UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 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 _________
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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 April 24, 2000, there were 31,058,500 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 March 31, 2000 (Unaudited) and
December 31, 1999 (Audited)
Condensed Consolidated Statements of 4
Operations (Unaudited) for the three months
ended March 31, 2000 and 1999
Condensed Consolidated Statements of Cash 5
Flows (Unaudited) for the three months ended
March 31, 2000 and 1999
Condensed Consolidated Statements of Stockholders' Equity 6
(Unaudited) for the period January 1,2000 through March 31,
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
March 31, 2000 and December 31, 1999
<TABLE>
<CAPTION>
Assets 03/31/2000 12/31/1999
----------- -----------
<S> <C> <C>
Current Assets:
Cash $ 1,092,566 $ 195,300
Accounts receivable, net of allowance for
doubtful accounts of $-0- in 2000 and 1999 65,417 162,061
Inventory 59,617 81,537
Prepaid expenses 1,000 500
----------- -----------
Total Current Assets 1,218,600 439,398
----------- -----------
Equipment and leasehold improvements, Net 57,494 37,787
Deposits 8,384 8,384
Investment in Subsidiary 2,500 --
----------- -----------
Total Assets $ 1,286,978 $ 485,569
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable $ 49,456 $ 126,181
Notes payable, related parties 70,295 112,145
Current maturities of long-term debt 351,164 757,736
Current maturities of long-term debt, related parties -- 20,000
Accounts payable 204,999 362,966
Accrued interest 193,179 407,541
Accrued salaries 191,500 191,500
Other accrued expenses 93,044 95,750
----------- -----------
Total Current Liabilities 1,153,637 2,073,819
----------- -----------
Long-term debt -- 200,000
----------- -----------
Total Liabilities 1,153,637 2,273,819
----------- -----------
Stockholders' Equity:
Preferred Stock 7% Convertible,$.01 par value; authorized
10,000,000; issued and outstanding 1,111,055 at March 31, 2000 999,950 --
Common stock, $.001 par value; authorized 50,000,000;
issued and outstanding 31,033,500 and 27,125,854
shares at March 31, 2000 and December 31, 1999, respectively 31,034 27,126
Additional paid-in capital 8,823,290 7,628,467
Accumulated deficit (9,720,933) (9,443,843)
----------- -----------
Total Stockholders' Equity 133,341 (1,788,250)
----------- -----------
Total Liabilities and Stockholders' Equity $ 1,286,978 $ 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 March 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenue:
Equipment sales $ 66,559 $ 47,741
Service 76,560 --
------------ ------------
Total Revenue 143,119 47,741
------------ ------------
Cost of Goods Sold 82,207 74,551
------------ ------------
Gross Profit 60,912 (26,810)
------------ ------------
Operating Expenses:
Research and development expense 103,262 35,282
Marketing, general and administrative expenses 239,637 147,502
------------ ------------
Total Expenses 342,899 182,784
------------ ------------
Loss from Operations (281,987) (209,594)
Other Expense (Income)
Interest expense 19,163 29,633
Interest income (633) --
Other (23,427) (1,500)
------------ ------------
Total Other Expense (Income), Net (4,897) 28,133
------------ ------------
Net Loss $ (277,090) $ (237,727)
============ ============
Net Loss per Common Share: $ (0.01) $ (0.01)
============ ============
Shares used in Per Share Calculation:
Average 27,469,014 21,340,721
============ ============
</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 three months ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (277,090) $ (237,727)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 4,500 4,594
Changes in assets and liabilities:
Accounts receivable 96,644 (10,682)
Inventory 21,920 18,673
Prepaid expenses (500) 5,335
Accounts payable and accrued expenses (160,673) (89,996)
Accrued interest (214,362) --
Accrued salaries -- (700)
----------- -----------
Net Cash Used in Operating Activities (529,561) (310,503)
----------- -----------
Cash Flows from Investing Activities:
(Increase) in Other Assets (2,500) (534)
Purchase of equipment and leasehold improvements (19,707) --
----------- -----------
Net Cash Used in Investing Activities (19,707) (534)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable -- 53,500
Payments on notes payable (100,575) (34,065)
Proceeds from issuance of stock 1,547,109 307,000
----------- -----------
Net Cash Provided by Financing Activities 1,446,534 326,435
----------- -----------
Net Increase (Decrease) in Cash 897,266 15,398
Cash at Beginning of Year 195,300 4,162
----------- -----------
Cash at End of Year $ 1,092,566 $ 19,560
=========== ===========
</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 March 31, 2000
<TABLE>
<CAPTION>
Additional Additional
Paid-In Paid-In
Common Stock Preferred Stock Capital Capital Accumulated
Shares Par Value Shares Par Value (Common) (Preferred) Deficit Total
------ --------- ------ --------- -------- ----------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 27,125,854 27,126 - - 7,628,467 - (9,443,843) (1,788,250)
Issuance of preferred stock
for cash 1,111,055 11,111 - 988,839 999,950
Issuance of common stock
for cash 950,000 950 - - 189,050 - - 190,000
Issuance of common stock
for warrants exercised 305,000 305 - - 101,195 - - 101,500
Debt and accrued interest
converted to common stock 2,364,807 2,365 - - 862,219 - - 864,584
Issuance of common stock
for services 16,000 16 - - 14,984 - - 15,000
Issuance of common stock
for options 271,839 272 - - 27,375 - 27,647
Net loss - - - - - - (277,090) (277,090)
---------- -------- --------- -------- ----------- --------- ------------ ---------
Balance, March 31, 2000 31,033,500 $ 31,034 1,111,055 $ 11,111 $ 8,823,290 $ 988,839 $ (9,720,933) $ 133,341
========== ======== ========= ======== =========== ========= ============ =========
</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 March 31, 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 three months ended March 31, 2000, notes payable and accrued
interest totaling $903,000 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 three months ended
March 31, 2000, the Company has recognized $76,560 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, the
remaining $34,880 will be realized in the second quarter of fiscal year
2000.
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 designs, develops and markets proprietary technology relating to
solar water power, including solar power products and international water
management consulting. The Company's primary products are cost effective power
systems driven entirely by solar energy, such as proprietary water pumping and
solar electric systems. The Company's primary customers are developing countries
that require non-traditional means of fulfilling their energy and water needs.
The mission of the Company is to maintain its leadership as principal provider
of renewable energy and remote water supply 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. The Company currently has
contract negotiations underway in seven emerging countries which, if
successfully concluded, would result in a substantial increase in revenues 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.
8
<PAGE>
RESULTS OF OPERATIONS
REVENUE. For the three months ended March 31, 2000 revenue increased to
$143,119, up from $47,741 in the same period of 1999. The primary reason for
increased revenue is due to continued sales of systems in Tanzania and the
service fees received from the U.S. Trade and Development Agency for the
feasibility study conducted in the Philippines.
GROSS PROFIT. Gross profit of $60,912 was recognized for the three months ended
March 31, 2000, up from a loss of $26,810 for the same period in 1999. Cost of
sales for the three months was $82,207, slightly up from $74,551 from the
previous period. The operating loss was $281,987 for the three months in 2000
compared to an operating loss of $209,594 for the same period in 1999.
SELLING, GENERAL AND ADMINISTRATIVE. Sales and marketing expenses increased by
$92,135 in the three month period ending March 31, 2000 to $239,637, up from
$147,502 in the same period of 1999. The increase is primarily due to travel
expenses incurred while negotiating overseas business. The Company is
maintaining its current 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 $67,980
for the three-month period to $103,262, up from $35,282 in the same period of
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 plans to apply 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 $897,266 to $1,092,566 from
December 31, 1999 to March 31, 2000. The net cash used in operating activities
during this three-month period in 2000 was $529,561 compared to $310,503 in
1999. The primary reasons for the consumption of cash in the first quarter of
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, 2000. The
Company has contacted debt holders regarding conversion of their debt into
shares of common stock which resulted in approximately $903,000 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
$100,000. Cash provided by financing activities in the three months that ended
March 31, 2000 was $1,446,534 compared to $326,435 in 1999.
SALE OF RESTRICTED SECURITIES DURING THE FIRST QUARTER 2000
The Company issued 3,907,646 restricted common stock shares for cash proceeds
and debt conversions totaling $1,221,008.
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: April 26, 2000 WORLDWATER CORP.
By: /s/ Quentin T. Kelly By: /s/ John A. Pell
-------------------- ----------------
Quentin T. Kelly John A. Pell
Chairman & CEO President/COO
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> DEC-31-2000
<CASH> 1,092,566
<SECURITIES> 0
<RECEIVABLES> 65,417
<ALLOWANCES> 0
<INVENTORY> 59,617
<CURRENT-ASSETS> 1,000
<PP&E> 128,044
<DEPRECIATION> (70,550)
<TOTAL-ASSETS> 1,286,978
<CURRENT-LIABILITIES> 1,153,637
<BONDS> 0
0
999,950
<COMMON> 31,034
<OTHER-SE> (897,643)
<TOTAL-LIABILITY-AND-EQUITY> 1,286,978
<SALES> 66,559
<TOTAL-REVENUES> 143,119
<CGS> 82,207
<TOTAL-COSTS> 342,899
<OTHER-EXPENSES> 23,427
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,530
<INCOME-PRETAX> (277,090)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (277,090)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
