10-Q 1 wwc-10q33102.txt FORM 10-Q FOR MARCH 31, 2002 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended March 31, 2002 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 ___ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___ No ___ NOT APPLICABLE _X_ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Each Class Number of Shares Outstanding ------------------- at June 7, 2002 Common stock ---------------------------- $0.01 Par Value 2,008,164 W-W CAPITAL CORPORATION Index ----- PART I FINANCIAL INFORMATION PAGE NO. ------ --------------------- -------- Item 1 Balance Sheets ------ March 31, 2002 and June 30, 2001 1 Statements of Operations Three and Nine Months Ended March 31, 2002 and 2001 3 Statements of Cash Flows Nine Months Ended March 31, 2002 and 2001 5 Notes to Financial Statements 7 Item 2 Management's Discussion and Analysis ------ of Financial Condition and Results of Operations 9 PART II OTHER INFORMATION ------- ----------------- Item 1 LEGAL PROCEEDINGS 11 ------ Item 2 CHANGES IN SECURITIES 11 ------ Item 3 DEFAULTS UPON SENIOR SECURITIES 11 ------ Item 4 SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS 11 ------ Item 5 OTHER INFORMATION 11 ------ Item 6 EXHIBITS AND REPORT ON FORM 8-K 11 ------ SIGNATURES 12 Part 1-FINANCIAL INFORMATION ---------------------------- ITEM 1 - FINANCIAL STATEMENTS -----------------------------

W-W CAPITAL CORPORATION ----------------------- Balance Sheets March 31 June 30, 2002 2001 ~~2000~~ ---- ---- (Unaudited) Assets ------ Current assets: Cash $ ~~306~~167,~~122~~987 $ ~~313~~216,~~898~~473 ----------- ----------- Trade accounts receivable 1,~~985~~767,~~196~~122 1,~~439~~582,~~179~~584 Less allowance for doubtful accounts (3855,000) (3835,000) ----------- ----------- Net accounts receivable 1,~~947~~712,~~196~~122 1,~~401~~547,~~179~~584 ----------- ----------- Accounts receivable, other 35,~~313~~469 4167,~~439~~975 Inventories: Raw materials ~~619~~519,~~145~~761 ~~563~~658,~~123~~943 Work-in-process ~~365~~361,~~168~~377 ~~388~~436,~~056~~237 Finished goods ~~994~~705,~~779~~626 ~~829~~634,~~408~~142 ----------- ----------- Total inventories 1,~~979~~586,~~092~~764 1,~~780~~729,~~587~~322 ----------- ----------- Prepaid expenses 6273,~~398~~989 2250,~~097~~168 Current portion of notes receivable from related parties 554 ~~507~~554 Deferred income tax asset 92184,~~000~~100 92150,~~000~~100 ----------- ----------- Total current assets 43,~~422~~760,~~675~~985 3,~~651~~762,~~707~~176 ----------- ----------- Property and equipment, at cost 34,~~518~~270,~~830~~172 34,~~223~~278,~~938~~694 Less accumulated depreciation and amortization (2,~~274~~063,~~223~~307) (21,~~134~~927,~~658~~259) ----------- ----------- Net property and equipment 12,~~244~~206,~~607~~865 12,~~089~~351,~~280~~435 ----------- ----------- Other Assets: Long-term notes receivable from related parties, net of current portion 21,073 21,~~627~~073 Loan ~~Acquisition~~acquisition ~~Costs~~costs-~~Net~~-net of accumulated amortization of $382,~~966~~050 at March 31, ~~2001~~2002 and $2543,~~142~~574 at June 30, ~~2000~~2001 1038,~~747~~950 246,~~571~~139 Equipment deposits 175,000 ~~-- Net assets of discontinued operations -- 1~~175,~~854,098~~000 Other assets 741,~~387~~529 106,~~454~~987 ----------- ----------- Total other assets ~~214~~276,~~207~~552 1209,~~910,750~~199 ----------- ----------- TOTAL ASSETS $ 56,~~881~~244,~~489~~402 $ 6,~~651~~322,~~737~~810 =========== ===========

(Continued on following page) See accompanying notes to financial statements. 1

W-W CAPITAL CORPORATION ----------------------- Balance Sheets, Continued March 31, June 30, 2002 2001 ~~2000~~ ---- ---- (Unaudited) Liabilities ----------- Current Liabilities: Accounts ~~Payable~~payable $ 1,~~406~~502,~~733~~280 $ 1,~~285~~423,~~816~~041 Accrued property taxes 198,~~081~~936 1615,~~995~~950 Accrued payroll and related taxes ~~183~~223,~~931~~706 ~~209~~177,~~819~~474 Accrued interest payable 4396,~~010~~614 1562,~~076~~361 ~~Accrued income taxes, current 42,417 36,000~~ Current portion of long-term notes payable ~~221~~180,000 ~~361~~220,000 Current portion of capital lease obligations 2479,000 2365,000 Other current liabilities ~~110~~52,~~330~~965 76121,~~546~~804 ----------- ----------- Total current liabilities 2,~~050~~143,~~502~~501 2,~~024~~085,~~252~~630 ----------- ----------- Other Liabilities: Long-term notes payable, net of current portion 32,~~125~~773,~~372~~175 12,~~452~~806,~~992~~268 Long-term capital lease obligations, net of current portion ~~250~~1,~~561~~229,838 681,~~426~~281,397 Deferred income tax liability ~~106~~155,~~000~~100 ~~106~~155,~~000~~100 Negative goodwill, net of accumulated amortization of $24,~~538~~881 at March 31, ~~2001~~2002 and $~~781~~3,124 at June 30, ~~2000~~2001 4441,~~315~~972 4643,~~072~~729 ----------- ----------- Total other liabilities 34,~~526~~200,~~248~~085 14,~~673~~286,~~490~~494 ----------- ----------- TOTAL LIABILITIES 56,~~576~~343,~~750~~586 36,~~697~~372,~~742~~124 ----------- ----------- Stockholders' ~~Equity~~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 and outstanding at March 31, ~~2001~~2002 and ~~5,540,661 at~~ June 30, ~~2000~~2001 55,538 55,~~406~~538 Capital in excess of par value 3,305,533 3,~~304~~305,~~629~~533 Accumulated ~~Deficit~~deficit (~~242~~581,~~317~~140) (~~357~~531,~~134~~270) ----------- ----------- 32,~~118~~779,~~754~~931 32,~~002~~829,~~901~~801 Less 3,~~534~~545,~~263~~663 shares of treasury stock at cost ~~at March 31, 2001 and 120,264 at June 30, 2000~~ (2,~~814~~879,~~015~~115) (482,~~906~~879,115) ----------- ----------- TOTAL STOCKHOLDERS' ~~EQUITY~~DEFICIT ~~304~~(99,~~739~~184) 2(49,~~953,995~~314) ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' ~~EQUITY~~DEFICIT $ 56,~~881~~244,~~489~~402 $ 6,~~651~~322,~~737~~810 =========== ===========

See accompanying notes to financial statements. 2

W-W CAPITAL CORPORATION ----------------------- Statements of ~~Income~~Operations (Unaudited) Three Months Ended Nine Months Ended March 31 March 31, -------- --------- 2002 2001 ~~2000~~2002 2001 ~~2000~~ ---- ---- ---- ---- Net ~~Sales~~sales $ 3,~~445~~182,~~016~~454 $ 3,~~031~~445,~~950~~016 $ 109,~~348~~008,~~242~~805 $ 810,~~432~~348,~~082~~242 Cost of goods sold 2,373,685 2,724,056 27,~~346~~037,~~312~~521 8,353,188 ~~6,653,161~~ ------------ ------------ ------------ ------------ Gross profit 808,769 720,960 ~~685~~1,~~638~~971,284 1,995,054 ~~1,778,921~~ ------------ ------------ ------------ ------------ Operating expenses: Selling expenses 303,094 270,209 ~~261~~869,~~518~~376 753,087 ~~735,169~~ General and administrative expenses 276,981 321,235 ~~222~~966,~~872~~265 995,272 ~~594,970~~ ------------ ------------ ------------ ------------ Total operating expenses 580,075 591,444 ~~484~~1,~~390~~835,641 1,748,359 ~~1,330,139~~ ------------ ------------ ------------ ------------ Operating earnings 228,694 129,516 ~~201~~135,~~248~~643 246,695 ~~448,782~~ ------------ ------------ ------------ ------------ Other income (~~expenses~~expense): Interest income -- 8,544 75,~~620~~690 23,871 ~~14,016~~ Interest expense (79,145) (84,025) (42260,~~416~~984) (197,287) ~~(122,228)~~ Gain on sale of assets -- 34,634 --4,700 72,434 -- Other income (expense), net 14,605 1,807 331,~~262~~081 20,704 ~~9,372~~ ------------ ------------ ------------ ------------ Total other income (expense) (64,540) (39,040) (31219,~~534~~513) (80,278) ~~(98,840)~~ ------------ ------------ ------------ ------------ Earnings (loss) before income taxes 164,154 90,476 ~~169~~(83,~~714~~870) 166,417 ~~349,942~~ Income ~~taxes~~tax benefit (expense) from continuing operations (65,000) (35,819) 8434,000 (59,819) ~~84,000~~ ------------ ------------ ------------ ------------ Net earnings (loss) from continuing operations 99,154 54,657 85(49,~~714~~870) 106,598 ~~265,942~~ ------------ ------------ ------------ ------------ Discontinued operations: Earnings from operations of Titan Industries disposed of (net of income taxes of $~~16,000 at three and nine months ended March 31, 2000 and $~~59,000 at nine months ended March 31, 2001) -- ~~60,290~~-- -- 88,219 ~~52,562~~Estimated ~~Loss~~loss on disposal of Titan Industries -- -- -- 80,000 -- ------------ ------------ ------------ ------------ Net earnings from discontinued operations -- ~~60,290~~-- -- 8,219 ~~52,562~~ ------------ ------------ ------------ ------------ Net earnings (loss) $ 99,154 $ 54,657 $ ~~146~~(49,~~004~~870) $ 114,817 ~~$ 318,504~~ ============ ============ ============ ============

(Continued on following page) See accompanying notes to financial statements. 3

W-W CAPITAL CORPORATION ----------------------- Statements of ~~Income~~Operations, ~~Continued~~continued (Unaudited) Three Months Ended Nine Months Ended March 31 March 31, -------- --------- 2002 2001 ~~2000~~2002 2001 ~~2000~~ ---- ---- ---- ---- Earnings per common share: Basic Earnings (loss) from continuing operations $ 0.0105 $ 0.0203 $ (0.02) $ 0.0502 Earnings from discontinued operations 0.00 0.0100 0.0200 0.0102 ~~Loss~~Estimated loss on disposal of Titan Industries 0.00 0.00 0.00 (0.02) ~~0.00~~ ------------- ------------- ------------- ------------- Net earnings (loss) $ 0.0105 $ 0.03 $ (0.02) $ 0.0602 ============= ============= ============= ============= Weighted average number of common shares 52,~~553~~008,~~827~~164 52,~~540~~043,~~661~~164 52,~~545~~008,~~050~~164 54,~~540~~294,~~661~~653 Diluted Earnings (loss) from continuing operations $ 0.0105 $ 0.0203 $ (0.02) $ 0.0502 Earnings from discontinued operations 0.00 0.0100 0.0200 0.0102 ~~Loss~~Estimated loss on disposal of Titan Industries 0.00 0.00 0.00 (0.02) ~~0.00~~ ------------- ------------- ------------- ------------- Net earnings (loss) $ 0.0105 $ 0.03 $ (0.02) $ 0.0602 ============= ============= ============= ============= Weighted average number of common shares 52,~~553~~008,~~827~~164 52,~~540~~043,~~661~~164 52,~~545~~008,~~050~~164 54,~~540~~294,~~661~~653

See accompanying notes to financial statements. 4

W-W CAPITAL CORPORATION ----------------------- Statements of Cash Flows (Unaudited) Nine Months Ended March 31, --------- 2002 2001 ~~2000~~ ---- ---- Cash flows from operating activities: Net earnings (loss) $ ~~114~~(49,~~817~~870) $ ~~318~~114,~~504~~817 Adjustments to reconcile net earnings (loss ) to net cash provided by (used in) operating activities: Earnings from discontinued operations -- (43,511) ~~(68,562)~~ Depreciation and amortization 186,005 153,389 ~~143,586~~ Gain on sale of property and equipment (4,700) (72,434) -- Provision for doubtful accounts receivable ~~725 20~~39,~~752~~784 725 Amortization of negative goodwill (1,757) (~~222~~1,757) Change in assets and liabilities: Accounts receivable (~~546~~204,~~742~~322) (~~146~~546,~~712~~742) Inventories 142,558 (213,284) ~~(268,917)~~ Other current and non-current assets (31,~~108~~314) (7931,~~298~~108) Accounts payable 79,239 118,196 ~~249,931~~ Accrued expenses and other current liabilities 4,632 44,333 ~~169,161~~ --------- --------- Net cash provided by (used in) operating activities 160,255 (477,376) ~~338,223~~ --------- --------- Cash flows from investing activities: Proceeds from sale of property and equipment 4,700 72,434 -- Purchase of property and equipment (~~254~~22,~~495~~111) (45254,~~736~~495) Proceeds from stockholders' notes receivable ~~507 466 Cash acquired in acquisition of subsidiary~~ -- ~~14,988~~507 --------- --------- Net cash used in investing activities $ (~~181~~17,~~554~~411) $ (30181,~~282~~554) --------- ---------

(Continued on following page) See accompanying notes to financial statements 5

W-W CAPITAL CORPORATION ----------------------- Statements of Cash Flows, Continued (Unaudited) Nine Months Ended March 31, --------- 2002 2001 ~~2000~~ ---- ---- Cash flows from financing activities: Payments on notes payable, financial institutions and government entities $(8,~~818~~679,~~756~~410) $(78,~~886~~818,~~803~~756) Proceeds from notes payable 8,577,774 9,385,739 ~~7,566,187~~ Payments on capital leases (48,694) (16,865) Payment of loan acquisition costs (1241,~~777~~000) -- Proceeds from leases payable -- 200,000 -- Proceeds from the exercise of stock options -- 1,036 -- Repurchases of common stock -- (100,000) -- ----------- ----------- Net cash provided by (used in) financing activities ~~651,154~~ (~~333~~191,~~393~~330) 651,154 ----------- ----------- Net decrease in cash (748,~~776~~486) (257,~~452~~776) Cash at beginning of period 216,473 313,898 ~~170,252~~ ----------- ----------- Cash at end of period $ ~~306~~167,~~122~~987 $ ~~144~~306,~~800~~122 =========== =========== Supplemental disclosures of cash flow for continuing operations: Cash paid during the period for interest $ ~~167~~226,~~457~~731 $ ~~118~~167,~~162~~457 Installment loans to acquire property and equipment $ 11,135 $ 40,397 Installment loans to acquire rental property $ 28,543 $ -- Installment loans used for deposits on purchase of property and equipment $ -- $ 175,000 ~~$ --~~ Installment loans used for the repurchase of common stock $ -- $ 750,000 ~~$ --~~ Cash paid during the period for income taxes $ ~~67,685~~-- $ --67,685

See accompanying notes to financial statements. 6 W-W CAPITAL CORPORATION ----------------------- NOTES TO FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION ------------------------------ The accompanying unaudited financial statements include the accounts of W-W Capital Corporation (the Company) and its three wholly-owned subsidiaries W-W Manufacturing Co., Inc., Titan Industries, Inc., and Eagle Enterprises, Inc. All significant intercompany accounts and transactions have been eliminated. In January 2001, the Company sold its water and environmental product segment, Titan Industries, Inc.. The Company's consolidated financial statements have been restated to reflect the segment as a discontinued operation for all periods presented. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and changes in cash flows in conformity with generally accepted accounting principles for full-year financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to W-W Capital Corporation's financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2001. 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 nine month periods ended March 31, 2002, are not necessarily indicative of the result that may be expected for the year ended June 30, 2002 NOTE 2 - NET BASIC EARNINGS PER SHARE ------------------------------------- The net basic earnings 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 nine month periods. NOTE 3 - LIQUIDITY AND CAPITAL RESOURCES ---------------------------------------- The accompanying financial statements have been prepared in accordance with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern. The Company has incurred losses from operations of $49,870 and $247,455 for the nine months ended March 31, 2002 and the year ended June 30, 2001, respectively. Additionally, the Company has a net stockholders' deficit of $99,184 at March 31, 2002. 7 NOTE 3 - LIQUIDITY AND CAPITAL RESOURCES (continued) ---------------------------------------------------- The Company relies on revolving notes payable from a financial institution for its working capital and has amended the associated credit and security agreements in May 2002 to modify the loan covenants among other things. Covenants beyond June 30, 2002 have not yet been established. The ability of the Company to continue as a going concern is dependent on meeting the requirements of its financing agreements in the near term. NOTE 4 - RELATED PARTY TRANSACTION ---------------------------------- The Company has a number of related party transactions. See the footnotes to W-W Capital Corporation financial statements for the year ended June 30, 2001, 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 nine months ended March 31, 2002 and 2001, respectively, is as follows:

NOTE 5 - DISCONTINUED OPERATION ------------------------------- On January 5, 2001, the Shareholders of the Company voted to sell its water and environmental product segment, Titan Industries, Inc., to certain shareholders of the Company in exchange for 3,390,399 shares, or approximately 61.2%, of the common stock of the Company. In addition to giving up its interest in Titan, the Company also contributed to the capital of Titan the sum of $850,000 used to equalize the value of the consideration being exchanged. The sale was accounted for as a treasury stock transaction and the estimated loss on disposal was the result of professional fees attributable to the transaction. The accompanying financial statements have been restated to conform to discontinued operations treatment for all historical periods presented. The operating results of the discontinued operation for the three and nine month periods ended March 31, 2001 were as follows:

8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. ------- ----------------------------------------------------------------------- The business of the Company is carried on within two segments by a number of operating units. The livestock handling equipment segment is composed of W-W Manufacturing (W-W Manufacturing), Eagle Enterprises (Eagle) and W-W Paul Scales (Paul), and the water and environmental product segment is represented by Titan Industries (Titan). On January 5, 2001, the Shareholders of the Company voted to sell Titan to certain shareholders of the Company. The accompanying financial statements, as well as management's discussion and analysis of financial condition and results of operations, have been stated to reflect discontinued operations treatment for all historical periods presented. (A) Analysis of Results of Operations --------------------------------- The Company had a net loss from continuing operations of $49,870 for the nine months ended March 31, 2002, as compared to net income of $114,817 for the same period of 2001. For the three month period ended March 31, 2002, the Company had net earnings of $99,154 as compared to $54,657 for the same period of 2001. The Company is recovering from a slow first half of year which included transition costs associated with the opening of the new Thomas, Oklahoma plant as well as a slowdown in the economy felt throughout the United States. Sales from continuing operations decreased from $10,348,242 for the nine months ended March 31, 2001, compared to $9,008,805 for 2002. The decrease of $1,339,437 is attributable to a general slowdown in the economy during the first half of fiscal 2002 as well as the terrorist attacks of September 11, 2001. Sales decreased at all three locations. Sales at the W-W Manufacturing location decreased slightly from $5,909,367 to $5,763,973 for the same nine-month period of 2001 and 2002. Sales decreased at the Eagle plant from $2,707,247 for the nine months ended March 31, 2001 as compared to $2,074,018 for the same period of 2002. Sales at the Paul location decreased from $1,731,628 for the nine months ended March 31, 2001 to $1,170,814 for the same nine-month period in 2002. Sales throughout fiscal 2002 have shown continued improvement from $2,816,733 for the first quarter to $3,182,454 for the third quarter. The Company is attempting to limit the effect of the economic slowdown by continuing to analyze existing product improvements and new product introductions which have allowed the Company to gain acceptance with new customers and move into markets not normally serviced by the Company. The Company is presently involved in several projects, which includes special sales to expo centers, fairs and livestock shows. The Company anticipates a continual increase in sales during the fourth quarter of 2002. Gross margins from continuing operations increased for the nine months ended March 31, 2002 to 21.9% as compared to 19.3% in 2001. The increased margins are the result of labor, shipping and manufacturing efficiencies felt subsequent to closing the Dodge City, Kansas facility and the opening of the new Thomas, Oklahoma plant during April 2001. Management expects continued improvement with gross margins as the Company begins to feel the effects of the new Oklahoma plant. The Company continues to seek improvements through manufacturing system analysis as well as price adjustments. This continual fine-tuning and adjustment has allowed the Company to increase the gross margin percentage while experiencing a slowdown in sales. 9 Selling expenses from continuing operations as a percentage of sales increased for the nine months ended March 31, 2002 from 7.3% in 2001 to 9.7% in 2002. Total dollars expended for selling expense increased $116,289 for the nine month period ended March 31, 2002. The increase reveals the Company's aggressive pursuit of new markets and expanding its distributor/dealer base. Through the balance of the fiscal year, management will continue to evaluate selling expense to find ways to keep costs in line as a percentage of sales, as we continue to grow markets and market share with new products. General and administrative expense from continuing operations increased for the nine months ended March 31, 2002 as a percentage of sales from 9.6% in 2001 as compared to 10.7% for the same period of 2002. Overall dollars spent on general and administrative expenses decreased $29,007 for the nine months ended March 31, 2002 as compared to the same period of 2001. The overall dollar decrease reflects the business structure changes that were completed during the third quarter of fiscal 2001. The Company will continue to find ways to lower general and administrative expense through the use of centralization, job realignment, and line-by-line expense reductions. Interest expense from continuing operations increased for the nine months ended March 31, 2002 to $260,984 from $197,287 for the same period of 2001. Interest expense from continuing operations for the three months ended March 31, 2002 decreased to $79,145 from $84,025 for the same three-month period of 2001. The year-to-date increase reflects heavy borrowings on the revolving lines to support the Titan split-off and manufacturing plant move as well as experiencing a slow down in sales due to economic conditions felt throughout the country. As profits and cash flow increase, the Company plans to reduce debt, thereby reducing overall interest expense. (B) Liquidity and Capital Resources --------------------------------- The Company has traditionally used a combination of cash generated from operations and its revolving credit facility to support operations and various growth initiatives. The Company generated funds from operations of $160,255 even though the Company realized a loss of $49,870. The Company uses cash in investing activities primarily for the purchase of new property and equipment. Cash purchases of property and equipment decreased from $254,495 for the nine months ended March 31, 2001 to $22,111 for the same period ended March 31, 2002. The Company had heavy purchases when providing equipment for the new Thomas, Oklahoma plant during the fiscal year ended June 30, 2001. Cash used in financing activities resulted in a decrease in borrowings of $191,330 for the nine months ended March 31, 2002. This compares to increased borrowing of $651,154 for the same period ended March 31, 2001. The Company used its revolving lines extensively during fiscal 2001 to fund the plant move and Titan split-off. As the Company moves into the final quarter of fiscal 2002, it anticipates that with continued sales growth along with the cost saving benefits associated with the new Thomas plant that borrowings will level off and remain consistent. Even though the United States economy is recovering from a state of recession and current worldwide conditions are uncertain, the Company feels that it will improve in both sales volume and operating earnings through the fourth quarter of fiscal 2002. The Company also believes that significant benefits will be realized because of the move to Thomas, Oklahoma through the remainder of fiscal 2002 and thereafter. With increased working capital and lines of credit, the Company feels it has an adequate supply of liquidity to meet its current obligations. 10 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 -------------------------------- Not Applicable 11 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: June 7, 2002 By: /s/ Steve D. Zamzow ---------------------------------- Steve D. Zamzow, President & CEO Dated: June 7, 2002 By: /s/ Mike Dick ---------------------------------- Mike Dick, Controller 12

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