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 June 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 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
(Registrant'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 June 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 June 30 Dec. 31
1998 1997
(unaudited)
CURRENT ASSETS:
Cash $ 3,100 $ 8,300
Accounts Receivable,net of allowance
for doubtful accounts of $6,700 15,300 20,500
Inventories 158,800 149,700
Prepaids and Other 21,000 6,100
TOTAL CURRENT ASSETS 198,200 184,600
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 16,500 17,100
$214,700 $201,700
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes Payable - Shareholders $ 96,500 $ 118,500
Accounts Payable 50,800 51,500
Accrued Compensation and Benefits 60,000 36,600
Accrued Interest - Shareholders 84,700 72,200
Warranty Reserve 3,200 6,300
Other 2,100 2,100
TOTAL CURRENT LIABILITIES 297,300 287,200
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 (1,258,500) (1,233,100)
(82,600) (85,500)
$ 214,700 $ 201,700
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Six Months
Ended June 30 Ended June 30
1998 1997 1998 1997
REVENUES:
Net Sales $ 72,100 $ 154,600 $ 189,000 $ 267,700
Interest and Other 2,000 1,700 4,800 3,500
TOTAL REVENUES 74,100 156,300 193,800 271,200
COSTS AND EXPENSES;
Cost of Products Sold 34,100 75,300 87,900 129,900
Selling 4,700 4,700 10,200 10,800
General and Administrative 37,000 36,600 71,000 69,700
Research and Development 18,400 21,400 37,100 39,300
Interest 6,500 5,000 13,000 9,700
100,700 143,000 219,200 259,400
NET EARNINGS (LOSS) $ (26,600) $ 13,300 (25,400) $11,800
NET EARNINGS (LOSS) PER
COMMON SHARE: $ (.001) $ * $ (.001) $ *
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,894,820 3,671,304 3,783,680 3,671,304
*Less than $.01 per share
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENT OF CASH FLOWS
(unaudited)
Six Months Ended June 30
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (25,400) $11,800
Adjustments to reconcile net earnings (loss)
to net cash used in operating activities:
Depreciation 2,000
Changes in operating assets and liabilities:
Accounts and other receivables 5,800 (50,000)
Inventories (9,100) 15,300
Other assets (14,900) (4,700)
Accounts payable (700) 12,000
Accrued compensation and benefits 23,400 (6,200)
Accrued interest - shareholders 12,500 7,900
Deposits (9,900)
Other liabilities (3,100) (400)
Total adjustments 13,900 (34,000)
Net cash used in operating activities (11,500) (22,200)
Cash flows from financing activities:
Proceeds from Private Placement of Stock 3,300
Proceeds from Notes Payable-Shareholders. 9,000 23,000
Principal payment on Notes Payable
Shareholder (6,000)
Net cash provided by financing activities 6,300 23,000
Net increase (decrease) in cash (5,200) 800
Cash beginning of year 8,300 1,600
Cash end of quarter $ 3,100 $ 2,400
Supplemental disclosure of non-cash financing activities:
Issuance of 1,000,000 of common stock in settlement of
Notes Payable - Shareholders (Note C) $ 25,000
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 June 30,
1998, and the results of operations and cash flows for the six months ended
June 30, 1998 and 1997.
The results of operations for the three and six-months periods ended
June 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 Second Quarter, 1998, the Company had no long-term debt.
C. Common Stock:
During the second quarter of 1998, the Company sold 1,130,000 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.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Second quarter sales of $72,100 were approximately 47% less than the $154,600
for the comparable period in 1997. The decrease is primarily a result of a
decrease in sales to utilities.
COST AND EXPENSE
Cost of Products Sold as a percentage of net sales decreased 2% for the second
quarter of 1998 compared with the same period in the prior year. This increase
in gross margin percentage is primarily due to an increase in the percentage
of sales to dealers of products with higher margins.
Selling expenses for the second quarter of 1998 increased by 4% for the same
period in the prior year.
General and Administrative expenses as a percentage of net sales for the
second quarter of 1998
increased to 51% compared to 23% in the same period in the prior year. The
total administrative expense remained about the same as the prior year.
Research and Development expenses as a percentage of net sales for the second
quarter increased to 26% from 14% in the same quarter in the prior year.
EARNINGS
The net loss for the second quarter were $26,600 compared to net earning of
$11,800 for the same period in the prior year. The losses were due to the
decrease in sales.
LIQUIDITY
The Independent Auditor's 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 .67 at the Quarter ended June 30, 1998.
Management believes the acid ratio (cash and accounts receivable divided by
current liabilities) of .06 is below the limits of reasonable liquidity. The
company placed 1,130,000 shares of common restricted stock to retire $25,000 in
Shareholder notes and raise $3,200 cash.
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 4 would appear to require no answers according to the
instructions.
Item 5. Other Information
Pursuant to Rule 14a-4( c ) under the Securities Exchange Act of 1934,
as amended, the Company hereby notifies its stockholders that the proxies
solicited by the Company in connection with the Company's annual meeting to
be held in 1999 will confer discretionary authority to vote on matters raised
by stockholders for which the Company did not have notice on or before March
23, 1999. In addition, if the Company receives notice on or before March 23,
1999 of a matter that a stockholder intends to raise at the annual meeting of
stockholders to be held in 1999, the proxies solicited by the Company may
exercise discretion to vote on each such matter if the Company included in
its proxy statement advice on the nature of the matter raised and how the
Company intends to exercise its discretion to vote on each such matter.
However, the Company may not exercise discretionary voting authority on a
particular proposal if the proponent of that proposal provides the Company
with a written statement on or before March 23,1999, that the proponent intends
to deliver a proxy statement and form of proxy to holders of at least the
percentage of the company's voting shares required under applicable law to
carry the proposal, (the Required Percentage) which would be a majority of the
Company's outstanding common stock or a majority of the shares of common stock
represented at the meeting, depending on the nature of the proposal, if the
proponent includes the same statement in its proxy materials filed under Rule
14a-6, and if the proponent, immediately after soliciting the holders of
Required Percentage, provides the Company with a statement from any solicitor
or any other person with knowledge that the necessary steps have been taken
to deliver a proxy statement and form of proxy to the holders of the Required
Percentage.
Item 6. Exhibits And Reports On Form 8-K
(a) The following Exhibit is filed as part of this Quarterly Report on
Form 10-Q:
27. Financial Data Schedule.
(b) During the quarter ended June 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: August 13, 1998
