UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
X Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
--- Act of 1934
For the Fiscal year ended June 30, 2000 or
-------------
Transition report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of1934
For the Transition period from ____________ to ____________
Commission File No.: 0-17757
W W CAPITAL CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada 93-0967457
-------------------------------------- ---------------
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification No.)
3500 JFK Parkway, Suite 202
Ft. Collins, Colorado 80525
------------------------------------ ------------------
Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (970) 207-1100
---------------
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange or
Title of each class which registered
------------------- ----------------
Common stock, $.01 par value None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.01 par Value
---------------------------
(Title of Class)
(Continued on next page)
<PAGE>
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
-------- --------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in PART III of this Form 10-K or any amendment to this
Form 10-K.
Yes X No
-------- --------
The aggregate market value of the voting stock held by non-affiliates of the
Company on October 11, 2000 (5,283,755 shares of common stock) was $332,877
based on the average of the bid and asked prices ($0.063 per share) as quoted on
the over the counter market.
The number of shares outstanding of each of the Company's sales of common stock,
as of October 11, 2000 was:
Common Stock, 5,540,661 Shares
$.01 par value
Documents Incorporated by Reference
-----------------------------------
*This value is not intended to make any representation as to the value or worth
of the Company's shares of common stock. The number of shares held by
non-affiliates of the Company has been calculated by subtracting shares held by
controlling persons of the Company from the shares issued by the Company and
outstanding.
2
<PAGE>
W W CAPITAL CORPORATION
FORM 10-K
PART I
Item 1. Business
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(a) General Development of Business
--- -------------------------------
W W Capital Corporation ("Company") was originally incorporated as Freedom
Acquisition Fund, Inc., a Colorado corporation, on September 23, 1987, to merge
with or engage in a merger with, or acquisition of, one or a small number of
private firms.
On May 16, 1988, the Company completed a public offering of 15,000,000 Units at
an offering price of $.03 per Unit, each Unit consisting of one share of common
stock, one Class A Warrant to purchase one share of the Company's common stock
and one Class B Warrant to purchase one additional share of the Company's common
stock. The net proceeds of the offering to the Company were approximately
$240,000. The exercise period of the Class A Warrants expired on September 1,
1989. 3,754,500 Class A Warrants, at a price of $0.035 per common share, were
submitted to the Company's transfer agent for exercise, with proceeds of $131,
408 to the Company before the payment of offering expenses and commissions
associated with the offering. The Class B Warrants expired unexercised in June,
1990.
On December 9, 1989, the Company's shareholders approved a proposal to
re-incorporate W W Capital in the State of Nevada and to concurrently therewith,
reverse split on a 1 for 100 basis the authorized shares of common stock from
500,000,000 shares par value $0.0001 per share to 5,000,000 shares of common
stock, par value $0.01 per share and the 40,000,000 shares of authorized
preferred stock, par value $0.10 per share to 400,000 shares of preferred stock,
par value $10.00 per share. The re-incorporation and reverse stock split was
effective December 15, 1989.
On November 16, 1990, the Company's shareholders approved a proposal to increase
the number of authorized shares of common stock from 5,000,000 to 15,000,000
shares.
On August 16, 1988, the Company acquired 100% of the outstanding shares of W-W
Manufacturing Co., Inc. ("W-W") one of the oldest and largest livestock
equipment manufacturers in the United States, in exchange for 160,000,000 shares
of the Company's common stock. W-W currently manufactures a full line of cattle
and equine handling and confinement equipment for use by farmers, ranchers,
rodeos, and universities throughout the United States.
W-W's principals began doing business in Texas City, Texas in 1945 designing and
building their first cattle squeeze chute. Due to production and sales growth,
the principals moved the operation to Dodge City, Kansas, where they established
their first manufacturing facility in 1948. Operations continued to expand and
develop, and on October 18, 1961, W-W was incorporated in the State of Kansas.
On October 12, 1990, the Company acquired certain real estate properties in
Abilene, Texas from Western Fire and Marine Insurance Company. The real estate
was acquired in exchange for 80,000 shares ($800,000 par value) of the Company's
newly issued Series A Preferred Stock and $52,428 cash.
On October 25, 1990, the Company acquired certain undeveloped real estate
located in Johnson County, Texas from Apex Realty Investments, Inc. The real
estate was acquired in exchange for 40,000 shares ($400,000 par value) of the
Company's newly issued Series B Preferred Stock.
3
<PAGE>
On August 15, 1991, the Company entered into an exchange agreement ("Exchange
Agreement") with Titan Industries, Inc., a Nebraska corporation ("Titan"),
whereby the Company would issue to Titan common stock, in exchange for all the
outstanding stock of Titan. The consummation of this Exchange Agreement was
subject to approval by the stockholders of the Company. On December 13, 1991,
the stockholders approved the acquisition. The actual closing and exchange of
stock took place December 30, 1991. Under the terms of the agreement the
stockholders of Titan received 1,600,000 shares of W W Capital Common Stock in
exchange for all the outstanding common shares (7,500) of Titan Industries. The
shares had an aggregate value of $3,600,000 at the date of closing. The purchase
price was arrived at through an arms length negotiation.
On October 26, 1992, the Company entered into an exchange agreement ("Eagle
Exchange Agreement") with Eagle Enterprises, Inc., a Tennessee corporation
("Eagle"), whereby the Company would issue to Eagle common stock, in exchange
for all the outstanding stock of Eagle. The consummation of the Eagle Exchange
Agreement was subject to approval by the Board of Directors of the Company. At a
special meeting of the Board of Directors held October 20, 1992, the Board
unanimously approved the acquisition. The actual closing and exchange of stock
took place on October 26, 1992. Under the terms of the Eagle Exchange Agreement,
the sole stockholder of Eagle (Jerry Bellar) received 325,000 shares of W W
Capital Corporation common stock in exchange for all the outstanding common
shares (1,539) of Eagle Enterprises. The shares had an aggregate value of
$893,750 at the day of closing. The purchase price was arrived through an arms
length negotiation. Eagle Enterprises was formed in August 1985 to manufacture
livestock handling equipment. The company is presently located in a 40,000
square foot facility on 11 1/2 acres in Livingston, Tennessee. The Company's
primary products are creep, bunk, mineral and round bale feeders for livestock.
The Company also manufactures livestock panels and gates along with two versions
of headgates.
On February 19, 1993, the Company entered into an exchange agreement ("Real
Estate Exchange Agreement") with Apex Realty Investments, Inc., a Colorado
corporation ("Apex") a related party, whereby the Company exchanged assets (real
property in Abilene, Texas) and common stock for real property owned by Apex.
Under the terms of the Real Estate Exchange Agreement, Apex received real
property the Company owned in Taylor County, Texas, a note receivable from two
individuals, and 100,000 shares of the Company's restricted common stock in
exchange for approximately 455 acres of real property, with water rights and a
$60,000 timber contract located on the property in the mountains of Grand
County, Colorado. In addition the Company assumed a $265,000 mortgage payable on
the real estate. On December 15, 1994 this land was sold to an unrelated third
party and received net cash of $374,606 after payoff of mortgage and other costs
and the Company is carrying back a note for $440,218 on the balance. This note
was paid in-full in February 1996.
On October 15, 1993, the Company acquired various assets of Wholesale Pump and
Supply, Inc. ("Wholesale") of Oklahoma City, Oklahoma by issuing 250,000 shares
of common stock. The shares had an aggregate value of $145,000 at the day of
closing. The purchase of assets was arrived through an arms length negotiation.
Wholesale operates as a division of Titan Industries and is currently doing
business in a 10,000 square foot warehouse rented on a month to month basis. The
Company's primary functions are distributing water well supplies and
environmental monitoring equipment for testing ground water.
During October 1998, the Board of Directors unanimously approved the merger of
W-W Manufacturing and Eagle Enterprises into one legal entity.
On March 21, 2000, W-W Manufacturing, a wholly owned subsidiary of the Company,
acquired various assets and assumed various liabilities of the Adrian J. Paul
Company, (renamed W-W Paul Scales) of Duncan, Oklahoma, out of bankruptcy. The
transaction was accounted for as a purchase and, accordingly, the excess of the
asset values acquired over the liabilities assumed were used first to reduce
long term assets and the remainder was recorded as negative goodwill of $46,853.
W-W Paul Scales operates as a subsidiary of W-W Manufacturing and is currently
doing business in a 35,000 square foot facility leased under a two year
agreement. The Company's primary functions are the manufacture of livestock
scales.
4
<PAGE>
(b) Financial Information About Industry Segments
--- ---------------------------------------------
The business of the Company is carried on within two segments by four operating
units, each with its own organization. The management of each operating
subsidiary unit has responsibility for product development, manufacturing,
marketing and for achieving a return on investment in accordance with the
standards and budgets established by W W Capital. Overall supervision,
coordination and financial control are maintained by the executive staff from
the corporate headquarters located at 3500 JFK Parkway, Suite 202, Ft. Collins,
Colorado. As of June 30, 2000, the Company and its segments had approximately
200 employees. The reader is referred to Item 7, Management's Discussion, and
Analysis of Financial Condition and Results of Operations and notes to the
Company's financial statements for certain financial information regarding these
segments.
(c) Narrative Description of Business
--- ---------------------------------
The registrant conducts its business through its two business segments:
livestock handling equipment group, and the water and environmental products
group. A discussion of these segments follows.
LIVESTOCK HANDLING EQUIPMENT GROUP
----------------------------------
This division generated 57.4% of total corporate sales in 2000 compared to 55.6%
for fiscal 1999.
Principal Products, Markets and Distribution
--------------------------------------------
The livestock handling group manufactures a broad line of cattle handling,
equine (horse), and rodeo equipment and containment systems. Farmers, ranchers,
rodeos, county fairs, veterinarians, and universities use this equipment.
Presently with its 56-year-old history W-W Manufacturing the primary subsidiary
of this segment, is well recognized in the industry as the leader in production
of livestock equipment. With the acquisition of Eagle Enterprises, October 1992,
the Company has experienced growth with this segment. Eagle had manufactured all
types of livestock feeding equipment and various containment systems similar to
that manufactured by W-W Manufacturing. The Eagle line of products is primarily
distinguished from W-W Manufacturing's products by a purchase decision that is
primarily motivated/driven by pricing considerations.
Since the purchase of Eagle, the Company eliminated some of its line of feeding
equipment which had not been profitable. By elimination of these products, Eagle
has the manufacturing capacity to produce the majority of W-W Manufacturing line
of products, thus improving its delivery time to dealer/distributors in the
east, and southeastern United States. The Eagle plant was realigned to
complement the W-W Manufacturing line of products and all products will be sold
under the W-W Manufacturing name. This is significant since the W-W line has a
long-term (56 years) reputation as an industry leader and manufacturing of
quality equipment. Now that the W-W Manufacturing line is manufactured at Eagle,
Eagle has reintroduced a redesigned feeding line to meet customer needs and
enabling Eagle to produce it profitably. This reintroduction has helped Eagle
reclaim sales levels that were lost when the feeding line was dropped as well as
pick up new sales from customers previously handling the W-W Manufacturing line
only. The redesigned feeding line has been introduced into the midwest and west
markets and is now being manufactured at W-W Manufacturing. Feed equipment has
proven to be a lower margin product line but continues to sell during depressed
market conditions and is used as a lead in product to gain new customers
acceptance for the traditional higher margin W-W working equipment line.
The market for cattle handling equipment is segmented by herd size into economic
classifications. Based upon an independent study done for the Company, it is
believed that economic dissimilarities between large and small operators create
important differences in buying behavior. Recognizing this, management of the
Company has positioned the Company to meet the demands of the market place and
to be able to service both the large and small operator through its sales and
marketing targeted at expanding the dealer/distributor network throughout the
entire United States.
The Company will continue to generate sales by offering special assistance in
design and installation of product. This service has proven to be a valuable
asset in the sale of equipment to large fairs, expo centers, rodeos, and
universities.
5
<PAGE>
Over the years, W-W Manufacturing products have become favored for durability
and ease of use by ranch hands who must work large volumes of cattle. W-W
Manufacturing's presence at rodeos underscores the Company's position in the
marketplace as a producer of equipment for the "working cowboy." W-W
Manufacturing has been responsible for many innovations in rodeo equipment and
has developed a well-respected line for that market. Since 1979, all of the
chutes and rodeo equipment for the Professional Rodeo Cowboys National Finals
Rodeo (NFR) have been supplied by W-W Manufacturing. The NFR is the largest
rodeo championship event in the world. In addition, W-W Manufacturing has
provided all the equipment for the International Rodeo Association Finals since
1978 and for many other top rodeos across the country.
In the past, the Company has produced both heavy duty and portable horse stalls.
These products have been primarily used by commercial users and exposition
centers. Based on the success of the commercial horse stalls, the Company has
introduced stalls designed for the equine hobbyist and horse show enthusiast.
Aesthetics, ease of use and durability are considered by management to be the
main selling points of this kind of equipment. The new horse stalls have been
marketed through the distributor network already established by the Company.
With the acquisition of Adrian J. Paul Scales, on March 21, 2000 the Company has
entered the new market of livestock scales. These scales are used to weigh and
track the development of various livestock. This market compliments the W-W line
of equipment and can be sold by the existing W-W distributor/dealer network.
Also the W-W line of products is being offered and sold by the distributors and
dealers of theW-W Paul Scale Company. The Company is in the process of
developing several new scales that will compliment and work interrelated with
the W-W cattle line of chutes.
Cost of distribution of products has and will continue to be a problem for the
customers and the Company. To help lower this cost, the Company needs to
continue to find ways to fill trucks with a variety of products. With the
reintroduction of the feed equipment, and other horse related products, the
Company believes these products will help reduce its distribution cost and
provides its customer the opportunity to carry more items with less depth of
inventory.
Management believes these developments are key to the success of the Company's
future expansion, and intends to continue to increase its dealer/distributor
network vigorously. Demonstrations, seminars and special designs will continue
to be offered and special discounts given to principal distributors for volume
purchases.
Raw Materials and Facilities
----------------------------
The manufacture of livestock handling equipment requires various sizes of steel,
tubing, and other related steel products. The products necessary for fabrication
of equipment are purchased from numerous steel companies, and the Company has
experienced no difficulties in obtaining adequate supplies. The divisions of
this segment are located as follows: W-W Manufacturing, the largest by sales
volume of the four divisions, is located at 2400 East Trail Street, Dodge City,
Kansas. Eagle Enterprises, is located at 175 Windle Community Road, Livingston,
Tennessee. The hydraulic chute division is located at 108 S. Main, Thomas,
Oklahoma. W-W Paul Scales is located at Hwy 81 South, Duncan, Oklahoma.
Competition
-----------
The Company encounters competition in varying degrees in both cattle handling
and equine product lines. Competitors are primarily domestic producers of
similar products. These companies compete in price, delivery schedules, quality,
product performance, and other conditions of sales. During 2000 and 1999,
management invested in new equipment, did extensive training, scheduled many
live demonstrations, improved plant efficiencies, introduced new product
improvements and new products, in order to maintain its competitive edge.
6
<PAGE>
Strategy for Growth
-------------------
Growth is anticipated in two areas. First, the Company will continue to expand
the distributor/dealer network throughout the country. Future growth will,
however, be constrained by availability of capital resources and continuing good
market conditions.
Diversification into related product areas now served by the Company could
afford a second area for growth as shown with the acquisition of the W-W Paul
Scale Co. Management believes W-W Manufacturing's 56 year old reputation for
quality, as well as for introducing new innovations into existing products, has
positioned the Company ideally as a marketer for new products of its own as well
as other companies' products.
Continued emphasis will be put on specials and special sales to universities,
expo centers and fairgrounds. This highly visible use of equipment provides
product endorsement for the standard line of products and help
distributors/dealers to sell product to the end consumer.
WATER AND ENVIRONMENT PRODUCTS GROUP
------------------------------------
The water and environmental products group consists of Titan Industries of
Paxton, Nebraska with distribution locations in Dodge City, Kansas and its
division, Wholesale Pump and Supply in Oklahoma City, Oklahoma. This group
accounts for 42.6% of total corporate sales for the fiscal year 2000. This
compared with 44.4% in fiscal year 1999.
Titan's functions are broken down primarily into two divisions. The distribution
of water well supplies and related products, and manufacturing of environmental
products for the water industry.
Principal Products, Markets and Distribution
--------------------------------------------
The Company distributes (wholesale) a wide variety of water well and related
products. These products include submersible pumps, high-pressure tanks, pipe,
pipefitting, and various other accessories for water well drillers, plumbers,
and various other applications of water uses. The Company sells these products
by direct sales through the sales force, by dealers and independent
representatives. These products are primarily sold in a close proximity to the
present three distribution points in Paxton, Nebraska, Dodge City, Kansas, and
Oklahoma City, Oklahoma. The Company has taken steps to widen its water well
supplies distribution by offering new lines not carried by local competitors.
Titan has also improved its delivery schedules to meet the demands of these
customers thereby making service the top priority in expanding this segment of
the business.
The Company is also involved in manufacturing water well monitoring equipment,
which adds an environmental aspect to the business. Titan manufactures several
unique products like flush threaded PVC pipe, which allows strong joints without
glue. Flush threaded pipe allows for seamless joints both inside and out. This
is significant as monitor wells are tested for impurities, in the parts per
million category, where joint solvents and glues can actually be measured as
part of the contamination. By packaging products together as monitoring well
units, the Company is able to sell these units for greater total profit margins
than the individual components command as separate (commodity type) items.
Another unique product produced by Titan is a flush mounted PVC screen, which
offer a lower cost and longer life since standard steel screens are subject to
corrosion. Titan has introduced several new products expanding its manufacturing
goods to include a combo-buried pressure tank Enviroflex well screen and various
Verta-slot applications used in heavier wall applications. The Company has added
significant growth in the environmental sales with other products such as well
protectors, manhole covers, drainage pipe and various other related products.
The environmental products are marketed through distributors, which have been
set up throughout the United States. Management plans to continue its efforts to
market aggressively to government agencies, as the guidelines for ground water
testing become more stringent.
7
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Raw Materials and Facilities
----------------------------
The Company redistributes various manufactured products through its water well
supply division. Also, the Company uses various sizes of PVC pipe for production
of its well screen and flush jointed products. The Company has not experienced
any difficulties in obtaining the raw material needed for production of its
water well products.
The subsidiary of this segment owns its headquarters and manufacturing
facilities which consists of 25,000 square feet located in Paxton, Nebraska. The
Company also has two other distribution points located in Dodge City, Kansas and
Oklahoma City, Oklahoma (Wholesale Pump and Supply).
Competition
-----------
The water well supply division of Titan experiences a high degree of competition
and only sells within a close proximity to its three distribution points. The
environmental products consisting of well screen flush jointed pipe, and new
horizontal drilling products have achieved a unique position in their various
markets. These products encounter some degree of competition, but due to their
unique design and availability of production, Titan maintains a market dominance
in this area, throughout the United States. The Company continues to invest in
new equipment to enhance production and improve delivery time. Since the
completion of the facility the Company has enjoyed new customer growth across
the country.
Strategy for Growth
-------------------
Growth is anticipated in many areas. First, distributor demand for the Company's
existing product lines has continued to remain strong as more and more
distributors around the country have become aware of Titan's quality and
reliability of delivery. The Company is maturing and growing in name recognition
as a leader in the fabricated PVC and polyethylene pipe market. Second, the
Company has started marketing Tru-Blue PVC Screens. Tru-Blue is a ribbed PVC
pipe product manufactured in India and is slotted with a protected square ridge,
thus retaining a more effective open area and making the screen more efficient.
The Company has an exclusive marketing agreement to fabricate the product in the
United States. Third, the Company has continued to develop new slotting
techniques using high-density polyethylene pipe for use in the horizontal
drilling industry. Enviroflex continues to develop as the product of choice in
the directional drilling market. Fourth, the Company's expansion into custom
fabrication of products used for filtration, drainage, dewatering, and other
construction applications continues to grow at a healthy pace. The Company feels
that the responsiveness to market demands for various custom applications should
provide excellent opportunities for growth. Recent developments for the need of
a perforated and slotted flat sheet of PVC and polyethylene for use in shaker
screen machining has been identified as a potential market and the Company's
sales and marketing departments are currently researching market size and
product demand. The Company has recently increased development of a new aerobic
septic system product to market in areas where the ground is not permeable. The
aerobic system purifies waste water, which can then be used for irrigation or
safely discharged in other manners.
8
<PAGE>
OTHER INFORMATION RELATIVE TO THE BUSINESS
------------------------------------------
Patents and Trademarks
----------------------
Under the water and environment segment of the business, the Company holds no
patents or registration trademarks or service marks. With the purchase of the
Adrian J. Paul Company, the livestock handling equipment segment, has acquired
various patents. These patents are all current and registered with the United
States Patent Trademark Office. These patents deal with systems for weighing
non-stationary objects, torqe bar suspension scales with strap assemblies and an
on board truck weighing system.
Seasonality
-----------
The Company experiences seasonality in sales in both of its segments. The
livestock handling equipment product segment has increased sales in the fall and
through the spring and lower sales in summer. The water and environment product
segment has increased sales in the spring, summer and into the fall and lower
sales in the winter. With this diversity in sales, the seasonality allows the
Company as a whole to experience overall level sales throughout the year.
Practice Relating to Working Capital
------------------------------------
The information relating to this Item is included under Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."
Dependence Upon a Single Customer
---------------------------------
Not Applicable
Dollar Amount of Backlog Orders
-------------------------------
Backlog in the livestock handling equipment group was $1,860,000 in 2000 as
compared to $1,210,000 in 1999. This increase from 1999 is due to general
improvement in cattle market conditions and the introduction of new equine
equipment and special projects. This is expected to improve as we move into the
fall season.
The water and environmental products segment showed a backlog increase from
$375,000 in 1999 to $701,000 on June 30, 2000. This increase is due to larger
demand for manufacturing goods. Substantially all the backlog is expected to be
realized as sales during the first quarter of the 2001 fiscal year.
Business Subject to Renegotiation at Election of Government
-----------------------------------------------------------
Not Applicable
Research and Development Expenditures
-------------------------------------
Due to the nature of manufacturing operations of the Company and the types of
products produced by its two segments, expenditures for research and development
are not material to the overall operating cost.
Compliance with Environmental Controls
--------------------------------------
The Company faces various issues with the EPA regarding its paint systems within
the livestock equipment segment of the business. The problems with the Dodge
City, Kansas and temporary Thomas, Oklahoma plants will be solved with the
powder coat paint system being installed in the new plant in Thomas, Oklahoma.
In the (Eagle) plant located in Livingston, Tennessee, the Company has been
issued a temporary paint operating permit through December 31, 2000. By that
time, the Company has to be compliant with the VOC's and HAP's emitted due to
the present flow coat paint
9
<PAGE>
system. Over the past year, management has worked with various paint suppliers
to come up with a solution that will solve the problem of emissions in the air
and meet the governmental guidelines. The first step taken was to change the
present paint to a water soluble paint, thereby lowering the VOC's to an
acceptable level. The second stage is to locate and install a powder coat paint
system by December 31, 2000. At the present time, management has located the
majority of the powder coat system to be installed, but since it needs
modifications due to the height of the product to be painted, it will not meet
the completion date of December 31, 2000. Management has been in contact with
the EPA offices and it appears that an extension under its' current permit will
be granted until the new powder coat system is completed. To the best of its
knowledge, the Company believes that it is presently in substantial compliance
with all existing environmental laws.
Item 2. Properties
------- ----------
The Company's corporate headquarters is located at 3500 JFK Parkway, Suite 202,
in Ft. Collins, Colorado, and is leased from an unrelated third party.
The livestock handling equipment division is located at 2400 East Trail Street,
Dodge City, Kansas. This facility is leased from Murle F. and Sara R. Webster,
shareholders of the Company, for $5,000 per month, on a month to month basis.
This facility is comprised of approximately 40,000 square feet in three
buildings. The Company had its hydraulic division located at 401 Loomis Rd.,
Weatherford, Oklahoma, which suffered a fire on March 17, 2000. Subsequently,
the Company relocated this plant to Thomas, Oklahoma until completion of the new
facility. This temporary facility is comprised of approximately 3,000 square
feet.
Eagle Enterprises is located at 175 Windle Community Road, Livingston,
Tennessee. This facility is owned by the Company and has approximately 40,000
square feet located on 11.5 acres of land.
W-W Paul Scales is located at Highway 81 South, Duncan, Oklahoma. This facility
is leased for $4,000 per month through April 2002 and has approximately 35,000
square feet located on 13.2 acres of land.
The water and environmental products group conducts its primary operations at
Highway 30, Paxton, Nebraska, in a facility which consists of general offices,
manufacturing facilities and open storage areas. This facility is approximately
25,000 square feet on 10.1 acres of land. The Company also has a distribution
facility at 11555 S. Hwy 283, Dodge City, Kansas. The Company owns both of the
aforementioned locations. Titan leases a third distribution facility for its
division, Wholesale Pump and Supply, located at 1203 SE Grand Blvd, Oklahoma
City, Oklahoma. The facility consists of approximately 10,000 square feet of
space, and is rented on a month to month basis for $1,500 per month.
Item 3. Legal Proceedings
------- -----------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
------- ---------------------------------------------------
No matters were submitted for a vote of security holders of the Company during
the fourth quarter of the fiscal year ended June 30, 2000.
10
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matter
------- --------------------------------------------------------------------
Market Information
------------------
High Bid Low Bid
-------- -------
Quarter ended
-------------
September 30, 1998 $ 0.150 $ 0.130
December 31, 1998 0.150 0.063
March 31, 1999 0.313 0.063
June 30, 1999 0.063 0.063
September 30, 1999 $ 0.063 $ 0.063
December 31, 1999 0.063 0.063
March 31, 2000 0.500 0.063
June 30, 2000 0.063 0.063
The Company's common stock is listed on the over-the-counter market and trades
under the symbol "WWCL".
Holders
-------
As of October 11, 2000 the Company had approximately 566 record holders of its
common stock, not including some individuals holding shares in street name.
Dividends
---------
The Company did not pay dividends during 2000 or 1999 and does not intend to pay
cash dividends in the foreseeable future. The management of the Company intends,
for the present, to retain all available funds for the development of its
business. Additionally, certain of the Company's loan covenants prohibit the
paying of dividends.
11
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Item 6. Selected Financial Data
------- -----------------------
<TABLE>
<CAPTION>
Year ended June 30
-----------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net Sales 21,263,753 16,387,043 15,576,140 15,072,285 14,512,234
Gross Profit Margin 4,051,494 3,084,962 2,867,106 2,859,843 2,412,831
Operating Earnings 634,220 303,671 247,454 349,922 (461,213)
(Loss)
Interest Expense 316,604 293,632 340,182 374,522 382,901
Operating Expense 3,417,274 2,781,291 2,619,652 2,509,921 2,874,044
Net Earnings (Loss) 338,777 104,808 87,420 28,120 (717,799)
PER SHARE DATA
--------------
Earnings .06 .02 .02 (A) .00 (.13)
Dividends per Common .00 .00 .00 .00 .00
Share
Weighted Average 5,540,661 5,540,661 5,560,794 5,549,544 5,530,661
Shares Outstanding
FINANCIAL CONDITION
-------------------
Total Assets 9,645,484 8,220,792 7,680,578 8,679,093 8,893,908
Fixed Assets (Net) 1,959,327 2,073,919 2,103,249 2,296,363 2,601,594
Long-Term Debt 2,851,618 2,971,628 2,860,930 577,074 1,927,267
Stockholders Equity 2,953,995 2,615,218 2,510,410 2,452,990 2,424,240
Working Capital (1) 3,949,982 3,396,955 3,116,776 289,203 1,284,898
Current Ratio (2) 2.08 2.29 2.35 1.05 1.28
</TABLE>
A. Less than .01 cent
(1) The year ended 1997 reflects a classification of debt from long-term to
current due to the renewal of bank lines less than one year.
The year ended 1998 reflects a reclassification of debt from short-term
to long-term due to the renewal of its bank lines for longer than one
year.
(2) Percent of current assets to current liabilities.
12
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
------- ----------------------------------------------------------------------
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto under Item 8.
Results of Operations:
The following table presents, for the periods indicated, the dollar value and
percentage relationship which certain items reflected in the Company's
Statements of Operations. This percentage shows the percent as it relates to the
total revenue.
<TABLE>
<CAPTION>
2000 1999 1998
------------------------ --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Livestock Handling Equipment $12,210,587 57.4% $9,108,446 55.6% $8,988,175 57.7%
Water and Env'l Products 9,053,166 42.6 7,278,597 44.4 6,587,965 42.3
------------- ------ ---------- ------ ---------- -------
Total Revenues 21,263,753 100.0 16,387,043 100.0 15,576,140 100.0
Cost of Revenues 17,212,259 80.9 13,302,081 81.2 12,709,034 81.6
------------- ------ ----------- ------ ------------- -------
Gross Profit 4,051,494 19.1 3,084,962 18.8 2,867,106 18.4
Selling, General, and
Administrative Expense 3,417,274 16.1 2,781,291 17.0 2,619,652 16.8
------------- ------ ----------- ------ ------------- -------
Operating Earnings 634,220 3.0 303,671 1.8 247,454 1.6
Other Income (Expense) 83,161 0.4 94,769 0.6 180,148 1.2
Interest Expense (316,604) (1.5) (293,632) (1.8) (340,182) (2.2)
------------- ------ ------------ ------- ------------- -------
Earnings Before Income Taxes 400,777 1.9 104,808 0.6 87,420 0.6
Income Taxes Net 62,000 0.3 -- 0.0 -- 0.0
--------------- ------- ------------ ------ ------------- -------
Net Earnings $ 338.777 1.6% $ 104,808 0.6% $ 87,420 0.6%
============= ======= ============ ======= ============= =======
Depreciation and Amortization $ 292,348 1.4% $ 352,246 2.1% $ 394,230 2.5%
============= ======= ============ ======= ============= =======
</TABLE>
13
<PAGE>
Fiscal Year Ended June 30, 2000 Compared to Fiscal Year Ended June 30, 1999.
The Company had net earnings of $338,777 for the year ended June 30, 2000, as
compared to $104,808 for the same period of 1999. The Company has exhausted net
operating losses carried over from prior years, therefore, the financial
statements reflect income tax expense of $62,000 for the year ended June 30,
2000, as compared to no tax expense in 1999. On a comparison basis, earnings
before income taxes were $400,777 for the year ended June 30, 2000 as compared
to $104,808 for the year ended June 30, 1999. The improved earnings were
realized by both segments with operating earnings in the livestock equipment
segment of $733,946 and $321,757 in the water and environment segment. The
improvement in earnings was due to the overall increase in sales, higher gross
margins, and by strong market acceptance of new products by both segments. Total
sales reached a record level of $21,263,753 for the fiscal year ended June 30,
2000, as compared to $16,387,043 for the same period of 1999 representing an
increase of $4,876,710 or 29.8%. Sales in the livestock equipment segment
increased by $3,102,141 to $12,210,587 for the fiscal year ended June 30, 2000
as compared to $9,108,446 for the same period of 1999. Sales at the Dodge City
location increased $1,824,409 and by $810,599 at the Livingston, Tennessee
plant. Part of the increase in sales for the livestock segment is due to the
purchase of the Adrian J. Paul Scale Company, later renamed W-W Paul Scales on
March 21, 2000. Of the total livestock equipment segment, sales by W-W Paul
Scales represented $467,133 or 3.8% of total sales and 15.1% of the increase in
sales.
Sales in the water and environmental product segment increased to $9,053,166 for
the fiscal year ended June 30, 2000 compared to $7,278,597 for the same period
of 1999 or an increase of $1,774,569. The increase in sales is due to several
factors with a major contribution coming from an overall increase in price of
the Company's main product being plastic PVC pipe. Approximately, 8% of the
sales increase is due to higher PVC prices during the year. The increase in PVC
plastic pipe is a reflection of the overall high price of crude oil, since it is
used in the production of PVC pipe. Another major factor attributing to the
sales increase is the concentrated efforts of the sales staff to find new
markets and customers for it's polyethyene slotted pipe and continued demand for
Titans' expertise in the custom fabrication of various pipe types and sizes.
Titan continues to be a leader in supplying its custom fabricated products to
the mining, waste treatment, environmental, and horizontal drilling markets. One
of the newest additions to the fine line of fabricated products is Tru-Blue PVC
Screens. This product is bought from a company in India and marketed exclusively
in the United States by Titan. This product is unique from other slotted pipes
in that the slot is protected by a ribbed square ridge, thus retaining more
effective open area making the screen more efficient. With the continuing strong
economy in residential and commercial building, the demands for Titans various
well screens, drainage monitoring, sewage and landfill products remain strong.
The Enviroflex product developed in 1998 continues to improve and is the product
of choice by the directional drilling market. The Company is also adding new
products to its wholesale product lines in an effort to remain competitive and
offer a full service wholesale operation. As Titan moves into fiscal 2001, it
will continue to find and develop new areas of growth with new products and
expand its distribution of these products by finding new dealers, distributors,
and markets to use its products.
Sales in the livestock equipment segment improved to $12,210,587 as stated
earlier. The increase of $3,102,141 is attributable to many factors including
the purchase of the Adrian J. Paul Company. The assets of this company were
purchased out of bankruptcy on March 21, 2000 and accounted for as a purchase.
The name of the company subsequent to the acquisition has been changed to W-W
Paul Scales. Sales reported from the purchase date through the fiscal year end
of June 30, 2000 amounted to $467,133. Other factors attributing to the sales
increase is the continued effort of the sales staff to find new
distributors/dealers throughout the upper midwest and western states. Sales were
dramatically increased at the eastern plant (Livingston, Tennessee) due to one
of the Company's larger customers acquiring a competitor in the south eastern
part of the United States. Sales also improved due to the strong acceptance of
the Company's equine products. Cattle product sales in all markets continue to
improve due to the strong cattle prices and an overall strong economy. Special
sales to expo centers, universities and fairgrounds also contributed to the
years record sales. The Company continues to increase sales efforts in this
market, since it is an area the Company feels has tremendous growth
opportunities. Sales at the Dodge City plant improved due to the production
14
<PAGE>
support from the hydraulic plant in Oklahoma. With the past and continued labor
problems and production inefficiencies in the Dodge City plant, some of the
production had to be moved to Oklahoma until the new plant in Thomas is
complete. As reported in Fiscal 1999, management has successfully reached an
agreement with the Economic Development Authority of Thomas, Oklahoma to
construct a new modern facility to house the consolidation of the Dodge City
facility and temporary Thomas location. The facility will be owned by the City
of Thomas and the Company will lease/purchase it over a twenty year term. It is
anticipated that completion of the production facility and move to be finished
by December 31, 2000. The effects on sales by the consolidation into the new
Thomas facility will start to be realized in spring of 2001. Management
anticipates that the long awaited new paint system combined with the abundance
of labor will greatly improve sales and give the Company a competitive advantage
in the market place. Sales in rodeo equipment remain strong as the rodeo
business continues to show growth all across the United States. With the
completion of the new plant, introduction of the new and improved products, and
a solid marketing plan, the Company anticipates seeing continued growth in sales
and market share in fiscal 2001.
Gross margins continued to improve to 19.1% in fiscal 2000 from 18.8% in 1999.
The livestock handling equipment segment improved to 20.6% in fiscal 2000
compared to 19.5% in 1999, while the water and environmental segment decreased
slightly to 17.2% in 2000 compared to 18% in 1999. The improvement in the
livestock equipment segment was realized despite the labor and production
problems that persist at the Dodge City location. To combat these problems, the
Company has used the other production facilities in Oklahoma to help produce
product and ship to Dodge City for paint and distribution to customers. With
these steps taken, the Company was able to introduce new products and expand
some existing lines, which enabled sales to increase, thereby improving gross
margins. It is expected that with the consolidation of the hydraulic division in
Oklahoma and Dodge City, Kansas operations to the new plant in Thomas that
margins will improve sharply in the future due to lower cost and less production
inefficiencies. Gross margins in the water and environmental segment declined
slightly even though sales of the higher margin custom fabricated products
improved. Based on the increase cost of PVC plastic pipe rising rapidly during
the year the Company could not pass all the related increase on to customers to
maintain normal margins. As prices settle, it is anticipated that margins will
improve and probably increase over normal levels because of the predictability
of cost. The wholesale of water well products continues to be very competitive
with margins that normally are below that of the manufactured and custom product
margins, while the wholesale side of the business, by its nature, is highly
competitive. Titan will continue to find products with more competitive prices
and products to fill customers needs.
Selling expenses as a percentage of sales decreased to 7.1% in fiscal 2000 as
compared to 8.1% in 1999. This decrease was due to the significant increase in
sales without the related increase in expense. The total dollars expended on
selling expense did increase from $1,324,702 in 1999 to $1,516,131 in 2000. This
increase was due to higher travel cost related to higher fuel prices, lodging
costs, and airline fares. The Company had expected to spend more dollars on
introducing new products and expanding product lines into new markets not
previously serviced. The increased sales expense is a direct effect of the
aggressive sales and marketing plan maintained by both segments of the Company
over previous years, and new sales personnel added in both segments of the
Company. Selling expense in the water and environmental products segment
decreased from 6.6% in 1999 to 6.1% in fiscal 2000. Selling expenses in the
livestock equipment segment decreased from 9.3% in 1999 to 7.8% for the fiscal
year ended June 30, 2000. The Company is going to continue an aggressive
marketing plan to expand the distributor/dealer network, introduce new higher
margin products, thereby maintaining selling expenses at current levels as a
percentage of sales.
General and administration expense remained constant at 8.9% as a percentage of
sales in both fiscal 2000 and 1999. The total dollars spent on general and
administration expenses increased from $1,456,589 in 1999 to $1,901,143 in
fiscal 2000. This increase was attributed to the write off of accounts
receivables, costs of acquiring the Adrian J. Paul Company and professional
fees. The Company anticipates that general and administration expenses will be
cut due to the consolidation of two production plants in the livestock equipment
segment. The Company will continue to tighten credit policies, review
administration expense, and find ways to lower costs while increasing sales.
15
<PAGE>
Interest expense increased slightly in fiscal 2000 to $316,604 from $293,632 for
the same period of 1999. This increase of $22,972 is directly related to the
raise in the prime interest rate, and increase costs of carrying higher
inventories and accounts receivable resulting from the growth in sales. The
Company anticipates that sales will continue to grow, but with the increased
profits average borrowings should remain at current levels.
It is anticipated that sales and profits in the livestock equipment segment will
continue to show strong improvement due to the consolidation of two production
plants into the new plant in Thomas, Oklahoma. Sales and profits in the water
and environmental product segment will be somewhat subjected to the relative
volatile PVC market but with new custom fabricated products to fit customer
needs, this segment will continue to grow in sales and improve profits.
Fiscal Year Ended June 30, 1999 Compared to Fiscal Year Ended June 30, 1998.
The Company had net earnings of $104,808 in 1999, as compared to $87,420 for
1998. After showing a net loss of $104,217 through the first half of the fiscal
year, the Company made a profit of $39,879 during the third quarter ended March
31, 1999 and $169,146 for the fourth quarter ended June 30, 1999. The improved
sales and profits were realized in both segments, however, the largest increase
was achieved in the livestock equipment segment due to improved market and
weather conditions over the first half of the year. Another factor contributing
to the improvement was the market acceptance of new products introduced by both
segments over the last six months of the fiscal year.
Total sales increase $810,903 or 5.2% to $16,387,043 in fiscal 1999 as compared
to $15,576,140 in fiscal 1998. Total sales in the livestock equipment segment
increased by $120,271 to $9,108,446. While sales in this segment increased
overall, sales at W-W Manufacturing in Dodge City, Kansas decreased by $195,573
while sales at the Livingston Tennessee plant increased by $315,844. Sales in
the water and environmental products segment increased by $690,632 to
$7,278,597. During fiscal 1999, the sales increase was due to the continued
growth in custom fabrication, various manufactured pipe products and an overall
increase in PVC pipe prices. The Company has also experienced growth because of
the continued efforts of the sales staff to expand its present and new market
areas. Additional growth was realized in the west, primarily California, where
record sales of slotted and perforated pipe were reached. The Company spent
considerable time working the upper-Midwest market by having to increase its
sales and show participation in that area. The result of this effort is clearly
apparent in sales. Other areas that have seen moderate increases include the
southeast and south regions. These sales and marketing efforts have helped the
Company achieve better than break-even sales levels during the traditionally
slow winter months. During the last half of the fiscal year, management has
taken steps to increase sales in its Oklahoma City distribution location,
formerly known as Wholesale Pump. Since purchasing Wholesale Pump, the Company
has realized a drop in sales volume. This was primarily due to a reduction in
environmental sales, which traditionally was a strong part of that business. The
Company has added some new product lines to its wholesale products thus enabling
the Company to be more competitive in the Oklahoma market area. Titan continues
to be a leader in supplying slotted and perforated pipe to all aspects of the
horizontal drilling, waste treatment, mining, and environmental industries. As
the Company moves into fiscal 2000, it plans on continuing its aggressive sales
efforts in new market areas and expanding distribution of its manufactured
product line. The Company maintains that its current and future success will
carry on based on Titan's ability to provide service and delivery to customers
throughout all its market areas.
Sales in the livestock equipment segment started out very sluggish due to
extreme drought conditions in the southwest and low cattle prices during the
first half of fiscal 1999. As the Company moved into the last half of the year,
market conditions improved and the introduction of new equine products created
stronger customer demand. Sales improved dramatically in the eastern market due
to an existing customer purchasing one of their competitors that was not
handling the W-W line of equipment. Also, the eastern market continues to become
more familiar with stronger and heavier equipment that W-W produces and the
demand for this equipment continues to improve. Sales in the W-W Manufacturing
Dodge City plant decreased, as
16
<PAGE>
mentioned earlier, due to extreme dry conditions during the first quarter and
production inefficiencies attributable to a shortage of labor in the local area.
Labor continues to be a major problem for the Dodge City plant. With no
unemployment in the area, it has been difficult to find adequate employees to
fill all the manufacturing jobs on a regular basis. The labor problem has caused
the Company a backlog of orders larger than is desirable and
distributors/dealers have been concerned with the shipments. In order for the
Company to meet demand and keep up with the aggressive marketing plan, the
Company has decided to move the Dodge City location. The western Oklahoma
market, where the present hydraulic division is located, has had plenty of labor
and is better suited for the W-W operations. Management has successfully reached
a tentative agreement with the Economic Development Authority of Thomas,
Oklahoma to move its Dodge City, Kansas and Weatherford, Oklahoma plants to
Thomas, Oklahoma. The agreement calls for the construction of a new 75,000 sq.
foot manufacturing facility including a new powder coat paint system. The
facility will be owned by the City of Thomas and the Company will lease/purchase
it through various federal, state, and local grants, various low interest loans,
and a portion financed through a local bank over a twenty year term. The Company
will receive various state and local tax incentives and the cost of moving to be
provided by the City of Thomas. Management believes the final agreement will be
signed in the fall of 1999 with the expected move date to be the late summer of
2000. The Company continued its efforts of expanding the distributor/dealer
network, rodeo sponsorships, and special designed installation as it moved
through the last half of the fiscal year. In order to improve Dodge City area
sales with the labor shortage, some production of products, mainly the panel
lines, had to be partially moved to the hydraulic production plant in
Weatherford, Oklahoma. While this helped to improve shipments and shortening
lead times, it added additional handling, freight, and other costs to the
finished products. The new and existing equine (horse) equipment continues to
gain momentum in the east and other areas of the country that have large horse
populations. Special designs and large arena installations remain strong as the
Company continues its marketing efforts of this business segment. During the
last part of the fiscal year, the sales of cattle products remained level while
the other non-traditional cattle products exhibited strong improvement. Sales in
rodeo equipment remain secure as the rodeo business continues to show growth in
all parts of the United States. With the Company continuing its solid marketing
efforts in new markets, the introduction of new products, it should ensure
additional growth and market share in fiscal 2000. The sales increase in the
water and environmental product segment continued from its strong finish from
the end of fiscal 1998.
Gross margins improved slightly to 18.8% in 1999 from 18.4% in 1998. The
livestock handling equipment segment improved to 19.5% in 1999 compared to 18.4%
in 1998, and the water and environmental segment improved its gross profit to
18% in 1999 compared to 17.5% in 1998. The overall improvement in the livestock
equipment segment was realized at the W-W Manufacturing plant in Dodge City
despite obvious labor problems and production inefficiencies. Gross margins at
the Eagle plant (Livingston, Tennessee) remain relatively steady with a slight
decline towards the end of the year. It is expected that gross margins in fiscal
2000 will remain fairly constant until the Company moves its Kansas operation to
Oklahoma in the spring of 2000. The move and consolidation of the W-W
Manufacturing Dodge City plant and the hydraulic division in Weatherford,
Oklahoma is expected to improve margins due to lower cost and less production
inefficiencies. Gross margins in the water and environmental products segment
continue to improve as more and more sales are generated through the Company's
manufactured products aspect of the business. The manufactured goods which
started with standard flush joint PVC screen and casing has lead the Company
into slotting high density polyethylene pipe and into more sophisticated
applications found in landfills, mining, and various highway construction
projects. Titan's Ver-Ta-Slot product continues to improve due to the ability to
vary slot openings in numerous diameters, schedules, and types of pipe. The
Ver-Ta-Slot process has been developed for all applications and materials
including plain end, belled end, flush joint, and gasket end pipe. The
Enviroflex screen developed by Titan also continues to show strength as a
cost-effective method to prevent sedimentation in horizontal remidiation wells.
This screen is used in diversified ground water extraction applications and
solid vapor extraction wells. A new product developed and tested by Titan during
fiscal 1999, which assisted in adding significant sales, is the Stalwart
Emergency Hand Pump. The pump offers the customer an inexpensive back up pump
for submersibles which may fail for various reasons. The advantages of the
back-up system is there is no need to dismantle an existing well, but can pump
water to high locations and it is made from non-corrosive materials, therefore
allowing for years of
17
<PAGE>
usage. Finding new applications of existing products and these other new
products will help Titan continue to improve sales and margins with its
manufacturing products and custom fabrication. The gross margins also improved
due to a general improvement in PVC prices during the year. The wholesale of
water and water well products continues to be a very competitive area of the
business. As sales and margins remain fairly consistent throughout fiscal 1999,
the Company is looking for additional improvement in this area by finding more
competitive prices and products to fill the needs of its customers.
Selling expenses as a percentage of sales increased to 8.1% in 1999 as compared
to 7.6% in 1998. Selling expense in the water and environmental products segment
remains reasonably constant with a slight increase from 6.4% in 1998 to 6.6% in
1999. The selling expense in the livestock equipment segment increased from 8.5%
in 1998 to 9.3% in 1999. Selling expenses increased in both segments of the
business due to the high cost associated with promoting new products to the
marketplace, additional travel cost in marketing the products to new
distributors/dealers, and expanding present market areas. The Company had
forecasted increasing the selling expense as a percentage of sales as explained
in the prior year's report. The Companies will continue an aggressive marketing
plan to expand its dealer network as it moves into fiscal 2000, but would not
anticipate to see any significant increase in cost as it relates to a percentage
of sales
General and administration expense decreased as a percentage of sales to 8.9% in
1999 from 9.2% in 1998. The total dollars spent on general and administrative
expenses increased slightly to $1,456,589 in 1999 from 1,431,249 in 1998
representing an increase of $25,340. While slight, this increase was
attributable to higher expenses in both operating segments in overhead, and
accounts receivable write-offs. Management will continue to take steps to
tighten credit policies therefore allowing for sales growth, and at the same
time minimizing the risk of uncollected accounts receivables. The Company will
continue to review all administrative expenses in the future in order to find
ways to keep costs as low as possible.
Interest expense continued to decline in fiscal 1999 to $293,632 from $340,182
in 1998. Management successfully completed new banking arrangements with Norwest
Business Credit Inc. of Colorado whereby reducing our overall borrowing cost.
These lines of credit are at more competitive rates, and allow for more
flexibility in structure. The Company utilizes a lock box system for receipts
therefore speeding up the processing time and allowing for a daily direct pay
down on the line of credit. Management feels the steps taken to reduce costs in
1999 will continue to benefit the Company as it moves into the new fiscal year.
Fiscal 2000 should be a year of continued growth in both sales and profits with
the new manufacturing plant for the livestock equipment segment, aggressive
marketing efforts, and continued cost reductions in all areas of the Company.
Fiscal Year Ended June 30, 1998 Compared to Fiscal Year Ended June 30, 1997.
The Company had net earnings of $87,420 in 1998, as compared to $28,120 for
1997. Had the Company not realized a loss of $72,354 on the Texas land sale, the
Company would have had a profit of $159,774. The overall improved performance is
due to improved sales and profits in the livestock equipment segment primarily
the Eagle plant, while the water and environmental products segments sales and
profits were slightly decreased compared to 1997.
Total sales increased $503,855 or 3.3% to $15,576,140 in fiscal 1998 as compared
to $15,072,285 in fiscal 1997. Total sales in livestock equipment segment
increased $817,204 to $8,988,175 in 1998. Sales in the water and environmental
products segment decreased $313,349 to $6,587,965 in 1998 compared to $6,901,314
in 1997. Sales volume at both Eagle of $349,118 and W-W Manufacturing of
$468,086 contributed to the increase in livestock handling equipment sales.
Sales increases were realized even though the cattle industry showed a down turn
during the late winter through summer months. Extreme dry weather conditions in
the south along with depressed cattle prices contributed to the overall poor
performance of the cattle industry as a whole during the last half of the year.
The continuing efforts of expanding the distributor/dealer network, rodeo
sponsorships, and special designed installations contributed to the increase in
sales. Sales continue to improve on new panel lines, and remained steady with
the traditional heavy cattle
18
<PAGE>
equipment. New and continuing equine (horse) equipment continues to gain
strength in the east and other areas of the country that have large horse
populations. The company will continue its efforts to produce new and redesign
equipment to meet the demands of all customers. Special designs and large
installations remain strong as the Company continues to market its products at
this segment of the business. This livestock segment has also been successful in
selling its products to other parts of the world including Japan, Europe, and
South America. Sales in rodeo equipment remain strong as the rodeo business
continues to show growth in all parts of the United States. With the Company
continuing to expand in new market areas mainly the west and upper midwest
states, and continuing to evaluate all product lines. Sales are expected to
remain strong through fiscal 1999.
Sales decreased in the water and environmental product segment overall.
Environmental products continue to decline with the governmental funding
continuing to be cut. The other major factor contributing to the decline in
sales is the depressed PVC pipe prices. Prices on PVC pipe are at all time lows
and are expected to remain low during the winter months into spring. Prices are
expected to improve as we move into spring and summer of 1999.
The water well supplies aspect of this segment continues to be very competitive
in pricing and margin. While this aspect of the business remains very
competitive, the Company continues to expand its other division of manufactured
products. The Company continues to manufacture various pipes, tanks, and
accessories for the water, horizontal drilling, waste treatment, and mining
industries. The custom fabrication market continues to grow with present
applications used for filtration, drainage, dewatering and other construction
application. With the success of slotted and perforated pipe and the new
emerging enviroflex product, the Company should see an improvement in sales and
profits through fiscal 1999.
Gross margins declined to 18.4% in 1998 from 19.0% in 1997. The decrease was
realized in the livestock equipment segment showing an overall decline to 18.4%
in 1998 from 20.6% in 1997. The water and environmental segment improved its
gross margin to 17.5% in 1998 as compared to 17.0% in 1997. The decline in the
livestock equipment segment gross margins was due to a significant decrease at
the W-W Manufacturing plant in Dodge City, Kansas due to severe labor shortages
and extreme inefficiency in production. Standard product had to be manufactured
at its Weatherford, Oklahoma plant then shipped to the Dodge City, Kansas plant
for shipment to the end customer. This resulted in high level of inefficiencies
and added freight cost. Gross margins continued to improve at the Eagle plant in
Livingston, Tennessee to 15.0% in 1998 as compared to 11.5% in 1997. The
increase in gross margins in the water and environmental products segment were
due to increased sales in the companies manufactured products. Sales continue to
do well in standard flush joint PVC screen and casing, and slotted high-density
polyethylene pipe introduced in fiscal 1996.
Titan's Ver-ta Slot product continues to show acceptance which product developed
for heavier wall applications found in landfills highway construction, and
various mining applications. Vertical slotted openings are available in various
diameters, schedules, and types of pipe the Company had developed the Ver-ta
Slot for all applications and material including belled end, gasket end, plain
end, or flush joint material. With the introduction of the Enviroflex well
screen, Titan again leads the way with an innovative well screen that's a cost
effective way to prevent sedimentation in horizontal remidiation wells. This
screen offers strength and high performance not found in other screens. This
screens can be used for ground water, extraction applications, and solid vapor
extraction wells. These and other new products being developed will help Titan
maintain its reputation for high quality, and innovative products.
Selling expenses as a percentage of sales remained constant at 7.6% in 1998 as
compared to 1997. The selling expenses in the livestock equipment segment
decreased to 8.5% in 1998 compared to 9.2% in 1997. The decrease is attributed
to the continuing improvement in sales in the distribution/dealer network
without a corresponding increase in selling expenses. The Company plans to
increase some selling expenses in new market areas in the coming fiscal year.
Selling expenses in the water and environmental products segment increased to
6.4% in 1998 compared to 5.6% in 1997. This increase is attributed to up front
selling and
19
<PAGE>
marketing expenses related to several introductions of new products. The Company
plans to pursue new markets for its products therefor continuing to see slight
increases in selling expenses throughout the balance of the fiscal year. It is
expected that total dollars expended on selling expenses will increase in fiscal
1998-1999, but the overall sales expense will remain fairly consistent as a
percentage of sales.
General and administration expenses increased $67,418 in fiscal 1998 as compared
to fiscal 1997. This is attributed to the increase in write offs of accounts
receivable in both segments. On a comparable basis had the write offs not been
significant, the Companies general and administrative expenses would have
decreased during fiscal 1998. Management has taken the necessary steps to
tighten credit policies where by allowing for sales growth to continue, and at
the same time minimize the risk of future write offs. The company has taken and
will continue to find ways of lowering general and administrative expenses in
the future. All expenses are reviewed and compared to budgeted projections on a
monthly basis then reviewed with both operating segments to insure expenses are
kept as low as possible.
Interest expenses continued to decline in 1998 to $340,182 from $374,522 in
1997. The company continued to pay down debt during 1998 reducing it by
$432,051; compared to a reduction of $142,742 in fiscal 1997. Subsequent to the
year-end, management has received a financial commitment for new lines of credit
with Norwest Business Credit Inc. of Colorado. These lines are at more
competitive rates and the structure will allow the Company more flexibility and
should lower interest expenses throughout 1999. The steps taken over the past
year in reducing selling, general and administrative, and interest expenses
should continue in fiscal 1999. Management feels that fiscal 1999 will benefit
more from these cost reductions than in 1998 as they will have an effect for a
twelve-month period. Fiscal 1999 should be a year of continued growth in sales
and profits through the aggressive marketing efforts and cost reductions that
have been implemented in all segments of the Company.
Impact of Year 2000:
During late fall 1999, the Company made routine software updates and system
reviews to its computer system to be "Year 2000" compliant. As of June 30, 2000
the Company has not experienced any significant disruptions to its operations
due to "Year 2000" issues.
Inflation:
Inflation has not been a significant factor in net income in recent years
because of the relatively modest rate of price increases in the United States.
Liquidity and Capital Resources:
The Company's principal sources of liquidity are from working capital,
internally generated funds and borrowings under its credit facilities. The
Company improved working capital to $3,949,982 in fiscal 2000 compared to
$3,396,955 for the same period of 1999. The Company generated funds from
operations with net earnings of $338,777 and produced a cash flow from
operations of $153,047 for fiscal 2000. With the increase of sales, borrowings
under the revolving credit facility had a net increase of $42,146. This
increase, while only slight, along with net earnings was needed to carry the
increase to support the additional accounts receivable and inventory resulting
from significant sales growth.
On March 17, 2000, the W-W hydraulic division in Weatherford, Oklahoma suffered
a fire that destroyed the majority of the production plant. The Company had
adequate insurance coverage to cover the building, inventory, contents and any
loss of income, therefore there was no material effect on the Company's
financial condition. With the destruction of the building, the Company decided
to move production to temporary facilities in Thomas, Oklahoma until moving into
the new production plant already under construction. As of the date of this
report the Company has a sales contract on the semi-destroyed building and land
and should close the sale in December 2000. The proceeds on the sale of the
building will be used to pay off the remaining real estate loan with a local
bank in Weatherford.
20
<PAGE>
During the year, the Company's primary lender, Norwest Business Credit merged
with Wells Fargo Business Credit, with Wells Fargo Business Credit being the
surviving entity. The results of the merger had no effect on the Company's lines
of credit or relationship with the bank. The Company negotiated an amended
revolving credit facility during the year by increasing its upper borrowing
limits, in case it was needed to support the present and future growth in sales.
Another of the Company's lending institutions went through a merger affecting
the real estate loan at the Livingston, Tennessee location. AmSouth Bank of
Birmingham, Alabama bought out First American Bank. The forbearance agreement
that was granted by First American on the Livingston, Tennessee facility real
estate through October 31, 2000 is being renewed with AmSouth Bank for three
years under standard terms yet to be finalized at the time of this report.
Cash flow from operations were affected by the write down of slow moving and
obsolete inventory. The Company has made changes in product designs and products
being offered in both segments, thereby creating some raw materials and finished
goods inventory that would not sell at all or sell for much less than original
cost. A provision for loss and write off of accounts receivable amounted to
$314,084 or 1.5% of sales for the fiscal year ended June 30, 2000 as compared to
$133,703 or .8% of sales for the same period of 1999. This increase resulted
from the aggressive sales and marketing plans and to several large accounts that
were deemed uncollectable due to no and/or slow pay history. The Company will
continue to pursue collection of these accounts and tighten its credit policies
through fiscal 2001.
The Company used cash in investing activities primarily for updating and
purchasing of new property and equipment needed in both segments. The Company
had a net increase in investing activities of $77,531 in fiscal 2000 as compared
to $20,518 for the same period of 1999. Net cash provided from financing
activities resulted in a net increase in borrowing on its' revolving credit
lines of $42,146. With the increase in sales growth experience, the Company has
used its increased revolving lines extensively to carry the additional inventory
and accounts receivable that come along with growth. As the Company moves into
the new fiscal year it anticipates it can continue its aggressive marketing and
sales efforts with the present credit lines and should maintain average
borrowings at or near fiscal 2000 levels.
Based in current conditions in all subsidiaries and general economic conditions,
the Company anticipates continuation of profits for fiscal 2001. However,
management does anticipate that moving the WW livestock equipment plant from
Dodge City, Kansas to Thomas, Oklahoma will have some effects on profitability
during and for a period shortly after the move. The Company feels that with
traditional cash flow continuing to improve, lower overall operating cost, and a
new modern production facility, that the Company will continue to improve in
fiscal 2001.
21
<PAGE>
Item 8. Financial Statements and Supplementary Data.
------- --------------------------------------------
W W CAPITAL CORPORATION
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE
----
Financial Statements:
Independent Auditors' Report . . . . . . . F-1
Consolidated Balance Sheets as of June 30, 2000 and
June 30, 1999. . . . . . . . . . . . . F2, F3
Consolidated Statements of Income for the years
ended June 30, 2000, 1999 and 1998 . . . . . . . F-4
Consolidated Statements of Stockholders' Equity for
the years ended June 30, 2000, 1999 and 1998 . . . . . F-5
Consolidated Statements of Cash Flows for the years ended
June 30, 2000, 1999 and 1998 . . . . . . . . . F6. F7
Notes to Consolidated Financial Statements . . . . . F-8
Financial Statement Schedules:
Independent Auditors' Report . . . . . . . . . S-1
I - Condensed Financial Information of Registrant . . . . S-2
II - Valuation and Qualifying Accounts . . . . . . S-6
All other schedules are omitted because they are not applicable or not required,
or because the required information is included in the consolidated financial
statements or notes thereto.
22
<PAGE>
Independent Auditor's Report
Board of Directors and Stockholders
W W Capital Corporation
Fort Collins, Colorado
We have audited the accompanying consolidated balance sheets of W W
Capital Corporation and subsidiaries as of June 30, 2000 and 1999, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the each of the three years ended June 30, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of W W Capital
Corporation and subsidiaries as of June 30, 2000 and 1999, and the results of
their operations and their cash flows for each of the three years ended June 30,
2000, in conformity with generally accepted accounting principles.
BROCK AND COMPANY, CPAs, P.C.
Fort Collins, Colorado
October 11, 2000
F-1
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Balance Sheets
==============================================================================================
June 30 2000 1999
----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 410,883 $ 311,491
Accounts receivable, trade, net of allowance for doubtful
accounts of $88,000 in 2000 and $115,000 in 1999 2,690,734 2,182,593
Accounts receivable, other 42,789 43,545
Inventories 4,317,954 3,475,749
Prepaid expenses 35,914 17,058
Current portion of notes receivable, related parties 507 465
Deferred income tax asset 114,000 --
---------- ----------
Total current assets 7,612,781 6,030,901
---------- ----------
Property and Equipment, net of accumulated
depreciation of $2,858,586 in 2000 and
$2,786,644 in 1999 1,959,327 2,073,919
---------- ----------
Other Assets
Long-term notes receivable, related parties, net current portion 21,627 22,135
Loan acquisition costs, net of accumulated amortization
of $42,661 in 2000 and $11,689 in 1999 41,294 72,266
Other assets 10,455 21,571
---------- ----------
Total other assets 73,376 115,972
---------- ----------
Total assets $9,645,484 $8,220,792
========== ==========
</TABLE>
The accompanying Notes are an integral part of the consolidated financial
statements
F-2
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Balance Sheets (continued)
============================================================================================
June 30 2000 1999
--------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 2,728,867 $ 2,129,501
Accrued payroll and related taxes 303,280 216,719
Accrued property taxes 30,254 23,062
Accrued interest payable 26,203 19,790
Accrued income taxes, current 45,000 --
Other current liabilities 88,195 874
Current portion of notes payable 418,000 227,000
Current portion of capital lease obligation 23,000 17,000
----------- -----------
Total current liabilities 3,662,799 2,633,946
----------- -----------
Long - Term Liabilities
Long-term notes payable, net of current portion 2,783,192 2,898,626
Long-term capital lease obligations, net of current portion 68,426 73,002
Deferred income tax liability 131,000 --
Negative goodwill, net of accumulated amortization of $781
in 2000 46,072 --
----------- -----------
Net long term liabilities 3,028,690 2,971,628
----------- -----------
Total liabilities 6,691,489 5,605,574
----------- -----------
Commitments and Contingency -- --
Stockholders' Equity
Preferred stock, $10.00 par value,
400,000 shares authorized -- --
Common stock, $0.01 par value, 15,000,000 shares
authorized, 5,540,661 shares issued in 2000 and 1999 55,406 55,406
Capital in excess of par value 3,304,629 3,304,629
Accumulated deficit (357,134) (695,911)
----------- -----------
3,002,901 2,664,124
Less 120,264 shares of treasury stock, at cost (48,906) (48,906)
----------- -----------
Net stockholders' equity 2,953,995 2,615,218
----------- -----------
Total liabilities and stockholders' equity $ 9,645,484 $ 8,220,792
=========== ===========
</TABLE>
The accompanying Notes are an integral part of the consolidated financial
statements
F-3
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Statements of Income
==============================================================================================
Years ended June 30 2000 1999 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 21,263,753 $ 16,387,043 $ 15,576,140
Cost of Goods Sold 17,212,259 13,302,081 12,709,034
------------ ------------ ------------
Gross profit 4,051,494 3,084,962 2,867,106
------------ ------------ ------------
Operating Expenses
Selling expenses 1,516,131 1,324,702 1,188,403
General and administrative expenses 1,901,143 1,456,589 1,431,249
------------ ------------ ------------
Total operating expenses 3,417,274 2,781,291 2,619,652
------------ ------------ ------------
Income From Operations 634,220 303,671 247,454
------------ ------------ ------------
Other Income (Expense)
Interest income 64,252 70,580 81,910
Interest expense (316,604) (293,632) (340,182)
Realized loss on real estate held for sale -- -- (72,354)
Gain on property and equipment
dispositions 685 1,653 87,122
Other income, net 18,224 22,536 83,470
------------ ------------ ------------
Net other income (expense) (233,443) (198,863) (160,034)
------------ ------------ ------------
Earnings Before Income Taxes 400,777 104,808 87,420
Income Tax 62,000 -- --
------------ ------------ ------------
Net earnings $ 338,777 $ 104,808 $ 87,420
============ ============ ============
Earnings Per Common Share
Basic
Net earnings $ 0.06 $0 .02 $ 0.02
Weighted average number of
common shares 5,540,661 5,540,661 5,540,661
Diluted
Net earnings $ 0.06 $ 0.02 $ 0.02
Weighted average number of
common shares 5,540,661 5,540,661 5,560,794
</TABLE>
The accompanying Notes are an integral part of the consolidated financial
statements
F-4
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity
===================================================================================================================================
Years ended June 30, 2000, 1999 and 1998
-----------------------------------------------------------------------------------------------------------------------------------
Common Stock Treasury Stock
--------------------- Capital -------------------- Total
Number of Par In Excess Accumulated Number of Stockholders'
Shares Value of Par Value Deficit Shares Cost Equity
---------- -------- ----------- ------------ --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1997 5,540,661 $ 55,406 $ 3,304,629 $ (888,139) (20,264) $ (18,906) $ 2,452,990
Acquisition of treasury stock -- -- -- -- (100,000) (30,000) (30,000)
Net earnings for year ended June 30, 1998 -- -- -- 87,420 -- -- 87,420
--------- -------- ----------- ----------- -------- ---------- -----------
Balance, June 30, 1998 5,540,661 55,406 3,304,629 (800,719) (120,264) (48,906) 2,510,410
Net earnings for year ended June 30, 1999 -- -- -- 104,808 -- -- 104,808
--------- -------- ----------- ----------- -------- ---------- -----------
Balance, June 30, 1999 5,540,661 55,406 3,304,629 (695,911) (120,264) (48,906) 2,615,218
Net earnings for year ended June 30, 2000 -- -- -- 338,777 -- -- 338,777
--------- -------- ----------- ----------- -------- ---------- -----------
Balance, June 30, 2000 5,540,661 $ 55,406 $ 3,304,629 $ (357,134) (120,264) $ (48,906) $ 2,953,995
=========== ======== =========== ========== ========= ========= ===========
</TABLE>
The accompanying Notes are an integral part of the consolidated financial
statements
F-5
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
==========================================================================================================
Years ended June 30 2000 1999 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net earnings $ 338,777 $ 104,808 $ 87,420
Adjustments to reconcile net earnings
to net cash provided by operating activities
Depreciation 261,376 340,557 394,230
Amortization 30,972 11,689 --
Gain on dispositions of property and equipment (685) (1,653) (87,122)
Loss on sale of real estate held for sale -- -- 72,354
Provision for loss on accounts and notes receivable 314,084 133,703 87,795
Amortization of negative goodwill (781) -- --
Write down of inventory to net realizable value 119,148 -- --
Net changes in assets and liabilities
Accounts receivable (777,381) (420,568) 5,947
Inventories (592,422) (318,250) 183,657
Other current and non-current assets (4,404) 27,110 (5,290)
Accounts payable, accrued expenses and
other current liabilities 464,363 380,708 (456,312)
------------ ------------ ------------
Net cash provided by operating activities 153,047 258,104 282,679
------------ ------------ ------------
Cash Flows From Investing Activities
Proceeds from sale of real estate -- -- 198,681
Proceeds from sale of property and equipment 93,519 3,000 124,424
Purchases of property and equipment (186,504) (134,287) (265,152)
Proceeds from notes receivable, other -- 110,341 6,209
Proceeds from stockholders' notes receivable 466 428 9,286
Cash acquired in acquisition of subsidiary 14,988 -- --
------------ ------------ ------------
Net cash provided (used) by
investing activities (77,531) (20,518) 73,448
------------ ------------ ------------
Cash Flows From Financing Activities
Payments on lines of credit -- -- (150,000)
Borrowings on notes payable 18,705,745 7,980,226 49,506
Payments on notes payable (18,663,599) (8,092,183) (319,984)
Payments on capital leases (18,270) (11,632) (11,573)
Payment of loan acquisition costs -- (83,955) --
------------ ------------ ------------
Net cash provided (used) by
financing activities 23,876 (207,544) (432,051)
------------ ------------ ------------
</TABLE>
The accompanying Notes are an integral part of the consolidated financial
statements
F-6
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (continued)
=======================================================================================
Years ended June 30 2000 1999 1998
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Increase (Decrease) in Cash $ 99,392 $ 30,042 $ (75,924)
Cash, Beginning of year 311,491 281,449 357,373
--------- --------- ---------
Cash, End of year $ 410,883 $ 311,491 $ 281,449
========= ========= =========
Supplemental Information
Liabilities assumed to acquire subsidiary $ 383,990 $ -- $ --
Installment loans and capital leases to acquire
property and equipment $ 53,114 $ 178,287 $ --
Note receivable obtained in sale of
real estate held for sale $ -- $ -- $ 110,000
Treasury stock acquired in sale of property $ -- $ -- $ 30,000
Cash paid during the period for interest $ 309,863 $ 301,624 $ 334,092
</TABLE>
The accompanying Notes are an integral part of the consolidated financial
statements
F-7
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 1 - Summary of Significant Accounting Policies
Nature of Operations. W W Capital Corporation and its
wholly-owned subsidiaries (the Company) principally engage in the
manufacture, distribution and sale of a wide range of livestock
confinement and handling equipment, and in the processing, purchasing
and distributing of water well supplies.
Basis of Presentation. The accompanying consolidated financial
statements include the accounts of W W Capital Corporation and all of
its wholly-owned subsidiaries, W-W Manufacturing Co., Inc. (W-W
Manufacturing), Titan Industries, Inc. (Titan) and Eagle Enterprises,
Inc. (Eagle). W-W Manufacturing Co. acquired WW Paul Scales on March
21, 2000. The accounts of WW Paul Scales since its acquisition are
included in the consolidated financial statements. During 1999, the
Company consolidated W-W Manufacturing and Eagle into one legal entity
without effecting the financial statements. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Use of Estimates. The preparation of the Company's consolidated
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Cash Equivalents. For purposes of the statement of cash flows,
the Company considers all highly liquid debt investments purchased
with an original maturity of three months or less to be cash
equivalents.
Loan Impairment and Allowance for Doubtful Accounts. The Company
uses the allowance method of accounting for bad debts. Individual
notes are evaluated for potential impairment when payments are in
arrears. Loans identified as impaired are then valued based upon the
present value of estimated future cash flows, valuation of collateral,
or management's judgment based upon general market conditions,
historical trends or individual circumstances. The resulting value is
then compared to the carrying amount. An allowance is established for
any resulting deficiency in the loan value compared to the carrying
amount.
The Company recognizes the entire change in the valuation
allowance as bad debt expense in the same manner in which impairment
initially was recognized or as a reduction in the amount of bad debt
expense that otherwise would have been reported. Interest accrued on
impaired loans is recognized as interest income. Payments received are
applied first to accrued interest receivable and then to principal.
The allowance for doubtful accounts are based on estimates and it
is reasonably possible they may change in the near-term.
Inventories. Inventories are stated at the lower of cost or
market. Cost includes materials, labor and production costs and is
determined on a first-in, first-out (FIFO) method.
Property and Equipment. Property and equipment are stated at
cost. Depreciation is computed using straight-line and accelerated
methods over the estimated useful lives of the assets, which are
generally thirty to forty years for buildings and improvements, three
to seven years for leasehold improvements and automobiles and trucks,
and five to seven years for machinery and equipment and office
equipment. Amortization of equipment under capital leases is included
in depreciation expense.
F-8
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 1 - Summary of Significant Accounting Policies (continued)
Loan Acquisition Costs. Loan acquisition costs were incurred
to obtain certain of the Company's long-term debt. Such costs have
been capitalized and are being amortized over the terms of the related
debt.
Long-Lived Assets. Long-lived assets to be held and used are
recorded at cost. Management reviews long-lived assets and the related
intangible assets for impairment whenever events or changes in
circumstances indicate the carrying amount of such assets may not be
recoverable. Recoverability of these assets is determined by comparing
the forecasted undiscounted net cash flows of the operation to which
the assets relate, to the carrying amount including associated
intangible assets of such operation. If the operation is determined to
be unable to recover the carrying amount of its assets, then
intangible assets are written down first, followed by the other
long-lived assets of the operation, to fair value. Fair value is
determined based on discounted cash flows or appraised values,
depending upon the nature of the assets.
Warranty. The Company provides a warranty to its customers and
the related costs are recorded at the time of service. Future warranty
costs are not considered significant to the financial statements as
most warranty work, if any, is generally performed shortly after the
sale.
Stock-Based Compensation. The Company applies the provisions
of Statement of Financial Accounting Standards Board Statement No. 123
(FAS 123), "Accounting for Stock-Based Compensation." The Statement
defined a fair value based method of accounting for stock options or
similar equity instruments. FAS 123 allows an entity to continue to
measure compensation cost for employee stock option plans using the
intrinsic value based method of accounting prescribed by Accounting
Principles Board Opinion (APB) No. 25, which was elected by the
Company. FAS 123 requires the Company to make certain proforma
disclosures as if the fair value based method had been applied. The
effects of the fair value based method for the periods presented were
not material for proforma disclosure.
Advertising. The Company expenses the cost of advertising the
first time the advertising takes place except for sales videos and show
materials, which were capitalized and amortized over their expected
period of future benefits of 60 and 36 months respectively.
At June 30, 2000 and 1999 $16,246 and $14,055 of advertising
cost was reported as assets. Advertising expense for each of the three
years ended June 30, 2000 was $96,367, $100,821 and $110,082,
respectively.
Income Taxes. Deferred income taxes are recognized for
temporary differences resulting from income and expense items reported
for financial accounting and tax purposes in different periods.
Deferred income taxes are classified as current or noncurrent,
depending on the classification of the assets and liabilities to which
they relate. Deferred income taxes arising from temporary differences
that are not related to an asset or liability are classified as
current or noncurrent depending on the periods in which the temporary
differences are expected to reverse. The recognition of deferred tax
assets is reduced if necessary, by the amount of any tax benefits
that, based on available evidence, are not expected to be realized.
F-9
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 1 - Summary of Significant Accounting Policies (continued)
Per Share Data. In 1998, the Company adopted Financial
Accounting Standards Board Statement No. 128(FAS 128), "Earnings Per
Share." The statement modifies the standards for computing and
presenting earnings per share. FAS 128 requires dual presentation of
basic and diluted earnings per share on the face of the income
statement. Basic earnings per share were computed on the basis of
weighted average number of shares outstanding. Diluted earnings per
share includes outstanding stock options, unless the effect would be
antidilutive.
Note 2 - Related Party Transactions
Receivables. Notes receivable from stockholders and all
affiliated entities consisted of the following at June 30:
<TABLE>
<S> <C> <C>
2000 1999
---- ----
Note receivable from a partnership owned by certain of
the Company's stockholders bears interest at 9%. During
October 1997, the note was renegotiated to provide for
annual installments of $2,500 through 2017 and for
collateral consisting of shares of the Company's common
stock owned by the partners. $22,134 $ 22,600
Less current portion (507) (465)
------- --------
$21,627 $ 22,135
======= ========
</TABLE>
During the years ended June 30, 2000, 1999 and 1998, the
Company recorded interest income of $1,993, $2,034 and $2,072 for the
notes receivable from related parties.
Accounts receivable - other includes an advance to a Director
of the Company with $925 outstanding at June 30, 1999. Director fees
and expenses of $925 were applied against the balance during 2000.
Notes Payable to Stockholder. The Company has outstanding
balances of $7,246 and $14,521 payable to a former stockholder of Titan
as of June 30, 2000 and 1999, respectively. The notes are unsecured,
bear interest at 10%, and are payable in total monthly installments of
$700 through March 2001 and $350 through July 2001.
During the years ended June 30, 2000, 1999 and 1998, the
Company incurred interest expense of $1,125, $1,814 and $2,525,
respectively, on the notes payable to stockholder.
Operating Lease. The Company leases its manufacturing facility
in Dodge City, Kansas, from Murle F. Webster, a stockholder, on a month
to month basis. The lease requires monthly payments of $5,000. The
provisions of the building leases require the Company to pay insurance,
property taxes and maintenance costs.
F-10
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 2 - Related Party Transactions (continued)
Other. During September 1998, the Company agreed to settle its
claim against Jerry R. Bellar (Bellar), a stockholder of the Company
and a former stockholder of Eagle Enterprises, Inc., and Bellar agreed
to settle claims against the Company asserted by him and two affiliated
companies. The settlement agreement provided for the cancellations of
amounts due to the Company from Bellar recorded at $167,572, and amount
payable by the Company to Bellar of $150,000. The Company paid $20,000
to Bellar in September 1998.
The Company has entered into the transactions with related
parties as disclosed above during the three-year period ended June 30,
2000. The Company has not attempted to determine whether any or all of
such transactions have been consummated on terms equivalent to those
that would have prevailed in arm's length transactions.
Note 3 - Inventories
<TABLE>
<CAPTION>
Inventories consisted of the following at June 30:
2000 1999
---- ----
<S> <C> <C>
Raw materials $ 563,123 $ 420,494
Work-in-process 388,056 240,573
Finished goods 3,366,775 2,814,682
----------- -----------
$ 4,317,954 $ 3,475,749
=========== ===========
</TABLE>
During the fourth quarter of 2000, the Company evaluated its
inventories for impairment. The inventory value was written down by
$119,148 to estimate net realizable value of impaired items. The write
down is recorded in cost of goods sold. It is reasonably possible that
estimates of net realizable value may change in the near term.
Note 4 - Property and Equipment
<TABLE>
<CAPTION>
Property and equipment consisted of the following at June 30:
2000 1999
---- ----
<S> <C> <C>
Land and improvements $ 156,262 $ 156,262
Building and improvements 1,425,861 1,515,956
Leasehold improvements 218,244 213,045
Machinery and equipment 1,985,630 1,893,574
Office equipment 419,171 403,157
Automobiles and trucks 612,745 641,464
Construction in progress - 37,105
----------- ----------
4,817,913 4,860,563
Less accumulated depreciation and amortization (2,858,586) (2,786,644)
----------- ----------
$ 1,959,327 $2,073,919
=========== ==========
</TABLE>
Note 5 - Investment in Real Estate
In November 1997, the Company sold 95 acres of undeveloped real
estate in Johnson County, Texas for $335,000. The company carried back
a $110,000 note receivable which was paid in full during 1999. A
realized loss was recorded in the amount of $72,354, which includes
expenses of sale of $26,319.
F-11
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 6 - Employee Benefit Plans
401(k) Plan. The Company has a 401(k) Saving Plan, whereby
eligible employees, who have one half year of service and are age 21 or
older, may contribute up to 20% of their salary up to a maximum as
allowed by the Internal Revenue Code. The Company may make
discretionary matching contributions on the first 4% of employee
contributions vesting at 25% per year after three years of service.
During the years ended June 30, 2000, 1999, and 1998, the Company made
$12,119, $7,255 and $7,729 in discretionary contributions to the Plan.
Stock Options. The Company has an Incentive Stock Option Plan.
Under this Plan, the Board of Directors or its designated committee is
authorized to grant officers and key employees options to purchase up
to 950,000 shares of the Company's common stock. At June 30, 2000,
options to purchase 727,500 shares of common stock are available to be
granted by the Company under the plan. These options have a three-year
vesting period.
Additionally, the Company has a non-qualified stock option plan
for the outside directors of the Company. Under this plan, the
incentive stock option plan committee is authorized to grant outside
directors options to purchase up to 400,000 shares of the Company's
common stock. The Company granted options to purchase up to 227,668
shares at option prices ranging from $0.063 to $2.50 per share of which
217,668 are outstanding as of June 30, 2000. Options to purchase 10,000
shares of common stock for $0.063 per share were exercised during 1998.
These options will expire ten years after issuance.
The following stock options are outstanding at June 30, 2000:
Number Number
of Options Exercise of Options
Issue Date Outstanding Price Exercisable
------------------- ----------- ----------- -----------
December 14, 1990 10,000 $1.00 10,000
May 1, 1992 25,000 $2.50 25,000
February 26, 1993 50,000 $1.50 50,000
July 1, 1993 26,001 $0.8125 26,001
June 10, 1994 172,500 $0.75 172,500
July 1, 1994 26,667 $0.75 26,667
July 1, 1995 30,000 $0.5625 30,000
July 1, 1996 20,000 $0.0625 20,000
July 1, 1997 10,000 $0.17 10,000
July 1, 1998 10,000 $0.30 10,000
July 1, 1998 20,000 $0.13 20,000
July 1, 1999 30,000 $0.0625 30,000
July 1, 2000 10,000 $0.0625 10,000
-------- --------
440,168 440,168
======== ========
F-12
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Notes to Consolidated Financial Statements
June 30, 2000
====================================================================================================================
Note 7 - Long-Term Debt
Long-term debt consists of the following at June 30:
2000 1999
-------------- ------------
<S> <C> <C>
Financial Institutions
----------------------
Revolving note payable bears interest at 1.5% above the Bank's
base rate (total interest rate of 11.00% at June 30, 2000). The note is
subject to various conditions described below and provides for the
issuance of $1,600,000 of revolving credit debt. The agreement matures
October 2001. $1,103,126 $ 964,603
Revolving note payable bears interest at 1.5% above the Bank's
base rate (total interest rate of 11.00% at June 30, 2000). The note is
subject to various conditions described below and provides for the
issuance of $1,300,000 of revolving credit debt. The agreement matures
October 2001. 1,038,803 1,046,669
Note payable bears interest at 8.5% and is due in monthly
installments of $8,300, including principal and interest. The note
matured in April 1998 and is collateralized by real estate located in
Livingston, Tennessee, and machinery and equipment. The Company was
granted forbearance until October 2000. Management is negotiating the
refinancing of the debt. 232,511 308,290
Mortgage note payable bears interest at 9.08% through February
2005. The interest rate is 4.98% over the Bank's consumer real estate
index rate and is subject to change in March 2005. The note is payable
in installments, including principal and interest, of $2,309 and
matures in March 2010. The mortgage is collateralized by real estate
located in Paxton, Nebraska, accounts receivable, inventories, property
and equipment, contract rights and intangibles. 178,443 189,889
Term note payable bears interest at 2% over the Bank's base rate
(total interest rate of 11.50% at June 30, 2000). The note is due in
monthly principal installments of $4,021 plus interest through October
2001. The note is collateralized by equipment, inventory, intangibles
and receivables. 170,653 218,540
</TABLE>
F-13
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Notes to Consolidated Financial Statements
June 30, 2000
===================================================================================================================
Note 7 - Long-Term Debt (continued)
2000 1999
-------------- --------------
<S> <C> <C>
Term note payable bears interest at 2% over the Bank's base rate
(total interest rate of 11.50% at June 30, 2000). The note is due in
monthly principal installments of $2,917 plus interest through October
2001. The note is collateralized by equipment, inventory, intangibles
and receivables. $ 134,167 $ -
Note payable bears interest at 9.75% and is due in monthly
installments of $949, including principal and interest. The note
matures in March 2005 and is collateralized by equipment in Weatherford,
Oklahoma. 71,033 -
Notes payable bearing interest at rates ranging from 5.9% to 7.6%
and are due in monthly installments, including principal and interest,
totaling $1,530 through November 2002, and $475 through February 2003.
The notes are collateralized by vehicles. 42,181 57,295
Notes payable bearing interest at rates ranging from 7.69% to
7.95% and are due in monthly installments, including principal and
interest, totaling $1,045 through January 2003, and $480 through March
2003. The notes are collateralized by vehicles. 30,397 -
Notes payable bearing interest at rates ranging from 5.9% to 8.25%
and are due in monthly installments, including principal and interest,
totaling $842 through July 2001, and $397 through June 2002. The notes
are collateralized by vehicles. 14,269 22,813
Notes paid in full during 2000. - 91,281
------------- -------------
3,015,583 2,899,380
------------- -------------
Other Entities
--------------
Mortgage note payable bears interest at 4.54% through January
2005. The interest rate will be adjusted in February 2005. The note is
due in monthly installments of $949, including principal and interest,
through February 2010. The note is collateralized by real estate
located in Paxton, Nebraska, accounts receivable, inventories, property
and equipment, contract rights and intangibles. $ 89,578 $ 96,864
</TABLE>
F-14
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Notes to Consolidated Financial Statements
June 30, 2000
=====================================================================================================================
Note 7 - Long-Term Debt (continued)
2000 1999
-------------- --------------
<S> <C> <C>
Note payable bears interest at 5.75% and is due in monthly
installments, including principal and interest, of $2,449 through July
2003. The note is collateralized by accounts receivable, equipment and
furniture and fixtures. The agreement requires the Company to create or
retain seventeen new full-time permanent positions within an eighteen
month period with 60% of the positions for low income individuals. $ 82,921 $ 106,680
Note payable bears interest at 5.25% and is due in quarterly
installments, including principal and interest, of $675. The note is
unsecured. 5,864 8,181
-------------- -------------
178,363 211,725
-------------- -------------
Related Party 7,246 14,521
-------------- -------------
3,201,192 3,125,626
Less current portion (418,000) (227,000)
-------------- -------------
$2,783,192 $2,898,626
============== =============
</TABLE>
Revolving notes payable in the amount of $2,141,929 are
collateralized by equipment, intangibles, inventory and receivables.
The debt is subject to borrowing base limitations of 80% of eligible
accounts receivable and 50% of eligible inventory. The loan agreement
contains certain covenants including the maintenance of minimum net
income and limitations on the acquisition of property and equipment.
The loans provide for charges of .25% on unused revolving credit lines
and for payment penalties in the event the agreement is terminated
prior to the maturity date. Receivable collections are used to pay down
the note on a daily basis. After two business days, these funds are
available for borrowing subject to the borrowing base limitations.
Approximately $3,015,000 of the Company's consolidated net assets at
June 30, 2000 are considered to be restricted net assets of
consolidated subsidiaries.
At June 30, 2000, one subsidiary was in violation of the
covenant pertaining to the maintenance of minimum net income. The
covenant violation was waived by the lender.
The aggregate maturities of long-term debt are as follows at
June 30, 2000:
Year
-------------
2001 $ 418,000
2002 2,444,973
2003 77,160
2004 30,321
2005 75,486
Thereafter 155,252
------------
$3,201,192
==========
F-15
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 8 - Lease Commitments
Capital Leases. The Company leases certain manufacturing
equipment under six capital leases which expire in August 2003 through
March 2005. Assets under capital leases are recorded at fair value and
are amortized over their estimated useful lives. The leased equipment
has a cost of $132,135 and $112,441and accumulated amortization of
$33,581 and $12,769 at June 30, 2000 and 1999.
Future minimum lease payments required under noncancelable
capital leases are as follows at June 30, 2000.
Year
2001 $ 29,743
2002 29,743
2003 29,743
2004 13,685
2005 3,480
--------
Total minimum lease payments 106,394
Less: amount representing interest (14,968)
--------
Present value of net minimum lease payments $ 91,426
========
Operating Leases. In January 2000, the Company entered into a
two year lease extension for office space. The lease provides for
monthly rental payments of $2,529 escalating to $2,601 through April
2002.
In November 1998, the Company entered into a lease for
warehouse space. The lease provides for monthly rental payments of
$1,500 through October 2001.
In April 2000, the Company entered into a two year lease for a
production facility. The lease provides for monthly rental payments of
$4,000 though April 2002.
The Company has entered into various lease agreements for
production and office equipment and vehicles. The lease terms are
generally two to five years.
Future minimum rental payments under operating leases as of
June 30, 2000 are as follows:
Warehouse and Vehicles and
Year Office Space Equipment Total
---- -------- -------- --------
2001 $ 96,824 $ 72,120 $168,944
2002 65,612 45,139 110,751
2003 -- 25,306 25,306
-------- -------- --------
Total minimum payments required $162,436 $142,565 $305,001
======== ======== ========
The Company also leases various facilities under informal
agreements. Rental expense under operating leases for the years ended
June 30, 2000, 1999 and 1998 amounted to $224,802, $212,188, and
$168,799, respectively.
F-16
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 9 - Business Combination
On March 21, 2000, W-W Manufacturing, a wholly-owned
subsidiary of WW Capital Corporation, acquired various assets and
assumed certain liabilities of Adrian J. Paul Company, out of
bankruptcy. Adrian J. Paul Company is located in Duncan, Oklahoma and
is a manufacturer of scales used by the livestock industry. Subsequent
to the acquisition, Adrian J. Paul Company was renamed WW Paul Scales.
W-W Manufacturing assumed liabilities of $383,990 to acquire
the assets. The transaction was accounted for as a purchase and,
accordingly, the excess of asset values over the total of cash paid and
liabilities assumed were used first to reduce long-term assets. The
remainder was recorded as negative goodwill of $46,853. The negative
goodwill will be amortized over 20 years using the straight-line
method.
The accompanying consolidated financial statements reflect the
acquisition from the date acquired. The following unaudited pro forma
summary presents the consolidated results of operations of the Company
as if the business combination had occurred on July 1, 1998.
2000 1999
------------- -------------
Revenues $ 22,545,000 $ 18,200,000
Net earnings $ 397,000 $ 141,000
Earnings per share $ .07 $ .03
The above amounts are based upon certain assumptions and
estimates, which the Company believes are reasonable. The pro forma
results do not necessarily represent results which would have occurred
if the business combination had taken place at the date and on the
basis assumed above.
Note 10 - Segmented Information and Reconciliation
The Company's operations are classified into principal
industry segments; W-W Manufacturing and Eagle, which consolidated into
one legal entity in 1999, manufacture and distribute livestock handling
equipment, and Titan which processes and distributes water well and
environmental supplies. Following is a summary of segmented information
for each of the three years in the period ended June 30:
<TABLE>
<CAPTION>
2000 1999 1998
------------ ------------ -------------
<S> <C> <C> <C>
Net Sales:
Livestock handling equipment $ 12,210,587 $ 9,108,446 $ 8,988,175
Water well and environmental supplies 9,053,166 7,278,597 6,587,965
------------ ------------ ------------
Total net sales $ 21,263,753 $ 16,387,043 $ 15,576,140
============ ============ ============
Operating Earnings:
Livestock handling equipment $ 733,946 $ 422,019 $ 427,900
Water well and environmental supplies 321,757 283,644 246,676
------------ ------------ ------------
Total operating earnings 1,055,703 705,663 674,576
Corporate and other (1) (654,926) (600,855) (587,156)
------------ ------------ ------------
Earnings before income taxes $ 400,777 $ 104,808 $ 87,420
============ ============ ============
</TABLE>
F-17
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Notes to Consolidated Financial Statements
June 30, 2000
===========================================================================================
Note 10 - Segmented Information and Reconciliation (continued)
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Identifiable Assets:
Livestock handling equipment $4,872,982 $3,953,879 $3,704,490
Water well and environmental supplies 4,847,845 4,231,583 3,803,234
---------- ---------- ----------
9,720,827 8,185,462 7,507,724
General corporate assets (2) 75,343 35,330 172,854
---------- ---------- ----------
Total assets as reported in
accompanying consolidated
balance sheets $9,645,484 $8,220,792 $7,680,578
========== ========== ==========
Capital Expenditures:
Livestock handling equipment $ 173,849 $ 174,648 $ 151,050
Water well and environmental supplies 78,391 176,974 174,087
Corporate 3,437 599 19,473
---------- ---------- ----------
Total capital expenditures $ 255,677 $ 352,221 $ 344,610
========== ========== ==========
Depreciation and Amortization:
Livestock handling equipment $ 190,241 $ 232,683 $ 277,914
Water well and environmental supplies 91,336 87,771 96,442
Corporate 10,771 31,792 19,874
---------- ---------- ----------
Total depreciation and amortization $ 292,348 $ 352,246 $ 394,230
========== ========== ==========
Write Down of Inventory to Net Realizable Value:
Livestock handling equipment $ 97,418 $ -- $ --
Water well and environment supplies 21,730 -- --
---------- ---------- ----------
Total write down of inventory
to net realizable value $ 119,148 $ -- $ --
========== ========== ==========
Provision for Loss on Accounts and Notes Receivable:
Livestock handling equipment $ 193,090 $ 37,578 $ 24,010
Water well and environment supplies 120,994 96,125 63,785
---------- ---------- ----------
Total Provision for loss on accounts
and notes receivable $ 314,084 $ 133,703 $ 87,795
========== ========== ==========
Interest Income:
Livestock handling equipment $ 19,840 $ 19,537 $ 20,737
Water well and environmental supplies 44,349 43,958 55,027
Corporate 63 7,085 6,146
---------- ---------- ----------
Total interest income $ 64,252 $ 70,580 $ 81,910
========== ========== ==========
Income Tax Expense:
Livestock handling equipment $ 50,000 $ -- $ --
Water well and environment supplies 12,000 -- --
---------- ---------- ----------
Total income tax expense $ 62,000 $ -- $ --
========== ========== ==========
</TABLE>
F-18
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Notes to Consolidated Financial Statements
June 30, 2000
===================================================================================================================
Note 10 - Segmented Information and Reconciliation (continued)
<S> <C> <C> <C>
Interest Expense:
Livestock handling equipment $ 170,953 $ 164,708 $ 194,921
Water well and environmental supplies 145,481 128,877 144,566
Corporate 170 47 695
------------ ------------- -----------
Total interest expense $ 316,604 $ 293,632 $ 340,182
============ ============= ===========
</TABLE>
(1) Corporate and other includes corporate general and
administrative expenses, net interest expense and other
nonoperating income and expense items.
(2) General corporate assets are principally notes receivable
and corporate fixed assets.
Note 11 - Income Taxes
<TABLE>
<CAPTION>
The provision for income taxes is as follows at June 30:
2000 1999 1998
---------- ---------- ---------
<S> <C> <C> <C>
Current
Federal $121,200 $ 64,800 $ 72,700
State 20,000 10,500 23,300
Deferred 17,000 - -
Tax benefit of net operating loss (96,200) (75,300) (96,000)
--------- --------- ---------
$ 62,000 $ - $ -
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
A reconciliation of income at the statutory rate to the
Company's effective rate is as follows at June 30:
2000 1999 1998
---------- ---------- ---------
<S> <C> <C> <C>
Federal statutory rate 34.00% 34.00% 34.00%
Non deductible expenses 3.01 9.14 9.51
Basis difference in assets and liabilities 3.98 22.98 (4.60)
Capital loss and reversal of non
deductible write down of real estate - - (8.38)
Change in deferred tax asset
valuation allowance and net
operating loss (24.84) (67.82) (30.53)
Other (0.68) 1.70 -
--------- --------- ---------
15.47% - % - %
======== ========= =========
</TABLE>
<TABLE>
<CAPTION>
Deferred tax assets and liabilities are comprised of the
following at June 30:
2000 1999 1998
---------- ---------- ---------
<S> <C> <C> <C>
Deferred Tax Assets:
Net operating loss carryforward $ - $ 104,100 $ 238,000
Allowance for doubtful accounts 31,000 42,900 38,900
Inventory 34,200 32,400 28,500
Accrued salaries 33,500 31,000 26,700
Other 15,300 2,900 -
---------- ----------- --------------
Total deferred tax assets 114,000 213,300 332,100
</TABLE>
F-19
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Notes to Consolidated Financial Statements
June 30, 2000
===================================================================================================================
Note 11 - Income Taxes
<S> <C> <C> <C>
Deferred Tax Liabilities:
Depreciation of property and equipment (131,000) (124,400) (135,000)
Valuation allowance - (88,900) (197,100)
-------- ---------- -----------
Deferred taxes - net $(17,000) $ - $ -
======== ========== ===========
Current deferred tax asset $114,000 $ - $ -
Long-term deferred tax liability (131,000) - -
--------- ----------- ------------
$ (17,000) $ - $ -
========= ========== ===========
</TABLE>
At June 30, 2000, the Company has capital loss carryforwards
in the amount of $89,000 which no benefit has been recognized due to
uncertainty as to realization. The losses expire in 2001.
Note 12 - Significant Group Concentrations of Credit Risk
The Company's business activity is in two industry segments,
livestock handling equipment and water well and environmental supplies.
W-W Manufacturing's livestock handling equipment customers are
principally resellers and are primarily located in the Midwest,
Tennessee and Georgia, while Titan's water well supply customers are
principally located in the states of Nebraska, Oklahoma and Kansas. At
June 30, 2000, W-W Manufacturing's accounts receivable, net of
allowance for doubtful accounts, totaled $1,388,358 and Titan's totaled
$1,272,970. The Company generally does not require collateral for
routine open accounts receivable.
Note 13 - Fair Value of Financial Instruments
The Company discloses fair value to the extent practicable for
financial instruments which are recognized or unrecognized in the
balance sheet. The fair value of the financial statements disclosed
herein is not necessarily representative of the amount that could be
realized or settled, nor does the fair value amount consider tax
consequences of realization. The carrying value of cash, trade
receivables, notes receivables and accounts payable and variable rate
debt instruments approximate fair value. The carrying value of
long-term debt approximates fair value in 2000 and 1999 due to the
scheduled maturities and restrictive provisions of the debt.
Note 14 - Commitment
The Company has entered into a 20 year lease agreement with
the Thomas Oklahoma Economic Development Trust Authority to lease
certain facilities and acquire certain benefits. The Company intends to
relocate its Dodge City, Kansas facilities to a new facility in Thomas,
Oklahoma during late fall 2000. The relocation is contingent upon
finalization of construction, at which time monthly rental payments
will be determined and the lease agreement will go into effect.
F-20
<PAGE>
W W CAPITAL CORPORATION
Notes to Consolidated Financial Statements
June 30, 2000
================================================================================
Note 15 - Proposed Split-Off
Management is negotiating with certain stockholders for the
exchange of all of the common stock the Company owns in Titan. The
Company will receive 3,390,399 shares of W W Capital Corporation common
stock, including 24,566 shares of common stock to be issued upon the
exercise of outstanding options. Additionally, the Company will receive
and cancel exercisable options to acquire 129,934 shares of W W Capital
Corporation common stock. The agreement, as currently proposed,
requires the Company to contribute $850,000 to Titan prior to the
exchange. As of October 11, 2000, no definitive agreement has been
reached. Any definitive agreement will be subject to certain conditions
including, among other conditions, obtaining stockholder approval.
In connection with the proposed exchange, management has
negotiated a proposed loan in the amount of $1,000,000 from an
unaffiliated investment group. The loan will be collateralized by
2,448,000 shares of the Company's outstanding common stock and by other
assets. Loan proceeds of $850,000 are expected to fund the capital
contributions to Titan.
F-21
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
W W Capital Corporation
Fort Collins, Colorado
We have audited the accompanying consolidated balance sheets of W W
Capital Corporation as of June 30, 2000 and 1999, and the related statements of
income, stockholders' equity and cash flows for each of the three years ended
June 30, 2000, and have issued our report thereon dated October 11, 2000. Our
audit also included the financial statement schedules of W W Capital Corporation
listed in Item 14. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedules, when considered
in relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
BROCK AND COMPANY, CPAs, P.C.
Fort Collins, Colorado
October 11, 2000
S-1
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Schedule I - Condensed Financial Information of Registrant
Balance Sheets
======================================================================================
June 30 2000 1999
--------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 54,077 $ 5,100
Accounts receivable, subsidiaries 43,776 90,716
Other current assets 6,812 6,585
----------- -----------
Total current assets 104,665 102,401
----------- -----------
Equipment, net of accumulated depreciation
of $114,726 in 2000 and $135,504 in 1999 12,143 21,333
----------- -----------
Other Assets
Investment in wholly owned subsidiaries 2,912,967 2,530,096
Other assets 2,312 2,312
----------- -----------
Total other assets 2,915,279 2,532,408
----------- -----------
Total assets $ 3,032,087 $ 2,656,142
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ -- $ 29,969
Accrued expenses 78,092 10,955
----------- -----------
Total current liabilities 78,092 40,924
----------- -----------
Stockholders' Equity
Preferred stock, $10.00 par value, 400,000
shares authorized -- --
Common stock, $0.01 par value, 15,000,000 shares
authorized, 5,540,661 shares issued and outstanding
at June 30, 2000 and 1999 55,406 55,406
Capital in excess of par value 3,304,629 3,304,629
Retained earnings (deficit) (357,134) (695,911)
----------- -----------
3,002,901 2,664,124
Less 120,264 shares of treasury stock at cost (48,906) (48,906)
----------- -----------
Total stockholders equity 2,953,995 2,615,218
----------- -----------
Total liabilities and stockholders' equity $ 3,032,087 $ 2,656,142
=========== ===========
</TABLE>
S-2
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Schedule I - Condensed Financial Information of Registrant
Statements of Operations
==========================================================================
Years ended June 30 2000 1999 1998
-------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Management fee from subsidiaries $ 363,000 $ 336,000 $ 336,000
Operating Expenses
General and administrative 407,365 405,535 427,120
--------- --------- ---------
Operating loss (44,365) (69,535) (91,120)
Other Income (Expense)
Interest income 63 7,085 6,145
Interest expense (170) (47) (695)
Realized loss on asset sales
and real estate held for sale (1,856) -- (72,354)
Other income 2,234 3,872 1,524
Equity in earnings of subsidiary
before income taxes 382,871 163,433 243,920
--------- --------- ---------
Earnings Before Income Taxes 338,777 104,808 87,420
Income Tax Expense -- -- --
--------- --------- ---------
Net earnings $ 338,777 $ 104,808 $ 87,420
========= ========= =========
</TABLE>
S-3
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Schedule I - Condensed Financial Information of Registrant
Statement of Cash Flows
=====================================================================================================
Years ended June 30 June 30 2000 1999 1998
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Cash Flows Used In Operating Activities $ 52,415 $(116,796) $(129,351)
--------- --------- ---------
Cash Flows From Investing Activities
Investment in subsidiaries -- -- (40,351)
Proceeds from the sale of real estate -- -- 198,681
Proceeds from notes receivable collections -- 110,000 2,500
Purchase of equipment (3,438) (599) (19,474)
--------- --------- ---------
Net cash provided (used) by investing activities (3,438) 109,401 141,356
--------- --------- ---------
Cash Flows From Financing Activities
Payments on long-term debt -- -- (12,570)
--------- --------- ---------
Net cash used by financing activities -- -- (12,570)
--------- --------- ---------
Net Increase (Decrease) in Cash 48,977 (7,395) (565)
Cash, Beginning of year 5,100 12,495 13,060
--------- --------- ---------
Cash, End of Year $ 54,077 $ 5,100 $ 12,495
========= ========= =========
Supplemental Schedule of Noncash Investing
and Financing Activities
Sale of real estate held for investment
Receipt of note receivable $ -- $ -- $ 110,000
========= ========= =========
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for
Interest $ 170 $ 47 $ 695
========= ========= =========
</TABLE>
S-4
<PAGE>
W W CAPITAL CORPORATION
Schedule I - Condensed Financial Information of Registrant
Notes
June 30, 1999
================================================================================
Note 1 - Related Party Transactions
At June 30, 1997, Jerry R. Bellar (Bellar), the former
majority shareholder of Eagle and a current stockholder of the Company,
owed $167,572 under an indemnification agreement related to the
Company's acquisition of Eagle. In October 1998, Bellar and the Company
settled amounts due to and from the Company. The Company recorded the
subsequent event at June 30, 1998. A payment of $20,000 was made by the
Company to Bellar to settle all obligations.
The following amounts related to wholly owned subsidiaries of
the Company were eliminated in the consolidated financial statements of
the Company but are reflected in this condensed financial statement of
registrant. W-W Manufacturing and Eagle were consolidated into one
legal entity during the fiscal year ended June 30, 1999. Amounts for
1998 have been reclassified to present the amounts as if the
consolidation has occurred in 1998, without effecting total amounts.
<TABLE>
<CAPTION>
Amounts receivable (payable) at June 30:
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
W-W Manufacturing Co. Inc. $ 332,657 $ 381,689 $ 318,404
Titan Industries, Inc. (288,881) (290,973) (270,732)
--------- --------- ---------
$ 43,776 $ 90,716 $ 47,672
========= ========= =========
Management fee income for:
W-W Manufacturing Co. Inc. $ 219,000 $ 192,000 $ 180,000
Titan Industries, Inc. 144,000 144,000 156,000
--------- --------- ---------
$ 363,000 $ 336,000 $ 336,000
========= ========= =========
Equity in subsidiary operations for:
W-W Manufacturing Co. Inc. $ 315,694 $ 105,551 $ 161,154
Titan Industries, Inc. 67,177 57,882 82,766
--------- --------- ----------
$ 382,871 $ 163,433 $ 243,920
========= ========= =========
</TABLE>
S-5
<PAGE>
W W CAPITAL CORPORATION
<TABLE>
<CAPTION>
Schedule II - Valuation and Qualifying Accounts
Years ended June 30, 2000
=========================================================================================================
Additions
-------------------------
Balance at Charged to Charged Balance
Beginning Costs and to Other at End of
Description of Period Expenses Accounts Deductions Period
----------- --------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
June 30, 2000
Allowance for doubtful accounts:
Accounts receivable $115,000 $314,084 $ - $341,084 $ 88,000
June 30, 1999
Allowance for doubtful accounts:
Accounts receivable 104,500 123,951 - 113,451 115,000
Notes receivable 10,000 9,752 - 19,752 -
June 30, 1998
Allowance for doubtful accounts:
Accounts receivable 134,000 87,795 - 117,295 104,500
Notes receivable 10,000 - - - 10,000
</TABLE>
S-6
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
------- ----------------------------------------------------------------------
Not Applicable
23
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
-------- --------------------------------------------------
The Officers of the Company are elected at the Board of Directors' Annual
Organizational Meeting immediately following the Annual Stockholders' Meeting.
Such officers hold office until their successors are elected and qualify. The
following information indicates the position and age of the directors and
officers as of October 11, 2000 and their business experience during the prior
five years.
STEVE D. ZAMZOW age 52, joined the Company in 1991 and was elected as the
Company's Chief Financial Officer in June 1992, President and Chief Executive
Officer in December 1993 and elected as a Director in December 1993 by the
shareholders. From 1976 to 1991, Mr. Zamzow owned numerous companies and was a
financial consultant for various companies. Mr. Zamzow has been Vice President
for a steel company and has worked extensively in business workouts. From 1971
to 1974, Mr. Zamzow was employed by Peat, Marwick, Mitchell & Co. as an auditor.
Mr. Zamzow received his accounting degree from the University of Nebraska.
MILLARD T. WEBSTER age 52,became a director of the Company in 1988 and has been
employed by the Company's subsidiary, W-W Manufacturing Co., Inc. since 1962.
Mr. Webster has occupied the positions of piecework production foreman,
production manager, and Vice President and President of the Company's
subsidiary, W-W Manufacturing Co., Inc. Mr. Webster is currently a Vice
President for the Company's subsidiary, W-W Manufacturing Co., Inc. Mr. Webster
graduated from Evangel College, Springfield, Missouri in 1970 with a bachelor's
degree in business administration.
JAMES H. ALEXANDER age 61, became a Director of the Company in 1997. Since 1992
Mr. Alexander has been a member of the Board of Directors of Zykronixm Inc.and
former Chief Operating Officer. Mr. Alexander is presently president of Isotech
as well as an independent real estate broker for TDI Property Brokers. From
April 1992 to November 1992, Mr. Alexander was a member of a management team of
a venture capital firm, which funded a satellite communications company. Mr.
Alexander is the founder of T.D.I., Inc., a corporation engaged in consulting,
fund raising, acquisitions and mergers of hi-tech firms. Mr. Alexander has taken
courses leading toward Bachelor of Science Degree in Business Administration
from Rollins College.
24
<PAGE>
Item 11. Executive Compensation
-------- ----------------------
The following table sets forth the cash compensation paid or accrued during the
fiscal years ended June 30, 2000, 1999 and 1998 to the Company's Chief Executive
Officer. No other executive officer received cash in excess of $100,000.
<TABLE>
<CAPTION>
Other
Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
--------------------------- ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Steve D. Zamzow 2000 $120,858 $ - $ - $ 13,749 (a)
President, Chief Executive 1999 $120,358 $ - $ - $ 6,874 (a)
Officer and Director 1998 $119,896 $ - $ - $ 4,575 (a)
</TABLE>
(a) Includes accrued vacation and compensated absences earned in prior
years and paid during June 30, 2000, 1999 and 1998.
Option Grants in Fiscal Year 2000
During the fiscal year ended June 30, 2000, the Company did not grant
stock options to the executive officers.
Aggregated Option Exercises in Fiscal Year 2000
The following table sets forth for the executive officer named in the
Executive Compensation Table, information concerning each exercise of stock
options during the fiscal year ended June 30, 2000 and the value of the
unexercised stock options at June 30, 2000.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
-----------------------------------------------
and Fiscal Year-End Option Values
---------------------------------
Number of Securities Value of Unexercised
Underlying Unex- In-the-Money
Shares ercised Options Options at
Acquired at June 30, 2000 June 30, 2000
on Value Exercisable/ Exercisable/
Name Exercise Realized (1) Unexercisable Unexercisable (1)
---- -------- ------------ ------------- -----------------
<S> <C> <C> <C> <C>
Steve D. Zamzow --- --- 150,000 (E) $ ---
President, Chief --- --- (U) $ ---
Executive Officer
and Director
</TABLE>
(1) The Option exercise price exceeded the fair market value of the underlying
common stock on June 30, 2000.
25
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
-------- --------------------------------------------------------------
The following table sets forth as of October 11, 2000, the ownership of
the Company's common stock by each director of the Company, by each person who
is known by the Company to be the beneficial owner of more than 5% of the
Company's common stock, and by the officers and directors of the Company as a
group:
Name and Address of
Officers and Directors and Amount and Nature of Percent of Class
Beneficial Owner (1) Beneficial Ownership (2) of Common Stock
-------------------- ------------------------ ---------------
Steve D. Zamzow 150,437 (3) 2.70%
4112 Sherman Court
Ft. Collins, CO 80525
Millard T. Webster 278,969 (4) 5.13%
1003 Central
Dodge City, KS 67801
David L. Patton 1,200,389(5) 21.87%
807 SW Terrace
Topeka, KS 66611
Robert L. and L. Louise Cullinan 284,958 5.26%
HCR 38, Box 32
Paxton, NE 69155
Jerry R. Beller 275,000 5.07%
4411 Harding Place
Nashville, TN 37025
James H. Alexander 30,000 (6) 0.55%
5495 W. 115th Place
Broomfield, CO 80020
Glenn A. Mull 507,184 9.36%
Rt. 1. Box 74
Pawnee Rock, KS 67567
All officers and director
as a group (3 persons) (See 8.17%
footnotes 3, 4,and 6) 459,406(7)
_________________________
(1) The business address of all officers and directors is 3500 JFK Parkway,
Suite 202, Ft. Collins, Colorado 80525
(2) "Beneficial ownership" is deemed to include shares for which an individual,
directly or indirectly, has voting or investment power, or both, and shares
subject to options exercisable within 60 days of the date hereof.
26
<PAGE>
(3) Includes 150,000 shares subject to incentive stock options which are
exercisable within six days of the date hereof.
(4) Includes 22,500 shares subject to incentive stock options, which are
exercisable within sixty days of the date hereof.
(5) Includes 67,500 shares subject to non-qualified stock options, which are
fully vested and exercisable.
(6) Includes 30,000 shares subject to non-qualified stock options which are
fully vested and exercisable.
(7) Includes 202,500 shares subject to stock options, which are fully vested
and exercisable.
Item 13. Certain Relationships and Related Transactions
-------- ----------------------------------------------
On June 30, 1989, W-W Land & Cattle, a partnership owned by Millard T. Webster,
a director of the Company, Mickey J. Winfrey, a former officer of the Company
and Terry L. Webster, a brother of Mr. Millard T. Webster and Ms. Winfrey,
executed a promissory note for the amount of $96,424 in favor of the Company's
subsidiary, W-W Manufacturing Co., Inc. Interest was payable annually at 9% per
annum and the principal was due on demand. On June 30, 1993, Ms. Winfrey
satisfied her obligations under this note by paying to the Company the amount of
$11,361. As of June 30, 2000, $22,134 remained payable under this note by
Millard T. Webster and Terry L. Webster.
The Company currently leases its manufacturing facility in Dodge City, Kansas
from Murle F. Webster, father of Millard T. Webster. This lease requires a
monthly rental payment of $5,000. This lease expired on December 31, 1994,
however, it has continued on a month to month basis. During each of the three
fiscal years ended June 30, 2000, $60,000 was paid by the Company under the
lease.
27
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
-------- ----------------------------------------------------------------
(a) (1) List of Financial Statements Filed as a Part of This Report
-----------------------------------------------------------
Consolidated Balance Sheets as of June 30, 2000 and June 30, 1999.
Consolidated Statements of Income for the years ended June 30, 2000, 1999,
and 1998.
Consolidated Statements of Stockholders' Equity for the years ended June
30, 2000, 1999, and 1998.
Consolidated Statements of Cash Flows for the years ended June 30, 2000,
1999, and 1998.
(a) (2) List of Financial Statement Schedules Filed as a Part of This Report
--------------------------------------------------------------------
Schedule I - Condensed Financial Information of Registrant
Schedule II - Valuation and Qualifying Accounts
(a) (3) Exhibits
------------
Exhibit
Number Document
------ --------
2.1 Exchange Agreement dated August 15, 1991 between W W Capital
Corporation and Titan Industries, Inc. (filed as Exhibit 3.3 to Form
10-K for the fiscal year ended June 30, 1991 and is hereby
incorporated by reference).
2.2 Exchange Agreement dated October 26, 1992 between W W Capital
Corporation and Eagle Enterprises, Inc. (filed as an exhibit to the
Company's Form 8-K dated November 3, 1993 and is hereby incorporated
by reference).
3.1 Articles of Incorporation dated December 13, 1989 of W W Capital
Corporation, a Nevada corporation (filed as Exhibit 3.2 to the
Company's Form 10-K for the year ended June 30, 1990 and is hereby
incorporated by reference).
3.1.1 Certificate and Amendment to Articles of Incorporation filed December
21, 1990 with the Nevada Secretary of State (filed as Exhibit 3.01 to
the Company's Form 10-Q for the quarter ended December 31, 1990 and is
hereby incorporated by reference).
3.2 Bylaws of W W Capital Corporation (filed as Exhibit 3.2 to the
Company's Form 10-K for the year ended June 30, 1991 and is hereby
incorporated by reference).
10.1 Real Estate Lease Agreement and Amendment between Murle F. and Sara R.
Webster and W W Capital Corporation (filed as an exhibit to the
Company's Post-Effective Amendment No. 1 to Form S-18 and is hereby
incorporated by reference).
10.1.1 Amendment to Real Estate Lease between Murle F. and Sara R. Webster
and W W Capital Corporation dated March 24, 1993 (filed herewith).
28
<PAGE>
10.2 Assignment of Rental Income from Murle F. and Sara R. Webster to W W
Capital Corporation (filed as an exhibit to the Company's
Post-Effective Amendment No. 1 to Form S-18 and is hereby incorporated
by reference).
10.3 1990 Incentive Stock Option Plan (filed as Exhibit 10.16 to the
Company's Form 10-K for the year ended June 30, 1990 and is hereby
incorporated by reference).
10.4 Promissory Note dated June 30, 1990 from Millard T. Webster in favor
of W W Capital Corporation for the amount of $2,716 (filed as Exhibit
10.8 to Form 10-K for the fiscal year ended June 30, 1991 and is
hereby incorporated by reference).
10.5 Promissory Note dated April 30, 1990 from Millard T. Webster and
Mickey J. Winfrey in favor of W W Capital Corporation for the amount
of $43,000 (filed as Exhibit 10.9 to Form 10-K for the fiscal year
ended June 30, 1991 and is hereby incorporated by reference).
10.6 Loan Agreement dated June 29, 1992 between W-W Manufacturing Co., Inc.
(wholly owned subsidiary of the Company) and Bank IV Kansas, N.A.
(Garden City Kansas) (filed as Exhibit 10.12 for the fiscal year ended
June 30, 1992 and is hereby incorporated by reference).
10.7 Loan Agreement dated June 29, 1992 between Titan Industries, Inc.
(wholly owned subsidiary of the Company) and Bank IV Kansas, N.A.
(Garden City Kansas) (filed as Exhibit 10.13 for the fiscal year ended
June 30, 1992 and is hereby incorporated by reference).
10.8 1990 Non-Qualified Stock Option Plan (filed as Exhibit 10.14 of Form
10-K for the fiscal year ended June 30, 1992 and is hereby
incorporated by reference).
10.9 Employee Stock Benefit Plan (filed as Exhibit 10.15 of Form 10-K for
the fiscal year ended June 30, 1992 and is hereby incorporated by
reference).
10.10 Loan Agreement dated December 15, 1992 between Eagle Enterprises, Inc.
(wholly owned subsidiary of the Company) and Bank IV Kansas, N.A.
(Garden City, Kansas) (filed as Exhibit 10.10 of Form 10-K for the
fiscal year June 30, 1993 and is hereby incorporated by reference).
10.11 Exchange Agreement between W W Capital Corporation and Apex Realty
Investments, Inc. dated February 19, 1993 (filed as an exhibit to the
Company's Form 8-K dated March 5, 1993 and is hereby incorporated by
reference).
10.11.1 Addendum to Exchange Agreement between W W Capital Corporation and
Apex Realty Investments, Inc. dated August 23, 1993 (filed as Exhibit
10.11.1 of Form 10-K for the fiscal year June 30, 1993 and is hereby
incorporated by reference).
10.12 Loan Agreement dated April 8, 1993 between Eagle Enterprises, Inc.
(wholly owned subsidiary of the Company) and First American National
Bank, N.A. (Cookeville, Tennessee) (filed as Exhibit 10.12 of Form
10-K for the fiscal year June 30, 1993 and is hereby incorporated by
reference).
10.13 1992 Non-Qualified Stock Option Plan (filed as Exhibit 10.13 of Form
10-K for the fiscal year June 30, 1993 and is hereby incorporated by
reference).
29
<PAGE>
10.14 Loan Agreement dated October 20, 1992 between W W Capital Corporation,
Eagle Enterprises, Inc. and Jerry R. and Jacqueline A. Bellar (former
owners of Eagle Enterprises, Inc.) (filed as Exhibit 10.14 of Form
10-K for the fiscal year June 30, 1993 and is hereby incorporated by
reference).
10.15 Asset Sale and Purchase Agreement between W W Capital Corporation and
Wholesale Pump and Supply, Inc. date October 14, 1993 (filed as
Exhibit 10.15 of Form 10-K for fiscal year June 30, 1994 and is hereby
incorporated by reference).
10.16 Real Estate Contract between W W Capital Corporation and Daniel L.
Hahn, Donna R. Hahn and Helene D. Linder, Promissory Note, date
December 15, 1994 between W W Capital Corporation and Daniel L. Hahn,
Donna R. Hahn and Helene D. Linder (filed as an exhibit to the
Company's Form 8-K dated December 15, 1994 and is hereby incorporated
by reference).
10.17 Loan Agreement dated March 3, 1995 between Titan Industries, Inc.
(wholly owned subsidiary of the Company and Keith County Economic
Development Corporation (incorporated by reference June 30, 1995
10-K).
10.18 Loan Agreement dated March 3, 1995 between Titan Industries, Inc.
(wholly owned subsidiary of the Company and First National Bank in
Ogallala (incorporated by reference June 30, 1995 10-K).
10.19 Letter Agreement dated September 17, 1996, between W W Capital
Corporation and Bank IV Garden City (incorporated by reference June
30, 1996 10-K.)
10.20 Articles of Merger of Eagle Enterprises, Inc. With and Into W-W
Manufacturing Co., Inc. dated October 29, 1998.
10.21 Lease agreement dated January 26, 2000 with an effective date at time
of occupancy, between W-W Manufacturing Co. Inc. (wholly owned
subsidiary of the Company) and Thomas Economic Development Authority.
21.0 Subsidiaries of the Registrant (filed herewith).
23.0 Independent Certified Public Accountants Consent
27.0 Financial Data Schedule.
Item 14 (b)
-----------
No reports on Form 8-K were filed during the fourth quarter of the fiscal year
covered by this report.
30
