U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
xQuarterly report under Section 13, or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1998
oTransition report under Section 13 or 15 (d) of the Exchange
Act
For the transition period from ________________ to
_________________
Commission file number 0-12122
WINCROFT, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Colorado 84-0601802
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Elthorne Gate, 64 High Street, Pinner, Middlesex HA5 5QA
(Address of Principal Executive Offices)
011 44 81 429 7300
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 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 past 90 days.
xYes oNo
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13, or 15 (d) of the Exchange
Act after the distribution of securities under a plan confirmed by
a court.
oYes oNo
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: 5140100 common stock, no par value.
<PAGE>
WINCROFT, INC.
and subsidiary
I N D E X
Page No.
Part I FINANCIAL INFORMATION:
Item 1. Consolidated Balance
Sheets 3
Consolidated Statements of
Operations 4
Consolidated Statements of
Cash Flows 5
Notes to Consolidated
Financial Statements
(unaudited) 6
Item 2. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations 6
Part II OTHER INFORMATION 7
<PAGE>
WINCROFT, INC. and subsidiary
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
ASSETS
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Nine Months Ended Eleven Months Ended
December 31, 1998 March 31, 1998
(Unaudited) (Audited)
Current Assets:
Cash $ 5,104 $ 16,584
Loan Receivable - -
Prepaids 4,619 -
Inventory 29,425 29,425
Total current assets 39,148 46,009
Non-marketable Securities - 43,000
Property and equipment
Leasehold improvements 47,012 47,012
Computer equipment 187,271 181,968
Other 99,042 99,042
Less accumulated
depreciation (126,352) (125,963)
Total $ 206,973 $ 202,059
Software, patents and
intellectual property 6,770,572 6,770,572
Total Assets $7,016,693 $7,061,640
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note Payable $ - $2,000,000
Note Payable - Affiliate 32,612 -
Accounts Payable 14,221 -
Taxes Payable (986) -
Total current liabilities $ 45,847 $2,000,000
Total liabilities $ 45,847 $2,000,000
Stockholders' Equity (Deficit):
Common stock no par value,
75,000,000 shares authorized;
5,140,100 and 5,140,100 shares
issued at December 31, 1998
and March 31, 1998, respectively 10,280 10,280
Preferred Stock 25,000,000 authorized
$.01 par value 7,000 and 5,000
issued at September 30, 1998 and
March 31, 1998, respectively 70 50
Additional paid in capital 7,938,654 5,938,674
Retained Earnings (886,231) (886,231)
Deficit Accumulated during the
development state (90,794) 0
Less treasury stock, 7,496,223 shares
at cost (1,133) (1,133)
6,970,846 5,061,640
$7,016,693 $7,061,640
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
WINCROFT, INC. and subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended Nine Months Ended Development Stage
December 31, December 31, March 31, 1998 to
September 30, 1998
1997 1997
1998 Restated 1998 Restated
Revenue $ - $ - $10,224 $ - $ 10,224
Cost of Revenue - - - - -
Gross Profit $ - - $10,224 - $ 10,224
Operating Expenses:
Administrative expenses 68,247 - 90,998 1,732 68,247
Total Operating Expenses 68,247 - 90,998 1,732 68,247
Realized Loss on Sale
of Securities - - (10,020) - (10,020)
Net Income (Loss) (68,247) - (90,794) (1,732) (18,546)
Net Income (Loss) per share* * * * * *
Weighted Average 5,140,100 7,536,600 5,140,100 7,536,600 5,140,100
Number of Shares outstanding
*less than (.01) per share
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
WINCROFT, INC. and subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Nine Months Ended
December 31,
Development Stage
1997 March 31,1998 to
1998 Restated September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (90,794) $ (1,732) $ (90,794)
Adjustments to reconcile
net income (loss) to net cash
from operating activities:
Depreciation and amortization 389 389 ) loss on
disposal of assets 10,020 10,020
Foreign Currency Adjustment (4) (4)
Change in assets and liabilities:
Accounts receivables and
Prepaids (4,619) (4,619)
Taxes (986) (986)
Accounts payable and accrued
expenses 14,221 1,688 14,221
Net cash provided (used) by
operating activities 19,021 (44) 19,021
CASH FLOW FROM INVESTING ACTIVITIES:
Loan Receivable Repayment 12,723 - 12,723
Purchases of property and
equipment (5,303) - (5,303)
Sales of non-marketable
securities 32,980 - 32,980
Net cash provided (used )by
investing activities 40,400 - 40,400
CASH FLOW FROM FINANCING ACTIVITIES:
Loans Receivable (12,723) - (12,723)
Loan Payable 32,612 - 32,612
Net cash provided (used) by
financing activities 19,889 - 19,889
NET INCREASE (DECREASE) IN CASH (11,484) (44) (11,484)
CASH AT BEGINNING OF PERIOD 16,588 66 16,588
CASH AT END OF PERIOD $ 5,104 $ 22 $ 5,104
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ - $ - $ -
SCHEDULE OF NON CASH INVESTING AND FINANCIAL ACTIVITIES:
Loan Payable by the issuance
of Preferred Stock $2,000,000
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
WINCROFT, INC. and subsidiary
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Financial Statements
The accompanying unaudited financial statements have been prepared
in accordance with the instructions to Form 10-QSB and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
The financial statements include the information for the
subsidiary, Wincroft (UK), Ltd. acquired by the Company during the
period under review.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair
presentation have been included. These statements should be read
in conjunction with the audited financial statements and notes
thereto included in the Registrant's annual Form 10-KSB for the
eleven months ended March 31, 1998. The results of the operations
for the nine month period ended December 31, 1998 are not
necessarily indicative of the operating results for the fiscal
year ending March 31, 1999.
The consolidated financial statements for the comparative six
months in 1997, included the accounts of the Company and the
majority owned company, Meteor Technology, plc. ("Meteor"). At
the year end, the Company determined that the interest should be
treated as an investment not a pooling of interest thus the
quarterly numbers have been restated to treat the interest as an
investment.
Adjustments were made to eliminate intercompany transactions and
for the conversion of Wincroft (UK), Ltd.'s numbers from pounds to
US Dollars. The conversion from British Pounds to US Dollars is
based on US accounting guidelines. The conversion rate for the
balance sheet was based on the published exchange rate at December
31, 1998 and March 30, 1998, one pound equals $1.66 and $1.70,
respectively. The conversion used for the statement of operations
was based on an average exchange rate for the six months ended
September 30, 1998 and September 30, 1997. This conversion rate
was one pound equals $1.66 for period ended March 30, 1998 and
$1.66 for period ended September 30, 1998.
The revenue consisted of computer consulting fees received during
the first quarter of this fiscal year.
Item 2. Management Discussion and Analysis of Financial
Condition and Results of Operations
During the nine month period under review the Company acquired a
dormant company, Wincroft,(UK), Ltd., for a nominal amount which
is intended to be its active subsidiary in the United Kingdom.
The Company has changed its fiscal year end from April 30 to March
31 and therefore the figures from last year are actually the nine
month ending January 31. The historic numbers do not reflect the
future activities of the Company and are not indicative of the
operating results for the current financial period. The revenues
for the nine month period were minor, and consisted of consulting
fees received, as management has focused on researching and
creating a marketing plan for VideoTalk. During the quarter under
review the Registrant continued to gather research as it refined
its marketing plan. During the period under review, the Company
requested and Camelot agreed to convert the $2,000,000 note owed
to Camelot into preferred shares of the Company. These shares
provide a yield tied to the revenue of VideoTalk and require
redemption should VideoTalk be sold.
<PAGE>
Liquidity and Capital Resources
The Registrant has met its shortfall of funds from operations
during prior periods by the sale of its majority owned
subsidiaries assets, and by borrowing from its Directors and
companies affiliated with its Directors. There can be no
guarantees that the Registrant will be able to continue to fund
operations by borrowing. The Registrant sold non-marketable
securities for cash in the amount of $32,980 resulting in a loss
on non-marketable securities in the amount of $10,020. Net cash
provided by operating activities for the nine months was $19,021
($ 44 in 1997). Net cash provided by investing activities was
$40,400 ($0 in 1997) and by financing activities was $19,889 ($0
in 1997).
The affiliated loan receivables of last quarter have been paid in
full. The Registrant has received loans from an entity related to
the President.
The Registrant's present needs for liquidity principally relates
to its employee and facilities costs, marketing expenses, its
obligations for SEC reporting requirements and the minimal
requirements for record keeping. The Registrant has limited liquid
assets available for its continuing needs. In the absence of any
additional liquid resources, the Registrant will be faced with
cash flow problems.
Year 2000 Readiness Disclosure
The Company is aware of the issues associated with the programming
code in existing computer systems as the year 2000 approaches.
The issue is whether computer systems will properly recognize date-
sensitive information when the year changes to 2000. Management
is currently assessing the year 2000 compliance issue. The
Company will expend necessary resources to assure that its
computer systems are reprogrammed in time to deal effectively with
transactions in the year 2000 and beyond. The Company presently
believes that, with modifications to existing software and
conversions to new software, the Year 2000 issue will not pose
significant operational problems for the Company's computer
systems as so modified, converted or replaced. The Company also
believes that the cost of conversion, modification or replacement
will not have a material adverse effect on the Company's financial
condition or results of operations. However, if such
modifications and conversions are not completed timely or third
parties on which the Company relies are unable to address this
issue in a timely manner, the Year 2000 issue may have a material
impact on the operations of the Company.
The Company believes that since the VideoTalk software is not date
dependent there should be no Year 2000 problems. Any contracts to
be entered into for suppliers of distributors of the VideoTalk
software, should an agreement be reached, would require Year 2000
certifications to ensure Year 2000 compliance by those entities.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(1) Articles of Incorporation: Incorporated by
reference to
Registration Statement filed
on Form 10, May 10, 1984;
File No. 0-12122
(2) Bylaws: Incorporated by reference as
immediately above.
(b) Reports on Form 8-K
Report dated June 29, 1998 reporting Item 5.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.
WINCROFT, INC.
(Registrant)
By: /s/ Jason Conway
JASON CONWAY, PRESIDENT
Date: February 12, 1999
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] DEC-31-1998
[CASH] 5104
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 29425
[CURRENT-ASSETS] 39148
[PP&E] 333325
[DEPRECIATION] 126352
[TOTAL-ASSETS] 7016693
[CURRENT-LIABILITIES] 45847
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 70
[COMMON] 10280
[OTHER-SE] 6960496
[TOTAL-LIABILITY-AND-EQUITY] 7016693
[SALES] 10224
[TOTAL-REVENUES] 10224
[CGS] 90998
[TOTAL-COSTS] 90998
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] (90794)
[INCOME-TAX] (90794)
[INCOME-CONTINUING] (90794)
[DISCONTINUED] 0
[EXTRAORDINARY] (10020)
[CHANGES] 0
[NET-INCOME] (90794)
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
</TABLE>
