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, 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 September 30, 1996, 2,273,958 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
September 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
September 30, December 31,
1996 1995
------------ ------------
(Unaudited)
Assets
Current Assets
Cash .............................................................. $ 7,032,364 $ 6,004,844
Other current assets .............................................. 142,931 248,237
Receivable due from related parties ............................... -- 278,412
------------ ------------
Total Current Assets ......................................... 7,175,295 6,531,493
------------ ------------
Property and Equipment, at cost
Land .............................................................. 115,563 115,563
Buildings ......................................................... 492,254 492,254
Office furniture and equipment .................................... 345,916 286,783
------------ ------------
953,733 894,600
Less: accumulated depreciation and amortization ................... (316,717) (290,492)
------------ ------------
Net Property and Equipment ................................... 637,016 604,108
------------ ------------
Other Assets
Due from related parties .......................................... 2,075,078 1,060,021
Other assets ...................................................... 281,820 164,564
------------ ------------
Total Other Assets ........................................... 2,356,898 1,224,585
------------ ------------
Total Assets ................................................. 10,169,209 8,360,186
============ ============
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, December 31,
1996 1995
------------ ------------
(Unaudited)
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses ............................. 327,738 384,885
Customer credit balances .......................................... 5,178,651 2,067,660
------------ ------------
Total Current Liabilities .................................... 5,506,389 2,452,545
------------ ------------
Minority interest in subsidiary ................................... 45,632 45,632
------------ ------------
Stockholders' Equity
Common stock, $.01 par value, 20,000,000 shares authorized,
2,273,958 and 2,146,633shares issued and outstanding, respectively 22,739 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 .................................... 13,204,052 13,724,083
Accumulated deficit ............................................... (8,722,016) (8,020,268)
Cumulative translation adjustment ................................. 112,375 139,445
Treasury stock, 275,812 common shares ............................. -- (2,758)
------------ ------------
Total Stockholders' Equity ................................... 4,617,188 5,862,009
------------ ------------
Total Liabilities and Stockholders' Equity ................... $ 10,169,209 $ 8,360,186
============ ============
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,
----------------------------------------- ------------------------------------------
1996 1995 1994 1996 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
Revenues ............................... $ 20,785,667 $ 11,974,528 $ 3,961,483 $ 67,052,415 $ 22,468,216 $ 15,694,919
Cost of Shares and Options ............. 17,065,996 7,800,454 3,636,817 53,352,077 17,221,490 11,427,728
------------ ------------ ------------ ------------ ------------ ------------
Gross Profit ........................... 3,719,671 4,174,074 324,666 13,700,338 5,246,726 4,267,191
Selling, general and administrative
expenses ............................ 6,754,214 3,388,198 1,550,111 15,872,922 7,836,021 5,560,729
------------ ------------ ------------ ------------ ------------ ------------
Income (Loss) From Operations .. (3,034,543) 785,876 (1,225,445) (2,172,584) (2,589,295) (1,293,538)
------------ ------------ ------------ ------------ ------------ ------------
Other Income (Expense)
Interest Income (Expense) ........... 77,928 -- (1,587) 77,928 -- (25,313)
Loss on disposition of subsidiary ... (440,217) -- -- (440,217) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total Other Income (Expense) ... (362,289) -- (1,587) (362,289) -- (25,313)
------------ ------------ ------------ ------------ ------------ ------------
Net Income (Loss) Before Taxes ......... (3,396,832) 785,876 (1,227,032) (2,534,873) (2,589,295) (1,318,851)
Provision for (benefit from) income
taxes ............................... (211,107) -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Income (Loss) ...................... $ (3,185,725) $ 785,876 $ (1,227,032) $ (2,534,873) $ (2,589,295) $ (1,318,851)
============ ============ ============ ============ ============ ============
Net Income (Loss) Per Share ............ $ (1.44) $ .37 $ (.57) $ (1.15) $ (1.21) $ (0.61)
============ ============ ============ ============ ============ ============
Weighted Average Number of Common Shares
Outstanding ............................ 2,210,296 2,146,633 2,146,633 2,210,296 2,146,633 2,146,633
============ ============ ============ ============ ============ ============
See notes to the consolidated financial statements.
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
1996 1995 1994
----------- ----------- -----------
Cash Flows From Operating Activities
Net (Loss) ................................................................ $(2,534,873) $(2,589,295) $(1,985,387)
Adjustments to Reconcile Net Loss to
Net Cash Provided by (Used in) Operating Activities:
Depreciation and amortization .......................................... 59,611 155,299 78,422
(Increase) in accounts receivable ...................................... -- (1,002) --
(Increase) in marketable securities .................................... -- (1,612,351) --
(Increase) decrease in other current assets ............................ 105,306 (87,063) (87,235)
(Increase) decrease in receivable due from related parties ............. 1,096,480 (695,034) (103,639)
Decrease in deposits ................................................... -- 1,120 38,640
(Increase) in other assets ............................................. (117,256) (4,342) 71,929
Increase (decrease) in accounts payable and accrued expenses ........... (57,147) (4,628) 44,268
Increase in customer credit balances ................................... 3,110,991 1,068,719 530,853
----------- ----------- -----------
Net Cash Provided by (Used in) Operating Activities .................. 1,663,112 (3,768,577) (1,412,149)
----------- ----------- -----------
Cash Flows From Investing Activities
(Purchase) of property and equipment ...................................... (92,519) (44,672) 66,219
Investment in subsidiary .................................................. -- (180,000) --
Disposition of goodwill ................................................... -- -- 40,487
----------- ----------- -----------
Net Cash Provided by (Used in) Investing Activities .................. (92,519) (224,672) 106,706
----------- ----------- -----------
Cash Flows From Financing Activities
Issuance (redemption) of preferred shares ................................. (1,075,857) 6,097,017 2,024,708
Acquisition of treasury shares` ........................................... -- (268,136) (365,255)
Issuance of common shares ................................................. 559,854 -- --
Payment on Note Payable ................................................... -- -- (19,195)
----------- ----------- -----------
Net Cash Provided by (Used in) Financing Activities .................. (516,003) 5,828,881 1,640,258
----------- ----------- -----------
Effect of Exchange Rate Changes on Cash ...................................... (27,070) 1,835 50,207
----------- ----------- -----------
Net Increase in Cash ......................................................... 1,027,520 1,837,467 400,448
Cash at Beginning of the Period .............................................. 6,004,844 953,633 351,701
----------- ----------- -----------
Cash at the End of the Period ................................................ $ 7,032,364 $ 2,791,100 $ 752,149
=========== =========== ===========
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, 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 in Item 1 above.
Fiscal Year 1996 vs.Fiscal Year 1995
Results of Operations
Substantially all of the Company's revenues during the quarter were generated
by its subsidiary, Opti-Wert-Interest AG ("OWI-AG") through its retail
securities brokerage activities.
Revenues decreased from $27,905,151 in the prior quarter but increased from
$11,974,528 in the third quarter of 1995, to $20,785,667 in the third quarter
this year. Significant growth in selling, general and administrative expenses
which amounted to $6,754,214 caused the Company to incur a loss for the quarter
of 3,185,725, for a net loss for the year to-date period of $2,534,873, compared
to a loss of $2,589,295 for the same period last year.
Liquidity and Capital Resources
The Company had total assets as of September 30, 1996 of $10,169,209, of
which $7,175,295 were current assets. Working capital at the end of the quarter
had decreased to $1,668,906 , as a result of the losses incurred during the
quarter. To bolster its liquid resources, the Company during the quarter sold a
total of 127,325 shares of its common stock through private placements with
European investors pursuant to Regulation S promulgated under the Securities Act
of 1933, as amended, for an aggregate $559,854.
Other Information
During the quarter, the Company changed the name of its Swiss subsidiary from
Opti-Wert-Interest AG to Prime Core AG.
Fiscal Year 1995 vs.Fiscal Year 1994
Results of Operations
Substantially all of the Company's revenues during the quarter were generated
by its subsidiary, Opti-Wert-Interest AG ("OWI-AG") through sales commissions
derived from its retail securities brokerage activities.
Revenues increased from $6,483,022 in the prior quarter and $3,961,483 in the
third quarter of 1994, to $11,974,528 in the third quarter this year. Coupled
with an improved gross margin and moderate growth in selling, general and
administrative expenses which amounted to $3,388,198, the Company achieved a
significant net profit for the quarter, in the amount of $785,876 , reducing the
net loss for the year to-date to $2,589,295, compared to a loss of $1,318,851
for the same period last year. Management expects the growth trend to continue,
a result of expanded marketing efforts during the last several quarters.
Liquidity and Capital Resources
The Company had total assets as of September 30, 1995 of $6,712,662, of which
$5,828,308 were current assets. Working capital at the end of the quarter had
increased to $3,651,302. With a stronger balance sheet and improved liquidity,
the Company is now equipped to fund further expansions in its activities.
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 sold a total of 127,325 shares of its
common stock through private placements with European investors pursuant
to Regulation S promulgated under the Securities Act of 1933, as amended,
for an aggregate $559,854.
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) Prime Core 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 23, 1997 By: /s/Volker Montag
----------------
Volker Montag, President
Principal Financial Officer