U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(X) ANNUAL REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT UNDER 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
(Name of small business issuer in its charter)
Delaware 4-3293446-112109 4 2
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Devonport Royal Dockyard
Plymouth, Devon, England, PL1 4SG
(Address of principal executive offices and Zip Code)
011-44-1752-605426
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per share
(Title of Class)
Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No ____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will
be contained, to the best of registrant'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 [X]
The issuer had no revenues for its most recent fiscal year.
The aggregate market value of the voting stock held by non-
affiliates of the registrant cannot be computed by reference to the
average bid and asked prices of such stock since the Company's stock is
not presently traded, However, the aggregate price at which the voting
stock held by non-affiliates was originally purchased is $956,163
The aggregate number of shares of Common Stock outstanding as of April
14, 1997 is 2,386,680
PART 1
Item 1 Description of Business
General
Walker Wingsail America, Inc (the "Company") was incorporated under
the laws of the State of Delaware on January 19, 1995 and, except as
discussed below, has been engaged primarily in organizational activities.
In May 1995, the Company merged with (the "Merger") Infocorp Technology,
Corp. ("Infocorp"), a corporation incorporated under the laws of the
State of New York. At the time of the Merger, 85% of the outstanding
shares of Infocorp were owned by an entity affiliated with the Company,
Walker Wingsail Systems PLC, a corporation incorporated in England
("WWS"). In accordance with the terms of the Merger, the Company issued
711,685 shares of its $.001 par value Common Stock in exchange for all of
the issued and outstanding shares of Infocorp. At the time of the
Merger, Infocorp did not have any assets or liabilities and was not
engaged in any business activity. The Company now has qualification of
the Company's Common Stock on the OTC Bulletin Board.
In May 1995, the Company entered into a license and sub-license
agreement (as subsequently amended, the "License Agreement") with WWS.
Under the terms of the License Agreement, the Company is provided the
right to distribute, market and produce yachts using WWS's technology and
design throughout the territory of Canada, the United States, Mexico, all
the countries of Central and South America and the Caribbean and the
Republic of the Bahamas. See "Licence Agreement".
In September 1995, the Company completed the sale of 1,294,500
shares of Common Stock at $0.70 per share. The net proceeds to the
Company from this offering, after the payment of offering expenses of
$94,825, were approximately $810,000. A further 91,000 shares were
issued during the year ended December 1996 for cash and non cash
consideration in the amount of $49,300. The Company used approximately
$353,000 of the offering proceeds to purchase from WWS the first
prototype yacht which utilized WWS's technology (the "ZEFYR 43"), as a
demonstration yacht. A total of $330,390 has been paid towards the
licensing fees required by the terms of the Licence Agreement. The
Company is committed to pay an additional $556,090 to WWS when it is
ready to begin manufacturing operations or October 1, 1998, whichever
occurs sooner. See "License Agreement". As of December 31, 1996, the
Company was obligated to WWS in the amount of $129,675 for administrative
and professional fees, and salaries which have been allocated from WWS to
the Company, based on specific expense identification and on a percentage
of time spent by employees of WWS on behalf of the Company respectively.
In February 1996, the Company sold ZEFYR 43 to an unaffiliated party for
a purchase price of $357,000. The Company elected to use $317,559 of the
proceeds from such a sale to pay a part of outstanding obligation to WWS
for the above referenced administrative and professional fees and
salaries.
In March 1996, the Company borrowed $142,500 net of an 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
borrowings outstanding are due in March 1997. The settlement date is
currently being re-negotiated. The note is collateralized by
substantially all assets of the Company.
Reliance on WWS
WWS was incorporated in England in 1981 to manufacture and market
sailing vessels using a unique technology which had been invented and
developed by Mr Walker. This technology basically involves the type of
sail used by WWS (the "Walker Wingsail") and a computerized control
system (the "Walker Micromariner control system") used to control the
Walker wingsail.
In the short term, any inability of WWS to continue in operation
will materially adversely affect the Company, although there are
provisions in the License Agreement to protect the Company in that event.
In such event, the Company has the right to obtain a direct license from
Mr and Mrs Walker, in replacement of the sub-license provided for under
the License Agreement, on the technology owned by them and to acquire the
source code and specifications of the Walker Micromariner control system.
Once the Company has commenced full operations, building yachts under the
License Agreement, the Company's business success should no longer be
directly dependent upon WWS. Except for the sales commission that it
will earn for acting as the selling agent on the sale of certain sailing
yachts manufactured by WWS, the Company will not benefit from orders
received by WWS, but will only benefit from sales achieved by it and/or
vessels built and sold by it.
WWS sustained losses in its fiscal years ending March 30, 1994,
1995, and 1996 of $1,000.000, $720,000 and $1,150,000 respectively. WWS
is in the first year of production, but has also continued with the
making a full set of production mould, alongside normal activities. WWS
expects to experience progressively decreasing losses on the first four
ZEFYR 43's built and is aiming to make a small profit on the fifth.
There can be, however, no assurance that WWS will be able to profitably
produce the ZEFYR 43 in the time described if at all. There are five
boats in build at the present time. The technology used in the design of
vessels manufactured by WWS is protected by a number of domestic and
foreign patents. See "License Agreement" below.
The Walker wingsail is mounted vertically, in the same fashion as a
conventional sail. However, unlike a conventional sail the Walker
wingsail is made of rigid composite material using the same aerodynamic
principles associated with aircraft wings and is built in a shape similar
to that of an airplane wing. The Walker Micromariner control system
adjusts the Walker wingsail in relation to prevailing winds so as to
allow the vessel to be propelled through the water in the direction and
at the speed desired.
The Walker wingsail and the Walker Micromariner control system
provide:
- total fingertip control by a single person regardless of the
size of the boat
- automatic tacking and gybing
- the ability to apply air braking to stop and reverse if
required
- virtual elimination of heeling
- powerful and continuous electronic protection against capsize
All yachts manufactured by WWS so far have been trimarans (three
hulled craft). The main hull houses the cockpit, galley, sleeping
quarters, heads and other living areas. The main hull, which also
supports the Walker wingsail, is flanked on either side by two additional
hulls which are used for storage and to provide stability.
The only sailing yacht presently manufactured by WWS is a 43ft
design called the ZEFYR 43. The ZEFYR 43 is manufactured predominantly
from composite materials including epoxy resins end grain balsa and glass
and carbon fibres, and rigid PVC structural foam sandwich cores. A
typical ZEFYR 43 sells for approximately $430,000 to $480,000 the final
price depending upon the range of options selected by the customer.
Although the ZEFYR 43 is the only sailing yacht currently
manufactured by WWS, WWS plans to design and manufacture other sailing
yachts which will range in length from 35 to 65 feet. It is currently
intended that yachts over 65 feet will be manufactured for WWS or the
Company by others, with the Walker wingsails, and Walker Micromariner
control systems provided by WWS or the Company. At the present time,
neither WWS nor the Company has any agreements with manufacturers for the
production of any yachts over 65 feet, and there can be no assurance that
any such agreements will be entered into on terms that are acceptable to
WWS and the Company.
Possible Future Merger of the Company and WWS
The respective boards of directors of each of the Company and WWS
have considered the advisability of merging the two companies. Each
respective board has agreed in principle that it is in the best interest
of their respective stockholders to pursue discussions on such a merger.
However, no formal discussions or negotiations have taken place regarding
such a merger. Before such a merger may be consummated, it would be put
to a vote of stockholders of both companies who would be asked to approve
the terms of the merger. Although the boards of directors of both
companies are intent on consummating such a merger, as negotiations on
such terms have not yet commenced, there can be no assurance that an
agreement can be or will be reached, or that the terms of such Agreement,
if agreed to, will be beneficial to the stockholders of the Company.
Licence Agreement
The technology used in the design and construction of WWS' sailing
yachts is covered by patents and patent applications, some of which are
owned by WWS and some of which have been licensed to WWS by Mr. and Mrs.
Walker. This technology is sometimes referred to as the "Walker wingsail
technology", and these patents are sometimes referred to as the "WWS
Patents" and the "Walker Patents".
In May 1995, the Company entered into the License Agreement. The
following summary describes certain provisions of the License Agreement.
It does not purport to be complete and is qualified in its entirety by
reference to the License Agreement and the amendment thereto which have
been filed as exhibits. The License Agreement grants the Company the
exclusive license and sub-license, subject to certain minimum sales and
production levels described below, to use certain proprietary know-how,
methods, experience, processes, drawings, designs and other technical
information owned by WWS and Mr. and Mrs. Walker (licensed to WWS) and
certain WWS Patents and Walker Patents (licensed to WWS), to manufacture,
market and sell the Walker wingsail yacht known as ZEFYR 43 in the United
States, Canada, Mexico, all nations of the Caribbean, Central and South
America and the Republic of the Bahamas (the "Territory"). The License
Agreement also grants the company the exclusive right and license to use
certain trademarks, names, trade names, brands, slogans, devices, logos,
designs, trade dress, get-up, appearance and goodwill in the Territory.
The License Agreement will remain in effect until the expiration of
the last patent pertaining to the Walker wingsail technology. At the
present time, the last such patent will expire in 2015. The License
Agreement may be terminated sooner by WWS upon a material breach of any
of the obligations set forth in the License Agreement, if any competitor
of WWS acquires control of the Company's Common Stock, the Company
abandons production of the ZEFYR 43, or the Company terminates the
employment of the Company's present officers other than for reasons of
wilful neglect or misconduct. In addition, the License Agreement will
terminate automatically if the Company is unable to pay its debts as they
become due. In the event the Company fails to meet the required
production and sales levels ( four yachts during a 12 month period,
commencing at such time as the Company is ready to begin manufacturing
operations), the license and sub-license will no longer be exclusive to
the Company in the Territory, although the License Agreement will
otherwise remain in effect. It was the original intention that the
company would be able to make the required payments under the License
Agreement upon signing. However, as a concession to help the Company in
its start-up phase, WWS has agreed to defer a portion of such amounts.
In consideration for this License Agreement, the Company has paid
$330,390 to WWS and is committed to pay an additional $556,090 to WWS
when the Company is ready to begin its manufacturing operations or
October 1, 1998, which ever occurs sooner. The Company, for the right to
manufacture under the terms of the License Agreement, is committed to pay
an additional $384,368 when the Company is ready to begin its
manufacturing operations before receiving tooling, written methods and
training. In addition, and in accordance with the License Agreement, the
Company, during the term of the License Agreement, is generally required
to pay a royalty to WWS of 5.7%, of the Net Sales Prices (as such term is
defined in the License Agreement) of Walker wingsail yachts manufactured
and sold by the Company. Upon construction by the Company of the first
ZEFYR 43, the Company will be free to establish its own sale price for
the yachts it constructs, subject only to normal pricing constraints.
The Company has also agreed not to manufacture or sell other marine
vessels or propulsion systems without the express written consent of WWS.
The License Agreement does not provide the Company the right to
manufacture the Walker Micromariner control system. The License
Agreement, however, states that such systems, for the term of the License
Agreement, will be manufactured by WWS and provided to the Company at the
list price for the Micromariner control systems as set by WWS from time
to time. The Walker Micromariner control system source code and design
data are held by WWS in escrow for the benefit of the Company in the
event of certain events, including the insolvency of WWS.
While the terms of the License Agreement were not negotiated at
arms length and were in fact determined unilaterally by Mr. and Mrs.
Walker, the principles involved in the determination of the terms of the
License Agreement were those of fairness. Management believed that the
License Agreement should be fair to the stockholders of WWS, who would be
relinquishing what could be approximately 50% of the world market for
Walker wingsail yachts, and equally fair to the stockholders of the
Company, who while benefiting from the availability of a fully developed
product with no need for costly research and development will pay what in
the early stages may well be a substantial proportion of revenues in
royalty payments.
It is anticipated that WWS will develop, over the course of several
years, a full range of models. The License Agreement provides that WWS
will offer the Company exclusive rights in respect of such new products,
upon the payment to WWS of a fee equal to 150% of the initial sales price
set by WWS for the new product.
In the event that the employment of Mr. Walker is terminated by
WWS, other than by reason of Mr. Walker's wilful neglect or misconduct,
his voluntary resignation or his death or in the event WWS becomes
insolvent, then the Company has the right to obtain the exclusive rights
and license to use the technology embraced by the patents and patent
applications owned by the Walkers, as well as the proprietary methods and
trade secrets for the design, construction and sale of Walker wingsail
yachts in the Territory for the manufacture, marketing and sale of ZEFYR
43 yachts.
The License Agreement also pertains to other proprietary methods
and trade secrets which are used by WWS in the design of its wingsail
yachts and which are not covered by existing patents or patent
applications.
Sales Representation Agreement
Prior to commencing its manufacturing operations, the Company will
act as a sales representative for WWS in connection with the sale of
Walker wingsail yachts manufactured by WWS. In such capacity the Company
will sell sailing yachts manufactured by WWS at prices determined by WWS
and will receive a commission of up to 8% on each sale. WWS has also
entered into a separate agreement with an unaffiliated third party
pursuant to which it has agreed to pay a commission of 20% on each sale
for which third party is responsible. WWS has agreed to pay WWA 2% of
each such sale to the third party. It is the understanding of WWA that
this commission arrangement is temporary and that in future, WWS will pay
commissions in the range of 8% to 10%.
The Company plans to advertise its boats in sailing magazines such
a Multihulls, Sail, Sailing World and Cruising World. To reach a wider
audience, advertisements may also be placed in magazines such as the Robb
Report, Popular Science, etc. The Company also plans to exhibit at many
of the major boat shows in its Territory.
Competition
The market for sailing yachts is highly competitive. The Company,
however, believes that it has the advantage of exclusive access to unique
technology. Nevertheless, many of the Company's competitors have
significantly greater financial, distribution, advertising, marketing,
management and personnel resources than the Company. To a significant
degree, the Company's future success will depend upon its ability to be
competitive in the areas of price, quality and marketing while operating
within the constraints imposed by its financial resources, as well as its
ability to obtain further financing when required.
Employees
As of April 14, 1997, the Company did not have any employees other
than Mr. and Mrs. Walker. The Company, however, plans to recruit a
management team as soon as it is financially capable of doing so. As of
that same date, WWS employed 48 persons on a full-time basis. These
employees of WWS were engaged in the following categories of activities:
executive, design and administration (12), sales (2), and manufacturing
(34).
Item 2 Description of Property.
The Company currently has no corporate offices or construction
facilities. The Company operates out of the offices of WWS. The
Company's registered office in the United States is located in the
offices of the Company's financial advisor. The Company has no leases
and pays no rent at either of these locations. The Company, however,
will be required to secure such facilities in the future.
Item 3 Legal Proceedings.
The company is not engaged in any litigation, and the officers and
directors presently know of no threatened or pending litigation in which
it is contemplated the Company will be made a party.
Item 4 Submission of Matters to a Vote of Security Holders.
No matters were submitted, during the fourth quarter of the year
covered by this report, to a vote of the security holders through the
solicitation of proxies or otherwise.
PART II
Item 5 Market for Common Equity and Related Shareholder Matters.
During May 1996 the Company was accepted for a listing on the OTC
Bulletin Board of it's Common Stock, but to date no stock has been
traded.
As of April 14, 1997 there were approximately 1,626 record holders
of the Company's Common Stock. The Company has not paid any dividends,
and it is not anticipated that any dividends will be paid in the near
term.
Item 6 Management's Discussion and Analysis or Plan of Operation
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1996 WITH THE PERIOD FROM INCEPTION (JANUARY 19, 1995) TO
DECEMBER 31, 1995 AND THE CUMULATIVE PERIOD FROM INCEPTION (JANUARY 19,
1995) TO DECEMBER 31, 1996
Results of Operations
During the period from the inception of the Company (January 19,
1995) through December 31, 1996, 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
twelve month period ended December 31, 1996, (the Current Period ), or
the period from inception (January 19, 1995) to December 31, 1995, (the
Prior Period ), or during the cumulative period from inception (January
19, 1995) to December 31, 1996. The Company suffered a loss of $445,300
during the Current Period and $483,971 in the Prior Period and $929,271
during the period from inception (January 19, 1995) to December 31, 1996
from development-stage operations.
The Company incurred selling, general and administrative expenses
of $396,956 in the Current Period, $497,097 in the Prior Period and
$894,053 during the cumulative period from inception (January 19, 1995)
to December 31, 1996.
The Company incurred depreciation and amortization expenses
including amortization of the debt discount, of $50,127 in the Current
Period, $34,970 in the Prior Period and $85,097 during the cumulative
period from inception (January 19, 1995) to December 31, 1996
The Company recorded a write-down of deferred syndication costs in
the amount of $43,062, incurred a loss on foreign currency exchange rate
of $1,703, interest expense of $17,223, interest income of $2,664, other
income of $2,130, and a gain on the sale of its demonstration yacht of
$8,850 in the Current Period and a gain on foreign currency exchange rate
of $11,529 and interest income of $1,597 in the Prior Period. During the
cumulative period from inception (January 19, 1995) to December 31, 1996
the Company recorded a write-down of deferred syndication costs in the
amount of $43,062, incurred a gain on foreign currency exchange rate of
$9,826, interest expense of $17,223, interest income of $4,261, other
income of $2.130, and a gain on the sale of its demonstration yacht of
$8,850 during the cumulative period of inception (January 19, 1995) to
December 31, 1996.
The net cash used in operating activities during the Current Period
amounted to $446,845, of this amount, cash was decreased in the amount
of $342,461 as a result of the net loss, net of non-cash items for
depreciation and amortization costs, including amortization of the debt
discount, gain on sale of demonstration yacht, stock compensation for
services rendered and deferred syndication costs in the amounts of
$50,127, $8,850, $18,500 and $43,062 respectively; cash increased in the
amount of $10,589 as a result of a decrease in prepaid expenses and other
current assets; cash decreased in the amount of $18,042 as a result of a
decrease in accounts payable and accrued expenses; cash increased in the
amount of $19,930 in customer deposits and cash decreased in the amount
of $116,861 as a result of a decrease in the amount due to WWS. During
the Prior Period, the net cash used in operating activities amounted to
$145,706 of which cash decreased in the amount of $449,001 as a result of
the net loss, net of non-cash items for depreciation and amortization
costs in the amount of $34,970, cash decreased in the amount of $12,689
as a result of an increase in prepaid expenses and other current assets;
cash increased in the amount of $44,490 as a result of an increase in
accounts payable and accrued expenses; cash increased in the amount of
$24,958 in customer deposits and cash increased by $246,536 as a result
of an increase in the amount due to WWS.
During the cumulative period of inception (January 19, 1995) to
December 31, 1996 the net cash provided by operating activities amounted
to $592,551. Of this amount, cash was decreased in the amount of
$791,462 as a result of the net loss, net of non-cash items including
depreciation and amortization costs, including amortization of the debt
discount, gain on the sale of demonstration yacht, stock compensation for
services rendered, deferred syndication costs in the amounts of $85,097,
$8,850, $18,500, and $43,062 respectively; cash decreased in the amount
of $2,100 as a result of an increase in prepaid expenses and other
current assets; and increased in the amount of $26,448 as a result of an
increase in accounts payable and accrued expenses; cash increased in the
amount of $44,888 as a result of an increase in customer deposits; and
cash increased in the amount of $129,675 as a result of an increase in
the amount due to WWS.
In the Current Period cash flows from investing activities
consisted of the proceeds from the sale of the demonstration yacht in the
amount of $357,000 and in the Prior Period, cash used in investing
activities amounted to $354,470 relating to the acquisition of a
demonstration yacht of $353,452 and an outlay for organisation costs in
the amount of $1,108. During the cumulative period from inception
(January 19, 1995) to December 31, 1996 the cash flows from investing
activities amounted to a net figure of $2,530; primarily attributable to
the proceeds from the sale of the demonstration yacht offset by the
acquisition costs of such yacht.
Cash flows from financing activities amounted to $32,056 during the
Current Period consisting of $30,800 from the issuance of 36,000 shares
of Common Stock, proceeds from issuance of note payable of $142,500; less
deferred syndication costs of $4,249; less a principal repayment of its
obligation on the license and sub license agreement with WWS in the
amount of $136,995. During the Prior Period, the net cash used in
financing activities amounted to $579,426 which consisted of deferred
syndication costs of $38,813 and $811,634 of proceeds from the issuance
of 1,294,500 of common stock, less a principal repayment of its
obligation on the license and sub license agreement with WWS in the
amount of $193,395.
During the cumulative period from inception (January 19 1995) to
December 31, 1996, the net cash used in financing activities amounted to
$611,482 consisting of $142,500 proceeds from issuance of note payable;
$842,434 from the issuance of 1,330,500 of common stock, less deferred
syndication costs of $43,062; less a principal repayment of its
obligation on the license and sub license agreement with WWS in the
amount of $330,390.
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 $4,300,00 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 are 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.
Item 7. Financial Statements
<TABLE>
<CAPTION>
Page
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Independent Auditors' Report F-1
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6 to F-10
</TABLE>
WALKER WINGSAIL AMERICA, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
To the Board of Directors
Walker Wingsail America, Inc.
555 Turnpike Street, Suite 44
North Andover, Massachusetts 01845
INDEPENDENT AUDITORS' REPORT
----------------------------
We have audited the accompanying balance sheets of Walker Wingsail America,
Inc. (a development stage company) as of December 31, 1996 and 1995, and the
related statements of operations, stockholders' equity (deficiency) and cash
flows for the year ended December 31, 1996, the period from inception (January
19, 1995) through December 31, 1995 and the cumulative period from inception
(January 19, 1995) 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 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 financial position of Walker Wingsail America, Inc.
as of December 31, 1996 and 1995, and the results of its operations and its
cash flows for the year ended December 31, 1996, the period from inception
(January 19, 1995) through December 31, 1995 and the cumulative period from
inception (January 19, 1995) through December 31, 1996, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has experienced continued losses from its
development stage operations and a deterioration of working capital that raise
substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters is also discussed in Note 10. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Moody, Cavanaugh & Company, LLP
March 27, 1996
Balance Sheets Walker Wingsail America, Inc.
(A Development Stage Company)
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<TABLE>
<CAPTION>
December 31 1996 1995
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<S> <C> <C>
Assets
Current Assets:
Cash $ 21,461 $ 79,250
Prepaid Expenses and Other Current Assets 2,100 12,689
-------------------------
Total Current Assets 23,561 91,939
Demonstration Yacht, Net of Accumulated Depreciation of $5,302 -- 348,150
Intangible Assets, Net of Accumulated Amortization of $74,197
and $29,668, Respectively. 813,301 857,830
Deferred Syndication Costs -- 38,813
-------------------------
Total Assets $ 836,862 $ 1,336,732
=========================
Liabilities and Stockholders' Equity (Deficiency)
Current Liabilities:
Accounts Payable and Accrued Expenses $ 26,448 $ 44,490
Customer Deposits 44,888 24,958
Note Payable, Net of Unamortized Discount of $1,902 (Note 2) 148,098 --
-------------------------
Total Current Liabilities 219,434 69,448
Due to Affiliated Entity (Note 4) 129,675 246,536
License and Sub-license Agreement Obligation (Note 7) 556,090 693,085
-------------------------
Total Liabilities 905,199 1,009,069
-------------------------
Stockholders' Equity (Deficiency):
Preferred Stock: $.001 Par Value; 5,000,000 Shares Authorized
(Note 6) -- --
Common Stock: $.001 Par Value; 20,000,000 Shares Authorized;
2,386,680 and 2,295,680 Shares Issued and Outstanding,
Respectively. 2,387 2,296
Additional Paid-in Capital 858,547 809,338
Deficit Accumulated During Development Stage (929,271) (483,971)
-------------------------
Total Stockholders' Equity (Deficiency) (68,337) 327,663
-------------------------
Total Liabilities and Stockholders' Equity (Deficiency) $ 836,862 $ 1,336,732
=========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Statements of Operations Walker Wingsail America, Inc.
(A Development Stage Company)
===============================================================================
<TABLE>
<CAPTION>
For the Period Cumulative
from Inception from Inception
For the Year (January 19, (January 19,
Ended 1995) through 1995) through
December 31, December 31, December 31,
1996 1995 1996
------------ -------------- --------------
<S> <C> <C> <C>
Selling, General and Administrative Expenses $ (396,956) $ (497,097) $ (894,053)
---------------------------------------------
Other Income (Expense):
Deferred Syndication Costs (43,062) -- (43,062)
Interest Expense (17,223) -- (17,223)
Gain on Sale of Demonstration Yacht 8,850 -- 8,850
Interest Income 2,664 1,597 4,261
Other Income 2,130 -- 2,130
Gain (Loss) on Foreign Currency Exchange Rate (1,703) 11,529 9,826
---------------------------------------------
Total Other Income (Expense) (48,344) 13,126 (35,218)
---------------------------------------------
Net Loss from Development Stage Operations $ (445,300) $ (483,971) $ (929,271)
=============================================
Net Loss per Share $ (0.19) $ (0.30) $ (0.47)
=============================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Statements of Stockholders' Equity (Deficiency) Walker Wingsail America, Inc.
(A Development Stage Company)
===============================================================================
<TABLE>
<CAPTION>
Common Stock Deficit
---------------------------------- Accumulated Total
Additional During Stockholders'
Paid-In Development Equity
Shares Par Value Capital Stage (Deficiency)
--------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Issuance of Common Stock to Founding
Stockholders, January 19, 1995 893,412 $ 893 $ (693) $ -- $ 200
Issuance of Common Stock, February 3, 1995 1,000 1 -- -- 1
Issuance of Common Stock for the Purchase of
Infocorp Technology Corp., May, 1995 711,685 712 -- -- 712
Repurchase and Retirement of Common Stock,
May, 1995 (604,917) (605) -- -- (605)
Issuances of Common Stock Pursuant to Initial
Stock Offering Completed on September 12, 1995 1,294,500 1,295 904,855 -- 906,150
Syndication Costs -- -- (94,824) -- (94,824)
Net Loss for the Period from Inception (January
19, 1995) through December 31, 1995 -- -- -- (483,971) (483,971)
--------------------------------------------------------------
Balance as of December 31, 1995 2,295,680 2,296 809,338 (483,971) 327,663
Issuances of Common Stock during the Year
Ended December 31, 1996 36,000 36 30,764 -- 30,800
Issuances of Common Stock in Consideration for
Certain Services Rendered to the Company 55,000 55 18,445 -- 18,500
Net Loss for the Year Ended December 31, 1996 -- -- -- (445,300) (445,300)
--------------------------------------------------------------
Balance as of December 31, 1996 2,386,680 $ 2,387 $ 858,547 $ (929,271) $ (68,337)
==============================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Statements of Cash Flows Walker Wingsail America, Inc.
(A Development Stage Company)
===============================================================================
<TABLE>
<CAPTION>
For the Period Cumulative
from Inception from Inception
For the Year (January 19, (January 19,
Ended 1995) through 1995) through
December 31, December 31, December 31,
1996 1995 1996
------------ -------------- --------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Loss from Development Stage Operations $ (445,300) $ (483,971) $ (929,271)
Adjustments to Reconcile Net Loss from Development Stage
Operations to Net Cash Used in Operating Activities:
Depreciation and Amortization 44,529 34,970 79,499
Deferred Syndication Costs 43,062 -- 43,062
Stock Compensation for Services Rendered 18,500 -- 18,500
Gain on Sale of Demonstration Yacht (8,850) -- (8,850)
Amortization of Debt Discount 5,598 -- 5,598
(Increase) Decrease in Prepaid Expenses and Other
Current Assets 10,589 (12,689) (2,100)
(Decrease) Increase in Accounts Payable and Accrued
Expenses (18,042) 44,490 26,448
Increase in Customer Deposits 19,930 24,958 44,888
(Decrease) Increase in Due to Affiliated Entity (116,861) 246,536 129,675
----------------------------------------------
Net Cash Used in Operating Activities (446,845) (145,706) (592,551)
----------------------------------------------
Cash Flows from Investing Activities:
Proceeds from the Sale of Demonstration Yacht 357,000 -- 357,000
Acquisition of Demonstration Yacht -- (353,452) (353,452)
Organization Costs -- (1,018) (1,018)
----------------------------------------------
Net Cash Provided by (Used in) Investing Activities 357,000 (354,470) 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) (193,395) (330,390)
Proceeds from Issuance of Common Stock 30,800 811,634 842,434
Deferred Syndication Costs (4,249) (38,813) (43,062)
----------------------------------------------
Net Cash Provided by Financing Activities 32,056 579,426 611,482
----------------------------------------------
Net (Decrease) Increase in Cash (57,789) 79,250 21,461
----------------------------------------------
Cash, Beginning 79,250 -- --
----------------------------------------------
Cash, Ending $ 21,461 $ 79,250 $ 21,461
==============================================
</TABLE>
See Note 9 for Supplemental Disclosures Cash Flow Information.
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements Walker Wingsail America, Inc.
(A Development Stage Company)
===============================================================================
1. Significant Accounting Policies:
Reporting Entity: Walker Wingsail America, Inc. (the Company) was incorporated
on January 19, 1995, as a Delaware corporation. On May 5, 1995, the Company
entered into a license and sub-license agreement with an affiliated entity,
Walker Wingsail Systems PLC, for the right to distribute, and contingent on
additional funding as provided for under the license and sub-license agreement,
produce and market yachts using Walker Wingsail Systems PLC's technology and
design. Under the terms of the license agreement, the Company is provided with
the right to distribute, market and produce Walker Wingsail yachts throughout
the territory of Canada, the United States, Mexico, all the countries of
Central and South America and the Caribbean and the Republic of the Bahamas.
On September 12, 1995, the Company completed an initial stock offering in which
it raised $811,326, net of syndication cost amounting to $94,824, through the
issuance of 1,294,500 shares of its $.001 par value common stock.
In May, 1995, the Company merged its operations with Infocorp Technology, Corp.
through a stock for stock exchange. In accordance with the merger, the Company
issued 711,685 shares of its $.001 par value common stock in exchange for all
of the issued and outstanding shares of Infocorp Technology Corp. Subsequent to
the merger, the Company repurchased 604,917 shares of its $.001 par value
common stock from an affiliated entity, Walker Wingsail Systems PLC. Such
shares, which were repurchased for consideration in the amount of $1, were
subsequently retired. This merger, which was accounted for under the purchase
method, had no monetary impact on the Company's financial position or
operational activities as Infocorp Technology Corp. was, since its inception,
an inactive corporation.
As of December 31, 1996, the Company, as a result of its attempting to raise
additional capital necessitated to commence its commercial operations and as a
result of it not commencing those commercial operations, has presented its
financial statements under the provision of Statement of Financial Accounting
Standards No. 7 "Accounting and Reporting by Development Stage Enterprises."
Earnings Per Share: Earnings per share of common stock are based on the
weighted average number of shares outstanding, which during the year ended
December 31, 1996, the period from inception (January 19, 1995) through
December 31, 1995 and the cumulative period from inception (January 19, 1995)
through December 31, 1996, amounted to 2,366,235, 1,588,366 and 1,987,133,
respectively.
Demonstration Yacht: The demonstration yacht is recorded at cost. Depreciation
is calculated using the straight-line method over the estimated life of the
related asset.
Intangible Assets: Intangible assets represent costs incurred to obtain a
license and sub-license agreement, and organization costs amounting to $886,480
and $1,018. The license and sub-license costs and the organization costs are
being amortized using the straight-line method over the estimated useful life
of the license and sub-license agreement and five years, respectively.
Amortization expense during the year ended December 31, 1996 and the period
from inception (January 19, 1995) through December 31, 1995, amounted to
$44,529 and $29,668, respectively.
Deferred Syndication Costs: Deferred syndication costs were scheduled to be
offset against the proceeds raised from a secondary stock offering. During the
year ended December 31, 1996 and the period form inception (January 19, 1995)
through December 31, 1995, the Company incurred and capitalized deferred
syndication costs in the amount of $4,249 and $38,813, respectively. As of
December 31, 1996, the Company has not initiated a secondary stock offering;
accordingly, during the year ended December 31, 1996, the Company has recorded
a loss on impairment of deferred syndication costs in the amount of $43,062.
Income Taxes: The Company reports under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes", which
requires an asset and liability approach to financial accounting and reporting
for income taxes. Deferred income tax assets and liabilities are computed
periodically for differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible amounts in the
future based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts
expected to be realized.
Advertising and Promotion: The Company expenses advertising and promotion costs
as incurred. The Company incurred advertising and promotion expense during the
year ended December 31, 1996 and the period from inception (January 19, 1995)
through December 31, 1995, in the amount of $38,565 and $98,297, respectively.
Foreign Currency Transactions: The Company reports its foreign currency
transactions in accordance with the Statement of Financial Accounting Standards
No. 52, "Foreign Currency Translation", whereas certain foreign currency
transactions are denominated in a currency other than its functional currency
and generate certain assets and liabilities that are fixed in terms of the
amount of foreign currency that will be received or paid. A change in the
exchange rates between the functional currency and the currency in which the
transaction is denominated increases and decreases the expected amount of
functional currency required upon settlement of the transaction. At each
balance sheet date, the Company adjusts assets and liabilities denominated in a
currency other than its functional currency to reflect the current exchange
rate, and the resulting exchange gain or loss is recorded in the Company's
statement of operations. Transaction gains and losses are also realized upon
settlement of a foreign currency transaction in the Company's statement of
operations for the period in which the transaction is settled.
Use of Estimates: Management has used estimates in its preparation of the
financial statements in accordance with generally accepted accounting
principles. Actual results experienced by the Company may differ from those
estimates.
2. Note Payable:
During March, 1996, the Company borrowed $142,500, net of an 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 borrowings
outstanding were due in March, 1997. The Company is in the process of
negotiating an extended due date. The note is collateralized by substantially
all assets of the Company. As of December 31, 1996, borrowings outstanding
under the note agreement, net of unamortized discount of $1,902, amounted to
$148,098. 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 in the amount of $3,500 in the accompanying balance sheet
as of December 31, 1996.
3. Demonstration Yacht:
The Company purchased its demonstration yacht during 1995 from an affiliated
entity, Walker Wingsail Systems PLC, for cash consideration in the amount of
$353,452.
During 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. Due to Affiliated Entity:
Due to affiliated entity represents balances due to Walker Wingsail Systems
PLC, an affiliated entity, for professional and administrative expenses
incurred by and allocated from Walker Wingsail Systems PLC for the benefit of
the Company. During the year ended December 31, 1996 and the period from
inception (January 19, 1995) through December 31, 1995, the Company was
allocated salaries in the amount of $112,821 and $125,404 from Walker Wingsail
Systems PLC based on the percentage of time spent by employees of Walker
Wingsail Systems, PLC on behalf of the Company. In addition, other
administrative expenses and professional fees, amounting to $87,877 and
$237,607 during the year ended December 31, 1996 and the period from inception
(January 19, 1995) through December 31, 1995, respectively, have been allocated
by Walker Wingsail Systems PLC to the Company based on specific expense
identification. As of December 31, 1996 and 1995, the Company is obligated to
Walker Wingsail Systems, PLC for the aforementioned activities in the amount of
$129,675 and $246,536, respectively. This amount due to Walker Wingsail Systems
PLC is non-interest bearing and is due at the point the Company completes a
secondary offering of its stock.
Although it was the Company's intention to repay this obligation to Walker
Wingsail Systems PLC at the point the Company completed a secondary offering of
its stock, upon receipt of proceeds from the sale of the demonstration yacht
(Note 3), the Company elected to remit payments toward this outstanding
obligation to Walker Wingsail Systems PLC during February and May, 1996 in the
amounts of $151,000 and $166,559, respectively.
5. Income Taxes:
As discussed in Note 1, the Company reports under the provisions of Statement
of Financial Accounting Standards No. 109. Deferred income taxes reflect the
impact of "temporary differences" between amounts of assets and liabilities for
financial reporting purposes and such amounts as measured by tax laws. The
temporary difference which gives rise to a significant portion of the deferred
tax asset as of December 31, 1996 and 1995, relates to the deferred net
operating loss carryforwards.
As of December 31, 1996, the Company has available approximately $929,000 in
federal deferred net operating loss carryforwards, which are available to
offset future taxable income. This offset in future taxable income, as provided
for under the United States Internal Revenue Code, commences at the point the
Company is ready to commence its commercial operations, and such offset is to
be provided systematically over a five-year period. As of December 31, 1996 and
1995, the Company's deferred tax asset relating to these deferred net operating
loss carryforwards, which approximates $316,000 and $165,000, respectively, has
been offset by a valuation allowance in an equal amount.
The United States Internal Revenue Code imposes limitations under certain
circumstances on the use of net operating loss carryforwards upon the
occurrence of an ownership change. An ownership change can result from the
issuance of equity securities by the Company, purchases of the Company's
securities in the secondary market or a combination of the foregoing. The
Company's issuance of new equity securities may jeopardize continued
availability of the Company's net deferred operating loss carryforwards.
6. Preferred Stock:
The Company maintains 5,000,000 shares of $.001 par value preferred stock, none
of which have been issued. The Company's Articles of Incorporation stipulate
that the Company's Board of Directors are authorized, subject to restrictions
imposed under the laws of the State of Delaware, to establish the rights and
privileges of such stock. These rights and privileges have not been established
by the Company's Board of Directors as of December 31, 1996.
7. License and Sub-License Agreement:
On May 5, 1995, the Company entered into an exclusive license and sub-license
agreement with an affiliated entity, Walker Wingsail Systems PLC, by which it
obtained the rights to manufacture and sell Walker Wingsail yachts in the
territory of Canada, the United States, Mexico, all the countries of Central
and South America and the Caribbean and the Republic of the Bahamas. The term
of the license and sub-license agreement, which is scheduled to expire in 2015,
is subject to an extension in the event that additional license and sub-license
agreement patents are created by either Walker Wingsail Systems PLC or a
related party, Mr. and Mrs. John Walker. Under the termination provisions, the
license and sub-license agreement shall remain in effect through the lives of
such additional patents.
Contingent on additional funding requirements as provided for under the license
and sub-license agreement, the Company has been granted the right to produce
and market yachts using Walker Wingsail Systems PLC's technology and design
and, through sub-licensing, patents and methods held and protected by Mr. and
Mrs. John Walker. In the event that the Company's production levels fall below
certain minimums, which are to be effected with the commencement of
manufacturing operations, the license and sub-license agreement shall become
non-exclusive to the Company within the licensed territory. In addition, the
Company is to be provided with tooling, written methods and training relating
to the manufacturing processes and marketing of the Walker Wingsail yachts.
In consideration for this license and sub-license agreement, the Company
remitted $136,995 and $193,395 to Walker Wingsail Systems PLC during the year
ended December 31, 1996 and the period from inception (January 19, 1995)
through December 31, 1995, respectively, and is committed to remit an
additional $556,090 to Walker Wingsail Systems PLC at the point the Company is
ready to begin its manufacturing operations or October 1, 1998, whichever
occurs sooner. The Company, for the right to manufacture under the terms of the
license and sub-license agreement, is also committed to remit an additional
$384,368 for tooling, written methods and training at the point the Company is
ready to begin its manufacturing operations. In addition and in accordance with
the license and sub-license agreement, the Company, during the term of the
license and sub-license agreement, subject to certain minimum royalty levels,
which are scheduled to be in effect subsequent to the commencement of the
Company's manufacturing operations, is required to remit a royalty to Walker
Wingsail Systems PLC ranging from 2.7% to 5.7% of the net sales price derived
from the future sale of the Walker Wingsail yachts. The Company also agrees not
to manufacture or sell other marine vessels or propulsion systems without the
express written consent of Walker Wingsail Systems PLC.
The license and sub-license agreement does not provide the Company the right to
manufacture the Walker Wingsail yacht's control computer systems and,
accordingly, such systems for the duration of the license and sub-license
agreement shall be provided by Walker Wingsail Systems PLC, at a price to be
determined from time to time. The Walker Wingsail yacht's control computer
systems' source code and design data are held by Walker Wingsail Systems PLC,
in escrow for the benefit of the Company in the event of certain occurrences,
including the insolvency of Walker Wingsail Systems PLC.
Prior to commencing its manufacturing operations, the Company will act as a
non-exclusive sales representative for Walker Wingsail Systems PLC in
connection with the sale of Walker Wingsail yachts manufactured by Walker
Wingsail Systems PLC. In such capacity, the Company will sell such Walker
Wingsail yachts at prices determined by Walker Wingsail Systems PLC and will
receive a commission of up to 8% of each such sale.
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% of each such sale made by Wingsail, U.S.A. Inc.
8. Economic Dependency:
The Company is economically dependent on the ability of the affiliated entity,
Walker Wingsail Systems PLC, to timely and properly discharge its
responsibilities under the license and sub-license agreement. Certain
provisions have been made under the license and sub-license agreement, whereas
in the event of certain occurrences, including insolvency of the affiliated
entity, the Company may be granted exclusive rights and privileges of the
sub-licensed technology and methods, held and protected by a related party, Mr.
and Mrs. John Walker, and the Company shall have the right of first refusal to
purchase the assets of Walker Wingsail Systems PLC. Walker Wingsail Systems PLC
was issued, by its Chartered Accountants and Registered Auditors, on October 8,
1996, an opinion as to the "true and fair view of the state of the company's
affairs as at 30th March, 1996 and of its loss for the year then ended." The
opinion included the statement that Walker Wingsail Systems PLC's "financial
statements have been prepared on a going concern basis and the validity of this
depends on the company's ability to raise additional funds and its ability to
generate sufficient profits in the future. The financial statements do not
include any adjustments that would result from a failure to obtain such funds
or to generate such profits."
9. Supplemental Disclosures of Cash Flow Information:
The Company paid cash for interest during the year ended December 31, 1996, in
the amount of $5,812.
During the year ended December 31, 1996, the Company issued 55,000 shares of
its common stock in consideration for certain services rendered to the Company
in the amount of $18,500.
During May, 1995, the Company incurred license and sub-license costs and an
equivalent obligation with an affiliated entity in the amount of $886,480.
During the period from inception (January 19, 1995) through December 31, 1995,
the Company issued 12,500 shares of its common stock in lieu of syndication
cost consideration in the amount of $8,750, for the initial stock offering
placement of certain of its common stock shares.
10. Adverse Conditions and Management's Plan:
The Company has experienced losses in its development stage and as of December
31, 1996, is in a working capital deficiency. These continued losses and
deficiency in working capital raise substantial doubt about the Company and its
ability to continue in existence as a going concern. In regard to this matter,
the Company continues to seek additional capital and is considering a merger
with its affiliated entity, Walker Wingsail Systems PLC. Walker Wingsail
Systems PLC 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. The
Company and its ability to continue as a going concern is dependent upon the
Company's containment of costs and the attainment of additional capital or the
ability of its affiliated entity to support the Company's operations.
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.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
John Walker 59 President and Director
Jean Walker 54 Executive Vice President,
Secretary and Director
</TABLE>
As of April 14, 1997 the Company's only directors and employees
were John Walker and Jean Walker. John Walker and Jean Walker are
married. The company is currently exploring the possibility of adding
additional directors to its board. No timetable, however has been set
for adding additional directors. Each director holds office for a period
of one year and serves until his successor is duly elected by the
stockholders. Executive officers serve at the pleasure of the Board of
Directors.
The members of the Board of Directors are not compensated in such
capacity; however, the Board of Directors may, by resolution, pay
director's fees and reimburse directors for expenses related to the
Company's business.
Mr Walker has been an officer and director of the Company since its
inception. Mr Walker has also been an officer and director of WWS since
1981.
Mrs Walker has been an officer and director of the Company since
its inception. Mrs Walker has been the Secretary of WWS since 1983,
became its Commercial Director in 1984, and is presently the Managing
Director of WWS.
Mr and Mrs Walker organized the Company and may be considered the
Company's "promoters" as that term is defined by the Securities and
Exchange Commission.
See Item 7 for information concerning loans and other transactions
between the Company and WWS, an affiliated company.
Item 10. Executive Compensation.
The following table shows the compensation paid to the Company's
officers by the Company during the period from January 1, 1996 through
December 31, 1996
<TABLE>
<CAPTION>
Name Compensation Paid by the Company
---- --------------------------------
<S> <C>
John Walker $50,792
Jean Walker $47,613
</TABLE>
Employment Agreements
The Company and Mr Walker are parties to a three-year Service
Agreement (commencing January 19, 1995) pursuant to which Mr Walker
serves as the President of the Company with responsibility for the
administration and management of all of the Company's engineering
operations and activities. Pursuant to the terms of the Service
Agreement, Mr Walker receives a salary of $72,000 per annum, subject to
adjustment, as well as certain additional benefits.
The Company and Mrs Walker are parties to a three-year Service
Agreement (commencing January 19, 1995) pursuant to which Mrs Walker
serves as the Chief Executive Officer of the Company with responsibility
for all the Company's financial, administrative, marketing, sales and
personnel activities. Pursuant to the terms of the Service Agreement,
Mrs Walker receives a salary of $64,000 per annum, subject to adjustment,
as well as certain additional benefits.
The Company has agreed that Mr and Mrs Walker may, during the
continuance of their respective Service Agreements, be directly or
indirectly engaged or concerned or interested in any other business and
are permitted to hold shares of securities in the other companies. Each
of Mr and Mrs Walker have agreed with the Company that they will devote
approximately 50% of their time to the business of the Company.
Mr and Mrs Walker have each agreed that they will not, at any time,
make use of, divulge or communicate to any unauthorized person any trade
secrets or other confidential information relating to the Company or any
subsidiary or associated company or acquired by them in the course of
their employment. Mr and Mrs have also agreed that they will not, during
the terms of their respective employments and for a period of 52 weeks
thereafter, solicit in competition with the Company, any person, firm or
company who or which at any time during the previous two years was a
supplier, an employee or customer of the Company.
Item 11 Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of and percentage of
outstanding shares of Common Stock owned by officers, directors and
principal shareholders of the Company as of April 14, 1997.
<TABLE>
<CAPTION>
Name and Address Shares of Common Stock Percent of Class
- ---------------- ---------------------- ----------------
<S> <C> <C>
John Walker 893,412(1) 39%
Devonport Royal Dockyard
Plymouth, Devon PL1 4SG
England
Jean Walker 893,412(2) 39%
Devonport Royal Dockyard
Plymouth, Devon PL1 4SG
England
Total 893,412 39%
________________________
<F1> Includes 446,706 shares of Common Stock owned by Mrs Walker
<F2> Includes 446,706 shares of Common Stock owned by Mr Walker
</TABLE>
Item 12 Certain Relationships and Related Transactions
In January 1995, John Walker and Jean Walker acquired their shares
of the Company's common stock for $100 each.
In September 1995, the Company completed the sale of 1,282,000
shares of Common Stock at $0.70 pr share. The net proceeds to the
Company from this offering, after the payment of offering expenses of
$94,825, were approximately $810,000. The Company used approximately
$353,000 of the offering proceeds to purchase a demonstration yacht from
WWS.
As of December 31, 1996 the Company had a liability of $129,675 to
WWS, representing amounts paid by WWS on behalf of the Company. The
majority of this liability relates to expenses which the Company has
classified as general and administrative expenses.
In February 1996, the Company sold the ZEFYR to an unaffiliated
party for a purchase price of $357,000.
See part II, Item 4 regarding the Company's merger with a Company
controlled by WWS.
Item 13 Exhibits, Lists and Reports on Form 8-K
(a) Exhibits - There are no additions to the list below filed for the
year ended December 31, 1996
<TABLE>
<CAPTION>
Exhibit No. Identification of Exhibit
- ----------- -------------------------
<C> <S>
2.1 Plan of Merger between the Company and Infocorp Technology
Corp. (Incorporated by reference to Exhibit 3 to the
Company's Form 10-SB)
3.1 Certificate of Incorporation (Incorporated by reference to
Exhibit 2 to the Company's Form 10-SB)
3.2 By-laws (Incorporated by reference to Exhibit 2 to the
Company's Form 10-SB)
10.1 License Agreement, dated May 5, 1995 (Incorporated by
reference to Exhibit 6(a) to the Company's Form 10-SB)
10.2 Amendment to License Agreement, dated February 23, 1996
(Incorporated by reference to Exhibit 6(b) to the
Company's Form 10-SB/A)
10.3 Service Agreement between the Company and John Walker,
dated January 19, 1995 (Incorporated by reference to
Exhibit 6(c) to the Company's Form 10-SB/A)
10.4 Amendment to Service Agreement between the Company and
John Walker dated February 23,1996 (Incorporated by
reference to Exhibit 6(d) to the Company's Form 10-SB/A)
10.5 Service Agreement between the Company and Jean Walker,
dated January 19, 1995 (Incorporated by reference to
Exhibit 6(e) to the Company's Form 10-SB/A)
10.6 Amendment to Service Agreement between the Company and
Jean Walker dated February 23, 1996 (Incorporated by
reference to Exhibit 6(f) to the Company's Form 10-SB/A)
10.7 Sales Representative Agreement between the Company and
WWS, dated February 23, 1996 (Incorporated by reference
to Exhibit 6(g) to the Company's Form 10-SB/A)
</TABLE>
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DATE: April 14, 1997 WALKER WINGSAIL AMERICA INC
By: /s/ John Walker
John Walker, President
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ John Walker President and a Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer) April 14, 1997
/s/ Jean Walker Executive Vice President
Secretary and a Director April 14, 1997
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1996 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 21
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 837
<CURRENT-LIABILITIES> 219
<BONDS> 556
0
0
<COMMON> 2
<OTHER-SE> (71)
<TOTAL-LIABILITY-AND-EQUITY> 837
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 397
<LOSS-PROVISION> 43
<INTEREST-EXPENSE> 17
<INCOME-PRETAX> (445)
<INCOME-TAX> 0
<INCOME-CONTINUING> (445)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (445)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
