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 JUNE 30, 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 August 8 1997:
Common Stock $0.001 par value 2,386,680
----------------------------- ----------------
Class Number of Shares
WALKER WINGSAIL AMERICA INC
INDEX Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets -
June 30, 1997 and December 31, 1996.................... 3
Condensed Statements of Operations -
For the Three Months ended June 30, 1997 and 1996
For the Six Months ended June 30, 1997
For the Cumulative From Inception
(January 19, 1995) to June 30, 1997 and 1996.......... 4
Condensed Statements of Cash Flows -
For the Six Months ended June 30, 1997 and 1996
For the Cumulative From Inception
(January 19, 1995) to June 30, 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
Condensed Balance Sheets Walker Wingsail America Inc
(A Development Stage Company)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30 December 31,
1997 1996
---------------------------
(Unaudited)
<S> <C> <C>
Assets $ $
Current Assets:
Cash 8,493 21,461
Prepaid Expenses and Other Current Assets 2,100 2,100
--------------------------
Total Current Assets 10,593 23,561
Intangible Assets, Net of Accumulated Amortization of $96,461
and $74,197 Respectively 791,037 813,301
--------------------------
Total Assets 801,630 836,862
==========================
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable and Accrued Expenses 13,866 26,448
Note Payable, Net of Unamortized Discount of $0 and $1,902
(Note 3) 150,000 148,098
Customer Deposits 19,958 44,888
--------------------------
Total Current Liabilities 183,824 219,434
Due to Affiliated Entity (Note 4) 206,479 129,675
License and Sub-License Agreement Obligation 556,090 556,090
--------------------------
Total Liabilities 946,393 905,199
--------------------------
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 (Notes 3 and 7) 2,387 2,387
Additional Paid-in Capital 858,547 858,547
Deficit Accumulated During Development Stage (1,005,697) (929,271)
--------------------------
Total Stockholders' Equity (144,763) (68,337)
--------------------------
Total Liabilities and Stockholders' Equity $ 801,630 $ 836,862
==========================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
Condensed Statement of Operations Walker Wingsail America Inc
(A Development Stage Company)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Six For the Period Cumulative
-------------------------- Months Ended From Inception From Inception
June 30 June 30 June 30 (January 19, 1995) (January 19, 1995)
1997 1996 1997 to June 30, 1996 to June 30, 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selling, General and Administrative
Expenses $ (22,296) $ (70,487) $ (76,484) $ (745,781) $ (970,537)
-------------------------------------------------------------------------------
Other Income(Expense)
Deferred Syndication Costs (43,062)
Interest Expense (17,223)
Gain on Sale of Demonstration Yacht - - - 8,850 8,850
Interest Income 2 (2,125) 64 3,437 4,325
Other Income - 30 - 2,130 2,130
Gain (Loss) on Foreign Currency Exchange
Rate (6) (474) (6) 9,923 9,820
------------------------------------------------------------------------------
Total Other Income (Expense) (4) (2,569) 58 24,340 (35,160)
------------------------------------------------------------------------------
Net Loss from Development Stage Operations $ (22,300) $ (73,056) $ (76,426) $ (721,441) $(1,005,697)
==============================================================================
Net Loss Per Share $ (0.01) $ (0.03) $ (0.03) $ (0.39) $ (0.49)
==============================================================================
Weighted Average Number of Common Shares
Outstanding 2,386,680 2,368,702 2,386,680 1,845,448 2,068,116
==============================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
Condensed Statement of Cash Flows Walker Wingsail America Inc
(A Development Stage Company)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Six Cumulative
Months Ended Months Ended From Inception
June 30 June 30 (January 19, 1995)
1997 1996 to June 30, 1997
(Unaudited) (Unaudited) (Unaudited)
--------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities $(76,426) $(237,470) $(1,005,697)
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 22,264 22,264 101,763
Deferred Syndication Costs 43,062
Stock Compensation for Services Rendered 18,500
Gain on Sale of Demonstration Yacht - (8,850) (8,850)
Non-Cash Debt Issuance Costs - 3,500 -
Amortisation of Note Payable 1,902 1,823 7,500
Decrease (Increase) in Prepaid Expenses and Other
Current Assets - 10,574 (2,100)
(Decrease) Increase in Accounts Payable (12,582) (29,189) 13,866
(Decrease) Increase in Customer Deposits (24,930) 19,923 19,958
(Decrease) Increase in Due to Affiliated Entity 76,804 (200,772) 206,479
---------------------------------------------
Net Cash (Used In) Provided by Operating Activities (12,968) (418,197) (605,519)
---------------------------------------------
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)
---------------------------------------------
Net Cash Provided by (Used In) Investing Activities - 357,000 2,530
---------------------------------------------
Cash Flows from Financing Activities:
Proceeds from Issuance of Note Payable - 142,500 142,500
Principal Repayments of License and Sub-License
Agreement Obligation - (136,995) (330,390)
Proceeds from Issuance of Common Stock, Net of
Syndication Costs - 30,800 842,434
Deferred Syndication Costs - - (43,062)
---------------------------------------------
Net Cash Provided by (Used In) Financing Activities - 36,305 611,482
---------------------------------------------
Net Increase in Cash (12,968) (24,892) 8,493
---------------------------------------------
Cash, Beginning 21,461 - -
---------------------------------------------
Cash, Ending $ 8,493 $ 54,358 $ 8,493
=============================================
</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 June 30, 1997 and December 31, 1996; the results of its operations and
its cash flows for the six months ended June 30, 1997 and 1996 and the
cumulative period from inception (January 19, 1995) through June 30, 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. 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 June 30, 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.
4. 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 sale
of the demonstration yacht in February, 1996 in the amount of $357,000. 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.
5. 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 six months ended June
30, 1997.
6. 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.
7. COMMON STOCK ISSUANCE:
No stock has been issued during the six months ended June 30, 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 JUNE 30, 1997
WITH THE QUARTER ENDED JUNE 30, 1996 AND THE PERIOD FROM INCEPTION FROM
(JANUARY 19, 1995) to JUNE 30, 1997.
RESULTS OF OPERATIONS
During the period from the inception of the Company (January 19, 1995)
through June 30, 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 June 30, 1997, (the Current Period ), or the three month
period ended June 30, 1996, (the Prior Period ), or during the period from
inception (January 19, 1995) to June 30, 1997. The Company suffered a loss
of $22,300 during the Current Period and $73,056 in the Prior Period and
$1,005,697 during the period from inception (January 19, 1995) to June 30,
1997 from development-stage operations.
The Company incurred selling, general and administrative expenses of $22,296
in the Current Period and $70,487 in the Prior Period and $970,537 during
the period from inception (January 19, 1995) to June 30, 1997.
The Company incurred depreciation and amortization expenses of $11,132 in
the Current Period and $11,132 in the Prior Period and $101,763 during the
period from inception (January 19, 1995) to June 30, 1997.
The Company incurred a loss on foreign currency exchange rate of $6 and
other income of $2. In the prior period the Company incurred a loss on
foreign currency exchange rate of $474, other income of $30 and recognized
an overstatement of interest income of $2,125. During the period from
inception (January 19, 1995 to June 30, 1997 the Company received other
income of $25,125, with Deferred Syndication Cost of $43,062 and Interest
Expense of $17,223.
During the six months ended June 30, 1997 the net cash used in operating
activities amount to $12,968, of this amount cash was decreased in the
amount of $54,162 as a result of the net loss, net of non-cash items.
During the period of inception (January 19, 1995) to June 30, 1997 the net
cash used in operating activities amounted to $605,519. Of this amount,
cash was decreased in the amount of $903,934 as a result of the net loss,
net of non-cash items.
During the six months ended June 30, 1997 there were no cash flow from
investing activities. During the period from inception (January 19, 1995)
to June 30, 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.
During the six months ended June 30, 1997 there were no cash flows from
financing activities.
During the period from inception (January 19 1995) to June 30, 1997, 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 has been dependent upon
raising additional capital until revenues are sufficient to fund the
company's operating expenses, and the Company has therefore been exploring
the possibility of raising additional capital through private sources. The
Company has been unable to secure such financing on a timely basis or on
terms that are acceptable to it. The directors therefore resolved on July
10, 1997 to recommend to its stockholders that an offer of takeover by its
affiliated entity, WWS, be accepted. The offer was made on July 10, 1997
and as at August 1, 1997 the necessary single majority of acceptances has
been received. The Company is now therefore a subsidiary of WWS. The
takeover terms offered two WWS Ordinary Shares for every share of Common
Stock held. 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. So far, approximately $1,000,000 has been subscribed.
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. At present it is continuing to pay interest at the rate agreed
and has been put under no pressure to repay the loan at this time. The loan
is secured by substantially all of the Company's assets, but the liability
to repay will be undertaken by WWS. The Company currently has no other
borrowing facilities or alternative financing methods available 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.
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 June 30, 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.
August 8, 1997
- --------------
/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 JUNE 30,
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 8
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 2
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<TOTAL-ASSETS> 801
<CURRENT-LIABILITIES> 184
<BONDS> 0
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 801
<SALES> 0
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<CGS> 0
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<OTHER-EXPENSES> 22
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (22)
<INCOME-TAX> 0
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<NET-INCOME> (22)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
