FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OFTHE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1999
Commission file Number (to be assigned)
RIDGEWOOD POWER GROWTH FUND
(Exact name of registrant as specified in its charter.)
Delaware 22-3495594
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
947 Linwood Avenue, Ridgewood, New Jersey 07450-2939
(Address of principal executive offices) (Zip Code)
(201) 447-9000
Registrant's telephone number, including area code:
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The Ridgewood Power Growth Fund
Financial Statements
June 30, 1999
<PAGE>
The Ridgewood Power Growth Fund
Balance Sheet
- --------------------------------------------------------------------------------
June 30, December 31,
1999 1998
------------ ------------
(unaudited)
Assets:
Cash and cash equivalents ................. $ 27,660,902 $ 25,256,560
Due from affiliates ....................... -- 9,330
Other current assets ...................... 83,719 86,348
------------ ------------
Total current assets ..................... 27,744,621 23,352,238
Investment in ZAP Power Systems ........... 4,047,762 --
Deferred due diligence costs .............. 925,588 381,192
------------ ------------
Total assets ............................. $ 32,717,971 $ 25,733,430
------------ ------------
Liabilities and shareholders' equity:
Accounts payable and accrued expenses ..... $ 245,139 $ 264,620
Due to affiliates ......................... 81,727 1,114,129
------------ ------------
Total current liabilities ................ 326,866 1,378,749
------------ ------------
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (404.1765 and
296.8815 shares issued and outstanding
at June 30, 1999 and December 31, 1998) .. 32,406,686 24,363,198
Managing shareholder's accumulated deficit (15,581) (8,517)
------------ ------------
Total shareholders' equity ............... 32,391,105 24,354,681
------------ ------------
Total liabilities and shareholders' equity $ 32,717,971 $ 25,733,430
------------ ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
Commencement
of Share
Three Offering
Six Months Ended Months (February 9
---------------------- Ended 1998) to
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
Revenue:
Loss from ZAP Power
Systems .................. $ (28,215) $ -- $ (28,215) $ --
Interest income ........... 647,338 45,167 348,369 39,947
--------- --------- --------- ---------
Total revenue ........... 619,123 45,167 320,154 39,947
--------- --------- --------- ---------
Expenses:
Accounting and legal fees . 24,037 12,690 8,470 8,443
Investment fee ............ 226,390 165,898 86,390 146,377
Due diligence costs ....... 92,175 -- 92,175 --
Miscellaneous ............. 49,773 11,140 9,196 9,668
--------- --------- --------- ---------
Total expenses .......... 392,375 189,728 196,231 164,488
--------- --------- --------- ---------
Net income (loss) .......... $ 226,748 $(144,561) $ 123,923 $(124,541)
--------- --------- --------- ---------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Changes in Shareholders' Equity (unaudited)
- --------------------------------------------------------------------------------
Managing
Shareholders Shareholder Total
------------ ------------ ------------
Shareholders' equity, December
31, 1998 (296.8815 shares) .. $ 24,363,198 $ (8,517) $ 24,354,681
Capital contributions (107.295
shares) ..................... 8,743,776 -- 8,743,776
Cash distributions ........... (924,769) (9,331) (934,100)
Net income for the period .... 224,481 2,267 226,748
------------ ------------ ------------
Shareholders' equity, June
30, 1999 (404.1765 shares) .. $ 32,406,686 $ (15,581) $ 32,391,105
------------ ------------ ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Cash Flows (unaudited)
- --------------------------------------------------------------------------------
Commencement of
Share Offering
Six Months Ended (February 9, 1998)
June 30, 1999 to June 30, 1998
------------ ------------
Cash flows from operating activities:
Net income (loss) ............................ $ 226,748 $ (144,561)
------------ ------------
Adjustments to reconcile net income (loss)
to net cash flows from operating
activities:
Loss from unconsolidated ZAP Power Systems .. 28,215 --
Changes in assets and liabilities:
Decrease in due from affiliates ............ 9,330 --
Increase in other current assets ........... 2,629 (4,411)
(Decrease) increase in accounts payable and
accrued expenses .......................... (19,481) 15,000
(Decrease) increase in due to
affiliates ............................... (1,032,402) 1,368
------------ ------------
Total adjustments ......................... (1,011,709) 11,957
------------ ------------
Net cash provided by (used in)
operating activities ..................... (784,961) (132,604)
------------ ------------
Cash flows from investing activities:
Investment in ZAP Power Systems .............. (4,075,977) --
Deferred due diligence costs ................. (544,396) --
------------ ------------
Net cash used in investing activities ....... (4,620,373) --
------------ ------------
Cash flows from financing activities:
Proceeds from shareholders' contributions .... 10,492,000 9,367,050
Selling commissions and offering costs paid .. (1,748,224) (1,307,885)
Cash distributions to shareholders ........... (934,100) --
------------ ------------
Net cash provided by financing activities .. 7,809,676 8,059,165
------------ ------------
Net increase in cash and cash equivalents .... 2,404,342 7,926,561
Cash and cash equivalents, beginning of period 25,256,560 --
------------ ------------
Cash and cash equivalents, end of period ..... $ 27,660,902 $ 7,926,561
------------ ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. General
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, which consist of normal recurring adjustments,
necessary for the pair presentation of the results for the interim periods.
Additional footnote disclosure concerning accounting policies and other matters
are disclosed in The Ridgewood Power Growth Fund's financial statements included
in the Registration Statement on Form 10, which should be read in conjunction
with these financial statements. The year-end balance sheet data was derived
from audited financial statements, but does not include all disclosures required
by generally accepted accounting principles.
The results of operations for an interim period should not necessarily be taken
as indicative of the results of operations that may be expected for a twelve
month period.
2. Purchase of Investment in ZAP Power Systems
On March 30, 1999, the Fund, through a wholly owned subsidiary, purchased
678,808 shares of common stock of ZAP Power Systems, Inc ("ZAP") for $2,050,000.
ZAP, headquartered in Sebastopol, California, designs, assembles, manufactures
and distributes electric power bicycle kits, electric bicycles and tricycles and
electric scooters.
ZAP's common stock is quoted on the OTC Bulletin Board under the symbol "ZAPP".
As part of the transaction, the Fund was granted a warrant to purchase
additional shares of Common Stock of ZAP. The total exercise price under the
warrant was $2,000,000 and the exercise price per share equaled 85% of the
average daily closing price of the Common Stock over the 20 day period prior to
the date of exercise, but not more than $4.50 per share and not less than $3.50
per share. The warrant had customary anti-dilution provisions. The warrant was
exercisable at any time but only in its full amount through December 29, 1999.
The Fund could be required by ZAP to exercise the warrant if ZAP had not
experienced a material adverse change in its financial condition or business
prospects and ZAP had satisfied all of the following milestones of performance
by December 29, 1999:
(x) Completion of the acquisition of a model bike rental unit which has
gross income of at least $400,000 per annum for the last two calendar
years; (y) Completion of at least three of the following six joint
marketing agreements that are currently being pursued by the Company: MTV
Networks; Baywatch Television Series; Ford Motor Company; KOA, Disney and
Huffy Bikes; and (z) Completion of the following financial milestones for
the period commencing on January 1, 1999: net sales of $8,500,000; gross
profit of $2,500,000; and net profit of $350,000.
Although all these conditions have not been met, the Fund exercised the warrant
in June 1999 and purchased 571,249 additional shares for $2,000,000. The Fund
owns approximately 30% of the outstanding common stock of ZAP
The Fund's investment in ZAP is accounted for using the equity method of
accounting. Accordingly, the accompanying statement of operations includes the
Fund's interest in ZAP's results of operations since the acquisition of the
shares.
The following pro forma information presents the results of operations of the
Fund as if the purchases had occurred on January 1, 1999:
Six months ended
June 30, 1999
Revenue $492,961
Net income 100,586
These unaudited pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of the results of operations which
would have actually occurred had the purchases occurred on January 1, 1999, or
of future results.
Summary results of operations for ZAP were as follows:
Six months ended June 30,
1999 1998
Total revenue ............... $ 2,677,000 1,324,900
Depreciation and amortization 50,000 44,600
Loss from operations ........ (8,600) (453,500)
Net loss .................... (66,900) (459,400)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Dollar amounts in this discussion are generally rounded to the nearest $1,000.
Introduction
The financial statements include only the accounts of the Fund. The Fund uses
the equity method of accounting for its investments in ZAP Power Systems, which
was acquired on March 30, 1999.
Results of Operations
Interest income was $348,000 for the second quarter of 1999 compared to $40,000
in the same period in 1998 reflecting the significant increase in the cash
balance of the Fund, which began offering shares in February 1998. Interest
income for the first six months of the year also increased from $45,000 in 1998
to $647,000 in 1999.
The Fund recorded a loss of $28,000 in the second quarter of 1999 equal to its
share of losses incurred at ZAP Power Systems. The Trust acquired a minority
interest in that company on March 30, 1999.
The investment fee expense charged on capital contributions increased to
$226,000 in the first six months of 1999 compared to $166,000 in the first six
months of 1998 reflecting a higher level of capital contributions. Contributions
in the second quarter of 1999 were lower than in the corresponding period in the
prior year resulting in investment fees of $86,000 in the first six months of
1999 compared to $146,000 in the first six months of 1999. During the second
quarter of 1999, the Fund wrote-off $92,000 of due diligence costs on projects
that were rejected. The increase in other expenses for the six months ended June
30, 1999 to $50,000 from $11,000 in the prior year is a result of 1999
representing a full six months of operations while in 1998 the Fund did not
begin incurring expenses until after it raised the minimum amount of the
offering and broke escrow in March 1998.
Liquidity and Capital Resources
At June 30, 1999, the Fund had $27,661,000 of cash available for investments in
power generation projects and payment of operating expenses. Upon the closing of
the Fund's offering of Investor Shares, the Fund will also pay a management fee
to Ridgewood Power VI LLC, one of the Managing Shareholders.
On March 30, 1999, the Fund, through a wholly owned subsidiary, purchased
678,808 shares of common stock of ZAP Power Systems, Inc ("ZAP") for $2,050,000.
ZAP, headquartered in Sebastopol, California, designs, assembles, manufactures
and distributes electric power bicycle kits, electric bicycles and tricycles and
electric scooters.
ZAP's common stock is quoted on the OTC Bulletin Board under the symbol "ZAPP".
As part of the transaction, the Fund was granted a warrant to purchase
additional shares of Common Stock of ZAP. The total exercise price under the
warrant was $2,000,000 and the exercise price per share equaled 85% of the
average daily closing price of the Common Stock over the 20 day period prior to
the date of exercise, but not more than $4.50 per share and not less than $3.50
per share. The warrant had customary anti-dilution provisions. The warrant was
exercisable at any time but only in its full amount through December 29, 1999.
The Fund could be required by ZAP to exercise the warrant if ZAP had not
experienced a material adverse change in its financial condition or business
prospects and ZAP had satisfied all of the following milestones of performance
by December 29, 1999:
(x) Completion of the acquisition of a model bike rental unit which has
gross income of at least $400,000 per annum for the last two calendar
years; (y) Completion of at least three of the following six joint
marketing agreements that are currently being pursued by the Company: MTV
Networks; Baywatch Television Series; Ford Motor Company; KOA, Disney and
Huffy Bikes; and (z) Completion of the following financial milestones for
the period commencing on January 1, 1999: net sales of $8,500,000; gross
profit of $2,500,000; and net profit of $350,000.
Although all these conditions have not been met, the Fund exercised the warrant
in June 1999 and purchased 571,249 additional shares for $2,000,000. The Fund
owns approximately 30% of the outstanding common stock of ZAP
On June 30, 1999, Ridgewood Electric Power Trust V ("Trust V"), a similar
investment program sponsored by the Managing Shareholder, entered into
agreements with the stockholders of Combined Landfill Projects Limited ("CLP"),
of London, England, for a $16.1 million purchase of 100% of the equity interest
in four operating landfill gas power plants and one plant in the late stages of
construction, as well as the rights to develop and construct another 20 landfill
gas plants in Great Britain. The estimated cost of the package of completed
plants and the 20 developmental sites, if all the developmental plants are
built, is $36 to $38 million. Trust V will supply the first $19 million of the
purchase price and developmental equity and the Fund will supply the remainder
of the developmental equity. To the extent that the Fund supplies capital, it
will receive an undivided interest in the entire package of operating and
developmental projects.
The Fund anticipates that, during 1999, its cash flow from operations and
unexpended offering proceeds will be adequate to fund its obligations.
Year 2000 remediation
Please refer to the Fund's disclosures at Item 2(b) - Management's Discussion
and Analysis of its Registration on Form 10 for a discussion of year 2000 issues
affecting the Fund. Since that report was filed, the only material change in the
Fund's year 2000 compliance is that the changes to the Managing Shareholder's
investor distribution system have been completed. No material changes in the
Fund's remediation efforts or its plans for year 2000 compliance have occurred.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
(c) Sales of unregistered securities
During the period from January 1, 1999 through June 30, 1999, the Fund sold a
total of 107.295 shares of its Investor Shares in its continuing private
placement offering under Rule 506. The total consideration paid was $10,492,000.
Information as to the underwriters, class of persons to whom the securities were
sold, the exemption from registration claimed, and terms of the securities is
incorporated by reference to Item 11 - Description of the Fund's Securities to
be Registered, in the Fund's Registration Statement on Form 10, filed April 30,
1999.
Item 5. Other Information
Ridgewood Power Corporation has been the managing shareholder of the Fund. It
organized the Fund and acted as managing shareholder until April 1999. On or
about April 20, 1999 it was merged into Ridgewood Power LLC, a New Jersey
limited liability company, which thus became the Managing Shareholder of the
Fund. Ridgewood Power LLC was organized in early April 1999 and has no business
other than acting as the successor to Ridgewood Power Corporation. No material
change in the Fund's operations or business will result from the merger.
Robert E. Swanson has been the President, sole director and sole stockholder of
Ridgewood Power Corporation since its inception in February 1991 and is now the
controlling member, sole manager and President of the Managing Shareholder. Mr.
Swanson currently is the sole equity owner of the Managing Shareholder but is
considering a transfer of 53% of the equity ownership to two family trusts. If
that transfer is made, he will have the power on behalf of those trusts to vote
or dispose of the membership equity interests owned by them and accordingly will
continue to have sole control of the Managing Shareholder. Further, Mr. Swanson
is designated as the sole manager of the Managing Shareholder in its operating
agreement.
Ridgewood Power LLC is also the managing shareholder of the other five business
trusts organized by Ridgewood Power Corporation to participate in the
independent electric power industry.
Similarly, Ridgewood Power Management Corporation, which operates certain
Projects on behalf of the Fund, was merged on or about April 20, 1999 into a new
New Jersey limited liability company, Ridgewood Power Management LLC. The
ownership and control of Ridgewood Power Management LLC are the same as those of
Ridgewood Power LLC and its only business is to be the successor to Ridgewood
Power Management Corporation. No material change in the operation of the
Projects is expected as a result of that merger.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE RIDGEWOOD POWER GROWTH FUND
Registrant
August 13, 1999 By /s/ Martin V. Quinn
Date Martin V. Quinn
Senior Vice President and Chief Financial
Officer (signing on behalf of the Registrant
and as principal financial officer)
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's unaudited interim financial statements for the six month period
ended June 30, 1999 and is qualified in its entirety by reference to those
financial statements.
</LEGEND>
<CIK>0001057076
<NAME> THE RIDGEWOOD POWER GROWTH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 27,660,902
<SECURITIES> 4,047,762<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 31,792,383
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,717,971
<CURRENT-LIABILITIES> 326,866<F2>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 29,406,684<F3>
<TOTAL-LIABILITY-AND-EQUITY> 30,919,190
<SALES> 0
<TOTAL-REVENUES> 619,123
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 392,375
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 226,748
<INCOME-TAX> 0
<INCOME-CONTINUING> 226,748
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 226,748
<EPS-BASIC> 561
<EPS-DILUTED> 561
<FN>
<F1>Investments in power project partnerships.
<F2>Includes $81,717 due to affiliates.
<F3>Represents Investor Shares of beneficial interest
in Trust with capital accounts of $32,406,686 less
managing shareholder's accumulated deficit of $15,581.
</FN>
</TABLE>
