10QSB: Optional form for quarterly and transition reports of small business issuers
Published on May 15, 2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2006.
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ____________.
Commission file number: 0-25097
WORLD ENERGY SOLUTIONS, INC.
(Exact name of small business issuer in its charter)
Florida 65-0783722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3900A 31st Street North, St. Petersburg, Florida 33714
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 727-525-5552
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. (x)Yes (_)No
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) (_)Yes (x)No
The number of shares of the issuer's common stock, par value $.0001 per share,
outstanding as of May 9, 2006, was 33,241,465.
Transitional Small Business Disclosure Format (Check one): (_)Yes (x) No
Part I. Financial Information
Item 1. Financial Statements.
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
BALANCE SHEET
MARCH 31, 2006
ASSETS
Current assets
Cash $ 283,374
Accounts receivable 48,340
Inventory 111,198
Prepaid expenses and other current assets 356,029
--------------
Total current assets 798,941
--------------
Property and equipment, net 72,626
Other assets
Deposits 3,850
Deferred offering costs 11,000
--------------
Total other assets 14,850
--------------
Total Assets $ 886,417
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 21,180
Accounts payable 86,502
Accrued expenses 13,155
Advance payments from dealers and customers 15,679
Loans payable to related parties 136,978
--------------
Total current liabilities 273,494
--------------
Long-term debt, less current portion 43,736
--------------
Stockholders' equity
Preferred stock; $.0001 par value; 100,000,000 shares
authorized and unissued -
Common stock; $.0001 par value; 100,000,000 shares
authorized; 27,109,198 shares issued and outstanding 2,711
Paid-in capital 6,014,668
Accumulated deficit (5,448,192)
--------------
Total stockholders' equity 569,187
--------------
Total Liabilities and Stockholders' Equity $ 886,417
==============
The Accompanying Notes are an Integral Part of These Financial Statements
F-1
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
--------------------------------
2006 2005
-------------- --------------
Net sales $ 103,763 $ 104,988
Cost of goods sold 60,020 58,950
-------------- --------------
Gross profit 43,743 46,038
General and administrative expenses 3,734,388 161,723
-------------- --------------
Earnings (loss) from operations (3,690,645) (115,685)
-------------- --------------
Other income (expense)
Gain on disposal of property and equipment - 47,457
Interest expense (4,560) (11,793)
Research and development (54,622) (45,900)
-------------- --------------
Total other income (expense) (59,182) (10,236)
-------------- --------------
Earnings (loss) before provision for
income taxes (3,749,827) (125,921)
Provision for income taxes - -
-------------- --------------
Net loss $ (3,749,827) $ (125,921)
============== ==============
Loss per common share $ (0.15) $ (0.01)
============== ==============
Weighted average common shares outstanding 25,624,707 19,114,371
============== ==============
The Accompanying Notes are an Integral Part of These Financial Statements
F-2
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
--------------------------------
2006 2005
-------------- --------------
Cash flows from operating activities
Net loss $ (3,749,827) $ (125,921)
-------------- --------------
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 3,845 3,562
Gain on disposal of property and
equipment - (47,457)
Stock issued for services 3,737,501 -
(Increase) decrease in:
Accounts receivable 1,445 15,117
Inventory 620 6,365
Prepaid expenses and other current
assets (263,643) (119)
Increase (decrease) in:
Accounts payable 57,674 (28,187)
Accrued expenses (506) (807)
Advance payments from dealers and
customers (3,378) (20,469)
-------------- --------------
Total adjustments 3,533,558 (71,995)
-------------- --------------
Net cash used in operating
activities (216,269) (197,916)
-------------- --------------
Cash flows from investing activities
Purchase of equipment (6,336) -
Proceeds from sale of property and
equipment - 324,404
-------------- --------------
Net cash provided by (used in)
investing activities (6,336) 324,404
-------------- --------------
Cash flows from financing activities
Proceeds from issuance of common stock 300,000 20,997
Proceeds from loans payable to related
parties - 32,708
Repayment of loans payable to related
parties (30,446) -
Proceeds from long-term debt - 21,700
Repayment of long-term debt (3,769) -
-------------- --------------
Net cash provided by financing
activities 265,785 75,405
-------------- --------------
Net increase in cash 43,180 201,893
Cash, beginning of period 240,194 101,961
-------------- --------------
Cash, end of period $ 283,374 $ 303,854
============== ==============
The Accompanying Notes are an Integral Part of These Financial Statements
F-3
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
STATEMENTS OF CASH FLOWS
(Continued)
Three Months Ended
March 31,
--------------------------------
2006 2005
-------------- --------------
Supplemental disclosures of noncash investing
and financing activities:
Common stock issued for services $ 3,737,501 $ -
Long-term debt repaid with proceeds from
sale of property and equipment $ - $ 210,000
Cash flow information:
Cash paid for interest $ 1,674 $ 11,793
Cash paid for income taxes $ - $ -
The Accompanying Notes are an Integral Part of These Financial Statements
F-4
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
March 31, 2006 AND 2005
The information presented herein as of March 31, 2006, and for the three-months
ended March 31, 2006, is unaudited.
(1) Organization:
Advanced 3D Ultrasound Services, Inc. was incorporated on September 23, 1997.
Advanced 3D Ultrasound Services, Inc. merged with World Energy Solutions, Inc.
(WESI) effective August 17, 2005. Advanced 3D Ultrasound Services, Inc. remained
as the surviving entity as the legal acquiror, while WESI was the accounting
acquiror.
On November 7, 2005, Advanced 3D Ultrasound Services, Inc. changed its name to
World Energy Solutions, Inc. Additionally, the Company agreed to increase its
authorized common shares to 100,000,000 shares.
On November 7, 2005, WESI merged with Professional Technical Systems, Inc.
(PTS). WESI remained as the surviving entity as the legal acquiror, while PTS
was the accounting acquirer.
(2) Basis of Presentation:
The accompanying financial statements of WESI (the Company) have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to From 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal required adjustments) considered necessary for a fair presentation
have been included.
Operating results for the three-month period ended March 31, 2006, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2006. For further information, refer to the financial statements
and footnotes included in the Company's annual report of Form 10-KSB for the
year ended December 31, 2005.
Net loss per common share is computed in accordance with the requirements of
Statement of Financial Accounting Standards No. 128 (SFAS 128). SFAS 128
requires net loss per share information to be computed using a simple weighted
average of common shares outstanding during the periods presented.
(3) Stock Transactions:
On January 31, 2006, the Company entered into employment agreements with its
CEO/CFO and President. The agreements call for annual salaries of $156,000 and
600,000 shares of Company common stock. The common stock was valued at $1.50 per
share based on the recent trading price for the Company's common stock. The
total value of the shares issued ($1,800,000) was included in salaries expense
during the first quarter of 2006. The employment agreements contain a noncompete
agreement and provide for severance pay equal to one year base salary.
On January 31, 2006, the Company entered into six consulting agreements for
various services including marketing, business development, product design
engineering and product development, real estate acquisition and business
planning. These agreements provide as compensation the issuance of 925,000
shares of common stock. The stock was valued at $1.50 per share based on the
recent trading price for the Company's common stock. Three of the agreements are
for terms ranging from 12 months to 26 months. The value of those agreements
($337,500) has been capitalized as prepaid expenses and is being recognized as
consulting expense over the life of the agreement. The value of the common stock
issued related to the remaining agreements ($1,050,000) has been expensed during
the first quarter of 2006. Additionally, the agreements include total cash
compensation of $3,050 per week and reimbursement of expenses. Lastly, two of
the agreements allow for additional compensation to be determined between the
Company and the consultant for specific services.
F-5
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
March 31, 2006 AND 2005
(3) Stock Transactions: (Continued)
On February 4, 2006, the Company entered into a media campaign agreement for
nationally syndicated newspaper and/or radio features in exchange for restricted
common stock valued at $1,000,000 to be satisfied in two payments. On February
28, 2006, the Company made the first payment with the issuance of 326,797 shares
of restricted common stock. The value of these shares ($550,000) has been
expensed during the first quarter of 2006.
(4) Subsequent Events:
On April 3, 2006, the Company entered into a financial and strategic consulting
agreement with a consultant for investor introductions leading to qualified
equity financing up to $10 million and project financing up to $100 million.
Additionally the consultant will provide financial consulting services including
the development of financial projections, presentation materials and customized
proposals. For these services the consultant received 6,309,000 unregistered
shares of common stock on April 3, 2006. The value of the shares issued will be
capitalized as deferred offering costs in anticipation of equity financing to be
received.
F-6
Item 2. Management's Discussion and Analysis or Plan of Operation.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Introduction
World Energy Solutions, Inc. (referred to as the "Company", "WESI," "New WESI,"
or in the first person notations of "we," "us," and "our") began operations in
1984 under the corporate name of Professional Technical Systems, Inc. (PTS). PTS
merged with WESI in November 2005 (the "November 2005 Merger") with WESI being
the legal acquiror but PTS being the accounting acquiror. Therefore the
financial statements presented herein are those of WESI (formerly known as PTS)
as the surviving entity of the November 2005 Merger.
In August 2005, a Florida corporation named World Engery Solutions, Inc. ("Old
WESI") merged with Advanced 3D Ultrasound, Inc. (ADVU) with ADVU being the legal
acquiror but Old WESI being the accounting acquiror (the "August 2005 Merger").
ADVU was the surviving entity of the August 2005 Merger and subsequently changed
its name to WESI.
ADVU, Old WESI, and New WESI, prior to merging with PTS, had no revenues and
minimal assets and activity. PTS has been the operating manufacturer before and
after the merger.
WESI manufactures and sells transient voltage surge suppressors and related
products and commercial and residential energy-saving equipment and applications
to distributors and customers throughout the United States. Although this
activity is expected to continue, the Company plans to implement a new business
model to market a multi-product package to commercial, industrial and
residential facilities in order to lower their overall cost of electric, gas and
water. The Company plans to market its package both by direct sales as well as a
Shared Revenue Program (SRP) where the Company pays for the entire installation
in return for a percentage of the realized savings. This new business model is
expected to increase revenues and profits for the Company.
Liquidity and Capital Resources
Our cash remained stable at approximately $283,000 as of March 31, 2006 compared
to $240,000 as of December 31, 2005. This is due mostly to proceeds from the
sale of common stock since we are using cash for operating activities.
The cash used in operations in 2006 exceeded the cash used in operations in 2005
by approximately $18,000. Although gross profit from sales remained virtually
unchanged, general and administrative expenses increased approximately
$3,572,000. This increase is attributable to increased salaries and consulting
fees. However, approximately $3,400,000 of salaries and consulting fees were
funded through the issuance of common stock during the first quarter of 2006.
These agreements are for future services but were funded almost entirely in the
first quarter of 2006.
We do not believe our working capital is sufficient to implement the full
spectrum of our planned, new energy-saving business model. Operations in 2006
and most of 2005 have been funded in large part through the sale of common stock
and such funding will need to continue in order to allow us to implement our new
business model. The Company has been successful in acquiring certain services
through consulting agreements that are funded in large part through the issuance
of common stock as noted above. However, the Company currently is offering its
stock through a private placement memorandum. The Company plans to raise up to
$10,000,000 through this sale of common stock. The proceeds from the sale will
be used to fund research and development, consulting and professional fees, new
job installs, other expenses and for working capital.
On January 31, 2006, the Company entered into employment agreements with its
CEO/CFO and President. The agreements call for annual salaries of $156,000 and
600,000 shares of Company common stock. The employment agreements contain
noncompete agreements and provide for severance pay equal to one year base
salary.
On January 31, 2006, the Company entered into six consulting agreements for
various services including marketing, business development, product design
engineering and product development, real estate acquisition and business
planning. These agreements provide as compensation the issuance of 925,000
shares of common stock. Additionally, the agreements include total cash
compensation of $3,050 per week and reimbursement of expenses. Lastly, two of
the agreements allow for additional compensation to be determined between the
Company and the consultant for specific services.
On February 24, 2006, the Company entered into a media campaign agreement for
nationally syndicated newspaper and/or radio features in exchange for restricted
common stock valued at $1,000,000 to be satisfied in two payments. On February
28, 2006, the Company made the first payment with the issuance of 326,797 shares
of restricted common stock. This media campaign will be utilized to gain
national attention for the Company and its business model of energy saving
contracts.
On April 3, 2006, the Company entered into a financial and strategic consulting
agreement with a consultant for investor introductions leading to qualified
equity financing up to $10 million and project financing up to $100 million.
Additionally the consultant will provide financial consulting services including
the development of financial projections, presentation materials and customized
proposals. For these services the consultant received 6,309,000 unregistered
shares of common stock on April 3, 2006.
Currently the Company has debt financing either from its officers, or guaranteed
by its officers. Debt financing is not expected to be a funding resource.
Results of Operations and Critical Accounting Policies and Estimates
The results of operations are based on preparation of financial statements in
conformity with accounting principles generally accepted in the United States.
The preparation of financial statements requires management to select accounting
policies for critical accounting areas as well as estimates and assumptions that
affect the amounts reported in the financial statements. The Company's
accounting policies are more fully described in Note 1 of Notes to Financial
Statements found in the Company's annual financial statements filed with Form
10-KSB. We have identified the following accounting policy and related judgment
as critical to understanding the results of our operations.
Valuation Allowance on Deferred Tax Assets
SFAS No. 109, "Accounting for Income Taxes" requires that deferred tax assets be
evaluated for future realization and reduced by a valuation allowance to the
extent we believe a portion will not be realized. We consider many factors when
assessing the likelihood of future realization of our deferred tax assets
including our recent cumulative earnings experience, expectations of future
taxable income, the carry-forward periods available to us for tax reporting
purposes and other relevant factors. At December 31, 2005, our net deferred tax
assets are $3,949,000, comprised principally of net operating loss carry
forwards (NOLs). Classification of deferred tax assets between current and
long-term categories is based on the expected timing of realization, and the
valuation allowance is allocated on a prorata basis.
We have reflected a valuation allowance of 100%, which resulted in an income tax
benefit of zero. The range of possible judgments relating to the valuation of
our deferred tax asset is very wide. If we had concluded that the weight of
available evidence supported a decision that substantially all of our deferred
tax assets may be realized, we would have a substantial income tax benefit in
our statement of operations. Significant judgment is required in making this
assessment, and it is very difficult to predict when, if ever, our assessment
may conclude our deferred tax assets is realizable.
2006 Compared to 2005
Total product sales for 2006 were $104,000 compared to 2005 sales of $105,000.
Gross profit on sales decreased from 44% in 2005 to 42% in 2006.
Our general and administrative expenses increased to $3,734,000 in 2006 from
$162,000 in 2005. The Company incurred consulting fees of $1,125,000 in 2006 and
none in 2005 related to its proposed business model. Lastly, salaries increased
approximately $1,932,000 due to increased salaries, additional personnel and the
employment agreements with the Company's president and its CEO/CFO as noted
above.
We expect significant increases in future consulting, salary and research and
development expenses as a result of the implementation of our new business
model.
Forward-looking Statement
All statements other than statements of historical fact in this report are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, and are based on management's current expectations of the
Company's near term results, based on current information available and
pertaining to the Company. The Company assumes no obligation to publicly update
any forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements.
Item 3. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures
The Company's management, recognizes its responsibility for establishing and
maintaining internal control over financial reporting for the Company. After
evaluating the effectiveness of our "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as
of March 31, 2006 (the "Evaluation Date"), the Company's management has
concluded, as of the Evaluation Date, the Company's disclosure controls and
procedures were adequate and designed to ensure the information required to be
disclosed in the reports filed or submitted by us under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported with in the
requisite time periods.
(b) Effectiveness of Internal Control
The Company's management is reviewing the Company's internal controls over
financial reporting to determine the most suitable recognized control framework.
The Company will give great weight and deference to the product of the
discussions of the SEC's Advisory Committee on Smaller Public Companies (the
"Advisory Committee") and the Committee of Sponsoring Organizations' task force
entitled Implementing the COSO Control Framework in Smaller Businesses (the
"Task Force"). Both the Advisory Committee and the Task Force are expected to
provide practical, needed guidance regarding the applicability of Section 404 of
the Sarbanes-Oxley Act to small business issuers. The Company's management
intends to perform the evaluation required by Section 404 of the Sarbanes-Oxley
Act at such time as a framework is adopted by the Company. At such time the
Company adopts and implements a framework and as required by the SEC's reporting
requirements, the Company's registered accounting firm will issue an
"attestation report" on the Company management's assessment of internal
controls.
(c) Changes in Internal Controls
After evaluation by the Company's management, the Company's management has
determined there were no significant changes in the Company's internal controls
or in other factors that could significantly affect the Company's internal
controls subsequent to the Evaluation Date.
Part II. Other Information
Item 1. Legal Proceedings.
NONE
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Date Name Total Dollar Price per Total Number
Amount Share of Shares
- --------- ----------------------- ------------ --------- ------------
2/28/2006 Global Media Fund, Inc. $ 549,999.68 $ 1.68 326,797
3/24/2006 Flood, Phillip $ 50,000.00 $ 0.50 100,000
3/24/2006 Kratz, Robert C $ 100,000.00 $ 0.50 200,000
3/29/2006 Peel, Joseph E $ 50,000.00 $ 0.50 100,000
3/30/2006 Prange, Ed and Alice $ 50,000.00 $ 0.50 100,000
3/30/2006 Kirk, Roger M $ 50,000.00 $ 0.50 100,000
All sales were made pursuant to Section 4(2) of the 1933 Act. The proceeds of
the sale of these securities is to provide operating capital and development
costs.
Item 3. Defaults Upon Senior Securities.
NONE
Item 4. Submission of Matters to a Vote of Security Holders.
NONE
Item 5. Other Information.
NONE
Item 6. Exhibits and Reports on Form 8-K.
Exhibit Number Location
and Description Reference
- --------------------------------------------------------------------------------
(b) Financial Statements Filed Herewith
(c) Exhibits required by Item 601, Regulation S-B:
(1.0) Underwriting Agreement None
(2.0) Plan of purchase, sale, reorganization, arrangement,
liquidation, or succession
(2.1) Agreement and Plan of Merger Between See Note 6
Registrant and World Energy Solutions, Inc (below)
(2.2) Agreement and Plan of Merger Between See Note 7
Registrant and Professional Technical (below)
Systems, Inc.
(3.0) Articles of incorporation and by-laws
(3.1) Initial Articles of Incorporation filed See Note 1
November 23, 1998. (below)
(3.2) Amendment to initial Articles of See Note 2
Incorporation (Name Change, Authorized (below)
Shares, & Issuance of Shares).
(3.3) By-Laws filed February 2, 1999. See Note 3
(below)
(4.0) Instruments defining the rights of security
holders, including indentures
(4.1) Specimen Share Certificate for Common Stock.
(9.0) Voting Trust Agreement None
(10.0) Material Contracts
(10.1) Strategic Alliance Agreement Between See Note 4
the Company and UTEK Corporation (below)
(10.2) Employment Agreement with Benjamin Croxton See Note 5
dated January 31, 2006. (below)
(10.3) Employment Agreement with Mike Prentice See Note 5
dated January 31, 2006. (below)
(10.4) Consulting Agreement with Thomas Kurk See Note 5
dated January 31, 2006. (below)
(10.5) Consulting Agreement with Rachel Steele See Note 5
dated January 31, 2006. (below)
(10.6) Consulting Agreement with Robert J. Depalo See Note 5
dated January 31, 2006. (below)
(10.7) Consulting Agreement with Nancy W. Hunt See Note 5
dated January 31, 2006. (below)
(10.8) Consulting Agreement with George Walker See Note 5
dated January 31, 2006. (below)
(10.9) Consulting Agreement with Dan Witherspoon See Note 5
dated January 31, 2006. (below)
(10.10) Agreement and Plan of Merger between
Registrant and World Energy Solutions, Inc.,
a Florida corporation, with Registrant
remaining as the surviving entity, dated See Note 8
August 16, 2005. (below)
(10.11) Strategic Alliance Agreement with UTEK
Corporation, a Delaware corporation dated See Note 9
September 9, 2005. (below)
(11.0) Statement re: Computation of Per Share Earnings Note 1
to Financial
Statements
(16.0) Letter on changes in certifying accountant None
(18.0) Letter on change in accounting principles None
(20.0) Other documents or statements to security holders None
or any document incorporated by reference
(21.0) Subsidiaries of Registrant None
(22.0) Published Report re: Matters Submitted to Vote of
Security Holders None
(23.0) Consents of Experts and Counsel None
(24.0) Power of Attorney None
(31.0) Certificate of Chief Executive Officer Filed Herewith
and Chief Financial Officer
(32.0) Certification pursuant to 18 U.S.C. Section 1350, Filed Herewith
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(99.0) Additional exhibits None
Exhibit Key
- --------------------------------------------------------------------------------
Note 1 Incorporated by reference to the Company's Form 10-SB filed with the
Securities and Exchange Commission on November 23, 1998.
Note 2 Incorporated by reference to the Company's Form 10-K filed with the
Securities and Exchange Commission on November 18, 2005.
Note 3 Incorporated by reference to the Company's Form 10-SBA No. 1 filed with
the Securities and Exchange Commission on February 2, 1999.
Note 4 Incorporated by reference to the Company's Form 10-K filed with the
Securities and Exchange Commission on September 13, 2005.
Note 5 Incorporated by reference to the Company's Form S-8 filed with the
Securities and Exchange Commission on January 31, 2006.
Note 6 Incorporated by reference to the Company's Form 10-K filed with the
Securities and Exchange Commission on August 19, 2005.
Note 7 Incorporated by reference to the Company's Form 10-K filed with the
Securities and Exchange Commission on November 14, 2005.
Note 8 Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on August 16, 2005.
Note 9 Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on September 9, 2005.
(b) REPORTS ON FORM 8-K:
Form 8-K Filed on April 5, 2006.
Item 1.01 on Form 8-K: Entry into a Material Definitive Agreement.
On April 3, 2006 World Energy Solutions, Inc. ("WESI" or the "Company")
entered into a Financial and Strategic Consulting Agreement (the "Agreement")
with Gray Capital Partners, Inc. ("Gray Capital") of Atlanta, Georgia. Pursuant
to the Agreement, Gray Capital will introduce the Company to prospective capital
sources and actively assist the Company with negotiations regarding terms and
structuring of equity capital financing, senior or sub-debt, convertible debt
instruments and/or commercial credit lines. The purpose of securing the equity
investments and debt financing is for use by WESI in the execution of its
business plan and acquisitions on a best efforts basis. The term of the
Agreement is for a period of one year.
The Agreement provides Gray Capital will assist the Company with acquiring
equity capital financing in amounts of up to ten million dollars
($10,000,000.00). The Agreement also provides Gray Capital will assist the
Company in acquiring project financing through, among other things, secured
senior debt in an amount of up to one hundred million dollars ($100,000,000.00).
The security to be provided by the Company for said debt financing is
undetermined as of the date of the Agreement and will be ascertained as debt
financing arrangements are negotiated.
Finally, Gray Capital will assist the Company in identifying merger and
acquisition targets, as well as venture capital funds, hedge funds, underwriters
and market makers and further provide consulting services toward the strategic
development and deployment of the Company's unique energy conservation services
business model.
In exchange for the services to be rendered under the Agreement, the
Company has issued to Gray Capital, six million, three hundred nine thousand
(6,309,000) shares of the Company's restricted common stock.
Item 3.02 on Form 8-K: Unregistered Sales of Equity Securities.
Pursuant to the Agreement identified in Item 1.01 above, the Company issued
6,309,000 shares of its restricted common stock to Gray Capital Partners, Inc.
on April 4, 2006.
As consideration for its receipt of the Company's restricted common stock,
Gray Capital has agreed to assist the Company with acquiring equity capital
financing in amounts of up to ten million dollars ($10,000,000.00). The
Agreement also provides that Gray Capital will assist the Company in acquiring
project financing through, among other things, secured senior debt in an amount
of up to one hundred million dollars ($100,000,000.00). Finally, Gray Capital
will assist the Company in identifying merger and acquisition targets, as well
as venture capital funds, hedge funds, underwriters and market makers and
further provide consulting services toward the strategic development and
deployment of the Company's unique energy conservation services business model.
Form 8-K Filed on May 2, 2006.
Item 1.01 on Form 8-K: Entry Into a Material Definitive Agreement.
On April 27, 2006 World Energy Solutions, Inc. ("WESI") entered into a
Subcontract Agreement (the "Agreement") with Fort Berthold Development
Corporation, Inc. ("FBDC") to participate as a subcontractor on construction
projects where FBDC will be the General Contractor for the United States
Department of the Interior ("DOI"). The term of the Agreement is two years. FBDC
is identified as the General Contractor under an existing contract with the DOI.
Under the Agreement, WESI will provide all management, supervision,
estimating, labor, material, tools, and equipment necessary for the performance
of minor construction, rehabilitation, alterations and new construction for
various DOI locations and installations within the Washington D.C. metropolitan
area and nationwide as requested by FBDC in various task orders submitted to
WESI. The Company's entry into the Agreement follows its earlier execution of a
Teaming Agreement with FBDC to pursue procurement of contracts with the United
States Government in response to its dissemination of requests for proposals to
obtain goods and services. The Agreement furthers the business plan of FBDC and
WESI to jointly cooperate in the submission of proposals to and procurement of
contracts with the United States Government regarding comprehensive energy
savings and construction solutions for government facilities.
Form 8-K/A Filed on May 2, 2006.
Item 1.01 on Form 8-K/A: Entry Into a Material Definitive Agreement.
On April 27, 2006 World Energy Solutions, Inc. ("WESI" or the "Company")
entered into a Subcontract Agreement (the "Agreement") with Fort Berthold
Development Corporation, Inc. ("FBDC") to participate as a subcontractor on
construction projects where FBDC will be the General Contractor for the United
States Department of the Interior ("DOI"). The term of the Agreement is for one
year. FBDC is identified as the General Contractor under an existing contract
with the DOI.
Under the Agreement, WESI will provide all management, supervision,
estimating, labor, material, tools, and equipment necessary for the performance
of minor construction, rehabilitation, alterations and new construction for
various DOI locations and installations within the Washington D.C. metropolitan
area and nationwide as requested by FBDC in various task orders submitted to
WESI. The Company's entry into the Agreement follows its earlier execution of a
Teaming Agreement with FBDC to pursue procurement of contracts with the United
States Government in response to its dissemination of requests for proposals to
obtain goods and services. The Agreement furthers the business plan of FBDC and
WESI to jointly cooperate in the submission of proposals to and procurement of
contracts with the United States Government regarding comprehensive energy
savings and construction solutions for government facilities.
Form 8-K Filed on May 10, 2006.
Item 8.01 on Form 8-K: Other Events.
On May 8, 2006, World Energy Solutions, Inc. ("WESI" or the "Company")
entered into a Memorandum of Understanding (the "Memorandum") with Chickasaw
Nation Industries, Inc. ("CNI") to facilitate the Company's participation as a
sub-consultant/subcontractor regarding construction projects pursued by the
parties with CNI as the Lead Party/Prime Contractor. The purpose of the
Memorandum is to provide a basic funding outline to facilitate the Company's
participation in projects with CNI. Pursuant to the Memorandum, CNI may
initially commit up to $1,000,000.00 to various construction projects mutually
agreed upon and ultimately approved by CNI, such as hospitals, schools, federal
facilities and/or hotels. Each agreed upon project will be subject to a proposed
performance contract containing terms and conditions that are mutually agreeable
to WESI and CNI.
The Memorandum follows the Teaming Agreement between WESI and CNI dated
December 20, 2005. Under the one-year Teaming Agreement CNI and WESI plan to
jointly cooperate to bid on and make proposals for contracts to offer
governmental entities/agencies and private customers comprehensive energy
savings and construction solutions for government, commercial, industrial and
residential facilities.
SIGNATURES
Pursuant to the requirements 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.
WORLD ENERGY SOLUTIONS, INC.
Dated: May 15, 2006 /s/ Benjamin C. Croxton
--------------------------
Benjamin C. Croxton
Chief Executive Officer
Chief Financial Officer