<PAGE>
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, 1997
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 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 the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if 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, 1997. The aggregate market value was computed by using the
closing price on the NASD Bulletin Board on December 31, 1997 of $.65 per
share.
State issuers revenues for its most recent fiscal year $425,483.00
Common Shares, Par Value $0.01 Per Share $6,296,585.75
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 $6,296,585.75
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 31, 1997
Common Shares $0.01 Par Value 15,880,039
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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 1995, under the guidance
of a new Board of Directors, the Company began actively concentrating on its
interest in a 31,000-acre parcel of prime Belizean real estate property.
Since 1996 the Company's focus is that of a holding company with three main
operations, a) trust and asset management, b) plantation revitalization and c)
the planning and development of a world-class destination resort with one or
more Caribbean sea-front hotels.
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 (1)
implementation of a Plantation Revitalization Plan that includes agriculture,
forestry and aquaculture projects and (b) preparation and implementation of a
Master Development Plan for a mixed-use, world-class destination health and
wellness-resort. The Master Development Plan will strive to utilize the
plantation operations as ecological attractions and the many Mayan sites on the
property as cultural attractions.
Compradore Limited, a Hawaii corporation, is the registered owner of the
property and holds the Transfer Certificate of Title ("TCT") dated December 19,
1973, registered in the Land Titles Register Volume 8, Folio 300 at the Belize
General Registry. The TCT encompasses 38,677-acres of land. Due to subsequent
transfers, the Plantation was reduced to 31,423.45 acres in 1989. The
Registrant owns twenty-three and 62/100 percent (23.62%) of the common stock of
Compradore Limited, the title holder of the 31,423.45-acre Plantation. WSF
Trust Corporation of Belize, Ltd. is the sole trustee and asset manager of the
Plantation.
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 through 1997 were focused on the
assessment of the resources of its asset base, the reduction of its liabilities,
the development of a strategic plan for the Company and the initiation of that
plan on a 14.470-acre parcel adjacent to the estate, the acquisition of a
sawmill and the start up of a wood processing operation. The information set
forth below is a summary of the Company's activities during 1997 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 inspections 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 operates 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 Plantation Hardwoods, Ltd. -- Plantation Revitalization Phase I - Forest
and Timber Resources
The forest and timber resource assessments obtained through the engagement of
qualified consultants 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. One of the preliminary assessments indicates that the annual
growth appears to be over 5% per year or approximately 7.5 Million board feet.
Among the assessments it was further reported that (1) a wide variety of non-
wood products are also available on the property, (2) the wildlife resources are
as impressive as its vegetation and (3) world class recreation opportunities are
present on and near the Plantation. The assessment 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 owns these timber resources in perpetuity.
The Company obtained its timber harvesting license and started a test harvesting
and milling program of its mahogany, santa maria and other tropical hardwood
resources. Encouraged by the high-grade quality of the lumber, the Company
exchanged its 100% interest in Belize Transportation Agencies, Ltd., d.b.a.
Mayan Lines for 20.27% of Sandhill Enterprises, Ltd., a Belizean company.
Sandhill Enterprises, Ltd. owned and operated a tropical hardwood sawmill
adjacent to the Plantation, and was one of the two customers for the estate's
timber. On September 14, 1997, Mayan Resorts executed a renewable timber
purchase contract for the annual delivery of approximately 1.2 million board
feet of Honduras Mahogany with a leading North Carolina hardwood manufacturer.
On December 28, 1997, the Company acquired all of the assets of Sandhill
Enterprises, Ltd. and is in the process of setting up the wood processing
facility which will have the capability of providing finished wood products for
use in the various projects on the Estate as well as for local sale and export.
The Company will continue to employ the services of 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.
Mayan Resorts Limited -- The Salt Creek Club
The Salt Creek Club is another development project of Mayan Resorts that is
planned to be open for service during the early second quarter of 1998. The
facility is expected to include a private dining club and spa, along with 90
units comprised of two- and three- bedroom suites, and facilities for a visitors
center and offices for all of the Company's operations. The Club site is
located just five miles north of Belize's International Airport on the southern
boundary of the Mayan Salt Creek Estate. It is at the intersection of the North
American Highway (which leads to the Mayan cultural sites of Altun Ha and
Lamanai, and is Belize's main corridor north to Cancun, Mexico), and a road that
runs through the Community Baboon Sanctuary from Belize City to Belmopan, the
country's inland capital city, and on to Guatemala.
The Club complex is planned to include five existing structures along with
several new buildings on this 14.470-acre site. When completed the complex will
have a clubhouse, dining and entertainment facilities, small movie theater,
exercise facilities, two swimming pools and jogging paths. The Salt Creek
Estate Club intends to offer membership by invitation only. Such "exclusivity"
is expected to attract a diverse, sophistocated clientele in Belize and
internationally.
Mayan Resorts plans to construct three buildings on the club site with a maximum
of 90 two- and three-bedroom hotel suite units in a lush landscaped private,
gated community. Club members will have the opportunity to live at and use the
on-site club and spa amenities.
The hotel suite buildings have been designed by the internationally acclaimed
architectural firm of Wimberly Allison Tong & Goo, with landscape design by
their affiliate Helbert, Hastert & Fee, based on data from the Horwath
Hospitality Consulting Corporation. Since the hotel suite residences will be
part of the private club complex, hotel type amenities such as room service,
maid service, security and valet parking will be available. A marketing
Pavilion and visitors center is currently being outfitted in one of the
buildings located at the Salt Creek Estate Club. The pavilion will provide an
opportunity to showcase the various developments on, and products from, the
Mayan Salt Creek Estate to interested parties (club members and guests).
The total project cost for the Salt Creek Estate Club, facilities and residences
is estimated at US$12 Million. The initial phase of the Salt Creek Estate Club
is expected to open at the end of March 1998 with the ground breaking for the
hotel suite residences scheduled for the second quarter of 1998 and anticipated
completion in late 1999 or soon thereafter.
Mayan Resorts Limited -- 1000 Acre 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. Sited well 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 ocean-front
villas. Buyers included physicians, other health care leaders and other
professionals. 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.
Wall Street Internet Corporation
Wall Street Internet Corporation ( WSIC ), a Hawaii company and subsidiary of
the Company was formed to operate as a communications and marketing tool for the
Company's operations. The Company has two websites:
http://www.wsf.com. and
http://www.mayanresorts.com.
The Company's ability to implement the above-described plan of operations will,
to a large extent, be dependent upon management's ability to attract qualified
developers as joint venture partners for the various non-company owned projects
and to raise additional capital. While the Company is confident in producing
the required investment and working capital through the sale of timber due to
the increasing value of its hardwood timber resource, there can be no assurance
that such capital will become available as required. The Company therefore will
continue to seek capital from private and/or institutional investors. The
Company plans to raise sufficient funds through a placement of debt or equity
instruments to develop the required infrastructure for projects, including
development of the golf course and the pre-sale of lots, homes and villas.
The information set forth in this Plan of Operation is management's best
estimate based upon current plans. Actual expenditures will be greater or
lesser depending upon many factors including, but not limited to, available
capital, overall market conditions in the plantation management and resort
development, and the status of the commercial domestic and international
finncial markets.
Due to possible economic or political factors that may affect the economic
viability of this project, there can be no assurance that the Company will be
able to raise the funds required for the implementation of all portions of its
plans.
Discontinued Operations
For strategic reasons, the Company exchanged its 100% interest in Belize
Transportation Agencies, Ltd., d.b.a. Mayan Lines for 20.27% 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 effective date of the exchange was January 1, 1997. The
Company acquired the assets of Sandhill Enterprises in a December 1997
transaction.
Employees
The Company and its subsidiaries currently employ 18 persons on a full time
basis and 5 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.
Inflation
The Company's business and operations have not been and are not expected to be
materially affected by inflation.
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, Central America. On December 31,
1995, the Registrant converted the equitable interest in the land into a twenty
three and 62/100 (23.62%) 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.
In September 1997, the Registrant acquired management control of a 14.470-acre
parcel at the juncture of the Northern Highway and Burrel Boom Road (mile 13
1/2) for the purpose of establishing a members club and other hospitality
services as the first project of the resort development plan.
In December 1997, the Registrant acquired the assets and management control of
Sandhill Enterprises, Ltd., including a working sawmill, 229 acres in fee
("TCT"), miscellaneous vehicles, equipment and buildings and various other
assets. The property is located at mile 14 1/2 on the Northern Highway.
ITEM 3. LEGAL PROCEEDINGS
At December 31, 1997, 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:
Litigation as a result of the cancellation of shares. Pursuant to the terms
of 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, without knowledge or approval
of the Company, Mr. Jackson 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 the recission agreement, the stock power and a legal
opinion obtained from the national law firm of Wickwire Gavin, the Company
cancelled the 6,000,000 shares. In addition the Company holds Mr. Jackson
personally liable for liabilities incurred while he was Chairman, and recognizes
the potential liability.
Although there is no assurance, Management believes it will prevail in the
recovery of these cancelled certificates and the recovery of its claims.
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 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. 51 Treasurer, 1995 1990-1994
Principal Financial President & CEO
Officer GRII Consulting
Richard G. MacMillan 56 Secretary 1986 1990-1996
Esq. Practicing Attorney
Antoine Y. Gedeon 51 Subsidiary 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
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
Richard Hinkle 52 Director-nominee 1998
Co-Founder of Team Rental
Group, Inc,/ Budget Group Inc.
(name change in 1997);
Director-Advanced Power
Technologies, Inc.; Co-founder
and Director of Consolidated
Golf Companies
1968-1983 Hertz Corp
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.
Quarter 1997 1996
High Low High Low
1st Quarter .4375 .20 .5625 .125
2nd Quarter .4375 .3125 .375 .125
3rd Quarter .47 .28 .35 .25
4th Quarter 1.1875 .75 .375 .19
(b) Holders. The number of shareholders of record of the Company's common
stock as of March 1, 1998, 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
1997 1996
Net Sales 639,731
Net Income (Loss) 358,145
Net Income (Loss) per Share .03
Total Assets 134,288,323
Total Liabilities 54,300,196
Shareholder's Equity 13,738,127
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 1997 Financial Condition and Results of
Operations. During 1996 and 1997 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 1997 financial statements in total, including the footnotes attached
thereto.
Liquidity and Capital Resources
At December 31, 1997, the Company continued to have limited liquid assets. The
Company had cash in the amount of $60,683 compared to $6,668 at December 31,
1996. Total assets were $138,554,230 which consist mainly of standing timber
resources purchased late in 1995. Total Liabilities were $55,439,068, Deferred
Income from Trust and Asset management Fees relating to the timber resource sale
were $67,250,000 (to be recognized as timber and wood products are sold through
the milling and wood processing facilities) and shareholders equity was
$15,015,162. At December 31, 1997, the Company had current assets of $170,364.
The Company's current liabilities increased to $2,325,925 from $1,971,049 at
December 31, 1996, due mainly to increases in short-term promissory notes
payable. At December 31, 1997, of the Company s total liabilities, $51,518,825
is payable to Compradore Limited, an affiliate, and $551,818 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, 1997, there were 15,880,039 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 $425,483 in 1997 and $639,731 in 1996. Revenues
recognized in 1997 relates mainly to lot sales and the sale of logs to local
sawmills pending the establishment of Company's own milling and wood processing
operations. During the year ended December 31, 1997, the Company had general
and administrative expenses of $378,661 as compared to general and
administrative expenses of $281,586 for the year ended December 31, 1996.
Increases in expenditures are related to the increase in activity in
establishing the Company's presence and operations in Belize.
During 1997 the Company's general and administrative expenses included $128,206
for salaries, wages and compensation, $116,669 for other professional/consulting
services, $16,880 for outside services, $11,342 for travel and transportation
and other smaller expenses.
The Company's net income after discontinued operations for the year ended
December 31, 1997, was $3,326 compared to a net income of $358,145 for the year
ended December 31, 1996.
The Company had an accrued net stockholders' equity of $15,015,162 as of
December 31, 1997, compared to $13,738,127 at December 31, 1996.
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 1997 and 1996
INDEX
Report of the auditor to the Board of Directors and Shareholders
for the Year ended December 31, 1997 and 1996
Consolidated balance sheets
for Years ended December 31, 1997 and 1996
Consolidated statement of operations
for Years ended December 31, 1997 and 1996
Consolidated statements of cash flows -
for Years ended December 31, 1997 and 1996
Consolidated statements of changes in stockholders' equity -
for Years ended December 31, 1997 and 1996
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 1997 and 1996, 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 1997 and 1996, 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
10th April 1998
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 1997 and 1996
Notes 1997 1996
Assets
Currents Assets
Cash $60,683 6,668
Accounts receivable-trade 24,687 20,547
Accounts receivable-related party 62,580 ---
Prepayments 10,000 1,302
Interest receivable 12,414 ---
------------ ------------
Total current assets 170,364 28,517
------------ ------------
Advances receivable-
Officers --- 47,543
Others 17,768 1,550
------------ ------------
17,768 49,093
------------ ------------
Note receivable 100,000 100,000
------------ ------------
Property, plant and equipment 3
Land 229,000 ---
Buildings 150,000 ---
Furniture fixtures and equipment 527,932 24,860
Vehicle 16,600 ---
------------ ------------
923,532 24,860
Less: accumulated depreciation (7,405) (4,339)
------------ ------------
Property, plant and equipment-net 916,127 20,521
------------ ------------
Other Assets 20,000 242,912
Deferred expenditures 5 1,785,030 347,280
Deposit 6 202,055 ---
Forest Resource 4 134,500,000 134,500,000
Organization Cost 28,024 ---
Less: accumulated amortization (2,457) ---
----------- ------------
25,567 ---
Sinking Funds 7 804,688 ---
Investment 12,631 ---
------------ -----------
$138,554,230 135,288,323
============ ============
The notes on pages 10-14 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (continued)
31st December 1997 and 1996
Notes 1997 1996
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $--- 4,293
Convertible promissory notes payable 8 1,675,000 1,475,000
Accounts payable-trade 242,116 217,491
Accounts payable-officer 2,742 ---
Accounts payable-others 174,593 79,675
Payroll taxes 9 9,654 ---
----------- ------------
2,104,105 1,776,459
----------- ------------
Accrued liabilities
Interest payable-officers 77,063 38,851
Interest payable 120,737 135,739
Insurance payable 1,264 ---
Net payroll payable 2,756 ---
----------- ------------
201,820 174,590
----------- ------------
Other current liabilities
Litigation settlement 10 20,000 20,000
----------- -----------
Total current liabilities 2,325,925 1,971,049
Notes Payable-Officers 12 551,818 210,322
Reserve 11 597,500 600,000
Notes Payable 4,13 51,963,825 51,518,825
----------- ------------
Total liabilities 55,439,068 54,300,196
----------- ------------
Deferred Revenue 4 67,250,000 67,250,000
Long-Term Debts 14 850,000 ---
Shareholders' Equity
Common stock-authorized, 25,000,000 15
shares of $.01 par value; issued
and outstanding 15,880,039 shares
in 1997 and 15,214,879 shares in 1996 158,801 152,149
Common stock-subscribed, 1,965,452 shares
of $.01 par value in 1997 19,655 ---
Additional paid-in capital 13,748,177 13,370,976
Additional paid-in capital-subscribed 858,201 ---
Retained earnings (Accumulated deficit) 16,17 230,328 227,002
----------- ------------
15,015,162 13,750,127
Less:
Treasury stock --- (12,000)
----------- ------------
15,015,162 13,738,127
----------- ------------
$138,554,230 135,288,323
============ ============
The notes on pages 10-14 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended 31st December 1997 and 1996
Notes 1997 1996
Revenue
Investment income $12,394 ---
Operations-gross profit 19 304,326 26,446
Interest income 16,249 ---
Other income 20 92,514 613,285
---------- -----------
425,483 639,731
----------- -----------
Expenses
Loss on disposal of investment --- 98,037
Operating expenses 321,664 151,649
Interest expenses 51,475 29,974
Depreciation/amortization 5,522 1,926
----------- -----------
378,661 281,586
----------- -----------
Income from continuing operation 46,822 358,145
Discontinued Operations
Loss on disposition of subsidiary (43,496) ---
----------- -----------
Net income from operations $3,326 358,145
=========== ===========
Net income per share-continuing operation $.0030 .0257
(Loss) per share-discontinued operation (.0028) ---
------- -------
Net income per share from operation $.0002 .0257
====== =======
The notes on pages 10-14 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended 31st December 1997 and 1996
1997 1996
Cash flows from operating activities:
Net income from operations $3,326 358,145
Items not affecting working capital
earned income recorded as interest receivable (12,414) ---
depreciation/amortization 5,522 1,926
non-cash expenditures 669,924 135,275
loss on disposition of subsidiary 43,496 ---
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)
investment income recognized (12,395) ---
accrued notes payable officer written off to
other income (12,000) ---
conversion of notes payable to sale of lot-
other income (40,000) ---
---------- -----------
645,459 (19,610)
Changes in assets and liabilities:
Increase(decrease)in accounts payable-trade 39,789 114,983
-officers 2,742 ---
-others (82)
Increase in payroll taxes 9,654 ---
Increase in interest payable-officers 54,644 30,525
Increase in interest payable 143,747 88,216
Increase in insurance payable 1,264 ---
Increase in net payroll payable 2,756 ---
(Increase) in accounts receivable-trade (24,687) (20,547)
-related party (61,761) ---
(Increase) in prepayments (10,000) (1,302)
(Increase) in advances receivable-others (16,218) ---
---------- ----------
Net cash provided by (used in ) operating
activities 787,307 192,265
---------- ----------
Cash flows from investing activities:
Purchase of property plant and equipment (259,243) (15,332)
Disposal of property plant and equipment 12,771 ---
Addition to advance receivable --- (81,243)
Decrease (addition) to other assets 30,000 (86,703)
Addition to deferred expenditures (1,061,296) (311,636)
Deposit (202,055) ---
Organization cost (28,024) ---
Proceeds from the sale of land option --- 20,000
---------- -----------
Net cash used in investing activities (1,507,847) (474,914)
----------- -----------
Cash flows from financing activities:
Repayment of short-term debt (4,293) (6,646)
Proceeds from sale of securities --- 26,963
Increase in notes payable-officers 30,351 7,000
(continued on next page)
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended 31st December 1997 and 1996
(continued from previous page)
Decrease in reserve (2,500) ---
Proceeds from long-term debts 850,000 ---
Proceeds from notes payable 650,997 200,000
Proceeds from sales of shares --- 50,000
Additions to notes payable--officers --- 12,000
Proceeds used to establish sinking funds (750,000) ---
--------- ---------
Net cash provided by financial activities 774,555 289,317
--------- ---------
Net increase in cash 54,015 6,668
Cash at beginning of year 6,668
---------- -----------
Cash at the end of the year $60,683 6,668
========== ===========
Cash paid during the year for:
Interest $ --- 850
========== ===========
Summary of Non Cash Transactions
Debit Credit
1997
Expenditures $669,924
Accounts payable-trade 15,164
Deferred expenditures 376,454
Interest payable 158,749
interest receivable 12,414
Loss on disposal of subsidiary 43,496
Property plant and equipment 652,199
Accounts receivable-related party 819
Investment 236
Interest payable-officers 16,432
Long-term loans 54,688
Convertible promissory notes payable 450,997
Additional paid in capital $377,201
Common Stock 6,652
Other income 64,414
Treasury stock 12,000
Advance receivable-officers 47,543
Convertible notes payable-officers 311,145
Other assets 192,912
Shares subscribed 19,655
Additional paid in capital-subscribed 858,201
Accounts payable-others 95,000
Accounts receivable-trade 20,547
Prepayment 1,302
Notes payable 445,000
The notes on pages 10-14 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended 31st December 1997 and 1996
Summary of Non Cash Transactions
1996
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 10-14 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended 31st December 1997 and 1996
Supplemental disclosure information:
1997
The Company issued 350,000 shares valued at $131,250 as compensation to
employees, officers and directors.
The Company issued 277,260 shares valued at $214,515 as settlement for
interest payable and the value of construction plans.
The Company issued 72,000 shares valued at $34,500 as compensation for
consulting services and other professional fees.
The Company issued 25,000 shares valued at $12,500 as partial settlement of a
note payable.
The Company retired its 60,000 treasury stock valued at $12,000.
The Company reclassified 1996 loss of $135,787 relating to the loss in value
of officer's shares held as collateral for a Company obligation from an
officer's account to deferred expenditures.
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.
The notes on pages 10-14 form an integral part of these financial statements.
<TABLE>
Wall Street Financial Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended 31st December 1997 and 1996
<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 1996 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 1st January 1997 15,214,879 $152,149 $13,370,976 $227,002
($12,000)
Shares issued as compensation to
employees/officers/directors 350,000 3,500 127,750
Shares issued for other professional
services 12,000 120 4,380
Shares issued for accounts payable 900 9 306
Shares issued for deferred expenditures
and interest payable 277,260 2,773 214,515
Shares issued for notes payable 25,000 250 12,250
Shares issued for consulting services 60,000 600 29,400
Treasury stock retired (60,000) (600) (11,400) 12,000
Net income from operations 3,326
-------------------------------------------------------------
Balance at 31st December 1997 15,880,039 $158,801 $13,748,177 $230,328
$ ---
==============================================
===============
</TABLE>
The notes on pages 10-14 form an integral part of these financial statements.
Wall Street Financial Corporation and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended 31st December 1997 and 1996
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 include only the accounts of Wall Street
Financial Corp. (the Company) and its wholly owned subsidiaries WSF Trust
Corporation of Belize Limited, Mayan Resorts Limited, Mayan Plantation Hardwoods
Limited, Wall Street Internet Corp, Belize Transportation Agencies Limited, and
minority equity interest in Compradore Limited. Belize Transportation Agencies
Limited was disposed of on 1st January 1997.
All significant intercompany accounts and transactions have been eliminated in
consolidation. With the exception of Mayan Resorts Limited and the Trust
Corporation, the Company's subsidiaries were inactive.
3. PROPERTY, PLANT AND EQUIPMENT
Property, 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 estimated useful lives. The following are the depreciation rates:
Buildings 3%
Furniture, fixtures and equipment 20%
Vehicle 20%
4. RELATED PARTIES TRANSACTIONS
The Company owns 23.62% 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 owns 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.
5. DEFERRED EXPENDITURES
These represent capitalized costs relating to pre-operation expenses for the
Company's Belize subsidiaries, primarily Mayan Resorts Limited and Mayan
Plantation Hardwoods, which were not operational until early 1998.
6. DEPOSIT
This represents cash payments relating to the transaction to acquire property
pending at December 31, 1997.
7. SINKING FUNDS
The Company has established sinking funds to retire long-term obligations
relating to Investor Visa Category investments made with one of the subsidiaries
the Company (see note 14).
8. CONVERTIBLE PROMISSORY NOTES PAYABLE
1997 1996
Convertible promissory notes payable consist
of the following:
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
Unsecured: 10% note issued 23/8/95.
Due date 30/9/97. This note was partially
converted and applied to the purchase of a lot
The Company has obtained oral extension for
the remaining balance of the note.
Paul Grab - principal --- 25,000
Unsecured: note issued 12/11/95. Note
was converted for stock in 1997, however 50%
of the shares were issued at 31/12/97.
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 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 balance of this note
was applied to the purchase of a lot.
NISSIM TSE - principal 125,000 125,000
Unsecured: 8% note issued 8/11/96. Due date:
31/12/96. The Company has obtained oral
extension for this note.
Richard G. Hinkle Trust - principal 100,000 ---
Secured: 10% of gross timber profits
issued 2/9/97. Due date: 31/12/99.
Richard G. Hinkle Trust - principal 250,000 ---
Secured: 10% of gross timber profits
issued 27/9/97. Due date: 31/12/99.
---------- ----------
$1,675,000 1,475,000
========== ==========
9. 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.
10. 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.
11. RESERVE
Reserve represents transfers from notes payable, $450,000, and from litigation
payable, $150,000. at 31/12/96, net of 1997 disbursements related threto.
12. NOTES PAYABLE-OFFICERS
Notes payable-officers consist of the following accounts:
1997 1996
MT/Merica $58,000 58,000
GK/GRII 125,645 47,000
(continued on next page)
(continued from previous page)
MT/Sypex 16,000 16,000
Adaniya-non-officer in 1996 85,000 ---
Gerhart W. Walch 267,173 77,322
due to officer-recorded as income --- 12,000
in 1997 -------- -------
$551,818 210,322
======== =======
13. NOTES PAYABLE
Notes payable consist of the following accounts:
1997 1996
Compradore note payable $160,000 160,000
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)
Sandhill Enterprises, Ltd. 445,000 ---
----------- -----------
$51,963,825 51,518,825
=========== ===========
14. LONG-TERM DEBTS
In October 1997 the Company became a participant in an approved immigrant
entreupeneur investment program (Investor Visa Category of the Immigration
Act of 1990), in which the Company received proceeds for hotel/resort
development. The long-term debt relates to transactions which have five year
maturity dates. The Company has established sinking funds to provide for the
retirement of these debts (see note 7).
15. 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 15,880,039 outstanding shares of Common Stock as of 31st December 1997,
approximately 2,433,280 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.
16. RETAINED EARNINGS/<ACCUMULATED DEFICITS>
1997 1996
Balance at the beginning of the year $227,002 (561,143)
Profit for the year 3,326 358,145
Prior year adjustment (note 17) 430,000
-------- --------
$230,328 227,002
======== ========
17. INCOME TAX
As of 31st December 1997, the Company has accumulated net earnings of
approximately $230,328. The Company is preparing its federal income tax returns
for filing from 1990 through 1997. The Company's income tax returns which are
not closed for examination by statutes have not been examined by the taxing
authorities. No provision for corporate income taxes payable are reflected in
these statements.
18. NET PROFIT PER SHARE
Net profit (loss) per share is based on weighted average number of shares
outstanding of 15,479,319 for 1997 and 13,917,330 for 1996.
19. GROSS PROFIT FROM OPERATIONS
1997 1996
From revenue-lot sales $554,326 ---
From revenue-transportation and services --- 142,390
Direct expenses (250,000) (115,944)
-------- --------
$304,326 26,446
======== ========
20. OTHER INCOME
1997 1996
Sale of logs $133,717 ---
Other 16,175 292
Sale of land option --- 160,000
Debt forgiveness/payable written off --- 452,993
Direct expenses (57,378) ---
------- --------
$92,514 613,285
======== ========
21. PRIOR YEAR ADJUSTMENT
1996 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 1997 and 1996, 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
10th April 1998
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 1997 and 1996
1997 1996
---- ----
Fuel $--- 4,039
Salaries, wages and compensation 128,206 48,613
Auto 950 1,605
Employee benefits 1,980 ---
Employee parking 1,139 771
Rent 5,475 11,048
Utilities 7,003 13,269
Bank charges 307 2,056
Delivery and postage 706 2,532
Insurance 1,255 1,222
Licenses and fees 753 297
Office expenses 1,613 3,195
Office supplies 1,917 3,165
Printing 1,823 3,175
Repairs and maintenance 741 1,076
Donation --- 50
Supplies - other 146 ---
Accounting 2,250 7,372
Legal 7,337 16,323
Outside services 16,880 5,572
Other professional services 116,559 918
Meals and entertainment 3,583 1,166
Travel and transportation 11,342 5,823
Advertising and promotion 1,383 1,052
Public relations 162 2,842
Dues, subscriptions and memberships 44 362
Other operating expenses 75 106
Bad debts --- 14,000
Taxes-other 151 ---
Recruiting costs 1,250 ---
Shareholders/investor expenses 4,511 ---
Loss on currency exchange 63 ---
Payroll taxes 1,992 ---
Trash/refuse 37 ---
Books and other research materials 51 ---
Online services (20) ---
--------- --------
$321,664 151,649
========= ========
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
In December 1996, 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 continuing 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.: 51 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. Until
recently he was 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 is the President of
Mayan Resorts Limited and the Chief Operating Officer of the Belize Operations.
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 of 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.
Richard G. Hinkle, 52, Mr. Hinkle is a Director-nominee of WSF. He was
cofounder of Team Rental Group, Inc. , a publicly-traded corporation traded
on NYSE which in 1997 changed it's name to Budget Group Inc. His a director
of Advanced Power Technologies provider of OEM products, and is co-founder
and Director of Consolidated Golf Companies. From 1969-1983 he held various
management positions with Hertz Corp.
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 1997 0 0 0 $15,625 <F2> 0 0 0
President,CEO 1996 0 0 0 0 0 0 0
Chairman 1995 0 0 0 $12,500 <F1> 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. The shares were not issued until 1995.
<F2>
(2) In 1996, the Company awarded Mr. Walch 50,000 shares of common stock for
services rendered as a member of the Board of Directors. On the day of the
grant, the closing market price was $.3125. Therefore, for purposes of the
Summary Compensation Table the dollar value of such restricted stock award was
$15,625. The shares were issued in 1997.
</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 years ending
December 31, 1997 and 1996. As of December 31, 1997, 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 vesting 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, 1997, with the residual shares being vested at December 31, 1997,
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 deferred 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, 1997, 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) 4,385,729 27.6%
4057 Black Point Road
Honolulu, HI 96816
Gordon E. Rapozo (1) 339,258 2.1%
187 Nawiliwili Street
Honolulu, HI 96825
Stock Bonus Plan 500,000 3.1%
Richard G. MacMillan, Esq., Trustee
Gail Kitaji, Ph.D., Trustee
Dr. Gail Kitaji, Ph. D. (1,3) 203,000 1.3%
1325 Wilder Avenue, 21 Makai
Honolulu, HI 96822
Richard MacMillan, Esq. (1) 271,750 1.7%
7016 Kamilo Street
Honolulu, HI 96820
Antoine Y. Gedeon (1) 163,247 1.0%
1016 Laukupu Way
Honolulu, HI 96825
Michael Singh (1) 150,000 .9%
South Street
Belize City, Belize, C.A.
Roy S. Adaniya, M.D.(1) 180,000 1.1%
2903 Laola Pl.
Honolulu, HI 96813
All Officers and Directors 6,192,984 39.0%
as a Group (7 persons)
Total Shares Issued and 15,880,039 100.0%
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 6.5%
30 Queens Rd
Central Hong Kong
William Y. Yano 958,150 6.0%
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 1997, the Company issued a total of 410,000 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
Antoine Y. Gedeon 50,000 1997
Michael Singh 50,000 1997
Roy S. Adaniya 50,000 1997
Gerhart W. Walch RL Trust 100,000 1997
Thompson Matheny Corporation 50,000 1997
Gordon Rapozo 50,000 1997
Paul R. Peterson 30,000 1997
Vincent Nerlino 30,000 1997
In recognition of services performed in prior years, on July 25, 1997, the
Compensation Committee of the Board of Directors approved the following
shares of registrant's common stock to be vested and issued at May 31, 1998:
Shares
Gerhart W. Walch 500,000
Antoine Y. Gedeon 150,000
Gail Kitaji 85,000
Gordon E. Rapozo 150,000
Roy S. Adaniya, M.D. 85,000
Deni N. Adaniya 10,000
Kevin H. Connolly 10,000
Paul R. Peterson 25,000
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. None filed
<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 April 10, 1998
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 April 10, 1998
Gerhart W. Walch and Director
Principal Executive Officer
/s/ Roy S. Adaniya, M.D. Director April 10, 1998
Roy S. Adaniya, M.D. Chairman
Compensation Committee
/s/ Antoine Y. Gedeon Subsidiary President April 10, 1998
Antoine Y. Gedeon and Director
/s/ Gail Kitaji, Ph.D. Treasurer April 10, 1998
Gail Kitaji, Ph.D. Principal Financial Officer
/s/ Richard G. MacMillan Secretary, Counsel April 10, 1998
Richard G. MacMillan, Esq.
/s/ Gordon E. Rapozo Director April 10, 1998
Gordon E. Rapozo Chairman Audit Committee
/s/ Michael Singh Subsidiary President April 10, 1998
Michael Singh and Director
[ARTICLE] 5
[MULTIPLIER] 1
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1997
[PERIOD-END] DEC-31-1997
[CASH] 60683
[SECURITIES] 0
[RECEIVABLES] 99681
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 170364
[PP&E] 923532
[DEPRECIATION] (7405)
[TOTAL-ASSETS] 138554230
[CURRENT-LIABILITIES] 2325925
[BONDS] 0
[COMMON] 158801
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 138554230
[SALES] 0
[TOTAL-REVENUES] 425483
[CGS] 0
[TOTAL-COSTS] 327186
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 51475
[INCOME-PRETAX] 46822
[INCOME-TAX] 0
[INCOME-CONTINUING] 46822
[DISCONTINUED] (43496)
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 3326
[EPS-PRIMARY] .0002
[EPS-DILUTED] .0002
</TABLE>
