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 September 30,1996
---- -------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
----------- ------------
Commission file number
-----------------------------------
INTERUNION FINANCIAL CORPORATION
--------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 87-0520294
- -------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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)
- ------------------------------------------------------------------------------
(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: $0.001 Par Value Common Shares -
969,714 as of September 30,1996.
Transitional Small Business Disclosure Format (Check One) Yes [ ] No [X]
Page 1 of 8
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(Expressed in U.S. Dollars)
Audited Revised
6 mos ended 12 mos ended 12 mos ended
Sept-96 Mar-96 Mar-95
REVENUES
Commissions, trading & investment income 2,300,357 4,500,899 3,971,161
Sales 709,726
Fee Revenue 317,308 1,364,297 56,907
---------- ----------- -----------
3,327,390 5,865,196 4,028,068
---------- ----------- -----------
EXPENSES
Cost of Goods Sold 709,726
General & Administration 318,206 710,939 796,674
Salaries & Benefits 514,436 759,361 291,687
Selling, Marketing & Research 1,697,964 4,207,289 2,868,886
Other Expenses (1,108) 13,132
Foreign Exchange Loss (Gain) 5 (20,902) (247)
Interest & Bank Charges Expense (Income) (12,647) (37,337) 5,830
Amortization & Depreciation 164,353 218,084 24,272
---------- ----------- -----------
3,390,935 5,850,565 3,987,102
---------- ----------- -----------
PROFIT (LOSS) FROM CONTINUING OPERATIONS (63,545) 14,631 40,966
Loss from Discontinued Operation (94,252) (184,845)
Gain on Disposal of Discontinued Assets 409,418
---------- ----------- -----------
PROFIT (LOSS) FOR THE PERIOD - BEFORE INCOME TAXES (63,545) 329,797 (143,879)
PROVISION FOR INCOME TAXES (RECOVERABLE) 6,533 28,231 (9,441)
---------- ----------- -----------
NET PROFIT (LOSS) FOR THE PERIOD (70,078) 301,566 (134,438)
RETAINED EARNINGS (DEFICIT) - BEGINNING OF PERIOD 167,128 (134,438) 0
---------- ----------- -----------
RETAINED EARNINGS (DEFICIT) - END OF PERIOD 97,050 167,128 (134,438)
========== =========== ===========
FINANCIAL OVERVIEW
Common Shares Outstanding 969,714 692,572 369,058
Weighted Average Shares Outstanding 738,129 501,335 157,531
EPS - From Continuing Operations (0.09) 0.03 0.24
EPS - After Discontinued Operations (0.09) 0.60 (0.85)
Page 2 of 6
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30, 1996
(Expressed in U.S. Dollars)
Audited Revised
6 mos ended 12 mos ended 12 mos ended
Sept-96 Mar-96 Mar-95
CURRENT ASSETS
Cash 599,162 722,795 490,681
Due from brokers and dealers 3,629,834 1,168,190 172,944
Client deposits 2,865,584 2,093,966 21,147,890
Marketable securities 292,014 2,625,585 15,682,071
Accounts receivable 1,076,333 208,727 55,262
Income tax receivable 20,506 1,597 15,866
Sundry assets and prepaid expenses 127,384 75,906 31,615
----------- ------------ -----------
8,610,817 6,896,766 37,596,329
----------- ------------ -----------
CAPITAL ASSETS 882,827 948,892 933,380
DEFERRED CHARGES 380,581 184,944 234,574
GOODWILL AND NON-CURRENT ASSETS 1,057,870 1,086,461 1,143,982
LONG TERM INVESTMENTS 913,834 913,834 900,361
OTHER ASSETS 240,693
START-UP COSTS 394,923 438,803
----------- ------------ -----------
3,630,036 3,572,934 3,452,990
----------- ------------ -----------
----------- ------------ -----------
12,240,853 10,469,700 41,049,319
=========== ============ ===========
CURRENT LIABILITIES
Accounts payable and accrued liabilities 1,079,819 675,623 283,459
Due to brokers and dealers 2,499,665 30,168,593
Due to clients 6,388,090 3,035,310 6,368,681
----------- ------------ -----------
7,467,909 6,210,598 36,820,733
----------- ------------ -----------
Other liabilities 499,377
Due to related parties 119,462 100,873
----------- ------------ -----------
0 119,462 600,250
----------- ------------ -----------
SHAREHOLDERS EQUITY
Capital Stock and additional paid-in capital 4,675,894 3,972,512 3,762,774
Retained Earnings (Deficit) 97,050 167,128 (134,438)
----------- ------------ -----------
4,772,944 4,139,640 3,628,336
----------- ------------ -----------
----------- ------------ -----------
12,240,853 10,469,700 41,049,319
=========== ============ ===========
Page 3 of 6
INTERUNION FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
(Expressed in U.S. Dollars)
Audited Revised
6 mos ended 12 mos ended 12 mos ended
Sept-96 Mar-96 Mar-95
OPERATING ACTIVITIES
Net Income (Loss) (70,078) 301,566 (134,438)
Amortization 164,353 218,084 24,272
Gain on disposition of discontinued operations (409,418)
---------- ----------- -----------
94,275 110,232 (110,166)
Increase (decrease) in due to brokers and dealers, net (4,961,309) (28,664,174) 29,995,649
Increase (decrease) in due to clients 2,581,162 15,720,553 (14,779,209)
Increase (decrease) in marketable securities 2,333,571 13,056,486 (15,682,071)
Increase (decrease) in accounts receivable & sundry assets (937,993) (183,488) (102,741)
Decrease (increase) in accounts payable and accrued 404,196 392,164 283,460
liabilities
---------- ----------- -----------
CASH PROVIDED (USED) BY OPERATING ACTIVITIES (486,098) 431,774 (395,078)
---------- ----------- -----------
FINANCING ACTIVITIES
Capital stock and additional paid-in capital issued 703,382 555,000 3,762,774
Increase (decrease) in due to related parties (119,462) 18,588 100,872
---------- ----------- -----------
CASH PROVIDED (USED) BY FINANCING ACTIVITIES 583,920 573,588 3,863,646
---------- ----------- -----------
INVESTING ACTIVITIES
Acquisition Costs (148,503)
Capital assets (2,405) (132,534) (957,653)
Deferred & Reorganization Costs (70,547) (61,634) (234,573)
Discontinued operations (126,804) 258,684
Goodwill (1,143,982)
Investment in subsidiaries (507,457)
Long term investments (13,473) (900,360)
Start-up costs (438,803)
---------- ----------- -----------
CASH PROVIDED (USED) IN INVESTING ACTIVITIES (221,455) (773,249) (3,485,341)
---------- ----------- -----------
INCREASE (DECREASE) IN CASH (123,633) 232,113 (16,775)
CASH - BEGINNING OF YEAR 722,795 490,681
CASH ACQUIRED ON ACQUISITION OF SUBSIDIARIES 507,456
---------- ----------- -----------
CASH - END OF YEAR 599,162 722,795 490,681
========== =========== ===========
Page 4 of 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
During the second quarter of fiscal 1997 (three months ending September
30,1996), InterUnion reported consolidated revenues of US$1.2 million.
InterUnion's revenue growth (figures in 000's):
FY 97Q2 FY 97Q1 FY 1996 FY 1995
------- ------- ------- -------
Commission Income 936 1,364 4,500 3,871
Sales 194 516
Fee Revenue 87 230 1,365 57
Total 1,217 2,110 5,865 4,028
Financial overview of InterUnion's financial statements:
FY 97 Q2 FY 1996 FY 1995
-------- ------- -------
Common Shares Issued 969,714 692,572 369,058
EPS - operations -0.09 0.027 0.243
EPS - After discontinued operations -0.09 0.602 -0.853
Working Capital 1,143,908 686,186 775,593
Cash Flow - operations 94,275 204,486 74,678
Cash Flow. - After discontinued operations 94,275 110,233 -110,167
Shareholders Equity 4,772,944 4,139,640 3,628,774
Book Value per Share 4.92 5.98 9.83
The reduction in the second quarter revenues is due to the following factors:
- Credifinance Securities Limited: most of the sales and research
staff effort was directed towards corporate finance activities which
allowed the completion of two transactions (efforts continue to
hire, traders/salespeople).
- Reeve, Mackay & Associates Limited: as previously stated in the
10-QSB MDA, there are two high seasons in the auction business: fall
(November & December) and late spring (May/June). Reeve, Mackay
incurred a great portion of the expenses related to important sales
in the off season months: moving and storage of goods, marketing of
consignments and cataloging.
Net loss for the six months ended September 30, 1996 was $70,078 on a
weighted average of 738,129 common shares for the period. Therefore, the
loss per share for the period is 0.09. Consolidated cash flow for the
period was $94,275.
The company's book value per share at the end of the second quarter is
$4.92 versus $5.98 six months earlier. The reduction is primarily due to
the issuing of 277,142 new common stock for net proceeds of $703,382.
As reported in our 10-QSB for the first quarter, InterUnion has raised
$759,710 and received commitment for an additional $1.5 million but the
Company would rather finalize the Placement at the same time that it
announces an acquisition or it receives its NASDAQ listing.
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. Management of the Company would
like to add that a number of opportunities have presented themselves,
however, none have been consummated as the parameters originally set out
were not met.
The Company feels that the financial statements for the periods ending
September 30,1996, March 31,1996 and March 31,1995 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 6
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
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
None.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
None.
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 duly authorized.
InterUnion Financial Corporation
--------------------------------
(Registrant)
/s/ Georges Benarroch
Date November 13, 1996 Georges Benarroch, Director
----------------- --------------------------------
(Signature)*
/s/ Ann Glover
Date November 13, 1996 Ann Glover, Director
----------------- --------------------------------
(Signature)*
*Print the name and title of each signing officer under his signature.
Page 6 of 6