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 November 30, 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 [X] No []
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 November 30, 2000: 4,063,635
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 2
Consolidated Balance Sheets as of 3
November 30, 2000 and February 29, 2000
Consolidated Statements of Operations for 5
the Three and Nine Months Ended November
30, 2000 and 1999
Consolidated Statements of Stockholders'
Equity (Deficit). 6
Consolidated Statements of Cash Flows for
the Three and Nine Months Ended November 7
30, 2000 and 1999
Management's Discussion and Analysis of
Financial Condition 8
PART II. Other Information 9
Exhibits and Reports on Form 8-K 9
Signatures 9
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
2
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
November 30, February 29,
2000 2000
ASSETS
Current assets:
Cash $ 3,585 $ 5,513
Accounts receivable, trade,
net of allowance for doubtful
accounts of $8,000 and $5,000,
respectively 62,429 31,427
Inventories 97,643 79,399
Prepaid expenses 4,431 4,430
Total current assets 168,088 120,769
Fixed assets 62,734 61,789
Less accumulated depreciation 36,986 33,303
Net fixed assets 25,748 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 $6,132 and $4,917, respectively 23,748 27,866
Total other assets 44,569 48,687
Total assets $ 238,405 $ 197,942
3
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
November 30, February 29,
2000 2000
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt $ 21,418 $ 32,117
Notes payable - stockholders 25,100 23,000
Accounts payable 177,960 145,958
Accrued expenses:
Payroll and related 45,639 12,253
Warranty 3,000 3,000
Interest 8,532 6,866
State minimum fee 100 100
Total current liabilities 281,749 223,294
Long-term debt:
Notes payable, net of current maturities 6,968 12,735
Convertible debenture 82,691 -
Total long-term debt 89,659 12,735
Total liabilities 371,408 236,029
Stockholders' equity (deficit):
Common stock, $.004 par value, 50,000,000
shares authorized 16,255 15,455
Additional paid-in capital 1,270,999 1,254,399
Accumulated deficit (1,420,257) (1,307,941)
Total stockholders'
equity (deficit) (133,003) (38,087)
Total liabilities and
stockholders' equity (deficit) $ 238,405 $ 197,942
4
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
November 30, November 30, November 30, November 30,
2000 1999 2000 1999
Net sales $ 183,891 $ 139,929 $ 316,526 $ 388,171
Cost of sales 54,182 26,580 96,774 104,971
Gross profit 129,709 113,349 219,752 283,200
Operating expenses 115,418 98,835 314,128 324,939
Operating income (loss) 14,291 14,514 (94,376) (41,739)
Other expenses:
Inventory valuation
allowance - - - -
Interest expense 8,882 2,233 17,940 6,446
Total other expenses 8,882 2,233 17,940 6,446
Net income (loss) before
income taxes 5,409 12,281 (112,316) (48,185)
Income taxes - - - -
Net income (loss) 5,409 12,281 (112,316) (48,185)
Other comprehensive
income (loss) - - - -
Comprehensive income (loss) $ 5,409 $ 12,281 $ (112,316) $ (48,185)
Basic earnings per share $ - $ - $ (.03) $ (.01)
Weighted-average number of
shares outstanding 4,063,635 3,863,635 3,974,180 3,863,635
Diluted earnings per share $ - $ - $ (.03) $ (.01)
Weighted-average number of
shares outstanding 4,063,635 3,863,635 3,974,180 3,863,635
5
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
Number of Paid-In Accumulated
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balances, March 1, 1998 3,863,635 $ 15,455 $ 1,254,399 $ (1,146,235) $ 123,619
Net loss - 1999 - - - (13,151) (13,151)
Net loss - 2000 - - - (148,555) (148,555)
Balances, February 29, 2000 3,863,635 15,455 1,254,399 (1,307,941) (38,087)
July 1, 2000 common stock
issued as part of
convertible debt
issuance at $.10 per
share, less offering
costs of $2,600 200,000 800 16,600 - 17,400
Net loss - March 1, 2000 to
November 30, 2000 - - - (112,316) (112,316)
4,063,635 $ 16,255 $ 1,270,999 $ (1,420,257) $ (133,003)
<TABLE/>
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CENTURY CONTROLS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
November 30, November 30, November 30, November 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 5,409 $ 12,281 $ (112,316) $ (48,185)
Adjustments to reconcile net
income (loss) to net cash flows
from operating activities:
Depreciation 1,549 1,353 4,647 4,059
Amortization 405 282 1,215 846
Allowance for doubtful accounts 1,000 - 3,000 -
Decrease (increase) in:
Accounts receivable - trade (46,446) (39,904) (34,002) 5,982
Inventories (15,647) (5,354) (18,244) (23,588)
Prepaid expense - - - -
Increase (decrease) in accounts
payable and accrued expenses 60,058 41,241 61,250 77,671
Bank overdraft - (2,222) - 2,027
Net cash used by operating activities 6,328 7,677 (94,450) 18,812
Cash flows from investing activities:
Purchase of fixed assets (945) - (945) (4,396)
Incurrence of patent costs - - - (1,475)
Net cash used by investing activities (945) - (945) (5,871)
Cash flows from financing activities:
Proceeds from convertible debenture
and common stock, net - - 97,400 -
Net borrowings on notes
payable - stockholders 1,000 - 2,100 -
Payment of long-term debt (4,338) (7,677) (6,033) (16,455)
Net cash from financing activities (3,338) (7,677) 93,467 (16,455)
Increase (decrease) in cash 2,045 - (1,928) (3,514)
Cash, beginning of year 1,540 - 5,513 3,514
Cash, end of year $ 3,585 $ - $ 3,585 $ -
<TABLE/>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
Results of Operations
Three and Nine Months Ended November 30, 2000 and 1999
Century Controls International, Inc. ("Century") had net sales of
$183,891 and $139,929 for the three-months ended November 30,
2000 and 1999, respectively; which represents a 31% increase from
1999. Net sales for the nine-months ended November 30, 2000 were
$316,526, a 19% decrease from $388,171 for the same period in
1999. This decrease is primarily a result of higher than normal
sales to a single customer in 1999 that did not recur in 2000.
Management believes that the net sales in fiscal year 2000 are
consistent with historic levels.
Cost of net sales for the three-months ended November 30, 2000
and 1999 were $54,182 and $26,580, respectively. This increase
is primarily due to greater sales of product in 2000. Such
costs, as a percentage of net sales for the three-months ended
November 30, 2000 and 1999, were 30% and 19%, respectively. Cost
of net sales for the nine-months ended November 30, 2000 and 1999
were $96,774 and $104,971, respectively. Such costs, as a
percentage of net sales for the nine-months ended November 30,
2000 and 1999 were 31% and 27%, respectively.
Operating expenses for the three-months ended November 30, 2000
and 1999 were $115,418 and $98,835, respectively. This
represents a 17% increase from 1999. Operating expenses for the
nine-months ended November 30, 2000 and 1999 were $314,128 and
$324,939, respectively. This represents a 3% decrease from 1999.
The high cost of operating expenses is attributable to increased
commissions to independent distributors, and increased
professional fees necessary to become a reporting company under
the Securities Exchange Act of 1934.
Due to the foregoing, Century experienced operating income of
$14,291 and $14,514 for the three-months ended November 30, 2000
and 1999, respectively. As for the nine-months ended November
30, 2000 and 1999, Century suffered operating losses of $94,376
and $41,739, respectively. This represents a 126% increase in
losses as compared to the same nine-month period in 1999.
Liquidity and Capital Resources
At November 30, 2000, Century had a working capital deficit of
$113,661 as compared to a working capital deficit of $102,525 at
February 29, 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. The Company is presently seeking
additional equity financing to fund future operations. Century
has not identified any sources of debt or equity financing and
cannot 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 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
8
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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 above 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
The Company filed no reports on Form 8-K during the quarter ended
November 30, 2000.
Exhibits
None.
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: January 15, 2001 By: /s/ Leo Christiansen
Leo Christiansen,
Chief Executive and Financial Officer
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