U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ----------
Commission File Number 0-27274
WALKER WINGSAIL AMERICA INC
(Exact Name of Registrant as specified in its charter)
Delaware 04-3303425
State or other jurisdiction of (IRS Employer Indentification No)
incorporation or organization)
Devonport Royal Dockyard, Plymouth, Devon, UK PL1 4SG
(Address of principal executive offices)
44 1752 605426
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirement for the past 90 days.
Yes X No
---------------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of May 14, 1997:
Common Stock $0.001 par value 2,386,680
----------------------------- ---------
Class Number of Shares
WALKER WINGSAIL AMERICA INC
INDEX Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets -
March 31, 1997 and December 31, 1996.................... 3
Condensed Statements of Operations -
For the Three Months ended March 31, 1997 and 1996
For the Cumulative From Inception
(January 19, 1995) to March 31, 1997.................... 4
Condensed Statements of Cash Flows -
For the Three Months ended March 31, 1997 and 1996
For the Cumulative From Inception
(January 19, 1995) to March 31, 1997.................... 5
Notes to Condensed Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............. 7-8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K...........................9-10
Signatures
PART 1 FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Condensed Balance Sheets Walker Wingsail America Inc
(A Development Stage Company)
- --------------------------------------------------------------------------------------
Mar 31 December 31,
1997 1996
(Unaudited)
- -------------------------------------------------------------------------------------
<S> <C> <C>
Assets $ $
Current Assets:
Cash 9,170 21,461
Prepaid Expenses and Other Current Assets 2,100 2,100
- -------------------------------------------------------------------------------------
Total Current Assets 11,270 23,561
Intangible Assets, Net of Accumulated Amortization
of $85,329 and $29,668, Respectively 802,169 813,301
- -------------------------------------------------------------------------------------
Total Assets 813,439 836,862
==========================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and Accrued Expenses 31,396 26,448
Note Payable, Net of Unamortized Discount of $0
and $1902 respectively (Note 4) 150,000 148,098
Customer Deposits 29,958 44,888
- -------------------------------------------------------------------------------------
Total Current Liabilities 211,354 219,434
Due to Affiliated Entity (Note 5) 168,458 129,675
License and Sub-License Agreement Obligation 556,090 556,090
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Total Liabilities 935,902 905,199
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Stockholders' Equity
Preferred Stock: $.001 Par Value; 5,000,000 Shares
Authorized Common Stock: $.001 Par Value; 20,000,000
Shares Authorized 2,386,680 Shares Issued and
Outstanding (Note 8) 2,387 2,387
Additional Paid-in Capital 858,547 858,547
Deficit Accumulated During Development Stage (983,397) (929,271)
- -------------------------------------------------------------------------------------
Total Stockholders' Equity (122,463) (68,337)
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Total Liabilities and Stockholders' Equity $ 813,439 $ 836,862
===========================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Condensed Statements of Operations Walker Wingsail America, Inc
(A Development Stage Company)
- -------------------------------------------------------------------------------------------------------
Cumulative
For the Three Months Ended From Inception
March 31 March 31 (January 19, 1995)
1997 1996 to March 31, 1997
(Unaudited) (Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Selling, General and Administrative Expenses (54,188) (178,197) (948,241)
- -------------------------------------------------------------------------------------------------------
Other Income(Loss)
Deferred Syndication Costs (43,062)
Interest Expense (17,223)
Gain on Sale of Demonstration Yacht - 8,850 8,850
Interest Income 62 3,965 4,323
Other Income - 2,100 2,130
Gain (Loss) on Foreign Currency Exchange Rate - (1,132) 9,826
- -------------------------------------------------------------------------------------------------------
Total Other Income(Loss) 62 13,783 (35,156)
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Net Loss from Development Stage Operations $ (54,126) $ (164,414) $ (983,397)
===============================================
Net Loss Per Share (0.02) (0.07) (0.48)
===============================================
Weighted Average Number of Common Shares Outstanding 2,386,680 2,302,493 2,031,970
===============================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows Walker Wingsail America,Inc
(A Development Stage Company)
- --------------------------------------------------------------------------------------------------------------
For the Three For the Three Cumulative
Months Ended Months Ended From Inception
March 31 March 31 (January 19, 1995)
1997 1996 to March 31, 1997
(Unaudited) (Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities (54,126) (164,414) (983,397)
Net Loss from Development Stage Operations
Adjustments to Reconcile Net Loss from Development Stage
Operations to Net Cash
(Used In) Provided by Operating Activities:
Depreciation and Amortization 11,132 11,132 90,631
Gain on Sale of Demonstration Yacht (8,850) (8,850)
Non-Cash Debt Issuance Costs 3,500
Amortisation of Note Payable Discount 1,902 7,500
Deferred Syndication Costs 43,062
Stock Compensation for Services Rendered 18,500
Decrease (Increase) in Prepaid Expenses and Other
Current Assets - 7,173 (2,100)
(Decrease) Increase in Accounts Payable 4,948 (4,355) 31,396
(Decrease) Increase in Customer Deposits (14,930) 9,923 29,958
(Decrease) Increase in Due to Affiliated Entity 38,783 (79,977) 168,458
- --------------------------------------------------------------------------------------------------------------
Net Cash Used In Operating Activities (12,291) (225,869) (604,842)
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Cash Flows from Investing Activities
Proceeds from Sale of Demonstration Yacht - 357,000
357,000
Acquisition of Demonstration Yacht - (353,452)
Organization Costs - (1,018)
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Net Cash Provided by Investing Activities - 357,000 2,530
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Cash Flows from Financing Activities:
Proceeds from Issuance of Note Payable - 142,500 142,500
Principal Repayments of License and Sub-License
Agreement Obligation - (79,000) (330,390)
Proceeds from Issuance of Common Stock, Net of
Syndication Costs - 10,500 842,434
Deferred Syndication Costs (43,062)
- --------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities - 74,000 611,482
- --------------------------------------------------------------------------------------------------------------
Net Increase in Cash (12,291) 205,131 9,170
================================================
Cash, Beginning 21,461 79,250 -
================================================
Cash, Ending $ 9,170 $ 284,381 $ 9,170
================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
NOTES TO CONDENSED FINANCIAL WALKER WINGSAIL AMERICA, INC.
STATEMENTS (UNAUDITED) (A DEVELOPMENT STAGE COMPANY)
1. INTERIM REPORTING:
In the opinion of management, the accompanying unaudited interim
condensed financial statements of Walker Wingsail America Inc. (the
"Company") contain all adjustments necessary to present fairly the
Company's financial position as of March 31, 1997 and December 31, 1996;
the results of its operations and its cash flows for the three months
ended March 31, 1997 and 1996 and the cumulative period from inception
(January 19, 1995) through March 31, 1997
The information included in the condensed balance sheet as of December
31, 1996 has been derived from the Company 's Form 10-KSB for the year
ended December 31, 1996 (1996 Form 10-KSB). The unaudited condensed
financial statements contained herein should be read in conjunction with
the financial statements and the corresponding notes contained in the
Company's 1996 Form 10-KSB.
2. NET LOSS PER SHARE:
Net loss per share is calculated based on the weighted average number of
shares of common stock and common stock equivalents outstanding during
the corresponding periods.
3. DEMONSTRATION YACHT:
In February, 1996, the Company sold its demonstration yacht to Wingsail
U.S.A., Inc., an unaffiliated third party, for cash consideration in the
amount of $357,000.
4. NOTE PAYABLE:
During March, 1996, the Company borrowed $142,500, net of unamortized
discount of $7,500, under a 7.75% note agreement with an effective
interest rate of 13.2%. Under the terms of the note agreement, the
outstanding borrowings were due on March 28, 1997. The note is
collateralized by substantially all assets of the Company. As of March
31, 1997 borrowings outstanding under the note amounted to $150,000. In
connection with the note agreement, the Company incurred debt issuance
costs in the amount of $12,500 and issued 50,000 shares of its .001 par
value common stock to the lender. Such shares of common stock have been
recorded at a value of $3,500 in the accompanying balance sheet as issued
and outstanding common stock. The Company is in the process of
negotiating an extended due date.
5. DUE TO AFFILIATED ENTITY:
Although it was the Company's intention to repay the balance due to
Walker Wingsail Systems PLC for allocated expenses at the point of the
Company completed a secondary offering, upon receipt of the proceeds from
the aforementioned sale of the demonstration yacht in February, 1996
(Note 3), the Company elected to remit a payment in February, 1996 toward
the outstanding obligation with Walker Wingsail Systems PLC in the amount
of $151,000. In addition, in May, 1996, the Company remitted an
additional payment of $166,559 toward such outstanding obligation to
Walker Wingsail Systems PLC.
6. LICENSE AND SUB-LICENSE AGREEMENT OBLIGATION:
During the year ended December 31, 1996 in consideration for this license
and sub-license agreement, the Company remitted $136,995 to Walker
Wingsail Systems plc. No remittance has been made during the three
months ended March 31, 1997.
7. SALES REPRESENTATION AGREEMENTS:
In March 1996, Walker Wingsail Systems PLC entered into a sales
representation agreement with Wingsail, U.S.A., Inc. pursuant to which it
agreed to pay a commission of 20% of each sale of Walker Wingsail yachts
for which Wingsail, U.S.A., Inc. is responsible. Walker Wingsail Systems
PLC has also agreed to pay the Company a commission of 2% for each such
sale made by Wingsail, U.S.A. Inc.
8. COMMON STOCK ISSUANCE:
No stock has been issued during the three months ended March 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE QUARTER ENDED MARCH 31,
1997 WITH THE QUARTER ENDED MARCH 31, 1996 AND THE PERIOD FROM INCEPTION
FROM (JANUARY 19, 1995) to MARCH 31, 1997.
RESULTS OF OPERATIONS
During the period from the inception of the Company (January 19, 1995)
through March 31, 1997, the Company has engaged in no significant
operations. During the Current Period (defined below) the Company's
primary activities consisted of acting as a sales representative for an
affiliated entity, Walker Wingsail Systems PLC ( WWS ).
No revenues were received by the Company from operations during the three
month period ended March 31, 1997, (the Current Period ), or the three
month period ended March 31, 1996, (the Prior Period ), or during the
period from inception (January 19, 1995) to March 31, 1997. The Company
suffered a loss of $54,126 during the Current Period and $164,414 in the
Prior Period and $983,397 during the period from inception (January 19,
1995) to March 31, 1997 from development-stage operations.
The Company incurred selling, general and administrative expenses of
$54,188 in the Current Period and $178,197 in the Prior Period and
$948,241 during the period from inception (January 19, 1995) to March 31,
1997.
The Company incurred depreciation and amortization expenses of $11,132 in
the Current Period and $11,132 in the Prior Period and $90,631 during the
period from inception (January 19, 1995) to March 31, 1997.
The Company received other income of $62 in the Current Period and
$14,915 in the Prior Period with a loss on foreign currency exchange of
$1,132. Income of $25,129 was received during the period from inception
(January 19, 1995) to March 31, 1997 with Deferred Syndication Cost of
$43,062 and Interest Expense of $17,223.
The net cash used in operating activities amounted to $12,291 during the
Current Period of which cash was decreased in the amount of $41,092 as a
result of the net loss, net of non-cash items and $225,869 during the
Prior Period of which amount cash was decreased in the amount of $158,632
as a result of the net loss, net of non-cash items.
During the period of inception (January 19, 1995) to March 31, 1997 the
net cash used in operating activities amounted to $604,842. Of this
amount, cash was decreased in the amount of $832,554 as a result of the
net loss, net of non-cash items.
During the Current Period there was no cash flow from investing
activities and during the Prior Period cash flows from investing
activities consisted of the proceeds from the sale of the demonstration
yacht in the amount of $357,000 and during the period from inception
(January 19, 1995) to March 31, 1997 the cash flows from investing
activities amounted to $2,530 which consisted of the purchase of the
demonstration yacht for $353,452, the proceeds from the sale of the
demonstration yacht in the amount of $357,000, and an outlay for
organisation costs in the amount of $1,018.
There were no cash flows from financing activities in the Current Period.
In the Prior period cash flows from financing activities amounted $74,000
which consisted of proceeds from issuance of note payable of $142,500,
issuance of common stock, $10,500; less a principal repayment of its
obligation on the license and sub license agreement of $79,000.
During the period from inception (January 19 1995) to March 31, 1996, the
net cash used in financing activities amounted to $611,482 which
consisted of $330,390 in principal repayments of Licence and Sub-Licence
agreement obligation, $842,434 in proceeds of issuance of Common Stock,
$142,500 proceeds from issuance of note payable, less $43,062 in deferred
syndication costs.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ability to continue in operation is dependent upon
raising additional capital until revenues are sufficient to fund the
company's operating expenses. The Company is currently exploring the
possibility of raising additional capital through private sources. There
can be no assurance that the Company will be able to secure such
financing on a timely basis or on terms that are acceptable to it, or
that such funds will be adequate for its future operations. The Company
is also currently considering a merger with its affiliated entity, WWS.
WWS is in the process of attempting to raise approximately $4,300,000 of
capital through a U.K. offering of its Convertible Unsecured Loan Stock.
During the first quarter 1996 the Company entered into a term loan
agreement with an unaffiliated third party pursuant to which the Company
borrowed $142,500, net of unamortized discount of $7,500, at an annual
interest rate of 7-3/4% (an effective annual interest rate of 13.2%) for
working capital purposes. Under the terms of the loan agreement, the
borrowings were due on March 28, 1997. The Company is in the process of
negotiating an extended due date. The loan is secured by substantially
all of the Company's assets. The Company currently has no other
borrowing facilities or alternative financing methods available to it.
Contingent on the Company's ability to raise additional capital, the
Company plans to acquire ship building facilities at a location yet to be
determined in the eastern United States and to begin commercial
production of Walker Wingsail yachts using the Walker Wingsail
technology. The Company believes that the initial cost of acquiring and
bringing into full production a ship building facility necessary for its
operations will be approximately $3.5 to $4.0 million. There can be no
assurance that the Company will be able to raise such capital on terms
satisfactory to it.
The Company is not currently committed to expend funds for
marketing or any other activities or purchases. Management also expects
to incur minimal office and administration expenses and professional
fees. Dependent upon the success of additional capital raising
activities, the Company's expenditures will increase accordingly to fund
its post-development stage operations.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits:
27.01 Financial Data Schedule
b. Reports on Form 8-K:
The Company has not filed any reports on Form 8-K during
the quarterly period ended March 31, 1997
SIGNATURES
----------
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorised.
WALKER WINGSAIL AMERICA, INC.
November 14 1996
- ---------------- /s/ John Walker
---------------------------------
John Walker, President (Principal
Executive Officer, Principal
Financial Officer and Principal
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1997 FINANCIAL STATEMENTS OF WALKER WINGSAIL AMERICA, INC. AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000942652
<NAME> WALKER WINGSAIL AMERICA, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 9
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 2
<CURRENT-ASSETS> 11
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<TOTAL-ASSETS> 814
<CURRENT-LIABILITIES> 380
<BONDS> 556
0
0
<COMMON> 2
<OTHER-SE> (124)
<TOTAL-LIABILITY-AND-EQUITY> 814
<SALES> 0
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<CGS> 0
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<OTHER-EXPENSES> 54
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<INCOME-PRETAX> (54)
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<EPS-PRIMARY> (.02)
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</TABLE>
