FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1997
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-22723
WOLF INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
NEVADA 98-0171619
(State of incorporation) (IRS Employer ID No.)
4020, 7 Street, SE
Calgary, Alberta, Canada T2G 2Y8
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (403) 543-0970
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 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.
Yes No X
----- -----
As of November 11, 1997, the Registrant had 10,582,300 shares of
Common Stock outstanding.
Transitional Small Business Disclosure Format (check one);
Yes No X
----- -----
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
<PAGE>
Part I Financial Information
------------------------------
Item 1 Financial Statements.
WOLF INDUSTRIES INC.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three month period ended September 30, 1997
(Unaudited)
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<PAGE>
WOLF INDUSTRIES INC.
CONSOLIDATED BALANCE SHEET
As at
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------- ----------
ASSETS
CURRENT
Cash and short-term deposits $ 9,413 $ 58,625
Accounts receivable 85,472 117,519
Inventory 63,128 36,593
Prepaid expenses 6,991 9,369
---------- ----------
165,004 222,106
CAPITAL 267,671 271,258
EXCESS OF COST OVER NET IDENTIFIABLE
ASSETS ACQUIRED 233,450 248,357
---------- ----------
$ 666,125 $ 741,721
========== =========
LIABILITIES
CURRENT
Demand bank loan $ 76,020 $ 65,430
Accounts payable and accrued
liabilities 111,067 112,380
Income taxes payable 2,478 15,653
Current portion of long-term debt 25,517 126,265
---------- ----------
215,082 319,728
LONG-TERM DEBT 177,510 109,807
---------- ----------
392,592 429,535
---------- ----------
SHAREHOLDERS' EQUITY
COMMON SHARES 322,918 307,330
RETAINED EARNINGS (DEFICIT) (49,385) 4,856
---------- ----------
273,533 312,186
---------- ----------
$ 666,125 $ 741,721
========== ==========
SEE ACCOMPANYING NOTES
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<PAGE>
WOLF INDUSTRIES INC.
INTERIM CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the three month period ended September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
COMMON SHARES ADDITIONAL
--------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, beginning
of period 10,532,300 $ 10,532 $ 314,298 $ (18,919) $ 305,911
COMMON SHARES ISSUED:
Proceeds 50,000 50 24,950 - 25,000
Balance of issue costs - - (26,912) - (26,912)
NET LOSS - - - (30,466) (30,466)
---------- ---------- --------- --------- ---------
BALANCE, end of period 10,582,300 $ 10,582 $ 312,336 $ (49,385) $ 273,533
========== ========== ========= ========== =========
</TABLE>
SEE ACCOMPANYING NOTES
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<PAGE>
WOLF INDUSTRIES INC.
INTERIM CONSOLIDATED STATEMENT OF EARNINGS (LOSS) AND
RETAINED EARNINGS (DEFICIT)
(Unaudited)
THREE MONTHS NINE MONTHS YEAR
ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1996
---------- ---------- ----------
REVENUE
Product sales $ 96,594 $ 326,058 $ 145,889
Cost of goods sold 45,622 164,449 75,723
---------- ---------- ----------
GROSS MARGIN 50,972 161,609 70,166
---------- ---------- ----------
EXPENSES
Amortization 14,190 45,520 12,440
Administration and marketing 41,570 99,738 11,613
Executive compensation 13,032 35,562 16,708
Interest on long-term debt 4,199 9,472 1,478
Rent 13,447 35,358 11,571
---------- ---------- ----------
86,438 225,650 53,810
---------- ---------- ----------
EARNINGS (LOSS) FROM OPERATIONS (35,466) (64,041) 16,356
INCOME TAXES (RECOVERED) (5,000) (9,800) 11,500
---------- ---------- ----------
NET EARNINGS (LOSS) (30,466) (54,241) 4,856
RETAINED EARNINGS, beginning
of period (18,919) 4,856 -
---------- ---------- ----------
RETAINED EARNINGS (DEFICIT),
end of period $ (49,385) $ (49,385) $ 4,856
========== ========== ==========
SEE ACCOMPANYING NOTES
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<PAGE>
WOLF INDUSTRIES INC.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
THREE MONTHS NINE MONTHS YEAR
ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1996
---------- ---------- ----------
CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net earnings (loss) $ (30,466) $ (54,241) $ 4,856
Amortization 14,190 45,520 12,440
---------- ---------- ----------
(16,276) (8,721) 17,296
Changes in working capital:
Accounts receivable 280 32,059 15,073
Inventory (8,259) (26,535) 16,797
Prepaid expenses 5,479 2,378 (5,821)
Demand bank loan (14,855) 10,590 65,430
Accounts payable (18,914) (1,313) 58,434
Income taxes payable (8,387) (13,187) 11,500
---------- ---------- ----------
(60,932) (4,729) 178,709
---------- ---------- ----------
FINANCING ACTIVITIES
Issue of common shares 25,000 42,500 348,650
Share issue costs (26,192) (26,912) (41,320)
Repayments of long-term debt (136,022) (177,845) 134,500
Advances on long-term debt 144,800 144,800 (7,477)
---------- ---------- ----------
6,866 (17,457) 434,353
---------- ---------- ----------
INVESTING ACTIVITIES
Purchase of capital assets (2,526) (22,526) (663,487)
Purchase of 418297 Alberta
Ltd. (o/a Calgary
Chemicals) - (4,500) 109,050
---------- ---------- ----------
(2,526) (27,026) (554,437)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH (56,592) (49,212) 58,628
CASH, beginning of period 66,005 58,625 -
---------- ---------- ----------
CASH, end of period $ 9,413 $ 9,413 $ 58,625
========== ========== ==========
SEE ACCOMPANYING NOTES
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<PAGE>
WOLF INDUSTRIES INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three month period ended September 30, 1997
(Unaudited)
NOTE 1 - PRESENTATION
The financial statements contain all adjustments which
management consider necessary to keep the statements from
being misleading.
NOTE 2 - SUBSEQUENT EVENT
On November 7, 1997, the holders of the vendor take-back
loan converted the remaining balance into 77,416 common
shares of the Corporation.
NOTE 3 - COMPARATIVE FIGURES
Wolf Industries Inc. primary business activity is carried
out through its wholly-owned subsidiary, 418297 Alberta Ltd.
(o/a Calgary Chemicals).
Wolf Industries Inc. acquired 418297 effective October 1,
1996, consequently, no comparative figures have been
disclosed.
The comparative financial statements for the year ended
December 31, 1996, contain the results of the corporation
and its wholly-owned subsidiary, 418297 from the date of
acquisition.
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<PAGE>
Item 2 - Management's Discussion and Analysis or Plan of Operation.
(a) Liquidity
In the quarter the Company made significant strides toward improving
its liquidity. The Company obtained $144,800 of long term debt financing.
The net proceeds were used to replace $110,100 of existing bank debt and
$34,700 for working capital. The new facility requires a monthly principal
repayment of $2,900 while the previous facility required a monthly
principal repayment of $3,700.
(b) Capital Resources
The Company's current financial condition has improved. While the
Company incurred a cash loss in the period of $16,276, its capital
resources improved by refinancing its primary long-term debt facility.
Subsequent to September 30, 1997, the Company converted a vendor take back
loan of $58,300 into 77,416 common shares. (SEE: Other Information,
below).
(c) Results of Operations
For the three months ending September 30, 1997, the Company incurred
a net loss of $30,466 and now has a net loss for the nine months ending
September 30, 1997, of $54,241. Sales for the quarter ended September 30,
1997, were $96,594 down $9,507 and $26,769 for the quarters ending June 30,
1997 and March 31, 1996, respectively.
The Company continues to have underutilized plant capacity.
Part II - Other Information
---------------------------
Item 1 - Legal Proceedings.
There are no proceedings to report.
Item 2. - Changes in Securities.
There are no changes to report.
Item 3. - Default Upon Senior Securities.
There are no defaults to report.
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<PAGE>
Item 4. - Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of Security holders during the
third quarter.
Item 5. - Other Information.
On or about November 7, 1997, the Registrant was notified by the
sellers of the predecessor company, Calgary Chemical, Mr. J.T. Bell and Mr.
Bill Bell (collectively, "the Bells" herein) that under the Share Purchase
Agreement dated August 28, 1996, among the Bells and Wolf Exploration Inc.
(the name was changed to the Registrant's name on March 26, 1997) that the
Bells intended to convert the balance of their Vendor Take-Back Loan
($65,000.00 Canadian) as of November 7, 1997 into shares of Wolf Industries
Inc. at the price of $.60 per share. The price per share was determined by
a formula as set forth on Schedule "D" to the Share Purchase Agreement as
1.2 times the last private placement price, which occurred in April 1997,
at $.50 per share. The Vendor Take-Back Loan of $65,000.00 Canadian is
equivalent to $46,449.00 U.S. and equates to 77,416.00 shares of the
Registrant's Common Stock. The Registrant issued shares to the Bells in
reliance upon Regulation "S" (Rule 901 et seq.) to exempt the transaction
from the registration provisions (section 5 (a through c) of the Securities
Act of 1933.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WOLF INDUSTRIES INC.
Dated: November 14, 1997
/s/Blair Coady
Blair Coady
President, Secretary and Treasurer
/s/James Donaldson
James Donaldson
Director
/s/John Edward Kenneth Grove
John Edward Kenneth Grove
Director
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<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> CANADIAN DOLLARS
<S> <C> <C>
<PERIOD-TYPE> 9-MOS OTHER
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JUL-10-1996
<PERIOD-END> SEP-30-1997 DEC-31-1996
<EXCHANGE-RATE> 1.37 1.37
<CASH> 9,413 58,625
<SECURITIES> 0 0
<RECEIVABLES> 85,472 117,519
<ALLOWANCES> 0 0
<INVENTORY> 63,128 36,593
<CURRENT-ASSETS> 165,004 222,106
<PP&E> 301,433 279,701
<DEPRECIATION> 33,762 8,443
<TOTAL-ASSETS> 666,125 741,721
<CURRENT-LIABILITIES> 215,082 319,728
<BONDS> 177,510 109,807
0 0
0 0
<COMMON> 322,918 307,330
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 666,125 741,721
<SALES> 326,058 145,889
<TOTAL-REVENUES> 326,058 145,889
<CGS> 164,449 75,723
<TOTAL-COSTS> 164,449 75,723
<OTHER-EXPENSES> 225,650 53,810
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 35,562 1,478
<INCOME-PRETAX> (63,041) 16,356
<INCOME-TAX> (9,800) 11,500
<INCOME-CONTINUING> (54,241) 16,356
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (54,241) 4,856
<EPS-PRIMARY> (0.005) (0.001)
<EPS-DILUTED> (0.005) (0.001)
</TABLE>
