U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended March 31, 2000
Commission File Number 0-18260
THE NEW WORLD POWER CORPORATION
-------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 52-1659436
-------- ----------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
14 Mount Pleasant Drive Aston, PA 19014
---------------------------------------
(Address and Zip Code of Principal Executive Offices)
(484) 840-0944
--------------
Issuer's Telephone Number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 __ No X .
There were 5,124,276 shares of the registrant's common stock
outstanding as of March 31, 2000.
<PAGE>
THE NEW WORLD POWER CORPORATION
- FORM 10QSB - INDEX -
PAGE(S)
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets at March 31, 2000
(unaudited) and December 31, 1999 1
Consolidated Condensed Statements of Operations for the Three
Month Periods Ended March 31, 2000 and 1999 (unaudited) 2
Consolidated Condensed Statements of Cash Flows for the Three
Month Periods Ended March 31, 2000 and 1999 (unaudited) 3
Notes to Interim Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis 9
PART II Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index
Exhibit 15 - Independent Accountants' Review Report
Exhibit 27 - Financial Data Schedule
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE NEW WORLD POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
- ASSETS -
MARCH 31, December 31,
2000 1999
-------------- --------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 239,260 $ 39,070
Cash restricted in use 26,473 7,973
Accounts receivable 154,321 157,882
Other current assets 91,877 13,201
-------------- --------------
TOTAL CURRENT ASSETS 511,931 218,126
-------------- --------------
Property, plant and equipment, net 9,222,034 2,809,283
Goodwill, net of accumulated amortization 339,953 342,453
Deferred project costs 182,343 183,958
-------------- --------------
9,744,330 3,335,694
-------------- --------------
TOTAL ASSETS $ 10,256,261 $ 3,553,820
============== ==============
- LIABILITIES AND STOCKHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 282,080 $ 452,157
Note payable - bank 175,000 -
Due to related parties 1,560,381 510,381
Deferred revenues 1,080,000 -
Current portion of lease obligations 556,531 -
Current portion of mortgage obligations 82,837 82,837
-------------- --------------
TOTAL CURRENT LIABILITIES 3,736,829 1,045,375
-------------- --------------
Long-term portion of due to related parties 950,000 950,000
Long-term portion of mortgage obligations 82,837 82,837
Long-term portion of lease obligations 3,400,547 -
Other non-current liabilities 50,000 100,000
-------------- --------------
4,483,384 1,132,837
-------------- --------------
TOTAL LIABILITIES 8,220,213 2,178,212
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value; authorized 40,000,000 shares; 5,124,276 and
3,797,212 shares 51,243 37,979
Additional paid-in capital 83,832,987 83,210,751
Currency translation adjustments (65,956) (88,401)
Accumulated deficit (81,782,226) (81,784,721)
-------------- --------------
TOTAL STOCKHOLDERS' EQUITY 2,036,048 1,375,608
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,256,261 $ 3,553,820
============== ==============
</TABLE>
See accompanying notes to interim consolidated condensed financial statements.
- 1 -
<PAGE>
THE NEW WORLD POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------------- -------------
<S> <C> <C>
OPERATING REVENUE $ 414,131 $ 457,669
COST OF OPERATIONS 211,783 151,303
------------- -------------
GROSS PROFIT 202,348 306,366
Project development expenses - 21,535
Selling, general and administrative expenses 166,588 243,316
------------- -------------
OPERATING INCOME 35,760 41,515
------------- -------------
OTHER INCOME (EXPENSE):
Interest expense (37,889) (31,752)
Interest income 19 1,143
Other 4,605 28,417
------------- -------------
TOTAL OTHER INCOME (EXPENSE) (33,265) (2,192)
------------- -------------
INCOME BEFORE TAXES 2,495 39,323
Provision for income taxes - 1,225
------------- -------------
NET INCOME $ 2,495 $ 38,098
============= =============
BASIC AND DILUTED EARNINGS PER SHARE:
Net earnings from continuing operations available to common stockholders
- Basic $ 0.00 $ 0.01
============== ==============
- Diluted $ 0.00 $ 0.01
============== ==============
AVERAGE NUMBER OF BASIC COMMON SHARES OUTSTANDING 4,436,164 3,797,912
============== ==============
AVERAGE NUMBER OF DILUTED COMMON SHARES OUTSTANDING 4,536,164 3,797,912
============== ==============
</TABLE>
See accompanying notes to interim consolidated condensed financial statements.
- 2 -
<PAGE>
THE NEW WORLD POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,495 $ 38,098
Adjustments to reconcile net earnings to net cash (used in) provided by
operating activities:
Depreciation and amortization 68,955 67,631
Amortization of goodwill 2,500 2,500
Other, net 22,445 (76,028)
Amortization of deferred costs 1,615 1,613
Change in assets and liabilities, net of effect of acquisitions/disposals:
Decrease in accounts receivable 3,561 289,386
(Increase) in other current assets (78,676) (16,018)
(Decrease) increase in accounts payable and accrued liabilities (148,320) 2,956
Increase in non-current liabilities (50,000) -
-------------- --------------
NET CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES (175,425) 310,138
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investment - (129,643)
Acquisition of Modular Power Systems, net (541,729) -
Capital expenditures (86,156) (20,546)
-------------- --------------
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (627,885) (150,189)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) in due to related parties - (83,442)
Payment of mortgage obligation - (118,300)
Net proceeds from short term notes 672,000 -
Proceeds from issuance of common stock, net 350,000 -
(Increase) decrease in restricted cash (18,500) 77,464
-------------- --------------
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES 1,003,500 (124,278)
-------------- --------------
Net change in cash and cash equivalents 200,190 35,671
Cash and cash equivalents at beginning of period 39,070 170,543
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 239,260 $ 206,214
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest paid $ 37,889 $ 24,075
Income taxes paid 19 1,143
Non-cash transactions:
During the three month period ended March 31, 2000,
the Company issued 690,000 shares of common stock
valued at $313,500.
</TABLE>
See accompanying notes to interim consolidated condensed financial statements.
- 3 -
<PAGE>
THE NEW WORLD POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION:
The New World Power Corporation ("the Company") was incorporated in the State of
Delaware in 1989. The Company is an independent power producer that focuses on
distributed power solutions, including renewable and modular generation
facilities. The Company sells electrical energy to major utilities under
long-term and mid-term contracts.
In the opinion of management, the accompanying unaudited interim consolidated
condensed financial statements of The New World Power Corporation ("the
Company") and its subsidiaries, which have been reviewed by our auditors,
contain all adjustments of a recurring nature considered necessary for a fair
presentation of the Company's financial position as of March 31, 2000 and the
results of operations and cash flows for the three month period ended March 31,
2000.
The consolidated condensed balance sheet presented as of December 31, 1999 has
been derived from the consolidated financial statements that have been audited
by the Company's independent public accountants. The consolidated financial
statements and notes are condensed as permitted by Form 10-QSB and do not
contain certain information included in the annual financial statements and
notes of the Company. The consolidated condensed financial statements and notes
included herein should be read in conjunction with the financial statements and
notes included in the Company's Annual Report on Form 10-KSB.
The results of operations for the three month period ended March 31, 2000 are
not necessarily indicative of the results to be expected for a full year.
NOTE 2 - SIGNIFICANT BUSINESS CHANGES:
On March 9, 2000, the Company completed the acquisition of Modular Power LLC
("MPS"). MPS owns three diesel-fired peaking facilities under construction in
Alma, Chelsea and Coldwater, Michigan. MPS facilities contain diesel-fueled
generating equipment and related power equipment. The power generated at each of
the facilities will be sold to Consumers Power Company ("Consumers") pursuant to
mid-term power purchase agreements commencing June 2000. The purchase price of
the acquisition was $1.8 million and 450,000 shares of common stock of the
company along with the assumption of debt of approximately $4.5 million. The
common stock was valued at $0.55 per share, which was the approximate market
value at the date of the acquisition. The former owners also hold a note payable
with a principal balance of $350,000. The note bears interest at 5% per annum
and matures March 1, 2001. Under the terms of the agreement, the former owners
will continue to work with the company to secure additional power facilities for
a minimum of two years.
- 4 -
<PAGE>
THE NEW WORLD POWER CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 2000 AND 1999
(UNAUDITED)
NOTE 2 - SIGNIFICANT BUSINESS CHANGES (CONTINUED):
As part of the acquisition, the Company assumed two capital leases for
equipment. The assets and liabilities under capital leases are recorded at the
lower of the present value of the minimum lease payments or the fair market
value of the assets.
Minimum annual future lease payments under capital leases as of March 31, 2000
and for each of the next five years and in the aggregate are:
Year Ended March 31, Amount
-------------------- ------
2001 $ 863,325
2002 863,325
2003 863,325
2004 1,750,506
2005 165,122
Subsequent to 2005 295,123
-----------
Total minimum lease payments 4,800,726
Amount representing interest 843,648
-----------
Present value of minimum lease
payments $ 3,957,078
===========
The interest rates on the two capital leases were 8% and 9.4%, respectively.
NOTE 3 - PLANT, PROPERTY AND EQUIPMENT:
Property, plant and equipment consists of the following as of March 31, 2000
(000's omitted):
Useful Life
(Years)
-----------
Power generation facilities and equipment:
Hydroelectric $ 3,900 40
Wind:
Owned 3,930 25
Land 401
Modular generation facilities under development 6,416 *
---------
Total 14,647
Less accumulated depreciation and amortization 5,425
---------
$ 9,222
=========
*When put into service these facilities will be depreciated over an estimated
useful life of 20 years.
- 5 -
<PAGE>
NOTE 4 - NOTE PAYABLE-BANK:
During the period ended March 31, 2000, the Company obtained an unsecured
working capital line of credit with a Bank which matures on May 31, 2000.
Maximum borrowings under this line are $375,000 and the interest rate is 9% per
annum. The amount outstanding at March 31, 2000 under the line was $175,000,
which was fully repaid in early May 2000.
NOTE 5 - DUE TO RELATED PARTIES:
Amounts due to related parties consists of the following at March 31, 2000
(000's omitted):
(a) Convertible Subordinated Notes $ 510
(b) Synex International 950
(c) Strategic Electric Power Fund, LLC 700
(d) Robert Evans/Tom Waters 350
--------
Total 2,510
Less current portion 1,560
--------
Long-term portion $ 950
========
CONVERTIBLE SUBORDINATED NOTES
The Company defaulted on its 8% Convertible Subordinated Notes in July 1997. The
default resulted in a significant restructuring of the indebtedness and the
Company agreed to amortize an additional $850,000 under a three year note
beginning in January 1998 and continuing through December 2000. The monthly
payment is $26,636 including principal and interest. The interest rate on the
notes is fixed at 8% per annum. The notes are collateralized by a second
mortgage position on Wolverine. The balance of the indebtedness at the
restructure date of approximately $1,346,000 was eliminated as debt and
converted by the holders of the Notes into New World common stock at a
conversion price of $1.50 per share when the market price of the Company's
common shares trading in the pink sheets was approximately $0.25 per share.
Accordingly, the Company issued approximately 897,400 shares of common stock to
the holders of the Notes. As a result of this restructuring and the issuance of
common stock, the Company reclassified the indebtedness due to the holders of
the Notes as amounts due to related parties at March 31, 2000. At March 31,
2000, the Company is in default under the terms of the restructured Subordinated
Convertible Notes and, accordingly, has reclassified the entire indebtedness as
current. On March 17, 2000, the Company entered into a Memorandum of Acceptance
with its Convertible Subordinated Noteholders. The Memorandum of Acceptance
contains terms by which the Company will exchange its Caton Moor wind farm for
cash and certain securities including all of the outstanding Convertible
Subordinated Notes and accrued interest thereon. The agreement is subject to due
diligence by the holders of the Notes and a definitive agreement being agreed
upon and executed by all parties. As of May 15, 2000, the transaction has not
been finalized but management anticipates closing by the end of May 2000.
- 6 -
<PAGE>
NOTE 5 - DUE TO RELATED PARTIES (CONTINUED):
SYNEX
In July 1998, the Company obtained a convertible debt investment from Synex
Energy Resources Ltd., the power project development subsidiary of
Vancouver-based Synex (TSE:SXI). Synex agreed to provide up to $1,000,000 to the
Company in the form of a convertible debenture, which matures on June 30, 2001.
The convertible debenture requires interest only payments monthly until
maturity. The convertible debenture provides for the conversion into the
Company's common stock at $1.00 per share and its interest rate is 10.3% per
annum. In addition, the investment provided Synex with warrants to purchase up
to 500,000 shares of the Company's Common Stock at $1.25 per share, that expire
on June 30, 2000. Vesting in the warrants only occurs after the entire $1.0
million has been funded by Synex. The convertible debenture is secured by a
first mortgage position on Wolverine. The investment also provides for a
strategic alliance with Synex and a Participation Agreement for a minimum term
of 18 months, which would enable the Company to procure resources for project
assessment at rates detailed in the agreement. As part of the agreement, Synex
purchased 100,000 shares of common stock from the Company for $25,000 and,
accordingly, their debt is classified as Due to Related Parties.
STRATEGIC ELECTRIC POWER FUND, LLC
In connection with the acquisition of Modular in March 2000, the Company issued
a bridge note in the amount of $700,000 (the "Strategic Bridge Note") to the
Strategic Electric Power Fund, LLC ("Strategic"). The Strategic Bridge Note
which matures on December 31, 2000, bears interest at 8% per annum and is
payable in cash or in stock. Interest payments are due semi-annually in arrears
on June 30 and December 31. The notes are convertible into shares of common
stock of the Company at the option of the noteholders. The conversion price of
the notes shall be at $.68 per share.
NOTE 6 - DEFERRED REVENUE:
In March of 2000, the Company received a payment from Consumers (see Note 2) in
accordance with the provisions of the Call Option Agreement between the parties.
The payment represents revenues to the Company for having installed capacity
available from June 1 to September 30, 2000. Accordingly, the Company recorded
the payment as deferred revenue and will recognize it as energy revenues in the
periods earned.
NOTE 7 - STOCKHOLDERS' EQUITY TRANSACTIONS:
In January 2000, the Company issued 120,000 shares of common stock valued at
$30,000 to the Company's directors for services rendered and 120,000 shares of
common stock valued at $36,000 to the terminated CEO as part of his severance
package.
In February 2000, the Company issued 636,364 shares of common stock and received
$322,000 of cash net of $28,000 of expenses.
In March the Company issued 450,000 shares of common stock valued at $247,500 as
part of the purchase price of MPS (see Note 2).
- 7 -
<PAGE>
NOTE 8 - COMMITMENTS AND CONTINGENCIES:
(A) EMPLOYMENT AGREEMENT
Effective March 1, 2000, the Company entered into an employment agreement
with Frederic A. Mayer, its President. Mr. Mayer's employment agreement
is for three years with an automatic renewal for three additional years
unless terminated by mutual consent. Under the agreement, Mr. Mayer shall
receive $132,000 in salary per annum with annual increases of $12,000 per
annum, 120,000 stock options exercisable at $0.65 (vesting over three
years) and an annual bonus at the discretion of the Board of Directors.
If the employment agreement is terminated without cause, Mr. Mayer shall
receive a termination payment equal to one year's salary at the rate per
annum at the termination date.
(B) OFFICE LEASE
Effective February 15, 2000, the Company entered into a lease agreement
for office space located in Aston, PA. The lease expires on August 14,
2000 with monthly payments of $800.
(C) EQUIPMENT PURCHASE
The Company, through its Modular subsidiary, entered into a purchase
agreement to acquire five units and related switchgear from a Caterpillar
dealer. The equipment cost is $1,596,000. The Company anticipates the
units to be delivered during May 2000 and that the equipment will be
financed by Caterpillar Financial Services Corporation under similar
terms as the capital leases outlined in Note 2.
- 8 -
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND PLAN OF OPERATIONS
INTRODUCTION
The New World Power Corporation ("New World" or the "Company") is an independent
power producer that focuses on distributed power solutions, including renewable
and modular generation facilities. The Company sells electrical energy to major
utilities under long-term and mid-term contracts.
The Company is organized as a holding company. Each electric power generating
facility or discreet group of facilities is owned by a separate corporate
entity. Executive management, legal, accounting, financial and administrative
matters are provided at the holding company level. Operations are conducted at
the subsidiary level.
The Company currently owns and operates three subsidiaries, Michigan based
Wolverine Power Corporation ("Wolverine") and Modular Power Systems LLC
("Modular") and The New World Power Company (Caton Moor) Limited ("Caton Moor")
in the United Kingdom. Each subsidiary owns and operates electric generation
facilities. Wolverine owns a 10.50 megawatt hydroelectric plant near Bay City,
Michigan; Modular owns 43 megawatts of mobile, trailer mounted and containerized
diesel-fired electric generating facilities at three sites in Coldwater, Chelsea
and Alma, Michigan; and Caton Moor owns a 3-megawatt wind farm in England.
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
securities Exchange Act of 1934. When used in this document, the words
"anticipate", "estimate", "expect", "intend", and similar expressions are
intended to identify forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. Such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may vary
materially from those set forth in the forward-looking statements.
SHORT TERM STRATEGY
Over the next 12 months New World intends to apply its available resources to
maintain positive earnings from its operating projects, while further attempting
to consummate targeted acquisitions in its core markets.
The Company will continue to maintain its efforts to hold down overhead and
generate profits from existing operations. It also expects to complete another
acquisition within the next twelve months. There can be no assurance, however,
that the Company can maintain profitability or complete any acquisition on terms
acceptable to the Company, if at all. In addition, there can be no assurance
that the Company will be able to close any financings to enable it to make
acquisitions.
- 9 -
<PAGE>
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
consolidated condensed financial statements and notes thereto and with the
Company's audited financial statements and notes thereto for the fiscal year
ended December 31, 1999.
REVENUES
Revenues decreased to $414,131 for the three months ended March 31, 2000 from
$457,669 for the three months ended March 31, 1999. Such decrease in revenues
was due primarily to the decrease in the amount of available water for the
hydroelectric facility at Wolverine. The revenues in the United Kingdom remained
constant between the years.
SEASONALITY OF PROJECT REVENUES
Hydroelectric and wind farm electric generating revenues are seasonal. The
spring in North America is the time of maximum hydroelectric output, while fall
and winter also experience reasonable flows; the summer months are dry and
generally unproductive. The best wind season in the United Kingdom is typically
from October to March. Both hydroelectric and wind power production can also
vary from year to year based on changes in meteorological conditions.
COST OF OPERATIONS
The costs of operations increased for the three months ended March 31, 2000 to
$211,783 as compared to $151,303 during the three months ended March 31, 1999,
primarily as a result of the increased costs from the Company's Modular
facilities offset by the Company's downsizing efforts in the UK. Wolverine's
cost of operations remained constant between the years.
PROJECT DEVELOPMENT EXPENSE
No project development expenses were incurred during the three month period
ended March 31, 2000 since the Company ended its development efforts, in line
with the Company's strategy of eliminating development risk. Expenses incurred
for the three month period ended March 31, 1999 was $21,535.
SELLING, GENERAL AND ADMINISTRATIVE
These expenses were reduced during the three months ended March 31, 2000 to
$166,588, as compared to $243,316 during the three months ended March 31, 1999.
Included in expenses for the three months ended March 31, 1999 were certain
costs associated with the proposed asset sales in China as well as additional
costs associated with pursuing acquisitions. The previous CEO was also
terminated in January 2000 and no replacement personnel have been hired.
- 10 -
<PAGE>
OTHER INCOME AND EXPENSES
During the three months ended March 31, 2000, the Company recorded other
expense-net of $33,265, as compared to other expense-net of $2,192 during the
three months ended March 31, 1999. Interest expense for the three months ended
March 31, 2000 increased to $37,889 from $31,752 for the three months ended
March 31, 1999, in line with the incurring of additional debt for the
acquisition of MPS. The other income for the three month period ended March 31,
1999 was a result of asset sales.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company finances its operations primarily from internally
generated funds and third party credit facilities. Net cash flow used by
operations was $175,425 for the three month period ended March 31, 2000 and
$310,138 was provided by operations for the three month period ended March 31,
1999.
The Company holds Convertible Subordinated Notes outstanding totalling $510,381.
The Notes mature July 31, 2000, bear interest at 8.00% and are convertible into
shares of the Company's common stock at a price of $8.75 per share. The Notes
are in default at March 31, 2000. On March 17, 2000, the Company entered into a
Memorandum of Acceptance with the holders of the Notes. The Memorandum of
Acceptance contains terms by which the Company will exchange its Caton Moor wind
farm for cash and certain securities including all the outstanding Convertible
Subordinated Notes and accrued interest thereon. As of this filing, the
transaction has not been finalized.
The Company also has a convertible debt instrument which would provide up to
$1.0 million to the Company. The convertible debenture matures on June 30, 2001.
The convertible debenture requires interest only payments monthly until maturity
and is convertible into the Company's common stock at $1.00 per share. The
interest rate is 10.3% per annum.
The Company believes that its cash flow from operations and funds expected to be
available under its existing credit facility will be sufficient to fund
foreseeable working capital and capital expenditure requirements. However, any
restriction on the availability of borrowing under the line of credit could
negatively affect the Company's ability to meet future cash flow requirements.
The Company plans to grow through the acquisition of complementary businesses. A
significant acquisition may require the Company to secure additional debt or
equity financing. While the Company believes it would be able to secure such
additional financing at reasonable terms, there is no assurance this would be
the case.
- 11 -
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
NONE.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
NONE.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
ITEM 5. OTHER INFORMATION.
NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS:
(B) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the quarter for
which this report has been filed.
The following document has been filed exclusively with the Securities
and Exchange Commission:
Exhibit No. Description
15 Review Report on Interim Financial Statements
27 Financial Data Schedule
- 11 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE NEW WORLD POWER CORPORATION
May 22, 2000 By: /s/ Frederic A. Mayer
---------------------
Frederic A. Mayer
President
- 12 -
EXHIBIT 15
REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS
Board of Directors
The New World Power Corporation
We have reviewed the accompanying consolidated condensed financial statements of
The New World Power Corporation as of March 31, 2000, and for the three-month
period then ended. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated condensed financial statements for them
to be in conformity with generally accepted accounting principles.
/s/ Lazar Levine & Felix LLP
----------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
May 12, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and statements of operations filed as part of the Company's
quarterly report on Form 10-QSB and is qualified in its entirety by reference to
such report.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 239260
<SECURITIES> 0
<RECEIVABLES> 154321
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 511931
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