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: June 30, 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.
As of June 30, 1996, 2,146,633 shares of Registrant's Common Stock,
$.01 par value, and 3,841,742 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
June 30, 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
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
Assets
Current Assets
Cash ................................................................. $ 7,035,775 $ 6,004,844
Other current assets ................................................. 147,690 248,237
Receivable due from related parties .................................. -- 278,412
------------ ------------
Total Current Assets ............................................ 7,183,465 6,531,493
------------ ------------
Property and Equipment, at cost
Land ................................................................. 115,563 115,563
Buildings ............................................................ 492,254 492,254
Office furniture and equipment ....................................... 331,949 286,783
------------ ------------
939,766 894,600
Less: accumulated depreciation ....................................... (291,649) (290,492)
------------ ------------
Net Property and Equipment ...................................... 648,117 604,108
------------ ------------
Other Assets
Due from related parties ............................................. 928,396 1,060,021
Other assets ......................................................... 709,249 164,564
------------ ------------
Total Other Assets .............................................. 1,637,645 1,224,585
------------ ------------
Total Assets .................................................... 9,469,227 8,360,186
============ ============
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses ................................ 186,239 384,885
Customer credit balances ............................................. 3,619,335 2,067,660
Income taxes payable ................................................. 278,937 --
------------ ------------
Total Current Liabilities ....................................... 4,084,511 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,
3,841,742 and 4,109,226 shares issued and outstanding, respectively 38 41
Capital in excess of par value ....................................... 12,704,013 13,724,083
Accumulated deficit .................................................. (7,369,416) (8,020,268)
Treasury stock, 275,812 common shares ................................ -- (2,758)
Cumulative translation adjustment .................................... (17,017) 139,445
------------ ------------
Total Stockholders' Equity ...................................... 5,339,084 5,862,009
------------ ------------
Total Liabilities and Stockholders' Equity ...................... $ 9,469,227 $ 8,360,186
============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------------ ------------------------------------------
1996 1995 1994 1996 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
Revenues ............................... $ 27,905,151 $ 6,483,022 $ 4,624,915 $ 46,266,748 $ 10,493,688 $ 11,733,436
Cost of Shares and Options ............. 21,709,038 5,370,575 2,984,555 35,778,034 9,421,036 7,790,911
------------ ------------ ------------ ------------ ------------ ------------
Gross Profit ........................... 6,196,113 1,112,447 1,640,360 10,488,714 1,072,652 3,942,525
Selling, general and administrative
expenses ............................... 4,606,399 2,595,526 1,768,404 9,118,708 4,447,823 4,010,618
------------ ------------ ------------ ------------ ------------ ------------
Income (Loss) From Operations ....... 1,589,714 (1,483,079) (128,044) 1,370,006 (3,375,171) (68,093)
------------ ------------ ------------ ------------ ------------ ------------
Other Income (Expense)
Interest Expense .................... -- -- (23,726) -- -- (23,726)
Loss on Disposition of Subsidiary ... (440,217) -- -- (440,217) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total Other Income (Expense) ... (440,217) -- (23,726) (440,217) -- (23,726)
------------ ------------ ------------ ------------ ------------ ------------
Income (Loss) Before Provision For
Income Taxes ........................ 1,149,497 (1,483,079) (151,770) 929,789 (3,375,171) (91,819)
Provision For Income Taxes ............. 278,937 -- -- 278,937 -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Income (Loss) ...................... $ 870,560 $ (1,483,079) $ (151,770) $ 650,852 $ (3,375,171) $ (91,819)
============ ============ ============ ============ ============ ============
Net Income (Loss) Per Share ............ $ 0.41 $ (0.69) $ (.071) $ 0.30 $ (1.57) $ (.043)
============ ============ ============ ============ ============ ============
Weighted Average Number of Common Shares
Outstanding 2,146,633 2,146,633 2,146,633 2,146,633 2,146,633 2,146,633
============ ============ ============ ============ ============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
----------------------------------------------
1996 1995 1994
----------- ----------- -----------
Cash Flows From Operating Activities
Net Income (Loss) ......................................................... $ 650,852 $(3,375,171) $ (91,819)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided
by (Used in) Operating Activities:
Depreciation and amortization .......................................... 52,342 133,828 65,456
(Increase) in marketable securities .................................... -- (8,068) (43,310)
(Increase) in accounts receivable ...................................... -- (1,262) (6,142)
(Increase) decrease in receivable due from related parties ............. 410,037 (312,961) 32,591
(Increase) decrease in other current assets ............................ 100,547 (21,119) (63,383)
(Increase) decrease in other assets .................................... (544,685) (130,112) 69,257
Decrease in capitalized costs .......................................... -- -- 15,426
Decrease in deposits ................................................... -- 1,162 39,152
Increase (decrease) in accounts payable and accrued expenses ........... (198,646) 61,438 9,623
Increase in customer credit balances ................................... 1,551,675 623,238 504,488
Increase in income taxes payable ....................................... 278,937 -- --
----------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities .................. 2,301,059 (3,029,027) 531,339
----------- ----------- -----------
Cash Flows From Investing Activities
Disposition (Purchase) of property and equipment .......................... (96,351) (2,971) 53,195
Investment in subsidiary .................................................. -- (180,800) --
Disposition of goodwill ................................................... -- -- 40,487
----------- ----------- -----------
Net Cash (Used in) Provided by Investing Activities .................. (96,351) (183,771) 93,682
----------- ----------- -----------
Cash Flows From Financing Activities
Issuance (redemption) of preferred shares ................................. (1,017,315) 6,097,017 --
Acquisition of treasury shares ............................................ -- (268,136) (391,250)
Repayment of note payable ................................................. -- -- (19,195)
----------- ----------- -----------
Net Cash Provided by (Used in) Financing Activities ................ (1,017,315) 5,828,881 (410,445)
----------- ----------- -----------
Effect on Exchange Rate Changes on Cash ...................................... (156,462) (356,171) 29,088
----------- ----------- -----------
Net Increase in Cash ......................................................... 1,030,931 2,259,912 243,664
Cash at Beginning of the Period .............................................. 6,004,844 953,633 351,701
----------- ----------- -----------
Cash at the End of the Period ................................................ $ 7,035,775 $ 3,213,545 $ 595,365
=========== =========== ===========
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
June 30, 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 six month period ended June 30, 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 June 30,
1994, were generated by its subsidiary, Opti-Wert-Interest AG ("OWI-AG") through
its retail securities brokerage activities. Revenues for the quarter totaled
$27,905,151 as compared to $6,483,022 during the second quarter a year ago and
$18,361,597 for the preceeding quarter. Revenues for the six months ended June
30, 1996, amounted to $46,266,748 compared to $10,493,688 for the same period
last year. Selling, general and administrative expenses for the quarter totaled
$4,606,399. The rapid growth of revenues reflects a very dynamic and favorable
investment climate in the Company's marketplace, Germany, which shows inceasing
market acceptance for the Company's products.
For the quarter ended June 30, 1996, the Company achieved a net profit of
$870,560 compared to a loss of $1,483,079 during the second quarter last year.
The six months' results were a profit of $650,852 and a loss of $3,375,171 for
1996 and 1995, respectively. Management is unable to predict with accuracy the
future profitability, because of market forces beyond the Company's control.
On April 2, 1996, the Company sold its interest in Finca Consulting GmbH, a
subsidiary incorporated in Germany, for the amount of DM100,000. The removal of
Finca Consulting GmbH from the Company's consolidated financial statements will
not have any material effect, either on historical or expected future
performance.
Liquidity and Capital Resources
The Company had total assets as of June 30, 1996 of $9,469,227, of which
$7,183,465 were current assets. The current assets include a cash position of
$7,035,775.
During the quarter, the Company redeemed 159,624 shares of its preferred
stock, for an aggregate $538,287.
Fiscal Year 1995 vs. Fiscal Year 1994
Results of Operations
Substantially all of the Company's revenues during the quarter ended June 30,
1994, were generated by its subsidiary, Opti-Wert-Interest AG ("OWI-AG") through
sales commissions derived from its retail securities brokerage activities.
Revenues for the quarter totaled $6,483,022 as compared to $4,624,915 during the
second quarter a year ago. Revenues for the six months ended June 30, 1995,
amounted to $10,493,688 compared to $11,733,436 for the same period last year.
Selling, general and administrative expenses for the quarter totaled $2,595,526
which is in line with the changes in revenues.
For the quarter ended June 30, 1995, the Company suffered a net loss of
$1,483,079 compared to a loss of $151,770 during the second quarter last year.
The six months' results were losses of $3,375,171 and $91,819 for 1995 and 1994,
respectively.
Liquidity and Capital Resources
The Company had total assets as of June 30, 1995 of $5,189,365, of which
$4,198,713 were current assets. The current assets include a cash position of
$3,213,545 . During the quarter, the Company continued its capital raising
program pursuant to which OWI-AG sold a total of 1,089,291 shares of the
Company's preferred stock through private placements with its European customers
pursuant to Regulation S promulgated under the Securities Act of 1933, as
amended. The net proceeds of these sales totaled $2,526,169.
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 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) 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
report on 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 23, 1997 By: /s/Volker Montag
----------------
Volker Montag, President
Principal Financial Officer