UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to __________
Commission file number _______________________________
ELECTRIC CITY CORP.
(Exact name of small business issuer as specified in its charter)
DELAWARE 36-4197337
------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1280 Landmeier Road, Elk Grove Village, Illinois 60007
(Address of principal executive offices)
(847) 437-1666
(Issuer's telephone number)
------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:____________________________________
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
<PAGE>
ELECTRIC CITY CORP.
FORM 10-QSB
FOR THE QUARTER ENDED OCTOBER 31, 1999
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheets - April 30, 1999 and October 31, 1999 3
Statements of Operations - Three Months Ended October 31, 1998 and 1999 5
Statements of Operations - Six Months Ended October 31, 1998 and 1999 6
Statements of Stockholders' Equity -
Six Months Ended October 31, 1998 and 1999 7
Statements of Cash Flows - Three Months Ended October 31, 1998 and 1999 8
Statements of Cash Flows - Six Months Ended October 31, 1998 and 1999 9
Notes to Condensed Consolidated Financial Statements 11
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
PART II - OTHER INFORMATION 17
Item 3 - Exhibits and Reports on Form 8-K 17
Signature 17
Exhibit Index 17
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Electric City Corp.
Balance Sheets
(Unaudited)
- - --------------------------------------------------------------------------------
October 31, April 30,
1999 1999
- - --------------------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $ 7,880,470 $ 484,162
Accounts receivable, net 854,866 118,272
Inventories 741,577 459,882
Other 1,529 213,332
- - --------------------------------------------------------------------------------
Total Current Assets 9,478,442 1,275,648
- - --------------------------------------------------------------------------------
Property and Equipment 1,577,009 1,285,320
Less accumulated depreciation (88,352) (30,353)
- - --------------------------------------------------------------------------------
Net Property and Equipment 1,488,657 1,254,967
Cost in Excess of Assets Acquired,
net of amortization of $147,123 3,215,692 --
- - --------------------------------------------------------------------------------
$ 14,182,791 $ 2,530,615
================================================================================
See accompanying notes to financial statements.
3
<PAGE>
Electric City Corp.
Balance Sheets
(Unaudited)
- - --------------------------------------------------------------------------------
October 31, April 30,
1999 1999
- - --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities
Due to seller $ 1,792,000 $ --
Line of credit and current maturities
of long-term debt 129,405 18,112
Notes payable to stockholders -- 500,000
Accounts payable 806,828 184,160
Accrued expenses 172,342 98,172
Amounts refundable from private placement 220,500 --
Deferred revenue 175,000 --
- - --------------------------------------------------------------------------------
Total Current Liabilities 3,296,075 800,444
- - --------------------------------------------------------------------------------
Deferred Revenue 437,500 --
Long-Term Debt 775,314 770,239
- - --------------------------------------------------------------------------------
Common Stock Subject to Recession 8,950,382 --
Stockholders' Equity
Common stock, $.0001 par value,
30,000,000 shares authorized,
26,091,500 and 24,388,250 issued
and outstanding as of October 31, 1999
and April 30, 1999, respectively 2,609 2,438
Additional paid-in capital 8,676,742 6,097,518
Accumulated deficit (7,955,831) (5,140,024)
- - --------------------------------------------------------------------------------
Total Stockholders' Equity 723,520 959,932
- - --------------------------------------------------------------------------------
$ 14,182,791 $ 2,530,615
================================================================================
See accompanying notes to financial statements.
4
<PAGE>
Electric City Corp.
Statements of Operations
(Unaudited)
- - --------------------------------------------------------------------------------
Three months ended October 31, 1999 1998
- - --------------------------------------------------------------------------------
Revenue $ 933,757 $ 21,400
- - --------------------------------------------------------------------------------
Expenses
Cost of sales 796,177 8,800
Selling, general and administrative 1,849,900 265,480
- - --------------------------------------------------------------------------------
Total expenses 2,646,077 274,280
- - --------------------------------------------------------------------------------
Operating loss (1,712,320) (252,880)
- - --------------------------------------------------------------------------------
Other Income (Expense)
Amortization of cost in excess (84,070) --
Interest income 56,825 4,261
Interest expense (62,999) (10,267)
- - --------------------------------------------------------------------------------
Total other expense (90,244) (6,006)
- - --------------------------------------------------------------------------------
Net Loss $ (1,802,564) $ (258,886)
================================================================================
Basic and Diluted Loss Per Common Share (0.07) (0.01)
================================================================================
Weighted Average Shares Outstanding 26,802,586 22,358,315
================================================================================
See accompanying notes to financial statements.
5
<PAGE>
Electric City Corp.
Statements of Operations
(Unaudited)
- - --------------------------------------------------------------------------------
Six months ended October 31, 1999 1998
- - --------------------------------------------------------------------------------
Revenue $ 1,777,279 $ 21,400
- - --------------------------------------------------------------------------------
Expenses
Cost of sales 1,465,039 8,800
Selling, general and administrative 2,923,590 513,196
- - --------------------------------------------------------------------------------
Total expenses 4,388,629 521,996
- - --------------------------------------------------------------------------------
Operating loss (2,611,350) (500,596)
- - --------------------------------------------------------------------------------
Other Income (Expense)
Acquisition cost -- (1,200,272)
Amortization of cost in excess (147,123) --
Interest income 64,981 6,982
Interest expense (122,315) (10,267)
- - --------------------------------------------------------------------------------
Total other expense (204,457) (1,203,557)
- - --------------------------------------------------------------------------------
Net Loss $ (2,815,807) $ (1,704,153)
================================================================================
Basic and Diluted Loss Per Common Share (0.11) (0.08)
================================================================================
Weighted Average Shares Outstanding 26,141,592 21,661,958
================================================================================
See accompanying notes to financial statements.
6
<PAGE>
Electric City Corp.
Statement of Stockholders' Equity
(Unaudited)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional Total
Common Paid-in Accumulated Stockholders'
Shares Stock Capital Deficit Equity
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1999 24,388,250 $ 2,438 $ 6,097,518 $(5,140,024) $ 959,932
Issuance of shares in exchange for
services received 103,250 11 260,134 -- 260,145
Acquisition of assets of Marino
Electric, Inc. 1,600,000 160 2,095,840 -- 2,096,000
Discount on shares issued in private
placement -- -- 600,000 -- 600,000
Commissions paid on private
placement shares subject to
recession -- -- (376,750) -- (376,750)
Net loss for the six months ended
October 31, 1999 -- -- -- (2,815,807) (2,815,807)
- - -------------------------------------------------------------------------------------------------------------
Balance, October 31, 1999 26,091,500 $ 2,609 $ 8,676,742 $(7,955,831) $ 723,520
=============================================================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
Electric City Corp.
Statements of Cash Flows
(Unaudited)
- - --------------------------------------------------------------------------------
Three months ended October 31, 1999 1998
- - --------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net loss $(1,802,564) $ (258,886)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 118,319 5,812
Issuance of shares and warrants
in exchange for services rendered 9,709 --
Discount on stock sold
in private placement 600,000 --
Expenses paid on behalf of company -- 1,880
Changes in assets and liabilities,
net of acquisition
Accounts receivable (256,268) (20,475)
Inventories (38,214) (78,940)
Prepaid expenses (1,529) --
Accounts payable 257,648 68,869
Accrued expenses 51,232 10,518
Deferred revenue (12,500) --
- - --------------------------------------------------------------------------------
Net cash used in operating activities (1,074,167) (271,222)
- - --------------------------------------------------------------------------------
Cash Flows Used in Investing Activities
Purchase of property and equipment (106,832) (76,874)
- - --------------------------------------------------------------------------------
Cash Flows Provided by Financing Activities
Line of credit - net (100,000) --
Payments on long-term debt (8,813) (3,485)
Proceeds from private placement 5,314,957 --
Borrowings 29,397 --
Amounts refundable from private placement 220,500 --
Payments on loan from stockholders (200,000) --
- - --------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 5,256,041 (3,485)
- - --------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 4,075,042 (351,581)
Cash and Cash Equivalents, at beginning of period 3,805,428 515,572
- - --------------------------------------------------------------------------------
Cash and Cash Equivalents, at end of period $ 7,880,470 $ 163,991
================================================================================
Supplemental Cash Flow Disclosure
In August 1998, the Company purchased a building
in exchange for an $800,000 mortgage and 170,000
shares of the Company's common stock,
valued at $2 per share.
See accompanying notes to financial statements.
8
<PAGE>
Electric City Corp.
Statements of Cash Flows
(Unaudited)
- - --------------------------------------------------------------------------------
Six months ended October 31, 1999 1998
- - --------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net loss $(2,815,807) $(1,704,153)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 205,020 5,940
Issuance of shares and warrants
in exchange for services rendered 260,145 1,200,272
Discount on stock sold
in private placement 600,000 --
Expenses paid on behalf of company -- 76,719
Changes in assets and liabilities,
net of acquisition
Accounts receivable (736,594) (20,475)
Inventories 60,305 (103,561)
Prepaid expenses 211,803 --
Accounts payable 622,668 78,198
Accrued expenses 74,170 10,518
Deferred revenue 612,500 --
- - --------------------------------------------------------------------------------
Net cash used in operating activities (905,790) (456,542)
- - --------------------------------------------------------------------------------
Cash Flows Used in Investing Activities
Purchase of property and equipment (108,402) (76,874)
- - --------------------------------------------------------------------------------
Cash Flows Provided by Financing Activities
Line of credit - net 100,000 --
Payments on long-term debt (13,029) (3,485)
Proceeds from private placement - net 8,573,632 --
Proceeds from stock issuance -- 426,977
Borrowings 29,397 --
Amounts refundable from private placement 220,500 --
Proceeds from loan from stockholders -- 246,000
Payments on loan from stockholders (500,000) --
- - --------------------------------------------------------------------------------
Net cash provided by financing activities 8,410,500 669,492
- - --------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 7,396,308 136,076
Cash and Cash Equivalents, at beginning of period 484,162 27,915
- - --------------------------------------------------------------------------------
Cash and Cash Equivalents, at end of period $ 7,880,470 $ 163,991
================================================================================
9
<PAGE>
Electric City Corp.
Statements of Cash Flows
(Unaudited)
- - --------------------------------------------------------------------------------
Six months ended October 31, 1999 1998
- - --------------------------------------------------------------------------------
Supplemental Cash Flow Disclosure
In May 1999, the Company purchased certain
assets of Marino Electric through the
issuance of 1,600,000 shares of common
stock ($2,096,000) and an amount due to the
seller of $1,792,000. The purchase price
exceeded the fair value of the assets
acquired by $3,362,815. This amount has
been accounted for as goodwill and will be
amortized over 10 years. The following is
the fair value of the assets acquired.
Inventory $ 342,000
Fixed assets 183,185
- - --------------------------------------------------------------------
$ 525,185
====================================================================
See accompanying notes to financial statements.
10
<PAGE>
Electric City Corp.
Notes to Financial Statements
(The information as of October 31, 1999 and April 30, 1999 and for the three
months and six months ended October 31, 1999 and 1998 is unaudited)
- - --------------------------------------------------------------------------------
1. Basis of Presentation The financial information included herein is
unaudited; however, such information reflects
all adjustments (consisting solely of normal
recurring adjustments), which, in the opinion
of management, are necessary for a fair
statement of results for the interim periods.
The results of operations for the six-month
and three-month period ended October 31, 1999
are not necessarily indicative of the results
to be expected for the full year.
2. Line-of-Credit Agreement In July 1999, the Company entered into a
$500,000 line-of-credit agreement with
LaSalle Bank N.A. This line of credit bears
interest at prime (8.25% at October 31, 1999)
plus one percent and expires on July 12,
2000. At October 31, 1999, $100,000 was
outstanding under this line-of-credit
agreement.
3. Private Placement In July 1999, the Company issued a private
placement offering under Regulation D of the
Securities Act of 1993. The offering was for
a minimum of 660,000 shares and a maximum of
2,200,000 shares at $4.50 per share. As of
October 31, 1999, the Company had received
cash proceeds, net of commissions, of
$8,573,632 in exchange for 2,113,182 shares
of common stock. (See Note 7). As discussed
below, certain common stock issued in
connection with this private placement
offering were sold for less than the
established offering price of $4.50.
500,000 shares of common stock were sold to
the Maslo Fund at $3.75 per share. The
Company has recognized $375,000 of marketing
expense for the difference between the
private placement offering price and the cash
received for these shares.
300,000 shares of common stock were sold to
Madison Trading at $3.75 per share. The
Company has recognized $225,000 of marketing
expense for the difference between the
private placement offering price and the cash
received for these shares.
11
<PAGE>
Electric City Corp.
Notes to Financial Statements
(The information as of October 31, 1999 and April 30, 1999 and for the three
months and six months ended October 31, 1999 and 1998 is unaudited)
- - --------------------------------------------------------------------------------
4. Acquisition of Marino In January 1999, the Company agreed,
Electric Assets subject to an appraisal, to acquire certain
assets of Marino Electric, Inc. from Joseph
Marino, a related party, for $1,792,000 in
cash and 1,600,000 shares ($1,600,000) of the
Company's common stock. The Company is
accruing interest expense at 9% per annum on
the unpaid cash balance. The closing took
place effective May 24, 1999. As Mr. Marino
owns less than 50% of the common stock of the
Company, the transaction was accounted for by
the purchase method of accounting. The
purchase price of $3,392,000 exceeded the
fair value of the assets acquired by
approximately $2,867,000 which will be
amortized on a straight-line basis over 10
years. The results of operations of Marino
Electric from the date of the acquisition are
reflected in the statement of operations for
the six-month and three-month period ended
October 31, 1999.
5. Stock Split The Company effected a two-for-one stock
split effective July 30, 1999. The stock
split has been retroactively reflected in the
financial statements as of and for the three
months ended October 31, 1999 and 1998,
respectively.
6. Net Loss Per Share The Company computes loss per share under
Statement of Financial Accounting Standards
No. 128 "Earnings Per Share." The statement
requires presentation of two amounts, basic
and diluted loss per share. Basic loss per
share is computed by dividing loss available
to common stockholders by the weighed average
common shares outstanding. Dilutive earnings
per share would include all common stock
equivalents. The Company has not included the
outstanding options or warrants as common
stock equivalents because the effect would be
antidilutive.
12
<PAGE>
Electric City Corp.
Notes to Financial Statements
(The information as of October 31, 1999 and April 30, 1999 and for the three
months and six months ended October 31, 1999 and 1998 is unaudited)
- - --------------------------------------------------------------------------------
7. Common Stock In October 1999, the Company completed a
Subject to Recession private placement of up to 2,200,000 shares
of its common stock in an offering made
pursuant to Regulation D and Rule 506 (the
"506 Offering"). The proceeds of this
offering are to be used for payment of the
cash portion of the Marino Electric
acquisition, inventory, repay indebtedness to
the principal stockholders and for general
working capital purposes. As a result of the
Company's statements made in certain press
releases issued during the 506 offering, it
is possible, but not altogether certain, that
such statements might be considered general
solicitation which is not permitted in a
nonpublic offering under Rule 506 and
therefore, a violation of the registration
provisions of Section 5 of the Securities Act
of 1933, as amended. As a result, the Company
may be in violation of Section 5 of the
Securities Act of 1933, as amended, and
consequently, certain investors may have
recession rights as to the shares purchased.
Such investors may have the right to rescind
these purchases of common stock for a period
of one year from the date of purchase of the
common stock. Based upon the close business
relationship some investors have with the
Company and its management and relationships
that others have with management of the
Company, the Company does not believe that
investors owning a material amount of
securities purchased in the 506 offering
would demand recession and any such recession
would not have a material effect on the
Company's financial position.
As the possibility of recession does exist,
the shares subject to recession have been
reported as mezzanine equity in the Company's
financial statements.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion regarding the Company and its business and operations
contains "forward-looking statements" within the meaning of Private Securities
Litigation Reform Act 1995. Such statements consist of any statement other than
a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward looking statements. The Company does not have a policy of up dating
or revising forward-looking statements and thus it should not be assumed that
silence by management of the Company over time means that actual events are
bearing out as estimated in such forward looking statements.
The Company has a short operating history. All risks inherent in a new and
inexperienced enterprise are inherent in the Company's business.
Results of Operations.
Three Months Ended October 31, 1999 Compared to Three Months Ended October 31,
1998
The Company's total sales for the quarter ended October 31, 1999 were $933,757,
an increase of $912,357 from the same quarter in the previous year.
Approximately one third of the increase in sales was from the sale of
EnergySaver units; the rest of the increase was from the sale of switching gear
and distribution panels. The Company had no sales of switching gear product
prior to purchasing certain assets of Marino Electric, Inc. ("Marino Electric")
in late May 1999. The Company sold approximately 20 EnergySaver units during the
quarter.
The Company's cost of sales for the quarter ended October 31, 1999 was $796,177
as compared to $8,800 in 1998. The increase in cost of sales was due to the
increase in sales activity resulting from the acquisition of Marino Electric and
increased sales of EnergySaver units. The gross margin was during the quarter
was 14.7%. The Company believes that its gross margin will improve as revenue
from the sales of EnergySavers becomes a large portion of its total sales.
Total selling, general and administrative expense ("SG&A") for the quarter
ending October 31, 1999 was $1,849,900, as compared to $265,480 in 1998.
Included in the 1999 figure is a $600,000 charge related to the discount on
shares issued as part of a private placement (the "Private Placement", as
discussed below). The Company also incurred significant professional fees for
legal and accounting services related to the Private Placement during the
quarter. Professional fees recorded during the quarter totaled $235,073. Total
payroll expense included in SG&A during the quarter was $363,409, or 19.6% of
the total. Other significant components of SG&A were advertising, insurance,
depreciation, research and development and utilities.
Other non-operating expense for the quarter ended October 31st was $90,244 for
1999 and $6,006 for 1998. Other Expense for the most recent quarter included
amortization of the goodwill associated with the purchase of Marino Electric of
$84,070. Since this purchase closed in May of 1999, there was no such
amortization expense in 1998. The Company also recorded interest expense of
$62,999 during the quarter, $40,320 of which was associated with the note due to
the seller of Marino Electric, and $11,813 was related to the mortgage on the
Company's facility in Elk Grove Village. Other interest expense included
interest on the working capital facility and on notes payable to stockholders.
The notes payable to stockholders were repaid in full on October 25, 1999.
Interest earned on investments during the quarter totaled $56,825.
14
<PAGE>
Six Months Ended October 31, 1999 Compared to Six Months Ended October 31, 1998
The Company acquired certain assets of Marino Electric, Inc. in late May 1999.
The six months ended October 31, 1999, therefore incorporates only five months
of contribution from Marino Electric.
The Company's revenue for the six months ending October 31, 1999 totaled
$1,777,279, an increase of $1,755,879 from the same period in 1998.
Approximately 29% of the total revenue recorded during the period was from the
sale of EnergySaver units; the remaining revenue was generated through the sale
of switching gear and distribution panels.
The Cost of Sales for the period increased $1,456,239 to $1,465,039. This
increase in the cost of sales was related to the increased sales activity
realized during the period. The gross margin for the period ended October 31,
1999 was 17.6%.
Selling, general and administrative expense for the six-month period ending
October 31, 1999 was $2,923,590 as compared to $513,196 in 1998. The company
incurred significant professional and consulting expenses during the period, a
large portion of which the Company expects to be non-recurring. The total
expense attributable to outside consultants and professionals was $729,528. SG&A
for the period also includes a $600,000 charge related to shares issued at a
discount as part of the Private Placement. Total payroll expense included in
SG&A was $618,462 or 21.0% of the total overhead. Other significant components
of SG&A were research and development, advertising, insurance, depreciation and
utilities.
Other non-operating expense for the period, which includes amortization of
goodwill and net interest expense, totaled $204,457 during 1999, versus
$1,203,557 during 1998. The Company recorded amortization of goodwill related to
the purchase of Marino Electric of $147,123 for the six-month period ending
October 31, 1999. Since this purchase closed in May of 1999, there was no such
amortization expense in 1998. Interest expense included $69,888 for interest on
the Marino Electric seller's note, $28,569 for the mortgage on the Company's
building in Elk Grove Village, $15,128 from the notes due stockholders, $7,829
for the working capital line and $437 of other interest expense. This was
partially offset by interest earned on investments of $64,981. Other
non-operating expenses during 1998 included a $1,200,272 charge related to the
purchase of Pice Products Corporation.
Liquidity and Capital Resources
The Company's principal cash requirements are for operating expenses, including
employee costs, the costs related to research and development, advertising
costs, the cost of outside consultants including those providing accounting and
legal services, and the funding of inventory and accounts receivable, and
capital expenditures. The primary source of cash has been the Private Placement
of the Company's common stock.
In July of 1999, the Company commenced an offering to sell 2,200,000 shares of
its common stock. As of October 31, 1999 the Company had raised $8,573,632
through the issuance of 2,113,182 shares. As is discussed more in note 7 to the
financial statements, the funds raised as part of the Private Placement may be
subject to recession. Based upon the close business relationship some investors
have with the Company and its management and relationships that others have with
15
<PAGE>
management of the Company, the Company does not believe that investors owning a
material amount of the securities purchased in the Private Placement would
demand recession and any such recession would likely not have a material effect
on the Company's financial position.
In July 1999, the Company entered into a $500,000 line-of-credit from LaSalle
Bank N.A. As of October 31, 1999 there was $100,000 outstanding under this line
of credit. The Company elected to cancel the line of credit in December 1999
because it was not needed as a result of the cash generated through the Private
Placement.
Three Months Ended October 31, 1999 Compared to Three Months Ended October 31,
1998
Net cash increased $4,075,042 during the three months ended October 31, 1999.
Net cash used in operating activities was $1,074,167 attributable primarily to
the net loss of $1,802,564. Cash supporting net working capital declined $369
during the period.
Net cash used in investing activities was $106,832 representing capital
expenditures for the purchase of shop equipment and office equipment.
Net cash provided by financing activities totaled $5,256,041. The Company
received $5,235,457 in proceeds from the sale of stock under the Private
Placement, $220,500 of which has been classified as refundable. The Company also
raised $29,397 during the quarter to finance the purchase of two automobiles.
Offsetting these sources of funds was a $100,000 reduction in the line of
credit, the repayment of $200,000 in loans from stockholders and the repayment
of $8,813 in principal on the mortgage on the Company facility in Elk Grove
Village Illinois.
Six Months Ended October 31, 1999 Compared to Six Months Ended October 31, 1998
Net cash increased $7,396,308 during the six-month period ending October 31,
1999. Net cash used in operating activities totaled $905,790, attributable to
the net loss of $2,815,807, which was partially offset by a $232,352 decline in
working capital and $612,500 deposits received from distributors which has been
classified as deferred revenue.
Cash used in investing activities total $108,402, entirely attributable to the
purchase of shop and office equipment.
Financing activities generated $8,410,500 during the six-month period. The
Private Placement raised $8,794,132, of which $220,500 has been classified as
refundable. The Company increased the borrowings on its credit line by $100,000
and financed the purchase of two automobiles for $29,397. Cash was used to repay
loans from stockholders in the amount of $500,000 and the principal balance on
the mortgage was reduced by $13,029 during the period.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On October 26, 1999, the Company received notice that John Prinz & Associates,
LLC ("Prinz") had initiated an action for damages arising out of a Consulting
Agreement (the "Agreement") entered into between Prinz and the Company on April
16, 1999 for Prinz to act as a consultant and promoter on behalf of the Company.
Prinz alleges that the Company breached the Agreement by failing to pay Prinz
for services rendered under the Agreement. The Company denies the allegations
and is defending the action. It is too early in the proceeding to determine its
outcome.
Item 2. Changes in Securities
See Notes 3, 4, 5 and 7 to the Financial Statements above.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits--none.
(b) Reports on Form 8-K--registrant was not required to file a Form 8-K during
the quarter ended October 31, 1999.
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ELECTRIC CITY CORP.:
Dated: January 24, 2000 By: /ss/ Brian Kawamura
----------------------------------------
Its: President- Its: Chief Operating Officer
Dated: January 24, 2000 By: /ss/ John Mitola
----------------------------------------
Its: Chief Executive Officer
Dated: January 24, 2000 By: /ss/ Jeff Mistarz
----------------------------------------
Its: Chief Financial Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1999, INCLUDED
IN THIS FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-QSB.
</LEGEND>
<CIK> 0001065860
<NAME> ELECTRIC CITY CORP.
<CURRENCY> dollars
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 7,880,470
<SECURITIES> 0
<RECEIVABLES> 864,866
<ALLOWANCES> 10,000
<INVENTORY> 741,577
<CURRENT-ASSETS> 9,478,442
<PP&E> 1,577,009
<DEPRECIATION> 88,352
<TOTAL-ASSETS> 14,182,791
<CURRENT-LIABILITIES> 3,296,075
<BONDS> 775,314
0
0
<COMMON> 2,609
<OTHER-SE> 720,911
<TOTAL-LIABILITY-AND-EQUITY> 14,182,791
<SALES> 1,777,279
<TOTAL-REVENUES> 1,777,279
<CGS> 1,465,039
<TOTAL-COSTS> 1,465,039
<OTHER-EXPENSES> 3,070,713
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,334
<INCOME-PRETAX> (2,815,807)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,815,807)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,013,243)
<EPS-BASIC> (.11)
<EPS-DILUTED> (.11)
</TABLE>
