10-K 1 wwc-10k63002.txt FORM 10-K FOR JUNE 30, 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal year ended June 30, 2002 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 incorporation of organization) Identification No.) 3500 JFK Parkway, Suite 202 Ft. Collins, Colorado 80525 ------------------------------- --------- (Address of principal (Zip Code) executive office) Registrant's telephone number, including area code: (970) 207-1100 --------------- Securities registered pursuant to Section 12(b) of the Act: Name of exchange or Title of each class which registered ------------------- ---------------- Common stock, $.01 par value None Securities registered pursuant to Section 12(g) of the Act: Common Stock $.01 par Value --------------------------- (Title of Class) 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 such filing requirements for the past 90 days. Yes X No -------- -------- (Continued on next page) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in PART III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the Company on November 15, 2002 (1,746,258 shares of common stock) was $17,463 (*) based on the average of the bid and asked prices ($0.010 per share) as quoted on the over the counter market. The number of shares outstanding of each of the Company's sales of common stock, as of November 15, 2002 was: Common Stock, 2,008,164 Shares $.01 par value *This value is not intended to make any representation as to the value or worth of the Company's shares of common stock. The number of shares held by non-affiliates of the Company has been calculated by subtracting shares held by controlling persons of the Company from the shares issued by the Company and outstanding. Documents Incorporated by Reference: The Registrant hereby incorporates herein by reference the following documents: Part III Item 9. Directors and Executive Officers of the Registrant. Item 10. Executive Compensation. Item 11. Security Ownership of Certain Beneficial Owners and Management. Item 12. Certain Relationships and Related Transactions. The foregoing are incorporated by reference from the Registrant's definitive Proxy Statement relating to its annual meeting of stockholders, which will be filed in an amendment within 120 days of June 30, 2002. Item 13. Exhibits: 1. Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended June 30, 1990. 2. Incorporated by reference from the Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 1991. 3. Incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended June 30, 1991. 4. Incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended June 30, 1992. 5. Incorporated by reference from the Registrant's Annual Report on Form 10-K for the year ended June 30, 1993. 6. Incorporated by reference from the Registrant's definitive Proxy Statement filed in conjunction with the Registrants' Annual Meeting of Shareholders held January 5, 2001. 2 Forward-Looking Statements: --------------------------- In addition to historical information, this Annual 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 the section entitled "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. 3 W W CAPITAL CORPORATION FORM 10-K PART I 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 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 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 4 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 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 operated as a division of Titan Industries and distributed 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 $67,210. 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. 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. The transaction had an effective date of December 31, 2000. In addition to giving up its interest in Titan, the Company also contributed the sum of $850,000 to the capital of Titan to equalize the value of the consideration being exchanged. The sale was accounted for as a treasury stock transaction and a loss on disposal of $14,900 was recorded as the result of professional fees attributable to the transaction. (b) Financial Information About Industry Segments --------------------------------------------- The continuing business of the Company is carried on within one segment by three operating units, each with its own organization. The management of each operating 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, 2002, the Company and its segments had approximately 150 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 this segment. (c) Narrative Description of Business --------------------------------- The registrant conducts its business through its business segment: livestock handling equipment group. A discussion of this segment follows. 5 LIVESTOCK HANDLING EQUIPMENT GROUP ---------------------------------- 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 57-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 (57 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. 6 With the acquisition of Adrian J. Paul Scales in March 2000 the Company 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 three divisions, is located at Route 1, Box 138, Hwy 54, Thomas, Oklahoma. Eagle Enterprises, is located at 175 Windle Community Road, Livingston, Tennessee. 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 2002 and 2001, 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. Management believes W-W Manufacturing's 57 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. 7 OTHER INFORMATION RELATIVE TO THE BUSINESS ------------------------------------------ Patents and Trademarks ---------------------- 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, torque bar suspension scales with strap assemblies and an on board truck weighing system. Seasonality ----------- The Company experiences seasonality in sales. The livestock handling equipment product segment has increased sales in the fall through spring and lower sales in summer. 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 $750,000 in 2002 as compared to $824,000 in 2001. This decrease from 2001 is due to depressed economic conditions and the extraordinary hot and dry summer. This is expected to improve as we move into the fall season. 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 expenditures for research and development are not material to the overall operating cost. Compliance with Environmental Controls -------------------------------------- The Company has faced issues with the EPA regarding its paint systems located at various plants. The problems with the Dodge City, Kansas and temporary Thomas, Oklahoma plants were solved with the powder coat paint system that was installed in the new plant in Thomas, Oklahoma, which has passed all EPA requirements. In the Eagle plant located in Livingston, Tennessee, the Company was issued a temporary paint operating permit through December 31, 2001. By that time, the Company was to be in compliance with the VOC's and HAP's emitted due to the present flow coat paint system and to install a powder coat paint system. Over the past two years, management has worked with various paint suppliers to come up with a solution that solved the problem of emissions in the air thereby lowering the VOC's to an acceptable level and meet other governmental guidelines. Management has located the majority of the powder coat system to be installed and has placed a $175,000 refundable deposit on the system. Management has been in contact with the EPA offices and is presently negotiating an extension of its' current permit until the new powder coat system is installed. To the best of its knowledge, the Company believes that it is presently in substantial compliance with all other existing environmental laws. 8 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. W-W Manufacturing is located at Route 1, Box 138, Hwy 54, Thomas, Oklahoma. This facility is leased from the City of Thomas Economic Development Authority for various monthly installments through June 2022. The facility is comprised of approximately 80,000 square feet located on 10 acres of land. 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 owned by the Company and has approximately 35,000 square feet located on 13.2 acres of land. Item 3. Legal Proceedings ------- ----------------- The Company is attempting to recover, through legal action, an accounts receivable balance of approximately $268,500, plus accrued interest, from a single customer that is in default of credit terms. Management believes it is reasonably possible it will collect the balances due. 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, 2002. 9 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matter ------- -------------------------------------------------------------------- Market Information High Bid Low Bid ------------------ -------- ------- Quarter ended ------------- September 30, 2000 $0.500 $0.080 December 31, 2000 0.500 0.070 March 31, 2001 0.063 0.063 June 30, 2001 0.063 0.063 September 30, 2001 $0.010 $0.010 December 31, 2001 0.010 0.010 March 31, 2002 0.010 0.010 June 30, 2002 0.010 0.010 The Company's common stock is listed on the over-the-counter market and trades under the symbol "WWCL". Holders ------- As of November 15, 2002 the Company had approximately 509 record holders of its common stock, not including some individuals holding shares in street name. Dividends --------- The Company did not pay dividends during 2002 or 2001 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. 10 Item 6. Selected Financial Data ------- -----------------------

Year ended June 30 -------------------------------------------------------------------------------------------------------------------------------- SUMMARY OF OPERATIONS (A) ------------------------- 2002 2001 2000 1999 1998 ~~1997~~ ---- ---- ---- ---- ---- Net Sales 12,652,044 13,092,869 12,210,587 9,108,446 8,988,176 ~~8,170,971~~ Gross Profit Margin 2,920,538 2,278,452 2,492,566 1,774,109 1,711,749 ~~1,684,958~~ Operating Earnings (Loss) 243,481 (95,939) 456,463 164,026 157,055 ~~(82,299)~~ Interest Expense 338,248 296,265 171,124 164,755 195,616 ~~219,609~~ Operating Expense 2,677,057 2,374,391 2,036,103 1,610,083 1,554,694 ~~1,767,257~~ Earnings(Loss) From Continuing Operations 54,464 (247,455) 271,600 46,925 4,655 ~~(69,212)~~ Net Earnings (Loss) 54,464 (174,136) 338,777 104,808 87,420 ~~28,120~~ PER SHARE DATA -------------- Earnings(Loss) From Continuing Operations .03 (.05) .05 .01 .02 ~~.01~~ Dividends per Common Share .00 .00 .00 .00 .00 Weighted Average Shares Outstanding 2,008,164 3,725,881 5,420,397 5,420,397 5,520,397 ~~5,517,064~~ FINANCIAL CONDITION ------------------- Total Assets 6,435,564 6,322,810 6,651,737 5,781,655 5,606,381 ~~4,322,928~~ Fixed Assets (Net) 2,155,188 2,351,435 1,089,280 1,174,409 1,268,605 ~~1,431,905~~ Long-Term Debt 4,186,666 4,087,665 1,521,418 1,606,879 1,117,818 ~~255,018~~ Stockholders Equity 5,150 (49,314) 2,953,995 2,615,218 2,510,410 ~~2,452,990~~ Working Capital (1B) 2,003,747 1,676,546 1,627,455 1,174,058 481,657 ~~(847,169)~~ Current Ratio (2C) 2.00 1.80 1.80 1.75 1.24 ~~0.74~~ A. This summary has been restated to reflect proper accounting treatment for the discontinued operations regarding the sale of Titan Industries, Inc. during the year ended 2001. ~~(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~~B. 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)~~C. Percent of current assets to current liabilities.

11 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. Results of Operations: ---------------------- The following table presents, for the periods indicated, the dollar value and percentage relationship which certain items reflected in the Company's Statements of Operations. This percentage shows the percent as it relates to the total revenue.

2002 2001 2000 ~~1999~~ ----~~--------------------~~ ----~~--------------------~~ ----~~--------------------~~ Total revenues $ 1312,~~092~~652,~~869~~044 100.0% $ 1213,~~210~~092,~~587~~869 100.0% $ 912,~~108~~210,~~446~~587 100.0% Cost of revenues 9,731,506 76.9 10,814,417 82.6 9,718,021 79.6 ~~7,334,337 80.5~~ ------------ ----- ------------ ----- ------------ ----- Gross profit 2,920,538 23.1 2,278,452 17.4 2,492,566 20.4 ~~1,774,109 19.5~~ Selling, general, and administrative expense 2,677,057 21.2 2,374,391 18.1 2,036,103 16.7 ~~1,610,083 17.7~~ ------------ ----- ------------ ----- ------------ ----- Operating earnings (loss) 243,481 1.9 (95,939) (0.7) 456,463 3.7 ~~164,026 1.8~~ Other income (expense) 174,631 1.3 103,206 0.8 36,261 0.3 ~~47,654 0.5~~ Interest expense (~~296~~338,~~265~~248) (2.36) (~~171~~296,~~124~~265) (12.43) (~~164~~171,~~755~~124) (1.84) ------------ ----- ------------ ----- ------------ ----- Earnings (loss) before income taxes 79,864 0.6 (288,998) (2.2) 321,600 2.6 ~~46,925 0.5~~ Income taxes from continuing operations (25,400) (0.2) 41,543 0.3 (50,000) (0.4) -- ~~0.0~~ ------------ ----- ------------ ----- ------------ ----- Net earnings (loss) from continuing operations 54,464 0.4 (247,455) (1.9) 271,600 2.2 ~~46,925 0.5~~ Net earnings of discontinued operations -- 0.0 73,319 0.6 67,177 0.6 ~~57,883 0.6~~ ------------ ----- ------------ ----- ------------ ----- Net earnings (loss) $ 54,464 0.4% $ (174,136) (1.3)% $ 338,777 2.8% ~~$ 104,808 1.1%~~ ============ ===== ============ ===== ============ ===== Depreciation and amortization $ 258,974 2.0% $ 221,491 1.7% $ 188,472 1.5% ~~$ 259,496 2.8%~~ ============ ===== ============ ===== ============ =====

On January 5, 2001, the Shareholders of the Company voted to sell it's 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. The transaction had an effective date of December 31, 2000. In addition to giving up its interest in Titan, the Company also contributed the sum of $850,000 to the capital of Titan to equalize the value of the consideration being exchanged. The sale was accounted for as a treasury stock transaction and the loss on disposal of $14,900 was the result of professional fees attributable to the transaction. As a result of the sale of Titan, the accompanying financial statements have been restated for the years presented to reflect proper accounting treatment for discontinued operations. The reader should be aware that the management discussion and analysis for all years presented have been restated to include only discussion of the livestock equipment segment. Sales in the water and environmental product segment, disposed of during 2001, were $4,699,336 for the six month period ended December 31, 2000 and $9,053,166 for the year ended June 30, 2000. Gross margins as a percentage of sales decreased during the six month period ended December 31, 2000 to 14.3% as compared to 17.2% in fiscal 2000. Total selling expenses as a percentage of sales decreased from 6.1% for fiscal 2000 to 4.8% for the six month period ended December 31, 2000. General and administration expense as a percentage of sales also dropped from 7.6% at fiscal 2000 to 6.5% for the six month period ended December 31, 2000. Total interest expense for the six month period ended December 31, 2000 was $80,659 and $145,481 for fiscal 2000. 12 Fiscal Year Ended June 30, 2002 Compared to Fiscal Year Ended June 30, 2001. The Company had net earnings of $54,464 for the year ended June 30, 2002 as compared to a net loss of $174,136 for the year ended June 30, 2001. This increase in net earnings of $228,600 reflects the Company's recovery from transition costs associated with the opening of the new Thomas, Oklahoma plant, expenses related to the sale of Titan Industries as well as a general slowdown in the economy felt throughout the United States during 2001and the first six months of fiscal 2002. Even though sales were down slightly, overall production efficiencies were felt with the opening of the new Thomas plant. It is believed that as operations stabilize at the new plant, that production efficiencies will also continue to improve during fiscal 2003. Sales decreased from $13,092,869 for the fiscal year ended June 30, 2001 to $12,652,044 for the fiscal year ended June 30, 2002. This decrease of $440,825, or 3.4%, was primarily due to a sluggish economic environment experienced during the first six months of the year, the effects of the September 11, 2001 tragedy as well as very dry weather conditions felt throughout the Western and Southern regions of the United States. Sales at the W-W Manufacturing location in Thomas, Oklahoma increased $454,166, from $7,623,492 in fiscal 2001 to $8,077,658 for the fiscal year ended June 30, 2002. Sales at the Livingston, Tennessee location decreased $445,722, from $3,448,948 in fiscal 2001 to $3,003,256 for the fiscal year ended June 30, 2002. The increase in sales at the Thomas location and related decrease in sales at the Livingston location are primarily due to transferring sales to Thomas because of the demand from our distributor/dealer network for a powder coat paint finish only offered at the Thomas location at this time. The Company is continuing its effort to remodel and update the Livingston location in order to house their own powder coat paint system. Sales at the W-W Paul location in Duncan, Oklahoma decreased $449,298 from $2,020,427 for the fiscal year ended June 30, 2001 to $1,571,130 for the fiscal year ended June 30, 2002. Because of the sluggish economy and hot/dry conditions in the South, in addition to the manufacturing of livestock scales and hydraulic chutes, the Duncan location was also used as a support to the Thomas plant by manufacturing certain parts and equipment, then shipping to Thomas for painting. This allowed the Duncan plant to reduce production down time as well as to keep any potential layoffs to a minimum. The Company is planning promotions and specials in an effort to maintain or improve sales levels through the new year. The Company continues to introduce new additions to the product line, along with analyzing improvements to existing products, which will help increase sales due to exposure in related markets. Gross margins increased from 17.4% in fiscal 2001 to 23.1% in fiscal 2002. This increase of 5.7% is due to several factors with the primary factor being decreased labor and manufacturing costs associated with running two plants while moving the largest plant from Dodge City, Kansas to Thomas, Oklahoma during 2001. The entire moving process took approximately four months to complete. Another factor contributing to the increase in gross margins are the result of labor, shipping and manufacturing efficiencies realized at the new plant during the last six months of the fiscal year. Management anticipates keeping gross margins in line as the Company begins to feel the effects of the new plant. The Company continues to seek improvements through manufacturing system analysis as well as price adjustments. Selling expense as a percentage of sales increased from 7.8% in fiscal 2001 to 9.1% in fiscal 2002. Total dollars expended for selling expense increased $129,435 for the year. This increase reveals the Company's aggressive pursuit of new markets and expanding its distributor/dealer base. Additionally, the increase is attributable to higher costs related to traveling expenses by salesmen and expanded exposure to new trade shows not attended by the Company in prior years. With the completion of the new Thomas plant and purchase of a powder coat paint system, the Company feels it can expand into markets not previously covered. Management continues to evaluate selling expense to seek ways of keeping costs in line as a percentage of sales. 13 General and administrative expenses increased as a percentage of sales from 10.3% in fiscal 2001 to 12.1% for the fiscal year ended June 30, 2002. This increase is a result of a write down of the accounts receivable balance of one large account that is in default of credit terms. Management is continuing collection efforts and believes it is reasonably possible it will collect the balance due. Overall dollars spent for general and administrative cost, not including bad debt write downs, decreased $104,885 for the fiscal year ended June 30, 2002 as compared to fiscal 2001 which was primarily due to legal expenses related to the Titan spin off during fiscal 2001. The Company continues to look for ways to lower general and administrative expense through centralization, job realignment, and line-by-line expense reductions. Interest expense increased in fiscal 2002 to $338,248 as compared to $296,265 in 2001. This increase is due to higher borrowings on the Company's' revolving line of credit to support the Titan split-off, the manufacturing plant move and the slow down in sales due to current economic conditions felt throughout the country. As profits and cash flow increase, the Company plans to reduce debt, thereby reducing overall interest expense. Fiscal Year Ended June 30, 2001 Compared to Fiscal Year Ended June 30, 2000. The Company had a net loss of $174,136 for the year ended June 30, 2001 as compared to net earnings of $338,777 for the year ended June 30, 2000. The net loss is attributed to several factors with the most notable being the cost to move the largest production plant, formally in Dodge City, Kansas, to its new modern facility in Thomas, Oklahoma. Moving expenses incurred of approximately $112,000 included the loading, transporting and unloading of inventory and equipment, training of new employees, relocation expenses for certain employees, payroll expenses running dual plants during the four month moving process, set up costs for the new plant and the cost to clean up the old plant in Dodge City. Prior to moving, the Company incurred significant expense in training Oklahoma employees by having them spend time in Dodge City, Kansas working with those employees to learn the production process needed at the new plant in Oklahoma. The cost related to this training was approximately $42,000. Other expenses relating to the loss were costs associated to the sale of Titan Industries during the year of $14,900 and other unrelated legal expenses of approximately $78,000. Lower margins were also affected by costs at the new plant immediately following the move due to the production flow inefficiencies and the learning process of some of the new employees. Had the Company not incurred these expenses management believes the Company would have continued to be profitable for the fiscal year ending June 30, 2001. Sales improved to $13,092,869 for the fiscal year ended June 30, 2001 as compared to $12,210,587 for the same period of 2000. This increase of $882,282, or 7.2%, is due to WW Paul Scales recording twelve months of sales for the year compared to only four months for fiscal 2000. Sales at the W-W Manufacturing location in Thomas, Oklahoma, which includes sales at the Dodge City, Kansas location that was moved during a four month process of February through May of 2001 to Thomas, decreased from $8,384,438 in fiscal 2000 to $7,727,463 for the fiscal year ended June 30, 2001. This decrease of $656,975 was primarily due to production down time during the move and sluggish economic conditions experienced during the last quarter of the fiscal year. Sales at the Livingston, Tennessee location declined slightly from $3,604,068 in fiscal 2000 to $3,448,948 for the fiscal year ended June 30, 2001. The decrease of $155,120 was due to slow sales during late spring into early summer. Despite the sluggish economy, the Company planned promotions and specials in an effort to maintain or improve sales levels through the fall and winter selling season. The Company introduced new additions to the product line along with product improvements throughout 2002. Also, management entered into a marketing agreement to sell related products not presently produced by the Company to enhance its equine product line. The Company believes the addition of these outside products will help increase sales of its own products due to increased exposure in related markets. With the completion of the new plant in Thomas, Oklahoma the Company now has a production facility that will add significant production capacity therefore allowing for an aggressive marketing plan to be put in place. 14 Gross margins decreased from 20.4% in fiscal 2000 to 17.4% in fiscal 2001. This decrease of 3.0% is due several factors with the primary factor being increased labor cost of running both plants while moving from Dodge City, Kansas to Thomas, Oklahoma. During the moving process, the Company continued operations at the old plant in Dodge City while gearing up operations at the new plant in Thomas, Oklahoma. The entire moving process took approximately four months to complete and excess labor was used to have both plants producing products while additional labor was needed for the moving process of loading and unloading material and equipment at both plants. Another factor contributing to the decrease in gross margins was the production inefficiencies at the new plant while employees were learning their jobs and production flows could be established. Selling expense as a percentage of sales remained relatively constant in fiscal 2001 at 7.8% as compared to 7.9% in the same period of fiscal 2000. The Company continued its aggressive marketing approach directed at developing new distributors/dealers in areas not previously covered. With the new plant and powder coat paint system, the Company has a competitive advantage with a superior product and feels it can attack new markets that it could not in previous years. General and administrative expenses increased as a percentage of sales from 8.8% in fiscal 2000 to 10.3% for the fiscal year ended June 30, 2001. This increase was due primarily to legal fees, higher management travel costs related to the move from Dodge City, Kansas to Thomas, Oklahoma, and other start up costs related to the new plant. Interest expense increased in fiscal 2001 to $296,265 as compared to $171,124 in 2000. This increase is due to higher borrowing on the Companies revolving line of credit to cover plant moving costs, accrued interest on the note payable used to finance the sale of its water and environmental segment, Titan Industries, and the addition of the capital lease on the new production facility in Thomas, Oklahoma. As the Company settles into its new plant and inventory levels off, the Company anticipates that borrowing on its revolving line will be reduced to normal levels. Fiscal Year Ended June 30, 2000 Compared to Fiscal Year Ended June 30, 1999. The Company had net earnings of $338,777 for the year ended June 30, 2000, as compared to $104,808 for the same period of 1999. The Company has exhausted net operating losses carried over from prior years, therefore, the financial statements reflect income tax expense from continuing operations of $50,000 for the year ended June 30, 2000, as compared to no tax expense in 1999. On a comparison basis, earnings before income taxes and discontinued operations were $321,600 for the year ended June 30, 2000 as compared to $46,925 for the year ended June 30, 1999. The improvement in earnings was due to the overall increase in sales, higher gross margins, and by strong market acceptance of new products. Total sales reached a record level of $12,210,587 for the fiscal year ended June 30, 2000, as compared to $9,108,446 for the same period of 1999 representing an increase of $3,102,141 or 34.1%. Sales at the Dodge City location increased $1,824,409 and by $810,599 at the Livingston, Tennessee plant. Part of the increase in sales for the livestock segment is due to the purchase of the Adrian J. Paul Scale Company, later renamed W-W Paul Scales on March 21, 2000. Of the total livestock equipment segment, sales by W-W Paul Scales represented $467,133 or 3.8% of total sales and 15.1% of the increase in sales. Sales in the livestock equipment segment improved to $12,210,587 as stated earlier. The increase of $3,102,141 is attributable to many factors including the purchase of the Adrian J. Paul Company. The assets of this company were purchased out of bankruptcy on March 21, 2000 and accounted for as a purchase. The name of the company subsequent to the acquisition has been changed to W-W Paul Scales. Sales reported from the purchase date through the fiscal year end of June 30, 2000 amounted to $467,133. Other factors attributing to the sales increase is the continued effort of the sales staff to find new distributors/dealers throughout the upper Midwest and western states. Sales were dramatically increased at the eastern plant (Livingston, Tennessee) due to one of the Company's larger customers acquiring a competitor in the southeastern part of the United States. Sales also improved due to the strong acceptance of the Company's 15 equine products. Cattle product sales in all markets continue to improve due to the strong cattle prices and an overall strong economy. Special sales to expo centers, universities and fairgrounds also contributed to the year's record sales. The Company continues to increase sales efforts in this market, since it is an area the Company feels has tremendous growth opportunities. Sales at the Dodge City plant improved due to the production support from the hydraulic plant in Oklahoma. With the past and continued labor problems and production inefficiencies in the Dodge City plant, some of the production had to be moved to Oklahoma until the new plant in Thomas is complete. As reported in Fiscal 1999, management has successfully reached an agreement with the Economic Development Authority of Thomas, Oklahoma to construct a new modern facility to house the consolidation of the Dodge City facility and temporary Thomas location. The facility will be owned by the City of Thomas and the Company will lease/purchase it over a twenty-year term. Gross margins in the livestock handling equipment segment improved to 20.4% in fiscal 2000 compared to 19.5% in 1999. The improvement was realized despite the labor and production problems that persist at the Dodge City location. To combat these problems, the Company has used the other production facilities in Oklahoma to help produce product and ship to Dodge City for paint and distribution to customers. With these steps taken, the Company was able to introduce new products and expand some existing lines, which enabled sales to increase, thereby improving gross margins. Selling expenses as a percentage of sales decreased to 7.9% in fiscal 2000 as compared to 9.3% in 1999. This decrease was due to the significant increase in sales without the related increase in expense. The total dollars expended on selling expense did increase from $847,566 in 1999 to $963,904 in 2000. This increase was due to higher travel cost related to higher fuel prices, lodging costs, and airline fares. The Company had expected to spend more dollars on introducing new products and expanding product lines into new markets not previously serviced. The increased sales expense is a direct effect of the aggressive sales and marketing plan maintained by the Company over previous years, and new sales personnel added. General and administration expense increased from 8.4% as a percentage of sales in 1999 to 8.8% in fiscal 2000. The total dollars spent on general and administration expenses increased from $762,517 in 1999 to $1,072,199 in fiscal 2000. This increase was attributed to the write off of accounts receivables, costs of start-up activities at the Adrian J. Paul Company and professional fees. Interest expense increased slightly in fiscal 2000 to $171,124 from $164,755 for the same period of 1999. This increase of $6,369 is directly related to the raise in the prime interest rate, and increase costs of carrying higher inventories and accounts receivable resulting from the growth in sales. Inflation: Inflation has not been a significant factor in net income in recent years because of the relatively modest rate of price increases in the United States. Liquidity and Capital Resources: The Company's principal sources of liquidity are from working capital, internally generated funds and borrowing under its various credit facilities. The Company believes that these sources are sufficient to fund the current requirements of working capital, capital expenditures and other financial commitments. The Company has in place a revolving debt facility that could provide up to $2,200,000. The Company's working capital improved for the year ended June 30, 2002 to $2,003,747 as compared to $1,676,546 for June 30, 2001. 16 The Company consumed funds from operations of $88,724 primarily caused by an increase in net accounts receivable balances. The provision for loss on the write off of accounts receivables amounted to $306,328 in fiscal 2002 as compared to $28,212 for the year ended June 30, 2001. This increase is due to the write down of a large account that is in default of credit terms. The Company is vigorously trying to collect this receivable and believes it is reasonably possible that it will succeed. The Company used cash in investing activities for the purchase and replacement of property and equipment. Cash used in investing activities decreased to $37,124 for the year ended June 30, 2002 compared to $105,364 for the same period of 2001. Cash purchases for property and equipment decreased $136,928 from $179,306 in 2001 to $42,378 in 2002. This decrease reflects the significant amounts invested in property and equipment during the move into the new plant in Thomas, Oklahoma in 2001. Net cash provided from financing activities resulted in a net increase in borrowing on its revolving credit line of $150,882. This increase was necessary to fund the Titan split-off, the manufacturing plant move and the slow down in sales due to current economic conditions felt throughout the country. As the Company moves into fiscal 2003 it anticipates that borrowing under its revolving line will decrease as operations at the new production plant in Oklahoma become more efficient and overall cash flow improves. The Company amended its three-year loan arrangement with its principal lender, Wells Fargo Business Credit, during the year, increasing its upper borrowing limits in case it was needed to supply the present and future growth of the Company. Terms and conditions of the agreement were not altered significantly from the original term agreement, therefore providing adequate lines to meet current and future needs. Another of the Company's lending institutions, Gold Bank of Weatherford, Oklahoma, agreed to refinance existing debt into a new loan on equipment in Duncan, Oklahoma and to loan on certain rental real estate purchased in Thomas, Oklahoma. All other banking and credit agreements were satisfactorily maintained throughout fiscal 2002. Even with the weakened economic climate and the tragedy of September 11, 2001, the Company has been able to maintain sales at reasonable levels. Gross margins may be weakened due to increased promotional costs and discount incentives used to maintain sales levels. Despite these facts, the Company does anticipate continued profitable operations during fiscal 2003. Item 7A. Quantitative and Qualitative Disclosures About Market Risk -------- ---------------------------------------------------------- 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 June 30, 2002, the Company had variable rate notes payable of approximately $2,643,000. 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 $26,000. 17 Item 8. Financial Statements and Supplementary Data. ------- -------------------------------------------- W W CAPITAL CORPORATION INDEX TO FINANCIAL STATEMENTS AND SCHEDULES PAGE ---- Financial Statements: Independent Auditors' Report . . . . . . . . F-1 Consolidated Balance Sheets as of June 30, 2002 and June 30, 2001. . . . . . . . . . . . . . F-2 Consolidated Statements of Operations for the years ended June 30, 2002, 2001 and 2000 . . . . . . . . F-4 Consolidated Statements of Stockholders' Equity for the years ended June 30, 2002, 2001 and 2000 . . . . . . F-6 Consolidated Statements of Cash Flows for the years ended June 30, 2002, 2001 and 2000 . . . . . . . . . . F-7 Notes to Consolidated Financial Statements . . . . . . F-9 Financial Statement Schedules: Independent Auditors' Report . . . . . . . . . . S-1 I - Condensed Financial Information of Registrant . . . . . S-2 II - Valuation and Qualifying Accounts . . . . . . . S-7 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. 18 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, 2002 and 2001, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years ended June 30, 2002. 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 auditing standards generally accepted in the United States of America. 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, 2002 and 2001, and the results of their operations and their cash flows for each of the three years ended June 30, 2002, in conformity with accounting principles generally accepted in the United States of America. BROCK AND COMPANY, CPAs, P.C. Fort Collins, Colorado October 21, 2002 F-1 W W CAPITAL CORPORATION

Consolidated Balance Sheets =======================================================================================~~========~~ June 30 2002 2001 ~~2000~~ ---------------------------------------------------------------------------------------~~--------~~ ASSETS Current Assets Cash $ ~~216~~137,~~473~~948 $ ~~313~~216,~~898~~473 Accounts receivable, trade, net of allowance for doubtful accounts of $35275,000 in ~~2001~~2002 and $3835,000 in ~~2000~~2001 1,~~547~~729,~~584~~161 1,~~401~~547,~~179~~584 Accounts receivable, other 162,703 67,975 ~~41,439~~ Inventories 1,~~729~~790,~~322~~304 1,~~780~~729,~~587~~322 Prepaid expenses 35,632 50,168 ~~22,097~~ Current portion of notes receivable, related parties 603 554 ~~507~~ Deferred income tax asset 149,500 150,100 ~~92,000~~ ---------- ---------- Total current assets 34,~~762~~005,~~176~~851 3,~~651~~762,~~707~~176 ---------- ---------- Property and Equipment, net of accumulated depreciation of $12,~~927~~135,~~259~~406 in ~~2001~~2002 and $21,~~134~~927,~~658~~259 in ~~2000~~2001 2,~~351~~155,~~435~~188 12,~~089~~351,~~280~~435 ---------- ---------- Other Assets Long-term notes receivable, related parties, net of current portion 2120,~~073~~470 21,~~627~~073 Loan acquisition costs, net of accumulated amortization of $433,~~574~~075 in ~~2001~~2002 and $2543,~~142~~574 in ~~2000~~2001 37,925 6,139 ~~24,571~~ Equipment deposits 175,000 ~~-- Net assets of discontinued operations -- 1~~175,~~854,098~~000 Other assets 41,130 6,987 ~~10,454~~ ---------- ---------- Total other assets 274,525 209,199 ~~1,910,750~~ ---------- ---------- Total assets $6,~~322~~435,~~810~~564 $6,~~651~~322,~~737~~810 ========== ==========

The accompanying Notes are an integral part of the consolidated financial statements F-2 W W CAPITAL CORPORATION

Consolidated Balance Sheets (continued) ================================================================================================ June 30 2002 2001 ~~2000~~ ------------------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts payable $ 1,~~423~~373,~~041~~803 $ 1,~~285~~423,~~816~~041 Accrued payroll and related taxes 198,887 177,474 ~~209,819~~ Accrued property taxes 10,400 15,950 ~~16,995~~ Accrued interest payable 80,106 62,361 ~~15,076 Accrued income taxes, current -- 36,000~~ Other current liabilities 24,908 121,804 ~~76,546~~ Current portion of notes payable ~~220~~239,000 ~~361~~220,000 Current portion of capital lease obligation 6575,000 2365,000 ----------- ----------- Total current liabilities 2,~~085~~002,~~630~~104 2,~~024~~085,~~252~~630 ----------- ----------- Long-Term Liabilities Long-term notes payable, net of current portion 2,~~806~~966,~~268~~693 12,~~452~~806,~~992~~268 Long-term capital lease obligations, net of current portion 1,219,973 1,281,397 ~~68,426~~ Deferred income tax liability 179,900 155,100 ~~106,000~~ Negative goodwill, net of accumulated amortization of $35,~~124~~466 in ~~2001~~2002 and $~~781~~3,124 in ~~2000~~2001 61,744 43,729 ~~46,072~~ ----------- ----------- Net long-term liabilities 4,~~286~~428,~~494~~310 14,~~673~~286,~~490~~494 ----------- ----------- Total liabilities 6,~~372~~430,~~124~~414 36,~~697~~372,~~742~~124 ----------- ----------- Commitments and Contingency -- -- 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 in ~~2001~~2002 and ~~5,540,661~~2001 ~~in 2000~~ 55,538 55,~~406~~538 Capital in excess of par value 3,305,533 3,~~304~~305,~~629~~533 Accumulated deficit (~~531~~476,~~270~~806) (~~357~~531,~~134~~270) ----------- ----------- 2,~~829~~884,~~801~~265 32,~~002~~829,~~901~~801 Less 3,545,663 shares of treasury stock at June 30, ~~2001~~2002 and ~~120~~2001,~~264~~ at ~~June 30, 2000, at~~ cost (2,879,115) (482,~~906~~879,115) ----------- ----------- Net stockholders' equity (deficit) 5,150 (49,314) ~~2,953,995~~ ----------- ----------- Total liabilities and stockholders' equity (deficit) $ 6,~~322~~435,~~810~~564 $ 6,~~651~~322,~~737~~810 =========== ===========

The accompanying Notes are an integral part of the consolidated financial statements F-3 W W CAPITAL CORPORATION

Consolidated Statements of Operations ================================================================================================~~========~~ Years ended June 30 2002 2001 2000 ~~1999~~ ------------------------------------------------------------------------------------------------~~--------~~ Net Sales $ 12,652,044 $ 13,092,869 $ 12,210,587 ~~$ 9,108,446~~ Cost of Goods Sold 9,731,506 10,814,417 9,718,021 ~~7,334,337~~ ------------ ------------ ------------ Gross profit 2,920,538 2,278,452 2,492,566 ~~1,774,109~~ ------------ ------------ ------------ Operating Expenses Selling expenses 1,152,475 1,023,040 963,904 ~~847,566~~ General and administrative expenses 1,524,582 1,351,351 1,072,199 ~~762,517~~ ------------ ------------ ------------ Total operating expenses 2,677,057 2,374,391 2,036,103 ~~1,610,083~~ ------------ ------------ ------------ Income (Loss) From Operations 243,481 (95,939) 456,463 ~~164,026~~ ------------ ------------ ------------ Other Income (Expense) Interest income 7,569 35,060 19,903 ~~26,622~~ Interest expense (338,248) (296,265) (171,124) ~~(164,755)~~ Gain ~~(loss)~~ on property and equipment ~~dispositions~~4,700 45,438 1,144 ~~(1,347)~~ Other income, net 162,362 22,708 15,214 ~~22,379~~ ------------ ------------ ------------ Net other income (expense) (163,617) (193,059) (134,863) ~~(117,101)~~ ------------ ------------ ------------ Earnings (Loss) Before Income Taxes 79,864 (288,998) 321,600 ~~46,925~~ Income Tax Benefit (Expense) From Continuing Operations (25,400) 41,543 (50,000) -- ------------ ------------ ------------ ~~Net~~Earnings ~~earnings~~ (loss) from continuing operations 54,464 (247,455) 271,600 ~~46,925~~ ------------ ------------ ------------ Discontinued Operations Earnings from operations of Titan Industries disposed of (net of income taxes of $59,000 at June 30, 2001 and $12,000 at June 30, 2000) -- 88,219 67,177 ~~57,883~~ Loss on disposal of Titan Industries -- (14,900) -- -- ------------ ------------ ------------ ~~Net~~Earnings ~~earnings~~ of discontinued operations -- 73,319 67,177 ~~57,883~~ ------------ ------------ ------------ Net earnings (loss) $ 54,464 $ (174,136) $ 338,777 ~~$ 104,808~~ ============ ============ ============

The accompanying Notes are an integral part of the consolidated financial statements F-4 W W CAPITAL CORPORATION

Consolidated Statements of Operations (continued) ========================================================================================================= Years ended June 30 2002 2001 2000 ~~1999~~ --------------------------------------------------------------------------------------------------------- Earnings Per Common Share Basic Earnings (loss) from continuing operations $( 0.~~05)~~03 $ (0.05) $ 0.0105 Earnings from discontinued operations 0.0200 0.0102 0.01 Loss on disposal of Titan Industries 0.00 (0.02) 0.00 ~~0.00~~ ------------ ------------- ------------ Net earnings (loss) $ 0.03 $ (0.05) $ 0.06 ~~$0.02~~ ============ ============= ============ Weighted average number of common shares outstanding 2,008,164 3,725,881 5,420,397 ~~5,420,397~~ Diluted Earnings (loss) from continuing operations $( 0.~~05)~~03 $ (0.05) $ 0.0105 Earnings from discontinued operations 0.0200 0.0102 0.01 Loss on disposal of Titan Industries 0.00 (0.02) 0.00 ~~0.00~~ ------------ ------------- ------------ Net earnings (loss) $ 0.03 $ (0.05) $ 0.06 ~~$0.02~~ ============ ============= ============ Weighted average number of common shares outstanding 2,008,164 3,725,881 5,420,397 ~~5,420,397~~

The accompanying Notes are an integral part of the consolidated financial statements F-5 W W CAPITAL CORPORATION

Consolidated Statements of Stockholders' Equity =================================================================================================================================== Years ended June 30, ~~2001~~2002, ~~2000~~2001 and ~~1999~~2000 ----------------------------------------------------------------------------------------------------------------------------------- Common Stock Treasury Stock ----------------------- Capital -------------------------- Total Number of Par In Excess Accumulated Number of Stockholders' Shares Value of Par Value Deficit Shares Cost Equity ----------- ---------- ------------ ------------ ----------- ----------- ------------ Balance, July 1, ~~1998~~1999 5,540,661 $ 55,406 $ 3,304,629 $ (~~800~~695,~~719~~911) (120,264) $ (48,906) $ 2,510,410 Net earnings for year ended June 30, 1999 -- -- -- 104,808 -- -- 104,808 ------------------------------------- --------- --------- ----------- ----------- ---------- ----------- ----------- Balance, June 30, 1999 5,540,661 55,406 3,304,629 (695,911) (120,264) (48,906) 2,615,218 Net earnings for year ended June 30, 2000 -- -- -- 338,777 -- -- 338,777 ----------- ---------~~-----------------~~ --------- --~~-------~~ ----------- ----------- ---------- -~~----------~~ ----------- Balance, June 30, 2000 5,540,661 55,406 3,304,629 (357,134) (120,264) (48,906) 2,953,995 Exercise of stock options 13,166 132 904 -- -- -- 1,036 Treasury stock redeemed in sale of Titan Industries, Inc. -- -- -- -- (3,390,399) (2,812,709) (2,812,709) Treasury stock redeemed in sale of inventory -- -- -- -- (35,000) (17,500) (17,500) Net loss for year ended June 30, 2001 -- -- -- (174,136) -- -- (174,136) ----------- --------- ----------- ----------- ----------- ----------- ----------- Balance, June 30, 2001 5,553,827 55,538 3,305,533 (531,270) (3,545,663) (2,879,115) (49,314) Net earnings for year ended June 30, 2002 -- -- -- 54,464 -- -- 54,464 ----------- --------- ----------- ----------- ----------- ----------- ----------- Balance, June 30, ~~2001~~2002 5,553,827 $ 55,538 $ 3,305,533 $ (~~531~~476,~~270~~806) (3,545,663) $(2,879,115) $ ~~(49~~5,~~314)~~150 =========== ========= =========== =========== =========== =========== ===========

The accompanying Notes are an integral part of the consolidated financial statements F-6 W W CAPITAL CORPORATION

Consolidated Statements of Cash Flows =========================================================================================================~~===~~ Years ended June 30 2002 2001 2000 ~~1999~~ ---------------------------------------------------------------------------------------------------------~~---~~ Cash Flows From Operating Activities Net earnings (loss) $ 54,464 $ (174,136) $ 338,777 ~~$ 104,808~~ Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities Earnings from discontinued operations -- (43,511) (67,177) ~~(57,883)~~ Depreciation 249,760 203,059 170,040 ~~252,786~~ Amortization 9,214 18,432 18,432 ~~6,710 (~~Gain) ~~loss~~ on dispositions of property and equipment (4,700) (45,438) (1,144) ~~1,347~~ Provision for loss on accounts and notes receivable 306,328 28,212 193,090 ~~37,579~~ Amortization of negative goodwill (2,343) (2,343) (781) -- Write down of inventory to net realizable value 15,469 52,826 97,418 -- Net changes in assets and liabilities Accounts receivable (487,905) (201,153) (402,489) Inventories (~~163~~76,~~549~~451) ~~Inventories~~ (16,340) (148,083) ~~(130,165)~~ Other current and non-current assets (85,192) (82,704) 5,133 ~~12,361~~ Accounts payable, accrued expenses and other current liabilities (67,368) 206,757 (101,795) ~~102,143~~ ------------ ------------ ------------ Net cash provided (used) by operating activities (88,724) (56,339) 101,421 ~~166,137~~ ------------ ------------ ------------ Cash Flows From Investing Activities Proceeds from sale of property and equipment 4,700 73,435 93,519 -- Purchases of property and equipment (42,378) (179,306) (157,593) ~~(38,700)~~ Proceeds from ~~notes receivable, other -- -- 110,341 Proceeds from~~ stockholders' notes receivable 554 507 466 ~~428~~ Cash acquired in acquisition of subsidiary -- -- 14,988 -- ------------ ------------ ------------ Net cash ~~provided (~~used) byin investing activities (37,124) (105,364) (48,620) ~~72,069~~ ------------ ------------ ------------ Cash Flows From Financing Activities Borrowings on notes payable 12,168,450 11,966,434 10,955,779 ~~4,913,435~~ Payments on notes payable (12,017,568) (11,700,110) (10,846,664) ~~(5,054,718)~~ Payments on capital leases (62,559) (37,982) (18,270) ~~(11,631)~~ Payment of loan acquisition costs (41,000) -- -- ~~(49,713)~~ Proceeds from the exercise of stock options -- 1,036 -- -- Repurchase of common stock -- (165,100) -- -- ------------ ------------ ------------ Net cash provided ~~(used)~~ by financing activities 47,323 64,278 90,845 ------------ ------------ ------------ Net Increase (~~202~~Decrease) in Cash (78,~~627~~525) (97,425) 143,646 ------------ ------------ ------------

The accompanying Notes are an integral part of the consolidated financial statements F-7 W W CAPITAL CORPORATION

Consolidated Statements of Cash Flows (continued) ================================================================================================~~============~~ Years ended June 30 2002 2001 2000 ~~1999~~ ------------------------------------------------------------------------------------------------~~------------~~ Net Increase (Decrease) in Cash $ (78,525) $ (97,425) $ 143,646 ~~$ 35,579~~ Cash, Beginning of year 216,473 313,898 170,252 ~~134,673~~ ------------ ------------ ------------ Cash, End of year $ 137,948 $ 216,473 $ 313,898 ~~$ 170,252~~ ============ ============ ============ Supplemental Information ~~Liabilities~~Cash ~~assumed~~paid toduring ~~acquire~~the ~~subsidiary~~year for interest $ --320,502 $ ~~383~~248,~~990~~084 $ 167,096 Cash paid during the year for income taxes $ 5,835 $ 50,677 $ -- Installment loans and capital leases to acquire property and equipment $ 11,135 $ 1,313,904 $ 19,693 ~~$ 121,236~~ Installment ~~loans~~loan ~~used~~to ~~for~~acquire ~~deposits~~residential onrental ~~purchase of~~ property ~~and equipment~~ $ ~~175~~28,~~000~~542 $ -- $ -- ~~Installment~~Liabilities ~~loans~~assumed ~~used~~to ~~for~~acquire ~~the~~subsidiary ~~repurchase of common stock~~ $ ~~750,000~~-- $ -- $ --383,990 ~~Treasury~~Installment ~~stock~~loans ~~acquired~~used infor ~~sale~~deposits on purchase of ~~inventory~~property $and ~~17,500~~equipment $ -- $ 175,000 $ -- ~~Cash~~Installment ~~paid~~loans ~~during~~used for the ~~year~~repurchase ~~for~~of ~~interest~~common stock $ ~~248,084~~-- $ ~~167~~750,~~096~~000 $ ~~170,403~~-- ~~Cash~~Treasury ~~paid~~stock ~~during~~acquired ~~the~~in ~~year~~sale ~~for~~of ~~income~~inventory ~~taxes~~ $ ~~50,677~~-- $ --17,500 $ --

The accompanying Notes are an integral part of the consolidated financial statements F-8 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================ 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 and environmental products. 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) and Titan Industries, Inc. (Titan). 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. 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. 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 accounting principles generally accepted in the United States of America 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. Allowance for Doubtful Accounts. The Company uses the allowance method of accounting for bad debts. The allowance for bad debts is 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 property and equipment under capital leases is included in depreciation expense. 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. F-9 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================ Note 1 - Summary of Significant Accounting Policies (continued) 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. Negative Goodwill. Negative goodwill was recorded in the acquisition of the Adrian J. Paul Company. It is the excess of the value of acquired assets over the total cash paid and liabilities assumed, after reducing long-term assets. The Company is amortizing negative goodwill using the straight-line method over a 20-year life. 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. The change in accounting principle will be recognized on July 1, 2002 with an increase in income of $61,744. 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. Revenue Recognition. The Company recognizes revenue in the period the product is shipped and title is transferred to the customer. Shipping and handling charges are included in net sales and the relate costs are included in cost of goods sold. Advertising. The Company expenses the cost of advertising the first time the advertising takes place. Advertising expense for the years ended June 30, 2002, 2001 and 2000 was $145,639, $137,045 and $85,795, 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. Per Share Data. 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. F-10 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================

~~2001~~Note ~~2000~~2 - Related Party Transactions Receivables. Notes receivable from stockholders and all affiliated entities consisted of the following at June 30: 2002 2001 ---------- ---------- Note receivable from a partnership owned by certain of the Company's stockholders bears interest at 9%. ~~During~~The ~~October 1997, the~~ note ~~was~~provides ~~renegotiated to provide~~ for annual installments of $2,500 through 2017 and for collateral consisting of shares of the Company's common stock owned by the partners. $ 21,~~627~~073 $ 2221,~~134~~627 Less current portion (~~554~~603) (~~507~~554) -------- -------- $ 2120,~~073~~470 $ 21,~~627~~073 ======== ========

During the years ended June 30, 2002, 2001 and 2000, the Company recorded interest income of $1,897, $1,946 and $1,993 for the notes receivable from related parties. Operating Lease. The Company leased its manufacturing facility in Dodge City, Kansas, from Murle F. Webster, a stockholder, on a month to month basis. The lease required monthly payments of $5,000 through April 2001 and monthly payments of $500 for May and June 2001. The Company closed the Dodge City, Kansas location during 2001. The provisions of the building lease required the Company to pay insurance, property taxes and maintenance costs. The Company has entered into the transactions with related parties as disclosed above during the three-year period ended June 30, 2002. 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

Inventories consisted of the following at June 30: 2002 2001 ~~2000~~ ------------- -------------- Raw materials $ ~~658~~528,~~943~~110 $ ~~563~~658,~~123~~943 Work-in-process 418,334 436,237 ~~388,056~~ Finished goods 843,860 634,142 ~~829,408~~ ------------ ------------ $ 1,~~729~~790,~~322~~304 $ 1,~~780~~729,~~587~~322 =========== ===========

During the fourth quarter of 2002, 2001 and 2000, the Company evaluated its inventories for impairment. The inventory value was written down by $15,469, $52,826 and $97,418, respectively, 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. F-11 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================

Note 4 - Property and Equipment Property and equipment consisted of the following at June 30: 2002 2001 ~~2000~~ ------------ ------------ Land and improvements $ 102,622 $ ~~107~~102,~~922~~622 Building and improvements 1,844,031 ~~781~~1,~~224~~844,031 Leasehold improvements 89,372 76,510 ~~218,244~~ Machinery and equipment 1,~~493~~512,~~411~~123 1,~~430~~493,~~980~~411 Automobiles and trucks 417,770 448,402 ~~334,598~~ Office equipment 324,676 313,718 ~~350,970~~ ----------- ------------ 4,~~278~~290,~~694~~594 34,~~223~~278,~~938~~694 Less accumulated depreciation and amortization (12,~~927~~135,~~259~~406) (21,~~134~~927,~~658~~259) ----------- ------------ $ 2,~~351~~155,~~435~~188 $ 12,~~089~~351,~~280~~435 =========== ============

Note 5 - Discontinued Operation On January 5, 2001, the stockholders of the Company voted to sell its water and environmental product segment, Titan Industries, Inc., to certain stockholders of the Company in exchange for 3,390,399 shares, or approximately 61.2%, of the outstanding common stock of the Company. The transaction had an effective date of December 31, 2000. In addition to giving up its interest in Titan, the Company also contributed the sum of $850,000 to the capital of Titan to equalize the value of the consideration being exchanged. The sale was accounted for as a treasury stock transaction and the loss on disposal of $14,900 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 results of the discontinued operation is as follows:

For the ~~Period~~period from July 1, For the ~~For the~~ 2000 through year ended ~~year ended~~ December 31, June 30, ~~June 30,~~ 2000 2000 ~~1999~~ ----------- --- -------- ----------- Net Sales $ 4,699,336 $ 9,053,166 ~~$ 7,278,597~~ =========== =========== =~~==========~~ Earnings before provision for income taxes $ 147,219 $ 79,177 ~~$ 57,883~~ Provision for income taxes (59,000) (12,000) Loss on disposal of Titan Industries (14,900) -- ------------ ----------- --~~---------~~ Earnings from discontinued operation $ 8873,~~219~~319 $ 67,177 ~~$ 57,883~~ ============ =========== ==~~=========~~

During January 2001, the Company borrowed $750,000 under a loan agreement with an affiliated investment group. The loan proceeds were used to partially fund the capital contribution to Titan Industries, Inc. The loan is collateralized by 2,448,000 shares of the Company's treasury stock. F-12 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================ 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, 2002, 2001, and 2000, the Company made $25,430, $11,877 and $7,289 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, 2002, options to purchase 773,500 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 153,334 shares at option prices ranging from $0.063 to $2.50 per share of which 122,668 are outstanding as of June 30, 2002. Options to purchase 10,000 and 3,166 shares of common stock for $0.0625 and $0.13 per share were exercised during 2001. These options vest immediately and expire ten years after issuance.

~~December~~Number ~~31,~~of ~~June~~Weighted ~~30,~~Average ~~2000~~Shares ~~2000~~Exercise Price --------- -- -------------- ~~Cash $ 105~~Outstanding,~~473~~ $July ~~96,986 Receivables~~ 1,~~258,184~~ ~~1,579,784~~1999 ~~Inventories~~(all ~~2,551,495~~vested) 2400,~~537,367~~168 ~~Prepaid~~$0.8600 ~~expenses~~Granted ~~18,151~~ 30,~~540 Deferred income tax asset 22,~~000 ~~22,000~~0.0625 Exercised --~~--------~~ --~~--------~~ ~~Current~~Cancelled ~~assets of discontinued operation 3,955,303 4,266,677~~ --~~--------~~ --~~--------~~ ~~Net property and equipment 909,224 870,047~~ ---------- -------~~---~~ ~~Accounts~~Outstanding, ~~payable~~June 130,~~405,448~~ ~~1,731,932~~2000 ~~Accrued~~(all ~~liabilities~~vested) ~~181~~430,~~004~~168 ~~138,494~~0.8000 ~~Short-term~~Granted ~~debt 1~~10,~~065,~~000 ~~57,000~~0.0625 ~~----------~~Exercised ~~----------~~(13,166) ~~Current~~0.0800 ~~liabilities~~Cancelled ~~of discontinued operation 2~~(110,~~651,452~~334) ~~1,927,426~~0.7900 ---------- -------~~---~~ ~~Long-term~~Outstanding, ~~debt~~June ~~290~~30,~~466~~ ~~1,330,200~~2001 ~~Deferred~~(all ~~income~~vested) ~~tax liability 25~~316,~~000~~668 ~~25,000~~0.8100 Granted -- -- Exercised --~~----~~ --~~--------~~ ~~Long-term~~Cancelled ~~liabilities of discontinued operation 315~~(17,~~466~~500) ~~1,355,200~~2.5000 ---------- -------~~---~~ ~~Net~~Outstanding, ~~assets~~June of30, ~~discontinued~~2002 ~~operation~~(all $1vested) 299,~~897,609~~168 $~~1,854,098~~0.7200 ========== =======~~===~~

F-13 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================

~~Number~~Note of6 ~~Weighted~~- ~~Average~~Employee ~~Shares~~Benefit ~~Exercise~~Plans ~~Price~~(continued) Options Outstanding Vested Options -------------------------------------------------- ----------------------------- ~~Outstanding,~~Weighted ~~July~~Average 1,Weighted ~~1998~~Weighted ~~(all~~Remaining ~~vested)~~Average ~~385,168~~Average $Exercise ~~0.9000~~Number ~~Granted~~Contractual ~~30,000~~Exercise ~~0.1900~~Number ~~Exercised~~Exercise --Prices --Outstanding ~~Cancelled~~Life (~~15,000~~Years) ~~0.6500~~Price Vested Price ---------- ------- ~~Outstanding, June 30, 1999 (all vested) 400,168 0.8600 Granted 30,000 0.0625 Exercised~~ -- -- ~~Cancelled~~ ------------ ------------ -------- ------------ ~~Outstanding~~$1.5000 50,000 ~~June~~0.7 30$1.5000 50,000 ~~2000~~$1.5000 ~~(all~~0.8125 ~~vested)~~16,001 ~~430~~1.0 0.8125 16,~~168~~001 0.~~8000~~8125 ~~Granted~~0.7500 143,167 1.9 0.7500 143,167 0.7500 0.5625 20,000 3.0 0.5625 20,000 0.5625 0.3000 10,000 6.0 0.~~0625~~3000 ~~Exercised~~10,000 ~~(13~~0.3000 0.1300 10,~~166)~~000 5.0 0.~~0800~~1300 ~~Cancelled~~10,000 ~~(110~~0.1300 0.0625 50,~~334)~~000 5.9 0.~~7900~~0625 50,000 0.0625 -------- ---- -------- ~~Outstanding,~~-------- ~~June~~-------- 30299,168 ~~2001~~2.6 ~~(all~~$0.7200 ~~vested) 316~~299,~~668~~168 $ 0.~~8100~~7200 ======= ==== ======= ======= =======

~~Options~~Note ~~Outstanding~~7 ~~Vested~~- ~~Options~~Long-Term Debt Long-term debt consists of the following at June 30: 2002 2001 --------------~~-------------------------------~~ ------------~~--------------~~ ~~Weighted~~Financial ~~Average~~Institutions ~~Weighted~~Revolving ~~Weighted~~note ~~Remaining~~payable ~~Average~~bears ~~Average~~interest ~~Exercise~~at ~~Number~~3.0% ~~Contractual~~above ~~Exercise~~the ~~Number~~Bank's ~~Exercise~~base ~~Prices~~rate ~~Outstanding~~(total ~~Life~~interest ~~(Years~~rate of 7.75% at June 30, 2002). ~~Price~~The ~~Vested~~note ~~Price~~is ~~----------~~subject ~~-----------~~to ~~------------~~various ~~----------~~conditions ~~--------~~described ~~----------~~below ~~$2.5000~~and ~~17,500~~provides ~~0.8~~for ~~$2.5000~~the ~~17,500~~issuance of $2~~.5000 1.5000 50~~,200,000 1of revolving credit debt.7 1The agreement matures in October 2004.~~5000~~ 50$1,~~000~~570,875 $1~~.5000~~,448,452 ~~0.8125~~Note ~~16,001~~payable 2bears interest at 9.0% ~~0.8125~~and ~~16,001~~is ~~0.8125~~due ~~0.7500~~in ~~143,167~~monthly ~~2.9~~installments ~~0.7500~~of ~~143~~$4,~~167~~191, ~~0.7500~~including ~~0.5625~~principal 20and interest,~~000~~ ~~4.0~~through 0November 2005.~~5625~~ 20The note is collateralized by real estate and machinery and equipment located in Livingston,~~000~~ 0Tennessee.~~5625~~ ~~0.3000~~142,939 10179,~~000~~165 7Note payable bears interest at 8.0% ~~0.3000~~and ~~10,000~~is ~~0.3000~~due ~~0.1300~~in 10monthly installments of $2,~~000~~505, ~~6.0~~including ~~0.1300~~principal 10and interest,~~000~~ ~~0.1300~~through ~~0.0625~~September 502004,~~000~~ ~~6.9~~at 0which time the remaining principal balance is due.~~0625~~ 50The note is collateralized by machinery and equipment located in Duncan,~~000~~ 0Oklahoma.~~0625~~ ~~--------~~106,899 -~~---~~ ~~--------~~Term ~~--------~~note ~~--------~~payable ~~316~~bears interest at 4% over the Bank's base rate (total interest rate of 8.75% at June 30,~~668~~ 32002).5 The note is due in monthly principal installments of $04,021 plus interest through April 2003.~~8100~~ ~~316~~The note is collateralized by equipment,~~668~~ ~~$0.8100~~inventory, ~~=======~~intangibles ~~====~~and ~~=======~~receivables. ~~=======~~60,047 ~~=======~~118,384

F-14 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================

~~Long-term~~Note ~~debt~~7 ~~consists~~- ofLong-Term ~~the~~Debt ~~following~~(continued) at2002 ~~June 30:~~ 2001 ~~2000~~ ------------ ----------- ~~Financial~~Notes ~~Institutions~~payable ~~----------------------~~bearing ~~Revolving~~interest ~~note~~at ~~payable~~rates ~~bears~~ranging ~~interest~~from at7.6% 1to 8.09% ~~above~~and ~~the~~are ~~Bank's~~due ~~base~~in ~~rate~~monthly ~~(total~~installments, including principal and interest, ~~rate~~totaling of$2,219 ~~7.75%~~through atFebruary ~~June~~2003, 30and $1,744 ~~2001)~~through February 2005. The ~~note~~notes isare ~~subject~~collateralized toby ~~various~~vehicles ~~conditions~~$ ~~described~~53,052 ~~below~~$ 74,021 Note payable bears interest at 8.0% and ~~provides~~is ~~for~~due ~~the~~in ~~issuance~~monthly installments, including principal and interest, of $2312 through August 2006,~~200,000~~ ofat ~~revolving~~which ~~credit~~time ~~debt~~the remaining principal balance is due. The ~~agreement~~note ~~matures~~is incollateralized ~~October~~by ~~2004.~~rental $property 1in Thomas,~~448,452~~ $Oklahoma 127,~~103,126~~291 -- Note payable bears interest at 98.5% and is due in monthly installments ~~of $4~~,~~191,~~ including principal and interest, of $522 through ~~November~~December ~~2005~~2004. The note is collateralized by ~~real~~a ~~estate~~vehicle ~~and~~13,990 ~~machinery~~18,733 ~~and~~Notes ~~equipment~~paid ~~located~~ in ~~Livingston~~full during 2002 -- 129,758 ~~Tennessee.~~----------- ~~179~~----------- 1,~~165~~975,093 1,968,513 ----------- ~~Term~~----------- ~~note~~Other Entities Note payable bears interest at 23.0% ~~over~~above the ~~Bank's~~Wall ~~base~~Street prime lending rate (total interest rate of 87.75% at June 30, ~~2001~~2002). The note is payable with one payment consisting exclusively of twelve month's unpaid accrued interest on the second anniversary date, January 2003. The remaining balance is due in monthly principal installments of $410,~~021~~541 commencing in February 2003 plus interest through ~~April~~December ~~2003~~2010. The note is collateralized by ~~equipment~~2, ~~inventory~~448,000 ~~intangibles~~shares ~~and~~of ~~receivables.~~the ~~118~~Company's treasury stock 1,~~384~~011,981 ~~170~~750,~~653~~000 ~~Term~~Note ~~note~~ payable bears interest at 2.0% ~~over~~and ~~the~~is ~~Bank's~~due ~~base~~in ~~rate~~monthly ~~(total~~installments, ~~interest~~including ~~rate~~principal ofand ~~8.75%~~interest, atof ~~June 30~~$2,820 ~~2001)~~through March 2009. The note is unsecured 213,523 242,777 Note payable bears interest at 5.25% and is due in ~~monthly~~quarterly ~~principal~~ installments, ofincluding ~~$2,917~~principal ~~plus~~and interest, ~~through~~of ~~April 2004~~$675. The note is ~~collateralized~~unsecured by5,096 ~~equipment~~7,452 ~~inventory~~Notes paid in full during 2002 -- 57,526 ~~intangibles~~----------- ~~and~~----------- ~~receivables.~~1,230,600 991,~~167~~057,755 ~~134~~----------- ----------- 3,~~167~~205,693 3,026,268 Less current portion (239,000) (220,000) ----------- ----------- $ 2,966,693 $ 2,806,268 =========== ===========

F-15 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================ Note 7 - Long-Term Debt (continued) A revolving note payable in the amount of $1,570,875 at June 30, 2002 is collateralized by equipment, intangibles, inventories 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, minimum debt service ratio, limitations on the acquisition of property and equipment and the requirement to develop certain inventory control systems. The loan provides for charges of .25% on the unused revolving credit line 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 $1,000,000 of the Company's consolidated net assets at June 30, 2002 are considered to be restricted net assets of consolidated subsidiaries. The aggregate maturities of long-term debt are as follows at June 30, 2002: Year ---------- 2003 $ 239,000 2004 251,636 2005 1,853,799 2006 180,697 2007 178,802 Thereafter 501,759 ----------- $ 3,205,693 =========== Note 8 - Lease Commitments Capital Leases. The Company leases its Thomas, Oklahoma plant under a capital lease arrangement that expires in June 2022. The leased building has a cost of $1,073,507 and accumulated amortization of $44,284 and $8,857 at June 30, 2002 and 2001, respectively. The Company also leases certain manufacturing equipment under eight capital leases which expire in August 2003 through February 2006. Assets under capital leases are recorded at fair value and are amortized over their estimated useful lives. The leased equipment has a cost of $165,333 and $151,579 and accumulated amortization of $97,439 and $61,255 at June 30, 2002 and 2001. Future minimum lease payments required under noncancelable capital leases are as follows at June 30, 2002.

~~Note~~Year 8Building -Equipment ~~Long~~Total -~~Term~~--- ~~Debt (continued) 2001 2000~~ ----------- --------- ----------- ~~Notes~~2003 ~~payable~~$ ~~bearing~~150,100 ~~interest~~$ ~~at rates ranging from 7.6% to 8.9% and are due in monthly installments~~37,416 ~~including~~$ ~~principal and interest~~187,516 ~~totaling~~2004 $2157,~~219~~600 ~~through February 2003~~21,736 ~~and $1~~179,~~744~~336 ~~through February~~ 2005. ~~The notes are collateralized by vehicles. $ 74~~157,~~021~~600 ~~$ 13~~11,~~717~~154 ~~Note payable bears interest at 9.75% and is due in monthly installments of $949~~168,754 ~~including~~2006 ~~principal and interest. The note matures in March 2005 and is collateralized by equipment in Thomas~~157,600 ~~Oklahoma. 30~~2,~~591~~337 71159,~~033~~937 ~~Note~~2007 ~~payable bears interest at 9.0% and is due in monthly installments~~157,600 ~~including~~- ~~principal and interest~~157,600 ofThereafter ~~$522 through December 2004. The note is collateralized by a vehicle. 18~~1,~~733~~399,562 - ~~Notes paid in full during 2000. - 232~~1,~~511~~399,562 ----------- --------- ----------- 1Total minimum lease payments 2,~~968~~180,~~513~~062 172,~~725~~643 2,~~207~~252,705 Less: amount representing interest (951,771) ( 5,961) (957,732) ------------ ----------- ~~Other Entities~~ -----------~~---~~ ~~Note~~Present ~~payable~~value ~~bears interest at 3.0% above the Wall Street prime lending rate (total interest rate~~ of ~~13.0%~~net atminimum ~~June~~lease ~~30,~~payments 2001). The note is payable with one payment consisting exclusively of twelve month's accrued interest on the second anniversary date, January 2003. The remaining balance is due in monthly principal installments of $~~11,419~~ ~~plus interest through December 2010. The note is collateralized by 2~~1,228,~~000~~291 ~~shares of the Company's treasury stock and provides for the issuance of~~ $~~1,000,000~~ ~~total debt. 750~~66,~~000~~682 ~~- Note payable bears interest at 2.0% and is due in monthly installments, including principal and interest, of~~ $~~2,820~~ ~~through March 2009. The note is unsecured. 242~~1,~~777 - Note payable bears interest at 5.75% and is due in monthly installments~~294,973 ~~including~~=========== ~~principal~~========= and interest, of $2,449 through July 2003. The note is collateralized by accounts receivable, equipment and furniture and fixtures. The agreement requires the Company to create or retain seventeen new full-time permanent positions within an eighteen month period with 60% of the positions for low income individuals. 57,526 82,921===========

F-16 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2001 ================================================================================ Note 8 - Lease Commitments (continued) Operating Leases. In January 2002, the Company entered into a two year lease extension for office space. The lease provides for monthly rental payments of $2,733 escalating to $2,810 through March 2004, at which time the Company has an option to extend the lease for an additional two years. In April 2000, the Company entered into a two year lease for a production facility. The lease provided for monthly rental payments of $4,000 though March 2002, at which time the Company exercised an option to purchase the production facility for $208,000 plus closing costs. The sale was consummated on July 2, 2002. The Company has entered into various lease agreements for production and office equipment, office space and vehicles. The lease terms are generally two to five years. Future minimum rental payments under operating leases as of June 30, 2002 are as follows:

~~Note~~Warehouse 8and -Vehicles ~~Long-Term~~and ~~Debt~~Year ~~(continued)~~Office ~~2001~~Space ~~2000~~Equipment Total ---- -------------- ------------ ~~Note~~------------ ~~payable~~2003 ~~bears~~$ ~~interest~~40,831 at$ ~~5.25%~~46,009 ~~and~~$ is86,840 ~~due~~2004 in33,094 ~~quarterly~~32,373 ~~installments~~65,467 ~~including~~2005 ~~principal~~3,250 ~~and~~8,061 ~~interest~~11,311 of2006 ~~$675.~~- ~~The~~1,749 ~~note is unsecured. $ 7~~1,~~452~~749 $2007 ~~5,864~~- - -~~---------~~ ---------~~----~~ ~~1,057,755 88,785~~ ----------- ---------~~----~~ ~~3,026,268~~Total ~~1,813,992~~minimum ~~Less~~payments ~~current~~required ~~portion~~$ ~~(220~~77,~~000)~~175 ~~(361,000) ----------- ------------~~ $2 88,~~806,268~~192 $1 165,~~452,992~~367 ========== ========= =========

Rental expense under operating leases for the years ended June 30, 2002, 2001 and 2000 amounted to $130,993, $196,253 and $173,639, respectively. 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 $67,210. 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 for the year ended June 30, 2000 as if the business combination had occurred on July 1, 1999. Revenues $ 13,495,000 Net earnings $ 397,000 Earnings per share $ 0.07 F-17 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================ Note 9 - Business Combination (continued) 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 - Income Taxes

~~Note~~The 9provision -for ~~Lease~~income ~~Commitments~~taxes ~~(continued)~~is ~~Future minimum lease payments required under noncancelable capital leases are~~ as follows at June 30,: 2002 2001. ~~Year~~2000 ~~Building Equipment Total~~ ---- -----~~--------~~ --------- ----------- ~~2002~~Current Federal $ ~~148~~68,~~850~~000 $ 3437,~~300~~757 $ ~~183~~111,~~150~~000 ~~2003~~State ~~157~~7,~~600~~000 3419,~~300~~000 ~~191,900 2004 157,600~~ 18,~~619~~200 ~~176,219~~Deferred ~~2005 157~~25,~~600~~400 8(9,~~038~~000) ~~165~~17,~~638~~000 ~~2006~~Tax ~~157,600~~benefit -of ~~157,600~~net ~~Thereafter~~operating ~~1,523,475~~loss ~~- 1,523,475 ----------- -------- ------------ Total minimum lease payments 2,302,725 95,257 2,397,982 Less: amount representing interest~~ (175,~~040,923~~000) (1089,~~662~~300) (196,~~051,585~~200) --------- -- -------- ------------ ~~Present value of net minimum lease payments~~ $ 125,~~261,802~~400 $ 84(41,~~595~~543) $ 150,~~346,397~~000 =========~~====~~ ========== ============

~~Warehouse~~A ~~and~~reconciliation ~~Vehicles~~of ~~and~~income ~~Year~~at ~~Office~~the ~~Space~~statutory ~~Equipment~~rate ~~Total~~to ~~----~~the Company's effective rate is as follows at June 30: 2002 2001 2000 ---------~~---~~ ---------~~---~~ --------- Federal statutory rate 34.00% 34.00% 34.00% Non deductible expenses 12.63 (2.53) 3.63 Basis difference in assets and liabilities 108.54 (25.42) 4.94 Capital loss and reversal of non deductible write down of real estate (21.41) - -- ~~2002~~Change $in ~~59,877~~deferred $tax ~~46,735~~asset $valuation ~~106,612~~allowance ~~2003~~and -net ~~34,725~~operating ~~34,725~~loss ~~2004~~(101.96) - ~~17,915~~(29.93) ~~17,915~~Discontinued ~~2005~~operations - ~~3,320~~(20.42) 3~~,320~~.73 ~~2006~~Other - ~~1,749~~- ~~1,749~~(0.82) ---------~~---~~ -------- ---------- ~~Total~~31.80% ~~minimum~~(14.37)% ~~payments~~15.55% ~~required $ 59,877 $ 104,444 $ 164,321~~ ========~~====~~ ========= ==========

~~2000~~Deferred ~~1999~~tax assets and liabilities are comprised of the following at June 30: 2002 2001 2000 --------- --- ------ --------- ~~Revenues~~Deferred Tax Assets Allowance for doubtful accounts $ 102,600 $ 13,~~495,000~~100 $ 1012,~~910~~300 Accrued compensation 30,~~000~~200 27,600 21,600 Inventory 19,900 19,100 11,300 Capital loss carryforward 18,800 - - Net ~~earnings~~operating $loss ~~397~~carryforward 15,000 $89,300 ~~141~~- Other 10,600 1,000 ~~Earnings~~46,800 ~~per~~---------- ~~share~~----------- $----------- ~~0.07~~Total $deferred ~~0.03~~tax assets 197,100 150,100 92,000 --------- --------- ----------

F-18 W W CAPITAL CORPORATION

~~The~~Notes ~~provision~~to ~~for~~Consolidated ~~income~~Financial ~~taxes~~Statements isJune as30, ~~follows~~2002 at===================================================================================================================== ~~June~~Note ~~30:~~10 - Income Taxes (continued) 2002 2001 2000 ~~1999~~ ----------- ----------- ---------- ~~Current~~Deferred ~~Federal~~Tax Liabilities: Depreciation of property and equipment $ 37(179,~~757~~900) $ ~~111~~(155,~~000~~100) $ 47(106,000) ~~State~~Insurance ~~19,000~~proceeds ~~18,200~~receivable 7(47,600) ~~Deferred~~- - ----------- ---------- ---------- Total deferred tax liabilities (9227,~~000~~500) 17(155,100) (106,000) ---------- ~~Tax~~---------- ~~benefit~~---------- ofDeferred taxes - net ~~operating~~$ ~~loss~~(30,400) $ (895,~~300~~000) $ (9614,~~200~~000) ========== ========== ========== Current deferred tax asset $ 149,500 $ 150,100 $ 92,000 Long-term deferred tax liability (54179,~~600~~900) (155,100) (106,000) ---------- ----------- ---------- $ (4130,~~543~~400) $ 50(5,000) $ --(14,000) ========== =========== ===========

The Company's net operating loss of $40,000 expires in 2021. The Company's capital loss carryover of $50,300 expires in 2003. Note 11 - Significant Group Concentrations of Credit Risk The Company's continuing business activity is in one industry segment, livestock handling equipment. The Company's livestock handling equipment customers are principally resellers and are primarily located in the Midwest, Tennessee and Georgia. At June 30, 2002, the Company's accounts receivable, net of allowance for doubtful accounts, totaled $1,729,161. The Company generally does not require collateral for routine open accounts receivable. During 2002, a single customer accounted for 11% of net sales. Note 12 - 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 2002 and 2001 due to the scheduled maturities and restrictive provisions of the debt. Note 13 - Contingencies Environmental. The Company's past and present operations include activities that are subject to federal and state environmental regulations. The Company has been notified by the Environmental Protection Agency that the flow coat paint system located in its Livingston, Tennessee plant is not in compliance with certain emission regulations. The Company has placed a $175,000 refundable deposit in a powder coat paint system with a total estimated cost of $400,000, including required plant renovations. The new paint system is expected to comply with federal and state regulations and to improve the quality of its products. F-19 W W CAPITAL CORPORATION Notes to Consolidated Financial Statements June 30, 2002 ================================================================================ Note 13 - Contingencies (continued) The Company has been issued a temporary paint permit which expired on December 31, 2001. The Company is negotiating with the Environmental Protection Agency for an extension of the permit. The accompanying financial statements do not include a provision for costs which may result from this contingency. It is reasonably possible this estimate may change in the near term, and the change may be material to the financial statements. Note 14 - Partially Self-Insured Health Insurance The Company is partially self-insured for losses and liabilities related to health insurance claims. Losses are accrued based upon the Company's estimates and experience. The plan includes a $30,000 stop-loss provision per month. The self-insurance liability of $60,000 at June 30, 2002 and $88,692 at June 30, 2001 is included in current liabilities in the consolidated balance sheets. Note 15 - Subsequent Events On July 2, 2002, the Company exercised an option to purchase the production facility in Duncan, Oklahoma, which it had been leasing. To finance the purchase, the Company borrowed $50,000 from the Duncan Area Economic Development Foundation which bears interest at 5% and is payable in monthly installments of $944, including principal and interest, through July 2007. Additionally, the Company borrowed $160,584 from a financial institution. The loan bears interest at 6% and is payable in monthly installments of $1,790, including principal and interest, through July 2012. Both of these notes are collateralized by the production facility. On October 24, 2002, the Company refinanced a certain term loan which resulted in additional borrowings of $184,447. The new term loan bears interest at 4% over the Bank's base rate and is payable in monthly principal installments of $6,250 plus interest through October 2004, at which time the remaining principal balance is due. The note is collateralized by equipment, inventory, intangibles and receivables. F-20 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, 2002 and 2001, and the related statements of operations, stockholders' equity and cash flows for each of the three years ended June 30, 2002, and have issued our report thereon dated October 21, 2002. 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 21, 2002 S-1 W W CAPITAL CORPORATION

~~2001~~Schedule ~~2000~~I ~~1999~~- Condensed Financial Information of Registrant Balance Sheets ===================================================================================== June 30 2002 2001 --------- -------- -------------------------------------------------------------------- ~~Federal~~ASSETS ~~statutory~~Current ~~rate~~Assets ~~34.00%~~Cash ~~34.00%~~$ ~~34.00%~~24,578 ~~Non~~$ ~~deductible~~98,423 ~~expenses~~Deferred ~~(2.53)~~income ~~3.63~~tax ~~9.14~~asset ~~Basis~~149,500 ~~difference~~150,100 inOther current assets ~~and~~28,023 ~~liabilities~~58,923 ~~(25.42)~~---------- ~~4.94~~---------- ~~22.98~~Total ~~Capital~~current ~~loss~~assets ~~and~~202,101 ~~reversal~~307,446 of---------- ~~non~~---------- ~~deductible~~Equipment ~~write~~Net ~~down~~of accumulated depreciation of ~~real~~$125,482 ~~estate~~in 2002 and $121,224 in 2001 5,539 7,211 -- -------- ---------- ~~Change~~Other inAssets ~~deferred~~Investment ~~tax~~in ~~asset~~wholly ~~valuation~~owned ~~allowance~~subsidiaries ~~and~~1,073,600 ~~net~~866,476 ~~operating~~Loan ~~loss~~acquisition --costs, ~~(29.93)~~net ~~(67.82)~~of ~~Discontinued~~accumulated ~~Operations~~amortization ~~(20.42)~~of $3~~.73~~,075 in 2002 37,925 -- Other --assets ~~(0.82)~~2,312 ~~1.70~~2,312 ---------- ---------- Total other assets 1,113,837 868,788 ---------- ~~(14.37)% 15.55%~~ ---------- %Total assets $1,321,477 $1,183,445 ======== == ===== =====~~===~~

S-2 W W CAPITAL CORPORATION

~~Deferred~~Schedule ~~tax~~I ~~assets~~- ~~and~~Condensed ~~liabilities~~Financial ~~are~~Information ~~comprised~~ of ~~the~~Registrant ~~following~~Balance atSheets (continued) =============================================================================================== June 30: 2002 2001 ~~2000 1999~~ --------- --------- ----------------------------------------------------------------------------- ~~Deferred~~LIABILITIES ~~Tax~~AND ~~Assets:~~STOCKHOLDERS' ~~Net~~EQUITY ~~operating~~(DEFICIT) ~~loss~~Current ~~carryforward~~Liabilities $Accounts ~~89,300~~payable $ -- $ ~~104~~6,~~100~~983 ~~Allowance~~Accounts ~~for~~payable, ~~doubtful~~subsidiaries ~~accounts 13~~69,~~100~~561 12168,~~300~~664 ~~7,500~~Accrued ~~Inventory~~expenses 1954,~~100~~885 11152,~~300~~012 ~~12,400~~Current ~~Accrued~~portion ~~salaries~~of ~~27,600~~notes ~~21,600~~payable 1963,000 ~~Other~~-- ~~1,000~~----------- ~~46,800 2,900~~ ----------- Total current liabilities 187,446 327,659 ----------- ----------- ~~Total~~Long-Term ~~deferred~~Liabilities ~~tax~~Long-term ~~assets~~notes ~~150~~payable,~~100~~ 92net of current portion 948,~~000~~981 ~~143~~750,000 Deferred ~~Tax~~income ~~Liabilities:~~tax ~~Depreciation~~liability of179,900 ~~property and equipment (~~155,100) ~~(106,000) (116,500) Other~~ ----------- ----------- ~~(9,800)~~Net ~~Valuation~~long-term ~~allowance~~liabilities 1,128,881 905,100 -- --------- ~~(16,700)~~ ----------- Total liabilities 1,316,327 1,232,759 ----------- ----------- ~~Deferred~~Stockholders' ~~taxes~~Equity -(Deficit) ~~net~~Preferred stock, $10.00 (5par value, 400,000) shares authorized -- -- Common stock, $0.01 ~~(14~~par value, 15,000),000 $shares --authorized, ~~=========~~5,553,827 ~~=========~~shares ~~=========~~issued ~~Current~~in ~~deferred~~2002 ~~tax~~and ~~asset~~2001 $55,538 ~~150~~55,~~100~~538 $Capital 92in excess of par value 3,~~000~~305,533 $3,305,533 Accumulated deficit (476,806) (531,270) ----------- ~~Long~~-~~term~~---------- ~~deferred~~2,884,265 ~~tax~~2,829,801 ~~liability~~Less 3,545,663 shares of treasury stock, at cost at June 30, 2002 and 2001 (~~155~~2,~~100~~879,115) (~~106~~2,~~000~~879,115) ----------- ----------- Net stockholders equity (deficit) 5,150 (49,314) ----------- ----------- $Total liabilities and stockholders' equity (~~5,000~~deficit) $ ~~(14~~1,~~000)~~321,477 $ --1,183,445 ========= == ======= ====~~=====~~

S-3 W W CAPITAL CORPORATION

Schedule I - Condensed Financial Information of Registrant ~~Balance~~Statements ~~Sheets~~of Operations ============================================================================================== Years ended June 30 2002 2001 2000 ---------------------------------------------------------------------------------------------- ~~ASSETS~~Revenues ~~Current~~Management ~~Assets~~fee ~~Cash~~from subsidiaries $ 98396,~~423~~000 $ 54336,~~077~~000 ~~Accounts~~$ ~~receivable~~219,000 ~~subsidiaries~~Operating --Expenses ~~43,776~~General ~~Deferred~~and ~~income~~administrative ~~tax asset 150~~444,~~100~~927 ~~-- Other current assets 58~~397,~~923~~511 6263,~~812~~365 ----------- ----------- ~~Total current assets 307,446 104,665~~ ----------- ~~-----------~~Operating ~~Equipment,~~loss ~~net of accumulated depreciation of $121~~(48,~~224~~927) ~~in 2001 and $114~~(61,~~726~~511) ~~in 2000 7~~(44,~~211~~365) ~~12,143~~ --------- -- ------- --------- Other ~~Assets~~Income ~~Investment~~(Expense) inInterest ~~wholly~~income ~~owned~~-- ~~subsidiaries 866,476~~ 1,~~058,869~~659 ~~Investment~~63 inInterest ~~discontinued~~expense ~~operation~~(89,995) ~~-- 1~~(48,~~854,098~~969) ~~Other~~(170) ~~assets~~Realized ~~2,312~~loss ~~2,312~~on ~~-----------~~asset ~~-----------~~sales ~~Total~~and ~~other~~real ~~assets~~estate ~~868,788~~held ~~2,915,279~~for sale -~~----------~~ --~~---------~~ ~~Total~~(1,856) ~~assets~~Other $income 111,~~183,445~~663 $539 32,~~032,087~~234 ~~===========~~Equity ~~===========~~in ~~LIABILITIES~~earnings ~~AND~~(loss) ~~STOCKHOLDERS'~~of ~~EQUITY~~continuing ~~Current~~subsidiaries ~~Liabilities~~before ~~Accounts~~income ~~payable~~taxes ~~$ 6~~207,~~983~~123 ~~$ -- Accounts payable~~(192,393) ~~subsidiaries 168~~315,~~664~~694 -- ~~Accrued expenses 152,012 78,092~~ -------~~----~~ ----------- ~~Total current liabilities 327,659 78,092~~ ----------- ~~-----------~~Earnings ~~Long-Term~~(Loss) ~~Liabilities~~From ~~Long-term~~Continuing ~~notes~~Operations ~~payable~~Before ~~750~~Income Taxes 79,~~000~~864 --(300,675) ~~Deferred~~271,600 ~~income~~Income ~~tax~~Tax ~~liability~~Benefit ~~155~~(Expenses) From Continuing Operations (25,~~100~~400) --53,220 --~~---------~~ ----------- ~~Total long~~-~~term liabilities 905,100~~ -- ------~~-----~~ ----------- ~~Total~~Earnings ~~liabilities~~(loss) 1from continuing operations 54,~~232~~464 (247,~~759~~455) 78271,~~092~~600 --------- -- ------- --------- ~~Stockholders'~~Discontinued ~~Equity~~Operations ~~Preferred~~Earnings ~~stock,~~from ~~$10.00~~operations ~~par~~of ~~value,~~Titan ~~400,000~~Industries ~~shares~~disposed ~~authorized~~of --(net --of ~~Common~~income ~~stock,~~taxes ~~$0.01~~of ~~par value~~$59, ~~15,~~000~~,000~~ ~~shares authorized, 5,553,827 shares issued and outstanding~~ at June 30, 2001 and 5$12,~~540,661~~000 at June 30, 2000) 55-- 88,~~538~~219 5567,~~406~~177 ~~Capital~~Loss inon ~~excess~~disposal of ~~par~~Titan ~~value~~Industries ~~3,305,533~~-- ~~3,304,629 Retained earnings~~ (~~deficit) (531~~14,~~270~~900) ~~(357,134)~~ -- --------- --------- --------- ~~2,829,801~~Earnings ~~3,002,901 Less 3,545,663 shares~~ of ~~treasury~~discontinued ~~stock,~~operations at-- ~~cost at June 30~~73,319 ~~2001 and 120~~67,~~264~~177 ~~at June 30, 2000 (2,879,115) (48,906)~~ ----------- ----------- ~~Total stockholders equity (49,314) 2,953,995~~ ----------- ~~-----------~~Net ~~Total~~earnings ~~liabilities~~(loss) ~~and~~$ ~~stockholders'~~54,464 ~~equity~~ $ 1(174,~~183,445~~136) $ 3338,~~032,087~~777 ========= == ======= =========

S-4 W W CAPITAL CORPORATION

Schedule I - Condensed Financial Information of Registrant ~~Statements~~Statement of ~~Operations~~Cash Flows ==================================================================================================== Years ended June 30 2002 2001 2000 ~~1999~~ ---------------------------------------------------------------------------------------------------- ~~Revenues~~Net ~~Management~~Cash ~~fee~~Flows ~~from~~Provided ~~subsidiaries~~(Used) $by ~~336,000~~Operating $Activities ~~219~~$(292,~~000~~239) $ ~~192~~209,~~000~~976 ~~Operating~~$ ~~Expenses General and administrative 397~~52,~~511~~415 ~~263,365 261,535~~ --------- --------- --------- ~~Operating~~Cash ~~loss~~Flows From Investing Activities Purchase of equipment (612,~~511~~587) (441,~~365~~566) (693,~~535~~438) ~~Other~~--------- ~~Income~~--------- ~~(Expense)~~--------- ~~Interest~~Net ~~income~~cash ~~1,659~~used 63by ~~7,085~~investing ~~Interest~~activities ~~expense~~ (482,~~969~~587) (~~170~~1,566) (473,438) ~~Realized~~--------- ~~loss~~--------- on--------- ~~asset~~Cash ~~sales~~Flows ~~and~~From ~~real~~Financing ~~estate~~Activities ~~held~~Borrowings ~~for~~on ~~sale~~notes payable 261,981 -- -- Payments of loan acquisition costs (141,~~856~~000) -- ~~Other~~-- ~~income~~Proceeds ~~539~~from ~~2,234~~the ~~3,872~~exercise ~~Equity~~of instock ~~earnings~~options ~~(loss)~~-- of1,036 ~~continuing~~-- ~~subsidiary~~Repurchase ~~before~~of ~~income~~common ~~taxes~~stock -- (~~192~~165,~~393~~100) ~~315,694~~-- ~~105,550~~ --------- --------- --------- ~~Earnings~~Net cash provided (~~Loss~~used) ~~From~~by ~~Continuing~~financing ~~Operations~~activities ~~Before~~220,981 ~~Income Taxes~~ (~~300~~164,~~675~~064) ~~271,600 46,925 Income Tax Benefit From Continuing Operations 53,220~~ -- -- --------- --------- --------- Net ~~earnings~~Increase (~~loss~~Decrease) ~~from~~in ~~continuing~~Cash ~~operations~~ (~~247~~73,~~455~~845) ~~271~~44,~~600~~346 4648,~~925~~977 Cash, Beginning of Year 98,423 54,077 5,100 --------- --------- --------- ~~Discontinued~~Cash, ~~Operations~~End ~~Earnings~~of ~~from~~Year ~~operations~~$ of24,578 ~~Titan~~$ ~~Industries~~98,423 ~~disposed~~$ of54,077 ~~(net~~========= of========= ~~income~~========= ~~taxes~~Supplemental Disclosure of ~~$59,000~~Cash atFlow ~~June~~Information ~~30,~~Cash ~~2001~~paid ~~and~~during ~~$12,000~~the atyear ~~June~~for 30interest $ 75,216 ~~2000)~~$ 881,219 ~~67,177~~$ ~~57,883~~170 ~~Loss~~========= on========= ~~disposal~~========= Installment loans used for the repurchase of ~~Titan~~common ~~Industries~~stock ~~(14,900)~~$ -- --$ ~~---------~~750,000 ~~---------~~$ --~~-------~~ ~~Net~~========= ~~earnings~~========= of========= ~~discontinued~~Treasury ~~operations~~stock ~~73,319~~acquired ~~67,177~~in ~~57,883~~sale ~~---------~~of ~~---------~~property $ --~~-------~~ ~~Net earnings (loss)~~ $~~(174,136)~~ ~~$ 338~~17,~~777~~500 $ ~~104,808~~-- ========= ========= =========

S-5 W W CAPITAL CORPORATION Schedule I - Condensed Financial Information of Registrant Notes June 30, 2002 ================================================================================ Note 1 - Related Party Transactions 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 at June 30:

~~Schedule~~2002 ~~I - Condensed Financial Information of Registrant Statement of Cash Flows ===================================================================================================== Years ended June 30~~ 2001 2000 ~~1999~~ ---------~~--------------------------------------------------------------------------------------------~~ ~~Net Cash Flows Provided (Used) by Operating Activities $ 209,976 $ 52,415 $(116,796)~~ --------- --------- ~~---------~~Amounts ~~Cash Flows From Investing Activities Proceeds from notes~~ receivable ~~collections -- -- 110,000 Purchase of equipment~~ (~~1,566~~payable): ~~(3,438) (599)~~ W-~~--------~~W ~~---------~~Manufacturing ~~---------~~Co. ~~Net~~Inc. ~~cash~~$ ~~provided~~ (~~used) by investing activities (1~~69,~~566~~561) $(3168,~~438~~664) ~~109~~$332,~~401~~657 ~~---------~~Discontinued ~~---------~~operation -~~--------~~ ~~Cash Flows From Financing Activities Proceeds from the exercise of stock options 1,036~~ -- ~~-- Repurchase of common stock~~ (~~165~~288,~~100~~881) -- -- -----~~----~~ --------- --------- ~~Net~~$ ~~cash used by financing activities~~ (~~164~~69,~~064~~561) ~~-- -- --------- --------- --------- Net Increase~~ $(~~Decrease) in Cash 44~~168,~~346 48,977 (7,395~~664) ~~Cash, Beginning of year 54,077 5,100 12,495 --------- --------- --------- Cash, End of Year~~ $ 9843,~~423~~776 ~~$ 54,077 $ 5,100~~ ========= ========= ========= ~~Supplemental~~Management ~~Disclosure~~fee ofincome ~~Cash~~from ~~Flow~~continuing ~~Information~~operations: ~~Cash~~W-W ~~paid~~Manufacturing ~~during~~Co. ~~the~~Inc. ~~year for interest~~ $ 1396,~~219~~000 $ ~~170~~336,000 $219,000 47 ========= ========= ========= ~~Installment~~Equity ~~loans~~(loss) ~~used~~from ~~for~~continuing ~~the~~subsidiary ~~repurchase~~operations: ~~of common stock $ 750,000 $~~ W--W $Manufacturing --Co. ~~=========~~Inc. ~~========= ========= Treasury stock acquired in sale of property~~ $ 17207,~~500~~123 $(192,393) -- $315,694 -- ========= ========= =========

S-6 W W CAPITAL CORPORATION Schedule II - Valuation and Qualifying Accounts Years ended June 30, 2002 ================================================================================

~~2001~~Additions ~~2000 1999~~ ---------- --------- -------------- ~~Amounts~~Balance ~~receivable~~at ~~(payable):~~Charged ~~W-W~~to ~~Manufacturing~~Charged ~~Co.~~Balance ~~Inc.~~Beginning ~~$(168,664)~~Costs $and ~~332,657~~to $Other ~~381,689~~at ~~Discontinued~~End ~~operation~~of --Description ~~(288,881)~~of ~~(290,973)~~Period Expenses Accounts Deductions Period --------------------------------- ---------- ----------- ~~$(168,664)~~-------- $---------- ~~43,776~~------------ $June 9030,~~716~~ ~~=========~~2002 ~~=========~~Allowance ~~=========~~for ~~Management~~doubtful ~~fee~~accounts: ~~income~~Accounts ~~from~~receivable ~~continuing~~$ ~~operations:~~35,000 ~~W-W~~$ ~~Manufacturing~~306,328 ~~Co.~~$ ~~Inc.~~-- $ ~~336~~66,~~000~~328 $ ~~219~~275,000 $June ~~192~~30,~~000~~ ~~=========~~2001 ~~=========~~Allowance ~~=========~~for ~~Equity~~doubtful ~~(loss)~~accounts: ~~from~~Accounts ~~continuing~~receivable ~~subsidiary~~38,000 ~~operations:~~28,212 W-W- ~~Manufacturing~~31,212 ~~Co.~~35,000 ~~Inc.~~June ~~$(192~~30,~~393)~~ $2000 ~~315,694~~Allowance $for ~~105~~doubtful accounts: Accounts receivable 20,~~550~~000 ~~=========~~193,090 ~~=========~~-- ~~=========~~175,090 38,000

S-7 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. ------- --------------------------------------------------------------- Not Applicable 19 PART III Part III, Items 10, 11, 12 and 13, are incorporated herein by reference from the Registrant's definitive proxy statement relating to its Annual Meeting of Shareholders which will be filed in an amendment within 120 days of June 30, 2002. 20 PART IV 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, 2002 and June 30, 2001. Consolidated Statements of Operations for the years ended June 30, 2002, 2001, and 2000. Consolidated Statements of Stockholders' Equity for the years ended June 30, 2002, 2001, and 2000. Consolidated Statements of Cash Flows for the years ended June 30, 2002, 2001, and 2000. (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 ------ -------- 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). 3.2 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). 3.3 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 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). 10.2 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). 10.3 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. 10.4 Stock Transfer and Exchange Agreement between the Registrant, Titan Industries, Inc. and others (filed as Appendix I to the Registrant's definitive Proxy Statement filed in conjunction with the Registrant's Annual Meeting of Shareholders held January 5, 2001). 10.5 Loan Agreement dated January 5, 2001 between the Registrant and West-OK Investment, LLC (attached hereto). 21 10.6 Promissory Note dated September 20, 2001 given by the Registrant to West-OK Investment, LLC (attached hereto). 21.0 Subsidiaries of the Registrant (attached hereto). 99.0 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached hereto). Item 14 (b) ----------- No reports on Form 8-K were filed during the fourth quarter of the fiscal year covered by this report. 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. W W CAPITAL CORPORATION (Registrant) Dated: November 15, 2002 By: /s/ Steve D. Zamzow -------------------------------- Steve D. Zamzow, President, CEO and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Dated: November 15, 2002 By: /s/ Steve D. Zamzow -------------------------------- Steve D. Zamzow, President, CEO and Director Dated: November 15, 2002 By: /s/ Harold Gleason -------------------------------- Harold Gleason, Chairman Dated: November 15, 2002 By: /s/ L.M. "Mick" McCarty -------------------------------- L.M. "Mick" McCarty, Secretary, Treasurer and Director Dated: November 15, 2002 By: /s/ Millard T. Webster -------------------------------- Millard T. Webster, Director Dated: November 15, 2002 By: /s/ A. Randall Kourt -------------------------------- A. Randall Kourt, Director I, Steve D. Zamzow, certify that: 1. I have reviewed this annual report on Form 10-K of W W Capital Corporation; 2. Based on my knowledge, this annual 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 annual report; 3: Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report; Dated: November 15, 2002 By: /s/ Steve D. Zamzow -------------------------------- Steve D. Zamzow, President and CEO 23 Exhibit 10.5 LOAN AGREEMENT DATED JANUARY 5, 2001 BETWEEN THE REGISTRANT AND WEST-OK INVESTMENT, LLC. LOAN AGREEMENT WEST-OK INVESTMENT, LLC and W.W. CAPITAL CORPORATION Dated as of January 5, 2001 LOAN AGREEMENT THIS LOAN AGREEMENT, effective as of January 5, 2001, is between WEST-OK INTESTMENT, LLC, an Oklahoma limited liability company (the "Lender") and W.W. CAPITAL CORPORATION, a Nevada corporation (the "Company"). RECITALS Lender and the Company acknowledge the following: A. The Company and certain existing Company shareholders (the "Exchanging Shareholders") have entered into an agreement (the "Split-Off Agreement") under which the Exchanging Shareholders will exchange their ownership interest in the Company consisting of approximately 3,390,399 shares of the Company's common stock together with options exercisable to acquire an additional 129,934 shares of the Company's common stock, for one hundred percent (100%) of the issued and outstanding shares of the Company's wholly-owned subsidiary, Titan Industries, Inc., a Nebraska corporation ("Titan") and other consideration (the "Split-Off"). B. Subject to the terms and conditions of the Agreement, the Company has agreed to contribute the sum of $850,000 to the capital of Titan prior to consummation of the Split-Off, which sum is being contributed to Titan to equalize the value of the consideration being exchanged in the Split-Off. C. In order for the Company to meet its obligations under the Agreement, the Company has requested, and the Lender has agreed, to loan the Company the Loan Proceeds (defined below) subject to the terms and conditions of this Loan Agreement. D. The Company will execute and deliver to the Lender this Loan Agreement together with the Promissory Note (defined below), which Promissory Note shall be secured by a pledge of 2,448,000 of the Exchanging Shareholders' Shares (as hereafter defined), and certain assets of the Company and/or its Subsidiaries. AGREEMENTS In consideration of the recitals and the promises and agreements contained herein, the Lender and the Company agree as follows: 1. Definitions As used in this Agreement, the following terms shall have the following meanings: 1.1 "Closing Date" means the date on which the Split-Off closes. 1.2 "Debt" means all liabilities, obligations and indebtedness of the Company to any Person, of any kind or nature, now or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct, contingent, fixed or otherwise, and includes capitalized leases. 2 1.3 "Event of Default" means the occurrence of any of the events described in section 9.1. 1.4 "Exchanging Shareholders' Shares means the 3,390,399 shares of Company common stock received by the Company from the Exchanging Shareholders under the terms of the Agreement, 2,448,000 of which will be pledged by the Company to secure repayment of the Promissory Note. 1.5 "GAAP" means generally accepted accounting principles in effect in the United States from time to time applicable to entities such as the Company. 1.6 "Lender Security Documents" means the documents described in Section 4 and any other document, instrument or agreement furnished by the Company to the Lender, which provides collateral for the obligations of the Company under the Loan Documents. 1.7 "Loan Documents" means this Agreement, the Promissory Note, the Lender Security Documents and all other documents, instruments, agreements and certificates related to or executed in connection with this Agreement and the transactions contemplated hereby. 1.8 "Loan Proceeds" means the sum of $1,000,000 to be loaned by the Lender to the Company. 1.9 "Obligations" means all indebtedness and other obligations of the Company to the Lender now existing or hereafter arising under this Agreement or the Lender Security Documents or any other Loan Documents, including without limitation any obligations to repay the Loan Proceeds to the Lender in accordance with the terms of the Promissory Note. 1.10 "Person" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, or any other entity. 1.11 "Promissory Note" means the Promissory Note of the Company in the form of Exhibit A attached hereto and incorporated herein by this reference. 1.12 "Subsidiary" means, as of a particular date, any limited liability company more than 50 percent of whose membership interest shall at the time be owned or controlled by the Company or by one of its Subsidiaries or any corporation more than 50 percent of whose outstanding stock having ordinary voting power for the election of directors shall at the time be owned or controlled by the Company or by one of its Subsidiaries. "Subsidiary" does not include Titan. 2. Loan; Promissory Note; Interest; Default. 2.1 Loan. The Lender agrees that concurrently with the closing of the Split-Off, on the terms and subject to the conditions hereinafter set forth, and upon receipt of the Loan 3 Documents fully executed by the Company, it shall deliver the Loan Proceeds to the Company on the Closing Date. 2.2 Promissory Note. The Loan shall be evidenced by the Promissory Note, duly executed by the Company, the original principal amount of which shall be equal to the Loan Proceeds. The Promissory Note shall mature, if not sooner paid, ten years from the Closing Date, and be subject to prepayment as provided in Section 3 below. 2.3 Interest. The Promissory Note shall bear interest from January 5, 2001 to maturity on the unpaid principal balance thereof at a rate of 3 percentage points above the prime lending rate of Gold Bank (currently 9.5%) per annum. After maturity (whether by acceleration or otherwise) interest shall accrue on the unpaid principal balance at the rate of eighteen percent (18%) per annum. Interest shall be calculated on the basis of a 365-day year. 2.4 Default. Upon the occurrence of an Event of Default, the Company agrees to pay to the Lender, immediately upon its demand after the occurrence of an Event of Default, the full amount then due and owing under the Promissory Note, including, but not limited to, the unpaid principal balance of the Promissory Note, together will all accrued but unpaid interest thereon. 3. Prepayments. The Company may from time-to-time, by giving the Lender not less than 10 days' prior written notice, prepay the Promissory Note in part or at any time in whole. Any such prepayment may be made without premium or penalty. If notice of prepayment is given under this Section 3, the amount specified therein to be paid shall be due and payable on the date specified therein for such prepayment, together with accrued interest to such date. No prepayment of less than the entire unpaid principal amount of the Promissory Note shall relieve the Company to any extent from its obligation to comply with all unsatisfied terms and conditions of the Loan Documents. 4. Security. As security for the full and timely payment of the principal of and interest on the Promissory Note and all other of the Company's existing or future indebtedness or Obligations to the Lender: 4.1 Stock Pledge. In consideration of the indebtedness of the Company to the Lender, the Company shall grant a security interest to the Lender in the following treasury shares of the common stock of the Company, as evidenced by instruments of the following description: Certificate Shares of Name Number Capital Stock ---- ------ ------------- W.W. Capital Corporation 4109 2,448,000 duly endorsed in blank, which shares shall be delivered to the Lender. The Lender shall hold the pledged shares as collateral security for the repayment of the indebtedness to the Company in the principal sum of the Loan Proceeds, together with interest thereon and any other sums that may become due and owing as evidenced by the Promissory Note. The Lender shall hold the pledged shares as security and shall not encumber or dispose of said shares except in accordance with the 4 provisions of the Stock Pledge Agreement attached hereto as Exhibit B and incorporated herein by this reference. 4.1.1 No Dividends. During the term of the pledge, and for so long as the Promissory Note is not in default, the Lender shall not have any right, title or interest in or to any dividends or other amounts paid by the Company to the holders of its capital stock. 4.1.2 No Voting Rights. During the term of the pledge, and so long as the Promissory Note is not in default and the Company is not in default in the performance of any of the terms of this Loan Agreement, whether same may exist now or arise in the future, the Lender shall not have the right to vote the pledged shares on any corporate questions. 4.1.3 Adjustments. In the event that, during the term of the pledge, any share reclassification, readjustment, or other change is declared or made in the capital structure of the Company, all new or substituted shares or other securities, issued by reason of any such change, shall be delivered to the Lender in substitution of the shares referenced above and thereafter held by the Lender under the terms of the Stock Pledge Agreement in the same manner as the shares originally pledged thereunder. 4.2 UCC-1 Financing Statement. As additional consideration for the indebtedness of the Company to the Lender, the Company and/or certain of its Subsidiaries shall execute and deliver to the Lender a UCC-1 Financing Statement in the form of Exhibit C attached hereto pursuant to which the Company and/or certain of its Subsidiaries will grant a security interest to the Lender in those assets of the Company and/or certain of its Subsidiaries specifically defined on Exhibit C which shall include certain accounts, accounts receivable, fixtures, proceeds, equipment, machinery, contract rights, inventory or products of the Company and/or certain of its Subsidiaries. 5. Representations and Warranties. In order to induce the Lender to enter into this Loan Agreement and to cause the Lender to loan the Loan Proceeds to the Company, the Company represents and warrants to the Lender: 5.1 Organization; Subsidiaries; Power. The Company is a corporation validly existing and in good standing under the laws of the State of Nevada and in every other jurisdiction in which the nature of its business or the ownership of its properties requires such qualification and in which the failure to so qualify would materially adversely affect the business operations or financial condition of the Company. The Company has the proper authority and power to own its properties and carry on its business as currently being conducted. 5.2 Authorization and Binding Effect. The execution and delivery of the Loan Documents to which it is a party, and the performance by the Company of its obligations thereunder, are within its power, have been duly authorized by proper action on the part of the Company, are not in violation of any existing law, rule or regulation of any governmental agency or authority, any order or, decision of any court, the Articles of Incorporation of the Company or the terms of any material agreement, restriction or undertaking to which the Company is a party or by which it is bound, and do not require the approval or consent of any governmental body, agency or authority or 5 any other person or entity, or, to the extent approval is required, such approval has been obtained. The Loan Documents to which the Company is a party, when executed and delivered, will constitute the valid and binding obligations of the Company enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or similar laws of general application affecting the enforcement of creditors' rights and except to the extent that general principles of equity might restrict the specific enforcement of such Loan Documents. 5.3 Litigation. Except as disclosed in writing to the Lender, there is no litigation or administrative proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or the properties of the Company that if decided or resolved adversely to the Company or its properties would have a material adverse effect on the Company or its properties taken as a whole. 5.4 No Default. There exists no material default nor has any act or omission occurred which, with the giving of notice or the passage of time, would constitute a material default under the provisions of any instrument evidencing material indebtedness for borrowed money incurred or assumed by the Company or any material agreement relating thereto or any other material agreement or instrument to which the Company is a party as of the date of this Agreement. 5.5 Ownership of Pledged Securities; Liens. On the Closing Date the Company will acquire the Exchanging Shareholders' Shares free and clear of any liens, security interests, or pledges (other than the pledge granted pursuant to the Stock Pledge Agreement hereunder) or other encumbrances. The Company has not entered into or granted any mortgages, agreements, or permitted the filing or attachment of any security interests, liens or encumbrances on or affecting the Exchanging Shareholders' Shares pledged by the Company to secure repayment of the Promissory Note that would be prior or that may in any way be superior to the Lender's security interests and rights in and to such Exchanging Shareholders' Shares granted to the Lender except as permitted in this Loan Agreement or as disclosed in writing to the Lender. 5.6 Ownership of Pledged Assets; Liens. Subject to those security interests granted by the Company and in existence as of the Closing Date, including, but not limited to, the security interest of Wells Fargo Fort Collins, NA, each of which is listed on Exhibit D hereto, the Company and/or certain of its Subsidiaries has or will have acquired good and marketable title to the assets described on Exhibit C and pledged as additional collateral to secure repayment of the Promissory Note. Neither the Company nor its Subsidiaries have entered into or granted any mortgages, agreements, or permitted the filing or attachment of any security interests, liens or encumbrances on or affecting said assets that would be prior or that may in any way be superior to the Lender's security interests and rights in and to such assets except as permitted in this Loan Agreement or as disclosed in writing to the Lender. 5.7 Tax Returns Filed. The Company has filed when due all federal and state income and other tax returns, which are required to be filed. The Company has paid or made provision for all taxes shown on said returns and on all assessments received by it to the extent that such taxes have become due except any such taxes which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been 6 established. The Company has no knowledge of any liabilities which may be asserted against it upon audit of its federal or state tax returns, except that the Tennessee Secretary of State has issued a Notice of Determination relating to Eagle Enterprises, Inc., pursuant to which the Tennessee Secretary of State's office has determined that grounds for corporate dissolution and/or the revocation of Eagle's authority to do business in Tennessee exist. 5.8 Accuracy of Information. All information furnished by the Company to the Lender is true, correct and complete in all material respects as of the date furnished and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make such information not misleading as of such date. 6. Conditions for Funding. The Lender's obligation to deliver the Loan Proceeds to the Company is subject to the Lender's receipt of the following documents and the satisfaction of the following conditions (in a form or manner acceptable to the Lender in its reasonable discretion): 6.1 Lender Security Documents. (a) A Stock Pledge Agreement in the form of Exhibit B granting the Lender a first priority security interest in the Company's right, title and interest in and to 2,448,000 of the Exchanging Shareholders' Shares, duly executed by the Company; and (b) UCC-1 Financing Statement in the form of Exhibit C granting the Lender a security interest in certain assets of the Company and/or certain of its Subsidiaries, duly executed by the proper corporate entity; and (c) such other documents or agreements as the Lender may reasonably request. 6.2 Promissory Note. The Promissory Note, duly executed by the Company. 6.3 Certified Articles of Incorporation. A copy of the Articles of Incorporation of the Company, certified as of a recent date by the Secretary of State of Nevada. 6.4 Good Standing Certificates. A certificate of good standing with respect to the Company, issued as of a recent date by the Secretary of State of Nevada. 6.5 Closing Certificate of Company. A copy, certified by an executive officer of the Company to be true and correct and in full force and effect on the Closing Date, of (i) the By-laws of the Company; (ii) proper authorizations of the Company authorizing the issuance, execution and delivery of the Loan Documents to which the Company is a party; and (iii) a statement containing the names of the officer or officers of the Company authorized to sign such Loan Documents, together with the signatures of such officer or officers. 6.6 No Default Certificate. The representations and warranties contained in section 5 hereof and in the other Loan Documents shall be true and correct in all material respects on 7 and as of the Closing Date; there shall exist on the Closing Date no Event of Default, and the Lender shall have received a certificate to those effects, signed by an executive officer of the Company. 6.7 Other Documents. Such other documents, instruments and agreements as the Lender may reasonably require. 6.8 Split-Off Agreement Closing. The Company shall have entered into the Split-Off Agreement with the Exchanging Shareholder and, simultaneously with the delivery of the Loan Proceeds to the Company, the transactions contemplated by and under the Split-Off Agreement shall be consummated. 6.9 Proceedings Satisfactory. All proceedings taken in connection with the transactions contemplated by the Split-Off Agreement, this Loan Agreement, and all instruments, authorizations and other documents applicable thereto, shall be satisfactory to the Lender. All such proceedings and all instruments, authorizations and other documents applicable thereto, shall be deemed to be satisfactory to the Lender unless the Lender, on or before September, 20, 2000, provides the Company with written notice of its objection setting forth the objection, and the action required to remedy the objection. 7. Affirmative Covenants. The Company agrees that it will, while the Promissory Note is outstanding or any of the Obligations remain unpaid: 7.1 Annual Financial Information. Furnish to the Lender within 150 days after the end of each fiscal year of the Company, a statement of financial position of the Company as of the close of such fiscal year and related statements of activities and cash flows for such year, setting forth in each case in comparative form corresponding figures from the preceding annual financial statements, all in reasonable detail and satisfactory in scope to the Lender, prepared in accordance with GAAP applied on a consistent basis, examined and certified by independent public accountants selected by the Company, whose opinion as to such financial statements shall be unqualified in scope and substance, and, if requested by the Lender, certified by an executive officer of the Company. If requested by Lender in writing, each such annual statement shall be accompanied by a written statement from such executive officer certifying that there exists no Default or Event of Default or, if any Default or Event of Default exists, specifying the nature thereof, the period of existence thereof and what action the Company proposes to take with respect thereto. 7.2 Interim Financial Statements. Furnish to the Lender within 60 days after the end of each of the first three quarters of each fiscal year of the Company a statement of financial position of the Company as of the end of each such period and related statements of activities and cash flows for the period from the beginning of the fiscal year to the end of such quarter which are correct, complete and fairly present the financial condition of the Company, certified, subject to normal year-end adjustments, by an executive officer of the Company and accompanied by the certificate of such executive officer to the effect that there exists no Event of Default or, if any Default or Event of Default exists, specifying the nature thereof, the period of existence thereof and what action the Company proposes to take with respect thereto. 8 7.3 Books and Records. Keep proper, complete and accurate books of record and account and permit any representatives of the Lender to examine any of the books and records of the Company at any reasonable time upon five business day's prior notice and as often as may reasonably be desired. 7.4 Compliance with Law. Do all things necessary to (a) maintain its existence in good standing in its state of incorporation, (b) preserve and keep in full force and effect all material licenses, rights and franchises necessary to continue its business and (c) comply with all applicable laws, rules, regulations, ordinances in all material respects, and comply with all writs, judgments, injunctions, decrees and awards to which it may be subject, except those being contested in good faith and involving no possibility of criminal liability. 7.5 Compliance with Other Loan Documents. Timely comply with all of its Obligations under the Loan Documents. Compliance shall be considered timely if it occurs within any applicable grace period set forth in the Loan Documents. 7.6 Notice of Event of Default or Claimed Default. Furnish to the Lender (a) immediately upon becoming aware of any Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; (b) immediately upon becoming aware that the holder of any indebtedness issued or assumed by the Company, or the lessor under any lease as to which the Company is the lessee, has given notice or has taken any action with respect to a claimed default thereunder, or under any agreement under which any such indebtedness was issued or secured, a written notice specifying the notice given or action taken, the nature of the claimed default and what action the Company is taking or proposes to take with respect thereto; (c) written notice of a material adverse change in the financial condition of the Company, as soon as the Company becomes aware of such condition or event. 7.7 Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to the Lender of any change in executive and management personnel; and conduct its business affairs in a reasonable and prudent manner. 7.8 Board of Directors. For so long as all or any portion of the Promissory Note remains unpaid, the Company's Board of Directors shall have five members, two (2) of whom shall be designated by the Lender. To this end, on the Closing Date, the Lender shall submit to the Company the names of two nominees for appointment to the Company's Board of Directors ("Lender's Nominees"), each of whom shall be appointed to the Company's Board of Directors to fill vacancies created by the resignation of two (2) previous directors. Lender's Nominees shall serve as members of the Company's Board of Directors until the next annual meeting of the Company's shareholders and until their successors are duly elected and qualified. Lender's Nominees shall owe fiduciary obligations to the Company and its shareholders and shall discharge their fiduciary obligations to the best of their abilities, and shall not unreasonably prevent the Company from obtaining financing or otherwise entering into one or more agreements to raise 9 additional capital for the Company, all or a portion of which may be used by the Company to retire the Company's obligations under the Promissory Note and other Loan documents. 7.9 Litigation. Notify the Lender of any litigation in which the Company or its assets are involved, where the Company's liability is asserted to be, or may be, in the judgment of the Company, in excess of $50,000. 8. Negative Covenants. The Company covenants that, without the prior written consent of the Lender, it will not while the Promissory Note is outstanding or while any of the Obligations remain unpaid: 8.1 Limitations on Liens and Encumbrances. Create, assume or permit to exist any mortgage, security interest, lien or charge of any kind upon the Exchanging Shareholders' Shares pledged to Lender other than the lien and security interest arising under the Stock Pledge Agreement hereunder. 8.2 Continuity of Operations. (a) Merge, transfer, acquire or consolidate with any other entity, change ownership or change its name without giving prior written notice to, and obtaining the consent of, the Lender, which consent shall not be unreasonably withheld or (b) cease operations, liquidate, dissolve or transfer or sell all or substantially all of its assets without the prior written consent of the Lender, which consent shall not be unreasonably withheld. 9. Events of Default; Remedies. 9.1 Events of Default. The occurrence of any of the following shall constitute an Event of Default: (a) Failure to Pay Obligations. The Company fails to pay when due any of the Obligations, which failure to pay continues for a period of thirty (30) days following receipt of written notice by the Company from the Lender; or (b) Failure to Pay Other Obligations. The Company fails to pay when due any of its other obligations, such default shall continue for a period of thirty (30) days and such default would cause an adverse material effect on the business of the Company, unless the Company, in good faith, is disputing the existence or amount of such obligation and has set aside a reserve sufficient to cover such obligation; or (c) Falsity of Representations and Warranties. Any representation or warranty made in any Loan Document is false or misleading in any material respect on the date as of which made or as of which the same is to be effective; or (d) Breach of Affirmative Covenants. The Company fails to comply with any term, covenant or agreement contained in section 7 of this Agreement and such default shall continue for a period of thirty (30) days after written notice to the Company from the Lender; or 10 (e) Breach of Negative Covenants. The Company fails to comply with any term, covenant or agreement contained in section 8 of this Agreement and such default shall continue for a period of thirty (30) days after written notice to the Company from the Lender; or (f) Breach of Other Provisions. The Company fails to comply with any other agreement contained herein and such default shall continue for a period of thirty (30) days after written notice to the Company from the Lender; or (g) Default Under Loan Documents. An Event of Default (as defined therein) shall occur under one or more of the other Loan Documents, including, but not limited to, the Promissory Note and such default continues beyond any grace period provided therein; or (h) Insolvency, Failure to Pay Debts or Receiver, Etc. The Company becomes insolvent or the subject of state insolvency proceedings, fails generally to pay Debts as they become due or fails to perform on any term, covenant or agreement of the Company relating to Debt of the Company which results in the holder of such Debt being able to accelerate such Debt or makes an assignment for the benefit of creditors; or a receiver, trustee, custodian or other similar official is appointed for, or takes possession of any substantial part of the property of, the Company which appointment remains in place for a period of sixty days; or (i) Subject of United States Bankruptcy. The taking of action by the Company to authorize such corporation to become the subject of proceedings under the United States Bankruptcy Code; or the execution by the Company of a petition to become a debtor under the United States Bankruptcy Code; or the filing of an involuntary petition against the Company under the United States Bankruptcy Code which remains undismissed for a period of sixty days; or the entry of an order for relief under the United States Bankruptcy Code against the Company. 9.2 Remedies. Upon the occurrence of an Event of Default, all of the Obligations shall, at the Lender's option and without notice or demand, become immediately payable with interest at the rate specified in Section 2.3. The Lender shall have all of the remedies for default provided in the Lender Security Documents, as well as applicable law, and the Lender may, at the Lender's option, accelerate the maturity of the Promissory Note, and/or exercise such other rights and remedies as may be available under the Loan Documents. 10. Indemnification. The Company agrees to defend, indemnify and hold harmless the Lender, its members, directors, officers, employees and agents from and against any and all claims, damages, losses, liabilities, costs or expenses (including reasonable attorneys' fees) incurred in connection with any and all claims and proceedings (whether brought by a private party or governmental agency) as a result of or arising out of or related to: (a) the execution and delivery or transfer of, or payment or failure to pay under, the Promissory Note; provided, however, that the Company shall not be required to indemnify the Lender for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct or gross negligence of the Lender, its members, directors, officers, employees and/or agents; or 11 (b) the entering into, performance of and exercise of its rights under any Loan Document by the Lender. 11. Obligations Absolute. The Obligations of the Company under this Loan Agreement shall be absolute, unconditional and irrevocable and shall remain in full force and effect until the Promissory Note has been paid in full, and such obligations of the Company shall not be affected, modified or impaired upon the happening of any event, including, without limitation, any of the following, whether or not with notice to, or the consent of, the Company: (a) Any amendment, modification, waiver, consent, or any substitution, exchange, or release of collateral, with respect to any of the Loan Documents; (b) Any failure, omission or delay on the part of the Lender or any party to any of the Loan Documents in enforcing, asserting or exercising any right, power or remedy conferred upon the Lender or any such party under this Loan Agreement or any of the operative documents, or any other acts or omissions on the part of the Lender or any such party; (c) Any other event or action that would, in the absence of this clause, result in the release or discharge by operation of law of the Company from the performance or observance of any obligation, covenant or agreement contained herein. 12. Waiver. The Lender shall not be deemed to have waived any of its rights hereunder unless the Lender shall have signed such waiver in writing. 13. Binding Effect. This Agreement inures to the benefit of, and is binding upon, the successors and assigns of the Lender and the Company, provided that none of the rights of the Company hereunder may be assigned without the prior written consent of the Lender. 14. Governing Law. This Agreement is being delivered in and shall be deemed to be a contract governed by the laws of the State of Oklahoma and shall be interpreted and enforced in accordance with the laws of that state without regard to the principles of conflicts of laws. 15. Notices. All notices provided for herein shall be in writing and shall be (a) delivered; (b) sent by express or first-class mail, postage prepaid and return receipt requested; (c) sent by Federal Express or other nationally recognized overnight courier service; or (d) sent by facsimile transmission and confirmation in writing provided to the recipient in a manner described in (a), (b) or (c) and, if to the Lender, addressed to it at 115 West Orient, Thomas, Oklahoma, 73669 and, if to the Company, addressed to it at 3500 JFK Parkway, Suite 320, Ft. Collins, Colorado, 80525 Attention: President, or to such other address with respect to any party as such party shall notify the others in writing; such notices shall be deemed given when delivered, mailed or so transmitted. 16. Titles. The titles of sections in this Agreement are for convenience only and do not limit or construe the meaning of any section. 12 17. Submission to Jurisdiction; Service of Process. (a) THE LENDER AND COMPANY AGREE THAT ALL ACTIONS OR PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY BE BROUGHT ONLY IN COURTS OF THE STATE OF COLORADO LOCATED IN DENVER COUNTY OR THE FEDERAL DISTRICT COURT IN COLORADO AND THE LENDER AND COMPANY CONSENT TO THE JURISDICTION OF SUCH COURTS. THE LENDER AND COMPANY WAIVE ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH COURT AND ANY RIGHT THEY MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM THAT ANY SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT; and (b) The Lender and Company consent to the service of process in any such action or proceeding by certified mail sent to the address specified in section 15; provided, however, that nothing contained herein shall affect the right of either the Lender or the Company to serve process in any other manner permitted by law. 18. Limitation of Liability. THE COMPANY AND THE LENDER HEREBY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO CLAIM OR RECOVER FROM THE OTHER PARTY ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES, OF WHATEVER NATURE, OTHER THAN ACTUAL DAMAGES. 19. Entire Agreement. This Agreement and the other Loan Documents shall constitute the entire agreement of the parties pertaining to the subject matter hereof and supersede all prior or contemporaneous agreements and understandings of the parties in connection therewith. 20. Arbitration. Except for "Core Proceedings" under the United States Bankruptcy Code, the Lender and the Company agree to submit to binding arbitration all claims, disputes and controversies between or among them, whether in tort, contract or otherwise (and their respective employees, officers, directors, attorneys, and other agents) arising out of or relating to in any way the Loan Documents or transactions which are the subject of this Agreement and their negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination. Any arbitration proceeding will (i) proceed in Denver, Colorado; (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code); and (iii) be conducted in accordance with the Commercial Arbitration rules of the American Arbitration Association ("AAA"). The arbitration requirement does not limit the right of either party to (i) foreclose against collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before, during or after the pendency or any arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of either party to submit any dispute to arbitration, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph. 13 Any arbitration proceeding will be before a single arbitrator selected according to the Commercial Arbitration Rules of the AAA. The arbitrator will be a neutral attorney who has practiced in the area of commercial law for a minimum of ten years. The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator's discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication. In any arbitration proceeding discovery will be permitted and will be governed by the Colorado Rules of Civil Procedure. All discovery must be completed no later than 20 days before the hearing date and within 180 days of the commencement of arbitration proceedings. Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party's presentation and that no alternative means for obtaining information is available. The arbitrator shall award costs and expenses of the arbitration proceeding in accordance with the provisions of this Agreement, the Promissory Note and/or other Loan Documents. WEST-OK INVESTMENT, LLC, an Oklahoma limited liability company By: ----------------------------------------------------------- Managing Member W.W. CAPITAL CORPORATION, a Nevada corporation By: ----------------------------------------------------------- Title: -------------------------------------------------------------- 14 Exhibit 10.6 PROMISSORY NOTE DATED SEPTEMBER 20, 2001 GIVEN BY THE REGISTRANT TO WEST-OK INVESTMENT, LLC. PROMISSORY NOTE $1,000,000.00 September 20, 2001 FOR VALUE RECEIVED, and intending to be legally bound, W.W. CAPITAL CORPORATION, a Nevada Corporation ("Debtor") hereby promises to pay to the order of WEST-OK INVESTMENT, LLC., an Oklahoma limited liability company whose address is 115 West Orient, Thomas, Oklahoma 73669 ("Holder") the principal amount of One Million Dollars ($1,000,000) ("Principal Amount") subject to the following terms and conditions: 1. Commencing effective as of January 5, 2001, the outstanding principal amount of this Note shall bear interest at the rate of 3 percentage points above the Wall Street Prime lending rate (currently 9.5%) per annum until the principal amount hereof, together with all accrued and unpaid interest, has been paid in full. Hereinafter, the total outstanding principal balance hereof, together with any and all accrued and unpaid interest shall be referred to as the "Loan Amount." 2. Subject to the terms and conditions hereinbelow set forth, the Loan Amount shall be payable as follows: (a) No payments shall be due or payable for the period commencing on the date hereof and ending on January 5, 2002 (the "Abatement Period"). Interest shall continue to accrue on the unpaid portion of the Principal Amount during the Abatement Period. (b) On January 5, 2003, the Debtor shall pay to the Holder one payment consisting exclusively of twelve months accrued interest. (c) On January 5, 2003, all accrued but unpaid interest shall be added to the unpaid Principal Amount and shall hereinafter be referred to as the "Remaining Loan Amount." Commencing on January 5, 2003, and continuing on the 5th day of each month thereafter until the entire Remaining Loan Amount has been paid in full, the Debtor shall pay to the Holder one-ninety-sixth (1/96th) of the Remaining Loan Amount plus any unpaid interest which has accrued on the Remaining Loan Amount. By way of example, because all accrued but unpaid interest as of January 5, 2003 will be included in the Remaining Loan Amount, the payment due to Holder on January 5, 2003 pursuant to this Section 2(c) will consist exclusively of one-ninety-sixth (1/96th) of the Remaining Loan Amount. The payment due Holder on February 5, 2003, and on each month thereafter, will consist of one-ninety-sixth (1/96th) of the Remaining Loan Amount plus any interest which has accrued on the Remaining Loan Amount from the date of the last payment through the payment date. If not sooner paid, the final installment, together with all accrued but unpaid interest, shall be due and payable on January 5, 2010. 3. If Debtor shall default in the payment of principal hereunder when the same shall become due and payable, the unpaid principal sum of this Note shall immediately bear interest at the rate of eighteen percent (18%) per annum until paid in full, and shall be payable monthly or, at the option of Holder hereof, on demand. A-1 4. Debtor may at any time, upon ten days advance notice, prepay the entire unpaid principal of this Note or any part thereof without additional interest or penalty. Any prepayment in part shall be applied first to accrued but unpaid interest hereunder, and second to installments of principal in the reverse order of maturity. 5. Payments of both principal and interest on this Note shall be made to Holder in immediately available funds in lawful money of the United States. 6. This Note is fully negotiable and may be assigned by Holder. Neither this Note nor the obligations of Debtor hereunder may be assigned or delegated by Debtor without the prior written consent of Holder. 7. The occurrence of any of the following events ("Events of Default") with respect to Debtor, shall constitute a default hereunder: (a) if any payment of principal or interest shall not be paid in full when due, and shall continue unpaid for a period of thirty (30) days thereafter; or (b) if a default shall occur under any covenant contained in any instrument relating to the rights of Holder hereunder including, but not limited to, that certain Loan Agreement of even date herewith and to which this Note is attached as Exhibit A, or any of the Loan Documents referenced in said Loan Agreement. 8. Upon the occurrence of a default hereunder, the entire principal balance of this Note plus accrued interest, shall, at the option of Holder, become immediately due and payable without notice or demand, and Holder shall have all rights and remedies provided under all applicable laws and shall be deemed to have exercised the same immediately upon the occurrence of any such event without notice or further action, irrespective of when any record of the same may thereafter be noted by Holder. 9. Failure by Holder to declare a default hereunder shall not constitute a waiver of any subsequent default. Debtor further promises to pay a reasonable attorney's fee, court costs, and any other expenses, losses, charges, damages incurred or advances made by Holder in protection of its rights or caused by Debtor's default under the terms of this Note. 10. If Holder retains an attorney for collection of this Note, or if any suit or proceeding is brought for the recovery of all or any part of or for protection of the indebtedness, or any collateral, or to enforce Holder's rights under any security agreement, letter of credit securing the Principal Amount, or other collateral agreement, then Debtor agrees to pay on demand all reasonable costs and expenses of the suit or proceeding, or any appeal thereof, incurred by Holder, including, without limitation, reasonable attorney's fees. 11. The terms of this Note shall not be varied, altered or modified except by a writing signed by Holder and Debtor. 12. Debtor hereby waives presentment for payment or acceptance, demand and protest, and notice of protest, dishonor and non-payment of this Note. 13. No delay on the part of Holder in exercising any power or right under this Note shall operate as a waiver of the power or right, nor shall any single or partial exercise of that power or right, preclude further exercise of that power or right. The rights and remedies A-2 specified in this Note are cumulative and not exclusive of any rights and remedies that Holder may otherwise possess. 14. The provisions of this Note shall be severable, so that if any provision hereof is declared invalid under the laws of any state where it is in effect, or of the United States, all other provisions of this Note shall continue in full force and effect. 15. This Note shall be binding upon Debtor and its successors and assigns, and shall inure to the benefit of and be enforceable by Holder, its successors and assigns. IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned has caused this Note to be executed on the date first above written. W.W. CAPITAL CORPORATION, a Nevada corporation By: /s/ Steven Zamzow, President ------------------------------------------- Steven Zamzow, President A-3 Exhibit 21.0 SUBSIDIARIES OF THE REGISTRANT W-W Manufacturing Co., Inc. Incorporated in the state of Kansas Exhibit 99.0 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACTO OF 2002 In connection with the Annual Report on Form 10-K of W W Capital Corporation (the "Company") for the period ending June 30, 2002 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: November 15, 2002 By: /s/ Steve D. Zamzow -------------------- Steve D. Zamzow, President & CEO

Additions ------------------------ Balance at Charged to Charged Balance Beginning Costs and to Other at End Description of Period Expenses Accounts Deductions of Period ----------- ---------- -------- -------- ---------- --------- June 30, 2001 Allowance for doubtful accounts: Accounts receivable $ 38,000 $ 28,212 $ -- $ 31,212 $ 35,000 June 30, 2000 Allowance for doubtful accounts: Accounts receivable 20,000 193,090 -- 175,090 38,000 June 30, 1999 Allowance for doubtful accounts: Accounts receivable 14,000 27,827 -- 21,827 20,000 Notes receivable 10,000 9,752 -- 19,752 --

Other Annual All Other Name and Principal Position Year Salary Bonus Compensation Compensation --------------------------- ---- ------ ----- ------------ ------------ Steve D. Zamzow 2001 $ 119,359 $ 13,600 $ - $ 9,166 (a) President, Chief Executive 2000 $ 120,858 $ - $ - $ 13,749 (a) Officer and Director 1999 $ 120,358 $ - $ - $ 6,874 (a) (a) Includes accrued vacation and compensated absences earned in prior years and paid during June 30, 2001, 2000 and 1999.

Aggregated Option Exercises in Last Fiscal Year ----------------------------------------------- and Fiscal Year-End Option Values --------------------------------- Number of Securities Value of Unexercised Underlying Unex- In-the-Money Shares ercised Options Options at Acquired at June 30, 2001 June 30, 2001 on Value Exercisable/ Exercisable/ Name Exercise Realized (1) Unexercisable Unexercisable (1) ---- -------- ------------ ------------- ----------------- Steve D. Zamzow --- --- 150,000 (E) $ --- President, Chief --- --- (U) $ --- Executive Officer and Director (1) The Option exercise price exceeded the fair market value of the underlying common stock on June 30, 2001.

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) 6.97% 4112 Sherman Court Ft. Collins, CO 80525 Millard T. Webster 278,969 (4) 13.74% 1003 Central Dodge City, KS 67801 Jerry R. Beller 275,000 13.69% 4411 Harding Place Nashville, TN 37025 Murle F. and Sara R. Webster 237,226 11.81% Start Route 3, Box 117A Cedar Creek, MO 65627 Terry L. Webster 105,917 5.27% 1005 E. Canterbury Lane Springfield, MO 65804 Harold Gleason 5,000 0.25% 115 West Orient Thomas, OK 73669 James H. Alexander 30,000 (5) 1.47% 5495 W. 115th Place Broomfield, CO 80020 All officers and directors 464,406(6) 21.01% as a group (3 persons) (See footnotes 3, 4,and 5) (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 sixty 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 30,000 shares subject to non-qualified stock options which are fully vested and exercisable. (6) Includes 202,500 shares subject to stock options, which are fully vested and exercisable.

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