SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO _________
--------
Commission File Number 0-16936
WorldWater Corp.
(Exact name of Registrant as specified in its charter)
NEVADA 33-0123045
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
117 Hopewell-Rocky Hill Rd., Hopewell, NJ 08525
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 466-3697
Golden Beverage Company
(Former name - name changed since last report.)
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 ____
As of the close of business on August 15, 1997, there were 14,533,190 shares of
the Registrant's Common Stock, $.001 par value, outstanding.
<PAGE>
WORLDWATER CORP.
QUARTERLY REPORT ON FORM 10-QSB
Part 1. FINANCIAL INFORMATION Page No.
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of June 30,
1997 (Unaudited) and December 31, 1996 (Audited)
Condensed Consolidated Statements of Operations
(Unaudited) for the three months ended June 30, 1997 and
1996, and the six months ended June 30, 1997 and 1996
Condensed Consolidated Statements of Cash Flows
(Unaudited) for the six months ended June 30, 1997 and
1996
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Part 2.
Item 1. Signatures
Item 2. Financial Data
<PAGE>
WorldWater Corp.
Condensed Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
6/30/97 12/31/96
------- --------
Current Assets
Cash and cash equivalents $ 93,139 $ 14,296
Accounts receivable 429,154 5,077
Inventory:
Raw Materials 65,741 --
Less: Reserve -- --
Total Inventory 65,741 102,998
Prepaid Expenses 400 --
--------------------------
Total Current Assets 588,434 122,371
--------------------------
Non-Current Assets
Property, Plant, & Equipment 107,572 64,809
Less: Accumulated Depreciation (57,230) (18,532)
--------------------------
Property, Plant, and Equipment, Net 50,342 46,277
Other Assets 384 474
--------------------------
TOTAL ASSETS 639,160 169,122
==========================
Current Liabilities
Accounts Payable and other accrued expenses 260,500 382,730
Employment taxes/benefits 11,089 --
Accrued payroll 155,684 212,075
Accrued interest 513,834 473,378
EDA Loan 200,000 --
Loan - related party -- 3,750
Notes Payable 162,750 140,984
Current maturities of
long-term debt - convertible notes 1,596,650 1,752,000
--------------------------
Total Current Liabilities 2,900,507 2,964,917
Non-Current Liabilities
Long-Term Debt - Convertible Notes, Net of
Current Maturities -- 550,000
--------------------------
TOTAL LIABILITIES 2,900,507 3,514,917
--------------------------
Common Stock 14,533 9,570
(Common Stock:Par value $.001; 20,000,000 shares
authorised; issued and outstanding June 30,1997--
14,533,190 and December 31, 1996 -- 9,569,908)
Additional paid-in capital 3,440,338 2,992,911
Retained Earnings (5,716,218) (6,348,276)
--------------------------
TOTAL STOCKHOLDERS EQUITY (2,261,347) (3,345,795)
--------------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 639,160 $ 169,122
==========================
<PAGE>
WorldWater Corp.
Condensed Consolidated Statements of Operations
For the three months ended June 30, 1997 and 1996,
and for the six months ended June 30, 1997 and 1996
<TABLE>
<CAPTION>
3 Month 6 Month
6/30/97 6/30/96 6/30/97 6/30/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue
Solar Pump Systems $ 429,784 $ -- $ 433,664 $ 10,000
Sale of Snowflake Beer -- 2,832 -- 18,350
------------ ------------ ------------ ------------
Total Revenue 429,784 2,832 433,664 28,350
------------ ------------ ------------ ------------
Cost of Goods Sold
Solar Pump Systems 209,557 69,966 278,889 233,900
Snowflake Beer -- -- -- 14,487
------------ ------------ ------------ ------------
Gross Profit (Loss) 220,227 (67,134) 154,775 (220,037)
------------ ------------ ------------ ------------
Operating Expenses:
Service & Installation 10,354 7,900 19,054 13,400
Sales & Marketing 39,270 25,100 69,050 59,100
Research & Development 61,925 18,000 179,642 34,900
General & Administrative 104,735 133,495 202,851 248,336
------------ ------------ ------------ ------------
Total Operating Expenses 216,284 184,495 470,597 355,736
------------ ------------ ------------ ------------
Operating Income (Loss) 3,943 (251,629) (315,822) (575,773)
------------ ------------ ------------ ------------
Other Expenses
Interest Expense 52,372 (45,569) 109,524 (89,995)
Other 5,026 (2,500) 5,959 (13,100)
------------ ------------ ------------ ------------
Net Loss $ (53,455) $ (299,698) $ (431,305) $ (678,868)
============ ============ ============ ============
Net Loss Per Share $ (0.004) $ (0.038) $ (0.036) $ (0.085)
Average Shares 12,051,454 7,945,900 12,051,454 7,945,900
Outstanding
</TABLE>
<PAGE>
WorldWater Corp.
Condensed Consolidated Statements of Cash Flows
For the six-months ended June 30, 1997 and 1996
30-Jun-97 30-Jun-96
----------- -----------
After Tax Income (Loss) $ (431,305) $ (678,868)
Adjustments to Reconcile Net Loss to
Net Cash Used in Operating Activities:
Depreciation 38,698 13,029
Changes in Assets and Liabilities:
Accounts Payable & Accrued Expenses (122,230) 129,808
Prepaid Expenses (400) (8,550)
Accrued Interest 40,456 106,701
Inventory 37,257 (11,971)
Accrued Salaries (56,391) (28,013)
Accounts Receivable (424,077) 8,780
Employment Taxes 11,089 4,063
----------- -----------
Net Cash Used in Operating Activities (906,903) (465,021)
----------- -----------
Cash Flows from Investing Activities:
Decrease in Other Assets 90 1,200
Capital Expenditures (42,763) (114,709)
Decrease in Notes Receivable (3,750) (91,550)
----------- -----------
Net Cash Used in Investing Activities (46,423) (205,059)
----------- -----------
Cash Flows from Financing Activities:
Conversion of Convertible Notes (550,000) (850,000)
Current Maturities Conversion (155,350) 1,340,125
Proceeds from Notes Payable 21,766 9,583
Proceeds from Issuance of Common Stock 4,963 71,513
Section 504 Stock -Net Proceeds -- 129,534
NJ Economic Development Agency Loan 200,000 --
Change in Paid-In-Capital 447,427 (252,899)
Change in Retained Earnings 1,063,363 258,697
----------- -----------
Net Cash Provided by (Used In)
Financing Activities 1,032,169 706,553
----------- -----------
Net Increase in Cash 78,843 36,473
Cash at Beginning of Year 14,296 5,096
----------- -----------
Cash at end of Second Quarter $ 93,139 $ 41,569
=========== ===========
<PAGE>
Part 1. FINANCIAL INFORMATION
WORLDWATER CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements have been prepared
by WorldWater Corp. (the "Company") without audit and reflect all adjustments
(consisting only of normal and recurring adjustments and accruals) which are, in
the opinion of management necessary to present a fair statement of the results
for the interim periods presented. The statements have been prepared in
accordance with the regulations of the Securities and Exchange Commission, but
omit certain information and footnote disclosures necessary to present the
statements in accordance with generally accepted accounting principles. The
results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full fiscal year. These
condensed financial statements should be read in conjunction with the financial
statement and footnotes thereto included as an exhibit to the company's form 8-K
dated 6/20/97, all previously filed with the Securities and Exchange Commission.
2. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation. The financial statements for all periods have been
restated to reflect the pooling of interests of the Company and Golden Beverage
Corporation as a result of the April 7, 1997 merger. As of the merger date
WorldWater, Inc, and Golden beverage Corporation became one entity.
3. NET LOSS PER SHARE
Net loss per share for the three months ended June 30, 1997 and 1996, and the
six months ended June 30, 1997 and 1996 is computed using the average number of
common shares of stock outstanding during the period.
4. ACQUISITION
On April 7, 1997 WorldWater, Inc. merged with Golden Beverage Corporation, a
Denver, Colorado based importer and distributor of Asian beverages, the latter
becoming the surviving public company trading as WorldWater Corp. with a NASDAQ
Electronic Bulletin Board symbol of WWAT. WorldWater's Board of Directors,
officers and employees replaced the Golden Beverage equivalents and WorldWater
gained control of
<PAGE>
87.8% of the public entity, now known as WorldWater Corp. in a 1,240:1 reverse
stock split.
WORLDWATER CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
REVENUE. The Company's revenue increased to $429,784 for the second quarter of
1997 up from $2,832 in the same period in 1996. For the six months ended June
30, 1997 revenue increased to $433,664 from $28,350 in 1996. The increase
resulted from domestic and international sales but was primarily due to the sale
of 25 irrigation and drinking solar powered pump systems to the Philippine
Government.
GROSS PROFIT. Gross profit increased to 51.2 percent of revenue in the second
quarter of 1997 from a loss of $67,134 in the same period of 1996. Gross profit
percentage also increased in the six-month period ending June 30, 1997 to 35.7
percent of revenue from a loss of $220,037 in 1996. The increase was primarily
due to the large Philippine order. However margins for the remainder of the year
may be difficult to anticipate because market development is at early stages in
several regions.
SELLING AND MARKETING. Selling and marketing expenses increased by 56.4 percent
to $39,270 in the second quarter of 1997, up from $25,100 in the same period of
1996. Sales and marketing expenses also increased in the six-month period ending
June 30, 1997 to $69,050 up from $59,100 in the same period of 1996. As a
percentage of revenue, expenses were 9.1 and 15.9 percent for the respective
three-month and six-month periods ending June 30, 1997. The increase resulted
primarily from expenses associated with the company's marketing efforts in the
Philippines, other Asian countries, Africa and Latin America. The Company was
primarily in an R&D mode until early 1996 when the marketing of solar powered
water pumping and electricity generation for off-grid applications (such as
power for remote community centers) on a global basis, began in earnest. Selling
and marketing expenses will remain high for the remainder of the year.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by 70.9
percent to $61,925 in the second quarter of 1997, up from $18,000 in the same
period of 1996. Research and development expenses also increased in the first
six months of 1997 to $179,642, up from $34,900 in the same period of 1996. As a
percentage of revenue research and development expenses were 14.4 and 41.4
percent for the respective three-month and six-month periods ended June 30,
1997. The increase resulted primarily from the company's continued investment in
current electrical solar power system testing and upgrading same.
GENERAL AND ADMINISTRATIVE. General and administrative expenses declined to
$104,735 in the second quarter of 1997, down from $133,495 in the same period of
1996. Expenses also declined to $202,851, for the six month period ended June
30, 1997, down from $248,338 in 1996. As a percentage of revenue, general and
administrative expenses
<PAGE>
were 24.3 and 46.8 percent for the second quarter, and first six months of 1997,
respectively. The declines were primarily due to stringent cost control.
ACQUISITION COSTS. Certain acquisition costs were recognized in the second
quarter of 1997 relating to the merger with Golden Beverage, Corporation in
April 1997. As of June 30, 1997 approximately $25,000 in acquisition costs were
recorded for legal and professional fees related to the merger, with $10,000
paid through June 30, 1997. Former Golden Beverage shareholders and the
consultants who brokered the deal received 1.2%, and 11.0% of the WorldWater
Corp. stock, respectively. These broker fees were expensed at the fair value at
the date of receipt.
INCOME TAXES. The Company recognized no income tax expense for 1997 and 1996.
The Company has net operating loss carry forwards resulting in a tax benefit to
the company of approximately $1,700,000 in future years.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents increased by approximately $78,800 from
December 31, 1996 to June 30, 1997. The increase resulted from inflows of funds
from investors, the conversion of debentures and bridge loan notes to stock, and
the utilization of $200,000 of our $250,000 line of credit from the NJ Economic
Development Agency. The largest use of cash was the fulfillment of requirements
in conjunction with the Philippine order and the building of inventory levels.
ACQUISITIONS.
In April 1997, the Company completed its merger with Denver based, Golden
Beverage Corporation, an importer of Asian beverages which gave it a listing on
the NASDAQ Electronic Bulletin Board under the symbol WWAT. WorldWater's Board
of Directors, officers and employees replaced the Golden Beverage equivalents
and WorldWater gained control of 87.8% of the public entity, now known as
WorldWater Corp. in a 1,240:1 reverse stock split.
<PAGE>
FORWARD LOOKING STATEMENTS
MARGINS FOR THE REMAINDER OF THE YEAR MAY BE INCONSISTENT
The system implementation requires varying levels of commitments to on-site
training. Special engineering requirements may also exist at an installation
site prior to the arrival of WorldWater technical staff. Thus variation of
profit margins exist for delivering products and most contracts will have a mix
of products which are difficult to forecast.
SELLING AND MARKETING EXPENSES TO REMAIN AT HIGH LEVELS FOR THE REMAINDER OF THE
YEAR.
The majority of current sales and marketing activities are an investment in new
market development which disproportionately increase costs as a percentage of
revenue generated.
INTERNATIONAL GOVERNMENT AND NON-GOVERNMENT ORGANIZATION CONTRACTUAL
UNCERTAINTIES
Some government agencies and international non-government organizations require
an open bidding process which often results in time delays and extended
negotiations. The complexity of proper financial, fiscal and trade related
paperwork can confuse and delay the organization initiating the procurement.
Orders can be coordinated between as many as four organizations on two
continents and through several management decision levels which can extend the
time between the decision to purchase and payment for delivery and system
installation.
<PAGE>
Part 2. Item 1
WORLDWATER CORP.
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, thereby duly authorized.
WORLDWATER CORP.
DATE: August 19, 1997 By: /s/ Joseph Cygler
-----------------------------
Joseph Cygler
Executive Vice-President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-1-1997
<PERIOD-END> JUN-30-1997
<CASH> 93,139
<SECURITIES> 0
<RECEIVABLES> 429,154
<ALLOWANCES> 0
<INVENTORY> 65,741
<CURRENT-ASSETS> 588,434
<PP&E> 107,572
<DEPRECIATION> 57,230
<TOTAL-ASSETS> 639,160
<CURRENT-LIABILITIES> 2,900,507
<BONDS> 0
0
0
<COMMON> 14,533
<OTHER-SE> (2,275,880)
<TOTAL-LIABILITY-AND-EQUITY> 639,160
<SALES> 429,784
<TOTAL-REVENUES> 429,784
<CGS> 209,557
<TOTAL-COSTS> 425,841
<OTHER-EXPENSES> 5,026
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,372
<INCOME-PRETAX> (53,455)
<INCOME-TAX> 0
<INCOME-CONTINUING> (53,455)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (53,455)
<EPS-PRIMARY> (0.004)
<EPS-DILUTED> (0.004)
</TABLE>