UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
Commission file Number 0-9180
Thermal Energy Storage, Inc.
(Exact name of registrant as specified in its charter.)
Colorado 95-3333931
(State of incorporation) (IRS Employer Identification No.)
6362 Ferris Square, Suite C
San Diego, CA 92121
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (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 preceding 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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report: Common Stock, $.001 Par Value - 58,931,289 shares
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PART I. - FINANCIAL INFORMATION
THERMAL ENERGY STORAGE, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
September 30 September 30
__________________ _________________
1998 1997 1998 1997
______ ______ ______ ______
<S> <C> <C> <C> <C>
Contract services $ 45 $ 94 $ 127 $ 258
Cost of revenues 54 100 103 238
______ ______ ______ ______
Gross profit (loss) (9) (6) 24 20
Selling, general and
administrative expenses 8 4 25 9
______ ______ ______ ______
Operating profit (loss) (17) (10) (1) 11
Transfer fees 1 2 3 5
Other expense 0 0 (1) 0
______ ______ ______ ______
Net income (loss) (16) (8) 1 16
Accumulated deficit -
Beginning of period (4,743) (4,715) (4,760) (4,739)
_______ _______ _______ _______
Accumulated deficit -
End of period (4,759) (4,723) (4,759) (4,723)
Loss per share $ (.00) $ (.00) $ .00 $ .00
<FN>
See Accompanying Notes to Financial Statements
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THERMAL ENERGY STORAGE, INC.
BALANCE SHEETS
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
September 1998 December 1997
______________ ______________
<S> <C> <C>
ASSETS
Current assets
Cash $ 5 $ 6
Accounts receivable 17 19
Inventories 1 1
Prepaid expenses 2 2
______ ______
Total current assets 25 28
Property and equipment
less accumulated depreciation of
$109,623 and $109,623 0 0
______ ______
TOTAL ASSETS 25 28
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C> <C>
Current liabilities
Accounts payable $ 24 $ 59
Accrued payroll 101 101
Payable to officers and affiliates 560 529
______ ______
Total current liabilities 685 689
Stockholder's deficit
Common stock par value $.001 per share
Authorized 110,000,000 shares
Issued and outstanding -
58,931,289 shares 59 59
Additional paid in capital 4,040 4,040
Accumulated deficit (4,759) (4,760)
_______ _______
Total stockholders' deficit $ (660) $ (661)
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIT $ 25 $ 28
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
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<TABLE>
THERMAL ENERGY STORAGE, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
(Amounts in thousands)
<CAPTION>
1998 1997
<S> <C> <C>
Cash flow from operating activities:
Income from operations $ 1 $ 16
_______ _______
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation 0 0
Decrease (increase) from changes:
Receivables 2 18
Prepaid expenses 0 0
Increase (decrease) from changes:
Accounts payable (35) (74)
Payable to officers & affiliates 31 30
_______ _______
Net cash used in operating activities $ (1) $ (10)
_______ _______
Net cash provided from
financing activities $ 0 $ 0
_______ _______
Decrease in cash (1) (10)
Cash at beginning of year $ 6 $ 37
_______ _______
Cash at end of period $ 5 $ 27
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
THERMAL ENERGY STORAGE, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
September 30, 1998
Material Changes in Financial Condition
As of September 30, 1998 cash and cash equivalents amounted to
$5,233 as compared to $6,264 as of December 31, 1997. The decrease
since December 31, 1997 was primarily attributable to a decrease in
accounts receivable of $1,554, a decrease in accounts payable of
$34,815, an increase in payable to affiliates of $31,500 and a net
income for the nine months ended September 30, 1998 of $730.
As of September 30, 1998 total shareholders' deficit amounted
to $(660,361) as compared to $(661,091) at December 31, 1997. The
decrease since December 31, 1997 was attributable to income of $730.
<PAGE>
THERMAL ENERGY STORAGE, INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1934, the registrant has duly cause this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THERMAL ENERGY STORAGE, INC.
Registrant
February 19, 1999 Richard A. McCormack
Date Richard A. McCormack
President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Sep-30-1998
<CASH> 5
<SECURITIES> 0
<RECEIVABLES> 17
<ALLOWANCES> 0
<INVENTORY> 1
<CURRENT-ASSETS> 25
<PP&E> 109
<DEPRECIATION> 109
<TOTAL-ASSETS> 25
<CURRENT-LIABILITIES> 685
<BONDS> 0
<COMMON> 59
0
0
<OTHER-SE> (660)
<TOTAL-LIABILITY-AND-EQUITY> 25
<SALES> 127
<TOTAL-REVENUES> 127
<CGS> 103
<TOTAL-COSTS> 103
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 1
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
