FORM 10-Q/a1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-17757
W-W CAPITAL CORPORATION
(exact name of Registrant as specified in its charter)
Nevada 93-0967457
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
11990 Grant Street, Suite 400, Northglenn, CO 80233
(Address of principal executive offices, including zip code)
(303) 452-5000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, address and former fiscal year, if changed since last
report)
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 the filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes No NOT APPLICABLE x
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Title of Each Class Number of Shares
Outstanding
Common stock at November 7, 1995
$0.01 Par Value 5,530,661
W-W CAPITAL CORPORATION
Index
PART I FINANCIAL INFORMATION PAGE NO.
Item 1 Balance Sheets
September 30, 1995 and June 30, 1995 1
Statements of Operations
Three Months Ended
September 30, 1995 and 1994 3
Statements of Cash Flows
Three Months Ended
September 30, 1995 and 1994 4
Notes to Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
PART II OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS 13
Item 2 CHANGES IN SECURITIES 13
Item 3 DEFAULTS UPON SENIOR SECURITIES 13
Item 4 SUBMISSION OF MATTERS TO VOTE OF
SECURITY HOLDERS 13
Item 5 OTHER INFORMATION 13
Item 6 EXHIBITS AND REPORT ON FORM 8-K 13
SIGNATURES 14
Part 1-FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1 - FINANCIAL STATEMENTS
W-W CAPITAL CORPORATION
Balance Sheet
September 30, June 30,
1995 1995
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash $ 5,522 $ 124,458
Trade accounts receivable 2,532,314 1,913,949
Less allowance for doubtful ( 197,008) (197,008)
accounts
Net accounts receivable 2,335,306 1,716,941
Accounts receivable, other 26,150 18,574
Accounts receivable, employee 2,768 6,946
Accounts receivable, related 101,415 100,114
party
Inventories:
Raw materials 417,508 417,094
Work-in-process 171,616 206,817
Finished goods 2,647,419 2,827,991
Total inventories 3,236,543 3,451,902
Deferred taxes 118,348 118,350
Prepaid expenses 33,364 72,961
Current portion of notes 43,210 48,310
receivable
Total current assets 5,902,626 5,658,556
Property and equipment, at cost 4,347,631 4,327,267
Less accumulated depreciation
and amortization ( 1,626,853 ) ( 1,525,737 )
Net property and equipment 2,720,778 2,801,530
Other Assets:
Long-term notes receivable from
stockholders, net of current 22,378 34,869
portion
Long-term notes receivable from 23,374 23,027
parties, other affiliated
entities and related
net of current portion
Real Estate held for resale 374,280 373,960
Accounts and notes receivable, 537,951 539,151
other
Covenant not to compete, net of
accumulated amortization 28,442 35,268
Other assets 88,418 81,156
Total other assets 1,074,843 1,087,431
TOTAL ASSETS $ 9,698,247 $ 9,547,517
</TABLE>
<TABLE>
<CAPTION>
Continued on following page<PAGE>
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
Balance Sheet, Continued
September 30, June 30,
1995 1995
(Unaudited)
<S> <C> <C>
Liabilities
Current Liabilities:
Accounts Payable $ 2,321,505 $ 2,143,658
Revolving credit note payable 1,811,613 1,662,613
to Bank
Accrued property taxes 42,650 31,892
Accrued payroll and related taxes 147,787 128,317
Accrued interest payable 25,903 30,656
Accrued commissions 166,936 165,327
Current portion of long-term 341,213 354,710
payables
Current portion of notes payable to
related parties 35,125 35,125
Other current liabilities 24,961 22,450
Total current liabilities 4,917,693 4,574,748
Other Liabilities:
Long-term note payable to financial
institutions net of current 1,625,279 1,692,624
portion
Deferred taxes 79,246 102,585
Other Long-term liabilities 28,646 35,521
Total other Liabilities 1,733,171 1,830,730
TOTAL LIABILITIES 6,650,864 6,405,478
Stockholders' Equity
Common stock: $.01 par value
15,000,000 shares authorized
5,530,661 shares issued and
outstanding at September 30,
1995, and June 30, 1995,
respectively 55,306 55,306
Capital in excess of par value 3,304,099 3,304,099
Accumulated Deficit ( 293,116 ) ( 198,460 )
3,066,289 3,160,945
Less 20,264 shares of treasury
stock at cost ( 18,906 ) ( 18,906 )
TOTAL STOCKHOLDERS' EQUITY 3,047,383 3,142,039
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 9,698,247 $ 9,547,517
</TABLE>
<TABLE>
<CAPTION>
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
Statements of Operations
(Unaudited)
Three Months Ended
September 30,
____________________________________________
1995 1994
<S> <C> <C>
Net Sales $ 4,067,632 $ 4,320,411
Cost of goods sold 3,372,234 3,491,497
Gross profit 695,398 828,914
Operating expenses:
Selling expenses 353,561 331,807
General and administrative 401,224 369,867
expenses
Total operating expenses 754,785 701,674
Operating (loss) earnings ( 59,387 ) 127,240
Other income (expense):
Interest income 35,769 17,517
Interest expense ( 101,819 ) ( 81,684 )
Gain (Loss) on sale of assets - 3,000
Other income (expense), net 7,442 20,558
Total other income (expense) ( 58,608 ) ( 40,609 )
(Loss) Earnings before income taxes ( 117,995 ) 86,631
Provision for deferred income taxes ( 23,339 ) 10,408
Net (loss) earnings $ ( 94,656 ) $ 76,223
(Loss) Earnings per common share: $ ( .02 ) $ .01
Weighted average number of
common shares outstanding 5,530,661 5,419,115
</TABLE>
<TABLE>
<CAPTION>
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
Statement of Cash Flows
(Unaudited)
Three Months Ended
September 30,
________________________________________________
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net (loss) earnings $ ( 94,656 ) $ 76,223
Adjustments to reconcile net
earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 109,300 92,773
Loss (Gain) on property and equipment - ( 3,000 )
Provisions for loss on accounts and
notes receivable - 35,000
Interest income added to notes
receivable - affiliates 347 -
Deferred income taxes ( 23,339 ) 10,408
Other ( 3,302 ) -
Changes in assets and liabilities:
Accounts receivable ( 618,365 ) ( 347,893 )
Inventories 215,359 400,338
Other current and non-current assets 22,013 ( 36,237 )
Accounts payable 177,847 ( 167,611 )
Accrued expenses
and other current liabilities 29,595 ( 102,380 )
Net cash (used in) provided by
operating activities ( 185,201 ) ( 42,379 )
Cash flows from investing activities:
Increase in real estate held for sale ( 320 ) -
Purchase of property and equipment ( 20,364 ) ( 206,847 )
Proceeds from other notes receivable 13,200 ( 32,812 )
Proceeds from stockholders'
notes receivable 5,591 5,312
Net cash (used in) provided by
investing activities (1,893 ) ( 234,347 )
</TABLE>
<TABLE>
<CAPTION>
(Continued on following page)
W-W CAPITAL CORPORATION
Statement of Cash Flows, Continued
(Unaudited)
Three Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from financing activities:
Proceeds from lines of credit $ 149,000 $ 148,160
Payments on notes payable to financial
institutions and government entities ( 85,542 ) ( 37,607 )
Payments on notes payable to affiliates - ( 2,775 )
Proceeds from notes payable 4,700 204,643
Net cash provided by (used in) financing
activities 68,158 312,421
Net (decrease) increase in cash ( 118,936 ) 35,695
Cash at beginning of period 124,458 52,944
Cash at end of period $ 5,522 $ 88,639
Supplement schedule of non cash investing
and financing activities - -
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest $ 105,942 $ 79,295
</TABLE>
See accompanying notes to financial statements.
W-W CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements include the
accounts of W W Capital Corporation (the Company) and its three
wholly-owned subsidiaries W-W Manufacturing Co., Inc., Titan
Industries, Inc., and Eagle Enterprises, Inc. All significant
intercompany accounts and transactions have been eliminated.
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They
do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and
changes in cash flows in conformity with generally accepted
accounting principles for full-year financial statements.
However, except as disclosed herein, there has been no material
change in the information disclosed in the notes to W W Capital
Corporation's financial statements included in its Annual Report
on Form 10-K for the year ended June 30, 1995. In the opinion of
management, all adjustments (consisting of normal recurring
accrual basis adjustments) considered necessary for a fair
presentation have been reflected in the accompanying financial
statements. Operating results for the three month period ended
September 30, 1995, are not necessarily indicative of the result
that may be expected for the year ended June 30, 1996.
NOTE 2 - NET EARNINGS PER SHARE
The net earnings (loss) per share amount included in the
accompanying statement of operations have been computed using the
weighted average number of shares of common stock outstanding and
the dilative effect, if any, of common stock equivalents existing
during the applicable three month periods.
NOTE 3 - RELATED PARTY TRANSACTION
The Company has a number of related party transactions. See
the footnotes to W W Capital Corporation financial statements for
the year ended June 30, 1995, included in its Annual Report on
Form 10-K for the nature and type of related party transactions.
The related party transactions include sales commission paid
to Agri-Sales Associates which had entered into a sales and
marketing agreement with the Company. The former owner of Eagle
Enterprises is also the principal owner of Agri-Sales and holder
of the Company's restricted common stock, as more fully
discussed in the Annual Report on Form 10-K for the year ended
June 30, 1995.
A summary of the related party transactions that effect the
Company's statement of operations for the three months ended
September 30, 1995, and 1994, respectively, is as follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
<S> <C> <C>
Transactions with
Related Parties
Rent expense $ 15,000 $ 15,000
Interest income $ 1,841 $ 2,222
Interest expense $ 878 $ 2,047
Commission expense $ 0 $ 165,966
</TABLE>
ITEM 2.Management's Discussion and Analysis of
Financial Condition and Results of Operations.
The business of the Company is carried on within two
segments by a number of operating units. The livestock handling
equipment segment is composed of W-W Manufacturing (W-W
Manufacturing) and Eagle Enterprises (Eagle), and the water and
environmental product segment is represented by Titan Industries
(Titan).
(A) Analysis of Results of Operations
The Company has a net loss of $94,656, for the quarter
ended September 30, 1995, as compared to a net earnings of
$76,223 in 1994.
Net sales decreased to $ 4,067,632 for the three months
ended September 30, 1995, compared to $ 4,320,141 for 1994. The
following table represents actual sales by segment group.
Sales by segment group:
<TABLE>
<CAPTION>
Three Months Ended
September 30
1995 1994
<S> <C> <C>
Livestock Handling Equipment $ 2,269,313 $ 2,397,806
Water and Environmental Products 1,798,319 1,922,605
Total Net Sales $ 4,067,632 $ 4,320,411
</TABLE>
The sales in the water and environmental product segment
decreased $124,286 or 6.5% as compared to corresponding period
in 1995. This decrease can be attributed to the wet weather
conditions in the midwest during the spring and summer period
having an effect on the water supplies aspect of the business.
Cut backs by governmental agencies has had a affect on sales of
the various environmental products produce by the Company. The
Company has concentrated its efforts to establish new distributors
and manufacturer's representatives on both the east and west coasts
to expand its market area so that weather and economics in a certain
area will not have a major impact on sales.
During the quarter ended September 30, 1995, sales in the
livestock handling equipment segment declined $128,493 or 6.5%.
The decline in sales are due to a concern in the cattle industry
about beef prices, and the extreme hot weather experienced all
across the United States, thereby, creating a weaker demand for
the traditional W-W Manufacturing equipment. A decline in sales
was felt most strongly in the first month of the quarter but
improved as the Company moved into its stronger fall selling
season. During the quarter ended September 30, 1995, W-W
Manufacturing had a special order which accounted for
approximately $533,000 of the total sales in this segment. This
sale helped offset the decline in sales orders from regular
customers. The Company can expect sales in the livestock
handling equipment to remain soft as long as beef prices remain
low and some experts in the cattle industry predict beef prices
to remain low for the next twelve to eighteen months. However,
during this period the Company is taking steps to maintain and
gain market share by expanding its sales and marketing efforts to
the upper midwest and western United States areas that have not
been traditionally strong markets for the Company in the past.
Historically, W-W Manufacturing has sold its equipment to the
larger ranchers and not to smaller operators because along with
higher quality and durability comes higher prices. Therefore,
smaller operators opted for lower priced equipment because the
size of their herd, they could not justify the price for W-W
Manufacturing equipment. In order to meet the needs of the
smaller price conscious operator, the Company has designed a new
line of quality equipment which will be priced lower than the
traditional equipment. Additionally, the Company expects to
reintroduce a line of feed equipment and gates during the late
second or early third quarter of fiscal 1996. It is expected
that these new products will help gain market share in the south
and southeast, because those regions have a larger number of
small operators.
Gross profit margins decreased from 19.18% in 1994 to 17.09%
in 1995 on an overall Company basis. The gross profit margin in
the livestock handling equipment decreased from 18.86% in 1994 to
17.99% in 1995. This decline is principally a result of lower
gross profit margin on "specials" which accounted for
approximately 23.4% of total sales in the livestock handling
equipment segment during the quarter. Eagle continued to show
improvement in its operating results. Eagle had a operating loss
of $97,452 during the quarter ended September 30, 1995 as
compared to an operating loss of $171,115 in corresponding
quarter in 1994. Product sales shipped out of the Eagle
manufacturing facility totaled $587,915 in 1995. Management has
estimated Eagle's breakeven point to be approximately $200,000 to
$225,000 in shipments per month. It is anticipated that Eagle's
shipments will increase as production of the reintroduced feed
equipment, gates and new lower priced cattle handling equipment
starts, during the late second or early third quarter of fiscal
1996. These new products will be targeted for the market area
Eagle supplies.
Gross profit margins in the water and environmental product
segment decreased from 19.6% in 1994 to 15.97% in 1995. This
decline corresponds to higher depreciation and other costs
associated with the new manufacturing facility which was
completed in December 1994. Presently, this facility is not
being utilized to its fullest capacity due to sluggish sales.
The selling expenses as a percent of sales increased to 8.69%
in 1995 as compared to 7.67% in 1994. The increase is a function
of the cost of the establishing sales force in the livestock
handling equipment segment, while sales have declined. The
Company has been successful in new establishing new dealers and
distributors in areas where the Company has not had a strong
presence. It is anticipated that as cattle prices improve and
the new dealers and distributors reduce their inventories, that
they will start ordering W-W livestock handling equipment.
General and administrative expenses increased $31,406 in 1995
as compared to 1994. This increase is a combination of higher
legal fees involving lawsuits and higher corporate travel costs
incurred. Corporate management has spent a majority of their
time assisting management of the subsidiaries in developing new
product lines, sales force and marketing plans.
Interest expense increased $20,135 during the quarter ended
September 30, 1995, as compared to the corresponding quarter in
the prior year. This increase can be attributed to increase in
borrowing on the lines of credit and interest incurred on the
funds borrowed to build Titan's new facility which was completed
in December 1994. Inflation has not had a significant effect on
operations in the recent years because of the relatively modest
rate of price increases in the United States.
(B) Liquidity and Capital Resources
The Company used $185,201 cash in operating activities in 1995
as compared to $42,372 in 1994. This was the result of an
increase of $618,365 in accounts receivable. The majority of
this increase related to the $533,000 receivable on "specials"
shipped at the end of the quarter, which was collected in full in
October. Even though inventory levels have declined since June
30, 1995, management feels that additional reductions can be made
without effecting sales. As the Company continues to reduce
inventory, liquidity will improve and management expectes,
corresponding reduction in debt and interest expense.
The Company is currently in the process of renewing its
banking arrangements with its primary lender on terms similar to
which is presently in effect. Currently Eagle is in violation of
certain loan covenants with both First American National Bank and
Bank IV, Kansas due to prior net operating losses. Management
has discussed these violations with the Banks and neither Bank
indicated that they would accelerate payment of the respective
loans.
During the quarter ended September 30, 1995, the Company made
capital additions of $20,364 down from $206,487 in 1994. W-W
Manufacturing is currently in discussions with the City of Dodge
City, Kansas regarding the issuance of $1,400,000 of Industrial
Revenue Bonds. Said proceeds would be used to acquire the Dodge
City Manufacturing facility and provide funds for additions,
improvements and remodeling. Under the terms of the indenture,
W-W Manufacturing would lease the facility from the City of Dodge
City for monthly pro-rata amounts sufficient to pay all principal
and interest due on said bonds. W-W Manufacturing has an option
to purchase property at any time for an amount equal to full
amount required to pay-in-full or redeem all outstanding bonds
plus $10.00.
Subsequent to September 30, 1995, the Company received
approximately $80,000 as payment toward principal and interest on
its note receivable in the amount of $440,218. This note received
as part of the proceeds from the December 1994 sale of real
estate. These payments and future payments received will be used
primarily to reduce debt, thereby, improving liquidity.
Management believes with net cash provided from operations,
available lines of credit and the Company's ability to obtain
additional long-term financing, the Company will have adequate
sources to meet its current obligations.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable
ITEM 2. CHANGES IN SECURITIES
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
Not Applicable
ITEM 5. OTHER INFORMATION
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 Financial Data Schedule<PAGE>
Pursuant to the requirements of the
Securities and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: February 7, 1996
By:________________________________
Robert W. Claar, Chief
Financial Officer
Dated: February 7, 1996
By:________________________________
Steve D. Zamzow, President &
CEO
<PAGE>
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: February 7, 1996 By: /s/ Robert W.
Claar
Robert W. Claar, Chief
Financial Officer
Dated: February 7, 1996 By: /s/ Steve D. Zamzow
Steve D. Zamzow, President & CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES 3,4 AND 5 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 5,552
<SECURITIES> 0
<RECEIVABLES> 2,532,314
<ALLOWANCES> 197,008
<INVENTORY> 3,236,543
<CURRENT-ASSETS> 5,902,626
<PP&E> 4,347,631
<DEPRECIATION> 1,626,853
<TOTAL-ASSETS> 9,698,247
<CURRENT-LIABILITIES> 4,917,693
<BONDS> 1,733,171
0
0
<COMMON> 55,306
<OTHER-SE> 2,992,077
<TOTAL-LIABILITY-AND-EQUITY> 9,698,247
<SALES> 4,067,632
<TOTAL-REVENUES> 4,067,632
<CGS> 3,372,234
<TOTAL-COSTS> 3,372,234
<OTHER-EXPENSES> 754,785
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 101,819
<INCOME-PRETAX> (117,995)
<INCOME-TAX> (23,339)
<INCOME-CONTINUING> (94,656)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (94,656)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
