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, 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 June 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 June 30 Dec. 31
1999 1998
(unaudited)
CURRENT ASSETS:
Cash $ 6,600 $ 8,300
Accounts Receivable,net of allowance for doubtful
accounts of $18,700 48,300 20,000
Inventories 155,100 138,100
Prepaids and Other 12,100 6,100
TOTAL CURRENT ASSETS 222,100 172,500
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 12,400 12,600
$234,500 $185,100
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes Payable - Shareholders $123,300 $ 118,300
Notes Payable - Others 25,000 5,000
Accounts Payable 71,700 36,500
Accrued Compensation and Benefits 196,700 133,700
Accrued Interest - Shareholders & Others 114,100 97,900
Warranty Reserve 3,200 3,200
Other 500 800
TOTAL CURRENT LIABILITIES 534,500 395,400
STOCKHOLDERS' DEFICIT
Common Stock, no par value, authorized 5,000,000
shares; issued & outstanding, 4,803,804 shares
1,175,900 1,175,900
Accumulated deficit (1,475,900) (1,386,200)
(300,000) (210,300)
$ 234,500 $ 185,100
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
1999 1998 1999 1998
REVENUES:
Net Sales $ 65,000 $ 72,100 $ 126,400 $ 189,000
Interest and Other 1,400 2,000 3,600 4,800
TOTAL REVENUES 66,400 74,100 130,000 193,800
COSTS AND EXPENSES:
Cost of Products Sold 34,800 34,100 72,900 87,900
Selling 1,400 4,700 9,800 10,200
General and Administrative 40,300 37,000 77,900 71,000
Research and Development 19,400 18,400 42,900 37,100
Interest 8,400 6,500 16,200 13,000
106,400 100,700 219,700 219,200
NET LOSS $ ( 40,000) $( 26,600) $( 89,700) $( 25,400)
NET LOSS PER
COMMON SHARE: $ (0.01) $ (0.01) $ (0.02) $ (0.01)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 4,803,804 3,894,820 4,803,804 3,783,680
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENT OF CASH FLOWS
(unaudited)
Six Months Ended June 30
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(89,700) $( 25,400)
Adjustments to reconcile net loss
to net cash used in operating activities:
Changes in operating assets and liabilities:
Accounts and other receivables (28,300) 5,800
Inventories (17,000) (9,100)
Other assets ( 6,000) (14,900)
Long term receivables 200 0
Accounts payable 35,200 (700)
Accrued compensation and benefits 63,000 23,400
Accrued interest - shareholders & others 16,200 12,500
Other liabilities ( 300) (3,100)
Total adjustments 63,000 13,900
Net cash used in operating activities (26,700) (11,500)
Cash flows from financing activities:
Proceeds from Private Placement of Stock 0 3,300
Proceeds from Notes Payable-Shareholders 5,000 9,000
Proceeds from Notes Payable - Others 20,000 0
Principal payment on Notes Payable Shareholder (0) (6,000)
Net cash provided by financing activities 25,000 6,300
Net decrease in cash (1,700) (5,200)
Cash beginning of year 8,300 8,300
Cash end of quarter 6,600 $ 3,100
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 June
30, 1999, and the results of operations and cash flows for the six months
and three months ended June 30, 1999 and 1998.
The results of operations for the three and six month periods ended
June 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 Second Quarter, 1999, the Company had no long-term debt.
C. Common Stock:
During the Second Quarter of 1999, the Company sold no restricted stock.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Second quarter sales of $65,000 were approximately 10% less than the $72,100
for the comparable period in 1998. The decrease is primarily a result of a
decrease in sales to dealers. The first half year sales were 33% less than
the first half year 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 6.2% for the
second quarter of 1999 compared with the same period in the prior year. For
the six month period the cost of products sold increased 10% compared to 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 second quarter of 1999, as percentage of net sales,
decreased by 4.4% compared to the same period in the prior year.
General and Administrative expenses as a percentage of net sales for the
second quarter of 1999 increased to 62% compared to 51% 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 29.8% from 25.5% in the same quarter in the prior year.
EARNINGS
The net loss for the second quarter was $40,000 compared to a net loss of
$26,600 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 .42 at the Quarter ended June 30, 1998. Man-
agement believes the acid ratio (cash and accounts receivable divided by
current liabilities) of .10 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, 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 complaince 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:
27. Financial Data Schedule.
(b) During the quarter ended June 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: August 13, 1999
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<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>
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