UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1998.
WOLF INDUSTRIES INC.
(Name of Small Business Issuer in its Charter)
Nevada E.I.N. 98-0171619
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
404 - 110 Cambie Street, Vancouver, British Columbia, Canada V6B 2M8
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(Address of principal executive office) (Zip/Postal Code)
Registrant's telephone number: (604) 688-6306
SECURITIES REGISTERED UNDER SECTION 12 (b) OF THE ACT: NONE.
SECURITIES REGISTERED UNDER SECTION 12 (g) OF THE ACT:
Title of each class Name of each exchange on which each class is registered
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Common Stock OTC Electronic Bulletin Board
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 ninety (90) days.
YES ( X ) NO ( )
Check here if there is no disclosure of delinquent filers in response to Item
405 of Regulation SB is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy of
information statements incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. ( X )
Issuer's operational revenues for its most recent fiscal year ending December
31, 1998 were $286,347. This represents sales by the Company's former subsidiary
until June 30, 1998 when it was sold as described below. Issuer's Common Shares
outstanding at March 31, 1999 was 11,684,648. The aggregate market value based
on the voting stock held by non-affiliates as of March 31, 1999 was $1,101,544
(based on 6,884,648 shares and on an average of bid and asked prices of $0.16).
Except for the historical information contained herein, the matters set forth in
this Form 10-KSB are forward looking statements within the meaning of the "Safe
Harbor" provision of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risk and uncertainties that may cause
actual results to differ materially. These forward-looking statements speak only
as of the date hereof and the Company disclaims any intent or obligation to
update these forward-looking statements.
DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits
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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, the Company entered into an agreement to acquire two numbered
companies that were combined with 714674 Alberta Ltd. continuing in operation.
The business operated as Calgary Chemical, selling chemical products to the oil
and gas industry.
In March 1997, the Company's name was changed to Wolf Industries Inc. to reflect
these developments.
Effective June 30, 1998, the Company sold its subsidiary, 714674 Alberta Ltd.
("Calgary Chemical") to Gorda Technology Holdings Limited, a Turks and Cacios
Islands corporation ("Gorda"). The terms of the sale were as follows:
(a) forgiveness of the inter company debt owed by Calgary Chemical to the
Company in the amount of $82,289 (Canadian);
(b) Payment by Gorda to the Company of fifteen percent of Calgary Chemical's
after-tax profit (as determined by generally accepted accounting
principles) for the fiscal year ended December 31, 1998 payable on or
before March 31, 1999 and completion of an audit of the financial
statements of Calgary Chemical for such period;
(c) Indemnification by Gorda to hold the Company harmless from any and all
liability arising from the debt guarantees of Calgary Chemical;
(d) Agreement by Gorda to hire Mr. Blair Coady as the President and Chief
Executive Officer of Calgary Chemical; and
(e) Receipt by the Company from Mr. Coady of his resignation as President and
Chief Executive Officer, Secretary, and Director of the Company and the
surrender of Mr. Coady's options to acquire 700,000 shares of the Company's
common stock.
This agreement is incorporated by reference from the Company's 10QSB filing for
the quarter ended March 31, 1998.
The sale of Calgary Chemical was subject to approval of the shareholders of the
Company, which was received at the Company's annual general meeting of July 24,
1998.
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On April 8, 1998, the Company entered into a License agreement with Andrew
Engineering Inc. ("Andrew") a British Columbia corporation, Andrew Rawicz Ph.D.,
and Ivan Melnyk, Ph.D., whereby the Company acquired a world-wide license to
manufacture and market a patent pending device for the color matching of
dentures to a dental patient's existing tooth color. Drs. Rawicz and Melnyk hold
the patent pending for the color analyzer and Andrew developed and/or acquired
the techniques and other proprietary information related to the device. The
License agreement required the Company and Andrew to develop a business plan for
manufacturing and marketing the device, including obtaining financing of
$1,500,000 US. The license agreement required the issuance of 4.8 million shares
of restricted stock to Andrew with registration rights on 600,000 of those
shares, and also required that Mr. Patrick McGowan be appointed President and
Chief Executive Officer. Mr. McGowan signed a management agreement with the
Company, and at a meeting of the Company's Board of Directors held on April 16,
1998, Mr. McGowan and Mr. A. Schwabe were appointed to the Company's Board of
Directors. They were also appointed interim President and CEO, and Secretary,
Treasurer respectively, pending the approval of the shareholders of the Gorda
transaction wherein Mr. Coady would resign from all positions. The agreement
also provided for the Company to pay a royalty to Andrew in the amount of ten
percent (10%) of gross profit on sales if the Company manufactures the product
itself or a Royalty of seven percent (7%) of gross revenue if manufacturing is
done by an independent third party.
This agreement is incorporated by reference from the Company's 10QSB filing for
the quarter ended March 31, 1998.
Upon approval by the shareholders of the sale of Calgary Chemical at the 1998
annual general meeting, Mr. P. McGowan, Mr. A. Schwabe and Dr. David Gane were
elected directors, and Messrs. McGowan and Schwabe were appointed President and
CEO, and Secretary, Treasurer respectively.
In September 1998, 4.8 million shares of the Company's stock were issued to
Andrew in accordance with that agreement.
(b) BUSINESS OF THE ISSUER
DENTAL COLOR ANALYZER
During 1998, the Company sold Calgary Chemical and acquired the worldwide
manufacturing and marketing rights to a dental color analyzer ("the product").
This technology was developed to assist the dental industry in determining the
shades and colors of dental materials used in replacement and/or restorative
work, by precisely matching these shades to the original teeth of patients. The
dental color analyzer discriminates between the minutest differences in tooth
shading and determines the best shade match for partial or total restorative
material. It does so by taking into account the differences in color of
spectrally unmatched materials when illuminated with different light sources
such as sunlight, incandescent lamps, and fluorescent lamps.
Since acquiring the rights in April 1998, the Company's efforts have been
directed towards research, development and business plans for manufacturing and
marketing the product. This has involved manufacturing a small quantity of the
product for testing and demonstration purposes; engaging technical experts and
firms to evaluate the product; attendance at dental conventions and shows to
demonstrate the product; attendance at various dental firms and laboratories to
demonstrate and evaluate the product; and work on both the product and related
software to perfect its operation. The Company has also engaged the assistance
of consultants to develop marketing plans for the product. This has resulted in
the Company incurring substantial research and development expenditures in the
year 1998.
The Company has also held discussions with companies involved in the
distribution of dental products in Canada, the United States and Europe
regarding marketing of the product.
The Company has developed preliminary business plans to proceed with manufacture
and sale of the units, but has been delayed in proceeding pending completion of
this research and development, and by the action brought against the Company by
AEI Trucolor (see Item 3 - Legal Proceedings).
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CALGARY CHEMICAL
The Company owned and operated its subsidiary, 714674 Alberta Ltd. until June
30, 1998, when it was sold as described previously. As a result, the Company is
no longer involved in the manufacturing and sale of chemical products.
ITEM 2. DESCRIPTION OF PROPERTY
As a result of the change of management and business direction, the Company
relocated its head offices from Calgary, Alberta to Vancouver, British Columbia.
Its Vancouver office is shared with other companies, and the Company pays for
its share of rent and office expenses under month-to-month arrangements with the
other companies. The Company occupies approx. 1,000 square feet of space and
paid $38,073 in the year 1998 for its share of office rent.
ITEM 3. LEGAL PROCEEDINGS
AEI Trucolor
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An action has been brought by AEI Trucolor Inc. ("AEI") in British Columbia
Supreme Court against Wolf Industries Inc., Andrew Engineering Inc. and other
parties to the Licence Agreement. AEI has made a claim against the defendants as
follows:
(a) Declaration that AEI holds all ownership rights and interest in the dental
color analyzer;
(b) An injunction against the Defendants from continuing the commercial or
other development of the dental color analyzer;
(c) An injunction against the Defendants from disposing of or in any way
dealing with the dental color analyzer;
(d) An order that the dental color analyzer be delivered forthwith to the
Plaintiff;
(e) An accounting of all monies, profits and benefits made and received by the
Defendants for and on account of AEI Trucolor Inc.;
(f) General damages; and
(g) Punitive damages
The Corporation has filed an Appearance and is currently preparing a response
denying the allegations and requesting that the claim be dismissed.
Harvey Productions Inc.
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The Company is presently in litigation in the Los Angeles County Superior Court,
West District, Santa Monica, California, concerning the approximately $55,000
demand of the complaint purportedly due and owing by the Company to plaintiff
Harvey Productions Inc. for public relations services allegedly rendered but not
paid. The Company has denied these allegations. The matter is still in the
discovery stage and has not been set for trial.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted for a vote of security holders of the Company during
the fourth quarter of the fiscal year ended December 31, 1998.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTER
(a) MARKET INFORMATION
Since December 15, 1997, the Company's stock has been listed for sale on the OTC
Electronic Bulletin Board. As of December 31, 1998 there were thirteen stock
brokerage firms making a market in the Company's common stock. The high ask and
low bid prices of the Common Stock of the Company have been as follows:
Quarter Ending: High ask per share: Low bid per share:
- --------------- ------------------- ------------------
March 31, 1998 $1.01 $0.47
June 30, 1998 $0.99 $0.50
September 30, 1998 $0.91 $0.18
December 31, 1998 $0.49 $0.27
The above quotations reflect inter-dealer prices, without retail mark-up,
markdown, or commission and may not necessarily represent actual transactions.
(b) HOLDERS
There were 38 holders of the Company's common stock as of December 31, 1998.
This includes four holders of 4,825,001 shares of the Company's common stock
whose certificates are restricted. 25,001 of the restricted shares were issued
in December 1997 and 4,800,000 were issued in September 1998. The holder of
4,800,000 shares is an affiliate of the Company.
(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 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following should be read in conjunction with the Selected Financial Data and
the Consolidated Financial Statements and notes thereto appearing elsewhere in
this report.
Revenue and expense transactions in Canadian funds are converted to US dollars
at the average rates in effect when the transactions occurred. Asset and
liability accounts are converted at year-end closing rates, which were $0.6522
U.S. for one Canadian dollar at December 31, 1998; $0.6991 at December 31, 1997;
and $0.7301 at December 31, 1996.
(a) Results of Operations
As a result of the sale of 714674 Alberta Ltd. (Calgary Chemical) effective June
30, 1998, the Company has reflected the operations of Calgary Chemical as a
discontinued operation. Revenue from sales during the six months until the sale
was $286,347, compared to $444,192 for the year 1997 and $145,889 for the year
1996 (from acquisition in September 30, 1996). Cost of goods sold was $147,496
in 1998, $227,240 in 1997, and $75,723 in 1996.
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General and administrative expenses for the fiscal year ended December 31, 1998
were $769,790. This reflects the change of business direction of the Company,
including substantial costs for staff, legal, accounting, consulting, travel,
and general office expenditures. Similar expenditures were $8,078 in 1997, and
$5,383 in 1996, but are not comparable, as the Company's operations were
conducted by its former subsidiary, Calgary Chemical, which was sold in 1998.
The Company incurred $590,118 of research and development costs in 1998, all
related to the dental color analyzer. These costs include the manufacture of a
quantity of the product for demonstration and testing purposes, and services of
consultants and technical firms in testing, evaluating, and perfecting the
product.
In 1998, the Company recorded a loss from discontinued operations of $14,350,
and a loss from the sale of the subsidiary of $273,099.
(b) Capital Resources
The Company had a working capital deficiency of $840,987 at December 31, 1998.
The AEI Trucolor matter (see Item 3 - Legal Proceedings) has delayed the
company's plans to raise capital through the issuance of shares until the matter
is resolved. In the meantime, the Company is meeting its obligations through
funds loaned by a shareholder, and has issued capital stock for certain services
rendered to the Company in accordance with an S-8 registration filing. The
company anticipates that it will be able to raise funds through share issuances
once the legal matter has been resolved in favor of the Company.
The Company has made no commitments for capital expenditures, but anticipates
further requirements to expend funds on research and development on the product.
(c) Liquidity
The Company is illiquid at the present time and is dependent upon a shareholder
to provide funds to maintain its activities, pending resolution of the AEI
Trucolor legal matter whereupon it expects to be able to raise funds through the
issuance of shares.
(d) Year 2000 Computer Issue
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
the year 2000 date is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000 and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant system failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company are filed under this Item,
and are included herein by reference.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements on accounting and financial disclosures from
the inception of the Company through to the date of this Form 10-KSB. The
principal accountants' report on the financial statements of the fiscal years
1998, 1997, and 1996 contained no adverse opinions, nor a disclaimer of opinion,
nor qualified as to uncertainty, audit scope, or accounting principles.
Effective September 3, 1998, Dick Cook Schulli, Chartered Accountants, the
Registrant's Certifying Accountant for the past two fiscal years, were
dismissed. On September 3, 1998, Morgan & Company, Chartered Accountants, were
engaged to serve as the Registrant's new auditors. The selection of Morgan &
Company was approved by the Registrant's Board of Directors. There was no
consultation regarding accounting policy or procedures with Morgan & Company
prior to their engagement.
Dick Cook Schulli's report on the financial statements for the fiscal years
ended December 31, 1996 and 1997 did not contain an explanatory paragraph
regarding the Registrant's ability to continue as a going concern. Dick Cook
Schulli's reports have not contained an adverse opinion or a disclaimer of
opinion, or were qualified or modified as to uncertainty, audit scope, or
accounting principles. Nor has there been any disagreement with Dick Cook
Schulli on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure during the Registrant's two most
recent fiscal years and from December 31, 1997 to the date of dismissal. Dick
Cook Schulli has not advised the Registrant that the internal controls necessary
for the Registrant to develop reliable financial statements do not exist. Nor
has Dick Cook Schulli advised the Registrant that information has come to their
attention that has led them to no longer be able to rely on management's
representations, or that has made them unwilling to be associated with the
financial statements prepared by management. Dick Cook Schulli has not advised
the Registrant of the need to expand significantly the scope of their audit, or
that information has come to their attention that if further investigated may
materially impact the fairness or reliability of either: a previously issued
audit report or the underlying financial statements; or the financial statements
issued or to be issued covering the fiscal period(s) subsequent to the date of
the most recent financial statements covered by an audit report (including
information that may prevent them from rendering an unqualified audit report on
those financial statements ), or cause them to be unwilling to rely on
management's representations or be associated with the Registrant's financial
statements. Nor has Dick Cook Schulli advised the Registrant that in formation
has come to their attention that they have concluded materially impacts the
fairness or reliability of either (i) a previously issued audit report or the
underlying financial statements, or (ii) the financial statements issued or to
be issued covering the fiscal period(s) subsequent to the date of the most
recent financial statements covered by an audit report (including information
that, unless resolved to the accountant's satisfaction, would prevent it from
rendering an unqualified audit report on those financial statements). Nor has
Dick Cook Schulli advised the Registrant of any other reportable event.
The Registrant provided Dick Cook Schulli with a copy of the disclosure
contained herein and requested that Dick Cook Schulli provide the Registrant
with a letter addressed to the U.S. Securities and Exchange Commission stating
whether they agree with the disclosure. Dick Cook Schulli provided such a
letter, which was attached as an Exhibit to the Report on Form 8-K.
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PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the names, positions, and municipalities of residence and
relevant backgrounds of key personnel of the Corporation:
PATRICK A. McGOWAN - (Age 60).
President, C.E.O. and Director, Coquitlam, British Columbia.
President of the Company since April 16, 1998. September 1996 to April
1999, president of Consolidated Ewing Industries Inc., Vancouver, B.C.,
a company formerly engaged in oil and gas exploration, which is
publicly traded on the Vancouver Stock Exchange. November 1997 to the
present, President of American Hunter Exploration, Vancouver, B.C., a
privately held Nevada corporation engaged in oil and gas exploration.
February 1998 to the present, President and Director of U.S Diamond
Corp., Vancouver, B.C., the parent company of American Hunter
Exploration, a public company involved in natural resources, and traded
on the Vancouver Stock Exchange. August 1997 to December 1997,
President and Director of Globenet Resources Inc., Vancouver, B.C., a
public traded company traded on the Vancouver Stock Exchange, engaged
in natural resource exploration and development. October 1992 -
September 1996, President and Director of The Indisposibles, Burnaby,
B.C., a manufacturer and distributor of infant wear, incontinent and
feminine hygiene products throughout North America and Europe. January
1988 to September 1992, Executive Vice President of Pacific Paper
Products, Burnaby, B.C., a manufacturer and distributor of paperboard
products in British Columbia and Alberta. Graduated from University of
Western Ontario with Masters of Business Administration in 1965,
graduated University of Oregon with Bachelor of Science, Finance and
Economics in 1963.
ALLEN SCHWABE (Age 42).
Secretary, Treasurer and Director, Delta, British Columbia.
Secretary, Treasurer since April 16, 1998. Since 1982 to the present,
President and owner of Buellex Holdings, Inc., Delta, B.C., a company
engaged in investing for its own account. January 1996 to present, a
Consultant to Pacific Insight Electronics Corporation, Nelson, B.C.,
Canada providing investment advice with respect to current market
conditions for a variety of investment options. March 1996 to the
present, Director of Porcher Island Gold Corporation, Vancouver, B.C.,
a precious metal exploration company publicly traded on the Vancouver
Stock Exchange. March 1991 to June 1995, Director of Cyberion
Networking Corp., a publicly held company traded on the Vancouver Stock
Exchange. March 1995 to June 1996, Director of East West Resource
Corp., a publicly held mining company traded on the Vancouver Stock
Exchange. May 1996 to September 1997, Director of G.F.M. Resources
Ltd., a publicly held mining company traded on the Vancouver Stock
Exchange.
DR. DAVID GANE - (Age 44).
Director, White Rock, British Columbia. Director since May 1998. Dr.
Gane has practiced restorative dentistry for 17 years and currently
maintains a part time dental practice limited to restorative and
appearance related dentistry in White Rock, British Columbia. 1998 to
present, President and co-founder of Source Dental Imaging, Inc.,
White Rock, B.C., Canada, a company specializing in the development
and sales of Dental Imaging Software. 1995 to present, Co-founder and
advisor to FX Software Solutions, White Rock, B.C., Canada, a company
specializing in the development and sale of Imaging Solutions to
Dentist and Physicians. 1993 to 1995, president and co-founder of
Pro-Dentec Canada, Langley, B.C., Canada, a dental supply business
headquartered in Datesville, Arkansas. Dr Gane graduated from the
University of Western Ontario in 1977 with a B.Sc. with honors in
Physiology and Pharmacology and obtained his DDS degree from the
University of Western Ontario in 1981. Since September 1998 Dr. Gane
has been Program Director since of Program Technologies for Experdent
Centers of Dental Excellence, Richmond B.C. Dr. Gane has made numerous
lecture presentations and has published articles and texts on
restorative and esthetic dentistry.
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ITEM 10. EXECUTIVE COMPENSATION
(a) SUMMARY COMPENSATION TABLE (OMITTED FOR SIMPLICITY)
A private company wholly-owned by Mr. McGowan received or was due a total of
$63,000 of compensation in the fiscal year ended December 31, 1998, in
accordance with a management agreement approved by the directors in April, 1998
at a rate of $7,000 per month.
Mr. Schwabe was owed $4,900 at December 31, 1998 for consulting services
provided to the Company.
(b) OPTIONS/SAR GRANTS IN LAST FISCAL YEAR (INDIVIDUAL GRANTS)
The Company has a Directors and Officers Stock Option Plan, and a Key Personnel
Compensation Plan, as described below. There have been no other options granted,
except in accordance with these plans.
(c) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
There were no exercises of options in the last fiscal year.
(d) LONG-TERM INCENTIVE PLANS - AWARDS IN THE 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 to the Company. In 1996 and 1997, a total of 960,000
options to purchase shares were granted under this plan. As a result of the sale
of Calgary Chemical, and change of management, the 960,000 options were
cancelled in 1998. By resolution of the directors of the Company dated May 28,
1998, the Company reserved an additional one million shares of common stock of
the Company for the Plan bringing the total shares reserved to 2,000,000 and
renamed the Plan "The Wolf Industries Inc. 1998 Directors and Officers Stock
Option Plan" ("the Revised Plan") with all other terms and conditions of the
Plan remaining in full force and effect.
In September 1998, the Company by resolution of the directors, established the
"1998 Key Personnel Compensation Plan" ("Key Plan") whereby 1,000,000 shares of
the Company's stock was reserved for issuance. By resolution of the directors
dated November, 1998, a further 1,000,000 shares of common stock was authorized
to be reserved for issuance, bringing the total issuable under the Key Plan to
2,000,000 shares of common stock.
During 1998, under the terms of the Revised Plan, a total of 1,050,000 option to
purchase common shares of the Company were granted to three officers and
directors of the Company at $0.25 per share for a five-year period.
During 1998, under the terms of the Key Plan, options to purchase 75,000 shares
of the common stock of the Company was granted to an employee at $0.25 per
share, for a five-year period. Also under the terms of the Key Plan, 1,973,026
shares of common stock of the Company were issued at a deemed price of $0.25 per
share, and 1,000,000 shares of common stock of the Company at a deemed price of
$0.20 per share for services rendered by key personnel to the Company.
(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.
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(f) EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, CHANGE IN
CONTROL ARRANGEMENTS
As a result of the sale of Calgary Chemical (Item 1(a)), Mr. Coady resigned at
President and Chief Executive Officer, Secretary, and Director of the Company.
There was no additional cost to the Company for severance or vacation pay
resulting from this termination.
Mr. Patrick McGowan was appointed President and Chief Executive Officer of the
Company in April 1998, at an annual fee of $84,000. In 1998, Andrea Resources
Ltd. a company wholly-owned by Mr. McGowan received or was owed a total of
$63,000 for services under this agreement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock by each director and nominee and by all directors and
officers of the Company as a group and of certain other beneficial owners of
more than 5% of any class of the Company's voting securities as of December 31,
1998 unless otherwise noted. The number of shares beneficially owned is deemed
to include shares of Common Stock which directors of officers have a right to
acquire pursuant to the exercise of options within sixty days of December 31,
1998. Each such person has sole voting and dispositive power with respect to
such securities, except as otherwise indicated.
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Name and Address Number Percentage
of Shares of Class
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Andrew Engineering Inc.
7218 Hewitt Street
Burnaby, B.C.
V5A 3M2 4,800,000 38.5%
(b) SECURITY OWNERSHIP OF MANAGEMENT.
Name and Address Number Percentage
Of Shares of Class
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Patrick A. McGowan
211 - 1148 Westwood Street
Coquitlam, B.C.
V3B 4S4 650.000 (1) 5.2%
Allen Schwabe
1730 Beach Grove Drive
Delta, B.C. 200,000 (1) 1.6%
V4L 1P3
Dr. David Gane
202 - 15047 Marine Drive
White Rock, B.C. 200,000 (1) 1.6%
V4B 1C5
(1) Consists entirely of options to purchase shares at a price of $0.25 per
share.
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(c) CHANGES IN CONTROL
Changes in control occurred in April 1998, when Patrick A. McGowan was appointed
the President and C.E.O. of the Company and Mr. Schwabe was appointed Secretary,
Treasurer and members of the Board of Directors. All of the former directors
resigned at that time and were replaced by the current directors, consisting of
Mr. McGowan, Mr. Schwabe, and Dr. Gane.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. McGowan is the sole shareholder of Andrea Resources Ltd., which billed the
Company a total of $63,000 during 1998 for services rendered under the
management agreement (Item 10(f)). Buellex Holdings Inc., a company wholly owned
by Mr. Schwabe, billed the Company $4,900 during 1998 for consulting services.
Also during 1998, Dr. Gane was paid $7,126 for consulting fees and a company
partially owned by Dr Gane, Image FX Inc. was paid or was owed a total of
$24,553 for technical work in evaluating and testing the product.
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 interest 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 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES & REPORTS ON FORM 8-K
The following documents are filed as part of this report under Part II, Item 8:
Audited Financial Statements and notes thereto Pages F-1 to F-13
Exhibits as required by Item 601 of Regulation S-B
<TABLE>
<CAPTION>
Exhibit Number Description Incorporated by Reference to
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<S> <C> <C>
(3) (1) Articles of Incorporation as amended Registrant's Report on Form 10SB12G
dated June 19, 1997.
(3) (2) Bylaws Registrant's Report on Form 10SB12G
dated June 19, 1997.
(10) (1) Sale agreement between Wolf Industries Inc. Registrant's Quarterly Report on
and Gorda Technology Holdings Limited Form 10QSB for the quarter ended
March 31, 1998.
(10) (2) License agreement between Wolf Industries Inc., Registrant's Quarterlyd Report on
Andrew Engineering Inc., Andrew Rawicz Ph.D. Form10QSB for the quarter ended
and Ivan Melnyk Ph.D. March 31, 1998.
</TABLE>
11
<PAGE>
WOLF INDUSTRIES INC.
Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
12
<PAGE>
MORGAN & COMPANY
Chartered Accountants
P.O. Box 10007, Pacific Centre
Suite 1730 - 700 West Georgia Street,
Vancouver, B.C. V7Y 1A1
Telephone (604) 687-5841
Fax (604) 687-0075
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Wolf Industries Inc.
- ------------------------------------------------------------------
We have audited the consolidated balance sheet of Wolf Industries Inc. as at
December 31, 1998 and the consolidated statements of income and retained
earnings, stockholders' equity and cash flows for the year 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 audit.
We conducted our audit in accordance with general accepted auditing standards in
the United States and Canada. 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. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of Wolf Industries Inc as at December 31, 1998
and the results of its operations and cash flows for the year then ended in
accordance with general accepted accounting principles.
Without qualifying our opinion we draw attention to Notes 1 and 11 to the
financial statements. The Company has incurred a net loss of $1,798,830 for the
year ended December 31, 1998 and as at that date, the Company's current
liabilities exceeded its current assets by $840,987. These factors raise
substantial doubt that the Company will be able to continue as a going concern.
The financial statements as at December 31, 1997 and for the year then ended
were audited by other auditors who expressed an opinion, without qualification,
on March 12, 1998.
Vancouver, Canada "Morgan & Company"
April 16, 1999 Chartered Accountants
Comments by Auditors on United States - Canada reporting difference
- -------------------------------------------------------------------
In Canada, reporting standards for auditors do not permit the addition of an
explanatory paragraph (following the opinion paragraph) when the consolidated
financial statements are affected by conditions and events that cast substantial
doubt on the Company's ability to continue as a going concern. Although our
audit was conducted in accordance with both United States and Canadian generally
accepted auditing standards, our report to the stockholders dated April 16, 1999
is expressed in accordance with United States reporting standards which require
a reference to such conditions and events in the Auditor's Report.
Vancouver, Canada "Morgan & Company"
April 16, 1999 Chartered Accountants
13
<PAGE>
WOLF INDUSTRIES INC.
Consolidated Balance Sheet
(Expressed in U.S. Dollars)
As at December 31,
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Assets --------------- ---------------
Current
Accounts receivable $ 27,858 $ 62,951
Inventory -- 55,926
Prepaid expenses 25,000 1,736
--------------- ---------------
52,858 120,613
Capital Assets (Note 3) -- 277,562
Excess of cost over net identifiable assets acquired (Note 4) -- 227,714
Intangible Asset (Net of Amortization) (Note 10) 1,293,600 --
--------------- ---------------
$ 1,346,458 $ 625,889
=============== ===============
Liabilities
Current
Bank indebtedness (Note 5) $ 11,716 $ 63,489
Accounts payable and accrued liabilities 882,129 121,978
Current portion of long-term debt (Note 6) -- 33,522
--------------- ---------------
893,845 218,989
Long-term debt (Note 6) -- 135,805
--------------- ---------------
893,845 354,794
--------------- ---------------
Stockholders' Equity
Common stock (Note 7) 2,342,973 354,367
Unrealized foreign exchange gain -- 8,258
Retained earnings (deficit) (1,890,360) (91,530)
--------------- ---------------
452,613 271,095
--------------- ---------------
$ 1,346,458 $ 625,889
================ ================
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
WOLF INDUSTRIES INC.
Consolidated Statement of Income (Loss) and Retained Earnings
(Expressed in U.S. Dollars)
For the years ended December 31,
1998 1997 1996
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Expenses
Administration $ 769,790 $ 8,078 $ 5,383
Amortization 50,400
Executive compensation 63,000 -- --
Rent 38,073 -- --
Research and development 590,118 -- --
1,511,381 8,078 5,383
Net Loss for the year, before undernoted (1,511,381) (8,078) (5,383)
Income (loss) from discontinued operations
(Note 9) (14,350) (88,308) 10,239
Loss on sale of subsidiary company (Note 9) (273,099) -- --
Net Income (Loss) for the year (1,798,830) (96,386) 4,856
Retained Earnings (Deficit), beginning of year (91,530) 4,856 --
Retained Earnings (Deficit), end of year $(1,890,360) $ (91,530) $ 4,856
===================== ===================== =====================
Income (Loss) per share (0.19) (0.01) 0.01
===================== ===================== =====================
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
WOLF INDUSTRIES INC.
Consolidated Statement of Cash Flows
(Expressed in U.S. Dollars)
For the years ended December 31,
1998 1997 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
Cash provided by (used for):
Operating activities
Net income (loss) from
continuing operations
$ (1,511,381) $ (8,078) $ (5,383)
Items not affecting cash
Amortization 50,400 -- --
----------------- ----------------- -----------------
1,460,981 (8,078) (5,383)
Changes in working capital:
Accounts receivable (27,858) -- --
Prepaid expenses (25,000) -- --
Accounts payable 850,977 24,171 6,982
----------------- ----------------- -----------------
(662,862) 16,093 1,599
Discontinued operations 17,698 (132,913) (250,304)
----------------- ----------------- -----------------
(645,164) (116,820) (248,705)
----------------- ----------------- -----------------
Financing activities
Issue of common shares 644,606 101,449 348,650
Share issue costs -- (54,412) (41,320)
----------------- ----------------- -----------------
644,606 47,037 307,330
----------------- ----------------- -----------------
Increase (decrease) in cash (558) (69,783) 58,625
Cash (bank indebtedness),
beginning of year
(11,158) 58,625 --
----------------- ----------------- -----------------
Cash (Bank indebtedness),
end of year $ (11,716) $ (11,158) $ 58,625
================= ================= =================
</TABLE>
17
<PAGE>
WOLF INDUSTRIES INC.
Consolidated Statement of Stockholders' Equity
(Expressed in U.S. Dollars)
For the years ended December 31,
<TABLE>
<CAPTION>
Common Shares Additonal Retained Foreign
-------------------------------- Paid-In Earnings Exchange
Shares Amount Capital (Deficit) Gains Total
- ------------------------------------------------------------------------------------------------------------------------------------
1998
<S> <C> <C> <C> <C> <C> <C>
Balance, beginning of year $ 10,684,716 $ 10,684 $ 343,683 $ (91,530) $ 8,258 $ 271,095
Stock Reverse Split 3:1 (7,123,094) -- -- -- -- --
Common shares issued 7,773,026 -- 1,988,606 -- -- 1,988,606
Share issue costs -- -- -- -- -- --
Net loss -- -- -- (1,798,830) -- (1,798,830)
Unrealized foreign
Exchange gain -- -- -- -- (8,258) (8,258)
------------ ------------ ------------ ------------- ------------ ------------
Balance, end of year $ 11,334,648 $ 10,684 $2,332,289 $ (1,890,360) $ -- $ 452,613
============ ============ ============ ============= ============ ============
1997
Balance, beginning of year 10,497,300 $ 10,497 $ 296,833 $ 4,856 $ -- $ 312,186
Common shares issued 187,416,000 187 101,262 -- -- 101,449
Share issue costs -- -- (54,412) -- -- (54,412)
Net loss -- -- -- (96,386) -- (96,386)
Unrealized foreign
Exchange gain -- -- -- -- 8,258 8,258
------------ ------------ ------------ ------------- ------------ ------------
Balance, end of year 10,684,716 $ 10,684 $ 343,683 $ (91,530) $ 8,258 $ 271,095
============ ============ ============ ============= ============ ============
1996
Common shares issued 10,497,300 $ 10,497 $ 338,453 $ -- $ -- $ 348,650
Share issue costs -- -- (41,320) -- -- (41,320)
Net income -- -- -- 4,856 -- 4,856
------------ ------------ ------------ ------------- ------------ ------------
Balance, end of year $ 10,497,300 $ 10,497 $ 296,833 $ 4,856 $ -- $ 312,186
============ ============ ============ ============= ============ ============
</TABLE>
18
<PAGE>
WOLF INDUSTRIES INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
1. Operations
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 business offices are
located in Vancouver, British Columbia, Canada.
In April 1998, the Corporation acquired an exclusive license to
develop and market a dental color analyzer. (Note 10). The Company's
primary business activity since that date has been to conduct
research, development and marketing plans to manufacture and sell the
product. Prior to this acquisition, the Corporation's primary business
activity was the blending of chemicals for use in oilfield production
from a wholly owned subsidiary's plant in Calgary, Alberta, Canada.
The subsidiary 714674 Alberta Ltd. was sold effective June 30, 1998.
(Note 9)
The consolidated financial statements of the corporation are prepared
in accordance with U.S. generally accepted accounting principles.
2. Significant Accounting Policies
(a) Consolidation (Discontinued Operations)
The Corporation sold its wholly owned subsidiary, 714674 Alberta
Ltd. (o/a Calgary Chemical) effective June 30, 1998. (Note 9) The
presentation of the consolidated financial statements for this
and prior years has been changed to reflect the subsidiary as a
discontinued operation.
(b) Excess of Cost over Net Identifiable Assets Acquired
The excess of cost over net identifiable assets acquired was
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) Intangible Asset
Intangible asset, license and patent rights, are recorded at cost
less accumulated amortization. Amortization is provided on a
straight line basis over a term of twenty years. Pursuant to
Statement of Financial Accounting Standards No 121, long lived
assets held by the Company must be reviewed for impairment
whenever events or circumstances indicate the carrying amount of
the asset may not be recoverable. An impairment loss is
recognized in the period it is determined.
19
<PAGE>
WOLF INDUSTRIES INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
2. Significant Accounting Policies, continued
(e) Revenue Recognition
Revenue earned by 714674 Alberta Ltd. in the blending of
chemicals was recorded on the completed contract basis.
(f) Foreign Currency Translation
The Company's functional currency is the Canadian Dollar and
reporting currency is the United States dollar. Monetary assets
and liabilities are translated at the exchange rate in effect at
the balance sheet date and non-monetary assets and liabilities at
the rate in effect on the dates of the related transactions.
Revenues and expenses are translated at rates approximating
exchange rates in effect at the time of the transactions. Gains
or losses arising on conversion of foreign currency transactions
are included in income in the period they occur.
(g) Income Taxes
The Company uses the liability method of accounting for income
taxes pursuant to SFAS No. 109. The only significant tax assets
the Company has are the accumulated non-capital losses which are
available to offset future taxable income. The Company's
operations have no income subject to income taxes and cannot be
determined that such tax assets will be realized. Accordingly,
the Company would eliminate the effect of the recognition of any
of these tax assets by the recording of a valuation allowance
equal to the value of the tax assets.
(h) Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, required management to
make estimates and assumptions that reflect the reported amount
of assets, liabilities, revenues, expenses and related
disclosures. Actual results could differ from those estimates.
3. Capital Assets
1998 1997
---------------------------------------
Net Book Value Net Book Value
----------------- -------------------
Equipment -- 21,780
Processing equipment -- 232,572
Furniture and fixtures -- 11,353
Leasehold improvements -- 11,857
------------------ -------------------
$ -- $ 277,562
================== ===================
20
<PAGE>
WOLF INDUSTRIES INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
4. Excess of Cost over Net Identifiable Assets Acquired
1998 1997
Excess of cost over net identifiable
assets acquired in acquisition of
714674 Alberta Ltd. (
o/a Calgary Chemicals)
$ -- $ 257,647
Less accumulated amortization -- (29,933)
------------ ------------
$ -- $ 227,714
============ ============
5. Bank Indebtedness
Bank indebtedness consists of: 1998 1997
------------ ------------
Bank overdraft $ 11,716 $ 11,158
Demand operating loan -- 52,331
------------ ------------
$ 11,716 $ 63,489
============ ============
6. Long-Term Debt
1998 1997
------------ ------------
Term bank loan requiring monthly
payments of $2,796 plus interest
at Canadian bankers acceptance
rate plus 4.14%, secured by a
first charge on all assets
$ -- $ 169,327
Less current portion -- 33,522
------------ ------------
$ -- $ 135,805
============ ============
During 1997, at the option of the vendor, $46,449 of the vendor loan
payable was converted into 77,416 common shares.
21
<PAGE>
WOLF INDUSTRIES INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
7. Common Stock
Authorized: 200,000,000 common shares, par value $0.001 each.
<TABLE>
<CAPTION>
1998 1997
Number Amount Number Amount
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Issued and outstanding
Balance beginning of year $ 10,684,716 $ 354,367 $ 10,497,300 $ 307,330
3:1 Reverse Stock Split (7,123,094) --
Private Placements -- -- 85,000 42,500
Conversion of Vendor Loan -- -- 77,416 46,449
Acquisition of licences 4,800,000 -- -- --
For services 2,973,026 1,988,606 25,000 12,500
10,684,716 408,779
Less share issue costs -- -- -- (54,412)
-------------- -------------- -------------- --------------
$ 11,334,648 $ 2,342,973 $ 10,684,716 $354,367
============== ============== ============== ==============
Represented by:
Common shares at par value 10,684 $ 10,684
Additional paid in capital 2,332,289 343,683
-------------- --------------
$ 2,342,973 $ 354,367
============== ==============
</TABLE>
At December 31, 1998, options providing for the issue of additional common
shares are outstanding as follows:
Number Price Expiry Date
1,050,000 $0.25 August 17, 2003
75,000 $0.25 October 1, 2003
22
<PAGE>
WOLF INDUSTRIES INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
7. Common Stock, continued
The Company accounts for options granted using the intrinsic value method
and in accordance with the accounting prescribed in Accounting Principles
Board Opinion No 25 ("APB 25"). Under APB 25, because the exercise price of
the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is
recognized. An alternative method is the fair value accounting provided for
under FASB statement No. 123 ("SFAS No 123"), which required the use of
option valuation models. Pro forma information regarding net income and
earnings per share is required by SFAS No. 123, and has been determined as
if the Company had accounted for its options granted under the fair value
method of that Statement. The fair value for these options was estimated at
the date of the grant using a Black-Scholes option pricing model with the
following weighted average assumptions for 1998, 1997, and 1996; risk free
rate of 5.25%; no dividends, volatility factor of the expected life of the
Company's common stock of 163%; and a weighted average expected life of the
options granted in each year of five years. The pro forma effect of SFAS No
123 is as follows:
Pro Forma
---------
December 31, 1998
Net loss for the period $ 2,074,046
Loss per share $ 0.221
No fair value estimate was made for 1997 and 1996 as the Company's stock
was not publicly traded.
8. Related Parties
(i) During the year, the company paid or accrued $63,000 for management
fees to a company wholly owned by a director.
(ii) A total of $31,679 was paid or accrued to a director and to a company
owned by a director for consulting and technical services rendered.
(iii)Accounts payable includes $4,900 payable to a company wholly owned by
a director for consulting fees.
24
<PAGE>
WOLF INDUSTRIES INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
9. Sale of 714674 Alberta Ltd. (o/a Calgary Chemical)
The Corporation disposed of its wholly owned subsidiary, 714674 Alberta
Ltd. (o/a Calgary Chemical) effective June 30, 1998 to an arm's length
corporation. The consideration for the sale was: a payment of fifteen
percent of the subsidiary's audited after-tax profit for the fiscal year
1998; indemnification of the Corporation from Calgary Chemical's bank debt;
a release of the employment contract of the former president of the
Corporation; cancellation of options to purchase shares of the Corporation
held by the former president; and forgiveness by the Corporation of $59,735
owed by the subsidiary to the Corporation.
As a result of the sale of 714674 Alberta Ltd. (Calgary Chemical) effective
June 30, 1998, the company has reflected the operations of Calgary Chemical
as a discontinued operation. Revenue from sales during the six months until
the sale was $286,347 compared to $444,192 for the year 1997 and $145,889
for the year 1996 (from acquisition September 30, 1996). Cost of goods sold
was $147,496 in 1998, $227,240 in 1997 and $75, 723 in 1996.
10. Intangible Asset
On April 8, 1998, the Corporation entered into a License Agreement with
Andrew Engineering Inc., ("Andrew") an arm's length corporation, whereby
the Corporation acquired a worldwide license to manufacture and market a
patented device for the color matching of dentures to a patient's tooth
color. The license agreement requires the Corporation and Andrew to develop
a business plan for manufacturing and marketing of the device, including
obtaining of financing; issuance of 4.8 million shares of the Corporation's
stock to Andrew; and provides for the Corporation to pay a royalty of 10%
of the gross profit of sales if the Corporation manufactures the product
itself, or 7% of gross profit if manufacturing is done by an independent
third party. The 4.8 million shares were issued during the year for a
deemed value of $1,344,000.
11. Contingencies
(i) An action has been brought by AEI Trucolor Inc. in British Columbia
Supreme Court against Wolf Industries Inc., Andrew Engineering Inc. and
other parties to the Licence Agreement as described above. AEI has made a
claim against the defendants as follows:
(a) Declaration that AEI Trucolor Inc. holds all ownership rights and
interest in the dental color analyzer;
(b) An injunction against the Defendants from continuing the commercial or
other development of the dental color analyzer;
(c) An injunction against the Defendants from disposing of or in any way
dealing with the dental color analyzer;
(d) An order that the dental color analyzer be delivered forthwith to the
Plaintiff;
(e) An accounting of all monies, profits and benefits made and received by
the Defendants for and on account of AEI Trucolor Inc.;
(f) General damages
(g) Punitive damages
The Corporation has filed an Appearance and is currently preparing a
response denying the allegations and requesting that the claim be
dismissed.
24
<PAGE>
WOLF INDUSTRIES INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. Dollars)
For the years ended December 31, 1998 and 1997
11. Contingencies, continued
(ii) The Company is presently in litigation in the Los Angeles County
Superior Court, West District, Santa Monica, California, concerning
the approximately $55,000 demand of the complaint purportedly due and
owing by the Company to Plaintiff Harvey Productions Inc. for public
relations services allegedly rendered but not paid. The Company has
denied these allegations. The matter is still in the discovery stage
and has not been set for trial.
12. Uncertainty Due to the Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using the year 2000 date is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000 and if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant system failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities set forth below on the dates indicated.
Date: May 11, 1999
- ---------------------------------
Wolf Industries Inc.
By /s/ Patrick A. McGowan
- ---------------------------------
Patrick A. McGowan, Title: President, Chief Executive Officer, and Director
By /s/ Allen Schwabe
- ---------------------------------
Allen Schwabe, Title: Director
By /s/ David Gane
- ---------------------------------
David Gane, Title: Director
26
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Financial Data Schedule Exhibit 27
This schedule contains summary financial information extracted from the interim
condensed consolidated financial statements of Wolf Industries Inc. as of and
for the twelve month period ended December 31, 1998 included in this report on
form 10-QSB and is qualified in its entirety by reference to such financial
statements.
<ARTICLE> 5
<CIK> 0001040482
<NAME> Wolf Industries, Inc.
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 27,858 62,951
<ALLOWANCES> 0 0
<INVENTORY> 0 55,926
<CURRENT-ASSETS> 52,858 120,613
<PP&E> 0 302,874
<DEPRECIATION> 0 (25,312)
<TOTAL-ASSETS> 1,346,458 625,889
<CURRENT-LIABILITIES> 893,845 218,989
<BONDS> 0 0
0 0
0 0
<COMMON> 2,342,973 354,367
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 1,346,458 625,889
<SALES> 0 0
<TOTAL-REVENUES> 0 440,192
<CGS> 0 227,240
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 1,511,381 323,218
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 17,426
<INCOME-PRETAX> (1,798,830) (106,266)
<INCOME-TAX> 0 (9,880)
<INCOME-CONTINUING> (1,784,480) (8,079)
<DISCONTINUED> (14,350) (88,307)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,798,830) (91,530)
<EPS-PRIMARY> (0.19) (0.01)
<EPS-DILUTED> (0.17) (0.01)
</TABLE>
