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, 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 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:
6,549,804 shares issued, at May 10, 2000.
Transitional Small Business Disclosure Format
Yes No X
<PAGE>
DENCOR ENERGY COST CONTROLS, INC.
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1. Condensed financial statements:
Independent accountant's report 1
Balance sheets - March 31, 2000 and December 31, 1999 2
Statements of operations - three months ended
March 31, 2000 and 1999 3
Statements of cash flows - three months ended
March 31, 2000 and 1999 4
Notes to consolidated 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 6
Signatures 6
<PAGE>
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 March 31, 2000, and the related condensed statements
of operations and cash flows for the three-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
May 12, 2000
<PAGE>
DENCOR ENERGY COST CONTROLS, INC.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
(Condensed Balance Sheets)
ASSETS March 31, December 31,
2000 1999
(unaudited)
CURRENT ASSETS:
Cash $ 5,000 $ 500
Accounts Receivable, net of allowance for
doubtful accounts of $5,700 14,900 25,100
Inventories 126,600 127,900
Prepaids and other 9,300 5,100
TOTAL CURRENT ASSETS 155,800 158,600
Furniture and Equipment 213,300 213,300
Less Accumulated Depreciation (213,300) (213,300)
Long term receivables, net of allowance for
doubtful receivables of $11,400 8,700 8,600
$164,500 $167,200
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes Payable - Shareholders $144,000 $121,400
Notes Payable - Other 0 5,000
Accounts Payable 52,200 65,200
Accrued Compensation and Benefits 300,700 272,100
Accrued Interest - Shareholders 135,300 130,600
Warranty Reserve 3,200 3,200
Other 1,200 1,000
TOTAL LIABILITIES (all current) 636,600 598,500
SHAREHOLDERS' 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 March 31, 2000,
5,749,804 shares at December 31, 1999 1,206,600 1,190,600
Accumulated deficit (1,678,700) (1,621,900)
Stockholders deficit (472,100) (431,300)
$ 164,500 $ 167,200
See notes to condensed financial statements.
DENCOR ENERGY COST CONTROLS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months
Ended March 31
2000 1999
REVENUES:
Net Sales $ 41,000 $ 61,400
Interest and Other 5,200 2,200
TOTAL REVENUES 46,200 63,600
COSTS AND EXPENSES;
Cost of Products Sold 32,800 38,100
Selling 3,500 6,300
General and Administrative 36,000 37,600
Research and Development 21,400 23,500
Interest 9,300 7,800
103,000 113,300
NET LOSS $ (56,800) $ (49,700)
NET LOSS PER
COMMON SHARE: $ (0.01) $ (0.01)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,549,804 4,803,804
See notes to condensed financial statements.
<PAGE>
DENCOR ENERGY COST CONTROLS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended March 31
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (56,800) $ (49,700)
Adjustments to reconcile net loss to net cash
used in operating activities
Changes in operating assets and liabilities:
Decrease (increase) in receivables 10,200 (10,800)
Decrease in inventories 1,300 4,400
Increase in other assets (4,200) (2,500)
(Increase) decrease in long-term receivables (100) 500
(Decrease) increase in Accounts payable (13,000) 12,500
Increase in accrued compensation and benefits 28,600 31,800
Increase in accrued interest - shareholders 4,700 7,800
Increase (decrease) in other liabilities 200 (600)
Total adjustments 27,700 43,100
Net cash used in operating Activities (29,100) (6,600)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - shareholders 22,600 0
Principal payments on notes payable - shareholders (5,000) 0
Proceeds from private placement of common stock 16,000 0
Net cash provided by financing activities 33,600 0
Net increase (decrease) in cash 4,500 (6,600)
CASH, beginning of year 500 8,300
CASH, end of quarter $ 5,000 $ 1,700
See notes to condensed financial statements.
<PAGE>
DENCOR ENERGY COST CONTROLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
A. The condensed Financial Statements of the Company as of March 31,2000
and for the three-month periods ended March 31, 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 note
disclosures normally included in the Company's annual 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 normal
and recurring adjustments, necessary to present fairly the financial position
as of March 31, 2000, and the results of operations and cash flows for the
three months ended March 31, 2000 and 1999.
The results of operations for the three-month periods ended March 31,
2000 and 1999, are not necessarily indicative of the results to be expected
for the full year. These condensed financial statements should be read in
conjunction with a reading of 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, 2000, the Company had no long-term debt.
C. Common Stock:
During the First Quarter, 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
NET SALES
First Quarter sales of $41,000 were approximately 33% less than sales of
$61,400 for the comparable period in 1999. 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 increased to 80% for the
first quarter of 2000 compared with 62% the same period in the prior year.
This increase in cost is primarily due to a decrease in production efficiency
resulting from a lower production volume.
Selling expenses as a percentage of net sales for the first quarter of 2000
decreased to 8.5% compared to 10.3% for the same period in the prior year due
to a decrease in travel and printing expenses.
General and Administrative expenses for the first quarter 2000 decreased
slightly compared to the same period in the prior year due to a decrease in
salaries charged.
Research and Development expenses as a percentage of net sales decreased
slightly compared to the same period in the prior year.
<PAGE>
DENCOR ENERGY COST CONTROLS, INC.
EARNINGS
The net loss for the first quarter was $56,800 compared to a net loss of
$49,700 for the same period in the prior year. The increase in the net loss
was due to the decrease in sales and decrease in gross margin due to lower
production volume.
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.
LIQUIDITY
The Independent Auditors' Report on the Company's financial statements as of
and for the year ended December 31, 1999 included a "going concern"
explanatory paragraph which means that the Auditors 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, 1999 financial
statements.
The Company's current ratio is .24 at the Quarter ended March 31, 2000.
Management believes the acid ratio (cash and accounts receivable divided by
current liabilities) of 0.03 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 strategic
acquisitions or mergers.
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-Q:
27. Financial Data Schedule.
(b) During the quarter ended March 31, 2000, 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:/s/ Maynard L. Moe
President and Principal Accounting Officer
Date: May 12, 2000
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM-10KSB
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
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