FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For Quarterly Period Ended December 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from to
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Commission File No. 0-17757
W-W CAPITAL CORPORATION
(exact name of Registrant as specified in its charter)
Nevada 93-0967457
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
3500 JFK Parkway Suite 202 Ft. Collins, CO 80525
(Address of principal executive offices, including zip code)
(970) 207-1100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, address and former fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days. Yes _X_ No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether Registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes No NOT APPLICABLE X
---- ---- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of Each Class Number of Shares Outstanding
- ------------------- at May 15, 2001
Common stock ---------------------
$0.01 Par Value 5,540,661
W-W CAPITAL CORPORATION
Index
PART I FINANCIAL INFORMATION PAGE NO.
- ------ --------------------- --------
Item 1 Balance Sheets
December 31, 2000 and June 30, 2000 1
Statements of Operations
Three and Six Months Ended
December 31, 2000 and 1999 3
Statements of Cash Flows
Six Months Ended
December 31, 2000 and 1999 5
Notes to Financial Statements 7
Independent Accountants Report 10
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
PART II OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS 14
- ------
Item 2 CHANGES IN SECURITIES 14
- ------
Item 3 DEFAULTS UPON SENIOR SECURITIES 14
- ------
Item 4 SUBMISSION OF MATTERS TO VOTE OF
- ------
SECURITY HOLDERS 14
Item 5 OTHER INFORMATION 14
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Item 6 EXHIBITS AND REPORT ON FORM 8-K 14
- ------
SIGNATURES 15
Part 1-FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------
W-W CAPITAL CORPORATION
-----------------------
Balance Sheets
December 31, June 30,
2000 2000
---- ----
(Unaudited)
Assets
- ------
Current assets:
Cash $ 310,236 $ 313,898
----------- -----------
Trade accounts receivable 1,472,110 1,439,179
Less allowance for doubtful accounts (38,000) (38,000)
----------- -----------
Net accounts receivable 1,434,110 1,401,179
----------- -----------
Accounts receivable, other 38,208 41,439
Inventories:
Raw materials 590,797 563,123
Work-in-process 369,563 388,056
Finished goods 946,714 829,408
----------- -----------
Total inventories 1,907,074 1,780,587
----------- -----------
Prepaid expenses 68,599 22,097
Current portion of notes receivable
from related parties 554 507
Deferred income tax asset 92,000 92,000
----------- -----------
Total current assets 3,850,781 3,651,707
----------- -----------
Property and equipment, at cost 3,405,839 3,223,938
Less accumulated depreciation
and amortization (2,222,553) (2,134,658)
----------- -----------
Net property and equipment 1,183,286 1,089,280
----------- -----------
Other Assets:
Long-term notes receivable from
related parties, net of current portion 21,073 21,627
Loan Acquisition Costs--Net of
accumulated amortization of $34,358
at December 31, 2000 and $25,142 at
June 30, 2000 15,355 24,571
Equipment deposits 175,000 --
Net Assets of discontinued operations 1,897,609 1,854,098
Other assets 7,787 10,454
----------- -----------
Total other assets 2,116,824 1,910,750
----------- -----------
TOTAL ASSETS $ 7,150,891 $ 6,651,737
=========== ===========
(Continued on following page)
See accompanying notes to financial statements.
1
W-W CAPITAL CORPORATION
-----------------------
Balance Sheets, Continued
December 31, June 30,
2000 2000
---- ----
(Unaudited)
Liabilities
- -----------
Current Liabilities:
Accounts Payable $ 1,374,736 $ 1,285,816
Accrued property taxes 21,824 16,995
Accrued payroll and related taxes 184,238 209,819
Accrued interest payable 17,390 15,076
Accrued income taxes, current 24,300 36,000
Current portion of long-term notes payable 345,000 361,000
Current portion of capital lease obligations 23,000 23,000
Other current liabilities 128,522 76,546
----------- -----------
Total current liabilities 2,119,010 2,024,252
----------- -----------
Other Liabilities:
Long-term notes payable, net of current portion 1,809,519 1,452,992
Long-term capital lease obligations, net
of current portion 57,306 68,426
Deferred income tax liability 106,000 106,000
Negative goodwill, net of accumulated
amortization of $1,952 at December 31,
2000, and $781 at June 30, 2000 44,901 46,072
----------- -----------
Total other liabilities 2,017,726 1,673,490
----------- -----------
TOTAL LIABILITIES 4,136,736 3,697,742
----------- -----------
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 December 31, 2000
and June 30, 2000 55,406 55,406
Capital in excess of par value 3,304,629 3,304,629
Accumulated Deficit (296,974) (357,134)
----------- -----------
3,063,061 3,002,901
Less 120,264 shares of treasury stock at cost (48,906) (48,906)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 3,014,155 2,953,995
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 7,150,891 $ 6,651,737
=========== ===========
See accompanying notes to financial statements.
2
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
December 31 December 31,
----------- ------------
2000 1999 2000 1999
---- ---- ---- ----
Net Sales $ 3,321,085 $ 2,713,578 $ 6,903,227 $ 5,400,131
Cost of goods sold 2,745,847 2,150,431 5,629,133 4,306,848
----------- ----------- ----------- -----------
Gross profit 575,238 563,147 1,274,094 1,093,283
----------- ----------- ----------- -----------
Operating expenses:
Selling expenses 256,464 250,442 482,877 473,651
General and administrative expenses 358,758 182,966 674,037 372,098
----------- ----------- ----------- -----------
Total operating expenses 615,222 433,408 1,156,914 845,749
----------- ----------- ----------- -----------
Operating earnings (loss) (39,984) 129,739 117,180 247,534
----------- ----------- ----------- -----------
Other income (expenses):
Interest income 7,506 2,010 15,326 6,396
Interest expense (55,794) (40,464) (113,262) (79,812)
Gain on sale of assets 10,500 -- 37,800 --
Other income (expense), net 16,967 4,094 6,110 18,897
----------- ----------- ----------- -----------
Total other income (expense) (20,821) (34,360) (41,239) (67,306)
----------- ----------- ----------- -----------
Earnings (loss) before income taxes (60,805) 95,379 75,941 180,228
Income taxes (provision) from continuing
operations (16,000) -- 24,000 --
----------- ----------- ----------- -----------
Net earnings (loss) from continuing operations (44,805) 95,379 51,941 180,228
----------- ----------- ----------- -----------
Discontinued operations:
Earnings (loss) from operations of Titan
Industries to be disposed of (net of
income taxes of $7,000 at three months
ended December 31, 2000 and $59,000
at six months ended December 31, 2000) 599 (105,954) 88,219 (7,728)
Estimated loss on disposal of Titan Industries (50,000) -- (80,000) --
----------- ----------- ----------- -----------
Net earnings (loss) from discontinued
operations (49,401) (105,954) 8,219 (7,728)
----------- ----------- ----------- -----------
Net earnings (loss) $ (94,206) $ (10,575) $ 60,160 $ 172,500
=========== =========== =========== ===========
(Continued on following page)
See accompanying notes to financial statements.
3
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations, Continued
(Unaudited)
Three Months Ended Six Months Ended
December 31 December 31,
----------- ------------
2000 1999 2000 1999
---- ---- ---- ----
Earnings per common share:
Basic
Earnings (loss) from continuing
operations $ (0.01) $ 0.02 $ 0.01 $ 0.03
Earnings (loss) from discontinued
operations 0.00 (0.02) 0.02 0.00
Estimated loss on disposal of Titan
Industries (0.01) 0.00 (0.02) 0.00
----------- ----------- ----------- -----------
Net earnings (loss) $ (0.02) $ 0.00 $ 0.01 $ 0.03
=========== =========== =========== ===========
Weighted average number of common
shares 5,540,661 5,540,661 5,540,661 5,540,661
Diluted
Earnings (loss) from continuing
operations $ (0.01) $ 0.02 $ 0.01 $ 0.03
Earnings (loss) from discontinued
operations 0.00 (0.02) 0.02 0.00
Estimated loss on disposal of Titan
Industries (0.01) 0.00 (0.02) 0.00
----------- ----------- ----------- -----------
Net earnings (loss) $ (0.02) $ 0.00 $ 0.01 $ 0.03
=========== =========== =========== ===========
Weighted average number of common
shares 5,540,661 5,540,661 5,540,661 5,540,661
See accompanying notes to financial statements.
4
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows
(Unaudited)
Six Months Ended
December 31,
------------
2000 1999
---- ----
Cash flows from operating activities:
Net earnings $ 60,160 $ 172,500
Adjustments to reconcile net earnings
to net cash used in operating activities:
(Earnings) loss from discontinued operations (43,511) 7,728
Depreciation and amortization 97,111 97,278
Gain on sale of property and equipment (37,800) --
Provision for doubtful accounts receivable 725 752
Amortization of negative goodwill (1,171) --
Change in assets and liabilities:
Accounts receivable (33,656) (144,300)
Inventories (126,487) (74,864)
Other current and non-current assets (30,604) (54,182)
Accounts payable 88,920 (37,268)
Accrued expenses and other current liabilities 21,838 (9,659)
--------- ---------
Net cash used in operating activities (4,475) (42,015)
--------- ---------
Cash flows from investing activities:
Proceeds from sale of property and equipment 37,800 --
Purchase of property and equipment (141,504) (28,167)
Proceeds from stockholders' notes receivable 507 466
--------- ---------
Net cash used in investing activities $(103,197) $ (27,701)
--------- ---------
(Continued on following page)
See accompanying notes to financial statements
5
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows, Continued
(Unaudited)
Six Months Ended
December 31,
------------
2000 1999
---- ----
Cash flows from financing activities:
Payments on notes payable, financial
institutions and government entities $(6,220,691) $(4,809,274)
Proceeds from notes payable 6,335,821 4,845,717
Payments on capital leases (11,120) (8,319)
----------- -----------
Net cash provided by financing
activities 104,010 28,124
----------- -----------
Net decrease in cash (3,662) (41,592)
Cash at beginning of period 313,898 170,252
----------- -----------
Cash at end of period $ 310,236 $ 128,660
=========== ===========
Supplemental disclosures of cash flow for continuing operations:
Cash paid during the period for interest $ 108,614 $ 78,370
Installment loans to acquire property and equipment $ 40,397 $ --
Installment loans used for deposits on purchase
of property and equipment $ 185,000 $ --
Cash paid during the period for income taxes $ 46,293 $ --
See accompanying notes to financial statements.
6
W-W CAPITAL CORPORATION
-----------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited financial statements include the accounts of W-W
Capital Corporation (the Company) and its three wholly-owned subsidiaries W-W
Manufacturing Co., Inc., Titan Industries, Inc., and Eagle Enterprises, Inc. All
significant intercompany accounts and transactions have been eliminated.
In January 2001, the Company sold its water and environmental product
segment, Titan Industries, Inc.. The Company's consolidated financial statements
have been restated to reflect the segment as a discontinued operation for all
periods presented.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. They do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and changes in cash
flows in conformity with generally accepted accounting principles for full-year
financial statements. However, except as disclosed herein, there has been no
material change in the information disclosed in the notes to W-W Capital
Corporation's financial statements included in its Annual Report on Form 10-K
for the year ended June 30, 2000. In the opinion of management, all adjustments
(consisting of normal recurring accrual basis adjustments) considered necessary
for a fair presentation have been reflected in the accompanying financial
statements. Operating results for the three and six month periods ended December
31, 2000, are not necessarily indicative of the result that may be expected for
the year ended June 30, 2001
NOTE 2 - NET BASIC EARNINGS PER SHARE
- -------------------------------------
The net basic earnings (loss) per share amount included in the accompanying
statement of operations have been computed using the weighted-average number of
shares of common stock outstanding and the dilative effect, if any, of common
stock equivalents existing during the applicable three and six month periods.
NOTE 3 - RELATED PARTY TRANSACTION
- ----------------------------------
The Company has a number of related party transactions. See the footnotes
to W-W Capital Corporation financial statements for the year ended June 30,
2000, included in its Annual Report on Form 10-K for the nature and type of
related party transactions.
7
A summary of the related party transactions that effect the Company's
statement of operations for the three and six months ended December 31, 2000 and
1999, respectively, is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
Transactions with
- -----------------
Related parties 2000 1999 2000 1999
- --------------- ---- ---- ---- ----
Rent expense $ 15,000 $ 15,000 $ 30,000 $ 25,000
NOTE 4 - DISCONTINUED OPERATION AND SUBSEQUENT EVENT
- ----------------------------------------------------
On January 5, 2001, the Shareholders of the Company voted to sell its water
and environmental product segment, Titan Industries, Inc., to certain
shareholders of the Company in exchange for 3,390,399 shares, or approximately
61.2%, of the common stock of the Company. In addition to giving up its interest
in Titan, the Company also contributed to the capital of Titan the sum of
$850,000 used to equalize the value of the consideration being exchanged. The
sale will be accounted for as a treasury stock transaction and the estimated
loss on disposal is the result of professional fees attributable to the
transaction. The accompanying financial statements have been restated to conform
to discontinued operations treatment for all historical periods presented.
The operating results of the discontinued operation is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
Net Sales $ 2,168,981 $ 2,602,720 $ 4,699,336 $ 4,071,064
=========== =========== =========== ===========
Earnings (loss) before
provision for income taxes $ 7,599 $ (105,954) $ 147,219 $ (7,728)
Provision for income taxes 7,000 -- 59,000 --
----------- ------------- ----------- -----------
Earnings (loss) from
discontinued operations $ 599 $ (105,954) $ 88,219 $ (7,728)
=========== =========== =========== ===========
8
Assets and liabilities of the discontinued operation is summarized as
follows:
December 31, June 30,
2000 2000
---- ----
Cash $ 105,473 $ 96,986
Receivables 1,258,184 1,579,784
Inventories 2,551,495 2,537,367
Prepaid expenses 18,151 30,540
Deferred taxes 22,000 22,000
---------- ----------
Current assets of discontinued
operations 3,955,303 4,266,677
---------- ----------
Net property and equipment 909,224 870,047
---------- ----------
Accounts payable 1,405,448 1,731,932
Accrued liabilities 181,004 138,494
Short-term debt 1,065,000 57,000
---------- ----------
Current liabilities of discontinued
operations 2,651,452 1,927,426
---------- ----------
Long-term debt 290,466 1,330,200
Deferred taxes 25,000 25,000
---------- ----------
Non-current liabilities of
discontinued operations 315,466 1,355,200
---------- ----------
Net assets of discontinued operations $1,897,609 $1,854,098
========== ==========
During January 2001, the Company entered into an informal loan
agreement with an affiliated investment group to borrow $1,000,000. 2,448,000
shares of the Company's outstanding common stock will collateralize the loan.
Loan proceeds of $750,000 were used to fund the capital contribution to Titan
Industries, Inc. The informal note agreement is tentatively scheduled to mature
in January 2011 and bears interest at 12%. The note is payable with one payment
consisting exclusively of twelve month's interest on the second anniversary
date, and beginning on the third anniversary date, annual installments of
$125,000 plus all unpaid interest.
NOTE 5 - CREDIT AGREEMENT
- -------------------------
During March 2001, the Company extended the maturity date of the
revolving notes payable credit agreement with Wells Fargo Bank through October
2004. Borrowing base limitations and loan agreement covenants remain unchanged.
9
Independent Accountant's Report
- -------------------------------
Board of Directors and Stockholders
W-W Capital Corporation
Fort Collins, Colorado
We have reviewed the accompanying balance sheets, statements of
operations, and cash flows of W-W Capital Corporation and consolidated
subsidiaries as of December 31, 2000, and for the 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 financial statements for them to be in
conformity with generally accepted accounting principles.
BROCK AND COMPANY, CPAs, P.C.
Fort Collins, Colorado
February 28, 2001
10
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
- ------ -----------------------------------------------------------------------
The business of the Company is carried on within two segments by a number
of operating units. The livestock handling equipment segment is composed of W-W
Manufacturing (W-W Manufacturing), Eagle Enterprises (Eagle) and W-W Paul Scales
(Paul), and the water and environmental product segment is represented by Titan
Industries (Titan). On January 5, 2001, the Shareholders of the Company voted to
sell Titan to certain shareholders of the Company. The accompanying financial
statements, as well as management's discussion and analysis of financial
condition and results of operations, have been stated to reflect discontinued
operations treatment for all historical periods presented.
(A) Analysis of Results of Operations
The Company had net earnings from continuing operations of $51,941 for the
six months ended December 31, 2000, as compared to $118,288 for the same period
of 1999. For the three month period ended December 31, 2000, the Company
incurred a loss of $44,805 as compared to net earnings of $95,379 for the same
period of 1999. This loss of earnings was attributable to the normal slow
selling periods during the winter months and holiday season as well as
transition costs associated with the plant shut down in Dodge City, Kansas and
the opening of the new plant in Thomas, Oklahoma.
Sales from continuing operations increased to $6,903,227 for the six months
ended December 31, 2000, compared to $5,400,131 for 1999. The increase of
$1,503,096 is attributable to improved cattle prices, therefore creating strong
distributor/dealer demand, as well as the Company's efforts in the equine
(horse) equipment market and expanded product offerings in rodeo and special
product sales. The Company continues to make improvements to various existing
products and is planning on introducing some significant changes in the spring
and summer of 2001. Sales increased at both the W-W Manufacturing and Eagle
plant locations. Sales at the W-W Manufacturing location increased from
$3,784,034 to $4,059,774 for the same six-month period of 1999 and 2000. Sales
increased at the Eagle plant to $1,725,336 for the six months ended December 31,
2000 as compared to $1,616,098 for the same period of 1999. The Company also
realized sales from the Paul location of $1,118,117 for the six months ended
December 31, 2000. Based on present conditions, the Company anticipates sales to
remain strong throughout fiscal 2000-2001. Product improvements and new product
introductions have allowed the Company to gain acceptance with new customers and
move into markets not normally serviced by the Company. The east coast market
serviced by Eagle continues to show improvement, as this market accepts and
appreciates a higher quality of equipment, replacing the lighter weight products
previously offered. The eastern market has seen the most significant
improvements in the rodeo and equine equipment lines. Livestock handling
equipment products should see strong sales and improved profits throughout the
balance of the current fiscal year. The Company is presently involved in several
projects, which includes special sales to expo centers, fairs and livestock
shows, as well as projects in the international market. The Company expects to
see this area of sales improve throughout 2001.
With the completion of the new plant in Thomas, Oklahoma during the first
quarter of 2001, the Company will incur significant costs for moving operations
from Dodge City, Kansas and the training of new employees in Oklahoma.
Management anticipates that this increase in cost will impair profits for
several months while the move is being completed. The Company plans to keep both
plants operating as the move is taking place. Temporary labor will be employed
to help move while regular full time employees will maintain operations. It is
anticipated that the move will take approximately two months to complete and
another month or two to get operations up to full operating levels. Management
is hopeful that during the second quarter of 2001 the Company will start
realizing the benefits of the new plant and the cost reductions that are
anticipated with the move completed.
11
Gross margins from continuing operations decreased for the six months ended
December 31, 2000 to 18.5% as compared to 20.2% in 1999. The decreased margins
are the result of labor, shipping and manufacturing problems in the Dodge City
facility due the closing of the plant. Many products during the six month period
ended December 31, 2000 had to be built in temporary production facilities in
Thomas, Oklahoma due to labor shortages in Dodge City. These products then had
to be shipped to Dodge City for painting and then reshipped to our
distributors/dealers. These extra costs, along with other manufacturing
insufficiencies in Dodge City and additional costs associated with the start up
of the new Thomas plant caused the decrease in margins. Management expects gross
margins to improve after the consolidation of the two plants into the new
facility in Thomas, Oklahoma. The move will take place during the third quarter
of 2001 and operations are expected to be in full swing by the fourth quarter
2001.
Gross margins at the Eagle plant continue to improve as the plant
utilization continues and sales increase in the eastern market. Gross profits
improved at the Eagle plant to $268,982 or 15.6% for the six months ended
December 31, 2000 as compared to $214,154 or 13.3% for the same period of 1999.
Selling expenses from continuing operations as a percentage of sales
decreased from 8.8% in 1999 to 7.0% in 2000. Total dollars expended for selling
expense increased only $9,266 during the six month period ended December 31,
2000. The slight increase reveals the Company's cost will remain stable while
sales continue to improve. The Company will continue its aggressive pursuit of
new markets and expanding its distributor/dealer base. Through the balance of
the fiscal year, management will continue to evaluate selling expense to find
ways to keep costs in line as a percentage of sales, as we continue to grow
markets and market share with new products.
General and administrative expense from continuing operations increased as
a percentage of sales to 9.8% as compared to 6.9% for the same period of 1999.
Overall dollars spent on general and administrative expenses increased $301,939
for the six months ended December 31, 2000 as compared to the same period of
1999. The increase was due to higher salaries, legal and accounting costs
related to the change in business structure and the increase of travel costs
nationwide. The overall dollar increase was also a result of the addition of
Paul by $79,362. The Company will continue to find ways to lower general and
administrative expense through the use of centralization, job realignment, and
line-by-line expense reductions. The Company also believes that general and
administrative expenses will also decrease due to the fact that the business
structure changes were completed during the third quarter and a majority of the
legal and accounting fees were finalized at that time.
Interest expense from continuing operations increased for the six months
ended December 31, 2000 to $113,262 from $79,812 for the same period of 1999.
Interest expense from continuing operations for the three months ended December
31, 2000 increased to $55,794 from $40,464 for the same three-month period of
1999. This increase is due to the rise in the prime interest rate and the heavy
borrowing on the revolving lines to support the Titan split-off and
manufacturing plant move. The Company plans on maintaining higher levels of
inventory while moving from Dodge City to Thomas in an effort to maintain sales
levels while in transit. As profits and cash flow increase, the Company plans to
reduce debt, thereby reducing overall interest expense.
12
(B) Liquidity and Capital Resources
The Company's principal sources of liquidity are borrowings under its
credit facilities and from internally generated funds. The Company generated
funds from operations with net earnings of $60,160 and produced a traditional
cash flow from operations of $157,271. This cash flow and funds from an
operating line increase of $92,890 were used to fund the sales growth of
$1,503,096 and the resulting inventory and accounts receivable increase. The
funds generated from operating cash flow has provided adequate liquidity to meet
all current obligations for the six months ended December 31, 2000. As the
company moves further into fiscal 2001, it anticipates continued sales growth
with a leveling off of borrowings.
The Company used cash in investing activities for the purchase of new
property and equipment. Overall purchases of property and equipment increased
for the six months ended December 31, 2000 to $141,504 from $28,167 for the same
six months ended December 31, 1999. The increased purchases are a result of the
Company providing equipment for the new Thomas plant. Cash used in financing
activities resulted in an increase in borrowings of $104,010 for the six months
ended December 31, 2000, and the Company anticipates overall debt to remain
steady over the balance of fiscal 2001. In March 2001, management successfully
completed a three-year extension for its banking arrangements with Wells Fargo
Business Credit of Denver. This allows the Company the necessary capital to
continue to grow and meet its obligations. The details of the arrangement called
for a three-year extension of its commitment from the bank of various revolving
lines and two equipment lines used for the purchase of equipment and the Adrian
J. Paul Company.
Based on current and general economic conditions, the Company anticipates
continued improvement in both sales and profits for fiscal 2001. However,
management does anticipate that moving the W-W Livestock Equipment plant from
Dodge City, Kansas to Thomas, Oklahoma will have some effects on profitability
during the move and for a period thereafter. Management believes that with net
cash provided from cash flow, available lines of credit, and funds provided from
earnings, it will have adequate sources to meet its current obligations.
13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
Not Applicable
ITEM 2. CHANGES IN SECURITIES
---------------------
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not Applicable
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------
On January 5, 2001, the Company held its annual meeting of stockholders,
and the following matters were voted upon.
A) Sale of the Company's wholly-owned subsidiary, Titan Industries, Inc.,
to certain existing shareholders of the Company.
For Against Abstained Not Voted
--- ------- --------- ---------
3,066,839 341,311 33,960 304,755
B) Election of the Board of Directors which include the following:
Nominee For Against
------- --- -------
Steve D. Zamzow 3,404,608 342,257
Millard T. Webster 3,404,608 342,257
L.M "Mick" McCarty 3,404,608 342,257
Harold Gleason 3,404,608 342,257
A. Randal Kourt 3,404,608 342,257
C) Election of the Company's independent auditors, Brock and Company
of Ft. Collins, Colorado.
For Against Abstained
--- ------- ---------
3,411,948 34,217 300,700
ITEM 5. OTHER INFORMATION
-----------------
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
None.
14
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: May 15, 2001 By: /s/ Steve D. Zamzow
----------------------------------
Steve D. Zamzow, President & CEO
Dated: May 15, 2001 By: /s/ Mike Dick
---------------------------------
Mike Dick, Controller
15