FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended: September 30, 1994
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: 33-31639
Finca Consulting, Inc.
(Exact name of registrant as specified in its Charter)
Colorado 84-1121635
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Koenigsallee 106, 40215 Duesseldorf, Germany
(Address of principal executive offices) (Zip Code)
(011-49-211) 384860
(Registrant's telephone number, including area code)
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 filed such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of September 30, 1994, 2,146,633 shares of Registrant's Common
Stock, $.01 par value, and 628,126 shares of Registrant's Convertible Preferred
Stock, $00001 par value, were issued and outstanding.
Finca Consulting, Inc.
Index
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Part II OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote
of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
PART I FINANCIAL INFORMATION
ITEM 1
Finca Consulting, Inc. and Subsidiaries
Index to the Consolidated Financial Statements
September 30, 1994
Financial Statements
Consolidated Balance Sheets................................................
Consolidated Statements of Operations......................................
Consolidated Statement of Changes in Stockholders' Equity..................
Consolidated Statements of Cash Flows......................................
Notes to the Consolidated Financial Statements.............................
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
1994 1993
----------- -----------
Assets
Current Assets
Cash ........................................................................ $ 752,149 $ 351,701
Other current assets ........................................................ 141,372 54,137
Receivable due from related parties ......................................... 397,570 293,931
----------- -----------
Total Current Assets ................................................... 1,291,091 699,769
----------- -----------
Property and Equipment, at cost
Land ........................................................................ 115,563 134,949
Buildings ................................................................... 462,254 545,238
Office furniture and equipment .............................................. 248,475 252,102
Motor vehicle ............................................................... -- 9,082
----------- -----------
826,292 941,371
Less: accumulated depreciation and amortization ............................. (192,856) (171,304)
----------- -----------
Net Property and Equipment ............................................. 633,436 770,067
----------- -----------
Other Assets
Deposits .................................................................... 14,701 53,341
Capital cost - office premium, net of accumulated amortization of $11,151 ... -- 15,426
Investment in Vintage Cars .................................................. 93,240 101,250
Goodwill, net of accumulated amortization of $1,577 ......................... -- 40,487
Other assets ................................................................ 64,613 136,542
----------- -----------
Total Other Assets ..................................................... 172,554 347,046
----------- -----------
Total Assets ........................................................... 2,097,081 1,816,882
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses ....................................... 240,790 196,522
Customer credit balances .................................................... 1,457,565 926,712
Note payable ................................................................ -- 19,195
----------- -----------
Total Current Liabilities .............................................. 1,698,355 1,142,429
----------- -----------
Minority interests in subsidiary ............................................... 45,632 45,632
----------- -----------
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
1994 1993
----------- -----------
Stockholders' Equity
Common stock, $.01 par value, 20,000,000 shares authorized, 2,146,633
shares issued and outstanding ............................................ 21,466 21,466
Preferred stock; $.00001 par value, 20,000,000 shares authorized, 628,126 and
$16,305 shares issued and outstanding, respectively ......................... 1 1
Capital in excess of par value .............................................. 6,101,593 5,107,476
Accumulated deficit ......................................................... (5,747,724) (4,428,873)
Treasury Stock, 120,006 common shares ....................................... (1,200) --
Cumulative translation adjustment ........................................... (21,042) (71,249)
----------- -----------
Total Stockholders' Equity ............................................. 353,094 628,821
----------- -----------
Total Liabilities and Stockholders' Equity ............................. $ 2,097,081 $ 1,816,882
=========== ===========
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ -------------------------------
1994 1993 1994 1993
---------- -------------- ------------ -------------
Revenues .................................. $ 3,961,483 $ 4,604,241 $ 15,694,919 $ 10,976,255
Cost of Shares and Options ................ 3,636,817 4,475,981 11,427,728 8,334,565
------------ ------------ ------------ ------------
Gross Profit .............................. 324,666 128,260 4,267,191 2,641,690
Operating Expenses
Selling, general and administrative .... 1,550,111 247,407 5,560,729 3,264,192
------------ ------------ ------------ ------------
Income (Loss) From Operations ... (1,225,445) (119,147) (1,293,538) (622,502)
------------ ------------ ------------ ------------
Other Income (Expense)
Interest income ........................ -- 25 -- 423
Interest expense ....................... (1,587) (1,375) (25,313) (15,215)
------------ ------------ ------------ ------------
Total Other Income (Expense) ...... (1,587) (1,350) (25,313) (14,792)
------------ ------------ ------------ ------------
Net Income (Loss) ......................... $ (1,227,032) $ (120,497) $ (1,318,851) $ (637,294)
============ ============ ============ ============
Net (Loss) Per Share ...................... $ (.572) $ (.059) $ (.614) $ (.312)
============ ============ ============ ============
Weighted Average Number of Common
Shares Outstanding ........................ 2,146,633 2,040,937 2,146,633 2,040,937
============ ============ ============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
From December 31, 1993 Through September 30, 1994
(Unaudited)
Preferred Stock Common Stock Treasury Stock
-------------------------- --------------------------- ----------------------------
Capital
in Excess
Par Par of Par
Shares Value Shares Value Value Shares
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 1993 ...... 16,305 $ 1 2,146,633 $ 21,466 $ 5,107,476 --
Acquisition of Treasury Shares ... -- -- -- -- (364,055) (120,006)
Issuance of Preferred Shares, less
offering costs of $666,536 ....... 611,821 -- -- -- 1,358,172 --
Foreign currency transition gain . -- -- -- -- -- --
Net (Loss) for the nine month
period ended June 30, 1994 .... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
628,126 $ 1 2,146,633 $ 21,466 $ 6,101,593 (120,006)
Balance - June 30, 1994
=========== =========== =========== =========== =========== ===========
Cumulative
Par (Accumulated Translation
Value Deficit) Adjustment
----------- ----------- -----------
Balance - December 31, 1993 ...... $ -- $(4,428,873) $ (71,249)
Acquisition of Treasury Shares ... (1,200) -- --
Issuance of Preferred Shares, less
offering costs of $666,536 ....... -- -- --
Foreign currency transition gain . -- -- 29,088
Net (Loss) for the nine month
period ended June 30, 1994 .... -- (1,318,851) --
----------- ----------- -----------
$ (1,200) $(5,747,724) $ (42,161)
Balance - June 30, 1994
=========== =========== ===========
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
-----------------------------
1994 1993
----------- ------------
Cash Flows From Operating Activities
Net (Loss) ........................................................ $(1,318,851) $ (637,294)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating
Activities:
Depreciation and amortization .................................. 78,422 106,951
Decrease in marketable securities .............................. -- 37,480
Decrease in prepaid expenses ................................... -- 4,369
(Increase) decrease in other current assets .................... (87,235) 180,399
(Increase) in receivable due from related parties .............. (103,639) (538,953)
Decrease in deposits ........................................... 38,640 497
Decrease in capital cost ....................................... 15,426 --
Decrease (increase) in other assets ............................ 71,929 (103,787)
Increase in accounts payable and accrued expenses .............. 44,268 123,994
Increase in customer credit balances ........................... 530,853 840,667
----------- -----------
Net Cash (Used in) Provided by Operating Activities .......... (730,187) 14,323
----------- -----------
Cash Flows From Investing Activities
Purchase of property and equipment ................................ 66,219 (39,260)
Investment in real estate - Spain ................................. -- (26,554)
Disposition of goodwill ........................................... 40,487 --
----------- -----------
Net Cash Provided by (Used in) Investing Activities .......... 106,706 (65,814)
----------- -----------
Cash Flows From Financing Activities
Acquisition of Treasury Shares .................................... (365,255) --
Issuance of Preferred Shares ...................................... 1,358,172 --
Proceeds from issuance of common shares ........................... -- 110,860
Payment on note payable ........................................... (19,195) --
----------- -----------
Net Cash Provided by Financing Activities .................... 973,722 110,860
----------- -----------
Effect on Exchange Rate Changes on Cash .............................. 50,207 (47,743)
----------- -----------
Net Increase in Cash ................................................. 400,448 11,626
Cash at Beginning of the Period ...................................... 351,701 374,915
----------- -----------
Cash at the End of the Period ........................................ $ 752,149 $ 386,541
=========== ===========
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock .......................................... $ -- $ 687,372
=========== ===========
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three and nine month periods ended September 30, 1994 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1994. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Registrant Company and
Subsidiaries' annual report on Form 10-K for the year ended December 31,
1993.
The balance sheet at December 31, 1993 has been derived from the audited
financial statements of that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
Finca Consulting, Inc. and Subsidiaries
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Financial
Statements and notes thereto included in Item 1 above.
Results of Operations
Substantially all of the Company's revenues during the period were generated
by its subsidiary, Opti-Wert-Interest AG ("OWI-AG") through its retail
securities brokerage activities.
Revenues decreased from $4,624,915 in the prior quarter to $3,961,483 in the
current quarter, and $4,604,241 in the third quarter a year ago. Coupled with a
severely depressed gross margin due to higher cost of purchased securities, and
despite lower selling, general and administrative expenses which amounted to
$1,550,111, the Company suffered a substantial net loss for the quarter of
$1,227,032 , which results in a nine months' net loss of $1,318,151 compared to
a loss of $637,294 for the same period last year. To counter this trend,
management plans to further reduce overhead and general expenses, and expand
marketing efforts to increase market presence and achieve renewed growth.
Liquidity and Capital Resources
The Company had total assets as of September 30, 1994 of $2,097,081, of which
$1,291,091 were current assets. The working capital deficit at the end of the
quarter totaled $407,264 which was a small improvement from the beginning of the
quarter when it amounted to $613,668. Cash flow from operations was negative
$1,282,818 primarily due to the losses experienced. To raise capital, OWI-AG
sold 611,821 shares of preferred stock of the Company to its European customers
under private placements pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended, with net proceeds totaling $1,358,172.
PART II - OTHER INFORMATION
ITEM 1.Legal Proceedings.
Many aspects of the Company's business involve risks of liability. The
Company has been named as a defendant in civil actions arising in the
ordinary course of business out its activities in securities and futures
options contracts. In the opinion of management of the Company, however,
the Company is not involved in any litigation or legal proceedings that
would have a material effect upon its financial condition.
ITEM 2.Changes In Securities.
During the quarter, the Company's subsidiary OWI-AG sold 611,821 shares of
preferred stock of the Company through private placements with European
investors, with net proceeds totaling $1,384,144.
ITEM 3.Defaults Upon Senior Securities.
Not Applicable.
ITEM 4.Submission of Matters to a Vote of Securities.
Not Applicable.
ITEM 5.Other Information
Not Applicable.
ITEM 6.Exhibits and Reports on Form 8-K
(a) (3)(i) Articles of Incorporation: incorporated by reference to the
Company's Form S-18 Registration Statement, filed with the Securities and
Exchange Commission on October 17, 1989, and declared effective on June 29,
1990.
(3)(i) Articles of Amendment to Articles of Incorporation: incorporated
by reference to the Exhibit to the Company's Form 10-K for the fiscal year ended
December 31, 1991 filed on June 4, 1992 with the Securities and Exchange
Commission.
(3)(ii) Bylaws:incorporated by reference to the Company's Form S-18
Registration Statement, filed with the Securities and Exchange Commission on
October 17, 1989, and declared effective on June 29, 1990.
(21) Subsidiaries of the Company:
(i) Finca Consulting Costa Brava, S.A. - is a corporation formed under
the laws of the Country of Spain and is the name under which it conducts
business.
(ii) Finca Consulting, GmbH - is a corporation formed under the laws of
the Country of Germany and is the name under which it conducts business.
(iii)Opti-Wert-Interest AG - is a corporation formed under the laws of
the Country of Switzerland and conducts its retail securities and options
business in Germany.
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the period covered by this
Form 10-Q.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
FINCA CONSULTING, INC.
(Registrant)
Date: December 20, 1997 By: /s/Volker Montag
----------------
Volker Montag, President
Principal Financial Officer