<PAGE> 1
UNITED STATES
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 MARCH 31, 1999
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)
Pennington Business Park, 55 Route 31 South
Pennington, New Jersey 08534
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 818-0700
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 May 14, 1999, there were 25,585,634 shares of
the Registrant's Common Stock, $.001 par value, outstanding.
<PAGE> 2
WORLDWATER CORP.
QUARTERLY REPORT ON FORM 10-QSB
Part I.
FINANCIAL INFORMATION Page No.
Item 1. Condensed Consolidated Financial Statements 3
Condensed Consolidated Balance Sheets
as of March 31, 1999 (Unaudited) and
December 31, 1998 (Audited)
Condensed Consolidated Statements of 4
Operations (Unaudited) for the three months
ended March 31, 1999 and 1998, and the three
months ended March 31, 1999 and 1998
Condensed Consolidated Statements of Cash 5
Flows (Unaudited) for the three months ended
March 31, 1999 and 1998
Condensed Consolidated Statements of Stockholders' 6
Equity (Unaudited) for the period January 1,1999
Through March 31, 1999.
Notes to the Condensed Consolidated 7-8
Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 9-11
Financial Condition and Results of Operations
Part II. OTHER INFORMATION
Item 1 Signatures 12
Item 2 Exhibit 27 Financial Data Schedule
2
<PAGE> 3
WorldWater Corp.
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998
<TABLE>
<CAPTION>
3/31/99 12/31/98
------- --------
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 19,560 $ 4,162
Accounts receivable 10,682 0
Marketable securities 7,500 11,875
Inventory 78,796 97,469
Prepaid expenses -- 5,335
----------- -----------
Total Current Assets 116,538 118,841
----------- -----------
Non-Current Assets:
Equipment and leasehold improvements, net 43,674 48,268
Other assets 8,918 8,384
----------- -----------
TOTAL ASSETS $ 169,130 $ 175,493
=========== ===========
Current Liabilities:
Accounts payable & other accrued expenses $ 335,311 $ 425,307
Accrued payroll 204,500 205,200
Accrued interest 358,415 332,829
Notes payable 293,680 373,581
Current maturities of long-term debt 853,500 917,150
----------- -----------
Total Current Liabilities 2,045,406 2,254,067
----------- -----------
TOTAL LIABILITIES 2,045,406 2,254,067
----------- -----------
Stockholders Deficiency:
Common Stock 24,995 21,985
(Par value $.001; 30,000,000 shares
authorized; issued and outstanding March 31,1999--
24,794,904 and December 31, 1998 --21,984,904 )
Additional paid-in capital 7,017,981 6,576,591
Accumulated other comprehensive loss (25,000) (20,625)
Accumulated deficit (8,894,252) (8,656,525)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIENCY (1,876,276) (2,078,574)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 169,130 $ 175,493
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE> 4
WorldWater Corp.
Condensed Consolidated Statements of Operations
For the three months ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
3 Months
3/31/99 3/31/98
------- -------
<S> <C> <C>
Sales $ 47,741 $ 37,643
Cost of Goods Sold 74,551 133,885
------------ ------------
Gross (Loss) Profit (26,810) (96,242)
------------ ------------
Operating Expenses:
Research & Development 35,282 28,359
Sales & Marketing 82,533 93,309
General & Administrative 64,969 78,152
------------ ------------
Total Operating Expenses 182,784 199,820
------------ ------------
Operating (Loss) Profit (209,594) (296,062)
------------ ------------
Other Expenses
Interest Expense 29,633 31,658
Other Expense (Income) (1,500) (1,000)
------------ ------------
Total Other Expense (Income) 28,133 30,658
------------ ------------
Net Loss $ (237,727) $ (326,720)
============ ============
Net Loss Per Share $ (0.01) $ (0.02)
Average Shares Outstanding 21,340,721 16,254,800
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE> 5
WorldWater Corp.
Condensed Consolidated Statements of Cash Flows
For the three-months ended March 31,1999 and 1998.
<TABLE>
<CAPTION>
3/31/99 3/31/98
------- -------
<S> <C> <C>
Net loss $(237,727) $(326,720)
Adjustments to Reconcile Net Loss to
Net Cash Used in Operating Activities:
Depreciation 4,594 1,800
Changes in Assets and Liabilities:
Accounts Payable & Accrued Expenses (89,996) (36,488)
Prepaid Expenses 5,335 (373)
Accrued Interest --
Inventory 18,673 (26,175)
Accrued Salaries (700) (13,566)
Accounts Receivable (10,682) (24,271)
--------- ---------
Net Cash Used in Operating Activities (310,503) (425,793)
--------- ---------
Cash Flows from Investing Activities:
(Increase) in Other Assets (534) 8,000
Capital Expenditures -- (1,332)
--------- ---------
Net Cash Used in Investing Activities (534) 6,668
--------- ---------
Cash Flows from Financing Activities:
Proceeds from Notes Payable 53,500
Repayment of Notes Payable (34,065) (20,000)
Repayment of Current Maturities -- (30,000)
Proceeds from Issuance of Common Stock 307,000 491,009
--------- ---------
Net Cash Provided by (Used In) Financing Activities 326,435 441,009
--------- ---------
Net Increase (Decrease) in Cash 15,398 21,884
Cash at Beginning of Year 4,162 61,160
--------- ---------
Cash at end of First Quarter $ 19,560 $ 83,044
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE> 6
WorldWater Corp
Consolidated Statements of Stockholders' Equity
For the Period January 1, 1999 through March 31, 1999
<TABLE>
<CAPTION>
Additional Accumulated Total
Common Stock (Par Value $.001) Paid-In Other Accumulated Stockholders
Shares Amount Capital Comprehensive Deficit Equity
Income
------------------------------------------------------------------------------------------------
(loss)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 21,984,904 $21,985 $6,576,591 ($20,625) ($8,656,525) ($2,078,574)
Issuance of common stock
for cash 1,873,333 1,873 305,127 307,000
Debt and accrued interest
converted into common stock 1,116,667 1,117 136,283 137,400
Issuance of common stock
for WorldWater Inc. Certificate 20,000 20 (20)
Net loss for the three months
ended March 31, 1999 (237,727) (237,727)
Unrealized decrease in value of
marketable securities (4,375) (4,375)
---------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999 24,994,904 $ 24,995 $7,017,981 ($25,000) $ (8,894,252) ($1,876,276)
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE> 7
Part I. Item 1.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
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 statements and footnotes
thereto included as an exhibit to the Company's form 8-K/A dated
February 19, 1999 and 10-K dated April 15, 1999, all previously filed
with the Securities and Exchange Commission.
2. NET LOSS PER SHARE
Net loss per share for the three months ended March 31, 1999 and 1998
is computed using the average number of common shares of stock
outstanding during the period. Common stock equivalents are not
considered in net loss per share because their effect would be
anti-dilutive.
3. CONVERSION OF DEBT
During the three months ended March 31, 1999, notes payable totaling
$137,400 were converted into equity.
4. VALUE OF MARKETABLE SECURITIES
During the three months ended March 31, 1999 the Company had marketable
securities valued at $7,500.
7
<PAGE> 8
5. ACCOUNTING CLASSIFICATIONS
Figures from the prior period March 31, 1998 have been adjusted to
reflect the current presentation for 1999. Management adjusted the
account groupings to better reflect current operations. These
adjustments did not change the net income for the prior period.
Part I. Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
Statements in this quarterly Report on Form 10-Q concerning the Company's
outlook or future economic performance: anticipated profitability, gross
billings, commissions and fees, expenses or other financial items; and
statements concerning assumptions made or exceptions to any future events,
conditions, performance or other matter are "forward looking statements" as
that term is defined under the Federal Securities Laws. Forward-looking
statements are subject to risks, uncertainties, and other factors that would
cause actual results to differ materially from those stated in such
statements. Such risks, uncertainties and factors include, but are not
limited to, (1) that there can be no assurance that the Company will grow
profitably or manage its growth, (2) risks associated with acquisitions, (3)
competition, (4) the Company's quarterly results have fluctuated in the past
and are expected to fluctuate in the future, (5) the loss of services of key
individuals which could have a material adverse effect on the Company's
business, financial condition or operating results, (6) risks associated with
operating in emerging countries.
OVERVIEW
WorldWater Corp is a full-service water engineering and solar energy company,
which designs, develops and markets proprietary technology relating to water
needs and solar power applications. The Company occupies a unique niche in
the international market place--supplying emerging countries and industry
throughout the world with solar electric powered products and performing all
phases of the water cycle: from finding, to pumping, storing and recycling
water. WorldWater has developed a proprietary solar-driven water pump, the
AquaSafe(TM), which can pump water from great depths, making it possible to
supply water to communities and to irrigate lands that might otherwise lie
barren. These solar pumps can supply potable water and irrigation to remote
areas at significantly less cost and less maintenance than other pumping
methods currently in use can.
The mission of the Company is to position itself as the leader and principal
supplier of renewable energy and remote water supply for emerging nations
throughout the world.
8
<PAGE> 9
In mid-1997, the Company made its first production shipment of its proprietary
products (to the Philippines) and has since begun limited operations in 16
emerging nations in Asia, Latin America and Africa. The Company currently has
contract negotiations underway in five emerging countries which, if successfully
concluded, will result in a substantial increase in revenues during the second
half of 1999, and in the year 2000. During the early stage of market
penetration, marketing and related costs invariably exceed revenues. Management
anticipates that as target markets for solar equipment become more fully
developed, operating profits will be achieved.
9
<PAGE> 10
RESULTS OF OPERATIONS
REVENUE. For the three months ended March 31, 1999 revenue increased to
$47,741, up from $37,643 in the same quarter of 1998.
GROSS PROFIT. Gross loss of $26,810 was recognized for the three months
ended March 31, 1999, down from a loss of $96,242 for the same period in
1998. Cost of sales was $74,551 down from $133,885 from the previous period.
The operating loss was $209,594 for the first quarter in 1999 compared to an
operating loss of $296,062 for the same period in 1998.
SELLING AND MARKETING. Sales and marketing expenses decreased by $10,776 in
the three-month period ending March 31, 1999 to $82,533, down from $93,309 in
the same period of 1998. Management believes that as a result of the contract
negotiations mentioned above, sales and marketing expenses will increase as
the year progresses.
RESEARCH AND DEVELOPMENT. Research and development expenses increased $6,923
for the three-month period to $35,282, up from $28,359 in the same period of
1998. The Company was awarded an $249,967 grant from the State of New Jersey
Commission on Science and Technology on April 29, 1999. The funds will be
used to develop its Off-Grid Drip Irrigation System in conjunction with New
Jersey's Rutgers University commencing May 1, 1999.
GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased by
$13,183 to $64,969 for the three month period ended March 31, 1999, down from
$78,152 in 1998. The decrease is due primarily to the Company's continued
exercise of close control over operating costs and staffing. Assuming that
contract negotiations now underway are successfully concluded, it will be
necessary to recruit additional staff to implement the contracts.
INCOME TAXES. The Company recognized no income tax expense for 1998, and for
1999 to date. The Company has net operating loss carry forwards resulting in a
potential federal tax benefit to the Company as of January 1, 1999 of
approximate $2.5 million. The Company entered into an agreement with Technology
Tax Certificate, L.L.C. to sell approximately $4.5 million in New Jersey State
Tax Loss Carry forwards. The new law allows the Company to sell its losses to
profitable companies in the State for a minimum of seventy-five (75%) percent of
the tax value. The law became effective in New Jersey January 1, 1999 and the
New Jersey Economic Development Authority is currently reviewing applications.
The Company expects to receive about $480,000 net proceeds from the sale,
however, the timing is uncertain.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents increased by $15,398 to $19,560 from
December 31, 1998 to March 31, 1999. The net cash used in operating
activities during this three-month period in 1999 was $310,503 compared to
$425,793 in 1998. The primary reasons for the consumption of cash in 1999
were to fund on-going operations and the net loss of $237,727 for the three
months ended March 31, 1999.
The Company's auditors indicated in their December 31, 1998 Annual Audit
Report that there was substantial doubt about its ability to continue as a
going concern. The Company has taken action to respond to this going concern
issue. This is defined by generally accepted accounting principles as the
possibility that current capital resources might be insufficient to meet
obligations over the next twelve months. The Company has contacted debt
holders regarding conversion of their debt into shares of common stock. The
Company continues to encourage its warrant holders to exercise their warrants
in order to provide an efficient and inexpensive means of raising capital.
Cash provided by financing activities in the three months that ended March
31, 1999 was $326,435 compared to $441,009 in 1998.
SALE OF RESTRICTED SECURITIES DURING THE FIRST QUARTER 1999
The Company issued 1,873,333 Common Stock shares for net proceeds of $307,000.
THE YEAR 2000
The use of computer systems that rely on two-digit programs to perform
computations or other functions may cause such systems to malfunction with
respect to the year 2000 and subsequent years. Like many other entities, the
Company is currently assessing its computer software and database with
respect to its functionality beyond the turn of the century. The extent and
estimated cost of the modifications which will be required cannot yet be
determined, although it is expected that such expenditures will not have a
material effect on the financial conditions and the results of operations of
the Company. There can be no assurance, however, that the year 2000 problem
will be resolved successfully and in a timely fashion or that any failure or
delay by the Company or any third parties which interact with the Company in
achieving year 2000 compliance will not have an adverse effect on its
operations.
11
<PAGE> 12
Part 2. Item 1
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.
DATE: May 14,1999 WORLDWATER CORP.
By: /s/ Quentin T. Kelly By: /s/ Peter I. Ferguson
--------------------- ----------------------
Quentin T. Kelly Peter I. Ferguson
Chairman & CEO Vice-President
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 19,580
<SECURITIES> 7,500
<RECEIVABLES> 10,682
<ALLOWANCES> 0
<INVENTORY> 78,796
<CURRENT-ASSETS> 110,538
<PP&E> 104,852
<DEPRECIATION> 61,178
<TOTAL-ASSETS> 169,130
<CURRENT-LIABILITIES> 2,045,408
<BONDS> 0
0
0
<COMMON> 24,795
<OTHER-SE> (1,851,481)
<TOTAL-LIABILITY-AND-EQUITY> 108,130
<SALES> 47,740
<TOTAL-REVENUES> 47,740
<CGS> 74,551
<TOTAL-COSTS> 182,784
<OTHER-EXPENSES> (1,500)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,663
<INCOME-PRETAX> (237,728)
<INCOME-TAX> 0
<INCOME-CONTINUING> (237,728)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (237,728)
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
