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, 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 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 outstanding at September 30, 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 Sept. 30 Dec. 31
1999 1998
(unaudited)
CURRENT ASSETS:
Cash $ 4,700 $ 8,300
Accounts Receivable,net of allowance for doubtful
accounts of $18,700 23,700 20,000
Inventories 140,300 138,100
Prepaids and Other 8,000 6,100
TOTAL CURRENT ASSETS $176,700 172,500
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 $11,400 12,000 12,600
$188,700 $185,100
LIABILITIES AND STOCKHOLDERS DEFICIT
CURRENT LIABILITIES:
Notes Payable - Shareholders $123,300 $ 118,300
Notes Payable - Others 5,000 5,000
Accounts Payable 57,700 36,500
Accrued Compensation and Benefits 219,900 133,700
Accrued Interest - Shareholders & Others 122,200 97,900
Warranty Reserve 3,200 3,200
Other 700 800
TOTAL LIABILITIES (ALL CURRENT) 532,000 395,400
STOCKHOLDERS' DEFICIT
Preferred Stock, no par value, authorized 5,000,000
shares; none issued and outstanding. 0 0
Common Stock, no par value, authorized 25,000,000
shares; issued & outstanding, 4,803,804 shares 1,175,900 1,175,900
Accumulated deficit (1,519,200) (1,386,200)
(343,300) (210,300)
$ 188,700 $ 185,100
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Nine Months
Ended Sept.30 Ended Sept.30
1999 1998 1999 1998
REVENUES:
Net Sales $ 74,200 $ 78,600 $ 200,600 $ 267,800
Interest and Other 1,700 1,900 5,300 6,600
TOTAL REVENUES 75,900 80,500 205,900 274,400
COSTS AND EXPENSES:
Cost of Products Sold 53,500 41,100 126,400 129,000
Selling 3,600 4,300 13,400 14,600
General and Administrative 30,500 35,000 108,400 106,000
Research and Development 22,300 19,300 65,200 56,300
Interest 9,300 6,200 25,500 19,300
119,200 105,900 338,900 325,200
NET LOSS $(43,300) $(25,400) $(133,000) $(50,800)
NET LOSS PER
COMMON SHARE: $ (0.01) $ (0.01) $ (0.02) $ (0.01)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 4,803,804 4,801,304 4,803,804 4,126,615
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended Sept. 30
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(133,000) $( 50,800)
Adjustments to reconcile net loss
to net cash used in operating activities:
Changes in operating assets and liabilities:
Accounts and other receivables (3,700) (16,700)
Inventories (2,200) (9,000)
Other assets (1,900) (12,100)
Long term receivables 600 700
Accounts payable 21,200 8,800
Accrued compensation and benefits 86,200 50,800
Accrued interest - shareholders & others 24,300 18,700
Deposits and other liabilities (100) (2,700)
Total adjustments 124,400 38,500
Net cash used in operating activities (8,600) (12,300)
Cash flows from financing activities:
Proceeds from Private Placement of Stock 0 3,300
Proceeds from Notes Payable-Shareholders 5,000 9,000
Principal payment on Notes Payable Shareholder (0) (6,000)
Net cash provided by financing activities 5,000 6,300
Net increase (decrease) in cash (3,600) (6,000)
Cash beginning of year 8,300 8,300
Cash end of quarter 4,700 $ 2,300
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 dis-
closures 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 Management, the accompanying unaudited condensed
Financial Statements contain all adjustments, which consist only of recurring
adjustments, necessary to present fairly the financial position as of Sept.
30, 1999, and the results of operations and cash flows for the nine months
and three months ended Sept. 30, 1999 and 1998.
The results of operations for the three and nine month periods ended
Sept. 30, 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 Third Quarter, 1999, the Company had no long-term debt.
C. Common Stock:
During the Third Quarter of 1999, the Company sold no restricted stock.
During the Third Quarter of 1999 the total number of shares the company
has authority to issue was raised to 30,000,000, consisting of 25,000,000 of
no par value common stock and 5,000,000 shares of no par value of preferred
stock.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Third quarter sales of $74,200 were approximately 6% less than the $78,600
for the comparable period in 1998. The decrease is primarily a result of a
decrease in sales to dealers. The nine-month sales were 25% less than
the nine-month sales the previous year. The decrease was due to a de-
crease in both utility sales and dealer sales.
COST AND EXPENSE
Cost of Products Sold as a percentage of net sales increased approximately
20% to 72.1% for the third quarter of 1999 compared with the same period
in the prior year. For the nine month period the cost of products sold
increased to 63.0% compared to 48.2% the same period the prior year.
This decrease in gross margin percentage is primarily due to a decrease
in the production efficiency resulting from lower production volume.
Selling expenses for the third quarter of 1999, as percentage of net sales,
decreased by 0.6% compared to the same period in the prior year.
General and Administrative expenses as a percentage of net sales for the
third quarter of 1999 decreased to 41.1% compared to 44.5% in the same period in
the prior year. The decrease resulted from decreased administrative personnel
time.
Research and Development expenses, as a percentage of net sales, for the second
quarter increased to 30.1% from 24.6% in the same quarter in the prior year.
The increase resulted from new product development.
EARNINGS
The net loss for the third quarter was $43,300 compared to a net loss of
$25,000 for the same period in the prior year. The losses were due to the
decrease in sales and decreased margin.
LIQUIDITY
The Independent Auditor's Report on Dencor Energy Cost Controls, Inc. Financial
Statements for the year ended December 31, 1998 included a "going concern"
explanatory paragraph that describes 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 .33 at Quarter ended Sept. 30, 1999. Man-
agement believes the acid ratio (cash and accounts receivable divided by
current liabilities) of .05 is below the limits of reasonable liquidity.
YEAR 2000
The Company has installed new software to make its accounting system year 2000
compliant. The Company has determined its products are year 2000 compliant
and that there are no year 2000 issues in its production processes. The
Company is surveying its vendors for year 2000 compliance. Also, as part
of the Company's contingency plan, in the event that there are
interruptions in obtaining parts from current suppliers several
potential suppliers have been identified for each part purchased. The Company
will be dependent on the power, communication, transportion and water infra-
structures. The cost of compliance is not expected to be material.
DENCOR ENERGY COST CONTROLS, INC.
PART II - OTHER INFORMATION
Items 1 through 5 would appear to require no answers according to the
instructions.
Item 5. Exhibits And Reports On Form 8-K
(a) The following Exhibit is filed as part of this Quarterly Report on
Form 10-Q:
3. Articles of Incorporation.
27. Financial Data Schedule.
(b) During the quarter ended Sept. 30, 1999, 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 5, 1999
<PAGE>
[ARTICLE] 5
[LEGEND]
THIS EXHIBIT CONTAINS THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
DENCOR ENERGY COST CONTROLS, INC.
[/LEGEND]
Pursuant to Sections 7-110-103 and 7-110-107 of the Colorado Business
Corporation Act, the undersigned corporation certifies to the Secretary of
State of Colorado that the following Amended And Restated Articles Of
Incorporation of Dencor Energy Cost Controls, Inc. (the "Corporation") were
adopted by the Board Of Directors of the Corporation effective as of March
24, 1999 and by the shareholders of the Corporation at the annual meeting of
shareholders held on July 22, 1999.
FIRST: The name of the corporation is Dencor Energy Cost Controls, Inc.
SECOND: The corporation shall have perpetual existence.
THIRD:
(a) Purposes. The nature, objects and purposes of the business to be
transacted shall be as follows:
(1) To carry on manufacturing business. To acquire, make,
manufacture, produce, sell, lease, rent and develop electrical devices.
(2) To carry on the real estate business. (A) to acquire
(by purchase, exchange, lease, hire or otherwise), hold own, improve,
manage, operate, let as lessor, sell, convey, mortgage, and encumber real
estate of every kind and character, wherever situated, and interests of all
kinds therein, including, but without in any way limiting the generality
of the foregoing, shopping centers, stores, office buildings, parking lots,
garages, apartment building, hotels, factory buildings and transportation
terminals; and (B) to carry on the business of managing agent, broker,
finder, consultant and other functions in connection therewith; and (C)
to accomplish such purposes by acting either alone or in conjunction with
others, as co-owners, partners, joint venturers or otherwise.
(3) To acquire business. To acquire (whether for cash or in
exchange for its assets or securities, or otherwise), operate and deal in
other businesses of all types and interests therein.
(4) To deal in securities and other personal property. To
purchase, take, receive, subscribe for, rent, or otherwise acquire, own, hold,
vote, use, employ, sell, mortgage, lend, let on lease, pledge, hypothecate,
encumber, place in voting trust, and otherwise use and deal in and with
tangible and intangible personal property of every kind, including but not
limited to (A) shares, voting trust certificates, scrip, warrants,
options, bonds, debentures, notes, equipment, trust certificates, certificates
of deposit and all other kinds and interests in, and obligations of, domestic
and foreign corporations, associations, parnterships and individuals; (B)
direct and indirect obligations of the United States and all foreign
governments, and of the various states, municipal bodies and all other
governmental bodies and authorities, wherever located; (C) inventions,
patents, patent applications, trademarks and copyrights; and (D) shares of
this corporation.
(5) To engage in other lawful business. To engage in any other
lawful business or activity for which corporations may be organized under the
laws of Colorado.
(b) Powers. In furtherance of the foregoing purposes the corporation
shall have and may exercise all of the rights, powers, and privileges now
or hereafter conferred upon corporations organized under the law of Colorado.
In addition, it may do everything necessary, suitable or proper for the
accomplishment of any of its corporate purposes.
FOURTH:
(a) The total number of shares that the corporation shall have the
authority to issue is 30,000,000, consisting of 25,000,000 shares of no par
value common stock and 5,000,000 shares of no par value preferred stock.
The board of directors is hereby expressly authorized, by resolution
or resolutions, to provide, out of the unissued shares of preferred stock,
for the issuance of one or more series of preferred stock, with such voting
powers, if any, and with such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be expressed in the resolution
or resolutions providing for the issuance thereof adopted by the board of
directors, including, without limiting the generality of the foregoing, the
following:
(1) the designation of such series, the number of shares to
constitute such series and the stated vale thereof if different from the par
value thereof;
(2) whether the shares of such series shall have voting rights,
in addition to any voting rights provided by law, and, if so, the terms of
such voting rights, which may be general or limited;
(3) the dividends, if any, payable on such series, whether any
such dividends shall be cumulative, and, if so, from what dates, the
conditions and dates upon which such dividends shall be payable, the
preferences or relation which such dividends shall hear to the dividends
payable on any shares of stock of any other class of any other series of
this class;
(4) whether the shares of such series shall be subject to
redemption by the corporation, and, if so, the times, prices, and other
terms and conditions of such redemption;
(5) the amount or amounts payable upon shares of such series
upon, and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any distribution
of the assets, of the corporation;
(6) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase
or redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relative to the operation thereof;
(7) whether the shares of such series shall be convertible into,
or exhangeable for, shares of stock of any other class or classes or of any
other series of this class or any other class or classes of capital stock and,
if so, the price or prices or the rate or rates of conversion or exchange and
the method, if any, of adjusting the same, and any other terms and conditions
of such conversion or exchange;
(8) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the corporation of, the common stock or shares of stock of any
other class or any other series of this class; and
(9) the conditions or restrictions, if any, upon the creation of
indebtedness of the corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this
class or of any other class or classes.
The powers, preferences and relative, participating, optional and other
special rights of each series of preferred stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any
and all other series at any time outstanding. All shares of any one series
of preferred stock shall be identical in all respects with all other shares
of such series, except that shares of any one series issued at different
times may differ as to the dates from which divideds thereon shall be
cumulative.
(b) Each shareholder of record shall have one vote for each share
of common stock standing in his name on the books of the corporation and
entitled to vote, except that in the elecion of directors he shall have
the right to vote such number of shares for as many persons as there are
directors to be elected. Cumulative voting shall be allowed in the
election of directors, but not for any other purpose.
(c) At all meetings of shareholders, more than 50 percent of the
shares entitled to vote at such meeting, represented in person or by proxy,
shall constitute a quorum. A majority of the shares represented at any
meeting at which a quorum is present shall be sufficient for the transaction
of business, unless the laws of Colorado require a greater number.
(d) No shareholder of the corporation shall have any pre-emptive
or similar right to subscribe for any additional shares of stock, or for
other securities of any class, or for rights, warrants or options to purchase
stock or for scrip, or for securites of any kind convertible into stock or
carrying stock purchase warrants or privileges.
(e) The board of directors may from time to time distribute to the
shareholders in partial liquidation, out of stated capital or capital surplus
of the corporation a portion of its assets, in cash or property, subject to
the limitations contained in the statute of Colorado.
FIFTH: The board of directors shall consist of not fewer than three
nor more than seven members.
SIXTH: The following provisions are inserted for the management of
the business and for the conduct of the affairs of the corporation, and the
same are in furtherance of and not in limitation of the powers conferred
by law.
No contract or other transaction of the corporation with any other
persons, firm or corporation, or in which this corporation is interesed,
shall be affected or invalidated by (a) the fact that any one or more
of the directors or officers of this corporation is interested in or is
a director or officer of such other firm or corporation; or (b) the fact
that any director or officer of this corporation, individually or jointly
with others, may be a party to or may be interested in any such contract
or transaction. Each person who may become a director or officer of the
corporation is hereby relieved from any liability that might otherwise
arise by reason of his contracting with the corporation for the benefit
of himself or any firm or corporation in which he may be in any way
interested.
SEVENTH: Limitation on Director's Liability. The personal liability
of each director of the Company shall be eliminated and limited to the
full extent permitted by the laws of the State of Colorado, including
without limitation as permitted by the provisions of Section 7-108-402 of
the Colorado Business Corporation Act and any successor provision, as amended
from time to time. No amendment of these Articles of Incorporation or repeal
of any of the provisions of these Articles of Incorporation shall limit
or eliminate the benefits provided to directors under this provision with
respect to any act or omission that occurred prior to that amendment of
repeal.
DATED the 1st day of October 1999.
DENCOR ENERGY COST CONTROLS, INC.
By: Maynard L. Moe, President
The undersigned, Maynard L. Moe, the President of Dencor Energy Cost
Controls, Inc., affirms and acknowledges, under penalty of perjury, that
his signature on the foregoing instrument is his act and deed of the
corporation and that the facts stated in the foregoing instrument are true.
By Maynard L. Moe, President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10K-QSB
FOR THE QUARTER ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> NINE MONTHS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEPT.-30-1999
<CASH> 4,700
<SECURITIES> 0
[TEXT]<RECEIVABLES> 35,700
<ALLOWANCES> 30,100
<INVENTORY> 140,300
<CURRENT-ASSETS> 176,700
<PP&E> 213,300
[TEXT]<DEPRECIATION> 213,300
<TOTAL-ASSETS> 188,700
<CURRENT-LIABILITIES> 532,000
<BONDS> 0
<COMMON> 1,175,900
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 188,700
<SALES> 200,600
<TOTAL-REVENUES> 205,900
<CGS> 126,400
<TOTAL-COSTS> 338,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
[TEXT]<INTEREST-EXPENSE> 25,500
<INCOME-PRETAX> (133,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (133,000)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
