10-Q 1 wwc10q-903.txt FORM 10-Q FOR SEPTEMBER 30, 2003 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File No. 0-17757 W-W CAPITAL CORPORATION (exact name of Registrant as specified in its charter) Nevada 93-0967457 (State or other jurisdiction of (IRS Employer Identi- incorporation or organization) fication Number) 3500 JFK Parkway Suite 202 Ft. Collins, CO 80525 (Address of principal executive offices, including zip code) (970) 207-1100 (Registrant's telephone number, including area code) Not Applicable (Former name, address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes _X_ No ___ Indicate by check mark whether the Registrant is an accelerated filer (as defined in rule 12b-2 of the Act). Yes ____ No_X_ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Title of Each Class Number of Shares Outstanding ------------------- at November 17, 2003 Common stock ---------------------------- $0.01 Par Value 2,010,614 W-W CAPITAL CORPORATION Index ----- PART I FINANCIAL INFORMATION PAGE NO. ------ --------------------- -------- Item 1 Balance Sheets ------ September 30, 2003 and June 30, 2003 1 Statements of Income Three Months Ended September 30, 2003 and 2002 3 Statements of Cash Flows Three Months Ended September 30, 2003 and 2002 5 Notes to Financial Statements 7 Item 2 Management's Discussion and Analysis ------ of Financial Condition and Results of Operations 9 Item 3 Quantitative and Qualitative Disclosures ------ About Market Risks 12 Item 4 Controls and Procedures 12 ------ PART II OTHER INFORMATION ------- ----------------- Item 1 LEGAL PROCEEDINGS 13 ------ Item 2 CHANGES IN SECURITIES 13 ------ Item 3 DEFAULTS UPON SENIOR SECURITIES 13 ------ Item 4 SUBMISSION OF MATTERS TO VOTE OF ------ SECURITY HOLDERS 13 Item 5 OTHER INFORMATION 13 ------ Item 6 EXHIBITS AND REPORT ON FORM 8-K 13 ------ SIGNATURES 14 Part I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS ----------------------------- W-W CAPITAL CORPORATION -----------------------

~~W-W CAPITAL CORPORATION -----------------------~~ Balance Sheets September 30, June 30, ~~2002~~2003 ~~2002~~2003 ---- ---- (Unaudited) Assets ------ Current assets: Cash $ ~~100~~127,~~458~~748 $ ~~137~~127,~~948~~479 ----------- ----------- ~~Trade~~Accounts ~~accounts~~ receivable, trade 1,~~908~~946,~~397~~143 21,~~004~~672,~~161~~198 Less allowance for doubtful accounts (~~275~~290,000) (~~275~~290,000) ----------- ----------- Net accounts receivable, trade 1,~~633~~656,~~397~~143 1,~~729~~382,~~161~~198 ----------- ----------- Accounts receivable, other ~~163~~15,~~266~~078 ~~162~~13,~~703~~458 Inventories: Raw materials ~~596~~575,~~912~~674 528,~~110~~112 Work-in-process ~~413~~428,~~061~~913 ~~418~~375,~~334~~882 Finished goods ~~833~~655,~~409~~122 ~~843~~607,~~860~~832 ----------- ----------- Total inventories 1,~~843~~659,~~382~~709 1,~~790~~511,~~304~~826 ----------- ----------- Prepaid expenses 7274,~~760~~373 3541,~~632~~556 Current portion of notes receivable, ~~from~~ related parties ~~603~~-- ~~603~~1,261 Current portion of net investment in sales-type lease 20,588 18,055 Deferred income tax asset ~~181~~174,~~500~~000 ~~149~~178,~~500~~000 ----------- ----------- Total current assets 3,~~995~~727,~~366~~639 43,~~005~~273,~~851~~833 ----------- ----------- Property and equipment, at cost: 4,~~536~~660,~~904~~786 4,~~290~~612,~~594~~478 Less accumulated depreciation and amortization (2,~~194~~382,~~730~~133) (2,~~135~~337,~~406~~391) ----------- ----------- Net property and equipment 2,~~342~~278,~~174~~653 2,~~155~~275,~~188~~087 ----------- ----------- Other Assets: Long-term notes receivable ~~from~~ related parties, net of current portion 2019,~~470~~812 2019,~~470~~812 Net investment in sales-type lease, net of current portion 6,810 27,398 Loan acquisition costs--, net of accumulated amortization of $48,~~100~~200 at September 30, ~~2002~~2003 and $37,~~075~~175 at June 30, ~~2002~~2003 3632,~~900~~800 3733,~~925~~825 Equipment deposits 175,000 175,000 Other assets 40,~~728~~463 4140,~~130~~463 ----------- ----------- Total other assets ~~273~~274,~~098~~885 ~~274~~296,~~525~~498 ----------- ----------- TOTAL ASSETS $ 6,~~610~~281,~~638~~177 $ 65,~~435~~845,~~564~~418 =========== ===========

The accompanying Notes are an integral part of the consolidated financial statements 1 W-W CAPITAL CORPORATION -----------------------

Balance Sheets, Continued September 30, June 30, ~~2002~~2003 ~~2002~~2003 ---- ---- (Unaudited) Liabilities ----------- Current Liabilities: Accounts payable $ 1,~~560~~685,~~941~~342 $ 1,~~373~~260,~~803~~959 Accrued ~~property~~payroll and related taxes 15228,~~600~~266 10205,~~400~~417 Accrued ~~payroll~~property ~~and related~~ taxes ~~204~~13,~~999~~575 ~~198~~9,~~887~~050 Accrued interest payable 6811,~~843~~558 8014,~~106~~898 Other current liabilities 17,842 14,444 Current portion of long-term notes payable ~~282~~2,033,000 ~~239~~1,943,000 Current portion of capital lease obligations 8069,000 7573,000 ~~Other current liabilities 14,160 24,908~~ ----------- ----------- Total current liabilities 24,~~226~~058,~~543~~583 23,~~002~~520,~~104~~768 ----------- ----------- Other Liabilities: Long-term notes payable, net of current portion 21,~~987~~407,~~528~~997 21,~~966~~498,~~693~~515 Long-term capital lease obligations, net of current portion 1,~~198~~130,~~790~~212 1,~~219~~147,~~973~~461 Deferred income tax liability ~~179~~20,900 ~~179~~20,900 ~~Negative goodwill, net of accumulated amortization of $5,466 at June 30, 2002~~ -- ~~61,744~~ ----------- ----------- Total other liabilities 42,~~366~~559,~~218~~109 42,~~428~~666,~~310~~876 ----------- ----------- TOTAL LIABILITIES 6,~~592~~617,~~761~~692 6,~~430~~187,~~414~~644 ----------- ----------- 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 at September 30, ~~2002~~2003 and June 30, ~~2002~~2003 55,538 55,538 Capital in excess of par value 3,305,533 3,305,533 Accumulated deficit (~~464~~818,~~079~~471) (~~476~~824,~~806~~182) ----------- ----------- 2,~~896~~542,~~992~~600 2,~~884~~536,~~265~~889 Less 3,~~545~~543,~~663~~213 shares of treasury stock, at cost (2,879,115) (2,879,115) ----------- ----------- NET STOCKHOLDERS' ~~EQUITY~~DEFICIT 17(336,~~877~~515) 5(342,~~150~~226) ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' ~~EQUITY~~DEFICIT $ 6,~~610~~281,~~638~~177 $ 65,~~435~~845,~~564~~418 =========== ===========

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

Statements of ~~Operations~~Income (Unaudited) Three Months Ended September 30, ------------- 2003 2002 ~~2001~~ ---- ---- Net sales $ 3,~~141~~089,~~639~~972 $ 23,~~816~~141,~~733~~639 Cost of goods sold 2,~~565~~388,~~668~~868 2,~~230~~565,~~499~~668 ----------- ----------- Gross profit 701,104 575,971 ~~586,234~~ ----------- ----------- Operating expenses: Selling expenses 281,389 241,065 ~~281,663~~ General and administrative expenses 335,685 331,165 ~~339,765~~ ----------- ----------- Total operating expenses 617,074 572,230 ~~621,428~~ ----------- ----------- Operating earnings ~~(loss)~~84,030 3,741 ~~(35,194)~~ ----------- ----------- Other income (expenses): Interest income 10,183 -- ~~5,754~~ Interest expense (8689,~~790~~486) (9786,~~698~~790) Gain on sale of assets 3,400 100 -- Other income (expense), net 1,584 1,932 ~~825~~ ----------- ----------- Total other income (expense) (8474,~~758~~319) (9184,~~119~~758) ----------- ----------- ~~Loss~~Earnings (loss) before income taxes and cumulative effect of a change in accounting principle 9,711 (81,017) ~~(126,313)~~ Income tax benefit 32(expense) (4,000) 5132,000 ----------- ----------- ~~Loss~~Earnings (loss) before cumulative effect of a change in accounting principle 5,711 (49,017) ~~(75,313)~~ Cumulative effect of a change in accounting principle -- 61,744 -- ----------- ----------- Net earnings ~~(loss)~~ $ 125,~~727~~711 $ ~~(75~~12,~~313)~~727 =========== ===========

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

Statements of ~~Operations~~Income, Continued (Unaudited) Three Months Ended September 30 ------------ 2003 2002 ~~2001~~ ---- ---- Earnings ~~(loss)~~ per common share: Basic ~~Loss~~Earnings (loss) before cumulative effect of a change in accounting principle $ (.~~02)~~00 $ ( .0402) Cumulative effect of a change in accounting principle .00 .03 -- ------------- ------------- Net earnings ~~(loss)~~ $ .0100 $ (.~~04)~~01 ============= ============= Weighted average number of common shares 2,~~008~~010,~~164~~614 2,~~008~~010,~~164~~614 Diluted ~~Loss~~Earnings (loss) before cumulative effect of a change in accounting principle $ (.~~02)~~00 $ (.0402) Cumulative effect of a change in accounting principle .00 .03 -- ------------- ------------- Net earnings ~~(loss)~~ $ .0100 $ (.~~04)~~01 ============= ============= Weighted average number of common shares 2,~~008~~010,~~164~~614 2,~~008~~010,~~164~~614

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

Statements of Cash Flows (Unaudited) Three Months Ended September 30, ------------- 2003 2002 ~~2001~~ ---- ---- Cash flows from operating activities: Net earnings ~~(loss)~~ $ 125,~~727~~711 $ ~~(75~~12,~~313)~~727 Adjustments to reconcile net earnings ~~(loss)~~ to net cash provided by ~~(used in)~~ operating activities: Depreciation and amortization 62,271 60,349 ~~63,755~~ Gain on sale of property and equipment (3,400) (100) --Provision ~~Amortization~~for ofloss ~~negative~~on ~~goodwill~~accounts receivable 3,322 -- ~~(585)~~ Write off of negative goodwill -- (61,744) -- Change in assets and liabilities: Accounts receivable (259,212) 95,764 Inventories (~~445~~147,~~828~~883) ~~Inventories~~ (53,078) ~~(52,586)~~ Other current and non-current assets (6930,~~289~~437) (9169,~~941~~289) Accounts payable 424,383 187,138 ~~320,007~~ Accrued expenses and other current liabilities 27,432 (10,699) ~~(27,129)~~ --------- --------- Net cash provided by ~~(used in)~~ operating activities 82,187 161,068 ~~(309,620)~~ --------- --------- Cash flows from investing activities: ~~Purchase~~Purchases of property and equipment (2,831) (16,791) (Proceeds from stockholders' notes receivable 1,~~014)~~261 -- Proceeds from sale of property and equipment 16,900 100 -- --------- --------- Net cash provided (used) inby investing activities $ ~~(16~~15,~~691)~~330 $ (116,~~014~~691) --------- ---------

(Continued on following page) 5 W-W CAPITAL CORPORATION -----------------------

Statements of Cash Flows, Continued (Unaudited) Three Months Ended September 30, ------------- 2003 2002 ~~2001~~ ---- ---- Cash flows from financing activities: Payments on notes payable, financial institutions and government entities $(32,~~233~~892,~~341~~535) $(23,~~148~~233,~~934~~341) Proceeds from notes payable 2,816,536 3,067,657 ~~2,456,050~~ Payment on capital leases (1621,~~183~~249) (1516,~~987~~183) ~~Payment on loan acquisition costs~~ -- ~~(41,000)~~ ----------- ----------- Net cash ~~provided~~used by ~~(used in)~~ financing activities (97,248) (181,867) ~~250,129~~ ----------- ----------- Net increase (decrease) in cash 269 (37,490) ~~(60,505)~~ Cash at beginning of period 127,479 137,948 ~~216,473~~ ----------- ----------- Cash at end of period $ ~~100~~127,~~458~~748 $ ~~155~~100,~~968~~458 =========== =========== Supplemental Information: Cash paid during the period for interest $ 9892,~~035~~827 $ 7498,~~054~~035 Installment loans to acquire property and equipment $ ~~229~~75,~~519~~479 $ --229,519 ~~Installment~~Cash ~~loan~~paid toduring ~~acquire~~the ~~residential~~period ~~rental~~for ~~property~~income taxes $ --920 $ ~~28,543~~--

The accompanying Notes are an integral part of the consolidated financial statements 6 W-W CAPITAL CORPORATION ----------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- NOTE 1 - BASIS OF PRESENTATION ------------------------------ The accompanying unaudited financial statements include the accounts of W-W Capital Corporation (the Company) and its wholly owned subsidiary W-W Manufacturing Co., Inc. All significant intercompany accounts and transactions have been eliminated. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and changes in cash flows in conformity with generally accepted accounting principles for full-year financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to W-W Capital Corporation's financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2003. In the opinion of management, all adjustments (consisting of normal recurring accrual basis adjustments) considered necessary for a fair presentation have been reflected in the accompanying financial statements. Operating results for the three month period ended September 30, 2003, are not necessarily indicative of the results that may be expected for the year ended June 30, 2004. The Company has incurred operating losses two out of the past three fiscal years, has a working capital deficit of $330,944 and has an accumulated deficit of $336,515 as of September 30, 2003. The report of independent auditors on the Company's June 30, 2003 audited financial statements includes an explanatory paragraph indicating there is substantial doubt about the Company's ability to continue as a going concern. The Company believes that it has developed a viable plan to address these issues and that its plan will enable the Company to continue as a going concern for the next twelve months. This plan includes the realization of revenues from the commercialization of new products and the reduction of certain operating expenses. Although the Company believes that its plan will be realized, there is no assurance that these events will occur. The financial statements do not include any adjustments to reflect the uncertainties related to the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern. NOTE 2 - NET BASIC EARNINGS PER SHARE ------------------------------------- The net basic earnings per share amount included in the accompanying statements of income have been computed using the weighted-average number of shares of common stock outstanding and the dilutive effect, if any, of common stock equivalents existing during the applicable three month period. 7 NOTE 3 - NEGATIVE GOODWILL AND CHANGE IN ACCOUNTING PRINCIPLE ------------------------------------------------------------- In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations." SFAS No. 141 requires that unamortized negative goodwill arising from a business combination, for which the acquisition date was before July 1, 2001, shall be written off and recognized as a change in accounting principle. SFAS No. 141 was effective for the Company on July 1, 2002. As of July 1, 2002, the Company had $61,744 of unamortized negative goodwill relating to the fiscal year 2000 purchase of the Adrian J. Paul Company by its subsidiary, WW Manufacturing Company. The write off resulted in an increase in income and was reflected as a cumulative effect of a change in accounting principle in the quarter ended September 30, 2002. A reconciliation of reported net income for the three months ended September 30, 2002 adjusted to reflect the adoption of SFAS No. 141 as if it had been effective July 1, 2001 is as follows: Reported net income $ 12,727 Subtract-back adjustment for accounting change ( 61,744) Add-back goodwill amortization -- Adjusted net loss $( 49,017) ======= Adjusted net loss per share - Basic $ (.02) Adjusted net loss per share - Diluted $ ( .02) NOTE 4 - RELATED PARTY TRANSACTION ---------------------------------- The Company has related party transactions. See the footnotes to W-W Capital Corporation financial statements for the year ended June 30, 2003, included in its Annual Report on Form 10-K for the nature and type of related party transactions. A summary of the related party transactions that affect the Company's statements of income for the three months ended September 30, 2003 and 2002 respectively, is as follows: Three Months Ended September 30, ------------- Transactions with Related parties 2003 2002 --------------- ---- ---- Interest income $1,261 $ -- 8 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. -------------------------------------------------------------------------------- The business of the Company is carried on within one segment group by three operating units. The livestock handling equipment segment is composed of W-W Manufacturing (W-W Manufacturing), Eagle Enterprises (Eagle), and W-W Paul Scales (Paul). Forward-Looking Statements -------------------------- In addition to historical information, this Quarterly Report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and are thus prospective. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, competitive pressures, changing economic conditions, factors discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations, and other factors, some of which will be outside the control of management. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should refer to and carefully review the information described in future documents the Company files with the Securities and Exchange Commission. Analysis of Results of Operations --------------------------------- The Company had net income of $5,711 for the three month period ended September 30, 2003, as compared to $12,727 in 2002 which included income of $61,744 related to a change in accounting principle. The Company had a net loss before the cumulative effect of the change in accounting principle of $49,017 for the three month period ended September 30, 2002. Net sales decreased $51,667, or 1.6% to $3,089,972 for the three months ended September 30, 2003, compared to $3,141,639 for 2002. Sales at the W-W Manufacturing plant in Thomas, Oklahoma increased $509,308, or 25.7%, from $1,980,924 for the three months ended September 30, 2002 to $2,490,232 in 2003. This increase in sales is attributable to an overall recovery in the economy as well as the addition of a large special project sale during the quarter. Management believes that with the improving economy and geopolitical environment, sales will exceed prior years levels. Sales at the Eagle Enterprises location in Livingston, Tennessee decreased $487,985, or 62.8% from $777,228 for the three months ended September 30, 2002 to $289,243 in 2003. The Livingston plant was hit hardest by the sluggish economy, the need to update certain equipment and the need for installation of a new paint system. After the powder coat paint system was implemented in Thomas, Oklahoma, many customers wanted to purchase only product with a powder coat finish. With the economic environment in decline, management decided that the cost to install a new paint system in the Livingston plant was to high and the risk too great for the Company to take. During November 2002 the decision to scale back operations at the Livingston plant was made. While 9 certain revenues were transferred to the Thomas plant, many revenues were permanently lost. During June 2003 management made the decision to market a new inline pre-galvanized product from the Livingston plant. This product allows for manufacturing without problems related to paint. Sales of the new product line showed steady improvement during the first quarter of fiscal 2004 from $58,451 in July 2003 to $132,318 in September 2003. Management believes this new product line will continue to show improvement throughout the second quarter, which should allow the Livingston plant to be in full operation by the third quarter of fiscal 2004. Sales at the W-W Paul location in Duncan, Oklahoma decreased $72,990, or 19.0%, from $383,487 for the three month period ended September 30, 2002 to $310,497 for 2003. Whereas the Duncan location's primary manufacturing responsibilities are livestock scales and hydraulic squeeze chutes, they also serve as a supply source to the Thomas location. While all interdivision sales are eliminated for financial statement purposes, the Duncan location had a substantial increase in such sales. This allowed overall sales for the Duncan location to remain stable. With the improved economic outlook and a new emphasis on marketing new and redeveloped scales, management believes that sales at the Duncan location should increase during the remainder of fiscal 2004. Gross margins increased from 18.3% for the three month period ended September 30, 2002 to 22.7% for the same period of 2003. This increase of 4.4% is the result of a drop in steel costs during the last portion of fiscal 2003. The Company also performed an extensive evaluation of raw materials during the fourth quarter of fiscal 2003 and found several ways to lower certain costs. The Company continues to seek improvements through manufacturing system analysis as well as retail price adjustments. Selling expenses as a percentage of sales increased from 7.7% for the three month period ended September 30, 2002 to 9.1% for the same period of 2003. The dollars expended on selling expense increased from $241,065 for the three months ended September 30, 2002 to $281,389 for the same period of 2003, an increase of $40,324. The Company is aggressively pursuing new markets and expanding its distributor/dealer base while at the same time evaluating ways of keeping costs in line as a percentage of sales. General and administration expenses as a percentage of sales increased from 10.5% for the quarter ended September 30, 2002 to 10.9% for the corresponding quarter in 2003. The total dollars expended on general and administration costs remained relatively consistent, increasing $4,520. The Company will continue to find ways to lower general and administrative expense through the use of centralization, job realignment, and line-by-line expense evaluation and reduction. Interest expense increased from $86,790 for the three months ended September 30, 2002 to $89,486 for the same period of 2003, an increase of 3.1%. As profits and cash flow improve, the Company plans to reduce debt, thereby reducing overall interest expense. Liquidity and Capital Resources ------------------------------- The Company's principal sources of liquidity are from working capital, internally generated funds and borrowing under its 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 generated funds from operations of $82,187 during the quarter ended September 30, 2003 primarily caused by an increase in accounts payable balances. 10 The Company provided cash from investing of $15,330 from the sales of certain equipment. Financing activities used net cash of $97,248, primarily to repay amounts outstanding under our credit facilities. As the Company moves further into fiscal 2004 it anticipates increased sales growth with a continued reduction in borrowings. The Company's working capital decreased for the period ended September 30, 2003 to $(330,944) as compared to $1,768,823 for September 30, 2002. This reduction is due to the reclassification of long-term debt to current liabilities because the Company was in violation of certain bank covenants at year-end. The Company is currently negotiating new covenants with the bank for fiscal 2004. The report of independent auditors on the Company's June 30, 2003 financial statements includes an explanatory paragraph indicating there is substantial doubt about the Company's ability to continue as a going concern. The Company believes that it has developed a viable plan to address these issues and that its plan will enable the Company to continue as a going concern for the next twelve months. The plan includes the realization of revenues from the commercialization of new products and the reduction of certain operating expenses. The financial statements do not include any adjustments to reflect the uncertainties related to the recoverability and classification of assets or the amounts and classification of liabilities that may result from the inability of the Company to continue as a going concern. There is no assurance that the Company will be able to achieve additional financing or that such events will be on terms favorable to the Company. The Company feels that it will improve in both sales and operating earnings throughout fiscal 2004. With increased working capital and lines of credit, the Company feels it has an adequate supply of liquidity to meet its needs. 11 ITEM 3. Quantitative and Qualitative Disclosures About Market Risks ------- ----------------------------------------------------------- The Company is exposed to market risk from changes in interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices such as interest rates. For fixed rate debt, interest rate changes affect the fair value of financial instruments but do not impact earnings or cash flows. Conversely for floating rate debt, interest rate changes generally do not affect the fair market value but do impact future earnings and cash flow, assuming other factors are held constant. At September 30, 2003, the Company had variable rate notes payable of approximately $2,642,000. 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. ITEM 4. Controls and Procedures ------- ----------------------- As of September 30, 2003, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Chief Executive Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer concluded that the Company's disclosure controls and procedures are effective in timely alerting him to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company's periodic Securities Exchange Commission (SEC) filings. Disclosure controls and procedures are defined as controls and procedures that are designed to ensure that information required to be disclosed by the Company in reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Subsequent to the date of the evaluation, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls, nor were any corrective actions required with regard to significant deficiencies and material weaknesses. 12 PART II OTHER INFORMATION ----------------- ITEM 1. LEGAL PROCEEDINGS ------- ----------------- Not Applicable ITEM 2. CHANGES IN SECURITIES ------- --------------------- Not Applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES ------- ------------------------------- Not Applicable ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS -------------------------------------------------- Not Applicable ITEM 5. OTHER INFORMATION ------- ----------------- Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ------- -------------------------------- Exhibit Number Document ------ -------- 31.0 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (attached hereto). 32.0 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached hereto). 13 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. W W CAPITAL CORPORATION (Registrant) Dated: November 17, 2003 By:/s/ Steve D. Zamzow -------------------------------------- Steve D. Zamzow, President & CEO Dated: November 17, 2003 By:/s/ Mike Dick -------------------------------------- Mike Dick, Controller Exhibit 31.0 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Steve D. Zamzow, certify that: 1. I have reviewed this quarterly report on Form 10-Q of W W Capital Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and I have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure control and procedures, as of the end of the period covered by this report based on such evaluation: and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: November 17, 2003 By:/s/ Steve D. Zamzow ----------------------------- Steve D. Zamzow, President and CEO Exhibit 32.0 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of W W Capital Corporation (the "Company") for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steve D. Zamzow, President and Chief Executive Officer of the Company, certify, based on my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 17, 2003 By:/s/ Steve D. Zamzow -------------------------------------- Steve D. Zamzow, President and CEO

Three Months Ended September 30, ------------- 2002 2001 ---- ---- Reported net income (loss) $ 12,727 $(75,313) Subtract-back adjustment for accounting change (61,744) -- Add-back goodwill amortization -- 585 -------- -------- Adjusted net income (loss) (49,017) (74,728) ======== ======== Adjusted net income (loss) per share - Basic (.02) (.04) Adjusted net income (loss) per share - Diluted (.02) (.04)

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