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, 1996
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 99-0240826
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1088 Bishop Street, Suite 202, 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 Common Shares OTC 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 the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No_X__
Indicate by check mark if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and no disclosure
will 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. [ ]
State the aggregate market value of the voting stock held by non-affiliates as
of December 31, 1996. The aggregate market value was computed by using the
closing price on the OTC Bulletin Board on December 31, 1996 of $.25 per share.
State issuers revenues for its most recent fiscal year $ 639,731.00
Common Shares, Par Value $0.01 Per Share $3,928,719.75
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates, computed by reference at which the common equity was sold,
or the average bid and asked price of such common equity on December 31, 1997
of $0.65 $6,882,885.75
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 December 9,1997
Common Shares $0.01 Par Value 15,940,039
<PAGE>
PART I.
ITEM 1. BUSINESS
(a) General Development
The Registrant (also referred to as the Company ) was incorporated under the
laws of the State of Delaware in March 1987. While Registrant initially provided
financial services to community banks, since 1996 its focus is that of a holding
company with two main operations, a) trust and asset management, and b)
destination resort development and hotel and resort management.
WSF Trust Corporation of Belize, Ltd.("the Trust Company"), a Belize trust
company, a wholly-owned subsidiary of Registrant was formed to implement the
corporate strategy involving trust and asset management. The Trust Company was
declared a full service trust corporation pursuant to the Trust Corporation Act
of the Laws of Belize. With the establishment of the Trust Company and the
appointment of the Trust Company as the sole trustee and asset manager of one
of the largest private Plantations in Belize, the Registrant assumed an active
role in the economic development of the Country of Belize. To implement these
plans and achieve these objectives the Trust Company has and will make
investments in synergistic companies and/or enter into joint ventures with
qualified strategic partners (see section on "Operations").
The Registrant has also formed Mayan Resorts Development Company, Ltd., a Belize
company, a wholly owned subsidiary of the Trust Company (hereinafter referred
to as "Mayan Resorts"). The primary objective of Mayan Resorts is to complete
the development of a major destination resort complex in the country of Belize
on a 50 square mile oceanfront parcel generally known in Belize as the Salt
Creek Estate or Salt Creek Plantation. Such development will include (a)
implementation of a Plantation Revitalization Plan that includes agriculture,
forestry and aquaculture projects in areas so designated and (b) preparation and
implementation of a Master Development Plan for a mixed use, world class
destination health and wellness-resort; utilizing the plantation operations as
ecological attractions; and the many Mayan sites on the property as cultural
attractions.
On June 3, 1986 the Registrant acquired an equitable interest in 5,010 acres of
a 38,677-acre parcel known as "the Salt Creek Estate"(hereinafter referred to
as the "Plantation") for 1,300,000 pre-split shares of the Company. The
Plantation is located in the northern part of the Belize District in Belize
City, Belize, Central America. The 5,010 acres were acquired from Euro-Pacific
Investment Corporation, a Hawaii Corporation and parent company of Compradore
Limited, a Hong Kong corporation, registered in Belize as an overseas company.
Compradore Limited is the registered proprietor of the property held by a
Transfer Certificate of Title dated December 19, 1973, and registered in the
Land Titles Register Volume 8, Folio 300. Due to subsequent transfers, the
Plantation was reduced to 31,423.45 acres as of the date of this filing. By
merger agreement dated January 31, 1995 Euro-Pacific Investment Corporation
(Parent) and Compradore Limited (Subsidiary)entered into a Plan and Agreement
of Merger, whereby the subsidiary was merged with the parent. On March 31, 1995,
Compradore Limited (Hong Kong) was dissolved. On June 6, 1996, the surviving
parent company changed its name to Compradore Limited. The Registrant converted
the equitable interest in the Plantation into a twenty-three and 6/10 (23.6%)
percent of the common stock of Compradore Limited, title holder of the 31,423.45
acres Plantation.
The merger was recognized and approved by the State of Hawaii on November 26,
1996 and the merger was also recognized and approved by the Supreme Court of
Belize by Order dated October 1, 1997. All rights and interest enjoyed by
Compradore Limited, Hong Kong since December of 1973 are now vested in
Compradore Limited, Hawaii.
Wall Street Internet Corporation, Hawaii company, a wholly-owned subsidiary of
Registrant, will serve as the communications and marketing arm for all of
Registrant s operations. This company remains a development stage company and
is based in Honolulu, Hawaii.
(b) Operations
The Registrant s activities during 1995 and 1996 were focused on the assessment
of the resources of its asset base, the reduction of its liabilities and the
development of a strategic plan for the Company. The information set forth
below is a summary of the Company's activities during 1996 and is not meant to
be a complete discussion of the Company's activities for that year.
Initially, Registrant engaged various consultants to evaluate the highest and
best use development potential for the Plantation including KPMG Peat Marwick,
Arthur Anderson, Comexindo Perkasa a multi national trading company, and other
recognized specialists in the areas of land use, forestry management and resort
development. The Plantation has a 300-year history as a citrus plantation,
cattle ranch and forest range that, at the height of its operation, employed
approximately 1,000 persons. Registrant proceeded to accumulate specific
information concerning the natural resources of the Plantation and of the
country of Belize during several site inspection visits by officers and
directors of the Company. The studies included a review of all industries,
economic trends, business practices, investment codes, fiscal incentives, laws
and taxation policies of Belize. These efforts resulted in the preparation of
a trust and asset management proposal for the entire Plantation.
The proposal, which was subject to the formation of a Trust Company, was
accepted by Compradore Limited. Immediately thereafter, The Trust Company
(hereinafter referred to as the Trust Company), was appointed the sole trustee
and asset manager of the Plantation. One of the first acts as the Trustee and
Asset Manager was to change the property's name to Mayan Plantation to reflect
Belize s rich Mayan heritage.
The Plantation now encompasses 31,423.45 acres owned by Compradore Limited, an
affiliate of the Company. It is managed by the Trust Company. The property is
held free and clear of any liens or other obligations. The Plantation is on the
ocean and has coastline frontage of approximately 20 miles on the Caribbean Sea.
The land itself consists of areas previously used as a forest range, cattle
ranch and tropical fruit plantation. It also features coastal lagoons, marshes
and savannas that transition into tropical hardwood forests. A major attraction
on this property is a large number of 4,000-year-old-Mayan temples and other
archaeological sites.
A portion of the Plantation is densely covered with natural hardwood forest
containing major stands of mahogany, cedar, pine, teak and other tropical
hardwoods. The forested area occupies approximately 14,576 acres (5,901
hectares), about 37% of the total land base. All forestry operations will be
based on sustained yield management. The Company manages the forest resources
and plans to operate a sawmill and wood processing plant.
The Land Use Plan for the Plantation sets forth the appropriate land uses. The
low lying lagoon areas of the property are appropriate for agriculture and
aquaculture ventures. In addition, many of these lagoons provide picturesque
sites for various types of resort development and for parks, wildlife
sanctuaries and recreation purposes. Also noted on this plan is the proposed
location for a Phase I - Development Plan for a 1,000-acre resort destination
development. In addition to ecological and archaeological tourism, an additional
theme incorporated into Plantation revitalization and development is health and
wellness.
Mayan Resort Belize (Phase I - Development Project)
Mayan Resort Belize, a 1000 acre resort destination concept designed by the
internationally acclaimed architectural firm of Wimberly Allison Tong & Goo, and
landscape design by their affiliate Helbert, Hastert & Fee, is based on data
provided by various consultants and subsequently reviewed by Arthur Anderson.
Subject to being able to raise the required project financing, the Company plans
to develop Mayan Resort Belize through a partnership. When completed, the Mayan
Resort Belize will be a world-class destination resort, managed by an
international hotel management company, with a wide variety of resort activities
and amenities in the context of an ecologically sound environment. The
development of this project is subject to raising the necessary infra-structure
and construction financing. This project is also subject to executing a resort
/ hotel management agreement and other contingencies. Pursuant to the current
plans the development of this project will include:
A 250 room, five-star resort hotel which can be accessed from the main national
highway and by water is the centerpiece for Phase I. The hotel will provide
guest-rooms clustered in low-rise buildings and in private bungalows scattered
around manmade lagoons. Well-sited back from the coastline, the resort will
offer swimming pools as well as access to natural ocean sports. Adjacent
buildings will provide a variety of food and beverage venues, ballrooms, meeting
rooms and other typical hotel facilities. The architectural character of the
resort will be low-rise colonial / tropical theme buildings built using local
hardwoods taken from the Plantation's timber resources and our wood processing
operations. In addition, innovative health and wellness programs will be created
for residents, visitors and neighbors of the resort.
According to the resort plans, retail shops with a total area of 20,000-sq. ft.
will be clustered near the hotel complex. These shops will sell imported goods
as well as provide a venue for local craftsmen.
An 18-hole golf course planned to incorporate the land conformation will provide
natural drainage for the interior of the site. The golf course will offer
private memberships to residents and non-residents but will permit play by
resort guests. Planned recreational facilities also include a tennis club.
These facilities will be supported by appropriate restaurants, locker rooms,
swimming pools and a health and wellness center.
Current plans are for the resort to offer up to 1,085 improved single family
residential houses and villas for sale during the development and construction
period. These properties will have golf course, lake or preservation area
frontage and views.
A trial marketing effort has been completed during which 20 two and four acre
ocean-front lots were purchased at an average pre-development purchase price of
U.S.$10,000.00 per acre, subject to government approval. Once governmental
approval has been obtained, Mayan Resorts plans to design and build their ocean-
front villas. Buyers included physicians and other health care leaders. These
professionals will make up the team advising the development of the wellness and
health education theme of the resort which will include a wellness center and
an education and medical center. The cost of construction of private homes on
improved lots will be the responsibility of the owners, but must be within the
overall design guidelines established for the resort. In addition, design and
construction packages will be offered to property owners.
This project is subject to a number of contingencies and there is no assurance
that any resort destination will ever be built at the Plantation. This project
is merely in the planning stages.
Forest and Timber Resources
The Company has engaged two consultants to prepare assessments of the forest
resources on the Plantation in order to develop sustainable forest resource
management plan.
A first "Assessment of the Forest Resources" on the Plantation was prepared by
Lorenzo Rugo, Natural Economist of Ottawa, Canada. Mr. Rugo is a member of the
Canadian Institute of Forestry and the Institute of Environmental Research and
Economy. Mr. Rugo performed this assessment as a senior member of the
international team to identify and develop new trade opportunities for PT Prima
Comexindo (Jakarta, Indonesia), a multi-national trading and manufacturing
conglomerate and their North American headquarters based in Montreal.
The assessment concluded that the entire length of the Plantation is bordered
inland by the North American Highway, with many established access roads into
the forested areas. The Plantation s high bush land contains an estimated 60,000
mature and merchantable #1 and #2 grade Honduras Mahogany trees and over 240,000
other mature and merchantable hardwood trees. The more mature Honduras Mahogany
trees, located in the center of the Plantation, are estimated to be between
40-50 years old with diameters between 23-36 inches and a clear bole of 30-50
feet. There is a commercial stocking density of approximately 49 trees per
hectare in this timber range. Younger Honduras Mahogany trees, between 10-25
years in age, are located around the forest center. These trees have diameters
of 12-24 inches, a clear bole of 18-24 feet, and have a commercial stocking
density of 60 trees per hectare. (One hectare = 2.47 acres). Based on this
assessment approximately 14,576 acres (37%) of the Plantation is considered high
bush land holding dense broadleaf forest cover and tree species of commercial
value, consisting of approximately 60,000 mature and merchantable hardwood trees
with an estimated value range of $107 Million U.S. to $166 Million U.S.
Although the property has an extensive history spanning over 300 years as a
citrus plantation, cattle ranch and forest range, it has been idle (not utilized
for productive purposes) for half a century allowing the trees to mature. A bid
presented by Prima Comexindo to harvest the forest resources was not accepted
by the Company as presented.
On December 21, 1995, the Registrant acquired, these timber resources in
perpetuity from Compradore Limited for One Hundred Thirty Four Million Five
Hundred Thousand U.S. Dollars (US $134,500,000.00, utilizing contractual Trust
and Asset Management Fees as down payment. On September 14, 1997, Mayan
Resorts executed a an annually renewable timber purchase contract for the
delivery of approximately 1.2 million board feet of Honduras Mahogany annually
with a leading North Carolina Hardwood manufacturer.
On December 11, 1996 a second assessment of the forest resources on the
Plantation was prepared by Mr. Leonard Spitz, CFA of Oregon, a Professional
Forestry Consultant. Mr. Spitz's professional qualifications include permanent
and seasonal assignments with the U.S. Forest Service, market potential
assessments for value added Canadian Forest products on behalf of the Canadian
Government, primary advisor to Indian Tribes and other professional forestry
consulting assignments, including congressional-mandated assessment of the
condition of Indian forest lands and forest management programs with
recommendations to Congress for improvement.
Although limited to time, budget and rainy season access, Mr. Spitz concluded
in the form of a "Preliminary Assessment of the Liquidation Value of the Timber
under a Forced Sale into the Belizean Market", that the liquidation value
assessment of the immediate harvest value, including administration, profit and
risk included a 24 Million board foot of high-value species at a gross selling
value of lumber @ 40% overrun at $0.92 / board foot and a net immediate harvest
value of $0.50 per board foot and 96 Million board foot of moderate-value
species, at a gross selling value of lumber @ 40% overrun at $0.92 / board foot
and a net immediate harvest value of $0.19 / board foot.
Based on these assumptions, the liquidation value of this immediately
harvestable timber under a forced sale into the current Belize (not the Export
Market) would be approximate $30 Million U.S. at this time. The preliminary
assessment further indicates that the annual growth appears to be over 5% per
year or approximately 7.5 Million board foot, that a wide variety of non-wood
products are also available on the property, that the wildlife resources are as
impressive as its vegetation and that world class recreation opportunities are
present on and near the Plantation. It further indicates that tourism is
booming in Belize due to the attraction of its ecological resources and that the
tropical rainforest, wildlife, and the lagoons on the property are among the
best in Central America.
The Company will continue to employ the services of Mr. Spitz and other forest-
and land management experts as required to prepare, implement and to maintain
an ecologically sound, sustainable resource management plan that will preserve
these resources for future generations.
Wall Street Internet Corporation
Wall Street Internet Corporation ( WSIC ), a Hawaii company, a subsidiary of the
Company was formed to operate in the near future as communications and marketing
tool for various operations.
Internet services will be based around the development and operation of two
World WideWeb server sites, one in Hawaii and another in Belize. The web sites
will provide access to use of electronic media, content publishing of
advertising, on-line marketing, secure commercial financial transactions and
customized Internet services. On March 21, 1996, the Company reported on Form
8-K, the establishment of its Internet Home Page: http:\\www.wsf.com.
Discontinued Operations
For strategic reasons, the Company exchanged its 100% interest in Belize
Transportation Agencies, Ltd., d.b.a. Mayan Lines for 20% of Sandhill
Enterprises, Ltd., a sawmill adjacent to the Plantation. Michael Singh, the
President of Belize Transportation Agencies, Ltd. remains a director of the
Registrant. The Company may acquire all of the shares or the assets of Sandhill
Enterprises in the future.
Employees
The Company and its subsidiaries currently employ 8 persons on a full time basis
and 3 persons on a part-time basis. It is anticipated that the number of
employees in Hawaii and in the Belize operations may increase significantly as
the development progresses. None of the Company's employees are covered by a
collective bargaining agreement. The Company employs several Hawaii based
international consulting firms and consultants.
ITEM 2. PROPERTIES
The Registrant s principal and administrative office is located at 1088 Bishop
Street, Suite 202, Honolulu, Hawaii 96813. Rent for these premises is $1,100.00
per month. The lease expires July 31, 1998.
In June 1986 the Registrant acquired an equitable interest in 5,010 acres of the
Plantation for 1,300,000 pre-split shares of the Company, located in the
northern part of the Belize District in Belize City, Belize, Central America.
On December 31, 1995 the Registrant converted the equitable interest in the land
into a twenty three and 6/10 (23.6%) percent of the common stock of Compradore
Limited, title holder of the 31,423.45 acres Plantation.
On May 11, 1995, the Trust Company was appointed the sole trustee and asset
manager of the entire 31,423.45 acre Plantation.
ITEM 3. LEGAL PROCEEDINGS
At December 31, 1996, the Registrant was a party to several lawsuits as
plaintiff or defendant, none of which individually or in the aggregate is
considered material in relation to the Registrant's financial position or
results of operations, including:
The Company is involved in litigation as a result of the cancellation of
shares. Pursuant to the terms on an Agreement and Plan of Merger dated January
12, 1994, the Registrant agreed to conditionally issue 6,000,000 shares to
Ernest J. Jackson, owner of Jackson Builders Corporation. During the agreed
upon post-closing time, the Board of Directors discovered that Jackson made
material misrepresentations to the Company and that Jackson did not provide the
Company with the closing schedules as required during the post closing period.
Therefore, Jackson did not meet the conditions for the closing of the merger
transaction and forfeited his rights to these shares. The Company disclosed the
material facts in its 1994 8-K Filings. On September 28, 1994 the Company
terminated Mr. Jackson as President and Director effective immediately. On
November 26, 1994, a Plan and Agreement of Rescission, under which the parties
agreed, among other things, to rescind the Agreement and Plan of Merger, dated
January 12, 1994, and Mr. Jackson agreed to return all of the 6,000,000 shares
for cancellation. However, as the Company discovered after the termination of
Mr. Jackson, he had, without approval of the Company, pledged portions of these
conditionally issued and restricted shares to personal creditors. Therefore in
order to avoid legal action, Mr. Jackson executed a stock power in the name of
the Company, with Paine Webber signature guarantee, and agreed to return the
stock certificates on December 31, 1994. However, he failed to deliver the stock
certificates as agreed upon. Based on a legal opinion obtained from the
national law firm of Wickwire Gavin, the rescission agreement and the
stockpower, the Company cancelled the 6,000,000 shares. In addition the Company
holds Mr. Jackson personally liable for liabilities incurred, while Chairman,
and recognized the potential liability.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held no meetings of securities holders during 1995. A shareholders
meeting was held in December 1996 in Honolulu, and a shareholder's meetings is
planned for late first quarter/early second quarter 1998.
ITEM 4a. EXECUTIVE OFFICERS OF REGISTRANT.
Other Positions
Year Held Last
Name Age Title Elected Five Years
Gerhart W. Walch 49 Chairman of the Board 10/94 1990-1993
President & CEO Chairman, CEO
WSF and subsidiaries and Director WSF
1994--Director WSF
1995 Present
Chairman, CEO
Compradore Ltd.
Gail Kitaji, Ph.D. 50 Treasurer & CFO 1995 1990-1994
President & CEO
GRII Consulting
Richard G. MacMillan 56 Secretary 1986 1990-1996
Esq. Practicing Attorney
Antoine Y. Gedeon 51 Sr. Vice President 1995 1990-1996
and Director Self employed
Hospitality Industry
Janice Milliken 50 Vice President-Sales 1997 1993-1996 VP/Dir-
Coast Kona Coffee
1991-1993 Broker
Owner Heritage Home
Loans
1990-1996, Self-
employed real estate
broker
Mario J. Machado 62 Vice President-Marketing 1997 1967-1997 Producer
& Media /Broadcaster
1987-1997 President,
MJM Communications
Peter L. Percy 49 Vice President-Corp Fin 1997 1997-VP/General
Counsel, The USA
Fund, Inc.
1994-1997 CEO
Millenium Technology
1990-1994 VP-
Operations, Impact
Television, Inc.
Paul R. Peterson 29 Vice President-Corp Fin 1997 1997-VP Corp Fin
1996-broker Dean
Witter
1991-1995 broker
Merrill Lynch
Michael Singh 31 Director 1995 1990 Tropical
Shipping Company,
Ltd.
1995-1996
President Belize
Transportation
Agencies, Ltd.
Roy S. Adaniya, M.D. 55 Director 1996 1990-1996 Physician
Chairman Comp. Comm. & Director Pulmonary
Services-Straub
Clinic
Gordon E. Rapozo 62 Director 1996 1990-1993
Chairman Audit Comm. Treasurer,
Chief Financial
Officer and
Director
1990-1996
Public Accountant
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
or on another major Exchange. [information provided is close]
Quarter 1996 1995
High Low High Low
1st Quarter .5625 .125 .875 .125
2nd Quarter .375 .125 .53125 .0625
3rd Quarter .35 .25 .5625 .0625
4th Quarter .375 .19 .625 .1875
(b) Holders. The number of shareholders of record of the Company's common
stock as of October 30, 1997, were approximately 500. 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 operations.
ITEM 6. SELECTED FINANCIAL DATA
1996 1995
Net Sales 639,731 15,969,824
Net Income (Loss) 358,145 14,762,214
Net Income (Loss) per Share .03 1.25
Total Assets 134,288,323 134,997,918
Total Liabilities 54,300,196 55,509,695
Shareholder's Equity 13,738,127 12,238,223
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's Analysis of Results of Operations
The financial statements attached hereto and this Management's Discussion and
Analysis Section address the Company's 1996 Financial Condition and Results of
Operations. During 1995 and 1996 the Company was able to establish the
foundation for planned development projects. Initial test marketing efforts
proved successful in the plantation revitalization such as timber management as
well as the real estate development area. Based on the initial revenues and
income derived from these new operations, the timber contract and its vast
timber and real estate resources, management is confident that it will be able
to achieve its goals and objectives. Interested persons should carefully read
the 1996 financial statements in total, including the footnotes attached
thereto.
Liquidity and Capital Resources
At December 31, 1996, the Company continued to have limited liquid assets. The
Company had cash in the amount of $6,668. Total assets were $135,288,323 which
consist mainly of standing timber resources purchased late in 1995. Total
Liabilities were $54,300,196, Deferred Income from Trust and Asset management
Fees relating to the timber resource sale were $67,250,000 (to be recognized as
timber or wood products are sold) and shareholders equity was $13,750.127. At
December 31,1996, the Company had current assets of $28,517. The Company's
current liabilities were reduced to $1,971,049 from $3,741,648 as of December
31, 1995. At December 31, 1996, of the Company s total liabilities $51,518,825
is payable to Compradore Limited, an affiliate, and $210,322 is due to Officers
of the Company.
The Company's ability to increase its working capital is dependent upon its
ability to raise cash through the issuance of the Company's securities and/or
on income from its timber, real estate development, and trust company
operations. The Company is uncertain whether it will be able to secure
sufficient working capital to enable it to implement the Company's corporate
strategic plan. However, the Company's ability to grow will, to a large
extent, depend upon its ability to successfully place debt and/or equity
securities and also on the successful implementation of the plantation
revitalization plan.
The issuance of the Company's securities will have the continued effect of
diluting the Company's current shareholders in their percentage of ownership in
the Company. As of December 31, 1996, there were 15,214,879 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 corporate strategic plan.
Results of Operations
The Company had revenues of $639,731 in 1996 and $15,969,824 in 1995. Revenues
recognized in 1995 relates mainly to non-recurring income earned on the sale of
the standing timber resources by Compradore Limited, the land-owner, prior to
the acquisition of the ownership interest by the Company. During the year ended
December 31, 1996, the Company had general and administrative expenses of
$281,586 as compared to general and administrative expenses of $1,207,610 for
the year ended December 31, 1995 as a result of non-recurring, fully expensed,
start-up costs for its Belize operations during 1995.
During 1996 the Company's general and administrative expenses included $48,613
for salaries, wages and compensation, bad debt expense of $14,000, $5,572 for
outside services, $16,323 for legal services and other smaller expenses.
The Company's net income after discontinued operations for the year ended
December 31, 1996 was $358,145 compared to a net income of $14,633,493 for the
year ended December 31, 1995 mainly relating to one-time, non-recurring income
earned on the sale of the standing timber resources.
The Company had an accrued net stockholders' equity of $13,750,127 as of
December 31, 1996 compared to $12,273,223 at December 31, 1995, as a direct
result of reduction in its current liabilities, including a reduction of its
Convertible Promissory Notes from $2,775,000 to $1,475,000 and the related
interest payable reduction from $483,650 as to $135,739.
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. 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.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS
31st December 1996 and 1995
INDEX
Report of the auditor to the Board of Directors and Shareholders
for the Year ended December 31, 1996
Consolidated balance sheets
for Years ended December 31, 1996 and 1995
Consolidated statement of operations
for Years ended December 31, 1996 and 1995
Consolidated statements of cash flows -
for Years ended December 31, 1996 and 1995
Consolidated statements of changes in stockholders' equity -
for Years ended December 31, 1996 and 1995
Notes to financial statements
Supplementary Information
Report of the auditor on supplementary information
Consolidated operating expenses
<PAGE>
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 SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of Wall Street
Financial Corporation and Subsidiaries as of 31st of December 1996 and 1995, and
the related consolidated statements of operations and statements of cash flows
for the years 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 audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated balance sheets and related financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of the company at 31st of December 1996 and 1995, and the
consolidated results of their operations and their consolidated cash flows for
the years 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 a deficit
working capital that raises 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.
/s/ Mark C. Hulse
CHARTERED ACCOUNTANT
2nd December 1997
Belize City,
Belize, C.A.
Member Firm of
SUMMIT INTERNATIONAL ASSOCIATES INC, (New York)
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
31st December 1996 and 1995
Notes 1996 1995
Assets
Currents Assets
Cash $6,668
Accounts receivable 20,547
Prepayment 1,302
------------ ------------
Total current assets 28,517
------------ ------------
Advances receivable- 3
Officers 47,543
Other, less allowance of $3,106,854
in 1995 1,550 1,850
------------ ------------
49,093 1,850
------------ ------------
Marketable equity securities--at cost 4 125,000
Note receivable 100,000
Plant and equipment 5
Furniture and fixtures 7,234
Equipment 17,626 9,527
------------ ------------
24,860 9,527
Less: accumulated depreciation 4,339 2,412
------------ ------------
Plant and equipment-net 20,521 7,115
------------ ------------
Other Assets 242,912 165,209
Deferred Expenditure 347,280 26,844
Forest Resource 6 134,500,000 134,500,000
Shares Held as Collateral 171,900
------------ ------------
$135,288,323 $134,997,918
============ ============
The notes on pages 9-13 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (continued)
31st December 1996 and 1995
Notes 1996 1995
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt 4,293 $10,939
Convertible promissory notes payable 7 1,475,000 2,775,000
Accounts payable-trade 217,491 169,058
----------- ------------
1,696,784 2,954,997
----------- ------------
Accrued liabilities
Payroll taxes 8 79,675 79,675
Interest payable-officers 38,851 8,326
Interest payable 135,739 483,650
----------- ------------
254,265 571,651
----------- ------------
Other current liabilities
Litigation settlement 9 20,000 215,000
----------- -----------
Total current liabilities 1,971,049 3,741,648
Notes Payable-Officers 210,322 409,222
Reserve 10 600,000
Notes Payable 6,11 51,518,825 51,358,825
----------- ------------
Total liabilities 54,300,196 55,509,695
----------- ------------
Deferred Revenue 6 67,250,000 67,250,000
Shareholders' Equity
Common stock-authorized, 25,000,000
shares of $.01 par value; issued
and outstanding 15,214,879 shares
in 1996 and 13,446,759 shares in 1995 12 152,149 134,468
Additional paid-in capital 13,370,976 12,699,898
Retained earnings (Accumulated deficit) 13 227,002 (561,143)
----------- ------------
13,750,127 12,273,223
Less:
Reserve in land contract valuation (13,000)
Subscription receivable (10,000)
Treasury stock (12,000) (12,000)
----------- ------------
13,738,127 12,238,223
----------- ------------
$135,288,323 $134,997,918
============ =============
The notes on pages 9-13 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended 31st December 1996 and 1995
Notes 1996 1995
Revenue
Transportation and services-Gross profit 16 $26,446
Timber resource $15,891,175
Other income 17 613,285 78,649
---------- -----------
639,731 15,969,824
----------- -----------
Expenses
Loss on disposal of investment 98,037
Start up expenses 250,000
Operating expenses 151,649 765,847
Interest expenses 29,974 8,458
Depreciation 1,926 1,906
Consulting 180,000
Other 1,399
----------- -----------
281,586 1,207,610
----------- -----------
Income from continuing operation 358,145 14,762,214
Discontinued Operations
Loss on disposition of subsidiaries 128,721
----------- -----------
Net income from operations $358,145 $14,633,493
=========== ===========
Net income per share-continuing operation .03 1.25
(Loss) per share-discontinued operation (0.01)
----- -----
Net income per share from operation $.03 $1.24
===== =====
The notes on pages 9-13 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended 31st December 1996 and 1995
1996 1995
Cash flows from operating activities:
Net income from operations $358,145 $14,633,493
Items not affecting working capital
earned income recorded as a receivable (15,891,175)
depreciation 1,926 1,905
non-cash expenditures 135,275 (468,434)
provision for losses on accounts
receivable and other assets 329,713
loss on disposition of subsidiary 128,721
stock bonuses and commission 117,555
consulting and start-up expenses 400,000
loss on disposal of marketable equity
securities 98,037
interest payable written off to other income (329,443)
litigation settlement payable written
off to other income (45,000)
accounts payable trade-written off to
other income (66,550)
accrued compensation payable written off to
other income (12,000)
other income-gain on sale of land option (160,000)
---------- -----------
(19,610) (748,222)
Changes in assets and liabilities:
Increase(decrease)in accounts payable 114,983 (5,904)
Increase in interest payable 88,216 332,413
Increase in interest payable--officers 30,525 8,021
(Decrease) in advance payable-officers (6,610)
(Increase) in accounts receivable (20,547)
(Increase) in prepayment (1,302)
---------- -----------
Net cash provided by (used in ) operating
activities 192,265 (420,302)
---------- -----------
Cash flows from investing activities:
Purchase of plant and equipment (15,332)
Addition to advance receivable (81,243) (1,300)
Addition to other assets (86,703) (64,144)
Addition to deferred expenditure (311,636) (2,094)
Proceeds from sale of land option 20,000
---------- -----------
Net cash used in investing activities (474,914) (67,538)
---------- -----------
Cash flows from financing activities:
Repayment of short-term debt (6,646)
Proceeds of sale of securities 26,963 2,022
Proceeds from short-term debt 10,939
Proceeds from notes payable 200,000 75,000
Proceeds from notes payable-officers 7,000 330,805
Proceeds from sales of shares 50,000 66,000
Additions to notes payable--officers 12,000
---------- -----------
Net cash provided by financial activities 289,317 484,766
---------- -----------
(continued on next page)<PAGE>
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended 31st December 1996 and 1995
1996 1995
Net increase/(decrease)in cash 6,668 (3,074)
Cash at beginning of year 3,074
---------- -----------
Cash at the end of the year $6,668 ---
========== ===========
Cash paid during the year for:
Interest $850 $10,000
========== ===========
Summary of Non Cash Transactions
Debit Credit
Notes payable--officers $205,900
Notes receivable 100,000
Other assets 13,000
Common stock 10,500
Additional paid-in capital 441,500
Deferred expenditures 8,800
Convertible promissory notes payable 1,500,000
Accounts payable--trade 66,550
Interest payable 436,127
Litigation settlement 195,000
Expenses 135,275
Advance receivable $34,000
Common Stock 26,684
Additional paid-in capital 1,064,075
Reserve in land contract valuation 13,000
Other assets 22,000
Shares held as collateral 171,900
Reserve 600,000
Notes payable 160,000
Other income 580,993
Subscription receivable 10,000
Prior year adjustment 430,000
The notes on pages 9-13 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended 31st December 1996 and 1995
Supplemental disclosure information:
1996
The Company issued 541,700 shares valued at $134,075 as compensation for bonus,
services rendered and compensation for performance.
The Company issued 1,626,700 shares valued at $856,684 in full and partial
settlement of 2 notes payable accounts and one interest payable account.
The Company reversed 1,050,000 shares valued at $452,000 incorrectly recorded
as issued in 1995.
The Company wrote off 1995 payables valued at $452,993 to other income.
The Company recognized other income $160,000 from sale of land option.
The Company transferred notes payable of $450,000 and litigation payables of
$150,000 to a reserve account.
The Company wrote off advance and other receivables of $3,120,584 in 1996. The
$3,106,584 of receivables written off were included in 1995 allowance for
doubtful accounts.
1995
The Company issued 665,500 shares valued at $142,305 in compensation for bonus,
services rendered and compensation for performance.
The Company issued 1,100,000 shares valued at $446,000 in settlement of
acquisition cost for subsidiaries and start-up costs.
The Company offset a stockholder notes receivable for $370,483 against notes
payable-officers.
The Company canceled subscriptions receivable for $38,000 along with the
corresponding shares and applicable paid-in capital.
The Company recognized $134,500,000 in forest reserve and a corresponding note
payable in a timber purchase and sale agreement executed with the owner of lands
in Belize, Central America.
The Company recorded $15,891,175 in revenue and a corresponding note
receivable-related party being the Company's proportionate portion of gross
revenue recognized.
The Company recognized deferred revenue and a note receivable from a related
party for services in administering land in Belize, Central America.
The notes on pages 9-13 form an integral part of these financial statements.
<TABLE>
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended 31st December 1996 and 1995
<CAPTION>
Retained Other
Common stock Additional Earnings Stockholders'
number paid-in (Accumulated equity
of shares Amount capital deficit) accounts
-------------------------------------------------------------
<S> C> <C> <C> <C> <C>
Balance 1st January 1995 11,576,759 $115,768 $12,082,293 ($15,194,636) ($443,483)
Shares of restricted common stock 152,000 1,520 64,480 0 0
Shares issued in lieu of employee
bonus, compensation, commission 553,000 5,530 112,025 0 0
Cancel subscription receivable (47,500) (475) (37,525) 0 38,000
Shares issued for investment services 112,500 1,125 23,625 0 0
Acquisition cost of subsidiaries 300,000 3,000 63,000 0 0
Shares in settlement of start-up costs 800,000 8,000 392,000 0 0
Offset against notes payable--officers 0 0 0 0 370,483
Net income 0 0 0 14,633,493 0
-------------------------------------------------------------
Balance at 31st December 1995 13,446,759 $134,468 $12,699,898 ($561,143) ($35,000)
Sale of restricted common stock 149,720 1,497 48,503 0 0
Shares issued as compensation to
employees/officers 412,500 4,125 99,000 0 0
Shares issued for legal and
consulting services 89,200 892 21,258 0 0
To reverse shares incorrectly recorded
as issued in 1995 (1,050,000) (10,500) (441,500) 0 0
Shares issued for notes and interest
payable 1,626,700 16,267 840,417 0 0
Shares issued for stock bonus plan 500,000 5,000 95,000 0 0
Shares issued for deferred expenditures 40,000 400 8,400 0 0
Reclassified as other asset 0 0 0 0 13,000
Written off to expense 0 0 0 0 10,000
Prior year adjustment 0 0 0 430,000 0
Net income 0 0 0 358,145 0
-------------------------------------------------------------
Balance at 31st December 1996 15,214,879 $152,149 $13,370,976 $227,002 ($12,000)
=============================================================
</TABLE>
The notes on pages 9-13 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31st December 1996 and 1995
1. STATUS
The Company was incorporated under the laws of the State of Delaware in 1987.
The Company invested in a California-based National bank and developed a
franchise system whereby member banks were supported by various financial
products and services.
Unable to achieve profitability the Company discontinued its franchise efforts.
During 1991, 1992, 1993 and 1994, the Company focussed on finding a new business
direction that would provide the basis for building a growth and added value
group of operations. In 1995, under the guidance of a new Board of Directors,
the Company began actively promoting its property interest in a 31,000-acre
piece of prime Belizean real estate.
As a result of the pursuit of the equity, and later a shareholder interest in
the property in Belize, through its subsidiaries and affiliates, the Company is
engaged in the development of a master plan for a mixed-use destination
residential and resort development, a Belizean mahogany and hardwood timber and
wood processing operation, the development and sales of residential lots,
condominiums, a members club, a world-class destination resort, and a variety
of other related ventures.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements includes only the accounts of Wall Street
Financial Corp. (the Company) and its wholly owned subsidiaries WSF Trust
Corporation of Belize Limited and Belize Transportation Agencies Limited.
All significant intercompany accounts and transactions have been eliminated in
consolidation. With the exception of Belize Transportation Agencies Limited,
the Company's subsidiaries were inactive.
3. ADVANCES RECEIVABLE
Advances receivable at 31st December 1995 consists of advances to Ernest Jackson
and Jackson's companies for operating purposes in 1994 for $2,729,443. The
amount is considered doubtful and is included in 1995 provision for doubtful
accounts. In 1996 the account was written off.
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.
Marketable equity securities were sold in 1996.
5. PLANT AND EQUIPMENT
Plant and equipment are recorded at cost. Renewals and major improvements are
capitalized; 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. RELATED PARTIES TRANSACTIONS
The Company owns 23.63% of Compradore Limited, a Hawaii Corporation which in
turn owns 31,423.45 acres of fee simple property in Belize, Central America.
Forest resource on the land is estimated at $134,500,000.
The Company owned 100% of WSF Trust Corporation of Belize Limited. WSF Trust
was appointed by Compradore Limited as the sole Trustee and Asset Manager of the
assets (land) of Compradore for a fee of 50% of the gross proceeds derived from
the projects. WSF Trust recorded a note receivable from Compradore Limited and
deferred income of $67,250,000.
WSFC entered into a timber purchase and sale agreement with Compradore Limited
through the Asset Manager WSF Trust. WSFC recorded forest resource - asset and
a note payable to Compradore for $134,500,000. In turn, Compradore Limited has
recognized WSFC earned portion of the remaining gross proceeds of the forest
reserve being 23.63% of $67,250,000 and as such has executed a promissory note
which WSFC has recorded as note receivable and income earned of $15,891,175.
7. CONVERTIBLE PROMISSORY NOTES PAYABLE
1996 1995
Convertible promissory notes payable consist
of the following:
NISSIM TSE - principal --- 150,000
Unsecured: 12.75% note issued 31/10/90.
Due date 31/10/93. The Company has obtained
oral extension for this date.
Benjamin Ynson / Phesco - principal 100,000 100,000
Unsecured: 12.75% note issued 31/10/90.
Due date 31/10/93. The Company has obtained
oral extension for this note.
Roy Adaniya - principal 50,000 50,000
Unsecured: 10% note issued 23/8/95.
Due date 30/9/97.
Paul Grab - principal 25,000 25,000
Unsecured: note issued 12/11/95.
Roy and Lavern Adaniya - principal 50,000 ---
Unsecured: 10% note issued 26,1,96. Due
date: 31/1/98. The Company has obtained
oral extension for this note.
James Schuler - principal 1,100,000 ---
Original amount of loan: $2,000,000;
10% note issued 28/6/96. Secured: 10% of
gross timber revenues. Due date: 31/12/96.
The Company has obtained oral extension
for this note.
Roy and Lavern Adaniya - principal 25,000 ---
Unsecured: 8% note issued 12/11/96. Due
date: 31/12/96. The Company has obtained
oral extension for this note.
NISSIM TSE - principal 125,000 ---
Unsecured: 8% note issued 8/11/96. Due date:
31/12/96. The Company has obtained oral
extension for this note.
Notes related to Jackson Builders Corporation --- 2,450,000
/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.
---------- ----------
$1,475,000 $2,775,000
========== ==========
8. 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.
9. LITIGATION
The Company is a party to several 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.
10. RESERVE
Reserve represents transfers from notes payable, $450,000, and from litigation
payable, $150,000.
11. NOTES PAYABLE
Notes payable consist of the following related party accounts:
1996 1995
Compradore note payable 160,000 ---
WSFC note payable (note 6) 134,500,000 134,500,500
WSFC note receivable (note 6) (67,250,000) (67,250,000)
WSFC note receivable (note 6) (15,891,175) (15,891,175)
----------- -----------
$51,518,825 $51,358,825
=========== ===========
12. 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 15,214,879 outstanding shares of Common Stock as of 31st December 1996,
approximately 3,638,120 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.
13. RETAINED EARNINGS/<ACCUMULATED DEFICITS>
1996 1995
Balance at the beginning of the year (561,143) (15,194,636)
Profit for the year 358,145 14,633,493
Prior year adjustment (note 18) 430,000 ---
-------- -----------
$227,002 ($561,143)
======== ===========
14. INCOME TAX
As of 31st December 1996, the Company has available estimated accumulated net
operating losses of approximately $600,000. The Company is preparing its
federal income tax returns for filing from 1990 through 1996. 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 2010. The Company's income tax returns which are not closed for
examination by statues have not been examined by the taxing authorities.
15. NET PROFIT PER SHARE
Net profit (loss) per share is based on weighted average number of shares
outstanding of 13,917,330 for 1996 and 11,864,092 for 1995.
16. TRANSPORTATION AND SERVICES--GROSS PROFIT
1996 1995
From revenue 143,390 ---
Direct expenses (115,944) ---
-------- -----
$26,446 ---
======== =====
17. OTHER INCOME
1996 1995
Sale of land option 160,000 ---
Debt forgiveness/payable written off 452,993 ---
Others 292 78,649
------- ------
$613,285 $78,649
======== =======
18. PRIOR YEAR ADJUSTMENT
Prior year adjustment is a result of 1995 expenses overstated.
<PAGE>
Report of the Auditor on Supplementary Information
REPORT OF THE AUDITOR
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
WALL STREET FINANCIAL CORPORATION AND SUBSIDIARIES
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole of Wall Street Financial Corporation and
subsidiaries as of and for the years ended 31st December 1996 and 1995, which
is in 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.
/s/ Mark C. Hulse
Chartered Accountant
2nd December 1997
Belize City
Belize, C.A.
Member Firm of
SUMMIT INTERNATIONAL ASSOCIATES INC. (New York)
Wall Street Financial Corporation and Subsidiaries
OPERATING EXPENSES
Years Ended 31st December 1996 and 1995
1996 1995
---- ----
Fuel 4,039 ---
Salaries, wages and compensation 48,613 269,380
Auto 1,605 119
Employee benefits --- 6,479
Employee parking 771 4,381
Rent 11,048 19,184
Utilities 13,269 6,334
Bank charges 2,056 39
Delivery and postage 2,532 1,321
Insurance 1,222 1,426
Licenses and fees 297 827
Office expenses 3,195 1,139
Office supplies 3,165 1,811
Printing 3,175 11,850
Repairs and maintenance 1,076 1,429
Donation 50 ---
Supplies - other --- 56
Accounting 7,372 5,888
Legal 16,323 61,457
Outside services 5,572 78,262
Other professional services 918 ---
Meals and entertainment 1,166 3,439
Travel and transportation 5,823 3,045
Advertising and promotion 1,052 ---
Public relations 2,842 5,155
Dues, subscriptions and memberships 362 531
Other operating expenses 106 ---
Bad debts 14,000 269,965
Organizational expense --- 12,000
Taxes-other --- 330
--------- --------
$151,649 $765,847
========= ========
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
In December 1995, the accounting firm Mark C. Hulse, Chartered Accountant,
Member Firm of Summit International Associates was approved at the Annual
Shareholders meeting as the Company's independent certifying accountant due to
the Company's focus on utilization of its Belize assets. Mark C. Hulse,
Chartered Accountant, formerly representing KPMG Peat Marwick in Belize, and the
firm of Grant Thornton LLP were the Company's prior accountants. The Company
anticipates to continue to utilize the services of KPMG Peat Marwick and Grant
Thornton LLP for other accounting matters and/or consulting services.
Additional information about the appointment of Summit International Associates,
Belize Office as the Company's certifying accountants, is as follows:
A. The date of such appointment of Summit International Associates, Belize
Office as the Company's independent certifying accountant was in December 1996.
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 three 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 resulted from the change in affiliations
of Mark C. Hulse, Chartered Accountant in Belize from KPMG Peat Marwick to
Summit International Associates.
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
and executive officers 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: 49, Mr. Walch has been the Chairman of the Board, President
and Chief Executive Officer of WSF and all its subsidiaries from 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 and
President of Compradore Limited, WSF's affiliated land holding company. Mr.
Walch served as Chief Financial Officer, Chief Executive Officer and/or Managing
Director or Director in private or public companies since 1974.
Richard G. MacMillan, Esq.: 56, Mr. MacMillan has been the Secretary of Wall
Street Financial Corporation and all its subsidiaries 1986-Present. Mr.
MacMillan is an attorney in private practice in Honolulu, Hawaii. He has been
a lecturer in the areas of real estate, securities and tax and also served as
a District Court Judge.
Gail Kitaji, Ph.D.: 50, Dr. Kitaji is Principal Financial Officer and Treasurer
of the Company, 5/95 - Present. Dr. Kitaji has been Operations Planning Manager
(Financial) for the Lanai Company 9/91 - 9/93; VP-Finance and Controller of
Alaska General Alarm, Inc., 1987 - 1989.
Michael Singh: 33, Mr. Singh is a member of the Board of Directors of WSF. He
is the President and Chief Operating Officer of Belize Transportation Agencies
Limited ("BTAL") and its subsidiary Mayan Freight Lines, Inc. since December
1995-Present. Between 1989 - 1995, Mr. Singh has held numerous positions with
Tropical Shipping Company, Ltd., and was the Country Manager, Belize. He is
the Chairman of the Board of the Air Traffic Licensing Authority of Belize.
Antoine Y. Gedeon: 51, Mr. Gedeon is Senior Vice President and a member of the
Board of Directors of WSF since November 1995-Present. He has held financial,
managerial and top management positions in the hospitality industry with Hilton
and Regent Hotels since 1969. He is the founder/president of the Vanuatu Hotel
& Restaurant Association, and an air-tour and ground transportation operation
in Honolulu, Hawaii.
Gordon E. Rapozo: 62, Mr. Rapozo is a member of the Board of Directors and
Chairman of the Audit Committee of WSF 4/96 - Present. He is a co-founder of
WSF and has been the Treasurer, Chief Financial Officer of WSF between 1987 -
2/94. Mr. Rapozo is a Public Accountant in private practice. He previously
served as Senior Loan Officer and Treasurer of GECC Financial / GE Capital
Hawaii, a General Electric Company.
Roy S. Adaniya, M.D. 56, Dr. Adaniya is a member of the Board of Directors of
WSF since December 1996, Chairman of the Compensation Committee since 4/97 and
member of the Executive Committee since 7/97. He is the Director of Pulmonary
Services at the Straub Clinic and Hospitals in Honolulu, Hawaii. He serves as
a Clinical Associate Professor of Medicine at the John A. Burns School of
Medicine, University of Hawaii. His interests include development of health
delivery systems and wellness planning.
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.
<PAGE>
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 $100,000:
(None).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
-------------------------------
Annual Compensation Awards Payout
-------------------- -------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted
and Compen- Stock LTIP All Other
Principal Salary Bonus sation Award(s) Options/ Payouts Compensa-
Position Year ($) ($) ($) ($) SARs (#) ($) tion ($)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerhart Walch 1996 0 0 0 0 0 0 0
President,CEO 1995 0 0 0 $12,500 <F1> 0 0 0
Chairman 1994 0 0 0 0 0 0 0
<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.
</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, 1996 and 1995. As of December 31, 1996, 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 Non-Employee Officers & Directors
The Company's non-employee directors are compensated $500 per board meeting
attended in addition to 50,000 shares of common stock of the Registrant. The
Company's non-employee officers, receive consulting fees and 50,000 shares of
the common stock of the Registrant. The shares will be issued immediately in the
Director's or Officer's name, but will be held by the Secretary of the
Corporation until vested is in full. The rate of vesting of these shares will
occur at the rate of 8% per month, on the last day of each month, beginning
January 1, 1996, with the residual shares being vested at December 31, 1996,
unless an acceleration of vesting occurs. The Company will reimburse for
reasonable and approved expenses.
Employment Agreements
Effective January 1, 1996, a new employment agreement was entered into with
Gerhart W. Walch for a minimum 3 (three) year term and provides for a base
salary of $9,000 per month, (reduced from its original $12,500 per month),
100,000 shares of common stock and a performance based incentive bonus
compensation package, consisting of cash and stock bonuses, relating to the
three year business plan, subject to the recommendation of the Compensation
Committee of the Board of Directors. This compensation was deferred by Gerhart
W. Walch.
Effective January 1, 1996, engagements agreements were entered into with Dr.
Gail Kitaji, Ph.D., Michael Singh and Antoine Y. Gedeon which provide for each
individual a base salary of $5,500 per month, 100,000 shares of common stock and
a performance based incentive bonus compensation package consisting of cash and
stock bonuses, relating to the implementation of the three year business plan,
subject to the recommendation of the Compensation Committee of the Board of
Directors. This compensation was partially waived by Dr. Kitaji, Mr. Singh and
Mr. Gedeon.
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, 1996 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) 4,255,729 28.0%
4057 Black Point Road
Honolulu, HI 96816
Gordon E. Rapozo (1) 277,258 1.8%
187 Nawiliwili Street
Honolulu, HI 96825
Dr. Gail Kitaji, Ph. D. (1) 203,000 1.3%
1325 Wilder Avenue, 21 Makai
Honolulu, HI 96822
Richard MacMillan, Esq. (1) 271,750 1.8%
7016 Kamilo Street
Honolulu, HI 96820
Antoine Y. Gedeon (1) 113,247 .7%
1016 Laukupu Way
Honolulu, HI 96825
Michael Singh (1) 100,000 .7%
South Street
Belize City, Belize, C.A.
Roy S. Adaniya, M.D.(1) 130,000 .9%
2903 Laola Pl.
Honolulu, HI 96813
All Officers and Directors 5,350,984 35.2%
as a Group (7 persons)
Total Shares Issued and 15,214,879 100.0%
Outstanding
(1) These individuals are the officers and/or directors of the Company.
(2) Mr. Walch is the CEO and director of the Company.
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 Percent
Nissim Tse 1,026,683 6.8%
30 Queens Rd
Central Hong Kong
William Y. Yano 958,150 6.3%
1750 Kalakaua Ave #3301
Honolulu, Hawaii
(b) Security Ownership of Management. See Item 12(a) above.
(c) Changes in Control. No changes in control of the Registrant are
contemplated.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In 1996, the Company issued a total of 541,700 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
Masahiro Tsuchiya 12,500 1996
Steven Grimme' 100,000 1996
Roy S. & LaVern G Adaniya 30,000 1996
Michael Huyhn 60,000 1996
Deni Leonard 50,000 1996
Gordon Rapozo 50,000 1996
Richard G. MacMillan, Esq. 138,000 1996
Gail Kitaji 100,000 1996
Steven Kornbluth 1,200 1997
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 12.
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
in 1996.
February 29, 1996 Form 8-K. The Company announced Bid opening and requests for
proposals for development projects of the Plantation's property in Belize,
Central America, particularly as related to the implementation of a timber
resource management plan.
March 20, 1996 Form 8-K. The Company reported the resignation of Masahiro
Tsuchiya, Ph.D. from its board of directors and the contents of its Web Pages
on the Internet under the access code www.wsf.com.
<PAGE>
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 December 23. 1997
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 December 23,1997
Gerhart W. Walch and Director
Principal Executive Officer
/s/ Roy S. Adaniya, M.D. Director December 23,1997
Roy S. Adaniya, M.D. Chairman
Compensation Committee
/s/ Antoine Y. Gedeon Sr. Vice President December 23,1997
Antoine Y. Gedeon and Director
/s/ Gail Kitaji, Ph.D. Treasurer December 23,1997
Gail Kitaji, Ph.D. Principal Financial Officer
/s/ Richard G. MacMillan Secretary, Counsel December 23,1997
Richard G. MacMillan, Esq.
/s/ Gordon E. Rapozo Director December 23,1997
Gordon E. Rapozo Chairman Audit Committee
/s/ Michael Singh Subsidiary President December 23,1997
Michael Singh and Director
[ARTICLE] 5
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[CASH] 6668
[SECURITIES] 0
[RECEIVABLES] 3276494
[ALLOWANCES] (3106854)
[INVENTORY] 0
[CURRENT-ASSETS] 177610
[PP&E] 24860
[DEPRECIATION] (4339)
[TOTAL-ASSETS] 135288323
[CURRENT-LIABILITIES] 1696784
[BONDS] 0
[COMMON] 152149
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 135288323
[SALES] 26446
[TOTAL-REVENUES] 639731
[CGS] 0
[TOTAL-COSTS] 153575
[OTHER-EXPENSES] 98037
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 29974
[INCOME-PRETAX] 358145
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 358145
[EPS-PRIMARY] .03
[EPS-DILUTED] .03
</TABLE>
