As filed with the Securities and Exchange Commission on February 14, 2000
SEC File No.: 0-26479
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12 (g) of the Securities Exchange Act of 1934
WOLFPACK CORPORATION
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(Name of Small Business Issuer in Its Charter)
Delaware 56-2086188
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
17 Glenwood Avenue,
Raleigh, North Carolina 27603
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(Address of Principal Executive Offices) (Zip Code)
(919) 831-1351
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(Registrant's Telephone Number, Including Area Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
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(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
(a) Business Development.
Wolfpack Corporation, a Delaware corporation (the "Company"), was
formed on March 16, 1998 to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law
("DGCL"). On May 14, 1998, the Company formed Wolfpack Subsidiary Corp., a
Delaware corporation and a wholly-owned subsidiary of the Company (the
"Subsidiary"), in order to effectuate and complete acquisitions of AAM
Investment Council, Inc. ("AAM") and Dina Porter, Inc. ("Dina Porter").
(Unless expressly stated otherwise, all references to the Company
hereinafter shall be deemed to include the Subsidiary. The acquisition of
AAM hereinafter shall be referred to as the "AAM Acquisition" and the
acquisition of Dina Porter hereinafter shall be referred to as the "Dina
Porter Acquisition." Together the AAM Acquisition and the Dina Porter
acquisition hereinafter shall be referred to as the "Acquisitions").
On January 4, 1999, the Company and the Subsidiary entered into two
acquisition agreements, one with AAM (the "AAM Acquisition Agreement") and
the other with Dina Porter (the "Dina Porter Acquisition Agreement")
(collectively the "Acquisition Agreements"). Under the terms of the
Acquisition Agreements, the Company (i) acquired all of the issued and
outstanding stock of AAM from the AAM shareholders in exchange for
1,000,000 shares of the Common Stock of the Company, and (ii) acquired all
of the issued and outstanding shares of stock of Dina Porter from the Dina
Porter shareholders in exchange for 1,000,000 shares of the Company's
common stock, par value $.001(the "Common Stock"). The shares of Common
Stock issued to the shareholders of AAM and Dina Porter were issued
pursuant to an exemption from the registration requirements of the
Securities Act pursuant to Section 4(2). As a result of the Acquisition,
AAM, which was formed under Pennsylvania law on February 15, 1990, and
Dina Porter, which was formed under North Carolina law on May 8, 1998
became the wholly-owned subsidiaries of the Company.
(b) Business of the Company.
(1) Principal Products or Services and their Markets.
(i) The Company.
The Company is a holding company, the principal assets of which
consist of the capital stock of each of AAM and Dina Porter. The Company
conducts no business on its own independent of AAM and Dina Porter.
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(ii) AAM
The business in which AAM engages is the provision of investment
advisory services. AAM currently has no active clients but it is presently
in discussions with four (4) prospective clients. Management has devoted
the majority of its efforts to (i) developing its marketing philosophy and
market strategy, (ii) obtaining new clients, (iii) pursuing and assembling
a management team to complete its marketing goals, and (iv) obtaining
sufficient working capital through loans and equity through private
placement offerings. These activities have been funded by the Company's
management and investments from stockholders. Among the services that AAM
has offered since its formation by management in 1990 has been portfolio
management designed to achieve unique investment objectives. AAM seeks to
act as a financial adviser to select companies in order to: (i) provide
financial advice and consulting on an everyday basis according to a
company's needs; (ii) analyze certain historical and pro forma financial
information pertaining to the operation of a company; (iii) perform due
diligence on a company, its industry, markets and operations as well as on
the principals involved to the extent that AAM deems prudent; (iv) assist
in the preparation of financial pro formas or other presentation documents
to the extent requested by a client to assist in the structuring,
negotiation, documentation and placement of financing; (v) use its best
efforts to identify and contact qualified private, institutional and
industry investors or their representatives regarding the financing and to
make introductions regarding the same; (vi) under the direction of a
client, advise and assist in the negotiations and structuring of such
financing with potential investors; and (vii) assist in the closing of the
financing with the potential investors. At the current time, AAM does not
have the resources or personnel to assist a client in a large financial
transaction. AAM does have the capabilities of assisting with structuring,
negotiation, preparation of documentation, and placement of financing of a
small to medium-size equity, debt or sub-debt raise in the range of one
million dollars to thirty million dollars.
AAM can service any size investment advisory client as long as such
client has no more than ten portfolios. The ideal client of AAM has one to
three portfolios and clearly defined investment objectives.
The criteria that AAM looks for in selecting a client are those
listed above and reiterated below:
1. A small to medium-size client.
2. A client looking for financial consulting assistance on a
small to medium-size transaction. (Debt, equity or sub-debt
raise)
3. A small company that needs "Start-up" financial consulting
assistance.
4. An investment advisory client that has or is willing to create
clearly defined investment objectives.
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5. An investment advisory client with one to three portfolios.
Market for AAM's Services
The market for AAM and the kind of companies that will engage the
services of AAM are the "start-up" and the small to medium-size company.
They do not have to be in a specific industry, but they need to require
financial consulting services such as:
1. Provide financial advice and consulting on an everyday basis
according to a company's needs.
2. Analyze certain historical and pro forma financial information
pertaining to the operation of a company.
3. Perform due diligence on a company, its industry, markets and
operations as well as on the principals involved.
4. Assist in the preparation of financial pro formas or other
presentation documents to the extent requested by a client to
assist in the structuring, negotiation, documentation and for
the offering.
5. Use its best efforts to identify and qualify private,
institutional and industry investors or their representatives
regarding the financing and to make introductions regarding
same.
6. Under the direction of the client, advise and assist in the
negotiations and structuring of such financing with potential
investors.
7. Assist in the closing of the financing with the potential
investors.
In the investment advisory business, AAM's potential clients will be
high net worth individuals, small companies or institutional investors.
AAM's relationship with a client that needs financial advisory
services with a specific transaction would generally last about three or
four months, and AAM would get a specific fee only for completing the
transaction. Usually, 1% of the total transaction for raising debt, 3% of
the total transaction for raising sub-debt, and 5% of the total
transaction for raising equity.
For an investment advisory client that wants a specific portfolio
structured and managed, AAM would charge fees to that client as follows:
1/4 of 1% of the total assets per year for a debt portfolio, billed
quarterly, or 3/4 of 1% of the total assets per year for an equity
portfolio, billed quarterly. The investment advisory client could stay
with AAM for a period as short as six months or indefinitely, depending on
the client's objective.
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The term "portfolio" refers to the combined holding of more than one
stock, bond, commodity, real estate investment, cash equivalent, or other
assets by an investor.
AAM's Marketing Strategy
Most of AAM's marketing will be done by word of mouth. Advertising
is not a very effective way to obtain business as it is expensive (over
time) and it can only be done on a small regional basis unless a great
deal of money is expended. Therefore, there will only be a small amount of
targeted advertising done. AAM's marketing will take place with accounting
and legal firms. These are the most likely types of professionals that
would refer business of the size and type that would be appropriate for
AAM. Establishing contacts with these firms would be accomplished first.
This would be done with breakfast or lunch meetings first with the
partners of legal and accounting firms and then meetings with other
members of the firm.
Financial consultants and other professional consultants would be
the second leg of a marketing program. Again, most of this would be
accomplished in one-on-one or small group meetings. Over time, this type
of marketing should build confidence and increase their comfort factor to
the point of recommending AAM to their clients.
Expansion of AAM
Mr. Coker is the sole employee of AAM and at the moment is integral
to AAM's success. However, AAM is going to devote considerable time and
efforts to recruiting highly-skilled and experienced individuals. Once
recruited, AAM will compensate such individuals and provide incentives to
encourage them to remain with AAM. AAM intends to hire one person within
the next six (6) months at a yearly salary of approximately $75,000.
Thereafter, AAM will evaluate its needs for additional personnel and hire
such personnel accordingly.
To date, AAM's investment advisory services have been limited. AAM
is not registered with the Securities and Exchange Commission (the "SEC")
as an investment adviser under the Investment Advisers Act of 1940, as
amended (the "Advisers Act") due to the exemption from such registration
for investment advisers who have fewer than 15 clients in a twelve month
period. The Company intends to expand AAM's investment advisory business
and will register as an investment adviser under the Advisers Act, when it
is required to do so.
(ii) Dina Porter
The business in which Dina Porter engages is the operation of a
retail store which specializes in contemporary clothing, jewelry and fine
crafts. Dina Porter specializes in contemporary clothing for women ranging
from sizes XS to 3X and in fine gifts. Dina Porter carries clothing, gifts
and crafts that are "Made in America". The clothing is unconstructed,
offering maximum comfort, and is easy to care for, while using top fabrics
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such as linen, silk and chiffon. Dina Porter carries casual to wedding
attire and certain lines can be custom ordered. Dina Porter carries over
100 lines of clothing, but only carries two or three items per style.
The term "contemporary" refers to more modern in character as
opposed to early American, traditional, or other older styles. Since all
the craftsmen and clothing designers of the products that Dina Porter
carries are living, their work represents newer looks in the art and
crafts world. The work is simpler, less cluttered - all represented by the
word "contemporary."
The term "fine," with respect to "fine crafts and clothing" refers
to a better quality of workmanship and style. Since pieces are made in
America by contemporary craftsmen and designers, using limited edition
materials, the work is more refined than found where price is a greater
issue than quality. Fine also refers to a refined quality - exceptional,
not commonplace.
The term "unconstructed" is a term in the clothing industry that
refers to clothing which is not highly defined in size. Unconstructed
clothing is generally sized as small/medium and medium/large instead of
size 6, 10, 12 or 18 etc. Since there are usually no definite seams or
waistbands to limit the wearer to a specific size, more than one size or
shape woman can wear the same garment. For example, shoulder seams do not
fall exactly on the shoulder, but drop; waistbands are elastic, and hems
tend to be much longer than on clothing that is more traditional. Comfort
is as important as the look of the clothing.
In addition to clothing, Dina Porter carries a wide selection of
accessories including scarves, hats, purses and limited edition jewelry.
The scarves that Dina Porter carries are usually one-of-a-kind, hand
painted silk. The jewelry carried consists of gold, silver, metal and
modern art pieces. For fine gifts, Dina Porter offers table pieces of hand
blown glass, clocks, hand-thrown pottery, perfume bottles, picture frames
and kaleidoscopes. Dina Porter does carry one line of gifts that is an
exception to the "Made in America" rule. That line is Halcyon Days, the
English Battersea Boxes that are considered to be highly desirable as
collectibles. Halcyon Days handmade enamel boxes are imported from Great
Britain. The manufacturer of the boxes was founded during the reign of
Queen Victoria, and is located in Bilston, England. Each box is made of
copper, covered in enamel, and then hand painted. The boxes are carried by
some of the most prestigious retailers in the USA including Tiffany's,
Neiman Marcus, Gumps, and Scully and Scully. Many of their editions are
limited, and collectors seek outdated boxes as well as the year boxes
(e.g., Mother's Day 1999, Valentine's Day 1999). Dina Porter provides a
unique service by customizing the inside of these boxes.
The market for Dina Porter is the upscale customer (primarily
female) living in Raleigh, Chapel Hill, and Durham, North Carolina area
(i.e., the Research Triangle) and also the tourists who come to the
capital city of Raleigh. The upscale customer, a person who has more
disposable income than the average consumer, is our target market: since
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our clothing and crafts are handmade in America and thus not produced
abroad for pennies on the dollar, the cost is greater and thus the end
market for these goods is more limited. Upscale customers are more easily
able to afford both this clothing and American crafts which are more
expensive to produce than visually comparable items that are imported from
third world countries and the Far East where labor costs are so much less.
The clothing and fine crafts carried by Dina Porter are not usually
available to other stores in the area, as the suppliers are smaller, more
"mom and pop" vendors rather than large manufacturers. Thus, the customers
who come to the store appreciate the fact that the items offered are not
readily available elsewhere in the area. In addition, Dina Porter is
focusing on increasing its sales through the Internet by way of its eleven
(11) page web site.
There are definite seasonal effects on sales due to the nature of
the retail business. However, the mixture of hard goods (i.e., crafts) and
soft goods (clothing) help minimize any downturn in economic cycles
experienced by stores having only one or the other type of goods. For
example, Christmas is not a peak season for clothing, whereas September
through mid-November are, but by late November the hard goods pick up and
help outweigh any downswings found in the clothing industry. Usually the
worst two months of the year for retail sales are January and July, but
that is typical throughout the retail industry.
Susan H. Coker is the founder and full time employee of Dina Porter.
She does the buying, ordering and is responsible for the daily operations.
Her other employees often assist in the buying and focus on the selling
part of the store, i.e., the customer contact.
Dina Porter has conducted this line of business since its inception
by Susan H. Coker in 1983 as a Pennsylvania sole proprietorship, in 1995
as a North Carolina sole proprietorship and as a North Carolina
corporation in 1998. The Company plans to build Dina Porter's retail
merchandising business by opening additional stores in the same geographic
area and in other locations in North Carolina. Dina Porter intends to open
an additional location in Chapel Hill, North Carolina within the next
twelve (12) months, in a retail space of approximately 2,000 square feet.
After opening the second location, Dina Porter and the Company will
evaluate the possibility of opening additional branches in other parts of
North Carolina. Dina Porter intends to pay no more than $20.00 per square
foot and estimates that one time set-up costs will be approximately
$25,000.
(2) Distribution Methods of the Products or Services.
Prior to the AAM Acquisition, AAM's investment advisory services
have been limited. AAM targeted only select clients via word of mouth and
had fewer than 15 clients in a twelve month period. The Company intends to
focus its efforts on enlarging its client base. Until recently, AAM has
had a few clients every year. The optimum number of clients in the past
has been three (3) to four (4) clients a year. Prior to the Dina Porter
Acquisition, former management relied on local and Internet advertising,
as
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well as "word of mouth". The Company seeks to expand the business of AAM
and Dina Porter by increasing sales and marketing efforts to attain
significant penetration into targeted areas.
Dina Porter is constantly working on increasing sales in many
directions. Their advertising budget increases yearly, and Susan Coker
stresses the importance of customer retention with the sales staff. In the
Spring of 1999, several in-house fashion shows were held, with a
percentage of proceeds going to the charitable group that sponsored the
show. These proved very successful and Dina Porter plans to continue them
in the future. The web site is another way to expand, and Dina Porter will
be one of two key retailers mentioned on Citysearch's retail page over the
ten week period during the Fall/Winter 1999-2000 season. Dina Porter's
semi-annual newsletter is mailed to over a 3,000 customer base and reminds
customers of what is current in both fashion and crafts.
The web site for Dina Porter is maintained by Susan H. Coker and her
staff, in addition to backup provided by Citysearch. Due to the limited
amount of any of the crafts and clothing sold by Dina Porter, it is not
possible or practicable to display the products or post the prices on the
website, since the product may not be available at the time the web site
is viewed. The photos of the products that are displayed on the website
are representative of the products Dina Porter carries. The Website
invites viewers to visit, telephone, or e-mail Dina Porter with inquiries.
Once a customer contacts Dina Porter via e-mail (which is contained
in the website) or by the "800" toll free number, the staff at Dina Porter
discuss the customer's needs. Dina Porter will then e-mail photographs of
the current products in stock to the customer. If Dina Porter has what the
customer wants, the merchandise is shipped directly to the customer via
UPS (Dina Porter maintains an account with UPS, which comes twice daily).
Dina Porter has purchased a digital camera in order to photograph
merchandise and e-mail it to a customer for viewing.
As most aspects of AAM's business will be dependent on highly
skilled and experienced individuals, AAM will devote considerable efforts
to recruiting and compensating such individuals and to providing
incentives to encourage them to remain with AAM. Further, approximately
sixteen and one-half (16.5%) percent of the proceeds derived from the
March 26, 1999 limited offering of the Company's common stock (the
"Offering") have been targeted for sales and marketing efforts and
approximately fifty-eight (58%) percent of the $271,500 raised by the
Offering have been targeted for the acquisition and expansion of AAM and
Dina Porter.
(3) Status of any publicly announced new product or service.
There have been no publicly announced new products or services by
the Company, AAM or Dina Porter.
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(4) Competitive Business Conditions and the Company's Competitive
Position in the Industry and Methods of Competition.
(i) The Company.
The Company is not aware of any competition that it may have from
other holding companies. However, AAM and Dina Porter do have significant
competition in their respective industries.
(ii) AAM.
AAM will encounter intense competition in all aspects of its
business and will compete directly with many full service securities
firms, a significant number of which (x) offer their customers a broader
range of financial services including investment advisory services, (y)
have substantially greater resources and (z) may have greater operating
efficiencies. In addition, a number of firms offer investment advisory
services which are incidental to their other services and do not charge
any commission for this type of service. Moreover, there is substantial
commission discounting by full-service broker-dealers competing for
institutional and individual brokerage business. The possible increase of
this discounting could adversely affect AAM.
Other financial institutions, notably commercial banks and savings
and loan associations, offer customers some of the services and products
presently provided by investment advisers and securities firms. In
addition, certain large corporations and banks have entered the securities
industry by acquiring securities firms, which offer investment advice.
While it is not possible to predict the type and extent of competitive
services which banks and other institutions ultimately may offer to
customers, AAM may be adversely affected to the extent those services are
offered on a large scale.
(iii) Dina Porter.
The specialty retail industry is highly competitive and fragmented.
Specialty retail means that the products offered are not available in
lower to mid-end department stores or from mass merchandisers. The
clothing and craft suppliers are usually smaller and create fewer products
to sell at a higher price. This duality of a more limited quantity and
higher price attracts the customer who prefers a more exclusive look and
is willing to pay for the exclusivity. Dina Porter competes with large
specialty retailers, traditional and better department stores, national
apparel chains, designer boutiques, individual specialty apparel stores
and direct marketing firms. Dina Porter competes for customers principally
on the basis of quality, assortment and presentation of merchandise,
customer service, store ambience, sales and marketing programs and value.
Dina Porter competes for quality merchandise and assortment principally
based on relationships with designer resources and purchasing power. Most
of Dina Porter's competitors are larger and have greater financial
resources than the Company. Certain of Dina Porter's merchandise
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resources have established competing free-standing retail stores in the
same vicinity as Dina Porter.
(5) Sources and Availability of Raw Materials and the Names of Principal
Suppliers.
None of the Company, AAM nor Dina Porter utilizes raw materials in
its respective business. The closest comparison to the utilization of raw
materials is the reliance by Dina Porter on designers of quality and
fashionable merchandise. The Company has no guaranteed supply arrangements
with its principal merchandising sources. The Company's success is
dependent in part upon initiating and maintaining strong relationships
with designers and that such designers will continue to meet Dina Porter's
quality, style and volume requirements.
(6) Dependence on one or a few major customers.
Neither the Company nor Dina Porter depends on one or a few major
customers. AAM, historically, has targeted only selected companies and has
had fewer than 15 clients in any twelve month period. Currently, AAM is in
discussions with four (4) potential clients. The loss of any client could
have a material adverse effect on its business. However, the Company has
targeted the build-up of the AAM client base as part of its business plan.
(7) Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration.
None.
(8) Need for any Government Approval of Principal Products or Services.
(i) The Company.
The Company is a holding company and does not need any Government
approval of any principal products or services. It may be noted that
effectiveness of this Form 10-SB, clearance of all comments on the Form
10-SB by the Securities and Exchange Commission and approval of Form 211
as filed with the NASD are prerequisites of the Company's common stock
being quoted on the National Association of Securities Dealers Over The
Counter Bulletin Board (the "Bulletin Board").
(ii) AAM
AAM is not presently awaiting any governmental approval for its
services. Note that AAM is not registered with the SEC as an investment
adviser under the Advisers Act due to the exemption from such registration
for investment advisers who have fewer than 15 clients in a twelve month
period. The Company intends to expand AAM's investment
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advisory business and will register as an investment adviser under the
Advisers Act, when it is required to do so.
Assuming that a determination is made that AAM is no longer exempt
from registration under the Advisers Act, it will be required to register
with the SEC and/or potentially with the state in which it is located or
intends to conduct business. Jurisdiction over investment advisers is
allocated between the states and the federal government based generally
upon the amount of assets the investment advisor has under management.
Benefits to a client of an investment advisor registering under the
Advisers Act include the receipt of certain current audited financial
information and other non-financial information. As a public reporting
company, AAM already will be preparing audited financial statements and
providing non-financial disclosure to the investing public. Therefore, AAM
does not view the preparation and updating of the Form ADV to be an
onerous responsibility.
There is no requirement for investment advisers to pass any
examination or to meet any qualification requirements based on training.
However, all investment advisers are subject to restrictions against
engaging in fraudulent, deceptive or manipulative acts or practices and
such activities could result in the adviser being barred from registration
or being subject to remedial sanctions after registration. To register,
AAM would file a Form ADV in triplicate and submit with it a registration
fee of approximately $150. As AAM would probably request the assistance of
an attorney to complete this filing on its behalf, AAM anticipates
incurring several hundred dollars in attorney's fees.
Form ADV consists of a two part application which provides the SEC
with information regarding the educational and business background and the
business practices of the investment adviser and of those who control the
investment adviser. An investment adviser must include an audited balance
sheet with Form ADV where it (i) retains custody of client funds or
securities or (ii) requires prepayment of advisory fees six months or more
in advance and in excess of $500 per client.
Within 45 days after Form ADV is filed, the SEC should grant
registration or begin proceedings to deny the registration. Grounds for
denial are where the SEC finds that the investment adviser has committed
prohibited acts and, therefore, denial is in the public interest.
In order for the investment adviser to remain in good standing, the
Advisor's Act requires the investment adviser, among other things, to:
1. keep Form ADV current by filing periodic amendments whenever
any information previously reported becomes inaccurate;
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2. file a brief report on Form ADV-S within 90 days of the end of
each fiscal year (along with an audited balance sheet when
applicable); and
3. comply with the "brochure rule" which requires most investment
advisers to provide clients and prospective clients with
information about the investment adviser's business practices
and educational and business background. Part II of Form ADV
can be used for this purpose.
As previously stated, all investment advisers are subject to
restrictions against engaging in fraudulent, deceptive or manipulative
acts or practices. Registered investment advisers are subject to remedial
sanctions including censure, limitations on their operations, suspension
for a period not exceeding 12 months, and revocation for, among other
things, willfully violating or aiding or abetting a violation of the
Securities Act of 1933, the Securities Exchange Act of 1934, the
Investment Company Act of 1940 or the Advisers Act.
(iii) Dina Porter
Dina Porter does not need any Government approval of any principal
products or services. It may be noted that a facility's operating costs
are affected by increases in the minimum hourly wage, unemployment tax
rates, sales taxes and similar costs over which the Company has no
control. Some of Dina Porter's personnel may be paid at rates based on the
federal minimum wage. As a result, increases in the minimum wage may
result in an increase in Dina Porter's as well as in the Company's labor
costs.
(9) Effect of Existing or Probable Governmental Regulations on the
Business.
The business of AAM, the investment advisory industry and securities
industry generally, are subject to extensive regulation at both the
federal and state levels. Failure to comply with any of these laws, rules
or regulations could result in fines, suspension or expulsion, which could
have a material adverse effect upon AAM as well as the Company. As
previously stated, increases in the minimum wage may result in an increase
in the Dina Porter's as well as the Company's labor costs.
(10) Estimate of the amount spent during each of the last two fiscal
years on research and development activities, and the extent to
which the cost of such activities are borne directly by customers.
Since the Company's inception in 1998, the Company has incurred no
research and development expense. Neither Dina Porter nor AAM has incurred
corporate research and development expense since the Company's acquisition
of them in January 1999. It may be noted that AAM incurs certain research
expenses as a part of conducting its investment advisory services and
passes these expenses along to its client. However, this type of daily
activity is part of the very foundation of the service which AAM provides
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and should be differentiated from the research and development expenses
incurred in overall technology or product development.
(11) Costs and effects of compliance with environmental laws (federal,
state and local).
None of the Company, AAM nor Dina Porter is impacted directly by the
costs and effects of compliance with environmental laws.
(12) Number of total employees and number of full time employees.
As of the date of this filing, the Company had no full-time
employees. As of the date of this filing, AAM had one (1) full-time
employee and Dina Porter had nine (9) employees, two (2) of whom are
full-time and seven (7) of which are part-time.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of 0perations.
The Company was formed on March 16, 1998, under the laws of the
State of Delaware to engage in any lawful act or activity for which
corporations may be organized under the general corporation law of the
State of Delaware. The Company's principal assets consist of cash and an
officer loan receivable and the assets of the Company's subsidiary, Dina
Porter, Inc. and the revenues it receives through the sales of products
through its one retail store. AAM is currently inactive with no revenues
or operating expenses. The Company has sold 3,077,400 shares of common
stock at $0.10 per share for an aggregate cash consideration of $307,740
less $40,473 in offering expenses through September 30, 1999.
Development Stage Activities
The following discussion relates to the results of our operations to
date, and our financial condition:
The Company
For the next 12 months, the Company plans to expand the operations
of its two subsidiaries Dina Porter, Inc. and AAM by providing its
subsidiaries with working capital obtained through its recently completed
limited offering and private placement of common stock. The expansion of
Dina Porter's business includes (i) obtaining new customers for the sale
of its retail products through its retail store by continuing its
marketing efforts through direct mail, advertising and the Internet and
plans to build Dina Porter's retail merchandising business by opening
additional stores in the same geographic area and in other locations in
North Carolina, (ii) enhancing its sources for inventory, and (iii)
pursuing and assembling a management team to continue the process
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of completing its marketing goals and to market limited quantities of
expanded lines of merchandise.
The Company's subsidiary, AAM, intends to act as a financial adviser
and provide investment advisory services to select companies who have
portfolios ranging in size from an ideal number of three to a practical
limit of 10 and have clearly defined investment objectives. At the moment,
Mr. Coker is the sole employee of AAM and is integral to its success.
However, AAM intends to devote considerable time and effort to recruiting
highly-skilled and experienced individuals. Once recruited, AAM will
compensate such individuals and provide incentives to encourage them to
remain with AAM. AAM is not registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") due to the exemption from such registration for investment
advisers who have fewer than 15 clients in a twelve month period. The
Company intends to expand AAM's investment advisory business and will
register as an investment adviser under the Advisers Act when it is
required to do so.
The Company anticipates that with the completion of its limited
offering and private offering of its common stock it will be in a position
to complete its expansion activities and expand its operations. The
Company anticipates that its results of operations may fluctuate for the
foreseeable future for Dina Porter due to several factors, including
whether and when new products are successfully integrated and accepted by
Dina Porter's present clientele and the targeted market for new stores,
continued market acceptance of current products, competitive pressures on
pricing, and changes in the mix of products sold. Operating results would
also be adversely affected by a downturn in the market for current
products. Because the Company is continuing to increase its operating
expenses for personnel and other general and administrative expenses, the
Company's operating results would be adversely affected if its sales did
not correspondingly increase. The Company's limited operating history
makes accurate prediction of future operating results difficult or
impossible. Although Dina Porter has experienced growth in recent years,
there can be no assurance that, in the future, the Company will sustain
revenue growth or remain profitable on a quarterly or annual basis or that
its growth will be consistent.
The Company anticipates that its results of operations may fluctuate
for the foreseeable future for AAM due to several factors, including
whether and when new services are successfully integrated and accepted by
AAM's targeted market of potential clients, market acceptance of initial
and planned services, competitive pressures on pricing, and changes in the
mix of services offered. Operating results would also be adversely
affected by a downturn in the market for current services and volatility
in the financial markets and changes in the regulated environment. Because
the Company is continuing to increase its operating expenses for personnel
and other general and administrative expenses, the Company's operating
results would be adversely affected if the demand for its services did not
correspondingly increase. The Company's limited operating history makes
accurate prediction of future operating results difficult or impossible.
13
<PAGE>
AAM is a development stage enterprise with no activity for the year
ended December 31, 1998 and for the nine months ended September 30, 1999.
During this period, management had devoted the majority of its efforts to
developing its marketing philosophy and market strategy, obtaining new
clients for its services, pursuing and assembling a management team to
continue the process of completing its marketing goals and obtain
sufficient working capital through loans and equity through the limited
and private offerings of the Company's common stock offering. These
activities were funded by the Company's management and investments from
stockholders.
Dina Porter is an operating entity with business operations going
back to 1995 and with increased revenue for the year ended December 31,
1998 and for the nine months ended September 30, 1999. During this period,
management has devoted the majority of its efforts to developing its
marketing philosophy and market strategy, obtaining new customers for its
products, enhancing its sources for inventory, pursuing and assembling a
management team to continue the process of completing its marketing goals,
market quantities of products and obtain sufficient working capital
through loans and equity through the limited and private offerings of the
Company's common stock. These activities were funded by the Company's
management and investments from stockholders.
Results of Operations
Results of Operations for the year ended December 31, 1998 as
compared to December 31, 1997.
For the year ended December 31, 1998, AAM was inactive.
For the year ended December 31, 1998, Dina Porter generated net
sales of $672,619 as compared to $463,536 for the year ended 1997 for an
increase of 209,083 or 45.1% of net sales. The increase in sales was the
direct result of an increase in advertising and better sales promotion
along with a change and improvement in merchandise offered. The Company's
cost of goods sold for the year ended December 31, 1998 was $405,540
representing 60.3% of net sales as compared to $251,790 for the year ended
December 31, 1997 representing 54.4% of net sales. The Company's gross
profit on sales was approximately $267,079 or 39.7% of net sales for the
year ended December 31, 1998 as compared to $211,746 for the year ended
December 31, 1997 or 45.6% of net sales. The decrease in gross profit is
the result of entering a period of reevaluation of Dina Porter's sources
of supply, changing the selection of merchandise being offered, and
yielded an average gross profit of 40% which was less than the same period
ending December 31, 1997 for the mix of the products sold. The Company
tries to maintain a targeted average gross profit of 40% of sales overall.
The gross profit of 39.7% of net sales for the year ended December 31,
1998 was considered close to the expected gross profit for the mix of
products sold. This targeted gross profit enabled Dina Porter to be more
competitive in the community being served and resulted in an increase in
sales and cash contribution from the increase in gross profit.
14
<PAGE>
The Company's general and administrative costs aggregated
approximately $219,220 for the year ended December 31, 1997 as compared to
$251,938 for the year ended December 31, 1998 representing an increase of
$32,718. This increase represents increased spending for advertising,
sales help and increased costs of handling credit cards. Expenses include
$-0- in expenses allocated to the parent company Wolfpack and $251,938 in
expenses incurred by Dina Porter. A breakdown of expenses for Dina Porter
disclose $64,613 for rent and real estate taxes; $23,820 in office
expenses; bank charges of $6,961; $28,045 in promotion expenses; $12,484
in shipping expenses; $83,942 in payroll and payroll taxes; $29,314 in
advertising expenses and $2,759 in professional fees.
Results of Operations for the nine months ended September 30, 1999
as compared to the nine months ended September 30, 1998.
For the nine months ended September 30, 1999, AAM was inactive.
For the nine months ended September 30, 1999, the Company generated
net sales of $449,493 as compared to $452,551 for the nine months ended
September 30, 1998 representing an decrease of $3,058 or approximately 1%
of net sales. The Company's cost of goods sold for the nine months ended
September 30, 1999 was $269,696 or 60.0% of net sales as compared to
$266,905 or 58.9% of net sales for the nine months ended September 30,
1998. The Company's gross profit on sales was $179,797 or 40.0% of sales
for the nine months ended September 30, 1999 as compared to $185,646 or
41.0% for the nine months ended September 30, 1998. The decrease in gross
profits is the result of a change in the mix of products sold having a
higher cost of goods versus the aggregate costs of the products sold
during the same nine month period ending September 30, 1998.
The Company's general and administrative costs aggregated
approximately $316,156 for the nine months ended September 30, 1999 as
compared to $192,575 for the nine months ended September 30, 1998
representing an increase of $123,581. This increase represents increased
spending for advertising, sales help and costs of handling credit cards.
Expenses include $94,125 in expenses allocated to the parent company
Wolfpack relating to the promotion of the Company and its offerings of
common stock and $222,031 in expenses incurred by Dina Porter. A breakdown
of the $94,125 in expenses for the parent Company include: $8,063 in
accounting fees; legal expenses not related to the stock offering of
$16,032; $ 2,794 in administrative expenses; $29,041 in consulting fees;
and $38,195 for market research fees. A breakdown of expenses for Dina
Porter disclose $44,574 for rent and real estate taxes; $24,363 in office
expenses; bank charges of $9,427; $14,476 in promotion expenses; $8,101 in
shipping expenses; $74,424 in payroll and payroll taxes; and $46,666 in
advertising expenses.
15
<PAGE>
Liquidity and Capital Resources
The Company increased cash by $20,716 from a balance of $132,070 at
January 4, 1999 to $152,786 at September 30, 1999 through the process of
receiving net cash from the sale of $267,267 in shares of common stock.
The Company increased working capital by $133,279 from a balance of
$233,928 at January 4, 1999 to $367,207 at September 30, 1999.
For the year ended December 31, 1998, the Company experienced
positive cash flows from operations of $54,990 and negative cash flows
from operations of $246,551 for the nine months ended September 30, 1999.
For the year ending December 31, 1998, the Company expended $35,139 for a
new vehicle for Dina Porter and a capital withdrawal of $7,500 while Dina
Porter was operating as a sole proprietorship. For the nine months ended
September 30, 1999, Dina Porter expended $61,135 to increase inventory for
its normal inventory needs, for the coming holiday season and with the
expectation of finding and opening a new retail location shortly after the
beginning of the new year.
Management believes that it will be able to fund the Company through
the proceeds of the recently completed limited offering and private
offering of its common stock and through positive cash flows from Dina
Porter until the Company has developed the business of AAM and is
experiencing positive cash flows.
Thereafter, if cash generated from operations is insufficient to
satisfy the Company's working capital and capital expenditure
requirements, the Company may be required to sell additional equity or
debt securities or obtain additional credit facilities. There can be no
assurance that such financing, if required, will be available on
satisfactory terms, if at all.
Known trends, events or uncertainties that could be reasonably
likely to have a material adverse effect on the businesses of Dina Porter,
AAM and the Company and may thereby materially impact the Company's
short-term or long-term liquidity and/or net sales, revenues or income
from continuing operations are, as to Dina Porter: seasonality of sales
and the continuation of inventory from present and future vendors at
prices that will permit Dina Porter to operate at the current or improved
gross profit levels; as to AAM: Federal Securities regulations that may
effect the ability for AAM to complete its marketing strategy and a
favorable environment in which AAM will conduct its consulting activities.
The following is a detailed explanation of these trends, events, or
uncertainties.
16
<PAGE>
1. As to AAM.
A. Fluctuating Securities Volume and Prices
AAM (and the securities industry in general) will be directly
affected by national and international economic and political
conditions, broad trends in business and finance, the level and
volatility of interest rates, changes in and uncertainty regarding
tax laws and substantial fluctuations in the volume and price levels
of securities transactions. AAM (and the securities industry in
general) will be subject to other risks, including customer fraud,
employee errors or misconduct and litigation. In addition, price
fluctuations may cause losses on securities positions, which AAM
recommends.
B. Competition from Securities Firms
AAM will encounter intense competition in all aspects of its
business and will compete directly with many full services
securities firms, a significant number of which offer their
customers a broader range of financial services including
investment advisory services, have substantially greater
resources and may have greater operating efficiencies. In
addition, a number of firms offer investment advisory services
which are incidental to their other services and do not charge
any commission for this type of service. Moreover, there is
substantial commission discounting by full-service
broker-dealers competing for institutional and individual
brokerage business. The possible increase of this discounting
could adversely affect AAM.
C. Competition from Banks
Other financial institutions, notably commercial banks and
savings and loan associations, offer customers some of the services
and products presently provided by investment advisers and
securities firms. In addition, certain large corporations and banks
have entered the securities industry by acquiring securities firms,
which offer investment advice. While it is not possible to predict
the type and extent of competitive services which banks and other
institutions ultimately may offer to customers, AAM may be adversely
affected to the extent those services are offered on a large scale.
D. Potential Litigation
Many aspects of AAM's business will involve substantial risks
of liability, including exposure to substantial liability under
federal and state securities laws in connection with the suitability
of the advice given to clients and the risk of liability arising out
of the activities of its employees. AAM may not be able to maintain
an errors and omissions insurance policy insuring it against these
risks.
17
<PAGE>
In recent years, there has been an increasing incidence of
litigation involving the securities industry, including class
actions which generally seek rescission and substantial damages.
E. Personnel
Most aspects of AAM's business will be dependent on highly
skilled and experienced individuals. AAM will devote considerable
efforts to recruiting and compensating those individuals and to
providing incentives to encourage them to remain with it.
Individuals associated with AAM may in the future leave it at any
time to pursue other opportunities. An inability of AAM to compete
with other companies in the same type of business as AAM in salary
and benefits could have an adverse impact on AAM's ability to
attract and retain those personnel.
F. Regulation
AAM's business, the investment advisory industry and
securities industry generally, are subject to extensive regulation
at both the federal and state levels. Failure to comply with any of
these laws, rules or regulations could result in fines, suspension
or expulsion, which could have a material adverse effect upon the
Company.
2. Risk Factors Relating to Dina Porter
A. Sensitivity To Economic Conditions and Consumer Confidence
The specialty retail industry is highly dependent upon the
level of consumer spending, particularly among affluent customers,
and may be adversely affected by an economic downturn, increases in
consumer debt levels, uncertainties regarding future economic
prospects, or a decline in consumer confidence. An economic downturn
in the areas in which Dina Porter is located, could have a material
adverse effect on Dina Porter's business and results of operations,
and thereby effect the Company.
B. Changing Consumer Preferences
Dina Porter's success depends in substantial part upon its
ability to anticipate and respond to changing consumer preferences
and fashion trends in a timely manner. Although Dina Porter attempts
to stay abreast of emerging lifestyle and consumer preferences
affecting its merchandise, any failure by Dina Porter to identify
and respond to such trends could have a material adverse effect on
Dina Porter's business and results of operations.
18
<PAGE>
C. Dependence on Designer Resources
Because Dina Porter offers high end apparel, the Company's
success is dependent in part upon initiating and maintaining strong
relationships with designers. The Company has no guaranteed supply
arrangements with its principal merchandising sources. Accordingly,
there can be no assurance that such sources will continue to meet
Dina Porter's quality, style and volume requirements. The inability
of Dina Porter to obtain quality and fashionable merchandise in a
timely fashion could have a material adverse effect on Dina Porter's
business and results of operations.
D. Seasonality; Fluctuation in Quarterly Results
The specialty retail industry is seasonal in nature, with a
disproportionately high level of sales and earnings typically
generated in the fall and holiday selling seasons. Working capital
requirements and inventory fluctuate during the year, increasing
substantially in the first quarter in anticipation of the holiday
selling season. If actual sales for a quarter do not meet or exceed
projected sales for that quarter, expenditures and inventory levels
could be disproportionately high for such quarter and Dina Porter's
cash flow and earnings for that quarter and future quarters could be
adversely affected.
E. Competition
The specialty retail industry is highly competitive and
fragmented. Dina Porter competes with large specialty retailers,
traditional and better department stores, national apparel chains,
designer boutiques, individual specialty apparel stores and direct
marketing firms. Dina Porter competes for customers principally on
the basis of quality, assortment and presentation of merchandise,
customer service, store ambience, sales and marketing programs and
value. Dina Porter competes for quality merchandise and assortment
principally based on relationships with designer resources and
purchasing power. Most of Dina Porter's competitors are larger and
have greater financial resources than the Company.
19
<PAGE>
ITEM 3. Description of Property.
The Company, the Subsidiary and AAM maintain their executive and
administrative offices at 17 Glenwood Avenue, Raleigh, North Carolina
27603. Dina Porter leases store space comprised of approximately 4,251
square feet in the Cameron Village Shopping Center, Daniels Street,
Raleigh, North Carolina. The lease agreement for the premises is from a
five year period from October 1, 1995 to September 30, 2000. As rent, Dina
Porter presently pays the greater of (i) the base minimum monthly rent of
$4,989.33 or (ii) 6% of gross sales. In addition, Dina Porter pays its pro
rata share of ad valorem property taxes on the premises, its pro rata
portion of insurance and Cameron Village Merchants Association marketing
fund dues. The annual rent for the premises paid by Dina Porter from
October 1, 1995 through September 30, 2000 is as follows:
$54,355 for the year of October 1, 1995 through September 30, 1996.
$56,194 for the year of October 1, 1996 through September 30, 1997.
$58,033 for the year of October 1, 1997 through September 30, 1998.
$59,872 for the year of October 1, 1998 through September 30, 1999.
$61,711 for the year of October 1, 1999 through September 30, 2000.
ITEM 4. Security Ownership of Certain Beneficial Owners and Management.
(a) Security Ownership of Certain Beneficial Owners.
The following information relates to those persons known to
the Company to be the beneficial owner of more than five percent
(5%) of the Common Stock, par value $.001 per share, the only class
of voting securities of the Company outstanding as of February 1,
2000.
<TABLE>
<CAPTION>
Name and Amount and
Title of Address of Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class*
-------- ---------------- -------------------- ---------
<S> <C> <C> <C>
Common Stock, par Peter L. Coker, Sr. 500,000 shares(1) 9.41%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Susan H. Coker. 1,500,000 shares(1) 28.24%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Peter L. Coker, Jr. 425,000 8.00%
value $.001 per share 361 Bukit Timah Road
Apartment 19-03 Direct
The Legend
Singapore
</TABLE>
20
<PAGE>
<TABLE>
<S> <C> <C> <C>
Common Stock, par Harold H. Reddick, Jr. 300,000 5.64%
value, $.001 per share 1216 Hunting Ridge Road
Raleigh, NC 27615 Direct
Common Stock, par Johan Tellvick 300,000 5.64%
value, $.001 per share 21 E. Blessings Garden
56 Conduit Road Direct
Mid-levels
Hong Kong
Common Stock, par Johnson Y. Lee 470,000 8.84%
value, $.001 per share 3004 Charlinda Street
West Covina, CA 91797 Direct
</TABLE>
- ----------
* Based on 5,311,400 shares issued and outstanding.
(1) Mr. and Mrs. Coker own 500,000 shares of stock as tenants by the entirety.
(b) Security Ownership of Management.
The number of shares of Common Stock of the Company owned by
the Directors and Executive Officers of the Company as of February
1, 2000 is as follows:
<TABLE>
<CAPTION>
Name and Amount and
Title of Address of Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class*
-------- ---------------- -------------------- ---------
<S> <C> <C> <C>
Common Stock, par Peter L. Coker 500,000 shares(1) 9.41%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Susan H. Coker. 1,500,000 shares(1) 28.24%
value $.001 per share 12804 Morehead
Chapel Hill, NC 27514-8443 Direct
Common Stock, par Ira A. Hunt, Jr. 160,000 3.01%
value $.001 per share 7102 Capitol View Drive
McLean, VA 22101 Direct
All Officer and Directors as
a Group (3 persons) 1,660,000 31.25%
</TABLE>
- ----------
* Based on 5,311,400 shares issued and outstanding.
(1) Mr. and Mrs. Coker own 500,000 shares of stock as tenants by the entirety.
21
<PAGE>
ITEM 5. Directors, Executive Officers, Promoters and Control Persons.
(a) Directors and Executive Officers.
The Directors and Executive Officers of the Company are as follows.
Directors of the Company serve for a term of one year or until their
successors are elected. Officers are appointed by, and serve at the
pleasure of, the Board.
Peter L. Coker, Sr., President, Treasurer and Director
Mr. Coker, age 56, has held the offices of President and Treasurer,
and has been a Director of the Company and Subsidiary since
inception. Mr. Coker has been a Partner and Senior Managing Director
of Capital Investment Partners, an investment banking firm located
in Raleigh, North Carolina since June of 1996. Since November of
1979, he has also served as President, Director and shareholder of
American Asset Management, Inc., an investment advisory firm located
in New York, New York. Mr. Coker founded American Asset Management,
Inc. in 1978. Mr. Coker served as President and Assistant Secretary
of AAM since it was formed in February 1990 until June 1996. Mr.
Coker currently acts as a consultant to American Asset Management
Inc. Mr. Coker is also a Director of Dina Porter, Inc. Mr. Coker is
currently a member of the Board of Directors of the following
companies: Leading Edge Packaging, Inc. ("LEPI"), Remote Source
Lighting International, Inc., Nations Page, Inc., Centennial Venture
Partners, LLC, Persimmon IT, Bear Rock Foods, Inc., and North
Carolina State University Foundation. Mr. Coker is also a member of
the New York Society of Security Analysts.
Susan H. Coker, Secretary and Director
Mrs. Coker, age 56, has held the office of Secretary and has been a
Director of the Company and Subsidiary since inception. Mrs. Coker
has been the President and a Director of Dina Porter, Inc. since it
was organized in May 1998. Since February 1990, Mrs. Coker has
served as Secretary and Treasurer and as sole Director of AAM. From
September 1983 to January 1999, Mrs. Coker was the sole proprietor
of Dina Porter, a clothing and gift store, first in Pennsylvania and
from 1995 to January 1999, in North Carolina. Since May 1998, Mrs.
Coker has held the office of President and has served as a Director
of Dina Porter, Inc.
Ira A. Hunt, Jr., Director
Mr. Hunt, age 74, has served as a director of the Company since
September 1, 1998. Mr. Hunt has been self-employed as a management
consultant since 1993. Mr. Hunt has served on the board of directors
of Data Measurement Corp., Information Resources Engineering,
American Multipleyer Corp., and Card Guard International, all public
companies. Mr. Hunt received a B.S. in 1945
22
<PAGE>
from the U.S. Military Academy, an MBA in 1958 from the University
of Detroit, an MS in 1950 from the Massachusetts Institute of
Technology, a Doctor of Business Administration in 1964 from George
Washington University and a Doctor of University in 1954 from the
University of Grenoble, France.
(b) Significant Employees.
The participation of Peter L. Coker and Susan Coker in AAM and Dina
Porter, respectively is significant to the success of each of AAM and Dina
Porter as well as to the Company. The Company presently does not have an
employment agreement with either of Peter Coker and Susan Coker.
(c) Family relationships.
Peter L. Coker, Sr. and Susan H. Coker are married to each other.
(d) Involvement in certain legal proceedings.
None of the directors or officers of the Company, the Subsidiary,
AAM and Dina Porter (i) have had any bankruptcy petitions filed by or
against them, (ii) have been convicted in a criminal proceeding or been
subject to a pending criminal proceeding, (iii) have been subject to any
order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; nor
(iv) have been found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
ITEM 6. Executive Compensation.
None of the Company, the Subsidiary, AAM nor Dina Porter have
commenced paying Susan Coker or Peter Coker any salary or fees.
ITEM 7. Certain Relationships and Related Transactions.
(a) Transactions where Key Company Members have a direct or indirect
material interest.
On January 4, 1999, the Company and the Subsidiary entered into the
AAM Acquisition Agreement and the Dina Porter Acquisition Agreement. The
terms of the Acquisition Agreements are identical in most respects. Under
the terms of the Acquisition Agreements, the Company acquired all the
issued and outstanding stock of
23
<PAGE>
AAM from the shareholders of AAM in exchange for 1,000,000 shares of the
Common Stock of the Company, and acquired all the issued and outstanding
shares of stock of Dina Porter from its shareholders in exchange for
1,000,000 shares of the Common Stock of the Company. The shares of Common
Stock issued to the shareholders of AAM and Dina Porter were issued
pursuant to an exemption from the registration requirements of the
Securities Act pursuant to Section 4(2).
On August 23, 1999, the Company made a short term loan of $94,500,
with interest of 6% per year to its president, Peter L. Coker, Sr. Mr.
Coker repaid the loan in full with interest on October 14, 1999.
(b) Transactions with Promoters.
None.
ITEM 8. Description of Securities.
(a) Common Stock
The Company is authorized to issue up to 25,000,000 shares of common
stock, par value $.001 per share ("Common Stock"), of which 5,311,400
shares are outstanding as of February 1, 2000. Holders of Common Stock are
entitled to one vote for each share held of record on each matter
submitted to a vote of stockholders. There is no cumulative voting for
election of directors.
Subject to the prior rights of any series of preferred stock which
may from time to time be outstanding, if any, holders of Common Stock are
entitled to receive ratably, dividends when, as, and if declared by the
Board of Directors out of funds legally available therefor, and upon the
liquidation, dissolution, or winding up of the Company, to share ratably
in all assets remaining after payment of liabilities and payment of
accrued dividends and liquidation preferences on the preferred stock, if
any. Holders of Common Stock have no preemptive rights and have no rights
to convert their Common Stock into any other securities. The outstanding
Common Stock is validly authorized and issued, fully paid, and
nonassessable.
(b) Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of "blank
check" preferred stock, par value $.001 per share ("Preferred Stock"),
none of which are outstanding on the date hereof. The Board of Directors
of the Company has to date not established the rights and preferences of
the Company's Preferred Stock.
24
<PAGE>
PART II.
ITEM 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
(a) Market information.
There is no public trading market on which the Company's common
stock is traded. The Company will file a Form 211 with the National
Association of Securities Dealers ("NASD") in order to allow the quote of
the Company's Common Stock on the Bulletin Board. The Company's 2,715,000
shares of Common Stock may trade on the Bulletin Board under the symbol
"WOLF", if available. The 1,500,000 shares of Common Stock held by Peter
Coker and Susan Coker can be sold pursuant to Rule 144 ("Rule 144") under
the Securities Act of 1933, as amended, after satisfying all holding
periods and other requirements imposed by Rule 144. Peter and Susan Coker
gifted an aggregate of 500,000 shares to three (3) persons in August 1999.
The holding period of the shares gifted by Susan and Peter Coker is
attributable to the three (3) recipients under Rule 144, however, the
shares can only be sold pursuant to Rule 144, after satisfying all holding
periods and other requirements imposed by Rule 144.
The 596,400 shares of the Common Stock that have been sold pursuant
to Rule 506 of Regulation D ("Rule 506"), may be sold pursuant to Rule 144
after satisfying all holding periods and other requirements imposed by
Rule 144.
(b) Holders.
There are approximately ninety-eight (98) record holders of common
equity.
(c) Dividends.
As of the date hereof, no cash dividends have been declared on the
Common Stock. Subject to the prior rights of any series of preferred stock
which may from time to time be outstanding, if any, holders of Common
Stock are entitled to receive ratably, dividends when, as, and if declared
by the Board of Directors out of funds legally available therefor. Under
the DGCL, the Company may only pay dividends out of capital and surplus,
or out of certain enumerated retained earnings, as those terms are defined
in the DGCL. The payment of dividends on its common stock is, therefore,
subject to the availability of capital and surplus or retained earnings as
provided in the DGCL.
25
<PAGE>
ITEM 2. Legal Proceedings.
None of the Company, AAM nor Dina Porter is party to any pending
legal proceeding, nor is its property the subject of any pending legal
proceeding that is not routine litigation that is incidental to its
business. It may be noted that many aspects of AAM's business will involve
substantial risks of liability, including exposure to substantial
liability under federal and state securities laws in connection with the
suitability of the advice given to clients and the risk of liability
arising out of the activities of its employees. AAM may not be able to
maintain an errors and omissions insurance policy insuring it against
these risks. In recent years, there has been an increasing incidence of
litigation involving the securities industry, including class actions
which generally seek rescission and substantial damages.
ITEM 3. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
ITEM 4. Recent Sales of Unregistered Securities.
On January 4, 1999, the Company and the Subsidiary entered into two
acquisition agreements, one with AAM (the "AAM Acquisition Agreement") and
the other with Dina Porter (the "Dina Porter Acquisition Agreement")
(collectively the Acquisition Agreements"). The terms of the Acquisition
Agreements are identical in most respects. Under the terms of the
Acquisition Agreements, the Company acquired all the issued and
outstanding stock of AAM from the shareholders of AAM, Peter L. Coker, Sr.
and Susan H. Coker, in exchange for 1,000,000 shares of the Common Stock
of the Company(1), and acquired all the issued and outstanding shares of
stock of Dina Porter from its shareholder, Susan H. Coker in exchange for
1,000,000 shares of the Common Stock of the Company. The shares of Common
Stock issued to the shareholders of AAM and Dina Porter were issued
pursuant to an exemption from the registration requirements of the
Securities Act pursuant to Section 4(2).
In March 1999, the Company offered and sold 2,715,000 shares of its
common stock, at a price of $0.10 per share, aggregating $271,500,
pursuant to Rule 504 of Regulation D promulgated under the Act (the "Rule
504 Offering"). The Rule 504 Offering closed on April 6, 1999. As part of
the Rule 504 Offering, the Company issued to Kaplan Gottbetter & Levenson,
LLP, 50,000 shares of the common stock as payment for legal services
valued at $5,000 or $.10 per share.
- ----------
(1) Mr. And Mrs. Coker own these 500,000 shares of stock as tenants by
the entirety.
26
<PAGE>
From June 1999 to September 30, 1999, the Company offered and sold
362,400 shares of its common stock, aggregating $36,240.00 to seventeen
(17) persons, three (3) of whom purchased shares of the Company's common
stock in the Rule 504 Offering. The shares of common stock were offered
and sold at a price of $.10 per share, pursuant to Rule 506. The sale of
these shares closed on September 30, 1999.
On October 15, 1999, the Company offered and sold an aggregate of
234,000 shares of its common stock, aggregating $34,350 to three (3)
persons, two (2) of who are prior shareholders of the Company. Of these
shares, 219,000 were offered and sold at a price of $.15 per share and
15,000 shares were offered and sold at a price of $.10 per shares. The
offer and sale of these shares was made pursuant to Rule 506.
All the persons who purchased shares of the Company's common stock
pursuant to Rule 506 are aware that the shares are restricted under the
Act and that the shares must be held indefinitely until the shares are
registered under the Act or an exemption from registration is available.
The Company has not raised more than an aggregate of $1,000,000 between
all the sales of shares sold pursuant to Rule 504 and Rule 506 and shares
of the common stock have not been sold to more than thirty-five (35)
non-accredited investors.
ITEM 5. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation contains provisions to
(i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty (other than breaches of
the duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, violations under
Section 174 of the DGCL or for any transaction from which the director
derived an improper personal benefit) and (ii) indemnify its directors and
officers to the fullest extent permitted by Section 145 of the DGCL,
including circumstances in which indemnification is otherwise
discretionary. The Company believes that these provisions are necessary to
attract and retain qualified persons as directors and officers. The SEC
has taken the position that the provision will have no effect on claims
arising under the federal securities laws.
Part F/S
Financial Statements.
The Company's Audited Financial Statements as of December 31, 1997 and
1998 and the unaudited financial statements for the nine months ended September
30, 1999 appear on pages F-1 to F-18 of this Form 10-SB. All such financial
statements are incorporated by reference herein.
27
<PAGE>
THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(973) 790-8775
Fax (973) 790-8845
To The Board of Directors and Shareholders
of Wolfpack Corporation and subsidiaries
I have audited the accompanying combined and consolidated balance sheet of
Wolfpack Corporation and subsidiaries as of December 31, 1998 and the related
combined and consolidated statements of operations, cash flows and shareholders'
equity for the year ended December 31, 1997 and 1998. These financial statements
are the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about 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 and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the combined and consolidated
financial position of Wolfpack Corporation and subsidiaries as of December 31,
1998 and the results of its combined and consolidated statements of operations,
shareholders equity and cash flows for the year ended December 31, 1997 and 1998
in conformity with generally accepted accounting principles.
Thomas Monahan
----------------------------------------
Thomas P. Monahan, CPA
June 10, 1999
Paterson, New Jersey
F-1
<PAGE>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
Unaudited
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 132,070 $ 152,786
Inventory 60,367 121,501
Prepaid expenses 57,091 14,000
Officer loan receivable 94,500
--------- ---------
Current assets 249,528 382,787
Property and equipment-net 43,811 35,411
Other assets
Security deposits 5,500 5,500
--------- ---------
Total other assets 5,500 5,500
--------- ---------
Total assets $ 298,839 $ 423,698
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 15,600 $ 15,580
--------- ---------
15,600 15,580
Stockholders' equity
Preferred stock - authorized 5,000,000 shares, $.001
per share each. At December 31, 1998 and September 30,
1999, there - 0- and -0- shares outstanding.
Common Stock authorized 20,000,000 shares, $0.001
par value each. At December 31, 1998 and September
30, 1999, there are 2,000,000 and 5,077,400 shares
outstanding respectively.
2,000 5,077
Additional paid in capital 281,165 545,355
Retained earnings 74 (142,314)
--------- ---------
Total stockholders' equity 283,239 408,118
--------- ---------
Total liabilities and stockholders' equity $ 298,839 $ 423,698
========= =========
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the nine For the nine
For the year For the year months ended months ended
ended ended September 30, September 30,
December 31, December 31, 1998 1999
1997 1998 Unaudited Unaudited
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 463,536 $ 672,619 $ 452,551 $ 449,493
Costs of goods sold 251,790 405,540 266,905 269,696
----------- ----------- ----------- -----------
Gross profit 211,746 267,079 185,646 179,797
Operations:
General and administrative 219,183 251,938 192,575 316,156
Depreciation 2,258 7,278 5,000 8,400
----------- ----------- ----------- -----------
Total expenses 221,441 259,216 197,575 324,556
Income (loss) from operations and before corporate (9,695) 7,863 (11,929) (144,759)
income taxes
Other income
Interest income 4,270 3,013 0 2,371
----------- ----------- ----------- -----------
Total other income 4,270 3,013 2,151 2,371
Net income (loss) $ (5,425) $ 10,876 $ (9,778) $ (142,388)
=========== =========== =========== ===========
Net income (loss) per share -basic $ (0.00) $ 0.00 $ (0.00) $ (0.04)
=========== =========== =========== ===========
Number of shares outstanding-basic 2,000,000 2,000,000 2,000,000 3,850,222
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Owner's equity
in sole
Date proprietorship Additional Retained
- ---- Preferred Common Common until acquisition paid in earnings
Stock Stock Stock ----------------- capital -------- Total
----- ------ ------ ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance $1,000 $ 288,428 $ 860 $ 290,288
January 1, 1997
Dina Porter
Capital withdrawal from sole (5,000) (5,000)
proprietorship
Net profit AAM $ 37 37
Net loss from sole proprietorship (5,462) (5,462)
------ --------- -------- --------- ---------
Balance 1,000 277,966 860 37 279,863
December 31, 1997
Capital withdrawal (7,500) (7,500)
from sole proprietorship
Net profit AAM 37 37
Net profit sole proprietorship 10,839 10,839
------ --------- -------- --------- ---------
Balance 1,000 281,305 860 74 283,239
December 31, 1998
Issuance of shares for acquisition 2,000,000 1,000 (281,305) 280,305 -0-
----------- ------ --------- -------- --------- ---------
Balances 2,000,000 $2,000 $281,165 $ 74 $ 283,239
January 4, 1999
Unaudited
Sale of shares 3,077,400 3,077 304,663 307,740
Offering expenses (40,473) (40,473)
Net loss (142,388) (142,388)
--- ----------- ------ -------- --------- ---------
09-30-1999 -0- $ 5,077,400 $5,077 $545,355 $(142,314) $ 408,118
=== =========== ====== ======== ========= =========
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
WOLFPACK CORPORATION
COMBINED AND CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the
nine months nine months
For the For the ended ended
year ended year ended September 30, September 30,
December 31, December 31, 1998 1999
1997 1998 Unaudited Unaudited
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (5,425) $ 10,876 $ (9,778) (142,388)
Depreciation 2,258 7,278 5,000 8,400
Adjustments to reconcile net income
(loss) to net cash
Inventory (7,235) 68,254 (10,677) (61,135)
Prepaid expenses 15,663 (23,910) 43,092
Officer loan receivable (94,500)
Accounts payable 27,279 10,790 43,792 (20)
--------- --------- --------- ---------
TOTAL CASH FLOWS FROM OPERATIONS 32,540 73,288 28,337 (246,551)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital withdrawal (7,500)
Purchase of assets (5,000) (35,139)
--------- ---------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (5,000) (42,635)
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of stock 307,740
Offering expenses (40,473)
---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 267,267
NET INCREASE (DECREASE) IN CASH 27,540 30,653 28,337 20,716
CASH BALANCE BEGINNING OF PERIOD 71,980 101,417 99,520 132,070
--------- --------- --------- ---------
CASH BALANCE END OF PERIOD $ 99,520 $ 132,070 $ 127,857 $ 152,786
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization of Company and Issuance of Common Stock
a. Creation of the Company
Wolfpack Corporation (the "Company") was formed under the laws of
Delaware on March 16, 1998 and is authorized to issue 20,000,000 shares of
common stock, $0.001 par value each and 5,000,000 shares of preferred
stock, $0.001 par value each.
b. Description of the Company
The Company was formed as a holding company for the acquisition of
Wolfpack Subsidiary, Corp. which has two (2) subsidiaries Dina Porter,
Inc. and AAM Investment Council, Inc. Dina Porter, Inc. (Dina Porter) is a
retail store which specializes in contemporary clothing, jewelry and fine
crafts. AAM Investment Council, Inc. (AAM) was formed in on February 15,
1990 under the laws of Pennsylvania by Peter Coker and Susan Coker. AAM is
an investment adviser, that offers portfolio management designed to
achieve unique investment objectives.
c. Issuance of Shares of Common Stock
On January 4, 1999, the Company issued 1,000,000 shares of common
stock each to Susan Coker and Peter Coker in consideration for all of the
issued and outstanding shares of common stock of Wolfpack Subsidiary,
Corp. and its subsidiaries.
As of September 30, 1999, the Company offered and sold 3,077,400
shares of common stock for an aggregate cash consideration of $307,740 or
$0.10 per share. The Company paid $40,473 as offering expenses consisting
of $35,473 in cash and the Company has issued 50,000 shares of common
stock valued at $0.10 per share in consideration for an offset of $5,000
in legal expense.
Note 2-Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
On January 4, 1999, the Company entered into an agreement with AAM
and Dina Porter, pursuant to which the Company and these affiliated
entities owned and controlled by Peter and Susan Coker exchanged all the
issued and outstanding shares of common stock of these entities for
2,000,000 shares of the Company's common stock. The combined and
consolidated financial statements presented at December 31, 1998, reflect
the reorganization of the Company on January 4, 1999 which consists of the
financial statements of the Company at January 4, 1999, the balance sheet
of AAM as of December 31, 1998 and the
F-6
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
balance sheet of Dina Porter, Inc. as of December 31, 1998 and the related
consolidated statements of operations, stockholders' equity and cash flows
for the Company for period from inception, March 16, 1998, to January 4,
1999 and the statement of operations and cash flows of AAM and Dina
Porter, Inc. for the years ended December 31, 1997 and 1998. Dina Porter
was operated as a sole proprietorship for the year ended December 31, 1997
and 1998 and was reorganized into a corporation on January 4, 1999 as Dina
Porter, Inc. for the purposes of this reorganization into the Company. The
financial statements include the balances of the Corporation and its
subsidiaries after elimination of material intercompany balances and
transactions. All material subsidiaries are wholly owned.
The unaudited combined and consolidated financial statements
presented consist of the unaudited financial statements of the Company as
at September 30, 1999 consisting of the balance sheets of the Company, AAM
and Dina Porter as at September 30, 1999 and the related unaudited
consolidated statements of operations, stockholders' equity and cash flows
for the nine months ended September 30, 1998 and 1999 and the unaudited
statements of operations, cash flows and stockholders' of the Company, AAM
and Dina Porter. The unaudited statements of operations, cash flows and
statements of stockholders' equity of Dina Porter for the nine months
ended September 30, 1998, reflect the transactions of Dina Porter while
Dina Porter was operated as a sole proprietorship.
b. Cash and cash equivalents
Cash and Cash Equivalents - Temporary investments with a maturity of
less than three months when purchased are treated as cash
c. Revenue recognition
Revenue is recognized at the point of sale for products sold over
the counter.
d. Selling and Marketing Costs
Selling and Marketing - Certain selling and marketing costs are
expensed in the period in which the cost relates. Other selling and
marketing costs are expensed as incurred. Advertising costs that are
deferred are expensed the first time the advertising takes place. For the
years ending December 31, 1997 and 1998 and for the nine months ended
September 30, 1998 and 1999, advertising expenses were $16,850, $45,314,
and $46,999 respectively.
F-7
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
e. Property and Equipment
Depreciation of property and equipment is computed using the
straight-line method over five years. Amortization of leasehold
improvements is computed using the straight-line method over the shorter
of the estimated useful lives of the assets or the remaining lease term.
Buildings 31 years
Furniture, Fixtures and Equipment 3 to 10 years
Leasehold improvements 5 years
f. Earnings per share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings per Share
("Statement No. 128"). Statement No. 128 applies to entities with publicly
held common stock or potential common stock and is effective for financial
statements issued for periods ending after December 15, 1997. Statement
No. 128 replaces APB Opinion 15, Earnings per Share ("EPS"). Statement No.
128 requires dual presentation of basic and diluted earnings per share by
entities with complex capital structures. Basic EPS includes no dilution
and is computed by dividing net income by the weighted average number of
common shares outstanding for the period. Diluted EPS reflects the
potential dilution of securities that could share in the earnings of the
Company such as common stock which may be issuable upon exercise of
outstanding common stock options or the conversion of debt into shares of
common stock. As of December 31, 1998 and September 30, 1999, there are no
matters that would effect the number of shares of common stock
outstanding.
Shares used in calculating basic and diluted net income per share were as
follows:
December 31, September 30,
1998 1999
------------ -------------
Shares used in calculating per share
amounts - Basic (Weighted average
common shares outstanding) 2,000,000 3,850,222
F-8
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
g. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
h. Asset Impairment
The Company adopted the provisions of SFAS No. 121, Accounting for
the impairment of long lived assets and for long-lived assets to be
disposed of effective January 1, 1996. SFAS No. 121 requires impairment
losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the estimated undiscounted cash
flows to be generated by those assets are less than the assets' carrying
amount. SFAS No. 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. Long-lived assets and certain
identifiable intangibles are reviewed for impairment whenever events or
changes in circumstances indicate that full recoverability is
questionable. There was no effect of such adoption on the Company's
financial position or results of operations.
i. Significant Concentration of Credit Risk
At December 31, 1998 and September 30, 1999, the Company has
concentrated its credit risk by maintaining deposits in several banks. The
maximum loss that could have resulted from this risk totaled $-0- which
represents the excess of the deposit liabilities reported by the banks
over the amounts that would have been covered by the federal insurance.
j. Recent Accounting Standards
Accounting for Derivative Instruments and Hedging Activities
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) was issued in
June 1998. It is effective for all fiscal years beginning after June 15,
1999. The new standard requires companies to record derivatives on the
balance sheet as assets or liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivatives and whether they
qualify for hedge accounting. The key criterion for hedge accounting is
that the hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. The Company does not
currently engage in derivative trading or hedging activity. The Company
F-9
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
will adopt SFAS 133 in the fiscal year ending December 31, 2000, although
no impact on operating results or financial position is expected.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
In March of 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". SOP 98-1
requires computer software costs associated with internal use software to
be charged to operations as incurred until certain capitalization criteria
are met. SOP 98-1 is effective beginning January 1, 1999. The Company is
currently assessing the impact that adoption of this statement will have
on consolidated financial position and results of operations.
k. Unaudited financial information
In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring
items) necessary to present fairly the financial position of the Company
as of September 30, 1999 and the results of its operations and its cash
flows for the nine months ended September 30, 1998 and 1999. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the SEC's rules and
regulations of the Securities and Exchange Commission. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full year.
Note 3 - Transfer of Assets
The Company was formed as a holding company for the acquisition of
certain assets and operating entities through its subsidiary Wolfpack
Subsidiary Corp. which has two subsidiaries Dina Porter, Inc. and AAM
Investment Council, Inc.
The Company entered into an Agreement with Wolfpack Subsidiary Corp.
on January 4, 1999, pursuant to which the Company exchanged all the issued
and outstanding shares of common stock of Wolfpack Subsidiary, Corp. and
its subsidiaries for an aggregate of 2,000,000 shares of common stock of
the Company. The transaction has been accounted for as a transfer and is
accounted for as if a pooling of interests had occurred using historic
costs with the recording of the net assets acquired at their historical
book value with restatement of periods prior to the reorganization on a
combined basis.
F-10
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Related Party transactions
a. Certain relationships
Susan Coker and Peter Coker are officer's and directors of the
Company, Wolfpack Subsidiary, Corp., Dina Porter and AAM. Peter Coker and
Susan Coker are husband and wife.
b. Officer Compensation
No officer or employee has received in excess of $100,000
compensation as of December 31, 1998 and September30, 1999.
c. Capital Withdrawal
For the year ended December 31, 1998, Susan Coker withdrew $7,500
cash from the Dina Porter, reducing Dina Porter's capital while Dina
Porter was operated as a sole proprietorship.
d. Officer Loan Receivable
The Company has loaned Peter Coker $94,500. The money is repayable
on demand with interest at 6%.
Note 5 - Commitments and Contingencies
Lease Agreements
On June 26, 1995, the Susan H. Coker d/b/a/ Dina Porter entered into
a lease agreement for 4,251 square feet of retail space at The Cameron
Village Shopping Center at 446 Daniel Street, Raleigh, North Carolina with
an unrelated party for a period of 5 years beginning October 1, 1995 and
ending September 30, 2000 for a rental of $4,530 per month. The lease
requires a security deposit of $4,530. The amount of rent to be paid over
the life of the lease is as follows:
$54,355 per year October 1, 1995 through September 30, 1996
$56,194 per year October 1, 1996 through September 30, 1997.
$58,033 per year October 1, 1997 through September 30, 1998.
$59,872 per year October 1, 1998 through September 30, 1999
F-11
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
$61,711 per year October 1, 1999 through September 30, 2000
The Company will pay its pro rata share of ad valorem property taxes
on the premises. This will be paid monthly in advance based on estimates
of costs for the year. The monthly amounts due for this space is $173.58
for property taxes and $63.76 for insurance. These amounts will be
adjusted once a year to reflect the actual pro rata costs for the year.
AAM occupies office space at 17 Glenwood Avenue, Raleigh, North Carolina
27603.
Note 6 - Inventory
Inventories are stated at the lower of cost (first-in, first-out
method) or market, as determined by the retail inventory method.
At December 31, 1998 and September 30, 1999, inventory of goods
available for sale was $60,367 and $121,502 respectively.
Note 7 - Property and Equipment
Property and Equipment for the Company consisted of the following at
December 31, 1998:
Accumulated
Asset depreciation Balance
----- ------------ -------
Vehicles $35,139 $ 5,020 $30,119
Furniture and fixtures 16,444 6,826 9,618
Leasehold Improvements 7,358 3,284 4,074
------- ------- -------
Total $58,941 $15,130 $43,811
======= ======= =======
Property and Equipment for the Company consisted of the following at
September 30, 1999:
Accumulated
Asset Deprecation Balance
----- -------
Vehicles $35,139 $ 7,520 $27,619
Furniture and fixtures 16,444 8,001 8,443
Leasehold Improvements 7,358 3,809 3,549
------- ------- -------
Total $58,941 $23,530 $35,411
======= ======= =======
F-12
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Income Taxes
Prior to January 4, 1999, the Company's subsidiary, Dina Porter
reported income and expenses as a sole proprietorship utilizing Form 1040
Schedule C and reflecting any profit and loss as a component of reportable
income of Susan Coker on Form 1040. The Company's subsidiary AAM was
inactive for the year ending December 31, 1998.
The Company provides for the tax effects of transactions reported in
the financial statements. The provision if any, consists of taxes
currently due plus deferred taxes related primarily to differences between
the basis of assets and liabilities for financial and income tax
reporting. The deferred tax assets and liabilities, if any represent the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or
settled. As of September 30, 1999, the Company had no material current tax
liability, deferred tax assets, or liabilities to impact on the Company's
financial position because the deferred tax asset related to the Company's
net operating loss carryforward and was fully offset by a valuation
allowance.
The Company's effective tax rate on tax benefits differs from the
expected federal tax rate as follows:
Income tax benefit at statutory rate $ 48,412
Increase in valuation allowance $(48,412)
--------
Actual income taxes $-0-
The Components of the deferred tax assets and
liabilities are as follows:
Net operating loss
available for carryforward $ 48,386
--------
Total deferred tax assets $ 48,346
Less valuation allowance $(48,346)
--------
Deferred tax assets,
net of valuation allowance $-0-
========
F-13
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 1999, the Company has net operating loss carry
forwards for Federal income tax purposes of $142,314. This carryforward is
available to offset future taxable income, if any, and expires in the year
2010. The Company's utilization of this carryforward against future
taxable income may become subject to an annual limitation due to a
cumulative change in ownership of the Company of more than 50 percent.
The Company recognized no income tax benefit for the loss generated
for the year ended December 31, 1998 and for the nine months ended
September 30, 1999. SFAS No. 109 requires that a valuation allowance be
provided if it is more likely than not that some portion or all of a
deferred tax asset will not be realized. The Company's ability to realize
benefit of its deferred tax asset will depend on the generation of future
taxable income. Because the Company's subsidiary AAM has yet to recognize
any revenue from operations and Dina Porter will be expending greater
amounts of cash to expand operations, increase cash expended for
advertising, labor, and other pre opening expenses to open new stores, the
Company believes that a full valuation allowance should be provided.
Note 9 - Segment Information
Segment information for the Company is as follows:
On January 4, 1999, Dina Porter Gallery(a sole proprietorship) was
reorganized into a corporation Dina Porter, Inc. The transaction has been
accounted for as a transfer and is accounted for as if a pooling of
interests had occurred using historic costs with the recording of the net
assets acquired at their historical book value with restatement of periods
prior to the reorganization on a combined basis.
F-14
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated and combined balance sheet for the Company at January 4,
1999 consists of the balance sheets of AAM as at December 31, 1998 and Dina
Porter Inc. as at December 31, 1998 with the following components.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Balance Sheet
- ------------------------------------------------------------------------------------------------------------------------------------
Wolfpack AAM Dina Porter Wolfpack
Corporation December 31, Inc. Corporation
January 4, 1998 December 31, Adjustment Consolidated
1999 1998 $
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ -0- $ 1,934 $ 130,136 $ 132,070
- ------------------------------------------------------------------------------------------------------------------------------------
Inventory 60,367 60,367
- ------------------------------------------------------------------------------------------------------------------------------------
Prepaid expenses 57,091 57,091
--------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current assets 1,934 247,594 249,528
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed assets 43,811 43,811
- ------------------------------------------------------------------------------------------------------------------------------------
Other assets 5,500 5,500
--------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ -0- $ 1,934 $ 296,905 $ 298,839
========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and stockholders' equity
- ------------------------------------------------------------------------------------------------------------------------------------
Current liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts payable $ 15,600 $ 15,600
--------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 15,600 15,600
- ------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred stock
- ------------------------------------------------------------------------------------------------------------------------------------
Common stock 1,000 1,000 2,000
- ------------------------------------------------------------------------------------------------------------------------------------
Additional paid in capital 860 269,466 10,839 281,165
- ------------------------------------------------------------------------------------------------------------------------------------
Retained earnings 74 10,839 (10,839) 74
--------- --------- --------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,934 281,305 -0- 283,239
--------- --------- --------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ -0- $ 1,934 $ 296,905 $ -0- $ 298,839
========= ========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-15
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet of the Company at September30, 1999 consists of
the balance sheets of AAM as at September30, 1999 and Dina Porter, Inc. as at
September30, 1999 with the following components:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Balance Sheet
September 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Dina Porter,
Wolfpack Inc. Wolfpack
Corporation AAM Adjustments Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current assets
- ------------------------------------------------------------------------------------------------------------------------------------
Cash $ 79,221 $ 1,950 $ 71,614 $ 152,785
- ------------------------------------------------------------------------------------------------------------------------------------
Inventory 121,502 121,502
- ------------------------------------------------------------------------------------------------------------------------------------
Officer loan receivable 94,500 94,500
- ------------------------------------------------------------------------------------------------------------------------------------
Prepaid expenses 14,000 14,000
--------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total Current assets 173,721 1,950 207,116 382,787
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed assets 35,411 35,411
- ------------------------------------------------------------------------------------------------------------------------------------
Other assets 5,500 5,500
--------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 173,721 $ 1,950 $ 248,027 $ 423,698
========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities and stockholders' equity
- ------------------------------------------------------------------------------------------------------------------------------------
Current liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts payable $ 15,580 $ 15,580
--------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 15,580 15,580
- ------------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
- ------------------------------------------------------------------------------------------------------------------------------------
Preferred stock
- ------------------------------------------------------------------------------------------------------------------------------------
Common stock 3,077 1,000 1,000 5,077
- ------------------------------------------------------------------------------------------------------------------------------------
Additional paid in capital 264,190 860 280,359 545,355
- ------------------------------------------------------------------------------------------------------------------------------------
Retained earnings (93,546) 90 (48,858) (142,314)
--------- --------- ========= ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 173,721 1,950 232,411 408,118
--------- --------- --------- ---------
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 173,721 $ 1,950 $ 248,027 $ 423,698
========= ========= ========= =========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-16
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Consolidated Statement of Operations
For the year ended December 31, 1998
- ----------------------------------------------------------------------------------------------------------------
Wolfpack AAM Dina Porter, Adjustments Wolfpack
Corporation Inc. Corporation
Consolidated
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue $ -0- $-0- $ 672,619 $ 672,619
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Costs of goods sold -0- -0- 405,540 405,540
--------- --------- --------- ---------
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Gross profit -0- -0- 267,079 267,079
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Operations:
- ----------------------------------------------------------------------------------------------------------------
General and administrative -0- -0- 251,938 251,938
- ----------------------------------------------------------------------------------------------------------------
Depreciation -0- -0- 7,278 7,278
--------- --------- --------- ---------
- ----------------------------------------------------------------------------------------------------------------
Total expenses -0- -0- 259,216 259,216
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Income (loss) from operations -0- -0- 7,863 7,863
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Other income
- ----------------------------------------------------------------------------------------------------------------
Interest income 37 2,976 3,013
--------- --------- ---------
- ----------------------------------------------------------------------------------------------------------------
Total other income 37 2,976 3,013
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Net income (loss) $ -0- $ 37 $ 10,839 $ (10,839) $ 10,876
========= ========= ========= ========= =========
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
F-17
<PAGE>
WOLFPACK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Consolidated Statement of Operations
For the nine months ended September 30, 1999
- -----------------------------------------------------------------------------------------------------------------------------
Wolfpack AAM Dina Porter, Adjustments Wolfpack
Corporation Inc. Corporation
Consolidated
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ -0- $ -0- $ 449,493 $ 449,493
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Costs of goods sold -0- -0- 269,696 269,696
--------- --------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Gross profit -0- -0- 179,797 179,797
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Operations:
- -----------------------------------------------------------------------------------------------------------------------------
General and administrative 94,125 222,031 316,156
- -----------------------------------------------------------------------------------------------------------------------------
Depreciation 8,400 8,400
--------- ---------
- -----------------------------------------------------------------------------------------------------------------------------
Total expenses 94,125 230,431 324,556
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations (99,125) (50,634) (144,759)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Other income
- -----------------------------------------------------------------------------------------------------------------------------
Interest income 579 16 1,776 2,371
--------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------------
Total other income 579 16 1,776 2,371
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (98,546) $ 16 $ (48,858) $(142,388)
========= ========= ========= =========
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 10 Subsequent Events
Subsequent to the date of the financial statements, the officer loan
aggregating $94,500 from Peter Coker was repaid with interest.
F-18
<PAGE>
PART III
ITEM 1. Index to Exhibits.
Exhibit No. Description
----------- -----------
2.1* Acquisition Agreement dated as of January 4, 1999 by and
between Wolfpack Corporation, Wolfpack Subsidiary Corp.
and AAM Investment Council, Inc.
2.2* Acquisition Agreement dated as of January 4, 1999 by and
between Wolfpack Corporation, Wolfpack Subsidiary Corp.
and Dina Porter, Inc.
3.1* Certificate of Incorporation of Registrant
3.2* By-laws of Registrant
10.1* Material Contracts (Lease dated April 20, 1995 by and
between Dina Porter Gallery and York Properties, Inc.)
21.* List of Subsidiaries of the Registrant
27. Financial Data Schedule (filed by EDGAR)
- ----------
* Previously Filed
<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.
WOLFPACK CORPORATION
Date: February 11, 2000 By: /s/ Peter L. Coker
------------------------------------
Peter L. Coker, Sr.
President, Treasurer and Director
Date: February 11, 2000 By: /s/ Susan H. Coker
------------------------------------
Susan H. Coker
Secretary and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the nine month period ended September 30, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 152,786
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 121,502
<CURRENT-ASSETS> 382,787
<PP&E> 58,941
<DEPRECIATION> 35,411
<TOTAL-ASSETS> 423,698
<CURRENT-LIABILITIES> 15,580
<BONDS> 0
0
0
<COMMON> 5,077
<OTHER-SE> 403,041
<TOTAL-LIABILITY-AND-EQUITY> 408,118
<SALES> 449,493
<TOTAL-REVENUES> 449,493
<CGS> 269,696
<TOTAL-COSTS> 324,556
<OTHER-EXPENSES> (2,371)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (144,759)
<INCOME-TAX> 0
<INCOME-CONTINUING> (144,759)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (142,388)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
