10QSB: Optional form for quarterly and transition reports of small business issuers
Published on November 14, 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 September 30, 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 November 10, 2006, was 28,322,376.
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.)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
BALANCE SHEET
SEPTEMBER 30, 2006
(UNAUDITED)
ASSETS
Current assets
Cash $ 18,754
Accounts receivable 77,045
Inventory 87,339
Prepaid expenses and other current assets 186,092
------------
Total current assets 369,230
------------
Property and equipment, net 75,152
------------
Other assets
Deposits 3,850
------------
Total Assets $ 448,232
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 34,290
Accrued expenses 8,437
Advance payments from dealers and customers 15,679
Loans from related parties 6,327
------------
Total current liabilities 64,733
------------
Commitments and contingencies
Stockholders' equity
Common stock; $.0001 par value; 100,000,000 shares
authorized and unissued -
Common stock; $.0001 par value; 100,000,000 shares
authorized; 28,234,876 shares issued and outstanding 2,822
Paid-in capital 6,709,356
Accumulated deficit (6,328,679)
------------
Total stockholders' equity 383,499
------------
Total Liabilities and Stockholders' Equity $ 448,232
============
The accompanying notes are an integral
part of these statements.
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales $ 162,501 $ 148,603 $ 429,832 $ 372,283
----------- ----------- ----------- -----------
Cost of goods sold 66,367 75,948 201,829 210,728
----------- ----------- ----------- -----------
Gross profit 96,134 72,655 228,003 161,555
General and administrative
expenses (388,264) 478,020 4,697,566 980,666
----------- ----------- ----------- -----------
Earnings (loss) from
operations 484,398 (405,365) (4,469,563) (819,111)
----------- ----------- ----------- -----------
Other income (expense)
Gain on disposal of property
and equipment - - - 47,457
Interest expense - (368) (6,278) (15,932)
Research and development (48,262) (39,451) (154,473) (131,826)
----------- ----------- ----------- -----------
Total other income
(expense) (48,262) (39,819) (160,751) (100,301)
----------- ----------- ----------- -----------
Earnings (loss) before
provision for income
taxes 436,136 (445,184) (4,630,314) (919,412)
Provision for income taxes - - - -
----------- ----------- ----------- -----------
Net loss $ 436,136 $ (445,184) $(4,630,314) $ (919,412)
=========== =========== =========== ===========
Income (loss) per common
share $ 0.01 $ (0.04) $ (0.15) $ (0.05)
=========== =========== =========== ===========
Weighted average common
shares outstanding 34,334,403 12,029,879 31,241,666 16,724,440
=========== =========== =========== ===========
The accompanying notes are an integral
part of these statements.
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
-------------------------
2006 2005
------------ ------------
Cash flows from operating activities
Net loss $ (4,630,314) $ (919,413)
------------ ------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 12,283 10,764
Gain on disposal of property and equipment - (47,457)
Stock issued for services 3,937,500 -
(Increase) decrease in:
Accounts receivable (27,260) (8,436)
Inventory 24,479 26,242
Prepaid expenses and other current assets (82,706) 121
Increase (decrease) in:,
Accounts payable 5,462 (35,732)
Accrued expenses (5,224) (3,024)
Advance payments from dealers and customers (3,378) (4,790)
------------ ------------
Total adjustments 3,861,156 (62,312)
------------ ------------
Net cash used in operating activities (769,158) (981,725)
Cash flows from investing activities
Purchase of equipment (17,300) (901)
Proceeds from sale of property and equipment - 324,404
------------ ------------
Net cash provided by (used in) investing
activities (17,300) 323,503
------------ ------------
Cash flows from financing activities
Proceeds from issuance of common stock 794,800 858,121
Proceeds from loans payable to related parties - 30,000
Repayment of loans payable to related parties (161,097) (238,280)
Proceeds from long-term debt - 15,000
Payments for common stock redeemed - (8,563)
Repayment of long-term debt (68,685) (56,718)
------------ ------------
Net cash provided by financing activities 565,018 599,560
------------ ------------
Net increase (decrease) in cash (221,440) (58,662)
Cash, beginning of period 240,194 101,961
------------ ------------
Cash, end of period $ 18,754 $ 43,299
============ ============
The accompanying notes are an integral
part of these statements.
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Continued)
Nine Months Ended
September 30,
--------------------------
2006 2005
------------ ------------
Supplemental disclosures of non-cash investing and
financing activities:
Common stock issued for services $ 3,937,500 $ -
Long-term debt repaid with proceeds from sale of
property and equipment $ - $ 210,000
Cash flow information:
Cash paid in interest $ 8,381 $ 11,793
Cash paid for income taxes - $ -
The accompanying notes are an integral
part of these statements.
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
The information presented herein as of September 30, 2006, and for the
three-months and nine months ended September 30, 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 acquirer, while WESI was the accounting
acquirer.
On November 7, 2005, Advanced 3D Ultrasound Services, Inc. changed its name to
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 acquirer, 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 and nine-month periods ended September 30, 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
non-compete 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
WORLD ENERGY SOLUTIONS, INC.
(FORMERLY ADVANCED 3D ULTRASOUND SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(3) Stock Transactions: (Continued)
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.
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. The value of these shares ($550,000) has been
expensed during the first quarter of 2006. During the second quarter of 2006 the
Company made three monthly payments with the issuance of 101,306 shares of
restricted common stock. The value of these shares ($150,000) has been expensed
during the second quarter of 2006. During the third quarter of 2006 the Company
made one monthly payment with the issuance of 34,772 shares of restricted common
stock. The value of these shares ($50,000) has been expensed during the third
quarter of 2006.
On April 3, 2006, the Company entered into a one-year 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 was to 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 restricted common stock on April 3, 2006. The
value of the shares ($3,154,500) issued was capitalized as prepaid expenses and
was being recognized as consulting expenses over the life of the agreement. On
September 28, 2006 the Company terminated the consulting agreement and cancelled
the 6,309,000 shares that were previously issued due to nonperformance of the
agreement as contemplated by the parties.
(4) Subsequent Events:
On October 11, 2006, the Company acquired Pure Air Technologies, Inc., a
subsidiary of UTEK Corporation in a tax-free stock-for-stock exchange. The
Company issued 100,000 shares of its Series A convertible preferred stock to
UTEK Corporation in exchange for 100% of the issued and outstanding shares of
Pure Air Technologies, Inc. (PATI), assignment of the technology license and the
sponsored research agreement and $300,000 cash.
After one year from the date of issuance of the preferred stock, the Company and
UTEK agree that the preferred stock is convertible into shares of the Company's
restricted common stock at the election of UTEK. The Company and UTEK also agree
that the preferred stock is convertible into the number of shares of the
Company's restricted common stock having a value of $4,050,000 at a share price
of no less than ten cents per share. Additionally the preferred stock shall bear
interest at 5% per annum, based on the $4,050,000 agreed value of the PATI
technology.
PATI holds a worldwide exclusive license for a technology designed to help
eliminate organic chemicals and microorganisms from indoor environments.
The Company extended a consulting contract with a company for the twelve months
ending September 2007. The Company will issue 82,759 shares of common stock
valued at $120,000 for consulting services. The shares will vest ratably over
the 12-month period.
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," 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 with WESI being the legal acquirer but PTS being the
accounting acquirer. Therefore the financial statements presented herein are
those of WESI (formerly known as PTS).
In August 2005, WESI merged with Advanced 3D Ultrasound, Inc. (ADVU) with ADVU
being the legal acquirer but WESI being the accounting acquirer. ADVU changed
its name to WESI.
ADVU and WESI prior to merging with PTS had no revenues and minimal assets and
activity. PTS has been an 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.
The Company also plans to acquire new technologies that complement its new
business model such as the acquisition of Pure Air Technologies, Inc. discussed
below.
Liquidity and Capital Resources
Our cash decreased to approximately $18,754 as of September 30, 2006 compared to
$240,000 as of December 31, 2005. This is due mostly to the repayment of loans
to related parties and other long term debt and the funding of operating
activities. Proceeds from the issuance of common stock have funded the cash used
for operating activities and the repayment of the loans.
The cash used in operations in 2006 was less than the cash used in operations in
2005 by approximately $212,000. Although gross profit from sales increased,
general and administrative expenses increased approximately $3,717,000. This
increase is attributable to increased salaries and consulting fees. However,
approximately $3,937,000 of salaries, consulting fees and advertising costs were
funded through the issuance of common stock during the first three quarters 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
non-compete 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. During the second quarter the Company made three
monthly payments with the issuance of 101,306 shares of restricted common stock.
During the third quarter the Company made one monthly payment with the issuance
of 34,772 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 agreed to 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. On September 28, 2006 the
Company terminated the consulting agreement and cancelled the 6,309,000 shares
that were previously issued due to nonperformance of the agreement as
contemplated by the parties.
Previously the Company had debt financing either from its officers, or
guaranteed by its officers. This debt was repaid in full during the second
quarter of 2006. Debt financing is not expected to be a funding resource.
In October 2006, the Company acquired all of the outstanding shares of Pure Air
Technologies, Inc. (PATI) from UTEK Corporation, a consultant of the Company.
Previously PATI licensed certain technology from the University of Florida. PATI
agreed to pay future patent costs related to the technology and to pay future
royalties based on sales of products incorporating the technology. PATI also
entered into a sponsored research agreement with the University through the
payment of $231,000. The Company issued UTEK 100,000 of its preferred stock in
exchange for all of the outstanding shares of PATI, assignment of the technology
license and the sponsored research agreement and $300,000 cash. The Company
believes any future costs related to the PATI technology can be funded through
operations.
After one year from the date of issuance of the Preferred Stock, the Company and
UTEK agree that the Preferred Stock is convertible into shares of the Company's
restricted common stock at the election of UTEK. The Company and UTEK also agree
that the Preferred stock is convertible into the number of shares of the
Company's restricted common stock having a value of $4,050,000.00 at a share
price of no less than $0.10 per share. The Preferred Stock shall bear interest
at the rate of five percent (5%) per annum, compounded quarterly, based on the
$4,050,000.00 agreed value of the PATI technology.
Pure Air Technologies, Inc. holds a worldwide exclusive license for a
technology, developed by researchers at the University of Florida designed to
help eliminate hazardous organic chemicals and microorganisms from indoor
environments. The technology generates ozone within a building's heating,
ventilating and air conditioning system, eliminating organic pollutants and
microorganisms, and then converts the ozone to O2 and water vapor.
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 $430,000 compared to 2005 sales of $372,000
for the nine months ended September 30. Total product sales for the three months
ended September 30, 2006 were $162,500 compared to 2005 sales of $149,000 for
the same period. Sales have remained consistent.
Gross profit on sales increased from 43% in 2005 to 53% in 2006. The increase in
sales noted above has been achieved without an increase in personnel or space.
Our general and administrative expenses increased to approximately $4,700,000 in
2006 from $981,000 in 2005. The Company incurred consulting fees and advertising
costs of approximately $2,111,000 in 2006 and none in 2005 related to its
proposed business model. Lastly, salaries increased approximately $1,930,000 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 update publicly
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 June 30, 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.
Sale of Common Stock
Date Name Total Dollar Price per Total Number
Amount Share of Shares
- --------- ------------------ ------------ --------- ------------
10/6/06 UTEK CORPORATION $ 35,000.00 $ 0.40 87,500
All sales were made pursuant to Section 4(2) of the 1933 Act. The proceeds of
the sale of these securities are to provide operating capital and development
costs.
Sale of Preferred Stock
On October 11, 2006, World Energy Solutions, Inc. (the "Company") acquired Pure
Air Technologies, Inc. ("PATI"), a subsidiary of UTEK Corporation (AMEX &
LSE-AIM: UTK), in a tax-free stock-for-stock exchange. Pursuant to the Agreement
and Plan of
Acquisition (the "Agreement"), the Company issued 100,000 shares of its Series A
Convertible Preferred Stock to UTEK Corporation in exchange for 100% of the
issued and outstanding shares of Pure Air Technologies, Inc., assignment of the
technology license and the sponsored research agreement and $300,000 cash. The
Preferred Stock issued in the exchange was sold pursuant to the transaction
exemption in Section 4(2) of the Securities Act of 1933, is restricted and may
only be resold pursuant to the requirements of the Securities Act of 1933.
After one year from the date of issuance of the Preferred Stock, the Company and
UTEK agree that the Preferred Stock is convertible into shares of the Company's
restricted common stock at the election of UTEK. The Company and UTEK also agree
that the Preferred stock is convertible into the number of shares of the
Company's restricted common stock having a value of $4,050,000.00 at a share
price of no less than $0.10 per share. The Preferred Stock shall bear interest
at the rate of five percent (5%) per annum, compounded quarterly, based on the
$4,050,000.00 agreed value of the PATI technology.
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.
Exhibit Number Location
and Description Reference
- --------------------------------------------------------------------------------
(a) Financial Statements Filed Herewith
(b) Exhibits required by Item 601, Regulation S-B:
(2) 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) Articles of incorporation and by-laws
(i) Initial Articles of Incorporation filed See Note 1
November 23, 1998. (below)
(ii) By-Laws filed February 2, 1999. See Note 2
(below)
(iii) Amendment to initial Articles of See Note 3
Incorporation (Name Change, Authorized (below)
Shares, & Issuance of Shares).
(4) Instruments defining the rights of security
holders, including indentures
(4.1) Specimen Share Certificate for Class A
Convertible Preferred Stock. Filed Herewith
(10) 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)
(10.12) Agreement and Plan of Acquisition with UTEK
Corporation, a Delaware corporation, and
Pure Air Technologies, Inc. dated October See Note 10
11, 2006. (below)
(11) Statement re: Computation of Per Share Earnings Note 2
to Financial
Statements
(15) Letter on unaudited interim financial information None
(18) Letter on change in accounting principles None
(19) Reports furnished to security holders None
(20) Other documents or statements to security holders None
or any document incorporated by reference
(22) Published Report Regarding Matters Submitted to Vote of
Security Holders None
(23) Consents of Experts and Counsel None
(24) Power of Attorney None
(31) Rule 13a-14(a)/15d-14(a) Certifications Filed Herewith
(32) Section 1350 Certifications Filed Herewith
(99) Additional exhibits None
(100) XBRL-Related Documents 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-SBA No. 1 filed with
the Securities and Exchange Commission on February 2, 1999.
Note 3 Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on November 18, 2005.
Note 4 Incorporated by reference to the Company's Form 8-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 8-K filed with the
Securities and Exchange Commission on August 19, 2005.
Note 7 Incorporated by reference to the Company's Form 8-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.
Note 10 Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on October 17, 2006.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLD ENERGY SOLUTIONS, INC.
Dated: November 13, 2006 /s/ Benjamin C. Croxton
--------------------------
Benjamin C. Croxton
Chief Executive Officer
Chief Financial Officer