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 the quarterly period ended December 31, 2003
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File No. 0-17757
W-W CAPITAL CORPORATION
(exact name of Registrant as specified in its charter)
Nevada 93-0967457
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
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 ___
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in rule 12b-2 of the Act).
Yes ___ No _X_
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 February 20, 2004
Common stock --------------------------
$0.01 Par Value 2,010,614
W-W CAPITAL CORPORATION
Index
-----
PART I FINANCIAL INFORMATION PAGE NO.
- ------ --------------------- --------
Item 1 Balance Sheets
- ------ December 31, 2003 and June 30, 2003 1
Statements of Operations
Three and Six Months Ended
December 31, 2003 and 2002 3
Statements of Cash Flows
Six Months Ended
December 31, 2003 and 2002 5
Notes to Financial Statements 7
Item 2 Management's Discussion and Analysis
- ------ of Financial Condition and Results
of Operations 9
Item 3 Quantitative and Qualitative Disclosures
- ------ About Market Risks 12
Item 4 Controls and Procedures 12
- ------
PART II OTHER INFORMATION
- ------- -----------------
Item 1 LEGAL PROCEEDINGS 13
- ------
Item 2 CHANGES IN SECURITIES 13
- ------
Item 3 DEFAULTS UPON SENIOR SECURITIES 13
- ------
Item 4 SUBMISSION OF MATTERS TO VOTE OF
- ------ SECURITY HOLDERS 13
Item 5 OTHER INFORMATION 13
- ------
Item 6 EXHIBITS AND REPORT ON FORM 8-K 13
- ------
SIGNATURES 14
Part I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------
W-W CAPITAL CORPORATION
-----------------------
Balance Sheets
December 31, June 30,
2003 2003
---- ----
(Unaudited)
Assets
- ------
Current assets:
Cash 108,900 127,479
----------- -----------
Accounts receivable, trade $ 1,853,130 $ 1,672,198
Less allowance for doubtful accounts (290,000) (290,000)
----------- -----------
Net accounts receivable, trade 1,563,130 1,382,198
----------- -----------
Accounts receivable, other 13,250 13,458
Inventories:
Raw materials 526,046 528,112
Work-in-process 348,100 375,882
Finished goods 717,840 607,832
----------- -----------
Total inventories 1,591,986 1,511,826
----------- -----------
Prepaid expenses 95,986 41,556
Current portion of notes receivable, related
parties 717 1,261
Current portion of net investment in sales-
type lease 20,588 18,055
Deferred income tax asset 178,000 178,000
----------- -----------
Total current assets 3,572,557 3,273,833
----------- -----------
Property and equipment, at cost: 4,662,529 4,612,478
Less accumulated depreciation
and amortization (2,420,113) (2,337,391)
----------- -----------
Net property and equipment 2,242,416 2,275,087
----------- -----------
Other Assets:
Long-term notes receivable related parties,
net of current portion 19,095 19,812
Net investment in sales-type lease, net of
current portion 6,810 27,398
Loan acquisition costs, net of accumulated
amortization of $9,225 at December
31, 2003 and $7,175 at June 30, 2003 31,775 33,825
Equipment deposits 175,000 175,000
Other assets 40,463 40,463
----------- -----------
Total other assets 273,143 296,498
----------- -----------
TOTAL ASSETS $ 6,088,116 $ 5,845,418
=========== ===========
The accompanying Notes are an integral part of the
consolidated financial statements
1
W-W CAPITAL CORPORATION
-----------------------
Balance Sheets, Continued
December 31, June 30,
2003 2003
---- ----
(Unaudited)
Liabilities
- -----------
Current Liabilities:
Accounts payable $ 1,603,800 $ 1,260,959
Accrued payroll and related taxes 209,517 205,417
Accrued property taxes 19,300 9,050
Accrued interest payable 16,940 14,898
Other current liabilities 18,918 14,444
Current portion of long-term notes payable 1,898,000 1,943,000
Current portion of capital lease obligations 68,000 73,000
----------- -----------
Total current liabilities 3,834,475 3,520,768
----------- -----------
Other Liabilities:
Long-term notes payable, net of current portion 1,357,113 1,498,515
Long-term capital lease obligations, net
of current portion 1,113,091 1,147,461
Deferred income tax liability 60,100 20,900
----------- -----------
Total other liabilities 2,530,304 2,666,876
----------- -----------
TOTAL LIABILITIES 6,364,779 6,187,644
----------- -----------
Stockholders' Deficit
Preferred stock: $10.00 par value, 400,000
shares authorized -- --
Common stock, $0.01 par value, 15,000,000
shares authorized; 5,553,827 shares issued
at December 31, 2003 and June 30, 2003 55,538 55,538
Capital in excess of par value 3,305,533 3,305,533
Accumulated deficit (758,619) (824,182)
----------- -----------
2,602,452 2,536,889
Less 3,543,213 shares of treasury stock, at cost (2,879,115) (2,879,115)
----------- -----------
NET STOCKHOLDERS' DEFICIT (276,663) (342,226)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 6,088,116 $ 5,845,418
=========== ===========
The accompanying Notes are an integral part of the
consolidated financial statements
2
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
December 31 December 31,
----------- ------------
2003 2002 2003 2002
---- ---- ---- ----
Net sales $ 3,278,339 $ 3,056,436 $ 6,368,310 $ 6,198,075
Cost of goods sold 2,455,873 2,408,805 4,844,741 4,974,472
----------- ----------- ----------- -----------
Gross profit 822,466 647,631 1,523,569 1,223,603
----------- ----------- ----------- -----------
Operating expenses:
Selling expenses 299,557 281,745 580,946 522,811
General and administrative expenses 325,846 314,007 661,531 645,172
----------- ----------- ----------- -----------
Total operating expenses 625,403 595,752 1,242,477 1,167,983
----------- ----------- ----------- -----------
Operating earnings 197,063 51,879 281,092 55,620
----------- ----------- ----------- -----------
Other income (expenses):
Interest income 78 93 10,261 76
Interest expense (104,913) (105,223) (194,399) (191,996)
Gain on sale of assets 1,988 -- 5,388 100
Other income (expense), net 836 50,067 2,421 51,999
----------- ----------- ----------- -----------
Total other income (expense) (102,011) (55,063) (176,329) (139,821)
----------- ----------- ----------- -----------
Earnings (loss) before income taxes and cumulative
effect of a change in accounting principle 95,052 (3,184) 104,763 (84,201)
Income tax benefit (expense) (35,200) 2,000 (39,200) 34,000
----------- ----------- ----------- -----------
Earnings (loss) before cumulative effect of a
change in accounting principle 59,852 (1,184) 65,563 (50,201)
Cumulative effect of a change in accounting
principle -- -- -- 61,744
----------- ----------- ----------- -----------
Net earnings (loss) $ 59,852 $ (1,184) $ 65,563 $ 11,543
=========== =========== =========== ===========
The accompanying Notes are an integral part of the
consolidated financial statements
3
W-W CAPITAL CORPORATION
-----------------------
Statements of Operations, Continued
(Unaudited)
Three Months Ended Six Months Ended
December 31 December 31,
----------- ------------
2003 2002 2003 2002
---- ---- ---- ----
Earnings per common share:
Basic
Earnings (loss) before cumulative effect
of a change in accounting principle $ 0.03 $ 0.00 $ 0.03 $ (0.02)
Cumulative effect of a change in
accounting principle 0.00 0.00 0.00 0.03
------------- ------------- ------------- -------------
Net earnings (loss) $ 0.03 $ 0.00 $ 0.03 $ 0.01
============= ============= ============= =============
Weighted average number of
common shares 2,010,614 2,010,614 2,010,614 2,010,614
Diluted
Earnings (loss) before cumulative effect
of a change in accounting principle $ 0.03 $ 0.00 $ 0.03 $ ( 0.02)
Cumulative effect of a change in
accounting principle 0.00 0.00 0.00 0.03
------------- ------------- ------------- -------------
Net earnings (loss) $ 0.03 $ 0.00 $ 0.03 $ 0.01
============= ============= ============= =============
Weighted average number of
common shares 2,010,614 2,010,614 2,010,614 2,010,614
The accompanying Notes are an integral part of the
consolidated financial statements
4
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows
(Unaudited)
Six Months Ended
December 31,
------------
2003 2002
---- ----
Cash flows from operating activities:
Net earnings $ 65,563 $ 11,543
Adjustments to reconcile net earnings to net cash
provided (used) by operating activities:
Depreciation and amortization 122,301 121,541
Gain on sale of property and equipment (5,388) (100)
Provision for loss on accounts receivable 1,845 --
Write off of negative goodwill -- (61,744)
Change in assets and liabilities:
Accounts receivable (164,722) (234,470)
Inventories (80,160) 136,675
Other current and non-current assets (54,222) (131,106)
Accounts payable 342,841 57,726
Accrued expenses and other current liabilities 60,066 13,032
--------- ---------
Net cash provided (used) by operating
activities 288,124 (86,903)
--------- ---------
Cash flows from investing activities:
Proceeds from sale of property and equipment 29,400 100
Proceeds from stockholders' notes receivable 1,261 --
Purchase of property and equipment (36,111) (22,190)
--------- ---------
Net cash used in investing activities $ (5,450) $ (22,090)
--------- ---------
(Continued on following page)
5
W-W CAPITAL CORPORATION
-----------------------
Statements of Cash Flows, Continued
(Unaudited)
Six Months Ended
December 31,
------------
2003 2002
---- ----
Cash flows from financing activities:
Payments on notes payable, financial
institutions and government entities $(6,316,911) $(5,950,483)
Proceeds from notes payable 6,055,028 6,093,240
Payments on capital leases (39,370) (37,046)
----------- -----------
Net cash provided (used) by financing
activities (301,253) 105,711
----------- -----------
Net decrease in cash (18,579) (3,282)
Cash at beginning of period 127,479 137,948
----------- -----------
Cash at end of period $ 108,900 $ 134,666
=========== ===========
Supplemental Information:
Cash paid during the period for interest $ 192,357 $ 196,245
Installment loans to acquire property and
equipment $ 75,481 $ 260,950
Cash paid during the period for income taxes $ 8,020 $ --
The accompanying Notes are an integral part of the
consolidated 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 wholly owned subsidiary W-W
Manufacturing Co., Inc. All significant intercompany accounts and transactions
have been eliminated.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. They do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and changes in cash
flows in conformity with generally accepted accounting principles for full-year
financial statements. However, except as disclosed herein, there has been no
material change in the information disclosed in the notes to W-W Capital
Corporation's financial statements included in its Annual Report on Form 10-K
for the year ended June 30, 2003. 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, 2003, are not necessarily indicative of the result that may be expected for
the year ended June 30, 2004.
The Company has incurred operating losses two out of the past three
fiscal years, has a working capital deficit of $261,918 and has an accumulated
deficit of $276,663 as of December 31, 2003. The report of independent auditors
on the Company's June 30, 2003 audited financial statements includes an
explanatory paragraph indicating there is substantial doubt about the Company's
ability to continue as a going concern. The Company believes that it has
developed a viable plan to address these issues and that its plan will enable
the Company to continue as a going concern for the next twelve months. This plan
includes the realization of revenues from the commercialization of new products
and the reduction of certain operating expenses. Although the Company believes
that its plan will be realized, there is no assurance that these events will
occur. The financial statements do not include any adjustments to reflect the
uncertainties related to the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the inability of
the Company to continue as a going concern.
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 dilutive
effect, if any, of common stock equivalents existing during the applicable three
and six month periods.
7
NOTE 3 - NEGATIVE GOODWILL AND CHANGE IN ACCOUNTING PRINCIPLE
- -------------------------------------------------------------
In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 141, "Business Combinations." SFAS
No. 141 requires that unamortized negative goodwill arising from a business
combination, for which the acquisition date was before July 1, 2001, shall be
written off and recognized as a change in accounting principle. SFAS No. 141 was
effective for the Company on July 1, 2002.
As of July 1, 2002, the Company had $61,744 of unamortized negative
goodwill relating to the fiscal year 2000 purchase of the Adrian J. Paul Company
by its subsidiary, WW Manufacturing Company. The write off resulted in an
increase in income and was reflected as a cumulative effect of a change in
accounting principle in the quarter ended September 30, 2002.
A reconciliation of reported net income (loss) for the three and six
months ended December 31, 2002 adjusted to reflect the adoption of SFAS No. 141
as if it had been effective July 1, 2001 is as follows:
Three Months Six Months
------------ ----------
Reported net income (loss) $ (1,184) $ 11,543
Subtract-back adjustment for
accounting change -- (61,744)
Add-back goodwill amortization -- --
-------- ----------
Adjusted net loss $ (1,184) $ (50,201)
======== ==========
Adjusted net income (loss) per share-
Basic $ 0.00 $ (0.02)
Adjusted net income (loss) per share-
Diluted $ 0.00 $ (0.02)
NOTE 4 - RELATED PARTY TRANSACTION
- ----------------------------------
The Company has related party transactions. See the footnotes to W-W
Capital Corporation financial statements for the year ended June 30, 2003,
included in its Annual Report on Form 10-K for the nature and type of related
party transactions.
A summary of the related party transactions that effect the Company's
statement of operations for the three and six months ended December 31, 2003 and
2002, respectively, is as follows:
Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
Transactions with
related parties 2003 2002 2003 2002
- --------------- ---- ---- ---- ----
Interest income $ -- $ -- $ 1,261 $ --
8
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
- --------------------------------------------------------------------------------
The business of the Company is carried on within one segment group by
three 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).
Forward-Looking Statements
- --------------------------
In addition to historical information, this Quarterly Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective. The forward-looking
statements contained herein are subject to certain risks and uncertainties that
could cause actual results to differ materially from those reflected in the
forward-looking statements. Factors that might cause such a difference include,
but are not limited to, competitive pressures, changing economic conditions,
factors discussed in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, and other factors, some of which will be
outside the control of management. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof. Readers should refer to and
carefully review the information described in future documents the Company files
with the Securities and Exchange Commission.
Analysis of Results of Operations
- ---------------------------------
The Company had net income of $65,563 for the six months ended December
31, 2003, as compared to $11,543 for the same period of 2002 which included
income of $61,744 related to a change in accounting principle. For the
three-month period ended December 31, 2003, the Company had net income of
$59,852 as compared to a net loss of $1,184 for the same period of 2002.
Net sales increased 2.7% to $6,368,310 for the six-month period ended
December 31, 2003, compared to $6,198,075 for 2002. For the three months ended
December 31, 2003 net sales increased 7.3%, from $3,056,436 in 2002 compared to
$3,278,339 in 2003.
Sales at the W-W Manufacturing plant in Thomas, Oklahoma increased
$653,229, or 15.9%, from $4,107,243 for the six months ended December 31, 2002
to $4,760,472 in 2003. The increase in sales is attributable to an overall
recovery in the economy and geopolitical environment. Based on present
conditions, the Company anticipates sales to remain steady during the second
half of fiscal 2004.
Sales at the Eagle Enterprises plant in Livingston, Tennessee decreased
$441,908, or 32.7%, from $1,353,063 for the six months ended December 31, 2002
to $911,155 in 2003. The Livingston plant was hit hardest by the sluggish
economy, the need to update certain equipment and the need for installation of a
new paint system. After the powder coat paint system was implemented in Thomas,
Oklahoma, many customers wanted to purchase only product with a powder coat
finish. With the economic environment in decline, management decided that the
cost to install a new paint system in the Livingston plant was to high and the
risk too great for the Company to take. During November 2002 the decision to
scale back operations at the plant was made. While certain revenues were
transferred to the Thomas plant, many revenues were permanently lost. During
June 2003 management made the
9
decision to market a new inline pre-galvanized product from the Livingston
plant. This product allows for the manufacturing of product without problems
related to painting. Sales of the new product line have shown steady improvement
during the first half of fiscal 2004 from $58,451 in July 2003 to $215,973 in
December 2003. Management believes this new product line will continue to show
improvement throughout the second half of the fiscal year, which should allow
the Livingston plant to be in full operation by the fourth quarter of fiscal
2004.
Sales at the W-W Paul location in Duncan, Oklahoma decreased $41,086,
or 5.6%, from $737,769 for the six month period ended December 31, 2002 to
$696,683 for 2003. The Duncan location's primary manufacturing responsibilities
are livestock scales and hydraulic squeeze chutes as well as a supply source to
the Thomas location. While overall sales at the Duncan location have remained
relatively stable, the improved economic outlook and a new emphasis on the
marketing of new and redeveloped scales should help sales at the Duncan location
to increase during the remainder of fiscal 2004.
Gross margins as a percentage of sales increased for the six months
ended December 31, 2003 to 23.9% as compared to 19.7% in 2002. For the three
months ended December 31, 2003 gross margins as a percentage of sales increased
from 21.2% in 2002 to 25.1% in 2003. This increase is the result of a drop in
steel costs during the last portion of fiscal 2003. The Company also performed
an extensive evaluation of raw materials during the fourth quarter of fiscal
2003 and found several ways to lower certain costs. During the third quarter of
fiscal 2004 the Company anticipates that the cost of steel will again increase.
Management continually analyzes the steel market and will implement retail price
adjustments as well as surcharges to help offset the increased cost.
Selling expenses as a percentage of sales increased for the six months
ended December 31, 2003 as a percentage of sales from 8.4% in 2002 to 9.1% in
2003. For the three months ended December 31, 2003 selling expenses as a
percentage of sales decreased slightly from 9.2% in 2002 to 9.1% in 2003. Total
dollars expended for selling expense increased $58,135 during the six month
period ended December 31, 2003 compared to 2002. 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 as a percentage of sales remained
consistent at 10.4% for the six months ended December 31, 2003 and 2002. For the
three months ended December 31, 2003 general and administrative expense as a
percentage of sales decreased from 10.3% in 2002 to 9.9% in 2003. Overall
dollars spent on general and administrative expenses increased $16,359. The
Company will continue to evaluate ways to lower general and administrative
expense through the use of centralization, job realignment, and line-by-line
expense reductions.
Interest expense increased 1.3% for the six months ended December 31,
2003 to $194,399 from $191,996 for the same period of 2002. Interest expense for
the three months ended December 31, 2003 decreased to $104,913 from $105,223 for
the same three-month period of 2002. As profits and cash flow increase, the
Company plans to reduce debt, thereby reducing overall interest expense.
10
Management's Discussion of Critical Accounting Policies
- -------------------------------------------------------
The consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires management to make estimates and
judgments that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Assumptions and estimates were based on the facts and
circumstances known at December 31, 2003. However, future events rarely develop
exactly as forecast, and the best estimates routinely require adjustment. The
accounting policies discussed in Item 7 of the Annual Report on Form 10-K for
the year ended June 30, 2003 are considered by management to be the most
important to an understanding of the financial statements, because their
application places the most significant demands on management's judgment and
estimates about the effect of matters that are inherently uncertain. These
policies are also discussed in Note 1 of the Notes to Consolidated Financial
Statements included in Item 8 of that report. There have been no material
changes to that information during the first six months of fiscal 2004.
Liquidity and Capital Resources
- -------------------------------
The Company's principal sources of liquidity are from working capital,
borrowings under its credit facilities and internally generated funds. The
Company believes that these sources are sufficient to fund the current
requirements of working capital, capital expenditures and other financial
commitments. The Company generated funds from operations of $288,124 during the
six month period ended December 31, 2003 primarily caused by a increase in
accounts payable balances and net earnings. The Company used cash in investing
activities of $5,450 that is made up primarily from the sale of certain
equipment offset by the purchase of new property and equipment. Financing
activities resulted in a decrease in borrowings of $301,253 for the six months
ended December 31, 2003. As the Company moves into the second half of fiscal
2004, it anticipates increased sales growth with a decline in borrowings.
The Company's working capital decreased from $2,045,276 at December 31,
2002 to a deficit of $261,918 at December 31, 2003. This reduction is due to the
reclassification of certain long-term debt to current liabilities because a
Credit and Security Agreement with Wells Fargo Business Credit Inc. matures
October 2004. The Company is negotiating an extension to the agreement and
believes it will be finalized during the first quarter of fiscal 2005. The
Company also received a default waiver from Wells Fargo for certain bank
covenants that were in violation at June 30, 2003.
The report of independent auditors on the Company's June 30, 2003
financial statements includes an explanatory paragraph indicating there is
substantial doubt about the Company's ability to continue as a going concern.
The Company believes that it has developed a viable plan to address these issues
and that its plan will enable the Company to continue as a going concern for the
next twelve months. The plan includes the realization of revenues from the
commercialization of new products and the reduction of certain operating
expenses. The financial statements do not include any adjustments to reflect the
uncertainties related to the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the inability of
the Company to continue as a going concern. There is no assurance that the
Company will be able to achieve additional financing or that such events will be
on terms favorable to the Company.
11
The Company feels that it will continue to improve in both sales and
operating earnings throughout fiscal 2004. With increased working capital and
lines of credit, the Company feels it has an adequate supply of liquidity to
meet its needs.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risks
- -------------------------------------------------------------------------
The Company is exposed to market risk from changes in interest rates.
Market risk is the potential loss arising from adverse changes in market rates
and prices such as interest rates. For fixed rate debt, interest rate changes
affect the fair value of financial instruments but do not impact earnings or
cash flows. Conversely for floating rate debt, interest rate changes generally
do not affect the fair market value but do impact future earnings and cash flow,
assuming other factors are held constant. At December 31, 2003, the Company had
variable rate notes payable of approximately $2,484,000. Holding other variables
constant, the pre-tax earnings and cash flow impact for the next year resulting
from a one percentage point increase in interest rates would be approximately
$25,000.
ITEM 4. Controls and Procedures
- -------------------------------------
As of December 31, 2002, the Company carried out an evaluation, under
the supervision and with the participation of the Company's management,
including the Chief Executive Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. Based upon that
evaluation, the Chief Executive Officer concluded that the Company's disclosure
controls and procedures are effective in timely alerting him to material
information relating to the Company (including its consolidated subsidiary)
required to be included in the Company's periodic Securities Exchange Commission
(SEC) filings. Disclosure controls and procedures are defined as controls and
procedures that are designed to ensure that information required to be disclosed
by the Company in reports filed with the SEC is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.
Subsequent to the date of the evaluation, there have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls, nor were any corrective actions
required with regard to significant deficiencies and material weaknesses.
12
PART II
OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
-----------------
Not Applicable
ITEM 2. CHANGES IN SECURITIES
---------------------
Not Applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not Applicable
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------
Not Applicable
ITEM 5. OTHER INFORMATION
-----------------
Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Exhibit
Number Document
------ --------
31.0 Certification pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 (attached hereto).
32.0 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(attached hereto).
13
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
W W CAPITAL CORPORATION
(Registrant)
Dated: February 20, 2004 By: /s/ Steve D. Zamzow
------------------------------------
Steve D. Zamzow, President & CEO
Dated: February 20, 2004 By: /s/ Mike Dick
------------------------------------
Mike Dick, Controller
14
Exhibit 31.0
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steve D. Zamzow, certify that:
1. I have reviewed this quarterly report on Form 10-Q of W W Capital
Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the consolidated financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
the registrant and I have:
a. designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to me by others within those entities, particularly during
the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure control and
procedures, as of the end of the period covered by this report
based on such evaluation: and
c. disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. I have disclosed, based on my most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a. all significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Dated: February 20, 2004 By: /s/ Steve D. Zamzow
----------------------------
Steve D. Zamzow, President and CEO
Exhibit 32.0
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of W W Capital Corporation
(the "Company") for the period ending December 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Steve
D. Zamzow, President and Chief Executive Officer of the Company, certify, based
on my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Dated: February 20, 2004 By: /s/ Steve D. Zamzow
------------------------------
Steve D. Zamzow, President and CEO