SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File Number
September 30, 1999 0-17345
W-J INTERNATIONAL, LTD.
(Exact name of small business issuer in its charter)
Delaware 41-1578316
(State of incorporation or organization) (IRS Employer Identification Number)
23 Washburne Avenue, Paynesville, Minnesota 56362
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (612) 243-3311
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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 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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
Number of shares of Common Stock, $.01 par value, outstanding as of December 15,
1999 was 12,214,632.
State Issuer's revenues (rental income) for its most recent fiscal year: $0.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant is not determinable as of a current date because there has been no
trading of the Registrant's Common Stock since March 31, 1994.
Transitional Small Business Disclosure Format Yes [ ] No [X]
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
W-J International, Ltd. (the "Company") was incorporated as a Delaware
corporation in February 1987 under the name of Duo, Inc. When the Company merged
with Wetjet International, Ltd. in 1988, it changed its name to Wetjet
International, Ltd. Following the Transaction described below, the Company
changed its name to W-J International, Ltd.
Prior to March 31, 1993, the Company manufactured and marketed personal
watercraft under the Company's registered trademark, "WETJET." During the fiscal
years ended September 30, 1991, 1992 and 1993, working capital shortages
required the Company to minimize operating expenses and reduce inventory. Due to
its financial condition and inability to obtain adequate financing, during
fiscal year 1993 the Company sold substantially all of its assets (the
"Transaction") to Tennessee Acquisition Corp., a wholly-owned subsidiary of
MasterCraft Boat Company.
The Company currently has no operations. Prior to July 1, 1999, the
Company's operations consisted primarily of renting land and a building to a
related party under a month-to-month lease.
The Company has satisfied substantially all of its debts and continues
to evaluate alternatives in order to improve the Company's financial condition,
including merger and acquisition opportunities. There is no assurance that the
Company will be successful in obtaining such opportunities. If a merger or
acquisition opportunity does arise, the Company's value as a partner in a merger
or other business combination will rest primarily upon the potential public
market for the Company's shares.
The Product and Manufacturing
The Company currently manufactures and sells no products.
The Market and Competition
The Company currently has no competition since it is producing no
products.
Sales and Distribution
The Company did not distribute any products domestically or
internationally during fiscal years 1994 through 1999.
Patents and Trademarks
The Company owns no patents or trademarks.
Employees
Since January 1994, the Company has had no employees.
<PAGE>
Environmental Compliance
Management believes that the Company properly disposed of all
production material or liquids that may be considered an environmental hazard
prior to the Transaction, when all production ceased.
Government Regulations
The Company is not subject to any material governmental regulations on
its business.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's assembly operations, warehousing and other operations
prior to the Transaction were conducted in a combined manufacturing, warehouse
and office facility located in Paynesville, Minnesota, which facility was owned
by the Company prior to July 1, 1999, subject to a mortgage. The building has
approximately 28,000 square feet, and had not been rented since March 31, 1997.
Prior to July 1, 1999, the Company also owned another building which was used to
manufacture its fiberglass parts. This facility was rented to a single lessee, a
related party, under a month-to-month rental agreement through June 30, 1999.
This building has approximately 9,700 square feet. On July 1, 1999, the Company
sold both of its buildings to Edward Webb, President, Chief Executive Officer
and Director of the Company. See "Certain Transactions" below for a greater
description of the transaction.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1999.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Currently, there is no public trading market for Company stock. In the
past the Company's Common Stock was traded on the local over-the-counter market
in Minneapolis, Minnesota. The following table sets forth the range of closing
bid prices per share for the Company's Common Stock for the periods indicated as
reported by Metro Data Company, Minneapolis, Minnesota.
<TABLE>
<CAPTION>
Bid Prices Bid Prices
Fiscal 1995 High Low Fiscal 1994 High Low
- ----------- ---- --- ----------- ---- ---
<S> <C> <C> <C> <C> <C>
Oct. 1 - Dec. 31, 1994 None None Oct. 1 - Dec. 31, 1993 .005 .005
Jan. 1 - March 31, 1995 None None Jan. 1 - March 31, 1994 .005 .005
April 1 - June 30, 1995 None None April 1 - June 30, 1994 None None
July 1 - Sept. 30, 1995 None None July 1 - Sept. 30, 1994 None None
</TABLE>
Such quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
There is no record of the volume of transactions in the purchase and sale of the
Company's securities, and such market volume may be insignificant. The Company
has not declared any dividends in the past, and it is not anticipated that the
Company will declare any dividends in the foreseeable future. As of December 15,
1999, the Company had approximately 227 shareholders.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Fiscal 1999 v. 1998
Rental Income. During the fiscal year ended September 30, 1999, the
Company's rental income decreased to $0 from fiscal 1998 rental income of
$12,000. The decrease in rental income from fiscal 1998 to 1999 was due to
having no renter for one building and then ultimately the sale of the Company's
two properties in July 1999 to Ed Webb, President and Director of the Company,
with a condition of the sale being the return of the rent already paid by Mr.
Webb.
Operating Expenses. The Company's operating expenses (not including
interest income) increased 111% to $82,137 in fiscal 1999 from $38,885 in 1998
(excluding a writedown in fiscal 1998 of $100,000 due to impairment of the
Company's land and buildings). The increase was due to legal expenses and other
consulting and tax preparation expenses, Mr. Webb's expenses of $17,075 which
related to his purchase of the property and which the Company agreed to assume,
and the refund of rent in the amount of $18,450 as part of the same transaction.
<PAGE>
General and administrative expenses increased to $72,247 in fiscal 1999 from
$32,136 in fiscal 1998. Interest expense increased to $9,890 in fiscal 1999 from
$6,749 in fiscal 1998, due to an interest payment on 9/30/99 on loans backed by
the Certificates of Deposit for monthly operating expenses, in the amount of
$4,059.27. The Company also took of loss of $792 on the sale of the property.
Net Income (Loss). In fiscal 1999, the Company experienced a net loss
of $77,139 as compared to net loss in fiscal year 1998 of $120,019. The
significant decrease in net loss from fiscal 1998 to 1999 was due primarily to
the $100,000 writedown of the value of the Company's land and buildings in 1998.
A substantial part of the 1999 loss related to expenses incurred as part of the
sale of the Company's properties, including Ed Webb's expenses related to the
sale in the amount of $17,075, and the crediting back to Koronis Parts, Inc., a
related party, of rent accrued in the fiscal year in the amount of $18,450.
Fiscal 1998 v. 1997
Rental Income. During the fiscal year ended September 30, 1998, the
Company's rental income decreased to $12,000 from fiscal 1997 rental income of
$62,400. The decrease in rental income from fiscal 1997 to 1998 was due
primarily to non-renewal of the lease on the Company's 28,000 square foot
building in 1997.
Operating Expenses. The Company's operating expenses (not including
interest income) increased substantially to $138,885 from $47,551 in 1997. The
$138,885 figure, however, includes a writedown of $100,000 due to impairment of
the Company's land and buildings.
General and administrative expenses decreased to $32,136 in fiscal 1998
from $37,571 in 1997. Interest expense decreased to $6,749 in fiscal 1998 from
$9,980 the prior year, due to the fact that the Company has only one interest
bearing debt remaining, that being the mortgage on its primary facility.
Net Income (Loss). In fiscal 1998, the Company experienced a net loss
of $120,019 as compared to net income in fiscal year 1997 of $25,916. The
significant decrease in net income from fiscal 1997 to 1998 was due primarily to
having no renter of its 28,000 square foot building and the $100,000 writedown
of the value of the Company's land and buildings.
Inflation
Inflation has not had a material impact on the Company's results of
operations.
Seasonality
Due to the Company's discontinuation of operations, seasonality no
longer affects its business.
<PAGE>
Liquidity and Capital Resources
The Company's working capital decreased to $32,842 at September 30,
1999 from $134,174 at September 30, 1998 primarily due to the Company's lack of
rental income or other revenues, in addition to the expenses incurred by the
Company as a result of the sale of its two properties to Ed Webb.
Year 2000
Because the Company has no operations, no products, and no key third
party relationships, the Company's assessment of its Year 2000 issues has
involved only internal computer and financial systems and embedded technology in
such things as its telephone system. For these reasons, it believes the Year
2000 issues will have no material impact on its business, results of operations
or financial condition.
ITEM 7. FINANCIAL STATEMENTS
The following financial statements are included herein on the pages
which follow:
Independent Auditor's Report dated December 6, 1999
Balance Sheets as of September 30, 1999
and as of September 30, 1998
Statements of Operations for the Fiscal Years Ended September 30,
1999 and September 30, 1998
Statements of Stockholders' Equity for the Fiscal Years Ended
September 30, 1999 and September 30, 1998
Statements of Cash Flows for the Fiscal Years Ended September 30,
1999 and September 30, 1998
Notes to Financial Statements
<PAGE>
To The Stockholders
W-J International, Ltd.
Paynesville, Minnesota
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of W-J International, Ltd. as of
September 30, 1999, and the related statements of operations, stockholders'
equity, and the cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit. The
financial statements for the year ended September 30, 1998 were audited by other
auditors whose report dated December 4, 1998 expressed an unqualified opinion on
those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we 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 used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of W-J International, Ltd. as of
September 30, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Frailer, Habeas & Co.
December 6, 1999
<PAGE>
W-J International, Ltd.
Balance Sheets
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
(Audited) (Audited)
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents $ 91 $ 5,157
Certificates of Deposit 33,333 140,953
Accounts Receivable - related party 0 12,375
----------- -----------
Total current assets 33,424 158,485
----------- -----------
Property and equipment:
Land 0 20,648
Buildings 0 284,266
----------- -----------
0 304,914
Less: accumulated depreciation 0 (122,728)
----------- -----------
Net property 0 182,186
Other assets:
----------- -----------
Notes receivable - related party 172,474 0
----------- -----------
Total Assets $ 205,898 $ 340,671
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable $ 582 0
Current portion-long-term debt 0 $ 24,311
----------- -----------
Total current liabilities 582 24,311
----------- -----------
Long-term debt 0 33,905
----------- -----------
Total liabilities 582 58,216
----------- -----------
Stockholders equity:
Preferred stock, $.01 par value;
10,00,000 shares authorized, non issued 0 0
Common stock, $.01 par value;
20,000,000 shares authorized,
12,214,632 shares issued and outstanding
in 1999 and 1998 122,146 122,146
Additional paid-in capital 2,274,840 2,274,840
Accumulated deficit (2,191,670) (2,114,531)
----------- -----------
Total stockholders equity 205,316 282,455
----------- -----------
Total liabilities and stockholders equity $ 205,898 $ 340,671
=========== ===========
</TABLE>
See notes to financial statements
<PAGE>
W-J International, Ltd.
Statements of Operations
<TABLE>
<CAPTION>
Years Ended September 30,
1999 1998
--------- ---------
<S> <C> <C>
Rental income $ 0 $ 0
Rental income - related party 0 12,000
--------- ---------
0 12,000
Other(Income)Expenses:
General & Administrative 72,247 32,136
Interest Expense 9,890 6,749
Interest Income (5,790) (6,866)
Impairment of assets 0 100,000
Loss on Sale of Property 792 0
--------- ---------
77,139 132,019
========= =========
Net income (loss) $ (77,139) $(120,019)
========= =========
Basic net income (loss) per share
$ (.006) $ (.010)
========= =========
</TABLE>
See notes to financial statements
<PAGE>
W-J International, Ltd.
Statements Of Stockholders' Equity
For the Years Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
Additional
Paid-In Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE,
09-30-97 12,214,632 $ 122,146 $ 2,274,840 $(1,994,512) $ 402,474
Net Loss (120,019) (120,019)
----------- ----------- ----------- ----------- -----------
BALANCE,
09-30-98 12,214,632 122,146 2,274,840 (2,114,531) 282,455
Net Loss (77,139) (77,139)
----------- ----------- ----------- ----------- -----------
BALANCE
09-30-99 12,214,632 $ 122,146 $ 2,274,840 $(2,191,670) $ 205,316
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
W-J International, Ltd.
Statements of Cash Flows
Increase (Decrease) in Cash
And Cash Equivalents
<TABLE>
<CAPTION>
Years Ended September 30,
1999 1998
(Audited) (Audited)
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ (77,139) $(120,019)
Adjustments to reconcile
net income (loss) to net cash
flows from operating activities:
Impairment of assets 0 100,000
Loss on Sale of Property 792 0
Depreciation 11,394 12,073
Accounts receivables - Related party (12,375) (5,425)
Accrued liabilities 0 (396)
Net Cash Flows from Operating Activities (52,578) (13,767)
Cash flows from investing activities:
Sale of Property 170,000 0
Certificates of Deposit 107,620 31,949
Notes Receivable - Related Parties (172,474) 0
Net cash flows from investing activities 105,146 31,949
--------- ---------
Cash flows from financing activities:
Proceeds from demand notes payable 39,667 0
Principal payments on demand notes payable (39,085) 0
Principal payments on long-term debt (58,216) (21,766)
--------- ---------
Net cash flows from financing activities: (57,634) (21,766)
Net change in cash and cash equivalents (5,066) (3,584)
Cash and cash equivalents, beginning of period 5,157 8,741
--------- ---------
Cash and cash equivalents, end of year $ 91 $ 5,157
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest $ 9,890 $ 7,145
========= =========
</TABLE>
See notes to financial statements
<PAGE>
W-J INTERNATIONAL, LTD.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
1. Summary of Significant Accounting Policies
Organization
W-J International, Ltd. (the Company or W-J) was formed on February 21,
1987, to produce, market and distribute personal recreational
watercraft. The Company discontinued its recreational watercraft
operations effective March 1993. The Company's operations consisted
primarily of renting land and buildings from April 1993 until September
1998. All property was sold in July 1999.
Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from
those estimates.
Concentrations
The Company's cash is deposited with a single financial institution. At
no time did cash exceed the federally insured limit. The Company has
not experienced any losses on its cash deposits.
The Company's source of revenue for 1998 was rent income of $1,000 per
month under a month-to-month lease. (See Note 3.) This lease was
terminated effective October 1, 1998.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, cash in bank and marketable securities with maturities of
three months or less.
Property
Property is stated at cost. Depreciation on buildings is computed using
the straight-line method over their estimated useful life of 31 years.
Expenditures for maintenance and repairs are charged to expense as
incurred and expenditures for renewals and betterments are capitalized.
Depreciation expense amounted to $11,394 and $12,073 in 1999 and 1998,
respectively.
<PAGE>
Earnings Per Share
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS No. 128). SFAS
128 establishes accounting standards for computing and presenting
earnings per share. Basic earnings per common share are computed by
dividing net income (loss) by the weighted average number of shares of
common stock outstanding during the period. No dilution for potentially
dilutive securities is included. The adoption had no effect on
previously reported earnings per share.
Income Taxes
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred income taxes. Deferred income taxes relate to differences
between the financial and tax basis of certain assets and liabilities.
Temporary differences that result in significant deferred income taxes
are net operating loss carryforwards.
2. Certificates of Deposit
Certificates of deposit at September 30, 1999 consist of two
certificates of deposit which are stated at cost plus accrued interest
which approximates market value. The certificates of deposit earn
interest at rates ranging from 5.0% to 5.5% and mature from March 2000
through May 2000.
3. Related Party Transactions
Related party transactions consisted of the following:
1998 1999
---- ----
Accounts receivable-related party $12,375 $ 0
======= =======
The Company leased a building to Koronis Parts, Inc., a company owned
by the majority stockholder, on a month-to-month basis for $1,000 per
month. This lease was terminated September 1998.
In June 1998, the Company guaranteed bank debt of Koronis Parts, Inc.
(Koronis), a related party, amounting to $70,860 by providing
certificates of deposit as collateral. In November 1998 the Company
cashed in certificates of deposit and repaid this note on Koronis'
behalf. Consequently, the Company set up an unsecured note receivable
from Koronis for $70,860 bearing interest at 6.98%. No payments have
been received on this note for the year ended September 30, 1999.
On July 1, 1999 all land and buildings of the Company were sold to
Edward H. Webb, a majority shareholder and president of the Company,
for $170,000. Mr. Webb assumed the related mortgage payable on the
property and issued a note to the Company bearing interest at 6.98%. In
connection with the transaction the Company paid Mr. Webb's expenses
connected with the purchase of the land and buildings in the amount of
$17,075. In addition, the Company credited rental income of $18,450
which was accrued during fiscal year 1999 prior to the above
transaction back to Koronis Parts, Inc.
<PAGE>
At September 30, 1999 related party notes receivable consisted of:
Notes receivable-Koronis Parts, Inc. $ 70,860
Notes receivable-Edward Webb 101,614
-------
$172,474
4. Long-Term Debt
Long-term debt consisted of the following:
1998 1999
---- ----
Mortgage note payable to bank, interest
at 9.75%, principal and interest due in
monthly installments of $2,410, maturing
in December 2000, secured by land and
buildings. $58,216 $ 0
Less current portion long-term debt (24,311) 0
------- ------
$33,905 $ 0
======= ======
This mortgage was assumed by the buyer when the land and buildings were
sold in July 1999. (See Note 3).
5. Income Taxes
The provision for income taxes was comprised of the following:
1998 1999
---- ----
Current:
Federal $ 0 $ 0
State 0 0
------- -------
$ 0 $ 0
======= =======
At September 30, 1999, the Company has net operating loss carryforwards
for tax purposes of approximately $2,092,000, which expire through
2014. The Company has fully reserved the tax benefit of the net
operating loss carryforwards because the likelihood of the realization
of the benefit cannot be established. The Internal Revenue Code
contains provisions which may limit the net operating loss
carryforwards available if significant changes in stockholder ownership
of the Company occur.
6. Impairment of Assets Held and Used
During 1998, land and buildings were deemed to be impaired and written
down to their fair value. Fair value was determined by reference to an
offer made by an arm's length party for the property. Carrying value of
land and buildings exceeded fair value by $100,000 and accordingly a
loss was charged to operations in 1998.
<PAGE>
7. Earnings Per Share Disclosures
Year Ended September 30, 1999
-------------------------------------------
Income Shares Rev-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income (loss) available
to common stockholders $ (77,139) 12,214,632 $ (.006)
=========== ============= =========
Year Ended September 30, 1998
Income Shares Rev-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income (loss) available
to common stockholders $ (120,019) 12,214,632 $ (.010)
=========== ============= =========
8. Fair Values of Financial Instruments
The estimated fair values of the Company's financial instruments at
September 30, 1999, and the methods and assumptions used to estimate
such fair values, were as follows:
The fair values of cash and cash equivalents and certificates
of deposit approximate the carrying amounts because of the
short maturity of those financial instruments.
The fair value of long-term debt approximates the carrying
amount, as the interest rate approximate current interest
rates.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
On December 3, 1999, the Company dismissed Stirtz Bernards Boyden
Surdel & Larter as the Company's independent public accountants and Frieler,
Habben & Company was appointed as the Company's independent accountants. There
were no disagreements with Stirtz Bernards Boyden Surdel & Larter on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedures. The change in accountants was reported in the
Company's current Report on Form 8-K dated December 3, 1999.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table provides certain information with respect to the
directors and executive officers of the Company.
Name Age Position
Edward H. Webb 56 President, Chief Executive Officer and
Director
Kathy V. Webb 55 Vice President, Secretary and Director
Gerald C. Westergaard 63 Director
Edward H. Webb, the Company's founder, served as President, Chief
Executive Officer and Director, of its predecessor from April 1985 until it
merged with Duo, Inc. in June 1988 and became the Company. Since then, Mr. Webb
has served as the Company's President, Chief Executive Officer and Director.
Since 1972, Mr. Webb has also been the principal shareholder (together with his
wife, Kathy Webb) of Koronis Parts, Inc. ("Koronis"), a Minnesota corporation
located in Paynesville, Minnesota, which is in the business of manufacturing and
selling replacement parts for many brands of snowmobiles. Prior to the
Transaction with Mastercraft, Koronis also manufactured the Brut engine used in
the Company watercraft. Since the completion of the transactions contemplated in
the agreement with Mastercraft, Mr. Webb has devoted substantially less time to
the Company's affairs.
Kathy V. Webb was Secretary and Director of the Company's predecessor
from April 1985 until it merged with Duo, Inc. in June 1988 and became the
Company. Since the merger, Ms. Webb has served as the Company's Vice-President,
Secretary and Director. Ms. Webb has worked in various capacities for Koronis
and other replacement parts manufacturing enterprises operated by Mr. and Ms.
Webb for more than ten years prior to the date of this Annual Report on Form
10-KSB. Ms. Webb is also currently a Director and Secretary of Koronis. Kathy
Webb is the spouse of Edward Webb.
Gerald C. Westergaard was a Director of Duo, Inc. prior to its merger
with the Company's predecessor in June 1988. Mr. Westergaard has been a Director
of the Company since June 1988. Mr. Westergaard has been a Loss Prevention
Manager for Erickson's Diversified Corporation in Hudson, Wisconsin since
November 1991. From March 1990 until November 1991, Mr. Westergaard was an
independent business consultant. From September 1981 to March 1990, Mr.
Westergaard was a controller of Flower City Stores, a Minneapolis-based patio
supply, casual furniture and Christmas decoration store.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
<PAGE>
Based solely on its review of the copies of such forms received by it,
the Company believes that, during fiscal year 1999, all officers, directors and
greater than ten-percent beneficial owners complied with the applicable filing
requirements.
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all cash compensation paid or to be paid
by the Company, as well as certain other compensation paid or accrued, during
fiscal years 1999, 1998 and 1997 to the Chief Executive Officer:
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------
Awards Payouts
-------------------------- ------------
All Other
Annual Compensation Restricted LTIP Compen-
Name and Principal Fiscal Stock Awards Payouts sation
Position Year Salary ($) Bonus($) Other($) ($) Options ($) ($)
- ------------------------ ----- ---------- -------- -------- --- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward H. Webb 1999 0 0 -- -- -- -- --
Chief Executive 1998 0 0 -- -- -- -- --
Officer, President 1997 0 0 -- -- -- -- --
and Chief Financial
Officer
</TABLE>
Option Grants During 1999 Fiscal Year
The Company has not granted any stock options during fiscal 1999 to the
named executive officer in the Summary Compensation Table. In addition, the
Company has not granted any stock appreciation rights.
Option Exercises During 1999 Fiscal Year and Fiscal Year-End Option Values
The named executive officer in the Summary Compensation Table did not
exercise any stock options during fiscal 1999, and there were no outstanding
stock options at September 30, 1999. The Company does not have any outstanding
stock appreciation rights.
Compensation to Directors
The Directors of the Company are not directly compensated.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table provides information as of December 15, 1999
concerning the beneficial ownership of the Company's Common Stock by (i) persons
known to the Company to be beneficial owners of more than five percent (5%) of
the Company's outstanding Common Stock, (ii) each director of the Company, (iii)
the named executive officer in the Summary Compensation Table, and (iv) all
directors and officers as a group. Unless otherwise indicated, the person or
entity listed as the beneficial owner of the shares has sole voting and sole
investment power over the shares.
Amount and
Name (and Address Nature of Shares Percent
of 5% Holders) Beneficially Owned (1) of Class (1)
Edward H. Webb 7,155,500 (2) 58.6%
Route 3, Box 59
Paynesville, MN 56362
Kathy V. Webb 7,155,500 (2) 58.6%
Route 3, Box 59
Paynesville, MN 56362
Gerald D. Westergaard 62,500 0.5%
All officers and directors 7,218,000 59.1%
as a group (three persons)
- ------------------
(1) Under the rules of the SEC, shares not actually outstanding are
deemed to be beneficially owned by an individual if such individual has
the right to acquire the shares within 60 days. Pursuant to such SEC
Rules, shares deemed beneficially owned by virtue of an individual's
right to acquire them are also treated as outstanding when calculating
the percent of the class owned by such individual and when determining
the percent owned by any group in which the individual is included.
(2) Shares jointly owned by Edward and Kathy Webb.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1998, the Company guaranteed bank debt of Koronis Parts, Inc.,
an entity of which Mr. Webb is a principal shareholder, amounting to $70,000 by
providing certificates of deposit as collateral. In November 1998, the Company
cashed in certificates of deposit and repaid this note on Koronis' behalf.
Consequently, the Company set up an unsecured demand note receivable from
Koronis for $70,000, with interest at 6.98%.
On July 1, 1999, the Company sold the two properties described in
"Properties" above to Edward Webb, President, Chief Executive Officer and
Director of the Company, for a total purchase price of $170,000. Mr. Webb
assumed the related mortgage payable on the property and issued a note to the
Company bearing interest at 6.98%. In connection with the transaction, the
Company paid Mr. Webb's expenses related to the purchase of the land and
buildings in the amount of $17,075. In addition, the Company credited rental
income of $18,450 which was accrued during fiscal year 1999 prior to the above
transaction back to Koronis Parts, Inc.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. See "Exhibit Index" beginning on page E-1
immediately following the Financial Statements.
(b) Reports on Form 8-K. The Company did not file any reports
on Form 8-K during the last quarter of fiscal year 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, The Company has caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
W-J INTERNATIONAL, LTD.
("Company")
Dated: January 11, 2000 /s/ Edward H. Webb
Edward H. Webb, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the Company,
in the capacities, and on the dates, indicated.
(Power of Attorney)
Each person whose signature appears below constitutes and appoints
Edward H. Webb and Kathy V. Webb as his or her true and lawful attorneys-in-fact
and agents, each acting alone, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Annual Report on Form 10-KSB
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Signature Title Date
/s/ Edward H. Webb President and Director January 11, 2000
Edward H. Webb (Principal Executive Officer
and Principal Financial and
Accounting Officer)
/s/ Kathy V. Webb Vice President, Secretary January 11, 2000
Kathy V. Webb and Director
/s/ Gerald C. Westergaard Director January 11, 2000
Gerald C. Westergaard
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBIT INDEX TO FORM 10-KSB
For the Fiscal Year Ended Commission File No. 0-17345
September 30, 1999
W-J INTERNATIONAL, LTD.
Exhibit
Number Description
3.1 Certificate of Incorporation, as amended (Incorporated by
Reference to Exhibit 3.1 of the Form 10-KSB for the fiscal
year ended September 30, 1994.)
3.2 Bylaws (Incorporated by Reference to Exhibit 3.2 to the
Registration Statement on Form S-4 of Duo, Inc. filed with the
SEC on February 29, 1988*--hereinafter referred to as "Duo's
Registration Statement on Form S-4")
4.1 Specimen Common Stock Certificate (Incorporated by Reference
to Exhibit 4.1 to the Company's Annual Report on Form 10-KSB
for the year ended September 30, 1993)
10.1 The Company's 1988 Stock Option Plan and form of option
agreements to be issued pursuant to the Plan (Incorporated by
Reference to Exhibit 10.12 to Duo's Registration Statement on
Form S-4*)
10.2 Mortgage Note between Farmers & Merchants State Bank and the
Company for $191,929.95 dated December 21, 1989. (Incorporated
by Reference to Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the year ended September 30, 1989**)
10.3 Promissory Note dated November 18, 1998 signed by Koronis
Parts, Inc. pursuant to a loan from the Company. (Incorporated
by reference to Exhibit 10.3 to the Company's Annual Report on
Form 10-KSB for the year ended September 30, 1998.)
23 Consent of Independent Auditors
24 Power of Attorney (Included in signature page of this Form
10-KSB)
27 Financial Data Schedule (included with electronic version
only)
- --------------------------
* SEC File No. 33-20419
** SEC File No. 0-17345
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation of our report dated December 6, 1999 appearing
in this Annual Report on Form 10-KSB of W-J International, Ltd. for the year
ended September 30, 1999.
/s/ Frieler, Habben & Company
December 28, 1999
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