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 SEPTEMBER 30, 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 November 10, 1999, there were 26,535,582 shares
of the Registrant's Common Stock, $.001 par value, outstanding.
<PAGE>
WORLDWATER CORP.
QUARTERLY REPORT ON FORM 10-QSB
Part I.
FINANCIAL INFORMATION Page No.
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Item 1. Condensed Consolidated Financial Statements 3
Condensed Consolidated Balance Sheets
as of September 30, 1999 (Unaudited) and
December 31, 1998 (Audited)
Condensed Consolidated Statements of 4
Operations (Unaudited) for the nine
months ended September 30, 1999 and 1998,
and the three months ended
September 30, 1999 and 1998
Condensed Consolidated Statements of Cash 5
Flows (Unaudited) for the nine months ended
September 30, 1999 and 1998
Condensed Consolidated Statements of 6
Stockholders' Equity (Unaudited) for the period
January 1, 1999 Through September 30, 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>
WorldWater Corp
Condensed Consolidated Balance Sheets
September 30, 1999 and December 31, 1999
<TABLE>
<CAPTION>
9/30/99 12/31/98
------- ---------
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 94,059 $ 4,162
Advance to affiliate 25,000 -
Marketable securities 6,250 11,875
Grant Receivable 37,495 -
Inventory 79,964 97,469
Prepaid expenses 2,441 5,335
Total Current Assets 245,209 118,841
----------- -----------
Non-Current Assets
Property, plant, and equipment, net 38,562 48,268
Other assets 8,384 8,384
----------- -----------
TOTAL ASSETS 292,156 175,493
=========== ===========
Current Liabilities
Accounts payable & other accrued expenses 333,511 425,307
Accrued payroll 192,500 205,200
Accrued interest 413,824 332,829
Notes payable 265,826 373,581
Deferred grant research 37,495 -
Current maturities of long term debt 874,500 917,150
----------- -----------
Total Current Liabilities 2,117,656 2,254,067
----------- -----------
Long term debt, net 200,000 -
----------- -----------
TOTAL LIABILITIES 2,317,656 2,254,067
----------- -----------
Stockholders Deficiency
Common stock 26,586 21,985
(Par value $.001; 50,000,000 shares
authorized; issued and outstanding September 30,1999--
26,585,582 and December 31, 1998--21,984,904)
Additional paid-in capital 7,385,807 6,576,591
Accumulated other comprehensive loss (27,180) (20,625)
Retained earnings (9,410,713) (8,656,525)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIENCY (2,025,500) (2,078,574)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 292,156 $ 175,493
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Finanacial Statements
3
<PAGE>
WorldWater Corp
Condensed Consolidated Statements of Operations
For the three months ended September 30, 1999 and 1998,
and for the nine months ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
3 Month 9 Month
9/30/99 9/30/98 9/30/99 9/30/98
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales $ 24,252 $ 1,112 $ 142,503 $ 51,645
Grant Revenue 58,653 - 212,472
----------- ----------- ----------- ------------
Total Revenue 82,905 1,112 354,975 51,645
Cost of Goods Sold 56,471 55,360 220,096 208,565
----------- ----------- ----------- ------------
Gross (Loss) Profit 26,434 (54,248) 134,880 (156,920)
----------- ----------- ----------- ------------
Operating Expenses:
Research & Development 69,656 51,458 184,404 150,175
Sales & Marketing 96,187 105,512 306,067 347,576
General & Administrative 137,229 123,639 341,396 347,651
----------- ----------- ----------- ------------
Total Operating Expenses 303,072 280,609 831,867 845,402
----------- ----------- ----------- ------------
Operating (Loss) Profit (276,638) (334,857) (696,987) (1,002,322)
----------- ----------- ----------- ------------
Other Expenses
Interest Expense 41,848 25,890 101,052 83,174
Other Expense (Income) (40,634) (2,027) (43,850) (6,102)
----------- ----------- ----------- ------------
Total Other Expense (Income) 1,214 23,863 57,201 77,072
----------- ----------- ----------- ------------
Net Loss $ (277,852) $ (358,720) $ (754,188) $(1,079,394)
=========== =========== =========== ============
Net Loss Per Share $ (0.01) $ (0.02) $ (0.03) $ (0.06)
Average Shares Outstanding 21,966,720 19,967,964 22,492,193 18,417,243
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
WorldWater Corp
Condensed Consolidated Statements of Cash Flows
For the nine-months ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
9/30/99 9/30/98
------- -------
<S> <C> <C>
Net Loss $ (754,188) $(1,079,394)
Adjustments to Reconcile Net Loss to
Net Cash Used in Operating Activities:
Depreciation 13,594 14,792
Charges relating to common stock issued - 4,764
for services
Changes in Assets and Liabilities:
Accounts Payable & Accrued Expenses (91,796) (6,698)
Prepaid Expenses 2,894 2,627
Accrued Interest 80,995 78,186
Inventory 17,505 34,766
Accrued Salaries (12,700) 10,000
Accounts Receivable (37,495) 29,685
Advance to Affiliate (25,000) -
Displays in Foreign Countries - (55,735)
Deferred Grant Research 37,495
----------- -----------
Net Cash Used in Operating Activities (768,696) (967,007)
----------- -----------
Cash Flows from Investing Activities:
Decrease in Other Assets - (2,701)
Proceeds from Securities - 50,000
Capital Expenditures (3,889) (7,019)
----------- -----------
Net Cash Used in Investing Activities (3,889) 40,280
----------- -----------
Cash Flows from Financing Activities:
Proceeds from Notes Payable 487,564 326,366
Repayment of Notes Payable (157,755) (50,900)
Repayment of Current Maturities (42,650) (171,000)
Proceeds from Issuance of Warrants 50,000 -
Proceeds from Issuance of Common Stock 525,323 807,700
----------- -----------
Net Cash Provided by (Used In) Financing Activities 862,482 912,166
----------- -----------
Net Increase (Decrease) in Cash 89,897 (14,561)
Cash at Beginning of Year 4,162 61,160
=========== ===========
Cash at end of Third Quarter $ 94,059 $ 46,599
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
WorldWater Corp
Consolidated Statements of Stockholders' Equity
For the Period January 1, 1999 through September 30, 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 2,512,377 2,512 522,811 525,323
for cash
Debt and accrued interest 1,778,301 1,778 236,716 238,494
converted into common stock
Issuance of common stock 60,000 60 (60) -
for WorldWater Inc. Certificate
Issuance of common stock 250,000 250 49,750 50,000
for warrants exercised
Net loss for the nine months (6,555) (754,188) (760,743)
ended September 30, 1999
- -----------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1999 26,585,582 $ 26,586 $ 7,385,807 ($27,180) $(9,410,713) ($2,025,500)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
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 nine months ended September 30, 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 nine months ended September 30, 1999, notes payable totaling
$238,494 were converted into equity.
4. VALUE OF MARKETABLE SECURITIES
At September 30, 1999 the Company had marketable securities recorded at
fair market value in the amount of $6,250.
5. ACCOUNTING CLASSIFICATIONS
Figures from the prior period September 30, 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.
7
<PAGE>
6. Technology Grant
The Company received a grant from the New Jersey Commission on Science and
Technology in the amount of $249,967. The grant funds are issued in two
increments of which the Company received $212,472 for the initial phase
and upon successful completion and review of the project an additional
payment of $37,495 will be forthcoming. After successful completion of the
project, a percentage of the Company's net income, one percent in the
first year, will be paid annually in the form of a royalty payment to the
Commission not to exceed the original grant amount of $249,967.
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 could 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 and
(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.
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>
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 seven emerging countries which, if
successfully concluded, would result in a substantial increase in revenues
during the fourth quarter 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
its solar powered water pumping and electric equipment become more fully
developed, operating profits will be achieved.
9
<PAGE>
RESULTS OF OPERATIONS
REVENUE. For the nine months ended September 30, 1999 revenue increased to
$354,975, up from $51,645 in the same period of 1998. For the three months ended
September 30, 1999 revenue increased $81,793 to $82,905 up from $1,112 in the
same period during 1998. The primary reason for increased revenue is due to
continued sales of systems in strategic locations and the grant received from
the New Jersey Commission on Science and Technology.
GROSS PROFIT. Gross profit of $134,880 was recognized for the nine months ended
September 30, 1999, up from a loss of $156,920 for the same period in 1998.
Gross profit of $26,434 was recognized for the three months ended September 30,
1999 compared to a loss of $52,248 for the same period during 1998. Cost of
sales for the nine months was $220,096, slightly up from $208,565 from the
previous period, and $56,471 for the three months, compared to $55,360 for the
same period during 1998. The operating loss was $696,987 for the nine months in
1999 compared to an operating loss of $1,002,322 for the same period in 1998.
Operating loss was $276,638 for the three months ended September 30, 1999,
compared to an operating loss of $334,857 for the same period during 1998.
SELLING AND MARKETING. Sales and marketing expenses decreased by $41,509 in the
nine-month period ending September 30, 1999 to $306,067, down from $347,576 in
the same period of 1998. Sales and marketing expenses decreased by $9,325 for
the three months ended September 30, 1999 as compared to the third quarter of
1998.
RESEARCH AND DEVELOPMENT. Research and development expenses increased $34,229
for the nine-month period to $184,404, up from $150,175 in the same period of
1998. Research and development expenses increased $18,198 for the three months
ended September 30, 1999. The Company was awarded a $249,967 grant from the
State of New Jersey Commission on Science and Technology on April 29, 1999. The
funds are being used to develop its Solar Off-Grid Drip Irrigation System in
conjunction with Rutgers University of New Jersey, which should contribute
significantly to the Company's agricultural product offerings and revenues.
GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased by
$6,255 to $341,396 for the nine month period ended September 30, 1999, down from
$347,651 in 1998. General and administrative expenses increased $13,590 for the
three-month period ending September 30, 1999. The overall 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 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 approximately $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 $400,000 net proceeds from the sale.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents increased by $89,897 to $94,059 from
December 31, 1998 to September 30, 1999. The net cash used in operating
activities during this nine-month period in 1999 was $768,696 compared to
$967,007 in 1998. The primary reasons for the consumption of cash in 1999 were
to fund on-going operations for the nine months ended September 30, 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 expects current contract negotiations to
result in expanded capital resources to meet this criterion. 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 nine months that ended
September 30, 1999 was $862,482 compared to $912,166 in 1998.
SALE OF RESTRICTED SECURITIES DURING THE THIRD QUARTER 1999
The Company issued 613,648 restricted common stock shares for cash proceeds of
$208,323. For the three quarters ending September 30, the Company has issued
2,512,377 shares for cash proceeds of $525,323.
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 has assessed its computer software and database with respect to its
functionality beyond the turn of the century. The extent and cost of the
modifications are nominal, and 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 or
that any failure or delay by the Company or any third parties which interacts
with the Company in achieving year 2000 compliance will not have an adverse
effect on its operations.
11
<PAGE>
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: November 4, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 94,059
<SECURITIES> 6,250
<RECEIVABLES> 37,495
<ALLOWANCES> 0
<INVENTORY> 79,964
<CURRENT-ASSETS> 245,209
<PP&E> 108,740
<DEPRECIATION> 70,178
<TOTAL-ASSETS> 292,156
<CURRENT-LIABILITIES> 2,117,656
<BONDS> 200,000
0
0
<COMMON> 26,586
<OTHER-SE> (2,052,086)
<TOTAL-LIABILITY-AND-EQUITY> 292,156
<SALES> 142,503
<TOTAL-REVENUES> 354,975
<CGS> 220,096
<TOTAL-COSTS> 831,867
<OTHER-EXPENSES> (43,850)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101,052
<INCOME-PRETAX> (754,188)
<INCOME-TAX> 0
<INCOME-CONTINUING> (754,188)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (754,188)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
