<PAGE>
FORM 10-QSB - Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the period ended March 31, 1998
------------------
or
[ ] Transition Report Pursuance to Section 13 or 15(d) of the Securities
Exchange act of 1934.
For the transition period from to
Commission File Number 0-22027
------------------
ROCKY MOUNTAIN POWER CO.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-0503585
------------------------------ ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
12835 E. Arapahoe Road, T-II, Ste. 110, Englewood, CO 80046
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(303) 792-2466
--------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of March 31, 1998, Registrant had 609,570 shares of common stock, $.05 par
value, outstanding.
<PAGE>
INDEX
Page
Number
Part I. Financial Information
Item I. Financial Statements
Balance Sheets as of March 31, 1998
and October 31, 1996 2
Statement of Operations, Three Months
Ended March 31, 1998 and March 31, 1997 3
Statement of Operations, Nine Months
Ended March 31, 1998 and March 31, 1997 4
Statement of Cash Flows, Three Months
Ended March 31, 1998 and March 31, 1997 5
Statement of Cash Flows, Nine Months
Ended March 31, 1998 and March 31, 1997 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 8
Part II. Other Information 9
1
<PAGE>
ROCKY MOUNTAIN POWER CO.
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
--------- --------
<S> <C> <C>
Current Assets:
Cash $ 338,483 $ 1,159,431
Certificates of purchase, real estate
foreclosures 239,138 566,577
Mortgage notes receivable, current
portion 65,653 59,655
Deferred income taxes receivable, current - 5,773
Other 11,798 41,140
------- ---------
Total Current Assets 655,072 1,832,576
Real estate, net of accumulated deprec-
iation of $3,625 at March 31, 1998 and
$21,758 at October 31, 1996 244,692 824,930
Transportation equipment, net of accumulated
depreciation of $2,375 at March 31, 1998 and
$125 and June 30, 1997 12,625 14,875
Mortgage notes receivable, net of
current portion 1,199,917 1,504,322
Other 81,827 80,827
----------- -----------
TOTAL ASSETS $ 2,194,133 $ 4,257,530
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 69,813 $ 8,301
Notes payable, current portion 7,286 1,018,758
Note payable, related party - 150,000
Income taxes payable 20,005 16,160
Deferred taxes payable, current portion 21,927 21,927
Other 124 12,523
------- ---------
Total Current Liabilities 119,155 1,227,669
Deferred taxes payable, long term 43,458 41,822
Notes payable, net of current portion 31,404 610,663
------ -------
TOTAL LIABILITIES 194,017 1,880,154
------- ---------
Stockholders' Equity:
Preferred stock, $25.00 par value, 200,000
shares authorized, none issued & outstanding - -
Common stock, $.05 par value, 100,000,000
shares authorized, 609,570 shares issued
and outstanding at March 31, 1998 and
752,537 shares at June 30, 1997 30,339 37,487
Additional paid-in capital 1,607,542 2,065,234
Retained earnings 362,235 274,655
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 2,000,116 2,377,376
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,194,133 $ 4,257,530
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
ROCKY MOUNTAIN POWER CO.
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
Revenue:
Rent income 2,207 49,500
Interest income 31,799 23,605
Gain on disposition of asset (Note 2) 82,809 -
Other income 27,769 4,437
------- ------
144,584 77,542
------- ------
Operating Expenses:
Depreciation 1,126 7,304
Interest 6,227 16,350
Rent 9,705 -
Auditing and accounting 388 -
Other 41,339 22,136
------ ------
58,785 45,790
------ ------
Net income before provision
for income taxes 85,799 31,752
Provision for income taxes 15,648 3,402
------ ------
Net income $ 70,151 $ 28,350
========== ==========
Per Share $ .09 $ .04
========== ==========
Weighted Average Shares Outstanding 752,537 673,808
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
ROCKY MOUNTAIN POWER CO.
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
Revenue:
Rent income 23,095 104,101
Interest income 111,385 83,969
Gain on dispostion of asset (Note 2) 82,809 -
Other income 50,969 5,437
------- -------
268,258 193,507
------- -------
Operating Expenses:
Depreciation 11,125 14,692
Interest 43,730 48,089
Rent 23,366 2,426
Audit and accounting 11,173 5,217
Other 71,278 42,559
------- -------
160,672 112,983
------- -------
Net income before provision
for income taxes 107,586 80,524
Provision for income taxes 20,005 13,988
------- -------
Net income $ 87,581 $ 66,536
========== ==========
Per Share $ .12 $ .10
========== ==========
Weighted Average Shares Outstanding 752,537 686,904
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
ROCKY MOUNTAIN POWER CO.
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
Cash Flows Operating Activities:
Net income $ 70,151 $ 28,350
Depreciation 1,126 7,304
Increase (decrease) in income taxes payable 15,178 (17,719)
Increase (decrease) in deferred income taxes payable 6,243 (4,860)
Increase (decrease) in accounts payable and accrued
expenses 74,016 (15,290)
Other 8,050 (6,802)
------- --------
Net Cash Provided by (Used in) Operating Activities 174,764 (9,017)
------- --------
Cash Flows from Investing Activities:
(Investments) in certificates of purchase (128,600) (774,153)
Proceeds from redemptions of certificates
of purchase 835,030 160,390
Investment in notes receivable (326,206) -
Collection of notes receivable 32,508 98,721
Other 87,775 69,091
------- ---------
Net Cash Provided by (Used in) Investing Activities 500,507 (445,951)
------- ---------
Cash Flows from Financing Activities:
Proceeds from bank notes payable - 1,000,000
(Repayment of) bank notes payable (403,870) -
Additional paid-in capital - 11,849
(Repayment of) mortgage notes payable (1,822) 3,207
(Repayment of) loan from related party - (119,700)
Loan from related party - 150,000
--------- ----------
Net Cash Provided by (Used in) Financing Activities (405,692) 1,045,356
--------- ---------
Increase in Cash 269,579 590,388
Cash, Beginning of Period 68,904 167,361
-------- -------
Cash, End of Period $ 338,483 757,749
========== ==========
Interest Paid $ 6,227 $ 16,350
========== ==========
Income Taxes Paid $ - $ 23,389
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
ROCKY MOUNTAIN POWER CO.
AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31, March 31,
1998 1997
--------- --------
<S> <C> <C>
Cash Flows Operating Activities:
Net income $ 87,581 $ 66,536
Depreciation 11,125 14,692
Increase in income taxes payable 9,618 41,416
Increase (decrease) in deferred income taxes
payable 1,636 (4,860)
Increase (decrease) in accounts payable
and accrued expenses 61,512 (1,846)
Stock issued for services 8,886 -
Other 13,281 (25,273)
------ --------
Net Cash Provided by Operating Activities 193,639 90,665
------- ------
Cash Flows from Investing Activities:
(Investments) in certificates of purchase (1,721,256) (1,241,438)
Proceeds from redemptions of certificates
of purchase 2,048,695 389,202
(Investment) in property - (60,140)
(Investment) in notes receivable (326,206)
Collection of notes receivable 42,637 400,717
Other 100,298 69,091
------- ---------
Net Cash Provided by (Used in) Investing Activities 144,168 (442,568)
------- ---------
Cash Flows from Financing Activities:
Proceeds from bank notes payable - 1,000,000
(Repayment of) bank notes payable (1,000,000) (4,201)
Additional paid-in capital - 11,849
(Repayment of) mortgage notes payable (8,755) (3,526)
(Repayment of) loan from related party (150,000) (240,650)
Loan from related party - 326,950
--------- ---------
Net Cash Provided by (Used in) Financing Activities (1,158,755) 1,090,422
----------- ---------
Increase (decrease) in Cash (820,948) 738,519
Cash, Beginning of Period 1,159,431 19,230
--------- -------
Cash, End of Period $ 338,483 757,749
========== ==========
Interest Paid $ 43,730 $ 48,089
========== ==========
Income Taxes Paid $ 14,524 $ 23,389
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
ROCKY MOUNTAIN POWER CO.
AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
(1) Condensed Financial Statements
- ----------------------------------
The financial statements included herein have been prepared by Rocky
Mountain Power Co. without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted as allowed by such rules and regulations, and Rocky Mountain
Power Co. believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements
be read in conjunction with the June 30, 1997 audited financial statements
and the accompanying notes thereto. While management believes the procedures
followed in preparing these financial statements are reasonable, the
accuracy of the amounts are in some respect's dependent upon the facts that
will exist, and procedures that will be accomplished by Rocky Mountain Power
Co. later in the year.
The management of Rocky Mountain Power Co. believes that the accompanying
unaudited condensed financial statements contain all adjustments (including
normal recurring adjustments) necessary to present fairly the operations and
cash flows for the periods presented.
(2) Related Party Transactions
- ------------------------------
On March 31, 1998, the Company repurchased 142,967 shares of its common
stock in connection with the sale of a Company-owned property to a
stockholder. The Company assigned a value of $3.25 per share for the shares
received in the sale, based on the then book value of the shares of the
common stock of the Company. The Company also received a collateralized
promissory note in the amount of $139,079 as part of the sale transaction.
The collateral on the promissory note is the property formerly owned by the
Company. The sale was not pursuant to an arms length transaction since it
was with a stockholder of the Company. A gain of $78,947 was recognized
from this transaction.
7
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Rocky Mountain Power Co. (the "Company") was organized as a Colorado
corporation on September 30, 1958. The Company is principally in the real
estate ownership and rental business. The Company also invests in mortgage
notes receivable and certificates of purchase related to real estate
foreclosures. Certain statements in the Report are forward-looking. Actual
results of future events could differ materially.
The following discussion of the financial condition and results of operations
of the Company relates to the three (3) months ended March 31, 1998 and 1997
and the nine (9) months ended March 31, 1998 and 1997, and should be read in
conjunction with the financial statements and notes thereto included
elsewhere in this Report. The Company was a relatively inactive public
shell corporation for the two years preceding the business combination with
Prime Rate Investment Management Enterprises, Inc. (PRIME) effective March
31, 1998. Since the controlling shareholders of PRIME control RMPC after
the business combination, the transaction was accounted for as a reverse
acquisition. The financial statements of PRIME are presented in this filing
since for accounting purposes PRIME is the acquiring entity. Effective
April 30, 1997, PRIME was merged into RMPC with Prime Rate Income & Dividend
Enterprises, Inc. (PRIDE), a wholly-owned subsidiary of PRIME becoming a
wholly-owned subsidiary of RMPC. PRIDE is the operating company and RMPC
is principally a holding company. PRIME formerly had an October 31 year end
but has changed its year end to June 30 to agree with RMPC's year end.
Results of Operations
- ---------------------
Revenue for the three and nine month periods ended March 31, 1998 increased
from the three and nine month periods ended March 31, 1997 as follows:
1997 1998 Increase
-------- -------- --------
Three Months Ended March 31, $ 77,542 $144,584 $ 67,042
Nine Months Ended March 31, $193,507 $268,258 $ 74,751
Revenue increased principally due to the gains on disposition of real estate
properties.
Operating expenses were $45,790 during the three month period ended March 31,
1997 as compared to $58,785 during the three month period ended March 31,
1998. Operating expenses were $112,983 during the nine month period ended
March 31, 1997 as compared to $160,672 during the nine month period ended
March 31, 1998. Operating expenses increased principally due to the ground
lease cost of the Racquetball/Health Club facility which totalled $9,705 and
$23,366 during the three and nine month periods, respectively. Other
8
<PAGE>
expenses also increased principally due to contract services paid for
property inspections.
Net income after provision for income taxes amounted to $70,151 during the
three month period ended March 31, 1998 as compared to $28,350 during the
three month period ended March 31, 1997, an increase of $41,801.
Net income after provision for income for the nine month period ended March
31, 1998 was $87,581 as compared to $66,536 during the nine month period
ended March 31, 1997, an increase of $21,045.
Liquidity and Capital Resources
- -------------------------------
Working capital was $535,917 at March 31, 1998 as compared to $604,907 at
March 31, 1997. The Company's stockholders' equity was $2,000,116 at March
31, 1998 as compared to $2,377,376 at June 30, 1997. The decrease in
stockholders' equity related principally to the redemption of 142,967
shares of the Company's common stock from a stockholder in exchange
for the Racquetball/Health Club facility formerly owned by the Company.
The exchange transaction was not an arms length transaction since it was
with a stockholder of the Company. The shares were redeemed at market value
of $3.25 per share which approximates net book value of $3.28 per share.
The Company received a promissory note collateralized by a racquetball/health
club facility formerly owned by the Company in the amount of $139,079 plus
the return of 142,967 shares of its stock for the facility. A gain of
approximately $78,947 was recognized in this transaction.
The Company has made no commitments that would require any material increase
in capital resources. The Company's financial condition has not been
affected by the modest inflation of the recent past. The Company believes
that future inflation, if any, would not materially affect the results of
operations, other than interest rates on the line of credit which are based
on a floating rate over prime would be higher. Also the values and rental
rates on the Company's real estate could be affected by future inflation, in
any.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
None.
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
--------------------------------
None.
EX-27 Financial Data Schedule
-----------------------
10
<PAGE>
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.
(Registrant) ROCKY MOUNTAIN POWER CO.
BY(Signature) Michael L. Schumacher
(Date)
(Name and Title Michael L. Schumacher, Chief Executive
Officer and Principal Accounting Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 338,482
<SECURITIES> 0
<RECEIVABLES> 239,138
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 655,072
<PP&E> 263,317
<DEPRECIATION> 6,000
<TOTAL-ASSETS> 2,194,133
<CURRENT-LIABILITIES> 119,155
<BONDS> 0
0
0
<COMMON> 609,570
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,194,133
<SALES> 0
<TOTAL-REVENUES> 144,584
<CGS> 0
<TOTAL-COSTS> 58,785
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,227
<INCOME-PRETAX> 85,799
<INCOME-TAX> 15,648
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,151
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
