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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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WASHINGTON,
D.C. 20549
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FORM
40-F
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o
REGISTRATION
STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF
1934
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x
ANNUAL
REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
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For
the fiscal year ended December 31, 2008
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Commission
File Number: 001-32667
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QUEST
CAPITAL CORP.
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(Exact
name of Registrant as specified in its charter)
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Canada
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6029
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Not
Applicable
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(Province
or Other Jurisdiction of
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(Primary
Standard Industrial
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(I.R.S.
Employer
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Incorporation
or Organization)
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Classification
Code)
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Identification
No.)
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Suite 1028, 550 Burrard
Street
Vancouver, British Columbia
Canada V6C 2B5
(604) 687-8378
(Address
and telephone number of Registrant’s principal executive offices)
Corporation Service Company
Suite 400, 2711 Centerville Road
Wilmington, Delaware
19808
(Name,
address (including zip code) and telephone number (including area code) of agent
for service in the United States)
Securities
registered or to be registered pursuant to section 12(b) of the
Act:
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Title Of Each
Class
Common
Shares
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Name Of Each Exchange
On Which Registered
NYSE
Amex
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Securities
registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
For annual reports, indicate by check mark the information filed with
this Form:
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x
Annual
Information Form
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x
Audited
Annual Financial Statements
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Indicate
the number of outstanding shares of each of the Registrant’s classes of capital
or common stock as of the close of the period covered by the annual report:
146,789,711
Common
Shares as at December 31, 2008
Indicate
by check mark whether the Registrant by filing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).
If “yes” is marked, indicate the file number assigned to the Registrant in
connection with such Rule.
Yes
o
No
x
Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for 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.
INTRODUCTORY
INFORMATION
In this
annual report, references to “we”, “our”, “us”, the “Company” or “Quest” mean
Quest Capital Corp. and its subsidiaries, unless the context suggests
otherwise.
Unless
otherwise indicated, all amounts in this annual report are in Canadian dollars
and all references to “$” mean Canadian dollars.
PRINCIPAL
DOCUMENTS
The
following documents that are filed as exhibits to this annual report are
incorporated by reference herein:
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our
Annual Information Form for the year ended December 31,
2008;
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•
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our
Audited Consolidated Financial Statements for the three years ended
December 31, 2008, 2007 and 2006;
and
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•
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our
Management Discussion and Analysis for the three years ended December 31,
2008, 2007 and 2006.
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FORWARD-LOOKING
STATEMENTS
This
annual report includes or incorporates by reference certain statements that
constitute “forward-looking statements” within the meaning of the United States
Private
Securities Litigation Reform Act of 1995
. These statements appear in a
number of places in this annual report and documents incorporated by reference
herein and include statements regarding our intent, belief or current
expectation and that of our officers and directors. Such
forward-looking statements involve known and unknown risks and uncertainties
that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. When used in this annual report or
in documents incorporated by reference in this annual report, words such as
“believe,” “anticipate,” “estimate,” “project,” “intend,” “expect,” “may,”
“will,” “plan,” “should,” “would,” “contemplate,” “possible,” “attempts,”
“seeks” and similar expressions are intended to identify these forward-looking
statements. These forward-looking statements are based on various factors and
were derived utilizing numerous assumptions that could cause our actual results
to differ materially from those in the forward-looking statements. Accordingly,
you are cautioned not to put undue reliance on these forward-looking statements.
Forward-looking statements include, among others, statements regarding:
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our
expected financial performance in future
periods;
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our
plan of operations; and
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our
business strategy and plans or
budgets.
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Some of
the risks, uncertainties and assumptions that could cause our actual results to
differ materially from those expressed in our forward-looking statements
include:
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defaults
by borrowers on their repayment
obligations;
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•
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our
ability to realize on security granted by defaulting
borrowers;
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•
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a
decline in the value of real estate assets held as security for loans to
borrowers;
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- 2
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•
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our
ability to estimate the provision for loan losses on our loan
portfolio;
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•
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the
nature and quality of our loan
portfolio;
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the
concentration of our portfolio in real
estate;
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our
ability to reinvest assets in real estate loans as they are
repaid;
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our
ability to manage our growth;
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our
management’s ability to successfully identify suitable candidates for
loans;
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competition
in the lending business;
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fluctuations
in interest rates;
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our
ability to attract clients and maintain client
relationships;
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our
ability to enter into strategic relationships to syndicate
loans;
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our
ability to maintain the nature and quality of our loan
portfolio;
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our
ability to maintain our tax status as a Mortgage Investment Corporation
(“MIC”) continuously throughout the taxation
year;
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our
ability to comply with our regulatory obligations as a mortgage broker
under the
Mortgage
Brokers Act
(British Columbia) or with other regulatory bodies that
regulate our business;
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our
ability to retain key personnel;
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environmental
issues in respect of the possible possession or acquisition of
properties;
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liabilities
associated with the former ownership of certain mineral
properties;
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the
impact of changes in environmental laws and regulations in respect of the
Castle Mountain property;
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the
costs of completing remaining long term monitoring and maintenance
obligations; and
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•
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adverse
changes in the economy generally.
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We refer
you to the section entitled “Risk Factors” in our Annual Information
Form. We assume no obligation to update or to publicly announce the
results of any change to any of the forward-looking statements contained or
incorporated by reference herein to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting the
forward-looking statements.
NOTE
TO UNITED STATES READERS REGARDING DIFFERENCES BETWEEN UNITED STATES AND
CANADIAN REPORTING PRACTICES
We are
permitted to prepare this annual report in accordance with Canadian disclosure
requirements, which are different from those of the United
States. Our audited consolidated financial statements included in
this annual report have been prepared in accordance with Canadian generally
accepted accounting principles, which differ in certain material respects from
United States generally accepted accounting principles. Note 19 to our audited
consolidated financial statements included herein provides a reconciliation of
the significant differences between Canadian and United States generally
accepted accounting principles.
- 3
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DISCLOSURE
CONTROLS AND PROCEDURES
As of the
end of the period covered by this report, our management carried out an
evaluation, with the participation of our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the
Securities
Exchange Act of 1934
(“
Exchange
Act
”)). Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that, as of the end of the period covered by this
report, our disclosure controls and procedures were effective in recording,
processing, summarizing and reporting, on a timely basis, information required
to be disclosed by us in reports that we file or submit under the Exchange
Act.
It should
be noted that while our Chief Executive Officer and our Chief Financial Officer
believe that our disclosure controls and procedures provide a reasonable level
of assurance that they are effective, they do not expect that our disclosure
controls and procedures or internal control over financial reporting will
prevent all errors and fraud. A control system, no matter how well conceived or
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system will be met.
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. With the participation of the
Chief Executive Officer and the Chief Financial Officer, our management
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework and criteria established in Internal
Control – Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, our
management has concluded that our internal control over financial reporting was
effective as of December 31, 2008.
ATTESTATION
REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
Our
independent public accountant has issued their report on their audit of our
internal control over financial reporting in accordance with Auditing Standard
No. 5 of the Public Company Accounting Oversight Board, which report is included
with our audited financial statements for the year ended December 31, 2008 which
are incorporated by reference in this annual report.
CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There
were no changes in our internal control over financial reporting during the
fiscal year ended December 31, 2008 that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
NOTICE
OF PENSION FUND BLACKOUT PERIOD
We were
not required by Rule 104 of Regulation BTR to send any notice to any of our
directors or executive officers during the fiscal year ended December 31,
2008.
AUDIT
COMMITTEE
Our Board
of Directors has established a separately-designated Audit Committee of the
board in accordance with Section 3(a)(58)(A) of the Exchange Act for the purpose
of overseeing our accounting and financial reporting processes and the audits of
our annual consolidated financial statements. As at the date of this annual
report, the Audit Committee is comprised of W. David Black, Frank Mayer and Dale
Peniuk.
- 4
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AUDIT
COMMITTEE FINANCIAL EXPERT
Our Board
of Directors has determined that Dale Peniuk, member of the Audit Committee of
our board, is qualified as an audit committee financial expert (as defined in
Item 401 of Regulation S-K under the Exchange Act), and is an independent
director under applicable laws and regulations and the requirements of the
NYSE
Amex.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
The
following table sets forth information regarding amounts billed* to us by our
independent auditors for each of our last two fiscal years:
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Year
Ended December 31,
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2008
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2007
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Audit
Fees
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$
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416,849
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$
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237,125
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Audit
Related Fees
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52,920
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133,087
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Tax
Fees
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249,206
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498,049
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Total
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$
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718,975
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$
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868,261
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*
Inclusive of general sales taxes
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Audit
fees are the aggregate fees billed by our independent auditor for the audit of
our annual consolidated financial statements, reviews of our interim
consolidated financial statements and attestation services that are provided in
connection with statutory and regulatory filings or engagements.
Audit-Related
Fees
Audit-related
fees are fees charged by our independent auditor for assurance and related
services that are reasonably related to the performance of the audit or review
of our financial statements and are not reported under “Audit
Fees.”
Tax
Fees
Tax fees
are fees for professional services rendered by our independent auditors for tax
compliance and tax advice on actual or contemplated transactions. December 31,
2008 tax fees include $113,518 related to the conversion to a MIC.
All
Other Fees
All other
fees relate to services other than the audit fees, audit-related fees and tax
fees described above.
Audit
Committee Pre-Approval Policies
Our Audit
Committee has established policies and procedures that are intended to control
the services provided to us by our independent auditors and to monitor their
continuing independence. Under these policies, no services may be undertaken by
our independent auditors, unless the engagement is specifically approved by the
Audit Committee or the services are included within a category which
has
- 5
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been
pre-approved by the Audit Committee. The maximum charge for services
is established by the Audit Committee when the specific engagement is approved
or the category of services pre-approved. Management is required to notify the
Audit Committee of the nature and value of pre-approved services
undertaken.
The Audit
Committee will not approve engagements relating to, or pre-approve categories
of, non-audit services to be provided by our independent auditors (i) if such
services are of a type the performance of which would cause our independent
auditors to cease to be independent within the meaning of applicable Securities
and Exchange Commission rules, and (ii) without consideration, among other
things, of whether the auditors are best situated to provide the required
services and whether the required services are consistent with their role as our
independent auditors.
OFF-BALANCE
SHEET ARRANGEMENTS
We have
not entered into any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues, expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to
investors.
CONTRACTUAL
OBLIGATIONS
The
following table provides information with respect to our known contractual
obligations as of December 31, 2008:
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Payments
due by Period
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More
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Less
than 1
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than
5
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Type
of Contractual Obligation
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Total
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Year
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1
- 3 Years
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3
- 5 Years
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Years
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Operating
Lease Obligation
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Office
Leases and other
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$
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2.2
M
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$
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0.7
M
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$
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1.4
M
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$
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0.1
M
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-
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Other
Obligation
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Loan
Commitments
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46.3M
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37.7M
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8.6M
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-
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-
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Total
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$
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48.5
M
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$
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38.4
M
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$
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10.0
M
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$
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0.1
M
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-
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Additional
information related to our obligations and commitments is provided in the notes
to our audited consolidated financial statements included in this annual
report.
CODE
OF ETHICS
We have
adopted a Code of Ethics, which we refer to as our Code of Conduct that applies
to our officers, employees and directors and promotes, among other things,
honest and ethical conduct. Investors may view our Code of Conduct on our web
site at
www.questcapcorp.com
.
On March 14, 2008, our Code of Conduct was amended: (a) to clarify that
officers, employees and directors are required to report any conduct that
violates applicable law or the Code of Conduct and that failure to report will
result in disciplinary action; (b) to expand the section on code compliance and
reporting to clarify the process for submitting complaints directly to the
Chairman of the Audit Committee or on an anonymous basis through our
Whistleblower Hotline and to describe how those complaints will be handled; (c)
to add sections relating to whistleblower protection, the treatment of
proprietary and confidential information,
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the
protection and proper use of company assets, improper accepting or giving of
gifts and antitrust and fair dealing; (d) to add a provision to the personal
conflicts of interest section acknowledging that personal loans to insiders are
prohibited; and (e) to make other wording and formatting changes for
consistency.
NYSE
AMEX CORPORATE GOVERNANCE
The
Company’s common shares are listed for trading on the NYSE Amex Exchange
(“AMEX”), previously the American Stock Exchange. Section 110 of the AMEX
company guide permits AMEX to consider the laws, customs and practices of
foreign issuers in relaxing certain AMEX listing criteria, and to grant
exemptions from AMEX listing criteria based on these considerations. A company
seeking relief under these provisions is required to provide written
certification from independent local counsel that the non-complying practice is
not prohibited by home country law. A description of the significant ways in
which the Company’s governance practices differ from those followed by domestic
companies pursuant to AMEX standards is contained on the Company’s website at
www.questcapcorp.com
.
UNDERTAKING
The
Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities registered pursuant to Form 40-F; the securities in
relation to which the obligation to file an annual report on Form 40-F arises;
or transactions in said securities.
CONSENT
TO SERVICE OF PROCESS
The
Company has previously filed an Appointment of Agent for Service of Process and
Undertaking on Form F-X signed by the Company and its agent for service of
process with respect to the class of securities in relation to which the
obligation to file this annual report arises.
SIGNATURES
Pursuant
to the requirements of the Exchange Act, the Registrant certifies that it meets
all of the requirements for filing on Form 40-F and has duly caused this annual
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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QUEST
CAPITAL CORP.
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By:
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“Stephen
C. Coffey”
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Stephen
C. Coffey
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Chief
Executive Officer
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Date:
March 26, 2009
EXHIBIT
INDEX
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Exhibit
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Exhib
it
Description
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Number
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99.1
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Annual
Information Form of the Company for year ended December 31,
2008.
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99.2
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Audited
consolidated financial statements of the Company and notes thereto as at
and for the three years ended December 31, 2008, 2007 and 2006, together
with the report of the auditors
thereon.
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99.3
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Management’s
Discussion and Analysis for the three years ended December 31, 2008, 2007
and 2006.
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99.4
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Consent
of PricewaterhouseCoopers LLP.
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99.5
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Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
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99.6
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Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
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99.7
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Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
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99.8
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Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
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