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 March 31, 2000
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
March 31, 2000
<PAGE>
The Ridgewood Power Growth Fund
Balance Sheet
- --------------------------------------------------------------------------------
March 31, 2000 December 31,
(unaudited) 1999
------------- -----------
Assets:
Cash and cash equivalents .................. $ 36,946,302 $ 35,732,660
Due from affiliates ........................ 305,720 316,833
Other current assets ....................... 154,537 156,644
------------- -----------
Total current assets .............. 37,406,559 36,206,137
Investment in:
Zap World.com ............................. 3,307,298 3,441,809
Egypt Projects ............................ 8,130,411 4,736,092
Mediterranean Fiber Optic Project/GFG ..... -- 1,497,670
Deferred due diligence costs .............. 10,951 --
------------- -----------
Total assets ..................... $ 48,855,219 $ 45,881,708
------------- -----------
Liabilities and shareholders' equity:
Liabilities:
Accounts payable and accrued expenses ..... $ 19,362 $ 216,795
Due to affiliates ......................... 18,076 7,487
------------- -----------
Total current liabilities ................. 37,438 224,282
------------- -----------
Commitments and contingencies
Shareholders' equity:
Shareholders' equity (636.4417 and 563.16
investor shares issued and outstanding
at March 30, 2000 and December 31, 1999) 48,870,261 46,548,589
Subscriptions receivable .................. -- (863,500)
------------ -----------
Shareholders' equity, net ........ 48,870,261 45,685,089
Managing shareholders' accumulated deficit
(1 management shares issued and outstanding) (52,480) (27,663)
------------- -----------
Total shareholders' equity ................. 48,817,781 45,657,426
------------- -----------
Total liabilities and shareholders' equity . $ 48,855,219 $ 45,881,708
------------- -----------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
Three Months Ended March 31,
2000 1999
----------- -----------
Revenue:
Interest income ....................... $ 321,021 $ 298,969
Loss from Egypt Projects .............. (49,440) --
Loss from Mediterranean Fiber Optic
Project/GFG .......................... (49,924) --
Loss from investment in Zap World.com . (134,511) --
----------- -----------
Total revenues .................... 87,146 298,969
----------- -----------
Expenses:
Investment fee ......................... 148,510 140,000
Accounting and legal fees .............. 9,409 15,567
Miscellaneous .......................... 31,986 40,577
Writedown of investment in Mediterranean
Fiber Optic Project / GFG 1,447,746 ---
----------- -----------
Total expenses ................. 1,637,651 196,144
----------- -----------
Net income (loss) ............. $(1,550,505) $ 102,825
----------- -----------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Changes in Shareholders' Equity (unaudited)
- --------------------------------------------------------------------------------
Subscriptions Managing
Shareholders Receivable Shareholders Total
---------- ------- ------- ---------
Shareholders' equity,
December 31, 1999
(563.16 investor
shares and 1
management share) ....... $46,548,589 $(863,500) $(27,663) $45,657,426
Capital contributions,
net (73.2817 investor
shares) 4,778,535 863,500 -- 5,642,035
Distributions ............. (921,863) -- (9,312) (931,175)
Net loss .................. (1,535,000) -- (15,505) (1,550,505)
---------- ------- ------- ---------
Shareholders' equity,
March 31, 2000 (636.4417
investor shares and 1
management share) ....... $48,870,261 $ -- $(52,480) $48,817,781
---------- ------- ------- ---------
See accompanying notes to financial statements.
<PAGE>
The Ridgewood Power Growth Fund
Statement of Cash Flows (unaudited)
- --------------------------------------------------------------------------------
Three Months Ended March 31,
2000 1999
------------ ------------
Cash flows from operating activities:
Net income (loss) ........................... $ (1,550,505) $ 102,825
------------ ------------
Adjustments to reconcile net (loss)
income to net cash flow from operations
Loss from Egypt Projects ................... 49,440 --
Loss from Mediterranean Fiber Optic
Project/GFG ............................... 49,924 --
Loss from investment in Zap World.com ...... 134,511 --
Writedown of investment in Mediterranean
Fiber Optic Project/GFG ................... 1,447,746 --
Changes in assets and liabilities:
Decrease (increase) in other current
assets .................................. 2,107 (15,854)
Decrease in accounts payable and
accrued expenses ........................ (197,433) (750)
Decrease in due to/(from) affiliates, net 21,702 116,738
------------ ------------
Total adjustments ........................ 1,507,997 100,134
------------ ------------
Net cash provided by (used in)
operating activities ........................ (42,508) 202,959
------------ ------------
Cash flows from investing activities:
Investment in ZAP Power Systems ............. -- (2,052,491)
Investment in Egypt Projects ................ (3,443,759) --
Deferred due diligence costs ................ (10,951) (306,613)
------------ ------------
Net cash used in investing activities ...... (3,454,710) (2,359,104)
------------ ------------
Cash flows from financing activities:
Proceeds from shareholders' contributions ... 6,421,618 6,549,000
Selling commissions and offering costs paid . (779,583) (1,598,822)
Cash distributions to shareholders .......... (931,175) (1,000)
------------ ------------
Net cash provided by financing activities .. 4,710,860 4,949,178
------------ ------------
Net increase in cash and cash equivalents .... 1,213,642 2,793,033
Cash and cash equivalents, beginning of period 35,732,660 25,256,560
------------ ------------
Cash and cash equivalents, end of period ..... $ 36,946,302 $ 28,049,593
------------ ------------
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 fair 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 (the "Fund") financial
statements included in the 1999 Annual Report on Form 10-K, which should be read
in conjunction with these financial statements.
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. Writedown of investment in Mediterranean Fiber Optic Project/GFG
In September 1999, the Fund and Ridgewood Electric Power Trust V ("Trust V")
made a joint investment of $3,000,000 in Global Fiber Group ("GFG"), which was
in the process of developing an underwater fiber optic cable in the Western
Mediterranean (the "Mediterranean Fiber Optic Project"). The investment, which
was funded equally by the Fund and Trust V, provided for a 25% ownership
interest in GFG and the right to invest in projects developed by GFG. In the
first quarter of 2000, the Fund determined that GFG would probably not be able
to develop the Mediterranean Fiber Optic Project or any other project. As a
result, the Fund determined that it would be unlikely to recover its investment
in GFG. As a result, the Fund recorded a writedown of $1,447,746 in the first
quarter of 2000 to reduce the estimated fair value of the investment to zero.
3. Subsequent Event - Synergics, Inc. Acquisition
Beginning in late 1999, Ridgewood Power LLC, the Managing Shareholder of the
Fund, began negotiations to buy nine existing hydroelectric generating plants
from Synergics, Inc. In the course of negotiations and due diligence, Ridgewood
Power learned that one of Synergics' lenders had declared a payment default
against Synergics and that the lender had agreed to discharge the debt at a
substantial discount from the face amount if payment were made by the end of
April 2000. In order to preserve the benefit of the lender's offer and to allow
completion of the acquisition on favorable terms, Trust V and the Fund, through
a joint venture, acquired the debt from the lender on April 28, 2000 for a
payment of $17 million to the lender. The debt remains in default, but the joint
venture is not exercising its remedies against Synergics or the Synergics
subsidiaries pending the proposed acquisition described below.
The joint venture intends to acquire the Synergics hydroelectric generation
business by forgiving the $17 million of outstanding debt and paying an
additional $1 million to the shareholders of Synergics and paying up to an
additional $1.7 million of Synergics' tax liabilities that might be incurred as
a result of the sale of its assets. In addition, if a project lease for
Synergics' Box Canyon, California hydroelectric plant is extended beyond the
year 2010, the joint venture will pay the Synergics shareholders the lesser of
$500,000 or one-half of the agreed present value derived from the lease
extension. The structuring and closing of the acquisition is to be determined
after a review of certain financial, contractual and tax considerations and
termination of the Hart-Scott-Rodino Act antitrust waiting period.
Until the acquisition closes, Synergics has agreed to retain all working capital
for the account of the joint venture and to allow the joint venture to approve
all operational decisions and expenditures. Synergics is cooperating closely
with the joint venture in making operational decisions. However, although the
joint venture currently intends to acquire the Synergics hydroelectric
generation business as promptly as possible, neither the joint venture nor the
Trust V or the Fund are obligated to acquire Synergics or any of its assets.
Wayne L. Rogers, the president of Synergics, Inc., agreed to vote the stock of
Synergics, Inc. beneficially owned by him (approximately 69% of the voting
stock) in favor of a merger or other corporate reorganization as specified by
Trust V and the Fund that materially complies with the provisions outlined
above.
Although the joint venture now owns $17 million of the debt of Synergics, there
is approximately $11.725 million of debt owed to Fleet Bank, N.A. Trust V and
the Fund are in discussions with Fleet Bank concerning the assumption of the
Fleet debt in connection with the acquisition.
Trust V supplied $5 million of the capital used by the joint venture to acquire
the debt and the Fund supplied the remaining $12 million. Any additional capital
needed for the acquisition will be supplied to the joint venture by the Fund.
Trust V and the Fund will own the joint venture in proportion to the capital
each supplies and neither will have preferred rights over the other.
4. Subsequent Event - Termination of Share Offering
On April 30, 2000, the Fund terminated its offering of shares.
5. Summary Results of Operations for Selected Investments
Summary results of operations for the Zap World.com projects, which are
accounted for under the equity method, were as follows:
Three Months Ended March 31,
2000
Total revenue ...... $ 1,897,000
Loss from operations (544,000)
Net loss ........... (515,000)
Summary results of operations for the Egypt Projects, which is accounted for
under the equity method, were as follows:
Three Months Ended March 31,
2000
Total revenue ............... $ --
Depreciation and amortization --
Net loss .................... (97,000)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Dollar amounts in this discussion are 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, the
Egypt Projects and the Mediterranean Fiber Optic Project/GFG.
Results of Operations
Quarter ended March 31, 2000 compared to quarter ended March 31, 1999.
Total revenues declined from $299,000 for the first quarter of 1999 to $87,000
in the same period in 2000, primarily as a result of the Fund's share of losses
from its investments which were acquired in the latter part of 1999. The Fund
recorded losses of $135,000, $50,000 and $50,000 from its investments in Zap
World.com, the Egypt Project and Mediterranean Fiber Optic Project/GFG,
respectively. Interest income increased from $299,000 in the first quarter of
1999 to $321,000 in the same period in 2000 reflecting increased cash balances
caused by additional capital contributions.
Except for the $1,447,746 writedown of its investment in Mediterranean Fiber
Optic Project/GFG discussed in Note 2 of the March 31, 2000 financial
statements, the Fund's expenses for the first quarter of 2000 were approximately
equal to its expenses in the same period in 1999.
Quarter ended March 31, 1999 compared to quarter ended March 31, 1998.
Interest income was $299,000 for the first quarter of 1999 compared to $5,000 in
the same period in 1998 reflecting the significant increase in the cash balance
of the Fund, which began offering shares in February 1998.
The investment fee expense charged on capital contributions increased to
$140,000 in the first quarter of 1999 compared to $20,000 in the first quarter
of 1998 reflecting a higher level of capital contributions. The increase in
other expenses to $56,000 in the first quarter of 1999 from $6,000 in March 1998
is a result of 1999 representing a full quarter of operations while 1998
represented only part of a month. 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
Other than investments of available cash in power generation Projects,
obligations of the Fund are generally limited to payment of Project operating
expenses, payment of a management fee to the Managing Shareholder, payments for
certain accounting and legal services to third persons and distributions to
shareholders of available operating cash flow generated by the Fund's
investments. The Fund's policy is to distribute as much cash as is prudent to
shareholders. Accordingly, the Fund does not expect that it will be necessary to
retain a material amount of working capital. The amount of working capital
retained is further reduced by the availability of the line of credit facility.
The Fund anticipates that, during 2000, its cash flow from operations and
unexpended offering proceeds will be adequate to fund its obligations.
Forward-looking statement advisory
This Quarterly Report on Form 10-Q, as with some other statements made by the
Fund from time to time, has forward-looking statements. These statements discuss
business trends and other matters relating to the Fund's future results and the
business climate and are found, among other places, in the notes to financial
statements and at Part I, Item 2, Management's Discussion and Analysis. In order
to make these statements, the Fund has had to make assumptions as to the future.
It has also had to make estimates in some cases about events that have already
happened, and to rely on data that may be found to be inaccurate at a later
time. Because these forward-looking statements are based on assumptions,
estimates and changeable data, and because any attempt to predict the future is
subject to other errors, what happens to the Fund in the future may be
materially different from the Fund's statements here.
The Fund therefore warns readers of this document that they should not rely on
these forward-looking statements without considering all of the things that
could make them inaccurate. The Fund's other filings with the Securities and
Exchange Commission and its Confidential Memorandum discuss many (but not all)
of the risks and uncertainties that might affect these forward-looking
statements.
Some of these are changes in political and economic conditions, federal or state
regulatory structures, government taxation, spending and budgetary policies,
government mandates, demand for electricity and thermal energy, the ability of
customers to pay for energy received, supplies of fuel and prices of fuels,
operational status of plant, mechanical breakdowns, availability of labor and
the willingness of electric utilities to perform existing power purchase
agreements in good faith. Some of the cautionary factors that readers should
consider are described in the Fund's most recent Annual Report on Form 10-K.
By making these statements now, the Fund is not making any commitment to revise
these forward-looking statements to reflect events that happen after the date of
this document or to reflect unanticipated future events.
<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, 2000 through March 31, 2000, the Fund sold a
total of 73.2817 shares of its Investor Shares in its continuing private
placement offering under Rule 506. The total consideration paid was $7,328,170.
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.
<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
May 15, 2000 By /s/ Christopher I. Naunton
Date Christopher I. Naunton
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 March 31, 2000 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 36,946,302
<SECURITIES> 11,437,709<F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37,406,559<F2>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 48,855,219
<CURRENT-LIABILITIES> 37,438<F3>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 48,817,781<F4>
<TOTAL-LIABILITY-AND-EQUITY> 48,855,219
<SALES> 0
<TOTAL-REVENUES> 87,146
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,637,651
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,550,505)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,550,505)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,550,505)
<EPS-BASIC> (2,436)
<EPS-DILUTED> (2,436)
<FN>
<F1>Investments in power project partnerships.
<F1>Includes $154,537 due from affiliates.
<F3>Includes $18,076 due to affiliates.
<F4>Represents Investor Shares of beneficial interest
in Trust with capital accounts of $48,870,261 less
managing shareholder's accumulated deficit of $52,480.
</FN>
</TABLE>
