U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission file number 0-17117
WALL STREET FINANCIAL CORPORATION
(Exact name of Small Business Issuer as specified in its
charter)
Delaware 99-024086
(State or other jurisdiction of (I.R.S.
employer
incorporation or organization)
identification No.)
1088 Bishop Street, Suite 1104, Honolulu, HI, USA
96813
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (808)
526-3999
________________________________________________________________
_____________
Securities registered pursuant to Section 12(g) of the Exchange
Act:
Title of each class Name of each exchange on
which registered
$.01 Par Value Par Share NASD Bulletin
Board - WSFI
________________________________________________________________
_____________
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
theregistrant was
required to file such reports), and (2) has been subject to
such filing
requirements for the past 90 days. Yes No X
Indicate by check mark if there is no disclosure of delinquent
filers in
response to Item 405 of Regulation S-Bcontained in this form,
and no disclosure
will be contained, to the best of Registrant's knowledge, in
definitiveproxy or
information statements incorporated by reference in Part III of
this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State the aggregate market value of the voting stock held by
non-affiliates as
of December 31, 1994. The aggregate market value was computed
by using the
closing price on the NASD Bulletin Board on December 31, 1994
of $.25 per share.
Common Shares, Par Value $0.01 Per Share
$2,894,189.75
Indicate the number of shares outstanding of each of the
Registrant s classes
of common stock, as of the latest practicable date.
Class Outstanding
as of May 15, 1996
Common Shares $0.01 Par Value
13,446,759
PART I.
ITEM 1. BUSINESS
(a) General Development
The Registrant was incorporated under the laws of the State of
Delaware in March
1987 succeeding a company established in 1986 as a holding
company.
During 1994, the Company generated limited revenues and its
activities were
limited to raising capital and attempting to commence business
operations in a
number of different businesses through several proposed
acquisitions. As a
result of its limited capital, the Company was limited in
acquisition
possibilities. Although the Company initiated several
acquisition agreements,
most of these proposed acquisitions were either never effected
or were
rescinded.
From its inception to December 1993 the Company accumulated a
deficit in
stockholders' equity in excess of $10,000,000.
(b) Operations
The Company's activities increased during 1994. The following
information
describes the Company's activities during 1994 and was derived
from Form 8-K's
filed by the Company during 1994. The information set forth
below is a summary
of the Company's activities during 1994 and is not meant to be
a complete
discussion of the Company's activities during such year.
January 21, 1994. The Company announced its agreement to
acquire Jackson
Builders Corp. from Ernest Jackson in exchange for 6,000,000
shares of the
Company's common stock.
March 10, 1994. The agreement with Ernest Jackson became
effective on March 3,
1994, and in connection therewith, the Company issued
6,000,000 of its common
stock shares to Ernest Jackson. Alfred Arce, Robert Maynard
and Gordon Rapozo
resigned as directors of the Company and Gerhart W. Walch
resigned as chairman
of the Board and as CEO. Ernest Jackson and William Dabney
were appointed as
directors of the Company with Gerhart Walch. Ernest Jackson
was appointed as
President and CEO of the Company. David Lauletta was appointed
as Controller
and Treasurer.
July 6, 1994. Eest Jackson resigned as Chairman and CEO but
remained as
President and a director of the Company and as chairman and CEO
of Jackson
Builders Corp. The Company continued with the implementation
of its new
business plan by entering into letters of intent to acquire
Reilley Homes, Mecon
Hawaii Limited, TMH and various assets from Ernest Jackson
including Honolulu
Roofing, Frame Tech, Sand Island Properties and West Pearl
Center. An
unaffiliated person agreed to lend $2,000,000 to the Company as
of July 6, 1994,
secured by a mortgage on a property owned in leasehold by Mr.
Jackson and
affiliated companies.
By July 1996, $1,500,000 were advanced towards that loan.
However, the check was
issued directly to Mr. Ernest J. Jackson and the funds were
used to benefit Mr.
Jackson rather than the Registrant. The loan is also
convertible into shares of
the Company's common stock at $1.00 / Share.
August 1994. The Company entered into an Agreement with Ernest
Jackson.
Jackson agreed to transfer 4,000,000 of the 6,000,000 shares
issued in March
1994 back to the Company for cancellation. The cancellation
was the result of
the Company becoming aware of previously undisclosed
liabilities of Jackson
Builders Corp., and other financial reporting matters relating
to Jackson
Builders operations.
September 1994. The remaining portion of the loan balance in
the amount of
$500,000 were funded and additionally collateralized by
publicly traded stock
owned by Mr. and Mrs. Walch. The Company entered into an
acquisition agreement
to acquire all of the issued and outstanding stock of TMH
Financial Corporation,
Irvine, California, based real estate financing company. TMH
had acted as a
consultant to arrange the $2,000,000 loan.
December 8, 1994 The Agreement of Merger entered into by
Jackson and the
Company in January 1994 was rescinded. Jackson agreed to
transfer all 6,000,000
shares back to the Company. Jackson agreed to transfer certain
properties to
the Company and James Shuler in lieu of foreclosure. The
Company transferred
the shares of Jackson Builders, Inc. back to Ernest Jackson.
The August 1994
Purchase Agreement has been terminated at the mutual agreement
of the parties
and Jackson resigned as a director. The 6,000,000 shares
previously issued to
Jackson have been cancelled on their books and records of the
Company. Between
February 1994 and September 1994, the Company advanced
$2,400,000 to Ernest J.
Jackson and affiliated entities. Pursuant to the terms of the
Rescission
Agreement, Ernest Jackson is obligated to, and agreed to,
transfer properties
to the Company and James Schuler for repayment of all or a
portion of the
amounts due and owing. As of May 15, 1996, these properties
have not been
conveyed to the Company or to Mr. Schuler. The Company intends
to commence
litigation to obtain repayment of the amount due and owing
however, inasmuch as
Mr. Jackson continues to be involved in a bankruptcy
proceeding, the Company is
unable to determine the outcome of its collection efforts.
(c) Employees
The Company and its subsidiaries currently employ 4 persons on
a full time
basis. and 3 persons on a part-time basis. Registrant s
principal and
administrative office is located at 1088 Bishop Street, Suite
1104, Honolulu,
Hawaii, for which it pays $1,630 per month. This lease expires
June 15, 1996,
and the Company will relocate to another suitable office
location. Currently
there is a glut of office space in Honolulu and the
Registrantbelieves that it
will be able to obtain facilities that are both suitable and
adequate for the
planned growth of the Company at reasonable terms.
ITEM 2. PROPERTIES
The operational offices in Belize is located at Belcan Plaza
Building, Belize
City, Belize, Central America. The lease agreement includes an
one year option
to purchase the building. The option and the lease expires on
January 31, 1997.
It is the objective of the Company to acquire the building to
meet the office
requirements of its growing operations.
In June 1986 the Registrant acquired an equitable interest in
5,010 acres of the
Mayan Salt Creek Estate, located in the northern part of the
Belize District in
Belize City, Belize, Central America. (Belize is the only
English speaking
Country in Central America and a member of the British
Commonwealth). The
Estate, which has a 300-year history as a working plantation,
pursuant to its
Certificate of Title consists of 31,423.45 acres and is located
less than ten
minutes north of the Belize International Airport in Belize.
The Estate has an
extensive history spanning over 300 years as a citrus
plantation, cattle ranch
and forest range. The Estate consist of over 31,000 acres and
has approximately
20 miles of Caribbean Sea frontage.
ITEM 3. LEGAL PROCEEDINGS
At December 31, 1995, the Registrant was a party to several
lawsuits as
plaintiff or defendant that were incurred and reported
previously, none of which
individually or in the aggregate is considered material in
relation to the
Registrant s financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held no meetings of securities holders during 1994.
A shareholders
meeting is planned in the 3rd Quarter of 1996.
ITEM 4a. EXECUTIVE OFFICERS OF REGISTRANT.
Other
Positions
Year Held
Last
Name Age Title Elected Five
Years
Gerhart W. Walch 46 Chairman of the Board 1994
1989-1993
President & CEO
Chairman, CEO
and
Director
1993-1994
Director
Gail Kitaji, Ph.D. 48 Treasurer and 1995
1989-1994
Chief Financial
President & CEO
Officer GRII
Consulting
Richard
MacMillan, Esq. 53 Secretary, 1986
1989-1994
General Counsel
Practicing Attorney
Ernest C. Hickson 64 Executive Vice 1994
1989-1994
President and Director
President & CEO
TMH
Financial Corp.
1994
President
TMH
Capital, Inc.
Dr. Masahiro Tsuchiya 49 Director 1994
1989-1994
Chairman Comp. Comm.
President
Sypex
International Co
1992-1994
Director
International Meta
Systems,
Inc.
Dr. William Dabney 64 Director 1994
1989-1994
Principal
Pacific
State Builders
Group
Pacific
States
Franchise Group
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market for Common Stock. The Company's common stock is
currently traded
on a very limited basis in the over-the-counter market and
quoted on the NASD's
Electronic Bulletin Board. The Company's common stock was
previously quoted
on NASDAQ. At such time as the Company meets the entry
requirements for NASDAQ
again, if ever, it intends to attempt to have its common stock
quoted thereon.
Quarter 1994 1993
High Low High Low
1st Quarter 2.75 .0625 Information for
1993
2nd Quarter 2.50 .625
3rd Quarter 2.875 .8125 not available.
4th Quarter 1.90 .3125
(b) Holders. The number of shareholders of record of the
Company's common
stock as of May 15, 1996, was approximately 450. A substantial
number of shares
are held in the name of Brokerage houses, therefore the Company
believes that
the actual number of shareholders is significantly higher.
(c) Dividends. The Company has not paid any cash dividends to
date and does
not anticipate or contemplate paying dividends in the
foreseeable future. It
is the present intention of management to utilize all available
funds for the
development of the Company's business.
ITEM 6. SELECTED FINANCIAL DATA
1994 1993
Net Sales 118,733 0
Net Income (Loss) (4,393,726) (957,633)
Net Income (Loss) per Share (.62) (.23)
Total Assets 346,631 134,339
Long term debt 0 0
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Analysis of Results of Operations
The Registrant exhausted most of its working capital and
financial resources in
1994. The financial statements attached hereto and this
Management's Discussion
and Analysis Section address the Company's 1993 and 1994
Financial Condition and
Results of Operations. Subsequent to December 31, 1993, the
Company has
attempted to continue to reduce its liabilities, to raise
additional capital and
to assist Jackson Builders Corporation and TMH Financial
Corporation to achieve
positive operating results on a consolidated basis. However,
both organizations
were unable to produce the desired results and these
acquisitions were
rescinded by mutual agreement. The Jackson Builders Corp.
rescission was
finalized in December of 1994 and the TMH Financial Corp.
rescission was
finalized in December of 1995. Interested persons should
carefully read the
1993 and 1994 financial statements in total, including the
footnotes attached
thereto.
Liquidity and Capital Resources
At December 31, 1994, the Company continued to have limited
liquid assets.
Total assets were $346,631, total liabilities were $3,786,689
and shareholders
equity was a negative $3,440,058. At December 31, 1994, the
Company's current
assets were $3,074 and its current liabilities were $3,786,689.
The Company's
liabilities included notes payable to creditors, notes payable
to management,
payroll taxes, wages, litigation settlement, interest payable,
notes to officers
and other liabilities. The Company's ability to increase
capital is dependent
upon its ability to raise cash through the issuance of the
Company's securities.
The Company does not anticipate that it will be able to raise
any significant
cash assets in the foreseeable future. Therefore, the
Company's ability to grow
will, to a large extent, be dependent upon its ability to
effect acquisitions
of assets and businesses through the issuance of its
securities. It can be
expected that assets and businesses available to the Company
for acquisition
will be high risk ventures which may be start-ups or
development stage
companies.
The issuance of the Company's securities in connection with
acquisition
transactions will have the continued effect of diluting the
Company's current
shareholders in their percentage ownership of the Company. As
of December 31,
1994, there were 11,576,759 shares of the Company's common
stock issued and
outstanding.
There can be no assurance that the Company will continue to
operate profitably.
There can be no assurance that the Company will improve its
working capital
position required to implement the Company's new corporate
strategic plan.
Results of Operations
The Company had revenues of $118,733 and no revenues for 1993.
During the year
ended December 31, 1994, the Company had general and
administrative expenses of
$3,872,224 as compared to general and administrative expenses
of $907,376 for
the year ended December 31, 1993. During 1994 the Company's
general and
administrative expenses included $2,408,717 bad debt expenses,
$331,891 for
legal and accounting fees, $596,075 for outside consulting
services and a
variety of other expenses. For the year ended December 31,
1994, the Company
had Other Expenses of $16,468 compared to net Other Expenses of
$2,503 for the
year ended December 31, 1993.
The Company's net loss for the year ended December 31, 1994 was
$4,393,726
compared to $957,633 for the year ended December 31, 1993.
The Company had an accrued deficit in stockholders' equity of
$15,194,636 as of
December 31, 1994 compared to $10,800,910 at December 31, 1993.
Impact of Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement
No. 109 regarding
accounting for income taxes. The statement requires an asset
and liability
approach to determining deferred income tax amounts and income
tax expense for
the period. The Company first applied this statement during
the fiscal year
ending December 31, 1994. In connection with the adoption of
SFAS 109, there
was no cumulative impact on the financial statements of the
Company and no
restatement of financial statements was required.
ITEM 8. FINANCIAL STATEMENTS
Index to Financial Statements
Financial Statements
Independent Accountants' Report
Year ended December 31, 1994
Balance Sheets -
December 31, 1994 and 1993
Statements of Operations
Years ended December 31, 1994 and 1993
Statements of Changes in Stockholders' Equity -
Years ended December 31, 1994 and 1993
Statements of Cash Flows -
Years ended December 31, 1994 and 1993
Notes to Financial Statements
INDEPENDENT AUDITORS REPORT ON FINANCIAL STATEMENTS AND
FINANCIAL
STATEMENT SCHEDULE
REPORT OF THE AUDITOR
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
WALL STREET FINANCIAL CORPORATION AND SUBSIDIARY
We have audited the accompanying consolidated balance sheet of
Wall Street
Financial Corporation as at 31st December 1994 and the related
consolidated
statement of operations and statement of 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.
We conducted our audit in accordance with generally accepted
auditing standards.
those standards require that I plan and perform the audit to
obtain reasonable
assurance about whether the financial statements are free of
material
misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes
assessing the accounting principles 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 consolidated balance sheet and related
financial statements
referred to above present fairly, in all material respects, the
consolidated
financial position of the company at 31st December 1994 and the
consolidated
results of their operations and their consolidated cash flows
for the year then
ended in conformity with generally accepted accounting
principles.
The accompanying consolidated financial statements have been
prepared assuming
that the company will continue as a going concern. The Company
has incurred
recurring losses from operations and has a deficit working
capital and a net
capital deficiency that raise substantial doubt about its
ability to continue
as a going concern. The consolidated financial statements do
not include any
adjustments that might result from the outcome of this
uncertainty.
The consolidated financial statements of Wall Street Financial
Corporation as
of 31st December 1993 were audited by other auditors whose
report dated 8th June
1994 expressed an unqualified opinion on those statements.
/s/ Mark C. Hulse
Chartered Accountant
4th April 1996
Belize City,
Belize, C.A.
Representative Firm of KPMG
Klynveld Peat Marwick Goerdeler
The notes on pages 16-21 form an integral part of these
financial statements.
Wall Street Financial Corporation and Subsidiary
CONSOLIDATED BALANCE SHEETS
31st December 1994 and 1993
Notes 1994
1993
Assets
Currents Assets
Cash $3,074
$292
------
----
Total current assets 3,074
292
Advances Receivable-Other, less 3
allowance of $2,777,141 in 1994
and $377,141 in 1993 550
Marketable Equity Securities-at cost 4 127,022
127,022
Plant and Equipment 5
Furniture and Fixtures 2,925
Equipment 6,602
-------
9,527
Less: accumulated depreciation 507
-------
Plant and equipment-net 9,020
Shares Held as Collateral 171,900
Other Assets 35,065
7,025
--------
- --------
$346,631
$134,339
========
========
The notes on pages 16-21 form an integral part of these
financial statements.
Notes 1994
1993
Liabilities and Shareholders' Equity
Current Liabilities
Convertible promissory notes payable 6 $2,700,000
$250,000
Accounts payable-trade 174,962
341,339
Accounts payable-officers 6,610
75,224
Accrued liabilities
Salaries and wages
95,850
Payroll taxes 7 79,675
79,675
Interest payable-officers 305
305
Interest payable 161,237
100,506
-------
-------
241,217
276,336
Other current liabilities
Litigation settlement 8 215,000
265,000
Other
6,168
-------
-------
215,000
271,168
Total current liabilities 3,337,789
1,214,067
Notes Payable-Officers 448,900
500,000
---------
- ---------
Total liabilities 3,786,689
1,714,067
Shareholders' Equity
Common stock-authorized, 25,000,000
shares of $.01 par value; issued and
outstanding, 11,576,759 shares in 1994
and 4,305,408 shares in 1993 9 115,768
43,054
Shares issued for no consideration
(16,467)
Additional paid-in capital 12,082,293
9,287,595
Accumulated deficit (15,194,636)
(10,800,910)
------------
- ------------
(2,996,575)
(1,486,728)
Less:
Reserve in land contract valuation (13,000)
(13,000)
Subscription receivable (10,000)
(10,000)
Stockholder notes receivable 10 (408,483)
(38,000)
Employee Stock Ownership Plan
note receivable 11
(20,000)
Treasury stock (12,000)
(12,000)
-----------
- -----------
(3,440,058)
(1,579,728)
-----------
- -----------
$346,631
$134,339
===========
===========
The notes on pages 16-21 form an integral part of these
financial statements.
Wall Street Financial Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended 31st December 1994 and 1993
1994
1993
Revenue
Interest $76,242
Other 42,491
-------
118,733
Expenses
Operating expenses 3,872,224
$907,376
Interest expense 176,508
47,754
Depreciation 507
Other 16,468
2,503
---------
- --------
4,065,707
957,633
Loss from continuing operations 3,946,974
957,633
Discontinued Operations
Loss on disposition of subsidiaries 446,752
------------
- ----------
Net loss from operations ($4,393,726)
($957,633)
============
==========
Net loss per share-continuing operation ($.56)
($.23)
Loss per share discontinued operation (.06)
------
- ------
Net loss per share from operation ($.62)
($.23)
======
======
The notes on pages 16-21 form an integral part of these
financial statements.
<TABLE>
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended 31st December 1994 and 1993
<CAPTION>
Other
Common Stock
Add Common stkhldr
Number paid
in stock Accumulated equity
of shares Amount
capital subscr deficit accounts
- ----------------------------------------------------------------
- -
<S> <C> <C> <C>
<C> <C> <C>
Balance at 1st January 1993 14,989,343 149,893
8,910,629 7,750 (9,843,277) (208,250)
Sale of restricted common stock 635,000 6,350
253,650 0 0 0
Issuance of restricted shares for
bonuses and other compensation 412,000 4,120
70,040 0 0 0
Issuance of restricted shares for
litigation settlement 250,000 2,500 0
(2,500) 0 0
Shares issued for no consideration 896,667 8,967 0
0 0 (8,967)
Common stock subscription 525,000 5,250 0
(5,250) 0 90,000
Payment received on stockholder
note receivable 0 0 0
0 0 29,000
Treasury stock 0 0 0
0 0 (12,000)
Stock cancelled (486,380) (4,864)
(75,886) 0 0 750
Net loss 0 0 0
0 (957,633) 0
Effect of four for one reserve
stock split (12,916,222) (129,162)
129,162 0 0 0
- ----------------------------------------------------------------
Balance at 31st December 1993 4,305,408 43,054
9,287,595 0 (10,800,910) (109,467)
- ----------------------------------------------------------------
Write off of "shares issued,
no consideration" 0 0 0
0 0 16,467
Issuance of restricted shares for
services rendered
(acquisition advisory team) 1,900,000 19,000
836,000 0 0 0
Sale of restricted common stock 2,157,340 21,574
1,347,394 0 0 0
Shares returned against Employee
Stock Ownership Plan note rec (15,000) (150)
(19,850) 0 0 20,000
Issuance of restricted shares to
stockholder on note receivable 1,764,204 17,642
352,841 0 0 (370,483)
Issuance of restricted shares for
note payable 1,464,807 14,648
278,313 0 0 0
Net loss 0 0 0
0 (4,393,726) 0
- ---------------------------------------------------------------
Balance at 31st December 1994 11,576,759 115,768
12,082,293 (15,194,636) (443,483)
===============================================================
</TABLE>
The notes on pages 16-21 form an integral part of these
financial statements.
Wall Street Financial Corporation and Subsidiary
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended 31st December 1994 and 1993
1994
1993
Cash flows from operating activities:
Net loss from operations ($4,393,726)
($957,633)
Items not affecting working capital
depreciation 507
non cash expenses 651,514
provision for losses on acct receivable
and other assets 2,400,000
319,113
loss on disposition of subsidiary 446,752
stock bonuses and commissions
74,160
shares issued-no consideration 16,467
-----------
- ----------
(878,486)
(564,360)
Changes in assets and liabilities:
(Decrease)/increase in accounts payable (166,377)
130,330
(Decrease)/increase in accrued salaries-officers (95,850)
(Decrease) in shareholders advance (68,614)
(Decrease) in litigation settlement payable (50,000)
(10,000)
(Decrease) in other current liability (6,168)
Increase in interest payable 60,731
31,850
(Decrease) in interest payable-officers
(41,869)
Decrease in advance receivable
14,522
(Decrease) in advance payable-officers
(49,776)
-----------
- ----------
Net cash used in operating activities (1,204,764)
(489,303)
-----------
- ----------
Cash flows from investing activities:
Purchase of plant and equipment (9,527)
Addition to other receivables (550)
(319,113)
Addition to other assets (2,601,345)
(7,025)
-----------
- ----------
Net cash used in investing activities (2,611,422)
(326,138)
-----------
- ----------
Cash flows from financing activities:
Proceeds from notes payable 2,450,000
Proceeds from notes payable-officers
500,000
Payment of notes payable-officers
(14,000)
Shares sold 1,368,968
Proceeds from sale of restricted common stock
260,000
Proceeds from stock subscription receivable
10,000
Proceeds from stockholders' note receivable
29,000
-----------
- ----------
Net cash provided by financing activities 3,818,968
785,000
-----------
- ----------
Net increase/(decrease) in cash 2,782
(30,441)
Cash at beginning of year 292
30,733
-----------
- ----------
Cash at the end of the year $3,074
$292
===========
==========
Cash paid during the year for:
Interest 115,776
17,977
The notes on pages 16-21 form an integral part of these
financial statements.
Supplemental disclosure of cash flow information:
1994
The Company issued 1,900,000 shares of common stock in
connection with a
proposed acquisition.
The Company issued 1,764,200 shares on a note receivable.
The Company issued 1,464,807 shares in settlement of a note
payable.
The Company accepted 15,000 shares against an Employee Stock
Ownership Plan note
receivable.
The Company wrote off "shares issued, no consideration" of
$16,467.
1993
The Company issued 412,000 shares of common stock in lieu of
cash bonuses and
other compensation. The shares were valued at approximately
$74,000.
The Company issued 250,000 shares of common stock for
litigation settlement.
In February 1993, the Company issued 4,000 shares of stock
under a stock
subscription agreement for no consideration. The shares were
valued at $80,000
and were subsequently cancelled in September 1993.
During 1993, the Company issued approximately 896,667 shares of
common stock in
connection with a propose acquisition.
In 1993, the Company purchased $125,000 of marketable equity
securities through
advances payable to an officer.
On November 24, 1993, the Company's Board of Directors
authorized a reverse
stock split of four (4) shares of common stock for one (1) new
share of common
stock.
In lieu of cash payments on a receivable balance, the Company
received 60,000
shares of its common stock. The shares were valued at $12,000.
The notes on pages 16-21 form an integral part of these
financial statements.
Wall Street Financial Corporation and Subsidiary
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31st December 1994 and 1993
1. STATUS
The Company was incorporated in 1986 and reincorporated under
the laws of the
State of Delaware in 1987. The Company and its previously
wholly-owned
California-based subsidiaries, Wall Street Financial Centers,
Inc., TRAC
Systems, Inc. and Bankers Financial Network, Inc., collectively
known as WSF
Bankers Financial Network, developed a franchise system whereby
member banks
would be supported by various financial products and services.
During the second quarter of 1991, the management team of the
subsidiary,
without approval of the Company, took control of all assets of
WSF Bankers
Financial Network and started operations in direct competition
with the
Company's subsidiaries. The Company, unable to raise
additional capital, was
forced to cease its operations of the WSF Bankers Financial
Network, assumed
certain liabilities which were guaranteed by the Company, and
delisted its
shares from NASDAQ.
In 1992, the Company filed a claim for consequential damages
and recovery of all
assets. In February 1994, the Company and defendants entered
into a Mutual
Release and Settlement Agreement which released and forever
discharged each
party from all claims for relief.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements includes only the
accounts of Wall Street
Financial Corp. (the Company).
3. ADVANCES RECEIVABLE
Advances receivable at 31st December 1994 consists of advances
to Ernest Jackson
and Jackson's companies for operating purposes in 1994 for
$2,400,000. The
amount is considered doubtful and is provided for.
4. MARKETABLE EQUITY SECURITIES
Marketable equity securities are carried at cost unless there
is a permanent
impairment in value, at which time the securities are valued at
market.
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in
Debt and Equity Securities" (SFAS 115), is effective for fiscal
years beginning
after 15th December 1993 and addresses the accounting and
reporting for
investment in equity securities having readily determinable
fair values and all
investment in debt securities. SFAS 115 requires such
investment to be
classified into three categories: securities held to maturity,
trading account
securities or securities available for sale.
The Company plans to adopt SFAS 115. Investments with a book
value of $125,000
shall be reported as securities available for sale at a fair
value of $206,000
and no securities shall be reported as trading account
securities. The
unrealized holding gain, net of tax effect, of approximately
$50,000 for
securities classified as available-for-sale shall be reported
as an adjustment
in a separate component of shareholders' equity.
5. PLANT AND EQUIPMENT
Plant and equipment are recorded at cost. Renewals and major
improvements are
capitalised; minor replacements, repairs and maintenance are
expended when
incurred.
Depreciation is calculated on the historical cost using the
straight line method
based on plant and equipment estimated useful lives. The
following are the
depreciation rates:
Furniture and fixtures 20%
Equipment 20%
6. CONVERTIBLE PROMISSORY NOTES PAYABLE 1994
1993
Convertible promissory notes payable
consist of the following:
NISSIM TSE - principal 150,000
150,000
Unsecured: 12.75% note issued 31/10/90.
Due dated 31/10/93. The Company has
obtained oral extension for this note.
Benjamin Ynson / Phesco - principal 100,000
100,000
Unsecured: 12.75% note issued 31/10/90.
Due dated 31/10/93. The Company has
obtained oral extension for this note.
Notes relating to Jackson Builders Corporation/
Ernest J. Jackson: notes executed by Ernest J.
Jackson while chairman but not properly authorized
by the board. The Company holds Ernest J. Jackson
personally liable while recognizing the potential
liability. 2,450,000
----------
- --------
$2,700,000
$250,000
==========
========
7. PAYROLL TAXES
Effective 1st January 1993, the Company adopted the
requirements of Statement
of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" (SFAS
109) which requires a change from the deferred method to the
asset and liability
method of accounting for income taxes.
As of 31st December 1994, the Company has estimated accumulated
net operating
losses of approximately $10,800,000. The Company is preparing
its federal
income tax returns for filing from 1990 through 1994. These
losses can be
carried forward and applied against future income of the
Company for federal and
state income tax purposes. The net operating losses will
expire on various
dates through 2009. The Company's income tax returns which are
not closed for
examination by statutes have not been examined by the taxing
authorities.
8. LITIGATION
In December 1991, the Company was found liable for damages in a
lawsuit brought
by a former landlord of its wholly-owned subsidiary, of which
the Company served
as guarantor to the lease agreement. In subsequent
negotiations with the former
landlord, a settlement agreement was reached in June 1993,
whereby the Company
would provide monetary relief in the amount of $250,000 to be
paid in
installments over a three-year period, beginning in September
1993 and also
issue 250,000 shares of restricted common stock valued at $.20
per share.
On 12th February 1994, a convertible promissory note was
executed, which reduced
the monetary settlement from $250,000 to $100,000, payable in
installments of
$15,000 due 15th March 1994 and $85,000 due on or before 15th
August 1994. The
cost of the settlement amounted to approximately $150,000 and
was provided for
in 1991. The note extended to 30th September 1994 under the
same terms and
conditions and was settled at 21st September 1994.
In July 1991, the Company reached a settlement agreement with a
computer vendor
for non-payment of services. The agreement totaled
approximately $100,000,
payable in 1993. As of 31st December 1993, the entire
settlement payable is
outstanding. The Company is in the process of renegotiating
the settlement.
The settlement cost was provided for in 1991.
In May 1994, a claim was filed against the Company for money
damages in the
amount of approximately $87,900 arising out of Pacific Wave
Technology's failure
to pay for computer equipment. Plaintiff alleges that the
Company had
guaranteed such payments. The outcome of this proceeding and
its effect, if
any, cannot be determined at this time and thus no provision
for any liability
has been made in the financial statements.
The company is a party to several other claims and legal
actions. In the
opinion of management, the ultimate disposition of these
matters will not have
a material adverse effect on the Company's operations or
financial condition.
9. STOCKHOLDERS' EQUITY
On 24th November 1993, the Company's Board of Directors
authorized a reverse
stock split of four (4) shares of common stock for one (1) new
share of common
stock, effected for shareholders of record as of 13th December
1993. The total
outstanding shares at 31st December 1993 was reduced from
17,221,630 to
4,305,408 shares in connection with the reverse split. A total
of $129,162 was
reclassified to the Company's additional paid-in capital
account from the
Company's common stock account.
Of the 11,576,759 outstanding shares of Common Stock as of 31st
December 1994,
approximately 7,000,000 shares are restricted as to resale.
These shares may
not be traded publicly or otherwise transferred except as
permitted under
various exemptions contained in the Securities Exchange Act, or
upon
satisfaction of the registration and prospectus delivery
requirements of the
Securities Exchange Act.
10. STOCKHOLDER NOTES RECEIVABLE
In December 1992, the Company issued to a stockholder 500,000
shares of stock
for $33,000 cash and a note receivable of $67,000 payable in
two installments,
with the final installment due on 1st March 1993. As of 31st
December 1994,
$38,000 is still outstanding. An additional note for $370,483
is included in
this account during 1994. As of 31st December 1994 the
accumulated total is
$408,483.
11. EMPLOYEE STOCK OWNERSHIP PLAN
In 1989, the Company established an Employee Stock Ownership
Plan (ESOP)
covering substantially all employees of the Company and its
subsidiaries who
meet minimum length of service requirements. The ESOP
purchased 600,000 shares
of the Company's common stock with a promissory note for
$1,380,000 at an 8%
annual rate, payable to the Company over seven years in
increasing annual
principal and interest installments beginning October 1992.
Contributions to
the ESOP may be in the form of cash or Common Stock of the
Company. The amount
of the annual contribution is subject to the discretion of the
Board of
Directors, except that the minimum amount must be sufficient to
enable the ESOP
to meet its current financial obligations. No contributions
were made to the
ESOP.
In November 1992, the Board of Directors agreed to cancel the
promissory note
in consideration for the disposition of the 600,000 shares held
by the ESOP with
the payment of proceeds to the Company or to transfer the
shares back to the
Company.
On 17th November 1992, the ESOP sold 500,000 ESOP shares for
$100,000, less
commission of $1,510. Of this amount, approximately $98,250
was disbursed to
the Company. As of 31st December 1992, the remaining 100,000
shares were held
by a brokerage firm. The Company has provided an allowance for
$1,260,000 of
the promissory note and waived any interest accrued. The
$1,260,000 has been
reflected as an expense in 1992.
During the third quarter of 1993, 40,000 shares were
transferred as payment for
financial and consulting services rendered. As of 31st
December 1993, 60,000
shares remain outstanding.
Effective 31st July 1994, the ESOP was formally terminated.
The Company has had
outside legal counsel review the ESOP and related documents for
the possibility
of contingent liabilities to former or present employees and
potential liability
for ERISA, Department of Labor (DOL) and Internal Revenue
Service (IRS)
requirements. Based on the results of the findings, counsel
and management
believe the Company does have contingent liabilities to its
former and present
employees who qualified for participation in the ESOP.
However, the three
principal participants have waived any rights they may have
under the ESOP. The
Company also has potential liability for violations of ERISA,
DOL and IRS
requirements; however, the contingent liability is not
determinable at this
time, and resolution of any liabilities could not be achieved
without
significant expense to the Company.
12. NET LOSS PER SHARE
Net loss per share is based on weighted average number of
shares outstanding of
7,117,186 for 1994 and 4,190,334 for 1993.
Report of the Auditor on Supplementary Information
REPORT OF THE AUDITOR
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
WALL STREET FINANCIAL CORPORATION AND SUBSIDIARY
Our audit was conducted for the purpose of forming an opinion
on the basic
financial statements taken as a whole of Wall Street Financial
Corporation and
Subsidiary as of and for the year ended 31st December 1994,
which is the
preceding section of this report. The supplementary
information presented
hereinafter is presented for purposes of additional analysis
and is not a
required part of the basic financial statements. The
information has been
subjected to the auditing procedures applied in the audits of
the basic
financial statements and, in our opinion, such information is
fairly stated in
all material respects in relation to the basic financial
statements taken as a
whole.
The supplementary information of Wall Street Financial
Corporation and
Subsidiary as of 31st December 1993 was audited by other
auditors whose report
dated 8th June 1994 expressed an unqualified opinion on these
statements.
/s/ Mark C. Hulse
Chartered Accountant
4th April 1996
Belize City
Belize, C.A.
Representative Firm of KPMG
Klynveld Peat Marwick Goerdeler
Wall Street Financial Corporation and Subsidiary
OPERATING EXPENSES
Years ended 31st December 1994 and 1993
1994
1993
Parking $376
Salaries, wages and compensation 417,520
Auto 2,029
Employee benefits 372
Employee parking 2,125
Rent 14,138
$23,248
Utilities 10,598
11,105
Bank charges 464
Delivery and postage 1,702
5,869
Equipment maintenance 1,336
Insurance 1,346
Licenses and fees 870
4,120
Office expenses (3,133)
Office supplies 3,553
6,989
Printing 2,428
14,243
Repairs and maintenance 302
Reprography 838
Accounting 90,198
114,501
Legal 241,693
156,455
Outside services 660,393
210,474
Other professional services (64,318)
Meals and entertainment 3,181
5,690
Travel and transportation 21,138
33,209
Advertising and promotion 10,156
Public relations 41,593
Dues, subscriptions and membership 141
Other operating expenses 2,468
2,360
Bad debt 2,408,717
319,113
----------
- --------
$3,872,224
$907,376
==========
========
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
On September 1994, the Company's Board of Directors appointed
the firm of KPMG
Peat Marwick, Belize Office as the Company's independent
certifying accountant
due to the Company s focus on utilization of its Belize assets.
The Company's
previous accountant was the firm of Grant Thornton LLP and the
Company
anticipates to continue to utilize the services of Grant
Thornton LLP for other
accounting matters and/or consulting services. Additional
information about the
appointment of KPMG Peat Marwick, Belize Office as the
Company's certifying
accountants, is as follows:
A. The date of such appointment of KPMG Peat Marwick, Belize
Office as the
Company's independent certifying accountant was in September
1995.
B. There have been no disagreements with the previous
accountant of the Company
on any matter of accounting principles or practices, financial
statement
disclosure or auditing scope of procedure.
C. The accountants' reports on the financial statements of the
Company for the
last two years in which audits were prepared did not contain
adverse opinions
or disclaimer of opinions nor were such reports qualified as to
audit scope or
accounting principles.
D. The decision to change accountants was recommended by the
Company's Board
of Directors. William Dabney, Esq., served as the Chairman of
the Audit
Committee at the time KPMG Peat Marwick, Belize Office was
appointed the
Company's independent certifying accountant.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
A. Identification of Directors and Executive Officers. The
current directors
of the Registrant who will serve until the next annual meeting
of shareholders
or until their successors are elected or appointed and
qualified, are set forth
below:
Gerhart W. Walch: 46, Chairman of the Board, President and
Chief Executive
Officer of WSF 10/94-Present. Mr. Walch is a co-founder of WSF
and has served
as a director or as an officer since its inception in 1987. He
is the Chairman
of the Board of Compradore Limited, d.b.a. Mayan Salt Creek
Estate. Mr. Walch
is also the International Managing Director of the Stockbrokers
Society.
Ernest C. Hickson: 64, Mr. Hickson has been Executive
Vice-President and
director of the Company, 10/94 - Present. He is also the
President of TMH
Capital, Inc., a subsidiary of the Company, 9/94 - Present; and
CEO of TMH
Financial Corporation and its subsidiaries, 1982 - Present.
Dr. Masahiro Tsuchiya: 49, Dr. Tsuchiya has been a director
and Chairman of the
Compensation Committee and Director of MIS of the Company,
10/94 - Present. He
is the President of Sypex International Company, 1985 -
Present. He serves on
the Board of Directors of International Meta Systems, Inc.,
1992 - Present.
William D. Dabney: 64, Mr. Dabney has been a director of the
Company, 3/94 -
Present. Mr. Dabney has been principal of Pacific State
Builders Group and
Pacific States Franchise Group, 1971 - Present.
Richard G. MacMillan, Esq.: 53, Mr. MacMillan has been the
Secretary of the
Company, 1986 - Present.
Gail Kitaji, Ph.D.: 48, Dr. Kitaji is Principal Financial
Officer and Treasurer
of the Company, 5/95 - Present. Dr. Kitaji is President and
CEO of GRII \, 8/89
- - Present; Operations Planning Manager (Financial) for the
Lanai Company 9/91
- - 9/93; VP-Finance and Controller of Alaska General Alarm,
Inc., 1987 - 1989.
B. Significant Employees. None.
C. Family Relationships. None.
D. Other: Involvement in Certain Legal Proceedings. There
have been no events
under any bankruptcy act, no criminal proceedings and no
judgments or
injunctions material to the evaluation of the ability and
integrity of any
director or executive officer during the past five years.
E. Compliance with Section 16(a). None.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation
paid by the
Company for services rendered during the last three years to
the Company's Chief
Executive Officer and to the Company's most highly compensated
executive
officers other than the CEO whose annual salary and bonuses
exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long
Term Compensation
- ---------------------------------
Annual Compensation
Awards Payouts
------------------------
- ---------------------- ---------
(a) (b) (c) (d) (e) (f)
(g) (h) (i)
Other
Name Annual Restricted
and Compen- Stock
LTIP All Other
Principal Salary Bonus sation Award(s)
Options/ Payouts Compensa-
Position Year ($) ($) ($) ($)
SARs (#) ($) tion ($)
<S> <C> <C> <C> <C> <C>
<C> <C> <C>
Gerhart Walch 1994 $-0- $-0- $-0- $12,500
<F1> $-0- $-0- $-0-
President, CEO 1993 $-0- $-0- $-0- $30,000
<F2> $-0- $-0- $-0-
Chairman 1992 $-0- $-0- $-0- $12,500
<F3> $-0- $-0- $-0-
1991
<FN>
<F1>
(1) In 1994, the Company awarded Mr. Walch 50,000 shares of
common stock for services rendered. On
the day of the grant, the closing market price was $.25.
Therefore, for purposes of the Summary
Compensation Table the dollar value of such restricted stock
award was $12,500.
<F2>
(2) In 1993, the Company awarded Mr. Walch 200,000 shares of
common stock for services rendered.
On the date of grant, the closing market price was $.15.
Therefore, for purposes of the Summary
Compensation Table the dollar value of such restricted stock
award was $30,000.
<F3>
(3) In 1992, the Company awarded Mr. Walch 100,000 shares of
common stock for services rendered.
On the date of grant,, the closing market price was $.18.
Therefore, for purposes of the Summary
Compensation Table the dollar value of such restricted stock
award was $18,000.
</FN>
</TABLE>
No options, stock appreciation rights or long-terms incentive
plan awards were
issued or granted to the Company's management during the fiscal
year ending
December 31, 1995, 1994, 1993 or 1992. As of December 31,
1995, the Company's
management owned no options or stock appreciation rights.
Accordingly, no
tables relating to such items have been included in this Item
10.
Compensation of Directors
The Company's non-employee directors are not compensated for
Board meetings
attended.
Previous Compensation
In 1989, the Company adopted an Employee Stock Option Plan
("ESOP") master Stock
Bonus Plan and a Stock Option Plan. All of such plans have
been terminated by
the Company. No shares were issued pursuant to the stock bonus
plan nor options
granted pursuant to the Stock Option Plan for the year ended
December 31, 1991,
1992, 1993, 1994 and 1995.
In 1989, the Company established an Employee Stock Ownership
Plan (ESOP)
covering substantially all employees of the Company and its
subsidiaries who
meet minimum length of service requirements. The ESOP
purchased 600,000 shares
of the Company's common stock with a promissory note for
$1,380,000 at an 8%
annual rate, payable to the Company over seven years in
increasing annual
principal and interest installments beginning October 1992.
Contributions to
the ESOP could be made in the form of cash or Common Stock of
the Company. The
amount of the annual contribution was subject to the discretion
of the Board of
Directors, except that the minimum amount must be sufficient to
enable the ESOP
to meet its current financial obligations. No contributions
were made to the
ESOP.
In November 1992, the Board of Directors agreed to cancel the
promissory note
in consideration for the disposition of the 600,000 shares held
by the ESOP with
the payment of proceeds to the Company or to transfer the
shares back to the
Company.
On November 17, 1992, the ESOP sold 500,000 ESOP shares for
$100,000, less
commission of $1,510. Of this amount, approximately $98,250
was disbursed to
the Company.
During the third quarter of 1993, 40,000 shares were
transferred as payment for
financial and consulting services rendered. As of December 31,
1993, 60,000
shares remain outstanding.
Effective July 31, 1994, the ESOP was formally terminated. The
Company has had
outside legal counsel review the ESOP and related documents for
the possibility
of contingent liabilities to former or present employees and
potential liability
for ERISA, Department of Labor (DOL) and Internal Revenue
Service (IRS)
requirements. Based on the results of the findings, counsel
and management
believe the Company does have contingent liabilities to its
former and present
employees who qualified for participation in the ESOP.
However, the three
principal participants have waived any rights they may have
under the ESOP. The
Company also has potential liability for violations of ERISA,
DOL and IRS
requirements; however, the contingent liability is not
determinable at this
time, and resolution of any liabilities could not be achieved
without
significant expense to the company.
In April 1990, the Company entered into an Employment Agreement
with Gerhart W.
Walch. The agreement was for a term of five years. The
Agreement provided for
a base salary of $12,850 per month. Mr. Walch was paid no cash
salary in 1993
and 1994 although he devoted substantially all of his efforts
to the Company.
In 1993 and 1994, Mr. Walch was issued a total of 200,000
shares of the Company
s common stock as payment for services rendered.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners. The
following table sets
forth information regarding shares of the Company's common
stock beneficially
owned as of December 31, 1994 by: (1) each officer and director
of the Company;
(ii) all officers and directors as a group; and (iii) each
person known by the
Company to beneficially own 5 percent or more of the
outstanding shares of the
Company's common stock.
Number of
Shares
Name Owned (1)
Percent
Gerhart Walch (1)(2) 4,205,729 36.3%
1088 Bishop Street
Suite 1104
Honolulu, HI 96813
Ernest C. Hickson (1)(3) 12,000 .1%
6 Hutton Centre Drive
Suite 950
Santa Ana, CA
Dr. Masahiro Tsuchiya (1)(4) 100,000 .9%
1585 Kaminaka Drive
Honolulu, HI 96816
Dr. William Dabney (1)(5) 103,500
.9%
1050 Windsor Ave.
Piedmont, CA 94610
Gail Kitaji, Ph.D. (1) 53,000
.5%
1325 Wilder Ave, 21 Makai
Honolulu, HI 96822
Richard MacMillan, Esq. (1) 83,750
.7%
7016 Kamilo Street
Honolulu, HI 96820
All Officers and Directors 4,555,979
39.4%
as a Group (6 persons)
Total Shares Issued and 11,576,759
100.0%
Outstanding
(1) These individuals are the officers and directors of the
Company.
(2) Mr. Walch is the CEO and director of the Company. All
shares indicated are
owned by the Gerhart Walch and Nancy Atmospera-Walch Revocable
Living Trust.
(3) Mr. Hickson was a director of the Company. He resigned at
the effective
date of the rescission between TMH Financial Corporation and
the Company in
November 1995.
(4) Mr. Tsuchiya was a director of the Company. He resigned
on March 12, 1995.
(5) Dr. William Dabney was a director of the Company. Dr.
Dabney is the owner
of 53,500 of these shares. The remaining 50,000 shares are
owned by a
partnership in which Dr. Dabney is a partner. He resigned on
September 23,
1995.
(b) Security Ownership of Management. See Item 12(a) above.
(c) Changes in Control. No changes in control of the
Registrant are currently
contemplated. The Registrant is seeking mergers or
acquisitions, which, when
consummated, will result in a change of control of the
management of the
Registrant as well as a change in the voting control of the
outstanding
securities of the Registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In May 1990, Gerhart W. Walch loaned the Company $277,000 at
12.75% interest.
In 1992, the note was exchanged for (375,000 post-split) shares
of the Company's
common stock.
On June 16, 1993, Gerhart W. Walch loaned the Company $500,000.
The note was
secured by marketable securities owned by the Company. In
April 1994, this note
was converted into 500,000 shares of the Company's common
stock. Mr. Walch had
borrowed the $500,000 from a private source and the 500,000
shares were
transferred to this person.
In February 1994, the Company acquired Jackson Builders
Corporation from Ernest
Jackson in exchange for 6,000,000 shares of the Company's
common stock.
Additionally, the Company issued 1,900,000 shares to certain
consultants
involved in the transaction, none of which were affiliates of
the Company. The
Company also agreed to issue 500,000 shares of its common stock
to Gerhart W.
Walch for services rendered in connection with the acquisition
and in
consideration of Mr. Walch canceling an option to purchase
1,000,000 shares of
the Company's common stock. These shares have not been issued
as of the date
hereof.
During 1993 and 1992, the Company issued a total of 719,388
shares to officers,
directors, employees and others in lieu of cash compensation
and to satisfy
obligations under commission contracts. These shares were
issued
to the following.
Number Year
Name of Shares Issued
Gerhart W. Walch 445,555 1992
Gordon E. Rapozo 158,333 1992
Alfred Arce 25,000 1992
Robert F. Maynard 25,000 1992
Richard MacMillian 12,500 1992
Lawrence Clapp 50,000 1993
Diane McHenry 3,000 1993
In 1994, the Company issued a total of 165,000 shares to
officers, directors,
employees and others in lieu of, or in addition to, cash
compensation. These
shares were issued to the following:
Number Year
Name of Shares Issued
William D. Dabney 50,000 1994
Richard MacMillan 65,000 1994
Gail Kitaji 25,000 1994
William Bousema 25,000 1994
On September 30, 1994, the Company acquired TMH Financial
Corporation ("TMHF")
from the Hickson Family Trust for 1,000,000 shares of the
Company's common
stock. The acquisition agreement further provided that the
purchase price is
subject to adjustment based upon the financial performance of
TMHF s subsidiary,
TMH Home Mortgage Company ("TMHM"). The Company will issue the
Hickson Family
Trust 200 additional shares of its common stock for every
$1,000 that the TMH
s earnings before interest taxes, depreciation and amortization
("EBITDA")
exceeds $227,000 for the year ended December 31, 1995.
Furthermore, the Hickson
Family Trust will retain 200 shares of the Company s common
stock to the Company
for every $1,000 that EBITDA is less than $227,000.
On March 10, 1994 Gerhart W. Walch, an officer and director of
the Company,
converted a $500,000 promissory note into 500,000 shares of the
Company's common
stock.
Parents of Company
The only parents of the Company, as defined in Rule 12b-2 of
the Exchange Act,
are the officers and directors of the Company. For information
regarding the
share holdings of the Company's officers and directors, see
Item 4.
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. No Exhibits are filed with this Report.
(b) Reports on Form 8-K. The Company filed the following
reports on Form 8-K
during the last quarter of its fiscal year and the first
quarter of 1990 through
December 31, 1994.
January 21, 1994. The Company announced its agreement to
acquire Jackson
Builders Corp. from Ernest Jackson.
March 10, 1994. The Company announced that the agreement with
Jackson became
effective on March 3, 1994. The Company also announced the
resignation of Messrs
Arce, Maynard and Rapozo as directors and the appointment of
Ernest Jackson and
William Dabney as directors. Gerhart W. Walch resigned as the
Chairman,
President and Chief Executive Officer, but remained a director
of the Company
to represent the interests of the public shareholders until
such time as the
transition is successfully completed.
July 6, 1994. The Board of Directors encountered serious
misrepresentations
made by Ernest J. Jackson. Based on these misrepresentations,
Ernest Jackson
resigned as Chairman and CEO of the Company but remained as a
director. The
Company also announced that Gordon Tippell was appointed as
interim CEO and
Chairman. The Company announced that it had entered into
letters of intent to
acquire Reilley Homes, Mecon Hawaii Limited, TMH and various
assets from Ernest
Jackson including Honolulu Roofing, Frame Tech, Sand Island
Properties and West
Pearl Center. The Company announced that a third party had
agreed to lend
$2,000,000 to the Company. As of July 6, 1994, $1,500,000 had
been loaned. The
loan is convertible into shares of the Company's common stock.
September 8, 1994. The Company announced that it had entered
into an Agreement
with Ernest Jackson. Jackson agreed to transfer 4,000,000 of
the 6,000,000
shares issued in March 1994 back to the Company for
cancellation. The Purchase
Agreement related to the assets described in the July 6, 1994
Form 8-K. The
Company also announced that Mr. Reilly and Tippell who were
described as
officers and directors in the July 6, 1994, 8-K have not in
fact become officers
and directors as their appointment was subject to the closing
of certain
acquisitions.
December 8, 1994 Form 8-K. The Company announced that the
Agreement of Merger
entered into by Jackson and the Company in January 1994 had
been rescinded.
Jackson agreed to transfer all 6,000,000 shares back that had
been issued in the
Merger. Jackson agreed to transfer certain properties to the
Company and James
Shuler in lieu of foreclosure. The Company transferred the
shares of Jackson
Builders, Inc. to Ernest Jackson. The August 12, 1994 Purchase
Agreement has
been terminated at the mutual agreement of the parties.
Jackson resigned as a
director.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its
behalf by the undersigned, thereunto duly authorized.
WALL STREET FINANCIAL CORPORATION
By /s/ Gerhart W. Walch Dated:
May 25, 1996
Gerhart W. Walch
Chairman, President and
Chief Executive Officer
In accordance with the Exchange Act, this report has been
signed below by the
following persons on behalf of the Registrant and in the
capacities and on the
dates indicated.
Signature Title Date
/s/ Gerhart W. Walch President/CEO May
25, 1996
Gerhart W. Walch and Director
(Principal Executive Officer)
/s/ Gail Kitaji, Ph.D. Treasurer May
25, 1996
Gail Kitaji, Ph.D. and Chief Financial Officer
(Principal Financial Officer)
/s/ Antoine Y. Gedeon Sr. Vice President May
25, 1996
Antoine Y. Gedeon and Director
/s/ Deni Leonard Director May
25, 1996
Deni Leonard Chairman
Compensation Committee
/s/ Michael Singh Subsidiary President May
25, 1996
Michael Singh and Director
/s/ Gordon E. Rapozo Director May
25, 1996
Gordon E. Rapozo Chairman Audit Committee
