<PAGE>
========================================================================
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File No.
September 30, 1997. 0-9180
THERMAL ENERGY STORAGE, INC.
(Exact name of the registrant as specified in its charter)
COLORADO
(State of other jurisdiction of incorporation or organization)
95-3333931
(I.R.S. Employer Identification No.)
6335 Ferris Square, Suite E
San Diego, California 92121
Registrant's telephone number, including area code: (619) 453-1395
========================================================================
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceeding 12 months (or for such shorter period that
the registrant was required to file such report(s), and (2) has been subject
to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common shares, as of the close of the period covered by this
report: 58,931,289 Common Shares, par value $.001 per share.
1
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Please refer to succeeding pages for the financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
THERMAL ENERGY STORAGE, INC.
BALANCE SHEETS
(Unaudited)
ASSETS
September 30, December 31,
1997 1996
------------- -------------
CURRENT ASSETS:
<S> <C> <C>
Cash $ 27,073 $ 37,396
Accounts receivable 0 18,150
Inventories 1,000 1,000
Prepaid expenses and deposits 2,011 2,011
--------- -------
Total current assets 30,084 58,557
-------- -------
PROPERTY AND EQUIPMENT, at cost
Machinery and equipment 55,946 55,946
Furniture and fixtures 53,677 53,677
------ ------
109,623 109,623
Less-accumulated depreciation (109,623) (109,623)
---------- ---------
$ 30,084 $ 58,557
========== =========
</TABLE>
3
<PAGE>
<TABLE>
THERMAL ENERGY STORAGE, INC.
BALANCE SHEETS
(Unaudited)
LIABILITIES AND SHAREHOLDERS' DEFICIT
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 32,277 $106,585
Accrued payroll 101,326 101,326
Payable to officers and affiliates 520,597 490,160
--------- ---------
Total current liabilities 654,200 698,071
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT
Preferred stock, par value $.10
per share; 30,000,000 shares
authorized; none issued ---- ----
Common stock, par value $.001 per
share; 110,000,000 shares author-
ized; 58,931,289 shares issued
and outstanding at September 30,
1997 and December 31, 1996 58,931 58,931
Additional paid-in capital 4,040,281 4,040,281
Accumulated deficit (4,723,328) (4,738,726)
----------- ----------
Total shareholders' deficit (624,116) (639,514)
----------- ----------
$ 30,084 $ 58,557
=========== ==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
THERMAL ENERGY STORAGE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
-------- --------- -------- -------
REVENUES:
<S> <C> <C> <C> <C>
Contract services $ 94,110 $ 32,806 $258,467 $ 77,273
Total revenues 94,110 32,806 258,467 77,273
-------- -------- -------- --------
COST OF REVENUES:
Contract services 100,025 40,247 238,480 89,766
-------- -------- -------- --------
100,025 40,247 238,480 89,766
-------- -------- -------- --------
Gross profit (loss) (5,915) (7,441) 19,987 (12,493)
-------- -------- -------- --------
OPERATING EXPENSES:
Research and development 0 0 0 0
Selling, general and
administrative expenses 4,012 9,694 9,170 25,180
-------- -------- -------- --------
Total operating expenses 4,012 9,694 9,170 25,180
-------- -------- -------- --------
Income (loss) from
operations (9,927) (17,135) 10,817 (37,673)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Transfer fees 1,879 2,343 4,579 4,568
-------- -------- -------- --------
NET PROFIT OR (LOSS) $ (8,048) $(14,792) $ 15,396 $(33,105)
======== ========= ========= =========
NET PROFIT OR (LOSS)
PER COMMON SHARE $ (0) $ (0) $ 0 $ (0)
========= ========= ========= =========
</TABLE>
5
<PAGE>
<TABLE>
THERMAL ENERGY STORAGE, INC.
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(Unaudited)
<CAPTION>
Nine Months Ended Nine Months
Ended
September 30, 1997 September 30,
1996
-------------------
- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Cash received from customers $240,317 $ 77,273
Cash paid to suppliers and employees (250,640) (77,985)
--------------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (10,323) (712)
Cash and cash equivalents at
beginning of year 37,396 1,840
---------------- -----------
Cash and cash equivalents at
end of period $ 27,073 $ 1,128
================ ===========
</TABLE>
6
<PAGE>
<TABLE>
THERMAL ENERGY STORAGE, INC.
STATEMENTS OF CASH FLOWS
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH (USED) BY OPERATING ACTIVITIES
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1997 September 30, 1996
------------------- -------------------
<S> <C> <C>
Net income (loss) $ 15,396 $ (33,105)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation 0 0
DECREASE (INCREASE) -
Accounts receivable 18,150 0
Prepaid expenses and deposits 0 0
INCREASE (DECREASE) -
Accounts payable (74,306) (6,550)
Other accrued liabilities 0 0
Payable to officers and affiliates 30,437 38,943
-------------- -------------
Net cash used by operating activities $ (10,323) $ (712)
=============== ============
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Material Changes in Financial Condition
As of September 30, 1997 cash and cash equivalents amounted to $27,073
as compared to $37,396 as of December 31, 1996. The decrease since December
31, 1996 was primarily attributable an decrease in accounts receivable of
$18,150, a decrease in accounts payable of $74,306 and an increase in pay-
able to affiliates of $30,437 and a net income for the nine months ended
September 30, 1997 of $15,396.
As of September 30, 1997 total shareholders' deficit amounted to
($624,116) as compared to ($639,514) as of December 31, 1996. The decrease
since December 31, 1996 was attributable to an income of $15,396.
8
