SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 4, 1997
WANDERLUST INTERACTIVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-27828 13-3779546
- -------------------- -----------------------
(Commission File No.) (IRS Employer I.D. No.)
462 Broadway
New York, New York 10013
- --------------------------------------- ------------
(Address of principal executive offices) (Postal Code)
Registrant's telephone number, including area code (212) 965-6700
Page 1 of 21<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Independent Auditors' Report
Board of Directors and Proprietor
Western Technologies, Inc. and
Smith Engineering (a proprietorship)
Los Angeles, California
We have audited the accompanying combined balance sheet of Western
Technologies, Inc. and Smith Engineering (a proprietorship) as of
March 31, 1996, and the related combined statements of operations,
deficit, and cash flows for each of the two years in the period ended
March 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 audits
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 referred to above present
fairly, in all material respects, the combined financial position of
Western Technologies, Inc. and Smith Engineering (a proprietorship) at
March 31, 1996, and the combined results of their operations and their
cash flows for each of the two years in the period ended March 31, 1996,
in conformity with generally accepted accounting principles.
Drucker, Math & Whitman, P.C.
North Brunswick, New Jersey
March 28, 1997
- -2-
<TABLE>
<CAPTION>
<PAGE>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
COMBINED BALANCE SHEET
MARCH 31, 1996
ASSETS
<S> <C>
Current assets:
Cash $ 265,507
Accounts receivable, less allowance
for doubtful accounts, $15,000 687,528
Costs and estimated earnings
in excess of billings on
uncompleted contracts 115,000
-------
Total current assets 1,068,035
---------
Property and equipment:
Automobiles 81,754
Computer equipment 859,789
Electronic equipment 126,463
Other 158,761
---------
1,226,767
Less accumulated depreciation (664,139)
---------
562,628
Other assets:
Deposits 21,897
---------
$1,652,560
=========
See notes to combined financial statements.
- -3-
<PAGE>
<CAPTION>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
COMBINED BALANCE SHEET (Continued)
MARCH 31, 1996
LIABILITIES AND COMBINED DEFICIT
<S> <C>
Current liabilities:
Notes payable, bank $ 473,160
Accounts payable 241,176
Accrued expenses 334,552
Federal corporate income tax payable 2,788
Billings in excess of costs and estimated
earnings on uncompleted contracts 168,988
Accrued loss on Vampire project 1,350,000
----------
Total current liabilities 2,570,664
Combined deficit (918,104)
---------
$1,652,560
=========
See notes to combined financial statements.
- -4-
<PAGE>
<CAPTION>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1996 AND 1995
1996 1995 ---- ----
<S> <C> <C>
Revenues:
Development contracts $ 3,874,848 $ 3,537,438
Royalties 674,810 2,343,587
--------- ---------
4,549,658 5,881,025
--------- ---------
Costs and expenses:
Cost of development
contracts 3,019,316 3,758,863
Provision for loss
on Vampire project 1,708,000 -
Research and development 71,655 241,980
General and administrative 1,361,710 974,453
--------- ---------
6,160,681 4,975,296
--------- ---------
Income (loss) before
income taxes (1,611,023) 905,729
---------- ---------
Income taxes:
Corporate 18,138 29,380
Pro forma on proprietor-
ship (benefit) (375,000) 375,000
---------- ---------
(356,862) 404,380
---------- ---------
Net income (loss) $(1,254,161) $ 501,349
========== ========
Per share data:
Net income (loss) per share ($11.40) $4.56
========== ========
Weighted average shares
outstanding 110,000 110,000
========== ========
See notes to combined financial statements.
- -5-
<PAGE>
<CAPTION>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
COMBINED STATEMENTS OF DEFICIT
YEARS ENDED MARCH 31, 1996 AND 1995
Additional Proprietor's Combined
Common paid-in Retained equity balance
stock* capital earnings (deficit) (deficit)
----- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance,
April 1, 1994 $1,100 $46,585 $448,583 $577,614 $1,073,882
Net income (loss),
year ended
March 31, 1995 (61,137) 562,486 501,349
Withdrawals (830,102) (830,102)
Pro forma taxes
adjustment 375,000 375,000
------ ------ -------- ------- -------
Balance,
March 31, 1995 1,100 46,585 387,446 684,998 1,120,129
Net loss,
year ended
March 31, 1996 (46,001) (1,208,160) (1,254,161)
Withdrawals (409,072) (409,072)
Pro forma taxes
adjustment (375,000) (375,000)
----- ------ -------- -------- -------
Balance (deficit),
March 31, 1996 $ 1,100 $ 46,585 $341,445 ($1,307,234) ($918,104)
* Common stock, $.01 par value; authorized, 250,000 shares; issued and outstanding, 110,000 shares.
- -6-
<PAGE>
<CAPTION>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1996 AND 1995
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,254,161) $501,349
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 188,761 135,582
Pro forma taxes on proprietorship (375,000) 375,000
Allowance for loss on Vampire project 1,350,000 -
Changes in assets/liabilities:
Accounts receivable (425,659) 65,009
Costs and estimated earnings
in excess of billings on
uncompleted contracts 34,385 (149,385)
Other assets (10,162) 8,365
Accounts payable 225,839 (55,454)
Accrued expenses 202,369 25,429
Federal corporate income tax payable (10,302) 15,695
Billings in excess of costs and estimated
earnings on uncompleted contracts 87,646 (122,576)
------- -------
Net cash provided by operating
activities 13,716 799,014
------- -------
Cash flows from investing activities:
Purchases of property and equipment (242,081) (124,060)
------- -------
Net cash used in investing
activities (242,081) (124,060)
------- -------
- -7- See notes to combined financial statements.
<PAGE>
<CAPTION>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1996 AND 1995
(Continued)
1996 1995
---- ----
<S> <C> <C>
Cash flows from financing activities:
Proceeds from notes payable 458,354 200,000
Repayments of notes payable (376,584) (18,787)
Proprietor drawings (409,072) (830,102)
------- -------
Net cash used in financing
activities (327,302) (648,889)
Net increase (decrease) in cash (555,667) 26,065
Cash at beginning of year 821,174 795,109
-------- -------
Cash at end of year $265,507 $ 821,174
======= =======
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest $ 60,615 $ 58,402
Income taxes $ 28,440 $ 13,685
Non-cash transactions, liabilities assumed
in connection with the purchase of equipment $ 56,498 $150,000
</TABLE>
- -8- See notes to combined financial statements.
<PAGE>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1996 AND 1995
1. Basis of presentation, business activity and summary of significant
accounting policies:
Basis of presentation:
The combined financial statements include the accounts and transactions
of Western Technologies, Inc. ("Western") and Smith Engineering ("Smith"),
a sole proprietorship, both owned by Jay Smith, III ("Mr. Smith").
Adrenalin Entertainment, Inc. ("Adrenalin") is owned by Mr. Smith and
Evolution Interactive, Inc. ("Evolution") is 50 per cent owned by Mr.
Smith. Adrenalin and Evolution have had insignificant or no transactions
and are not included in these financial statements. Any personal assets
or liabilities of Mr. Smith are not included in these financial statements.
Collectively, Western and Smith are referred to as the "Company".
Intercompany transactions and balances have been eliminated.
Business activity:
The Company is engaged in the invention and development
(including engineering and software development) of electronic designs,
technology, and software, principally for toys and electronic games.
The Company licenses or sells inventions, designs, and software to
independent manufacturers and publishers. Such manufacturers and
publishers generally pay advanced royalties or development fees and may
pay additional royalties based on products sold. The Company also provides
product development services to manufacturers. The Company is located in
Southern California.
The Company's customers are concentrated in the toy and electronic
entertainment industries. These industries are characterized by rapid
changes in technology and customer preferences.
- -9-
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
YEARS ENDED MARCH 31, 1996 AND 1995
1. Basis of presentation, business activity and summary of significant
accounting policies:
(continued)
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect amounts and disclosures reported therein.
Due to the inherent uncertainty involved in making estimates, actual
results reported in future periods may be based upon amounts which
differ from those estimates.
Development contract revenue and cost recognition:
Revenues from fixed-price and modified fixed-price development
contracts are recognized on the percentage-of-completion method
measured by the percentage that costs incurred to date bear to
total estimated costs. A contract is considered complete when
all costs, except insignificant items, have been incurred.
Contract costs include all direct labor, subcontractor and
other costs and those indirect costs related to contract performance,
such as indirect salaries, employee benefits, insurance, and payroll taxes.
Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined. Changes in job
performance, customer acceptance of work done, technological developments
and estimated profitability may result in revisions to costs and income
and are recognized in the period in which the revisions are determined.
The asset, "Costs and estimated earnings in excess of billings
on uncompleted contracts", represents revenues recognized in excess of
amounts billed. The liability, "Billings in excess of costs and estimated
earnings on uncompleted contracts", represents billings in excess of
revenues recognized.
- -10-
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
YEARS ENDED MARCH 31, 1996 AND 1995
1. Basis of presentation, business activity and summary of significant
accounting policies: (continued)
Royalty revenue:
Royalties earned by the Company are generally reported by the licensees
on a calendar quarter basis. The Company recognizes royalty revenue
when received.
Property and equipment and depreciation:
Property and equipment are stated at cost. Depreciation is provided by
various methods over the estimated useful lives of the related assets,
predominantly from 5 to 7 years.
Earnings (loss) per share:
Earnings (loss) per share are based on 110,000 average shares
outstanding during each year.
Cash and cash equivalents:
The Company considers highly liquid investments with an original
maturity of three months or less to be cash and cash equivalents.
Income taxes:
Smith, as a sole proprietorship, is taxed on a combined basis with
Mr. Smith. A pro forma amount for income taxes (or benefit) applicable
to income (or loss) of Smith, calculated at a 40% tax rate, is included
in the combined statements of operations and offset by a pro forma
adjustment in the combined statements of deficit. Western files its
tax return on the cash basis. Deferred taxes are not provided for the
differences between amounts of assets and liabilities for financial
statement reporting purposes and such amounts as measured by tax returns
filed as the deferred taxes would not be significant to
the financial presentation.
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
YEARS ENDED MARCH 31, 1996 AND 1995
2. Accounts receivable:
March 31, 1996
--------------
Completed contracts $ 325,350
Contracts in progress 247,644
Other 129,534
-------
702,528
Less allowance for doubtful accounts 15,000
-------
$ 687,528
=======
3. Billings in excess of costs and estimated earnings on uncompleted
contracts:
Costs incurred $1,372,754
Estimated earnings 388,258
---------
1,761,012
Less billings to date (1,815,000)
$ (53,988)
Included in the accompanying combined balance sheet under the following:
Costs and estimated earnings in excess of
billings on uncompleted contracts $ 115,000
Billings in excess of costs and estimated
earnings on uncompleted contracts (168,988)
--------
$ ( 53,988)
========
- -12-
<PAGE>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
YEARS ENDED MARCH 31, 1996 AND 1995
4. Notes payable, bank:
Note payable, $150,000, due on demand, being paid in 36
monthly installments of $4,167 plus accrued interest.
Interest rate is the bank index rate plus 2%. Bank index
rate was 8.25% at March 31, 1996. $ 83,328
Note payable, $100,000, due on demand, being paid in 36
monthly installments of $2,780 plus accrued interest.
Interest rate is the bank index rate plus 2%. 77,760
Note payable, $150,000, due on demand, being paid in 36
monthly installments of $4,864, which includes principal
and interest at the bank index rate plus 2%. 112,072
Revolving loan, up to $250,000. The outstanding balance
is due upon demand, no later than January 15, 1998.
Payment of accrued interest is due monthly at the bank
index rate plus 1.5%. 200,000
-------
$473,160
=======
The above loans are secured by a blanket lien on all assets, and
are personally guaranteed by Mr. and Mrs. Smith.
- -13-
<PAGE>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
YEARS ENDED MARCH 31, 1996 AND 1995
5. Concentration of credit risk and major customers:
The Company deals with a relatively small number of customers which
account for the vast majority of revenues and receivables.
At March 31, 1996, five customers accounted for 79% of the accounts
receivable; these customer balances ranged from 20% to 13% of total
receivables.
For the years ended March 31, 1996 and 1995, the customers listed below
accounted for 10 per cent or more of revenue:
March 31, 1996 March 31, 1995
-------------- --------------
Customer "A" - 15%
Customer "B" - 10%
Customer "C" 29% -
Customer "D" 12% -
Customer "E" 11% -
6. Commitments:
The Company is obligated under a noncancellable lease agreement for a
production and office facility for minimum monthly payments of $13,801
through January 31, 1999. The lease provides for two one-year renewal
options. The Company is obligated to pay its proportionate share of
the property taxes, insurance, and operating costs in connection with
the operation and maintenance of the facility. Rent expense for the
fiscal years ended March 31, 1996 and 1995 was $144,000 and $141,000,
respectively.
Minimum rental commitments are; 1997, $165,610; 1998, $165,610;
1999, $138,010.
- -14-
<PAGE>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
YEARS ENDED MARCH 31, 1996 AND 1995
7. Accrued loss on Vampire contract:
In 1994, the Company entered into a fixed price contract to develop an
interactive game for a publisher who had licensed the game property
"Vampire: The Masquerade". The game was to be constructed on the PC
CD ROM platform. At that time, the game design and the technology
represented an advance that had not been previously used by the Company.
During the development, the specifications required for the game
design changed substantially, requiring a much more powerful and
elaborate game than initially proposed.
Under the terms of the contract with the publisher, the Company was to
receive non-refundable advance royalties, to be paid in installments
based on achievement of milestones as the work progressed, totaling
$700,000. In addition, the Company was to receive additional
earned royalties, based on 16% of the publisher's wholesale sales
of the completed game, to the extent that such earned royalties
exceed advance royalties. Mr. Smith is personally responsible for
the Company's obligations under the contract with the publisher.
As of March 31, 1996, the Company estimated that its total cost to
develop the game would total $2,408,000 and would exceed total
advance royalties provided under the contract by $1,708,000.
A liability which represents the excess which is expected to be
incurred in subsequent periods has been reflected in the Company's
balance sheet at March 31, 1996 in the amount of $1,350,000. It
is reasonably possible that a change in estimate will occur in the
near term.
- -15-
<PAGE>
WESTERN TECHNOLOGIES, INC.
and
SMITH ENGINEERING (A PROPRIETORSHIP)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
YEARS ENDED MARCH 31, 1996 AND 1995
8. Subsequent event:
The Company, Mr. Smith and Wanderlust Interactive, Inc. ("Wanderlust")
entered into an acquisition agreement on December 30, 1996, which
acquisiton closed on February 4, 1997. The agreement provides for the
sale of 100% of the outstanding shares of stock of Western and certain
assets of Smith in exchange for 800,000 shares of Wanderlust stock.
An additional 600,000 shares of Wanderlust stock may be issued if
certain events transpire. These events relate to Wanderlust's
obtaining additional equity capital. As part of the
acquisition, a license agreement was entered into between Western
and Mr. Smith whereby Mr. Smith granted to Western the exclusive
right to use and market patents and license agreements owned by Mr.
Smith. The license agreement provides that 75% of the revenues
from such patents and licenses will be retained by Western and 25%
will be retained by Mr. Smith until Mr. Smith receives an aggregate
revenue from such patents and licenses of $2,000,000, at which time
no further revenue will inure to Mr. Smith.
In December 1996, the Company borrowed $230,000 from Wanderlust.
From January 1, 1997 through March 21, 1997, an additional $548,000
was borrowed. These borrowings are non-interest bearing.
- -16-
<PAGE>
Pro Forma Financial Information:
On February 4, 1997 Wanderlust Interactive, Inc. ("Wanderlust") closed
on an acquisition agreement with Western Technologies, Inc. ("Western")
and Mr. Jay Smith, owner of certain patents and trademarks. The
agreement provides for the sale of 100% of the outstanding shares of
Western, and the patents and trademarks owned by Mr. Smith to Wanderlust
in exchange for 800,000 shares of Wanderlust common stock. Wanderlust
may issue an additional 600,000 shares of stock if certain events
transpire. These events relate to Wanderlust's obtaining additional equity
capital. The proforma financial information presents the financial
condition as of December 31, 1996 and the results of operations for the
year ended June 30, 1996 and the six months ended December 31, 1996, as
if the acquisition had occurred on July 1, 1995. In management's opinion,
the unaudited proforma financial information is not necessarily
indicative of the actual results that would have occurred, had the
acquisition been consummated on July 1, 1995.
- -17-
<PAGE>
<TABLE>
<CAPTION>
Condensed Balance Sheet
December 31, 1996
Wanderlust Western Pro forma Pro forma
Historical (1) Historical (2) Adjustments Results
============== ============== =========== =========
<S> <C> <C> <C> <C>
Cash and cash equivalents $2,281,672 $ 22,592 $2,304,264
Other current assets 127,441 381,126 508,567
--------- ---------- ----------- ---------
Total current assets 2,409,113 403,718 2,812,831
Fixed assets, net 452,499 616,403 1,068,902
License rights, advance
royalty 293,998 293,998
Patents and trademarks, net $2,737,363(3) 2,737,363
Goodwill 1,352,579(3) 1,352,579
Other assets 276,194 58,548 334,742
--------- ---------- ----------- ---------
$3,431,804 $1,078,669 $4,089,942 $8,600,415
========= ========== ========== ==========
Accounts payable and
accrued expenses 123,555 533,443 656,998
Notes payable and
loans payable 555,168 555,168
Due to shareholder 187,625 (107,625)(4) 80,000
Accrued loss on
Vampire project 982,000 (982,000)(5) 0
Convertible debenture
payable 507,500 507,500
--------- --------- ---------- ---------
Total current liabilities 631,055 2,258,236 (1,089,625) 1,799,666
--------- --------- ---------- ---------
- -18- Footnotes on next page
<CAPTION>
Condensed Balance Sheet
December 31, 1996 (Cont.)
Wanderlust Western Pro forma Pro forma
Historical (1) Historical (2) Adjustments Results
============== ============== =========== =========
<S> <C> <C> <C> <C>
Capital stock 37,637 8,000(3) 45,637
Additional paid in
capital 7,216,348 3,992,000(3) 11,208,348
Accumulated deficit (4,453,236) (1,179,567) 982,000(5)
107,625(4)
89,942(3)
(4,453,236)
--------- --------- --------- ---------
2,800,749 (1,179,567) 5,179,567 6,800,749
--------- --------- --------- ---------
$3,431,804 $1,078,669 $4,089,942 $8,600,415
========= ========= ========= =========
(1) Per Wanderlust 10-QSB, December 31, 1996
(2) Per Western's unaudited financials, September 30, 1996.
(3) Allocation of cost of acquisition to assets acquired.
(4) To adjust to promissory note dated February 4, 1997.
(5) Accrued loss on Vampire project, a liability of Smith sole
proprietorship, not included in acquisition.
- -19-
<PAGE>
<CAPTION>
Condensed Statements of Operations
For the six months ended December 31, 1996
Wanderlust Western Pro forma Pro forma
Historical (1) Historical (2) Adjustments Results
============== ============== =========== =========
<S> <C> <C> <C> <C>
Revenue $ 294,387 $1,858,904 $2,153,291
--------- --------- --------- ---------
Cost of revenue 50,042 859,902 $ 342,170(3) 1,252,114
Research and development 1,524,720 1,524,720
Selling, general and
administrative 855,002 873,000 16,907(4) 1,744,909
Interest income, net (38,965) (38,965)
--------- --------- --------- ---------
2,390,799 1,732,902 359,078 4,482,779
--------- --------- --------- ---------
Net loss ($2,096,412) $ 126,002 ($359,078) ($2,329,488)
========= ========= ======== =========
Weighted average shares
outstanding 3,763,719 4,563,719(5)
========= ========= ======== =========
Net loss per common
share (0.56) ($0.51)
========= =========
(1) Per Wanderlust's 10-QSB, December 31, 1996.
(2) Per Western's unaudited financials, September 30, 1996.
(3) Amortization of patents and trademarks for six months, assuming a 4
year life.
(4) Amortization of goodwill for six months, assuming a 40 year life.
(5) Adjusted for 800,000 shares issued.
- -20-
<PAGE>
<CAPTION>
Condensed Statements of Operations
For the year ended June 30, 1996
Wanderlust Western Pro forma Pro forma
Historical (1) Historical (2) Adjustments Results
============== ============== =========== =========
<S> <C> <C> <C> <C>
Revenue $ 50,000 $4,549,658 $4,599,658
---------- --------- ---------- ---------
Cost of revenue 4,727,316 $684,341(3) 5,411,657
Research and development 1,274,183 71,655 1,345,838
Selling, general and
administrative 859,546 1,361,710 33,814(4) 2,255,070
Interest income, net (48,149) (48,149)
Income tax benefit (356,862) 356,862(5) 0
--------- --------- --------- ---------
2,085,580 5,803,819 1,075,017 8,964,416
--------- --------- --------- ---------
Net loss ($2,035,580) ($1,254,161) ($1,075,017) ($4,364,758)
========= ========= ========= =========
Weighted average shares
outstanding 2,825,802 3,625,802(6)
========= ========= ========= =========
Net loss per common
share ($0.72) ($1.20)
========= ========= ========= =========
(1) Per Wanderlust's 10-KSB, June 30, 1996.
(2) Per Western's audited March 31, 1996 financial statements.
(3) Amortization of patents and trademarks for one year, assuming a 4 year
life.
(4) Amortization of good will for one year, assuming a 40 year life.
(5) Eliminate income tax benefit.
(6) Adjusted for 800,000 shares issued.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
WANDERLUST INTERACTIVE, INC.
By: s/ Catherine Winchester
----------------------
Catherine Winchester,
President
April 15, 1997
- -22-
