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 September 30, 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: 5,140,100 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
<TABLE>
<S> <C> <C>
ASSETS
September 30, 1998 March 31, 1998
(Unaudited) (Audited)
Current Assets:
Cash $ 24,043 $ 16,584
Loan Receivable 10,988 -
Prepaids 3,944 -
Inventory 29,425 29,425
Total current assets 68,400 46,009
Non-marketable Securities - 43,000
Property and equipment
Leasehold improvements 47,012 47,012
Computer equipment 181,968 181,968
Other 102,017 99,042
Less accumulated
depreciation (125,963) (125,963)
Total $ 202,059 $ 202,059
Software, patents and
intellectual property 6,770,572 6,770,572
Total Assets $7,044,006 $7,061,640
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note Payable $ - $ 2,000,000 Total current
liabilities 2,010.3 2,133.4
Accounts Payable 4,064 - -
Taxes Payable 460 -
Total current liabilities $ 4,524 $ 2,000,000
Total liabilities $ 4,524 $ 2,000,000
Foreign Currency Adjustment 389 -
Stockholders' Equity (Deficit):
Common stock no par value,
75,000,000 shares authorized;
5,140,100 and 5,140,100 shares
issued at September 30, 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 7,888,223 5,888,243
Retained Earnings (835,890) (835,800)
Deficit Accumulated during
the development state (22,457) 0
Less treasury stock, 7,496,223 shares
at cost (1,133) (1,133)
7,039,093 5,061,640
$7,044,006 $7,061,640
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
WINCROFT, INC. and subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C> <C>
Three Months Ended Six Months Ended Development Stage
September 30, September 30, March 31, 1998 to
September 30, 1998
1997 1997
1998 Restated 1998 Restated
Revenue $ 10,224 $ - $10,224 $ - $10,224
Cost of Revenue - - - - -
Gross Profit - - - - -
Operating Expenses:
Administrative expenses (18,750) (22,751) (1,732) (18,750)
Total Operating Expenses (18,750) (22,751) (1,732) (18,750)
Realized Loss on Sale
of Securities (10,020) - (10,020) - (10,020)
Net Income (Loss) 18,546) (22,547) (1,732) (18,546)
Net Income (Loss) per share* * * * * *
Weighted Average Number of 5,140,100 7,536,600 5,140,100 7,536,600 5,140,100
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)
<TABLE>
<S> <C> <C> <C>
Six Months Ended
September 30, Development Stage
1997 March 31, 1998 to
1998 Restated September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (22,547) $ (1,732) $(22,547)
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation and amortization -
(Gain) loss on disposal of assets 10,020 10,020
Foreign Currency 389 389
Change in assets and liabilities:
Accounts receivables and Prepaids (3,944) (3,944)
Taxes 460 460
Accounts payable and accrued expenses 4,064 1,688 4,064
Net cash used by operating
activities (11,562) (44) (11,562)
CASH FLOW FROM INVESTING ACTIVITIES:
Loan Receivable (10,988) (10,988)
Purchases of property and equipment (2,975) (2,975)
Sales or Purchases of
marketable securities 32,980 32,980
Net cash used by investing activities 19,017 19,017
CASH FLOW FROM FINANCING ACTIVITIES:
Net cash provided (used) by
financing activities -
NET INCREASE (DECREASE) IN CASH 7,455 (44) 7,455
CASH AT BEGINNING OF PERIOD 16,588 66 16,588
CASH AT END OF PERIOD $24,043 $ 22 $24,043
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
six month period ended September 30, 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 September 30, 1998 and March 30, 1998, one pound
equals $1.70 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 $1.70 for period ended March 30, 1998 and $1.7 for period ended September
30, 1998.
The revenue consisted of computer consulting fees. The loan receivable
consisted of $1,809 to the wife of the President and $9,180 to an unrelated
party. Both unsecured loans carried an interest rate of 6% and are due on
demand. Subsequent to the period under review the loans have been repaid.
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
During the 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 six month ending October 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 period were minor, and
consisted of consulting fees received, as management has focused on researching
and creating a marketing plan for VideoTalk. 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.
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. 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 used by
operating activities for the six months was $11,562 ($ 44 in 1997). Net cash
provided by investing activities was $19,017 ($0 in 1997) and by financing
activities was $0 ($0 in 1997).
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 3, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 24043
<SECURITIES> 0
<RECEIVABLES> 10988
<ALLOWANCES> 0
<INVENTORY> 29425
<CURRENT-ASSETS> 68400
<PP&E> 328022
<DEPRECIATION> 125963
<TOTAL-ASSETS> 7044006
<CURRENT-LIABILITIES> 4524
<BONDS> 0
0
70
<COMMON> 10280
<OTHER-SE> 7028743
<TOTAL-LIABILITY-AND-EQUITY> 7044006
<SALES> 10224
<TOTAL-REVENUES> 10224
<CGS> 22751
<TOTAL-COSTS> 22751
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (22751)
<INCOME-TAX> (22751)
<INCOME-CONTINUING> (22751)
<DISCONTINUED> 0
<EXTRAORDINARY> (10020)
<CHANGES> 0
<NET-INCOME> (22547)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
