[X]
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Nevada
|
88-0409160
|
|
(State
or
other jurisdiction
of
incorporation or organization)
|
(IRS
Employer
Identification
No.)
|
PAGE
|
|||||||||
NUMBER
|
|||||||||
PART
I
|
FINANCIAL
INFORMATION
|
||||||||
Item
1
|
Financial
Statements
|
||||||||
Consolidated
Balance Sheets (unaudited) as of June 30,
|
3
|
||||||||
2007
and
December 31, 2006
|
|||||||||
Consolidated
Statements of Operations (unaudited) for
|
|||||||||
the
three and
six months ended June 30, 2007 and 2006
|
4
|
||||||||
Consolidated
Statements of Cash Flows (unaudited) for the
|
|||||||||
six
months
ended June 30, 2007 and 2006
|
5
|
||||||||
Notes
to the
Consolidated Financial Statements (unaudited)
|
6
|
||||||||
Item
2
|
Management's
Discussion and Analysis or Plan of Operations
|
12
|
|||||||
Item
3
|
Controls
and
Procedures
|
19
|
|||||||
PART
II
|
OTHER
INFORMATION
|
||||||||
Item
1
|
Legal
Proceedings
|
20
|
|||||||
Item
2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
20
|
|||||||
Item
3
|
Defaults
Upon
Senior Securities
|
20
|
|||||||
Item
4
|
Submission
of
Matters to a Vote of Security Holders
|
20
|
|||||||
Item
5
|
Other
Information
|
20
|
|||||||
Item
6
|
Exhibits
|
20
|
|||||||
SIGNATURES
|
22
|
||||||||
TOWER
TECH
HOLDINGS INC. AND SUBSIDIARY
|
|||||||||
Consolidated
Balance Sheets
|
|||||||||
(Unaudited)
|
(Audited)
|
||||||||
June
30,
|
December
31,
|
||||||||
ASSETS
|
2007
|
2006
|
|||||||
Current
assets:
|
|||||||||
Cash
|
$ |
8,478,138
|
$ |
125,409
|
|||||
Accounts
receivable
|
1,943,925
|
160,351
|
|||||||
Related
party
receivable
|
33,816
|
-
|
|||||||
Inventories
|
378,993
|
288,291
|
|||||||
Prepaid
expenses
|
32,957
|
14,195
|
|||||||
Other
current
assets
|
2,389
|
-
|
|||||||
Total
current
assets
|
10,870,218
|
588,246
|
|||||||
Property
and
equipment:
|
|||||||||
Machinery
and
equipment
|
5,848,757
|
3,045,291
|
|||||||
Office
equipment
|
49,173
|
32,276
|
|||||||
Leasehold
improvements
|
390,551
|
356,434
|
|||||||
6,288,481
|
3,434,001
|
||||||||
Less
accumulated depreciation and amortization
|
(833,044 | ) | (635,218 | ) | |||||
Net
property
and equipment
|
5,455,437
|
2,798,783
|
|||||||
Other
assets:
|
|||||||||
Restricted
cash
|
500,000
|
-
|
|||||||
Bond
issuance
fees, net of amortization of $2,282 and $2,091,
respectively
|
3,149
|
14,640
|
|||||||
Accounts
receivable - retainage
|
-
|
492,945
|
|||||||
Total
other
assets
|
503,149
|
507,585
|
|||||||
TOTAL
ASSETS
|
$ |
16,828,804
|
$ |
3,894,614
|
|||||
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
|
|||||||||
Current
liabilities:
|
|||||||||
Notes
payable
- bank
|
$ |
-
|
$ |
588,346
|
|||||
Notes
payable
- related party
|
-
|
4,376,816
|
|||||||
Current
maturities of long-term debt
|
36,000
|
97,000
|
|||||||
Accounts
payable
|
1,456,442
|
891,797
|
|||||||
Accounts
payable - related party
|
32,960
|
725,257
|
|||||||
Accrued
liabilities
|
518,725
|
1,531,865
|
|||||||
Customer
deposits
|
1,854,602
|
190,635
|
|||||||
Total
current
liabilities
|
3,898,729
|
8,401,716
|
|||||||
Long-term
debt, less current maturities
|
340,593
|
806,536
|
|||||||
Total
liabilities
|
4,239,322
|
9,208,252
|
|||||||
Commitments
and contingencies
|
|||||||||
Shareholders'
equity (deficit):
|
|||||||||
Common
stock,
$.001 par value;
|
|||||||||
100,000,000
shares authorized;
|
|||||||||
47,724,464
and 35,235,500 shares issued and outstanding, respectively
|
47,724
|
35,236
|
|||||||
Additional
paid-in capital
|
18,491,338
|
1,260,992
|
|||||||
Accumulated
deficit
|
(5,949,580 | ) | (6,609,866 | ) | |||||
Total
shareholders' equity (deficit)
|
12,589,482
|
(5,313,638 | ) | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
|
$ |
16,828,804
|
$ |
3,894,614
|
|||||
Consolidated
Statements of Operations
|
|||||||||||||||||
(Unaudited)
|
|||||||||||||||||
For
the Three
Months Ended
|
For
the Six
Months Ended
|
||||||||||||||||
June
30,
|
June
30,
|
June
30,
|
June
30,
|
||||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||||||
Net
sales
|
$ |
2,643,095
|
$ |
23,112
|
$ |
4,861,747
|
$ |
613,843
|
|||||||||
Cost
of
sales
|
1,527,501
|
492,098
|
3,049,495
|
1,589,738
|
|||||||||||||
Gross
profit
(loss)
|
1,115,594
|
(468,986 | ) |
1,812,252
|
(975,895 | ) | |||||||||||
Product
development
|
-
|
9,858
|
2,063
|
26,936
|
|||||||||||||
Selling,
general and administrative expenses
|
750,615
|
235,696
|
1,208,834
|
507,757
|
|||||||||||||
Merger
transaction costs
|
-
|
-
|
-
|
250,000
|
|||||||||||||
Total
operating expenses
|
750,615
|
245,554
|
1,210,897
|
784,693
|
|||||||||||||
Income
(loss)
from operations
|
364,979
|
(714,540 | ) |
601,355
|
(1,760,588 | ) | |||||||||||
Other
income
(expense):
|
|||||||||||||||||
Realized loss on foreign currency transactions |
-
|
-
|
-
|
(3,083 | ) | ||||||||||||
Interest income |
120,108
|
-
|
162,478
|
-
|
|||||||||||||
Interest expense | (5,979 | ) | (112,103 | ) | (103,547 | ) | (209,324 | ) | |||||||||
Other
income
(expense), net
|
114,129
|
(112,103 | ) |
58,931
|
(212,407 | ) | |||||||||||
Income
(loss)
before income taxes
|
479,108
|
(826,643 | ) |
660,286
|
(1,972,995 | ) | |||||||||||
Provision
for
income taxes
|
-
|
-
|
-
|
-
|
|||||||||||||
Net
income
(loss)
|
$ |
479,108
|
$ | (826,643 | ) | $ |
660,286
|
$ | (1,972,995 | ) | |||||||
Net
income
(loss) per common share (basic)
|
$ |
0.01
|
$ | (0.02 | ) | $ |
0.02
|
$ | (0.06 | ) | |||||||
Net
income
(loss) per common share (diluted)
|
$ |
0.01
|
$ | (0.02 | ) | $ |
0.02
|
$ | (0.06 | ) | |||||||
Weighted
average shares outstanding:
|
|||||||||||||||||
Basic |
47,724,464
|
35,000,000
|
43,584,476
|
32,495,856
|
|||||||||||||
Diluted |
47,724,464
|
35,000,000
|
43,584,476
|
32,495,856
|
TOWER
TECH
HOLDINGS INC. AND SUBSIDIARY
|
|||||||||
Consolidated
Statements of Cash Flows
|
|||||||||
(Unaudited)
|
|||||||||
For
the Six
Months Ended
|
|||||||||
June
30,
|
June
30,
|
||||||||
2007
|
2006
|
||||||||
Cash
flows
from operating activities:
|
|||||||||
Net income (loss) | $ |
660,286
|
$ | (1,972,995 | ) | ||||
Adjustments to reconcile net income (loss) to | |||||||||
net cash used in operating activities: | |||||||||
Depreciation |
197,826
|
159,494
|
|||||||
Amortization of bond issuance fees |
191
|
837
|
|||||||
Stock issued for marketing costs |
240,000
|
-
|
|||||||
Contributed services by shareholders |
-
|
138,500
|
|||||||
Stock issued for merger costs |
-
|
250,000
|
|||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (1,783,574 | ) |
155,835
|
||||||
Inventories | (90,702 | ) |
217,576
|
||||||
Prepaid expenses | (18,762 | ) | (29,001 | ) | |||||
Accounts receivable - retainage |
492,945
|
-
|
|||||||
Other current assets | (2,389 | ) |
-
|
||||||
Accounts payable | (511,671 | ) |
25,400
|
||||||
Accounts payable - related party | (542,910 | ) |
-
|
||||||
Accrued liabilities | (1,013,140 | ) |
335,430
|
||||||
Customer deposits |
1,663,967
|
(132,111 | ) | ||||||
Net
cash used
in operating activities
|
(707,933 | ) | (851,035 | ) | |||||
Cash
flows
from investing activity:
|
|||||||||
Purchases of property and equipment | (1,778,164 | ) | (12,539 | ) | |||||
Increase in related party receivable | (33,816 | ) |
-
|
||||||
Increase in restricted cash | (500,000 | ) |
-
|
||||||
Net
cash used
in investing activities
|
(2,311,980 | ) | (12,539 | ) | |||||
Cash
flows
from financing activities:
|
|||||||||
(Payments on) borrowings from notes payable | (3,511,715 | ) |
783,932
|
||||||
Principal payments on long-term debt | (526,943 | ) | (19,444 | ) | |||||
Proceeds from the issuance of common stock |
15,400,000
|
-
|
|||||||
Refund of bond issuance fees |
11,300
|
-
|
|||||||
Net
cash
provided by financing activities
|
11,372,642
|
764,488
|
|||||||
Net
increase
(decrease) in cash
|
8,352,729
|
(99,086 | ) | ||||||
Cash
at
beginning of period
|
125,409
|
166,023
|
|||||||
Cash
at end
of period
|
$ |
8,478,138
|
$ |
66,937
|
|||||
Non-cash
disclosure information:
|
|||||||||
Common stock issued to partially repay related party notes | $ |
1,453,447
|
$ |
-
|
|||||
Common stock issued to Integritas for finders fee owed | |||||||||
related to the private placement offering | $ |
1,490,613
|
$ |
-
|
|
|
June
30,
2006
|
|
|
December
31, 2005
|
|
||
Third
Party
|
|
|
|
|
||||
Prime
plus 1% (9.25% at March 2, 2007) note, repaid in
March
2007
|
|
$
|
-
|
|
$
|
100,000
|
||
Prime
plus 2.5% (10.75% at March 2, 2007) note,
repaid
in March 2007
|
|
|
-
|
|
|
|
428,346
|
|
Prime
rate (8.25% at March 2, 2007) note,
Repaid
in March 2007
|
|
-
|
|
|
60,000
|
|
||
Total
third party notes payable
|
$
|
-
|
$
|
588.346
|
Related
Party
|
|
|
|
|
||||
5% notes,
due on demand, unsecured,
repaid
in March 2007
|
|
$
|
-
|
|
$
|
665,500
|
||
Shareholder
notes at a fixed rate of 8%, due
on
demand, unsecured, repaid and a portion
converted to common shares in March 2007
|
|
|
-
|
|
|
|
3,711,316
|
|
Total
third party notes payable
|
$
|
-
|
$
|
4,376,816
|
|
|
June
30, 2007
|
|
|
December
31, 2006
|
|
||
Accrued
payroll and related taxes
|
|
$
|
148,507
|
|
$
|
637,955
|
||
Accrued
rent
- related party
|
|
|
241,920
|
|
|
|
558,479
|
|
Accrued interest | 2,133 | 213,530 | ||||||
Other | 126,165 | 121,901 | ||||||
|
$
|
518,725
|
$
|
1,531,865
|
|
|
June
30, 2007
|
|
|
December
31, 2006
|
|
||
Wisconsin Business Development Finance Corporation | ||||||||
6.796%
note,
due in monthly installments of $4,982 including interest, due
September 1,
2015,
secured by substantially all assets of the Company and personal
guarantees
of the shareholders
|
|
$
|
376,593
|
|
$
|
393,564
|
||
|
|
|
|
|
|
|
|
|
Associated Bank | ||||||||
Prime plus .5% (8.75% at March 2, 2007) note, repaid in March 2007 | - | 509,972 | ||||||
Total long-term debt | 376,593 | 903,536 | ||||||
Less current maturities | (36,000 | ) | (97,000 | ) | ||||
Total
long-term debt, less current maturities
|
$
|
340,593
|
$
|
806,536
|
Year
ending
December
31,
|
||||
2007
|
$ |
36,000
|
||
2008
|
39,000
|
|||
2009
|
42,000
|
|||
2010
|
45,000
|
|||
2011
|
48,000
|
|||
Thereafter
|
166,593
|
|||
$ |
376,593
|
Regulation
S-B
Number
|
Exhibit
|
2.1
|
Share
Exchange Agreement by and among Blackfoot Enterprises, Inc. and the
shareholders of Tower Tech Systems, Inc. and Tower Tech Systems,
Inc.
dated as of November 7, 2005 (1)
|
3.1
|
Articles
of
Incorporation (2)
|
3.2
|
Certificate
of Amendment to Articles of Incorporation (3)
|
3.3
|
Amended
Bylaws
|
10.1
|
Tower
Production Agreement (4)
|
10.2
|
Associated
Bank loan documents (4)
|
10.3
|
Wisconsin
Business Development Finance Corporation loan documents
(4)
|
10.4
|
Lease
agreement with City Centre, LLC (4)
|
10.5
|
Promissory
note to BFM LLC dated January 28, 2005 (4)
|
10.6
|
Promissory
note to Choice Inc dated May 25, 2005 (4)
|
10.7
|
Promissory
note to 43 Enterprises dated October 20, 2005
(4)
|
Regulation
S-B
Number
|
EXHIBIT
|
10.8
|
Promissory
note to Choice Inc. dated October 21, 2005 (4)
|
10.9
|
Promissory
note to City Centre LLC dated November 11, 2005 (4)
|
10.10
|
Promissory
note to City Centre LLC dated December 30, 2005 (4)
|
10.11
|
Line
of
credit agreements with related parties (4)
|
10.12
|
Investment
Agreement, dated as of June 27, 2006, by and between Tower Tech Holdings,
Inc. and Dutchess Private Equities Fund, L.P. (5)
|
10.13
|
Registration
Rights Agreement, dated as of June 27, 2006, by and between Tower
Tech
Holdings, Inc. and Dutchess Private Equities Fund, L.P.
(5)
|
10.14
|
April
1, 2006
amended line of credit agreements with related parties
(6)
|
10.15
|
Promissory
note to City Centre LLC dated April 7, 2006 (6)
|
10.16
|
Employment
Agreement with Raymond L. Brickner III dated February 26, 2007
(7)
|
10.17
|
Securities
Purchase Agreement dated March 1, 2007 between Tower Tech Holdings
Inc.
and the Buyers named therein (7)
|
10.18
|
Registration
Rights Agreement dated March 1, 2007 (7)
|
31.1
|
Rule
13a-14(a) Certification of Chief Executive Officer
|
31.2
|
Rule
13a-14(a) Certification of Chief Financial Officer
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 of Chief Executive
Officer
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 of Chief Financial
Officer
|
(1)
|
Incorporated
by reference to the exhibits to the registrant’s current report on Form
8-K, filed November 21, 2005.
|
(2)
|
Incorporated
by reference to the exhibits to the registrant’s registration statement on
Form 10-SB filed August 11, 2000.
|
(3)
|
Incorporated
by reference to the exhibits to the registrant’s current report on Form
8-K, filed February 10, 2006.
|
(4)
|
Incorporated
by reference to the exhibits to the registrant’s annual report for the
fiscal year ended December 31,
2005.
|
(5)
|
Incorporated
by reference to the exhibits to the registrant’s current report on Form
8-K, filed June 30, 2006.
|
(6)
|
Incorporated
by reference to the exhibits to the registrant’s quarterly report on Form
10-QSB for the quarter ended June 30, 2006, filed August 14,
2006.
|
(7)
|
Incorporated
by reference to the exhibits to the registrant’s current report on Form
8-K, filed March 5, 2007.
|
TOWER TECH HOLDINGS INC. | |||
August
13,
2007
|
By:
|
/s/ Raymond L. Brickner III | |
Raymond L. Brickner III | |||
President and acting Chief Executive Officer | |||
TOWER TECH HOLDINGS INC. | |||
August
13,
2007
|
By:
|
/s/ Steven A. Huntington | |
Steven A. Huntington | |||
Chief Financial Officer | |||