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, 1999
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
_________________________________________________________
(Exact name of Registrant as specified in its charter)
Washington 91-1395124
_______________________ __________________________
State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
3653 Hemlock Court, Reno, Nevada 89505
____________________________________________________________
(Address of Principal executive offices) (Zip Code)
(775) 829-8812
____________________________________________________________
(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, 1999 was approximately
$1,000,000.
The number of shares of Registrant's common Stock outstanding
on June 30, 1999 was 11,232,948.
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, 1997, the Company was mainly involved in
defending certain law suites, described elsewhere in this document and the
Company has allowed all of its natural resource property permits to expire.
The Company is engaged in the following business segment:
1. production of specialty vehicles;
During the year ended June 30, 1996, the Registrant ceased its activities
relating to the following:
1. establishment of rehabilitation facilities;
2. tree farming; and
3. 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, 1998 the Registrant settled the law suite
brought against it by Robert Page and the McGee Settlement Trust. There was
no development work completed during the year on the Specialty Vehicles.
During the year ended June 30, 1997 the Registrant was engaged in the legal
defense of a law suite brought against it by Robert Page and the McGee
Settlement Trust. There was no development work completed during the year on
the Specialty Vehicles.
During the year ended June 30, 1996, the Registrant through its subsidiary
company, Tradesman Industries, Inc. ("Tradesman"); a Delaware corporation
completed a prototype minivan. Efforts were expended on showing the
prototype to many interest parties during the year. Development work on
the minivan was suspended on or about March 31, 1996 due to lack of funding.
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 was 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.
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 1, 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. During the year ended June 30, 1996 it became
evident that WRI may not have performed under the consulting agreement as
their Form 10K for June 30, 1995 indicated that of the $2,609,000 paid by the
Registrant to WRI, only $600,000 has been recognized in proportion to
identified costs incurred and that $2,009,000 has been deferred. The
Registrant is considering an attempt to recover the funds paid under this
agreement.
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.
During the year ended June 30, 1996 WRI was placed into receivership and the
future of the relationship described above is uncertain.
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, in the United
States, 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.
The interests are described below. The mining tenements leased by the
Registrant are for perpetual terms and provide for payment of annual
maintenance fees of $3,000.
As at July 22, 1997 all of the natural resource property permits have expired
and the Registrant sold its interest in Queensland to a former director for
nominal proceeds.
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 southeast 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 has 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 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.
The Flat Rock claims were allowed to lapse during the year ended June 30,
1997.
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 ton
silver, 5% lead, .5% zinc and 2.7% copper. Four mines constitute this area.
Production up to 1906 totaled 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.
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.
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 in the future and if results warrant additional exploration,
$1,000,000. 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.
The Tin and base metal claims were allowed to lapse during the year ended
June 30, 1997.
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
were 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.
The Grey Granite claims were allowed to lapse during the year ended June 30,
1997.
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 intended 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.
During the year ended June 30, 1996 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. During the year ended June 30, 1996 three of the required payments
was made and as a result the agreement is in default.
The President of the Registrant owns approximately 19% 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 grown 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 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.
During the year ended June 30, 1996 WRI has been placed in receivership and
will be unable to fulfill its commitment to the Registrant under the
Consulting Agreement.
In May 1996, Wincanton (Aust) Pty. Ltd. sold all of its assets in a non-arms
length transaction. The asset were exchanged for debts owing to related
parties including directors and company's with directors in common with
Wincanton (Aust) Pty. Ltd. The amounts owing to the related parties resulted
from the advance of cash to perform the necessary tree maintenance on the
tree farm, mortgage payments made on behalf of the company and for services
rendered to he company. The Registrant has ceased the operations of
Wincanton (Aust) Pty. Ltd. due to continuing unsustainable losses.
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.
During the year ended June 30, 1996, 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 1999 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, 1999, the Company did not engage in any
research and development activities.
Employees
At June 30, 1999, the company had no 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 leased 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. On or
about March 31, 1996 the Registrant terminated the lease and vacated the
premises and expects to pay no further rent on same.
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. During the year ended June 30, 1996 the Company
has negotiated a termination of this lease and vacated the space.
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.
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. All of the remaining counts were dismissed during the year
ended June 30, 1996.
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.
During the year ended June 30, 1999 the Registrant negotiated a settlement of
this lawsuit. The settlement involves the payment of $400,000 over an eight
month period commencing in October 1997, the return of all rights to the
technology granted under the McGee Settlement Trust agreement and the return
to the Registrant of 1,000,000 common shares issued. All payments were made
and the common shares were returned to the Registrant and will be returned to
the transfer agent for cancellation.
In April 1997, Work Recovery, Inc. brought suit against the Registrant
alleging that the Registrant owes Work Recovery, Inc. the sum of $6,750,000
plus interest and attorneys' fees. The amount alleged due is pursuant to a
consulting agreement, whereby the Registrant agreed to pay Work Recovery,
Inc., $9,600,000, for consultancy services rendered from July 1, 1994 through
July 1, 1995. This agreement is more fully described elsewhere in this
document.
On July 3, 1997, Work Recovery, Inc. was awarded a default judgement against
the Registrant in the amount of $6,750,000.
During the year ended June 30, 1998, the registrant had retained legal
council and successfully reopen the default judgement. During the year
ended June 30, 1999, the registrant's legal council settled the dispute with
prejudice for a total of $5,000.
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
(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, 1999 0.12 0.07
Quarter ended March 31, 1999 0.28 0.22
Quarter ended December 31, 1998 0.24 0.08
Quarter ended September 30, 1998 0.12 0.05
Quarter ended June 30, 1998 0.06 0.02
Quarter ended March 31, 1998 0.06 0.02
Quarter ended December 31, 1997 0.47 0.06
Quarter ended September 30, 1997 0.50 0.125
Quarter ended June 30, 1997 0.50 0.10
Quarter ended March 31, 1997 0.50 0.125
Quarter ended December 31, 1996 0.50 0.125
Quarter ended September 30, 1996 0.50 0.125
Quarter ended June 30, 1996 0.50 0.28
Quarter ended March 31, 1996 1.00 0.28
Quarter ended December 31, 1995 5.25 0.28
Quarter ended September 30, 1995 11.62 5.25
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, 1993 5.00 1.50
The aforementioned prices reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not necessarily represent actual
transactions.
(b) As at June 30, 1999 there were approximately 720 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
The selected financial data presented below was derived from the financial
statements of the Company which have been audited Mark Bailey and Company
as to June 30, 1999, by Davidson & Company, independent chartered
accountants, as to June 30, 1998, June 30, 1997, June 30, 1996, June 30, 1995
and by KPMG Peat Marwick Thorne as to June 30, 1994 and December 31, 1993.
Another firm of independent auditors audited the years 1989 through 1992.
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".
As at and for the years ended December 31,
1989 1990 1991 1992
Sales Nil Nil Nil Nil
Loss from
continuing
operations ($8,596) ($1,411) ($12,875) ($2,408)
Loss from
continuing
operations
per share ($0.01) Nil ($0.01) Nil
Total Assets $3,701 $2,290 $164 $277
Long term
obligations Nil Nil Nil Nil
Dividends
declared Nil Nil Nil Nil
--------------------------------------------------------------
1993 As at and for As at and for As at and for
the period the period the period
ended June 30, ended June 30, ended June 30,
94 95 96
Sales Nil Nil Nil Nil
Loss from
continuing
operations ($234,846) ($424,715) ($16,887,396) ($1,800,760)
Loss from
continuing
operations
per share ($0.06) ($0.06) ($1.80) ($0.19)
Total Assets $386,977 $2,506,062 $6,757,292 $355,768
Long term
Obligations
Nil $181,300 Nil Nil Nil
Dividends
declared Nil Nil Nil Nil
--------------------------------------------------------------
As at and for As at and for As at and for Inception on
the period the period the period October 5,
ended June 30, ended June 30, ended June 30, 87 to June 30
97 98 99 99
Sales Nil Nil Nil Nil
Loss from
continuing
operations ($683,801) ($55,578) 191,245 ($20,513,414)
Loss from
continuing
operations ($.07) ($0.01) ($0.02) N/A
per share
Total Assets $217,315 $193,161 1,916 N/A
Long term
obligations Nil Nil Nil Nil
Dividends
declared Nil Nil Nil Nil
--------------------------------------------------------------
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 years ended June 30, 1999, June 30, 1998, June 30, 1997, June 30,
1996, 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. During the year ended June 30, 1997 all of the
natural resource exploration permits expired. During the year ended June 30,
1998, the Registrant sold all of it's interest in Queensland to a former
Director for nominal proceeds. The Registrant also settled the Page and
McGee Settlement Trust Law suit.
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, 1996. Work Recovery, Inc. was placed into
receivership during the year ended June 30, 1996 and the future of this
license is uncertain.
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 was subsequently sold
for $2,000,000 AUD to a third party. Revenue from the sale has been deferred
until the purchaser harvests the trees. During the year ended June 30, 1996,
Australia sold all of its assets in non-arms length transaction in exchange
for debt.
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. During the year ended June 30,
1996, McGee Settlement Trust and Robert Page have sued the Registrant. (See
Item 1, Specialty Vehicles and Item 3, Legal proceedings).
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. The
option agreements expired unexercised during the year ended June 30, 1996.
During the year ended June 30, 1999, Wincanton Properties Pty. Ltd. and
Wincanton Holdings Pty. Ltd. were discontinued as ongoing entities in their
respective domiciles.
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 its 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,
1996 to completion of Tradesman's prototype vehicle development.
Work Recovery, Inc. was placed in receivership during the year ended June 30,
1996 and the future concerning the agreements discussed above is uncertain.
Liquidity and capital resources
At June 30, 1999 current liabilities exceed current assets by 79,703, and
total liabilities exceed total assets by $67,128.
Results of operations
The Registrant's loss for the year ended June 30, 1999 was 191,245 compared
to $55,578 for the year ended June 30, 1998. The increase in the loss amount
is a result of the asset value of one prototype vehicle being written down
during the current year to its fair market value as listed in the "Kelly
Blue Book". This asset had been previously valued at cost.
Administrative expenses for the year ended June 30, 1998 was $55,578 (being
professional fees of $107,605 less Other expenses of $52,027) compared to
$683,801 for the prior year. This reduction in expenses is a result of no
spending during the year except for the legal defense of the law suits
discussed elsewhere in this document together with accounting and audit fees.
Other expenses of ($52,027) is made up of general administrative
expenses of $5,276 reduced by certain account payable amounts which
were written off during the year in the amount of $57,303.
Year ended June 30, 1997 compared to the year ended June 30, 1996
At June 30, 1997, the Registrant has $45,616 of current assets and $8,978,301
in current liabilities compared to $149,069 of current assets and $8,433,047
of current liabilities as at June 30, 1996. This decrease in working capital
is the result of two main factors, being the recording of $400,000 payable,
during the year, for settlement of the McGee Settlement Trust law suit,
together with legal fees included in accounts payable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MARK BAILEY & CO. LTD.
CERTIFIED PUBLIC ACCOUNTANTS
Management Consultants
Office Address: Mailing Address:
1495 Ridgeview Drive, Ste. 200 Phone: 775/332.4200 P.O. Box 6060
Reno, Nevada 89509-6634 Fax: 775/332.42 1 0 Reno, Nevada 89513
Independent Auditors' Report
September 22, 1999
To the Shareholders of Wincanton Corporation
We have audited the accompanying consolidated balance sheet of Wincanton
Corporation as of June 30, 1999 and the consolidated statements of
operations, changes in stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of Wincanton
Corporation as of June 30, 1998, before restatement, were audited by other
auditors, whose report dated September 8, 1998, expressed an unqualified
opinion on those statements.
We also audited the adjustments described in Note 5 that were applied to
restate the June 30, 1998 financial statements. In our opinion, such
adjustments are appropriate and have been properly applied.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Wincanton
Corporation as of June 30, 1999 and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note I to the
financial statements, the Company has no source of operating revenue, and
has incurred substantial net losses in the past. At June 30, 1999 current
liabilities exceed current assets by $79,703, and total liabilities exceed
total assets by $67,128. These factors, discussed in Note 1, raise
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the
Company cannot continue its existence.
Mark Bailey & Company, Ltd.
Reno, Nevada
WINCANTON CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, 1999
ASSETS
Current Assets
Cash 1,916
Accounts receivable (net of allowance for doubtful
accounts of $8,716) (Note 1) -0-
Total current assets 1,916
Other Assets
Capital assets (Note 1) 12,575
Total assets $ 14,491
LIABILITIES AND SHAREHOLDERS'EQUITY
Current Liabilities
Accounts payable $ 16,695
Due to a director (Note 2) 64,924
Total current liabilities 81,619
Total liabilities 81,619
Minority Interest (Note 1) 1,158,136
Stockholders' Equity
Common stock $.OOOI par value, 15,000,000 shares
authorized, 11,323,948 shares
issued (Note 10) 1,133
Additional paid-in-capital 7,148,834
Retained deficit (8,375,231)
Total stockholders' equity (1,225,264)
Total liabilities and stockholders'
equity $ 14,491
The Accompanying Notes are an Integral Part of These Financial Statements
WINCANTON CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended June 30, 1999
Revenue -0-
Other Income
Expired unearned revenue (Note 3) 5,005,251
Expenses
Interest (10,170)
Other (21,937)
Research and development (Note 1) (156,573)
Total administrative expenses (188,680)
Income before extraordinary income and
minority interest in income 4,816,571
Extraordinary item - gain on extinguishment
of debt (Note 4) 6,746,499
Income before minority interest in
income 11,563,070
Minority interest in income
(Note 1) (1,158,136)
Net income $10,404,934
Earnings per share (Note 1) $ 0.98
The Accompanying Notes are an Integral Part of These Financial Statements
WINCANTON CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'EOUITY
For the Year Ended June 30, 1999
Additional
Common Stock Paid-in Preferred Retained Total
Shares Amount Capital Stock Earnings Equity
Balance at
June 30, 1998,
As previously
reported
9,077,752 $ 834 $ 6,494,596 $ 5 $(18,816,682)(12,321,247)
Prior period
adjustment - error
in recording
stock issuances
(Note 5) 74 74
Prior period adjustment - error in
recording legal settlement agreement
(Note 5) 100,000 100,000
Prior period
adjustment -
error in
recording issuance
of note payable
and related
interest expense
(Note 5) (63,483) (63,483)
Balance at June 30,
1998, as restated
9,077,752 908 6,494,596 5 (18,780,165)(12,284,656)
Issuance of shares
at $0.25 per
share in payment of
services received (Note 10)
1,439,272 144 359,664 359,808
Issuance of shares at $0.22 per
share to a related party as
repayment of debt (Note IO)
1,806,924 181 394,474 394,655
Retirement of shares
(Note 10)
(1,000,000) (100) (99,900) (100,000)
Expiration of options on preferred
shares (5) (5)
Net income at June 30, 1999 10,404,934 10,404,934
Balance at June 30, 1999
11,323,948 1,133 $ 7,148,834 $(8,375,231) $ (1,225,264)
The Accompanying Notes are an Integral Part of These Financial Statements
WINCANTON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
June 30, 1999
Reconciliation of Net Income to Net Cash
Provided by Operatin2 Activities:
Net income $10,404,934
Minority interest in income 1,158,136
Adjustments to reconcile net income to net cash
Used in operating activities:
Increase in allowance for doubtful accounts 8,716
Extraordinary gain on extinguishment of debt (6,746,449)
Expired unearned revenue (5,005,251)
Payment of expenses via stock issuances 8,656
Write-off of assets to research and development 156,573
Decrease in accounts payable (8,866)
Increase in due to a director 10,170
Net cash used in operating activities (13,381)
Net decrease in cash and cash equivalents (Note 1) (13,381)
Cash and cash equivalents at June 30, 1998 (Note 1) 15,297
Cash and cash equivalents at June 30, 1999 (Note 1) $1,916
Supplementary Schedule of Noncash Investing and Financing Activities
During the year ended June 30, 1999, the Company paid off accounts payable
totaling $351,147 by issuing 1,439,272 shares of
its common stock at $0.25 per share. In addition, the Company issued
1,806,924 shares at $0.22 per share to a related
corporation as payment for an outstanding loan in the amount of $371,000
and related interest totaling $23,655.
No cash amounts were actually paid for either interest or income taxes
during the year ended June 30, 1999.
The Accompanying Notes are an Integral Part of These Financial Statements
WLNCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
Orizanization and Si2nificant Accounting Policies Accountins! Methods
The Company was incorporated in the State of Washington on October 5, 1987.
The Company was inactive until June, 1993, when it began to evaluate the
acquisition of business opportunities. In 1994, the Company entered into an
agreement with an unrelated third party for the 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 Company assigned the
above agreement to its newly formed subsidiary, Tradesman Industries, Inc.
("Tradesman"). During the year ended June 30, 1996, work on the specialty
vehicles was suspended due to lack of funding. The Company is currently
inactive. The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. The Company, however,
currently is inactive and has no source of operating revenue. In addition,
at June 30, 1999 current liabilities exceed current assets by $79,703, and
total liabilities exceed total assets by $67,128.
In view of these matters, realization of a major portion of the assets in
the accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to
meet is liability requirements. Management believes that actions presently
being taken to revise the Company's operating and financial requirements
provide the opportunity for the Company to continue as a going concern.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
WINCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
Organization and Significant Accountinti Policies (continued Principles of
Consolidation Generally accepted accounting principles require consolidation
of all majority-owned subsidiaries. The Company has a 90% interest in
Tradesman, Inc. The consolidated financial statements include the accounts
of Wincanton Corporation, as well as its subsidiary, Tradesman, Inc. at June
30, 1999. All material inter-company transactions and balances have been
eliminated.
Minority Interest
Minority interest represents the minority shareholder's ten percent (10%)
interest in Tradesman, Inc.
Cash and Cash Eguivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
Accounts Receivable
The Company has accounts receivable from unrelated parties in the amount of
$8,716 as of June 30, 1999. An allowance for doubtful accounts has been
recorded for the entire $8,716 receivable, as these amounts are not deemed
to be collectible.
Capital Assets
Capital assets consist of one prototype vehicle, developed by Tradesman, Inc.
as a model for its electro-hydraulic cargo bed and tailgate system. This
asset had previously been recorded at cost. During the current year, the
asset was written down to its fair market value, listed in the "Kelly Blue
Book", as Tradesman, Inc. is no longer developing these vehicles. This
resulted in an impairment loss of $156,573
recognized during the current year ended June 30, 1999.
WINCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
1. Organization and Significant Accounting Policies (continued)
Research and Development Costs
Research and development costs are charged to operations as incurred.
Earnin2s Per Share
Earnings per share is calculated based on the weighted average number of
shares outstanding during the year
ended June 30, 1999.
2. Due to a Director
During the year ended June 30, 1998 a director of the Company and a related
corporation controlled by the Director, advanced the Company a total of
$43 1,000 in order to pay accounting fees and legal fees (see
Notes 5, 8, and 10 ). A portion of this advance totaling $381,000 was
recorded in the previous financial statements audited by other auditors.
The remaining $50,000, as well as related interest expense at 10%
calculated on the unpaid balance totaling $13,483, has been reported as a
prior period adjustment during the current year ended June 30, 1999. On
October 7, 1998, the Company repaid the entire $394,655 it owed the
related corporation controlled by the Director via issuance of 1,806,924
shares of its common stock for $0.22 per share. During the current year
ended June 30, 1999, the director advanced the Company an additional $5,000
in order to pay expenses.
3. Expired Unearned Revenue
During the year ended June 30, 1995, Tradesman entered into a Master License
Distribution Agreement with Work Recovery, Inc. ("WRI"). Under this license
agreement, WRI paid Tradesman $6,000,000 in cash and stock in order to be
the exclusive dealer of Tradesman's electro-hydraulic cargo bed and tailgate
system vehicles in the United States for the next fifteen (1 5)
years. Tradesman recognized the entire amount in the year received for tax
purposes. Tradesman planned to amortize the $5,005,251 over the fifteen (15)
year life of the agreement. As such, the
consolidated financial statements in the past, audited by other auditors,
have shown $5,005,251 of
this
WINCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
3. Expired Unearned Revenue (continued)
revenue as unearned, During the year ended June 30, 1996, however, Tradesman
suspended its operations.
Neither Tradesman nor WRI have performed their obligations under the
contract. The entire $5,005,251 has
been recognized in the current year ended June 30, 1999 as expired unearned
revenue.
4. Gain on Extinizuishment of Debt
In conjunction with the Master License Distribution Agreement (see Note 3),
the Company entered into an
agreement with WRI whereby WRI would provide consulting services with
respect to the electro-hydraulic cargo
bed and tailgate system technology during the year ended June 30, 1995 for
aggregate consideration of
$9,600,000. Work Recovery, Inc. 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. During the year ended June
30, 1996, a further $200,000 was
paid. On April 28, 1997, WRI filed a lawsuit against the Company in order
to recover the remaining amounts
due under the consulting agreement. The Company was unable to confirm
whether any consulting services were
actually performed by WRI, and attempted to recover amounts already paid
for consulting services via a
lawsuit against WRI. Work Recovery, Inc. had since filed Chapter I I in
the United States Bankruptcy court.
The June 30, 1998 financial statements
included $6,751,499 in accounts payable. On September 16, 1998, a
Settlement Agreement and Mutual
Release was signed by both the Company and WRI, whereby the Company agreed
to pay WRI a total sum of
$5,000. In return for this settlement payment, WRI and the Company released
all claims against each
other. This transaction resulted in an extraordinary gain of $6,746,499.
The gain has been shown
net of tax of $0, as the entire amount has been offset against the Company's
net operating loss
carryforward (see Note 7).
WINCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
5. Prior Period Adjustments
During the audit of the financial statements for the year ended June 30,
1999, several errors were
discovered in the prior year's audited financial statements audited by other
auditors. Common stock at the
beginning of fiscal year ended June 30, 1999 has been adjusted to correct an
error in recording the
issuances of common stock made in 1993 and 1995. The error had no effect on
net income in any previous
year.
The financial statements for fiscal year ended June 30, 1998 have been
restated to correct an error in
recording a legal settlement made in the fiscal year ended June 30, 1997.
In December, 1995, Robert Page
and McGee Settlement Trust brought suit against the Company, its subsidiary
Tradesman, Inc., and various
Company directors and employees alleging acts of fraud, securities
violations, and breeches of fiduciary
duty. The Company moved to stay the proceedings, and to compel arbitration,
which motion was granted. On
September 14, 1997, the courts settled the lawsuit by ordering that the
Company pay Mr. Page and McGee
Settlement Trust $300,000 in cash over an eight month period commencing in
October, 1997. In addition, the
courts ordered the Company to return all rights to the electro-hydraulic
cargo bed and tailgate system
technology, and to purchase back from McGee Settlement Trust 1,000,000
shares of the Company's common stock
for $100,000. The Company's financial statements at June 30, 1998 show
the entire $400,000 as a legal
settlement expense. The financial statements for the year ended June 30,
1998 have been corrected to remove
the $100,000 from retained earnings, and to show the purchase of treasury
stock for $100,000. During the
year ended June 30, 1998, these shares were retired. The effect of this
restatement was to increase net
income for the year ended June 30, 1998 by $100,000, net of income tax of
$0 as the Company has a large net
operating loss carryforward available to offset this income. Retained
earnings of June 30, 1998 has been
adjusted for the effects of the restatement on prior years.
WINCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
5. Prior Period Adjustments (continued)
Retained earnings at June 30, 1998 has been adjusted to correct an error.
During the year ended June 30, 1998, a related
corporation loaned the Company $371,000 (see Note 3) at IO% interest on the
unpaid balance. The money received from this
loan was used to pay the McGee Settlement Trust legal settlement described
above. Though the entire $371,000 was received,
only $321,000 was recorded. In addition, related interest of $13,483 was
not recorded. Net income for the year ended June
30, 1998 has been decreased by $63,483.
6. Stock Options and Warrants
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 Expiration date
1,000,000 $1.00 December 6, 1999
500,000 2.50 December 6, 1999
500,000 3.50 December 6, 1999
500,000 4.50 December 6, 1999
7. Income Taxes
At June 30, 1999, the Company has the following approximate amounts available
to reduce taxable income of future years, the
tax benefits of which have not been reflected in the accounts, as future
net income is uncertain.
Wincanton Tradesman
Losses expiring 201 0 to 2013 $ 4,535,502 $1,633,692
WINCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
8. Related Party Transactions
During the year ended June 30, 1999, the Company repaid a loan from a
corporation controlled by a director
of the Company via issuance of 1,806,924 shares of the Company's common
stock (see Note 3).
During the year ended June 30, 1999 a director of the Company loaned the
Company $5,000. This amount is to
be repaid in the current year.
During the year ended June 30, 1999, the Company repaid $110,052 owed to a
former director via issuance of
440,249 shares of the Company's common stock.
9. Fair Value of Financial Investments
Financial Accounting Standards Board ("FASB") Statement No. 107, "Disclosure
About Fair Value of Financial
Instruments" is part of a continuing process by the FASB to improve
information on financial statements.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for
such financial instruments as defined by the Statement.
The carrying amount reported in the balance sheet for cash approximates fair
value at June 30, 1999.
The carrying amounts reported in the balance sheets for both accounts
payable and due to a director
approximate fair value at June 30, 1999 because they both mature in less
than one year.
10. Stockholders' Equity
During the year ended June 30, 1999, the Company issued a total of 1,439,272
shares of common stock at $0.25
per share. These shares were issued to various creditors as payment for
amounts due for the fair market
value of services received.
WINCANTON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
10. Stockholders' Equity (continued)
On October 7, 1998, the Company issued 1,806,924 shares to a corporation
controlled by the Company's
director as repayment of a loan (see Note 3 and 8).
On September 16, 1998, 1,000,000 shares repurchased in the prior year and
held as treasury shares were
retired (see Note 5).
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the year ended June 30, 1999, The Company changed it's auditors from
Davidson & Co. to Mark Bailey and Company. The Company has had no disputes
with Davidson & Co.
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
Henri Hornby Chairman of 43
3653 Hemlock Court the board
Reno, Nevada, 89509 and Director
Neil Hornby Secretary 39
25 N.W. 23rd Place 6 and Director
#136
Portland, Oregon, 97210
Directors and Executive Profiles
Henri Hornby was first elected to the Board of Directors in June 1993. From
November 1989 to present, he was engaged in asset management.
Neil Hornby was first elected to the Board of Directors in June 1993. He
resigned form the board in 1995 and again joined the board in October 1997.
From August 1993 to the present, he has also been President of RAT Marketing,
a software distribution firm.
Neil Hornby and Henri Hornby are brothers.
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. Walter Doyle resigned from the board of directors on October 14,
1997.
Carl Kosnar was first elected to the Board of Directors of Tradesman
Industries, Inc. in August 1994, and became President and Chief Executive
Officer in August 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).
Carl Kosnar resigned from his position in April 1997.
ITEM 11. EXECUTIVE COMPENSATION
For the fiscal year ended June 30, 1999, there was no executive compensation
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 30, 1999, 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
Henri Hornby 2,868,000 25.3%
3653 Hemlock Court
Reno, Nevada, 89509
ADVEN, INC. 1,806,924 16.0%
3653 Hemlock Court
Reno, Nevada, 89509
Mendips Management 1,000,000 8.8%
Ltd.
3653 Hemlock Court
Reno, Nevada, 89509
Steven Sanders 666,070 5.9%
116 John Street, Suite 1616
NY, NY 10038
All directors and 3,868,000 34.1%
Officers as a group
(2 persons)
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On October 7, 1998, the Company repaid an amount $394,655 it owed a related
corporation controlled by a Director via issuance of 1,806,924 shares of
its common stock for $0.22 per share. During the current year ended June
30, 1999 a director advanced the Company an additional $5,000 in order to
pay expenses.
During the current year ended June 30, 1999 the Company paid off accounts
payable totaling $351,147.
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) The Registrant filed a report on Form 8-K 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.
The Registrant filed a report on Form 8-K in August of 1999, changing auditors
from Davidson & Co. to Mark Bailey & Co.
(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.
(8) Incorporated by reference as Exhibit Nos. 2-7 with Form 8-K.
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 30,1998
WINCANTON CORPORATION
By: Neil Hornby
Neil 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
Henri Hornby Chairman of the Board
Henri Hornby President/Secretary
Neil Hornby Treasurer/Director
Neil Hornby
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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