UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-9255
DENCOR ENERGY COST CONTROLS, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0658020
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
1450 West Evans, Denver, Colorado 80223
(Address of principal executive office) (Zip Code)
(303) 922-1888
(Issuer's telephone number, including area code)
Check whether the issuer (1) 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.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. No par value per share:
4,801,304 shares outstanding at September 30,1998.
Transitional Small Business Disclosure Format
Yes No X
DENCOR ENERGY COST CONTROLS, INC.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
(Condensed Balance Sheets)
ASSETS September 30 December 31
1998 1997
(unaudited)
CURRENT ASSETS:
Cash $ 2,300 $ 8,300
Accounts Receivable, net of allowance for doubtful
accounts of $6,700 37,200 20,500
Inventories 158,700 149,700
Prepaids and Other 18,200 6,100
TOTAL CURRENT ASSETS 216,400 184,600
Furniture & Equipment 213,300 213,300
Less Accumulated Depreciation (213,300) (213,300)
0 0
Long term receivables, net of allowance for doubtful
receivables of $9,400 16,400 17,100
$ 232,800 $ 201,700
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes Payable - Shareholders $ 96,500 $ 118,500
Accounts Payable 60,300 51,500
Accrued Compensation and Benefits 87,400 36,600
Accrued Interest - Shareholders 90,900 72,200
Warranty Reserve 3,200 6,300
Other 2,500 2,100
TOTAL CURRENT LIABILITIES 340,800 287,200
STOCKHOLDERS' DEFICIT
Common Stock, no par value, authorized 5,000,000
shares; issued & outstanding, 4,801,304 shares (1998)
and 3,671,304 (1997) 1,175,900 1,147,600
Accumulated deficit (1,283,900) (1,233,100)
( 108,000) ( 85,500)
$ 232,800 $ 201,700
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Nine Months
Ended September 30 Ended September 30
1998 1997 1998 1997
REVENUES:
Net Sales $ 78,600 $ 92,300 $ 267,800 $ 360,000
Interest and Other 1,900 1,700 6,600 5,200
TOTAL REVENUES 80,500 94,000 274,400 365,200
COSTS AND EXPENSES;
Cost of Products Sold 41,100 43,600 129,000 173,500
Selling 4,300 7,900 14,600 18,700
General and
Administrative 35,000 37,200 106,000 106,800
Research and Development 19,300 30,100 56,300 69,400
Interest 6,200 5,500 19,300 15,200
105,900 124,300 325,200 383,600
NET LOSS (25,400) ($ 30,300) ($50,800) ($ 8,400)
NET LOSS PER
COMMON SHARE ($ *) ($ *) $ (.01) ($ *)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 4,801,304 3,671,304 4,126,615 3,671,304
*Less than $.01 per share
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
NINE MONTHS ENDED SEPTEMBER 30, 1998
Common Stock
Accumulated Shareholders'
Shares Amount deficit deficit
Balances
January 1, 1998 3,671,304 $1,147,600 ($1,233,100) ($ 85,000)
Issuances of 1,130,000
shares of Common Stock
(Note C) 1,130,000 23,300 28,300
Net loss ________ _________( 50,800) ( 50,800)
Balances,
September 30, 1998
4,801,304 $1,175,900 ($1,283,900) ($108,000)
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended September 30
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (50,800) ($18,400)
Adjustments to reconcile loss
to net cash used in operating activities:
Depreciation 2,000
Changes in operating assets and liabilities:
Accounts and other receivables (16,000) 3,300
Inventories (9,000) 11,500
Other assets (12,100) (16,200)
Accounts payable 8,800 10,500
Accrued compensation and benefits 50,800 2,400
Accrued interest - shareholders 18,700 12,800
Deposits (9,900)
Other liabilities (2,700)
Total adjustments 38,500 16,400
Net cash used in operating activities (12,300) (2,000)
Cash flows from financing activities:
Proceeds from Private Placement of Stock 3,300
Proceeds from Notes Payable-Shareholders 9,000 6,000
Principal payment on Notes Payable Shareholders ( 6,000)
cash provided by financing activities 6,300 6,000
Net decrease in cash (6,100) 4,000
Cash beginning of year 8,300 1,600
Cash end of quarter $ 2,300 $5,600
Supplemental disclosure of non-cash
financing activities: $25,000
Issuance of 1,000,000 shares of common stock in settlement of $25,000 of Notes
payable-Shareholders (Note C)
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
A.The condensed Financial Statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the information presented
not misleading.
In the opinion of the Company, all accompanying unaudited condensed
Financial Statements contain all adjustments, which consist only of
recurring adjustments, necessary to present fairly the financial
position as of September 30, 1998, and the results of operations and cash
flows for the three and nine months ended September 30, 1998 and 1997.
The results of operations for the three and nine-month periods ended
September 30, 1998 and 1997, are not necessarily indicative of the results
to be expected for the full year. It is suggested that these Condensed
Financial Statements be read in conjunction with the Financial Statements
and the notes therein included in the Company's latest annual report on
Form 10-KSB.
B. Long-Term Debt:
As of the end of third quarter of 1998, the Company had no long-term debt.
C. Common Stock:
During the third quarter of 1998, the Company sold no restricted common
stock. During the second quarter of 1998, the Company sold 1,130,00 shares
of restricted common stock in a private placement at a price of $0.025/share.
Maynard L. Moe, President and Director, purchased 500,000 shares to retire
$12,500 in notes from the Company to Dr. Moe. Theodore A. Hedman, Secretary
and Director, purchased 500,000 shares to retire $12,500 in notes from the
Company to Mr. Hedman. Edmund Barbour, Director, purchased 70,000 shares
for $1,750 cash and an unrelated party purchased 60,000 shares for $1,500
cash.
D. Compliance Income:
On January 1, 1998 the company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income." This standard
establishes requirements for disclosure of comprehensive income which
includes certain items previously not included in the statement of operations
including adjustments, among others. For the three and nine months ended
September 30, 1998 and 1997, the company had no items of comprehensive income.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Third quarter sales of $78,600 were approximately 15% less than the $92,300
for the comparable period in 1997. The decrease is primarily a result of a
decrease in sales to dealers.
COST AND EXPENSE
Cost of Products Sold as a percentage of net sales increased 5% for the
third quarter of 1998 compared with the same period in the prior year. This
decrease in gross margin percentage is primarily due to an increase in the
percentage of sales of products with less software content and thus lower
margins.
Selling expenses as a percentage of net sales decreased by 3% compared to
the same period in the prior year. The decrease was due to a decrease in
the purchase of marketing material.
General and Administrative expenses as a percentage of net sales for the
third quarter of 1998 increased to 45% compared to 40% in the same period
in the prior year. The total administrative expense decreased slightly
from the prior year.
Research and Development expenses as a percentage of net sales for the
second quarter decreased to 25% from 33% in the same quarter in the prior
year. The decrease was due to decreased software development expenses.
NET LOSSES
The net loss for the third quarter was $25,400 compared to a net loss of
$30,300 for the same period in the prior year. The decrease in losses was
due to the decreased software development expenses.
LIQUIDITY
The Independent Auditors' Report on Dencor Energy Cost Controls, Inc.
Financial Statements for the year ended December 31, 1997 included a
"going concern" explanatory paragraph which means that the Auditors have
expressed substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regards to the factors which prompted
the explanatory paragraph are discussed in Note 2 to the Company's December
31, 1997 Financial Statements.
The Company's current ratio is .63 at the Quarter ended September 30, 1998.
Management believes the acid ratio (cash and accounts receivable divided by
current liabilities) of .12 is below the limits of reasonable liquidity.
YEAR 2000
The Company has not completed its evaluation of year 2000 issues. The
Company has determined its products are year 2000 compliant and that there
are no year 2000 issues in its production processes.
DENCOR ENERGY COST CONTROLS, INC.
PART II - OTHER INFORMATION
Items 1 through 5 would appear to require no answers according to the
instructions.
Item 6. Exhibits And Reports On Form 8-K
(a) The following Exhibit is filed as part of this Quarterly Report on Form
10-QSB:
27. Financial Data Schedule.
(b) During the quarter ended September 30, 1998, the Registrant filed no
reports on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DENCOR ENERGY COST CONTROLS, INC.
Registrant
By: Maynard L. Moe
President
Date: November 11,1998
