U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
AMENDMENT NUMBER 5
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
WOLF INDUSTRIES INC.
(Name of Small Business Issuer in its Charter)
Nevada E.I.N. 98-0171619
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4020, 7 Street, SE
Calgary, Alberta, Canada T2G 2Y8
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number: (403) 543-0970
SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:
None
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title of each class Name of each exchange on which
to be so registered each class to be registered
Common Stock OTC Electronic Bulletin Board
Total Number of Pages: 47
Index to Exhibits Appears on Page: 15 Page: 1
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
(a) BUSINESS DEVELOPMENT
--------------------
Wolf Industries Inc. (the "Company") was incorporated on January 24, 1996,
pursuant to the laws of the State of Nevada under the name Wolf
Exploration, Inc. with a business plan to acquire property for precious
metal exploration in the Western United States. However after considering
several properties, the Company determined that the properties identified
were not suitable to fully implement an exploration and development project
in the United States. In August 1996, the Company changed management and
developed a new business plan.
In October 1996, Wolf Exploration entered into an agreement with Bill Bell
and J.T. Bell (not related) to acquire all of the outstanding common stock
of 418297 Alberta, Ltd. operating as Calgary Chemicals. The consideration
paid was $620,500 (U.S.). The Company continues the business of Calgary
Chemical as its activities are targeted to the oil and gas service industry
through a wholly owned subsidiary operating as Calgary Chemical.
In March 1997, the name was changed to Wolf Industries Inc. to reflect
these developments. The Company does not have any plans, proposals,
arrangements or understandings with respect to future acquisitions.
(b) BUSINESS OF THE ISSUER
----------------------
CALGARY CHEMICAL
----------------
Wolf Industries Inc. carries out its present operations through a wholly
owned subsidiary company 714674 Alberta Ltd., operating as Calgary
Chemical. Calgary Chemical began operations in 1989 and has experienced
steady growth. In the fiscal year ending July 1996, its gross revenue was
Can. $1,029,150 (U.S. $744,345), with an operating profit before
compensation to the former owners and income taxes of approximately Can.
$310,000 (approximately U.S. $227,850).
The Company was founded in 1988 by William Bell, who had worked for NOWSCO,
a Canadian worldwide provider of services to oil and gas exploration firms.
Mr. Bell directed the creation of NOWSCO's in house custom blending
operations. Mr. Bell created Calgary Chemical because he perceived a
unique market niche for a company capable of custom blending oil and gas
lubricants for production companies.
Thus, Calgary Chemical's primary service is the custom blending of
chemicals for application in the production of oil and gas. The Company
provides dewaxing chemicals, scale inhibitors and demulsifying agents and
lubricants to its customers throughout Western Canada. In addition to
providing a custom blending service, Calgary Chemical carries quantities of
certain basic liquids, such as zylene, methanol and kerosene, in stock for
the immediate use of its customers and also provides a storage service to
its customers for their own blended products.
-2-
<PAGE>
The manner of the relationship among the Company and its customer is that
the custom blends are demanded by the production company whose ingredients
are subject to a confidentiality agreement in place. Formulas are
proprietary to the end-users. Raw materials are delivered to Calgary
Chemical who then provides the service of blending the formulas and
producing the finished product. It does not provide any chemical
production facilities. Nor does Calgary Chemical ship the finished
products. This is done by independent shippers.
The blending process was designed by the Company. In addition to the
blending and storage facility and office space, the Company has its own
laboratory facilities for testing its product and supporting customers'
special needs.
The raw materials used by the Company historically have been readily
available from a number of different suppliers. The pricing of these raw
materials historically has not been volatile, and the Company has no
significant supply contracts extending into the future.
The products used by the Company are toxic and some are hazardous, which
requires the Company to comply with local and provincial environmental and
fire protection standards. The Company takes strict precautions to
maintain compliance with regulatory environmental and safety standards. In
addition the Company is going to seek ISO 9002 certification.
The Company's current customer list comprises the majority of those that
have been customers since the Company's inception. The commitment to
servicing this customer base has resulted in customer loyalty, built
through the confidentiality with which each customer's recipes for chemical
blending are treated, combined with an accurate and timely service
delivery.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The most significant event of the fiscal year ended December 31, 1996, was
the share purchase agreement dated August 28, 1996, pursuant to which the
Company acquired all of the outstanding shares of its subsidiary 418297
Alberta Ltd. The result of this agreement was that the Company acquired
and assumed management of its custom chemical blending business, Calgary
Chemical. Where Calgary Chemical had a prolific business operation, it had
virtually no marketing plan or management strategy to facilitate growth.
Conversely, Wolf possessed limited business operations, but the ability to
envision and implement expanded operations for Calgary Chemical. The goal
was to merge the two companies in order to take advantage of the attributes
of each.
Calgary Chemical's results have been included from October 1, 1996, the
effective date of the acquisition. Calgary Chemical was a closely held
private corporation which had conducted operations for eight years prior to
its acquisition by Wolf Industries. Selected audited operating highlights
for the last three years are included as follows:
-3-
<PAGE>
(a) RESULTS OF OPERATION
--------------------
The pro forma comparative results of operations of the Company are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1997. Calgary Chemical's revenue from product sales
for the year ended July 31, 1996 was $744,345, a decrease of $29,628 for
the same period ended July 31, 1995. The cost of Calgary Chemical's
product sold for year ended July 31, 1996 was $377,247. A decrease over
the same period ended July 31, 1995 of $110,458. Calgary Chemical's gross
margin for the year ended July 31, 1996 was $367,098, an increase of
$80,830 over the same period ended July 31, 1995. All of the foregoing
figures are in U.S. dollars computed at a $0.735 exchange rate of CN $1.00.
Wolf Industries Inc.'s revenue from product sales for the short fiscal year
ended December 31, 1996, was $145,889. Revenue from product sales was
$229,464 for the six month period ended June 30, 1997. The cost of Wolf
Industries Inc.'s product sold for the short fiscal year ended
December 31, 1996 was $75,723. The cost of Wolf Industries Inc.'s cost
of product sold was $118,827 for the six month period ended June 30,
1997. The Company expects to increase revenue without further capital
investment, as a result of implementation of its marketing plan and
presently underutilized facilities. All of the foregoing figures are
in U.S. dollars computed at a $0.735 exchange rate of CN $1.00.
The Company expects that these revenues will continue and sales margins may
increase as the Company's business and accounting practices continue to
impact its operations.
-4-
<PAGE>
(b) CAPITAL RESOURCES
-----------------
Calgary Chemical's financial condition, prior to its acquisition by the
Company, was stable. Calgary had sufficient cash flow to pay its expenses.
Excess revenues were distributed to its owners as compensation. For the
fiscal years ended December 31, 1995 and December 31, 1996, Calgary
Chemical's financial position and results of its operations, were as
follows:
FY Ended FY Ended
July 31, 1996 July 31, 1995
------------- -------------
Current Assets $347,451 $284,208
Capital Assets $ 41,982 $ 59,709
Other Assets $ -0- $ -0-
-------- --------
Total Assets $389,433 $343,917
======== ========
Current Liabilities $146,517 $149,563
Long Term Debt $ -0- $ -0-
-------- --------
Total Liabilities $146,517 $149,563
======== ========
Common Shares $ 73 $ 73
Retained Earnings (Deficit) $242,843 $194,281
-------- --------
$242,916 $194,354
======== ========
Revenues $744,345 $773,973
Cost of Sales $377,247 $487,705
Expenses $225,412 $186,416
-------- --------
Income (Loss) Before Income Taxes $141,686 $ 99,852
======== ========
-5-
<PAGE>
The Company's current financial condition is stable. Wolf applies sound
business practices to pay its expenses and retains excess earnings to
accumulate capital. Wolf also has a goal of expanding through additional
capacity and a marketing plan. For the short fiscal year ending December
31, 1996, and as of June 30, 1997, the Company's financial position and
results of its operations, are as follows:
Three Months Ended Six Months Ended
December 31, 1996 June 30, 1997
Current Assets $ 222,106 $ 219,084
Capital Assets $ 271,258 $ 273,602
Other Assets $ 248,357 $ 239,183
---------- ---------
Total Assets $ 741,721 $ 731,869
========== =========
Current Liabilities $ 319,728 $ 357,974
Long Term Debt $ 109,807 $ 67,984
---------- ---------
Total Liabilities $ 429,535 $ 425,958
---------- =========
Common Shares $ 307,330 $ 324,830
Retained Earnings (deficit) $ 4,856 $ <18,919>
---------- ---------
$ 741,721 $ 731,869
========== =========
Revenues $ 145,889 $ 229,464
Cost of Sales $ 75,723 $ 118,827
Expenses $ 53,810 $ 139,212
---------- ---------
Income (Loss) Before $ 16,356 $ <28,575>
Income Taxes ========== =========
(c) LIQUIDITY.
---------
Calgary Chemical did not expend resources to increase revenues, but was
able to meet its obligations in a timely manner.
The Company has good banking relationships and creditworthiness and is
presently restructuring its long term debt; whereby the long term debt
obligations will require payments of approximately $15,300 per quarter.
Finally, the Company expects to raise additional capital through equity
investment.
Calgary Chemical did not expend funds on research and development. It did
not have any commitments for capital expenditures.
-6-
<PAGE>
The Company has not expended funds on research and development. The
Company does not have any commitments for capital expenditures and does not
anticipate any short term need to make capital expenditures in order to
maintain and increase operations. The Company has increased its number of
employees from three at December 31, 1996, to five, by recently adding an
office manager and a marketing officer.
Calgary Chemical did not seek capital infusions in return for equity but
rather realized cash flow from operations primarily. Historically this
cash flow was sufficient to meet its cash demands.
The Company has raised capital through the sale of securities in two
private placements. In January 1996, $100,000 ($0.01 per share) was raised
by selling 10,000,000 shares of common stock pursuant to a Regulation Rule
504 offering. In November 1996, Wolf Industries Inc. raised an additional
$266,150 ($.50 per share) by selling 532,300 shares of common stock also in
reliance upon Regulation D Rule 504. The Company has also realized cash
flow from operations. Historically, this cash flow has been sufficient to
meet current cash demands. The Company will investigate asset based bank
financing for the purpose of expanding operations, but these cash sources
are not needed for current cash needs. The Company will also investigate
debt or equity based financing for capital expansion.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's principal office is located at 4020, 7 Street, S.E., Calgary,
Alberta T2G 2Y8; phone no. (403) 543-0970; facsimile no. (403) 543-0977.
These premises are leased. The premises consist of an industrial warehouse
of 12,100 square feet, of which 1,750 is used as office space, and are
subject to a lease that expires December 31, 2001. The Company owns its
own blending and storage equipment, together with forklift trucks for use
on the Company's premises.
-7-
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
-----------------------------------------------
Number of Percentage of
Name and Address Shares Class
- ---------------- --------- -------------
John Donaldson (1) 2,150,000 20.4%
329 Brill Road, RR#1
Foster, Quebec
T2J 3N6, Canada
Chen Jih Hwee 900,000 8.5%
c/o Monarch Consulting Services, Inc.
7th Floor, Kalaw-Ledesma Condo.
117 Gamboa St., Legaspi Village
1229 Makati City, Metro Manila
Philippines
Clive P. H. Ng 900,000 8.5%
c/o Monarch Consulting Services, Inc.
7th Floor, Kalaw-Ledesma Condo.
117 Gamboa St., Legaspi Village
1229 Makati City, Metro Manila
Philippines
Ernesto Geromino 900,000 8.5%
c/o Monarch Consulting Services, Inc.
7th Floor, Kalaw-Ledesma Condo.
117 Gamboa St., Legaspi Village
1229 Makati City, Metro Manila
Philippines
Cheng Ming Lee 900,000 8.5%
c/o Monarch Consulting Services, Inc.
7th Floor, Kalaw-Ledesma Condo.
117 Gamboa St., Legaspi Village
1229 Makati City, Metro Manila
Philippines
Shiew Ming Moo 900,000 8.5%
c/o Monarch Consulting Services, Inc.
7th Floor, Kalaw-Ledesma Condo.
117 Gamboa St., Legaspi Village
1229 Makati City, Metro Manila
Philippines
(1) Does not include 147,300 shares beneficially owned by his son, James
Donaldson, a Director of the Registrant for which John Donaldson disclaims
any beneficial ownership.
-8-
<PAGE>
(b) SECURITY OWNERSHIP OF MANAGEMENT.
--------------------------------
Shares Percentage of Class
Blair Coady 700,000 (1) 6.6%
4020, 7 Street, SE
Calgary, Alberta, Canada
John Grove 150,000 (2) 1.4%
4020, 7 Street, SE
Calgary, Alberta, Canada
James Donaldson 147,300 (3) 1.4%
4020, 7 Street, SE
Calgary, Alberta, Canada
Combined Ownership of 997,300 9.5%
Management
(1) Consists of shares issuable upon exercise of options at $.50 per share.
Does not include 490,000 shares held by Christopher Coady, the brother of
Blair Coady, for which Blair disclaims beneficial ownership.
(2) Consists of shares issuable upon exercise of options at $.50 per share.
(3) Consists of 75,000 shares issuable upon exercise of options at $.50 per
share and 72,300 shares purchased in November 1996. Does not include
2,150,000 shares held by his father, John Donaldson, for which James
Donaldson disclaims beneficial ownership.
(c) CHANGES IN CONTROL.
------------------
Changes in control occurred in August 1996, when Blair Coady was appointed
the sole officer of the Company and a member of its Board of Directors. As
part of the change in control, Mavis Robinson, a former director and
officer, resigned. This occurred on March 19, 1997. At that time John
Grove joined the Board of Directors.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
(a) DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
The following are the names, positions, municipalities of residence and
relevant backgrounds of key personnel of the Corporation.
BLAIR COADY - (Age 55). Director, President and Secretary, Calgary,
Alberta.
OCTOBER 1992 THROUGH MARCH 1995. Chairman of the Board of Earthwhile
Developments Inc., a Canadian corporation involved in waste
management, specifically solvent recycling, bioremediation and
composting.
1985-1992. Chairman and Director of Calto Industries Ltd., a Canadian
corporation engaged in biomedical waste remediation and solvent
recycling.
-9-
<PAGE>
1978-1984. Director; 1978-1982 President of Terato Resources Ltd., a
Canadian public corporation engaged in the exploration, development
and production of oil and gas in Western Canada and the Southern
United States.
1966-1976. Partner, Director and Vice President in Bongard, Leslie &
Co., Ltd. a Canadian Investment Dealer and Brokerage firm.
JOHN EDWARD KENNETH GROVE - (Age 41). Director, Chairman of the Audit
Committee and Consultant, Calgary, Alberta.
SEPTEMBER 1994 TO PRESENT. Mr. Grove is Vice President, Vestiture
Corporation, a merger, acquisition and corporate finance firm.
APRIL 1991 TO AUGUST 1994. Mr. Grove was with Armada Development
Group and responsible for leasing 150,000 square feet of new strip
mall development.
JUNE 1988 TO AUGUST 1991. Mr. Grove was President and Director of CR-3
Express Ltd., a refrigerated transportation company which he
created, developed to an annual gross sales level of 7 million dollars
and then sold the company.
JULY 1985 TO FEBRUARY 1988. Mr. Grove was President and Director of
Hurricane Hydrocarbons Ltd., a public company of which he was one of
the founders and which he developed to a level of $600,000 gross
revenue per annum.
JULY 1983 TO JULY 1985. Mr. Grove was General Manager of Slant
Systems Ltd., a private oil and gas drilling company.
DECEMBER 1980 TO JUNE 1983. Mr. Grove was with H.C.I. Holdings Ltd.
of Toronto as an oil and gas analyst for that company and also Elliot
and Page.
SEPTEMBER 1978 TO NOVEMBER 1980. Bastion Drilling Ltd., President and
Director. Mr. Grove graduated from the University of Alberta in 1978
with a Bachelor of Commerce Degree.
JAMES DONALDSON - (Age 35). Director, Vancouver, British Columbia.
1991 TO PRESENT. Donegal Developments Ltd., Vancouver, B.C., Project
Manager. Mr. Donaldson supervises property evaluation programs
throughout the western hemisphere for this mining company.
1993-1995. Nicholson & Associates, Vancouver, B.C., Project
Manager/Exploration Technician. Mr. Donaldson supervised mining
exploration programs throughout the western hemisphere for this mining
company.
1987-1994. Goldon Mining Ltd., Delta, B.C., Geophysical Technician.
Mr. Donaldson performed geophysical surveys on mineral exploration
properties throughout Canada.
1985-1987. Freegold Recovery Inc., Vancouver, B.C., Mill
Technician/Geotechnician. Mr. Donaldson installed gravity
concentrating systems and conducted testing at various mining
operations.
1984-1985. Erana Mines Ltd., Lively, Ontario, Mill Technician. Mr.
Donaldson was responsible for installing, operating and maintaining
production plant equipment for this mining company.
-10-
<PAGE>
(b) SIGNIFICANT EMPLOYEES.
---------------------
IAN BUBIS - (Age 26). Calgary Chemical Plant Manager, Calgary, Alberta,
1994 to present. Mr. Bubis has extensive experience in the blending of
chemical formula and related plant operations. Mr. Bubis is an original
employee of Mr. Bill Bell, the founder of the Company. From 1990 to 1994,
Mr. Bubis was a self employed Equestrian Trainer.
(c) FAMILY RELATIONSHIPS.
--------------------
There are no family relationships to report.
(d) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
----------------------------------------
There are no legal proceedings to report.
ITEM 6. EXECUTIVE COMPENSATION
(a) SUMMARY COMPENSATION TABLE (omitted for simplicity)
--------------------------
Mr. Coady received $4,380 of compensation per month for November and
December of 1996, no other cash compensation was granted or paid in the
fiscal year ended December 31, 1996.
(b) OPTION/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS)
---------------------------------------------------------
The Company has a Management Stock Option Plan, described below. There
have been no other options granted.
(c) AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
--------------------------------------------------------------
OPTION/SAR VALUES
-----------------
There have been no exercises in the past fiscal year.
(d) LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
-------------------------------------------------------
In November 1996, the Company adopted the Wolf Exploration Inc. 1996
Directors and Officers Stock Option Plan (the "Plan") for its officers,
directors, key personnel and consultants of the one million shares
contributed to the Plan, Mr. Coady in November 1996, was awarded a five
year option to acquire 700,000 at $0.50 per share. In March 1997, Mr.
Grove received 150,000 options at $0.50 per share. Mr. Donaldson was
awarded 75,000 options at $0.50 per share in November 1996. The purpose of
the Plan is to advance the business and development of the Company and its
shareholders by affording to its Directors, Officers, Employees and
Consultants the opportunity to acquire a propriety interest in the Company
by the grant of Options.
-11-
<PAGE>
(e) COMPENSATION OF DIRECTORS
-------------------------
1. Standard Arrangements
---------------------
The members of the Company's Board of Directors are reimbursed for actual
expenses incurred in attending Board meetings.
2. Other Arrangements
------------------
There are no other arrangements.
(f) EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, CHANGE IN
-------------------------------------------------------------
CONTROL ARRANGEMENTS
--------------------
The terms are set forth in Mr. Coady's Employment Agreement. SEE Exhibit
E.2. These terms may be summarized as follows: Mr. Coady receives a
salary of $52,560 per annum and three weeks of paid vacation per annum.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) VESTITURE CORPORATION
---------------------
Mr. Grove is an Executive Vice President of Vestiture Corporation as well
as a director of Wolf Industries Inc. Vestiture Corporation was paid
$35,770 for brokering the transactions by which Mr. Bill Bell and Mr. J.T.
Bell sold their interests to Wolf Exploration in Calgary Chemicals. It was
further paid an additional $7,300 for arranging certain bank financing in
connection with the Bell transaction.
The Company's By-laws include a provision regarding RELATED PARTY
TRANSACTIONS which requires that each participant to such a transaction
identify all direct and indirect interests to be derived as a result of the
Company's entering into the related transaction. A majority of the
disinterested members of the board of directors must approve any Related
Party Transaction.
ITEM 8. LEGAL PROCEEDINGS
There are no legal proceedings involving the Company or its management.
ITEM 9. MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER
MATTERS
(a) MARKET INFORMATION
------------------
The Company's stock is not listed for sale on any exchange or trading
medium. However, certain of the Registrant's shareholders have made
private sale transactions through a broker-dealer in the Philippines. The
Company intends to seek the listing of its Common Stock on the NASD's OTC
Electronic Bulletin Board upon the effectiveness of this Form 10-SB. Until
such
-12-
<PAGE>
time, there is no public market for the Company's Common Stock. There are
options held by management to acquire 1,000,000 shares pursuant to the
stock option plan.
In January 1996, 10,000,000 shares were sold to individuals pursuant to
Rule 504 of Regulation D. Between November 1996, and April 1997, 532,300
shares were sold pursuant to Rule 504 of Regulation D to nine individuals.
As permitted by Rule 504 certificates for these securities were issued
without restrictive legends. However, 72,300 of these shares were
purchased by James Donaldson, a director of the Registrant and may only be
publicly sold pursuant to Rule 144.
(b) HOLDERS
-------
There are 66 holders of the Company's Common Stock.
(c) DIVIDENDS
---------
The Company has paid no dividends to date on its Common Stock. The Company
reserves the right to declare a dividend when operations merit.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, the Registrant sold securities which were not
registered under the Securities Act of 1933, as amended, as set forth
below.
The Registrant was not a reporting company pursuant to the Securities
Exchange Act of 1934 nor was it a development stage company with no
business plan. Thus it was eligible to rely upon Rule 504. Moreover, Rule
504 was available to the registrant in that the Company sold less than
$1,000,000.00 worth of securities in the previous 12 month period and the
purchasers were unaffiliated, sophisticated investors. Further, Rule 504
does not require the presentation of specified information prior to the
sale of the securities offered in reliance upon this rule.
Name of Purchaser Date Security (1) Total
- ----------------- ---- ------------ Consideration
-------------
Arden Saxon 1/27/96 490,000 $ 4,900
Mirian Chernoff 1/27/96 490,000 $ 4,900
Magic Trading Company 1/27/96 490,000 $ 4,900
411276 B.C. Ltd. 1/27/96 490,000 $ 4,900
John Donaldson (2) 1/27/96 2,150,000 $ 21,500
Chen Jih Hwee 1/27/96 900,000 $ 9,000
Clive P. H. Ng 1/27/96 900,000 $ 9,000
Charlie Chew 1/27/96 900,000 $ 9,000
-13-
<PAGE>
Ernesto Geromino 1/27/96 900,000 $ 9,000
Cheng Fong Lee 1/27/96 900,000 $ 9,000
Shiew Ming Moo 1/27/96 900,000 $ 9,000
Christopher C. Coady (3) 1/27/96 490,000 $ 4,900
411276 B.C. Ltd. 11/1/96 300,000 $150,000
Brian Heaney 11/1/96 100,000 $ 50,000
L.C.M. Equity, Inc. 11/1/96 25,000 $ 12,500
James Donaldson (2) 11/1/96 72,300 $ 36,150
Orest Sherban and
Jeri Sherban 3/31/97 20,000 $ 10,000
Paul Gomery 3/31/97 5,000 $ 2,500
Donald Patterson and
David Patterson 4/30/97 10,000 $ 5,000
(1) All securities are common stock.
(2) John Donaldson is the father of James Donaldson, a director of the
Registrant. James Donaldson disclaims any beneficial ownership in the
shares owned by his father.
(3) Christopher C. Coady is the brother of Blair Coady a director of the
Registrant. Blair Coady disclaims any beneficial ownership in the shares
owned by his brother.
With respect to the sales made, the Company or its affiliates relied on
Regulation D, Rule 504 and Section 4(2) of the Securities Act of 1933, as
amended as the exemption from the registration requirements of said Act.
ITEM 11. DESCRIPTION OF SECURITIES
COMMON STOCK: The Company is authorized to issue up to 200,000,000 shares
of its $0.001 par value common stock. Each share is entitled to one vote
on matters submitted to a vote of the shareholders of the Company. There
is no cumulative voting of the common stock. The common stock shares have
no redemption provisions nor any preemptive rights.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 11 of the Company's By-laws provides that every person who was or
is a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or a person for whom he is the
legal representative is or was a director or officer of the corporation or
is or was serving at the request of the corporation or for its benefit as
a director or officer of another corporation, or as its representative in
a partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless to the fullest extent legally permissible
under the General
-14-
<PAGE>
Corporation Law of the State of Nevada against all expenses, liability and
loss (including attorney's fees, judgments, fines and amounts paid or to be
paid in settlement) reasonably incurred or suffered by him in connection
therewith.
ITEM. 13. FINANCIAL STATEMENTS.
The Financial Statements are presented immediately after the signature page
and include:
(i) Consolidated Financial Statements of
Wolf Industries Inc. for Fiscal Year
Ended December 31, 1996
(ii) Interim Consolidated Financial Statements
for the Period Ended June 30, 1997 - Unaudited
(iii) Financial Statements of 418297 Alberta Ltd.
(o/a Calgary Chemicals);
For the period ended July 31, 1995 -- Audited;
For the period ended July 31, 1996 -- Audited; and
For the two month period ended September 30, 1996, -- Audited.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no disagreements on accounting and financial disclosures
from the inception of the Company through the date of this Registration
Statement.
ITEM 15. INDEX TO EXHIBITS
PAGE
2. (i) The Bell Purchase Agreement*
3. (i) Articles of Incorporation*
(ii) Bylaws*
10. Material Contracts
(i) Employment Agreement Among Mr. Blair
Coady and Wolf Industries Inc.*
(ii) The Management Stock Option Plan*
21. (i) Subsidiaries of the Registrant*
27. (i) Financial Data Schedule*
* Previously submitted.
-15-
<PAGE>
WOLF INDUSTRIES INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the period ended December 31, 1996
16
<PAGE>
AUDITORS' REPORT
To the Shareholders of Wolf Industries Inc.
We have audited the consolidated balance sheet of Wolf Industries Inc. as
at December 31, 1996 and the consolidated statements of income,
shareholders' equity and cash flows for the period then ended. These
consolidated financial statements are the responsibility of the
corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of Wolf Industries Inc. as at
December 31, 1996 and the results of its operations and the changes in its
cash flow for the period then ended in accordance with generally accepted
accounting principles in Canada.
Calgary, Alberta /s/ DICK COOK SCHULLI
March 20, 1997 CHARTERED ACCOUNTANTS
17
<PAGE>
WOLF INDUSTRIES INC.
CONSOLIDATED BALANCE SHEET
As at December 31, 1996
(Note 1)
ASSETS
CURRENT
Cash and short-term deposits $ 58,625
Accounts receivable 117,519
Inventory 36,593
Prepaid expenses 9,369
----------
222,106
CAPITAL - Note 3 271,258
EXCESS OF COST OVER NET IDENTIFIABLE ASSETS
ACQUIRED - Note 4 248,357
----------
$ 741,721
==========
LIABILITIES
CURRENT
Demand bank loan - Note 5 $ 65,430
Accounts payable and accrued liabilities 112,380
Income taxes payable 15,653
Current portion of long-term debt - Note 6 126,265
----------
319,728
LONG-TERM DEBT - Note 6 109,807
----------
429,535
----------
SHAREHOLDERS' EQUITY
COMMON SHARES - Note 7 307,330
RETAINED EARNINGS 4,856
----------
312,186
----------
$ 741,721
==========
SEE ACCOMPANYING NOTES
18
<PAGE>
WOLF INDUSTRIES INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the period ended December 31, 1996
(Note 1)
<TABLE>
<CAPTION>
COMMON SHARES ADDITIONAL
--------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET INCOME - $ - $ - $ 4,856 $ 4,856
COMMON SHARES ISSUED,
net of issue costs 10,497,300 10,497 296,833 - 307,330
---------- ---------- ---------- ---------- ----------
10,497,300 $ 10,497 $ 296,833 $ 4,856 $ 312,186
========== ========== ========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES
19
<PAGE>
WOLF INDUSTRIES INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
For the period ended December 31, 1996
(Note 1)
REVENUE
Product sales $ 145,889
Cost of goods sold 75,723
----------
GROSS MARGIN 70,166
----------
EXPENSES
Amortization 12,440
Administration 11,613
Executive compensation 16,708
Interest on long-term debt 1,478
Rent 11,571
----------
53,810
----------
INCOME FROM OPERATIONS 16,356
INCOME TAXES 11,500
----------
NET INCOME REPRESENTING RETAINED EARNINGS,
END OF PERIOD $ 4,856
==========
SEE ACCOMPANYING NOTES
20
<PAGE>
WOLF INDUSTRIES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended December 31, 1996
(Note 1)
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net income $4,856
Amortization 12,440
----------
17,296
Changes in working capital:
Accounts receivable 15,073
Inventory 16,797
Prepaid expenses (5,821)
Demand bank loan 65,430
Accounts payable 58,434
Income taxes payable 11,500
----------
178,709
----------
FINANCING ACTIVITIES
Issue of common shares 348,650
Share issue costs (41,320)
Long-term borrowings 134,500
Repayments of long-term debt (7,477)
----------
434,353
----------
INVESTING ACTIVITIES
Purchase of 418297 Alberta Ltd.
(o/a Calgary Chemicals) (663,487)
Vendor loan on acquisition - Note 6 109,050
----------
(554,437)
----------
INCREASE IN CASH REPRESENTING CASH, END OF PERIOD $ 58,625
==========
SEE ACCOMPANYING NOTES
21
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period ended December 31, 1996
NOTE 1 - OPERATIONS, ACQUISITION AND AMALGAMATION
Wolf Exploration Inc. was incorporated under corporate charter of
the State of Nevada on January 4, 1996. Active operations
commenced on July 10, 1996 and these financial statements are for
the period July 10, 1996 to December 31, 1996. On March 17,
1997, Wolf Exploration Inc. changed its name to Wolf Industries
Inc.
The corporation's primary business activity is the blending of
chemicals for use in oilfield production from the corporation's
plant in Calgary, Alberta, Canada.
The consolidated financial statements of the corporation are
prepared in accordance with Canadian generally accepted
accounting principles and conform in all material respects with
accounting principles generally accepted in the United States
(see Note 10). Amounts are stated in U.S. dollars unless
otherwise noted.
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that reflect the reported amounts
of assets, liabilities, revenues, expenses and related
disclosures.
Pursuant to a share purchase agreement, dated August 28, 1996,
with an effective date of September 30, 1996, the corporation,
through a wholly-owned subsidiary, 708213 Alberta Ltd., acquired
all the outstanding shares of 418297 Alberta Ltd. (o/a Calgary
Chemicals). On October 30, 1996, 708213 Alberta Ltd. and 418297
Alberta Ltd. were amalgamated to form 714674 Alberta Ltd. 714674
now carries on business as Calgary Chemicals.
A summary of the net assets acquired and consideration given are
as follows:
NET ASSETS ACQUIRED:
Current assets $ 189,530
Capital assets 279,701
Current liabilities (58,097)
------------
411,134
------------
CONSIDERATION GIVEN:
Cash 554,437
Vendor loan payable 109,050
------------
663,487
============
EXCESS OF COST OVER
NET IDENTIFIABLE
ASSETS ACQUIRED $ 252,353
============
Included in the consideration are consulting fees paid to the
former principal shareholders of 418297 Alberta Ltd. as part of
the purchase agreement in the amount of $11,632. In addition,
fees were paid to consultants in the amount of $35,290.
22
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period ended December 31, 1996
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
(a) CONSOLIDATION
These financial statements include the accounts of the
corporation and its wholly-owned subsidiary, 714674 Alberta
Ltd. (o/a Calgary Chemicals).
(b) EXCESS OF COST OVER NET IDENTIFIABLE ASSETS ACQUIRED
The excess of cost over net identifiable assets acquired is
being amortized on a straight-line over ten years.
(c) CAPITAL ASSETS
Capital assets are recorded at cost. Amortization is
provided to apportion the assets over their estimated useful
lives at the following annual rates:
Equipment 30% declining balance
Processing equipment 10% declining balance
Furniture and fixtures 20% declining balance
(d) REVENUE RECOGNITION
Revenue earned on the blending of chemicals is recorded on
the completed contract basis.
(e) FOREIGN CURRENCY TRANSLATION
Substantially all of the corporation's activities are
carried out through the Canadian subsidiary, a self-sustaining
unit. The corporation uses the current rate method
whereby all assets and liabilities are translated at
exchange rates prevailing at the year-end and revenue and
expense items at average exchange rates for the year.
Translation adjustments arising from changes in exchange
rates form part of the change in the foreign currency
translation adjustment component of shareholders equity.
These adjustments are not included in operations until
realized through a reduction in the corporation's net
investment in such operations.
(f) INCOME TAXES
The corporation follows the tax deferral method in providing
for income taxes, whereby the income tax provision is based
on the income reported in the accounts. Under this method,
deferred income taxes arise as a result of providing for
amortization for income tax purposes on a different basis
than for accounting purposes. Deferred income taxes are
provided for on these differences at current income tax
rates. The excess of cost over net identifiable assets
acquired on the acquisition of the corporation's subsidiary
is not deductible for income tax purposes.
23
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period ended December 31, 1996
NOTE 3 - CAPITAL ASSETS
Accumulated Net Book
Cost Amortization Value
--------- ------------ --------
Equipment $ 27,700 $ 2,079 $ 25,621
Processing equipment 249,456 6,236 243,220
Furniture and fixtures 2,545 128 2,417
--------- --------- ---------
$ 279,701 $ 8,443 $ 271,258
========= ========= =========
NOTE 4 - EXCESS OF COST OVER NET IDENTIFIABLE ASSETS ACQUIRED
Excess of cost over net identifiable
assets acquired in acquisition $ 252,353
acquisition of 714674 Alberta Ltd.
(o/a Calgary Chemicals).
Less accumulated amortization (3,996)
----------
$ 248,357
==========
NOTE 5 - DEMAND BANK LOAN
The corporation has arranged a revolving credit facility bearing
interest at the bank's prime rate plus 1 1/4%, secured by a
general security agreement and a fixed charge on specific capital
assets.
NOTE 6 - LONG-TERM DEBT
Term bank loan requiring monthly $ 127,022
payments of $3,736 plus interest at
the bank's prime rate plus 1 3/4%
secured by a general security
agreement and postponement of the
vendor loan payable.
Vendor loan payable, requiring payments 109,050
of $7,270 per month for sixteen months
including interest at 9.4% ----------
236,072
Less current portion 126,265
----------
$ 109,807
==========
- CONTINUED -
24
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period ended December 31, 1996
NOTE 6 - LONG-TERM DEBT - CONTINUED
At the option of the vendor, the remaining principal of the
vendor loan payable may be converted into common stock using a
price of 1.2 times the first private or public offering price for
the common stock.
The future principal repayments required on long-term debt, for
the next twelve month period, are as follows:
1997 $ 126,265
1998 $ 72,449
1999 $ 37,358
NOTE 7 - COMMON SHARES
Authorized:
200,000,000 common shares
NUMBER AMOUNT
---------- ----------
Issued and outstanding:
On incorporation 10,000,000 $ 100,000
Private placement 497,300 248,650
---------- ----------
10,497,300 348,650
Less share issue costs - (41,320)
---------- ----------
10,497,300 $ 307,330
========== ==========
The corporation issued the share certificates for the private
placement after the year-end. At December 31, 1996, the
corporation has granted options to acquire 700,000 common shares
at $0.50 per share. These options expire November 30, 2001.
NOTE 8 - INCOME TAXES
The differences between the effective tax rate of the amounts
recorded and the amounts computed by applying the statutory
Canadian income tax rate to the income before income taxes are as
follows:
RATE AMOUNT
---------- ----------
Basic rate applied to
pre-tax income 46% $ 7,360
Increase in tax resulting from
accounting amortization in
excess of tax depreciation 24% 4,140
---------- ----------
70% $ 11,500
========== ==========
25
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the period ended December 31, 1996
NOTE 9 - COMMITMENT
The corporation has entered into a premises lease, expiring
January 31, 2002, requiring a yearly base rental payment of
$45,900.
NOTE 10 - UNITED STATES ACCOUNTING PRINCIPLES
The consolidated financial statements are prepared in accordance
with Canadian generally accepted accounting principles and for
the period ending December 31, 1996. There are no material
differences between Canadian Generally Accepted Accounting
Principles and United States Generally Accepted Accounting
Principles.
26
<PAGE>
WOLF INDUSTRIES INC.
Interim Consolidated Financial Statements
For the period ended June 30, 1997
(Unaudited)
27
<PAGE>
WOLF INDUSTRIES INC.
CONSOLIDATED BALANCE SHEET
As at
(Unaudited)
JUNE 30,
1997
----------
(Note 10)
ASSETS
CURRENT
Cash and short-term deposits $ 66,005
Accounts receivable 85,740
Inventory 54,869
Prepaid expenses 12,470
----------
219,084
CAPITAL (Note 3) 273,602
EXCESS OF COST OVER NET IDENTIFIABLE
ASSETS ACQUIRED (Note 4) 239,183
----------
$ 731,869
==========
LIABILITIES
CURRENT
Demand bank loan (Note 5) $ 90,875
Accounts payable and accrued
liabilities 129,981
Income taxes payable 10,853
Current portion of long-term debt (Note 6) 126,265
----------
357,974
LONG-TERM DEBT (Note 6) 67,984
----------
425,958
----------
SHAREHOLDERS' EQUITY
COMMON SHARES (Note 7) 324,830
DEFICIT (18,919)
----------
305,911
----------
$ 731,869
==========
28
<PAGE>
WOLF INDUSTRIES INC.
INTERIM CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the period ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
COMMON SHARES ADDITIONAL
--------------------- PAID-IN
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
---------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, beginning of period 10,522,300 $ 10,522 $ 309,308 $ (3,504) $ 316,326
COMMON SHARES ISSUED,
net of issue costs 10,000 10 4,990 - 5,000
NET LOSS - - - (15,415) (15,415)
---------- ---------- ---------- ---------- ----------
BALANCE, end of period 10,532,300 $ 10,532 $ 314,298 $ (18,919) $ 305,911
========== ========== ========== ========== ==========
</TABLE>
29
<PAGE>
WOLF INDUSTRIES INC.
INTERIM CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
(Unaudited)
SIX MONTHS
ENDED
JUNE 30,
1997
-----------
(Note 10)
REVENUE
Product sales $ 229,464
Cost of goods sold 118,827
----------
GROSS MARGIN 110,637
----------
EXPENSES
Amortization 31,330
Administration and marketing 58,168
Executive compensation 22,530
Interest on long-term debt 5,273
Rent 21,911
----------
139,212
----------
LOSS FROM OPERATIONS (28,575)
INCOME TAXES RECOVERED 4,800
----------
NET LOSS (23,775)
RETAINED EARNINGS (DEFICIT),
beginning of period 4,856
----------
DEFICIT, end of period $ (18,919)
==========
30
<PAGE>
WOLF INDUSTRIES INC.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
SIX MONTHS
ENDED
JUNE 30,
1997
-----------
(Note 10)
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net loss $ (23,775)
Amortization 31,330
----------
7,555
Changes in working capital:
Accounts receivable 31,779
Inventory (18,276)
Prepaid expenses (3,101)
Demand bank loan 25,445
Accounts payable 17,601
Income taxes payable (4,800)
----------
56,203
----------
FINANCING ACTIVITIES
Issue of common shares 17,500
Repayments of long-term debt (41,823)
----------
(24,323)
----------
INVESTING ACTIVITIES
Purchase of capital assets (20,000)
Purchase of 418297 Alberta Ltd.
(o/a Calgary Chemicals) (4,500)
----------
(24,500)
----------
INCREASE IN CASH 7,380
CASH, beginning of period 58,625
----------
CASH, end of period $ 66,005
==========
31
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended June 30, 1997
(Unaudited)
NOTE 1 - OPERATIONS, ACQUISITION AND AMALGAMATION
Wolf Exploration Inc. was incorporated under corporate charter of
the State of Nevada on January 4, 1996. Active operations
commenced on July 10, 1996. On March 17, 1997, Wolf Exploration
Inc. changed its name to Wolf Industries Inc.
The corporation's primary business activity is the blending of
chemicals for use in oilfield production from the corporation's
plant in Calgary, Alberta, Canada.
The interim consolidated financial statements of the corporation
are prepared in accordance with Canadian generally accepted
accounting principles and conform in all material respects with
accounting principles generally accepted in the United States
(see Note 10). Amounts are stated in U.S. dollars unless
otherwise noted.
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to
make estimates and assumptions that reflect the reported amounts
of assets, liabilities, revenues, expenses and related
disclosures.
Pursuant to a share purchase agreement, dated August 28, 1996,
with an effective date of September 30, 1996, the corporation,
through a wholly-owned subsidiary, 708213 Alberta Ltd., acquired
all the outstanding shares of 418297 Alberta Ltd. (o/a Calgary
Chemicals). On October 30, 1996, 708213 Alberta Ltd. and 418297
Alberta Ltd. were amalgamated to form 714674 Alberta Ltd. 714674
now carries on business as Calgary Chemicals.
A summary of the total net assets acquired and consideration
given are as follows:
NET ASSETS ACQUIRED:
Current assets $ 189,530
Capital assets 279,701
Current liabilities (58,097)
------------
411,134
------------
CONSIDERATION GIVEN:
Cash 558,937
Vendor loan payable 109,050
------------
667,987
============
EXCESS OF COST OVER NET
IDENTIFIABLE
ASSETS ACQUIRED $ 256,853
============
- CONTINUED -
32
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended June 30, 1997
(Unaudited)
NOTE 1 - OPERATIONS, ACQUISITION AND AMALGAMATION - CONTINUED
Of the excess cost, $4,500 relates to additional expenses
incurred during the period ending June 30, 1997. The balance
relates to the year ending December 31, 1996.
Included in the consideration were consulting fees paid to the
former principal shareholders of 418297 Alberta Ltd. as part of
the purchase agreement in the amount of $11,632. In addition,
fees were paid to consultants in the amount of $35,290.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
(a) CONSOLIDATION
These financial statements include the accounts of the
corporation and its wholly-owned subsidiary, 714674 Alberta
Ltd. (o/a Calgary Chemicals).
(b) EXCESS OF COST OVER NET IDENTIFIABLE ASSETS ACQUIRED
The excess of cost over net identifiable assets acquired is
being amortized on a straight-line over ten years.
(c) CAPITAL ASSETS
Capital assets are recorded at cost. Amortization is
provided to apportion the assets over their estimated useful
lives at the following annual rates:
Equipment 30% declining balance
Processing equipment 10% declining balance
Furniture and fixtures 20% declining balance
Leasehold improvements 5 years straight-line
(d) REVENUE RECOGNITION
Revenue earned on the blending of chemicals is recorded on
the completed contract basis.
- CONTINUED -
33
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended June 30, 1997
(Unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
(e) FOREIGN CURRENCY TRANSLATION
Substantially all of the corporation's activities are
carried out through the Canadian subsidiary, a self-sustaining
unit. The corporation uses the current rate method
whereby all assets and liabilities are translated at
exchange rates prevailing at the year-end and revenue and
expense items at average exchange rates for the year.
Translation adjustments arising from changes in exchange
rates form part of the change in the foreign currency
translation adjustment component of shareholders equity.
These adjustments are not included in operations until
realized through a reduction in the corporation's net
investment in such operations.
(f) INCOME TAXES
The corporation follows the tax deferral method in providing
for income taxes, whereby the income tax provision is based
on the income reported in the accounts. Under this method,
deferred income taxes arise as a result of providing for
amortization for income tax purposes on a different basis
than for accounting purposes. Deferred income taxes are
provided for on these differences at current income tax
rates. The excess of cost over net identifiable assets
acquired on the acquisition of the corporation's subsidiary
is not deductible for income tax purposes.
NOTE 3 - CAPITAL ASSETS
JUNE 30, DECEMBER 31,
1997 1996
------------------------------ --------
Accumulated Net Book Net Book
Cost Amortization Value Value
-------- ------------ -------- --------
Equipment $ 27,700 $ 4,000 $ 23,700 $ 25,621
Processing equipment 249,456 12,317 237,139 243,220
Furniture and fixtures 7,506 372 7,134 2,417
Leasehold improvements 6,362 159 6,203 -
-------- -------- -------- --------
$291,024 $ 16,848 $274,176 $271,258
======== ======== ======== ========
34
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended June 30, 1997
(Unaudited)
NOTE 4 - EXCESS OF COST OVER NET IDENTIFIABLE ASSETS ACQUIRED
JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
Excess of cost over net $ 256,853 $ 252,353
identifiable assets acquired
in acquisition of 714674
Alberta Ltd. (o/a Calgary
Chemicals).
Less accumulated amortization (10,437) (3,996)
---------- ----------
$ 246,416 $ 248,357
========== ==========
NOTE 5 - DEMAND BANK LOAN
The corporation has arranged a revolving credit facility bearing
interest at the bank's prime rate plus 1 1/4%, secured by a
general security agreement and a fixed charge on specific capital
assets.
NOTE 6 - LONG-TERM DEBT
JUNE 30, DECEMBER 31,
1997 1996
---------- ----------
Term bank loan requiring monthly $ 115,815 $ 127,022
payments of $3,736 plus interest
at the bank's prime rate plus
1 3/4% secured by a general
security agreement and
postponement of the vendor
loan payable.
Vendor loan payable, requiring 95,294 109,050
payments of $7,270 per month
for sixteen months with interest
imputed at 9.4% ---------- ----------
211,109 236,072
Less current portion 126,265 126,265
---------- ----------
$ 84,844 $ 109,807
========== ==========
At the option of the vendor, the remaining principal of the
vendor loan payable may be converted into common stock using a
price of 1.2 times the first private or public offering price for
the common stock.
- CONTINUED -
35
<PAGE>
WOLF INDUSTRIES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the period ended June 30, 1997
(Unaudited)
NOTE 6 - LONG-TERM DEBT - CONTINUED
The future principal repayments required on long-term debt, for
the next twelve month period, are as follows:
1998 $ 126,265
1999 $ 84,844
NOTE 7 - COMMON SHARES
Authorized:
200,000,000 common shares
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996
--------------------- ---------------------
Number Amount Number Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Issued and outstanding:
Balance, beginning
of period 10,497,300 $ 307,330 - $ -
Issued on
incorporation - - 10,000,000 100,000
Private placements 25,000 12,500 497,300 248,650
---------- ---------- ---------- ----------
10,522,300 319,830 10,497,300 348,650
Less share issue costs - - - (41,320)
---------- ---------- ---------- ----------
Balance, end of period 10,522,300 $ 319,830 10,497,300 $ 307,330
========== ========== ========== ==========
</TABLE>
NOTE 8 - COMMITMENT
The corporation has entered into a premises lease, expiring
January 31, 2002, requiring a yearly base rental payment of
$45,900.
NOTE 9 - UNITED STATES ACCOUNTING PRINCIPLES
The interim consolidated financial statements are prepared in
accordance with Canadian generally accepted accounting principles
and for the period ending June 30, 1997. There are no material
differences between Canadian Generally Accepted Accounting
Principles and United States Generally Accepted Accounting
Principles.
NOTE 10 - PRESENTATION
The unaudited interim consolidated financial statements are for
the period January 1, 1997 to June 30, 1997.
36
<PAGE>
418297 ALBERTA LTD.
(o/a Calgary Chemicals)
Financial Statements
(Expressed in U.S. Dollars)
For the period ended September 30, 1996 and for the years ended
July 31, 1996 and 1995
37
<PAGE>
AUDITORS' REPORT
To the Board of Directors and Stockholders of 418297 Alberta Ltd. (o/a
Calgary Chemicals):
We have audited the balance sheet of 418297 Alberta Ltd. (o/a Calgary
Chemicals) as at September 30, 1996, July 31, 1996 and July 31, 1995 and
the statements of income, stockholders' equity and changes in financial
position for the period and years then ended except as to Note 6, which is
unaudited and as of September 24, 1997. These financial statements are the
responsibility of the corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of 418297 Alberta Ltd. (o/a Calgary
Chemicals) as at September 30, 1996, July 31, 1996 and July 31, 1995 and
the results of its operations and the changes in its financial position for
the period and years then ended in accordance with generally accepted
accounting principles in Canada.
Calgary, Alberta /s/ DICK COOK SCHULLI
September 24, 1997 CHARTERED ACCOUNTANTS
38
<PAGE>
418297 ALBERTA LTD.
(o/a Calgary Chemicals)
BALANCE SHEET
(Expressed in U.S. Dollars)
AS AT AS AT AS AT
SEPTEMBER 30, JULY 31, JULY 31,
1996 1996 1995
---------- --------- ----------
ASSETS
CURRENT
Cash and short-term deposits $ 7,270 $ 155,994 $ 77,726
Accounts receivable 129,449 124,019 160,109
Inventory 53,389 63,168 42,254
Prepaid expenses 3,548 4,270 4,119
---------- ---------- ----------
193,656 347,451 284,208
CAPITAL - Note 2 39,870 41,982 59,709
---------- ---------- ----------
$ 233,526 $ 389,433 $ 343,917
========== ========== ==========
LIABILITIES
CURRENT
Accounts payable and
accrued liabilities $ 53,260 $ 40,196 $ 52,775
Income taxes payable 4,153 23,940 8,017
Management bonus payable - 82,381 56,706
Due to shareholders - - 32,065
---------- ---------- ----------
57,413 146,517 149,563
---------- ---------- ----------
STOCKHOLDERS' EQUITY
COMMON STOCK - Note 3 73 73 73
RETAINED EARNINGS 176,040 242,843 194,281
---------- ---------- ----------
176,113 242,916 194,354
---------- ---------- ----------
$ 233,526 $ 389,433 $ 343,918
========== ========== ==========
39
<PAGE>
418297 ALBERTA LTD.
(o/a Calgary Chemical)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Expressed in U.S. Dollars)
For the period ended September 30, 1996 and the years ended
July 31, 1996 and 1995
<TABLE>
<CAPTION>
COMMON SHARES ADDITIONAL RETAINED
--------------------- PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
-------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
BALANCE, July 31, 1994 100 $ 73 $ - $ 113,351 $ 113,424
Net income - - - 80,930 80,930
---------- ---------- ---------- ---------- ----------
BALANCE, July 31, 1995 100 73 - 113,992 194,354
Net income - - - (65,430) 113,992
Dividends - - - 242,843 (65,430)
---------- ---------- ---------- ---------- ----------
BALANCE, July 31, 1996 100 73 - 242,843 242,916
Net income - - - 17,319 17,319
Dividends - - - (84,122) (84,122)
---------- ---------- ---------- ---------- ----------
BALANCE,
September 30, 1996 100 $ 73 $ - $ 176,040 $ 176,113
========== ========== ========== ========== ==========
</TABLE>
40
<PAGE>
418297 ALBERTA LTD.
(o/a Calgary Chemicals)
STATEMENT OF EARNINGS AND RETAINED EARNINGS
(Expressed in U.S. Dollars)
TWO MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, JULY 31,
1996 1996 1995
---------- ---------- ----------
REVENUE
Product sales $ 97,250 $ 744,345 $ 773,973
COST OF GOODS SOLD 55,389 377,247 487,705
---------- ---------- ----------
GROSS MARGIN 41,861 367,099 286,268
---------- ---------- ----------
EXPENSES
Amortization 2,112 18,016 18,345
Administration 16,456 79,780 78,461
Management bonus - 82,381 56,706
Rent 1,820 45,236 32,903
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 21,472 141,686 99,852
INCOME TAXES 4,153 27,694 18,922
---------- ---------- ----------
NET INCOME 17,319 113,992 80,930
RETAINED EARNINGS,
beginning of year 242,843 194,281 113,351
DIVIDENDS (84,122) (65,430) -
---------- ---------- ----------
RETAINED EARNINGS, END OF YEAR $ 176,040 $ 242,843 $ 194,284
========== ========== ==========
Supplemental unaudited pro-forma
net income - Note 6 $ 6,995 $ 94,963 $ 57,496
========== ========== ==========
41
<PAGE>
418297 ALBERTA LTD.
(o/a Calgary Chemicals)
STATEMENT OF CHANGES IN FINANCIAL POSITION
(Expressed in U.S. Dollars)
TWO MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, JULY 31,
1996 1996 1995
---------- ---------- ----------
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net income $ 17,319 $ 113,992 $ 80,930
Amortization 2,112 18,016 18,345
---------- ---------- ----------
19,431 132,008 99,275
Change in working capital
items:
Accounts receivable (5,430) 36,090 (69,104)
Inventory 9,778 (20,914) (21,394)
Prepaid expenses 723 (150) (744)
Accounts payable and
accrued liabilities 13,064 (12,579) 27,214
Income taxes payable (19,787) 15,923 (15,356)
Management bonus payable (82,381) 25,675 727
---------- ---------- ----------
(64,602) 176,052 20,618
---------- ---------- ----------
FINANCING ACTIVITIES
Repayment of shareholder
advances - (32,065) (4,135)
Dividends (84,122) (65,430) -
---------- ---------- ----------
(84,122) (97,495) (4,135)
---------- ---------- ----------
INVESTING ACTIVITIES
Purchase of capital assets - (289) (28,335)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH (148,724) 78,268 (11,853)
CASH, beginning of period 155,994 77,727 89,579
---------- ---------- ----------
CASH, end of period $ 7,270 $ 155,994 $ 77,727
========== ========== ==========
42
<PAGE>
418927 ALBERTA LTD.
(o/a Calgary Chemicals)
NOTES TO FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
For the period ended September 30, 1996 and for the years
ended July 31, 1996 and 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
(a) CAPITAL ASSETS
Capital assets are recorded at cost. Amortization is
provided to apportion the assets over their estimated useful
lives at the following annual rates:
Equipment 30% declining balance
Processing equipment 10% declining balance
Furniture and fixtures 20% declining balance
(b) REVENUE RECOGNITION
Revenue earned on the blending of chemicals is recorded on
the completed contract basis.
(c) CURRENCY
The corporation's operating activities are carried on in
Calgary, Alberta, Canada. The accompanying financial
statements have been converted into U.S. funds using the
average exchange rate outstanding in the year for operations
and the year-end exchange rate for balance sheet items.
(c) INCOME TAXES
The corporation follows the tax deferral method in providing
for income taxes, whereby the income tax provision is based
on the income reported in the accounts
NOTE 2 - CAPITAL ASSETS
SEPTEMBER 30, 1996
-----------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
---------- ------------ ----------
Equipment $ 9,851 $ 7,122 $ 2,729
Processing equipment 126,809 90,028 36,781
Furniture and fixtures 1,898 1,898 360
---------- ---------- ----------
$ 138,558 $ 98,688 $ 39,870
========== ========== ==========
- C o n t i n u e d -
43
<PAGE>
418927 ALBERTA LTD.
(o/a Calgary Chemicals)
NOTES TO FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
For the period ended September 30, 1996 and for the years
ended July 31, 1996 and 1995
NOTE 2 - CAPITAL ASSETS - CONTINUED
JULY 31, 1996
-----------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
---------- ------------ ----------
Equipment $ 9,851 $ 6,979 $ 2,872
Processing equipment 126,809 88,091 38,718
Furniture and fixtures 1,898 1,506 392
---------- ---------- ----------
$ 138,558 $ 96,576 $ 41,982
========== ========== ==========
JULY 31, 1995
-----------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
---------- ------------ ----------
Equipment $ 9,851 $ 5,748 $ 4,103
Processing equipment 126,809 71,500 55,020
Furniture and fixtures 1,898 1,312 586
---------- ---------- ----------
$ 138,558 $ 78,560 $ 59,709
========== ========== ==========
NOTE 3 - COMMON SHARES
Authorized:
Unlimited number of:
Class A, B and C common voting shares
Class D, E and F common non-voting shares
Class G, H and I preferred shares
NUMBER AMOUNT
------ ------
Issued:
Class A 100 $ 73
========== ==========
44
<PAGE>
418927 ALBERTA LTD.
(o/a Calgary Chemicals)
NOTES TO FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
For the period ended September 30, 1996 and for the years
ended July 31, 1996 and 1995
NOTE 4 - UNITED STATES ACCOUNTING PRINCIPLES
The financial statements are prepared in accordance with Canadian
Generally Accepted Accounting Principles for the period ended
September 30, 1996 and for the years ended July 31, 1996 and
1995. There are no material differences between Canadian
Generally Accepted Accounting Principles and United States
Generally Accepted Accounting Principles.
NOTE 5 - SUBSEQUENT EVENTS
Pursuant to a share purchase agreement dated August 28, 1996 with
an effective date of September 30, 1996, all of the corporation's
outstanding shares were effectively acquired by Wolf Industries
Inc. for $667,987 ($912,637 Cdn.). The purchase price was
satisfied by the prior shareholders taking all of the receivables
$129,449, receiving cash of $429,488 and having a loan payable by
Wolf of $109,050.
NOTE 6 - SUPPLEMENTAL UNAUDITED PRO-FORMA NET INCOME
The pro-forma net income figures for the two years ended
July 31, 1996 and 1995 and the two month period ended
September 30, 1996 have been prepared to show the results of
operations of 418297 Alberta Ltd. (o/a "Calgary Chemicals")
on a basis consistent with the results presented for
Wolf Industries Inc. ("Wolf"). Wolf acquired all of the
shares of Calgary Chemicals effective October 1, 1996. The
previous shareholders left the employment of Calgary Chemicals
once the sale of the shares to Wolf was completed.
The principal pro-forma adjustments are to replace the prior
management compensation with the executive compensation for
current management and to calculate income taxes at the rates
applicable to Wolf (45%). Set out below is a summary of the
determination of pro-forma net income.
Basic earnings per share figures for the above periods are
not presented as they are not significant.
- C o n t i n u e d -
45
<PAGE>
418927 ALBERTA LTD.
(o/a Calgary Chemicals)
NOTES TO FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
For the period ended September 30, 1996 and for the years
ended July 31, 1996 and 1995
NOTE 6 - SUPPLEMENTAL UNAUDITED PRO-FORMA NET INCOME (CONTINUED)
TWO MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, JULY 31, JULY 31,
1996 1996 1995
---------- ---------- ----------
NET INCOME AS REPORTED $ 17,319 $ 113,992 $ 80,930
PRIVATE COMPANY ADJUSTMENTS:
Management salaries - 82,381 56,706
Income taxes 4,153 27,694 18,922
---------- ---------- ----------
21,472 224,067 156,558
PARENT COMPANY ADJUSTMENTS:
Executive compensation of
current management (8,869) (52,962) (52,962)
Income taxes (5,608) (76,142) (46,100)
---------- ---------- ----------
UNAUDITED PRO-FORMA NET
INCOME $ 6,995 $ 94,963 $ 57,496
========== ========== ==========
46
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Wolf Industries, Inc.
- -------------------------------------------------------------------------
(Registrant)
Date October 8, 1997
---------------------------------------------------------------------
By /s/ Blair Coady
-----------------------------------------------------------------------
(Signature)
Blair Coady, Title: Director, President and Secretary
- -------------------------------------------------------------------------
(Type Name and Title)
(On behalf of the Registrant and as [Title].)
Date October 8, 1997
---------------------------------------------------------------------
By /s/ John Grove
-----------------------------------------------------------------------
(Signature)
John Grove, Title: Director
- -------------------------------------------------------------------------
(Type Name and Title)
(On behalf of the Registrant and as [Title].)
Date October 8, 1997
---------------------------------------------------------------------
By /s/ James Donaldson
-----------------------------------------------------------------------
(Signature)
James Donaldson, Title: Director
- -------------------------------------------------------------------------
(Type Name and Title)
(On behalf of the Registrant and as [Title].)
-47-
