FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________to________________
Commission File No. 0-23712
Wincanton Corporation
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(Exact name of Registrant as specified in its charter)
Washington 91-1395124
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State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
3653 Hemlock Court, Reno, Nevada 89505
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(Address of Principal executive offices) (Zip Code)
(702) 829-8812
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(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE
SECURITIES EXCHANGE ACT OF 1934:
Name of each Exchange on
Title of Each Class which Registered
Common None
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE SECURITIES
EXCHANGE ACT OF 1934:
NONE
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 of 15(d) of the Securities 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 or No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy of
information statements incorporated by reference in Part II of this Form 10-K or
any amendment to this Form 10-K. [x]
The aggregate market value of the voting stock held by
non-affiliates of the Registrant at June 30, 1995 was approximately $37,000,000.
The number of shares of Registrant's common Stock outstanding
on June 30, 1995 was 9,287,752.
<PAGE>
ITEM 1 - BUSINESS
Wincanton Corporation ("Registrant" or "Company") was organized in October, 1987
as a Washington corporation. The Company was inactive until June, 1993 when it
began to evaluate the acquisition of business opportunities. During its fiscal
year ending June 30, 1995, the Company continued to develop its business
interests and is now engaged in the following business segments:
1. production of specialty vehicles;
2. exploration and development of natural resource properties;
3. establishment of rehabilitation facilities;
4. tree farming; and
5. Australian commercial real estate options.
SPECIALTY VEHICLES
On April 19, 1994, the Registrant entered into an agreement with McGee
Settlement Trust for the assignment to it of design and patent rights to certain
truck/trailer devices for the raising and lowering of a truck/trailer cargo bed.
During the year ended June 30, 1995, the Registrant assigned the agreement noted
above to its newly formed subsidiary company, Tradesman Industries,
Inc.("Tradesman"), a Delaware corporation. Under the April 19, 1994 agreement,
$422,833 were transferred to McGee Settlement Trust and the concept vehicles
were delivered to Tradesman. Tradesman has been actively evaluating the Concept
Vehicles. In April 1995, Tradesman's management decided to redesign the cargo
bed and rear end suspension system since it was determined that the Concept
Vehicles delivered under the McGee Settlement Trust Agreement were not suited to
the U.S. market. Tradesman anticipates that its minivan production prototype
vehicle will be completed by the first quarter of 1996.
Basic minivans will be purchased from major automotive corporations in quantity
and delivered to one or more large specialty automotive manufacturing companies
where they will be modified with the Tradesman easy-loading technology. Finished
units will be transported to retail automobile and truck dealers for customer
sales.
Production and assembly of the Tradesman vehicles will be outsourced to third
parties. Tradesman has commenced discussions with potential production
candidates. Components and parts will be serviced in accordance with the
manufacturer's standards for after-market service.
Tradesman plans to market its vehicles through (1) established retail automobile
and truck dealerships (generally Chrysler) and (2) national accounts.
The Registrant engaged the services of Work Recovery, Inc. through a one year
consulting agreement dated July 31, 1994. The services provided relate to
marketing activities including holding focus groups with potential users of the
Tradesman products; utilizing WRI's existing network of sales representatives to
conduct local market research; and to provide graphic, video and printed media
consultation on the development of marketing materials. In addition WRI advised
Tradesman on the development of additional products; is to provide introductions
to existing and future WRI license holders and to assist in the development of
international distribution licenses for its products.
Tradesman sold its first Master Distribution License to Work Recovery, Inc.
("WRI") in December 1994. The License is for the designated territory described
as the United States, to sell all Tradesman products. The term of the License is
fifteen years with two extensions for five years each. Consideration for the
License was $6,000,000. The agreement is subject to certain performance
criterion by both parties, and for an initial purchase commitment deposit from
WRI of $1,500,000. By a second agreement, WRI subscribed for a 10% interest in
Tradesman for consideration of $2,500,000. Tradesman has been paid in full for
the License, the purchase commitment and the 10% equity interest through the
issue by WRI of 4,651,163 of it's common shares.
Subsequent to June 30, 1995 WRI was placed into receivership and may claim
The specialty vehicle industry is highly competitive and fragmented. There is no
single company that provides competition in all product lines. The Company is
unaware of any lightweight truck on the market that can lower its entire cargo
bed to the ground in a substantially horizontal position.
NATURAL RESOURCE PROPERTIES
In July, 1993, the Registrant, through its wholly owned subsidiary, Queensland
Industries, Inc. ("Queensland") entered into a Joint Venture Agreement with
North Queensland Mining Pty Ltd. ("NQM") pursuant to which the parties would
develop three mining tenements in North Queensland, Australia. NQM is a
corporation owned by the father and brother of the Registrant's President. A
description of the interests is described below. The mining tenements leased by
the Registrant are for perpetual terms and provide for payment of annual
maintenance fees of $3,000.
Flatrock Sandstone Deposit
The Company's sandstone project consists of an approximately one-half square
mile property held under a mining lease.
Geology and Mineralization
The Flatrock Sandstone Deposit is located 125 miles south-east of Charters
Towers which is connected by highway and rail to the city of Townsville
(population 150,000) in North Queensland. The thickness of the sandstone beds
range from 20 to 30 centimeters. Initial quarrying activities will exploit the
deposit to a depth of between 1 and 1.5 meters. Recoverable reserves are
estimated at approximately 4 million square meters.
Production
Limited quarrying has begun in the sandstone deposit. Excavation up to depths of
six feet have been made, as well as grading, mapping and test quarrying. At the
present time, 1,500 square meters of sandstone has been extracted from the
sandstone deposit. The Company was paid $12 per square meter for the sandstone
and is soliciting additional parties to extract sandstone.
Approximately 300 square meters of sandstone has been used for testing and
suitability analysis. Results show excellent weathering, wear and chemical
resistance. The 1,500 square meters of sandstone previously extracted has been
placed in various locations where it is being studied for resistance to cracking
and natural deterioration. These tests are ongoing and results are not yet
available.
Due to the location of the deposit near the surface, recovery will not involve
the use of heavy quarrying equipment. Further the Registrant plans to sell the
product in its raw state. The Registrant proposes to contract with third parties
for recovery and transport operations. Accordingly, the Registrant will not make
provision for capital expenditures to quarry the deposit. An independent
consultant has placed a net present value (gross value discounted at 12.5% per
year over the estimated 20 year life, minus start up and extraction costs) at
$7.4 million.
Market
The use of sandstone building material has experienced a resurgence since the
early 1980's. Usage in Australia is small by world standard. Total world
production of dimensional stone is US$16 - 18 billion annually. Australia
produces 1.5% of world production. The value of stone currently used in
Australia is A$200,000,000 per annum of which approximately 42% is imported.
Inquiries have been received from a local landscaping agent and contractors with
a view to stocking a certain grade of material for resale and to mine the
sandstone for use in future construction.
Uses of sandstone include exterior application for high quality surface
finishing, bricks and tiles, internal walls, floors, counter tops and furniture.
Tin and Base Metals
The Company's tin and base metals project area has been progressively reduced to
7 square miles, as required by the Department of Minerals and Energy. The area
retained covers the target area for silver, lead, zinc, copper and tin. The
project is located 100 kilometers north west of Townsville, North Queensland in
the southern part of what is called the Kangaroo Hills Mineral Field. This
project is held under a mining lease and exploration permit.
Geology and Mineralization
An independent consultant has prepared a report including estimated reserves for
the project dated March 18, 1993 and the following has been extracted from the
report. Four mining areas comprise the project.
1. Macauley Creek - Surface exploration has produced assays of 8 oz. per
tone silver, 5% lead, .5% zinc and 2.7% copper. Four mines constitute this area.
Production up to 1906 totalled 1075 tons. Evidence indicated production occurred
after 1906 but no definite records are available. During the year ended June 30,
1995, the Company conducted preliminary exploration drilling to 100 meters in
depth at locations dictated by the historic workings and of possible extensions
of mineralization. A number of offset mineralizations have been intersected with
the drilling program. The results of this drilling program are now under review
and interpretation and a report is expected in early 1996.
2. Mount Kidson, Dawn of Hope - The Mt. Kidson mine produced 591 tons of
tin ore between 1906 and 1913. The Dawn of Hope mine last produced tin in 1917.
The hard rock area of the Mount Kidson has had preliminary exploration drilling
to 100 meters depth in proximity to the historic workings. The results of this
exploration will be available in early 1996.
3. The Ditch - No production statistics are available for this mining
area.
4. Spiniflex Creek - No production statistics are available for this
mining area.
Production
While these properties have been mined in the past and there is evidence of the
mineral described in the evaluation report, ongoing exploration is required to
determine the proven reserves.
Exploration of the Tin and Base Metal mines will require an expenditure of
$500,000 through 1995 and if results warrant additional exploration, $1,000,000
through 1996. The Company has expended approximately $240,000 to date in this
evaluation. A new mine plan would only be formulated if data received from
ongoing exploration merits same. The Registrant does not have the resources to
recommission the mine. If the Registrant can prove by survey that the
development of its mining interest is commercially feasible, the Registrant
intends to joint venture the development with a company with larger financial
resources providing the monies for development. It is not anticipated that the
Registrant will be called upon to provide financing to recommission the mine.
Grey Granite Deposit
This deposit is located 50 miles northwest of Townsville, North Queensland,
Australia and is held under a lease tenement and covers 74 acres. The deposit is
located less than a half mile from a paved road and 50 miles from the cutting
and polishing plant operated by Australian Granite Corporation, with whom the
Company continues to negotiate a supply agreement.
Geology and Mineralization
An independent consultant prepared a review of the commercial potential for the
exploitation of the Grey Granite Deposit dated September 29, 1993 and the
following has been extracted from that report:
Production
The deposit is estimated to contain 2 million cubic meters of product and is
approximately 400 meters by 800 meters in size. On site operations and
transportation are intended to be performed by third party contractors. No
granite has been extracted from the Company's Grey Granite Deposit and as the
granite is located relatively close to the surface, large expenditures for
capital equipment will not be necessary. The Company has received quotations
from Interlink Services and Davis Brothers for transportation and storing. The
Company has not entered into any transportation and storage contracts to date.
Park Lane has placed a net present proved value of $7.8 million on this deposit.
Test mining of this area commenced in January 1995. Approximately 57 tones was
extracted and samples transported to the Australian Granite processing plant
located in Townsville. The sample material was slabbed, sliced and polished, and
is now being tested for weathering, staining and scratch resistance.
Market
As with sandstone, the use of granite as a building material in Australia has
undergone a revival since the early 1980's. Usage in Australia is small by world
standards. Total world production of dimensional stone is US$16 - 18 billion
annually. Australia produces 1.5% of world production. The value of stone
currently used in Australia is A$200,000,000 per annum of which approximately
42% is imported.
The characteristics of the deposit permit the granite to be sawn into thin
sheets giving the impression of solid blocks for a classically styled exterior
facade. Uses also include internal walls, floors, counter tops and furniture.
Australian Granite is currently upgrading their facilities to cut tiles. The
Company's grey granite is particularly well suited for this purpose.
There are no other known local suppliers of grey granite to the Australian
Granite plant.
Other features of the Business
To minimize capital expenditures and personnel requirements, on-site mining,
extraction and transportation of product is intended to be under fixed contracts
with third parties.
Competitive Conditions
The Registrant has many competitors in the mining and/or quarrying of sandstone,
tin and base metals and granite respectively, none of which are dominant. In
each of its markets, the Company encounters larger, more experienced companies
with greater resources. The sandstone and granite deposits are located close to
ground surface. The Company's mineral activities involve the mining of commodity
type products which is not easily differentiated from that of its competitors.
The Company believes that the quality of its product is at least equal to or
better than its competitors.
Environmental Regulation
Environmental laws and regulations of the jurisdictions in which the Registrant
carries on business have some impact on the exploration for and development of
the Registrant's mineral reserves. To date, the Registrant has not been required
to spend any substantial sums to comply with environmental laws and regulations.
However, the Registrant may be required in the future to comply with
environmental laws and regulations. The additional changes in operating
procedures and expenditures required to comply with future laws dealing with the
protection of the environment cannot be predicted.
REHABILITATION FACILITIES
On April 15, 1994, Queensland entered into a license agreement with Work
Recovery, Inc. ("WRI"). Pursuant to the agreement, Queensland was granted a
master license in Canada for ERGOS. ERGOS is a trademark name for proprietary
equipment that serves as a work simulator for functional capacity testing in
situations of work loss due to injury.
ERGOS is a computer based work simulator initially designed to assist
rehabilitation facilities, physician groups, hospitals and medical clinics in
performing physical function evaluations in measuring the progress of work
therapy programs. The simulator provides both functional capacity testing and
work conditioning.
Under its license agreement, Queensland has the right to open rehabilitation
clinics using the ERGOS equipment in Canada. These clinics are intendes to
provide physical and vocational aptitude assessment services and rehabilitation
therapy to physician groups, employers, hospitals and medical clinics and also
offer physical assessments for the purpose of complying with the American
Disabilities Act.
The license is for an initial term of 5 years with renewal based upon primarily
opening of 15 centers during the term of the license agreement.
The terms of the license agreement provides for payment of $2,500,000 as
follows: $1,000,000 upon signing of the agreement (WRI agreed to accept 200,000
shares of the Registrant's common stock in lieu of $1,000,000) and is in the
process of renegotiating the balance of payments due.
Subsequent to June 30, 1995 WRI has been placed in to receivership and the
Company does not expect to pay the balance of the License fee noted above.
TREE FARMING
On April 15, 1994, Wincanton (Aust) Pty. Ltd. ("Australia"), a wholly owned
subsidiary of the Registrant, entered into an agreement with Forestry
International Pty. Ltd. ("Forestry") to acquire a tree plantation in the country
of Australia. The purchase price was $740,200 with $222,060 payable on signing
of the agreement. During the year ended June 30, 1995, the Registrant
renegotiated the terms of the remaining amount payable. Under the revised
agreement, amended on May 18, 1995, the balance due was increased from $700,000
AUD to $900,000 AUD. The revised balance due is to be repaid at $62,500 AUD per
month for 12 months with the balance of $150,000 AUD due in the thirteenth
month. No interest is payable under the agreement unless in default.
The President of the Registrant owns 19.48% interest in Forestry International
Inc., parent company to Forestry International Pty. Ltd.
Also on April 15, 1994, Australia entered into an agreement with Saddle Mountain
Timber Corporation whereby it sold the tree inventory for $1,480,400, $222,060
payable on signing of the agreement. Under the agreement, the Registrant is
responsible to grow the tree inventory until harvestable or 20 years. During the
year ended June 30, 1995, Australia negotiated the settlement of the balance of
funds due under the agreement by accepting 2,428,571 common shares of the
purchaser.
The Registrant's tree farm is located in the County of Rous, Australia and
encompasses approximately 245 acres. The farm seeks to grow fast growing
hardwood trees propagated by tissue culture resulting in disease free,
consistently growing trees.
The risk of forest fire exists with any timberland. The Company will rely on
fire prevention programs for fire fighting services. Fire insurance for standing
timber is rarely purchased in Australia for it and would be prohibitively
expensive. Consistent with historical practice, the Company does not purchase
such insurance coverage.
The Company has engaged the services of an expert botanist with extensive
experience working in the hardwood industry and with particular knowledge of the
Paulownia trees being grow by the Company.
In the operation and management of its tree farm, the Company is subject to
various laws regulating land use. Management believes it is in substantial
compliance with such laws and regulations. Management anticipates that
increasingly strict laws and regulations relating to the environment, natural
resources, forestry operations, and health and safety matters, as well as
increased social concern over environmental issues, may result in additional
restrictions on the operations of the tree farm. This will in turn result in
increased costs, additional capital expenditures and reduced operating
flexibility. Although the Company does not consider laws and regulation to be
materially burdensome, there can be no assurance that future legislative,
governmental or judicial decisions will not adversely affect the Company's
operations.
The Registrant has retained the services of Work Recovery, Inc. through a one
year consulting agreement dated July 1, 1994, whereby WRI will assist the
Company through the introduction of influential people in each of the countries
where WRI currently holds master license programs for distribution of its
products and services. WRI will also provide introductions to governmental
agencies within these countries and will direct the Registrant to individuals
who have as their primary responsibility decisions related to environmental
reforestation and reclamation of land during mining operations. Subsequent to
June 30, 1995 WRI has been placed in receivership and will be unable to fulfill
its commitment to the Registrant under the Consulting Agreement.
COMMERCIAL REAL ESTATE OPTION, AUSTRALIA
On March 2, 1995, the Company, through its wholly owned subsidiaries Wincanton
Properties Pty. Ltd. and Wincanton Holdings Pty. Ltd. entered into five separate
option agreements. The option agreements give the holder the right to
purchase five commercial real estate properties in Australia. The option is
exercisable for a period of one year and expires on March 2, 1996.
Consideration for the option was the payment of cash in the amount of
$143,645, the issuance of 784,572 common shares at a deemed value of
$4,118,751 and the issuance of five classes of preferred shares, which have
been assigned a nominal value of $5 in total.
Under the option agreements, the property owners were issued series A, B, C, D
and E preferred shares which shares are held by an escrow agent. The preferred
shares are convertible into common shares, on a share for share basis, at the
discretion of the property owners. If converted the property owners may instruct
the escrow agent to sell the common shares for cash. When the cash raised by
selling the common shares is sufficient to pay the option purchase price and the
Company exercises the option to purchase, the cash shall be transferred to the
owners and the title to the property shall be transferred to the Company. In the
event that the cash raised is sufficient to pay the option purchase price and
the Company does not exercise the option, the property holders have the right
under a put arrangement to cause the optioned properties to be sold.
Subsequent to June 30, 1995, the property purchase options have expired
unexercised.
Patents, Trademarks, Licenses, Franchises and Commission
The Company's legal counsel has conducted a patentability search of the new
Tradesman rear end suspension technology. Based on that search, counsel believes
that claims affording patent protection of meaningful scope for the Tradesman
invention can be obtained by the Company.
Seasonal Business
The Registrant's businesses are generally not seasonal. However, while the
Registrant's tree farm is a year round activity, harvesting schedules are based
on species, soil classification, timber inventory and size, age and
classification of timber.
Practices Relating to Working Capital Items
The Registrant manufactures little of its products for its own inventory. The
Registrant purchases materials from third parties and assembles goods upon
receipt of orders.
Customers
During the 1995 fiscal year, the Registrant recorded no sales.
Backlog Order
The Registrant has no backlog orders.
Governmental Contracts
The Company has no government contracts.
Research and Development Activities
During the year ended June 30, 1995, the Company incurred expenses of
approximately $3,900,000 for Company sponsored research, automotive
design/engineering, development of 10 prototype vehicles and market research
activities. In addition the Company retained the services of Work Recovery, Inc.
under a one year Consulting Agreement dated July 1, 1994, to assist in, inter
alia, product development and market research.
Employees
At June 30, 1995, the company had three full time employees.
ITEM 2. - DESCRIPTION OF PROPERTY
Since June 1993, the Company has maintained its executive office in the office
of one of its directors pursuant to an oral month-to-month lease calling for the
payment of no rent.
Tradesman leases 21,000 square feet for their headquarters building in an
automotive park in Carlsbad, California. The lease is for a period of five years
and expires on December 31, 1999 at a rent of $25,110 per month.
As part of its design and engineering program to develop vehicle cargo lifting
technology, Tradesman leases 3,306 square feet in an industrial park in Santa
Ana, California. The lease is for one year and expires on April 30, 1996 at a
rent of $1,620 per month. Subsequent to June 30, 1995 the Company has negotiated
a termination of the leases herein described.
ITEM 3. - LEGAL PROCEEDINGS
On or about April 10, 1995, Tradesman Industries, Inc. was sued in the United
States District Court for the District of Delaware by Fairgill Investments Pty
Limited and Roll-on Vehicles Management Pty Limited. The Complaint in this
Action included a First Count for the alleged misappropriation of trade secrets,
a Second Count for alleged patent infringement, a Third Count for alleged false
patent marking, and a Fourth Count for an alleged violation of Section 43(a) of
the Trademark Act. The Action seeks damages and attorneys' fees and a permanent
injunction against the alleged acts of patent infringement and unfair
competition. Tradesman has answered denying misappropriation of trade secrets as
to the First Count, denying that there is any basis whatsoever for the multiple
charges of patent infringement under the Second Count and denying liability
under the Third and Fourth Counts of complaint. Counsel is of the opinion that
Tradesman has meritorious defenses as to each of the Counts of the Complaint and
that Tradesman does not have a significant liability with respect to the
multiple Counts of the Complaint.
On September 21, 1995, the Second Count for patent infringement was dismissed,
with prejudice, by stipulation between the parties and order of Delaware Federal
Court. The other counts were subsequently dismissed.
In December 1995, Robert Page and McGee Settlement Trust brought suit against
the Registrant its subsidiary Tradesman Industries Inc., the company's
directors, employees, certain consultants and other unrelated individuals
alleging in sum, various acts of fraud, securities violations and breaches of
fiduciary duty. The defendant's moved to stay the proceedings and to compel
arbitration, which motion was granted. The arbitration date has not yet been
set. The plaintiffs have claimed damages in the amount of $30,000,000 and to
seek the appointment of a receiver for Wincanton and Tradesman. The Company
contends that Page and McGee Settlement Trust breached their agreement to
provide technology and that no loss should be incurred.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There are no such matters requiring disclosure.
PART II
ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
<PAGE>
(a) The shares of the Company's common stock are listed in the "Pink
Sheets" and on the NASDAQ Bulletin Board under the symbol WNCC.
The high and low bid price for the shares of the Company's common stock
since trading commenced on August 23, 1993 is as follows:
PERIOD HIGH BID LOW BID
Quarter ended June 30, 1995 11.75 9.75
Quarter ended March 31, 1995 10.25 8.00
Quarter ended December 31, 1994 8.25 6.00
Quarter ended September 30, 1994 -- --
Quarter ended June 30, 1994 -- --
Quarter ended March 31, 1994 -- --
Quarter ended December 31, 1993 5.00 3.00
August 23 - September 30, 1994 5.00 1.50
The aforementioned prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
(b) As at September 30, 1995 there were approximately 780 holders of record of
the Company's common stock.
(c) The Company has never paid any dividends and does not anticipate paying
dividends for the foreseeable future.
ITEM 6.- SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
The selected financial data presented below was derived from the financial
statements of the Company which have been audited by Davidson & Company,
independent chartered accountants, as to June 30, 1995 and by KPMG Peat Marwick
Thorne as to June 30, 1994 and December 31, 1993. The years 1989 through 1992
were audited by another firm of independent auditors. The data should be read in
conjunction with the Company's financial statements and the accompanying notes
and "Management Discussion and Analysis of Financial Condition and Results of
Operations".
<PAGE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As at and for the
Years ended December 31,
As at and for As at and for Inception
the period ending the year ended on 10/05/87 to
1989 1990 1991 1992 1993 June 30, 1994 June 30, 1995 06/30/95
Net Sales Nil Nil Nil Nil Nil Nil Nil Nil
Income (loss)
from continuing ($8,596)($1,411) ($12,875)($2,408) ($234,846) ($424,715) ($14,919,740) ($15,,611,394)
operations
Income (loss) from
continuing ($0.01) Nil ($0.01) Nil ($0.06) ($0.06) ($1.59) N/A
operations per share
Total Assets $3,701 $2,290 $164 $277 $386,977 $2,506,062 $9,738,947 N/A
Long term obligations Nil Nil Nil Nil Nil $181,300 Nil N/A
Dividends declared Nil Nil Nil Nil Nil Nil Nil Nil
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The above selected financial information and the following discussions should be
read in conjunction with the Registrant's consolidated financial statements for
the year ended June 30, 1995, six months ended June 30, 1994, year ended
December 31, 1993 and 1992 and from inception on October 5, 1987 to June 30,
1995 included elsewhere in this form.
Since its incorporation on October 5, 1987, the Registrant has investigated and
evaluated various assets, properties and business opportunities for acquisition.
Prior to 1993, the Registrant had been unsuccessful in this regard. During 1993,
the Registrant entered into a joint venture agreement with a related company to
acquire an 85% interest in certain resource properties under development located
near Charters Tower, North Queensland, Australia in exchange for 800,000 common
shares of the Registrant and cash of approximately $240,000. Exploration of this
property continued during 1995.
On March 30, 1994, the Corporation and Queensland entered into a license
agreement with Granite Marketing Corp. Under the agreement, Queensland was
granted a license of certain patents to manufacture, promote, market, sell and
distribute industrial electrical products. The license was terminated in 1995.
On April 15, 1994, Queensland entered into a license agreement with Work
Recovery, Inc. Under the agreement, Queensland was granted a master license for
Canada, for the use of ERGOS. ERGOS is a trademark name for proprietary
equipment that serves as a work simulator for functional capacity testing in
situations of human work loss due to injury. No sales have been made during the
year ended June 30, 1995.
On April 15, 1994, Australia entered into an agreement to acquire a tree
plantation located in the country of Australia. The $1,000,000 AUD ($740,000 US)
purchase price was allocated to land as to $331,000 and plantation assets as to
$409,000. A portion of the plantation assets were subsequently sold for
$2,000,000 AUD to a third party. Revenue from the sale has been deferred until
the purchaser harvests the trees.
On April 19, 1994, the Corporation entered into an agreement with the McGee
Settlement Trust for the design and patent rights to certain trolley/tow
devices. The Corporation has cash advances made to June 30, 1995 of $423,000 to
the development of these concept vehicles (see Item 1, Specialty Vehicles).
On March 2, 1995, the Company, through its wholly owned subsidiaries Wincanton
Properties Pty. Ltd. and Wincanton Holdings Pty. Ltd. entered into five separate
option agreements. The option agreements give the holder the right to
purchase five commercial real estate properties in Australia. The option is
exercisable for a period of one year and expires on March 2, 1996.
Consideration for the option was the payment of cash in the amount of
$143,645, the issuance of 784,572 common shares at a value of $2,540,887
and the issuance of five classes of preferred shares, which have been assigned
a nominal value of $5 in total.
Under the option agreements, the property owners were issued series A, B, C, D
and E preferred shares which shares are held by an escrow agent. The preferred
shares are convertible into common shares, on a share for share basis, at the
discretion of the property owners. If converted the property owners may instruct
the escrow agent to sell the common shares for cash. When the cash raised by
selling the common shares is sufficient to pay the option purchase price and the
Company exercises the option to purchase, the cash shall be transferred to the
owners and the title to the property shall be transferred to the Company. In the
event that the cash raised is sufficient to pay the option purchase price and
the Company does not exercise the option, the property holders have the right
under a put arrangement to cause the optioned properties to be sold.
On June 27, 1994 the Company formed a subsidiary company, Tradesman Industries,
Inc. ("Tradesman"). The McGee Settlement Trust agreement was assigned to
Tradesman. In April 1995, Tradesman's management decided to design a new body
frame, rear suspension system and cargo bed. A 1996 production prototype vehicle
is currently being produced and is a radical departure from the technology
transferred under the McGee Settlement Trust Agreement. Tradesman is pursuing
patent protection domestically and internationally for the new easy-loading
technology currently being developed.
On December 5, 1994, Tradesman entered into two agreements with WRI.
The first agreement provides for WRI acquiring a 10% equity interest in
Tradesman in exchange for $2,500,000.
The second agreement provides for the sale to WRI of a master distribution
license for the United States to sell all Tradesman products, for a period of 15
years. Consideration for the master distribution license was $6,000,000. The
agreement also called for an initial purchase commitment deposit from WRI of
$1,500,000.
All of the amounts have been paid by way of WRI delivering 4,651,163 shares of
it's common stock to Tradesman. The Company has sold all but 401,163 of the
shares received from Work Recovery, Inc.
The Registrant has concentrated its efforts during the year ended June 30, 1995
to Tradesman's prototype vehicle development and to the sale of its first master
distribution license.
Year ended June 30, 1995 compared to the six months ended June 30, 1994
Liquidity and capital resources
At June 30, 1995, the Registrant has $5,576,804 of current assets and $9,897,528
in current liabilities compared to $554,887 of current assets and $626,681 of
current liabilities as at June 30, 1994. This decrease in working capital is the
result of several factors:
- - - accounts payable includes $6,951,499 due to Work Recovery, Inc. being
the balance due under the one year consulting agreement entered into on
July 1, 1994.
- - - income taxes payable in the amount of $2,076,095 resulting from the sale
of the Master Distribution License to Work Recovery, Inc.
- - - mortgage payable which results from the renegotiation of amounts due
under the April 15, 1994 agreement with Forestry International, Inc. to
include interest in the amount of $160,510.
These decreases to working capital are offset by the following:
- - - the sale of the master distribution license to WRI wherein $3,129,000 was
receivable at June 30, 1995.
- - - the private placement of 100,000 shares for cash proceeds of $1,000,000.
It is anticipated that the Registrant will require further working capital to
fund its current operations. It is expected that such funds will be obtained by
the sale of additional capital stock of the Registrant although there can be no
assurance that the Registrant will be able to obtain such funds.
Results of operations
The Registrant's loss for the year ended June 30, 1995 was $14,919,740 compared
to $424,715 for the six months ended June 30, 1994. The increase in the loss
amount is a result of several factors.
Administrative expenses for the year ended June 30, 1995 were $11,649,828
compared to $208,401 for the six months ended June 30, 1994. Consulting fees
incurred during the year increased to $9,895,005 compared to $55,021 for the six
month period ended June 30, 1994. The Registrant incurred $9,600,000 in the
consulting fees under a one year consulting agreement with Work Recovery, Inc.
dated July 1, 1994, of which $2,653,501 were paid to Work Recovery, Inc. for the
following:
- - - introductions to influential people and decision makers involved in health
care and rehabilitation industries.
- - - conducted transportation surveys, customer expectation interviews, focus
group surveys and feasibility studies for persons with disabilities, with a
view to deriving demand for Tradesman products.
- - - provided introductions to Federal and State agencies representing persons
with disabilities and Workers' Compensation claims.
- - - provided counsel to Tradesman with regard to the American's with Disabilities
Act.
- - - Consulted on Tradesman behalf with Workers Compensation seeking endorsements
for Tradesman's products.
- - - inquiry as to how to get customers through the Workers Compensation and
American Disabilities Act representatives.
- - - promotional activity making the various Federal, State and the public aware of
the vehicles.
- - - assisted Tradesman at national health care trade shows and expos for the
physically challenged.
- - - Conducted health care sales and service training programs for Tradesman
employees and representatives.
- - - assisted Tradesman with producing brochures, slide presentations and videos
directed toward the physically challenged and health care market.
- - - to provide introductions to WRI's existing and future license holders and
general assistant in the development of international distribution license
agreements for its products.
Financing costs are $139,612 compared to nil for the six months ended June 30,
1994, such increase due mainly to interest on the mortgage payable to Forestry
International, Inc. for the tree plantation acquired on April 15, 1994.
Other expenses increased to $419,866 compared to $26,188 for the prior period.
This increase is results from the increased activity with Tradesman in the
development of their prototypes and technology.
Professional fees for the year ended June 30, 1995 were $281,384 compared to
$70,718 for the previous period. This increase is due largely to the legal
defense of the law suit brought against Tradesman (see Item 3. - Legal
Proceedings) and to the cost of completing the Australian real estate option
agreements.
Promotion expense was $182,500 compared to nil. Tradesman was active during the
year promoting its prototypes and technology, producing printed and video
material.
Travel and entertainment expense increase to $318,897 compared to $42,227. This
increase resulted from travel by the Registrant's employees for legal,
technical, and capital raising activities.
During the year ended June 30, 1995 the Registrant sold a 10% interest in its
subsidiary, Tradesman. This transaction resulted in a gain of $1,682,774. In
addition 10% of Tradesman's loss $186,976 was allocated to the minority interest
holder.
Income tax expense increased to $1,866,437 from $205,234. The income tax
liability results from the sale to Work Recovery, Inc. of the Master
Distribution License.
The Registrant also recorded an unrealized loss on available for sale securities
in the amount of $665,474. This amount represents the decline in value of common
shares held in Saddle Mountain Timber Corporation.
Lastly the Registrant expensed to research and development $422,833, being
amounts paid under the McGee Settlement Trust agreement dated April 19, 1994.
Six months ended June 30, 1994 compared to year ended December 31, 1993
Liquidity and capital resources
At June 30, 1994, the Registrant had $554,887 of current assets and $626,681 of
current liabilities compared to $385,100 of current assets and $12,613 of
current liabilities as at December 31, 1993. This decrease in working capital is
the result of several factors.
- - - the redemption of the subsidiary company share held by the non-controlling
interest for CDN $250,000;
- - - advances of $50,780 relating to the prototypes described above, under
"Item 1., Specialty Vehicles".
- - - current portion of long-term debt on the purchase of land and plantation
assets of $346,690; and
- - - income tax payable in Australia on the sale of the plantation assets of
$205,235.
These decreases were offset by the sale of capital stock and advances on share
subscriptions received of $117,000.
Six month period ended June 30, 1994 compared to 1993
Results of Operations
The Registrant's loss for the six month period ended June 30, 1994 was $424,715
compared to a loss of $234,846 for the year ended December 31, 1993. The
increase in loss is due to the provision for income taxes of $205,235 which
resulted from the sale of the plantation assets in Australia for proceeds of
$2,000,000 AUD ($1,480,000 US). The gain on the disposal of plantation assets
has been deferred for accounting purposes until such time as the trees are
harvested.
Administrative expenses for the six month period ended June 30, 1994 were
$208,401 compared to $193,603 for the year ended December 31, 1993. The
financing costs were nil compared to $18,749 for the year ended December 31,
1993. Professional fees were $70,718 compared to $30,809 for the prior year
resulting from the legal cost of drafting of various license agreements. Travel
and entertainment of $42,227 were down form $63,678 for the prior year as the
Registrant incurred substantial travel costs in acquiring its investments in
1993.
The Registrant's expenses included exploration and development expenditures of
$20,168 compared to $57,656 for the year ended December 31, 1993, which
represents the Registrant's 85% share of exploration and development
expenditures incurred by the joint venture. The expenses also include the
Registrant's 85% share in administrative expenses relating to the joint venture
amounting to $14,247, compared to $33,277 for the year ended December 31, 1993
reflecting the shorter period of activity.
The Registrant also had other costs of $26,188 compared to $42,090 for the prior
year which relate to office and administration expenses. These costs are less in
the current period due the shorter period of activity.
The Registrant spent $55,021 on consulting services which were for project
evaluation in Australia for the plantation and $30,000 for management services
in the US.
During the six months ended June 30, 1994, the Registrant's subsidiary,
Queensland, redeemed the 10% minority interest for cash consideration of
$250,000 CDN. The excess of the redemption price over the stated capital is
reflected as a charge against retained earnings in the amount of $183,292 US.
1993 compared to 1992
The Registrant's loss for the year ended December 31, 1993 was $234,846 compared
to $2,408 for the previous year. This reflected the Registrant's operating
activities for 1993 compared to the relative inactive status for the year ended
December 31, 1992 and prior years.
The Registrant's loss for 1993 included $57,656 of exploration and development
expenditures, $44,826 of which was the Registrant's 85% share of exploration and
development expenditures incurred by the joint venture with North Queensland
Mining Pty. Ltd. on their Australian mineral resource properties. The remaining
$12,830 of exploration and development expenditures was incurred directly by the
Registrant. The 1993 loss also included the Registrant's 85% share of
administrative expenses related to operating the joint venture, amounting to
$33,277.
The Registrant also incurred $18,749 of financing costs, $30,809 of professional
fees and $63,678 of travel and promotion, primarily related to the evaluation of
various assets, properties and business opportunities for possible acquisition
and anticipation of the registration of the Registrant's capital stock with the
Securities Exchange Commission.
In addition, the Registrant had other expenses of $42,090 relating to office and
other administration costs, foreign exchange losses, and dilution losses
relating to the Registrant's advances to the joint venture.
The years loss was reduced by $16,413, representing the 10% minority interest
share of the losses of Queensland.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is included below.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names of all current directors, executive
offices and significant employee of the Company, and of its significant
subsidiaries, as well as their ages and specific positions as of the date of
this report:
Name and residential address Position Age
Walter Doyle Chairman of 40
38 Orchid Avenue the Board and
Surfers Paradise President
Queensland, Australia
Henri Hornby Secretary 39
3653 Hemlock Court and Director
Reno, Nevada, 89509
Carl Kosnar President 57
5365 Car Country Drive Tradesman Industries, Inc.
Carlsbad, California, 92008
Directors and Executive Profiles
Walter Doyle was first elected to the Board of Directors in October, 1987. In
1992, he also founded Forestry International, Inc., a company which seeks to
restore deforested lands. Since January 1990, he has been a private investor and
syndicator. During the period from May, 1987 to February 1989, he organized
Century Investors Inc. and Ventech, Inc., both venture capital companies.
Henri Hornby was first elected to the Board of Directors in June, 1993. From
November, 1989 to present, he was engaged in asset management.
Carl Kosnar was first elected to the Board of Directors of Tradesman
Industries, Inc. in June 1994, and became President and Chief Executive
Officer in July 1994. From May 1993 to July 1994, he was Senior Vice President
of corporate development for Postal Annex +, Inc. From February 1992 to
April 1993, he was Senior Investment Executive with Paine Webber, Inc.
involved in investment banking. From October 1990 to January 1992, Mr. Kosnar
was Chief Operating Officer of Rx Medical Services, Inc. a public company
reporting under Section 12(g).
ITEM 11. EXECUTIVE COMPENSATION
For the fiscal year ended June 30, 1995, no director or executive officer or key
employee received aggregate direct remuneration in excess of $100,000. All
officers, directors and principal shareholders as a group received aggregate
direct remuneration of $112,500.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 1995, the Common Stock ownership
of each person known by the Company to be the beneficial owner of 5% or more to
the Company's Common Stock, all directors individually, and all directors and
officers of the Company as a group. Each person has sole voting and investment
power with respect to the shares of Common Stock owned.
Name and Address Number of Shares Owned Percentage of Class
Walter Doyle 2,068,000 22.3%
38 Orchid Avenue
Surfers Paradise
Queensland, Australia
Henri Hornby 1,000,000 10.8%
3653 Hemlock Court
Reno, Nevada, 89509
McGee Settlement 1,000,000 10.8%
Trust
Level 1, 4753 Kinghorn st
Nowra, NSW, 2541
Australia
Mendips Management 1,000,000 10.8%
Ltd.
3653 Hemlock Court
Reno, Nevada, 89509
All directors and 3,068,000 33.1%
Officers as a group
(2 persons)
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The President of the Registrant owns 19.48% interest in Forestry International
Inc., parent company to Forestry International Pty. Ltd.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) The following documents are filed as part of this report:
(1) Financial Statements. See "Index to Financial Statements" on Page 29.
(2) Financial Statements Schedules. Not Applicable.
(3) Exhibits:
3(i) Articles of Incorporation dated October 5, 1987. (1)
3(i)(a) Articles of Amendment dated December 1, 1987. (1)
3(i)(b) Articles of Amendment dated August 11, 1993. (1)
3(ii) By-Laws. (1)
10(a) Share Purchase Agreement dated July 12, 1993 between
Wincanton Corporation and Queensland Industries, Inc. (1)
10(b) Amendment to Share Purchase Agreement dated July 31, 1993. (1)
10(c) Joint Venture Agreement dated July 12, 1993 between North Queensland
Mining Pty Ltd. and Queensland Industries, Inc. (1)
10(d) Amendment to Joint Venture Agreement dated July 31, 1993. (1)
10(e) Independent Consultant's Report relating to Flatrock Sandstone
Deposit. (2)
10(f) Independent Consultant's Report relating to Grey Granite Deposit. (2)
10(g) Independent Consultant's Report relating to Tin and Base Metal Mines.(2)
10(h) License Agreement made the 30th day of March, 1994 among Granite
Marketing Corp., Queensland Industries, Inc. and the Registrant. (3)
10(i) License Agreement entered into April 19, 1994 between the Registrant and
Work Recovery, Inc. (4)
10(j) Agreement made as of April 19, 1994 between the Registrant and McGee
Settlement Trust. (5)
10(k) Agreement entered into as of April 15, 1994 between Wincanton
(Aust) Pty. Ltd. and Forestry International Pty. Ltd. (6)
10(l) Agreement made as of April 19, 1994 between the Wincanton (Aust)
Pty. Ltd. and Saddle Mountain Timber Corporation. (7)
10(m) Consulting agreement dated July 1, 1994, between the Registrant and Work
Recovery, Inc.
10(n) Release from Granite Marketing Corp. terminating license agreement
made March 30, 1994 (see item 10(b) above).
10(o) Amendment dated May 18, 1995 to agreement dated April 15, 1994 between
Wincanton (Aust) Pty. Ltd. and Forestry International Pty. Ltd.
(see item 10(k) above).
10(p) Agreement dated December 6, 1994 between Tradesman Industries, Inc. and
Work Recovery, Inc.
10(q) Deed/Agreement dated March 2, 1995 among 121 Tamar Street Pty. Ltd.,
Wincanton Properties Pty. Ltd. ("Properties"), Wincanton Holdings
Pty. Ltd. ("Holdings") and Steven A. Sanders ("Sanders").
10(r) Deed/Agreement dated March 2, 1995 among Conway Court Pty. Ltd.,
Properties, Holdings and Sanders.
10(s) Deed/Agreement dated March 2, 1995 among Conway Plaza Pty. Ltd.,
Properties, Holdings and Sanders.
10(t) Deed/Agreement dated March 2, 1995 among Best Place Pty. Ltd.,
Properties, Holdings and Sanders.
10(u) Deed/Agreement dated March 2, 1995 among Tembuck Pty. Ltd., Properties,
Holdings and Sanders.
21(a) Queensland Industries, Inc. a company duly incorporated under the laws
of British Columbia, Canada, is a subsidiary of the Registrant. (1)
(b) A report on Form 8-K was filed by the Registrant in April of
1995. The report disclosed a lawsuit instituted against
Tradesman Industries, Inc., a subsidiary of the Registrant.
The suit alleges in part (1) use of proprietary information,
(2) patent information and (3) unfair competition.
(1) Incorporated by reference under same Exhibit number with From 10
Registration Statement dated March 25, 1994.
(2) Incorporated by reference under same Exhibit number with Form 10A
Registration Statement dated September 27, 1994.
(3) Incorporated by reference as Exhibit Nos. 2-1 with Form 8-K Current
Report dated August 22, 1994 ("Form 8-K").
(4) Incorporated by reference as Exhibit Nos. 2-2 with Form 8-K.
(5) Incorporated by reference as Exhibit Nos. 2-4 with Form 8-K.
(6) Incorporated by reference as Exhibit Nos. 2-5 with Form 8-K.
(7) Incorporated by reference as Exhibit Nos. 2-6 with Form 8-K.
<PAGE>
DRAFT 4
31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: September __, 1996
WINCANTON CORPORATION
By:___________________________
Henri Hornby
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, 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
______________________ Chairman of the Board of
Walter Doyle Directors, President and ____________
Director
______________________ Secretary and Director ____________
Henri Hornby
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE
Contents of Statements F-1
Report of Independent Chartered Accountants F-2
Comments by Auditor for U.S. readers on Canada - U.S. Reporting Conflict
F-3
Consolidated Balance Sheets as at June 30, 1995 and 1994 F-4
Consolidated Statements of Operations and Deficit
Accumulated during the Development Stage
Year ended June 30, 1995, six months ended June 30, 1994 year ended
December 31, 1993 and 1992 and from inception to June 30, 1995 F-5
Consolidated Statement of Changes in Financial Position Year ended June 30,
1995, six months ended June 30, 1994 year ended December 31, 1993 and 1992
and from inception to June 30, 1995 F-6
Notes to Consolidated Financial Statements F-7
WINCANTON CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
(A Company in the development stage)
(Expressed in U.S. dollars)
JUNE 30, 1995
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
AS AT JUNE 30
1995 1994
- - -----------------------------------------------------------------------------
ASSETS
Current
Cash $ 2,113,731 $ 117,011
Amounts and notes receivable (Note 3) 2,686,069 390,470
Due from a director (Note 4) - 47,406
------------- ------------
4,799,800 554,887
Long-term note receivable (Note 3) - 888,000
Resource properties (Note 5) 1 1
Investments, advances and licences (Note 6) 890,952 290,396
Capital assets (Note 7) 1,066,539 772,778
------------- ------------
$ 6,757,292 $ 2,506,062
===============================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
CONSOLIDATED BALANCE SHEET
(Expressed in U.S. dollars)
AS AT JUNE 30
1995 1994
- - --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued
liabilities (Note 3) $ 8,632,933 $ 74,756
Current portion of mortgage
payable (Note 8) 688,500 346,690
Income taxes payable 166,095 205,235
------------- ------------
9,487,528 626,681
Mortgage payable (Note 8) - 181,300
Unearned revenue (Note 3) 8,535,251 1,480,000
------------- ------------
18,022,779 2,287,981
Shareholders' equity Capital stock (Note 9)
Authorized
15,000,000 preferred shares
15,000,000 common shares with a
par value of $0.0001 per share
Issued
9,287,752 common shares
(1994 - 8,746,180) 835 796
4,195,895 preferred shares
(1994 - Nil) 5 -
Additional paid-in capital (Note 9) 6,494,596 983,561
Advances on account of share
subscriptions - 117,000
Cumulative translation adjustment 1,519 (8,230)
Deficit, accumulated during the
development stage (17,762,442) (875,046)
------------- ------------
(11,265,487) 218,081
$ 6,757,292 $ 2,506,062
================================================================================
Continuing operations (Note 1)
Commitments (Notes 3, 6, and 15)
Subsequent event (Note 17)
On behalf of the Board:
Director Director
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
WINCANTON CORPORATION
(A Company in the development stage)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(Expressed in U.S. dollars)
<S> <C> <C> <C> <C> <C>
Six Months
From Inception Year Ended Ended
to June 30, June 30, June 30, Year ended December 31
------------------------------
1995 1995 1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------------
Exploration and development
expenditures on resource
properties $ 156,088 $ 78,264 $ 20,168 $ 57,656 $ -
-------------- ------------- ------------- -------------- ----------
Administration expenses
Consulting 9,950,026 9,895,005 55,021 - -
Financing costs 188,918 139,612 - 18,749 2,122
Joint venture operations (Note 10) 66,517 18,993 14,247 33,277 -
Management fees 5,000 - - 5,000 -
Other 489,680 419,866 26,188 42,090 286
Professional fees 382,911 281,384 70,718 30,809 -
Promotion 182,500 182,500 - - -
Research and development 437,133 437,133 - - -
Travel and entertainment 424,802 318,897 42,227 63,678 -
-------------- ------------- ------------- -------------- ----------
12,127,487 11,693,390 208,401 193,603 2,408
-------------- ------------- ------------- -------------- -------------
Other income (expenses)
Unrealized loss on available for sale
securities (Note 6) (665,474) (665,474) - - -
Write-down of licence (Note 6) (1,500,000) (1,500,000) - - -
Loss on sale of investments (28,614) (28,614) - - -
Write-off of options to purchase
real estate (Note 11) (2,684,537) (2,684,537) - - -
Write-off of advances (Note 12) (467,656) (467,656) - - -
-------------- ------------- ------------- -------------- ----------
(5,346,281) (5,346,281) - - -
-------------- ------------- ------------- -------------- ----------
Loss before non-controlling
interest and income taxes (17,629,856) (17,117,935) (228,569) (251,259) (2,408)
-------------- ------------- ------------- -------------- -------------
Income taxes - current 161,671 (43,563) 205,234 - -
-------------- ------------- ------------- -------------- ----------
- continued -
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(Expressed in U.S. dollars)
Six Months
From Inception Year Ended Ended
to June 30, June 30, June 30, Year ended December 31
-------------------------------
1995 1995 1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------------
continued.....
Loss before non-controlling interest $ (17,791,527) $ (17,074,372) $ (433,803) $ (251,259) $ (2,408)
Non-controlling interest in
loss of subsidiary 212,477 186,976 9,088 16,413 -
-------------- ------------- ------------- -------------- ----------
Loss for the period (17,579,050) (16,887,396) (424,715) (234,846) (2,408)
Deficit, accumulated during the
development stage, beginning
of period - (875,046) (266,939) (32,093) (29,685)
Redemption of non-controlling
interest in subsidiary from
related party (Note 5) (183,392) - (183,392) - -
-------------- ------------- ------------- -------------- ----------
Deficit, accumulated during the
development stage, end of
period $ (17,762,442) $ (17,762,442) $ (875,046) $ (266,939) $ (32,093)
========================================================================================================================
Loss per share $ (1.80) $ (0.06) $ (0.06) $ -
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
WINCANTON CORPORATION
(A Company in the development stage)
CONSOLIDATED STATEMENT OF CHANGE IN FINANCIAL POSITION
(Expressed in U.S. dollars)
<S> <C> <C> <C> <C> <C>
Six Months
From Inception Year Ended Ended
to June 30, June 30, June 30, Year ended December 31
----------------------------
1995 1995 1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (APPLIED TO):
OPERATING ACTIVITIES
Loss for the period $ (17,579,050) $ (16,887,396) $ (424,715) $ (234,846) $ (2,408)
Items not affecting cash:
Amortization of organization costs 515 - - - 86
Expenses paid by stock issuance 60,000 60,000 - - -
Write-off of advances for research
and development 50,780 50,780 - - -
Write-off of options to purchase
real estate 2,684,537 2,684,537 - - -
Write-off of advances 467,656 467,656 - - -
Write-down of licences 1,500,000 1,500,000 - - -
Other 1,519 9,749 (15,384) 7,154 -
Change in non-cash working capital:
Amounts and notes receivable 442,931 463,401 (7,529) (12,941) -
Due from a director 14,495 61,901 30,686 (78,092) -
Accounts payable and accrued
liabilities 8,632,933 8,558,177 62,143 12,513 (3,479)
Income taxes payable 166,095 (39,140) 205,235 - -
-------------- ------------- ------------- -------------- ----------
(3,557,589) (3,070,335) (149,564) (306,212) (5,801)
-------------- ------------- ------------- -------------- -------------
FINANCING ACTIVITIES
Due to a director - - - (13,070) 6,000
Unearned revenue 4,852,827 4,630,827 222,000 - -
Long-term debt 688,500 160,510 527,990 - -
Advances on account of share
subscriptions - (117,000) 76,848 40,152 -
Issue of capital stock 2,024,148 1,039,999 390,152 574,797 -
Additional paid-in capital 1,682,774 1,682,774 - - -
Redemption of minority interest
in subsidiary (183,392) - (183,392) - -
-------------- ------------- ------------- -------------- ----------
9,064,857 7,397,110 1,033,598 601,879 6,000
-------------- ------------- ------------- -------------- -------------
- continued -
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
CONSOLIDATED STATEMENT OF CHANGE IN FINANCIAL POSITION
(Expressed in U.S. dollars)
Six Months
From Inception Year Ended Ended
to June 30, June 30, June 30, Year ended December 31
--------------------------------------
1995 1995 1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------------
continued......
INVESTING ACTIVITIES
Resource properties $ (1) $ - $ - $ (1) $ -
Investments, advances and licences (2,182,837) (1,892,649) (290,188) - -
Capital assets (1,066,539) (293,761) (770,902) (1,876) -
Options on real estate (143,645) (143,645) - - -
Organization cost (515) - - - -
-------------- ------------- ------------- -------------- ----------
(3,393,537) (2,330,055) (1,061,090) (1,877) -
-------------- ------------- ------------- -------------- ----------
Change in cash position during period 2,113,731 1,996,720 (177,056) 293,790 199
Cash, beginning of period - 117,011 294,067 277 78
-------------- ------------- ------------- -------------- -------------
Cash, end of period $ 2,113,731 $ 2,113,731 $ 117,011 $ 294,067 $ 277
=======================================================================================================================
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
1. CONTINUING OPERATIONS
These financial statements have been prepared on the basis that the
Company will continue to operate as a going concern, notwithstanding
that the Company has incurred significant operating losses and has an
excess of liabilities over assets at June 30, 1995. Future operations of
the Company, and the related recoverability of the costs of acquiring
its licences (Note 6), are dependent upon:
a) Obtaining additional financing to meet its liabilities as they come
due and carry out its business plans;
b) Resolving the legal claim described in Note 17 on conditions
favourable to the Company;
c) Meeting certain minimum product delivery requirements under its
licences in order to maintain its licences in good standing,
d) Determining whether the sale of common shares of Work Recovery, Inc.
as described in Note 3 were incompliance with Securities law, and
e) Attaining profitable operations from its various businesses described
in Note 2.
As at June 30, 1995, the Company had a working capital deficiency of
$4,687,728.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The Company was incorporated on October 5, 1987 under the laws of the
State of Washington, U.S.A. The Company holds investments in other
companies as follows:
i) 100% of the shares of Queensland Industries, Inc. ("Queensland"),
a company incorporated under the laws of the Province of British
Columbia, Canada, whose principal business activities are the
exploration and development of natural resource properties, more
particularly described in Note 5.
ii) 100% of the shares of Wincanton (Aust) Pty. Ltd. ("Wincanton
Aus"), a company incorporated under the laws of Australia, whose
principal business is growing trees.
iii) 90% of the shares of Tradesman Industries, Inc. ("Tradesman"), a
development stage company incorporated under the laws of the
State of Delaware, U.S.A., whose principal business is intended
to be the manufacturing, marketing and distribution of trucks,
minivans and trailers with cargo beds and tailgate systems, that
lower to the ground.
iv) 100% of the shares of Wincanton Properties Pty. Ltd.
("Properties"), a company incorporated under the laws of
Australia, whose sole purpose is to hold options to acquire real
estate properties, more particularly described in Note 11.
v) 100% of the shares of Wincanton Holdings Pty. Ltd. ("Holdings"),
a company incorporated under the laws of Australia, whose sole
purpose is to hold options to acquire real estate properties,
more particularly described in Note 11.
These consolidated financial statements include the accounts of the
Company, its subsidiaries, Wincanton (Aus), Tradesman, Properties,
Holdings, Queensland and Queensland's proportional share of the assets,
liabilities, revenue and expenses of the joint venture described in Note
10. All significant intercompany transactions and balances have been
eliminated.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Generally accepted accounting principles
These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States. For
United States reporting purposes, the Company is considered to be in the
development stage and the accompanying financial statements are those of
a development stage enterprise.
Resource properties
Each group of claims in a property is accounted for as a separate area
of interest. Property acquisition costs are deferred until it is
determined if the property contains economically recoverable ore
reserves and a production decision is made. These acquisition costs and
development costs incurred after a production decision is made will be
amortized against related revenues by the unit-of-production method upon
commencement of commercial production, written-down to an estimated net
realizable value when it is determined that the property's value is
impaired, or written-off when the property is abandoned or sold.
All exploration, other development and administrative expenditures are
charged to expense as incurred.
The amounts shown for resource properties represent costs incurred to
date, and do not necessarily reflect present or future values.
Investments, advances and licences
Investments, advances and licences consist of investments in shares of
companies which are available for sale, advances to individuals and
companies, and licences. Investments in shares of companies which are
available for sale are initially recorded at cost with subsequent
unrealized gains and losses included in a separate component of
shareholder equity, except where a decline in value is other than
temporary, in which case the loss is reflected in income. Advances and
licences are recorded at cost and are written-down to reflect a
permanent impairment in value.
Capital assets
Capital assets are recorded at cost. The Company has not made provisions
for depreciation as it is still considered to be in the development
stage.
Foreign exchange
Account balances and transactions denominated in foreign currencies and
the accounts of the Company's foreign operations have been translated
into U.S. funds as follows:
i) Assets and liabilities at the rates of exchange prevailing at the
balance sheet date; ii) Revenue and expenses at average exchange rates
for the period in which the transaction occurred; iii) Exchange gains
and losses arising from foreign currency transactions are included in
the determination of net
earnings for the period; and
iv) Exchange gains and losses arising from the translation of the
Company's foreign operations are included as a separate component
of shareholders' equity.
Research and development costs
Research and development costs are charged to operations as incurred.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Loss per share
Loss per share is calculated based on the weighted average number of
shares outstanding during the year ended June 30, 1995, being 9,387,738
shares (six months ended June 30, 1994 - 7,098,000 shares, year ended
December 31, 1993 - 3,375,000 shares and year ended December 31, 1992 -
1,203,000 shares).
3. AMOUNTS AND NOTES RECEIVABLE
1995 1994
--------------------------------------------------------------------
Work Recovery, Inc. $ 2,525,001 $ -
Saddle Mountain Timber Corp. - 1,260,537
Other 161,068 17,933
-------------- -------------
2,686,069 1,278,470
Current portion (2,686,069) (390,470)
-------------- -------------
$ - $ 888,000
===================================================================
Work Recovery, Inc.
The Company entered into an agreement with an arms length company to
issue common shares representing a 10% interest in Tradesman. The
Company received common shares of Work Recovery, Inc. ("WRI") with a
market value of $2,500,000 as consideration, realizing a dilution gain
of $1,682,774, which has been treated as an addition to paid-in-capital.
In addition, Tradesman entered into an agreement with WRI to sell
marketing rights for the cargo bed and tailgate systems in exchange for
common shares of WRI with a market value of $5,005,251. During the year
ended June 30, 1995, the Company sold all of the WRI shares it had
received through June 30, 1995 for net proceeds of $4,980,250, resulting
in a nominal gain.
The revenue of $5,005,251 recorded on the sale of the marketing rights
has been reflected as unearned. These amounts will be recognized as
revenue on a straight-line basis as the performance criteria under the
licence agreement are met, including the delivery of a minimum number of
units of manufactured product. If the performance criteria are not met,
the Company may be liable to repay the licence fee.
The final instalment of shares of WRI with an aggregate value of
$2,525,000 was received on July 15, 1995. Prior to June 30, 1995, the
Company received $2,000,000 as proceeds of disposition of a portion of
these shares, which amount has been included in unearned revenue.
Subsequent to June 30, 1995, the Company held 401,163 shares of WRI
which have been recorded at a nominal value of $1.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
3. AMOUNTS AND NOTES RECEIVABLE (cont'd.....)
Work Recovery, Inc. (cont'd.....)
In conjunction with the sale of the Tradesman shares and the marketing
rights to WRI, the Company entered into an agreement with WRI whereby
WRI would provide consulting services with respect to the cargo bed and
tailgate system technology during the year ended June 30, 1995 for
aggregate consideration of $9,600,000. WRI was to provide these services
for $800,000 per month for a one year period through June 30, 1995. Of
this amount, approximately $2,650,000 was paid, with the remaining
$6,950,000 included in accounts payable at June 30, 1995. Subsequent to
June 30, 1995 a further $200,000 was paid. The Company is unable to
confirm whether these services were actually performed by WRI and is
contemplating an attempt to recover the $2,850,000 already paid. There
is no assurance the Company will be able to recover any of the amounts
as WRI has subsequently been placed into receivership and WRI is
currently under investigation by the Securities Exchange Commission for
various securities violations. The Company will retain the $6,950,000 in
accounts payable and accrued liabilities until such time as it has
determined the liability has been legally dismissed. This consulting
agreement was not previously disclosed by either the Company or WRI in
their respective public filings.
Saddle Mountain Timber Corp.
Wincanton (Aus) entered into an agreement with an arms length company,
whereby plantation assets (trees) were sold for $2,000,000 AUD
($1,530,000 U.S.). Under this agreement, Wincanton (Aus) is required to
care for the trees on the plantation for a period equal to the lessor of
20 years, or until the trees are harvested.
On August 29, 1994, the Company accepted 2,428,571 common shares of the
purchaser Saddle Mountain Timber Corp. (Note 6), in full settlement of
amounts receivable under the sale of the agreement.
All of the revenues from the sale of the plantation assets have been
recorded as unearned. These amounts will be recognized as revenue on a
prorata basis as the trees are harvested.
4. DUE FROM A DIRECTOR
Amounts due from a director are non-interest bearing and due on demand.
During the year, the Company determined that advances of $173,005 to a
director were uncollectible and consequently wrote-off the amounts to
operations (Note 12). Subsequent to June 30, 1995, further advances of
$716,788 were made to the director.
5. RESOURCE PROPERTIES
Queensland owns an 85% interest in a joint venture with North Queensland
Mining Pty. Limited ("North Queensland"), a related company. The joint
venture acquired an 85% interest in certain granite, sandstone, tin and
copper/lead/zinc/silver resource properties. Under the terms of the
joint venture, Queensland and North Queensland have agreed to develop
the resource properties. The Company issued 800,000 common shares and
paid $266,000 to Queensland in exchange for 90% of the common shares of
Queensland. Queensland transferred its 800,000 shares of the Company and
paid $146,000 to North Queensland in exchange for its 85% interest in
the joint venture.
On April 15, 1994, Queensland redeemed the 10% minority interest
outstanding in its common stock in consideration of payment of $250,000
Cdn ($183,392 U.S.). The minority shareholder is a director and
shareholder of the Company. The excess of the redemption price over the
stated capital in the amount of $183,392, was charged to deficit. As a
result of the transactions, the Company owns 100% of Queensland, which
has an 85% interest in the joint venture.
As these transactions are common control transactions between related
parties, the Company has recorded the acquisition at historical costs to
Queensland and North Queensland, which were nominal, in a manner similar
to a pooling of interests.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
6. INVESTMENTS, ADVANCES AND LICENCES
Total Total
Investment Advances 1995 1994
- - ------------------------------------------------------------------------------
Thanksmate $ 100 $ - $ 100 $ 50,880
Pty. Ltd.
Saddle Mountain 792,832 - 792,832 239,408
Timber Corp.
Work Recovery Inc. - 20 20 20
Other - 98,000 98,000 -
Granite Marketing - - - 88
Corp. ------------- ------------- -------------- -------------
$ 792,932 $ 98,020 $ 890,952 $ 290,396
==============================================================================
Thanksmate Pty Ltd.
On April 19, 1994, the Company entered into an agreement with the McGee
Settlement Trust for the design and patent rights to certain
electro-hydraulic cargo bed and tailgate systems of Thanksmate Pty. Ltd.
Consideration for the acquisition consisted of the payment of $130,000
AUD ($96,300 U.S.) for the express purpose of building five different
prototypes, and the issuance of 1,000,000 common shares. The Company has
recorded this licence at a nominal value of $100. The licence was
subsequently transferred to Tradesman.
During the fiscal year ended June 30, 1995, a claim was filed against
Tradesman for alleged misappropriation of trade secrets, patent
infringement, false patent marking and violation of the Trademark Act
(U.S.). The claim seeks damages and a permanent injunction against the
patent infringement and unfair competition. Counsel is of the opinion
that Tradesman has meritorious defences to the claims and will not have
a significant liability arising from the claim. Losses arising from this
claim will be treated retroactively. Subsequent to June 30, 1995, all of
the claims under this litigation were dismissed.
Saddle Mountain Timber Corp.
The Company owns 2,626,571 shares of Saddle Mountain Timber Corp.
(formerly Saddle Mountain Mining Corp.), a company trading publicly on
the Alberta Stock Exchange. These shares, with an aggregate cost of
$1,458, 306 have been classified as "available for sale". The value of
these shares has declined since acquisition, the decline is considered
to be other than temporary, and accordingly the shares have been
recorded at their market value at June 30, 1995.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
6. INVESTMENTS, ADVANCES AND LICENCES (cont'd.....)
Work Recovery, Inc.
On April 15, 1994, Queensland entered into a licence agreement with Work
Recovery, Inc. ("WRI"). Under the agreement, Queensland was granted a
master licence, for Canada, for the use of ERGOS. ERGOS is a trademark
name for a proprietary piece of equipment that serves as a work
simulator for functional capacity testing, in situations of human work
loss due to injury. The Company initially recorded this licence at a
nominal value of $20.
The agreement calls for certain minimum performance criteria necessary
to keep the licence in good standing. The licence is for an initial term
of 5 years with renewal provisions based upon performance.
Advance royalties of $1,500,000 were required to be paid by the Company
during the year ended June 30, 1995; this amount had been included in
licences. As at June 30, 1995, the $1,500,000 remains unpaid and is
included in accounts payable and accrued liabilities. Subsequent to June
30, 1995, management determined that there was an impairment in the
value of the licence and has written it down to a nominal value of $20.
Other
During the year, the Company advanced $392,651 to a director of Saddle
Mountain Timber Corp. The advances are non-interest bearing, with no
fixed terms of repayment. Subsequent to June 30, 1995, the Company
advanced a further $188,000 and received 586,000 shares of Saddle
Mountain Timber Corp. with a market value of $62,000 as repayment. The
Company agreed to settle the remaining balance for Cdn $50,000 (U.S.
$36,000). Consequently, $294,651 has been written-off to operations
(Note 12).
Granite Marketing Corp.
On April 7, 1995, the Company negotiated a settlement agreement with
Granite Marketing Corp. whereby Granite accepted payment of $50,000 in
exchange for cancellation of a licence agreement and the return for
cancellation of the 875,000 common shares previously issued by the
Company to Granite. The Company had previously recorded the licence and
shares at a nominal value of $88.
7. CAPITAL ASSETS
Accumulated Net Book Value
Cost Depreciation 1995 1994
- - -------------------------------------------------------------------------------
Land $ 331,466 $ - $ 331,466 $ 331,466
Plantation 495,271 - 495,271 439,385
assets
Vehicles 137,458 - 137,458 -
Furniture 97,812 - 97,812 1,927
and equipment
Leasehold 4,532 - 4,532 -
improvements ------------- ------------- -------------- ----------
1,066,539 $ - $ 1,066,539 $ 772,778
===============================================================================
During the six months ended June 30, 1994, Wincanton (Aus) sold certain
plantation assets, the proceeds of which have been deferred for
accounting purposes and included in unearned revenue (Note 3).
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
8. MORTGAGE PAYABLE
1995 1994
--------------------------------------------------------
Mortgage payable $ 688,500 $ 527,990
Current portion (688,500) (346,690)
-------------- -------------
$ - $ 181,300
========================================================
The purchase price of the land and plantation assets in 1994 was $1
million AUD ($740,200 U.S.), payable as to $300,000 AUD ($222,000 U.S.)
on signing and the remaining $700,000 AUD ($518,200 U.S.) in
instalments.
During the year ended June 30, 1995, Wincanton (Aus) renegotiated the
terms of the mortgage to reflect accrued interest of $160,510. The
mortgage is due on demand, and accordingly the entire amount has been
classified as a current liability. The Company also issued 210,000
shares to the vendor of the plantation assets and land as security for
the mortgage payable. It is expected that these shares will be returned
to treasury when the mortgage is settled.
9. CAPITAL STOCK
<TABLE>
<CAPTION>
Capital stock issued from incorporation of the Company on October 5,
1987 to June 30, 1995 is summarized as follows:
<S> <C> <C> <C> <C>
Capital Stock Additional
paid-in
Shares Amount capital Total
1987 Issued for cash at $0.10 per share,
net of offering costs of $500 100,000 $ 10 $ 9,490 $ 9,500
1988 Issued for cash at $0.10 per share,
net of offering costs of $500 100,000 10 9,490 9,500
Issued for cash at $0.0001 per share 1,000,000 100 - 100
1991 Issued for cash at $0.0333 per share 3,000 1 99 100
------------- ------------- -------------- -------------
At December 31, 1991 and 1992 1,203,000 121 19,079 19,200
1993 Issued for business acquisition 800,000 1 - 1
Issued for cash at $0.01 per share 2,000,000 200 19,800 20,000
Issued for cash at $0.02 per share 2,000,000 200 39,800 40,000
Issued for cash at $1.00 per share 514,796 51 514,745 514,796
------------- ------------- -------------- -------------
At December 31, 1993 6,517,796 573 593,424 593,997
1994 Issued for cash at $3.00 per share 13,384 1 40,151 40,152
Issued for cash at $2.50 per share 140,000 14 349,986 350,000
Issued for licences at $0.0001 per share 2,075,000 208 - 208
------------- ------------- -------------- -------------
At June 30, 1994 8,746,180 796 983,561 984,357
- continued -
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
9. CAPITAL STOCK (cont'd.....)
Capital Stock Additional
paid-in
Shares Amount capital Total
continued.....
At June 30, 1994 8,746,180 $ 796 $ 983,561 $ 984,357
1995 Issued for cash at $1.01 per share 116,000 12 116,988 117,000
Issued for shares in Work Recovery, Inc. 200,000 20 187,480 187,500
Issued as security for mortgage
payable (Note 8) 210,000 1 - 1
Issued for options to purchase real
estate (Note 11) 784,572 78 2,540,809 2,540,887
Issued for cash at $10 per share, net
of offering costs of $77,000 100,000 10 922,990 923,000
Issued for services received 6,000 6 59,994 60,000
Shares returned and cancelled (Note 6) (875,000) (88) - (88)
Gain on dilution of interest in
Tradesman (Note 3) - - 1,682,774 1,682,774
------------- ------------- -------------- -------------
At June 30, 1995 9,287,752 $ 835 $ 6,494,596 $ 6,495,431
===============================================================================================================
</TABLE>
Preferred shares
Shares Amount
Class A convertible preferred stock convertible into
common stock at $4.80 per share 918,000 $ 1
Class B convertible preferred stock convertible into
common stock at $5.20 per share 381,323 1
Class C convertible preferred stock convertible into
common stock at $5.60 per share 836,035 1
Class D convertible preferred stock convertible into
common stock at $6.00 per share 1,055,700 1
Class E convertible preferred stock convertible into
common stock at $7.86 per share 1,004,837 1
------------ --------
4,195,895 $ 5
============================================================================
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
9. CAPITAL STOCK (cont'd.....)
Stock options
On November 16, 1994, the Company granted 800,000 employee share
purchase options. The share purchase options entitle the holder to
purchase one share of the Company for each option held at a price of
$4.00 per share for a period of 10 years.
Warrants
On December 5, 1994, the Company issued 2,500,000 warrants. Each warrant
gives the holder the right to purchase one common share in the Company
in exchange for the exercise price noted, as follows:
Number of warrants Exercise Price
1,000,000 $ 1.00
500,000 2.50
500,000 3.50
500,000 4.50
The warrants expire on December 6, 1999.
10. INVESTMENT IN JOINT VENTURE
These consolidated financial statements include Queensland's 85% share
of the assets, liabilities and expenses of their joint venture with
North Queensland as follows:
June 30, June 30,
1995 1994
Cash $ 32,551 $ 25,318
Accounts receivable and deposits 12,782 9,727
Resource properties 1 1
Equipment 2,507 1,927
Accounts payable (974) (96)
-------------- -------------
Venturer's equity and advances $ 46,867 $ 36,877
============== =============
Exploration and development expenditures$ 78,264 $ 20,168
Administrative expenses 3,695 5,433
-------------- -------------
$ 81,959 $ 25,601
======================================================================
The Company incurred an additional $3,695 (1994 - $8,814) of
administrative expenses on behalf of the joint venture. Included in
administrative expenses of the joint venture is $Nil (1994 - AUD$8,000)
of management fees paid to a
<PAGE>
director of the Company.
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
11. WRITE-OFF OF OPTIONS TO PURCHASE REAL ESTATES
<TABLE>
<CAPTION>
On March 2, 1995, the Company, through its wholly owned subsidiaries,
Properties and Holdings, entered into five separate option agreements.
The option agreements gave the holder the right to purchase commercial
real estate property in Australia. The options were exercisable for a
period of one year. The purchase price for each option was as follows:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Option Common Shares Issued Preferred shares issued
Purchase Number Number
Property name Price Cash of Shares Amount of Shares Amount
---------------------------------------------------------------------------------------------------------------
Best Place $ 5,202,000 $ 26,418 142,130 $ 460,297 918,000 Class A $ 1
121 Tamar Street 2,065,500 10,490 61,965 200,578 381,323 Class B 1
Conway Court 5,202,000 26,418 146,306 473,821 836,035 Class C 1
Conway Plaza 7,038,000 35,742 197,553 639,788 1,055,700 Class D 1
Manchester 8,778,375 44,577 236,618 766,303 1,004,837 Class E 1
------------- ------------ ------------ ----------- ------------ --------
$ 28,285,875 $ 143,645 784,572 $ 2,540,887 4,195,895 $ 5
===============================================================================================================
</TABLE>
Under the option agreements, the property owners were issued series A,
B, C, D and E preferred shares as shown above, which shares are held by
an escrow agent. The preferred shares are convertible into common
shares, on a one-for-one basis, at the discretion of the property
owners. If converted the property owners may instruct the escrow agent
to sell the common shares for cash. When the cash raised by selling the
common shares is sufficient to pay the option purchase price, title to
the property will be transferred to the Company.
Consideration for the option was the payment of cash in the amount of
$143,645, the issuance of 784,572 common shares and the issue of
preferred shares, which have been assigned a nominal value of $5 in
total (see Note 9). Subsequent to June 30, 1995, the options expired
unexercised, consequently all related costs have been written-off to
operations.
12. WRITE-OFF OF ADVANCES
1995 1994
-----------------------------------------------------------
Due from a director (Note 4) $ 173,005 $ -
Other (Note 6) 294,651 -
-------------- ----------
$ 467,656 $ -
===========================================================
13. INCOME TAXES
At June 30, 1995, the Company has the following approximate amounts
available to reduce taxable income of future years, the tax benefits of
which has not been reflected in the accounts.
United States Canada
Losses - expiring 2000 to 2009 $ 450,000 $ 265,000
Amounts deducted for accounting
purposes in
excess of amounts deducted for tax 5,015,000 -
-------------- ----------
$ 5,465,000 $ 265,000
==============================================================================
<PAGE>
WINCANTON CORPORATION
(A Company in the development stage)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. dollars)
JUNE 30, 1995
14. RELATED PARTY TRANSACTIONS
During the year, subsidiaries of the Company purchased services from
companies with directors in common in the amount of $12,623 (1994 -
$4,530). Included in accounts payable at June 30, 1995 is $23,731 (1994
- $7,834) due to companies with directors in common.
The mortgage payable by Wincanton (Aus) (Note 8) is due to a company
with directors in common.
15. COMMITMENTS
A subsidiary of the Company is committed to minimum payments under
operating leases for premises for the next five years as follows:
1996 $ 254,640
1997 235,200
1998 235,200
1999 235,200
2000 117,600
16. SEGMENTED INFORMATION
The Company operates in Canada, United States and Australia. Identifiable
assets by geographic segment are as follows:
Canada United States Australia Consolidated
Identifiable assets $ 119,853 $ 4,981,861 $ 1,655,578 $ 6,757,292
================================================================================
All expenses are corporate in nature.
17. SUBSEQUENT EVENT
A claim for approximately $30,000,000 has been made against the Company,
Tradesman, certain of its directors, officers et al. alleging various
acts of fraud, securities violations and breaches of fiduciary duties.
Counsel is of the opinion that the plaintiff have breached their
agreement to provide technology to the Company and Tradesman and that no
loss should be incurred. The Company is defending the claim and is
unable to determine at this time what liability, if any, it may
ultimately have as a result of this claim. Any settlement resulting from
this claim will be treated retroactively.
<PAGE>
