Item 1. Business - ------- --------
(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.
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.
(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.
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.
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.
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.
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
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.
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.
Item 3. Legal Proceedings - ------- -----------------
Not applicable
Item 4.
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.
PART II
Item 5.
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.
Item 6.
Item 6. Selected Financial Data - ------- -----------------------
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.
Item 7.
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.
Item 8. Financial Statements and Supplementary Data. - ------- --------------------------------------------
W W CAPITAL CORPORATION INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PAGE ----
Financial Statements:
Independent Auditors' 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 . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . .
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.
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
W W CAPITAL CORPORATION
The accompanying Notes are an integral part of the consolidated financial statements
W W CAPITAL CORPORATION
The accompanying Notes are an integral part of the consolidated financial statements
W W CAPITAL CORPORATION
The accompanying Notes are an integral part of the consolidated financial statements
W W CAPITAL CORPORATION
The accompanying Notes are an integral part of the consolidated financial statements
W W CAPITAL CORPORATION
The accompanying Notes are an integral part of the consolidated financial statements
W W CAPITAL CORPORATION
The accompanying Notes are an integral part of the consolidated financial statements
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.
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.
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:
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.
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
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
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.
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 ======== ========
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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 ==========
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.
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:
W W CAPITAL CORPORATION
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(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
W W CAPITAL CORPORATION
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.
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.
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
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S-2
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S-3
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S-4
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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.
S-5
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S-6
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. - ------- ----------------------------------------------------------------------
Not Applicable
PART III
Item 10.
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.
Item 11.
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.
(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.
(1) The Option exercise price exceeded the fair market value of the underlying common stock on June 30, 2000.
Item 12.
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.
(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.
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.
PART IV
Item 14.
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).
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).
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.