<PAGE>
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A No. 1
Amending Item Number 7*
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest
event reported) May 14, 1998.
EASTBROKERS INTERNATIONAL INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-26202 52-1807562
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Incorporation) Number) Identification Number)
15245 Shady Grove Road, Suite 340
Rockville, Maryland 20850
(Address of Principal Executive Offices, Including Zip Code)
(301) 527-1110
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
* The Form 8-K dated May 14, 1998 is being amended to include the financial
statements of the business acquired and pro forma financial information.
- --------------------------------------------------------------------------------
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Businesses Acquired.
Cohig:
Financial Statements at and for the years ended September 26,
1997, September 27, 1996 and September 30, 1995.
Financial Statements at March 31, 1998 and for the six month
periods ended March 31, 1998 and March 31, 1997 (unaudited).
(b) Pro Forma Financial Information.
Cohig:
Pro Forma Statement of Financial Condition and Statement of
Operations as of and for the year ended March 31, 1998
(unaudited).
(c) Pro Forma Condensed Consolidated Financial Information.
Eastbrokers International Incorporated:
Pro Forma Condensed Consolidated Financial Statements as of
and for the year ended March 31, 1998 (unaudited).
(d) Exhibits.
The following exhibits are filed with this Form 8-K:
2. Agreement and Plan of Merger dated May 14, 1998
by and among the Registrant, East Merger
Corporation, Cohig & Associates, Inc., and
Cherry Creek Investments, Ltd., incorporated by
reference to the Current Report on Form 8-K
dated May 14, 1998 (File No. 0-26202).
99. Press Release relating to the merger,
incorporated by reference to the Current
Report on Form 8-K dated May 14, 1998 (File
No. 0-26202).
.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to the report to be signed on its
behalf by the undersigned hereunto duly authorized.
Eastbrokers International Incorporated
(Registrant)
Date: October 30, 1998 By: /s/ Kevin D. McNeil
------------------------------------
Name: Kevin D. McNeil
Title: Vice President, Treasurer, and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2. Agreement and Plan of Merger dated May 14, 1998 by
and among the Registrant, East Merger Corporation,
Cohig & Associates, Inc., and Cherry Creek
Investments, Ltd., incorporated by reference to the
Current Report on Form 8-K dated May 14, 1998 (File
No. 0-26202).
99. Press Release relating to the merger, incorporated
by reference to the Current Report on Form 8-K
dated May 14, 1998 (File No.0-26202).
<PAGE>
Item 7(a)
COHIG & ASSOCIATES, INC.
CONTENTS
Page
Independent Auditors' Report 6
Statements of Financial Condition as of September 26, 1997 and
September 27, 1996 7
Statements of Operations for the years ended September 26, 1997,
September 27, 1996 and September 30, 1995 8
Statements of Changes in Shareholder's Equity for the years ended
September 26, 1997, September 27, 1996 and September 30, 1995 9
Statements of Cash Flows for the years ended September 26, 1997,
September 27, 1996 and September 30, 1995 10
Notes to Financial Statements 11
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cohig & Associates, Inc.
We have audited the accompanying statements of financial condition of
Cohig & Associates, Inc. as of September 26, 1997 and September 27, 1996,
and the related statements of operations, changes in shareholder's
equity, and cash flows for the years ended September 26, 1997, September
27, 1996 and September 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
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
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cohig &
Associates, Inc. as of September 26, 1997 and September 27, 1996, and the
results of its operations and its cash flows for the years ended
September 26, 1997, September 27, 1996 and September 30, 1995 in
conformity with generally accepted accounting principles.
/s/ Spicer, Jefferies & Co.
Denver, Colorado
November 12, 1997
<PAGE>
COHIG & ASSOCIATES, INC.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Cash $ 41,148 $ 987,859
Receivables
Clearing broker 2,023,287 1,793,026
Income taxes 245,048 -
Parent 48,200 299,486
Other, less allowance for doubtful accounts of $180,000 213,358 160,687
Securities owned, at market value 1,817,652 1,599,138
Furniture and equipment, at cost, net of accumulated
depreciation of $69,593 (Note 3) 166,165 -
Other assets 123,176 263,799
----------- ------------
$4,678,034 $ 5,103,995
=========== ============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Commissions payable $ 790,876 $ 409,669
Securities sold, but not yet purchased, at market value 501,252 420,433
Trade accounts payable 299,823 308,537
Accrued salaries and benefits 432,269 517,319
Other accrued liabilities 638,022 395,203
Accrued income taxes - 375,000
----------- ----------
Total liabilities 2,662,242 2,426,161
----------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 6)
LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL
CREDITORS (Note 2) - 200,000
----------- ---------
SHAREHOLDER'S EQUITY (Note 4):
Preferred stock, 10% cumulative, $1.00 par; - -
200,000 shares authorized; -0- shares issued and outstanding
Common stock, $.001 par value; 800,000 shares authorized;
124,100 shares issued and outstanding 124 124
Capital in excess of par 910,110 910,110
Retained earnings 1,105,558 1,567,600
----------- ----------
Total Shareholder's Equity 2,015,792 2,447,834
----------- ----------
$4,678,034 $5,103,995
=========== ==========
</TABLE>
<PAGE>
COHIG & ASSOCIATES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended
--------------------------------------------------------------
September 26, September 27, September 30,
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
REVENUE
Commissions (Note 1) $12,855,974 $17,874,496 $16,316,780
Investment banking 2,325,022 2,161,572 2,341,045
Trading profit, net 2,565,809 3,400,522 2,143,041
Other 404,699 338,300 443,941
------------ ------------- --------------
TOTAL REVENUE 18,151,504 23,774,890 21,244,807
EXPENSES
Commissons 9,266,594 12,484,386 12,486,204
Occupancy and equipment costs (Note 3) 2,009,594 2,097,626 2,038,951
Salaries, wages and benefits 2,295,760 2,835,699 2,229,814
General and administrative 1,320,183 1,401,604 1,035,927
Communications 1,512,991 1,701,952 1,829,038
Office supplies and postage 450,611 513,332 532,485
Payroll taxes 586,490 702,783 737,131
Clearing charges 742,224 601,970 721,805
Legal and professional 674,154 413,091 161,661
------------ ----------- -------------
TOTAL EXPENSES 18,858,594 22,752,443 21,778,016
------------ ------------ -------------
INCOME (LOSS) BEFORE INCOME TAX BENEFIT (PROVISION) (707,090) 1,022,447 (533,209)
Income tax benefit (provision) 245,048 (375,000) (45,486
------------ ------------- -------------
NET INCOME (LOSS) $ (462,042) $ 647,447 (487,723)
============ ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
COHIG & ASSOCIATES, INC.
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED
SEPTEMBER 26, 1997, SEPTEMBER 27, 1996 AND SEPTEMBER 30, 1995
Additional
Common Stock Preferred Stock Paid-in Retained
Shares Amount Shares Amount Capital Earnings
<S> <C> <C> <C> <C> <C> <C>
BALANCES, September 30, 1994 124,100 $ 124 - $ - $ 810,110 $ 1,407,876
Contribution of capital - - - - 100,000 -
Net loss - - - - - (487,723)
------------- -------------- ------------- ------------- ------------------ -----------------
BALANCES, September 30, 1995 124,100 124 - - 910,110 920,153
Net income - - - - - 647,447
------------- ------------- ------------- ------------- ------------------ ----------------
BALANCES, September 27, 1996 124,100 124 - - 910,110 1,567,600
Net loss - - - - - (462,042)
------------- ------------- ------------- ------------- ------------------ -----------------
BALANCES, September 26, 1997 124,100 $124 - $ - $ 910,110 $1,105,558
============= =========== =============== ============= ================== =================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
<PAGE>
COHIG & ASSOCIATES, INC.
STATEMENT OF CASH FLOWS
=======================
<TABLE>
<CAPTION>
For the years ended
---------------------------------------------------------
September 26, September 27, September 30,
1997 1996 1995
---------------- ---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) $ (462,042) $ 647,447 $ (487,723)
Adjustments to reconcile net income (loss) to net cash
used in (provided by) operating activities:
Depreciation and amortization 40,101 21,642 7,962
Increase (decrease) in securities sold, but not
yet purchased 80,819 (855,852) 1,032,522
(Increase) decrease in receivables from clearing broker (230,261) 2,313,083 (4,162,556)
Increase (decrease) in trade accounts payable (8,714) 110,021 18,387
Increase )decrease) in accrued salaries and benefits (85,050) (213,360) 407,959
(Increase) decrease in securities owned, at market value (266,269) (760,255) 2,050,225
Increase (decrease) in commissions payable 381,207 (405,880) 288,237
Increase (decrease) in other accrued liabilities 242,819 (212,256) 390,480
(Increase) decrease in accrued income taxes (620,048) 375,000 -
Increase (decrease) in deferred revenue - (310,471) 319,471
---------------- ---------------- ----------------
NET CASH PROVDED BY (USED IN) INVESTING ACTIVITIES (927,438) 709,119 (144,036)
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in receivables - other (52,671) (58,221) 231,545
(Increase) decrease in other assets 40,129 (111,878) (59,224)
Purchase of furniture and equipment, net (58,017) - -
---------------- ---------------- ----------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (70,559) (170,099) 172,321
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Issuance) reduction of subordinated notes payable (200,000) (30,000) 200,000
(Increase) decrease in receivable from parent 251,286 (94,000) (205,486)
Contribution of capital - - 100,000
---------------- ---------------- ----------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 51,286 (124,000) 94,514
---------------- ---------------- ----------------
NET INCREASE (DECREASE) IN CASH (946,711) 415,020 122,799
CASH, at beginning of year 987,859 572,839 450,040
---------------- ---------------- ----------------
CASH, at end of year $ 41,148 $ 987,859 $ 572,839
================ ================ ================
SUPPLEMENTAL DISCLOSURE OF INVESTING AND FINANCING
ACTIVITIES
Reduction of subordinated notes payable through reduction of secured
demand notes receivable $ - $ 113,000 $ -
================ ================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest
$ 24,190 $ - $ 101,722
================ ================ ================
</TABLE>
<PAGE>
COHIG & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cohig & Associates, Inc. was organized on January 22, 1985, and is engaged
in business as a securities broker-dealer. The Company is a wholly-owned
subsidiary of Cherry Creek Investments, Ltd.
Securities owned or sold but not yet purchased by the Company are recorded at
market value, and related changes in market value are reflected in income. The
Company records proprietary transactions, commission revenue and related
expenses on a settlement date basis. Revenues and related expenses on a trade
date basis would not be materially different.
The Company under Rule 15c3-3(k)(2)(ii) is exempt from the reserve and
possession or control requirements of Rule 15c3-3 of the Securities and Exchange
Commission. The Company does not carry or clear customer accounts. Accordingly,
all customer transactions are executed and cleared on behalf of the Company by
its clearing broker on a fully disclosed basis. The Company's agreement with its
clearing broker provides that as clearing broker, that firm will make and keep
such records of the transactions effected and cleared in the customer accounts
as are customarily made and kept by a clearing broker pursuant to the
requirements of Rules 17a-3 and 17a-4 of the Securities and Exchange Act of
1934, as amended (the Act). It also performs all services customarily incident
thereon, including the preparation and distribution of customer's confirmations
and statements and maintenance margin requirements under the Act and the rules
of the Self Regulatory Organizations of which the Company is a member.
Good faith and expense allowances received by the Company in connection with its
underwriting activities are deferred and recognized as income as related costs
are incurred.
The Company provides for depreciation of furniture and equipment on a
straight-line method based on useful lives of five to seven years.
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents.
The Company and its parent file a consolidated federal income tax return. For
financial statement purposes, the Company presents income tax information as if
it filed a separate income tax return. The difference between the effective tax
rate and the statutory federal tax rate is primarily due to certain expenses not
recognized for tax purposes until paid. The income tax benefits recognized for
the years ended September 26, 1997 and September 30, 1995 are the result of net
operating losses which were carried back to prior years tax returns.
The carrying amount of cash, receivables, commissions and accounts payable and
accrued liabilities approximate fair value.
<PAGE>
COHIG & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
NOTE 2 - LIABILITIES SUBORDINATED TO CLAIMS OF GENERAL CREDITORS
The Company had borrowed money under various subordination agreements as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------------- ------------- ---------
<S> <C> <C> <C>
Subordinated notes,
7.25% interest, due December 31, 1996 $ - $ 200,000 $ 200,000
Subordinated notes,
10% interest, due September 30, 1995 - - 30,000
Liabilities pursuant to secured demand
note collateral agreements, 10% interest,
due September 30, 1995 - - 113,000
-------------- ------------ -------------
$ - $ 200,000 $ 343,000
============== ============= =============
</TABLE>
The subordinated borrowings were covered by agreements approved by the National
Association of Securities Dealers, Inc., and were thus available in computing
net capital under the Securities and Exchange Commission's uniform net capital
rule. To the extent that such borrowings were required for the Company's
continued compliance with minimum net capital requirements, they could not be
repaid.
NOTE 3 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company leases office space and equipment from its parent on a month to
month basis. The leases of the parent are operating leases expiring through
2000. During the fiscal years 1997, 1996 and 1995, the Company paid $1,639,955,
$1,680,000 and $1,680,000, respectively, to this affiliated entity relating to
these leases.
The Company leases office space and equipment from unrelated parties under
noncancellable operating leases expiring through 1998.
At September 26, 1997, aggregate minimum future rental commitments under the
Company's leases with initial or remaining terms in excess of one year are as
follows:
Fiscal Year Amount
----------- ------
1998 $ 6,753
During 1997, 1996 and 1995, total rental expense was approximately $1,912,600,
$2,024,000 and $1,948,800, respectively.
<PAGE>
COHIG & ASSOCIATES, INC.
NOTES TO FINANCIAL STATEMENTS
(Concluded)
NOTE 4 - NET CAPITAL REQUIREMENTS
Pursuant to the net capital provisions of Rule 15c3-1 of the Securities Exchange
Act of 1934, the Company is required to maintain a minimum net capital, as
defined under such provisions. At September 26, 1997, the Company had net
capital and net capital requirements of $836,299 and $250,000, respectively. The
Company's net capital ratio (aggregate indebtedness to net capital) was 2.58 to
1. According to Rule 15c3-1, the Company' net capital ratio shall not exceed 15
to 1.
NOTE 5 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Company's client activities ("clients")
through its clearing broker involve the execution, settlement and financing of
various client securities transactions. These activities may expose the Company
to off-balance sheet risk. In the event the client fails to satisfy its
obligations, the Company may be required to purchase or sell financial
instruments at prevailing market prices in order to fulfill the client's
obligations.
The Company has sold securities that is does not own and it will, therefore, be
obligated to purchase such securities at a future date. The Company has recorded
this obligation in the financial statements at the September 26, 1997 market
value of the securities. The Company may incur a loss if the market value of the
securities increases subsequent to September 26, 1997.
The Company bears the risk of financial failure by its clearing broker. If the
clearing broker should cease doing business, the Company's receivable from
this clearing broker could be subject to forfeiture.
NOTE 6 - CONTINGENCIES
The Company is involved in various litigation and disputes arising in the normal
course of business, some of which are in the preliminary or early stages. In
certain of these matters, large amounts are sought. Management, after review and
discussion with counsel, believes the Company has meritorious defenses and
intends to vigorously defend itself in these various matters, but it is not
feasible to predict the final outcomes at the present time.
The accompanying notes are an integral part of these statements.
<PAGE>
Item 7(b)
COHIG & ASSOCIATES, INC.
PRO FORMA STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
COHIG & ASSOCIATES, INC.
PRO FORMA STATEMENTS OF FINANCIAL CONDITION
March 27,
1998
________
ASSETS
<S> <C> <C>
Cash $ 24,524
Receivables
Clearing broker 484,378
Parent -
Other 383,317
Securities owned, at market value 2,040,416
Furniture and equipment 166,842
Other assets 104,498
------------
$ 3,204,975
============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Commissions payable $474,675
Securities sold, but not yet purchased, at market value 242,244
Trade accounts payable 259,387
Accrued salaries and benefits 266,423
Other accrued liabilities 351,160
-------------
Total liabilities 1,593,889
-------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Preferred stock, 10% cumulative, $1.00 par;
200,000 shares authorized; -0- shares issued and outstanding -
Common stock, $.001 par value; 800,000 shares authorized;
124,100 shares issued and outstanding 124
Capital in excess of par 910,110
Retained earnings 700,852
-------------
Total Shareholder's Equity 1,611,086
-------------
$ 3,204,975
=============
</TABLE>
<PAGE>
COHIG & ASSOCIATES, INC.
PRO FORMA STATEMENTS OF OPERATIONS
For the year
ended
March 17,
1998
---------------
REVENUE
Commissions $ 12,982,805
Investment banking 2,253,289
Trading profit, net 2,361.466
Other 131,289
----------------
TOTAL REVENUE 17,728,849
----------------
EXPENSES
Commissions 9,441,273
Occupancy and equipment costs 1,840,284
Salaries, wages and benefits 2,200,882
General and administrative 1,497,514
Communications 1,371,351
Office supplies and postage 387,108
Payroll taxes 584,209
Clearing charges 773,460
Legal and professional 491,928
----------------
TOTAL EXPENSES 18,588,010
----------------
INCOME (LOSS) BEFORE INCOME TAX
BENEFIT (PROVISION) (859,161)
Income tax benefit (provision) 254,049
NET INCOME (LOSS) $ (614,112)
=================
<PAGE>
<PAGE>
Item 7(c)
EASTBROKERS INTERNATIONAL INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Year Ended March 31, 1998
------------------------------------------------------------------------
Eastbrokers Cohig & Pro forma Pro forma
International Assoc. Inc. Adjustment As adjusted
------------- ----------- ---------- -----------
(Unaudited) (Unaudited) (Unaudited)
REVENUE
<S> <C> <C> <C> <C>
Commissions $ 2,521,031 $ 12,982,805 $ - $ 15,503,836
Investment banking 807,803 2,253,289 - 3,061,092
Trading profit, net 4,175,023 2,361,466 - 6,536,489
Other 2,735,024 131,289 - 2,866,313
-------------- --------------- -------------
Total revenue 10,138,881 17,728,849 - 27,867,730
-------------- ------------ --------------- -----------
EXPENSES
Compensation and benefits 3,748,948 12,226,364 - 15,975,312
Consulting and professional fees 2,412,787 491,928 - 2,904,715
Occupancy and equipment costs 982,095 1,840,284 - 2,722,379
Communications 678,718 1,371,352 - 2,050,070
Brokerage, clearing, exchange fees & other 1,145,567 773,460 - 1,919,027
General and administrative 6,041,354 18,588,622 - 7,925,976
-------------- ------------ ------------- -----------
Total expenses 15,009,469 18,558,010 - 33,597,479
-------------- ------------ ------------- -----------
Income (loss) continuing operations before provision
for income taxes and minority interest in earnings
of subsidiaries (4,870,588) (859,161) - (5,729,749)
Income tax benefit (expense) (285,830) 245,049 - (40,781)
Minority interest in earnings of subsidiaries 208,861 - - 208,861
-------------- --------------- ------------- ------------
Income from continuing operations (4,947,557) (614,112) - (5,561,669)
Disconsinuted operations
Income (loss) from discontinued operations
(net of income taxes of $0 for the year March 31,
1998) - - - -
--------------- --------------- ------------- -------------
NET INCOME (LOSS) $ (4,947,557) $ (614,112) $ - $ (5,561,669)
=============== =============== ============= ===============
Pro forma earnings per common share from
continuing operations $ (1.09) $ (1.38) - $ (1.42)
Primary
Fully diluted $ (1.09) $ (1.38) - $ (1.42)
--------------- --------------- ------------- -------------
Pro forma earnings from common shares $ (1.57) $ (1.38) - $ (1.54)
--------------- --------------- ------------- -------------
Primary
Fully diluted $ (1.57) $ (1.38) - $ (1.54)
--------------- --------------- ------------- -------------
Pro forma weighted shares outstanding 3,149,009 445,000 - 3,594,009
--------------- --------------- ------------- -------------
Primary
Fully diluted 3,149,009 445,000 - 3,594,009
--------------- --------------- ------------- -------------
</TABLE>
The accompanying notes and assumptions for the consolidated pro forma
presentation are an integral part of these statements.
<PAGE>
EASTBROKERS INTERNATIONAL INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
(Unaudited)
This unaudited Pro forma Condensed Consolidated Statement of Operations is
presented as if Eastbrokers International Incorporated (the "Company") had owned
Cohig & Associates, Inc. ("Cohig") as of April 1, 1997. This unaudited Pro forma
Condensed Consolidated Statement of Operations should be read in conjunction
with the historical financial statements of the Company as presented in Form
10-KSB for the year ended March 31, 1998. In management's opinion, all
significant adjustments necessary to reflect the acquisition transactions have
been made.
This unaudited Pro forma Condensed Consolidated Statement of Operations is not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the acquisition transactions had been consummated as of
April 1, 1997, nor does it purport to represent the results of operations
anticipated or attainable in future periods.
Assumptions:
1. Eastbrokers International Incorporated acquired 100 percent of the
outstanding capital stock of Cohig & Associates, Inc. as of April 1,
1997 for 445,000 shares of the Company. The value assigned to this
transaction by the Board of Directors was $2,225,000 or $5.00 per
share.
<PAGE>
EASTBEOKERS INTERNATIONAL INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Eastbrokers Cohig & Pro Forma Pro Forma
International Assoc., Inc. Adjustment As Adjusted
--------------- -------------- ------------ --------------
(Unaudited) (Unaudited) (Unaudited)
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 7,156,702 $ 24,524 $ - $ 7,181,226
Cash and securities segregated under regulations 986,233 - - 986,233
Securities purchased under agreements to resell 887,170 - - 887,170
Receivables 17,924,744 868,695 - 18,793,439
Securities owned, at value 8,677,912 2,040,416 - 10,718,328
Net assets of discontinued operations 868,960 - - 868,960
Office facilities, furniture and equipment, at cost 1,153,439 166,842 - 1,320,281
Goodwill 2,073,774 - 613,914 2,773,138
OTher assets 5,109,919 104,498 (85,450) 5,128,967
--------------- ------------- --------------- -------------
Total assets $ 44,838,853 $ 3,204,975 $ 613,914 $ 48,657,742
=============== ============= =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Short-term borrowings 2,602,436 - - 2,602,436
Payables 12,302,135 1,242,729 - 13,544,864
Other liabilities and accrued amounts 1,169,272 351,160 - 1,520,432
--------------- ------------- ---------------- ---------------
16,073,843 1,593,889 - 17,667,732
Deferred taxes - liability 84,382 - - 84,382
Long-term borrowings 2,020,087 - - 2,020,087
--------------- ------------- ---------------- ---------------
Total liabilities 178,312 1,593,889 - 19,772,201
--------------- ------------- ---------------- ---------------
Minotiry interest in consolidated subsidiaries 8,776,678 - - 8,776,678
--------------- ------------- ---------------- ---------------
SHAREHOLDERS' EQUITY
Common stock 214,888 124 22,126 237,138
Paid-in capital 640,114 910,110 1,292,640 27,790,664
Retained earning/(accunukated deficit) (5,512,386) 700,852 (700,852) (4,327,400)
Note redceivable - common stock (313,133) - - (313,133)
Cumulative translation adjustments (2,140,620) - - (2,140,620)
--------------- ------------- ---------------- ---------------
Total shareholders' equity 19,022,009 1,611,086 613,914 21,247,009
--------------- ------------- ---------------- ---------------
Total liabilities and Shareholders' Equity $ 44,838,853 $ 3,204,975 $ 613,914 $ 48,657,742
=============== ============= ================ ===============
</TABLE>
The accompanying notes and assumptions for the consolidated pro forma
presentation are an integral part of these statements.
<PAGE>
EASTBROKERS INTERNATIONAL INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED MARCH 31, 1998
(Unaudited)
This unaudited Pro forma Condensed Consolidated Statement of Operations is
presented as if Eastbrokers International Incorporated (the "Company") had owned
Cohig & Associates, Inc. ("Cohig") as of April 1, 1997. This unaudited Pro forma
Condensed Consolidated Statement of Operations should be read in conjunction
with the historical financial statements of the Company as presented in Form
10-KSB for the year ended March 31, 1998. In management's opinion, all
significant adjustments necessary to reflect the acquisition transactions have
been made.
This unaudited Pro forma Condensed Consolidated Statement of Operations is not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the acquisition transactions had been consummated as of
April 1, 1997, nor does it purport to represent the results of operations
anticipated or attainable in future periods.
Assumptions:
1. Eastbrokers International Incorporated acquired 100 percent of the
outstanding capital stock of Cohig & Associates, Inc. as of April 1,
1997 for 445,000 shares of the Company. The value assigned to this
transaction by the Board of Directors was $2,225,000 or $5.00 per share.
Adjustments:
(a) Purchase of 100 percent of the outstanding capital stock of Cohig
& Associates, Inc. as of April 1, 1997 for 445,000 shares of the
Company. The value assigned to this transaction by the Board of
Directors was $2,225,000 or $5.00 per share.
Consolidation of Cohig & Associates, Inc. into Eastbrokers
International Incorporated and recording the goodwill related to the
purchase transaction at April 1, 1997. Net assets acquired were
$1,611,086 leaving goodwill acquired of $613,914.
