Wally Findlay Galleries International, Inc. and Subsidiaries - Page 9

                                        - 9 -                                         

               In July 1984 the subsidiary's accountants discovered that              
          FF 108,000 (approximately $11,000 - $12,000 at then-current                 
          exchange rates) attributable to cash transactions was missing.              
          WFGI's officers concluded that the funds had been embezzled by              
          the subsidiary's resident manager.  The money was never                     
          recovered.  The manager left the company before the end of the              
          fiscal year, pursuant to a settlement agreement involving a                 
          mutual release of claims and an additional payment by WFGI of               
               In July an artist doing business as Selene Ltd. filed suit             
          against the French subsidiary, seeking payment of $25,500                   
          allegedly due to him as his share of the sale price of two                  
          paintings.  Having investigated the financial capacity of the               
          subsidiary and learned that it was technically insolvent, he                
          requested a declaration of insolvency and involuntary liquidation           
          of the company to satisfy his claim.                                        
               As the fiscal yearend approached, the officers of WFGI                 
          expected that the results for the year would again show a large             
          loss.  Moreover, despite payments to the parent by the subsidiary           
          during the years at issue totaling more than $1.5 million, the              
          intercompany account balance had reached its highest level since            
          the first year of operation.  A special meeting was convened on             
          September 20, 1984, to consider the possibility of dissolving the           
          French subsidiary.  For reasons that are not clearly articulated            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011