UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30,1996
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/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number
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INTERUNION FINANCIAL CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 87-0520294
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
249 Royal Palm Way, Suite 301 H, Palm Beach, Fl 33480
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(Address of principal executive offices) (Zip Code)
(561) 820 - 0084
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(Issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or 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 / / No /X/
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of share outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: $1.00 Par Value Common Shares -
692,572 as of June 30,1996.
Transitional Small Business Disclosure Format (Check One) Yes / / No /X/
Page 1 of 7
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 1996
(Expressed in U.S. Dollars)
Audited Audited
3 mos 12 mos 12 mos
ended ended ended
Jun-96 Mar-96 Mar-95
CURRENT ASSETS
Cash 622,757 722,795 490,681
Due from brokers and dealers 911,160 1,168,190 172,944
Client deposits 1,070,270 2,093,966 21,147,890
Marketable securities 194,117 2,625,585 15,682,071
Accounts receivable 492,324 208,727 55,262
Income tax receivable (35,402) 1,597 15,866
Sundry assets and prepaid expenses 170,149 75,906 31,615
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3,425,375 6,896,766 37,596,329
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START-UP COSTS 418,990 438,803
LONG TERM INVESTMENTS 913,834 913,834 900,361
CAPITAL ASSETS 915,586 948,892 933,380
DEFERRED CHARGES 174,367 184,944 234,574
GOODWILL AND NON-CURRENT ASSETS 1,072,165 1,086,461 1,143,982
OTHER ASSETS 0 0 240,693
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3,492,942 3,572,934 3,452,990
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6,918,317 10,469,700 41,049,319
========= ========== ==========
CURRENT LIABILITIES
Due to brokers and dealers 429,091 2,499,665 30,168,593
Due to clients 1,629,007 3,035,310 6,368,681
Accounts payable and accrued liabilities 714,382 675,623 283,459
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2,772,480 6,210,598 36,820,733
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Other liabilities 0 0 499,377
Due to related parties 171 119,462 100,873
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171 119,462 600,250
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SHAREHOLDERS EQUITY
Capital Stock and additional paid-in capital 3,972,512 3,972,512 3,762,774
Retained Earnings (Deficit) 173,154 167,128 (134,438)
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4,145,666 4,139,640 3,628,336
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6,918,317 10,469,700 41,049,319
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Page 2 of 7
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
FOR THE THREE MONTHS ENDED JUNE 30, 1996
(Expressed in U.S. Dollars)
Audited Audited
3 mos 12 mos 12 mos
ended ended ended
Jun-96 Mar-96 Mar-95
REVENUES
Commissions, trading & investment income 1,364,701 4,500,899 3,971,160
Sales 515,934 0 0
Fee Revenue 229,908 1,364,297 56,907
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2,110,543 5,865,196 4,028,067
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EXPENSES
Selling, Marketing & Research 1,008,674 4,207,289 2,868,886
Cost of Goods Sold 515,934 0 0
Salaries & Benefits 274,331 759,361 291,687
General & Administration 176,294 710,938 796,673
Other Expenses (639) 13,132 0
Foreign Exchange Loss (Gain) 296 (20,902) (247)
Interest & Bank Charges Expense (Income) (8,137) (37,337) 5,830
Amortization 79,992 218,084 24,272
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2,046,745 5,850,565 3,987,101
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PROFIT (LOSS) FROM CONTINUING OPERATIONS 63,798 14,631 40,966
Loss from Discontinued Operation 0 (94,252) (184,845)
Gain on Disposal of Discontinued Assets 0 409,418 0
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PROFIT (LOSS) FOR THE PERIOD - BEFORE INCOME TAXES 63,798 329,797 (143,879)
PROVISSION FOR INCOME TAXES (RECOVERABLE) 57,772 28,231 (9,441)
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NET PROFIT (LOSS) FOR THE PERIOD 6,026 301,566 (134,438)
RETAINED EARNINGS (DEFICIT) - BEGINNING OF PERIOD 167,128 (134,438) 0
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RETAINED EARNINGS (DEFICIT) - END OF PERIOD 173,154 167,128 (134,438)
========= ========= =========
FINANCIAL OVERVIEW
Common Shares Outstanding 692,572 692,572 369,058
Weighted Average Shares Outstanding 692,572 501,335 157,531
E.P.S. - From Continuing Operations 0.01 0.03 0.24
E.P.S. - After Discontinued Operations 0.01 0.60 (0.85)
Page 3 of 7
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE THREE MONTHS ENDED JUNE 30, 1996
(Expressed in U.S. Dollars)
Audited Audited
3 mos 12 mos 12 mos
ended ended ended
Jun-96 Mar-96 Mar-95
OPERATING ACTIVITIES
Net Income (Loss) 6,026 301,566 (134,438)
Amortization 79,992 218,084 24,272
Gain on disposition of discontinued operations 0 (409,418) 0
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86,018 110,232 (110,166)
Increase (decrease) in due to brokers and dealers, net (1,813,544) (28,664,174) 29,995,649
Increase (decrease) in due to clients (382,607) 15,720,553 (14,779,209)
Increase (decrease) in marketable securities 2,431,468 13,056,486 (15,682,071)
Increase (decrease) in accounts receivable & sundry assets (340,841) (183,487) (102,741)
Decrease (increase) in accounts payable and accrued liabilities 38,762 392,164 283,460
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CASH PROVIDED (USED) BY OPERATING ACTIVITIES 19,256 431,774 (395,078)
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FINANCING ACTIVITIES
Capital stock and additional paid-in capital issued (note 8) 0 555,000 3,762,774
Increase (decrease) in due to related parties (119,291) 18,589 100,872
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CASH PROVIDED (USED) BY FINANCING ACTIVITIES (119,291) 573,589 3,863,646
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INVESTING ACTIVITIES
Start-up costs 0 (438,803) 0
Long term investments 0 (13,472) (900,361)
Purchase of capital assets 0 (132,533) (957,653)
Reorganization costs 0 (61,632) (234,574)
Goodwill 0 0 (1,143,982)
Investment in subsidiaries (note 5) 0 0 (507,457)
Discontinued operations 0 (126,809) 258,684
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CASH PROVIDED (USED) IN INVESTING ACTIVITIES 0 (773,249) (3,485,343)
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INCREASE (DECREASE) IN CASH (100,035) 232,114 (16,775)
CASH - BEGINING OF YEAR 722,795 490,681 0
CASH ACQUIRED ON ACQUISITION OF SUBSIDIARIES 0 0 507,456
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CASH - END OF YEAR 622,760 722,795 490,681
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Page 4 of 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
During the first quarter of fiscal 1997 (three months ending June
30,1996), InterUnion reported consolidated revenues of US$2.1 million.
No comparative figure for the same period is available as InterUnion was
in an acquisition and reorganization mode during the first half of fiscal
1996. This is collaborated by the fact that revenues for the quarter
represents 36.0% and 52.4% of all of fiscal 1996 and 1995 respectively.
The increase is due to InterUnion's wholly owned subsidiary Reeve, Mackay
& Associates Limited, which started its operations in the second quarter
of fiscal 1996.
InterUnion's revenue growth (figures in 000's):
FY 97 FY 1996 FY 1995
Q1
Commission Income 1,364 4,500 3,871
Sales 516
Fee Revenue 230 1,365 57
Total 2,110 5,865 4,028
Financial overview of InterUnion's financial statements:
FY 97 Q1 FY 1996 FY 1995
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Common Shares Issued 692,572 692,572 369,058
E.P.S. - operations 0.009 0.027 0.243
E.P.S. - After discontinued operations 0.009 0.602 -0.853
Working Capital 652,893 686,186 775,593
Cash Flow - operations 86,018 204,486 74,678
Cash Flow. - After discontinued operations 86,018 110,233 -110,167
Shareholders Equity 4,145,666 4,139,640 3,628,774
Book Value per Share 5.99 5.98 9.83
Net earnings for the quarter was $6,026 on a weighted average of 692,572
common shares for the period. The set back in net earnings was to be
expected as Reeve, Mackay & Associates Limited down period is June to
October, with the high seasons being November and December and April and
May.
Consolidated cash flow from operations continued to improve to $86,018
(equal to 42.1% of fiscal 1996) which is a result of monitoring of
operations and better controls by management. New acquisitions continue
to be a top priority for InterUnion. But the Company has increased its
attention towards cost cutting and economies of scales within the
marketing and administrative functions of the different subsidiaries.
Book value per share is $5.99 versus $5.98 and shareholders' equity
increased 0.1% to $4,145,666 versus $4,139,640.
In order to meet its growth plans, the Company issued a Confidential
Private Offering Memorandum under Regulation "S" dated September 1,1996.
This Offering Memorandum offered for sale a maximum of 250,000 units of
the Company at a price of $5.00 per unit. Each unit consists of one
share common voting stock and one warrant to purchase one share of common
voting stock at $6.00 per share, with an expiration date on the warrant
of September 15,1997. The total offering seeks to raise $2,000,000,
with anticipated net proceeds after commissions and offering costs to be
$1,775,000.
The Company continues to explore opportunities for the acquisition of
operating companies that will provide additional liquidity and cash flow.
The Company anticipates that such acquisitions would be financed by the
use of the cash generated by the above mentioned financing as well as the
issuance of common stock from treasury.
The Company feels that the financial statements for the periods ending
June 30,1996 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.
Page 5 of 7
There are no material events and uncertainties know to the management of
the Company that would cause the reported financial information to be
other then indicative of future operating results or of future financial
conditions.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceeding, nor is its
property the subject of a pending legal proceeding for which the claims,
exclusive of interest and costs, exceed 10% of the current assets of the
Company on a consolidated basis.
ITEM 2 - CHANGES IN SECURITIES
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
There have been no defaults in the payment of principal or interest with
respect to any senior indebtedness of InterUnion Financial Corporation.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a special meeting of the shareholders held May 17,1996 the following
events took place:
1. The following nominees to the Board of Directors to serve until the
next shareholders meeting have been elected: Georges Benarroch, Chairman,
Jacques Meyer de Stadelhofen, Karen Lynn Bolens, and Ann Glover,
Directors
2. A twenty (20) for one (1) common stock consolidation was voted on and
approved.
3. The Board of Directors was given the authority to act within its
discretion in regards to the outstanding stock options and warrants.
4. The Board of Directors was granted the authority to act within its
discretion in making application for admission to the NASDAQ Market and
registering the Corporation with the US Securities & Exchange Commission
pursuant to the appropriate section of the Securities & Exchange Act of
1934, as amended.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
27 - Financial Data Schedule (for SEC use only)
Page 6 of 7
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto dully authorized.
InterUnion Financial Corporation
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(Registrant)
Date October 29,1996 /s/ Georges Benarroch
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Georges Benarroch, Director
Date October 29,1996 /s/ Ann Glover
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Ann Glover, Director
Page 7 of 7