UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
40-F
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REGISTRATION
STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF
1934
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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, 2007
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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 Incorporation or Organization)
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(Primary
Standard Industrial Classification Code)
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(I.R.S.
Employer
Identification
No.)
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Suite
1028, 550 Burrard Street
Vancouver,
British Columbia
Canada
V6C 2B5
(604)
687-8378
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(Address
and telephone number of Registrant’s principal executive
offices)
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Corporation
Service Company
Suite
400, 2711 Centerville Road
Wilmington,
Delaware 19808
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(Name,
address (including zip code) and telephone number (including
area
code) of agent for service in the United States)
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Securities
registered or to be registered pursuant to section 12(b) of the
Act:
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Title Of Each Class
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Name Of Each Exchange On Which
Registered
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Common
Shares
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American
Stock Exchange
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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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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, 2007
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.
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,
2007;
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our
Audited Consolidated Financial Statements for the three years ended
December 31, 2007, 2006 and 2005;
and
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our
Management Discussion and Analysis for the three years ended
December 31, 2007, 2006 and
2005.
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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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our
ability to realize on security granted by defaulting
borrowers;
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a
decline in the value of real estate assets held as security for loans to
borrowers;
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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
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
Caste Mountain property;
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the
costs of completing remaining long term monitoring and maintenance
obligations; and
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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 17 to
our audited consolidated financial statements included herein provides a
reconciliation of the significant differences between Canadian and United States
generally accepted accounting principles.
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.
There
were no changes in our internal control over financial reporting during the
quarter ended December 31, 2007 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).
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, 2007. 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, 2007 which
are incorporated by reference in this annual report.
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, Michael Hannesson
and Dale Peniuk.
AUDIT
COMMITTEE FINANCIAL EXPERT
Our Board
of Directors has determined that Michael Hannesson and Dale Peniuk, members of
the Audit Committee of our board, are each qualified as audit committee
financial expert (as defined in Item 401 of Regulation S-K under the
Exchange Act), and are independent directors under applicable laws and
regulations and the requirements of the American Stock Exchange.
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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2007
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2006
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Audit
Fees
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$
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237,125
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$
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175,349
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Audit
Related Fees
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133,087
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9,143
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Tax
Fees
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498,049
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49,279
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All
Other Fees
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0
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78,452
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Total
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$
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868,261
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$
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312,223
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Audit
Fees
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.
All
Other Fees
All other
fees relate to services other than the audit fees, audit-related fees and tax
fees described above. In 2006, these services related primarily to
prospectus work and translation services of financial documents.
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 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, 2007:
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Payments
due by Period
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Type
of Contractual Obligation
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Total
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Less
than 1 Year
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1
- 3 Years
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3
- 5 Years
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More
than 5 Years
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Operating
Lease Obligation
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Office
Leases
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$
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2.6M
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$
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0.6M
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$
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1.2M
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$
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0.8M
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-
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Other
Obligation
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Loan
Commitments
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98.3
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M
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98.3
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M
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-
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-
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-
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Total
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$
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100.9M
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$
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98.9M
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$
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1.2M
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$
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0.8M
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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, 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.
AMEX
CORPORATE GOVERNANCE
The
Company’s common shares are listed for trading on The American Stock Exchange
(“AMEX”). 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
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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 concurrently 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, which Form F-X is incorporated
herein by reference.
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.
QUEST
CAPITAL CORP.
Date: March 14,
2008
EXHIBIT
INDEX
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Exhibit
Number
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Exhibit
Description
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Annual
Information Form of the Company for year ended December 31,
2007.
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Audited
consolidated financial statements of the Company and notes thereto as at
and for the three years ended December 31, 2007, 2006 and 2005,
together with the report of the auditors thereon.
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Management’s
Discussion and Analysis for the three years ended December 31, 2007, 2006
and 2005.
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Consent
of PricewaterhouseCoopers LLP.
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Certification
of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
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Certification
of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
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Certification
of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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Certification
of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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