SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission file number 0-8638
WULF INTERNATIONAL LTD. (formerly Wulf Oil Corporation)
(Exact name of registrant as specified in its charter)
COLORADO 83-0218086
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1909 Central Dr. (Suite 200), Bedford, TX 76021
(Address of principal executive offices) (Zip Code)
817.540.5492
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
$.01 par value common stock
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No X
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common Stock 30,328,911
<PAGE>
Table of Contents
-----------------
Part I - Financial Information Page No.
--------
Item 1 - Wulf International Ltd.
Financial Statements (UNAUDITED)
Balance Sheets as of March 31, 2000 and 1999 3
Statement of Operations for the Three Months ended
March 31, 2000 and 1999 5
Statement of Cash Flows for the Three Months ended March 31, 2000 6
Notes to Financial Statements 8
Item 2 - Management's Discussion and Analysis or Plan of Operation 13
Part II - Other Information
Item 1 Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
(a) Exhibits: (None)
(b) Reports on form 8-K (None)
Signature Page 17
2
<PAGE>
Turner, Stone & Company
Certified Public Accountants
A Registered Limited Liability Partnership
12700 Park Central Dr., Suite 1610
Dallas, Texas 75251
Independent Accountant's Report
-------------------------------
Board of Directors and Stockholders
Wulf International, Ltd.
and subsidiary
Dallas, Texas
We have reviewed the accompanying consolidated balance sheet of Wulf
International, Ltd. and subsidiary as of March 31, 2000 and the related
statement of operations stockholders' equity and cash flows for the quarter then
ended. These consolidated financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying March 31, 2000 consolidated financial statements for
them to be in conformity with generally accepted accounting principles.
/s/ Turner, Stone & Company, LLP
-------------------------------
Certified Public Accountants
June 26, 2000
<PAGE>
PART I
Item 1. Financial Statements
WULF INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
March 31, 2000 AND 1999
(Unaudited)
Assets
------
2000 1999
---------- ----------
Current assets:
Cash $ 77,582 $ 3,743
Accounts receivable, trade 85,337
Advances to employees 4,753
Deferred income tax benefits 172,975
---------- ----------
Total current assets 340,647 3,743
---------- ----------
Property and equipment, net of $34,095
of accumulated deprecation 107,807 --
---------- ----------
Other assets:
Deposits 6,776 --
Goodwill, net of $40,673 of
accumulated amortization 403,043 --
Investments in GMM and PRM 300,000 --
Investment in Warisan Group JV -- --
---------- ----------
709,819 --
---------- ----------
$1,158,273 $ 3,743
========== ==========
3
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<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
------------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Current liabilities:
Accounts payable, trade $ 123,239 $ -
Accrued payroll and other expenses 94,750 -
Bank loans 68,592 -
Other current liabilities 94,760 -
---------- ----------
Total current liabilities 381,341 -
---------- ----------
Long-term note payable, net of current portion 20,848 -
Stockholders' equity:
Convertible preferred stock, 10,000,000
shares authorized, 1,302,800 and 1,107,500
issued and outstanding, respectively 1,302,800 1,107,500
Common stock, $ .01 par value,
50,000,000 shares authorized,
30,328,911 and 15,863,338
issued and outstanding, respectively 303,289 158,633
Paid in capital in excess of par value 3,400,639 2,000,169
Accumulated deficit (4,250,644) (3,262,559)
---------- ----------
756,084 3,743
---------- ----------
$1,158,273 $ 3,743
========== ==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
WULF INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED March 31, 2000 AND 1999
(Unaudited)
2000 1999
---------- ----------
<S> <C> <C>
Revenues:
Loan origination and other fees $ 738,079 $ -
Other income 42 -
---------- ----------
738,121 -
Operating costs and expenses:
Personnel costs 357,784 -
Loan production costs 293,168 -
General and administrative 161,172
Amortization 11,093 -
Depreciation 9,300 -
---------- ----------
832,517
----------
Operating loss (94,396)
Corporate general and administrative expenses,
principally related to Philippines Housing project (53,147) (42,843)
Interest expense 1,219 0
---------- ----------
Loss before income taxes ( 148,762) (42,843)
Provision for income tax benefit 0 -
---------- ----------
Net loss $( 148,762) $( 42,843)
========== ==========
Net loss per share:
Basic $( .005) $( .003)
Diluted $( .004) $( .002)
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
WULF INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED March 31, 2000 AND 1999
(Unaudited)
2000 1999
---------- ----------
Cash flows from operating activities:
Cash from customers $ 738,079 $ -
Cash paid to employees ( 357,784) -
Cash paid to suppliers ( 456,476) (42,849)
Interest paid ( 1219) -
---------- ----------
Net cash used in operating activities ( 77,400) (42,849)
---------- ----------
Cash flows from investing activities:
Employee advances repaid 1,250 -
Purchase of property and equipment ( 11,069)
---------- ----------
Net cash used in investing activities ( 9,819) -
---------- ----------
Cash flows from financing activities:
Issuance of common and preferred stock 29,980 40,000
Advances 79,760
Repayments of notes payable ( 5,199) -
---------- ----------
Net cash provided by financing activities 104,541 40,000
---------- ----------
Net increase (decrease) in cash 17,322 ( 2,849)
Cash at beginning of period 60,260 6,592
---------- ----------
Cash at end of period $ 77,582 $ 3,743
========== ==========
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
WULF INTERNATIONAL, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED March 31, 2000 AND 1999
Reconciliation of Net Loss to Net Cash
Used in Operating Activities
2000 1999
---------- ----------
<S> <C> <C>
Net loss $( 148,762) $( 42,843)
---------- ----------
Adjustment to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 20,393
Common stock issued for services 6,000
Preferred stock issued for services 0 -
(Increase) decrease in accounts receivable, trade 13,031 -
Increase (decrease) in accounts payable, trade ( 19,200) -
Increase (decrease) in accrued expenses 10,265 -
Increase (decrease) in other current liabilities 40,873 (6)
---------- ----------
Total adjustments 71,362 (6)
---------- ----------
Net cash used in operating activities $( 77,400) $( 42,849)
========== ==========
Supplemental Schedule of Non-Cash Investing
and Financing Activities
Issuance of preferred stock for purchase of
gold lease $ 100,000 $ -
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
WULF INTERNATIONAL, LTD.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and business
-------------------------
Wulf International, Ltd. (the Company) was incorporated in the state of Colorado
in 1973. The Company originally operated as an oil and gas exploration entity
until 1992. In 1992, the Company became inactive and ceased reporting with the
SEC but retained its status as a registered company. During 1997 and 1998 the
Company negotiated a joint venture agreement with a native Philippines company
and an agency of the Government of the Philippines, the Southern Philippines
Development Authority (SPDA) (Note 2), to construct one million low cost housing
units in the southern portion of the country. The Company is currently seeking
funding and government guarantees for this project.
In April 1999, through the acquisition described below, the Company's primary
operations became mortgage banking and at December 31, 1999, the majority of its
net assets and its revenues and expenses were from this operating segment.
Business combinations
---------------------
On April 30, 1999, the Company acquired 100% of the outstanding stock of
Specialized Financial Services, Inc. (SFM), a Texas corporation engaged in
mortgage banking activities, in exchange for 7,500,000 shares of common stock
valued at $0.104 a share. The transaction was accounted for as a purchase. The
purchase price was allocated to the fair value of the net assets acquired with
the excess of Wulf's cost over the fair value of acquired net assets allocated
to goodwill.
As part of the agreement, SFM purchased 50,000 shares of Wulf's preferred stock
at $1.00 per share and received an option to purchase 200,000 shares of the
Company's preferred stock at $0.10 per share. This option must be exercised
prior to a proposed secondary public offering of the Company's preferred stock.
The accompanying consolidated statement of operations includes SFM's results of
operations subsequent to April 30, 1999.
The following pro forma information is presented as if the above acquisition had
occurred as of January 1, 1999, the beginning of the earliest period presented
in the accompanying consolidated financial statements.
Quarters ended
March 31,
--------------
2000 1999
------------ ------------
Revenues $ 738,121 $ 831,632
Net loss (148,762) (43,649)
Net loss per share ( .005) ( .003)
8
<PAGE>
Principles of consolidation and basis of presentation
-----------------------------------------------------
The accompanying unaudited consolidated condensed financial statements of Wulf
International Ltd have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the financial statements and footnotes thereto included in
the Company's report on form 10-KSB for the year ended December 31, 1999. These
statements include the general accounts of the Company and its wholly owned
subsidiary Specialized Financial Services, Inc. (SFM). All inter-company
transactions, accounts and balances have been eliminated in the consolidation.
Property and equipment
----------------------
Property and equipment are stated at cost less accumulated depreciation.
Depreciation of property and equipment are being provided by accelerated methods
for financial and tax reporting purposes over estimated useful lives of five to
seven years.
Goodwill
--------
Goodwill relating to the Company's purchase of SFM is being amortized using the
straight-line method over ten years. For the quarter March 31, 2000,
amortization expense totaled $11,093.
Management estimates
--------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting 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.
Cash flows
----------
For purposes of the statement of cash flows, each includes demand deposits and
time deposits with maturities of less than three months.
Impairment of long-lived assets
-------------------------------
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." This Statement establishes accounting standards for
the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used, and long-lived assets and
certain identifiable intangibles to be disposed of. The Company periodically
evaluates, using independent appraisals and projected undiscounted cash flows,
the carrying value of its long-lived assets and certain identifiable intangibles
to be held and used whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. In addition, long-lived
assets and identifiable intangibles to be disposed of are reported at the lower
of carrying value or fair value less cost to sell.
9
<PAGE>
Net loss per share
------------------
Basic loss per share amounts are computed by dividing the net loss plus any
preferred stock dividends by the weighted average number of common stock shares
outstanding. Diluted loss per share amounts reflect the maximum dilution that
would have resulted from the conversion of the preferred stock shares. Diluted
loss per share amounts are computed by dividing the net loss by the weighted
average number of common stock shares outstanding plus the assumed conversion of
preferred stock shares.
For the quarters ended March 31, 2000 and 1999, basic loss per share amounts are
based on 29,504,011 and 15,863,338 weighted average shares of common stock
outstanding, respectively, and diluted loss per share amounts are based on
36,143,011 and 21,400,838 weighted average shares of common stock outstanding,
respectively.
2. INVESTMENT IN UNCONSOLIDATED AFFILIATES
Warisan Group JV (WRG)
----------------------
In April 1998, the Company formed a joint venture with a Republic of the
Philippines company, Amin and Sons Corporation (ASC), for the purposes of
participating in a socialized low cost housing project for the Republic of the
Philippines. The Company owns an 80% interest and ASC owns a 20% interest in
this joint venture, which is registered and organized under the laws of the
Republic of the Philippines. Taticbilt Corp., a Philippines company qualified as
a builder of low cost housing, was given a 10% share of this joint venture in
1999 by Wulf.
To accomplish this purpose WRG formed a joint venture with the Southern
Philippines Development Authority (SPDA), a government owned and controlled
corporation. The name of this joint venture is SPDA-Warisan Joint Venture (SWJV)
and it is owned 70% by WRG and 30% by SPDA.
The Company accounts for its investment in WRG using the equity method of
accounting. For the quarters ended March 31, 2000 and 1999, all capital
contributed to the joint venture has been expended for operating purposes and,
as a result, the joint venture has substantially no net assets. Accordingly,
there is no difference between the amount at which this joint venture investment
is carried and the Company's underlying equity in the joint venture's net
assets.
Gold Mountain Mining, Ltd. (GMM)
--------------------------------
In April 1999, the Company issued 200,000 preferred stock shares in exchange for
a 20% interest in each of two Philippine corporations, Gold Mountain Mining,
Ltd. (GMM) and Pacific Rim Mining, Ltd. (PRM). These corporations own
prospecting permits for gold reserves on approximately 261,000 hectares of land
in the Philippines. As part of the agreement, the Company was granted the option
to acquire an additional 75% of each corporation in exchange for an additional
100,000 preferred stock shares.
In January 2000, the Company conditionally exercised the above option. The
100,000 preferred stock shares have been accounted for as issued but are being
held in escrow pending the receipt of a certified engineer's appraisal or a
certified audit of both corporations.
The Company accounts for its investments in GMM and PRM using the cost method of
accounting until the conditional exercise referred to above is completed, at
which time it will use the equity method of accounting.
10
<PAGE>
3. CONVERTIBLE PREFERRED STOCK
The Company's preferred stock shares are convertible into the Company's common
stock shares at any time after one year from the date of issuance at the rate of
five common stock shares for each share of preferred stock. The preferred shares
do not pay a dividend, are non-voting and have a preference in liquidation of up
to $1.00 per share. In addition, each preferred share grants the holder to one
warrant to purchase for $.10 per share one common stock share for each preferred
stock share held. The warrants expire one year from the date of issuance.
4. COMMITMENTS AND CONTINGENCIES
Leases
------
The Company conducts its operations from facilities in Bedford, Texas under a
lease expiring in September 2003 requiring a monthly rental of $5,798.
Litigation
----------
The Company is subject to legal proceedings that arise in the ordinary course of
business. Management does not believe that the outcome of any of these matters
will have a material adverse effect on the Company's consolidated financial
position, operating results or cash flows.
Contingent liabilities
----------------------
The Company has entered into several transactions related to its Philippines
housing project joint venture (Note 2) for which payment of the obligations
incurred is contingent upon funding of the project. These amounts are only due
and payable when and if funding for this project is obtained. Accordingly, no
liabilities relating to this contingency have been recorded in the accompanying
financial statements. At March 31, 2000 the amount of this contingent liability
was $735,942.
At March 31, 2000 SFM had temporarily funded loans through two lending
institutions in the amount of $3,190,287 for loans not yet funded by the final
lender.
5. EMPLOYEE BENEFIT PLAN
The Company's SFM subsidiary has adopted a profit sharing plan under Section
401(k) of the Internal Revenue Code of 1986. The plan covers substantially all
full time employees that meet general eligibility requirements. Company matching
and discretionary contributions to the plan are determined annually by the Board
of Directors, subject to a limitation of 25% of 5% of eligible compensation.
Participants vest in their employee deferral account balances immediately and in
their employer matching and discretionary account balances over a period of two
to six years based on years of service. For the quarters ended March 31, 2000
and 1999, employer matching and discretionary contributions to the plan totaled
$4010 and 0.
6. NOTES PAYABLE
The Company's notes payable consist of a business line of credit (balance
$49,392) of its SFM subsidiary due in July 2000 which bears interest at prime
plus 1.0%, and is secured by substantially all the assets of its SFM subsidiary.
Also, a loan financing computer equipment matures in July 2001 and has a balance
of $14,043.
11
<PAGE>
In addition, the Company has another note payable with principal and interest
payable monthly through November 2003. This note bears interest at 8.25% and is
secured by the equipment it is financing. The current balance totals $26,005.
Other Current Liabilities
-------------------------
This represents an advance from a relative of a shareholder in the amount of
$94,760.
7. INCOME TAXES
The Company uses the accrual method and SFM uses the cash basis method of
accounting for tax reporting purposes.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. In addition, future tax benefits, such as those from net operating loss
carry forwards, are recognized to the extent that realization of such benefits
is more likely than not. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
8. FINANCIAL INSTRUMENTS
The Company's financial instruments, which potentially subject it to credit
risks, consist of its cash, accounts receivable and notes payable.
Cash
----
The Company maintains its cash in bank deposit and other accounts that, at
times, may exceed federally insured limits. The Company has not experienced any
losses in such accounts, and does not believe it is subject to any credit risks
involving cash.
Accounts receivable
-------------------
The Company's accounts receivable are unsecured and represent fees of closed
mortgage loans from customers in the Dallas/Ft. Worth metropolitan area not
collected at quarter's end. Management believes it is not exposed to any
significant credit risks affecting accounts receivable and that these amounts
are fairly stated at estimated net realizable amounts.
Notes payable
-------------
Management believes the carrying value of these notes represent the fair value
of these financial instruments because their terms are similar to those in the
lending market for comparable loans with comparable risks.
12
<PAGE>
Item 2. Management's Discussion and Analysis
Acquisition of SFM Mortgage Co.
-------------------------------
On April 30, 1999, Wulf International Ltd. (hereinafter also referred to as
Wulf or the Company) closed its agreement to acquire all of the shares of
Specialized Financial Services, Inc. d/b/a SFM Mortgage Company of Bedford,
Texas, for 7,500,000 shares of Wulf common stock. SFM is an eleven-year old
mortgage finance company with 44 employees. It does business primarily in Texas,
and is active in Oklahoma, Colorado, California, Arizona and other states.
Through lines of credit with major financial institutions, SFM provide mortgage
money primarily to the home real estate market. SFM Mortgage is expanding its
business by going into more states and increasing its staff this year, which
will cause it to report losses for this quarter. This acquisition will be
helpful to Wulf because SFM can assist with mortgage financing for the
Philippines National Shelter Project when, and if that project can obtain
funding, approvals and be implemented. This project is for one million new homes
to be built by the Southern Philippines Development Authority (SPDA)-Warisan
Joint Venture of which Wulf is a 49% partner and is further described below.
Philippines National Shelter Low Cost Housing Project
-----------------------------------------------------
The Company's Philippines Project, which is described in detail in the
Company's form 10KSB for 1999, and which is subject to obtaining financing and
government guarantees, neither of which can be assured, is described in outline
form below.
On July 24, 1999, the Company formally presented the proposed low-income
housing project for the southern Philippines to Joseph Estrada, President of the
Philippines. This letter described the key components of the project and asked
for his general indication of support. The key items covered in the letter were:
(1)On June 24, 1998, about one year ago, the Warisan Group of companies
entered Into a joint venture agreement with the Southern Philippines Development
Authority (SPDA) whereby Warisan as developer will build One Million new homes
for low income families over the next ten years in Mindanao, under the auspices
of the National Shelter Program. The Warisan Group includes Amin & Sons
Corporation of Zamboanga City, Taticbilt International Corporation of Manila,
and Wulf International Ltd of Dallas, Texas. The estimated value of the houses
is US$7,628,000,000.
(2)Wulf International, as underwriter, has received commitments, subject to
normal investment banking qualifications as to market conditions, due diligence,
etc., from five of the larger international investment banking firms to be the
lead manager and underwriter for US$250,000,000 in ten-year bonds to be
guaranteed by the Government of the Philippines. These funds would be rolled
over during the ten-year construction period to provide US$7,628,000,000 in new
homes, medical clinics, market areas, and schools for low-income families.
(3)Warisan's architectural engineering staff, FSB/Parker-Croston of Fort
Worth, Texas, has spent over six months on the design of the housing units and
town sites that would meet the exacting standards of the SPDA. Warisan's
engineering management staff, A.E.P.M., also of Fort Worth, advises that they
can complete about 10,000 new houses each month after full mobilization, and
that the services of about 50,000 professional, skilled, and unskilled Filipino
workers will be required for this project. The houses will be of varying design
and size and will be fabricated in the Philippines using, to the extent
practicable, available materials and equipment. The goal of the Warisan Group is
to build homes that (1) are well designed with full amenities, (2) are
attractive and compatible with the surroundings, and (3) are quality homes that
low income families can be proud to own.
13
<PAGE>
(4)SFM Mortgage Company, a wholly owned subsidiary of Wulf, will be the
loan originator and primary lender to the buyers of the One Million new homes.
(5)The Warisan Group has completed its Feasibility Study of this project,
including a Business Plan, Executive Presentation, Exhibits, and House Design
and Construction reports, in cooperation with the SPDA.
(6)Warisan also is interested in engaging in a similar project of another
One Million homes for low income families in Greater Manila and other areas in
the northern Philippines. We have been provided with a draft joint venture
agreement from the National Housing Authority for this project and would be
ready to proceed very quickly upon confirmation of the Government of the
Philippines. Also, SFM Mortgage is ready and willing to provide funding for the
currently outstanding low-income home mortgages in the Philippines upon
receiving an invitation from that Government.
On September 17, 1999 SFM Mortgage Company, a wholly owned subsidiary of
the Company, received an invitation from the Presidential Committee on Flagship
Programs and Projects in the Office of the President inviting SFM to visit the
Philippines and meet with the Chairman of the Flagship Committee and the key
housing agencies. The purpose of the meeting is to acquaint SFM with the
mortgage requirements for the low income housing program and to assist SFM in
setting up a legal entity in the Philippines.
On October 15, 1999, the Company received a reply to the July 24, 1999
letter from the Presidential Committee on Flagship Programs and Projects in the
Office of the President informing the Company that "we strongly support this
proposed housing project in Mindanao and the establishment of mortgage company
for the benefit of our people." The Committee requested that the company now
submit a detailed feasibility study and corporate profiles of the joint venture
partners. The consulting-design-construction company, Lockwood Greene, a
subsidiary of Philipp Holzmann International has been contacted by the Company
and negotiations are underway for a contract to complete the required
feasibility study.
Wulf is currently planning a June visit to the Philippines to meet with
the President and other officials to discuss housing construction, mortgages,
engaging investment banker(s), and other necessary contractual issues to move
this project forward.
Results of Operations
---------------------
Wulf's mortgage subsidiary (SFM Mortgage) incurred a pretax loss of
$94,396 in the quarter (compared to a loss of $806 in the prior year quarter.
These losses in the current year were caused by SFM's business expansion within
Texas and into additional states necessitating up front expenditures for
increased staff and other expenses. General and administrative expenses for the
three months totaled $53,147 compared to $42,843 in the prior year. The majority
of these expenses were related to the Philippines National Shelter Project and
included professional fees, travel, and expenses associated with the Project's
office in the Philippines.
Wulf's total net losses for the quarter were $148,762 compared to a
loss of $42,843 in 1999.
14
<PAGE>
Liquidity and Capital Resources
-------------------------------
Wulf continued to fund its business through existing working capital,
bank loans described below, private sales of securities and issuance of common
and preferred stock in exchange for professional services and other expenses.
Wulf expects to continue to fund itself through these means. Mid-Cities National
Bank has extended to the Company's SFM Mortgage subsidiary a line of credit of
$50,000 (current balance $49.392) effective from July 29, 1999 for one year. The
line is secured by a lien on equipment, inventories and accounts. In addition,
SFM had a two year bank loan for $21,000 (current balance $14,043) covering
certain computer equipment, secured by same, maturing July 28, 2001. Interest
rates on these loans are at rates of 9.25% and 9% respectively. The 9% rate on
the $50,000 line of credit is adjusted based on 1% over the lowest money center
bank rate quoted in the Wall Street Journal.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
Insofar as is known to the Company's management as of March 31, 2000, there
are no material legal proceedings now pending, threatened, or contemplated in
any court or agency to which the Company is, or may be a party, or against any
officer or director, in such capacity; or of which any of their property is the
subject.
Item 2. Changes in Securities and Use of Proceeds
Both common and preferred stock have been sold in private sales under
section 4(2) of the Securities Act of 1933, as amended. In addition both common
and preferred shares have been issued for services to benefit from the
professional advice of certain experts and for other expenses. These are
summarized in the table below:
Three Months Ended March 31, 2000
---------------------------------
Shares Dollars
-------- --------
Common stock sold cash 299,800 $ 29,980
Common stock issued for services 600,000 6,000
Common stock issued for preferred converted 750,000 150,000
Preferred stock issued for Philippines
Mineral lease interests 100,000 100,000
The holders of preferred stock have the option to convert their stock to
common on the basis of one share of preferred for five shares of common after
one year from date of issue. Preferred shareholders also have the right to one
warrant to purchase common stock for $0.10 per share for each share of preferred
held, with the warrant expiring one year from date of purchase of the preferred
stock. The preferred stock is non-voting stock but has first right on all assets
in the event of liquidation up to $1.00 per preferred share.
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
15
<PAGE>
Item 5. Other Information.
On April 1, 1998, SFM Mortgage Corporation et al entered into a compromise
Conciliation Agreement with the United States Department of Housing and Urban
Development and the Fort Worth Human Relations Commission settling a complaint
which alleged a violation by SFM of the Fair Housing Act. The Settlement
Agreement provides that over the next three years SFM will increase the funds
available to low/moderate income minority single family, owner-occupied mortgage
loans by $35,415,258 in the Dallas/Ft. Worth metroplex.
The Company's SFM Mortgage subsidiary had an informal conference on June 5, 2000
with the U.S. Department of HUD to discuss SFM's above average rates of default
on FHA mortgages during 1998 and 1999. No decision has been received as of this
date from FHA/HUD, though one is expected in approximately 4 weeks. FHA/HUD
could terminate SFM'S ability to originate FHA loans in its Bedford office for 6
months or place SFM on credit watch. The Company believes, but cannot be
assured, that regardless of the decision it will be able to conduct FHA business
with a minimum of ecomonic disruption.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits (None)
(b) Reports on Form 8-K (None)
SAFE HARBOR STATEMENT UNDER THE PRIVATE LITIGATION REFORM ACT OF 1995.
Statements contained in this document which are not historical fact are
forward-looking statements based upon management's current expectations that are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WULF INTERNATIONAL LTD.
Date: June 27, 2000 /s/ George R. Wulf
-------------------------------------
George R. Wulf
Chief Executive Officer and
Principal Financial and
Accounting Officer
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