UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) August 23, 2000
Ocean Power Corporation
-------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 94-3350291
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5000 Robert J. Mathews Parkway, El Dorado Hills, CA 95762
---------------------------------------------------------
(Address of principal executive offices)
(916) 933-8100
--------------
(Registrant's telephone number including area code)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT:
Not applicable
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS.
Ocean Power Corporation (the "Company") entered into a Share Purchase Agreement
("Agreement") with the Shareholders of SIGMA Elektroteknisk, AS ("SIGMA") on
July 25, 2000 whereby the Shareholders of SIGMA agreed to a stock for stock
exchange as set forth in the Agreement and attached hereto as Exhibit 1. There
were no prior material relationships between or among any of the Shareholders of
SIGMA and the Company or any of their officers, directors, associates or
affiliates. The acquisition was completed on August 10, 2000. It did not require
the use of any funds. Pursuant to the terms of the Agreement, the Company
acquired 100% of the issued and outstanding shares of SIGMA from its
Shareholders in return for 1,178,748 shares of the Company's restricted common
stock valued at $3.20 per share or $5,500,000. The common stock of the Company
issued in connection with the acquisition have not been registered under the
Securities Act of 1933. The acquistion will be accounted for as a purchase per
the requirements of APB No. 16.
<PAGE>
SIGMA is a developer of Stirling engine systems that generate heat and
electricity for residential uses. They are leaders in the development of engines
that use a wide range of fuels including propane, diesel and natural gas. The
assets of SIGMA comprise patents, cash, machinery, tools and fixtures. SIGMA
will continue its present operations. It is now a wholly owned subsidiary of the
Company. The acquisition is intended to broaden the technology base of the
Company and to add a potentially major source of revenue for the Company.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not Applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS.
Not Applicable
ITEM 5. OTHER EVENTS
Not Applicable
ITEM 6. RESIGNATION OF REGISTRANT'S DIRECTORS.
Not Applicable
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
(i) Audited financial statements of SIGMA pages F-1 - F-15
(b) Pro Forma Financial Information
(i) Pro Forma Financial information pages F-16 - F-21
(c) Exhibits
1. Share Purchase Agreement
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
1
<PAGE>
C O N T E N T S
Independent Auditors' Report...............................................F - 3
Balance Sheet..............................................................F - 4
Statements of Operations...................................................F - 6
Statements of Stockholders' Equity (Deficit)...............................F - 7
Statements of Cash Flows...................................................F - 8
Notes to the Financial Statements..........................................F - 9
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Sigma Elektroteknisk, AS
Holen, Norway
We have audited the accompanying balance sheet of Sigma Elektroteknisk, AS (a
development stage company) as of December 31, 1999 and the related statements of
operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1999 and 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 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 the 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 financial statements referred to above present fairly in all
material respects, the financial position of Sigma Elektroteknisk, AS (a
development stage company) as of December 31, 1999 and the results of its
operations and its cash flows for the years ended December 31, 1999 and 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. As discussed in Note 6 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 6. The financial statements do not include
any adjustments that might result for the outcome of the uncertainty.
By: /s/ HJ & Associates, LLC
----------------------------
HJ & Associates, LLC
Salt Lake City, Utah
September 21, 2000
F-3
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1999
------------------
CURRENT ASSETS
Cash and cash equivalents $ 180,023
Accounts receivable 59,216
Employee advances 26,522
Prepaid and other current assets 22,542
VAT tax receivable 98,318
------------------
Total Current Assets 386,621
------------------
FIXED ASSETS, NET (Note 2) 78,307
------------------
OTHER ASSETS
Patents, net (Note 3) 1,163,163
Deposits 11,403
------------------
Total Other Assets 1,174,566
------------------
TOTAL ASSETS $ 1,639,494
==================
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31,
1999
------------------
CURRENT LIABILITIES
Accounts payable $ 236,030
Accrued expenses 74,006
Patents payable - current portion (Note 3) 233,250
Notes payable - current portion (Note 4) 245,876
------------------
Total Current Liabilities 789,162
------------------
COMMITMENTS AND CONTINGENCIES (Note 5) 439,840
------------------
LONG-TERM LIABILITIES
Patents payable (Note 3) 429,553
Notes payable (Note 4) 582,650
------------------
Total Long-Term Liabilities 1,012,203
------------------
Total Liabilities 2,241,205
------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: unlimited shares authorized of $0.14
par value, 2,308,660 shares issued and outstanding 315,829
Additional paid-in capital 5,159,729
Other comprehensive income 70,590
Deficit accumulated during the development stage (6,147,859)
------------------
Total Stockholders' Equity (Deficit) (601,711)
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 1,639,494
==================
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Statements of Operations
For the Years Ended
December 31,
1999 1998
------------------ ------------------
SALES $ -- $ --
------------------ ------------------
COSTS AND EXPENSES
Research and development (Note 9) 64,038 732,220
General and administrative 1,001,537 1,304,839
Depreciation and amortization 183,260 155,500
------------------ ------------------
Total Costs and Expenses 1,248,835 2,192,559
------------------ ------------------
LOSS BEFORE OTHER EXPENSES (1,248,835) (2,192,559)
------------------ ------------------
OTHER INCOME (EXPENSE)
Other Income 49,555 --
Interest income 18,042 13,022
Interest expense (123,225) (29,735)
Loss on sale of assets (7,173) --
------------------ ------------------
Total Other (Expense) (62,801) (16,713)
------------------ ------------------
NET LOSS (1,311,636) (2,209,272)
OTHER COMPREHENSIVE INCOME
Currency translation adjustment 18,008 (14,408)
------------------ ------------------
Total Other Comprehensive Income 18,008 (14,408)
------------------ ------------------
NET COMPREHENSIVE LOSS $ (1,223,038) $ (2,223,680)
================== ==================
BASIC LOSS PER SHARE $ (0.75) $ (2.13)
================== ==================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 1,744,124 1,038,197
================== ==================
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional Other
Common Stock Paid-In Comprehensive Retained
Shares Amount Capital Income Earnings
---------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 989,100 $ 145,142 $ 3,103,522 $ 66,990 $(2,626,951)
Common stock issued for cash
at $3.34 per share -
November 23, 1998 414,000 55,228 1,325,462 -- --
Common stock issued for debt
at $5.34 per share -
November 23, 1998 57,594 7,683 299,639 -- --
Currency translation adjustment -- -- -- (14,408) --
Net loss for the year ended
December 31, 1998 -- -- -- -- (2,209,272)
---------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 1,460,694 208,053 4,728,623 52,582 (4,836,223)
Common stock issued for cash
at $0.64 per share -
August 31, 1999 383,983 48,804 195,217 -- --
Common stock issued for debt
at $0.64 per share -
August 31, 1999 463,983 58,972 235,889 -- --
Currency translation adjustment -- -- -- 18,008 --
Net loss for the year ended
December 31, 1999 -- -- -- -- (1,311,636)
---------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 2,308,660 $ 315,829 $ 5,159,729 $ 70,590 $(6,147,859)
========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Statements of Cash Flows
For the Years Ended
December 31,
1999 1998
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,311,636) $ (2,209,272)
Adjustments to reconcile net loss
to net cash
used by operating activities:
Depreciation and amortization 183,260 155,500
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (3,681) 8,604
(Increase) decrease in employee receivables 33,588 9,778
(Increase) decrease in prepaid assets (104,526) 1,469
(Increase) decrease in deposits 43,540 --
Increase (decrease) in accounts payable (99,631) 120,543
Increase (decrease) in accrued expenses 147,393 122,229
------------- ------------
Net Cash (Used) by Operating activities (1,111,693) (1,791,149)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loss on sale of assets (7,173) --
Purchase of license and patents -- (36,795)
Purchase of fixed assets (5,692) (65,600)
------------- -------------
Net Cash (Used) by Investing Activities ( 12,865) (102,395)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued for cash 244,021 1,380,690
Proceeds from notes payable 192,306 1,001,982
Payments on notes payable (8,515) --
------------- ------------
Net Cash Provided by Financing Activities 427,812 2,382,672
------------- ------------
NET INCREASE (DECREASE) IN CASH (696,746) 489,128
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 876,769 387,641
------------- --------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 180,023 $ 876,769
============= ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITY
Cash Paid For:
Interest $ 3,487 $ --
Income taxes $ -- $ --
SCHEDULE OF NON-CASH FINANCING ACTIVITIES
Common stock issued for debt $ 294,861 $ 307,322
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Sigma Elektroteknisk, AS (the Company) was incorporated January 6,
1994 under the laws of the country of Norway.
The Company has had limited operations since inception and is
considered a development stage company because no significant
revenues have been realized and planned principal operations have
not yet commenced. The Company is planning to engage in the
business of developing and producing personal combustion power
plants (PCP's), an energy converter utilizing a Sitrline engine
that runs on natural gas or propane and produces heat and
electricity for use in micro CHP (combined heat and power)
systems, an appliance to produce heat and power in households.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year
end.
b. Basic Loss Per Share
The computation of basic loss per share of common stock is based
on the weighted average number of shares outstanding during the
period of the financial statements. Fully diluted loss per share
is not presented due to no dilutive instruments being present.
For the Year Ended
December 31, 1999
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------------- ------------------ -----------------
$ (1,311,636) 1,744,124 $ (0.75)
================= ================== =================
For the Year Ended
December 31, 1998
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------------- ------------------ -----------------
$ (2,209,272) 1,038,197 $ (2.13)
================= ================== =================
F-9
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Provision for Taxes
At December 31, 1999, the Company has net operating loss
carryforwards of approximately $6,148,000 that may be offset
against future taxable income through 2019. No tax benefit has
been reported in the financial statements, because the Company
believes there is a 50% or greater change the carryforwards will
expire unused. Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same
amount.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
e. Equipment
Office equipment and software are recorded at cost. Major
additions and renewals are capitalized and depreciated over their
estimated useful lives of 3 to 7 years using the straight-line
method. Depreciation expense for operations for the years ended
December 31, 1999 and 1998 was $36,653 and $39,402, respectively.
Equipment consists of the following:
December 31,
1999
Office equipment and furniture $ 166,076
Stirling engine 12,440
Artwork 1,555
Accumulated depreciation (101,764)
-----------------
Net Equipment $ 78,307
=================
f. 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 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.
F-10
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Change in Accounting Principle
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending
on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. The adoption of this statement had no material
impact on the Company's financial statements.
h. Revenue Recognition Policy
The Company currently has no established source of revenues.
Revenue recognition policies will be determined when principal
operations begin.
i. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
j. Long-lived Assets
All long-lived assets are evaluated yearly for impairment per SFAS
121. Any impairment in value is recognized as an expense in the
period when the impairment occurs.
k. Research and Development
All amounts expended for research and development are charged to
expense as incurred.
NOTE 3 - PATENTS
During November 1998, the Company entered into an agreement with
Silent Clean Power, AB (SCP), (a Swedish company) to purchase
licenses and patents to certain technology associated with the
Company's PCP development for $1,518,935, payable in stock and a
note payable. The licenses and patents are being amortized over
their estimated useful lives of 111 to 134 months using the
straight-line method. Amortization expense for continuing
operations for the years ended December 31, 1999 and 1998 was
$146,607 and $116,098, respectively.
At December 31, 1999, the Company owed SCP $662,803 on the
remainder of its license and patent obligation.
F-11
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 3 - PATENTS (Continued)
Annual maturities of licenses and patents payable are as follows:
2000 $ 233,250
2001 202,150
2002 186,600
2003 40,803
------------------
$ 662,803
==================
NOTE 4 - NOTES PAYABLE
Notes payable at December 31, 1999 consist
of the following:
Note payable to a bank bearing a variable
interest rate, (9.9% at December 31, 1999)
due in equal semi-annual
payments beginning May 1, 2000, unsecured. $ 151,480
Note payable to a bank bearing a variable
interest rate, (9.9% at December 31, 1999)
due in equal semi-annual
payments beginning May 10, 2000, unsecured. 622,823
Note payable to a bank bearing a variable
interest rate, (9.9% at December 31, 1999)
due in equal semi-annual
payments beginning April 3, 2000, unsecured. 54,223
-------------------
Total Notes Payable $ 828,526
==================
Annual maturities of notes payable are as follows:
Years Ending
December 31,
2000 $ 245,876
2001 245,876
2002 245,875
2003 90,899
-------------------
$ 828,526
===================
Total interest expense was $123,225 and $29,735 for the years
ended December 31, 1999 and 1998, respectively.
F-12
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 5 - COMMITMENTS AND CONTINGENCIES
a. Contributions Payable
During 1999, 1998 and 1997, the Company received a total of
$439,840 as contributions for its PCP project, a project to
develop an energy converter utilizing a Stirling engine that runs
on natural gas or propane and produces electricity and heat for
use in the micro CHP (combined heat and power), and appliance to
produce heat and power in households. This amount is payable upon
demand or may be converted into the Company's common stock at a
rate of $1.87 per share at any time.
b. Building Lease
During July 1999, the Company signed a one year lease for building
and warehouse space with its Chief Executive Officer (CEO). The
lease calls for payments of $6,220 per month and is renewable for
2 years at the discretion of the Company.
NOTE 6 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has had
limited activities since inception and is considered a development
stage company because it has no significant revenues, planned
principal operations have not yet commenced, and the Company has
incurred losses from its inception through December 31, 1999. The
Company does not have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a
going concern.
In order to continue as a going concern, develop a reliable source
of revenues, and achieve a profitable level of operations, the
Company will need, among other things, additional capital
resources. Management's plans to continue as a going concern
include raising additional capital of approximately $16,800,000
for continued research and development of the PCP and operating
expenses to get it to the production stage over the next three
years. However, management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans
The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the plan
described in the preceding paragraph and eventually attain
profitable operations. The Company has recently completed an
agreement with Ocean Power Corporation whereby the Company
exchanged 100% of its outstanding stock for Ocean Power stock
valued at $5,500,000, thereby giving the Company access to
additional equity markets in the United States. The accompanying
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
F-13
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 7 - RELATED PARTY TRANSACTIONS
During 1999, the Company signed a one year lease for office and
warehouse space with its CEO (see Note 5).
During 1999 and 1998, the Company had employee receivables for
salary advances of $26,522 and $63,396, respectively. These
advances are being repaid through salary deductions.
NOTE 8 - STOCK ISSUANCES
During November 1998, the Company issued 414,000 shares of its
common stock for cash of $1,380,690 (or $3.34 per share).
During November 1998, the Company issued 57,594 shares of its
common stock for debt of $307,322 (or $5.34 per share).
During August 1999, the Company issued 383,983 shares of its
common stock for cash of $244,021 (or $0.64 per share).
During August 1999, the Company issued 463,983 shares of its
common stock for debt of $294,861 (or $0.64 per share).
NOTE 9 - RESEARCH AND DEVELOPMENT
During 1999 and 1998, the Company was involved in several research
and development projects for the development of its PCP
technology. These projects were partially funded by partners. The
Company records the expenses of each project net of contributions
received. Net research and development expense for the years ended
December 31, 1999 and 1998 was $64,038 and $732,220, respectively.
NOTE 10 - SUBSEQUENT EVENTS
a. Building Lease
During July 2000, the Company renewed its one year lease for
office and warehouse space with a related party. The lease calls
for monthly payments of approximately $6,220. The lease may be
extended for 2 years at the Company's discretion.
b. Purchase Agreement
During August 2000, the Company completed an agreement to be
acquired by Ocean Power Corporation. The agreement provides for
the shareholders of the Company to exchange all of the outstanding
shares of the Company for 1,718,748 shares of Ocean Power common
stock valued at $3.20 per share, or $5,500,000.
F-14
<PAGE>
SIGMA ELEKTROTEKNISK, AS
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 10 - SUBSEQUENT EVENTS
c. Stock Issuances
During March 2000, the Company issued 836,500 shares of its common
stock for cash of $98,791 (or $0.12 per share).
During March 2000, the Company issued 280,000 shares of its common
stock for debt of $33,068 (or $0.12 per share).
During June 2000, the Company issued 216,000 shares of its common
stock for debt of $25,099 (or $0.12 per share).
During July 2000, the Company issued 22,167 shares of its common
stock for cash of $2,578 (or $0.12 per share).
F-15
<PAGE>
OCEAN POWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED PROFORMA FINANCIAL STATEMENTS
December 31, 1999
F-16
<PAGE>
C O N T E N T S
Consolidated Proforma Balance Sheet........................................3
Consolidated Proforma Statement of Operations..............................5
Statement of Assumptions and Disclosures...................................6
F-17
<PAGE>
OCEAN POWER CORPORATION AND SUBSIDIARIES
Consolidated Proforma Balance Sheet
December 31, 1999
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
Sigma Proforma
Ocean Elektro- Adjustments
Power teknisk, Increase Proforma
Corporation AS (Decrease) Consolidated
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 368,276 $ 180,023 $ -- $ 548,299
Accounts receivable -- 59,216 -- 59,216
Employee advances 658,965 26,522 -- 685,487
Prepaid and other assets -- 22,542 -- 22,542
VAT tax receivable -- 98,318 -- 98,318
---------- ---------- ---------- ----------
Total Current Assets 1,027,241 386,621 -- 1,413,862
---------- ---------- ---------- ----------
FIXED ASSETS, NET 52,555 78,307 -- 130,862
---------- ---------- ---------- ----------
OTHER ASSETS
Goodwill, net -- -- 5,491,531 5,491,531
Patents, net -- 1,163,163 -- 1,163,163
Deposits 20,402 11,403 -- 31,805
Equipment procurement costs 364,110 -- -- 364,110
---------- ---------- ---------- ----------
Total Other Assets 384,512 1,174,566 5,491,531 7,050,609
---------- ---------- ---------- ----------
TOTAL ASSETS $1,464,308 $1,639,494 $5,491,531 $8,595,333
========== ========== ========== ==========
</TABLE>
See Summary of Assumptions and Disclosures.
F-18
<PAGE>
OCEAN POWER CORPORATION AND SUBSIDIARIES
Consolidated Proforma Balance Sheet
December 31, 1999
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<TABLE>
<CAPTION>
Proforma
Ocean Sigma Adjustments
Power Elektroteknisk, Increase Proforma
Corporation AS (Decrease) Consolidated
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,453,908 $ 236,030 $ 50,000 $ 1,739,938
Accrued expenses 326,582 74,006 -- 400,588
Patents payable -- 233,250 -- 233,250
Notes payable -- 245,876 -- 245,876
Notes payable - related parties 4,040,051 -- -- 4,040,051
Convertible debentures 650,000 -- -- 650,000
------------ ------------ ------------ ------------
Total Current Liabilities 6,470,541 789,162 50,000 7,309,703
------------ ------------ ------------ ------------
COMMITMENTS AND
CONTINGENCIES -- 439,840 -- 439,840
------------ ------------ ------------ ------------
LONG-TERM DEBT
Patents payable -- 429,533 -- 429,533
Notes payable -- 582,650 -- 582,650
------------ ------------ ------------ ------------
Total Long-Term Debt -- 1,012,203 -- 1,012,203
------------ ------------ ------------ ------------
Total Liabilities 6,470,541 2,241,205 50,000 8,761,746
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY
(DEFICIT)
Preferred stock: 70,000,000
shares authorized of $0.001
par value, none issued and
outstanding -- -- -- --
Common stock: 500,000,000
shares authorized of $0.01 par
value, 34,014,673 shares issued
and outstanding 328,359 315,829 (304,042) 340,146
Additional paid-in capital 5,844,025 5,159,729 257,884 11,261,638
Other comprehensive income -- 70,590 -- 70,590
Accumulated deficit (11,178,617) (6,147,859) 5,487,689 (11,838,787)
------------ ------------ ------------ ------------
Total Stockholders' Equity
(Deficit) (5,006,233) (601,711) 5,441,531 (166,413)
------------ ------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT) $ 1,464,308 $ 1,639,494 $ 5,491,531 $ 8,595,333
============ ============ ============ ============
</TABLE>
See Summary of Assumptions and Disclosures.
F-19
<PAGE>
OCEAN POWER CORPORATION AND SUBSIDIARIES
Consolidated Proforma Statement of Operations
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Sigma Proforma
Ocean Elektro- Adjustments
Power teknisk, Increase Proforma
Corporation AS (Decrease) Consolidated
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $ -- $ -- $ -- $ --
----------- ----------- ----------- -----------
EXPENSES
Research and development 258,000 46,860 -- 304,860
Depreciation and amortization 18,742 183,260 601,711 803,713
General and administrative 4,857,844 1,018,715 50,000 5,926,559
----------- ----------- ----------- -----------
Total Expenses 5,134,586 1,248,835 651,711 7,035,132
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (5,134,586) (1,248,835) (651,711) (7,035,132)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Other income -- 49,555 -- 49,555
Interest income -- 18,042 -- 18,042
Loss on disposition of assets (387,649) (7,173) -- (394,822)
Interest expense (432,052) (123,225) -- (555,277)
----------- ----------- ----------- -----------
Total Other Income (Expense) (819,701) (62,801) -- (882,502)
----------- ----------- ----------- -----------
NET LOSS $(5,954,287) $(1,311,636) $ (651,711) $(7,917,634)
=========== =========== =========== ===========
</TABLE>
See Summary of Assumptions and Disclosures.
F-20
<PAGE>
OCEAN POWER CORPORATION AND SUBSIDIARIES
Summary of Assumptions and Disclosures
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Organization
Ocean Power Corporation (the "Company") entered into a Share
Purchase Agreement ("Agreement") with the shareholders of SIGMA
Elektroteknisk, AS ("SIGMA") on July 25, 2000 whereby the
shareholders of SIGMA agreed to a stock-for-stock exchange as set
forth in the Agreement. There were no prior material
relationships between or among any of the shareholders of SIGMA
and the Company or any of their officers, directors, associates
or affiliates. The acquisition was completed on August 10, 2000.
It did not require the use of any funds. Pursuant to the terms of
the Agreement, the Company acquired 100% of the issued and
outstanding shares of SIGMA form its shareholders in return for
1,178,748 shares of the Company's restricted common stock valued
at $3.20 per share or $5,500,000. The common stock of the Company
issued in connection with the acquisition have not been
registered under the Securities Act of 1933. The acquisition will
be accounted for as a purchase per the requirements of APB No.
16.
SIGMA is a developer of Stirling engine systems that generate
heat and electricity for residential uses. They are leaders in
the development of engines that use a wide range of fuels,
including propane, diesel and natural gas. The assets of SIGMA
comprise patents, cash, machinery, tools and fixtures. SIGMA will
continue its present operations. It is not a wholly-owned
subsidiary of the Company. The acquisition is intended to broaden
the technology base of the Company and to add a potentially major
source of revenue for the Company.
b. Proforma Adjustments
The proforma financial statements have been prepared as though
the acquisition of SIGMA by the Company occurred on January 1,
1999
1) Goodwill (Ocean) $ 6,101,711
Amortization expense (Ocean) 610,171
Accumulated amortization (Ocean) (610,171)
Common stock (Ocean) (11,787)
Additional paid-in capital (Ocean) (6,089,924)
------------------
$ -
==================
To record the acquisition of SIGMA through issuance of 1,178,748
shares of common stock and to amortize 1 year of goodwill based
on a 10 year life.
2) General and administrative $ 50,000
Accounts payable (50,000)
------------------
$ -
==================
To accrue merger costs.
F-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has fully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 19, 2000
OCEAN POWER CORPORATION
BY: /s/ Joseph P. Maceda
------------------------
Joseph P. Maceda, President and Director
