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 September 30, 1999
Commission file Number 0-25935
THE 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
September 30, 1999
<PAGE>
The Ridgewood Power Growth Fund
Balance Sheet
- --------------------------------------------------------------------------------
September 30, December 31,
1999 1998
------------ -----------
(unaudited)
Assets:
Cash and cash equivalents ................... $ 28,071,619 $ 25,256,560
Due from affiliates ......................... 1,188,708 9,330
Other current assets ........................ 84,516 86,348
------------ ------------
Total current assets ..................... 29,344,843 23,352,238
Investment in ZAP Power Systems ............. 3,919,967 --
Investment in Egyptian Projects ............. 2,287,201 --
Investment in GFG / Med Fiber ............... 1,500,000 --
Deferred due diligence costs ................ 691,461 381,192
------------ ------------
Total assets ............................. $ 37,743,472 $ 25,733,430
------------ ------------
Liabilities and shareholders' equity:
Accounts payable and accrued expenses ....... $ 253,139 $ 264,620
Due to affiliates ........................... -- 1,114,129
------------ ------------
Total current liabilities ................ 253,139 1,378,749
------------ ------------
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (466.912 and
296.8815 shares issued and
outstanding at September 30, 1999
and December 31, 1998) ..................... 37,505,936 24,363,198
Managing shareholder's accumulated deficit .. (15,603) (8,517)
------------ ------------
Total shareholders' equity ............... 37,490,333 24,354,681
------------ ------------
Total liabilities and shareholders' equity $ 37,743,472 $ 25,733,430
------------ ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
Commencement of
Share Offering
Nine Months (February 9, Three Months Ended
Ended 1998) to ---------------------
September 30, September 30, September 30,
1999 1998 1999 1998
--------- --------- --------- ---------
Revenue:
Loss from ZAP Power Systems $(157,523) $ -- $(129,308) $ --
Interest income ........... 991,975 181,059 344,637 135,892
--------- --------- --------- ---------
Total revenue .......... 834,452 181,059 215,329 135,892
--------- --------- --------- ---------
Expenses:
Accounting and legal fees . 28,902 26,113 4,865 13,423
Investment fee ............ 346,130 389,358 119,740 223,460
Due diligence costs ....... 173,606 -- 81,431 --
Miscellaneous ............. 60,352 21,952 10,579 10,812
--------- --------- --------- ---------
Total expenses ......... 608,990 437,423 216,615 247,695
--------- --------- --------- ---------
Net income (loss) .......... $ 225,462 $(256,364) $ (1,286) $(111,803)
--------- --------- --------- ---------
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 (170.0305
shares) ...................... 13,844,289 -- 13,844,289
Cash distributions ............ (924,758) (9,341) (934,099)
Net income for the ............ 223,207 2,255 225,462
period
------------ ------------ ------------
Shareholders' equity,
September 30, 1999 (466.912
shares) ...................... $ 37,505,936 $ (15,603) $ 37,490,333
------------ ------------ ------------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Cash Flows (unaudited)
- --------------------------------------------------------------------------------
Commencement of
Share Offering
Nine Months Ended (February 9, 1998)
September 30, 1999 to September 30,
1998
------------ ------------
Cash flows from operating activities:
Net income (loss) ............................ $ 225,462 $ (256,364)
------------ ------------
Adjustments to reconcile net income
(loss) to net cash flows from
operating activities:
Loss from unconsolidated ZAP Power Systems ... 157,523 --
Changes in assets and liabilities:
Increase in due from affiliates ............. (1,179,378) (4,905)
Decrease (increase) in other current assets . 1,832 (5,129)
(Decrease) increase in accounts payable and
accrued expenses ............................ (11,481) 26,250
Decrease in due to affiliates ................ (1,114,129) --
------------ ------------
Total adjustments .......................... (2,145,633) 16,216
------------ ------------
Net cash used in operating activities ...... (1,920,171) (240,148)
------------ ------------
Cash flows from investing activities:
Investment in ZAP Power Systems ............... (4,077,490) --
Investment in Egyptian Projects ............... (2,287,201) --
Investment in GFG / Med Fiber ................. (1,500,000) --
Deferred due diligence costs .................. (310,269) --
------------ ------------
Net cash used in investing activities ....... (8,174,960) --
------------ ------------
Cash flows from financing activities:
Proceeds from shareholders' contributions ..... 16,527,899 20,913,800
Selling commissions and offering costs paid ... (2,683,610) (3,001,736)
Cash distributions to shareholders ............ (934,099) --
------------ ------------
------------ ------------
Net cash provided by financing activities ... 12,910,190 17,912,064
------------ ------------
Net increase in cash and cash equivalents .... 2,815,059 17,671,916
Cash and cash equivalents, beginning of period 25,256,560 --
------------ ------------
Cash and cash equivalents, end of period ..... $ 28,071,619 $ 17,671,916
------------ ------------
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:
Nine months ended
September 30, 1999
Revenue $708,290
Net income 99,300
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:
Nine months ended September 30,
1999 1998
Total revenue ............... $ 4,444,000 $ 2,555,000
Depreciation and amortization 78,000 58,000
Loss from operations ........ (350,000) (535,00)
Net loss .................... (391,000) (550,000)
3. Investment in Egyptian Projects
In 1999, the Fund and Ridgewood Electric Power Trust V ("Trust V"), a similar
investment program sponsored by the Managing Shareholder, jointly formed a
company to develop electric power and water purification plants for resort
hotels in Egypt. As of September 30, 1999, the Fund and Trust V had invested
approximately $4.5 million in various projects under development and anticipate
investing, at a minimum, an additional $6 million. To the extent that the Fund
and Trust V supply capital, they receive an undivided interest in the entire
package of projects.
3. Investment in GFG / Med Fiber Project
In September 1999, the Fund and Trust V made a joint investment of $3,000,000 in
Global Fiber Group ("GFG"), which is in the process of developing an underwater
fiber optic cable in the Western Mediterranean (the "Med Fiber Project"). The
investment, which was funded equally by Trust V and the Fund, provides for a 25%
ownership interest in GFG and the right to invest in projects developed by GFG.
Trust V and the Fund anticipate equally funding an $18,000,000 joint venture
investment in the Med Fiber Project in the fourth quarter of 1999.
4. Potential Investment in UK Landfill Gas Plants
On June 30, 1999, Trust V 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
supplied the first $16.1 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.
<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 $345,000 for the third quarter of 1999 compared to $136,000
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 nine months of the year also increased from $181,000 in
1998 to $992,000 in 1999.
The Fund recorded losses of $129,000 and $158,000 in the third quarter and first
nine months of 1999, respectively, 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 decreased slightly
to $346,000 in the first nine months of 1999 compared to $389,000 in the first
nine months of 1998 reflecting a slightly lower level of capital contributions.
Contributions in the third quarter of 1999 were lower than in the corresponding
period in the prior year resulting in investment fees of $120,000 in the third
quarter of 1999 compared to $223,000 in the third quarter of 1998.
During the third quarter and first nine months of 1999, the Fund wrote-off
$81,000 and $174,000, respectively, of due diligence costs on projects that were
rejected.
Liquidity and Capital Resources
At September 30, 1999, the Fund had $28,072,000 of cash available for
investments in power generation projects and payment of operating expenses.
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. As part of the transaction, the Fund was granted a warrant to
purchase additional shares of Common Stock of ZAP. The Fund could be required by
ZAP to exercise the warrant under certain conditions. Although all the
conditions have not been met, the Fund exercised the warrant in September 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 supplied the first $16.1 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.
In 1999, the Fund and Ridgewood Electric Power Trust V ("Trust V"), a similar
investment program sponsored by the Managing Shareholder, jointly formed a
company to develop electric power and water purification plants for resort
hotels in Egypt. As of September 30, 1999, the Fund and Trust V had invested
approximately $4.5 million in various projects under development and anticipate
investing, at a minimum, an additional $6 million. To the extent that the Fund
and Trust V supply capital, they receive an undivided interest in the entire
package projects in proportion to the capital supplied.
In September 1999, the Fund and Trust V made a joint investment of $3,000,000 in
Global Fiber Group ("GFG"), which is in the process of developing an underwater
fiber optic cable in the Western Mediterranean (the "Med Fiber Project"). The
investment, which was funded equally by Trust V and the Fund, provides for a 25%
ownership interest in GFG and the right to invest in projects developed by GFG.
Trust V and the Fund anticipate equally funding an $18,000,000 joint investment
in the Med Fiber Project in the fourth quarter of 1999.
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 in its Registration Statement on Form 10,
at "Item 2(b) - Management's Discussion and Analysis," for a discussion of year
2000 issues affecting the Fund. In October 1999, the Managing Shareholder
completed its year 2000 remediation program after having successfully tested and
implemented all necessary changes to its software, including the
subscription/investor relations systems and all subsystems used for preparing
internal reports. Costs of remediation did not materially exceed the estimated
amounts.
The Fund's projects have been reviewed by an outside consultant or by personnel
from RPMCo, who determined that the projects' electronic control systems do not
contain software affected by the Year 2000 problem and do not contain embedded
components that contain Year 2000 flaws.
No other material changes to the risks to the Fund described in its Annual
Report on Form 10-K have occurred. The reasonable worst case scenario
anticipated by the Trust is that its electric generating facilities will be able
to operate on and after January 1, 2000 but that there may be some short-term
inability of their customers to pay promptly. In that event, the Trust's
revenues could be materially reduced for a temporary period until the purchasers
make up any payment arrears. The Fund believes it has sufficient working capital
to handle any such arrearages.
<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 September 30, 1999, the Fund sold
a total of 170.0305 shares of its Investor Shares in its continuing private
placement offering under Rule 506. The total consideration paid was $17,003,050.
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
Mr. Swanson has transferred 54% of the equity interest in the Managing
Shareholder to family trusts. He has sole dispositive and voting power over the
equity interest transferred to each trust and accordingly continues to be the
beneficial owner as defined in Rule 13d-3 of all of the equity interest in the
Managing Shareholder.
<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
November 11, 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 nine month period
ended September 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 28,071,619
<SECURITIES> 7,707,168<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,052,011
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,743,472
<CURRENT-LIABILITIES> 253,139<F2>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 37,490,333<F3>
<TOTAL-LIABILITY-AND-EQUITY> 27,743,472
<SALES> 0
<TOTAL-REVENUES> 834,452
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 608,990
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 225,462
<INCOME-TAX> 0
<INCOME-CONTINUING> 225,462
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 225,462
<EPS-BASIC> 483
<EPS-DILUTED> 483
<FN>
<F1>Investments in power project partnerships.
<F2>Includes $1,188,708 due to affiliates.
<F3>Represents Investor Shares of beneficial interest
in Trust with capital accounts of $37,505,936 less
managing shareholder's accumulated deficit of $15,603.
</FN>
</TABLE>
