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, 1993
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. [ ]
<PAGE>
Registrant's revenues for the fiscal year ended December 31, 1993, were
$16,603,901.
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, 1993, 2,146,633 shares of Common Stock, $.01 par
value, and 16,305 shares of Preferred Stock $.00001 par value were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: SEE EXHIBIT INDEX
<PAGE>
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
<PAGE>
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 Ltd, incorporated in
the United Kingdom. Finca Consulting Ltd. 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 primarily 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.
<PAGE>
As of December 31, 1993, there were outstanding 2,146,633
Common Shares and 16,305 Preferred Shares.
The Corporation did not acquire or dispose of any material
amount of assets during the fiscal year ended December 31,
1993.
(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 Corporation operates primarily in Europe. Information
regarding each geographic area on an unconsolidated basis for
1993 and 1992 is as follows:
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers
Real estate sales ................. $ 0 $ 0 $ 0 $ 0
Marketable securities
and option sales ............... 0 16,603,901 0 16,603,901
Operating (loss)
Real estate sales ................. 0 (877,237) 0 (877,237)
Marketable securities
and option sales ............... (181,441) (1,380,633) 0 (1,562,074)
Other income (expense .................. 24,887 (43,207) 0 (18,320)
------------ ------------ ------------ ------------
Net (Loss) ............................. (156,554) (2,301,077) 0 (2,457,631)
Identifiable assets at December 31, 1993
Real estate industry ............... 0 925,575 0 925,575
Marketable securities and
option industry ................. 0 885,274 0 885,274
Other industries
General corporate assets ............... 0 6,033 0 0
------------ ------------ ------------ ------------
6,033
Total Assets ..................... $ 0 $ 1,816,882 $ 0 $ 1,816,882
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, 1992
---------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers
Real estate sales ................. $ 0 $ 36,369 $ 0 $ 36,369
Marketable securities
and option sales ............... 0 2,656,076 0 2,656,076
Operating (loss)
Real estate sales ................. 0 (550,639) 0 (550,639)
Marketable securities
and option sales ............... (102,453) (1,136,310) 0 (1,238,763)
Other income (expense .................. 10,938 (8,173) 0 2,765
----------- ----------- ----------- -----------
Net (Loss) ............................. (91,515) (1,695,122) 0 (1,786,637)
Identifiable assets at December 31, 1992
Real estate industry ............... 0 473,878 0 473,878
Marketable securities and
option industry ................. 551,263 766,147 0 1,317,410
Other industries
General corporate assets ............... 0 19,140 0 19,140
----------- ----------- ----------- -----------
Total Assets ..................... $ 551,263 $ 1,259,165 $ 0 $ 1,810,428
=========== =========== =========== ===========
</TABLE>
(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").
The Corporation's activities have been limited to raising
capital and through its subsidiary, OWI-AG, the buying and
selling of marketable securities and options on behalf of its
customers in Germany.
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 and $51,848 in 1991. No revenues were earned from this
business segment in fiscal 1993. The Corporation and its
subsidiaries generated revenues from its securities brokerage
operations of $16,603,901 in 1993 and $2,656,076 in 1992.
<PAGE>
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 employ no full time
persons and no part time persons in its real estate operations
and 16 full time persons and no part time persons in its
securities brokerage operations.
(d) Financial information about foreign and domestic
operations and export sales.
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers ........ $ 0 $ 16,603,901 $ 0 16,603,901
Operating (loss) ....................... (181,441) (2,257,870) 0 (2,439,311)
Other income (expense) ................. 24,887 (43,207) 0 (18,320)
Net (Loss) ............................. (156,554) (2,301,077) 0 (2,457,631)
Identifiable assets at December 31, 1992 0 1,810,849 0 1,810,849
General corporate assets ............... $ 0 $ 6,033 $ 0 $ 6,033
------------
Total Assets ..................... $ 1,816,882
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, 1992
--------------------------------------------------------------
United Consolidated
States Europe Eliminations Totals
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers ........ $ 0 $ 2,692,445 $ 0 $ 2,692,445
Operating (loss) ....................... (102,453) (1,686,949) 0 (1,789,402)
Other income (expense) ................. 10,938 (8,173) 0 2,765
Net (Loss) ............................. (91,515) (1,695,122) 0 (1,786,637)
Identifiable assets at December 31, 1992 551,263 1,038,779 0 1,590,042
General corporate assets ............... $ 0 $ 220,386 $ 0 $ 220,386
-----------
Total Assets ..................... $ 1,810,428
===========
</TABLE>
<PAGE>
ITEM 2: Properties
Real Estate Operations.
During 1993, the Corporation's executive offices were located
at 665 Finchley Road, London NW2 2HN Telephone No.
011-44-71-431-4529. The offices have since been relocated to
106 Koenigsallee, 40215 Duesseldorf, Germany. The Corporation
leases 1,000 square feet in office and showroom space in Play
de Aro, Spain under a five year lease which commenced February
1991. The lease is cancelable with a 90 day notice and
provides for annual rent increases based on a price index. the
Corporation paid rents of $32,103 and $40,631 for the years
1993 and 1992, respectively.
In January 1993, the Company leased the Spanish property,
consisting of a residential dwelling located in Gerona, Spain
to Volker Montag, an officer and director of the Company. The
term of the lease is for a period of five years commencing
January 1, 1993 and requires payment of $1,000 rent per month
for each of the ensuing sixty months.
Securities Operations.
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 requires
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
(by virtue of its acquisition of King National Corporation)
leases 13,700 square feet in office space in Zug, Switzerland,
as well as automobiles and office equipment under operating
leases. The Corporation paid $21,807 for the six month period
from July 1, 1992 to December 31, 1992 and $84,546 for the
year ended December 31, 1993.
ITEM 3: LEGAL PROCEEDINGS
The Corporation is not involved in any legal proceedings as of
the date of this Form 10-K nor are any material proceedings
known to be contemplated.
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.
<PAGE>
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, 1993 there were approximately 671
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, 1993, 1992,
1991, 1990 and 1989 is derived from the financial statements of the Corporation
and should be read in conjunction with the financial statements and notes
thereto.
<TABLE>
<CAPTION>
Balance Sheet For The Year Ended
December 31,
-----------------------------------------------------------------------
1993 1992 1991 1990 1989
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Assets ................... $1,816,882 $1,810,428 $1,287,313 $ 50,449 $ 162,610
Long Term Debt ................. 0 0 0 0 0
Minority Interests in Subsidiary 45,632 45,632 0 0 0
Total Stockholders' Equity ..... $ 628,821 $1,456,690 $1,254,952 $ 40,764 $ (38,781)
</TABLE>
<PAGE>
Statement of Operations
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------------------
1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues from continuing operations .. $ 16,603,901 $ 2,692,445 $ 46,914 $ 29,361 $ 5,310
Cost of Shares and Options ........... $ 13,728,846 $ 1,749,426
------------ ------------ ------------ ------------ ------------
Gross Profit ...................... $ 2,875,055 $ 943,019 $ 46,914 $ 29,361 $ 5,310
Selling general and administrative
expenses .......................... $ 5,314,366 $ 2,732,421 $ 245,744 $ 140,728 $ 84,673
------------ ------------ ------------ ------------ ------------
Operating (loss) ..................... $ (2,439,311) $ (1,789,402) $ (198,830) $ (111,367) $ (79,363)
Other income (expense) ............... $ (18,320) $ 2,765 $ 12,225 $ 1,524 $ 901
Net (loss) from continuiing operations $ (2,457,631) $ (1,786,637 $ (186,605) $ (109,843) $ (78,462)
Extraordinary income ................. $ 0 $ 0 $ 0 $ 190,305 $ 0
------------ ------------ ------------ ------------ ------------
Net Income (Loss)..................... $ (2,457,631) $ (1,786,637) $ (186,605) $ 80,462 $ (78,462)
============ ============ ============ ============ ============
Loss per common share of
outstanding and subscribed stock
(from continuing operations)....... $ (1.14) $ (1.77) $ (0.26) $ 0.17 $ (0.12)
</TABLE>
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Quarter Ended December 31, 1993
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, 1993 the Corporation had
revenues of $5,627,646, resulting in a net loss of $1,820,337.
This loss was substantially due to the high cost of equity
securities and options of $5,394,281 and selling, general and
administrative expenses of $2,050,174, incurred for the
quarter.
Year Ended December 31, 1993
For the year ended December 31, 1993, the Corporation had
gross revenues of $16,603,901, generated exclusively by its
subsidiary, OWI-AG, through its securities brokerage business
in Germany. For the year ended December 31, 1993, the
Corporation experienced a net loss of $2,457,631. This loss
was the result of the high cost of products - equity
securities and options - purchased by OWI-AG in the course of
its trading business, in the amount of $13,728,846, and the
substantial administrative costs incurred as well as
commissions paid in the amount of $5,314,366. OWI-AG utilizes
the administrative services of a German affiliate, Telecom
GmbH, which provides the facilities and infrastructure for the
Company's network of brokers for its equity securities and
options business. During fiscal year 1993, the Corporation,
through OWI-AG, paid Telecom GmbH $1,703,792, for these
administrative services and $1,891,704, in brokerage fees:
see, Note 2 to Consolidated Financial Statements annexed
hereto as Exhibit A.
Fiscal Year 1993 Compared to Fiscal Year 1992
On July 15, 1992, the Corporation consummated a stock exchange
agreement with King National Corporation, a Nevada
corporation, the principal result of which was the acquisition
of Opti-Wert-Interest AG ("OWI-AG"), the Corporation's
currently wholly owned subsidiary and sole revenue generating
business (the "OWI-AG Acquisition"): see, Note 5 to
Consolidated Financial Statements annexed hereto as Exhibit A.
During fiscal 1992 and prior to the OWI-AG Acquisition, the
Corporation derived its revenues from its real estate sales
and rental operations of holiday residential units in Spain:
this real estate business produced no revenues during fiscal
year 1993, as compared to revenues of $36,369 during fiscal
year 1992.
<PAGE>
During 1993, the Corporation's revenues of $16,603,901 were
all derived from OWI-AG's securities brokerage activities in
Germany as compared to 1992, which showed revenues of
$2,656,076 attributable to OWI-AG and revenues of $36,369 from
its Spain-based real estate operations. During 1993, the
Corporation sustained a loss of $2,457,631, as compared to a
loss of $1,786,637 in fiscal year 1992. The OWI-AG Acquisition
resulted in a material increase in selling, general and
administrative expenses which totaled $5,314,366 in 1993 as
compared to $2,732,421 in 1992.
For the year ended December 31, 1993, the Corporation
experienced a nominal decrease in cash used in operations,
from $(1,686,186) for the year ended December 31, 1992, to
$(1,539,520)for the year ended December 31, 1993. Cash flow
from operations was affected primarily by an increase in
customer credit balances to $749,929 at December 31, 1993,as
compared to $176,783 at December 31, 1992, due to the
increased customer brokerage activities of OWI-AG.
Conjunctively, cash flow from operating activities was
materially reduced by a $234,402 increase in receivables.
Depreciation and amortization contributed $246,181 to cash
flow from operations in 1993. The Corporation materially
reduced cash outlays for investing activities during fiscal
1993, from utilizing $1,099,990 during fiscal year 1992 to
total expenditures of $132,651 during fiscal year 1993.
$90,120 was spent on real estate and property and equipment
during 1993 as compared to expenditures aggregating $775,741
during 1992, while an investment of $42,531 in vintage cars
was made during 1993 as compared to a total investment of
$226,226 in such assets in 1992.
Cash flow from financing activities during fiscal year 1993
amounted to $1,654,161, most of which represented proceeds
derived from the private placement of the Corporation's Common
Shares with European investors pursuant o Regulation S
promulgated under the Securities Act of 1933, as amended.
During fiscal year 1992, the Corporation derived a material
amount of its cash through similar financing activities, i.e.,
the private placement of its preferred and common stock with
European investors, producing cash of $2,362,381: see,
Consolidated Statements of Changes in Stockholders' Equity
annexed hereto as Exhibit A. At December 31, 1993, the
Corporation experienced a decrease in its cash position of
$5,204 due to the effects of currency exchange rates as
compared to a $74,888 decrease at December 31, 1992 for the
same reasons.
Fiscal Year 1992 Compared To Fiscal Year 1991
Prior to the OWI-AG Acquisition (see above) the Corporation's
business and source of revenue was in the sale and rental of
holiday residential units in Spain. Through subsidiaries
located in the United Kingdom and Germany, the Corporation
sold and rented holiday homes in Spain to European residents.
<PAGE>
Gross revenues in this real estate business amounted to
$36,369 at December 31, 1992, a decrease of approximately 22%
from revenues of $46,914 at December 31, 1991. As a result of
the OWI-AG Acquisition in July 1992 resulting in the
Corporation's refocus from its core Spain-based real estate
business to OWI-AG's Germany-based securities brokerage
operations, selling, general and administrative expenses
increased materially, from $245,746 at December 31, 1991 to
$2,732,421 at December 31, 1992.
The Corporation suffered a loss of $1,786,637 at December 31,
1992, as compared to a loss of $186,605 at December 31, 1991.
The material increase in the Corporation's losses at December
31, 1992, was due chiefly to the cost to purchase equity
securities and options, amounting to $1,749,426, as well as
the material increase in selling, general and administrative
expenses, mentioned above, arising from OWI-AG's securities
brokerage business.
The OWI-AG Acquisition, with its accompanying shift in the
Corporation's business, materially changed the Corporation's
sources and uses of cash. Substantial amounts of cash were
utilized during fiscal 1992 by the Corporation for
investments: $551,263 was used to invest in real estate in
Spain; $224,778 for property and equipment; $226,226 for
vintage automobiles; $37,480 was invested in marketable
securities; $43,018 to purchase goodwill, and $17,534 was used
for certain capitalized lease expenses. Conjunctively,
$2,294,866 was derived from proceeds resulting from the
private placement by the Corporation of its common and
preferred shares to investors in Europe.
At December 31, 1992, the Corporation's cash was decreased by
$74,888, as compared to $13,343 at December 31, 1991 due to
adjustments resulting from currency exchange rates.
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.
<PAGE>
(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.
<PAGE>
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:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
---- -------- -----------------
<S> <C> <C>
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
</TABLE>
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.
<PAGE>
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, 1993, 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 16,305
Preferred Shares outstanding issued to individuals who are
neither officers or directors.
<PAGE>
Title of Name and Address of Amount and Nature of Percent of
Class Beneficial Owner Beneficial Ownership 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 266,667* 12.42%
Bernd Nagel
Hessenweg 10 A
D-4422 Ahaus
Germany 119,667 5.57%
Volker Montag
c/o Opti-Wert-Interest
Industriel Str. 9
Postfach 6300 ZUB
Switzerland 526,907* 24.55%
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 526,907* 24.55%
All Directors and Officers
as a Group 526,907* 24.55%
- ---------------
*Messrs. Volker Montag and Roland Schoneberg are majority shareholders of
Secure Securities, Ltd. and Visa International, PLC.
<PAGE>
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Minority Interest in Subsidiary. One of the Corporation's
subsidiaries Opti-Wert-Interest, AG ("OWI-AG") has issued
participation certificates with a minimal value of Sfr.
10(U.S. $6.60) for a subscription price of U.S. $9.07. These
participation certificates carry no voting rights and do not
have a fixed return. The Corporation subscribed to 5,040
certificates (49,603). Subsequently in 1992, OWI-AG's parent
company (King National Corporation) was acquired by the
Corporation thus causing this investment to be eliminated in
the consolidation process. The remaining 5,460 certificates
are held by various investors.
(b) 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. During fiscal year 1993 OWI-AG
paid Telecom $1,703,792 for their administrative services.
Telecom also pays all of OWI-AG's brokerage commissions due to
non-affiliated third parties arising out of OWI-AG sales to
its customers, which amounted to $1,891,704 during 1993.
(c) Loan to Officer and Director. OWI-AG made a loan in the
amount of $141,750 to Mr. Volker Montag, an officer and
director of the Company during 1993. 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.
(d) Payments to Officers and Directors. During 1992, the
Corporation paid $4,300 for various office services to a
company owned by Hugo Winkler, an officer and director.
(e) 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.
<PAGE>
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
There were no reports filed on Form 8-K during the
quarter ended December 31, 1993.
<PAGE>
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 20, 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 20, 1997
- ----------------
Volker Montag, President
and Director
/s/Roland Schoneberg December 20, 1997
- --------------------
Roland Schoneberg, Secretary
and Director
<PAGE>
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) Letter regarding change in certifying accountant incorporated
by reference to Form 8-K filed in February, 1993.
(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
<PAGE>
EXHIBIT A
Finca Consulting, Inc. and Subsidiaries
Consolidated Financial Statements
December 31, 1993
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Index to the Consolidated Financial Statements
December 31, 1993
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.............................
<PAGE>
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, 1993 and 1992, 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, 1993 and 1992, 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
December 15, 1995
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
December December
31, 1993 31, 1992
----------- -----------
<S> <C> <C>
Assets
Current Assets
Cash ..................................................................... $ 351,701 $ 374,915
Marketable securities .................................................... -- 37,480
Prepaid expenses ......................................................... -- 4,369
Other current assets ..................................................... 54,137 86,188
Sales tax refunds receivable ............................................. -- 98,216
Receivable due from related parties ...................................... 293,931 59,529
----------- -----------
Total Current Assets ................................................ 699,769 660,697
----------- -----------
Property and Equipment, at cost
Land ..................................................................... 134,949 19,826
Buildings ................................................................ 545,238 84,560
Office furniture and equipment ........................................... 252,102 195,602
Motor vehicle ............................................................ 9,082 --
----------- -----------
941,371 299,988
Less: accumulated depreciation and amortization .......................... (171,304) (96,731)
----------- -----------
Net Property and Equipment .......................................... 770,067 203,257
----------- -----------
Other Assets
Deposits ................................................................. 53,341 58,354
Capital cost - office premium, net of accumulated amortization of $11,151
and $9,646, respectively ................................................. 15,426 17,534
Investment in Vintage Cars ............................................... 101,250 226,226
Investment in real estate - Spain ........................................ -- 551,263
Goodwill, net of accumulated amortization of $1,577 and $538, respectively 40,487 42,480
Other assets ............................................................. 136,542 50,617
----------- -----------
Total Other Assets .................................................. 347,046 946,474
----------- -----------
Total Assets ........................................................ 1,816,882 1,810,428
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued expenses .................................... 196,522 131,323
Customer credit balances ................................................. 926,712 176,783
Note payable ............................................................. 19,195 --
----------- -----------
Total Current Liabilities ........................................... 1,142,429 308,106
----------- -----------
Minority interests in subsidiary ......................................... 45,632 45,632
----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Balance Sheets
(continued)
December December
31, 1993 31, 1992
----------- -----------
<S> <C> <C>
Stockholders' Equity
Common stock, $.01 par value, 20,000,000 shares authorized, 2,146,633 and
1,939,895 shares issued and outstanding, respectively .................... 21,466 19,399
Preferred stock; $.00001 par value, 20,000,000 shares authorized, 16,305
and 16,305 shares issued and outstanding, respectively ................... 1 1
Capital in excess of par value ........................................... 5,107,476 3,474,577
Accumulated deficit ...................................................... (4,428,873) (1,971,242)
Cumulative translation adjustment ........................................ (71,249) (66,045)
----------- -----------
Total Stockholders' Equity .......................................... 628,821 1,456,690
----------- -----------
Total Liabilities and Stockholders' Equity .......................... $ 1,816,882 $ 1,810,428
=========== ===========
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Operations
Year Ended December 31,
-------------------------------
1993 1992
----------- ---------------
<S> <C> <C>
Revenues and Sales Commissions ..................... $ 16,603,901 $ 2,692,445
Cost of shares and options ......................... 13,728,846 1,749,426
------------ ------------
Gross Profit ....................................... 2,875,055 943,019
Selling, general and administrative expenses ....... 5,314,366 2,732,421
------------ ------------
(Loss) From Operations ............................. (2,439,311) (1,789,402)
------------ ------------
Other Income (Expense)
Other income .................................... -- 3,104
Interest income ................................. 1,034 10,427
Interest expense ................................ (19,354) (10,766)
------------ ------------
Total Other Income (Expense) ............... (18,320) 2,765
------------ ------------
(Loss) Before Income Taxes ......................... (2,457,631) (1,786,637)
------------ ------------
Net (Loss) ......................................... $ (2,457,631) $ (1,786,637)
============ ============
Net (Loss) Per Share ............................... $ (1.14) $ (1.77)
============ ============
Weighted Average Number of Common Shares Outstanding 2,146,633 1,011,450
============ ============
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Year Ended December 31, 1993
Preferred Stock Common Stock
-------------------------- --------------------------
Capital Retained
in Excess Earnings Cumulative
Par Par of Par (Accumulated Translation
Shares Value Shares Value Value Deficit) Adjustment
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - December
31, 1992 ............ 16,305 $ 1 1,939,895 $ 19,399 $ 3,474,577 $(1,971,242) $ (66,045)
Payment of stock sub-
scription receivable -- -- -- -- -- -- --
Issuance of common
stock ............... -- -- 206,738 2,067 1,632,899 -- --
Issuance of preferred
stock ............... -- -- -- -- -- --
Preferred stock offering
costs ............... -- -- -- -- -- -- --
Foreign currency
translation loss .... -- -- -- -- -- -- (5,204)
Net (Loss) for the year
ended December 31,
1993................. -- -- -- -- -- (2,457,631) --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31,
1993................. 16,305 $ 1 2,146,633 $ 21,466 $ 5,107,476 $(4,428,873) $ (71,249)
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
For the Year Ended December 31, 1992
Preferred Stock Common Stock
-------------------------- --------------------------
Capital Retained
in Excess Earnings Cumulative
Par Par of Par (Accumulated Translation
Shares Value Shares Value Value Deficit) Adjustment
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - December
31, 1991 ........... 69,920 $ 1 814,803 $ 8,148 $ 1,422,565 $ (184,605) $ 8,843
Issuance of common
stock-merger
agreement .......... -- -- 500,000 5,000 (147,052) -- --
Issuance of preferred
stock .............. 30,070 -- -- -- 601,400 -- --
Preferred stock
conversion to
common stock ....... (83,685) -- 418,425 4,184 (4,184) -- --
Issuance of common
stock .............. -- -- 206,667 2,067 1,783,848 -- --
Stock offering costs .. -- -- -- -- (182,000) -- --
Foreign currency
translation loss ... -- -- -- -- -- -- (74,888)
Net (Loss) for the year
ended December 31,
1992................ -- -- -- -- -- (1,786,637) --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance - December 31,
1992................ 16,305 $ 1 1,939,895 $ 19,399 $ 3,474,577 $(1,971,242) $ (66,045)
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Finca Consulting, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Year Ended December 31,
----------------------------
1993 1992
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities
Net (Loss) ............................................... $(2,457,631) $(1,786,637)
Adjustments to Reconcile Net (Loss) to Net Cash (Used for)
Operating Activities
Depreciation and amortization ....................... 246,181 40,940
Minority interests in subsidiary .................... -- 45,632
Decrease in marketable securities ................... 37,480 --
(Increase) decrease in prepaid expenses ............. 4,369 (1,407)
Decrease (increase) in sales tax refunds receivable . 98,216 (98,216)
Increase in receivable due from related parties ..... (234,402) --
(Increase) decrease in other current assets ......... 32,051 (86,188)
(Increase) in other assets .......................... (85,925) (50,617)
Increase in accounts payable and accrued expenses ... 65,199 101,118
Increase in customer credit balances ................ 749,929 176,783
Decrease (increase) in deposits ..................... 5,013 (27,594)
----------- -----------
Net Cash (Used for) Operating Activities ........ (1,539,520) (1,686,186)
----------- -----------
Cash Flows From Investing Activities
Purchase of property and equipment .................. (90,120) (224,478)
Investment in real property - Spain ................. -- (551,263)
Investment in vintage cars .......................... (42,531) (226,226)
Investment in marketable securities ................. -- (37,480)
Purchase of goodwill ................................ -- (43,018)
Purchase of capital cost - office premium ........... -- (17,534)
----------- -----------
Net Cash (Used for) Investing Activities ........ (132,651) (1,099,999)
----------- -----------
Cash Flows From Financing Activities
Proceeds from issuance of common stock .............. 1,634,966 1,693,466
Proceeds from issuance of preferred stock ........... -- 601,400
Stock offering costs ................................ -- (182,000)
Proceeds from note payable to affiliate ............. 19,195 251,671
Payments on note payable to affiliate ............... -- (2,156)
----------- -----------
Net Cash Provided by Financing Activities ....... 1,654,161 2,362,381
----------- -----------
Effect on Exchange Rate Changes on Cash .................. (5,204) (74,888)
----------- -----------
Net (Decrease) in Cash ................................... (23,214) (498,692)
Cash at Beginning of Year ................................ 374,915 873,607
----------- -----------
Cash at End of Year ...................................... $ 351,701 $ 374,915
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest .......................................... $ 19,354 $ 10,766
</TABLE>
See notes to the consolidated financial statements.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Finca Consulting, Inc. (formerly Charter Ventures, Inc.) (the
Company) was incorporated in the State of 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 (NOTE 5) with Finca Consulting
Costa Brava, S.A. (Finca) whereby, the Company transferred
essentially 100% of its net assets to Finca. Subsequent to this
stock exchange agreement, the Company and Finca remain as two
separate legal entities (the Company as the parent of Finca)
however, at the date of the merger Finca remained as the sole
ongoing entity for accounting purposes. Finca 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 Company
generated capital through an offering of preferred stock (NOTE 6)
and in September 1991 formed an additional wholly-owned
subsidiary, Finca Consulting Limited, incorporated in the United
Kingdom. Finca Consulting Limited assists Finca in marketing and
sales of Spanish properties.
In January 1992, the Company formed another new wholly-owned
subsidiary, Finca Consulting GmbH, incorporated in Germany. Finca
Consulting GmbH is engaged in the buying, selling and
administration of the Spanish real estate.
In July 1992, the Company entered into a common stock exchange
agreement (NOTE 5) with King National Corporation, a U.S.
corporation, whereby the sole transferrable asset was a 100%
ownership interest of Opti-Wert - Invest AG (OWI-AG) a Switzerland
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.
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.
A summary of the Company's significant accounting policies is as
follows:
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Finca Consulting, Inc. (for the period after the July
22, 1991 merger) and its wholly-owned subsidiaries, Finca
Consulting Costa Brava, S.A., Finca Consulting Limited (and
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Subsidiaries after October 1, 1992), Finca Consulting GmbH, and
King National Corporation for the period July 1, 1992 through
December 31, 1992 (collectively hereinafter referred to as the
Company). All significant intercompany accounts and transactions
have been eliminated.
Property and Equipment
Property and equipment are recorded at cost with depreciation and
amortization being recorded by using the straight-line method over
estimated economic useful lives as follows:
<TABLE>
<CAPTION>
Depreciation
Method Lives
------ -----
<S> <C> <C>
Buildings Straight-line 50 years
Leasehold improvements Straight-line 5 to 8 years
Office furniture and equipment Straight-line 4 to 10 years
Motor vehicles Straight-line 4 years
</TABLE>
Expenditures for maintenance and repairs are charged to expense
when incurred. Property replacements and betterments, which improve
or extend the useful lives of assets, are capitalized and
subsequently depreciated.
Amortization
Goodwill and Capital Costs - Office Premium is stated at cost.
Goodwill is being amortized over 40 years using a straight-line
basis. Office premium is being amortized over 19 years using a
straight-line basis.
Vintage Cars - Vintage cars are being amortized based on their
estimated book value.
Stock Offering Costs
Costs relating to the offering of the Company's common and
preferred stock (NOTE 6 and 7) have been charged against the
proceeds of the respective offerings.
Income Taxes
The provision for income taxes is based on income (loss) as
reported for financial statement purposes. Such provision may
differ from amounts currently payable, if any, because certain
items are reported for income tax purposes in periods different
from those in which they are reported in the financial statements.
If applicable, the tax effects of these timing differences are
reflected as deferred income taxes.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 1 - ORGANIZATION OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
International subsidiaries are taxed according to applicable laws
of the countries in which they do business.
Translation of Foreign Currencies
For international subsidiaries operating in their local currency
environment, net assets are translated at year-end exchange rates
while revenue and expenses are translated at average exchange rates
in effect during the year. Adjustments resulting from these
translations are accumulated in a separate component of
stockholders' equity.
Net (Loss) Per Share
The net income (loss) per share has been computed using the
weighted average number of common stock shares outstanding during
the year. During the period January 1, 1991 through July 21, 1991,
651,842 shares are reported as outstanding. Effective with the July
22, 1991 recapitalization (NOTE 5), 162,961 shares of common stock
are reported as issued for a $29,402 capital contribution. During
1992 and 1993, common shares were outstanding as follows:
A. January 1, 1992 through July 15, 1992 - 814,803
B. July 16, 1992 through September 14, 1992 - 1,733,228
(500,000 shares issued for all of King National
Corporation common shares (NOTE 5)
C. September 15, 1992 through December 31, 1992 - 1,939,895
(206,667 additional common shares issued)
(NOTE 7)
D. January 1, 1993 through May 15, 1993 - 2,012,582
E. May 16, 1993 through November 14, 1993 - 2,040,937
F. November 15, 1993 through December 31, 1993 - 2,146,633
Common stock purchase warrants and common stock issuable upon
conversion of the Company's preferred stock have been excluded from
the computation in that their effects are anti-dilutive.
NOTE 2 - RELATED PARTY TRANSACTIONS
(1) On December 31, 1991 the Company made a $49,603 investment
in participation certificates of OWI AG (NOTE 8). The
investment has been recorded at cost which approximates
market value at December 31, 1991. Subsequently in 1992,
OWI AG's parent company (King National Corporation) was
acquired by the Company thus causing this $49,603
investment to be eliminated in the consolidation process.
(2) During 1993 and 1992, the Company paid $0 and $19,743,
respectively for legal fees to Andrew J. Telsey, P.C. and
Andrew I. Telsey, a stockholder of the Company.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 2 - RELATED PARTY TRANSACTIONS (continued)
(3) Finca Consulting Limited, a wholly-owned subsidiary of the
Company, is provided, free of charge, office space in
London, England in the business office of a Company
officer and director.
(4) OWI AG pays fees for sales administration services to
Telecom GmbH, Dusseldorf. Both companies have the same
manager. Fees paid for the years ended 1993 and 1992
amounted to $1,703,792 and $994,498, respectively. Telecom
also pays certain brokerage fees on behalf of the company
which amounted to $1,891,704 and $1,068,907 for 1993 and
1992, respectively.
(5) OWI AG has granted a loan of $141,750 to its company
manager. The loan is payable in quarterly installments of
$7,020 with interest at five percent per annum.
NOTE 3 - INCOME TAXES
As of December 31, 1993, the Company has $2,918,238 of domestic
and foreign net operating loss carryforwards as follows:
Net
Operating
Available Through Losses
- ----------------- ------
United States
2004 $ 10,075
2005 677
2006 34,835
2007 74,177
2008 154,223
---------------
$ 273,987
===============
Spain
1996 $ 156,356
1997 73,757
1998 238,634
---------------
$ 468,747
===============
Germany
1997 $ 442,556
1998 488,110
---------------
$ 930,666
===============
Switzerland
1998 $ 1,059,919
===============
United Kingdom
Indefinite $ 184,919
===============
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 4 - OPERATING LEASES
The Company leases office space in Playa de Aro, Spain under a
five year lease which commenced February 1991. The lease is
cancelable with a 90 day notice and provides for annual rent
increases based on a price index. The Company paid $32,103 and
$40,631 for the years 1993 and 1992, respectively.
In January 1992 the Company entered into a lease agreement for
office space in Dusseldorf, Germany. The lease required a deposit
of $37,345 and requires monthly rental 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.
In January 1993, the Company leased the Spanish property,
consisting of a residential dwelling located in Gerona, Spain to
Volker Montag, an officer and director of the Company. The term
of the lease is for a period of five years commencing January 1,
1993 and requires payment of $1,000 rent per month for each of
the ensuing sixty months.
The Company (by virtue of its acquisition of King National
Corporation) leases office space in Switzerland, as well as
automobiles and office equipment under operating leases. The
Company paid $84,546 for the year ended December 31, 1993.
The following is a schedule years of future minimum rental
payments required under operating leases that have initial or
remaining noncancelable terms:
Year Ending December 31, Total
------------------------ -----
1994 $ 237,361
1995 230,262
1996 170,518
1997 13,930
1998 8,625
Thereafter 36,750
---------------
Total Minimum Payments
Required $ 697,446
===============
Total rental expense for all operating leases, except those with
terms of a month or less that were not renewed, amounted to
$284,049 and $185,796 for the year ended December 31, 1993 and
1992, respectively.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 5 - BUSINESS ACQUISITION
Effective July 22, 1991, Charter Ventures, Inc. (Charter) (Note
1) entered into a common stock exchange agreement with Finca
Consulting Costa Brava, S.A. (Finca). Charter acquired 100% of
Finca's issued and outstanding shares of common stock by issuing
325,921,000 shares (651,842 shares as adjusted for a 1 for 500
reverse stock split) of $.00001 ($.01 as amended) per value
common stock which represents 80% of the new combined common
stock outstanding. Charter was incorporated under the laws of the
State of Colorado on October 25, 1988 to engage in all aspects of
review and evaluation of private companies, partnerships and sole
proprietorships for the purpose of completing mergers with or
acquisitions by Charter. Effective with the common stock exchange
agreement, Charter changed its name to Finca Consulting, Inc.
(the Company) and effected a reverse split of its common stock
which provided that every 500 shares of common stock would be
exchanged for 1 share of common stock. In addition, the number of
authorized common shares was amended to 20,000,000 shares, par
value $.01. As of July 21, 1991 the Company's capital structure
consisted of the following:
Preferred Stock - $.00001 par value; 20,000,000 shares
authorized, none issued (NOTE 6).
Common Stock - $.01 (as amended) par value; 20,000,000 (as
amended) shares authorized, 162,961 (as adjusted for
reverse split) shares issued and outstanding.
Effective with the stock exchange agreement, the Company
transferred $29,402 of cash to Finca which represented
essentially 100% of the Company's net assets at the merger date.
The common stock exchange agreement has been accounted for as "a
recapitalization and issuance of shares for net assets (reverse
purchase of the Company by Finca)". Subsequent to the July 22,
1991 recapitalization, the Company and Finca remain as two
separate legal entities (the Company as the parent of Finca)
however, at the date of the merger Finca remained as the sole
ongoing entity for accounting purposes. The accompanying
consolidated financial statements exclude the financial
condition, results of operations and cash flows of Charter for
the period prior to the July 22, 1991 merger. As a result of the
recapitalization, the stockholders' equity section of the balance
sheet has been presented to reflect the 325,921,000 shares
(651,961 shares as adjusted for reverse stock split) of common
stock issued to Finca in the stock exchange agreement, 81,480,250
shares (162,961 shares as adjusted for reverse stock split) of
common stock issued for $29,402, and reflects the preferred stock
available for issuance by the new combined equity.
In December 1990, the Company completed a public offering of
5,175 units with each unit consisting of 1,000 shares (2 shares
as adjusted for the reverse split) of common stock. As part of
the common stock exchange agreement, two former officers of the
Company assigned to Secure Securities, Ltd., a stockholder of the
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 5 - BUSINESS ACQUISITION (Continued)
Company, 100,000,000 (200,000 as adjusted for the reverse split)
common stock purchase warrants. Each warrant entitles the holder
to purchase one share of common stock at $10.00 (as adjusted) per
share at any time prior to June 29, 1992 though a one-year
extension has been approved by the Board of Directors effectively
extending the expiration date to June 30, 1993. The notice at
$.005 (as adjusted) per warrant, providing a current registration
statement covering the warrants in effect. To date none of the
warrants have been exercised and the Company has not called any
of the warrants for redemption.
As of December 31, 1990, Charter previously reported net assets
of approximately $42,000, consisting primarily of cash. During
the period January 1, 1991 through July 22, 1991 Charter, as a
separate entity, incurred a net loss of approximately $12,600,
which included income of approximately $1,000 and the following
general and administrative expenses:
Administrative $ 2,958
Accounting 500
Legal 10,142
--------------
$ 13,600
==============
As of July 22, 1991, Charter had cash of $29,402 which
essentially represented 100% of its net assets. As previously
discussed, this cash was transferred to Finca effective with the
July 22, 1991 merger. If Charter's net loss of approximately
$12,600 for the period January 1, 1991 through July 22, 1991 is
combined with the Company's net loss of $186,605 included in the
accompanying reported statement of operations for the year ended
December 31, 1991, the earnings (loss) per share is as follows:
<TABLE>
<CAPTION>
<S> <C>
Combined net (loss) $ (199,205)
===========
Combined net (loss) per share $ (.28)
===========
Combined weighted average number of common shares outstanding 724,170
===========
</TABLE>
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 5 - BUSINESS ACQUISITION (Continued)
During the period January 1, 1991 through July 22, 1991 Charter
paid $10,142 in legal fees to Andrew I. Telsey, P.C. and Andrew
I. Telsey is a company stockholder.
In January 1992, the Company formed as a wholly-owned subsidiary
Finca Consulting GmbH, incorporated in Germany. Finca Consulting
GmbH is engaged in the buying, selling and administration of the
Spanish real estate. The Company capitalized the subsidiary with
$284,810 of its cash.
On July 15, 1992, the Company entered into a common stock
exchange agreement with King National Corporation, a U.S.
Corporation (King) whereby 500,000 common shares of Finca
Consulting, Inc. were exchanged for all 7,500,000 outstanding
shares of King in a 15 for 1 exchange. Since both Finca
Consulting, Inc. and King are controlled by the same interests,
this transaction is accounted for as neither a purchase or
pooling of interests. The assets and liabilities of the acquired
company (King) are recorded at historical cost with the excess of
liabilities assumed over assets acquired in the amount of
$147,052 resulting in a reduction of consolidated equity. The
sole transferrable asset of King is a 100% ownership interest in
the common stock of Opti-Wert-Invest AG (OWI AG), a Switzerland
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.
Activity during the period July 1, 1992 through December 31, 1992
for OWI AG has been included in the consolidated statements of
operations. King did not have any activity during this period.
For the period January 1, 1992 to June 30, 1992 King and OWI AG,
as a separate consolidated entity, incurred a consolidated loss
of $70,029. Consolidated assets of $442,934 are essentially
comprised of cash, vintage car, and fixed assets.
If the net loss of $70,029 for the period January 1, 1992 to June
30, 1992 is combined with the Company's net loss of $1,786,637
included in the accompanying reported statement of operations for
the year ended December 31, 1992 the (loss) per share is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Combined net (loss) $ (1,856,666)
==============
Combined net (loss) per share $ (1.84)
==============
Combined weighted average number of common shares outstanding 1,011,450
==============
</TABLE>
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 5 - BUSINESS ACQUISITION (Continued)
On October 1, 1992 Finca Consulting Limited (a United Kingdom
subsidiary) acquired the net assets of three additional companies
incorporated in the United Kingdom as wholly-owned subsidiaries.
This transaction was accounted for under the purchase method and,
accordingly, the three month activity from October 1, 1992
through December 31, 1992 in each of these acquired companies has
been included in the consolidated statement of operations. The
assets and liabilities of the acquired companies are recorded at
historical cost with the excess of liabilities assumed over
assets acquired in the amount of $443,018 recorded as goodwill.
NOTE 6 - PREFERRED STOCK OFFERING
In August 1991 the Company's Board of Directors authorized the
offering of 100,000 convertible preferred shares of the Company's
$.00001 par value preferred stock at a price of $20 per share.
The offering was undertaken pursuant to Regulation S under the
Securities Act of 1993 as amended. Each preferred share is
convertible into five shares of the Company's common stock within
a five year period from the date of subscription for the
preferred shares. No call provision exists relevant to the
preferred shares and the preferred shares do not include any
voting or redemption rights and are not subject to any operation
of a retirement or sinking fund. In the event of a liquidation of
the Company, either voluntary or involuntary, dissolution or
winding up of the Company or any distribution of the assets of
the Company, the holders of the preferred shares shall be
entitled to any and all amounts payable upon such shares superior
to those similar rights available to holders of the Company's
common shares, but subordinate to all creditors of the Company.
The Company has reserved for issuance from its authorized but
unissued common shares, 500,000 common stock shares relating to
the conversion rights of the preferred shares.
During 1991 the Company sold 69,920 shares of convertible
preferred stock and recorded gross proceeds of $1,398,400.
Commissions of $90,000 on the shares sold were paid to an
affiliate (NOTE 2) and as of December 31, 1991, $311,200 of the
gross proceeds remained payable to the Company by the same
affiliated brokerage firm (NOTE 2). During 1992, the Company sold
30,070 shares of convertible preferred stock and recorded gross
proceeds of $601,400. To date, preferred stockholders have
exercised their right to convert 83,685 preferred shares into
418,425 common stock shares and at December 31, 1992, 16,305
preferred shares remain outstanding.
The Company's commission arrangement with an affiliate (OWI-AG)
provided that $90,000 of commissions were payable December 31,
1991, and that an additional $100,000 could be paid during 1992
based upon the successful completion of the offering of the
100,000 convertible preferred shares. However, the affiliate
received no additional payments in 1992.
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
NOTE 7 - COMMON STOCK ISSUANCE
For the years ended December 31, 1993 and 1992, respectively the
Company authorized the issuance of 206,738 and 206,667 additional
common shares with a par value per share of $.01. The offering
was undertaken pursuant to Regulation S under the Securities Act
of 1993 as amended.
NOTE 8 - MINORITY INTEREST IN SUBSIDIARY
One of the Company's subsidiaries (OWI-AG) has issued
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. The 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 9 - OPERATIONS OF BUSINESS SEGMENTS AND IN GEOGRAPHIC AREAS
Business Segments
The Company operates in two business segments, acting as a real
estate broker for sales of properties in Europe and through its
subsidiary OWI-AG buying and selling of marketable securities and
options on behalf of its customers in Germany.
Geographic Areas
The Company operates primarily in Europe. Information regarding
each geographic area on an unconsolidated basis for 1993 and 1992
is as follows:
<TABLE>
<CAPTION>
December 31, 1993
-------------------------------------------------------------------------
United Elimin- Consolidated
States Europe ations Totals
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ - $ 16,603,901 $ - $ 16,603,901
=============== ============== =============== ==============
Operating (loss) $ (181,441) $ (2,257,870) $ - $ (2,439,311)
Other income (loss) 24,887 (43,207) - (18,320)
--------------- -------------- --------------- --------------
Net (loss) $ (156,554) $ (2,301,077) $ - $ (2,457,631)
=============== ============== =============== ==============
Identifiable assets at
December 31, 1993 $ - $ 1,810,849 $ - $ 1,810,849
=============== ============== ===============
General corporate assets 6,033
--------------
Total Assets $ 1,816,882
==============
</TABLE>
<PAGE>
Finca Consulting, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
<TABLE>
<CAPTION>
December 31, 1992
-------------------------------------------------------------------------
United Elimin- Consolidated
States Europe ations Totals
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sales to unaffiliated customers $ - $ 2,692,445 $ - $ 2,692,445
=============== ============== =============== ===============
Operating (loss) $ (102,453) $ (1,686,949) $ - $ (1,789,402)
Other income (loss) 10,938 (8,173) - 2,765
--------------- -------------- --------------- ---------------
Net (loss) $ (91,515) $ (1,695,122) $ - $ (1,786,637)
=============== ============== =============== ===============
Identifiable assets at
December 31, 1993 $ 551,263 $ 1,038,779 $ - $ 1,590,042
=============== ============== ===============
General corporate assets 220,386
---------------
Total Assets $ 1,810,428
===============
</TABLE>
Operating (loss) consists of sales less operating expenses.
General corporate assets represent parent company cash,
receivable due from affiliate for preferred stock offering
proceeds and the Company's stock investment in an affiliate.
NOTE 10 - CONCENTRATIONS OF CREDIT RISK
The Company maintains cash balances in several foreign financial
institutions which are not insured by the respective countries.
At December 31, 1993, the Company's uninsured cash balances total
$345,668.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS OF FINCA CONSULTING, INC. AND SUBSIDIARIES AT AND FOR THE CALENDAR
YEAR ENDED DECEMBER 31, 1993 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-END> DEC-31-1993
<CASH> 351,701
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 699,769
<PP&E> 941,371
<DEPRECIATION> 171,304
<TOTAL-ASSETS> 1,816,882
<CURRENT-LIABILITIES> 1,142,429
<BONDS> 0
0
1
<COMMON> 21,466
<OTHER-SE> 607,354
<TOTAL-LIABILITY-AND-EQUITY> 1,816,882
<SALES> 0
<TOTAL-REVENUES> 16,603,901
<CGS> 0
<TOTAL-COSTS> 13,728,846
<OTHER-EXPENSES> 5,314,366
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,354
<INCOME-PRETAX> (2,439,311)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,439,311)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,457,631)
<EPS-PRIMARY> (1.14)
<EPS-DILUTED> (1.14)
</TABLE>
