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: March 31, 1996
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 March 31, 1996, 2,146,633 shares of Registrant's Common Stock,
$.01 par value, and 4,001,366 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
March 31, 1996
Financial Statements
Consolidated Balance Sheets................................................
Consolidated Statements of Operations......................................
Consolidated Statements of Cash Flows......................................
Notes to the Consolidated Financial Statements.............................
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
Assets
Current Assets
Cash ............................................................ $ 8,363,915 $ 6,004,844
Other current assets ............................................ 239,375 248,237
Receivable due from related parties ............................. -- 278,412
------------ ------------
Total Current Assets .................................... 8,603,290 6,531,493
------------ ------------
Property and Equipment, at cost
Land ............................................................ 115,563 115,563
Buildings ....................................................... 462,254 492,254
Office furniture and equipment .................................. 336,666 286,783
------------ ------------
914,483 894,600
Less: Accumulated depreciation .................................. (293,532) (290,492)
------------ ------------
Net Property and Equipment ............................... 620,951 604,108
------------ ------------
Other Assets
Receivable due from related parties ............................. 903,129 1,060,021
Other assets .................................................... 711,303 164,564
------------ ------------
Total Other Assets ........................................ 1,614,432 1,224,585
------------ ------------
Total Assets .............................................. 10,838,673 8,360,186
============ ============
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, December 31,
1996 1995
------------ ------------
(Unaudited)
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses ........................... 387,085 384,885
Customer credit balances ........................................ 5,340,090 2,067,660
------------ ------------
Total Current Liabilities .................................. 5,727,175 2,452,545
------------ ------------
Minority interest 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, respectively ........ 21,466 21,466
Preferred stock, $.00001 par value, 20,000,000 shares authorized,
4,001,366 and 4,109,226 shares issued and outstanding,
respectively .................................................. 40 41
Capital in excess of par value .................................. 13,242,298 13,724,083
Accumulated deficit ............................................. (8,239,976) (8,020,268)
Treasury stock, 275,812 common shares ........................... -- (2,758)
Cumulative translation adjustment ............................... 42,038 139,445
------------ ------------
Total Stockholders' Equity .................................... 5,065,866 5,862,009
------------ ------------
Total Liabilities and Stockholders' Equity .................... $ 10,838,673 $ 8,360,186
============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statement of Operations
(Unaudited)
Three Months Ended
March 31,
------------------------------
1996 1995
------------ ------------
Revenues ........................................... $ 18,361,597 $ 4,010,666
Cost of shares and options ......................... 14,068,996 4,050,461
------------ ------------
Gross Profit (Loss) ................................ 4,292,601 (39,795)
Selling, general and administrative expenses ....... 4,512,309 1,852,297
------------ ------------
Net Income (Loss) .................................. (219,708) (1,892,092)
============ ============
Net Income (Loss) Per Share ........................ $ (.10) $ (.88)
============ ============
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 Cash Flows
(Unaudited)
Three Months Ended
March 31,
--------------------------
1996 1995
----------- -----------
Cash Flows From Operating Activities
Net (Loss) ....................................................... $ (219,708) $(1,892,092)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by
(Used in) Operating Activities:
Depreciation and amortization ................................. 27,482 113,042
Decrease in accounts receivable ............................... -- 10,265
Decrease (increase) in other current assets ................... 8,862 (7,147)
(Increase) in deposits ........................................ -- (28,682)
(Increase) decrease in receivable due from related parties .... 435,304 (116,375)
(Increase) in other assets .................................... (546,739) (108,647)
Increase in accounts payable and accrued expenses ............. 2,200 39,173
Increase in customer credit balances .......................... 3,272,430
-- 705,255
Net Cash Provided by (Used in) Operating Activities ......... 2,979,831 (1,285,208)
----------- -----------
Cash Flows From Investing Activities
(Purchase) of property and equipment ............................. (44,325) (2,069)
----------- -----------
Net Cash Provided by (Used in) Investing Activities ......... (44,325) (2,069)
----------- -----------
Cash Flows From Financing Activities
Acquisition of Treasury Shares ................................... -- (26,639)
Redemption of Preferred Shares ................................... (479,028) 3,570,848
----------- -----------
Net Cash Provided by (Used in) Financing Activities ......... (479,028) 3,544,209
----------- -----------
Effect on Exchange Rate Changes on Cash ............................. (97,407) (121,967)
----------- -----------
Net Increase in Cash ................................................ 2,359,071 2,134,965
Cash at Beginning of the Period ..................................... 6,004,844 953,633
----------- -----------
Cash at the End of the Period ....................................... $ 8,363,915 $ 3,088,598
=========== ===========
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
March 31, 1996
(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 month period ended March 31, 1996 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1996. 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, 1995.
The balance sheet at December 31, 1995 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 herein.
Fiscal Year 1996 vs. Fiscal Year 1995
Results of Operations
Substantially all of the Company's revenues during the quarter ended March
31, 1996, was generated by its subsidiary, Opti-Wert-Interest AG ("OWI-AG")
through its retail securities brokerage activities in Europe.
For the quarter ended March 31, 1996, the Company had revenues of $18,361,597
compared to $4,010,666 for same quarter in 1995. The revenue growth reflects
increased activity resulting from expanded sales and marketing efforts, and was
accompanied by a corresponding increase in gross profits. However, as a
consequence of increased selling, general, and administrative expenses of
$4,512,309 for the quarter, the Company experienced a net loss of $219,708 for
the quarter, compared to a loss of $1,892,092 for the comparable period a year
ago.
Liquidity and Capital Resources
The Company had total assets as of March 31, 1996 of $10,838,673, of which
$8,603,290 were current assets. The current assets include a cash position of
$8,363,915, an increase of $2,359,071 over the position at the beginning of the
year, primarily as a consequence of higher customer prepayment balances brought
about by increased activity.
During the quarter, the Company redeemed 107,860 shares of its preferred
stock, for an aggregate $479,028.
Working capital at March 31, 1996, increased to $2,876,115. Management
believes capital resources to be sufficient to fund current and anticipated
future opearations.
Fiscal Year 1995 vs. Fiscal Year 1994
Results of Operations
Substantially all of the Company's income during the quarter ended March 31,
1995, was generated by its subsidiary, Opti-Wert-Interest AG ("OWI-AG") through
its retail securities brokerage activities in Europe.
For the quarter ended March 31, 1995, the Company had revenues of $4,010,666
compared to $7,108,521 for same quarter in 1993, and $3,205,908 for the
preceding quarter. The revenue growth over the previous quarter while reflecting
increased activity resulting from expanded sales and marketing efforts was
accompanied by negative gross profits due to unfavorable price developments in
securities purchased by the Company for re-sale. As a consequence of the
unsatisfactory margins, the Company experienced a net loss of $1,892,092 for the
quarter, compared to a profit of $59,951 for the comparable period a year ago.
Liquidity and Capital Resources
The Company had total assets as of March 31, 1995 of $4,681,728, of which
$3,843,613 were current assets. The current assets include a significantly
higher cash position of $3,088,598 than at the beginning of the year, primarily
as a consequence of an on-going capital raising program pursuant to which OWI-AG
sold a total of 1,501,930 shares of the Company's preferred stock under private
placements to its European customers pursuant to Regulation S promulgated under
the Securities Act of 1933, as amended. The net proceeds of these sales totaled
$3,544,209.
Working capital at March 31, 1995, increased to $1,986,270. This amount
includes $638,936 receivables from an affiliated company in Germany which
provides facilities and support services for OWI-AG's retail brokerage
operations.
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.
Not Applicable.
ITEM 3.Defaults Upon Senior Securities.
Not Applicable.
ITEM 4.Submission of Matters to a Vote of Security Holders.
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 did not file any reports on Form 8-K during the quarter for which
this report is filed.
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 23, 1997 By: /s/Volker Montag
-------------- -------------------------------
Volker Montag, President
Principal Financial Officer