UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[ X ] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1998
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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 33-55254-14
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GREEN CAPITAL GROUP, INC.
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(FORMERLY PACIFIC FOREST CORPORATION)
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(Exact name of small business issuer as specified in its charter)
NEVADA 87-0438451
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(State or other jurisdiction of incorporation (IRS Employer Identification Number)
or organization)
2575 South Bayshore Drive, Unit 8B, Miami, FL 33133
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (305) 860-4475
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 file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ X ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of November 20,1998
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CLASS A COMMON STOCK 16,335,593 shares
Par Value $0.001
1
PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
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Financial Statements Page
Unaudited Consolidated Balance Sheet as of September 30, 1998 F-1
Unaudited Consolidated Statement of Operations for the quarter ending
September 30, 1998 and 1997 F-2
Unaudited Consolidated Statement of Cashflow for the quarter
ending September 30, 1998 and 1997 F-3
Statements of Changes in Stockholders' Equity (Deficit) F-4
Notes to Consolidated Financial Statements F-5
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
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Results of Operations
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The net revenues for the quarter ended September 30, 1998 are lower than
for the comparative period in 1997 due to a decrease in teakwood sales as
further described in the following paragraph, and the additional marketing and
selling expenses incurred during the quarter. Additionally, the results of the
quarter ended on September 30, 1998, are strongly influenced by a conservative
policy of amortization of the goodwill and by the recognition of an implicit
interest rate in the purchase of the Registrant's farms.
Liquidity and Capital Resources
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Management believes that the shortfall in working capital shown in the
balance sheet as of September 30, 1998 can be reversed as soon as new marketing
strategies implemented in the previous quarter increase the cash flows from
sales. The cash flow shortfall is directly attributable to a drop in sales in
The Netherlands which was caused by the Registrant's disassociation with its
former sales representatives in the previous quarter. The lack of sufficient
cash flow has been responsible for the failure to pay certain contractual
obligations to Gambordela Enterprises. Since early June, management has been
establishing a new professional sales organization and identifying and
developing contacts with banks and insurance companies in The Netherlands. As a
result of these efforts, several new financial products are being marketed by
the Registrant in The Netherlands which has resulted in increased sales.
Management believes that the increase in sales will enable the Registrant to pay
all arrearages to Gambordela Enterprises before the end of the current calendar
year although no assurances can be given.
Additionally, the Registrant to date has raised $235,000 of an anticipated
$1.5 million through the private offering of its restricted securities to
non-U.S. citizens. Proceeds thus far have been used for debt
2
repayment and working capital. It is anticipated that additional funds raised,
if any, will be used to acquire SFI (as described in Item 5.) and to finance new
projects; however, no assurances are given that these offerings will be
successful and that the necessary funds will be raised.
Impact of Inflation
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The Registrant believes that its activities are not materially affected by
inflation.
PART II - OTHER INFORMATION
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Item 5. Other Information
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In July 1998, the Company signed a letter of intent with SFI Corporation, a
Costa Rican public company involved in providing credit reporting and factoring
services in Costa Rica, whereby the Company would acquire SFI. Both companies
are currently completing due diligence. No assurances are given that the
acquisition will be consummated.
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Item 6. Exhibits and Reports on Form 8-K
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(a) The following exhibits are included in this filing:
27 Financial Data Schedule
(b) Reports on Form 8-K:
A Current Report on Form 8-K relating to the Registrant's change of
certifying accountants was filed with the Commission on November 16, 1998.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GREEN CAPITAL GROUP, INC.
Dated: November 25, 1998 By: /s/ Oscar S. Christian
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Oscar S. Christian, President
3
GREEN CAPITAL GROUP, INC. AND SUBSIDIARIES
(FORMERLY PACIFIC FOREST CORPORATION)
CONSOLIDATED BALANCE SHEET
(amounts expressed in U.S. Dollars)
(UNAUDITED)
As of
September 30, 1998
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ASSETS
Current assets:
Cash on hand and in banks $ 64,215
Accounts receivable 827,876
Receivable from stockholder 97,989
Other assets 11,983
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Total current assets 1,002,063
Property, machinery and equipment, net 8,009,810
Plantations under development 5,289,025
Other assets 2,104,035
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Total assets $ 16,404,933
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 381,108
Current portion of long-term debt 694,487
Accounts payable to suppliers 288,863
Payable to stockholder 38,159
Provision for future plantations' maintenance costs 176,102
Accrued expenses and others liabilities 141,534
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Total current liabilities 1,720,253
Long-term debt 9,131,546
Provision for future plantations' maintenance costs 690,953
Other liabilities 84,634
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Total liabilities 11,627,386
Stockholders' equity:
Capital stock 15,616
Additional capital contributions 5,789,771
Retained earnings (1,099,732)
Currency translation adjustment 71,892
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Total stockholders' equity 4,777,547
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Total liabilities and stockholders' equity $ 16,404,933
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F-1
(FORMERLY PACIFIC FOREST CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts expressed in U.S. Dollars)
(UNAUDITED)
For the nine For the three For the nine For the three
month period month period month period month period
ended ended ended ended
September 30, September 30, September 30, September 30,
1998 1998 1997 1997
---------------- -------------------- ------------------- ---------------
Income from sales of teakwood contracts $ 1,564,277 $ 214,290 $ 1,971,832 $ 720,844
Operating expenses and costs:
Maintenance costs of teakwood plantations 493,126 175,852 526,532 175,510
Marketing and selling 403,223 202,022 103,195 34,398
General and administrative 812,654 286,039 508,021 169,340
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Total operating expenses and costs 1,709,003 663,913 1,137,748 379,248
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Operating profit (loss) $ (144,726) $ (449,623) $ 834,084 $ 341,596
Financial expenses 1,009,901 683,421
Amortization of goodwill 227,136 11,075 5,886 654
Other expenses, net 70,067 33,676 109,332
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Net profit (loss) for the period $ (1,451,830) $(1,177,795) $ 718,866 $ 340,942
Retained earnings at the beginning of the 370,598 78,063 246,743 624,667
period
Adjustment to previous periods (18,500)
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Retained earnings at the end of the $ (1,099,732) $(1,099,732) $ 965,609 $ 965,609
period
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F-2
GREEN CAPITAL GROUP, INC. AND SUBSIDIARIES
(FORMERLY PACIFIC FOREST CORPORATION)
CONSOLIDATED STATEMENTS OF CASHFLOW
(amounts expressed in U.S. Dollars)
(UNAUDITED)
For the nine For the three For the nine month For the three
month period month period period month period
ended ended ended ended
September 30, 1998 September 30, 1998 September 30, 1997 September 30, 1997
-------------------- --------------------- --------------------- -------------------
Cash flow of the operating activities
Net profit (loss) of the period $ (1,451,830) $ (1,177,795) $ 718,866 $ 340,942
Adjustments to reconcile net profit
of the period to net cash provided by
operating activities:
Depreciation 15,128 5,043 15,132 5,044
Financial expenses 401,369 74,889
Capitalized promotion expenses 522,328 522,328
Goodwill amortization 227,136 11,075 (5,886) (4,578)
Exchange of units (292,600) (20,750)
Provision for future plantations' 350,413 154,163 269,157 89,719
maintenance costs
Allowance for doubtful receivables - - - -
Increase in assets:
Accounts receivable (23,487) 51,239 (943,253) (381,045)
Other assets 102,545 146,506 (6,542) (2,052)
Increase (decrease) in liabilities:
Accounts payable 189,145 88,001
Maintenance costs charged to the (166,308) (64,805)
provision
Payable to stockholder 38,159 - - -
Accrued expenses and other liabilities 83,212 26,322 (73,250) (38,058)
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Total adjustments 1,447,040 994,011 (744,642) (330,970)
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Net cash provided (used) by operating activities (4,790) (183,784) (25,776) 9,972
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Cashflow of the investing activities:
Disposition of fixed assets 1,328 4,561 -
Acquisition of fixed assets (16,289) (14,951) (640) -
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Net cash used (provided) by investing activities (14,961) (14,951) 3,921 -
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Cashflows of the financing activities:
Payment of interest (50,048)
Notes payable (3,883) 1,108
Capital stock 99,755 93,505
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Net cash provided (used) by financing 45,824 94,613 - -
activities equivalent
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Net increase (decrease) in cash and cash 26,073 (104,122) (21,855) 9,972
equivalent
Cash on hand and in banks at beginning 30,486 165,731 112,666 89,982
of period
Effect of currency translation adjustments 7,656 2,606 12,154 3,011
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Cash on hand and in banks at end of period $ 64,215 $ 64,215 $ 102,965 $ 102,965
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F-3
GREEN CAPITAL GROUP INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
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Common Stock
Par Value $0.001
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Additional Paid-in Deficit
Shares Amount capital Accumulated
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Balances at 4/16/86 (Date of Inception) $ 0 $ 0 $ 0 $ 0
Issuance of common stock (restricted)
at $0.002 per share at 4/16/86 1,000,000 1,000 1,000
Net (loss) for period (1,950)
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Balances at 12/31/86 1,000,000 1,000 1,000 (1,950)
Net (loss) for year (10)
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Balances at 12/31/87 1,000,000 1,000 1,000 (1,960)
Net (loss) for year (10)
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Balances at 12/31/88 1,000,000 1,000 1,000 (1,970)
Net (loss) for year (10)
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Balances at 12/31/89 1,000,000 1,000 1,000 (1,980)
Net (loss) for year (10)
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Balances at 12/31/90 1,000,000 1,000 1,000 (1,990)
Net (loss) for year (10)
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Balances at 12/31/91 1,000,000 1,000 1,000 (2,000)
Net (loss) income for year 0
Balances at 12/31/92 1,000,000 1,000 1,000 (2,000)
Net (loss) income for year 0
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Balances at 12/31/93 1,000,000 1,000 1,000 (2,000)
Net (loss) income for year 0
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Balances at 12/31/94 1,000,000 1,000 1,000 (2,000)
Issuance of common stock (restricted)
at $0.50 per share at 9/12/95 100,000 100 49,000
Net (loss)income for year 0
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Balances at 12/31/95 1,100,000 1,100 50,000 (2,000)
Issuance of common stock (Regulation S)
at $0.9796 per share to acquire
subsidiary at 6/28/96(1). 100,000 100 97,860
Issuance of common stock (Regulation S)
at $8.73 per share to retire debt of
subsidiary at 6/28/96(2). 45,000 45 392,857
Issuance of common stock (Regulation S)
at $10.00 per share to acquire
subsidiary at 8/23/96(3). 200,000 200 1,999,800
Stock canceled (1) (100,000) (100) (97,860)
Stock canceled (2) (45,000) (45) (392,857)
Stock canceled (3) (200,000) (200) (1,999,800)
Net earnings for year 248,743
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Balances at 12/31/96 1,100,000 1,100 50,000 246,743
Issuance of common stock 100,000 100 4,900
Additional paid in capital 216,397
Net earnings for year 123,855
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Balances at 12/31/97 1,200,000 1,200 272,197 370,598
Issuance of common stock 125,000 125 6,125
Net earnings for quarter 203,904
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Balances at 3/31/98 1,325,000 1,325 278,322 574,502
Net (loss) for quarter (496,439)
Capitalization of liabilities 4,200,000
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Balances at 6/30/98 1,325,000 1,325 4,478,322 78,063
Net (loss) for quarter (1,177,795)
Issuance of common stock 14,291,073 14,291 1,311,449
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Balances at 9/30/98 15,616,073 15,616 5,789,771 (1,099,732)
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F-4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(amounts expressed in US dollars)
1. Domicile, Activities, Accounting Records, and Currency:
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Green Capital Group, Inc. (the parent company) is domiciled in Nevada.
The subsidiary, Green Capital N.V. (the holding company) is domiciled
in Curacao, as well as it subsidiary, Green Capital Management (Capital
Management), which is the parent company of Promociones Capital Verde
S.A. and Bosque Teca Verde S.A. (BTV). The subsidiary, Green Capital
Netherlands, is domiciled in The Netherlands. The subsidiary El Reino
de Papa Juan S.A. is domiciled in the Republic of Costa Rica.
Promociones Capital Verde S.A. as well as its wholly owned subsidiary,
Reforestadora Capital Verde S.A., are domiciled in Costa Rica. Bosque
Teca Verde (BTV) is domiciled in The Netherlands. All the companies are
referred herein as the Company. Their main line of business is the
development of teakwood plantations and the sale of teakwood contracts,
for which they count with 297 hectares planted of teakwood out of a
total of 1,508 suitable for such purpose. The holding company and its
subsidiary, Green Capital Management, as well as BTV, keep their
accounting records in US dollars. The subsidiary, Green Capital
Netherlands, keeps its accounting records in Dutch guilders. The other
companies keep their accounting records in colones ((cent)), the
official currency of Costa Rica.
2. Summary of Acquisition:
----------------------
Effective as of April 14, 1998, the Company acquired all of the
outstanding capital stock of Green Capital N.V. (the "Acquisition").
Upon consummation of the Acquisition, the sole Green Capital N.V.
stockholder beneficially owned approximately 90% of the voting
securities of the Company. The source of the consideration used in the
Acquisition were the shares of Green Capital N.V. stock owned prior to
the Acquisition by the sole stockholder that were acquired by the
Company upon consummation of the Acquisition in exchange for the common
stock issued by the Company.
The transaction between the Company and Green Capital N.V. is a reverse
acquisition and has been treated as a recapitalization of Green Capital
N.V. Accordingly, the accumulated deficit during the development stage
of the Company has been eliminated.
3. Principal Accounting Policies:
-----------------------------
Principal accounting policies followed by the Company are in conformity
with accounting principles generally accepted in the United States of
America:
Consolidation:
The consolidated financial statements include the accounts of Green
Capital N.V. and its wholly owned subsidiaries, as well as those of the
other companies mentioned in note 1. All significant intercompany
balance transactions have been eliminated in consolidation. Financial
statements of subsidiaries domiciled in Costa Rica were consolidated as
of June 30, of each year.
Translation of the Financial Statements into US Dollars:
The financial statements of El Reino de Papa Juan S.A., Promociones
Capital Verde S.A. and Reforestadora Capital Verde S.A., have been
translated into US dollars on the basis of the Costa Rican colon as the
functional currency, as follows:
a. Monetary and non-monetary assets and liabilities, at the exchange
rate in force at the end of the period.
b. Equity accounts, at the historical exchange rates.
c. The adjustment resulting from translation is included as part of
the stockholders' equity, in an account denominated "Currency
translation adjustment".
Property, Machinery and Equipment:
These are recorded at cost. Repairs that do not extend useful life of
assets are charged to the results of the period.
F-5
Depreciation is recorded at the rates required to amortize the cost
over their estimated useful life (10 years for vehicles, machinery,
furniture and office equipment, between 12 and 50 years for buildings
and similar ones), using the straight-line method. Depreciation expense
is charged to the results of the period.
Plantations Under Development:
Teakwood
Costs related with sowing and maintenance of teakwood plantations sold
are estimated (as to the moment of harvest) and directly registered as
part of the results of the period in which the sale of units is made.
The Company begins plantation only until teakwood contracts are sold.
Provision for future plantations' maintenance cost is reviewed and
adjusted periodically based on current conditions and technicians'
opinion.
Secondary Forest
Timber trees' plantations other than teakwood, acquired as product of
the purchase of the operative lands, are registered at cost.
Goodwill:
Since it is related mostly with lands acquired for teakwood plantation,
it is amortized during a period no greater than 40 years and according
to selling of teakwood contracts, calculated with basis on the hectares
available for teakwood plantations during such period.
The acquisition of Green Capital N.V. by the Company generated a
positive goodwill of $703,907 which is being amortized by the Company
over a 40-year period.
Sale of Teakwood Contracts:
Income from the sale of teakwood contracts is recognized when the
contract is signed.
Employees' Legal Benefits:
These are recognized when the payment is made.
F-6