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 JUNE 30, 2000
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 August 14, 2000, there were 32,178,770 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.
--------
Item 1. Condensed Consolidated Financial Statements 3
Condensed Consolidated Balance Sheets
as of June 30, 2000 (Unaudited) and
December 31, 1999 (Audited)
Condensed Consolidated Statements of 4
Operations (Unaudited) for the three months
ended June 30, 2000 and 1999 and for the six
months ended June 30, 2000 and 1999.
Condensed Consolidated Statements of Cash 5
Flows (Unaudited) for the six months ended
June 30, 2000 and 1999
Condensed Consolidated Statements of Stockholders' 6
Equity (Unaudited) for the period January 1, 2000
through June 30, 2000.
Notes to the Condensed Consolidated 7
Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of 8-10
Financial Condition and Results of Operations
Part II. OTHER INFORMATION
Item 1 Signatures 11
Item 2 Exhibit 27 Financial Data Schedule
2
<PAGE>
WORLDWATER CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
Assets 06/30/2000 12/31/1999
---------- ----------
<S> <C> <C>
Current Assets:
Cash $ 495,942 $ 195,300
Accounts receivable, net of allowance for
doubtful accounts of $-0- in 2000 and 1999 35,350 162,061
Inventory 69,155 81,537
Prepaid expenses 4,531 500
------------ -----------
Total Current Assets 604,978 439,398
------------ -----------
Equipment and leasehold improvements, Net 117,000 37,787
Deposits 8,384 8,384
Investment in Subsidiary 52,500 --
------------ -----------
Total Assets $ 782,862 $ 485,569
============ ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable $ 44,931 $ 126,181
Notes payable, related parties 37,295 112,145
Current maturities of long-term debt 165,500 757,736
Current maturities of long-term debt, related parties -- 20,000
Accounts payable 138,737 362,966
Accrued interest 141,005 407,541
Accrued salaries 139,800 191,500
Other accrued expenses 35,941 95,750
------------ -----------
Total Current Liabilities 703,209 2,073,819
------------ -----------
Long-term debt -- 200,000
------------ -----------
Total Liabilities 703,209 2,273,819
------------ -----------
Stockholders' Equity:
Preferred Stock 7% Convertible,$.01 par value; authorized
10,000,000; issued and outstanding 1,111,055 at June 30, 2000 999,950 --
Common stock, $.001 par value; authorized 50,000,000;
issued and outstanding 31,923,745 and 27,125,854
shares at June 30, 2000 and December 31, 1999, respectively 31,924 27,126
Additional paid-in capital 9,370,601 7,628,467
Accumulated deficit (10,322,822) (9,443,843)
------------ -----------
Total Stockholders' Equity 79,653 (1,788,250)
------------ -----------
Total Liabilities and Stockholders' Equity $ 782,862 $ 485,569
============ ===========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
3
<PAGE>
WORLDWATER CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended June 30, 2000 and 1999,
and for the six months ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
3 Month 6 Month
6/30/00 6/30/99 6/30/00 6/30/99
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue:
Equipment sales $ -- $ 70,511 $ 66,559 $ 118,251
Service 40,283 153,819 116,843 153,819
----------- ----------- ----------- -----------
Total Revenue 40,283 224,330 183,402 272,070
----------- ----------- ----------- -----------
Cost of Goods Sold 26,298 95,976 108,505 163,625
----------- ----------- ----------- -----------
Gross Profit 13,985 128,354 74,896 108,445
----------- ----------- ----------- -----------
Operating Expenses:
Research and development expense 81,407 77,293 184,669 114,748
Marketing, general and administrative expenses 561,995 242,793 801,632 414,047
----------- ----------- ----------- -----------
Total Expenses 643,402 320,086 986,301 528,795
----------- ----------- ----------- -----------
Loss from Operations (629,417) (191,732) (911,405) (420,350)
Other Expense (Income)
Interest expense 38,972 29,865 58,135 59,204
Interest income (11,696) -- (12,329) --
Other (54,806) (1,716) (78,233) (3,216)
----------- ----------- ----------- -----------
Total Other Expense (Income), Net (27,530) 28,149 (32,426) 55,988
----------- ----------- ----------- -----------
Net Loss $ (601,887) $ (219,881) $ (878,979) $ (476,338)
=========== =========== =========== ===========
Net Loss per Common Share: $ (0.02) $ (0.01) $ (0.03) $ (0.02)
=========== =========== =========== ===========
Shares used in Per Share Calculation:
Average 31,459,584 21,310,997 29,516,762 22,041,826
=========== =========== =========== ===========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
4
<PAGE>
WORLDWATER CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (878,979) $ (476,338)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 9,000 9,094
Changes in assets and liabilities:
Accounts receivable 126,711 (25,898)
Inventory (12,382) 42,369
Prepaid expenses 4,031 5,335
Accounts payable and accrued expenses (284,038) (7,418)
Accrued interest (266,536) 53,143
Accrued salaries (51,700) 3,300
Advance to Affiliate -- (25,000)
Deferred Grant Research -- 58,653
----------- -----------
Net Cash Used in Operating Activities (1,353,893) (362,760)
----------- -----------
Cash Flows from Investing Activities:
(Increase) in Other Assets (52,500) --
Purchase of equipment and leasehold improvements (70,213) --
----------- -----------
Net Cash Used in Investing Activities (122,713) --
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable -- 138,350
Payments on notes payable (193,150) (124,500)
Proceeds from exercise of warrants 456,617 50,000
Proceeds from issuance of stock 1,513,781 317,000
----------- -----------
Net Cash Provided by Financing Activities 1,777,248 380,850
----------- -----------
Net Increase (Decrease) in Cash 300,642 18,090
Cash at Beginning of Year 195,300 4,162
----------- -----------
Cash at End of Second Quarter $ 495,942 $ 22,252
=========== ===========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
5
<PAGE>
WORLDWATER CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
For the Period Ended June 30, 2000
<TABLE>
<CAPTION>
Additional
Paid-In
Common Stock Preferred Stock Capital
Shares Par Value Shares Par Value (Common)
------ --------- ------ --------- --------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999 27,125,854 27,126 -- -- 7,628,467
Issuance of preferred stock
for cash 1,111,055 11,111 --
Issuance of common stock
for cash 950,000 950 -- -- 189,050
Issuance of common stock
for warrants exercised 1,008,667 1,009 -- -- 455,608
Debt and accrued interest
converted to common stock 2,551,385 2,551 -- -- 1,055,117
Issuance of common stock
for services 16,000 16 -- -- 14,984
Issuance of common stock
for options 271,839 272 -- -- 27,375
Net loss -- -- -- -- --
---------- ------------ --------- ------- ----------
Balance, March 31, 2000 31,923,745 $ 31,924 1,111,055 $11,111 $9,370,601
========== ============ ========= ======= ==========
<CAPTION>
Additional
Paid-In
Capital Accumulated
(Preferred) Deficit Total
----------- ------- -----
<S> <C> <C> <C>
Balance, December 31, 1999
Issuance of preferred stock -- (9,443,843) (1,788,250)
for cash
Issuance of common stock 988,839 999,950
for cash
Issuance of common stock -- -- 190,000
for warrants exercised
Debt and accrued interest -- -- 456,617
converted to common stock
Issuance of common stock -- -- 1,057,668
for services
Issuance of common stock -- -- 15,000
for options
Net loss -- 27,647
-- (878,979) (878,979)
Balance, March 31, 2000 -------- ------------ -----------
$988,839 $(10,322,822) $ 79,653
======== ============ ===========
</TABLE>
The Notes to Consolidated Financial Statements are an integral part of
these statements.
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 10-K dated
April 15, 2000, all previously filed with the Securities and Exchange
Commission.
2. NET LOSS PER SHARE
Net loss per share for the three months ended June 30, 2000 and 1999 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 six months ended June 30, 2000, notes payable and accrued
interest totaling $1,057,668 were converted into equity.
4. REVENUE RECOGNITION
Revenue from equipment sales is recognized when the product is shipped and
title has passed. Revenue from time and material service contracts is
recognized as the services are provided. During the six months ended June
30, 2000, the Company has recognized $111,440 of a feasibility study
conducted in the Philippines and funded by the U.S. Trade and Development
Agency (USTDA). The total amount of the study is $235,000 of which
$123,560 was realized in the fourth quarter of fiscal year 1999.
7
<PAGE>
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 water and power solutions company providing new and
powerful solar technology to developing nations throughout the world. The
Company fills a major infrastructural void by acting as contractor, implementer,
key equipment supplier and water/power manager for rural communities, delivering
clean water from deep wells and rivers for drinking and irrigation with its
proprietary solar pumps, and providing light and power with its solar electrical
systems. WorldWater is already operating its solar pumps and electrical systems
in Asia, Africa, and South America.
The mission of the Company is to be the leading provider of solar powered water
supply and electricity for emerging nations throughout the world.
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. In June 2000, the Company
received an order for $1.2 million from the Philippines to supply water to
Municipalities on the Island Province of Cebu using the Company's proprietary
solar water pumping systems. This initial order is part of an over-all program
of the Cebu Rural Water and Sanitation Development Project. Shipments for the
initial order are projected to begin in the third quarter of this year. The
Company has also signed two contracts in Pakistan with the Cholistan Development
Authority and Punjab Border Police which are to begin shipments in the third
quarter of this year.
8
<PAGE>
RESULTS OF OPERATIONS
REVENUE. For the six months ended June 30, 2000 revenue decreased to $183,402,
from $272,070 in the same period of 1999 and decreased to $40,283 from $224,330
for the three months ended June 30, 2000 and 1999, respectively. The primary
reason for the decrease in revenue is the grant received during the same period
in 1999 from the New Jersey Commission on Science and Technology in the amount
of $249,967.
GROSS PROFIT. Gross profit of $74,896 was recognized for the six months ended
June 30, 2000, down from a profit of $108,445 for the same period in 1999. Gross
profit for the three months ended June 30, 2000 was $13,985 as compared to
$128,354 for 1999. Cost of sales for the six months was $108,505, less than
$163,625 from the previous period. Cost of sales for the three month period was
$26,298 as compared to $95,976 for the same period in 1999. The operating loss
was $911,405 for the six months in 2000 compared to an operating loss of
$420,350 for the same period in 1999. For the three months ended June 30, 2000
the operating loss was $629,417 as compared to $191,732 in 1999.
MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and administrative
expenses increased by $387,585 in the six month period ending June 30, 2000 to
$801,632, up from $414,047 in the same period of 1999. Marketing, general and
administrative expenses increased $319,202 during the three month period to
$561,995 as compared to $242,793 during the three month period in 1999. The
increase is primarily due to commissions paid for the $999,950 Preferred Stock
Placement, startup of the office in the Philippines and travel expenses incurred
while negotiating overseas business primarily in the Philippines, Sri Lanka and
Pakistan. The Company is maintaining minimal staffing levels. Assuming that
contract negotiations now underway are successfully concluded, it will be
necessary to recruit additional staff to implement the contracts.
RESEARCH AND DEVELOPMENT. Research and development expenses increased $69,921
for the six month period to $184,669, up from $114,748 in the same period of
1999. Research and development expenses increased slightly for the three month
period by $4,114 to $81,407 as compared to $77,293 in 1999. The Company has
several water and solar products in various stages of research and development.
The Company continues to develop its Solar Off-Grid Drip Irrigation System in
conjunction with Rutgers University of New Jersey and has expanded this research
to include "brackish" water for irrigation. These developments should contribute
significantly to the Company's agricultural product offerings and revenues.
INCOME TAXES. The Company recognized no income tax expense for 2000, 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, 2000 of approximately $7.7
million. During 1999 the Company's application to the New Jersey Division of
Taxation and the New Jersey Economic Development Authority to sell its State of
New Jersey Corporate Operating Losses was approved. The new law was enacted
January 1, 1999 and allows emerging technology companies involved in research
and development the opportunity to sell their state loss carry-forwards and
research and development credits to profitable companies in the state for not
less than 75% of their net tax value. The Company was able to sell its Net
Operating Losses for $475,285 in 1999 and has applied to sell its loss
carry-forwards again in fiscal year 2000.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents increased by $300,642 to $495,942 from
December 31, 1999 to June 30, 2000. The net cash used in operating activities
during this six month period in 2000 was $1,353,893 compared to $362,760 in
1999. The primary reasons for the consumption of cash in 2000 were to fund
on-going operations and to pay down debt and accrued interest.
The Company's auditors have alleviated their going concern in their December 31,
1999 Annual Audit Report. The Company has taken action to improve their Balance
Sheet which has resulted in a positive net worth as of March 31 and June 30,
2000. The Company has contacted debt holders regarding conversion of their debt
into shares of common stock which resulted in approximately $1,057,668 of debt
and accrued interest converted into equity. The Company has also raised $999,950
through a private sale of preferred stock and the Company continues to encourage
its warrant holders to exercise their warrants which provided an additional
$456,617. Cash provided by financing activities in the six months that ended
June 30, 2000 was $1,777,248 compared to $380,850 in 1999.
SALE OF RESTRICTED SECURITIES DURING THE SECOND QUARTER 2000
The Company issued 710,997 restricted common stock shares for cash proceeds and
debt conversions totaling $358,049. For the two quarters ending June 30, 2000,
the Company has issued 2,994,991 restricted shares and for cash proceeds and
debt conversions totaling $768,277.
THE YEAR 2000
The Company did not experience any problems relating to Year 2000 compliance.
10
<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: August 14, 2000 WORLDWATER CORP.
By: /s/ Quentin T. Kelly By: /s/ James S. Farrin
------------------------- ---------------------------
Quentin T. Kelly James S. Farrin
Chairman & CEO President/COO
