U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC FORM 10-SB General Form for Registration of Securities of Small Business Issuers Under Section 12(b) or 12(g) of the Securities Act of 1934 INTERUNION FINANCIAL CORPORATION Delaware 87-0520294 - ----------------------------------------------------------------------------------------- ------------------- (State of Other jurisdictions of Incorporation of Organization) (I.R.S. Employer Identification No.) 249 Royal Palm Way, Suite 301 H, Palm Beach, FL 33480 - ----------------------------------------------------------------------------------------- ------------------- (Address of Principal Executive Offices) (Zip Code) (561) 820-0084 - ----------------------------------------------------------------------------------------- (Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which to be so Registered Each Class is to be Registered ------------------- ------------------------------
- ----------------------------------- ------------------------------------ - ----------------------------------- ------------------------------------ Securities to be registered under Section 12(g) of the Act: Common Stock, par value $.001 - ------------------------------------------------------------------------------- (Title of Class) - ------------------------------------------------------------------------------- (Title of Class) INTERUNION FINANCIAL CORPORATION FORM 10-SB TABLE OF CONTENTS
PART I. PAGE Item 1. Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Item 3. Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Item 4. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Item 5. Directors, Executive Officers, Promoters and Control Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Item 6. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Item 7. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Item 8. Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 PART II. Item 1. Market Price of and Dividends on the Registrant's Common Equity and Other Shareholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Item 2. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Item 3. Changes in and Disagreements with Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Item 4. Recent Sales of Unregistered Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Item 5. Indemnification of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 PART F/S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 PART III. Item 1. Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2 PART I ITEM 1. DESCRIPTION OF BUSINESS (a) BUSINESS DEVELOPMENT InterUnion Financial Corporation (the "Company" or "IFC") was incorporated under the laws of the State of Delaware on July 15, 1994. At the time of incorporation, the name of the Company was: AU 'N AG, INC. On February 15, 1994, a Certificate of Merger was executed by and between AU 'N AG, INC., a Utah corporation and AU 'N AG, INC., a Delaware corporation (the Company) and was filed in the office of the Secretary of State of Delaware on March 10, 1994. Under the Certificate of Merger AU 'N AG, INC., the Delaware corporation, was the surviving corporation. Under the terms of the above-referenced merger each share of common stock of AU 'N AG, INC. (Utah) was converted into one share of AU 'N AG, INC. (Delaware). At the time of its incorporation, AU 'N AG, INC. (Delaware) had total authorized capital stock in the amount of 50,000,000 shares at $.001 par value. Each holder of AU 'N AG, INC. (Utah) upon surrender to AU 'N AG, INC. (Delaware) of one or more certificates for such shares for cancellation received one or more certificates for the number of shares of common stock of AU 'N AG, INC. (Delaware) represented by the certificates of AU 'N AG, INC. (Utah) so surrendered for cancellation by such holder. As a result of the above-referenced merger, 23,297,800 shares of common stock of AU 'N AG, INC. (Delaware) were issued to the shareholders of the corporation formerly known as AU 'N AG, INC. (Utah). At the time of the merger, AU 'N AG, INC. (Utah) had no assets and was an inactive corporation. On April 11, 1994, a Certificate of Amendment of the Certificate of Incorporation of AU 'N AG, INC. (Delaware) was executed, providing that the name of the Company be changed to: INTERUNION FINANCIAL CORPORATION. This change of name was filed by the office of the Secretary of State of Delaware n April 19, 1994. Subsequent to a filing of information submitted to the National Association of Securities Dealers, Inc. (NASD) pursuant to Schedule H of the NASD By-Laws and Rule 15c 2-11 under the Securities Act of 1934, on July 27, 1994 IFC was 3 cleared for listing on the OTC Bulletin Board. The Company currently trades under the symbol: IUFC. Subsequent to approval by the required shareholders at a meeting held October 14, 1994, the common stock was reverse split at a ratio of ten (10) to one (1). Further, based upon shareholder approval at that meeting, a Certificate of Amendment was filed with the Secretary of State, State of Delaware, showing capitalization as follows: (1) 100,000,000 shares of common voting stock at $.001 par value. (2) 1,500,000 shares of Class A preferred stock at $.10 par value. (3) 50,000,000 shares of Class B preferred stock with par value to be set by the Board of Directors. (4) 50,000,000 shares of Class C preferred stock with par value to be set by the Board of Directors. On January 18, 1995 the Company acquired all of the stock of BEARHILL, LIMITED, INC., a British Virgin Islands corporation, for the issuance of 444,000 shares of common stock. On January 18, 1995 the Company also acquired all of the stock of GUARDIAN TIMING SERVICES, INC., a corporation organized under the laws of Ontario, Canada, for the issuance of 112,112 shares of common stock. Upon application to the Florida Department of State, on February 2, 1995, the Company was qualified and authorized to transact business in the State of Florida. The Company moved its principal office to 249 Royal Palm Way, Suite 301-H, Palm Beach, Florida 33480. On March 20, 1995, the Company acquired all of the stock of I & B, INC., a Delaware corporation, CREDIFINANCE CAPITAL, INC., a corporation organized under the laws of Ontario, Canada, CREDIFINANCE SECURITIES, LTD., a corporation organized under the laws of Ontario, Canada, and Ninety-Five percent (95%) of the stock of ROSEDALE REALTY CORPORATION, a corporation organized under the laws of Ontario, Canada, for the issuance of 1,500,000 shares of common stock. The Company further acquired the remaining outstanding stock of ROSEDALE REALTY CORPORATION for the issuance of 24,600 shares of common stock. It should be noted that in 1996 the Company disposed, by way 4 of an assignment in bankruptcy, of its shares in ROSEDALE REALTY CORPORATION (See Note 13 of InterUnion Financial Corporation Notes to Consolidated Financial Statements, March 31, 1996 and 1995, Part F/S). At a special meeting of the shareholders held May 17, 1996, the Board of Directors was authorized to reverse split all authorized shares in a ratio of twenty (20) to one (1). At the time of this authorization, the total of all issued and outstanding voting shares of stock was 13,851,156. REEVE, MACKAY & ASSOCIATES LIMITED was formed May 15, 1995 as a corporation organized under the laws of Ontario, Canada. All capital stock of this corporation was originally issued to InterUnion Financial Corporation. The corporation is a wholly-owned subsidiary of the Company. (b) BUSINESS OF ISSUER GENERAL The Company was formed to act as a holding company to invest primarily in the equity securities of securities firms, investment management companies, banks, insurance companies, and other financial and brokerage companies located in the United States and Canada. Following its investment, the Company intends to function as an "information link" between these financial companies resulting in their immediate access to new markets and investment opportunities. The Company will also engage in bridge financing, which involved providing capital for a company to go public or make targeted acquisitions, and the Company may also purchase restricted securities for resale, or publicly traded securities. Because of the information link the Company is able to provide, the Company believes, but cannot assure investors, that it will be allowed to make investments in certain banks, insurance companies and securities firms that, without the information link would not be possible. The Company may invest both in debt as well as equity investments. The Company may invest in securities of privately held firms, as well as securities listed in markets that are official, regulated, well recognized, normally functioning, and open to public investment in Europe, and North America. The Company may invest in those markets on a case-by-case basis, as opportunities arise. 5 There can be no assurance that the Company will generate adequate, or any, returns from securities investments. The risks inherent to securities investments are connected to the possible variations in the underlying prices of the securities. Securities prices can vary depending on the general trends in the economy, in the money markets, and in the securities markets, as well as on the specific economic and financial performance of the issuers. Investments in foreign securities present the added risk of foreign exchange fluctuations. PRODUCTS AND/OR SERVICES OF ACTIVE SUBSIDIARIES In addition to the operations of InterUnion Financial Corporation as the parent, the Company owns five operating subsidiary corporations. A description of the business operations of these subsidiary corporations is as follows: (1) CREDIFINANCE SECURITIES, LTD. Credifinance Securities, Ltd. ("Credifinance") is an investment bank with office in Toronto and Montreal, and is a member of the Investment Dealers Association of Canada, the Toronto Stock Exchange, Montreal Exchange and the International Securities Market Association. Credifinance has 30 employees engaged in fixed income and equity trading for Canadian institutions and in corporate finance. Credifinance's six person research team provides perspective on equity markets, companies and industries in Canada. Credifinance Securities was started in 1990, engaging in institutional trading, investment banking and research. The consolidation in the brokerage/investment banking industry in Canada created opportunities for small companies to provide better service to institutions. This unit began by specializing in the trading of less than investment grade bonds. In 1991-92, it expanded into equity trading for its institutional clients. Unlike the large brokerage firms, Credifinance Securities acts strictly as an agent, and does not take positions against its clients. To enhance its service for the institutional clients, Credifinance has developed research capability focusing on: - biotechnology - communications and media - software - telecommunications - metals, minerals and precious metals mining - oil and gas - industrial products 6 Credifinance's corporate finance activities consist primarily of underwritings for small and medium-size, technology-intensive companies. Between 1993 and 1995, Credifinance has been the sole underwriter in five transactions, ranging in value from C (Canadian) $1.5 to $5.4 million; co-underwriter in two transactions of C$32.5 million and C$11 million; participated in a C$135 million co-bought deal; and has been involved in two special transactions of C$10 and C$15 million. In the first quarter of 1996, Credifinance has financed, through private placements of special warrants, the following companies: - Getty Cooper (C$5.9 million) - copper mining in British Columbia; - Etruscan Enterprises (C$7.0 million) - gold mining in Niger, West Africa; - Novadx International (C$1.8 million) - biotechnology company commercializing in vitro tests for arthritis, osteoporosis and other chronic diseases; - Nortran Pharmaceuticals (C$2.0 million) - pharmaceutical company focusing on research and commercial development of targeted small molecule drugs; and - Imutec (C$2.8 million) - biotechnology company engaged in the development of immunotherapeutic products. In additional, Mariposa Steamship Company and Mancan Gold Limited have engaged Credifinance as their fiscal agent to take them public in 1996. (2) GUARDIAN TIMING SERVICES, INC. Guardian Timing Services, Inc. ("Guardian") is an investment management firm located in Toronto, Canada, currently having approximately C$90 million in assets under management. Guardian manages the Canadian Protected Fund, the Protected American Fund and the First America Fund. It uses a proprietary ITM market timing model owned by Bearhill Limited, Inc., another subsidiary of the Company. (3) CREDIFINANCE CAPITAL, INC. Credifinance Capital, Inc. is an investment corporation located in Toronto, Canada. The business activities of this subsidiary corporation are limited to proprietary security investing using its own capital resources. 7 (4) BEARHILL LIMITED, INC. Bearhill Limited, Inc. ("Bearhill") is an investment management firm located in Toronto, Canada. Bearhill now manages the Rexmore Fund which invests primarily in U.S. equity mutual funds and offers management services in the international market place. Bearhill owns the rights to the ITM market timing trading model which is used by Guardian in making investment decisions for the funds it manages. The forecasting technique used by the ITM market timing model involves general market indicators, interest rates and monetary analysis, market perception indicators, and various statistical data to detect trends. An earlier version of the market timing model predicted the stock market downturn in October, 1987, allowing Guardian clients to get out of the market 10 days prior to the downturn. The model is continually updated and has been credited with successfully avoiding many of the overall market declines in the early part of the 1990s. A major Canadian bank has acquired a three year option, renewable each year, to purchase the ITM software development by Bearhill. In the event that this option is exercised, InterUnion Financial Corporation will be a direct beneficiary of the option price of C$15 million. There is, of course, no assurance that such an option will be exercised. (5) REEVE, MACKAY & ASSOCIATES LIMITED Reeve, Mackay & Associates Limited ("Reeve, Mackay") commenced business operations in July, 1995 as a Canadian auction house. Reeve, Mackay held auctions in 1995 on a monthly basis, which has increased, due to its successful sales, to two monthly with a continuing goal of holding four auctions monthly. In the first nine months of operation, Reeve, Mackay generated revenues of C$1.6 million. As a result of its sales and a considerable amount of media attention in the form of numerous unsolicited articles in the major Canadian press, Reeve, Mackay has reached an agreement with two of the largest international auction houses (Christie's and Phillips) whereby these companies have agreed to recommend it as the Canadian auctioneers for the portion of the Canadian estates that they will not sell in New York or London. 8 COMPETITION The search for potentially profitable investments is intensely competitive. A list of actual and potential competitors would include the multinational banks, regional banks, thrift institutions, investment banks, brokerage firms, finance and leasing companies, merchant banks, venture capitalists and other financial service companies. The Company may be at a disadvantage when competing with firms with substantially greater financial and management resources and capabilities than the Company. The issue of competition also directly impacts the subsidiary companies owned by InterUnion Financial Corporation. Credifinance Securities, Ltd. concentrates on providing underwritings for small and medium-sized technology-intensive companies. Credifinance must compete with underwriting companies in Canada that are superior in asset strength and personnel staff. Guardian Timing Services, Inc. and Bearhill Limited, Inc. both operate as managers of funds. A decline in their investment performance could cause the loss of these essential accounts. And if the ITM market timing model used by both of these companies should not show an accurate forecast the companies could lose the managed accounts to larger investment management firms. Finally, the auction company of Reeve, Mackay & Associates Limited must directly compete for accounts with larger internationally recognized companies such as Christie's and Phillips. There is certainly no assurance that Reeve, Mackay can continue to attract substantial accounts for auction. GROWTH STRATEGY The growth strategy consists of two complimentary components: . Investing in the existing portfolio of financial services companies; and acquiring, when the appropriate opportunities arise, major positions in well-managed banks, thrifts, brokerage houses, investment banks and other financial services companies (e.g. leasing, insurance) positioned in niche markets in key international money centers; and . Expansion of bridge financing and investment banking activities. Entry into the U.S. market is the next step in the Company's long-term strategy to take major positions in investment banks, brokerage houses, insurance companies, and other financial services companies around the world. The Company is positioning itself to take advantage of opportunities. There is no pressure to make an acquisition at any time or at any cost. 9 But any acquisition will represent the second phase in the Company's growth strategy. The first phase involves building up the existing operations to more completely utilize the existing resources and to capitalize on each unit's competitive strengths. For example, the Montreal office of Credifinance Securities has been expanded and is fully bilingual, staffed by French Canadians to better serve Quebec institutions. The corporate finance capabilities of Credifinance will continue to be expanded to fully utilize the unit's research and corporate finance capabilities and trading networks. Additional capital will enable InterUnion to participate in more bridge financing opportunities that in turn, will provide more corporate finance work for Credifinance; and will permit Credifinance to increase its block trading activity. Bearhill will launch a new fund in 1996 and Guardian will continue to expand the assets under its management by actively engaging in marketing for the first time in its history. A new fund may be established for U.S. investors. A retail brokerage operation may be established in Canada to take advantage of the client lists provided by Reeve, Mackay and the investment products created by Guardian. InterUnion Financial Corporation also may create an investment banking presence in the United States by expanding Credifinance into this market and/or by following up on negotiations with individuals who are part of the Company's international network. Credifinance may expand into the United States in order to provide better service for Canadian corporations which increasingly are being listed on NASDAQ. On the other hand, if the latter partnership is created, this new division will provide research on markets and industries in the European Union and emerging markets in Europe and Asia, and trading services for U.S. clients in European and emerging markets equities and fixed income. This unit also will develop, over time, a corporate finance capability that will match European investment opportunities with U.S. investors. A high priority has been assigned to acquiring hard assets, in the form of a bank, savings and loan company or insurance company, in order to add stability to revenues, provide access to new sources of capital and open new distribution channels. Moreover, these types of financial institutions will permit IFC to offer the companies, which it will advise and assist, a complete range of loan options. In addition, IFC will continue to search for and invest in financial services companies with talented partners and employees, predictable cash flows, low break evens and low marginal costs that are complementary with the Company's existing divisions. The Company will pay for the current cash flow with stock equity and share the incremental increase in cash flow with the owners/managers of the companies. 10 GOVERNMENT REGULATION The operating activities of InterUnion Financial Corporation are not subject to governmental regulatory agencies. Likewise, the Canadian investment management companies of Guardian Timing Services and Bearhill Limited are not subject to direct government regulation in Canada. Credifinance Securities, Ltd. is a member of the Investment Dealers Association of Canada, the Toronto Stock Exchange, Montreal Exchange and the International Securities Market Association. As such, it is subject to the rules, regulations, and adminis trative rulings of these entities. However, these regulatory entities are not considered as having any adverse impact on the ability of Credifinance to conduct its underwriting activities. The auction firm of Reeve, Mackay is not subject to government regulation under Canadian law. It should be noted that InterUnion Financial Corporation considers itself to be outside of the Investment Company Act of 1940, as amended (the "Act"). Section 3 of the Act broadly defines the term "investment company." It specifies that investment company means any issuer which is (a) primarily engaged in investing, reinvesting, or trading in securities, or (b) is in the business of issuing amount face- certificates of the installment type, or has been engaged in such business and has any such certificates outstanding. It is a matter of fact that IFC does not come within (a) or (b) above. The third part of the investment company definition is a company that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 per centum of the value of such issuer's total assets (exclusive of Government securities and cash items) on an unconsolidated basis. Section 3(a)(3) of the Act defines "investment securities" to include all securities except government securities, securities issued by employees' securities companies, and securities issued by majority-owned subsidiaries of the owner which are not investment companies. It has been clearly ruled that a holding company whose primary business is owning or holding securities issued by its non-investment company subsidiaries would not be an investment company. IRC clearly does not own 40 percent of its assets in investment securities. EMPLOYEES The employees of the Company and its subsidiaries are all full-time employees. The total number of such employees is listed below: 11 InterUnion Financial Corporation ............................................................... 3 Credifinance Securities, Ltd. .................................................................. 30 Bearhill Limited ............................................................................... 1 Guardian Timing Services ....................................................................... 2 Reeve, Mackay & Associates Limited ............................................................. 14 -- Total Employees ....................................................................... 50
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During fiscal year 1996 (ending March 31), InterUnion reported consolidated revenues of US$5.9 million. This represented a 45 percent increase over the consolidated revenues for fiscal 1995 of US$40 million. Revenues for fiscal 1996 were generated as follows: US$4.5 million from commissions (US$530,000 increase over fiscal 1995 commission, trading and investment income) and US$1.4 million from fees (US$1.3 million improvement from fiscal 1995 fee revenues). Net earnings for the year were $301,566 versus the previous year's loss of $134,438. The increase reflects a gain on the disposition of Rosedale Realty and is also the result of middle management streamlining to better manage the Company's growth. The net earnings represent earnings per share of US$0.60 on a weighted average of 501,535 common shares outstanding. Cash flow from operations were a positive $110,232 in fiscal 1996, as compared to a negative cash flow of $110,166 in 1995. Shareholders' equity increased by 14 percent to US$4.1 million, representing a book value per share of $5.98 on a total of 692,558 outstanding and issued common shares as of March 31, 1996. Reeve, Mackay & Associates, which started operations in July 1995, had excellent results in November-December due to the quality of the consignments which generated substantial sales volumes and strong margins. Revenues generated in the first nine months of operation were C$1.6 million. The reputation 12 of its specialists combined with its association with Credifinance Securities has secured important consignments from collectors and trust companies. Christie's and Phillips have agreed to recommend Reeve, Mackay as the Canadian auctioneers for the portion of the Canadian estates that they will not sell in New York or London. Credifinance Securities Limited saw its commission income rise and the investment banking revenues for fiscal 1996 far exceeded the levels in 1995. Credifinance benefited from the strength of its research department in sectors which have been in demand by investors -- oil and gas, mining and biotechnology. This resulted in a significant increase in underwritings during the year to about C$45 million. The last quarter of 1996 was particularly active as Credifinance raised C$25 million in Canada and Europe for its clients. Credifinance is steadily gaining market share as it continues to improve its institutional research and trading capability. There were several other positive changes in the last quarter for Credifinance. A new fixed-income operation was started in the Montreal office. The institutional equity desks were expanded. The decision to make the Montreal office a "French" franchise has met with the approval of Credifinance's Quebec-based institutional and corporate clients. Guardian Timing Services, the investment management company, increased assets under management to approximately C$90 million. The investment management firm is well positioned to achieve and surpass the C$100 million ark for assets under management -- the target set for the 18 months following its acquisition by IFC in January 1995. The Company will commence marketing Guardian's services more systematically during the 1997 fiscal year. Guardian Timing's sister company, Bearhill, has entered into an option agreement to sell its proprietary market timing model to a major financial institution for proceeds to IFC of approximately C$15 million. The Company's interest in the software is valued at US$774,450 and is included in the capital assets. The Company does not require an infusion of cash proceeds to maintain its business operations on a profitable level. However, in order to meet its growth plans, the Company issued a Confidential Private Offering Memorandum dated July 8, 1996. This Offering Memorandum offers for sale 250,000 units of the Company at a price of $8.00 per unit. Each unit consists of one share of common voting stock and one warrant to purchase one share of common voting stock at $9.00 per share, with an expiration date on the warrant of July 15, 1997. The total offering seeks to raise $2,000,000, with anticipated net proceeds after commissions and offering costs of $1,775,000. 13 The offering as noted above has not been registered under the Securities Act of 1933, as amended, in reliance on an exemption from registration under Regulation D (Rule 505) as promulgated by the Securities and Exchange Commission, and under Regulation S as promulgated by the Securities and Exchange Commission. Assuming a sale of all units offered, the Company anticipates that the net proceeds will be applied as follows:
Approximate Percentage Use Amount of Proceeds - ------------- ------------- ----------- InterUnion Financial Corporation ................ US$1,075,000 61 . business development including bridge financing Credifinance Securities Limited ................. US$500,000 28 . increase statutory capital . upgrade equipment and leaseholds . expand research department . develop U.S. institutional equity business Guardian Timing; Bearhill; Reeve, Mackay ................................... US$200,000 11 . market the services of Guardian and Bearhill systematically . develop Reeve, Mackay into a market leader ------------ ---- Total .................................. US$1,775,000 100% ============ ====
The Company feels that the financial statements for the periods ending March 31, 1995 and March 31, 1996 accurately reflect the operations of the Company and its subsidiaries. In fact, the Company has taken every reasonable step to insure that its financial statements do not represent a distorted picture to anyone having a business reason to review such statements. As evidence of this commitment, see Note 1 of the InterUnion Financial Corporation Notes to Consolidated Financial Statements March 31, 1996 and 1995, Part F/S, explaining that a change in accounting policy resulted in a decreased value of goodwill and additional paid-in capital of $7,103,020. There are no material events and uncertainties known to the management of the Company that would cause the reported financial information to be other than indicative of future operating results or of future financial condition. 14 ITEM 3. DESCRIPTION OF PROPERTY Neither the Company nor any of its subsidiaries owns real estate. The Company and certain of its subsidiaries do have leasehold interests in real estate as shown below.
Lessee & Location of Gross Area Annual Rent Premises (S. Ft.) Term (Per S. Ft.) - ------------------------------------------------------------------------------------------------------- Credifinance Securities, Ltd. Suite 3303 130 Adelaide Street W 3,310 Feb. 92-Jan. 97 $16.00 Toronto, Ontario Feb. 97-Jan. 02 $22.00 Credifinance Securities, Ltd. Suite 3304 130 Adelaide Street W 927 Feb. 93-Jan. 97 $12.00 Toronto, Ontario Jul. 97-Jan. 02 $15.00 Credifinance Securities, Ltd. Suite 1580 1501 McGill College Ave. Montreal, Quebec 1,386 Jun. 92-Jan. 98 $16.00 Reeve, MacKay & Associates, Ltd. Suite 400 163 Queen St. E Toronto, Ontario 3,375 Jul. 96-Jun. 97 $ 5.00 Reeve, MacKay & Associates, Ltd. Suite 102 163 Queen St. E Toronto, Ontario 2,053 Jul. 96-Jun. 97 $ 3.00 InterUnion Financial Corp. Suite 301 249 Royal Palm Way Palm Beach, Florida 1,000 Mar. 96-Feb. 97 US$365 per month
15 ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following persons (including any group as defined in Regulation S-B, Section 228.403) are known to InterUnion Financial Corporation, as the issuer, to be the beneficial owner of more than five percent of any class of the said issuer's voting securities.
Title Name and Address Amount and Nature Percent of Class of Beneficial Owner of Beneficial Owner of Class - ------------------------------------------------------------------------------------------------------------------------ Common RIF Capital Inc,(1) 354,121 51.13% Price Waterhouse Centre PO Box 634C St. Michael, Barbados, WI Common Capital Securities & Credit Corp. 52,144 7.53% 114 Belmont Street Toronto, Ontario, Canada M5R 1P8 Common Finance Research Development 50,500 7.29% (FRD) Trust Icaza, Ruiz-Gonzalez & Alemen Vanterpool Plaza, 2nd Floor Wickhams Cay, PO Box 873 Road Town, Tortola, BVI Common Financiera Hispano-Suiza, SA 50,050 7.23% 10 Rue Pierre-Fatio Geneva, Switzerland CH1204 TOTAL 506,815 73.18% ========= ======= Preferred A RIF Capital Inc. 1,500,000 100.00% Price Waterhouse Centre PO Box 634C St. Michael, Barbados, WI
____________________ (1)RIF Capital Inc. is a wholly-owned subsidiary of Equibank Inc. which is wholly-owned by Central Investment Trust. Georges Benarroch is the sole protector of Central Investment Trust and is not a beneficiary of the Trust nor its subsidiaries. 16 (b) SECURITY OWNERSHIP OF MANAGEMENT The following information lists, as to each class, equity securities beneficially owned by all directors and nominees, and of the directors and nominees of the issuer, as a group.
Title Name and Address Amount and Nature Percent of Class of Beneficial Owner of Beneficial Owner of Class - ------------------------------------------------------------------------------------------------------------------------ Common Georges Benarroch 354,121 51.13% Suite 3303 Trustee (voting 130 Adelaide Street power) of Central Toronto, Ontario Investment Trust Canada, M5H 3P5 Preferred A Georges Benarroch 1,500,000 100.00% Suite 3303 Trustee (voting 130 Adelaide Street power) of Central Toronto, Ontario Investment Trust Canada, M5H 3P5 Common Directors and 354,121 51.13% Executive Officers as a group (1 person) Preferred A Directors and 1,500,000 100.00% Executive Officers as a group (1 Person)
NOTE TO (A) AND (B): As to the beneficial owner(s) of the securities listed above in (a) and (b), no such owner has any right to acquire within sixty (60) days or otherwise, the right to acquire shares from options, warrants, rights, conversion privileges or similar obligations. 17 ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS (a) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS
Name, Municipality of Residence Age Length of Service - ---------------------------------------------------------------------------- Georges Benarroch 49 Appointed as President and Toronto, Ontario Chairman of the Board, Canada March 21, 1994 T. Jack Gary, III 55 Appointed as Secretary West Palm Beach, Florida January 30, 1995 Ann Glover 46 Appointed to Board Toronto, Ontario of Directors Canada February 17, 1995 Jacques Meyer de Stadelhofen 48 Appointed to Board Geneva, Switzerland of Directors December 16, 1994 Karen Lynn Bolens 49 Appointed to Board Geneva, Switzerland of Directors December 16, 1994
GEORGES BENARROCH is the President, Chief Executive Officer and Chief Financial Officer of the Company. He is also the President, Chief Executive Officer, and Chairman of the Board of Credifinance Securities, Ltd., Credifinance Capital, Inc. and Reeve, Mackay & Associates, Ltd. -- all wholly-owned subsidiaries of the Company. He is also the president of Equibank. Since 1977, Mr. Benarroch has held the position of officer and partner/director with various investment firms and private/public companies in the United States, Canada and Europe. He has been a senior partner and/or 18 seat holder of a member firm of the Toronto Stock Exchange since 1982. His experience covers Euro-financings, venture capital, mining and high tech financings and bridge financings. Between 1988 and 1990, he was one of the largest foreign traders of Austrian and Eastern European securities. One of his holding companies, which indirectly is the largest current shareholder of InterUnion, owns or has owned substantial equity interest in financial companies in North America, mining companies in California and technology-oriented, venture capital firms. T. JACK GARY, III is the Secretary of the Company. He is also Branch Manager of the West Palm Beach, Florida, office of Raymond James & Associates, a national brokerage firm, having held that position since 1995. He is the President of Crown Financial Advisors, Inc., an investment advisory firm. From April, 1988 to 1992 Mr. Gary was President and Chief Executive Officer of Crown Capital Advisors, Inc., a company registered as an investment advisor with the Securities and Exchange Commission and with the State of Florida under the Florida Securities and Investor Protection Act. From 1992, until his appointment with Raymond James, Mr. Gary served as Chief Executive Officer of Crown Financial and Executive Vice President of Crown Capital Advisors, Inc. ANN GLOVER serves as a Director of the Company. She is a Director, Secretary/Treasurer, and Chief Operating Officer of Credifinance Securities, Limited a subsidiary of the Company. Ms. Glover has been an employee of Credifinance Securities, Limited since 1991, having held the position of a Director, Secretary/ Treasurer, and Chief Compliance Officer. JACQUES MEYER DE STADELHOFFEN serves as a Director of the Company. Since 1981 through and including the present time, he has practiced as an attorney, specializing in tax and financial matters for international corporations and charitable organizations. KAREN LYNN BOLENS serves as a Director of the Company. Since 1985 through and including the present time, she has practiced as an associate attorney, specializing in corporate, estate and family law for international clients. 19 ITEM 6. EXECUTIVE COMPENSATION (a) SUMMARY COMPENSATION TABLE
NAME & PRINCIPAL FISCAL OTHER LONG TERM ALL OTHER POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION COMPENSATION - ------------------------------------------------------------------------------------------------ Georges Benarroch, President 1996 None None None None None & CEO 1997 None None $50,000* None None
*Georges Benarroch was paid $50,000 as compensation for services subsequent to the end of the fiscal year ending March 31, 1996. No other officer was paid compensation. (B) ALL COMPENSATION COVERED The Company's Board of Directors has approved payment of $1,750 for the services of each of its directors for the fiscal year ending March 31, 1997. No payments to Directors have been made as of the date of this registration statement. As of the date of this registration statement, the Company has no options, warrants, SARs, long-term incentive plans, pension or profit-sharing plans, insurance plans, medical reimbursement plans, or other compensation plans in any form, direct or indirect, in effect regarding any employees of the Company. The Company feels that it does not have to include executive compensation for an executive officer of any subsidiary because under Rule 3b-7 under the Exchange Act (17 CFR 240.3b-7) no executive officer(s) of any subsidiary perform(s) policy making functions for the registrant. As of the date of this registration statement, the Company has no agreement or understanding, express or implied, with any officer or director, or any other person regarding employment with the Company or compensation for services. 20 ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. ITEM 8. DESCRIPTION OF SECURITIES (A) COMMON STOCK The Company is authorized to issue 100,000,000 (One Hundred Million) shares of common voting stock, each share having one vote, at $.001 par value. There are no fixed rights to dividends on the common stock. Dividends may be paid as authorized by the Board of Directors in cash, in property, or in shares of capital stock. Section 102 of the General Corporation Law of Delaware provides that no stockholder shall have any preemptive right to subscribe to an additional issue of stock or to any security convertible into stock unless, and except to the extent that, such right is expressly granted to him in the certificate of incorporation. The Certificate of Incorporation of InterUnion Financial Corporation contains no provision for preemptive rights. (B) PREFERRED STOCK (1) CLASS A PREFERRED STOCK The Company is authorized to issue 1,500,000 (One Million Five Hundred Thousand) shares of Class A preferred stock at $.10 par value. The Class A preferred stock is voting stock, each share having 100 votes. In any given fiscal year in which the directors shall declare a dividend, the holder(s) of Class A preferred stock shall be entitled to a fixed yearly dividend in the percentage amount, which such amount shall be fixed and declared by the directors at the time of issuance of the Class A preferred stock. When such a dividend is declared, the holder(s) of the Class A preferred stock shall receive payment before any dividend shall be paid or set apart on the common stock. The dividends in respect to the Class A preferred stock shall be non-cumulative and shall be non-participating. These shares carry no terms of repayment and have no terms of conversion. 21 In the event of dissolution of the Company, the holder(s) of Class A preferred stock shall be entitled to be paid in full the par value of the shares before any amount is to be paid to the holders of common stock or the holders of Class B and C preferred stock. (2) CLASS B PREFERRED STOCK The Company is authorized to issue 50,000,000 (Fifty Million) shares of Class B preferred stock. The par value of this stock and the yearly dividend in a percentage amount to which the holder(s) of this stock shall be entitled, shall be determined by the directors at the time of first issuance of any such shares. In any given year in which the directors shall declare a dividend, the holder(s) of the Class B preferred stock shall receive payment before any dividend shall be set apart or paid on the common stock. The Class B preferred stock is non-voting, non-cumulative and non-participating. These shares carry no terms of repayment and have no terms of conversion. In the event of dissolution of the Company, the holder(s) of the Class B preferred stock shall be entitled to be paid in full the par value of the shares before any amount is to be paid to the holders of common stock or the holders of Class C preferred stock. (3) CLASS C PREFERRED STOCK The Company is authorized to issue 50,000,000 (Fifty Million) shares of Class C preferred stock. The par value of this stock and the yearly dividend in a percentage amount to which the holder(s) of this stock shall be entitled, shall be determined by the directors at the time of first issuance of any such shares. In any given year in which the directors shall declare a dividend, the holder(s) of the Class C preferred stock shall receive payment before any dividend shall be set apart or paid on the common stock. The Class C preferred stock is non-voting, non-cumulative and non-participating. These shares carry no terms of repayment. The Class C preferred stock is convertible to common voting stock, provided, however, that the exchange ratio on such a conversion shall be subject to the price and terms as decided by the directors, and provided further, that the right of conversion shall be decided by the directors in their sole discretion. In the event, upon a conversion, it shall appear that a fraction of a common share 22 shall be issued, the Company shall pay cash for the pro rata market value of any such fraction, market value being based upon the last sale price for a share of common stock on the business day next prior to the date such fair market value is to be determined. In the event of dissolution of the Company, the holder(s) of the Class C preferred stock shall be entitled to be paid in full the par value of the shares before any amount is paid to the holders of common stock. 23 PART II ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS (a) MARKET INFORMATION The issuer's common equity is traded on the OTC Bulletin Board under the symbol: IUFC. The high and low sale prices for each quarter within the last two fiscal years and the first quarter of fiscal year 1977 are listed below. Only two quarters are shown for fiscal year 1995 because the stock was not cleared by the NASD for trading until July 27, 1994. ================================================================================
Open High Low Close ------ ------ ----- ----- FY 95 Qtr 3 $52.50 $100.00 $52.50 $80.00 FY 95 Qtr 4 $80.00 $102.50 $77.50 $80.00 FY 96 Qtr 1 $80.00 $ 85.00 $32.50 $40.00 FY 96 Qtr 2 $40.00 $ 50.00 $15.00 $30.00 FY 96 Qtr 3 $30.00 $ 32.50 $10.63 $21.25 FY 96 Qtr 4 $21.25 $ 21.25 $ 5.00 $13.75 FY 97 Qtr 1 $13.75 $ 13.75 $ 5.00
================================================================================ (b) HOLDERS The approximate number of holders of record of each class of common equity is as follows: 24 ================================================================================
CLASS OF STOCK NUMBER OF HOLDERS Common 383 Class A Preferred 1 Class B Preferred 0 Class C Preferred 0
================================================================================ (c) DIVIDENDS The company has never declared or paid dividends on its common stock or its preferred stock. The Board of Directors does not anticipate paying any dividends in the foreseeable future. It intends to retain its distributable earnings, if any, for the expansion and development of its business. ITEM 2. LEGAL PROCEEDINGS The issuer is not a party to any pending legal proceeding, nor is its property the subject of a pending legal proceeding. ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS Not applicable. ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES (a) SALES PURSUANT TO REGULATION D The following sales were made by the Company within the past three (3) years in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, as contained within Regulation D promulgated by the Securities and Exchange Commission: 25 ===============================================================================
Title of Class Number Shares Price per Share Consideration Date of Sale - -------------- ------------- ------------------ ------------- -------------- Common 16,980,000 .00145 cents/share $ 24,621 April 1, 1994 Common 1,750,000 2 cents/share $ 35,000 April 22, 1994 Common 1,000,000 2 cents/share $ 20,000 May 16, 1994 Common 1,250,000 2 cents/share $ 25,000 July 26, 1994 Common 1,000,000 1 cent/share $ 10,000 July 26, 1994 Common 3,702,200 1 cent/share $ 37,022 Aug. 4, 1994 Common 5,000,000 1 cent/share $ 50,000 Aug. 17, 1994 Common 1,000,000 5 cents/share $ 50,000 Oct. 5, 1994 Common 1,500,000 20 cents/share $300,000 Mar. 23, 1994 Common 1,250,000 10 cents/share $125,000 June 5, 1995 Common 3,200,000 10 cents/share $320,000 Mar. 12, 1996
=============================================================================== NOTES TO SALES PURSUANT TO REGULATION D (1) All sales of securities are shown based upon the shares at the date of sale and do not reflect subsequent reverse stock splits as approved by the shareholders. (2) All sales were made directly by the Company as issuer. No commissions or underwriting discounts were paid in connection with the sales. (3) The class of persons to whom the Company sold the above-referenced securities were individuals or entities whom the Company had reason to believe were either accredited investors within the meaning of Regulation Section 230.501 or were investors having such knowledge and experience in financial and business matters that the purchaser could properly evaluate the risks and merits of the investment. (4) All sales as shown above were made to non-U.S. persons. 26 (5) The company specifically relied upon compliance with Rule 504 of Regulation D (Regulation Section 230.504). The Company qualified for Rule 504 because all offers and sales were made by the issuer, the Company was not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company was not an investment company, and the Company was not a development stage company. Further, the Company was in compliance with the conditions as set forth in Regulation Section 230.504(b). (B) SALES PURSUANT TO REGULATION S The following sales were made by the Company within the past three (3) years in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, as contained within Regulation S promulgated by the Securities and Exchange Commission: ================================================================================
Title of Class Number Shares Price per Share Consideration Date of Sale - -------------- ------------- --------------- ------------- ------------ Common 2,000,000 .10 cents/share $200,000 Oct. 16, 1995 Title of Class Number Shares Price per Share Consideration Date of Sale - -------------- ------------- --------------- ------------- ------------ Class A Preferred 1,500,000 .10 cents/share $150,000 Dec. 21, 1994
================================================================================ NOTES TO SALES PURSUANT TO REGULATION S (1) All sales of securities are shown based upon the shares at the date of sale and do not reflect subsequent reverse stock splits as approved by the shareholders. 27 (2) All sales were made directly by the Company as issuer. No commissions or underwriting discounts were paid in connection with the sales. (3) The class of persons to whom the Company sold the above-referenced securities were individuals or entities whom the Company had reason to believe were either accredited investors within the meaning of Regulation Section 230.501 or were investors having such knowledge and experience in financial and business matters that the purchaser could properly evaluate the risks and merits of the investment. (4) All sales as shown above were made to non-U.S. persons. (5) The company specifically relied upon compliance with Regulation S as promulgated by the Securities and Exchanges Commission. The Company was in compliance with Category 3 of Rule 903 of Regulation S which provides an issuer safe harbor. Under this Category the Company complied with the two general conditions of Rule 903(a) and (b) and to transactional and offering restrictions by the execution of an investor Subscription Agreement, and the placing of the appropriate restrictive legend on the stock certificate(s). ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 14 of the By-laws of the Company provides for Indemnification to directors and officers. This section is as follows: "Section 14. The corporation shall indemnify and reimburse each present and future director and officer of the corporation for and against all or part of the liabilities and expenses imposed upon or reasonably incurred by him in connection with any claim, action, suit or proceeding in which he may be involved or with which he may be threatened by reason of his being or having been a director or officer of the corporation or of any other corporation of which he shall at the request of this corporation then be serving or theretofore have served as a director or officer, whether or not he continues to be a director or officer, at the time such liabilities or expenses are imposed upon or incurred by him, including but without being limited to attorney's fees, court costs, judgments and reasonable compromise settlements; provided, however, that such indemnification and reimbursement shall not 28 cover: (a) liabilities or expenses imposed or incurred in connection with any matter as to which such director or officer shall be finally adjudged in such action, suit or proceeding to be liable by reason of his having been derelict in the performance of his duty as such director of officer, or (b) liabilities or expenses (including amounts paid in compromise settlements) imposed or incurred in connection with any matter which shall be settled by compromise (including settlement by consent decree or judgment) unless the board of directors of the corporation by resolution adopted by it (i) approves such settlement and (ii) finds that such settlement is in the best interest of the corporation and that such director of officer has not been derelict in the performance of his duty as such director or officer with respect to such matter. These indemnity provisions shall be separable, and if any portion thereof shall be finally adjudged to be invalid, or shall for any other reason be inapplicable or ineffective, such invalidity, inapplicability or ineffectiveness shall not affect any other portion or any other application of such portion or any other portion which can be given effect without the invalid, inapplicable or ineffective portion. The rights of indemnification and reimbursement hereby provided shall not be exclusive of other rights to which any director of officer may be entitled as a matter of law or by votes of stockholders or otherwise. As used in this paragraph, the terms "director" and "officer" shall include their respective heirs, executors and administrators." This provision of the By-laws specifically does not provide any measure of indemnification under circumstances whereby the director or officer is adjudged to be derelict in the performance of his duty as an officer or director. There would be no indemnification of an officer or director for liabilities arising under the federal securities laws. PART F/S FINANCIAL STATEMENTS The following audited consolidated financial statements for InterUnion Financial Corporation, covering fiscal years ending March 31, 1995 and March 31, 1996 are submitted in compliance with the requirements of Item 310 of Regulation S-B. 29 PART III ITEM 1. INDEX TO EXHIBITS
Exhibit Table Number Exhibit Page No. - -------------- ---------------------------------------------------- -------- (2) Certificate of Merger, dated February 15, 1994 E-1 (3)(i) Certificate of Incorporation of AU 'N AG, INC. Dated February 15, 1994 E-3 (3)(i) Certificate of Amendment of Certificate of Incorporation of AU 'N AG, INC. Dated April 11, 1994 E-4 (3)(i) Certificate of Amendment of Certificate of Incorporation of InterUnion Financial Corporation Dated October 17, 1994 E-5 (3)(ii) Bylaws of InterUnion Financial Corporation E-7 (21) Subsidiaries of InterUnion E-17
30 SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. INTERUNION FINANCIAL CORPORATION (Registrant) Date: July 15, 1996 By: /s/ Georges Benarroch ------------------------ ----------------------------------- Georges Benarroch President, Chief Executive Officer Chairman, Board of Directors In accordance with the requirements of the Securities Exchange Act of 1934, this Registration Statement has been signed below by the following persons in their capacities on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ Georges Benarroch President, Chief Executive July 15, 1996 - -------------------------------- Officer, Chairman, Board of ------------- Georges Benarroch Directors /s/ Georges Benarroch Chief Financial Officer July 15, 1996 - -------------------------------- ------------- Georges Benarroch /s/ Jacques Meyer de Stadelhofen Director July 15, 1996 - -------------------------------- ------------- Jacques Meyer de Stadelhofen /s/ Ann Glover Director July 15, 1996 - -------------------------------- ------------- Ann Glover
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