SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A/3
[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File No. 000-25209
Besicorp Ltd.
--------------------------------------------
(Name of small business issuer in its charter)
New York 14-1809375
--------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1151 Flatbush Road
Kingston, New York 12401
- --------------------------------------- --------
(Address of principal executive offices) Zip Code
Issuer's telephone number, including area code: (914) 336-7700
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
Check whether the issuer (1) has 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
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year is $5,716,603.
As of July 27, 1999, 136,382 shares of Common Stock were outstanding. The
aggregate market value of the shares held by non-affiliates of the issuer is not
determinable because the shares are not traded on any exchange or automated
quotation system.
<PAGE>
CITRIN COOPERMAN & COMPANY, LLP
Certified Public Accountants
529 Fifth Avenue, Tenth Floor
New York, NY 10017
212-697-1000
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
BESICORP LTD.
Independent Auditors' Report
We have audited the accompanying consolidated balance sheet of Besicorp Ltd. and
subsidiaries as at March 31, 1999 and 1998 and the related consolidated
statements of operations, changes in shareholders' equity, and cash flows for
the two years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of Besicorp Ltd. and
subsidiaries as at March 31, 1999 and 1998 and the results of their operations
and their cash flows for the two years then ended in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 15 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has received (but will not in the future receive)
substantial financial support from the former parent company that raise
substantial doubt about its ability to continue as a going concern without such
support. Management's plans in regard to these matters are also described in
Note 15. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Citrin Cooperman & Company, LLP
CITRIN COOPERMAN & COMPANY, LLP
June 16, 1999
New York, New York
F-1
<PAGE>
BESICORP LTD.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
<S>
<C> <C>
ASSETS March 31, March 31,
1999 1998
--------- ----------
Current Assets:
Cash $1,824,139 $ 104,428
Trade accounts receivable (less allowance for doubtful
accounts of $32,000 at March 31, 1999 and
$23,000 at March 31, 1998) 988,589 369,494
Due from affiliates 374,250 47,662
Current portion of long-term notes receivable:
Others (includes interest of $4,057 at March 31, 1999
and $8,316 at March 31, 1998) 107,951 102,054
Inventories 1,165,761 944,013
Other current assets 465,566 485,052
--------- ---------
Total Current Assets 4,926,256 2,052,703
--------- ---------
Property, Plant and Equipment:
Land and improvements 229,660 237,160
Buildings and improvements 1,914,029 1,906,952
Machinery and equipment 726,958 714,620
Furniture and fixtures 237,423 246,702
--------- ---------
3,108,070 3,105,434
Less: accumulated depreciation and amortization (1,520,385) (1,478,950)
--------- ---------
Net Property, Plant and Equipment 1,587,685 1,626,484
--------- ---------
Other Assets:
Patents and trademarks, less accumulated
amortization of $2,350 at March 31, 1999
and $1,691 at March 31, 1998 12,530 7,823
Long-term notes receivable:
Affiliate - net of allowance of $555,376 at March 31, 1998 - -
Others - net of allowance of $1,944,624 at March 31, 1998 - 129,886
Deferred costs - 1,316,693
Investment in partnerships 4,009,810 -
Other assets 76,620 95,063
--------- ---------
Total Other Assets 4,098,960 1,549,465
--------- ---------
TOTAL ASSETS $ 10,612,901 $ 5,228,652
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
BESICORP LTD.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S>
<C> <C>
March 31, March 31,
1999 1998
--------- ---------
Current Liabilities:
Accounts payable and accrued expenses $ 763,531 $1,234,920
Current portion of long-term debt 20,000 109,208
Current portion of accrued reserve and warranty expense 111,215 152,891
Taxes other than income taxes 103,207 100,693
Income taxes payable 5,300 -
--------- ---------
Total Current Liabilities 1,003,253 1,597,712
Long-Term Accrued Reserve and Warranty Expense 174,462 152,402
Long-Term Debt 115,308 3,768,233
--------- ---------
Total Liabilities 1,293,023 5,518,347
--------- ---------
Shareholders' Equity:
Common stock, $.01 par value
authorized 5,000,000 shares;
issued and oustanding 121,382 shares 1,214 -
Additional paid-in capital 9,490,827 -
Besicorp Group Inc. investment - (289,695)
Retained earnings (deficit) (172,163) -
--------- --------
Total Shareholders' Equity 9,319,878 (289,695)
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,612,901 $ 5,228,652
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
BESICORP LTD.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S>
<C> <C>
Years Ended March 31,
1999 1998
---- ----
Revenues:
Product sales $5,103,275 $3,838,351
Other revenues 486,030 426,154
Interest and other investment income 20,412 35,482
Other income 106,886 108,435
--------- ---------
Total Revenues 5,716,603 4,408,422
--------- ---------
Costs and Expenses:
Cost of product sales 4,839,016 3,932,301
Selling, general and
administrative expenses 9,444,398 8,466,360
Interest expense 134,110 481,651
Other expense 11,018 2,519,114
---------- ----------
Total Costs and Expenses 14,428,542 15,399,426
---------- ----------
Loss Before Income Taxes (8,711,939) (10,991,004)
Credit for Income Taxes 2,897,200 3,767,000
---------- ---------
Net Loss $ (5,814,739) $(7,224,004)
========== =========
Net loss per share $ (47.90) $ (59.51)
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
BESICORP LTD.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the Years Ended March 21, 1999 and 1998
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C> <C> <C>
Additional Besicorp Retained
Common Stock Paid In Group Inc. Earnings
Shares Amount Capital Investment (Deficit) Total
------ ------ --------- ---------- --------- -----
Balance April 1, 1997 $ $ $ 2,221,758 $ $2,221,758
Net Loss (7,224,004) (7,224,004)
Net transactions with
Besicorp Group Inc. 4,712,551 4,712,551
--------- --------- --------- --------- --------- ---------
Balance March 31, 1998 (289,695) 0 (289,695)
Net loss to March 22, 1999 (5,642,576) (5,642,576)
Net transactions with
Besicorp Group Inc. 15,424,312 15,424,312
Distribution of Besicorp Ltd.
stock by Besicorp Group Inc. 122,057 1,221 9,490,820 (9,492,041) 0
Net loss March 23, 1999
to March 31, 1999 (172,163) (172,163)
Payment in lieu of issuance
of shares (675) (7) (29,035) (29,042)
Additional capital
contibution 29,042 29,042
------- ----- --------- ------- ------- ---------
121,382 $ 1,214 $ 9,490,827 $ 0 $ (172,163) $ 9,319,878
======= ===== ========= ======= ======= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
BESICORP LTD.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
<S>
<C> <C>
Years Ended March 31,
1999 1998
---- ----
Operating Activities:
Net loss $(5,814,739) $(7,224,004)
Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization of discounts on notes (2,196) (2,196)
Provision for uncollectibles 9,000 2,483,654
Realized and unrealized (gains)/losses 7,500 6,066
Depreciation and amortization 165,307 243,793
Changes in assets and liabilities:
Accounts and notes receivable (828,500) 326,916
Inventories (221,748) 236,252
Accounts payable and accrued expenses (471,389) (510,223)
Taxes payable 7,814 (1,393)
Other assets and liabilities, net 1,351,555 (94,844)
--------- ---------
Net Cash Used
By Operating Activities (5,797,396) (4,535,979)
--------- ---------
Financing Activities:
Repayment of borrowings (3,742,133) (72,640)
Net transactions with Besicorp Group Inc. 11,392,588 4,712,551
---------- ---------
Net Cash Provided
By Financing Activities 7,650,455 4,639,911
---------- ---------
Investing Activities:
Acquisition of property, plant and equipment (133,348) (149,266)
Net Cash Used By Investing ----------- ---------
Activities (133,348) (149,266)
----------- ---------
Increase in Cash 1,719,711 45,334
Cash Beginning 104,428 59,094
---------- --------
Cash Ending $ 1,824,139 $ 104,428
Supplemental Cash Flow Information: ========== ========
Interest paid $ 94,689 $ 445,601
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Basis of Presentation
- ---------------------
Besicorp Group Inc., the former parent of Besicorp Ltd., was a party to an
Agreement and Plan of Merger dated November 23, 1998, as amended, (the "Plan of
Merger") among Besicorp Group Inc., BGI Acquisition LLC ("Acquisition") and BGI
Acquisition Corp. ("Merger Sub"), a wholly owned subsidiary of Acquisition.
Pursuant to the Plan of Merger, Merger Sub was merged into Besicorp Group Inc.
which then became a wholly owned subsidiary of Acquisition (the "Merger").
Because Acquisition did not want to acquire certain assets or assume certain
liabilities of Besicorp Group Inc., it was a condition precedent to the Merger
that Besicorp Group Inc., prior to the Merger, spin-off its photovoltaic and
independent power development businesses (the "Distributed Businesses") to its
shareholders. Therefore, Besicorp Group Inc. formed Besicorp Ltd. to assume the
operations of the Distributed Businesses by having Besicorp Group Inc. assign to
Besicorp Ltd. all of its assets relating to the Distributed Businesses and
substantially all of Besicorp Group Inc.'s other assets (other than Besicorp
Group Inc.'s cash, securities, the subsidiaries which held Besicorp Group Inc.'s
interests in partnerships which owned or leased five cogeneration natural gas
power plants (the "Retained Subsidiaries") and certain other assets (including
in particular, other claims of and awards made to Besicorp Group Inc. in the
aggregate stated amount of approximately $1 million)), and by having Besicorp
Ltd. (the "Company") assume substantially all of Besicorp Group Inc.'s
liabilities other than the following liabilities (collectively, the "Permitted
Liabilities"): (i) the liabilities of Besicorp Group Inc. and any Retained
Subsidiary (actual or accrued) for unpaid federal income taxes for Besicorp
Group Inc.'s 1999 fiscal year based on the consolidated net income of Besicorp
Group Inc. through the effective date of the Merger (i.e. March 22, 1999), (ii)
the liabilities of Besicorp Group Inc. or its subsidiaries for New York State
income taxes for the 1999 fiscal year, and (iii) certain intercompany
liabilities. The Plan of Merger contemplated that prior to the consummation of
the Merger Besicorp Group Inc. would effect this contribution of assets to the
Company (and the assumption of these liabilities by the Company) and distribute
all of Besicorp Ltd.'s stock to Oldco's shareholders. Therefore, following the
contribution, which took place shortly prior to the Merger which was consummated
on March 22, 1999, Besicorp Group Inc. distributed 100% of Besicorp Ltd.'s
common stock (the "Distribution"), and Besicorp Ltd. became a separate, publicly
held company.
Effective March 22, 1999, Besicorp Group Inc. distributed to its shareholders
all of its interests in Besicorp Ltd. and certain subsidiaries. Prior to the
Distribution, Besicorp Ltd. and subsidiaries were wholly-owned subsidiaries
of Besicorp Group Inc.
Besicorp Ltd. and subsidiaries consolidated financial statements at and prior
to the Distribution reflect the operations, financial position and cash flows
of Besicorp Ltd. and subsidiaries as if they were a separate entity. Such
financial statements were derived from the consolidated financial statements of
Besicorp Group Inc. using historical results of operations and historical basis
in the assets and liabilities of the business operated by Besicorp Ltd.
The financial information for the year ended March 31, 1999 may not necessarily
reflect the consolidated results of operations, financial position, cash flows
and changes in shareholders' equity of Besicorp Ltd. had Besicorp Ltd. been a
separate entity during that period.
Amounts shown as net transactions with Besicorp Group Inc. represent the net
effect of cash generated or used by the Distributed Businesses and transferred
to or from Besicorp Group Inc.
F-7
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
Business
- --------
Besicorp Ltd. specializes in the development, assembly, manufacture, marketing
and resale of photovoltaic products and systems ("Product Segment") and the
development of power plant projects ("Project Segment").
Basis of Consolidations
- -----------------------
The consolidated financial statements include the accounts of Besicorp Ltd. and
its wholly-owned subsidiaries. Investments in partnerships are accounted for
under the equity method. All significant intercompany transactions and accounts
have been eliminated.
Use of Estimates
- ----------------
Management uses estimates in preparing the consolidated financial statements, in
conformity with generally accepted accounting principles. Significant estimates
include collectibility of accounts receivable, warranty costs, profitability on
long-term contracts, as well as recoverability of long-term assets and residual
values. The Company regularly assesses these estimates and, while actual results
may differ from these estimates, management does not anticipate a material
difference in its actual results versus estimates in the near term.
Inventories
- -----------
Inventories are carried at the lower of cost (first-in, first-out method) or
market.
Property, Plant and Equipment
- -----------------------------
Property, plant and equipment are stated at cost. Depreciation on such assets is
computed on a straight-line basis at rates adequate to allocate the cost over
their expected useful lives as follows: (i) land improvements - 15 years, (ii)
buildings and improvements - 20 years to 39 years; (iii) furniture and fixtures
- - three years to 35 years; and (iv) machinery and equipment - three years to 35
years.
Patents and Trademarks
- ----------------------
Costs of patents ($14,395 at March 31, 1999 and $9,029 at March 31, 1998) are
capitalized and amortized on a straight-line basis over the remaining useful
life of the patent of up to 17 years. Trademark costs ($485 at March 31, 1999
and $485 at March 31, 1998) are capitalized and amortized on a straight-line
basis over the estimated useful life of 35 years. During the year ended March
31, 1998, $690,467 of patent and trademark costs were written off upon the
discontinuance of the related product lines as a result of management's decision
to focus the Company's alternative energy business on photovoltaic products and
systems. The write-off of these costs is reflected in selling, general and
administrative expenses in that period.
Deferred Costs
- --------------
Consists of engineering and legal fees, licenses and permits, site testing, bids
and other charges, including salaries and employee expenses, incurred by the
Company in developing projects. These costs are deferred until the date the
project construction financing is arranged and then expensed against development
fees received, or, in some cases, such costs are reimbursed periodically or at
the time of closing. When in the opinion of management it is determined that a
project will not be completed, the deferred costs are expensed.
Impairment of Long-Lived Assets
- -------------------------------
The Company follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." The Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairments whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
F-8
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
Basic/Diluted Earnings Per Common Share
- ----------------------------------------
Effective December 15, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per Share. The
Statement required companies with a complex capital structure to report both
Basic Earnings per Share and Diluted Earnings per Share. Diluted Earnings per
Share considers the effect of potential common shares such as stock options and
warrants. Loss per common share is computed based on 121,823 shares being issued
after reduction for payment of fractional shares as adjusted after the
Distribution and Spin-Off. Since there were no potential Common Shares as of
March 31, 1999, Basic and Diluted Earnings per Share are the same for both
fiscal years.
Product Warranties
- ------------------
Warranty expense for the Company's product sales is provided on the basis of
management's estimate of the future costs to be incurred under product
warranties presently in force. Adjustments to revenue or expense are reflected
in the period in which revisions to such estimates are deemed appropriate.
Revenue Recognition
- -------------------
Revenues on product sales are recognized at the time of shipment of goods. Other
revenues, primarily cost reimbursement billings, are recognized when deemed
payable under the applicable agreement.
Research and Development
- ------------------------
Research and development costs are expensed when incurred.
Statement of Cash Flows
- -----------------------
For purposes of the consolidated statement of cash flows, the Company considers
temporary investments with a maturity of three months or less when purchased to
be cash equivalents. There were no cash equivalents in any of the periods
presented.
Concentration of Credit Risk
- ----------------------------
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash and trade receivables. The Company
places its cash and investments with high credit qualified financial
institutions and, by policy, limits the amount of credit exposure to any one
financial institution. Concentrations of credit risk with respect to trade
receivables are limited due to the large number of customers comprising the
Company's customer base, and their dispersion across many different industries
and regions. During Fiscal 1999, no sales to a customer equaled or exceeded 10%
of product sales. During the year ended March 31, 1998 ("Fiscal 1998"), one
customer accounted for approximately 14% of product sales.
Goodwill
- --------
The excess of the purchase price over the book value of a corporation acquired
at March 31, 1993 of $557,898 was added to the basis of the land and buildings
of such corporation based upon an independent appraisal of the property acquired
and is being amortized on a straight-line basis over the asset lives of 31.5
years. The remaining book value at March 31, 1999 and 1998 was $458,489 and
$475,057, respectively.
Income Taxes
- ------------
The Company's operations were included in the income tax returns filed by
Besicorp Group Inc. through the distribution date. During such time, income tax
expense (benefit) in the Company's consolidated financial statements was
calculated as if the Company had filed separate income tax returns. Deferred
income taxes are recognized for the tax consequences of "temporary differences"
by applying enacted statutory tax rates applicable to future years to
differences between the financial statement carrying amounts and tax bases of
existing assets and liabilities. The tax benefits of tax operating loss
carryforwards are recorded to the extent available, less a valuation allowance
if it is more likely than not that some portion of the deferred tax asset will
not be realized.
F-9
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
NOTE 2 - INVENTORIES
-----------
Inventories consist of the following:
March 31, 1999 March 31, 1998
-------------- ---------------
Assembly parts $263,761 $298,239
Finished goods 902,000 645,774
---------- ---------
$1,165,761 $944,013
========= =======
NOTE 3 - DEFERRED COSTS
--------------
Deferred and reimbursable costs at March 31, 1999 and March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
Internal Costs Third
Payroll Expenses Party Costs Total
------- -------- ----------- -----
Balance March 31, 1997 $917,671 $267,947 $295,110 $1,480,728
Additions 259,335 34,706 388,238 682,279
Expensed (634,631) (85,142) (64,335) (784,108)
Reimbursements (58,825) - (3,381) (62,206)
----------- ------------ ----------- ------------
Balance March 31, 1998 483,550 217,511 615,632 1,316,693
Additions 75,504 11,851 43,716 131,071
Expensed (513,375) (229,362) (659,348) (1,402,085)
Reimbursements (45,679) - - (45,679)
----------- ------------ ----------- ------------
Balance March 31, 1999 $0 $0 $0 $0
=========== =========== =========== ============
</TABLE>
The Company wrote off all deferred costs during the second quarter of Fiscal
1999 due to the uncertain nature of the development of the projects and due to
the uncertain political and economic conditions in the countries where the
projects are located (principally India and Brazil). The Company determined, in
accordance with its existing policy, that due to the uncertain development of
the projects and uncertain economic conditions in the respective countries the
carrying amounts may be impaired.
NOTE 4 - NOTES RECEIVABLE
----------------
Long-term notes receivable consist of the following:
<TABLE>
<CAPTION>
<S>
<C> <C>
March 31, 1999 March 31, 1998
-------------- --------------
Due from affiliate (net of allowance of
$0 at March 31, 1999 and
$555,376 at March 31, 1998 (a) $0 $0
======= =======
Due from others:
- Greenhouse (net of allowance of
$0 at March 31, 1999 and
$1,944,624 at March 31, 1998 (a) $0 $0
- 9% notes receivable due from limited
partnerships, receivable in annual
installments through December, 1999 (b) 103,894 223,623
Less current portion - net of interest (103,894) (93,737)
------- -------
TOTAL $0 $129,886
======= =======
</TABLE>
F-10
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
(a) In connection with a project (the "Project"), the Company advanced an
aggregate of $2,500,000 (see Note 7(d)) of which, at March 31, 1998, $1,944,624
and $555,376 was owed to the Company by, respectively, an affiliated partnership
and an unrelated company ("Allegany"). During Fiscal 1998, Besicorp Group Inc.
reserved the full amount of such loan due to its impairment and wrote off the
combined loan during the third quarter of Fiscal 1999 because the Company
relinquised its rights thereunder pursuant to the plan of reorganization
approved by the United States Bankruptcy Court for the District of New Jersey
(Case No.95-28703 (WT)) and the related settlements agreements. The Company did
not in Fiscal 1999 or Fiscal 1998 record any interest income with respect to
such advances.
(b) The Company contracted to design, build, and operate energy systems with
limited partnerships. Under the terms of the agreements with these partnerships,
the partnerships provided the Company with initial cash payments and issued
long-term notes. Additional interest on these notes was imputed at the rate of
2% per annum to yield an effective rate of 11% per annum on substantially all of
the long-term notes.
NOTE - 5 INVESTMENTS IN PARTNERSHIPS
---------------------------
The Company's interests in partnerships range from 35.715% to 50.2% and are
accounted for under the equity method. The investment in partnerships of
$4,009,810 at March 31, 1999 primarily represents the amounts paid by the
Company of $2,310,549 which equaled the tax bases of the partnership interests
of $2,310,549, which was contributed by Besicorp Group Inc. to the Company. In
addition, included in the investment balance is a receivable of $1,721,175 which
was also contributed to the Company by Besicorp Group Inc. and represents the
funds due from certain revenues earned by the partnerships in March 1999. The
partnerships are presently in liquidation. In June 1999, the Company received
distributions from the partnerships of approximately $2,000,000. Also included
in the investment balance are (a) approximately $550,000 which management
expects will be received by the Company, reduced by certain expenses to be
incurred, upon liquidation of one partnership around October 1999 and (b)
approximately $1.4 million (the "Liquidated Partnership Funds") held in cash
escrow accounts which were established in connection with the liquidated
partnerships. The Liquidated Partnership Funds, if any, may be released to the
Company between June 2000 and May 2002 subject to the satisfaction of certain
conditions, as to which no assurance can be given.
NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
-------------------------------------
Accounts payable and accrued expenses were comprised of the following:
March 31, 1999 March 31, 1998
-------------- --------------
Trade accounts payable $220,107 $465,584
Accrued interest expense - 39,421
Accrued legal fees - 308,281
Accrued salaries 144,871 134,640
Due to affiliate - 56,624
Deposits and other payables 398,553 230,370
------- ---------
$763,531 $1,234,920
======= =========
F-11
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
NOTE 7 - LONG-TERM DEBT
--------------
<TABLE>
<CAPTION>
<S>
<C> <C>
Long-term debt consists of the following: March 31, 1999 March 31, 1998
-------------- --------------
- Installment loans at 0% to 10.54% maturing through
September 2000 (a) $0 $75,639
- Mortgage loan payable in monthly installments of
$4,180 including interest at prime plus 1.5% through
April 2007, when the unpaid balance was due (b) 0 315,455
- Second mortgage payable in monthly installments
of $1,771 plus interest at prime plus 1.5% through
March 2002, when the unpaid balance was due (b, c) 0 288,646
- Mortgage loan payable in monthly installments of $1,060 plus interest
at prime plus 1.5% to March 1998
and prime plus .5% thereafter through March 2001 (b, c) 0 50,680
- Obligation on SunWize asset acquisition (e) 135,308 147,021
- Working capital loan (d) 0 3,000,000
--------- ---------
Total 135,308 3,877,441
Less: Current maturities 20,000 109,208
--------- ----------
$115,308 $3,768,233
======= =========
</TABLE>
Long-term debt maturities at March 31, 1999, including current maturities, are
as follows:
March 31, 1999
--------------
2000 $20,000
2001 20,000
2002 20,000
2003 20,000
2004 20,000
Thereafter 35,308
$135,308
=======
With the exception of the SunWize acquisition obligation, which is the only debt
(other than trade and similar debt incurred in the ordinary course of business)
remaining subsequent to the Spin-Off, all debt was repaid during Fiscal 1999.
a. Collateral for the installment loans consists of automobiles, machinery and
equipment, computer equipment and furniture and fixtures with a net book value
of $60,468 at March 31, 1998. All these loans were repaid prior to December 31,
1998.
F-12
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
b. Collateralized by mortgages on land and/or buildings with a net book value of
$1,153,622 at March 31, 1998. These mortgages were repaid prior to December 31,
1998.
c. As a part of his guarantees of the Company's debts of $339,326 at March 31,
1998, the a major shareholder has a security interest in various assets, patents
and personal property owned by the Company. These mortgages were repaid prior to
December 31, 1998 and the related security interests released.
d. On June 1, 1992, Besicorp Group Inc. and its partnership co-developer with
respect to certain projects, entered into a loan agreement with Stewart &
Stevenson Services, Inc. to borrow up to $3,000,000 each for working capital.
Interest on advances under the agreement were payable quarterly in arrears at
the rate of 2% above prime. The loan required payments of interest only during
the initial term. Principal was to be repaid based on termination dates of
operating and maintenance contracts on certain projects with an initial term of
six years that may be extended an additional six years. Loans were secured by
cash flows of certain of the partnerships in the event of default. During Fiscal
1993 and 1994 Besicorp Group Inc. borrowed $2,500,000 under the agreement to
fund development activities of one of the partnerships (see Note 4), and, in
February 1997, borrowed the remaining $500,000 available under the loan
agreement. The loan was repaid in full in July 1998.
e. Obligation payable on the acquisition of SunWize assets, payable on an annual
basis as a percentage of gross margins of the SunWize division. $11,713 was paid
in Fiscal 1999. $19,878 was paid in Fiscal 1998.
NOTE 8 - INCOME TAXES
------------
The credit for income taxes for the period through the Distribution represents
the allocated benefits of the respective losses which Besicorp Group Inc. was
able to use in filing its consolidated tax returns.
Tax benefits are allocated based on the taxable loss of the companies and
deferred taxes are provided on temporary differences in recognition of income
between book and tax. Such tax benefits and deferred taxes are charged or
credited to the amount due to or from Besicorp Group Inc. and included in the
net transactions with Besicorp Group Inc.
Deferred tax assets of approximately $415,000 primarily from equipment and
depreciation differences are offset by valuation allowances since it is more
likely than not that some portion of the deferred tax asset will not be
realized.
Upon conclusion of the Merger and Distribution, the Company became an
independent entity and will no longer have its results included with the
consolidated tax return of Besicorp Group Inc. The Company has an available net
operating loss of approximately $167,900 which expires 2019. The tax benefits of
the net operating loss carry forward of $57,000 have been offset by a
corresponding increase in valuation allowance.
NOTE 9 - CAPITALIZATION
The Company has authorized 1,000,000 shares of $.01 par value preferred stock,
of which none have been issued, and 5,000,000 shares of $.01 par value common
stock. Upon formation of the Company in November 1998, 500 shares of common
stock were issued to Besicorp Group Inc. for $500. In connection with the Merger
and the Distribution, approximately 122,057 shares of the Company are available
to be issued to the holders of Besicorp Group Inc. common stock on a one share
of the Company for 25 shares of Besicorp Group Inc. basis subject to adjustment
based upon the payment of cash in lieu of the issuance of fractional shares. At
March 22, 1999, $40,000 was placed in escrow with the transfer agent for payment
of cash in lieu of fractional shares. Stock certificates for 121,382 shares of
the Company's common stock have been received for distribution in exchange of
Besicorp Group Inc. shares after payment on the issuance of fractional shares.
The $29,042 of payment for fractional shares is an additional capital
contribution by Besicorp Group Inc. and the balance of the $40,000 was
transferred to the escrow account established to satisfy the Company's
obligations under the Indemnification Agreement.
F-13
<PAGE>
NOTE 10 - RELATED PARTIES
---------------
Net amounts due from affiliates at March 31, 1999 and March 31, 1998 relate to
receivables from companies owned by a major shareholder which provided certain
services to Besicorp Group Inc., and which will continue to provide services to
the Company, for airport usage, plane services and engineering consulting
services totaling $56,197 and $31,939 for the years ended March 31, 1999 and
1998, respectively.
Also, included in amounts due from affiliates at March 31, 1999 is $314,000 of
funds due from Besicorp Group Inc. Additional cash balances were identified
subsequent to the Merger which were not included in the calculation of the
Merger consideration. The funds were transferred to the Company subsequent to
the balance sheet date.
Included in other current assets at March 31, 1998 is a receivable of $164,211
from the President of the Company representing primarily the balance due on
$186,000 of legal fees incurred in connection with a certain legal proceeding
(the "Proceeding") which the President had agreed, subject to a determination
that such repayment was not required, to reimburse to the Company. In January
1999, after the receipt of a report from independent legal counsel addressing
the propriety under the BCL and Besicorp Group Inc.'s by-laws of indemnifying
the President, a committee of directors of Besicorp Group Inc. (composed of
independent directors) determined that the President was entitled to full
indemnification with respect to the Proceeding and (i) authorized the repayment
to the President of the fine of $36,673 he had paid in connection with the
Proceeding and the refund of $45,000 he had previously reimbursed Besicorp Group
Inc.; (ii) acknowledged that the President had no further obligations with
respect to the $141,000 he had, subject to a determination as the propriety of
indemnification, agreed to reimburse Besicorp Group Inc.; and (iii) authorized
the reimbursement of the President for the legal fees and expenses
(approximately $39,180) incurred by third parties in connection with the
Proceeding and which were paid by him. All such reimbursements were made during
the fourth quarter of Fiscal 1999 and any related receivables were written off
and charged to expense during the same period.
NOTE 11 - SUPPLEMENTARY INCOME STATEMENT INFORMATION
------------------------------------------
Fiscal 1999 Fiscal 1998
----------- -----------
Advertising costs $ 72,734 $142,154
Research and development expenses(1) 603,399 697,182
Warranty expense 3,767 53,701
Amortization of patents and trademarks 659 40,632
Maintenance and repairs 105,949 84,903
Taxes other than payroll and income taxes 57,761 57,721
(1) Expenditures for research and development were $603,399 in Fiscal 1999 and
$697,182 in Fiscal 1998. Personnel expenses, comprising the largest portion of
these amounts, were $223,799 in Fiscal 1999 and $330,428 in Fiscal 1998. Of the
total amounts, expenses attributable to the Company's agreements with the New
York State Energy Research and Development Authority were $331,539 for Fiscal
1999 and $520,950 in Fiscal 1998.
NOTE 12 - LEGAL PROCEEDINGS
-----------------
The Company is a party to numerous legal proceedings in the normal course of
business and certain shareholder suits.
F-14
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
As part of the Plan of Merger, there is (i) an indemnification agreement which
obligates the Company to indemnify the purchaser from any damages it suffers
arising out of, among other things, Besicorp Group Inc.'s breach of
representations and warranties set forth in the Plan of Merger and certain
liabilities, taxes and litigation of Besicorp Group Inc. and (ii) an escrow
agreement governing the $6.5 million initially placed in escrow to satisfy the
Company's obligations under the indemnification agreement and provides for
payment of, among other things, certain litigation and related costs.
Management is of the opinion that there are meritorious defenses in the various
legal proceedings and that the balance in the escrow will cover any legal costs
and settlements that might result from these actions.
NOTE 13 - COMMITMENTS AND CONTINGENCIES
-----------------------------
Other than the equipment lease described below, at March 31, 1999, the Company
has no significant minimum annual rental commitments under non-cancelable
operating leases for equipment and office space. The Company has three leases
for office and warehouse space. One lease calls for monthly rental of $575 for a
period of 12 months ending April 1999 and subsequently extended for another
year. The second lease calls for monthly rental of $410 per month for a period
of 12 months ending January 2000. The third lease was for an initial period of
six months, commencing on October 1, 1995 and ending on March 31, 1996. The term
automatically renews for successive periods of six months each. Either party may
terminate the lease at any time by giving the other party at least ninety days
notice in writing. The annual rent from September 1, 1995 forward is $102,000,
which will be adjusted in future periods based on the Consumer Price Index. Rent
expense on all operating leases for Fiscal 1999 and 1998 was $176,964 and
155,197, respectively.
Since March 1994 the Company has been entering into cost-sharing agreements with
the New York State Energy Research and Development Authority ("NYSERDA") with
completion dates extending through April 2001. The agreements provide for
payment to the Company by NYSERDA of $1,442,237 (approximately $1,015,822 has
been earned through March 31, 1999) for funding and development of photovoltaic
projects with estimated costs of $2,963,235. Funds advanced by NYSERDA are to be
repaid from revenues on sales of products developed under the agreements, if
any.
The Company has a 401(k) plan covering substantially all full-time employees for
which the Company makes matching contributions as defined. The Company's
expenses under the plan for Fiscal 1999 and 1998 were $98,868 and $72,692,
respectively.
As part of the Plan of Merger, certain equipment with an original cost of
$827,000 was retained by Besicorp Group Inc. and be leased to the Company.
Rentals under the two year lease will be approximately $63,474 per quarter
commencing July 1, 1999. The Company has the option to purchase the equipment
after the first year for $288,479. Besicorp Group Inc. has the option to require
the Company to purchase the equipment at the end of the lease for $55,000. The
lease is accounted for as an operating lease on the Company's books.
In February 1999, Besicorp Ltd. adopted the 1999 Incentive Plan to provide
for the issuance of up to 40,000 shares of Besicorp Ltd. common stock as an
equity incentive program. On May 14, 1999, restricted grants of 15,000 shares
were made under the plan.
NOTE 14 - SEGMENTS OF BUSINESS
--------------------
The Company specializes in the development, assembly, manufacture, marketing and
resale of photovoltaic products and systems ("Product Segment") and the
development of power plant projects ("Project Segment"). Segments are reported
based on the subsidiary involved with the activity of that segment, with no
intersegment revenues and expenses. Export product sales, principally to Europe
and the Pacific Rim, for the years ended March 31, 1999 and 1998 were $153,543
and $299,293, respectively. A summary of industry segment information for Fiscal
1999 and 1998 is as follows:
F-15
<PAGE>
BESICORP LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S>
<C> <C> <C> <C>
For the Year Ended Project Product
March 31, 1999 Segment Segment Eliminations (1) Total
- -------------- ------- ------- ------------ -----
Net revenues $165,161 $5,551,442 $ 5,716,603
Loss before taxes (6,856,945) (1,854,994) (8,711,939)
Income tax provision (credit) (2,283,500) (613,700) (2,897,200)
Net income (loss) (4,573,445) (1,241,294) (5,814,739)
Identifiable assets 18,315,811 2,635,574 $(10,338,484) 10,612,901
Investment in partnerships 4,009,810 - 4,009,810
Capital expenditures - 133,348 133,348
Depreciation and amortization 84,466 80,841 165,307
For the Year Ended Project Product
March 31, 1998 Segment Segment Eliminations (1) Total
------- ------- ------------ -----
Net revenues $158,427 $4,249,995 $4,408,422
Loss before taxes (8,412,438) (2,578,566) (10,991,004)
Income tax provisions (credit) (2,868,000) (899,000) (3,767,000)
Net income (loss) (5,544,438) (1,679,566) (7,224,004)
Identifiable assets 17,355,904 1,947,316 $(14,074,568) 5,228,652
Investment in partnerships - - -
Capital expenditures 39,478 109,788 149,266
Depreciation and amortization 152,662 91,131 243,793
</TABLE>
(1) Eliminations are comprised of inter-company accounts receivable recorded on
certain subsidiaries, which are eliminated in consolidation.
NOTE 15 - GOING CONCERN
-------------
The Company has suffered recurring losses from operations and has previously
received (but will not in the future receive) substantial financial support from
Besicorp Group Inc., which raises substantial doubt about the Company's ability
to continue as a going concern without such support. The Company is exploring a
potential transaction in which a major shareholder would acquire all outstanding
shares not already owned by him (the "Transaction"). In this regard, the Company
has retained a financial advisor to render financial and other general advice ,
including an evaluation of the fairness of the Transaction from a financial
point of view, and to assist the Company in responding to proposed alternative
transactions, if any. No assurance can be given that the Transaction will be
completed or that alternative transactions will be available.
NOTE 16 - PRO FORMA FINANCIAL INFORMATION
-------------------------------
The consolidated financial statements for the year ended March 31, 1999 include
the results of operations and cash flows for the period April 1, 1998 through
March 22, 1999, the date of Distribution, during which the Company was a part of
Besicorp Group Inc. and the period March 23, 1999 through March 31, 1999 during
which the Company was a stand alone entity. The results of operations are
summarized as follows:
F-16
<PAGE>
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
April 1, 1998 March 23, 1999 Year Ended
through through March 31, 1999
March 22, 1999 March 31, 1999 --------------
-------------- ---------------
Revenues:
Product Sales $4,902,642 $200,633 $5,103,275
Other Revenue 485,705 325 486,030
Interest and other invesment income 19,188 1,224 20,412
Other income 105,041 1,845 106,886
--------- ------- ---------
Total Revenues 5,512,576 204,027 5,716,603
--------- ------- ---------
Cost and Expenses:
Cost of product sales 4,661,182 177,834 4,839,016
Selling, general and
administrative expense 9,251,042 193,356 9,444,398
Interest expense 134,110 - 134,110
Other expense 11,018 - 11,018
---------- ------- ----------
Total Cost and Expenses 14,057,352 371,190 14,428,542
---------- ------- ----------
Loss Before Income Taxes (8,544,776) (167,163) (8,711,939)
Credit for Income Taxes 2,902,200 (5,000) 2,897,200
--------- ------- ---------
Net Loss $(5,642,576) $(172,163) $(5,814,739)
========= ======= =========
Loss Per Common Share $ (46.48) $ (1.42) $ (47.90)
</TABLE>
F-17
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BESICORP LTD.
By: /s/Michael F. Zinn
------------------
Name: Michael F. Zinn
Title: Chairman of the Board,
Chief Executive Officer and President
(principal executive officer)
Dated: April 17, 2000
By: /s/James E. Curtin
------------------
Name: James E. Curtin
Title: Vice President, Controller
(principal accounting officer)
Dated: April 17, 2000
