U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File No. 33-89714
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______ to ______ .
WILD WINGS, INC.
(Name of small business issuer in its charter)
Nevada 84-1120614
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
899 South Artistic Circle, Springville, Utah 84663
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code: (801) 491-4066
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Act: None
Check whether the Issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Issuer was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be
contained, to the best of the Issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
The Issuer's revenues for its most recent fiscal year. $121,184.00
As of February 12, 1997, the aggregate market value of voting stock held
by non-affiliates was $2,280,000.
The number of shares outstanding of the Issuer's common stock at
December 31, 1996: 12,960,000
Transitional Small Business Disclosure Format: Yes No X
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PART I
Item 1. Description of Business
(a) Business Development.
Wild Wings, Inc. (the "Company") was incorporated in the State of
Colorado on July 7, 1989 originally as Winter Ventures of Colorado, Inc.
In connection with the initial formation of the Company, 100,000 shares
of Common Stock were issued to the initial founder of the corporation
for $1,000. The Company was inactive from inception until 1994. On
November 30, 1994, the stock was forward split on a 3 for 1 basis,
increasing the total outstanding shares to 300,000. An additional
460,000 shares were sold for aggregate consideration of $10,200 in
December, 1994, and shareholders approved a name change to Wild Wings,
Inc., and a change of corporate domicile from Colorado to Nevada. The
Company was activated and registered a public offering of its securities
to raise funds from such offering with which to commence business
operations. Pursuant to a Registration Statement on Form SB-2,
Commission File No. 33-89714, which become effective April 28, 1995, the
Company sold 100,000 shares of its common stock to the public at $1.00
per share and raised gross proceeds of $100,000.
(b) Business of Company.
General
The Company is engaged in the business of operating a hunting
club, sporting clays shooting range and gun dog kennels for sportsmen.
The Company commenced full scale operations when it opened the hunting
club, shooting range, and gun dog kennels in September 1995. During
1995 the Company sold more than 100 memberships, leased and improved
properties, bought game birds, dogs, and other assets to have the
sporting clay range and the hunting club ready for the commercial
hunting season opening on September 1, 1995. The Company's target
market is Utah's upland game bird hunters, which are estimated to number
in excess of 70,000. The Company offers a top quality hunting and
shooting club that is located on the southeast side of Utah Lake. The
area provides excellent bird habitat and cover and is easily accessible
within a one hour drive of Utah's major metropolitan areas. Members of
the hunting club have the opportunity to hunt with guides or on their
own and are able to hunt for pheasants, quail, chukar, as well as a
variety of other game birds such as duck, geese, etc. In addition to
bird hunting, the company operates a sporting clays shooting range with
a variety of different shooting courses designed to duplicate the flight
of wild game birds and to challenge the shooting skills of the shooters.
The operation of the gun dog kennel provides hunting dogs as needed for
the club members and also provides an additional source of revenues
through the sale of dogs.
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The Industry
The decline of pheasant and other upland game bird populations
throughout Utah due to loss of rural habitat from increasing
urbanization, and exploding hunter and other predator populations has
led to limitations on hunting for all upland game birds. These
restrictions include a short hunting season (3-14 days for most of
Utah), small bag limits (typically 2 roosters), and a less enjoyable
hunting environment for many upland bird hunters. In addition, access
to quality pheasant habitat is severely restricted for most hunters due
to the ever increasing access restrictions imposed by land owners. In
response to the decline in quality upland bird hunting in Utah,
Commercial Hunting Areas (CHA's) have begun to satisfy the needs of the
70,000 plus upland bird hunters. CHA's provide hunters with quality
hunting habitat, large populations of game birds (pheasants, quail,
chukar, Hungarian partridges, etc.), and a managed environment to
prevent overcrowding and provide a quality bird hunting experience. In
addition to bird hunting, management believes that sporting clays have
become a fast growing shooting sport nationally, and that in Utah,
sporting clays are quietly gaining in popularity at the clubs which have
put in sporting clay ranges.
Government Regulation
Hunting for upland game birds and other wildlife is subject to
strict licensing and other extensive government regulation at both the
federal and state level. In Utah, the Utah Division of Wildlife
Resources (DWR) is the principal agency which controls hunting,
licensing, and otherwise regulates wildlife management and resources,
including the operation of Commercial Hunting Areas (CHA) such as the
Company operates. Such regulations include various restrictions and
limitations which will affect the Company's business, including
prescribed hunting seasons, bag limits, license limits and fees, habitat
management and use, and prescribed numbers of birds released and
harvested.
Under the direction of the Utah Wildlife Board, the DWR governs
the administration and operation of each CHA. A CHA must have a
current, valid certificate of registration for the private property that
it has registered as a CHA. A CHA must have a minimum area of 160 acres
and can have no more than 1,920 acres in a single connected tract of
land. The boundaries must be clearly marked with signs and natural or
artificial boundaries. Species of game birds authorized for use on a
CHA are limited to those which do not create a potential hazard to
existing adjacent protected wildlife and which do not conflict with the
public interest. Only species of birds which can be readily propagated
under penned conditions and for which brood stock can be legally
acquired are authorized. A minimum of 100 birds of each authorized
species must be released on each CHA during the current operating year.
CHA operators must not allow harvest of more than 85% of the birds of
each species released during each season. The hunting season for CHAs
is from September 1 of each year through the following March 31. An
application must be filed with a $150 fee and approved for a registered
CHA prior to each hunting season.
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Seasonality
The hunting club season is from September 1 through March 31.
Therefore, the Company is able to generate hunting club revenues for
only seven months. The Sporting Clays courses will be open year round
(weather permitting), however, management has no experience or basis to
forecast the demand for the Sporting Clays. In addition, the lease
holder has the option of closing the sporting clay range at anytime.
Therefore, there is no assurance that the sporting clays will be opened
during any period of time.
Sources and Availability of Raw Materials
The Company has placed purchase orders for the majority of its
game birds from three suppliers; Hatt's Ranch, Rocky Mountain Hatchery
and Quailco. The Company's business could be adversely affected by a
disruption in its purchases from these suppliers. While the Company
believes its supplier relations are good, the Company has no supply
contracts with any of its suppliers, and any supplier could discontinue
selling to the Company at any time.
Competition and Markets
Utah has approximately 32 operating CHA's located throughout the
state. Management believes that the club appeals to sportsmen that live
within a radius of approximately 100-150 miles of Springville where the
Company has its operations. This area includes Utah County and Salt
Lake County which contains the majority of Utah's upland bird hunting
population.
The market for CHA's and Sporting Clays is very competitive and is
composed of different types of CHA's and sportsmen. The most common
type of CHA targets the middle class sportsman with a moderate priced
membership ranging from a $100-200 initiation fee and $10-15 for each
pheasant. These CHA's are frequently operated by landowners looking to
supplement their farming or ranching income. Service and quality are
not a major focus, rather raising game birds and planting them for
hunters is the standard approach. Service is limited to showing hunters
where to find birds. These clubs cater and appeal to hunters who are
somewhat price sensitive and are looking for an inexpensive place to
hunt birds.
The other market segment consists of corporations and wealthy
hunters looking for an exclusive, top quality CHA. Currently, there are
approximately 4-5 CHA's that target this market. These clubs charge
$400-2,000 initial fee and $12-15 for each pheasant shot. However, most
of these clubs are a 4-8 hour round trip drive for the sportsman to
reach. Management believes that there is an opportunity for a
top-quality exclusive hunting club that targets corporations and wealthy
individuals with a lodge that is conveniently located within 100-150
miles of their homes and businesses.
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While marketing emphasis will be targeted towards corporations and
wealthy hunters, management believes that it will also be able to cater
to the middle class market by implementing price sensitive membership
structures with restricted hunting privileges.
Advertising and Marketing Strategy
The Company markets its hunting club, sporting clay range, and
gundog kennels through a very targeted marketing program. The Company
has utilized the sporting goods conventions and shows in Salt Lake City
dispensing information and signing up members at a booth that it rented.
Also, the company will develop co-promotions with sporting goods stores
and relevant sporting goods manufacturers (i.e. guns, ammunition, etc).
Direct mail and direct solicitation will also be utilized to contact
potential members. Additionally, the Company will utilize billboards
and local newspapers and television hunting programs to advertise.
Membership Structure
Management has developed and tested with sportsmen a membership
structure that is not only unique in the market, but also appealing to
wealthy sportsmen and corporations. A description of the current
membership structure follows. Prices are subject to change.
Wild Wings 100 Club Membership
This is an exclusive membership that is limited to no more than
100 memberships. The Company sold 38 of these memberships to date.
Price Initial fee: $1,975 each (20% discount for shareholders of 1,000
or more shares.)
Prepaid Birds Each member must prepay for a minimum of 50 birds at
prepaid bird price by March 31 of each year to maintain membership.
Annual fee A $95 annual fee must be paid by March 31 of each year to
maintain membership.
Membership Rights
1-Hunt Tuesday through Sunday with priority given on weekends and
holidays.
2-Bring up to 8 hunters free of charge.
3-Membership is transferable (can give or sell to other people).
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Wild Wings Classic Family Membership
This type of membership is unlimited. The Company has sold 68 of
these memberships to date.
Price Initial fee-$750 (20% discount for shareholders of 1,000 or more
shares.)
Prepaid Birds Minimum of 5 birds prepaid by March 31 annually
Annual fee A $50 annual fee must be paid by March 31 of each year to
maintain membership.
Classic Family Membership Rights
1-Hunting on Tuesday through Sunday
2-Any designated family member can bring up to 4 people at no
extra charge.
Note: Membership is not transferable (member must accompany other
hunters)
Wild Wings Individual Membership
This unlimited membership was implemented in November of 1996.
The Company has sold 3 of these memberships to date.
Price Initial fee-$495 (20% discount for shareholders of 1,000 or more
shares.)
Prepaid Birds Minimum of 5 birds prepaid by March 31 annually
Annual fee A $50 annual fee must be paid by March 31 of each year to
maintain membership.
Individual Membership Rights
1-Hunting on Tuesday through Sunday
2-Member can bring up to 3 people at no extra charge.
Note: Membership is not transferable (member must accompany other
hunters)
Wild Wings Weekday Membership
This unlimited membership was implemented in November 1996. The
Company has sold 2 of these memberships to date.
Price Initial fee-$295 (20% discount for shareholders of 1,000 or more
shares.)
Prepaid Birds Minimum of 5 birds prepaid by March 31 annually.
Annual fee A $50 annual fee must be paid by March 31 of each year to
maintain membership.
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Weekday Membership Rights
1-Hunting on Tuesday through Friday
2-Bring up to 3 people at no extra charge
Note: Membership is not transferable (member must accompany other
hunters)
Prices for Other Products & Services
1. Bird Prices
Pheasants Chukar Quail
Prepaid $13 $8 $7
In-Season $16 $10 $9
2. Bird Cleaning
Pheasants Chukar Quail
$2.00/bird $1.50/bird $1.00/bird
3. Dogs and Guide - $25/hour
4. Additional Hunters - $30 per additional hunter
Sporting Clay Range Pricing - $10 for 50 clays
$12 for 50 clays (5 Stand)
$7 for 25 clays (5 Stand)
Employees
During the 1996 fiscal year, the Company hired a total of 17
employees, some of whom were seasonal and are no longer employed with
the company. Currently, nine of these employees are on the payroll, of
which two are employed full-time.
Item 2. Properties
The Company's principal executive offices are located at 899 South
Artistic Circle, Springville, UT 84663 and its telephone number is
(801) 491-4066.
In January, 1995 the Company entered into a lease agreement with
Crandall Farms, Inc. of Springville, Utah to acquire the rights to use,
for the operation of a Commercial Hunting Area and sporting clays
shooting range, the real property and improvements located at 250 West
3500 South in Utah County, Utah, consisting of 518 acres of farmland on
the shore of Utah lake just west of I-15. The lease is for a term of
five years commencing April 1, 1995 and ending March 31, 2,000 and is
renewable by the Company for an additional five year term. However, the
lease is effectively a periodic lease from year to year because it is
terminable by either party on the anniversary date (April 1) each year
upon 30 days written notice prior to such anniversary date. In the
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event of termination, the landowner is precluded from using or
permitting use of the property as a Commercial Hunting Area for three
years after such termination.
Improvements on the property include a house of approximately
1,000 square feet which the Company remodeled and fixed up for use as a
club house and office, and two barns which the Company uses in the
breeding and raising of hunting dogs and game birds. In addition, a
fifty-car parking lot was built in 1996. The Company uses approximately
two acres immediately adjacent to the barns to install and maintain fly
pens for the pheasants and other birds, and approximately 15 acres in
the vicinity of the house and barns for parking area and the sporting
clays shooting range. The remaining acreage is subject to joint use
between the Company to have reasonable and adequate access to all
parcels of the property for hunting rights. The landowner will continue
to raise crops and otherwise conduct farming operations on the property.
In consideration of the hunting rights and other uses the Company is
leasing, the Company agreed to pay the following amounts to or for the
benefit of the landowner and the property: $2,000 for approximately one
half mile of fencing materials plus labor for installation annually: 10%
of sales from the Sporting Clays Shooting Range with a guaranteed $1,000
annual minimum; $180 per month as rental for the club house; $100 per
acre annually used for pheasant fly pens; a landowner membership in the
club; and other payments in amounts to be negotiated in the event the
Company requests the landowner to forego cultivation and/or change crops
in order to preserve or facilitate cover and habitat for birds.
The Company opened an office on-site at the Springville hunting
club location. The Company uses the home office of Mr. David N.
Nemelka, (899 South Artistic Circle, Springville, Utah 84663) its
former CEO and Secretary/Treasurer, in Springville, Utah, on a rent free
basis as its executive or administrative office for the time being until
the Company's business requires more extensive administrative
facilities. In addition, the Company paid $500 per month to an entity
owned by David R. Nemelka, the father of the former President of Wild
Wings for use of a mobile home located within a few miles of the
clubhouse, which is used as a management office. The trailer was lived
in by the on-site manager of the hunting club and was also used to
provide phone reception services for the hunting club, since there was
no phone service at the clubhouse until July 1996 at which time the club
terminated use of the trailer.
Although the initial lease agreement covering in excess of 500
acres is more than sufficient to operate a hunting club, management's
ultimate objective was to lease a total of approximately 1,500 acres for
use of the club. After the initial lease was secured, management
continue negotiating with landowners of adjacent tracts of land and
reached agreements with other landowners of 780 acres for one year
leasing arrangements which management expects to negotiate renewal of on
an annual basis. Management estimates that total payments with respect
to the land leases the Company has secured will be within the range of
$2-3,000 annually.
It is contemplated by the parties that joint use of the property
will not be incompatible. However, the potential for conflicting uses
exists and there is no assurance that the parties will resolve any
conflicts that may arise. Failure to resolve conflicts on a mutually
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satisfactory basis would most likely result in one or both parties
electing to terminate the lease, in which event the Company would have
to locate and secure rights to other suitable property, for which it
presently has no commitments or arrangements, in order to be able to
continue operating a Commercial Hunting Area. Continuation of the
agreement from year to year is therefore entirely dependent upon the
continuing agreement, cooperation and mutual satisfaction of both
parties, of which there is no assurance. Management is generally of the
belief that the availability of other suitable property is such that it
could locate and secure rights to other suitable property if necessary
in the event of termination, but there is no assurance of this.
Furthermore, the company has spent substantial sums for development with
respect to the property which would be totally lost in the event of
termination.
Item 3. Legal Proceedings.
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no action by or against
the Company has been threatened.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market information.
The Company's Common stock trading activity has been limited. A
public trading market having the characteristics of depth, liquidity and
orderliness depends upon the existence of market makers as well as the
presence of willing buyers and sellers, which are circumstances over
which the Company does not have control.
The Common Stock was registered under a SB2 Registration Statement
of the Securities Act of 1933. On or close to July 19, 1996 the Common
Stock was listed on the Over-The-Counter Bulletin Board (OCTBB) under
the symbol WILG. The following table sets forth the high and low bid
prices for the Common Stock based on closing transactions during each
specified period as reported by the Over-The-Counter Bulletin Board ,
which prices reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not necessarily represent actual
transactions:
Fiscal 1995 High Low
1st Quarter N/A N/A
2nd Quarter N/A N/A
3rd Quarter N/A N/A
4th Quarter N/A N/A
(The stock was not listed until the 3rd quarter of 1996)
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Fiscal 1996 High Low
1st Quarter N/A N/A
2nd Quarter N/A N/A
Third Quarter N/A N/A
Fourth Quarter $2.25 $2.00
The first month the stock traded was November 1996.
(b) Holders.
As of December 31, 1996, there were approximately 68 record
holders of the Company's Common Stock. No other class of stock has been
issued at this time.
(c) Dividends.
The Company has not previously paid any cash dividends on common
stock and does not anticipate or contemplate paying dividends on common
stock in the foreseeable future. It is the present intention of
management to utilize all available funds for the development of the
Company's business. The only restrictions that limit the ability to pay
dividends on common equity or that are likely to do so in the future,
are those restrictions imposed by law. Under Nevada corporate law, no
dividends or other distributions may be made which would render the
company insolvent or reduce assets to less than the sum of its
liabilities plus the amount needed to satisfy any outstanding
liquidation preferences.
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following discussion and analysis should be read in
conjunction with the Company's financial statements and the notes
associated with them contained elsewhere in this report.
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Results of Operations.
FISCAL YEAR ENDED DECEMBER 31, 1996
COMPARED TO
FISCAL YEAR ENDED DECEMBER 31, 1995
Year Ended December 31,
___________________________________
1996 1995
________________ ____________
% of % of
Dollars Revenue Dollars Revenue
Revenue
Net Sales . . . . . $121,184 100.0% $91,552 100.0%
Cost of Sales . . . . 23,867 19.7 20,006 21.9
Gross Profit . . . . . $ 97,317 80.3 $71,546 78.1
Operating expenses:
Salaries, wages and benefits 44,142 36.4 10,189 11.1
Consultants and independent
contracting fees . . . . 10,359 8.5 23,589 25.7
Facilities and maintenance 7,889 6.5 18,848 20.5
Legal and accounting fees 17,426 14.4 4,539 4.9
Depreciation and amortization 12,407 10.2 3,081 3.3
General and administrative 107,900 89.0 43,259 47.2
Total operating expenses . 200,123 103,505
(Loss) from operations . .. (102,806) N/A (31,959) N/A
Other income (expense) . . (277) 936
(Loss) before income taxes . (103,083) N/A (31,023) N/A
Current Tax Expense -- --
Deferred Tax Expense -- --
Net (Loss) . . . . . . . . (103,083) N/A (31,023) N/A
Operating revenue for fiscal 1996 was $121,184, an increase of $29,632 or
32.4% over revenue of $91,552 during fiscal 1995. This increase was primarily
due to the fact that the club was only in operation for four months of the 1995
fiscal year and in full operation during the entire 1996 fiscal year.
Operating expenses for fiscal 1996 was $200,123, (165% of revenue), an
increase of 96,618 or or 93.3% over operating expenses of $103,505 (113% of
revenue) for fiscal 1995. As explained previously, the increase was primarily
generated from the club being in full operation for an entire fiscal year as
compared to 1/3 of a year. The operating expenses were also increased due to a
significant increase in payroll wages, but offset by a decrease in
consultanting and independent contracting fees.
Payroll expenses for fiscal 1996 were $44,142 (36.4% of revenue), an
increase of $33,953 or 333% over payroll expenses of $10,189 (11.1% of revenue)
during fiscal 1995. The significant increase is due to the fact that not only
was the club opened for the entire fical 1996 year but as the business grew
more employees were needed to meet the demand of club members. Consulting and
independent contracting fees for fiscal 1996 were $10,359 (8.5% of revenue) a
decrease of $13,230 or 43% from fiscal 1995 consulting and independent
contracting fees of $23,589 (25.7% of revenue).
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The decrease is directly
related to the demand for such contractors during the start-up period of the
business. Many independent contractors and consultants were hired during
fiscal 1995 to get the club ready for business.
Facilities and maintenance costs for fiscal 1996 were $7,889 (6.5% of
revenue) a decrease of $10,959 or 41.8% from the 1995 fiscal facilities and
maintenance costs of $18,848 (20.5% of revenue). Once again, the 1995
facilities and maintenance costs included a lot of the start-up business cost.
Once the club was established the maintenance costs considerably decreased.
The club also hired a new manager in September 1996 that has been instrumental
in cutting costs, especially maintenance to equipment and fly pens. The club
also terminated a rental agreement for use of a trailer in July of 1996.
Depreciation and amortization expenses for fiscal 1996 were $12,407 (10.2% of
revenue) and increase of $9,326 or 302% from the 1995 fiscal depreciation and
amortization expenses of $3,081 (3.3% of revenue). The increase is not only a
result of the length of operations but it is also a result of acquisitions of
sporting clays equipment during the 1996 fiscal year.
Legal and accounting fees for fiscal 1996 were $17,426 (14.4% of revenue)
an increase of $12,887 or 283% from the 1995 fiscal legal and accounting fees
of $4,539 (4.9% of revenue). The increase is primarily a result of a full year
of operations in 1996 was opposed to 4 months in 1995.
General and administrative costs for fiscal 1996 were $107,900 (89% of
revenue) an increase of $64,641.00 or 149% from the 1995 fiscal general and
administrative costs of $43,259 (47.2% of revenue). As explained earlier the
increase is direct result of the longer length of operations.
Seasonality
The Company's operations are subject to seasonal fluctuations during the
winter and spring months due to weather. The sporting clays business is also
affected by weather during the summer months due to heat.
Subsequent Events
(a) Komatsu
On October 8, 1996, Wild Wings, Inc. entered into a Stock Purchase
Agreement with Komatsu Investments Limited pursuant to which the Company sold
Komatsu Investments Limited 12,000,000 shares of common stock for a cash
payment of $40,000. As a result of the transaction, Komatsu Investments
Limited held approximately 93% of the Company's issued and outstanding common
stock. On October 25, 1996, the Board of Directors issued 100,000 common
shares at $.25 per share ($25,000) to Pascal Corporation pursuant to Regulation
S of the Securities Act.
It was the intention of Komatsu Investements Limited to pursue the
acquisition of an operating company by the Company. A letter of intent was
negotiated with Kangarway Company Limited to enter into a tax free
reorganization. Kangarway, an electronics company expects USD $14.2 million in
net after tax earning on USD $55 million in reveunes for the fiscal year ended
1996. The reorganization was contingent upon certain financing conditions.
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On February 18, 1997 Komatsu Investments Limited having failed to
negotiate an acquisition of a company with annual sales of not less than
$20,000,000.00 per year signed a cancellation agreement with Wild Wings, Inc.
The agreement allows Wild Wings to repurchase the shares issued to Komatsu upon
the acquisition of another company by Wild Wings for $31,000. Komatsu agreed
that any company which entered into any acquistion agreement with Wild Wings
shall be beneficiary of the full release and discharge granted Wild Wings by
Komatsu and that Wild Wings is authorized to represent to such acqusition
candidate that such acquisition candidate may rely on the agreement and
representations that there are no threatened or pending claims of litigation
against Wild Wings or any outstanding options or claims against shares of
common stock of Wild Wings held by Komatsu or any of its affiliates except the
payment to be made to Komatsu.
(b) Mid-Ag, L.C.
On March 4, 1997, Wild Wings, Inc. signed a letter of intent with Mid-Ag,
L.C. (to be reorganized as Red Oak Farms, Inc.) to enter into a tax-free
reorganization. Red Oaks Farms, an Iowa Corporation is in the business of
processing and marketing Certified Hereford Beef as a part of an exclusive
agreement with the American Hereford Association, Kansas City, Missouri. Red
Oak Farms processed in excess of 60,000 cattle in 1996 and is developing a
program to become a major producer of premium quality branded beef.
As a part of the transaction, Wild Wings, Inc. intends to acquire all of
the issued and outstanding common stock of Red Oak Farms, Inc. in exchange for
10,000,000 shares of the $.001 par value common stock of Wild Wings, Inc. In
addition, Wild Wings, Inc. would change its name to Red Oak Hereford Farms,
Inc. and new officers and directors would be appointed. The closing of this
transaction is conditional upon the signing of an acquisition agreement within
30 days of the signing of the letter of intent.
Liquidity and Capital Resources.
The Company was incorporated on July 7, 1989. Although the Company was
incorporated in 1989 it was inactive from inception until 1994. The Company
was activated to raise funds from the sale of its securities and commence
business operations. In connection with these activities, in 1994 the officers
and directors of the Company contributed $3,000 of additional capital to the
Company in exchange for 300,000 shares of Common Stock. The Company also
issued 140,000 shares in a private offering of its Common Stock and raised
$7,000 from several investors. The Company then filed a SB2 with the
Securities and Exchange Commission which was declared effective April 3, 1995.
Commencing on such date, the Company offered and sold 100,000 shares of common
stock and raised gross proceeds of $100,000. Net proceeds after offering costs
amounted to $87,414.
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The Company has no other significant assets or commitments with respect
to sources of capital. At this time no assurance can be given with respect to
the length of time that it will be necessary to fund operations. If the
Company is unable to generate sufficient revenues to finance ongoing
operations, the Company may have to seek additional financing. The Company
presently has no commitment or arrangements for additional financing from any
source.
Item 7. Financial Statements.
See attached Financial Statements and Schedules.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
(a) Identify Directors and Executive Officers.
The following table sets forth the directors and executive officers of
the Company, their ages, and all offices and positions with the Company. Each
director is elected for a period of one year and thereafter serves until his
successor is duly elected by the stockholders and qualifies. Officers and
other employees serve at the will of the Board of Directors.
Term Served As Positions
Name of Director Age Director/Officer With Company
Brenda M. Hall 28 Since Oct. 1996 President, Sec/Treas.&
Director
Puai Wichman 28 Since Oct. 1996 Director
David N. Nemelka(1) 30 Since Nov. 1994 CEO, Pres., Sec/Treas. &
Chairman
Brenda M. Hall assumed the roles of President, Secretary/Treasurer and
as one of the Directors of the Company on October 8, 1996. Her primary duties
include marketing, bookkeeping and general management of the Company. Before
accepting the position of Company President, Mrs. Hall worked as an independent
contractor for the company doing bookkeeping, membership and public relations
projects and general secretarial work. She is currently employed as the
Assistant to the President of Maca Supply Company and also serves as their
AR/AP manager. She has held this position since April 13, 1993. She has had
experience operating her bookkeeping business, Dassity, and also a home
business retailing decorative rubber stamps from 1992 to 1995. She graduated
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<PAGE>
from Brigham Young University with a B.A. in December of 1991. Mrs. Hall does
not hold any other past or present directorships of any other reporting
companies.
Puai Wichman accepted the position of Director for the Company on October
8, 1996. Mr. Wichman received a Bachelor of Law from Auckland University in
1991 and has been admitted as Barrister and Solicitor of the High Court of New
Zealand in 1992 and the High Court of the Cook Islands in 1993. Since 1993 he
has been employed by TrustNet Limited, a company in the Cook Islands of which
he was appointed Director in March of 1996. His primary duties include
advising clients of all technical aspect of trust and common law, utilizing
international trusts to provide clients with effective specialized products to
meet their particular requirements, maintaining corporate records and provide
advisory services and review general trustee administration services. From
February 1992 to January 1993 Mr. Wichman helped to establish the branch office
of Ross Holmes Law Partnership in the Cook Islands where he served in a number
of capacities. Namely, native land title conveyancing, incorporating companies
and maintaining their records, commercial planning advising, criminal/civil
litigation and financing loan agreements and related securities for
individuals. Before accepting the position with Ross Holmes Law Partnership
in the Cook Islands in 1992, he was employed in their Auckland, New Zealand
office from May 1991 to January 1992. His area of focus there included, estate
and tax planning for private clients, company formation and maintenance of
their respective records, financing, loan agreements and related securities for
individuals and general conveyancing. Mr. Wichman does not hold any other past
or present directorships of any other publicly held reporting companies.
(1) David N. Nemelka served as CEO, President, Secretary/Treasurer and
Chairman of the Board of Directors of the Company until his resignation in
October of 1996. His primary duties included financing, marketing, computer
systems, leasing, and general management of the Company. He has experience
operating Northstar Adventures, a similar Sportsman focused company operating a
fishing lodge on the Kenai River in Alaska. Since July, 1994 he has been self
employed pursuing personal business projects. From June 1993 to July 1994 he
was an Assistant Brand manager at Proctor & Gamble in Cincinnati, Ohio. From
September 1991 to May 1993 he attended the Wharton Business School at the
University of Pennsylvania from which he earned an MBA. From August 1989 to
August 1991 he served as CEO of Northstar Adventures which he co-founded. From
January 1989 to July 1994 he served as President of Tri-Nem, Inc. a public
company that was merged in July 1994 with Innovus Multimedia, Inc., a software
development company. From August 1988 to August 1991 he served as President
and co-founder of Certified Share Transfer Company, a stock transfer company.
Mr. Nemelka received his B.S. in business finance from Brigham Young University
and his MBA in finance from the Wharton Business School.
Directorships.
(b) Identify Significant Employees.
Troy Ryan, age 31, serves as the current on-site manager of the hunting
club since September of 1996. As a member of the hunting club, Mr. Ryan and
his brother renovated the club house and worked occasional weekends. Prior to
accepting the job as on site manager, Mr. Ryan was employed as an area
supervisor at Teleflex, Inc. from 1986 to September 1996. Currently, the
Company pays Mr. Ryan a salary of $2,000.00 a month and 10% sales commission on
membership fees.
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<PAGE>
(c ) Family Relationships.
None.
(d) Involvement in Certain Legal Proceedings.
None.
Compliance with Section 16(a) of the Exchange Act
The Issuer is not subject to the provisions of Section 16(a).
Item 10. Executive Compensation.
(a) and (b) General and Summary Compensation Table
The following table contains information with respect to all cash
compensation paid or accrued by the Company during the past two fiscal years to
the Chief Executive Officer of the Company. No officer individually received
annual cash compensation exceeding $100,000 during the past three years.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(e) (f) (g) (h) (i)
(a) (b) (c) (d) Other Restricted Securities (h) All
Annual Stock Underlying LTIP Other
Name and Principal Compens- Award(s) Options/ Payouts Compen-
Position Year Salary Bonus ation($) ($) SARs(#) ($) sation($)
David N. Nemelka ($) ($) $3,310
CEO 1995
David N. Nemelka $6,000 $510
CEO 1996
Brenda M. Hall $1,500
CEO 1996
The Company did not pay a regular salary or wage to management in 1995,
but did pay and will continue to pay sales commissions to management or
employees involved in soliciting the sale of memberships in the hunting club.
David N. Nemelka received a total of $3,310 in such commissions in 1995. In
addition, the Company, pursuant to a consulting agreement, paid McKinley
Capital, an entity owned and controlled by David N. Nemelka, $11,500 in
consulting fees for services performed from August through December of 1995.
These services included setting up the computer system for the Company, 3rd and
4th quarter accounting, developing and implementing the marketing campaign,
expanding the business plan and other related business services. (See Item 12.
Certain Relationships and Related Transactions) Mr. Nemelka received $6000
salary compensation and $510 sales commissions during 1996 fiscal year. He was
also provided the option to acquire 72,500 shares of common stock at $3.00 per
share for services rendered.
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<PAGE>
Brenda Hall received a salary of $1500 for services performed as an
officer of the company in 1996. She was also provided the option to acquire
2500 shares of common stock at $3.00 per share. An additional $1,257
compensation was paid to Dassity, a business owned by Mrs. Hall, for
bookkeeping fees and services performed from January to October 1996. (See
Item 12. Certain Relationships and Related Transactions)
(c) and (d) Stock Option and Stock Appreciation Right Plans
1995 Stock Option Plan
In February 1995, the Board of Directors of the Company adopted and the
present stockholders approved, a Stock Option Plan ("1995 Plan"). The 1995
Plan authorizes the granting of awards of up to 400,000 shares of Common Stock
to the Company's key employees, officer, directors and consultants. Awards
consist of stock options (both non-qualified options and options intended to
qualify as "Incentive" stock options under Section 422 of the Internal Revenue
Code of 1986, as amended), restricted stock awards, deferred stock awards,
stock appreciation rights and other stock-based awards, as described in the
1995 Plan. The 1995 Plan is administered by the Board of Directors which
determines the persons to whom awards will be granted, the number of awards to
be granted and the specific terms of each grant, including the vesting thereof,
subject to the provisions of the 1995 Plan.
In connection with qualified stock options, the excise price of each
option may not be less than 100% of the fair market value of the Common Stock
on the date of grant or 110% of the fair market value of the Common Stock on
the date of grant for affiliates of the Company. The aggregate fair market
value of shares for which qualified stock options are exercisable for the first
time by such employee during any calendar year may not exceed $100,000.
Non-qualified stock options granted under the 1995 Plan may be granted
at a price
determined by the Board of Directors, not to be less than the fair market value
of the Common Stock on the date of grant.
The 1995 Plan also contains certain change in control provisions which
could cause options and other awards to become immediately exercisable and
restrictions and deferral limitations applicable to other awards to lapse in
the event any "person," as the term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, including a "group" as defined in Section
13(d), but excluding certain stockholders of the Company, became the beneficial
owners of more than 25% of the Company's outstanding shares of Common Stock.
As of February 24, 1997, all 400,000 stock options have been issued and
are outstanding. None of the options have been exercised to date.
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<PAGE>
Option/SAR Grants in Last Liscal Year
Individual Grants
(a) (b) (c) (d) (e)
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to
SARS Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
David N. Nemelka, CEO 72,500 100% $3.00 10/10/2001
Brenda M. Hall, CEO 2,500 100% $3.00 10/10/2001
(e) Long-term Incentive Plan.
None.
(f) Compensation of Directors
None.
(g) Employment Contracts and Termination of Employment and
Change-in-Control Arrangements.
None.
(h) Report on Repricing of Options/SARs
None.
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<PAGE>
Item 11. (a) and (b) Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth certain information with respect to the
current beneficial ownership of the Company's common stock as of February 12,
1997, of each person known to the Company to be the beneficial owner of more
than five percent (5%) of said securities, each director of the Company, and
all directors and executive officers of the Company as a group:
Title of Amount & Nature of % of Stock
Name and Address Class Beneficial Ownership(1) Class Options
Brenda M. Hall Common 200 shares 0% 2,500 (2)
157 So. 880 E.
Springville, UT 84663
Puai Wichman Common 0 shares 0% 0
P.O. Box 208
Rarotonga, Cook Islands
All officers and directors Common 200 shares 0% 2,500 (2)
as a group (2 persons)
Komatsu Investments Ltd, Common 12,000,000 shares 93% 0
P.O. Box 208
Rarotonga, Cook Islands
(1) The nature of the beneficial ownership for all the shares is sole
voting and investment power.
(2) Options are immediately exercisable for a period of five years.
Item 12. Certain Relationships and Related Transactions.
During the past two fiscal years, the Company has entered into certain
transactions with officers, directors or affiliates of the Company which
include the following:
For the time being, the Company will use as its principal executive
office, the office of David N. Nemelka, former President, on a rent free basis,
until such time as the business operations of the Company may require more
extensive facilities and the Company has the financial ability to rent
commercial office space. There is presently no formal written agreement for
the use of such facilities, and no assurance that such facilities will be
available to the Company on such a basis for any specific length of time.
During the 1996 fiscal year the Company paid $12,309 in wages and $2,185
in sales commissions to Roger Nemelka, former on-site club manager. In 1995,
Mr. R. Nemelka was paid $6,000 in wages and $11,500 in sales commissions in
1995. Mr. Nemelka is the uncle of the club's former President, David N.
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<PAGE>
Nemelka The Company paid Troy Ryan, current on-site club manager $8,000 in
wages and $1,382 in sales commissions during the 1996 fiscal year.
In addition, the Company paid pursuant to a consulting agreement,
McKinley Capital, an entity owned and controlled by David N. Nemelka, former
President & Director, $11,500 in consulting fees for services performed from
August through December 1995. These services included setting up the computer
system for the Company, 3rd & 4th quarter accounting, developing and
implementing the marketing campaign, expanding the business plan and other
related business services.
In addition, the Company paid $500 per month to Summer Ventures, an
entity owned by the father of David N. Nemelka, for use of a mobile home
located about one mile from the clubhouse, which was used as a management
office. The trailer was lived in by the on-site manager of the hunting club
and was used to provide phone reception services for the hunting club until
phone service was installed at the clubhouse in July, 1996. The hunting club
terminated their use of the facility in August 1996.
In addition, the Company paid Brenda M. Hall, the current President,
Secretary/Treasurer and Director of the hunting club and Dassity, an entity
owned and controlled by Brenda M. Hall, $1,257 during the first three quarters
of 1996 for bookkeeping and general secretarial service rendered to the
Company. Mrs. Hall/Dassity billed the company for services rendered at an
hourly rate of $10.00.
Numerous short term loans have been made to the Company by David N.
Nemelka or affiliated entities, and by the Company to David N. Nemelka or
affiliated entities, most of which were outstanding only for a matter of days.
The principal amount of loans made to the Company totaled $17,000 in 1996 and
$37,750 in 1995. The principal amount of loans made by the Company totaled
$15,000 in 1996 and $56,000 during 1995.
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits Index
Exhibit # Item Location
3.(i) Articles of Incorporation. Registration Statement Filed
on Form SB2; April 28, 1995;
File #33-89714
3.(ii) By-laws. Registration Statement Filed
on Form SB2; April 28, 1995;
File #33-89714
27. Financial Data Attached
(b) Reports on Form 8-K
A report on Form 8-K was filed during the fourth quarter of 1996
reporting the following matters:
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<PAGE>
(1) Items Reported
Wild Wings, Inc. (The "Company") entered into a Stock Purchase Agreement
with Komatsu Investments Limited pursuant to which the Company sold Komatsu
Investments Limited 12,000,000 shares of its common stock for a cash
payment of
$40,000. The transaction was closed on October 8, 1996. As a result of the
transaction, Komatsu Investments Limited now holds 12,000,000 shares or
approximately 93% of the 12,860,000 shares of the Company's common stock which
are issued and outstanding following the transaction. The shares
were acquired
with Komatsu Investments Limited corporate funds.
Concurrently with the closing of the transaction described above, David
N. Nemelka resigned from his respective positions as director and President of
the Company and the following persons were appointed to the
positions set forth
opposite their name below:
Brenda M. Hall President, Secretary/Treasurer and Director
Puai Wichman Director
The Stock Purchase Agreement and the election of new officers and
directors of the Company as described above were approved by the Board of
Directors without a meeting signed by directors of the Company and
stockholders
holding a majority of the issued and outstanding shares of the Company's
common stock as allowed per the Nevada revised corporate statutes.
As a result of the transaction, the former officers and directors of the
Company are no longer affiliates of the company and the shares of the
Company's
common stock held by such persons may be eligible for sale under
the provisions
of Rule 144(k). As of March 28, 1996, such persons owned a total of 513,850
shares of the Company's common stock as reported in the Company's 1996
Form 10-K report. The sale of shares by such persons could have a depressive
effect on
any market for the Company's common stock that may develop in the future.
(2) Financial Statements Filed
None.
(3) Date of Report
October 30, 1996
An additional 8K report was filed during the first quarter of 1997
reporting the following matters:
On March 4, 1997 Wild Wings, Inc., (the "Company") entered into a letter
of intent with Mid-Ag, L.C. (to be reorganized as Red Oak Farms, Inc.) to
acquire all of the issued and outstanding stock of Red Oak Farms, Inc.
from the
shareholders of Red Oak Farms, Inc. in exchange for 10,000,000 shares of the
$.001 par value common stock of the Company. This transaction is intended to
qualify as a tax-free reorganization under Section 368 of the Internal Revenue
Code such that the shares of the Company received by the shareholders of Red
Oak Farms, Inc. will be received on a tax-free basis. The shares to be issued
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<PAGE>
by the Company will be restricted securities as defined in Rule 144 under the
Securities Act of 1933, and an appropriate legend will be placed on the
certificates representing such shares. At the date of closing this
transaction, there will be 10,960,000 shares outstanding.
The closing of this transaction is subject to the following conditions:
1. On or before the closing date, Wild Wings, Inc. will provide audited
financial statements as of December 31, 1996 with a current interim
statement showing $0 liabilities and $0 assets as of the Closing Date.
2. Wild Wings, Inc. shall be in good standing as a corporation of the State
of Nevada and shall not be in violation of any Federal or State
securities or other laws governing it.
3. Wild Wings, Inc. will be current in all of its filing requirements as to
all tax, securities or other reports required under laws to which it is
subject, and shall deliver copies of these reports to Mid-Ag, L.C. along
with copies of its past and current audited financial statements.
4. Mid-Ag, L.C. and Red Oak Farms, Inc. shall be current and in good
standing with respect to all material contracts to which it is a party,
unless disclosed and accepted by the board of directors of Wild Wings,
Inc.
5. Mid-Ag, L.C. agrees that it will engage a financial public relations firm
by the closing date of this transaction who is mutually satisfactory to
Mid-Ag, L.C. and the now existing board of directors of Wild Wings, Inc.
Such firm, or an acceptable substitute firm, shall be continuously
engaged for a minimum of eighteen (18) months. Two million shares of Red
Oak Farms, Inc. owned by the current shareholders of Mid-Ag, L.C. will be
placed in escrow at closing and released once this provision has been
fulfilled.
6. Mid-Ag, L.C. agrees that it will engage a management consulting firm by
the closing date of this transaction who is mutually satisfactory to
Mid-Ag, L.C. and the now existing board of directors of the Wild Wings,
Inc.
The management consulting firm will assist the management in evaluating
and revising their current business plan and assisting management in the
development of a marketing and financing plan.
7. Mid-Ag, L.C. agrees that it will have a minimum of two year binding
contract with a packing plant to slaughter Mid-Ag, L.C. cattle that is
mutually satisfactory to Mid-Ag, L.C. and the now existing board of
directors of Wild Wings, Inc.
8. Mid-Ag, L.C. agrees that it will have a binding contract with the
American Hereford Association for the exclusive right to produce and
market "Certified Hereford Beef" that is mutually satisfactory to Mid-Ag,
L.C. and the board of directors of Wild Wings, Inc.
9. Mid-Ag, L.C. agrees that at the time of closing the Red Oak Farms, Inc.
will have entered into a binding agreement to acquire 100% of the
outstanding shares of Midland Cattle Company.
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<PAGE>
10. Mid-Ag, L.C. agrees to hire additional management to serve in senior
management levels. Specifically, the Company will hire management with
senior level experience in marketing and promotion.
Such management will
be hired within a reasonable time period after closing not to exceed 120
days from the date of closing.
11. Upon the execution of the Letter of Intent by both parties, counsel for
Wild Wings, Inc. and Mid-Ag, L.C. will prepare an Exchange Agreement,
which shall contain provision in accord with this letter together with
such further appropriate terms and conditions as legal counsel and the
parties may mutally determine. The Exchange Agreement shall be subject
to the approval of the repsective shareholders and boards of
directors of
the Wild Wings, Inc. and Mid-Ag, L.C.
(2) Financial Statements Filed
None.
(3) Dates of Such Reports.
March 12, 1997
Item 14. Signatures
/s/ Brenda M. Hall, Sole Director & Officer
Wild Wings, Inc.
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<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
DECEMBER 31, 1996
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
CONTENTS
PAGE
_ Independent Auditors' Report 1
_ Balance Sheet, December 31, 1996 2
_ Statements of Operations, for the years ended
December 31, 1996 and 1995 and from
inception on July 7, 1989 through December 31,
1996 3
_ Statement of Stockholders' Equity (Deficit), from
inception on July 7, 1989 through December 31,
1996 4 - 5
_ Statements of Cash Flows for the years ended
December 31, 1996 and 1995 and from
inception on July 7, 1989 through December 31,
1996 6 - 7
_ Notes to Financial Statements 8 - 14
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84118
(801) 328-2727
INDEPENDENT AUDITORS' REPORT
Board of Directors
WILD WINGS, INC.
Springville, Utah
We have audited the accompanying balance sheet of Wild Wings,
Inc. [a development stage company] at December 31, 1996 and the
related statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1996 and 1995 and from
inception on July 7, 1989 through December 31, 1996. 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 audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present
fairly, in all material respects, the financial position of Wild
Wings, Inc. as of December 31, 1996 and the results of its
operations and its cash flows for the years ended December 31,
1996 and 1995 and from inception through December 31, 1996, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 8 to the financial statements, the Company has suffered
losses since inception and has not yet been successful in
establishing profitable operations, raising substantial doubt
about its ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 8.
The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
/s/ PRITCHETT, SILER & HARDY, P.C.
February 1, 1997
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<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
1996
___________
CURRENT ASSETS:
Cash $ 7,068
Inventory 3,578
___________
Total Current Assets 10,646
___________
PROPERTY AND EQUIPMENT, net 59,827
___________
OTHER ASSETS:
Prepaids and other 1,012
Organization costs, net 147
___________
Total Other Assets 1,159
___________
$ 71,632
___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 18,197
Customer bird deposits 26,572
___________
Total Current Liabilities 44,769
___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000
shares authorized, no shares issued and
outstanding at December 31, 1996 -
Common stock, $.001 par value, 50,000,000
shares authorized, 12,960,000 issued
and outstanding at December 31, 1996 12,960
Capital in excess of par value 150,654
Deficit accumulated during the development stage (136,751)
___________
Total Stockholders' Equity 26,863
___________
$ 71,632
___________
The accompanying notes are an integral part of these financial
statements.
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<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
From Inception
For the Years Ended on July 7,
December 31, 1989 Through
_____________________________ December 31,
1996 1995 1996
___________ ________________________
REVENUE:
Net sales $121,184 $ 91,552 $212,736
COST OF SALES 23,867 20,006 43,873
___________ ________________________
GROSS PROFIT 97,317 71,546 168,863
___________ ________________________
EXPENSES:
General and
administrative 107,900 43,259 153,279
Consultants and independent
contracting fees 10,359 23,589 33,948
Operating expenses 7,889 18,848 26,737
Salaries, wages and
benefits 44,142 10,189 54,331
Legal and accounting
fees 17,426 4,539 22,215
Depreciation and
amortization 12,407 3,081 15,763
___________ ________________________
Total Expenses 200,123 103,505 306,273
___________ ________________________
OPERATING (LOSS) (102,806) (31,959) (137,410)
___________ ________________________
OTHER INCOME (EXPENSE):
Interest income 700 1,423 2,123
Interest expense (977) (487) (1,464)
___________ ________________________
Total Other
Income (Expense) (277) 936 659
___________ ________________________
(LOSS) BEFORE INCOME TAXES(103,083) (31,023) (136,751)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
___________ ________________________
NET (LOSS) $(103,083) $(31,023) $(136,751)
___________ ________________________
INCOME (LOSS) PER COMMON SHARE$ (.04) $ (.04) $ (.00)
___________ ________________________
The accompanying notes are an integral part of these financial
statements.
-3-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON JULY 7, 1989
THROUGH DECEMBER 31, 1996
Preferred Stock Common Stock Capital in Accum-
__________________ _____________ Excess of ulated
Shares Amount Shares Amount Par Value Deficit
____________________________________________________
BALANCE, July 7, 1989 - $ - - $ - $ - $ -
Shares of common stock
issued to officer
and director for cash,
July 21, 1989 - - 300,000 300 700 -
Net loss for the
period ended
December 31, 1989 - - - - - (28)
____________________________________________________
BALANCE, December 31,
1989 - - 300,000 300 700 (28)
Net loss for the year ended
December 31, 1990 - - - - - (450)
____________________________________________________
BALANCE, December 31,
1990 - - 300,000 300 700 (478)
Net loss for the year ended
December 31, 1991 - - - - - (680)
____________________________________________________
BALANCE, December 31,
1991 - - 300,000 300 700 (1,158)
Net loss for the year ended
December 31, 1992 - - - - - (55)
____________________________________________________
BALANCE, December 31,
1992 - - 300,000 300 700 (1,213)
Net loss for the year ended
December 31, 1993 - - - - - (55)
____________________________________________________
BALANCE, December
31, 1993 - - 300,000 300 700 (1,268)
Shares of common stock
issued to incorporators,
officers, directors and other
related parties for cash,
December 9, 1994 at $.01
per share - - 300,000 300 2,700 -
[Continued]
-4-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON JULY 7, 1989
THROUGH DECEMBER 31, 1996 [CONTINUED]
Preferred Stock Common Stock Capital in Accum-
_______________ ________________Excess of ulated
Shares Amount Shares Amount Par Value Deficit
_______________________________________________
Shares of common stock
issued to a former director
for payment of a related
party accounts payable,
December 30, 1994 at
$.01 per share - - 20,000 20 180 -
Shares of common stock
issued to related parties for
cash, December 30, 1994
at $.05 per share - - 140,000 140 6,860 -
Net loss for the year ended
December 31, 1994 - - - - - (1,377)
_____________________________________________________
BALANCE, December
31, 1994 - - 760,000 760 10,440 (2,645)
Shares of common stock
issued pursuant to public offering
for cash, July, 1995 at $1.00
per share, net of offering
costs of $12,586 - - 100,000 100 87,314 -
Net loss for the year ended
December 31, 1995 - - - - - (31,023)
_____________________________________________________
BALANCE, December
31, 1995 - - 860,000 860 97,754 (33,668)
Shares of common stock issued
for cash September, 1996 at
$0.0033 per share - - 12,000,000 12,000 28,000 -
Shares of common stock issued
for cash October, 1996 at
$.25 per share - - 100,000 100 24,900 -
Net loss for the year ended
December 31, 1996 - - - - - (103,083)
____________________________________________________
BALANCE, December
31, 1996 - $- 12,960,000 $12,960 $150,654 $(136,751)
_____________________________________________________
The accompanying notes are an integral part of these financial
statements.
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<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
From Inception
For the Years Ended on July 7,
December 31, 1989 Through
___________________________ December 31,
1996 1995 1996
______________________________________
Cash Flows from Operating Activities:
Net income (loss) $(103,083) $(31,023) $(136,751)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Depreciation and
Amortization expense 12,375 3,081 15,731
Non-cash expenses 300 1,000 1,300
Changes in assets and liabilities:
(Increase) decrease in
accounts receivable 844 (844) -
(Increase) in inventory (2,150) (1,428) (3,578)
(Increase) in prepaid expenses (362) (650) (1,012)
(Increase) decrease in
accrued interest 1,391 (1,391) -
Increase in accounts payable 13,089 4,858 18,197
Increase in customer deposits 11,811 14,760 26,571
Increase (decrease) in related party
payable - (670) (300)
_______________________________________
Net Cash Flows Used by
Operating Activities (65,785) (12,307) (79,841)
_______________________________________
Cash Flows from Investing Activities:
Organization costs - - (520)
Acquisition of property
and equipment (30,690) (44,269) (76,485)
(Increase) decrease in
N/R related party 20,000 (20,000) -
______________________________________
Net Cash Used by Investing
Activities (10,690) (64,269) (77,005)
_______________________________________
Cash Flows from Financing Activities:
Proceeds from common stock
issuance 65,000 100,000 176,000
Stock offering costs - (12,586) (12,586)
Advances received from related parties - 31,750 32,250
Payments to related parties - (31,750) (31,750)
_______________________________________
Net Cash Provided by Financing
Activities 65,000 87,414 163,914
_______________________________________
Net Increase (Decrease) in Cash (11,475) 10,838 7,068
Cash at Beginning of Period 18,543 7,705 -
_______________________________________
Cash at End of Period $ 7,068 $ 18,543 $ 7,068
_______________________________________
[Continued]
-6-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS [Continued]
From Inception
For the Years Ended on July 7,
December 31, 1989 Through
_______________________________ December 31,
1996 1995 1996
_______________________________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest $ 977 $ 487 $ 487
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financial
Activities:
For the year ended December 31, 1996:
The Company reduced its property and equipment by $300 for the
basis of hunting dogs which died during the year.
For the year ended December 31, 1995:
The Company reduced its property and equipment by $1,000 for
the basis of hunting dogs which died during the year.
The accompanying notes are an integral part of these financial
statements.
-7-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was incorporated under the laws of
the State of Colorado on July 7, 1989. In November, 1994, the
Company changed the par value of its stock from $.01 to $.001.
In December, 1994 the Company changed it's domicile from the
State of Colorado to the State of Nevada. This change in
domicile was accomplished by merging the Company into a Nevada
corporation created solely for this purpose. Also at this
time the name was changed from Winter Ventures of Colorado,
Inc. to Wild Wings, Inc. The Company commenced planned
principal operations during 1995 but is still considered a
development stage company as defined in SFAS No. 7. The
Company is operating a hunting club and eventually plans to
expand into other areas of interest to sportsmen. The Company
has, at the present time, not paid any dividends and any
dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant
factors.
Revenue Recognition - The Company records revenue as sales are
made. Membership initiation fees are recorded as income upon
sale of the membership. Annual fees are recorded upon renewal
of the memberships. Bird revenue is recognized as birds are
harvested by the customer.
Organization Costs - The Company is amortizing its
organization costs, which reflect amounts expended to organize
the company, over sixty [60] months using the straight line
method.
Inventory - Inventory is carried at the lower of cost or
market.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the period
Depreciation Methods - The Company is depreciating its
property and equipment, which consists of sporting clay
equipment, fly pens and hunting dogs, using the straight line
method, over the estimated useful lives of the related assets
ranging from 3 to 5 years.
Cash and Cash Equivalents - For purposes of the statement of
cash flows, the Company considers all highly liquid debt
investments purchased with a maturity of three months or less
to be cash equivalents.
Income Taxes - The Company accounts for its income taxes in
accordance with statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes" which requires the
liability approach for the effect of income taxes.
Restatement of Financial Statements - During November, 1994,
the Company effected a 3 for 1 split of its common stock and
reduced the par value of its common stock from $.01 to $.001
per share. The financial statements have been restated to
reflect these changes for all periods presented.
Customer Bird Deposits - This account represents birds that
have been presold to customers and for which the company must
provide birds during hunting season.
-8-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amount of
revenues and expenses during the reported period. Actual
results could differ from those estimated.
NOTE 2 - INVENTORIES
Inventories consist of the following:
December 31,
_______________________
1996 1995
_____________________
Birds $ 1,529 $ 791
Ammunition 554 509
Clays 494 128
Misc. 1,001 -
_____________________
$ 3,578 $ 1,428
_____________________
NOTE 3 - ACCOUNTS RECEIVABLE
Accounts receivable consist primarily of amounts due from
normal sales transactions. No allowance for doubtful accounts
has been recorded as management believes all receivables are
fully collectible.
NOTE 4 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment, at cost,
less accumulated depreciation:
December 31,
_______________________
1996 1995
_____________________
Office equipment $ 4,885 $ 4,885
Machines and equipment 69,325 39,234
Hunting dogs 975 675
_____________________
75,185 44,794
Less Accumulated depreciation(15,358) (3,032)
_____________________
$ 59,827 $41,762
_____________________
Depreciation expense for the years ended December 31, 1996 and
1995 was $12,326 and $3,032.
-9-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - CAPITAL STOCK
During September, 1996, the Company sold 12,000,000 shares of
its previously authorized but unissued common stock, total
proceeds from the sale amounted to $40,000. During October,
1996, the Company sold 100,000 shares its previously
authorized but unissued common stock, total proceeds from the
sale amounted to $25,000.
Public Offering of Common Stock - During July, 1995, the
Company completed a public stock offering of 100,000 shares of
its previously authorized but unissued common stock. This
offering was registered with the Securities and Exchange
Commission on Form SB-2. An offering price of $1.00 per share
was arbitrarily determined by the Company. The offering was
managed by the Company without any underwriter. The shares
were offered and sold by officers of the Company, who received
no sales commissions or other compensation in connection with
the offering, except for reimbursement of expenses actually
incurred on behalf of the Company in connection with the
offering. Total proceeds of the offering amounted to $100,000
with offering costs of $12,586 which were offset against
capital in excess of par value.
Stock Option Plan - During 1995, the Board of Directors of the
Company adopted and the stockholders approved, a stock option
plan. The plan provides for the granting of awards of up to
400,000 shares of common stock to officers, directors,
consultants and employees. The awards can consist of stock
options, restricted stock awards, deferred stock awards, stock
appreciation rights and other stock-based awards as described
in the plan. Awards under the plan will be granted as
determined by the board of directors. At present, no awards
have been granted under the plan.
On October 1, 1996 and December 1, 1996 the Company's board of
directors granted an officer of the Company 72,500 and 2,500
options under the plan to purchase shares of the Company's
common stock at $3.00 per share. The options granted vested
immediately and expire five years from the date granted.
The Company accounts for this plan under the Accounting
Principles board Opinion No. 25, "Accounting for Stock Issued
to Employees", and related interpretations. Accordingly,
since all options granted under this plan were granted at or
in excess of market value, no compensation cost has been
recognized in the accompanying financial statements for
options granted under this plan. There would be no effect to
the Company's net loss and loss per common share, had
compensation cost for this plan been determined based on the
fair value at the grant dates for awards under this plan
consistent with the method prescribed by FASB No. 123,
"Accounting for Stock-Based Compensation". The fair value of
each option grant was estimated on the date of grant using the
Black-Scholes option pricing model with following weighted
average assumptions used for grants during the year ended
December 31, 1996: risk free interest rate of 6%, expected
dividend yields of zero for all periods, expected lives of 5
years, and an estimated expected volatility of 50%.
-10-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - CAPITAL STOCK [Continued]
Stock Split - In November, 1994, the Board of Directors
authorized a 3 for 1 stock split, thereby increasing the
number of authorized shares to 50,000,000 and decreasing the
par value of each share to $.001. All references in the
accompanying financial statements to the number of common
shares and per-share amounts have been restated to reflect the
stock split for all periods presented.
Related Party Stock Transactions - On December 9, 1994, the
Company issued to related parties (including officers,
directors and incorporators) 300,000 shares of common stock
valued at $.01 per share, for $3,000 cash. On December 30,
1994, the Company issued 20,000 shares of common stock to a
former director for payment of past directors fees which were
accrued as a related party payable in the amount of $200. The
Company also issued 140,000 shares of common stock during
December, 1994, pursuant to subscription agreements and
investment letters to certain individuals including related
parties for $7,000 cash or $.05 per share.
Preferred Stock - The Company has authorized 5,000,000 shares
of preferred stock, $.001 par value with such rights,
preferences and designations and to be issued in such series
as determined by the Board of Directors. No shares are issued
and outstanding at December 31, 1996 and 1995.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 1996, the Company made a
short term loan to an officer/shareholder of the Company. The
loan, in the amount of $15,000, was outstanding for
approximately ten days and earned interest at a rate of 15%
per annum.
During 1995 the Company made various loans to officers,
directors or entities related thereto in the total amount of
$56,000. Three of the loans, totaling $36,000 accrued
interest at 15% and were outstanding for approximately 11 to
18 days. At December 31, 1995 there was one unpaid, interest
bearing, demand note receivable of $20,000 due from an entity
related to an officer/shareholder of the Company. During
1996, the note with related accrued interest was received from
the related party.
Total interest income for the year ended December 31, 1996 and
1995 on related party notes receivable was $700 and $1,391,
respectively.
During 1995, officers, directors or entities related thereto
made various loans totaling $37,250 to the Company. These
loans were all short term in nature and provided operating
capital for the Company. One loan in the amount of $750 was
non-interest bearing, one loan for $4,000 provided interest at
18% and one loan for $5,000 provided interest at 10%. The
remaining loans provided for interest at 15%. At December 31,
1995, there were no unpaid balances owing to these related
parties.
During 1995, the Company paid consulting fees of $11,500 to an
entity related to an officer/director of the Company.
-11-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - RELATED PARTY TRANSACTIONS [Continued]
In connection with the sale of memberships and related
services to get the club opened and operating, the Company
paid commissions of $15,106 and consulting fees of $3,000 to
certain officers, shareholders and other individuals or
entities related to officers or shareholders. The Company
also paid rent of $2,500 to an entity related to an officer
and shareholders of the Company. The rent paid was for a
mobile home located in the near vicinity of the hunting club
which was used by the clubs manager as a management office and
where he resides.
The Company previously had an agreement to pay each member of
the Board of Directors $100 for attendance at each annual
meeting. A total of $400 was accrued to directors for years
prior to 1992. Of this amount, $200 was paid in cash and $200
owing to one director was subsequently paid by issuing 20,000
shares of common stock during December, 1994 valued at $.01
per share. During 1992 this agreement was terminated and as
of December 31, 1996 and 1994, no subsequent compensation had
been paid or accrued to any director of the Company.
The Company made various issuance's of common stock to related
parties during the year ended 1994. [See Note 5]
NOTE 7 - OPERATING LEASES
Land Lease - During January 1995, the Company entered into a
land lease for 518 acres of farmland which it is developing
for a commercial hunting area and sporting clays shooting
area. The lease is for a term of five years commencing on
April 1, 1995 and ending on March 31, 2000. The lease is
renewable by the Company for an additional five year term.
However, the lease is effectively a periodic lease from year
to year as it is terminable by either party on the anniversary
date each year upon thirty days written notice. The Company
will pay the lessor 10% of sales with a $1,000 minimum. The
Company will also pay monthly fees of approximately $280 for
rental of a club house and acreage for pheasant fly pens. The
Company will also provide a membership and other benefits to
the lessor and paid approximately $2,600 for required fencing
materials and labor. The Company also entered into a one year
land lease for approximately 780 acres for $2,000. The
Company expects to negotiate renewals of the lease on an
annual basis.
The Company also rented a mobile home, which was used as a
management office, for $500 per month on a month to month
basis [See Note 6]. The Company terminated use of the mobile
home in August, 1996.
-12-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - OPERATING LEASES [Continued]
Future Minimum rental payments under the various operating
leases are as follows:
Year Ending December 31: Minimum Rental Payments
1997 $ 4,360
1998 4,360
1999 4,360
2000 4,360
2001 -
__________
$ 17,440
__________
Rental expenses on the various operating leases for the years
ended December 31, 1996 and 1995 was $6,150 and $6,173.
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
contemplate continuation of the Company as a going concern.
However, the Company has incurred losses since inception and
has not yet been successful in establishing profitable
operations. These factors raise substantial doubt about the
ability of the Company to continue as a going concern. In
this regard, management is proposing to raise additional funds
through loans and/or through additional sales of its common
stock. Management also has plans to commence its hunting club
operations during the current year. There is no assurance
that the Company will be successful in raising this additional
capital or achieving profitable operations. The financial
statements do not include any adjustments that might result
from the outcome of these uncertainties.
NOTE 9 - INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109 "Accounting for Income
Taxes" which requires the liability approach for the effect of
income taxes. The financial statements for prior years have
not been restated and the cumulative effect of the change in
accounting principle was not material in 1993 or for prior
years.
The Company has available at December 31, 1996, unused
operating loss carryforwards of approximately $135,000, which
may be applied against future taxable income and which expire
in various years beginning in 2004 through 2011. The amount
of and ultimate realization of the benefits from the operating
loss carryforwards for income tax purposes is dependent, in
part, upon the tax laws in effect, the future earnings of the
Company, and other future events, the effects of which cannot
be determined. Because of the uncertainty surrounding the
realization of the loss carryforwards the Company has
established a valuation allowance equal to the amount of the
loss carryforwards and, therefore, no deferred tax asset has
been recognized for the loss carryforwards. The net deferred
tax assets are approximately $46,000 and $13,000 as of
December 31, 1996 and 1995, respectively, with an offsetting
valuation allowance at each year end of the same amount
resulting in a change in the valuation allowance of $33,000
during 1996.
-13-
<PAGE>
WILD WINGS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - INCOME TAXES [Continued]
Due to changes in the ownership of the Company in September
1996 the Company's available operating loss carry forwards of
approximately $135,000 will be limited.
NOTE 10 - SUBSEQUENT EVENTS
During February, 1997 the Company entered into an agreement
with two consultants to assist the company in finding
acquisitions and personnel. According to the agreement, the
two consultants were granted 162,500 options each under the
Company's stock option plan. The options are exercisable at
$3.00 per share and expire February 20, 2002.
-14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 7,068
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 3,578
<CURRENT-ASSETS> 10,646
<PP&E> 75,185
<DEPRECIATION> 15,358
<TOTAL-ASSETS> 71,632
<CURRENT-LIABILITIES> 44,769
<BONDS> 0
0
0
<COMMON> 12,960
<OTHER-SE> 13,903
<TOTAL-LIABILITY-AND-EQUITY> 71,632
<SALES> 121,184
<TOTAL-REVENUES> 121,184
<CGS> 23,867
<TOTAL-COSTS> 23,867
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 977
<INCOME-PRETAX> (103,083)
<INCOME-TAX> 0
<INCOME-CONTINUING> (103,083)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (103,083)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
