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, 2000
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: 6,549,804 shares outstanding at August 10, 2000.
Transitional Small Business Disclosure Format
Yes No X
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DENCOR ENERGY COST CONTROLS, INC.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Financial statements:
Independent accountants' report 1
Balance sheets - June 30, 2000 and December 31, 1999 2
Statements of operations - three and six months ended
June 30, 2000 and 1999 3
Statements of cash flows - six months ended
June 30, 2000 and 1999 4
Notes to condensed financial statements 5
Item 2. Management's discussion and analysis 5
PART II. OTHER INFORMATION
Item 1-5 N/A
Item 6. Exhibits and reports on Form 8-K 7
Signatures 7
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INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders
Dencor Energy Cost Controls, Inc.
Denver, Colorado
We have reviewed the accompanying condensed balance sheet of Dencor Energy
Cost Controls, Inc. as of June 30, 2000, and the related condensed statement
of operations for the three-month and six-month period then ended, and
statement of cash flows for the six-month period then ended. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 1999, and the related
statements of operations, shareholders' deficit, and cash flows for the year
then ended (not presented herein); and in our report dated February 29, 2000,
we expressed an unqualified opinion (which included an explanatory paragraph
relating to the Company's ability to continue as a going concern) on those
financial statements. In our opinion, the information set forth in the
accompanying condensed balance sheet as of December 31, 1999, is fairly
stated, in all material respects, in relation to the balance sheet from which
it has been derived.
GELFOND HOCHSTADT PANGBURN, P.C.
Denver, Colorado
August 14, 2000
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DENCOR ENERGY COST CONTROLS, INC.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
(Condensed Balance Sheets)
ASSETS June 30, December 31,
2000 1999
(unaudited)
CURRENT ASSETS:
Cash $ 2,400 $ 500
Accounts Receivable,net of allowance for doubtful
accounts of $5,700 23,800 25,100
Inventories 122,800 127,900
Prepaids and Other 13,800 5,100
TOTAL CURRENT ASSETS 162,800 158,600
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 $11,400 9,900 8,600
$172,700 $167,200
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes Payable - Shareholders $144,000 $ 121,400
Notes Payable - Others 0 5,000
Accounts Payable 56,800 65,200
Accrued Compensation and Benefits 336,200 272,100
Accrued Interest - Shareholders & Others 145,000 130,600
Warranty Reserve 3,200 3,200
Other 1,400 1,000
TOTAL LIABILITIES (All Current) 686,600 598,500
STOCKHOLDERS' DEFICIT
Preferred Stock, no par value, authorized
5,000,000 shares, none issued and outstanding
Common Stock, no par value, authorized
25,000,000 shares; issued and outstanding,
6,549,804 shares at June 30, 2000,
5,749,804 shares at December 31, 1999
1,206,600 1,190,600
Accumulated deficit (1,720,500) (1,621,900)
Stockholders' Deficit (513,900) (431,300)
$ 172,700 $ 167,200
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
2000 1999 2000 1999
REVENUES:
Net Sales $ 52,600 $ 65,000 $ 93,400 $ 126,400
Interest and Other 1,200 1,400 6,500 3,600
TOTAL REVENUES 53,800 66,400 99,900 130,000
COSTS AND EXPENSES:
Cost of Products Sold 29,500 34,800 62,400 72,900
Selling 2,500 1,400 5,900 9,800
General and Administrative 33,300 40,300 69,400 77,900
Research and Development 20,400 19,400 41,800 42,900
Interest 9,800 8,400 19,000 16,200
95,500 106,400 198,500 219,700
NET LOSS $ ( 41,700) $( 40,000) $(98,600) $( 89,700)
BASIC AND DILUTED NET
LOSS PER COMMON SHARE: $ (0.01) $ (0.01) $ (0.02) $ (0.02)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,549,804 4,803,804 6,532,124 4,803,804
See notes to condensed financial statements.
DENCOR ENERGY COST CONTROLS, INC.
STATEMENT OF CASH FLOWS
(unaudited)
Six Months Ended June 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(98,600) $( 89,700)
Adjustments to reconcile net loss
to net cash used in operating activities:
Changes in operating assets and liabilities:
Accounts and other receivables 1,300 (28,300)
Inventories 5,100 (17,000)
Other assets (8,700) (6,000)
Long term receivables (1,300) 200
Accounts payable (8,400) 35,200
Accrued compensation and benefits 64,100 63,000
Accrued interest - shareholders & others 14,400 16,200
Other liabilities 400 (300)
Total adjustments 66,900 63,000
Net cash used in operating activities (31,700) (26,700)
Cash flows from financing activities:
Proceeds from Private Placement of Stock 16,000 0
Proceeds from Notes Payable-Shareholders 22,600 5,000
Proceeds from Notes Payable - Others (5,000) 20,000
Net cash provided by financing activities 33,600 25,000
Net decrease in cash 1,900 (1,700)
Cash beginning of year 500 8,300
Cash end of quarter $ 2,400 $ 6,600
See notes to condensed financial statements.
DENCOR ENERGY COST CONTROLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
A. The condensed Financial Statements of the Company as of June 30,2000 and
for the three-month and six-month periods ended June 30, 2000 and 1999 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 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, 2000, and the results of operations for the three months and six months
ended June 30, 2000 and 1999 and statement of cash flows for the six months
ended June 30, 2000.
The results of operations for the three and six month periods ended
June 30, 2000 and 1999, 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, 2000, the Company had no long-term debt.
C. Common Stock:
In January 2000, the Company issued 800,000 shares of common stock in a
private placement at $0.02 per share, which was the quoted market price of
the Company's common stock on the date of issuance.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Second quarter sales of $52,600 were approximately 19% less than the $65,000
for the comparable period in 1999. The decrease is primarily a result of a
decrease in sales to dealers. The first half year sales were 26% 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 2.5% for the
second quarter of 2000 compared with the same period in the prior year. For
the six month period the cost of products sold increased 9.1% 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 2000, as percentage of net sales,
increased by 2.6% 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 63.3% compared to 62.0% in the same period
in the prior year. The total administrative expense decreased 17.4% compared
to the same period in the prior year. The decrease was due to less time
devoted to administration.
Research and Development expenses for the second quarter remained about at
the same level as in the same quarter in the prior year.
EARNINGS
The net loss for the second quarter was $41,700 compared to a net loss of
$40,000 for the same period in the prior year. The losses were due to the
decrease in sales and decreased margin due to deceased production volume.
LIQUIDITY
The Independent Auditor's Report on Dencor Energy Cost Controls, Inc. Financial
Statements for the year ended December 31, 1999 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, 1999 Financial Statements.
The Company's current ratio is .24 at the Quarter ended June 30, 2000. Man-
agement believes the acid ratio (cash and accounts receivable divided by
current liabilities) of .04 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. The Company may also seek acquisitions or mergers.
YEAR 2000
The Company did not experience any Year 2000 problems with its accounting
system, its products, or production processes. The Company has no information
that indicates key vendors, service providers, or any third parties, may be
unable to sell or purchase from the Company because of any Year 2000
compliance problems they may have. The Company's contingency plans in the
event year 2000 problems arise are set forth in the Company's Annual Report
on Form 10KSB for the year ended December 31, 1999.
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, 2000, 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 14, 2000
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