UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: May 16, 2006
Date of Earliest Event Reported: May 12, 2006
(Exact Name of Registrant as Specified in its Charter)
-------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-11476 95-3977501-------------------------------------- -------------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) ------------------------------------------------------------ ------------(Address of Principal Executive Offices) (Zip Code) (858) 391-3400 -------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) |
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K
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|_| Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)).
On May 12, 2006, the audit committee of the board
of directors of World Waste Technologies, Inc., upon the recommendation of
management following a series of discussions with our independent accountants
and members of the accounting staff of the SEC, decided to amend our Annual
Report on Form 10-KSB for the year ended December 31, 2005 to correct certain
errors in the financial statements included in such report. Accordingly, our
audit committee concluded that our previously issued audited financial
statements included in such report and the financial statements for the first
three fiscal quarters of 2005 should no longer be relied upon.
The principal accounting errors reflected in such
financial statements were as follows:
1) Fair value of options and warrants: As
previously disclosed in our reports filed with the SEC, on August 24, 2004
World Waste Technologies, Inc., a private company ("WWT") completed a
reverse merger with and into a subsidiary of Voice Powered Technologies
International, Inc ("VPTI"), a publicly-traded company with no
assets, liabilities or operations. As a result of this merger, VPTI (renamed
World Waste Technologies, Inc.) succeeded to all of the assets, liabilities and
operations of WWT.
In order to properly account for the expense
associated with our issuance of options and warrants, we are required to
determine the fair value of these securities. In determining this value we
undertook a "Black Scholes" analysis, a
method of valuation that takes into account the expected volatility of the
stock underlying the convertible securities being valued. Because at the time
of this valuation we had no stock trading history as a company with the
operations of WWT (i.e. all of the trading had been as VPTI, a company with no
operations), in determining our expected volatility, we decided to use the
trading prices of a representative sample of companies within our industry as
opposed to VPTI's trading history.
Based on our discussions with the staff of the SEC
as to current practices in applying the applicable accounting guidelines (SFAS
123R) and further review of the authoritative accounting literature for new
public companies, we concluded that the use of a volatility factor more
consistent with our stage of life cycle and financial leverage would be more
appropriate than a volatility factor based on the trading of shares of
companies within our industry. As a result, we intend to change the volatility
factor previously used from approximately 20% to 70%. Based on this analysis,
we also intend to change the price used in calculating the fair value of the
warrants issued in connection with a private placement of our Series A
Preferred Stock from the price such shares were actually sold at to the quoted
market price of our stock as of the closing of such issuance. These changes are
expected to affect primarily the recorded value on our balance sheet of the
following line item accounts: Debt Offering Costs, Patent and Licenses, Senior
Secured Debt, Redeemable Preferred Stock, Warrant Liability, Additional Paid in
Capital and Deficit Accumulated during the Development Stage. We currently
anticipate that these changes will result in an increase in our net loss for
2004 of approximately $32,000 and a decrease in our net loss for 2005 of
approximately $50,000, as well as an increase in dividend expense on our Series
A Preferred Stock in 2005, including the amortization of preferred stock
warrants, offering costs and the beneficial conversion feature of the preferred
stock, of approximately $490,000. These changes will have no impact on our cash
position for the period of restatement or future periods, but will affect our
operating results and preferred stock dividend in future periods.
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2) On
November 1, 2005 we completed a private placement of senior debt securities
with detachable warrants. In accounting for this transaction, we discounted the
recorded value of the senior debt securities by an amount equal to the fair value
of the warrants. Upon further review of the applicable accounting literature
(APB 14), we determined that we should have discounted the senior debt for the
"relative fair value" of the warrants rather than the "fair
value" of the warrants. This had the affect of overstating the discount on
the senior debt at December 31, 2005 by approximately $235,000.
3) The Convertible Redeemable Preferred Stock had
been classified as a liability because it is redeemable at the end of five
years, at the option of the holders. Upon further review of authoritative
literature, Convertible Redeemable Preferred Stock will be reclassified as
"mezzanine equity" rather than as a liability.
Although we intend to file an amended Annual
Report on Form 10-KSB for the year ended December 31, 2005 as soon as
practicable, because we have not yet concluded our analysis of these issues,
the anticipated impact on our financial statements described above is subject
to change.
We have completed our assessment of how the
changes being made reflect on the adequacy of our internal controls over
financial reporting and our disclosure controls in general and have concluded
that the factors that resulted in the restatements were caused by a lack of
consistent authoritative guidance and not a failure to detect and assess the
issues and collect relevant data.
Certain matters discussed in this report may
constitute "forward-looking statements" including, but not limited
to, the expected impact of our accounting adjustments on our reported net loss
for the years ended December 31, 2005 and 2004. Actual results and the timing
of certain events may differ materially from those indicated by such
forward-looking statements due to a variety of risks and uncertainties, many of
which are beyond our ability to control or predict, including, but not limited
to (i) our final determination of the magnitude of
the accounting adjustments described in this report, (ii) the discovery of
other errors in our financial statements, which could result in further adjustments,
(iii) the completion of the restatement process and, (iv) other risks and
uncertainties outlined in our periodic reports filed with the SEC. These
statements are made as of the date of this report, and we undertake no
obligation to publicly update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise.
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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.
Date: May 16, 2006 WORLD WASTE TECHNOLOGIES, INC. By: /s/ David Rane ------------------------------ David Rane Chief Financial Officer |
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