UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Form 10-QSB
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE | |||||
| SECURITIES EXCHANGE ACT OF 1934 | ||||||
| For the quarterly period ended September 30, 2003 | ||||||
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE | |||||
| SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 000-2791
ELECTRIC CITY CORP.
| Delaware (State or other jurisdiction of incorporation or organization) |
36-4197337 (I.R.S. Employer Identification No.) |
1280 Landmeier Road, Elk Grove Village, Illinois 60007-2410
(Address of principal executive offices)
(847) 437-1666
(Issuer’s telephone number)
(Former name, former address and former fiscal year, if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 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 o
34,172,021 shares of the registrant’s common stock, $.0001 par value per share, were outstanding
as of October 31, 2003.
Transitional Small Business Disclosure Format: Yes o No x
ELECTRIC CITY CORP.
FORM 10-QSB
For The Quarter Ended September 30, 2003
INDEX
| Page | ||||
| Number | ||||
| Part I | Financial Information | |||
| ITEM 1. | Financial Statements: | |||
|
Condensed Consolidated Balance Sheets September 30, 2003 (unaudited) and December 31, 2002 |
3 | |||
|
Condensed Consolidated Statement of Operations Three Months Ended September 30, 2003 and 2002 (unaudited) |
5 | |||
|
Condensed Consolidated Statement of Operations Nine Months Ended September 30, 2003 and 2002 (unaudited) |
6 | |||
|
Condensed Consolidated Statement of Stockholders’ Equity Nine Months Ended September 30, 2003 (unaudited) |
7 | |||
|
Condensed Consolidated Statement of Cash Flows Nine Months Ended September 30, 2003 and 2002 (unaudited) |
8 | |||
| Notes to Condensed Consolidated Financial Statements | 9 | |||
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition or Plan of Operations | 21 | ||
| ITEM 3. | Control and Procedures | 29 | ||
| Part II | Other Information: | |||
| ITEM 1. | Legal Proceedings | 31 | ||
| ITEM 2. | Changes in Securities | 31 | ||
| ITEM 4. | Submission of Matters to a Vote of Security Holders | 32 | ||
| ITEM 6. | Exhibits and Reports on Form 8-K | 34 | ||
| Signatures | 36 |
2
PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
ELECTRIC CITY CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
| September 30, | |||||||||
| 2003 | December 31, | ||||||||
| (unaudited) | 2002(1) | ||||||||
Assets |
|||||||||
Current Assets |
|||||||||
Cash and cash equivalents |
$ | 2,582,969 | $ | 1,555,904 | |||||
Accounts receivable, net |
1,295,786 | 2,681,772 | |||||||
Inventories |
1,254,921 | 2,596,218 | |||||||
Prepaid expenses and other |
147,473 | 116,210 | |||||||
Total Current Assets |
5,281,149 | 6,950,104 | |||||||
Net Property and Equipment |
1,134,225 | 1,539,919 | |||||||
Deferred Financing Costs |
682,400 | — | |||||||
Cost in Excess of Assets Acquired |
416,573 | 416,573 | |||||||
Other Assets |
— | 1,955 | |||||||
| $ | 7,514,347 | $ | 8,908,551 | ||||||
3
ELECTRIC CITY CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
| September 30, | ||||||||||
| 2003 | December 31, | |||||||||
| (unaudited) | 2002(1) | |||||||||
Liabilities and Stockholders’ Equity |
||||||||||
Current Liabilities |
||||||||||
Line of credit |
$ | — | $ | 500,000 | ||||||
Current maturities of long-term debt |
39,086 | 148,531 | ||||||||
Current portion of convertible term loan |
400,000 | — | ||||||||
Accounts payable |
1,034,070 | 1,732,719 | ||||||||
Accrued expenses |
597,160 | 972,584 | ||||||||
Deferred revenue |
216,492 | 50,000 | ||||||||
Total Current Liabilities |
2,286,808 | 3,403,834 | ||||||||
Deferred Revenue |
241,666 | 279,166 | ||||||||
Long-Term Debt, less current maturities and discounts |
610,427 | 941,260 | ||||||||
Convertible Term Loan, less current portion, net of unamortized
discount of $343,781 and $0 at September 30, 2003 and December
31, 2002, respectively |
256,219 | — | ||||||||
Total Liabilities |
3,395,120 | 4,624,260 | ||||||||
Stockholders’ Equity |
||||||||||
Preferred stock, $.01 par value; 5,000,000 shares authorized
Series A - 2,338,137 and 2,171,192 shares issued
and outstanding as of September 30, 2003 and
December 31, 2002, respectively (liquidation value
of $46,763,000 and $43,424,000 at September 30,
2003 and December 31, 2002, respectively) |
23,381 | 21,712 | ||||||||
Series C - 227,916 and 211,643 issued and
outstanding as of September 30, 2003 and December
31, 2002, respectively (liquidation value of
$4,558,000 and $4,233,000 at September 30, 2003 and
December 31, 2002,respectively) |
2,279 | 2,116 | ||||||||
Series D - 153,921 issued and outstanding as of
September 30, 2003 (liquidation value of $3,078,000) |
1,539 | — | ||||||||
Common stock, $.0001 par value; 120,000,000 shares
authorized, 34,152,022 and 32,283,335 issued as of
September 30, 2003 and December 31, 2002,
respectively |
3,416 | 3,229 | ||||||||
Additional paid-in capital |
51,060,560 | 47,150,313 | ||||||||
Accumulated deficit |
(46,971,948 | ) | (42,884,579 | ) | ||||||
| 4,119,227 | 4,292,791 | |||||||||
Less treasury stock, at cost, 0 and 1,000 shares as of
September 30, 2003 and December 31, 2002, respectively |
— | (8,500 | ) | |||||||
Total Stockholders’ Equity |
4,119,227 | 4,284,291 | ||||||||
| $ | 7,514,347 | $ | 8,908,551 | |||||||
See accompanying notes to condensed consolidated financial statements
| (1) | Derived from audited financial statements in the Company’s annual report on Form 10-KSB for the year ended December 31, 2002 |
4
ELECTRIC CITY CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
| Three months ended, September 30 | 2003 | 2002 | |||||||
Revenue |
$ | 857,021 | $ | 1,703,393 | |||||
Expenses
|
|||||||||
Cost of sales |
868,773 | 1,487,560 | |||||||
Expenses
|
|||||||||
Selling, general and administrative |
1,059,416 | 1,283,695 | |||||||
| 1,928,189 | 2,771,255 | ||||||||
Operating loss |
(1,071,168 | ) | (1,067,862 | ) | |||||
Other Income (Expense)
|
|||||||||
Interest income |
3,167 | 4,782 | |||||||
Interest expense |
(7,953 | ) | (9,900 | ) | |||||
Total other income (expense) |
(4,786 | ) | (5,118 | ) | |||||
Loss from continuing operations |
(1,075,954 | ) | (1,072,980 | ) | |||||
Discontinued Operations
|
|||||||||
Loss from discontinued operations |
— | (252,276 | ) | ||||||
Loss on disposal of discontinued operations |
— | — | |||||||
| — | (252,276 | ) | |||||||
Net Loss |
(1,075,954 | ) | (1,325,256 | ) | |||||
Plus Preferred Stock Dividends |
(1,379,889 | ) | (623,704 | ) | |||||
Net Loss Available to Common Shareholder |
$ | (2,455,843 | ) | $ | (1,948,960 | ) | |||
Basic and diluted loss per common share from
continuing operations |
$ | (0.07 | ) | $ | (0.05 | ) | |||
Discontinued operations |
— | (0.01 | ) | ||||||
Basic and Diluted Net Loss Per Common Share |
$ | (0.07 | ) | $ | (0.06 | ) | |||
Weighted Average Common Shares Outstanding |
34,149,435 | 31,196,378 | |||||||
See accompanying notes to condensed consolidated financial statements
5
ELECTRIC CITY CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
| Nine months ended, September 30 | 2003 | 2002 | |||||||
Revenue |
$ | 3,676,495 | $ | 5,025,361 | |||||
Expenses |
|||||||||
Cost of sales |
3,485,217 | 4,125,485 | |||||||
Selling, general and administrative |
3,183,752 | 4,686,092 | |||||||
| 6,668,969 | 8,811,577 | ||||||||
Operating loss |
(2,992,474 | ) | (3,786,216 | ) | |||||
Other Income (Expense) |
|||||||||
Interest income |
6,154 | 21,361 | |||||||
Interest expense |
(34,398 | ) | (45,014 | ) | |||||
Total other income (expense) |
(28,244 | ) | (23,653 | ) | |||||
Loss from continuing operations |
(3,020,718 | ) | (3,809,869 | ) | |||||
Discontinued Operations |
|||||||||
Loss from discontinued operations |
(302,503 | ) | (585,877 | ) | |||||
Loss on disposal of discontinued operations |
(764,148 | ) | — | ||||||
| (1,066,651 | ) | (585,877 | ) | ||||||
Loss before cumulative effect of accounting change |
(4,087,369 | ) | (4,395,746 | ) | |||||
Cumulative effect of accounting change |
— | (4,103,872 | ) | ||||||
Net Loss |
(4,087,369 | ) | (8,499,618 | ) | |||||
Plus Preferred Stock Dividends |
(3,213,133 | ) | (3,529,928 | ) | |||||
Net Loss Available to Common Shareholder |
$ | (7,300,502 | ) | $ | (12,029,546 | ) | |||
Basic and diluted loss per common share from continuing operations |
$ | (0.19 | ) | $ | (0.24 | ) | |||
Discontinued operations |
(0.03 | ) | (0.02 | ) | |||||
Cumulative effect of accounting change |
— | (0.13 | ) | ||||||
Basic and Diluted Net Loss Per Common Share |
$ | (0.22 | ) | $ | (0.39 | ) | |||
Weighted Average Common Shares Outstanding |
33,603,874 | 31,155,117 | |||||||
See accompanying notes to condensed consolidated financial statements
6
ELECTRIC CITY CORP.
STATEMENT OF CONDENSED CONSOLIDATED STOCKHOLDERS’ EQUITY
(Unaudited)
| Series A | Series A | Series C | Series C | Series D | Series D | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||
| Common | Preferred | Preferred | Preferred | Preferred | Preferred | Preferred | Paid-in | Accumulated | Treasury | Stockholders' | |||||||||||||||||||||||||||||||||||||||
| Common Shares | Stock | Shares | Stock | Shares | Stock | Shares | Stock | Capital | Deficit | Stock | Equity | ||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2002 |
32,283,335 | $ | 3,229 | 2,171,192 | $ | 21,712 | 211,643 | $ | 2,116 | — | $ | — | $ | 47,150,313 | $ | (42,884,579 | ) | $ | (8,500 | ) | $ | 4,284,291 | |||||||||||||||||||||||||||
Issuance of common stock (net of offering costs of $154,790) |
1,815,125 | 182 | — | — | — | — | — | — | 1,514,944 | — | — | 1,515,126 | |||||||||||||||||||||||||||||||||||||
Issuance of series D convertible preferred stock
(net of offering costs of $146,500) |
— | — | — | — | — | — | 150,000 | 1,500 | 1,352,000 | — | — | 1,353,500 | |||||||||||||||||||||||||||||||||||||
Issuance of common stock to purchasers of series D
convertible preferred stock |
22,562 | 2 | — | — | — | — | — | — | (2 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||
Cumulative dividends on preferred stock |
— | — | — | — | — | — | — | — | (1,871,385 | ) | — | — | (1,871,385 | ) | |||||||||||||||||||||||||||||||||||
Satisfaction of accrued dividends through the issuance
of preferred stock |
— | — | 166,945 | 1,669 | 16,273 | 163 | 3,921 | 39 | 1,869,514 | — | — | 1,871,385 | |||||||||||||||||||||||||||||||||||||
Warrants issued in connection with convertible debt issuance |
— | — | — | — | — | — | — | — | 483,400 | — | — | 483,400 | |||||||||||||||||||||||||||||||||||||
Value of beneficial conversion feature of convertible notes |
— | — | — | — | — | — | — | — | 180,381 | — | — | 180,381 | |||||||||||||||||||||||||||||||||||||
Exercise of warrants to purchase common stock |
32,000 | 3 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||