U.S. 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 quarterly period ended May 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 000-30313
CENTURY CONTROLS INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Utah 41-1294552
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
3140 Neil Armstrong Blvd, Suite 226, Eagan, MN 55121
(Address of principal executive offices)
(651) 454-0323
(Issuer's telephone number)
Not Applicable
(Former name, address and fiscal year, if changed since last report)
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
preceding 12 months (or for such shorter period that the issuer
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13, or 15(d) of the
Exchange Act subsequent to the distribution of securities under
a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's
classes of common equity, as of May 31, 2000 3,863,635 shares of
common stock.
Transitional Small Business Format: Yes [ ] No [ X ]
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FORM 10-QSB
CENTURY CONTROLS INTERNATIONAL, INC.
INDEX
Page
PART I. Financial Information 3
Balance Sheets as of May 31, 2000 and
February 29, 2000 4
Statements of Operations for the Three
Months Ended May 31, 2000 and 1999 6
Statements of Cash Flows for the Three
Months Ended May 31, 2000 and 1999 7
Management's Discussion and Analysis of
Financial Condition 8
PART II. Other Information 9
Exhibits and Reports on Form 8-K 9
Signatures 9
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PART I.
Financial Information
In the opinion of management, the accompanying unaudited
financial statements included in this Form 10-QSB reflect all
adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the results of operations
for the periods presented. The results of operations for the
periods presented are not necessarily indicative of the results
to be expected for the full year.
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
May 31, February 29,
2000 2000
ASSETS
Current assets:
Cash $ 2,805 $ 5,513
Accounts receivable, trade,
net of allowance for doubtful
accounts of $5,000 and $5,000,
respectively 48,315 31,427
Inventories 78,907 79,399
Prepaid expenses 4,431 4,430
Total current assets 134,458 120,769
Fixed assets 61,789 61,789
Less accumulated depreciation 34,852 33,303
Net fixed assets 26,937 28,486
Other assets:
Inventories, less valuation allowance of
$60,000 and $60,000, respectively 20,000 20,000
Deposit 821 821
Patents, net of accumulated amortization
of $5,322 and $4,917, respectively 24,548 27,866
Total other assets 45,369 48,687
Total assets $ 206,764 $ 197,942
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
May 31, February 29,
2000 2000
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $ 32,206 $ 32,117
Notes payable - stockholders 24,100 23,000
Accounts payable 180,357 145,958
Accrued expenses:
Payroll and related 39,123 12,253
Warranty 3,000 3,000
Interest 6,866 6,866
State minimum fee 100 100
Total current liabilities 285,752 223,294
Long-term debt:
Notes payable, net of current maturities 11,815 12,735
Total liabilities 297,567 236,029
Stockholders' equity (deficit):
Common stock, $.004 par value, 50,000,000
shares authorized; issued and
outstanding 3,863,635 15,455 15,455
Additional paid-in capital 1,254,399 1,254,399
Accumulated deficit (1,360,657) (1,307,941)
Total stockholders' equity (deficit) (90,803) (38,087)
Total liabilities and
stockholders' equity (deficit) $ 206,764 $ 197,942
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
ACCUMULATED DEFICIT
Three Months Ended
May 31, May 31,
2000 1999
Net sales $ 89,127 $ 178,637
Cost of sales 30,573 51,695
Gross profit 58,554 126,942
Operating expenses 108,204 114,126
Operating income (loss) (49,650) 12,816
Other expenses:
Inventory valuation allowance - -
Interest expense 3,066 3,060
Total other expenses 3,066 3,060
Net income (loss) before
income taxes (52,716) 9,756
Income taxes - -
Net income (loss) (52,716) 9,756
Accumulated deficit:
Beginning of year (1,307,941) (1,159,386)
End of year $(1,360,657) $(1,149,630)
Basic earnings per share $ (.01) $ (.00)
Weighted-average number of
shares outstanding 3,863,635 3,863,635
Diluted earnings per share $ (.01) $ (.00)
Weighted-average number of
shares outstanding 3,880,696 3,983,856
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
May 31, May 31,
2000 1999
Cash flows from operating activities:
Net income (loss) $ (52,716) $ 9,756
Adjustments to reconcile net income (loss) to
net cash flows from operating activities:
Depreciation 1,549 1,353
Amortization 405 282
Allowance for doubtful accounts - -
Inventory valuation allowance - -
Decrease (increase) in:
Accounts receivable - trade (16,888) (5,644)
Inventories 492 (50)
Prepaid expense (1) 340
Other assets - -
Increase (decrease) in accounts payable
and accrued expenses 61,269 1,774
Net cash used by operating activities (5,890) 7,811
Cash flows from investing activities:
Purchase of fixed assets - -
Incurrence of patent costs 2,913 (802)
Net cash used by investing activities 2,913 (802)
Cash flows from financing activities:
Net borrowings on notes payable - stockholders 1,100 -
Payment of long-term debt (831) (4,044)
Net cash provided by financing activities 269 (4,044)
Increase (decrease) in cash (2,708) 2,965
Cash, beginning of year 5,513 3,514
Cash, end of year $ 2,805 $ 6,479
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
Results of Operations
Three Months periods Ended May 31, 2000 and 1999
Century had net sales of $89,127 and $178,637 for the fiscal
quarters ended May 31, 2000 and 1999, respectively. The decrease
in sales is primarily a result of higher than normal sales to a
single customer in 1999 that did not recur in 2000. Management
believes sales in fiscal year 2000 are consistent with historical
levels
In the three-month period ended May 31, 2000, Century's cost of
sales was $30,573 compared to $51,695 for the fiscal quarter
ended May 31, 1999. This decrease is primarily due to fewer
sales of product in 2000 as compared to 1999.
Operating expenses for the three-month periods ended May 31, 2000
and 1999, were $108,204 and $114,126, respectively. The increase
in operating expenses is attributable to increased commissions to
independent distributors and increased professional fees relating
to becoming a reporting company under the Securities Exchange Act
of 1934.
As a result of the foregoing factors, Century realized an
operating loss of $49,650 for the three months ended May 31,
2000, as compared to operating income of $12,816 for the three
months ended May 31, 1999.
Liquidity and Capital Resources
At May 31, 2000, Century had a working capital deficit of
$151,294 as compared to a working capital deficit of $105,525 at
February 28, 2000. Century's cash balance at May 31, 2000 was
$2,805. Century has used cash flow from operations to finance
its operating activities during the quarter ended May 31, 2000.
Century's ability to continue in existence is dependent upon
obtaining adequate financing and profitable operations.
Management is expanding its product line with a new low cost
microprocessor controller for smaller boilers and a sequencer
program for air compressors, which are expected to generate
additional profitable sales. However, the ability of Century to
bring its products to market will be hampered as long as Century
does not have the working capital necessary to pursue more
aggressive marketing. In July 2000, Century obtained a bridge
loan for $100,000 under a convertible debenture bearing interest
at the rate of 12% per annum that is due July 1, 2002. The
convertible debenture may be converted at the election of the
holder to common stock of the Company at the rate of one share
for $0.25 of principal amount of the debenture. In connection
with the financing, the lender received 200,000 shares of common
stock of the Company and a warrant to purchase 400,000 of common
stock at $0.25 per share, which is exercisable for a term of four
years. The lender is Michael Baghdoian, a principal stockholder
of the Company. The Company is also presently seeking additional
equity financing to fund future operations. Century has not
identified any sources of debt or equity financing and can not
predict whether any such financing will be available to Century
on terms acceptable to Century.
Forward-Looking Statement Notice
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the
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meaning of Section 27a of the Securities Act of 1933 and Section
21e of the Securities Exchange Act of 1934 regarding events,
conditions, and financial trends that may affect the Company's
future plans of operations, business strategy, operating results,
and financial position. Persons reviewing this report are
cautioned that any forward-looking statements are not guarantees
of future performance and are subject to risks and uncertainties
and that actual results may differ materially from those included
within the forward-looking statements as a result of various
factors. Such factors are discussed under the headings "Item 1.
Description of Business," and "Item 6. Management's Discussion
and Analysis of Financial Condition and Results of Operations,"
and also include general economic factors and conditions that may
directly or indirectly impact the Company's financial condition
or results of operations.
PART II. OTHER INFORMATION
Exhibits and Reports on Form 8-K.
Reports on Form 8-K: No reports on Form 8-K were filed by
the Company during the quarter ended May 31, 2000.
Exhibits: Included only with the electronic filing of this
report is the Financial Data Schedule for the three-month period
ended May 31, 2000 (Exhibit ref. No. 27).
SIGNATURES
In accordance with the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CENTURY CONTROLS INTERNATIONAL, INC.
Date: July 13, 2000 By: /s/ Leo Christiansen,
Chief Executive and Financial Officer
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