UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 31, 1999
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
(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:
4,803,804 shares issued, at May 10, 1999.
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 March 31 Dec.
31
1999 1998
(unaudited)
CURRENT ASSETS:
Cash $ 1,700 $ 8,300
Accounts Receivable, net of allowance for
doubtful accounts of $18,700 30,800 20,000
Inventories 133,700 138,100
Other 8,600 6,100
TOTAL CURRENT ASSETS 174,800 172,500
Furniture & Equipment 213,300 213,300
Less Accumulated Depreciation (213,300) 213,300
Long term receivables, net of allowance for doubtful
receivables of $11,400 12,100 12,600
$186,900 $185,100
LIABILITIES & SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes Payable - Shareholders $118,300 $118,300
Notes Payable - Other 5,000 5,000
Accounts Payable 49,000 36,500
Accrued Compensation and Benefits 165,500 133,700
Accrued Interest - Shareholders 105,700 97,900
Warranty Reserve 3,200 3,200
Other 200 800
TOTAL CURRENT LIABILITIES 446,900 395,400
STOCKHOLDERS' DEFICIT
Common Stock, no par value, authorized 5,000,000
shares; issued & outstanding, 4,803,804 shares 1,175,900 1,175,900
Deficit (1,435,900)
(1,386,200)
Stockholders' Deficit (260,000)
(210,300)
$ 186,900 $ 185,100
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months
Ended March 31
1999 1998
REVENUES:
Net Sales $ 61,400 $ 116,900
Interest and Other 2,200 2,800
TOTAL REVENUES 63,600 119,700
COSTS AND EXPENSES;
Cost of Products Sold 38,100 53,800
Selling 6,300 5,500
General and Administrative 37,600 34,000
Research and Development 23,500 18,700
Interest 7,800 6,500
113,300 118,500
NET EARNINGS (LOSS) $ (49,700) $ 1,200
NET (LOSS) PER
COMMON SHARE: $ (0.01) $ *
* less than $0.01
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 4,803,804 3,671,304
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENT OF CASH FLOWS
(unaudited)
Three Months Ended March 31
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings loss $ (49,700) $ 1,200
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Changes in operating assets and liabilities:
Accounts and other receivables (10,800) (50,100)
Inventories 4,400 13,800
Other assets (2,500) (10,700)
Long term receivables 500 0
Accounts payable 12,500 4,000
Accrued compensation and benefits 31,800 19,000
Accrued interest - shareholders 7,800 6,600
Other liabilities (600) (400)
Total adjustments 43,100 (17,800)
Net cash provided by (used in) operating
activities (6,600) (16,600)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - shareholders 0 9,000
Net cash provided by financing activities 0 9,000
Net decrease in cash (6,600) (7,600)
CASH, beginning of year 8,300 8,300
CASH, end of quarter $ 1,700 $ 700
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 March 31, 1999, and the results of operations and cash flows for the three
months ended March 31, 1999 and 1998.
The results of operations for the three-month periods ended March
31, 1999 and 1998, 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 First Quarter, 1999, the Company had no long-term
debt.
C. Common Stock:
During the First Quarter, 1999, the Company sold no restricted stock.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
First Quarter sales of $61,400 were approximately 47% less than sales of
$116,900 for the comparable period in 1998. The decrease is primarily a
result of a decrease in sales to dealers and utilities.
COST AND EXPENSE
Cost of Products Sold as a percentage of net sales increased to 62% for
the first quarter of 1999 compared with 46% the same period in the prior year.
This increase in cost is primarily due to an decrease in the production
efficiency resulting from lower production volume.
Selling expenses as a percentage of net sales for the first quarter of
1999 increased to 10% compared to 4.7% for the same period in the prior year.
DENCOR ENERGY COST CONTROLS, INC.
General and Administrative expenses for the first quarter 1999 as a
percentage of sales increased to 61% compared to 29% for the same period in
the prior year.
Research and Development expenses as a percentage of net sales increased
to 38% compared to 16% for the same period in the prior year. The increase is
due to an increase in new product development.
EARNINGS
The loss for the first quarter was $49,700 compared to a net earnings of
$1,200 for the same period in the prior year. The decrease in net earnings was
due to the decrease in sales and an increase in research and development
expenses for new product development.
YEAR 2000
The Company is taking action to make its accounting system year 2000
compliant by June 30, 1999. The Company has determined its products are year
2000 compliant and that there are no year 2000 issues in its production
processes. The costs incurred by the Company in determing its Year 2000
compliance have been minimal. The Company is surveying its vendors for year
2000 compliance. As part of its contingency plan in the event of supply
interruptions caused by lack of Year 2000 compliance by suppliers, the
Company has identified several potential suppliers for each part purchased by
the Company. The Company will be dependent on the power, communication,
transportation and water infrastructures.
LIQUIDITY
The Independent Auditors' Report on Dencor Energy Cost Controls, Inc.
Financial Statements for the year ended December 31, 1998 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, 1998 Financial
Statements.
The Company's current ratio is .39 at the Quarter ended March 31, 1999.
Management believes the acid ratio (cash and accounts receivable divided
by current liabilities) of 0.07 is below the limits of reasonable liquidity.
If working capital beyond that provided by cash flow is needed, additional
debt financing will be sought. If traditional debt financing is not
available, the Company will attempt to raise working capital by private
borrowing including stockholder loans although no assurances can be given
that financing will be available.
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 March 31, 1999, the Registrant did
not file any 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 and Principal Accounting Officer
Date: May 13, 1999
<PAGE>
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<S><C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-KSB
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 8,300
<SECURITIES> 0
<RECEIVABLES> 32,600
<ALLOWANCES> 30,100
<INVENTORY> 138,100
<CURRENT-ASSETS> 172,500
<PP&E> 213,300
<DEPRECIATION> 213,300
<TOTAL-ASSETS> 185,100
<CURRENT-LIABILITIES> 395,400
<BONDS> 0
<COMMON> 1,175,900
0
0
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<TOTAL-LIABILITY-AND-EQUITY> 185,100
<SALES> 318,200
<TOTAL-REVENUES> 326,600
<CGS> 179,900
<TOTAL-COSTS> 479,700
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<LOSS-PROVISION> 16,100
<INTEREST-EXPENSE> 25,800
<INCOME-PRETAX> (153,100)
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