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, 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 November 10, 2000, there were 32,310,811 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 September 30, 2000 (Unaudited) and
December 31, 1999 (Audited)
Condensed Consolidated Statements of 4
Operations (Unaudited) for the three months
ended September 30, 2000 and 1999 and for the nine
months ended September 30, 2000 and 1999.
Condensed Consolidated Statements of Cash 5
Flows (Unaudited) for the nine months ended
September 30, 2000 and 1999
Condensed Consolidated Statements of Stockholders' 6
Equity (Unaudited) for the period January 1,
2000 through September 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
September 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
Assets 09/30/2000 12/31/1999
------ ---------- ----------
<S> <C> <C>
Current Assets:
Cash $ 382,105 $ 195,300
Accounts receivable, net of allowance for
doubtful accounts of $-0- in 2000 and 1999 60,432 162,061
Inventory 139,236 81,537
Prepaid expenses 20,627 500
------------ ------------
Total Current Assets 602,400 439,398
------------ ------------
Equipment and leasehold improvements, Net 154,546 37,787
Deposits 8,492 8,384
------------ ------------
Total Assets $ 765,438 $ 485,569
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable $ 53,421 $ 126,181
Notes payable, related parties 27,295 112,145
Current maturities of long-term debt 155,500 757,736
Current maturities of long-term debt, related parties -- 20,000
Accounts payable 176,707 362,966
Accrued interest 95,949 407,541
Accrued salaries 118,950 191,500
Other accrued expenses 51,501 95,750
------------ ------------
Total Current Liabilities 679,323 2,073,819
------------ ------------
Long-term debt -- 200,000
------------ ------------
Total Liabilities 679,323 2,273,819
------------ ------------
Stockholders' Equity:
Preferred Stock 7% Convertible,$.01 par value; authorized
10,000,000; issued and outstanding at September 30, 2000:
Series A 1,111,055 shares 11,111 --
Series B 611,111 shares 6,111 --
Common stock, $.001 par value; authorized 50,000,000;
issued and outstanding 32,219,311 and 27,125,854
shares at September 30, 2000 and December 31, 1999, respectively 32,219 27,126
Additional paid-in capital 10,969,365 7,628,467
Accumulated deficit (10,932,691) (9,443,843)
------------ ------------
Total Stockholders' Equity 86,115 (1,788,250)
------------ ------------
Total Liabilities and Stockholders' Equity $ 765,438 $ 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 September 30, 2000 and 1999,
and for the nine months ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
3 Month 9 Month
9/30/2000 9/30/99 9/30/00 9/30/99
--------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue:
Equipment sales $ 15,165 $ 24,252 $ 81,724 $ 142,503
Service 3,663 58,653 120,506 212,472
------------ ------------ ------------ ------------
Total Revenue 18,828 82,905 202,230 354,975
------------ ------------ ------------ ------------
Cost of Goods Sold 35,781 56,471 144,286 220,096
------------ ------------ ------------ ------------
Gross Profit (16,953) 26,434 57,944 134,879
------------ ------------ ------------ ------------
Operating Expenses:
Research and development expense 103,940 69,656 288,609 184,404
Marketing, general and administrative expenses 471,081 233,416 1,272,713 647,462
------------ ------------ ------------ ------------
Total Expenses 575,021 303,072 1,561,322 831,866
------------ ------------ ------------ ------------
Loss from Operations (591,974) (276,638) (1,503,378) (696,987)
Other Expense (Income)
Interest expense 5,212 41,848 45,847 101,051
Interest income (3,598) -- (15,927) --
Other 16,283 (40,634) (44,450) (43,850)
------------ ------------ ------------ ------------
Total Other Expense (Income), Net 17,897 1,214 (14,530) 57,201
------------ ------------ ------------ ------------
Net Loss $ (609,871) $ (277,852) $ (1,488,848) $ (754,188)
============ ============ ============ ============
Net Loss per Common Share: $ (0.02) $ (0.01) $ (0.05) $ (0.03)
============ ============ ============ ============
Shares used in Per Share Calculation:
Average 32,167,729 21,966,720 30,400,418 22,492,193
============ ============ ============ ============
</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 nine months ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $(1,488,848) $ (754,188)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 13,500 13,594
Changes in assets and liabilities:
Accounts receivable 101,629 (37,495)
Inventory 57,699 17,505
Prepaid expenses 20,019 2,894
Accounts payable and accrued expenses (230,508) (91,796)
Accrued interest (203,271) 80,995
Accrued salaries (72,550) (12,700)
Advance to Affiliate -- (25,000)
Deferred Grant Research -- 37,495
----------- -----------
Net Cash Used in Operating Activities (1,802,330) (768,696)
----------- -----------
Cash Flows from Investing Activities:
Purchase of equipment and leasehold improvements (117,665) (3,889)
----------- -----------
Net Cash Used in Investing Activities (117,665) (3,889)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable -- 487,564
Payments on notes payable (157,610) (200,405)
Proceeds from exercise of warrants 486,617 50,000
Proceeds from issuance of stock 1,777,793 525,323
----------- -----------
Net Cash Provided by Financing Activities 2,106,800 862,482
----------- -----------
Net Increase (Decrease) in Cash 186,805 89,897
Cash at Beginning of Year 195,300 4,162
----------- -----------
Cash at End of Third Quarter $ 382,105 $ 94,059
=========== ===========
</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
For the Period Ended September 30, 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 - Series A 1,111,055 11,111 -- 988,839 -- 999,950
Issuance of preferred stock
for cash - Series B 611,111 6,111 -- 543,889 -- 550,000
Issuance of common stock
for cash 975,000 975 -- -- 194,025 -- -- 195,000
Issuance of common stock
for warrants exercised 1,074,667 1,075 -- -- 485,542 -- -- 486,617
Debt and accrued interest
converted to common stock 2,691,385 2,691 -- -- 1,078,624 -- -- 1,081,315
Issuance of common stock
for services 28,340 28 -- -- 17,440 -- -- 17,468
Issuance of common stock
for options 304,065 304 -- -- 32,539 -- -- 32,843
Issuance of common stock
for WorldWater Inc. shares 20,000 20 -- -- -- -- -- 20
Net loss -- -- -- -- -- -- (1,488,848) (1,488,848)
---------- ------- ---------- ------- ---------- ---------- ------------ -----------
Balance, September 30, 2000 32,219,311 $32,219 1,722,166 $17,222 $9,436,637 $1,532,728 $(10,932,691) $ 86,115
========== ======= ========== ======= ========== ========== ============ ===========
</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-KSB
dated April 15, 2000, 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, 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 nine months ended September 30, 2000, notes payable and accrued
interest totaling $1,081,315 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 nine months ended
September 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 fourth quarter of this year. The
Company has also signed two contracts in Pakistan with the Cholistan Development
Authority and Punjab Border Police which began shipments in the fourth quarter
of this year.
8
<PAGE>
RESULTS OF OPERATIONS
REVENUE. For the nine months ended September 30, 2000 revenue decreased to
$202,230, from $354,975 in the same period of 1999 and decreased to $18,828 from
$82,905 for the three months ended September 30, 2000 and 1999, respectively.
The primary reason for the decrease in revenue is the grant received and
realized in 1999 from the New Jersey Commission on Science and Technology in the
amount of $249,967.
GROSS PROFIT. Gross profit of $57,944 was recognized for the nine months ended
September 30, 2000, down from a profit of $134,879 for the same period in 1999.
Gross profit for the three months ended September 30, 2000 was $(16,953) as
compared to $26,434 for 1999. Cost of sales for the six months was $144,286,
less than $220,096 from the previous period. Cost of sales for the three month
period was $35,781 as compared to $56,471 for the same period in 1999. The
operating loss was $1,503,378 for the nine months in 2000 compared to an
operating loss of $696,987 for the same period in 1999. For the three months
ended September 30, 2000 the operating loss was $591,974 as compared to $276,638
in 1999.
MARKETING, GENERAL AND ADMINISTRATIVE. Marketing, general and administrative
expenses increased by $625,251 in the nine month period ending September 30,
2000 to $1,272,713, up from $647,462 in the same period of 1999. Marketing,
general and administrative expenses increased $237,665 during the three month
period to $471,081 as compared to $233,416 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 $104,205
for the nine month period to $288,609, up from $184,404 in the same period of
1999. Research and development expenses increased for the three month period by
$34,284 to $103,940 as compared to $69,656 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 been approved 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 $186,805 to $382,105 from
December 31, 1999 to September 30, 2000. The net cash used in operating
activities during this nine month period in 2000 was $1,802,330 compared to
$768,696 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 continues
through September 30, 2000. The Company has contacted debt holders regarding
conversion of their debt into shares of common stock which resulted in
approximately $1,081,315 of debt and accrued interest converted into equity. The
Company has also raised $999,950 through a private sale of Series A preferred
stock and $550,000 of Series B preferred stock. The Company continues to
encourage its warrant holders to exercise their warrants which has provided an
additional $486,617. Cash provided by financing activities in the nine months
that ended September 30, 2000 was $2,106,800 compared to $862,482 in 1999.
SALE OF RESTRICTED SECURITIES DURING THE THIRD QUARTER 2000
The Company issued 231,000 restricted common stock shares for cash proceeds and
debt conversions totaling $140,389. For the three quarters ending September 30,
2000, the Company has issued 3,666,385 restricted shares for cash proceeds and
debt conversions totaling $1,262,203.
THE YEAR 2000
The Company has 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: November 10, 2000 WORLDWATER CORP.
By: /s/ Quentin T. Kelly By: /s/ James S. Farrin
-------------------- -------------------
Quentin T. Kelly James S. Farrin
Chairman & CEO President/COO
