 ARISTA INVESTORS CORP. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Three Months Ended March 31, 2001 and 2000 (unaudited)

The accompanying notes are an integral part of these financial statements. 4 ARISTA INVESTORS CORP. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Three month period ended March 31, 2001 (unaudited) and year ended December 31, 2000

The accompanying notes are an integral part of these financial statements. 5 ARISTA INVESTORS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 2001 and 2000 (Unaudited)

The accompanying notes are an integral part of these financial statements. 6 ARISTA INVESTORS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001 and 2000 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying consolidated financial statements are prepared on the basis of generally accepted accounting principles ("GAAP"). Certain information normally included in annual financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). In the opinion of the management of Arista Investors Corp. (the "Registrant"), all adjustments (consisting of normal recurring accruals only) have been reflected for a fair presentation of the unaudited financial position as of March 31, 2001 and results of operations for the three-month periods ended March 31, 2001 and 2000. The operating results for the periods are not necessarily indicative of the results to be expected for the entire year. NOTE 2 - REVENUE RECOGNITION In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB 101"), entitled "Revenue Recognition in Financial Statements", as amended by SAB No. 101A and SAB No. 101B, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements filed with the SEC. SAB 101 outlined the basic criteria that companies must follow to recognize revenue and provide guidance for disclosures related to recognition policies. The Registrant adopted SAB 101 effective January 1, 2001 without having any effect on its reported result of operation because its policies were substantially the same as the following requirements of SAB 101. The Registrant recognized revenue only when: - Persuasive evidence of the service arrangement existed; - Delivery of services had occurred; - The Registrant's service price to its customers were known and determinable; and - Collectibility was reasonably assumed. -7- ARISTA INVESTORS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001 and 2000 (Unaudited) These policies presume that shipment occurs when administrative services are completed. NOTE 3 - TRANSACTIONS WITH RELATED PARTIES At March 31, 2001 and December 31, 2000, Bernard Kooper, Chairman of the Boards of Directors of the Company and Arista and a Director of The Collection Group, Inc., beneficially owned 20.4% of the outstanding shares of Class A common stock, par value $.01 per share (the "Class A Common Stock"). At December 31, 1998 Mr. Kooper also owned 100% of the outstanding shares of Class B common stock, par value $.01 per share (the "Class B Common Stock"). Mr. Kooper is also the owner of Bernard Kooper Life Agency, Inc. (the "Agency"), one of the general agents marketing the Insurance. During the three months ended March 31, 2001 and 2000, the Agency received approximately $39,000 and $43,000, respectively, in commissions based on the premiums collected under the Treaty's Insurance. Of this amount, the Agency paid approximately $30,000 and $33,000 during the three months ended March 31, 2001 and 2000, respectively, to brokers, which included certain members of the Board of Directors of the Company and Arista. The amount paid to members of the Board of Directors of the Company and Arista by the Agency was approximately $3,000 and $4,000 for the three months ended March 31, 2001 and 2000, respectively. NOTE 4 - THIRD PARTY ADMINISTRATION The Registrant entered into an Administrative Services Agreement dated September 23, 1998 (the "TPA Agreement") with The Guardian. The TPA Agreement was consummated on November 12, 1998 and deemed effective as of July 1, 1998. As a third party administrator under the TPA Agreement, the Registrant performs various services relating to the Insurance underwritten by The Guardian, including, but not limited to pricing of risk, underwriting new and renewal business, investigation, and calculation and payment of claims. The TPA Agreement will terminate on June 30, 2003. However, the Guardian may terminate the agreement after the first two years. -8- ARISTA INVESTORS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001 and 2000 (Unaudited) In addition, the Registrant acts as a third party administrator for the temporary disability insurance of Hartford Life and Health Insurance Company and statutory disability benefits insurance of the United States Life Insurance Company in the City of New York. The latter agreement was terminated effective June 30, 2000. Effective January 1, 1999, the Registrant entered into an agreement with the Girl Scouts of the U.S.A. (the "Girl Scouts") to provide third-party administrative claim services for the Super Statutory Disability Benefits Insurance provided by the Girl Scouts. Effective October 1, 2000, the Company entered into an agreement with Highmark Life Insurance Company of New York ("Highmark") to perform third-party administrative services relating to disability policies underwritten by Highmark. -9- ARISTA INVESTORS CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements (unaudited) of the Company and the notes thereto appearing elsewhere in this Form 10-Q. Except for the historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those projected in the forward-looking statements discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section, as well as in other sections herein. RESULTS OF OPERATIONS THREE-MONTH PERIODS ENDED MARCH 31, 2001 VS. MARCH 31, 2000 (UNAUDITED) Consolidated revenues from third-party administrative services during the three months ended March 31, 2001 and 2000 were approximately $1,087,000 and $1,031,000, respectively. Consolidated total revenue from operations for the first three months of 2001 and 2000 were approximately $1,133,00 and $1,042,000, respectively. This increase in total revenue was offset by a greater increase in consolidated general and administrative expenses, resulting in a net loss of approximately $82,000 for the first three months of 2001 as compared to a gain of approximately $92,000 for the same period in 2000. Consolidated investment income for the first three months of 2001 and 2000 were both approximately $7,000. Consolidated other income for the first quarter of 2001 and 2000 was approximately $39,000 and $4,000, respectively. -10- ARISTA INVESTORS CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) The consolidated general and administrative expenses for the first three months of 2001 and 2000 were approximately $1,236,000 and $909,000, respectively. Increases in expenses for professional fees, employee wages and benefits, rent, and travel and entertainment attributed to the additional general and administrative expenses. LIQUIDITY AND CAPITAL RESOURCES Retained earnings decreased from $1,161,829 at December 31, 2000 to $1,079,591 at March 31, 2001 as a result of the Company's net loss. Since the consummation of the cession of Arista's Insurance business to The Guardian, Arista has reduced its capital and paid in surplus to the minimum amount permitted by the New York State Insurance Department and is reviewing its plans to sell Arista's charter and license. INFLATION AND SEASONALITY The Company does not anticipate that inflation will significantly impact its business nor does it believe that its business is seasonal. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market risk encompasses liquidity risk and price risk, both of which arise principally in transactions involving financial instruments. The Company's operations are not subject to these risks. -11- ARISTA INVESTORS CORP. PART II. OTHER INFORMATION Item 1. Legal Proceedings Nothing to report. Item 2. Changes in Securities Nothing to report Item 3. Defaults Upon Senior Securities Nothing to report. Item 4. Submission of Matters to a Vote of Security Holders Nothing to report. Item 5. Other Information Nothing to report. Item 6. Exhibits and Reports on Form 8-K Nothing to report. -12- 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. ARISTA INVESTORS CORP. (REGISTRANT) BY: /S/ STANLEY S. MANDEL --------------------------------- STANLEY S. MANDEL, President and Chief Executive Officer (principal executive officer) BY: /S/ SUSAN J. HALL --------------------------------- SUSAN J. HALL, Senior Vice President and Treasurer (principal financial and accounting officer) May 14, 2001 -13-

ARISTA INVESTORS CORP 10-Q