SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 [Fee Required]
For the Fiscal Year ended December 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and
Exchange of 1934 [No Fee Required]
For the Transition Period From to
Commission File No. 33-31639
FINCA CONSULTING, INC.
Exact Name of Registrant as Specified in its Charter
COLORADO 84-1101572
State or Other Jurisdiction of IRS Employer
Incorporation or Organization Identification Number
Koenigsallee 106, 40215 Duesseldorf, Germany
Address of Principal Executive Offices , Zip Code
011-44-171-431-4529
Registrants Telephone Number, Including Area Code
Securities Registered Pursuant to Section 12(b) of the Act:
NONE
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
NONE NONE
Securities Registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
NOT APPLICABLE
Registrant's revenues for the fiscal year ended December 31, 1995, were
$49,409,821.
The aggregate market value of the vesting stock held by non-affiliates of the
Registrant cannot be determined because there has been no appreciable trading in
the stock for the past several years.
As of December 31, 1995, 2,146,633 shares of Common Stock, $.01 par
value, and 4,109,226 shares of Preferred Stock $.00001 par value were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: SEE EXHIBIT INDEX
FINCA CONSULTING, INC.
CONTENTS
PART I.
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a
Vote of Security Holders
PART II.
Item 5. Market for Registrant's Common
Equity and Related Stockholder
Matters
Item 6. Selected Financial Data
Item 7. Managements' Discussion and
Analysis of Financial Condition
and Results of Operation
Item 8. Financial Statements and
Supplementary Data
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure
PART III.
Item 10. Directors and Executive Officers
of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain
Beneficial Owners
and Management
Item 13. Certain Relationships
and Related Transactions
PART IV.
Item 14. Exhibits, Financial Statement
Schedules, and Reports on 8-K
PART I
ITEM 1: BUSINESS
(a) General Development of Business
The Corporation was incorporated in Colorado on October 25,
1988 for the purpose of acquiring or completing a merger with
another company. Effective July 22, 1991, the Company entered
into a common stock exchange agreement with Finca Consulting
Costa Brava, S.A. whereby the Company transferred essentially
100% of its net assets to Finca Consulting Costa Brava, S.A.
As a result of the merger, Finca Consulting Costa Brava, S.A.
remained as the sole ongoing entity for accounting purposes.
Finca Consulting Costa Brava, S.A. is located in and was
incorporated in Spain on June 14, 1989 and its principal
business is acting as a real estate broker for sales of
Spanish properties, mainly holiday homes.
Subsequent to the aforementioned July 22, 1991 merger, the
Corporation generated capital through an offering of preferred
stock in Europe and in September 1991 formed an additional
wholly-owned subsidiary, Finca Consulting Limited,
incorporated in the United Kingdom. Finca Consulting Limited
was formed to assist Finca Consulting Costa Brava, S.A. in the
marketing and sales of Spanish properties.
In January 1991, the Corporation formed another new
wholly-owned subsidiary, Finca Consulting GmbH, incorporated
in Germany. Finca Consulting GmbH was formed to engage in the
buying, selling and administration of Spanish real estate.
In May, 1992, the Company commenced an offering of its Common
Shares in Europe.
In July 1992, the corporation entered into and consummated a
common stock exchange agreement with King National
Corporation, a U.S. corporation, whereby the sole transferable
asset was a 100% ownership interest of Opti-Wert-Interest AG
("OWI-AG") a Swiss corporation. OWI-AG is principally engaged
in the buying and selling of marketable securities and options
on behalf of its customers in Germany via a network of
independent brokers. The sale of securities, including futures
options contracts are subject to regulation in Germany by the
Banking Supervisory Authority.
On October 1, 1992, Finca Consulting Limited acquired three
additional companies incorporated in the United Kingdom, each
of which are engaged as real estate agencies.
The Corporation is currently subject to the reporting
requirements under the Securities Exchange Act of 1934, as
amended. The Corporation has the authority to issue an
aggregate of Twenty Million (20,000,000) common shares, par
value $.01 and Twenty Million (20,000,000) preferred shares,
$.00001 par value.
As of December 31, 1995, there were outstanding 2,146,633
Common Shares and 4,109,226 Preferred Shares.
In December 1995, the Corporation relocated its principal
executive offices to 380 Foothill Road, Bridgewater, NJ 08807.
The Corporation did not acquire or dispose of any material
amount of assets during the fiscal year ended December 31,
1995.
(b) Financial Information About Industry Segments.
The Corporation operates in two business segments, acting as a
real estate broker for sales and rentals of properties in
Europe and, through its subsidiary, OWI-AG, the buying and
selling of marketable securities and options on behalf of
OWI-AG's customers in Germany. The Company did not realize any
revenues from its real estate business during 1994 and 1993.
The Corporation operates primarily in Europe. Information
regarding each geographic area on an unconsolidated basis for
1994 and 1993 is as follows:
December 31, 1995
-----------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
Sales to unaffiliated customers
Real estate sales ................. $ 0 $ 0 $ 0 $ 0
Marketable securities
and option sales ............... 49,409,821 49,409,821
Operating (loss)
Real estate sales ................. 0 (25,000) 0 (25,000)
Marketable securities
and option sales ............... 0 (1,272,928) 0 (1,272,928)
Other income (expense) ................. 0 90,906 0 90,906
------------ ------------ ------------ ------------
Net (Loss) ............................. 0 (1,207,022) 0 (1,207,022)
Identifiable assets at December 31, 1995 0 8,360,186 0 8,360,186
General corporate assets ............... 0 0 0 0
------------ ------------ ------------ ------------
Total Assets ..................... $ 0 $ 8,360,186 $ 0 $ 8,360,186
============ ============ ============ ============
December 31, 1994
-----------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
Sales to unaffiliated customers
Real estate sales ................. $ 0 $ 0 $ 0 $ 0
Marketable securities
and option sales ............... 18,900,827 18,900,827
Operating (loss)
Real estate sales ................. 0 (25,000) 0 (25,000)
Marketable securities
and option sales ............... 0 (2,325,897) 0 (2,325,897)
Other income (expense) ................. 0 (33,476) 0 (33,476)
------------ ------------ ------------ ------------
Net (Loss) ............................. 0 (2,384,373) 0 (2,384,373)
Identifiable assets at December 31, 1994 0 2,407,100 0 2,407,100
General corporate assets ............... 0 0 0 0
------------ ------------ ------------ ------------
Total Assets ..................... $ 0 $ 2,407,100 $ 0 $ 2,407,100
============ ============ ============ ============
(c) Narrative Description of Business
The Corporation and its subsidiaries operate in two segments,
acting as a real estate broker for sales and rentals of
properties in Europe and the buying and selling of marketable
securities and options on behalf of its customers in Germany
through its subsidiary, Opti-Wert-Interest AG, a Swiss
corporation ("OWI-AG").
Historically, the Company operated solely in the European real
estate market. However, since its acquisition of OWI-AG, in
July, 1992, the Company has focused its business operation
chiefly in the buying and selling of equities and options on
behalf of German customers.
The Corporation and its subsidiaries derived revenues from its
real estate operations in the approximate amount of $36,369 in
1992. No revenues were earned from this business segment in
fiscal years 1993 to 1995. The Corporation and its
subsidiaries generated revenues from its securities brokerage
operations of $49,409,821 in 1995 and $18,900,827 in 1994. The
significant growth in revenues from 1994 to 1995 occurred as a
consequence of a concerted effort by the Company to expand its
network of independent brokers in Germany, its primary market,
in response to a rapidly developing acceptance of stock and
option equities as investment vehicles in that country.
Neither industry segment in which the Corporation does
business is seasonal. The Corporation is not dependent upon a
single customer or a few customers. Accordingly, the loss of
any one or more of such customers would not have a material
adverse effect on either industry segment.
In its securities brokerage operations, the Corporation
competes with established companies, private investors,
limited partnerships and other entities (many of which may
possess substantially greater resources than the Corporation)
in connection with its brokerage business securities and
options brokerage business. A majority of the companies with
which the Corporation competes are substantially larger, have
more substantial histories, backgrounds, experience and
records of successful operations, greater financial,
technical, marketing and other resources, more employees and
more extensive facilities than the Corporation now has, or
will have in the foreseeable future. It is also likely that
other competitors will emerge in the near future. The
Corporation competes with these entities on the basis of
service and sales commissions.
The Corporation and its subsidiaries at this time employ no
personnel in its real estate operations and 22 full time
persons and no part time persons in its securities brokerage
operations.
(d) Financial information about foreign and domestic
operations and export sales.
December 31, 1995
------------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------- ------------
Sales to unaffiliated customers ........ $ 0 $ 49,409,821 $ 0 $ 49,409,821
Operating (loss) ....................... 0 (1,297,928) 0 (1,297,928)
Other income (expense) ................. 0 90,906 0 90,906
Net (Loss) ............................. 0 (1,207,022) 0 (1,207,022)
Identifiable assets at December 31, 1995 $ 0 $ 8,360,186 $ 0 $ 8,360,186
General corporate assets ............... 0 0
------------
Total Assets ..................... $ 8,360,186
============
December 31, 1994
------------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------- ------------
Sales to unaffiliated customers ........ $ 0 $ 18,900,827 $ 0 $ 18,900,827
Operating (loss) ....................... 0 (2,350,897) 0 (2,350,897)
Other income (expense) ................. 0 (33,476) 0 (33,476)
Net (Loss) ............................. 0 (2,384,373) 0 (2,384,373)
Identifiable assets at December 31, 1994 $ 0 $ 2,407,100 $ 0 $ 2,407,100
General corporate assets ............... 0
------------
Total Assets ..................... $ 2,407,100
============
ITEM 2: Properties
In January 1992, the Corporation entered into a lease
agreement for 9,600 square feet of office space in Dusseldorf,
Germany. The lease required a deposit of $37,345 and calles
for monthly rental payments of $12,448 through December 1996.
The monthly rent may be increased based on a price index and
the lease provides for a five year renewal option. The
Corporation also, through its subsidiary OWI-AG, leases 13,700
square feet of office space in Zug, Switzerland, as well as
automobiles and office equipment under operating leases. The
Corporation paid approximately $247,000 for the year ended
December 31, 1995 and $240,000 for the year ended December 31,
1994 pursuant to above leases.
ITEM 3: 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 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders
during the fourth quarter of this fiscal period.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a)(1)(i) The Corporation is not currently trading on the over-the-
counter "Pink Sheet" market or on any exchange.
(b) As of December 31, 1995 there were approximately 1223
shareholders of record for the Common Stock.
(c) the Corporation has not declared or paid any cash dividends.
ITEM 6: SELECTED FINANCIAL DATA
The selected financial information presented below under the captions "Statement
of Operations" and "Balance Sheet" for the years ended December 31, 1995, 1994,
1993, 1992 and 1991 is derived from the financial statements of the Corporation
and should be read in conjunction with the financial statements and notes
thereto.
Balance Sheet For The Year Ended
December 31,
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
Total Assets ................... $8,360,186 $2,407,100 $1,816,882 $1,810,428 $1,287,313
Long Term Debt ................. 0 0 0 0 0
Minority Interests in Subsidiary 45,632 45,632 45,632 45,632 0
Total Stockholders' Equity ..... $5,862,009 $1,248,603 $ 628,821 $1,456,690 $1,254,952
Statement of Operations
December 31,
------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
Revenues from continuing operations .. $ 49,409,821 $ 18,900,827 $ 16,603,901 $ 2,692,445 $ 46,914
Cost of Shares and Options ........... $ 37,695,202 $ 14,450,630 $ 13,728,846 $ 1,749,426 0
------------ ------------ ------------ ------------ ------------
Gross Profit ...................... $ 11,714,619 $ 4,450,197 $ 2,675,055 $ 943,019 $ 46,914
Selling general and administrative
expenses .......................... $ 13,012,547 $ 6,801,094 $ 5,314,366 $ 2,732,421 $ 245,744
------------ ------------ ------------ ------------ ------------
Operating income (loss) .............. $ (1,297,928) $ (2,350,897) $ (2,439,311) $ (1,789,402) $ (198,830)
Other income (expense) ............... $ 90,906 $ (33,476) $ (18,320) $ 2,765 $ 12,225
Net (loss) from continuiing operations $ (1,207,022) $ (2,384,373) $ (2,457,631) $ (1,786,637) $ (186,605)
Extraordinary income ................. $ 0 $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------ ------------
Net Income (Loss) .................... $ (1,207,022) $ (2,384,373) $ (2,457,631) $ (1,786,637) $ (186,605)
============ ============ ============ ============ ============
Loss per common share of
outstanding and subscribed stock
(from continuing operations) ...... $ (0.56) $ (1.11) $ (1.20) $ (1.77) $ (0.26)
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Quarter Ended December 31, 1995
The Corporation's wholly owned Swiss subsidiary
Opti-Wert-Interest, AG ("OWI-AG") continues to be the sole
source of revenues for the Corporation. OWI-AG operates a
securities brokerage business in Germany, utilizing
commissioned sales brokers to sell equity stocks and options
to its customers in Germany.
For the quarter ended December 31, 1995 the Corporation had
revenues of $26,941,605, resulting in a net profit of
$1,382,273, compared to revenues of $3,205,908 and a loss of
$1,065,522 in the fourth quarter a year ago. The growth in
revenues resulted from a concerted effort by the Company to
expand its network of independent brokers in Germany, its
primary market, in response to a rapidly developing acceptance
of stock and option equities as investment vehicles in that
country. The growth in selling, general, and administrative
expenses was commensurate with this expansion. Such expenses
amounted to $5,176,526 for the quarter, compared to
$1,240,365, for the quarter a year ago.
Year Ended December 31, 1995
For the year ended December 31, 1995, the Corporation had
gross revenues of $49,409,821, generated exclusively by its
subsidiary OWI-AG through its securities brokerage business in
Germany. For the same year, the Corporation experienced a net
loss of $1,207,022. The loss is attributable to relatively
high operating expenses which amounted to $13,012,547 for the
year, the majority of which were incurred by OWI-AG. OWI-AG
utilizes the administrative services of a German affiliate,
Telecom GmbH, which provides the infrastructure and facilities
for the Company's network of brokers, in its equity securities
and options business. During fiscal year 1995, the
Corporation, through OWI-AG, paid Telecom GmbH $1,643,639 for
these administrative services and $5,757,210 in brokerage
fees: see, Note 3 to Consolidated Financial Statements annexed
hereto as Exhibit A.
Fiscal Year 1995 Compared to Fiscal Year 1994
During 1995 the Corporation's revenues of $49,409,821 were all
derived from OWI-AG's securities brokerage activities in
Germany. The same held true in 1994 when revenues totaled
$18,900,827. There were no revenues from real estate
operations in either 1995 or 1994. The Company in 1995
achieved gross profits of $11,714,619 or 23.7% of revenues as
opposed to $4,450,197 or 23.5% of revenues in 1994. In spite
of the increase in revenues and the increase in the gross
profits, however, the Company incurred a loss for the year,
primarily due to the increase in selling, general and
administrative expenses which totaled $13,012,547 during the
year, as compared to $6,801,094 a year ago.
At December 31, 1995, working capital amounted to $4,078,948,
as opposed to $106,872 on December 31, 1994. Current assets at
year's end included high cash balances representing customers'
prepayments, as a direct consequence of the expansion of
business. The Company obtained the necessary funding to
finance its expansion through the private placement during the
year with European investors pursuant to Regulation S
promulgated under the Securities Act of 1933, as amended, of a
total of 2,404,775 shares of its preferred stock which, after
deduction of related expenses yielded $6,139,902 for the
Company. During 1994 the Company obtained additional financing
in a similar fashion through placement of an aggregate of
1,688,146 shares of its preferred stock, for net receipts of
$3,578,378. These fund inflows helped offset cash flow
deficits from operations, primarily due to the losses incurred
in both year: see, Consolidated Statements of Changes in
Stockholders' Equity annexed hereto as Exhibit A.
Fiscal Year 1994 Compared to Fiscal Year 1993
During 1994 the Corporation's revenues of $18,900,827 were all
derived from OWI-AG's securities brokerage activities in
Germany as compared to OWI-AG's revenues of $16,603,901 in
1993. There were no revenues from real estate operations in
either 1994 or 1993. The Company in 1994 achieved gross
profits of 4,450,197 or 23.5% of revenues as opposed to
$2,875,055 or 17.3% of revenues in 1993.
In spite of the increase in revenues and the increase in the
gross profits in both absolute and relative terms, the net
loss in 1994 was only marginally less than in 1993 -i.e.
$2,384,373 as compared to $2,457,631.
During the year ended December 31, 1994, the Corporation
experienced a net outflow of cash from operations in the
amount of $2,408,770 compared to a deficit of $1,562,856 in
1993. The deficit in 1994 was almost entirely due to the
losses experienced during the year which accounted for
approximately 96% of that amount. The negative cash flow from
operations was offset through new funding from financing
activities which produced $2,818,498 in 1994 and $1,654,161 in
1993.
Most of the cash flow from financing activities during both
years represented proceeds derived from the private placement
of the Corporation's Common and Preferred Shares with European
investors pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Corporation's Financial Statement and Notes to Financial
Statements are attached hereto as Exhibit A and incorporated
herein by reference.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Changes in Registrant's Certifying Accountant.
(a)
304(a)(1)(i): Neil James & Associates, P.C., Registrant's former
independent accountant previously engaged as the principal accountant to audit
the Registrant's financial statements, was dismissed on December 18, 1995.
(a)(1)(ii): Mr. Neil James & Associates, P.C. did not issue any reports
on the Registrant's financial statements for the past two fiscal years.
(a)(1)(iii): The Registrant's Board of Directors recommended and
approved the hiring of Rosenberg Rich Baker Berman & Company Certified Public
Accountants, 380 Foothill Road, Bridgewater, New Jersey as the Registrant's
principal independent accountant and to dismiss Neil James & Associates, P.C.
(a)(1)(iv)(A): Registrant is unaware of any disagreements between
Registrant and Neil James & Associates, P.C. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
(a)(1)(iv)(B)(1),(2) and (3): Not applicable.
(a)(1)(iv)(C): Not applicable.
(a)(1)(iv)(D): Not applicable.
(a)(1)(iv)(E): Registrant authorized its former accountant, Neil James
& Associates, P.C., to respond fully to inquiries of Rosenberg Rich Baker Berman
& Company, its successor accountant, concerning the subject matter of each and
every disagreement or event, if any, known by Registrant's former accountant.
(a)(2): Registrant's new independent auditors are Rosenberg Rich Baker
Berman & Company who were engaged on December 15, 1995.
(a)(2)(i): Registrant's management engaged in general business
conversation with its new accountant, who did not, during such conversations,
render any advice to Registrant, oral or written, which was an important factor
considered by Registrant in reaching any accounting, auditing or financial
reporting issue decisions.
(a)(2)(ii): Registrant's management did not consult its new accountant
regarding any matter that was the subject of a disagreement or event referred to
in (a)(1)(iv) above since Registrant is unaware and has no knowledge of any such
disagreement or event.
(a)(2)(ii)(A),(B), and (C): Not applicable.
(a)(2)(ii)(D): Registrant has requested its new accountant to review
the disclosure required by this Item before it is filed with the Securities and
Exchange Commission and has been provided the opportunity to furnish Registrant
with a letter addressed to the Commission containing any new information,
clarification of Registrant's expression of its views, or the respects in which
it does not agree with the statements made in response to this Item.
PART III
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The names and ages of all directors and executive officers of the Corporation
are as follows:
Name Position Term(s) of Office
---- -------- -----------------
Volker Montag, Age 40 President and Director July 22, 1991 to Present
Hugo Winkler, Age 39 Secretary and Director July 22, 1991 to November 1, 1995
Norani Mohammad Zin, Age 37 Director July 22, 1991 to November 1, 1995
Roland Schoneberg, Age 36 Secretary and Director November 1, 1995 to Present
There are no family relationships among the Corporation's Officers and
Directors.
All Directors of the Corporation hold office until the next annual meeting of
the shareholders and until successors have been elected and qualified. Executive
Officers of the Company are appointed by the Board of Directors at the annual
meeting of the Corporation's Directors and hold office for a term of one year or
until they resign or are removed from office.
Resumes:
Volker Montag - Mr. Montag was born in Essen, Germany and makes his home in
Weeze, Germany. From 1990 he has been an officer and Director of King National
Corporation (acquired by the Corporation in July 1992.) From 1988 to 1990, Mr.
Montag was the Managing Director of Opti-Wert Interest, AG, Switzerland, a Swiss
brokerage company, which is a wholly owned subsidiary of the Corporation. He was
also associated with VISA Enterprise PLC, London, United Kingdom.
Hugo Winkler - Mr. Winkler was born in Switzerland and currently makes his home
in London. Mr. Winkler is an international business consultant and holds
directorships in seventeen companies throughout the world. He is the founder and
Managing Director of Hugo Winkler & Co., Ltd., a managing consulting company
located in London since the early 1980s. Mr. Winkler also has extensive holdings
in Southeast Asia, including Singapore and Malaysia. Mr. Winkler is a Qualified
Business Administrator from Kaukfmaennischer Verein Zurich, Switzerland in 1974.
He is a member of the United Kingdom Institute of Directors in London. Mr.
Winkler resigned as Director effective November 1, 1995.
Norani Mohammad Zin - Mr. Zin was born in Malaysia and currently makes is home
in Maui, Malaysia. Since 1981, Mr. Zin has been the General Manager of Hugo
Winkler & Co., Ltd. in Singapore. Mr. Zin resigned as Director effective
November 1, 1995.
Roland Schoneberg - Mr. Schoneberg was born in Germany and currently lives in
Koln, Germany. He is member of the board of Telecom GmbH, an affiliate of the
Company. He served as director of the Company since November 1995.
ITEM 11: EXECUTIVE COMPENSATION
No compensation was paid to the officers and directors of the
Corporation over the last fiscal year. The Corporation has
reimbursed and will continue to reimburse its officers and
directors for any and all out of pocket expenses incurred
relating to the business of the Corporation. In addition, it
is not expected that the officers and directors of the
Corporation will begin drawing salary until such time as the
business operations of the Corporation can substantiate the
same. However, in the event any officer and/or director
performs extraordinary services on behalf of the Corporation,
it is the position of the Board of Directors to reward such
services by issuance of a bonus to such person(s).
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of December 31, 1995, there were 2,146,633 Common Shares
outstanding. The following tabulates holdings of shares of the
Corporation by each person who, subject to the above, at the
date of this Memorandum, holds of record or is known by
Management to own beneficially more than 5.0% of the Common
Shares and, in addition, by all directors and officers of the
Corporation individually and as a group. There were 4,109,226
Preferred Shares outstanding issued to individuals who are
neither officers or directors.
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
- -------- ---------------- -------------------- --------
Common Secure Securities, Ltd.
Stock c/o Hugo Winkler
665 Finchley Road
London, UK 260,240* 12.12%
Visa International, PLC
c/o Hugo Winkler
665 Finchley Road
London, UK 91,463* 4.26%
Bernd Nagel
Hessenweg 10 A
D-4422 Ahaus
Germany 132,200 6.16%
Volker Montag
c/o Opti-Wert-Interest
Industriel Str. 9
Postfach 6300 ZUB
Switzerland 351,703* 16.38%
Hugo Winkler
665 Finchley Road
London, UK 0 0%
Norani Mohammad Zin
665 Finchley Road
London, UK 0 0%
Roland Schoneberg
c/o Opti-Wert-Interest
Industriel Str. 9
Postfach 6300 ZUB
Switzerland 351,703* 16.38%
All Directors and Officers
as a Group 351,703* 16.38%
- -------------
*Messrs. Volker Montag and Roland Schoneberg are majority shareholders of Secure
Securities, Ltd. and Visa International, PLC.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Commissions to Affiliate. Secure Securities, Ltd., a
shareholder of the Corporation, controlled by Messrs. Volker
Montag and Roland Schoneberg, owns a German company, Telecom
GmbH, having its principal offices located in Dusseldorf,
Germany ("Telecom"). Telecom provides all of the
administrative services to Opti-Wert-Interest AG, the
Corporation's wholly owned subsidiary ("OWI-AG"), for its
securities brokerage business which include all commission
charges. During fiscal years 1995 and 1994, OWI-AG paid
Telecom $1,643,639 and $2,731,982 respectively, for their
administrative services. Telecom also pays all of OWI-AG's
brokerage commissions arising out of OWI-AG sales to its
customers, due to non-affiliated third parties which amounted
to $5,757,210 in 1995 and $2,552,161 in 1994.
(b) Loan to Officer and Director. During 1993, OWI-AG made a
loan in the amount of $141,750 to Mr. Volker Montag, an
officer and director of the Company. The loan's outstanding
principal balance accrues interest at the rate of five (5%)
percent, per annum, and payments in the amount of $7,020 are
due quarterly.
(c) Payments to Officer. The Company advances, from
time-to-time, funds to a shareholder and officer of the
Company and to entities in which he has a controlling
interest. Such advances amounting to $1,060,021 and $375,654
at December 31, 1995 and 1994 are unsecured, non-interest
bearing and payable upon demand.
(d) Office space to Subsidiary. Finca Consulting Limited, a
wholly-owned subsidiary of the Corporation is provided, free
of charge, office spacein London, England in the business
office of an officer and director.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a)(1) Financial Statements
The response to this portion of Item 14 is included
as a separate section, Exhibit A, attached hereto and
incorporated herein by reference.
(a)(2) Financial Statements Schedules
All schedules are omitted since the required
information is not applicable or of insufficient
materiality.
(a)(3) Exhibits
The Exhibits that are filed with this report or that
are incorporated by reference are set forth in the
Exhibit Index.
(b) Reports on form 8-K
On December 18,1995, the Company filed a report on
Form 8-K with the Securities and Exchange Commission
which is incorporated herein by reference. The report
informs about (a) the dismissal of the Company's
former independent auditors, Neil James & Associates,
P.C. as per December 18, 1995, and the retention of
Rosenberg Rich Baker Berman & Company as the
Company's new independent auditors effective December
15, 1995; and (b) the relocation of its principal
executive offices to 380 Foothill Road, Bridgewater,
NJ, from its previous address in London, England.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FINCA CONSULTING, INC.
Date: December 23, 1997
By: /s/Volker Montag
----------------
Volker Montag
President
And Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Name Date
---- ----
/s/ Volker Montag December 23, 1997
- -----------------
Volker Montag, President
and Director
/s/Roland Schoeneberg December 23, 1997
- ---------------------
Roland Schoeneberg, Secretary
and Director
EXHIBIT INDEX
(2) Agreement and Plan of Reorganization between the Corporation
and King National Corporation dated July 1992 incorporated by
reference to Form 8-K.
(3)(i) Articles of Incorporation incorporated by reference to Form S-
18 filed October 17, 1989. 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.
(3)(ii) By Laws incorporated by reference to Form S-18 filed October
17, 1989.
(13) Quarterly report incorporated by Reference to Quarterly Report
on Form 10-Q for period ended September 30, 1993.
(16) Documentation regarding change in certifying accountant
incorporated by reference to Form 8-K filed in February, 1993
and Form 8-K filed in December 1995.
(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, Limited
- is a corporation formed under the
laws of the Country of the united
Kingdom and is the name under which
it conducts business.
(iii)Finca Consulting, GmbH - is a corporation formed
under the laws of the Country of Germany and
is the name under which it conducts
business.
(iv) 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 - attached to Exhibit A
EXHIBIT A
Finca Consulting, Inc. and Subsidiaries
Consolidated Financial Statements
December 31, 1995 and 1994
Finca Consulting, Inc. and Subsidiaries
Index to the Consolidated Financial Statements
December 31, 1995 and 1994
Independent Auditors' Report on the Financial Statements........................
Financial Statements
Consolidated Balance Sheets................................................
Consolidated Statements of Operations......................................
Consolidated Statements of Changes in Stockholders' Equity.................
Consolidated Statements of Cash Flows......................................
Notes to the Consolidated Financial Statements.............................
Independent Auditors' Report
Rosenberg Rich Baker Berman & Company
380 Foothill Road
Bridgewater, New Jersey 08807
To the Board of Directors and Stockholders of
Finca Consulting, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Finca
Consulting, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Finca Consulting,
Inc. and Subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/Rosenberg Rich Baker Berman & Company
- ----------------------------------------
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
March 25, 1996
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31,
------------------------------
1995 1994
------------ ------------
Assets
Current Assets
Cash and cash equivalents ............................................. $ 6,004,844 $ 997,218
Prepaid expenses and other ............................................ 248,237 75,612
Receivable due from related party ..................................... 278,412 146,907
------------ ------------
Total Current Assets ............................................. 6,531,493 1,219,737
------------ ------------
Property and Equipment ................................................... 604,108 649,523
------------ ------------
Other Assets
Receivables due from related parties .................................. 1,060,021 375,654
Other assets .......................................................... 164,564 162,186
------------ ------------
Total Other Assets ............................................... 1,224,585 537,840
------------ ------------
Total Assets ..................................................... 8,360,186 2,407,100
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses ................................. 384,885 279,491
Customer credit balances .............................................. 2,067,660 833,374
------------ ------------
Total Current Liabilities ........................................ 2,452,545 1,112,865
------------ ------------
Minority interests in subsidiary ...................................... 45,632 45,632
------------ ------------
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,
4,109,226 and 1,704,451 shares issued and outstanding, respectively 41 17
Capital in excess of par value ........................................ 13,724,083 7,927,857
Accumulated deficit ................................................... (8,020,268) (6,813,246)
Cumulative translation adjustment ..................................... 139,445 114,408
Less: Treasury stock, 275,812 and 189,899 shares, respectively ........ (2,758) (1,899)
------------ ------------
Total Stockholders' Equity ....................................... 5,862,009 1,248,603
------------ ------------
Total Liabilities and Stockholders' Equity ....................... $ 8,360,186 $ 2,407,100
============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Operations
Year Ended December 31,
-------------------------------
1995 1994
------------ -------------
Revenues ........................................... $ 49,409,821 $ 18,900,827
Cost of shares and options ......................... 37,695,202 14,450,630
------------ ------------
Gross Profit ....................................... 11,714,619 4,450,197
Selling, general and administrative expenses ....... 13,012,547 6,801,094
------------ ------------
(Loss) From Operations ............................. (1,297,928) (2,350,897)
------------ ------------
Other Income (Expense)
Interest income ................................. 90,906 --
Interest expense ................................ -- (33,476)
------------ ------------
Total Other Income (Expense) ............... 90,906 (33,476)
------------ ------------
Net (Loss) ......................................... $ (1,207,022) $ (2,384,373)
============ ============
Net (Loss) Per Share ............................... $ (0.56) $ (1.11)
============ ============
Weighted Average Number of Common Shares Outstanding 2,146,633 2,146,633
============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Year Ended December 31, 1995
Preferred Stock Common Stock
----------------------------- -----------------------------
Capital
in Excess
Par Par of Par
Shares Value Shares Value Value
------------ ------------ ------------ ------------ ------------
Balance - December 31, 1994 ..... 1,704,451 $ 17 2,146,633 $ 21,466 $ 7,927,857
Acquisition of treasury stock ... -- -- -- -- (343,652)
Issuance of preferred stock, less
offering costs of $2,110,400 .... 2,404,775 24 -- -- 6,139,878
Foreign currency transition gain -- -- -- -- --
Net (Loss) for the year ended
December 31, 1995 ............ -- -- -- -- --
------------ ------------ ------------ ------------ ------------
4,109,226 $ 41 2,146,633 $ 21,466 $ 13,724,083
Balance - December 31, 1995
============ ============ ============ ============ ============
Treasury Stock
-------------------------------
Retained
Earnings Cumulative
Par (Accumulated Translation
Shares Value Deficit) Adjustment
Balance - December 31, 1994 ..... (189,899) $ (1,899) $ (6,813,246) $ 114,408
Acquisition of treasury stock ... (85,913) (859) -- --
Issuance of preferred stock, less
offering costs of $2,110,400 .... -- -- -- --
Foreign currency transition gain -- -- -- 25,037
Net (Loss) for the year ended
December 31, 1995 ............ -- -- (1,207,022) --
------------ ------------ ------------ ------------
(275,812) $ (2,758) $ (8,020,268) $ 139,445
Balance - December 31, 1995
============ ============ ============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Year Ended December 31, 1994
Preferred Stock Common Stock Treasury Stock
------------------------- --------------------------- ----------------------------
Par Par Par
Shares Value Shares Value Shares Value
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 1993 ..... 16,305 $ 1 2,146,633 $ 21,466 -- $ --
Acquisition of treasury stock ... -- -- -- -- (189,899) (1,899)
Issuance of preferred stock, less
offering costs of $1,841,260 .... 1,688,146 16 -- -- -- --
Foreign currency transition gain -- -- -- -- -- --
Net (Loss) for the year ended
December 31, 1994 ............ -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31, 1994...... 1,704,451 $ 17 2,146,633 $ 21,466 (189,899) $ (1,899)
=========== =========== =========== =========== =========== ===========
Capital
in Excess Earnings Cumulative
of Par (Accumulated Translation
Value Deficit) Adjustment
----------- ----------- -----------
Balance - December 31, 1993 ..... $ 5,107,476 $(4,428,873) $ (71,249)
Acquisition of treasury stock ... (757,981) -- --
Issuance of preferred stock, less
offering costs of $1,841,260 .... 3,578,362 -- --
Foreign currency transition gain -- -- 185,657
Net (Loss) for the year ended
December 31, 1994 ............ -- (2,384,373) --
----------- ----------- -----------
$ 7,927,857 $(6,813,246) $ 114,408
Balance - December 31, 1994
=========== =========== ===========
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
----------------------------
1995 1994
----------- -----------
Cash Flows From Operating Activities
Net (Loss) ........................................................... $(1,207,022) $(2,384,373)
Adjustments to Reconcile Net (Loss) to Net Cash (Used for)
Operating Activities
Depreciation .................................................... 51,736 70,412
(Increase) in prepaid expenses and other ........................ (172,625) (21,475)
(Increase) in receivables due from related parties .............. (815,872) (228,630)
(Increase) decrease in other assets ............................. (2,378) 184,860
Increase in accounts payable and accrued expenses ............... 105,394 63,774
Increase (decrease) in customer credit balances ................. 1,234,286 (93,338)
----------- -----------
Net Cash (Used for) Operating Activities .................... (806,481) (2,408,770)
----------- -----------
Cash Flows From Investing Activities
(Purchase) disposition of property and equipment ............... (6,321) 50,132
----------- -----------
Net Cash (Used for) Provided by Investing Activities ........ (6,321) 50,132
----------- -----------
Cash Flows From Financing Activities
Proceeds from issuance of preferred shares, net of offering costs 6,139,902 3,578,378
Acquisition of treasury shares .................................. (344,511) (759,880)
----------- -----------
Net Cash Provided by Financing Activities ................... 5,795,391 2,818,498
----------- -----------
Effect on Exchange Rate Changes on Cash .............................. 25,037 185,657
----------- -----------
Net Increase in Cash ................................................. 5,007,626 645,517
Cash and cash equivalents at Beginning of Year ....................... 997,218 351,701
----------- -----------
Cash and cash equivalents at End of Year ............................. $ 6,004,844 $ 997,218
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest ...................................................... $ -- $ 33,487
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Finca Consulting, Inc. and Subsidiaries (the Company) through its
subsidiary Opti-Wert-Interest AG, is engaged principally in the
buying and selling of marketable securities and options on behalf
of its customers and through its subsidiaries Finca Consulting
Costa Brava, S.A. and Finca Consulting GmBH the buying, selling
and administration of real estate.
Principles of Consolidation
The consolidated financial statements include the accounts of
Finca Consulting, Inc. and its wholly owned subsidiaries.
All intercompany balances and transactions have been eliminated
in consolidation. Pursuant to Statement of Financial Accounting
Standards (SFAS) No. 52, "Foreign Currency Translation",
substantially all assets and liabilities of the Company's wholly
owned subsidiaries are translated at their respective period-end
currency exchange rates and revenues and expenses are translated
at average currency exchange rates for the period. The resulting
translation adjustments are accumulated in a separate component
of stockholders' equity. All foreign currency transaction gains
and losses are included in other income (expense) on the
accompanying statements of operations and are immaterial in each
year.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased
with an original maturity of three months or less to be cash
equivalents.
Property and Equipment
Property and equipment are reported at cost with depreciation
being provided by using the straight line method over the
estimated useful lives of the respective assets which range from
3-5 years as to equipment, furniture and fixtures and 25 years
as to real estate. Repairs and maintenance expenditures which do
not extend the useful lives of the related assets are expensed
as incurred.
Income Taxes
As of January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes". Under SFAS No. 109, the liability
method issued in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
Continued
differences between the financial reporting and tax bases of
assets and liabilities and are measured using enacted tax rates
that are expected to be in effect when the differences reverse.
The adoption of SFAS No. 109 did not have a material impact on
the Company's position or results of operations.
International subsidiaries are taxed according to applicable
laws of the countries in which they do business.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentration of credit risk consist principally of cash
balances. The Company invests its excess cash with large
financial institutions.
Net (Loss) Per Share
The net (loss) per share has been computed using the weighted
average number of common shares outstanding during the year.
During 1995 and 1994, 2,146,633 common shares were outstanding.
Common stock purchase warrants and common stock issuable upon
conversion of the Company's preferred shares have been excluded
from the computation in that their effects are anti-dilutive.
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at cost, less accumulated
depreciation, consists of the following:
December 31,
-------------------------
1995 1994
--------- ----------
Land ............................................. $ 115,563 $ 115,563
Buildings ........................................ 492,254 492,254
Office furniture and equipment ................... 286,783 280,462
--------- ---------
Subtotal .................................... 894,600 888,279
Less accumulated depreciation and amortization ... (290,492) (238,756)
--------- ---------
Total ....................................... $ 604,108 $ 649,523
========= =========
Depreciation expense charged to operations was $51,736 in 1995 and
$70,412 in 1994.
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 3 - RELATED PARTY TRANSACTIONS
(1) OWI AG pays fees for sales administration services to
Telecom GmbH, Dusseldorf (Telecom). Both companies have
the same manager. Fees paid for the years ended 1995 and
1994 amounted to $1,643,639 and $2,731,982, respectively.
Telecom also pays certain brokerage fees on behalf of the
company which amounted to $5,757,210 and $2,552,161 for
1995 and 1994, respectively.
Amounts due from Telecom amounted to $278,412 and $146,907
at December 31, 1995 and 1994.
(2) The Company advances, from time-to-time, funds to a
shareholder and officer of the Company and entities in
which he has a controlling interest. Such advances
amounting to $1,060,021 and $375,654 at December 31, 1995
and 1994, are non-interest bearing, unsecured, and payable
on demand.
(3) During 1994 and 1995 the Company's subsidiary, Opti-Wert -
Interest AG sold 1,688,146 and 2,404,775 shares of the
Company's preferred stock to its customers. Gross proceeds
therefrom amounted to $5,419,638 and $8,250,302. Opti-Wert
- Interest AG's proportionate costs of the offering,
consisting of allocable selling, general and
administrative expenses amounted to $1,841,260 and
$2,110,400 have been charged against such gross proceeds.
NOTE 4 - INCOME TAXES
As of December 31, 1995, the Company has domestic and foreign net
operating loss carryforwards of approximately $6,000,000,
substantially all of which expire by 2002.
The Company has not provided a deferred tax asset at December 31,
1995 and 1994 since it is undetermined that the deferred asset
would be realized in the future.
NOTE 5 - OPERATING LEASE COMMITMENT
The Company leases certain office space and equipment under
operating leases.
The following is a schedule of future minimum rental payments
required under operating leases that have initial or remaining
non-cancelable lease terms in excess of one year as of December
31, 1995.
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
The schedule is as follows:
Year Ending December 31,
1996 $ 402,122
1997 246,445
1998 219,511
1999 148,957
2000 145,077
2001 and thereafter 134,601
NOTE 5 - MINORITY INTEREST IN SUBSIDIARY
One of the Company's subsidiaries (Opti-Wert - Interest) has
issued 10,500 participation certificates with a minimal value of
Sfr. 10 (US $6.60) for a subscription price of US $9.07. These
participation certificates carry no voting rights and do not have
a fixed return. A total of 5,040 certificates have been
subscribed to by the Company and have been eliminated in the
consolidation process. The remaining 5,460 certificates are held
by various investors.
NOTE 6 - OPERATIONS OF BUSINESS SEGMENTS AND IN GEOGRAPHIC AREAS
Business Segments
The Company operates in two business segments, through its
subsidiary Opti-Wert - Interest AG buying and selling marketable
securities and options on behalf of its customers in Germany and
through its subsidiaries Finca Consulting Costa Brava, SA and
Finca Consulting GmBH buying, selling, and the administration of
real estate.
The Company conducts no business activities and has no
identifiable assets in the United States.