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 June 30, 1998
--------------
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
-----------
GREEN CAPITAL GROUP, INC.
-------------------------
(FORMERLY PACIFIC FOREST CORPORATION)
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
<TABLE>
<CAPTION>
NEVADA 87-0438451
- --------------------------------------------- -----------------------------------
<S> <C>
(State or other jurisdiction of incorporation (IRS Employer Identification Number)
or organization)
</TABLE>
2575 South Bayshore Drive, Unit 8B, Miami, FL 33133
- --------------------------------------------- ----------
(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 October 1,1998
- ------------------------------- --------------------------------
CLASS A COMMON STOCK 15,616,073 shares
Par Value $0.001
1
<PAGE>
PART I - FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Item 1. Financial Statements
- --------------------------------------------------------------------------------
Financial Statements Page
Unaudited Consolidated Balance Sheet as of June 30, 1998 F-1
Unaudited Consolidated Statement of Operations for the quarter ending
June 30, 1998 and 1997 F-2
Unaudited Consolidated Statement of Cashflow for the quarter
ending June 30, 1998 and 1997 F-3
Notes to Consolidated Financial Statements F-4
- --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- --------------------------------------------------------------------------------
Results of Operations
- ---------------------
The net revenues for the quarter ended June 30, 1998 are lower than for the
comparative period in 1997 because of the additional marketing and selling
expenses incurred during the quarter which included payments of sales
commissions to certain agents. Additionally, the results of the quarter ended on
June 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 Company's farms.
Liquidity and Capital Resources
- -------------------------------
Management believes that the shortage in the working capital shown in the
balance sheet as of June 30, 1998 can be reversed as soon as newly implemented
marketing strategies increase the cash flows from sales of teakwood contracts.
These marketing strategies consist of the introduction to the market place of
two new products and establishing strategic alliances with large finance
companies to sell these products. The past and current cash flow shortage has
resulted in the failure to make payments to Gambordela Enterprises which, at the
end of the quarter, was in arrears by $60,565. The cash flow shortfall is
directly attributable to a drop in sales in The Netherlands which was caused by
the Company's disassociation with its former sales representatives during the
quarter. 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 now being marketed by the Company in The Netherlands
which has resulted in increased sales. Management believes that the increase in
sales will enable the Company to pay all arrearages to Gambordela Enterprises
before the end of the current calendar year although no assurances can be given.
Additionally, the Company is making efforts to raise up to $1.5 million
through the private offering of its restricted securities to non-U.S. citizens.
It is anticipated that the proceeds of these offerings will
2
<PAGE>
be used for debt repayment, the acquisition of SFI (as described in Item 5) and
working capital. No assurances are given that these offerings will be
successful.
Impact of Inflation
- -------------------
The Registrant believes that its activities are not materially affected by
inflation.
PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 5. Other Information
- --------------------------------------------------------------------------------
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 conducting due diligence. No assurances are given that the
acquisition will be consummated.
- --------------------------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------
(a) The following exhibits are included in this filing:
27 Financial Data Schedule
(b) Reports on Form 8-K:
An amendment to a Current Report on Form 8-K providing certain proforma and
other financial statements relating to the acquisition of Green Capital N.V. and
subsidiaries by the Company was filed with the Commission on September 8, 1998
and amended on September 28, 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 : October 5, 1998 By:_____________________________
Oscar S. Christian, President
3
<PAGE>
GREEN CAPITAL GROUP, INC. AND SUBSIDIARIES
(FORMERLY PACIFIC FOREST CORPORATION)
CONSOLIDATED BALANCE SHEET
(amounts expressed in U.S. Dollars)
(UNAUDITED)
<TABLE>
<CAPTION>
As of
June 30, 1998
----------------------
<S> <C>
ASSETS
Current assets:
Cash on hand and in banks $ 165,731
Accounts receivable 918,226
Receivable from stockholder 58,878
Other assets 158,489
----------------------
Total current assets 1,301,324
Property, machinery and equipment, net 8,001,439
Plantations under development 5,268,275
Other assets 1,409,666
----------------------
Total assets $ 15,980,704
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 380,000
Current portion of long term-debt 694,487
Accounts payable to suppliers 200,862
Payable to stockholder 38,159
Provision for future plantations' maintenance costs 181,337
Accrued expenses and others liabilities 152,675
----------------------
Total current liabilities 1,647,520
Long term-debt 9,056,657
Provision for future plantations' maintenance costs 596,360
Other liabilities 47,171
----------------------
Total liabilities 11,347,708
Stockholders' equity:
Capital stock 7,325
Contributions for future capital increases 4,200,000
Additional capital contributions 278,322
Retained earnings 78,063
Currency translation adjustment 69,286
----------------------
Total stockholders' equity 4,632,996
----------------------
Total liabilities and stockholders' equity $ 15,980,704
======================
</TABLE>
F-1
<PAGE>
GREEN CAPITAL GROUP, INC. AND SUBSIDIARIES
(FORMERLY PACIFIC FOREST CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts expressed in U.S. Dollars)
(UNAUDITED)
<TABLE>
<CAPTION>
For the six For the three For the six For the three
month period month period month period month period
ended ended ended ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
Income from sales of teakwood contracts $ 1,349,987 $ 571,070 $ 1,064,725 $ 508,500
Operating expenses and costs:
Maintenance costs of teakwood plantations 317,274 58,737 310,532 145,473
Marketing and selling 201,201 194,539 60,994 36,532
General and administrative 526,615 282,156 301,726 174,999
------------------- ------------------ ----------------- ------------------
Total operating expenses and costs 1,045,090 535,432 673,252 357,004
------------------- ------------------ ----------------- ------------------
Operating profit $ 304,897 $ 35,638 $ 391,473 $ 151,496
Financial expenses 326,480 326,480
Amortization of goodwill 216,061 174,640 1,308 654
Other expenses, net 36,391 12,457 12,241 1,446
------------------- ------------------ ----------------- ------------------
Net profit for the period (274,035) (477,939) 377,924 149,396
Retained earnings at the beginning of the 370,598 574,502 246,743 475,271
period
Adjustment to previous periods (18,500) (18,500)
------------------- ------------------ ----------------- ------------------
Retained earnings at the end of the period $ 78,063 $ 78,063 $ 624,667 $ 624,667
=================== ================== ================= ==================
</TABLE>
F-2
<PAGE>
GREEN CAPITAL GROUP, INC. AND SUBSIDIARIES
(FORMERLY PACIFIC FOREST CORPORATION)
CONSOLIDATED STATEMENTS OF CASHFLOW
(amounts expressed in U.S. Dollars)
(UNAUDITED)
<TABLE>
<CAPTION>
For the six For the three For the six For the three
month period month period month period month period
ended ended ended ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Cashflow of the operating activities
Net profit of the period $ (274,035) $ (477,939) $ 377,924 $ 149,396
Adjustments to reconcile net profit of the period to
net cash provided by
operating activities:
Depreciation 10,085 5,044 10,088 5,044
Financial Expenses 326,480 326,480
Goodwill amortization 216,061 174,640 (1,308) (654)
Exchange of units (271,850) (271,850)
Provision for future plantations' maintenance costs 196,250 18,436 179,438 89,719
Allowance for doubtful receivables - - - -
Increase in assets:
Accounts receivable (74,726) 368,674 (562,208) (373,406)
Other assets (43,961) (35,389) (4,490) 33
Increase (decrease) in liabilities:
Accounts payable 101,144 (3,924)
Maintenance costs charged to the provision (101,503) (60,564)
Payable to stockholder 38,159 - - -
Accrued expenses and other liabilities 56,890 50,011 (35,192) (54,286)
---------------- ----------------- ----------------- -----------------
Total adjustments 453,029 571,558 (413,672) (333,550)
---------------- ----------------- ----------------- -----------------
Net cash provided (used) by operating activities 178,994 93,619 (35,748) (184,154)
---------------- ----------------- ----------------- -----------------
Cashflow of the investing activities:
Disposition of fixed assets 1,328 1,326 4,561 -
Acquisition of fixed assets (1,338) - (640) (640)
---------------- ----------------- ----------------- -----------------
Net cash used (provided) by investing activities (10) 1,326 3,921 (640)
---------------- ----------------- ----------------- -----------------
Cashflows of the financing activities:
Payment of interest (50,048)
Notes payable (4,991)
Capital stock 6,250
---------------- ----------------- ----------------- -----------------
Net cash provided (used) by financing activities (48,789) - - -
---------------- ----------------- ----------------- -----------------
Net increase (decrease) in cash and cash equivalent 130,195 94,945 (31,827) (184,794)
Cash on hand and in banks at beginning of period 30,486 67,655 112,666 268,879
Effect of currency translation adjustments 5,050 3,131 9,143 5,897
---------------- ----------------- ----------------- -----------------
Cash on hand and in banks at end of period $ 165,731 $ 165,731 $ 89,982 $ 89,982
================ ================= ================= =================
</TABLE>
F-3
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(amounts expressed in US dollars)
1. Domicile, Activities, Accounting Records, and Currency:
------------------------------------------------------
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. 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 March 31, 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. 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)
F-4
<PAGE>
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.
Sale of Teakwood Contracts:
Income from the sale of teakwood contracts is recognized when the contract
is signed (note 12)
Employees' Legal Benefits:
These are recognized when the payment is made.
F-5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Green
Capital Group, Inc. June 30, 1998 financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 866678
<NAME> GREEN CAPITAL GROUP, INC.
(FORMERLY PACIFIC FOREST CORPORATION)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 165,731
<SECURITIES> 0
<RECEIVABLES> 918,226
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,301,324
<PP&E> 8,001,439
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,980,704
<CURRENT-LIABILITIES> 1,647,520
<BONDS> 0
0
0
<COMMON> 7,325
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 15,980,704
<SALES> 1,349,987
<TOTAL-REVENUES> 1,349,987
<CGS> 0
<TOTAL-COSTS> 1,045,090
<OTHER-EXPENSES> (252,452)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (326,480)
<INCOME-PRETAX> (274,035)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (274,035)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
