SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) OCTOBER 21, 1999
--------------------------------
GEOTEC THERMAL GENERATORS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 0-26315 59-3357040
(State or other jurisdiction (Commission File (IRS Employer
or incorporation) Number) Identification No.)
5956 N.W. 63RD WAY, PARKLAND, FLORIDA 33067
(Address of principal executive offices, including zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (954) 340-4694
Kennsington Capital and Equity Corp.
162 E. RIVERBEND DRIVE, ALTAMONT SPRINGS, FL 32779
(Former name or former address, if changed since last report)
1
<PAGE>
This amendment is being filed to include the financial information
which was unavailable at the time of the original filing dated October 21, 1999.
The undersigned registrant hereby amends the following items:
ITEM 7 Financial Exhibits, Pro Forma Financial Information And Exhibits.
(a) Financial Statements and Pro Forma Financial Information
(1) Audited Financial Statements at and for the period
ended December 31, 1998;
(2) Unaudited Financial Statements at and for the period
ended September 30, 1999 and 1998;
(3) Pro Forma financial information.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned herein duly authorized.
GEOTEC THERMAL GENERATORS, INC.
By:\S\_W. Richard Lueck, Chief Executive Officer__
W. Richard Lueck, Chief Executive Officer
Dated: February 2, 2000
2
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GEOTEC THERMAL GENERATORS, INC
INDEX TO FINANCIAL STATEMENTS
Page Number
---------------
Independent Auditors' Report F-2
Financial Statements February 2, 1998 (Date of Inception)
through December 31, 1998:
Balance Sheet F-3
Statement of Operations F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6 - F-8
Unaudited Financial Statements September 30, 1999 and 1998:
Balance Sheet F-9
Statement of Operations F-10
Statement of Cash Flows F-11
Notes to Financial Statements F-12
Kennsington Capital and Equity Corporation / Geotec Thermal
Generators, Inc.
Unaudited Pro Forma Consolidated Financial Statements F-13 - F-15
<PAGE>
To the Board of Directors
Geotec Thermal Generaters, Inc.
Parkland, Florida 33067
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Geotec Thermal Generaters,
Inc. (a development stage enterprise) as of December 31, 1998, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the period February 2, 1998 (Date of Inception) through December 31, 1998. 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 audit 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 the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Geotec Thermal Generaters, Inc.
(a development stage enterprise) as of December 31, 1998, and the results of its
operations and its cash flows for the period February 2, 1998 (date of
inception) through December 31, 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and has no significant revenue from operations. It is utilizing technology
which may require substantial expenditures to successfully market. The Company
must successfully complete its marketing efforts. As a result the Company may
need additional funds. These factors raise substantial doubt about the ability
of the Company to continue as a going concern. Management's plans in regard to
these matters are described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of the foregoing
uncertainties.
\S\Millward & Co. CPAs
Millward & Co. CPAs
Fort Lauderdale, Florida
June 14, 1999
F-2
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GEOTEC THERMAL GENERATERS, INC.
A DEVELOPMENT STAGE ENTERPRISE
BALANCE SHEET
December 31, 1998
CURRENT ASSETS
Cash .......................................................... $ 21
----------
Total Current Assets ...................................... 21
Property and Equipment, at Cost, (Net of Accumulated Depreciation of
$1,546 at December 31, 1998) .............................. 6,186
Organizational Costs (Net of Accumulated
Amortization of $207 at December 31, 1998) ................ 1,035
----------
Total Assets .............................................. $ 7,242
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable .............................................. $ 76
Accrued Expenses .............................................. 815
----------
Total Current Liabilities ................................. 891
----------
STOCKHOLDERS' EQUITY
Common Stock, No Par Value, 50,000,000 Shares Authorized;
Issued and Outstanding, 79,300 Shares in 1998 ............... --
Additional Paid in Capital .................................... 284,000
Deficit Accumulated During the Development Stage .............. (277,649)
Total Stockholders' Equity ................................ 6,351
----------
Total Liabilities and Stockholders' Equity ................ $ 7,242
==========
The accompanying notes are an integral part of these financial statements.
F-3
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GEOTEC THERMAL GENERATERS, INC.
A DEVELOPMENT STAGE ENTERPRISE
STATEMENT OF OPERATIONS
For the Period February 2, 1998 (Date of Inception) through December 31, 1998
REVENUES .................................. $ --
----------
COSTS AND EXPENSES:
General and Administrative ............ 278,810
----------
Total Operating Expenses .......... 278,810
----------
Interest Income (Net of Expense of $43) 1,373
----------
NET LOSS BEFORE TAX ....................... $(277,437)
==========
LESS TAXATION ............................. 212
----------
NET LOSS .................................. $(277,649)
==========
The accompanying notes are an integral part of these financial statements.
F-4
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GEOTEC THERMAL GENERATERS, INC.
A DEVELOPMENT STAGE ENTERPRISE
STATEMENT OF CASH FLOWS
For the Period February 2, 1998 (Date of Inception) through December 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss .......................................... $(277,649)
Adjustments to Reconcile Net Loss to Net Cash Flows
From (Used in) Operating Activities:
Depreciation and Amortization ............. 1,753
Changes is Operating Assets and Liabilities:
Organizational Costs ...................... (1,242)
Accrued Expenses .......................... 76
Accounts Payable .......................... 815
----------
Net Cash Flows Used in Operating Activities ........... (276,247)
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Fixed Assets .......................... (7,732)
----------
Net Cash Flows Used in Investing Activities ........... (7,732)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Common Stock ............ 284,000
----------
Net Cash Flows Provided by Financing Activities ....... 284,000
----------
Net Increase (Decrease) in Cash and Cash Equivalents .. 21
Cash - Beginning of Period ............................ --
Cash - End of Period .................................. $ 21
==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Income Taxes .................................. $ --
==========
Interest ...................................... $ 43
==========
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
GEOTEC THERMAL GENERATERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
For the Period February 2, 1998 (Date of Inception)
through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The Company was incorporated on February 2, 1998, in the State of Florida. The
Company is in the development stage of its existence.
The principles operated for several years individually, without incorporating
the Company prior to 1998. The Company is in the development stage and its
intent is to commercialize the Russian Federation's technology for secondary oil
and gas recovery that has been used in approximately 30,000 wells, to date. The
Company was formed to complete the initial development contract which was
executed in August 1996. Subsequently three contracts were executed, covering
patent rights, transfer of technology and a long term exclusive contract for the
technology for North, South and Central America.
BASIS OF PRESENTATION
The Company is in the development stage and the Company's operations are subject
to all of the risks inherent of an emerging business enterprise. The Company has
incurred an operating loss of $277,437 for the period February 2, 1998 (date of
inception) through December 31, 1998. No assurance exists that the Company will
not encounter substantial delays and expenses related to financing its
successful completion of its product development and marketing efforts and/or
other unforeseen difficulties. The Company will be required to expand its
management and administrative capabilities in order to manage the aforementioned
items as well as respond to competitive conditions. These and other factors may
require additional funds and the Company may seek such funds through additional
equity financings, debt financings, collaborative arrangements or from other
sources. Such funds may not be available on terms acceptable to the Company.
Based on the Company's current plans and assumptions, the Company believes its
cash on-hand and subsequent financing will be sufficient to fund its anticipated
operations through fiscal 1999.
PER SHARE DATA
The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (FAS 128), which establishes new standards for computing
and presenting earnings per share ("EPS") effective for periods ending after
December 15, 1997. FAS 128 requires a dual presentation of basic and diluted
EPS. Because of losses from continuing operations, the effect of stock options
and warrants is antidilutive. Accordingly, the Company's presentation of diluted
earnings per share is the same as that of basic earnings per share in all
periods presented.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and other highly liquid debt
instruments with an original maturity of less than three months.
F-6
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GEOTEC THERMAL GENERATERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Period February 2, 1998 (Date of Inception)
through December 31, 1998
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
PROPERTY AND EQUIPMENT
Computers and equipment are stated at cost. Depreciation is charged to
operations over the estimated useful lives of 3-5 years.
Depreciation expense for the year ended December 31, 1998 amounted to $1,546.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INCOME TAXES
The Company accounts for income taxes under the liability method in accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes". Deferred income taxes are determined based upon the difference between
the financial statement carrying amount and the tax basis of assets and
liabilities using tax rates expected to be in effect in the years in which the
differences are expected to reverse.
As of December 31, 1998, the Company has net operating losses amounting to
approximately $277,648 which the Company has elected to carry forward for tax
purposes and accordingly, the loss may be carried forward and used to offset
taxable earnings of future years. The net operating loss carryover will expire
in the year 2018 if not used in any intervening years. The operating losses may
be limited to the extent an "ownership" change occurs. As the utilization of
such operating loss for tax purposes is not assured, the deferred tax asset has
been fully reserved through the recording of a 100% valuation allowance.
FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of
credit risk are primarily cash and accounts receivable. The Company invests its
excess cash in high quality short-term liquid money market instruments with
major financial institutions and the carrying value approximates market value.
The Company does not have significant trade receivables.
The Company believes it is not exposed to any significant credit risk on cash
and/or notes receivable.
F-7
<PAGE>
GEOTEC THERMAL GENERATERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS (Continued)
For the Period February 2, 1998 (Date of Inception)
through December 31, 1998
NOTE 2 - OPERATING LEASES
The Company leases a vehicle from a related party under operating leases
expiring in February, 2003.
Future minimum rental payments under non-cancelable operating leases having
remaining terms in excess of 1 year as of December 31, 1998, for each of the
next 5 years and in the aggregate are:
Year Ended December 31, Amount
2000 $ 8,964
2001 8,964
2002 8,964
2003 2,241
-----------
$ 38,097
NOTE 3 - STOCKHOLDERS' EQUITY
In 1998, the Company issued 500 shares of no par value for proceeds of $284,000.
NOTE 4 - SUBSEQUENT EVENT
The Company also has the obligation and right to patent the technologies in its
exclusive territory of North, South and Central America during its two- 10 year
contract exclusive periods. The long term contract requires the minimum purchase
of 500 gas generators each year over the first of the two 10 year periods. This
obligates the Company to purchase approximately $12,750,000 including freight
costs over the first ten year contract.
In February 1999, the Company entered into a contract with the Federal State
Unitary Enterprise "State Corporation Rosvoorouzhenie", Moscow, Russia. This
contract calls for the Company to purchase certain equipment for $129,960 and
$119,500 for the cost of training, and requires the opening of a Letter of
Credit for a four month period.
As of June 1999, the Company has accumulated cash of approximately $15,000 and
has received capital contributions of $45,000, all of which will be used to
offset the liability for the equipment and training cost.
F-8
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GEOTEC THERMAL GENERATORS, INC.
BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
ASSETS
CURRENT ASSETS
Cash .................................................. $ 8,560
---------
TOTAL CURRENT ASSETS .............................. 8,560
---------
PROPERTY AND EQUIPMENT, net ................................ 8,145
ORGANIZATION COSTS, net .................................... 848
---------
TOTAL ASSETS ................................... $ 17,553
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Payroll tax liability ................................. $ 4,377
---------
TOTAL CURRENT LIABILITY ........................... 4,377
---------
DUE FROM SHAREHOLDER ....................................... 100
STOCKHOLDERS' EQUITY:
Common stock, no par value, 50,000,000
shares authorized; 79,300 shares issued and outstanding --
Additional paid in capital ............................ 527,250
Accumulated deficit ................................... (514,174)
---------
TOTAL STOCKHOLDERS' EQUITY ........................ 13,076
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........ $ 17,553
=========
F-9
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GEOTEC THERMAL GENERATORS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Nine months ended September 30,
----------------------------------------------
1999 1998
------------------- -----------------------
REVENUE $ - $ -
COST OF SALES 3,783 -
------------------- -----------------------
GROSS PROFIT (3,783) -
OPERATING EXPENSES 232,742 209,108
------------------- -----------------------
NET LOSS $ 236,525 $ 209,108
=================== =======================
F-10
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GEOTEC THERMAL GENERATORS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
----------------------
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .................................... $(236,525) $(209,108)
--------- ---------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ............... 2,996 1,315
Changes in assets and liabilities:
Increase in payroll tax liability ........ 4,377 --
Increase (decrease) in accounts payable ... (76) 57
Increase (decrease) in accrued expenses ... (804) 8
--------- ---------
NET CASH USED IN OPERATING ACTIVITIES ............ (230,032) (207,728)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets .................... (4,579) (5,799)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES ............ (4,579) (5,799)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock ...... 243,250 213,000
Loan to shareholder ......................... (100) --
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES ........ 243,150 213,000
--------- ---------
NET INCREASE (DECREASE) IN CASH .................. 8,539 (527)
CASH, beginning of period ........................ 21 --
--------- ---------
CASH, end of period .............................. $ 8,560 $ (527)
========= =========
F-11
<PAGE>
GEOTEC THERMAL GENERATORS, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Geotec have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 8-K. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation (consisting of
normal recurring accruals) have been included. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Operating results for the nine month period ended September 30, 1999
and 1998 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999. For further
information, refer to the financial statements and footnotes included
herein.
F-12
<PAGE>
PRO FORMA FINANCIAL DATA
INTRODUCTION
The following financial data is based upon the historical
financial statements of Kennsington Capital and Equity Corporation
("Kennsington" or the "Company") and has been prepared to illustrate
the effects on such historical data of the Geotec Thermal Generators,
Inc. ("Geotec") acquisition. The unaudited pro forma consolidated
balance sheet as of September 30, 1999 gives effect to the Geotec
acquisition as if such transaction had been completed on September 30,
1999.
The acquisition has been accounted for as a reverse
acquisition under the purchase method for business combinations.
Accordingly, the combination of the two companies is recorded as a
recapitalization of Geotec, pursuant to which Geotec is treated as the
continuing entity.
The pro forma financial data is provided for comparative
purposes only and does not purport to represent the actual financial
position of the Company that actually would have been obtained if the
Geotec acquisition had been consummated on the date specified.
The pro forma financial data are based on certain assumptions
and adjustments described in the notes thereto and should be read in
conjunction therewith.
F-13
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------ ------------------------------
Kennsington Adjustments (A) As Adjusted
Geotec Thermal Capital and Equity
Generators, Inc. Corporation
------------ -------------- -------------- -----------
<S> <C> <C> <C> <C>
Current assets:
Cash .................................. $ 8,560 $ -- $ -- $ 8,560
------------ -------------- -------------- -----------
Total current assets ....................... 8,560 -- 8,560
Property and equipment, net ................ 8,145 -- -- 8,145
Organization costs, net .................... 848 -- -- 848
------------ -------------- -------------- -----------
Total assets ............................... $ 17,553 $ -- $ -- $ 17,553
============ ============== ============== ===========
Current liabilities:
Payroll tax liability ................. $ 4,377 $ -- $ -- $ 4,377
------------ -------------- -------------- -----------
Total current liabilities .................. 4,377 -- -- 4,377
------------ -------------- -------------- -----------
Due from shareholder ....................... 100 100
Stockholders' equity:
Common stock, $.001 par value
50,000,000 shares authorized, 2,000,000
(actual) and 20,714,775 (pro forma)
shares issued and outstanding ......... -- 2,000 18,715 20,715
Additional paid-in capital ............ 527,250 9,994 (30,709) 506,535
Accumulated deficit ................... (514,174) (11,994) 11,994 (514,174)
------------ -------------- -------------- -----------
Total stockholders' equity ................. 13,076 -- -- 13,076
------------ -------------- -------------- -----------
Total liabilities and stockholders'
equity ................................ $ 17,553 $ -- -- $ 17,553
============ ============== ============== ===========
</TABLE>
See notes to unaudited pro forma consolidated financial statements
F-14
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
A. The following unaudited pro forma adjustments are included in the
unaudited pro forma balance sheet at September 30, 1999:
To record the acquisition of Geotec by Kennsington.
On October 21, 1999, Kennsington completed the acquisition of Geotec
under an agreement dated as of October 1, 1999. As part of the
acquisition, the shareholders of Geotec acquired 18,714,775 shares of
Kennsington's common stock in exchange for all of the capital stock of
Geotec. As a result of this transaction, the shareholders of Geotec
received approximately 90.3% of the total outstanding common stock of
Kennsington, and at the completion of the transaction there were
20,714,775 shares of common stock of Kennsington issued and
outstanding. Prior to the completion of the acquisition, Kennsington
had completed a two-for-one forward stock split of its outstanding
common stock. On November 5, 1999, Geotec was merged into Kennsington
and Kennsington changed its name to Geotec Thermal Generators, Inc. as
part of the merger of its subsidiary into itself.
The acquisition has been accounted for as a reverse acquisition under
the purchase method for business combinations. Accordingly, the
combination of the two companies is recorded as a recapitalization of
Geotec, pursuant to which Geotec is treated as the continuing entity.
F-15
