================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-QSB/A NO. 1
-----------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
-----------------------
Amending Part I - Item 1. Financial Statements
and Exhibit 27 - Financial Data Schedule
Commission file number 0-26202
EASTBROKERS INTERNATIONAL INCORPORATED
(Exact name of small business issuer as specified in its charter)
-----------------------
DELAWARE 52-1807562
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
15245 SHADY GROVE ROAD, SUITE 340, ROCKVILLE, MARYLAND 20850
(Address of principal executive offices) (Zip Code)
(301) 527-1110
(Registrant's telephone number, including area code)
CZECH INDUSTRIES, INC.
(Former name, if changed since last report)
-----------------------
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. Yes [X] No [ ]
Transitional Small Business Disclosure Format: Yes [ ] No [X]
The total number of shares of the registrant's Common Stock, $.05 par value,
outstanding on November 1, 1996, was 2,871,000.
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<PAGE>
CZECH INDUSTRIES, INC.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Historical Financial Statements
Consolidated Statements of Financial Condition ............................... 2
Consolidated Statements of Operations
Quarter Ended September 30, 1996 .......................................... 3
Six Months Ended September 30, 1996 ....................................... 3
Consolidated Statements of Cash Flows ........................................ 4
Notes to Consolidated Financial Statements ................................... 5
Pro forma Condensed Consolidated Financial Statements
Acquisition of Eastbrokers
Pro forma Condensed Consolidated Statements of Operations ................. 7
Transitional Period Ended March 31, 1996 ............................... 8
Quarter Ended September 30, 1996 ....................................... 9
Six Months Ended September 30, 1996 .................................... 10
Notes to Pro forma Condensed Consolidated Statements of Operations ..... 11
Pro forma Condensed Consolidated Statements of Financial Condition ........ 12
Notes to Pro forma Condensed Consolidated Statements of Financial Condition 14
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................................ 16
Signature ........................................................................... 17
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
1995 1996
----------- -----------
(AS RESTATED)
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 5,104,625 $ 5,639,410
Cash and securities segregated for regulatory
purposes or deposited with clearing organizations -- 33,577
Securities purchased under agreements to resell -- 6,687,236
Receivables
Customers 524,487 3,677,096
Broker dealers and other -- 774,643
Affiliated companies -- 1,531,703
Other -- 2,788,603
Securities owned, at value
Equities and other -- 967,572
Buildings, furniture and equipment, at cost (net of
accumulated depreciation and amortization of
$368,665 and $178,714 respectively) 18,501,387 2,135,336
Deferred taxes 16,691 143,996
Investments held for resale 3,001,869 262,300
Investments in affiliated companies -- 5,665,728
Goodwill -- 777,874
Net assets of discontinued operations -- 7,957,012
Other assets 151,894 751,013
----------- -----------
Total Assets $27,300,953 $39,793,099
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings
Lines of credit $ -- $ 1,080,924
Affiliated companies -- 297,697
Other 111,678 17,783
Payables
Customers -- 9,490,175
Broker dealers and other -- 869,414
Accounts payable and accrued expenses 186,229 765,788
Other liabilities and deferred amounts -- 1,097,301
----------- -----------
297,907 13,619,082
Long-term borrowings 3,072,610 5,632,434
----------- -----------
Total liabilities 3,370,517 19,251,516
----------- -----------
Minority interest in consolidated subsidiaries 8,161,015 2,510,546
----------- -----------
Stockholders' equity
Common stock; $.05 par value; 10,000,000 shares
authorized; 1,781,000 and 2,871,000 shares issued and
outstanding at September 30, 1995 and 1996, respectively 89,050 143,550
Paid-in capital 13,693,733 19,089,233
Retained earnings 23,426 (1,201,746)
Cumulative translation adjustment 1,963,212 --
----------- -----------
Total stockholders' equity 15,769,421 18,031,037
----------- -----------
Total Liabilities and Stockholders' Equity $27,300,953 $39,793,099
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- 2 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED FOR THE SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -------------------------
1995 1996 1995 1996
--------- --------- ----------- -----------
(AS RESTATED) (AS RESTATED)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Hotel room revenues $ 842,009 $ -- $1,590,323 $ --
Hotel food and beverage revenues 526,873 -- 550,526 --
Other 121,247 73,891 167,270 349,611
Equity in earnings of unconsolidated
affiliates 87,072 -- 87,072 --
---------- ----------- ---------- -----------
Total revenues 1,577,201 73,891 2,395,191 349,611
---------- ----------- ---------- -----------
Costs and expenses
Cost of sales 244,010 -- 254,964 --
Compensation and benefits 318,895 137,500 601,126 231,700
Interest 315,565 41,355 439,108 133,425
General and administrative 174,135 82,161 479,817 210,899
Depreciation and amortization 166,276 4,487 234,906 4,487
Loss on foreign currency transactions -- -- -- 38,444
---------- ----------- ---------- -----------
Total costs and expenses 1,218,881 265,503 2,009,921 618,955
---------- ----------- ---------- -----------
Income (loss) from continuing operations before provision for income taxes and
minority interest in earnings of
subsidiaries 358,320 (191,612) 385,270 (269,344)
Benefit from income taxes (82,000) -- (123,555) --
Minority interest in earnings of
subsidiaries (132,900) -- (186,067) --
---------- ----------- ---------- -----------
Income (loss) from continuing operations 143,420 (191,612) 75,648 (269,344)
Discontinued operations Income from discontinued operations (net of income taxes
of $0 for the quarter and six months ended September
30, 1996) -- 36,125 -- 41,899
Loss on sale of discontinued operations -- (1,323,083) -- (1,323,083)
---------- ----------- ---------- -----------
Net income (loss) $ 143,420 $(1,478,570) $ 75,648 $(1,550,528)
========== =========== ========== ===========
Weighted average number of shares
outstanding 1,781,000(1) 2,871,000 1,781,000(1) 2,871,000
========== =========== ========== ===========
Income (loss) from continuing operations
per share $ 0.08 $ (0.07) $ 0.04 $ (0.09)
========== =========== ========== ===========
Net income (loss) per share $ 0.08 $ (0.52) $ 0.04 $ (0.54)
========== =========== ========== ===========
</TABLE>
(1) Adjusted for 1 for 5 reverse stock split in September 1996
See notes to consolidated financial statements.
- 3 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
SEPTEMBER 30,
--------------------------
1995 1996
----------- -------------
(AS RESTATED)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ 75,648 $(1,550,528)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 234,906 4,487
Deferred taxes 166,600 76,565
Loss on sale of discontinued operations -- 1,323,083
Equity in earnings (loss) of unconsolidated affiliates (87,072) --
---------- -----------
390,082 (146,393)
Changes in operating assets and liabilities
Receivables
Customers (190,275) (421,112)
Affiliated companies -- (2,215,772)
Other assets 226,790 279,649
Accounts payable and accrued expenses (196,734) 399,097
---------- -----------
Net cash provided by (used in) operating activities 229,863 (2,104,531)
---------- -----------
Cash flows from investing activities
Net proceeds from (payments for)
Acquisition of net assets of Eastbrokers
Beteiligungs AG, net of cash acquired -- (2,441,047)
Investments in affiliates (3,001,869) --
Investments held for resale 851,158 1,677,623
Purchases of furniture and equipment 66,715 --
---------- -----------
Net cash provided by (used in) investing activities (2,083,996) (763,424)
---------- -----------
Cash flows from financing activities
Net proceeds from (payments for)
Proceeds from public offering 11,717,835 --
Proceeds from public offering - Eastbrokers Beteiligungs AG -- 3,387,150
Short-term financings (850,000) --
Other long-term debt (5,811,478) (97,007)
---------- -----------
Net cash provided by (used in) financing activities 5,056,357 3,290,143
---------- -----------
Foreign currency translation adjustment 1,552,135 26,636
---------- -----------
Increase (decrease) in cash and cash equivalents 4,754,359 448,824
Cash and cash equivalents at beginning of period 350,266 5,190,586
---------- -----------
Cash and cash equivalents at end of period $5,104,625 $ 5,639,410
========== ===========
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 4,401 $ 0
========== ===========
Cash paid for interest $ 439,108 $ 150,430
========== ===========
Non-cash transactions
Czech Industries shares issued as part of Eastbrokers
Beteiligungs AG acquisition $ 0 $ 5,400,000
========== ===========
</TABLE>
See notes to consolidated financial statements.
- 4 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION AND INTERIM REPORTING
The financial statements of Czech Industries, Inc. (the "Company") for the
quarter and six months ended September 30, 1996 have been prepared by the
Company, are unaudited, and are subject to year-end adjustments. These
unaudited financial statements reflect all known adjustments (which
included only normal, recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position,
results of operations, and cash flows for the periods presented in
accordance with generally accepted accounting principles. The results
presented herein for the interim periods are not necessarily indicative of
the actual results to be expected for the fiscal year.
The notes accompanying the consolidated financial statements in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1995
and in the Company's Transitional Report on Form 10-KSB for the period
ended March 31, 1996, include accounting policies and additional
information pertinent to an understanding of these interim financial
statements.
For the quarter and six months ended September 30, 1995, the accompanying
consolidated financial statements include the financial position, results
of operations and cash flows of the Company and its subsidiary, Hotel
Fortuna a.s., for the quarter and six months ended September 30, 1995.
For the quarter and six months ended September 30, 1996, the accompanying
consolidated financial statements include the financial position, results
of operations and cash flows of the Company for the quarter and six months
ended September 30, 1996, the financial position of its subsidiary,
Eastbrokers Beteiligungs Aktiengesellschaft ("Eastbrokers") as of the date
of acquisition (August 1, 1996), and the financial position, results of
operations, and cash flows of its subsidiary, Hotel Fortuna a.s.
for such periods.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Certain amounts in prior periods have been reclassified to conform to the
current presentation.
2. ACQUISITION OF EASTBROKERS BETEILIGUNGS AKTIENGESELLSCHAFT
On August, 1, 1996, the Company acquired 80 percent of the outstanding
stock of Eastbrokers through the issuance of 5,400,000 shares of the
Company (1,080,000 shares as adjusted for the reverse stock split effective
September 1996). The Company acquired an additional 245,320 shares in
Eastbrokers increasing its ownership percentage to 83.62 percent.
3. SUBSEQUENT EVENTS
On October 1, 1996, the Company entered into an agreement with Y.S.E. a.s.
to dispose of the Company's controlling equity interest in the Hotel
Fortuna a.s. The Company had owned 251,000 shares of Common Stock of the
Hotel Fortuna a.s., which owns and operates a 242 room hotel, restaurant
and lounge located in Prague, Czech Republic. The disposition of the
Company's interest in the Hotel Fortuna a.s. is deemed to be a disposition
of a significant amount of the Company's assets.
In return for its equity interest in the Hotel Fortuna a.s., the Company
received 100,000 shares of Common Stock of Ceske energeticke zavody a.s.,
nominal value 1,100 CZK ("CEZ"), a Czech utility company, and 86,570 shares
of Common Stock of Vodni stavby Praha a.s., nominal value 1,000 CZK ("VS"),
a Czech construction company. Both CEZ and VS are actively traded on the
Prague Stock Exchange's ("PSE")
- 5 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
Main Market. The VS shares were transferred to the Company on or about
October 15, 1996, and the CEZ shares were transferred to the Company about
November 5, 1996. Although the Company received the shares at various
dates, the title to these shares did not transfer until the delivery of the
Hotel Fortuna, a.s. shares. The Company transferred its shares of the Hotel
Fortuna a.s. to Y.S.E. a.s. on or about November 6, 1996 which also
represents the final closing of the sale.
The Company determined the cost basis of the Hotel Fortuna a.s. shares by
adding the Company's historical cost basis in the hotel with the Company's
proportionate share of the hotel's earnings it received through June 30,
1996. Based on this computation, the Company determined that the cost basis
of its interest in the hotel was approximately $9,400,000 USD. In
negotiating the sale of the Company's interest in Hotel Fortuna, a.s., the
Purchaser offered shares of CEZ and VS as considerations for the shares of
Hotel Fortuna, a.s. The Company negotiated the number of the CEZ and VS
shares it was to receive as consideration by utilizing the then current
market values of the shares as quoted on the PSE on October 1, 1996, the
date of the signing of the contract. On October 1, 1996, the PSE quoted
prices of CEZ and VS were 1,040 CZK (approximately $37.50 USD) and 1,900
CZK (approximately $69.50 USD) per share, respectively. Based on these
October 1, 1996 quoted prices, the value of the consideration to be
received was approximately $9,800,000 USD.
The Company valued the consideration received on the sale of its interest
in Hotel Fortuna, a.s. as of November 6, 1996, which is the date title to
these shares was transferred to the Company. This is consistent with the
provisions of current accounting literature which describes the conditions
required to be met for a sale to be considered consummated. As of November
6, 1996, the per share prices of the CEZ and VS were 950 CZK (approximately
$35.00 USD) and 1,300 CZK (approximately $51.00 USD), respectively, which
represented approximately $7,957,012 USD at the then current exchange
rates. The Company classified these shares as available for sale
securities.
On a date subsequent to obtaining the shares, the Company used 2,500 shares
of CEZ and 30,302 shares of VS to repay the balance of the principal and
interest due under a Note payable owed to Finn s.r.o. in the approximate
amount of $2.1 million USD. Also, the Company sold 13,900 shares of VS at
1,800 CZK (approximately $65.50 USD) per share for approximately $910,000
USD.
In accordance with current accounting standards, the Company has restated
the financial statements to reflect its investment in discontinued
operations at the estimated net realizable value on disposition.
Accordingly, in the course of restating the financial statements, the
minority interest in consolidated subsidiaries has been has been
significantly reduced due to the elimination of the minority interest
attributable to the Company's investment in the Hotel Fortuna a.s. as of
September 30, 1996.
- 6 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ACQUISITION OF EASTBROKERS
FOR THE TRANSITIONAL PERIOD ENDED MARCH 31, 1996,
THE QUARTER ENDED SEPTEMBER 30, 1996 AND
THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
The following unaudited Pro forma Condensed Consolidated Statements of
Operations are presented as if Czech Industries, Inc. (the "Company") had owned
Eastbrokers Beteiligungs Aktiengesellschaft ("Eastbrokers") as of January 1,
1995 and the purchase for stock by Czech Industries, Inc. had occurred at the
beginning of each period. The unaudited Pro forma Condensed Consolidated
Statements of Operations should be read in conjunction with the historical
financial statements of the Company included elsewhere herein. In the opinion of
management, all adjustments necessary to reflect the acquisition transactions
have been made.
These unaudited Pro forma Condensed Consolidated Statements of Operations are
not necessarily indicative of what the actual results of operations the Company
would have been assuming the acquisition transactions had been consummated as of
the beginning of each period, nor does it purport to represent the results of
operations attainable for future periods.
- 7 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ACQUISITION OF EASTBROKERS
<TABLE>
<CAPTION>
TRANSITIONAL PERIOD ENDED MARCH 31, 1996
---------------------------------------------------------
CZECH EASTBROKERS PRO FORMA PRO FORMA
INDUSTRIES, INC. AG ADJUSTMENT AS ADJUSTED
--------------- ------------- ---------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Investment bank and brokerage revenues $ -- $4,220,481 $ -- $4,220,481
Hotel revenues 478,044 -- -- 478,044
Gain on sales of investments 327,104 -- -- 327,104
Equity in earnings of affiliates -- 644,904 -- 644,904
Other 79,954 1,376,068 -- 1,456,022
---------- ---------- --------- ----------
Total revenues 885,102 6,241,453 -- 7,126,555
---------- ---------- --------- ----------
Expenses
Cost of sales 39,525 -- -- 39,525
Compensation and benefits 233,267 1,183,471 -- 1,416,738
General and administrative 341,036 3,154,564 -- 3,495,600
Interest 46,920 558,815 -- 605,735
Depreciation and amortization 99,742 135,882 -- 235,624
Loss on foreign currency exchange 12,653 -- -- 12,653
---------- ---------- --------- ----------
Total expenses 773,143 5,032,732 -- 5,805,875
---------- ---------- --------- ----------
Income before provision for income
taxes and minority interest in
earnings of consolidated
subsidiaries 111,959 1,208,721 -- 1,320,680
Provision for (benefit from)
income taxes -- 253,721 -- 253,721
---------- ---------- --------- ----------
Income before minority interest
in earnings of consolidated
subsidiaries 111,959 955,000 -- 1,066,959
Minority interest in earnings of
consolidated subsidiaries (5,727) (84,973) (142,510)(a) (233,210)
---------- ---------- --------- ----------
Net income (loss) $ 106,232 $ 870,027 $(142,510) $ 833,749
========== ========== ========= ==========
Pro forma weighted average
shares outstanding 2,871,000 528,913 -- 2,871,000
========== ========== ========= ==========
Pro forma earnings per share $ 0.04 $ 1.64 $ -- $ 0.29
========== ========== ========= ==========
</TABLE>
See notes to pro forma consolidated financial statements.
- 8 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ACQUISITION OF EASTBROKERS
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30, 1996
---------------------------------------------------------
CZECH EASTBROKERS PRO FORMA PRO FORMA
INDUSTRIES, INC. AG ADJUSTMENT AS ADJUSTED
--------------- ------------- ---------- -------------
(AS RESTATED) (AS RESTATED)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Investment bank and brokerage revenues $ -- $ 879,345 $ -- $ 879,345
Gain on sales of investments -- -- -- --
Equity in earnings of affiliates -- 393,512 -- 393,512
Other 73,891 14,101 -- 87,992
----------- ---------- --------- -----------
Total revenues 73,891 1,286,958 -- 1,360,849
----------- ---------- --------- -----------
Expenses
Compensation and benefits 137,500 157,902 -- 295,402
General and administrative 82,161 716,269 -- 798,430
Interest 41,355 5,201 -- 46,556
Depreciation and amortization 4,487 35,714 -- 40,201
Loss on foreign currency exchange -- -- -- --
----------- ---------- --------- -----------
Total expenses 265,503 915,086 -- 1,180,589
----------- ---------- --------- -----------
Income (loss) from continuing operations before provision for income taxes and
minority interest in earnings of
subsidiaries (191,612) 371,872 -- 180,260
Provision for (benefit from)
income taxes -- 137,380 -- 137,380
----------- ---------- --------- -----------
Income (loss) from continuing operations
before minority interest in earnings
of subsidiaries (191,612) 234,492 -- 42,880
Minority interest in earnings of
subsidiaries -- 17,151 (41,219)(a) (24,068)
----------- ---------- --------- -----------
Income (loss) from continuing operations (191,612) 251,643 (41,219) 18,812
Discontinued operations
Income from discontinued operations
(net of income taxes of $0 for the
quarter ended September 30, 1996) 36,125 -- -- 36,125
Loss on sale of discontinued operations (1,323,083) -- -- (1,323,083)
----------- ---------- --------- -----------
Net income (loss) $(1,478,570) $ 251,643 $ (41,219) $(1,268,146)
=========== ========== ========= ===========
Pro forma weighted average
shares outstanding 2,871,000 528,913 -- 2,871,000
=========== ========== ========= ===========
Pro forma income (loss) from
continuing operations per share $ (0.07) $ 0.48 $ -- $ 0.01
=========== ========== ========= ===========
Pro forma earnings per share $ (0.52) $ 0.48 $ -- $ (0.44)
=========== ========== ========= ===========
</TABLE>
See notes to pro forma consolidated financial statements.
- 9 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ACQUISITION OF EASTBROKERS
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------------------
CZECH EASTBROKERS PRO FORMA PRO FORMA
INDUSTRIES, INC. AG ADJUSTMENT AS ADJUSTED
--------------- ------------- ---------- ------------
(AS RESTATED) (AS RESTATED)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Investment bank and brokerage revenues $ -- $2,037,057 $ -- $ 2,037,057
Gain on sales of investments -- -- -- --
Equity in earnings of affiliates -- 573,028 -- 573,028
Other 349,611 191,767 -- 541,378
----------- ---------- --------- -----------
Total revenues 349,611 2,801,852 -- 3,151,463
----------- ---------- --------- -----------
Expenses
Compensation and benefits 231,700 399,051 -- 630,751
General and administrative 210,899 1,646,729 -- 1,857,628
Interest 133,425 93,185 -- 226,610
Depreciation and amortization 4,487 53,196 -- 57,683
Loss on foreign currency exchange 38,444 -- -- 38,444
----------- ---------- --------- -----------
Total expenses 618,955 2,192,161 -- 2,811,116
----------- ---------- --------- -----------
Income (loss) from continuing operations before provision for income taxes and
minority interest in earnings of
subsidiaries (269,344) 609,691 -- 340,347
Provision for (benefit from)
income taxes -- 201,346 -- 201,346
----------- ---------- --------- -----------
Income (loss) from continuing operations
before minority interest in earnings
of subsidiaries (269,344) 408,345 -- 139,001
Minority interest in earnings of
subsidiaries -- (92,755) (51,694)(a) (144,449)
----------- ---------- --------- -----------
Income (loss) from continuing operations (269,344) 315,590 (51,694) (5,448)
Discontinued operations
Income from discontinued operations
(net of income taxes of $0 for the
quarter ended September 30, 1996) 41,899 -- -- 41,899
Loss on sale of discontinued operations (1,323,083) -- -- (1,323,083)
----------- ---------- --------- -----------
Net income (loss) $(1,550,528) $ 315,590 $ (51,694) $(1,268,146)
=========== ========== ========= ===========
Pro forma weighted average
shares outstanding 2,871,000 528,913 -- 2,871,000
=========== ========== ========= ===========
Pro forma income (loss) from
continuing operations per share $ (0.09) $ 0.60 $ -- $ (0.01)
=========== ========== ========= ===========
Pro forma earnings per share $ (0.54) $ 0.60 $ -- $ (0.45)
=========== ========== ========= ===========
</TABLE>
See notes to pro forma consolidated financial statements.
- 10 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
ACQUISITION OF EASTBROKERS
FOR THE TRANSITIONAL PERIOD ENDED MARCH 31, 1996,
THE QUARTER ENDED SEPTEMBER 30, 1996 AND
THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
The financial information included in the accompanying Pro forma Condensed
Consolidated Statements of Operations has been derived and accumulated as
follows:
TRANSITIONAL PERIOD ENDED MARCH 31, 1996
Czech Industries, Inc. includes information derived from the audited
financial statements for the transitional period ended March 31, 1996.
This includes only the results of operations of Czech Industries, Inc.
for the first three months of 1996. Results of operations for the
Hotel Fortuna a.s. are not included in these transitional period
statements.
Eastbrokers includes the information derived from the compiled consolidated
financial statements included with the Current Report on Form 8-K filed in
connection with the acquisition of Eastbrokers. Included in this period are
the consolidated results of operations for the year ended December 31,
1995.
QUARTER ENDED SEPTEMBER 30, 1996
Czech Industries, Inc. includes information derived from the Form 10-QSB
historical financial statements for the quarter ended September 30, 1996.
This includes the results of operations of Czech Industries, Inc. for the
quarter ended September 30, 1996 and the results of operations of the
company's subsidiary, Hotel Fortuna a.s., for the quarter ended June 30,
1996.
Eastbrokers includes information derived from the consolidated results of
operations for the quarter ended June 30, 1996.
SIX MONTHS ENDED SEPTEMBER 30, 1996
Czech Industries, Inc. includes information derived from the Form 10-QSB
historical financial statements for the six months ended September 30,
1996. This includes the results of operations of Czech Industries, Inc. for
the six months ended September 30, 1996 and the results of operations of
the company's subsidiary, Hotel Fortuna a.s., for the six months ended June
30, 1996.
Eastbrokers includes information derived from the consolidated results of
operations for the six months ended June 30, 1996.
ASSUMPTIONS:
1. Czech Industries, Inc. acquired 83.62 percent of the outstanding
capital stock of Eastbrokers as of the beginning of each period
for cash and shares of Czech Industries, Inc. The total value of
this transaction is $8,971,028. The purchase was comprised of
5,400,000 shares of Czech Industries, Inc. issued for the initial
acquisition and cash to Eastbrokers for the issuance of additional
shares of $3,571,028. (The value assigned to these shares by the
Board of Directors was $1.00 per share for a total of $5,400,000).
After a one for five reverse stock split, the total shares related
to this transaction were 1,080,000 at an assigned value of $5.00
per share.
ADJUSTMENTS:
(a) Adjustment to recognize the minority shareholders' interest in the
net income of Eastbrokers for each of the periods presented.
- 11 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ACQUISITION OF EASTBROKERS
FOR THE TRANSITIONAL PERIOD ENDED MARCH 31, 1996,
THE QUARTER ENDED SEPTEMBER 30, 1996 AND
THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
The following unaudited Pro forma Condensed Consolidated Statement of Financial
Condition is presented as if Czech Industries, Inc. (the "Company") had owned a
controlling interest in Eastbrokers as of June 30, 1996. Information relating to
Czech Industries, Inc. has been derived from the Form 10-QSB historical
financial statements for the six months ended September 30, 1996. This includes
the financial condition of Czech Industries, Inc. as of September 30, 1996, and
the financial condition of the company's subsidiary, Hotel Fortuna a.s., as of
June 30, 1996. Eastbrokers includes information derived from the consolidated
financial condition as of June 30, 1996. This unaudited Pro forma Condensed
Consolidated Statement of Financial Condition should be read in conjunction with
the historical financial statements of the Company included elsewhere herein. In
the opinion of management, all adjustments necessary to reflect the acquisition
transactions have been made.
This unaudited Pro forma Condensed Consolidated Statement of Financial Condition
is not necessarily indicative of what the actual financial position of the
Company would have been assuming the acquisition transactions had been
consummated as of June 30, 1996, nor does it purport to represent the future
financial position of the Company.
- 12 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ACQUISITION OF EASTBROKERS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
ASSETS
CZECH EASTBROKERS PRO FORMA PRO FORMA
INDUSTRIES, INC. AG ADJUSTMENT AS ADJUSTED
--------------- ------------- ---------- -----------
(AS RESTATED) (AS RESTATED)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents $1,172,279 $ 6,399,665 $ -- $ 7,571,944
Securities purchased under
agreements to resell -- 5,813,593 -- 5,813,593
Receivables 2,215,772 9,789,168 (2,215,772)(c) 9,789,168
Securities owned, at value -- 689,327 -- 689,327
Investments held for resale -- 936,062 -- 936,062
Other current assets 132,329 133,563 -- 265,892
Net assets of discontinued operations 7,957,012 -- -- 7,957,012
----------- ----------- ----------- -----------
Total current assets 11,477,392 23,761,378 (2,215,772) 33,022,998
Property and equipment, net 90,188 1,894,002 -- 1,984,190
Investments in affiliated companies 8,971,028 5,011,967 (8,366,323)(b) 5,616,672
Other assets -- 602,795 777,874 (b) 1,380,669
----------- ----------- ----------- -----------
Total Assets $20,538,608 $31,270,142 $(9,804,221) $42,004,529
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ -- $ 3,264,802 $ -- $ 3,264,802
Payables -- 12,408,350 (2,215,772)(c) 10,192,578
Accounts payable and accrued expenses 578,146 242,902 -- 821,048
Other liabilities and deferred amounts -- 1,250,141 -- 1,250,141
----------- ----------- ----------- -----------
Total current liabilities 578,146 17,166,195 (2,215,772) 15,528,569
----------- ----------- ----------- -----------
Long-term borrowings 1,929,425 3,587,371 -- 5,516,796
----------- ----------- ----------- -----------
Total liabilities 2,507,571 20,753,566 (2,215,772) 21,045,365
----------- ----------- ----------- -----------
Minority interest in consolidated
subsidiaries -- 975,631 1,952,496 (b) 2,928,127
----------- ----------- ----------- -----------
Stockholders' equity 18,031,037 9,540,945 (9,540,945)(b) 18,031,801
----------- ----------- ----------- -----------
Total Liabilities and
Stockholders' Equity $20,538,608 $31,270,142 $(9,804,221) $42,004,529
=========== =========== =========== ===========
</TABLE>
See notes to pro forma consolidated financial statements.
- 13 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
ACQUISITION OF EASTBROKERS
FOR THE TRANSITIIONAL PERIOD ENDED MARCH 31, 1996,
THE QUARTER ENDED SEPTEMBER 30, 1996 AND
THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
ASSUMPTIONS:
1. Czech Industries, Inc. acquired 83.62 percent of the outstanding
capital stock of Eastbrokers as of the beginning of each period for
cash and shares of Czech Industries, Inc. The total value of this
transaction is $8,971,028. The purchase was comprised of 5,400,000
shares of Czech Industries, Inc. issued for the initial acquisition
and cash to Eastbrokers for the issuance of additional shares of
$3,571,028. (The value assigned to these shares by the Board of
Directors was $1.00 per share for a total of $5,400,000.) After a
one for five reverse stock split, the total shares related to this
transaction were 1,080,000 at an assigned value of $5.00 per share.
ADJUSTMENTS:
(b) Adjustment to record the consolidation of Eastbrokers into Czech
Industries, Inc., recognition of minority interest in the equity of
Eastbrokers AG, and recording the goodwill related to the purchase as
March 31, 1996. Common stock and cash with a combined value of
$8,971,028 was used to acquire net assets of $8,193,154 leaving
goodwill acquired of $777,874.
(c) Adjustment to eliminate intercompany loans and related receivables
as of September 30, 1996.
- 14 -
<PAGE>
CZECH INDUSTRIES, INC.
(A DELAWARE CORPORATION)
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF
DISPOSITION OF HOTEL FORTUNA A.S.
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
These statements have been deleted in light of the discontinued operations
restatement to the historical financial statements.
- 15 -
<PAGE>
PART II -- OTHER INFORMATION
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits required by Item 601 of Regulation S-B
Exhibit No. Description
----------- -----------
(3)(i) Certificate of Incorporation of Czech
Industries, Inc., as amended. (a)
(10) Material Contract between the Company and YSE a.s.
entered into on October 1, 1996, subject to the
receipt and delivery of certain consideration. (a)
(27.1) Financial Data Schedule (Electronic Filing Only).
(27.2) Item 2 of Current Report on Form 8-K dated August 1,
1996.*
b. Reports on Form 8-K
On August 8, 1996, the Company filed with the Commission a Current
Report on Form 8-K dated August 1, 1996 containing information relating
to Item 2, Acquisition or Disposition of Assets, and Item 7, Financial
Statements and Exhibits. Such Report contained financial statements,
including the separate financial statements of Eastbrokers.
- ------------------------
(a) As previously filed.
* Incorporated by reference from Current Report on Form 8-K dated
August 1, 1996 (File No. 0-26202).
- 16 -
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this amendment to this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EASTBROKERS INTERNATIONAL INCORPORATED
----------------------------------------
(Registrant)
August 11, 1997 /s/ Martin A. Sumichrast
------------------- ----------------------------------------
Date (Signature)
Martin A. Sumichrast,
Vice Chairman
- 17 -
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description PAGE
- - ----------- ----------- ----
<S> <C> <C>
(3)(i) Certificate of Incorporation of Czech Industries, Inc., as amended. (a)
(10) Material Contract between the Company and YSE a.s. (a)
(27.1) Financial Data Schedule (Electronic Filing Only).
(27.2) Item 2 of Current Report on Form 8-K dated August 1, 1996.*
</TABLE>
- ---------------------
(a) As previously filed.
* Incorporated by reference from Current Report on Form 8-K dated
August 1, 1996 (File No. 0-26202).
- 18 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,639,410
<SECURITIES> 7,654,808
<RECEIVABLES> 8,772,045
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,099,840
<PP&E> 2,314,050
<DEPRECIATION> 178,714
<TOTAL-ASSETS> 39,793,099
<CURRENT-LIABILITIES> 13,619,082
<BONDS> 5,632,434
0
0
<COMMON> 143,550
<OTHER-SE> 17,887,487
<TOTAL-LIABILITY-AND-EQUITY> 39,793,099
<SALES> 0
<TOTAL-REVENUES> 349,611
<CGS> 0
<TOTAL-COSTS> 618,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 133,425
<INCOME-PRETAX> (269,344)
<INCOME-TAX> 0
<INCOME-CONTINUING> (269,344)
<DISCONTINUED> (1,281,184)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,550,528)
<EPS-PRIMARY> (0.54)
<EPS-DILUTED> (0.54)
</TABLE>
