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, 1997
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 May
31, 1998 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 was 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". This license agreement was
terminated on the July 10, 1997.
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 was committed to pay an additional $556,090
to WWS when it was ready to begin manufacturing operations or October 1,
1998, whichever occurred 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 original terms of the note agreement, the
borrowings outstanding were due in March 1997. The settlement date has been
re-negotiated and the borrowing is being paid off in four equal instalments
of capital and interest. The note is collateralized by substantially all
assets of the Company.
During the year ended 1997 the company the company had very little
activity. There were no sales, and the running expenses were very limited.
A takeover by Walker Wingsail Systems plc was recommended in July 1997 and
this was taken up on August 1, 1997 by 56% of the issued stock. In this
connection the license and sub-license agreement with WWS was canceled.
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.
WWS sustained losses in its fiscal years ending March 30, 1994, 1995,
1996 and 1997 of $1,000,000, $720,000, $1,150,000 and $1,100,000
respectively. WWS is still in the early stages of production. WWS expects
to experience progressively decreasing losses on the first four ZEFYR 43's
built and is aiming to break even in late 1998 or early 1999. 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 $480,000 to $520,000 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 by others, with the Walker wingsails, and
Walker Micromariner control systems provided by WWS. At the present time
WWS has no 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.
Merger of the Company and WWS
The respective boards of directors of each of the Company and WWS
considered the advisability of merging the two companies. Each respective
board agreed in principle that it was in the best interests of their
respective stockholders to pursue discussions on such a merger. After
formal discussions and negotiations the takeover of the company by WWS was
completed on August 31, 1997.
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 granted 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
granted 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 was to remain in effect until the expiration of
the last patent pertaining to the Walker wingsail technology. The License
Agreement was however terminated by WWS on July 19, 1997.
Sales Representation Agreement
Pending a possible sale of the company as a shell it will continue to
act as a sales representative for WWS in connection with the sale of Walker
wingsail yachts manufactured by WWS. In such capacity the Company may 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%. WWS is presently planning to sell directly in the future either
through WWA or on its own account.
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.
Item 3 Legal Proceedings.
As at December 31, 1997
The company WWS, Mr. and Mrs. John Walker are parties to a lawsuit
with Wingsail USA Inc. Action under the lawsuit has been postponed while
the Company, WWS, and Mr. and Mrs. Walker are in negotiations with Wingsail
U.S.A. Inc in an attempt to settle the disagreements. The lawsuit alleges
breach of contract with respect to certain distributor agreements. The
Company, WWS, and Mr. and Mrs. Walker believe that the lawsuit in without
merit and in the event of a settlement not being reached, intend vigorously
defend this action.
Item 4 Submission of Matters to a Vote of Security Holders.
In July 1997 takeover documents were sent to all WWAI stock holders
recommending that Walker Wingsail Systems plc takeover WWAI. Each
stockholder in WWAI was offered two ordinary shares of WWS stock for every
share of WWAI stock held. An additional 90,250 shares of the Ordinary
Shares of WWS were issued to certain non-affiliated shareholders of WWAI who
had purchased shares of the common stock of WWAI at higher prices than the
remaining non-affiliated shareholders. All documents are enclosed as
Exhibits.
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 its Common Stock, but to date no stock has been traded.
As of May 31, 1998 there were approximately 1,105 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, 1997 WITH THE TWELVE MONTHS ENDED DECEMBER 31, 1996 AND THE CUMULATIVE
PERIOD FROM INCEPTION (JANUARY 19, 1995) TO DECEMBER 31, 1997.
RESULTS OF OPERATIONS
During the period from the inception of the Company (January 19, 1995)
through December, 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
twelve month period ended December 31, 1997, (the Current Period ), or the
twelve month period ended December, 31, 1996, (the Prior Period ), or
during the period from inception (January 19, 1995) to December, 31, 1997.
The Company incurred a gain of $77 during the Current Period and a loss of
$445,300 in the Prior Period and $929,194 during the period from inception
(January 19, 1995) to December, 31, 1997 from development-stage operations.
The Company incurred selling, general and administrative expenses of
$85,411 in the Current Period, $396,956 in the Prior Period and $979,464
during the period from inception (January 19, 1995) to December, 31, 1997.
The Company incurred depreciation and amortization expenses of $24,268
in the Current Period, $50,127 in the Prior Period and $109,365 during the
period from inception (January 19, 1995) to December, 31, 1997
The Company incurred a gain on foreign currency exchange rate of $6,
interest income of $66, interest expense of $10,620 and a gain on the
surrender of Licence Agreement of $96,036 in the Current Period. In the
Prior Period 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. During the period from inception (January 19, 1995) to December,
31, 1997 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
$9,832, interest expense of $27,843, interest income of $4,327, other
income of $2,130, a gain on the sales of its demonstration yacht of $8,850,
and a gain on the surrender of Licence Agreement of $96,036 during the
period of inception (January 19, 1995) to December, 31, 1997.
The net cash used in operating activities during the Current Period
amounted to $19,120, of this amount, cash was decreased in the amount of
$71,691 as a result of the net gain net of non cash items. Cash decreased
in the sum of $46,753 as a result of a decrease in accounts payable, accrued
expenses, and customer deposits, cash increased in the amount of $99,324 as
a result of an increase in the amount due from WWS.
The net cash used in operating activities during the Prior 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, 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 an increase in accounts payable and accrued expenses; cash
increased in the amount of $19,930 in customer deposits and cash increased
in the amount of $116,861 as a result of a decrease in the amount due to
WWS.
During the period of inception (January 19, 1995) to December, 31,
1997 the net cash used in operating activities amounted to $611,671. Of
this amount, cash was decreased in the amount of $995,235 as a result of the
net loss, net of non-cash items including depreciation and amortization
costs, gain on the sale of demonstration yacht, gain on surrender of Licence
Agreement, stock compensation for services rendered, deferred syndication
costs in the amounts of $109,365, $8,850, $96,036, $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 $4,625 as a result of a increase in accounts payable and accrued
expenses; cash increased in the amount of $19,958 as a result of an increase
in customer deposits; and cash increased in the amount of $228,999 as a
result of an increase in the amount due to WWS.
There was no cash flows from investing activities in the Current
Period. In 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. During the period from inception (January 19, 1995) to December,
31, 1997 the cash flows from investing activities amounted to a net figure
of $2,530.
During the Current Period there were no cash flows from financing
activities. Cash flows from financing activities amounted to $32,056 during
the Prior 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 period from inception (January 19 1995) to December,
31, 1997, 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 2,386,680 of common stock, less deferred syndication
costs of $43,062: less principal repayments 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 was dependent upon
raising additional capital until revenues were sufficient to fund the
company's operating expenses. The Company explored the possibility of
raising additional capital of approximately $8,000,000 through private
sources, but such further capital has not been forthcoming. The Company
therefore currently has no plans, agreements, understandings or arrangements
for completing such a financing since there was no assurance that the
Company would 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. 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. A new date of December, 31st 1998
has been agreed. 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.
The Company is not currently committed to expend funds for marketing
or any other activities or purchases. During 1998/1999, it is management's
intention to incur minimal office and administration expenses and
professional fees. The company is dependant on WWS to fund these fees
until such time as the company is sold see financials.
In July 1997 Walker Wingsail Systems plc made an offer of takeover of
the Company, and this was taken up by 56% of issued stock. The Company is
presently acting as the US sales and marketing subsidiary of Walker Wingsail
Systems plc.
Item 7. Financial Statements
Page
Independent Auditors' Report F-1
Balance Sheets F-2
Statements of Operations F-3
Statements of Stockholders' Equity (Deficiency) F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 to F-10
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, 1997 and
1996, and the related statements of operations, stockholders' equity
(deficiency) and cash flows for the years then ended. 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, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended, 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, 1998
Balance Sheets Walker Wingsail America, Inc.
(A Development Stage Company)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash $ 2,341 $ 21,461
Prepaid Expenses and Other Current Assets 2,100 2,100
- ---------------------------------------------------------------------------
Total Current Assets 4,441 23,561
Intangible Assets, Net of Accumulated
Amortization of $527 and $74,197,
Respectively 491 813,301
Due from Affiliated Entity (Note 4) 101,391 -
- ---------------------------------------------------------------------------
Total Assets $ 106,323 $ 836,862
===========================================================================
Liabilities and Stockholders' Deficiency
Current Liabilities:
Accounts Payable and Accrued Expenses $ 4,625 $ 26,448
Customer Deposits 19,958 44,888
Note Payable, Net of Unamortized Discount
of $-0- and $1,902, Respectively (Note 2) 150,000 148,098
- ---------------------------------------------------------------------------
Total Current Liabilities 174,583 219,434
Due to Affiliated Entity (Note 4) - 129,675
License and Sub-License Agreement Obligation
(Note 7) - 556,090
- ---------------------------------------------------------------------------
Total Liabilities 174,583 905,199
- ---------------------------------------------------------------------------
Stockholders' 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 Shares Issued
and Outstanding 2,387 2,387
Additional Paid-in Capital 858,547 858,547
Deficit Accumulated During Development Stage (929,194) (929,271)
- ---------------------------------------------------------------------------
Total Stockholders' Deficiency (68,260) (68,337)
- ---------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficiency $ 106,323 $ 836,862
===========================================================================
</TABLE>
Statements of Operations Walker Wingsail America, Inc.
(A Development Stage Company)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cumulative
from Inception
For the Year For the Year (January 19,
Ended Ended 1995) through
December 31, December 31, December 31,
1997 1996 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Selling, General and Administrative Expenses $(85,411) $(396,956) $(979,464)
- --------------------------------------------------------------------------------------------
Other Income (Expense):
Net Gain on Cancellation of License
Agreement 96,036 - 96,036
Interest Expense (10,620) (17,223) (27,843)
Interest Income 66 2,664 4,327
Gain (Loss) on Foreign Currency Exchange
Rate 6 (1,703) 9,832
Deferred Syndication Costs - (43,062) (43,062)
Gain on Sale of Demonstration Yacht - 8,850 8,850
Other Income - 2,130 2,130
- --------------------------------------------------------------------------------------------
Total Other Income (Expense) 85,488 (48,344) 50,270
- --------------------------------------------------------------------------------------------
Net Income (Loss) from Development Stage
Operations $ 77 $(445,300) $(929,194)
============================================================================================
Net Income (Loss) per Share $ - $ (0.19) $ (0.44)
============================================================================================
</TABLE>
Statements of Stockholders' Equity Walker Wingsail America, Inc.
(Deficiency) (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>
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)
Net Income for the Year Ended December 31, 1997 - - - 77 77
- ----------------------------------------------------------------------------------------------------------------------
Balance as of December 31, 1997 2,386,680 $2,387 $858,547 $(929,194) $(68,260)
======================================================================================================================
</TABLE>
Statements of Cash Flows Walker Wingsail America, Inc.
(A Development Stage Company)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cumulative
from Inception
For the Year For the Year (January 19,
Ended Ended 1995) through
December 31, December 31, December 31,
1997 1996 1997
---------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) from Development Stage
Operations $ 77 $(445,300) $(929,194)
Adjustments to Reconcile Net Income (Loss)
from Development Stage Operations to Net
Cash Used in Operating Activities:
Depreciation and Amortization 22,366 44,529 101,865
Net Gain on Cancellation of License
Agreement (96,036) - (96,036)
Amortization of Debt Discount 1,902 5,598 7,500
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)
Decrease (Increase) in Prepaid Expenses and
Other Current Assets - 10,589 (2,100)
(Decrease) Increase in Accounts Payable and
Accrued Expenses (21,823) (18,042) 4,625
(Decrease) Increase in Customer Deposits (24,930) 19,930 19,958
Increase (Decrease) in Due to Affiliated
Entity 99,324 (116,861) 228,999
- -------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities (19,120) (446,845) (611,671)
- -------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Proceeds from the 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 - 30,800 842,434
Deferred Syndication Costs - (4,249) (43,062)
- -------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities - 32,056 611,482
- -------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash (19,120) (57,789) 2,341
- -------------------------------------------------------------------------------------------------
Cash, Beginning 21,461 79,250 -
- -------------------------------------------------------------------------------------------------
Cash, Ending $ 2,341 $ 21,461 $ 2,341
=================================================================================================
</TABLE>
See Notes 4, 7 and 9 for Supplemental Disclosures Cash Flow Information.
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. During the
year ended December 31, 1997, the Company became a subsidiary of its
affiliated entity, Walker Wingsail Systems PLC, (WWS) through the exchange,
by approximately 93% of the Company's common stockholders, of their shares
in the Company for certain shares in WWS. In connection with such exchange,
non-founding stockholders of the Company owning 1,343,625 shares of the
Company's $.001 par value common stock exchanged each of such shares for two
ordinary shares of WWS's stock. An additional 90,250 ordinary shares of
WWS's stock were issued to certain non-founding stockholders of the Company
who had originally purchased the Company's common stock at higher prices
than the other non-founding stockholders. The founding stockholders of the
Company, Mr. and Mrs. John Walker, owning 893,412 shares of the Company's
$.001 par value common stock, did not exchange their stock. The remainder
of the Company's non-founding stockholders owning 149,643 shares of the
Company's $.001 par value common stock did not exchange their stock.
The Company originally entered into a license and sub-license agreement with
WWS, 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 WWS's technology and design (Note 7). Under the terms of the
license agreement, the Company was 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. In connection
with the change in control of the Company, during the year ended December
31, 1997, the license and sub-license agreement with WWS was canceled.
Accordingly, all operations of the Company relating to the distribution,
marketing and production of Walker Wingsail yachts has been shifted to WWS,
although the Company continues to act as a non-exclusive sales
representative for WWS (Note 7). The management of WWS is considering
offering the Company for sale as a shell corporation.
As a result of not commencing commercial operations, the Company has
presented its financial statements under the provisions 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 years ended
December 31, 1997 and 1996, and the cumulative period from inception
(January 19, 1995) through December 31, 1997, amounted to 2,386,680,
2,366,235, and 2,122,541, respectively.
Intangible Assets: As of December 31, 1996, intangible assets represented
costs incurred to obtain the license and sub-license agreement, and
organization costs amounting to $886,480 and $1,018, respectively. During
the year ended December 31, 1997, the license and sub-license agreement with
WWS was canceled (Note 7). Accordingly, during the year ended December 31,
1997, the net book value of the license and sub-license agreement in the
amount of $790,444 has been written off. The license and sub-license costs
were being amortized using the straight-line method over the estimated
useful life of the license and sub-license agreement. The organization
costs are being amortized using the straight-line method over five years.
Amortization expense during the years ended December 31, 1997 and 1996,
amounted to $22,366 and $44,529, respectively.
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 years ended December 31, 1997 and 1996, in the amount of $9,870
and $38,565, respectively.
Foreign Currency Transactions: The Company reports its foreign currency
transactions in accordance with 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, as amended, payments
are due in four equal quarterly installments, plus interest, beginning on
December 31, 1997. The note is collateralized by substantially all assets
of the Company. As of December 31, 1997 and 1996, borrowings outstanding
under the note, net of unamortized discount of $-0- and $1,902, amounted to
$150,000 and $148,098, respectively. During February, 1998, the quarterly
payment that was due on December 31, 1997, in the amount of $37,500, was
paid in arrears by WWS on behalf of the Company. In connection with the
issuance of the note, 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:
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 and from Affiliated Entity:
As of December 31, 1996, due to affiliated entity represented balances due
to WWS for professional and administrative expenses incurred by and
allocated from WWS for the benefit of the Company, net of payments made by
the Company to WWS during the year ended December 31, 1996 for such
allocated costs in the amount of $317,559. As of December 31, 1996, the net
balance due to WWS for the aforementioned activities, which was non-interest
bearing, amounted to $129,675.
As of December 31, 1997, in connection with the cancellation of the license
and sub-license agreement (Notes 1 and 7), due from affiliated entity
represents a balance due to the Company from WWS in the amount of $330,390
representing a refund of payments previously made by the Company to WWS
toward its license and sub-license agreement obligation, offset by balances
due to WWS for cash advances and payments made by WWS on behalf of the
Company, and professional and administrative expenses incurred and allocated
from WWS for the benefit of the Company. As of December 31, 1997, the net
balance due from WWS for the aforementioned activities, which is non-
interest bearing, amounted to $101,391. This balance due from WWS is
payable through offsets in the future against professional and
administrative costs allocated to the Company from WWS and against cash
advances and payments made by WWS on behalf of the Company.
During the year ended December 31, 1997, WWS made cash advances to, and
payments on behalf of, the Company in the amount of $67,659. During the
years ended December 31, 1997 and 1996, the Company was allocated salaries
in the amount of $28,216 and $112,821, respectively, from WWS based on the
percentage of time spent by employees of WWS on behalf of the Company. In
addition, during the years ended December 31, 1997 and 1996, other
administrative expenses and professional fees in the amount of $3,449 and
$87,877, respectively, were allocated to the Company by WWS based on
specific expense identification.
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, 1997 and 1996, relates to the
deferred net operating loss carryforwards.
As of December 31, 1997, 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. Pursuant
to the provisions of Section 382 of the Internal Revenue Code, utilization
of the deferred net operating loss carryforward may be limited as a result
of the change in the Company's control during the year ended December 31,
1997 (Note 1). As of December 31, 1997 and 1996, the Company's deferred tax
asset relating to these deferred net operating loss carryforwards, which
approximates $316,000, has been offset by a valuation allowance in an equal
amount.
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,
1997.
7. License and Sub-License Agreement:
On May 5, 1995, the Company entered into an exclusive license and sub-
license agreement with WWS, through 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 was scheduled to expire in 2015, was subject to
an extension in the event that additional license and sub-license agreement
patents were created by either WWS or Mr. and Mrs. John Walker. Under the
termination provisions, the license and sub-license agreement was to 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 was granted the right to
produce and market yachts using WWS'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 fell below
certain minimums, which were to be effected with the commencement of
manufacturing operations, the license and sub-license agreement was to
become non-exclusive to the Company within the licensed territory. In
addition, the Company was 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, through
December 31, 1996, the Company remitted $330,390 to WWS and was committed to
remit an additional $556,090 to WWS at the point the Company was ready to
begin its manufacturing operations or October 1, 1998, whichever occurred
sooner. In connection with the Company's change in control during the year
ended December 31, 1997 (Note 1), the license and sub-license agreement with
WWS was canceled. In connection with the cancellation of the license and
sub-license agreement, the net book value of the license and sub-license
agreement intangible asset and the related license and sub-license agreement
obligation in the amounts of $790,444 and $556,090, respectively, were
written off. Also in connection with the cancellation of the license and
sub-license agreement, the Company became entitled to receive a refund for
previous payments it made in consideration for the license and sub-license
agreement in the amount of $330,390. During the year ended December 31,
1997, such refund was offset against the Company's balance due to WWS for
allocated services and cash advances (Note 4). The cancellation of the
license and sub-license agreement resulted in a net gain of $96,036.
Subsequent to the cancellation of the license and sub-license agreement, the
Company continues to act as a non-exclusive sales representative for WWS in
connection with the sale of Walker Wingsail yachts manufactured by WWS. In
such capacity, the Company is allowed to sell such Walker Wingsail yachts at
prices determined by WWS for a commission of up to 8% of each such sale.
During March, 1996, WWS 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.
was responsible. WWS 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 WWS to meet substantially all of
its current and future obligations. WWS was issued, by its Chartered
Accountants and Registered Auditors, on October 21, 1997, an opinion as to
the "true and fair view of the state of the company's affairs as at 30th
March, 1997 and of its loss for the year then ended." The opinion included
the statement that WWS'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 years ended December 31, 1997,
in the amount of $8,719 and $5,812, respectively.
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.
10. Adverse Conditions and Management's Plan:
The Company has experienced losses in its development stage and as of
December 31, 1997, 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 control of the Company was shifted to WWS through
an exchange of stock (Note 1). The management of WWS is considering selling
the Company as a shell corporation. The Company and its ability to continue
as a going concern is dependent upon the ability of WWS to support the
Company in meeting its obligations for professional and administrative costs
until such time as the Company is sold as a shell corporation or it
generates sufficient cash flow in its capacity as a sales representative for
WWS to support itself.
11. Subsequent Event:
During January, 1998, the Company, WWS and Mr. and Mrs. John Walker were
named as parties to a lawsuit initiated by Wingsail U.S.A., Inc. The
lawsuit alleges, among other things, breach of contract with respect to
certain distributor agreements with the Company and WWS, and raises certain
warranty issues, with respect to the demonstration yacht purchased by
Wingsail U.S.A., Inc. from the Company during February, 1996 (Note 3).
Action under the lawsuit has been postponed while the Company, WWS and Mr.
and Mrs. Walker are in negotiations with Wingsail U.S.A. Inc. in an attempt
to settle the disagreements. The Company, WWS and Mr. and Mrs. Walker
believe that the lawsuit is without merit and, in the event that a
settlement is not reached, they intend to vigorously defend this action.
The litigation is in its initial stages and the potential losses by the
Company are not predictable at this time.
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 60 President and Director
Jean Walker 55 Executive Vice President,
Secretary and Director
</TABLE>
As of May 31, 1998 the Company's only directors and employees were
John Walker and Jean Walker who are married. 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 and officer and directors of WWS since 1984.
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, 1997 through
December 31, 1997.
<TABLE>
<CAPTION>
Name Compensation Paid by the Company
---- --------------------------------
<S> <C>
John Walker $13,425
Jean Walker $12,439
</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 is
entitled to receive a salary of $72,000 per annum, subject to adjustment, as
well as certain additional benefits. Mr Walker has agreed to accept reduced
or nil financial compensation if the company's financial situation makes
that desirable.
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 is
entitled to receive a salary of $64,000 per annum, subject to adjustment, as
well as certain additional benefits. Mrs Walker has agreed to accept reduced
or nil financial compensation if the company's financial situation makes
that desirable.
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.
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 Walker have also agreed that they will not, during
the terms of their respective employment's 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 May 31, 1998.
<TABLE>
<CAPTION>
Name and Address Shares of Common Stock Percent of Class
- ---------------- ---------------------- ----------------
<S> <C> <C>
John Walker 893,412(1) 37%
Devonport Royal Dockyard
Plymouth, Devon PL1 4SG
England
Jean Walker 893,412(2) 37%
Devonport Royal Dockyard
Plymouth, Devon PL1 4SG
England
Total 893,412 37%
________________________
<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.
September 1995, the Company completed the sale of 1,282,000 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. The Company used approximately $353,000 of the
offering proceeds to purchase a demonstration yacht from WWS.
In February 1996, the Company sold the ZEFYR to an unaffiliated party
for a purchase price of $357,000.
As of December 31, 1997 WWS had a liability to the company of $101,391
which is the balance left after the reversal of the licence agreement. This
will be used to offset future professional and administrative costs
allocated to the company from WWS.
Item 13 Exhibits, Lists and Reports on Form 8-K
(a) Exhibits - There are additions to the list below filed for the year
ended December 31, 1996
Exhibit No. Identification of Exhibit
- ----------- -------------------------
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)
Additions to Exhibits
11.1 Letter to WWAI stockholders recommending takeover by WWSplc
11.2 Agreement of takeover between WWS plc and WWAI to be
approved on or before August 31, 1997.
11.3 Shareholder Election/Consent Form
11.4 WWSplc Board of Directors Consent
11.5 WWAI Board of Directors Consent
11.6 Tender Offer Disclosures by WWSplc for Tender Offer for the
Equity Securities of WWAI
11.7 Profit and Loss Account, Balance Sheet, and Cash Flow
Statement for WWSplc for the ten months ended January 31
1997
11.8 Final Amendment to Schedule 14D-1 Tender Offer Disclosures
by WWSplc for tender offer for the equity securities of
WWAI
11.9 Schedule 14D-1
(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: May 31, 1998 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.
Name Title Date
- ---- ----- ----
/s/ John Walker President and a Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer) May 31, 1998
/s/ Jean Walker Executive Vice President
Secretary and a Director May 31, 1998
EXHIBIT 11.1
10th July 1997
To: Walker Wingsail America Inc (WWAI) Shareholders
Dear Shareholder:
I am afraid that, as many of you are already aware, it has not proved
possible to raise the secondary funding needed to fulfil the original WWAI
Business Plan through the procedures and at the share prices recommended by
our US advisers. While it might be possible to restructure WWAI and to
renegotiate the License Agreement so that more attractive terms could be
offered to new investors, it has actually become clear that there is no
definite requirement for the establishment of a US manufacturing plant for
the next two years or so, since Walker Wingsail Systems plc (WWS) in
Plymouth can readily satisfy the early stage demand. In addition, the cost
to WWAI both in money and in executive and professional effort has already
been heavy, and would under those circumstances continue or even increase.
The directors have therefore decided to recommend the acceptance of an offer
of takeover of WWAI by WWS. Each shareholder in WWAI is now offered two
Ordinary Shares of WWS stock for every share of WWAI stock held. If
shareholders voting more than 50% of the issued share capital consent by or
before 31st August 1997 control of WWAI will pass to WWS. If you consent
you should send the duly completed Election/Consent Form to this office,
together with your WWAI share certificate. The appropriate WWS share
certificates will be issued without delay.
In the event of the takeover being approved by shareholders the WWAI Licence
Agreement will be terminated and WWAI will be offered for sale by WWS as a
shell company with the benefits of being an SEC approved and reporting
corporation which is already on the NASD Electronic Bulletin Board in the
USA. American shareholders may decide that it could be in their best
interests to wait for that eventuality, and in that case they need take no
action at this time.
Finally, since the Directors of WWAI were issued their shares at the
inception of WWAI for nominal value, they will waive the issuance to and
receipt by them of WWS shares in exchange for their holdings in WWAI.
Yours sincerely
John Walker
President
Encs: Directors' Consents, Shareholders' Election/Consent Form, Takeover
Agreement
EXHIBIT 11.2
AGREEMENT OF TAKEOVER
The following constitutes the Agreement of Takeover by and between Walker
Wingsail Systems plc (WWS), a corporation organised and existing pursuant to
the Companies Act 1948-81 of England, No. 1566677, and Walker Wingsail
America Inc (WWAI), a corporation organised and existing pursuant to the
laws of the State of Delaware, USA.
CONSTITUENT CORPORATIONS: Walker Wingsail America Inc
Devonport Royal Dockyard
Plymouth PL1 4SG UK
Walker Wingsail Systems plc
Devonport Royal Dockyard
Plymouth PL1 4SG UK
AGREEMENT:
It is hereby agreed that, subject to the consent of shareholders voting a
majority of the Common Stock of WWAI, that WWAI shall be taken over by WWS.
Such takeover shall become effective, if approved, on or before 31st August
1997.
STOCKHOLDING:
WWAI has only one class of stock issued and outstanding, that being common
stock. WWAI has 2,386,680 shares of common stock outstanding, with each
share entitled to one vote.
WWS has two classes of stock outstanding, being Ordinary Shares with each
share entitled to one vote and Founder Shares which presently vote as 10% of
the total. WWS has 64,421,619 aggregate shares issued and outstanding.
TERMS AND CONDITIONS:
In the event of WWAI shareholder consent:
(1) Each shareholder of WWAI who consents shall receive two Ordinary
Shares of WWS for every share of the common stock of WWAI held by such
shareholder.
(2) All liabilities of WWAI shall be assumed by WWS.
(3) The Licence Agreement between WWS and WWAI shall be terminated.
(4) WWS agrees to be subject to service of process within the State of
Delaware for the enforcement of any obligation of WWAI.
DATED: 10th July 1997
The undersigned hereby state under the pains and penalties of perjury and
respectively acknowledge that the foregoing constitutes their acts and the
acts of the corporation and that the facts stated herein are true.
WALKER WINGSAIL AMERICAN INC
______________________________
John Graham Walker
President
______________________________
Jean Margaret Walker
Secretary
The undersigned hereby state under the pains and penalties of perjury and
respectively acknowledge that the foregoing constitutes their acts and the
acts of the corporation and that the facts stated herein are true.
WALKER WINGSAIL SYSTEMS PLC
______________________________
John Graham Walker
Chairman
______________________________
Jean Margaret Walker
Managing Director
______________________________
Raymond Peter Turgoose
Director
EXHIBIT 11.3
SHAREHOLDER ELECTION/CONSENT FORM
The undersigned shareholder of Walker Wingsail America Inc. acknowledges
receipt of a certain Agreement of Takeover by and between Walker Wingsail
America Inc. and Walker Wingsail Systems plc, dated 10th July 1997, and the
accompanying Directors' Consents authorising said Agreement in the event
that sufficient consents are received.
In accordance with the Agreement of Takeover and applicable law, the
undersigned elects the following (choose one):
[ ] I, the undersigned, hereby Consent to the takeover of Walker Wingsail
America Inc (a Delaware corporation) by Walker Wingsail Systems plc
(incorporated in England). I agree to receive two Ordinary Shares of
Walker Wingsail Systems plc in exchange for every share of the common
stock of Walker Wingsail America Inc. held by me, and the
certificate(s) in respect of my WWAI shareholding is(are) enclosed.
[ ] I, the undersigned, do not Consent to the above described Takeover.
PLEASE RETURN THIS ELECTION/CONSENT FORM DULY COMPLETED AND DATED TO THE
ABOVE ADDRESS WITH, IF YOU CONSENT, YOUR WWAI SHARE CERTIFICATE. IT IS
STRONGLY RECOMMENDED THAT YOU USE A RECORDED DELIVERY MAIL SERVICE.
DATED: ______________, 1997
SHAREHOLDER:
________________________________
Signature
________________________________
Type or Print Name
________________________________
Address
________________________________
________________________________
________________________________
EXHIBIT 11.4
ACTION BY UNANIMOUS CONSENT OF THE
BOARD OF DIRECTORS OF WALKER WINGSAIL SYSTEMS PLC
The undersigned, being all of the directors of Walker Wingsail Systems plc,
hereby consent to the adoption of the following resolutions:
RESOLVED: To direct and authorise the appropriate representatives of the
Corporation to make an offer to the shareholders of Walker Wingsail America
Inc of two Walker Wingsail Systems plc Ordinary Shares for every one Walker
Wingsail America Inc share of Common Stock held, and that in the event that
sufficient consents are achieved to execute an Agreement of Takeover between
the Corporation and Walker Wingsail America Inc, on the terms and conditions
as set forth in a copy of said Agreement annexed hereto.
RESOLVED: That such Takeover shall become effective, if approved, on or
before 31st August 1997.
Dated 10th July 1997
________________________________
John Graham Walker
________________________________
Jean Margaret Walker
________________________________
Raymond Peter Turgoose
Exhibit 11.5
ACTION BY UNANIMOUS CONSENT OF THE
BOARD OF DIRECTORS OF WALKER WINGSAIL AMERICA INC
The undersigned, being all of the directors of Walker Wingsail America Inc,
hereby consent to the adoption of the following resolutions:
RESOLVED: To direct and authorise the appropriate representatives of the
Corporation to recommend to the shareholders of Walker Wingsail America Inc
that a takeover be agreed of Walker Wingsail America Inc by Walker Wingsail
Systems plc, and in the event that sufficient consents are achieved to
execute an Agreement of Takeover between the Corporation and Walker Wingsail
Systems plc on the terms and conditions as set forth in a copy of said
Agreement annexed hereto.
RESOLVED: That such Takeover shall become effective, if approved, on or
before 31st August 1997.
Dated 10th July 1997
________________________________
John Graham Walker
________________________________
Jean Margaret Walker
EXHIBIT 11.6
TENDER OFFER DISCLOSURES BY WALKER WINGSAIL SYSTEMS PLC FOR TENDER OFFER FOR
THE EQUITY SECURITIES OF WALKER WINGSAIL AMERICA INC
The following information is provided as required by Rule 14d-6 adopted by
the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934 and Regulation 14D promulgated thereunder.
1. The identity of the bidder for the equity securities of Walker
Wingsail America Inc is Walker Wingsail Systems plc.
2. The identity of the subject company is Walker Wingsail America Inc.
3. By this tender offer, Walker Wingsail Systems plc seeks to buy more
than 50% and up to 100% of the 2,386,680 shares of the common stock of
Walker Wingsail America Inc issued and outstanding, which constitutes
all of the common stock of said company. The consideration for the
purchase of the aforesaid stock is two Ordinary Shares of Walker
Wingsail Systems plc for every one share of the common stock of Walker
Wingsail America Inc.
4. The scheduled expiration date of the tender offer is 31 August 1997.
5. Securities deposited pursuant to this tender offer may be withdrawn by
any such holder making such deposit during the period that this offer
remains open. Notice of withdrawal shall be deemed to be timely upon
the receipt by Walker Wingsail Systems plc of a written notice of
withdrawal specifying the name(s) of the tendering stock holder(s),
the number or amount of the securities to be withdrawn and the name(s)
in which the certificate is registered, if different from that of the
tendering security holder(s). Walker Wingsail Systems plc shall not
release the withdrawn securities unless it receives the aforesaid
notice, which notice shall be signed by the holder of record of such
securities, which signature must be notarised.
6. Although Walker Wingsail America Inc has obtained a trading symbol and
is listed on the NASD OTC electronic bulletin board, a market for such
securities never developed and none of its securities has traded in a
recognised securities market.
7. Walker Wingsail Systems plc is a corporation organised and existing
pursuant to the Companies Act 1948-81 of England, no. 1566677, having
a principal place of business and a principal office at Devonport
Royal Dockyard, Plymouth, Devon PL1 4SG, United Kingdom.
The Board of Directors of Walker Wingsail Systems plc consists of John
Walker (Chairman), Jean Walker (Managing Director) and Peter Turgoose.
John Walker is responsible for the engineering management of the
company, and Jean Walker is the managing director of the company
concentrating on marketing, operations, finance and administration.
Peter Turgoose is a member of the Board of Directors but not an
executive of the company. The authorised capital of the company is
divided into 66,000 Founder Shares and 149,934,000 Ordinary Shares.
All the Founder Shares and 64,021,181 Ordinary Shares are issued and
outstanding. Of these shares John Walker and Jean Walker each hold
33,000 Founder Shares and Peter Turgoose holds 300,000 Ordinary
Shares.
8. On 5 May 1995, Walker Wingsail Systems plc entered into a license
agreement with Walker Wingsail America Inc for the granting of certain
rights in the Americas in relation to the technology of Walker
Wingsail Systems plc for an access fee of [Pound Sign]560,000, a
product fee (partially deferred) of [Pound Sign]247,500 in respect to
a particular design and a royalty on sales of products not manufactured
or supplied by Walker Wingsail Systems plc. Walker Wingsail Systems
plc accounted for the access fee of [Pound Sign]560,000 in the year
ended 30 March 1996 by way of an equivalent write-down of development
costs. On 30 March 1996 [Pound Sign]122,170 of these fees had been
received in respect of the product fee. During the year ended 30
March 1996, Walker Wingsail Systems plc sold a ZEFYR 43 boat to Walker
Wingsail America Inc for [Pound Sign]225,000. This amount was
paid prior to the year ended 30 March 1996.
In the year ended 30 March 1996, Walker Wingsail Systems plc paid
costs of $297,938 with respect to the marketing and trading activities
of Walker Wingsail America Inc, including costs allocated from the
overhead of that Company.
9. The consideration for the capital stock of Walker Wingsail America Inc
subject of this tender offer is the authorised but unissued shares of
Walker Wingsail Systems plc. There is no other consideration involved
in this tender offer. Walker Wingsail America Inc was formed for the
express purpose of developing a business presence for the Walker
wingsail products in the Americas. To achieve this goal, the original
business plan for Walker Wingsail America Inc was to raise capital
through the sale of its equity. This plan has not been realised
despite the expenditure of significant effort and money to raise such
further capital and to maintain Walker Wingsail America Inc as a
reporting company in the United States.
In the event that the proposed tender offer is successful, the license
agreement between Walker Wingsail America Inc and Walker Wingsail
Systems plc will be terminated insofar as Walker Wingsail America inc
is in default of the terms and provisions of that agreement. A
successful tender offer will result in the reorganisation of Walker
Wingsail America Inc by the management of Walker Wingsail Systems plc
for the express purpose of offering Walker Wingsail America Inc for
sale as a reporting company having a presence on the NASD OTC
electronic bulletin board.
At the incorporation of Walker Wingsail America Inc, Mr John Walker
and Mrs Jean Walker were issued shares by that company which presently
amount to 38% of the issued and outstanding shares of Walker Wingsail
America Inc. No transaction with respect to capital stock of Walker
Wingsail America Inc has occurred within the 60 days preceding the
date of the disclosure statement. In connection with the anticipated
tender offer, Mr and Mrs Walker have waived their right to surrender
their shares in Walker Wingsail America Inc for shares in Walker
Wingsail Systems plc.
10. Other than an agreement in principal reached by the management of both
companies with respect to this tender offer, there does not exist any
contract, arrangement, understanding or relationship between Walker
Wingsail Systems plc and any of the individual persons enumerated in
this disclosure statement with respect to any securities of Walker
Wingsail America Inc.
11. There are no persons, employed, retained or to be compensated by
Walker Wingsail Systems plc, or by any person on that company's
behalf, to make solicitations or recommendations in connection with
the anticipated tender offer.
12. The most recent financial statements of Walker Wingsail America Inc
and Walker Wingsail Systems plc are annexed hereto as Exhibit B.
13. Annexed hereto as Exhibit A is a proposed "agreement of takeover"
which has been approved by the respective Boards of Directors of
Walker Wingsail America Inc and Walker Wingsail Systems plc.
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this disclosure statement is true, complete and
correct.
WALKER WINGSAIL SYSTEMS PLC
By:.______________________________
John Walker, President
Dated: 10 July 1997
EXHIBIT 11.7
WALKER WINGSAIL SYSTEMS plc
PROFIT AND LOSS ACCOUNT
For the ten months ended 31st January 1997
<TABLE>
<CAPTION>
[Pound Sign '000]
-----------------
<S> <C>
Turnover (Note 1) 275
Change in stocks of finished goods and work in progress 95
Own work capitalised 313
Other operating income 1
External charges (654)
Staff costs (552)
Depreciation and other amounts written off
tangible and intangible fixed assets (201)
-----
Operating loss (723)
Other interest receivable and similar income 3
Interest payable and similar charges (6)
Proof on sale of fixed assets 2
-----
Loss on ordinary activities before taxation (724)
Tax on ordinary activities before taxation -
Loss for the financial year (724)
Profit and loss account brought forward (5,735)
-----
Profit and loss account carried forward (6,459)
-----
</TABLE>
Note 1. Turnover represents the value invoiced on contracted boats to the
extend of costs incurred. Monies received under these contracts
in excess of work in progress is shown as deferred income in
creditors on the balance sheet. Such monies are non-refundable.
BALANCE SHEET
As at 31st January 1997
<TABLE>
<CAPTION>
[Pound Sign '000] [Pound Sign '000]
----------------- -----------------
<S> <C> <C>
FIXED ASSETS
Intangible assets 2,340
Tangible assets 1,532
-----
3,872
CURRENT ASSETS
Stocks 176
Debtors 30
Amount due from Walker Wingsail America Inc
(falling due after one year) 511
Cash at bank and in hand 192
-----
909
-----
CREDITORS: amounts falling due with in
one year
Bank loan 14
Obligations under finance leases and hire
purchase contracts 13
Payments received on account of contracted
boats (Note 1) 338
Trade creditors 112
Taxation and social security 17
Accruals and deferred income 173
-----
667
-----
Net current assets 242
------
Total assets less current liabilities 4,114
CREDITORS: Amounts falling due after more than one year
Bank loan (84)
------
4,030
------
CAPITAL AND RESERVES
Called up share capital 6,369
Share premium account 4,120
Profit and loss account (6,459)
------
Total equity shareholders' funds 4,030
</TABLE>
Note 1. This represents amounts invoiced and received on contracted boats
in excess of WIP value. At 31st January 1997 the company had
signed construction contracts for ten boats with an approximate
sales contract value of [Pound Sign]2.75 million.
CASH FLOW STATEMENT
For the ten months ended 31st January 1997
<TABLE>
<CAPTION>
[Pound Sign '000] [Pound Sign '000]
----------------- -----------------
<S> <C> <C>
Operating loss (723)
Amortization of intangible assets 11
Depreciation of tangible fixed assets 190
Increase in stocks (95)
Decrease in debtors 190
Decrease in creditors (15)
----
Net cash outflow from operating activities (578)
Returns on investments and servicing of
finance
Interest received 3
Interest paid (6)
----
New cash outflow from returns on investments
and servicing of finance (3)
Capital expenditure
Purchase of licences and patents (11)
Purchase of tangible fixed assets (117)
Receipts from sales of fixed assets 22
Own work capitalized (313)
----
(419)
-----
Net cash outflow before financing (1,000)
Financing
Issue of ordinary shares 395
New finance leases in year 15
Repayment of capital under finance leases (2)
New bank loans 100
Repayment of amounts borrowed (2)
----
Net cash inflow from financing 1,006
-----
Increase in cash 6
-----
</TABLE>
5th April 1997
NEWLAND MALLET GARNER WOODBURY
Chartered Accountants
The Board of Directors Crown House
Walker Wingsail Systems plc 37/41 Prince Street
Devonport Royal Dockyard Bristol
Plymouth BS1 4PS
Devon Telephone 0117 927 7702
PL1 4SG Facsimile 0117 922 5191
E Mail [email protected]
Dear Sirs
We have reviewed without carrying out an audit, the management accounts for
the ten months period ended 31st January 1997 which are set out as above.
We confirm that these accounts have been prepared on a consistent basis to,
and with the same accounting policies as, the audited financial statements
of the company.
Yours faithfully
Newland Mallet Garner Woodbury & Co
Partners
Oliver Newland Nigel Mallet Stephen Garner
EXHIBIT 11.8
Re: Walker Wingsail America, Inc.
File No. 000-27274
FINAL AMENDMENT TO SCHEDULE 14D-1
TENDER OFFER DISCLOSURES
BY WALKER WINGSAIL SYSTEMS plc
FOR TENDER OFFER FOR THE EQUITY
SECURITIES OF WALKER WINGSAIL AMERICA INC.
The following information is provided as a First and Final Amendment
to its Schedule 14D-1, filed on July 17, 1997 by Walker Wingsail Systems
plc, as required by Rule 14d-6 adopted by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 and Regulation
14D promulgated thereunder:
The identity of the bidder for the equity securities of Walker Wingsail
America Inc. is Walker Wingsail Systems plc.
The identity of the subject company is Walker Wingsail America, Inc.
By this tender offer, Walker Wingsail Systems plc sought to buy 2,386,680
shares of the common stock of Walker Wingsail America Inc. issued and
outstanding, which constitutes all of the common stock of said company. The
consideration for the purchase of the aforesaid stock was the exchange of
two Ordinary Shares of Walker Wingsail Systems plc for every one share of
the common stock of Walker Wingsail America Inc.
The tender offer terminated on July 31, 1997 and the exchange of shares
occurred on September 1 through 4, 1997, respectively (see attached Summary
Schedule).
No material changes in the items to the Schedule 14-D1 occurred;
accordingly, no additional disclosures have been made.
Securities deposited pursuant to this tender offer during the period that
the offer remained open consisted of 2,237,066 shares of the common stock of
Walker Wingsail America Inc. (the "Tendered Common Stock"). The Tendered
Common Stock consisted of (i) 1,343,654 shares tendered by non-affiliated
shareholders of Walker Wingsail America Inc. and (ii) 893,412 shares
tendered by affiliated shareholders of Walker Wingsail America Inc. The
affiliated shareholders consisted of Mr. John Walker and Mrs. Jean Walker,
the founders of both Walker Wingsail Systems plc and Walker Wingsail America
Inc., who hold a controlling interest in Walker Wingsail Systems plc.
Pursuant to the terms of the offer, 2,687,308 shares of the Ordinary Shares
of Walker Wingsail Systems plc were exchanged for the 1,343,654 shares of
Tendered Common Stock of the non-affiliated shareholders of Walker Wingsail
America Inc. With respect to Mr. and Mrs. Walker, 893 412 shares of Walker
Wingsail Systems plc were exchanged (on a one for one basis) for their
Tendered Common Stock. Finally, an additional 90,250 shares of the Ordinary
Shares of Walker Wingsail Systems plc were issued to certain non-affiliated
shareholders of Walker Wingsail America Inc., who had purchased shares of
the common stock of Walker Wingsail America Inc. at higher prices than the
remaining non-affiliated shareholders.
EXHIBIT 11.9
SCHEDULE 14D-1 TENDER OFFER DISCLOSURES BY PERSONS OTHER THAN
THE ISSUER FOR TENDER OFFERS FOR THE EQUITY SECURITIES
OF ISSUERS SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS
Item 1: Security and Subject Company
a) The name of the subject Company is Walker Wingsail America Inc
with principal executive offices at Devonport Royal Dockyard, Plymouth,
Devon PL1 4SG, United Kingdom. Commission File No. 0-27274.
b) The securities being sought consist of 2,386,680 shares of the
common stock issued and outstanding of Walker Wingsail America Inc. The
consideration for such shares is two Ordinary Shares of Walker Wingsail
Systems plc for every one share of the common stock of Walker Wingsail
America Inc.
c) The securities are not traded in a market.
Item 2: Identity and Background
Walker Wingsail Systems plc is registered in England and Wales, having been
incorporated on 8 June 1981 under the Companies Act 1948-1981. The
registered office and principal place of business of the company is at
Devonport Royal Dockyard, Plymouth, Devon PL1 4SG, United Kingdom.
a) Name
i) John Walker (Executive Officer, Director)
ii) Jean Walker (Executive Officer, Director)
iii) Peter Turgoose (Director)
b) Business Address
i) Devonport Royal Dockyard, Plymouth, Devon PL1 4SG,
United Kingdom
ii) same
iii) same
c) Present Occupation
i) Employed by Walker Wingsail Systems plc
ii) Employed by Walker Wingsail Systems plc
iii) Non Executive Director
d) Occupation
i) Employed by Walker Wingsail Systems plc; Chairman with
operating responsibility for product design, engineering
and quality control
ii) Employed by Walker Wingsail Systems plc; Managing Director
with operating responsibility for marketing, operations,
finance and administration
iii) Non Executive Director; ex boat building industrialist
with experience in sales and finance
e) No person enumerated herein has been convicted in any criminal
proceeding during the past five years.
f) No person enumerated herein has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction during the
last five years which, as a result of such proceeding, was or is subject to
a judgement, decree or final order enjoining further violations of, or
prohibiting activities subject to federal or state securities law or finding
any violation of such laws.
Item 3: Past Contracts, Transactions or Negotiations with the Subject
Company
On 5 May 1995, Walker Wingsail Systems plc entered into a license agreement
with Walker Wingsail America Inc for the granting of certain rights in the
Americas in relation to the technology of Walker Wingsail Systems plc for an
access fee of [Pound Sign]560,000, a product fee (partially deferred) of
[Pound Sign]247,500 in respect to a particular design and a royalty on sales
of products not manufactured or supplied by Walker Wingsail Systems plc.
Walker Wingsail Systems plc accounted for the access fee of [Pound
Sign]560,000 in the year ended 30 March 1996 by way of an equivalent
write-down of development costs. On 30 March 1996, [Pound Sign]122,170 of
these fees had been received in respect of the product fee. During the year
ended 30 March 1996 Walker Wingsail Systems plc sold a ZEFYR 43 boat to
Walker Wingsail America Inc for [Pound Sign]225,000. This amount was paid
prior to the year ending 30 March 1996.
In the year ending 30 March 1996 Walker Wingsail Systems plc paid costs of
$297,938 with respect to the marketing and trading activities of Walker
Wingsail America Inc, including costs allocated from the overhead of that
company.
Item 4: Source and Amount of Funds or other Consideration
The consideration for the capital stock of Walker Wingsail America Inc
subject of this tender offer is the authorised but unissued shares of Walker
Wingsail Systems plc. There is no other consideration involved in this
tender offer. Walker Wingsail America Inc was formed for the express
purpose of developing a business presence for the Walker wingsail products
in the Americas. To achieve this goal, the original business plan for
Walker Wingsail America Inc was to raise capital through the sale of its
equity. This plan has not been realised despite the expenditure of
significant effort and money to raise such further capital and to maintain
Walker Wingsail America Inc as a reporting company in the United States.
Item 5: Purpose of the Tender Offer and Plans or Proposals of the Bidder
In the event that the proposed tender offer is successful, the license
agreement between Walker Wingsail America Inc and Walker Wingsail Systems
plc will be terminated insofar as Walker Wingsail America Inc is in default
of the terms and provisions of that agreement. A successful tender offer
will result in the reorganisation of Walker Wingsail America Inc by the
management of Walker Wingsail Systems plc for the express purpose of
offering Walker Wingsail America Inc for sale as a reporting company having
a presence on the NASD OTC electronic bulletin board.
Item 6: Interest in Securities of the Subject Companies
At the incorporation of Walker Wingsail America Inc, Mr John Walker and Mrs
Jean Walker were issued shares by that company which presently amount to 38%
of the issued and outstanding shares of Walker Wingsail America Inc. No
transaction with respect to capital stock of Walker Wingsail America Inc has
occurred within the 60 days preceding the date of the disclosure statement.
In connection with the anticipated tender offer, Mr and Mrs Walker have
waived their right to surrender their shares in Walker Wingsail America Inc
for shares in Walker Wingsail Systems plc.
Item 7: Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities
Other than an agreement in principal reached by the management of both
companies with respect to this tender offer, there does not exist any
contract, arrangement, understanding or relationship between Walker Wingsail
Systems plc and any of the individual persons enumerated in this disclosure
statement with respect to any securities of Walker Wingsail America Inc.
Annexed hereto as Exhibit A is a proposed "agreement of takeover" which has
been approved by the respective Boards of Directors of Walker Wingsail
America Inc and Walker Wingsail Systems plc.
Item 8: Persons Retained, Employed or to be Compensated
There are no persons, employed, retained or to be compensated by Walker
Wingsail Systems plc, or by any person on that company's behalf, to make
solicitations or recommendations in connection with the anticipated tender
offer.
Item 9: Financial Statements of Certain Bidders
The most recent financial statements of Walker Wingsail America Inc and
Walker Wingsail Systems plc are annexed hereto as Exhibit B.
Item 10: Additional Information
a) None
b) Approval of majority of shareholders of subject company required,
Form D filing requirement (see Item 11e herein)
c) Not applicable
d) Not applicable
e) None
f) None
Item 11: Material to be Filed as Exhibits
a) Attached as Exhibit C is a copy of the tender offer material which
has been sent to the security holders in connection with the
tender offer.
b) Not applicable
c) Attached as Exhibit D is a copy of the license agreement by and
between Walker Wingsail Systems plc and Walker Wingsail America
Inc.
d) Not applicable
e) In this exchange offer, the securities of Walker Wingsail Systems
plc are to be issued pursuant to an exemption to registration
under the Securities Act of 1933 found in section 3(b) and
Regulation D, Rule 504 promulgated thereunder.
f) Not applicable
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this disclosure statement is true, complete and
correct.
WALKER WINGSAIL SYSTEMS PLC
By: ______________________________
John Walker, President
Dated: 10 July 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER
31, 1997 FINANCIAL STATEMENTS OF WALKER WINGSAIL AMERICAN, 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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 2
<CURRENT-ASSETS> 4
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 106
<CURRENT-LIABILITIES> 174
<BONDS> 0
0
0
<COMMON> 2
<OTHER-SE> (71)
<TOTAL-LIABILITY-AND-EQUITY> 106
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 85
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
