<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended February 29, 2000.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _______, 19___ to _______, 19___.
Commission File Number: 0-10157
CAPCO ENERGY, INC.
---------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
COLORADO 84-0846529
- ------------------------------- -----------------------
(State or Other Jurisdiction of (IRS Employer Identi-
Incorporation or Organization) fication Number)
2922 E. CHAPMAN, SUITE 202
ORANGE CALIFORNIA 92869
--------------------------------------
Address of Principal Executive Offices
(714) 288-8230
--------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
N/A
--------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Check whether the Issuer (1) has 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 Issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
X Yes No
There were 21,303,838 shares of the Registrant's $.001 par value common stock
outstanding as of February 29, 2000.
<PAGE>
CAPCO ENERGY, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
FEBRUARY 29, MAY 31,
2000 1999
CURRENT ASSETS:
Cash & Cash Equivalents $ 1,714,743 $ 20,860
Accounts Receivables, net 777,250 700
Accounts Receivables, related parties 2,276,823 -
Inventory 952,599 -
Deferred Tax Asset 146,755 -
Other Current Assets 6,799 -
Total Current Assets 5,874,969 21,560
Property, Plant and Equipment 6,979,060 1,430,126
Accumulated Depreciation (840,322) (1,430,126)
Total Property 6,138,738 -
OTHER ASSETS
Investments 15,427,358 -
Intangibles 363,359 -
Amortization of Intangibles (118,016) -
Other Assets 31,012 843,000
Total Other Assets 15,703,713 843,000
TOTAL ASSETS $27,717,420 $ 864,560
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
CAPCO ENERGY, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
FEBRUARY 29, MAY 31,
1999 1999
CURRENT LIABILITIES
Accounts Payable, Trade $ 1,900,576 $ 23,941
Book Overdraft 2,492,749 -
Current Portion, Long-term Debt 2,347,202 -
Accrued Expenses 100,016 -
Taxes Payable (26,844) -
Dividend Payable 26,673 26,673
Total Current Liabilities 6,840,372 50,614
Long Term Debt 3,546,772 -
Deferred Tax Liability 608,247 -
Minority Interest in Subsidiaries 765,798 -
Commitments and Contingencies
Total Liabilities 11,761,189 50,614
Stockholders' Equity
Preferred Stock, $1.00 par value;
Authorized 10,000,000 shares, 292,947
Shares issued and outstanding 292,947 292,947
Common Stock, $.001 par value;
Authorized 150,000 shares; 21,303,838
Shares issued and outstanding 21,304 99,000
Paid-In Capital 17,841,739 2,422,976
Retained Earnings (2,199,759) (2,000,977)
Total 15,956,231 813,946
TOTAL LIABILITIES AND EQUITY $27,717,420 $ 864,560
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
CAPCO ENERGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended February 29, 2000 and February 28, 1999
2000 1999
REVENUES
Sales $ 3,448,627 $ 809,131
Cost of Sales 2,634,830 -
Gross Profit 813,797 809,131
EXPENSES
Selling, General and Administrative 1,013,416 5,427
Amortization 3,755 -
Depreciation/Depletion (798) 1,800
Total Expenses 1,016,373 7,227
Income from Operations (202,576) 801,904
OTHER INCOME AND (EXPENSES)
Interest Income (468) 57
Interest Expense (78,555) -
Other 12,723 -
Gain on Sale of Assets 70 -
Total Other Income (66,230) 57
Income (loss) before Taxes (268,806) 801,961
Provision for Income Taxes (136,255) -
Income before Minority (132,551) 801,961
Minority Interest (17,956) -
Net Income (loss) $ (114,595) $ 801,961
Net Income (loss) per Share
Basic $ (0.01) $ 0.81
Diluted $ (0.01) $ 0.81
Average Share Outstanding
Basic 14,535,892 990,000
Diluted 14,535,892 990,000
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
CAPCO ENERGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
2000 1999
REVENUES
Sales $ 3,459,648 $ 816,768
Cost of Sales 2,634,830 -
Gross Profit 824,818 816,768
EXPENSES
Selling, General and Administrative 1,104,092 30,498
Amortization 3,755 -
Depreciation/Depletion 2,931 5,400
Total Expenses 1,110,778 35,898
Income from Operations (285,960) 780,870
OTHER INCOME AND (EXPENSES)
Interest Income (398) 204
Interest Expense (83,483) -
Other 12,723 -
Gain on Sale of Assets 4,125 -
Total Other Income (67,033) 204
Income (loss) before Taxes (352,993) 781,074
Provision for Income Taxes (136,255) -
Income before Minority (216,738) 781,074
Minority Interest (17,956) -
Net Income (loss) $ (198,782) $ 781,074
Net Income (loss) per Share
Basic $ (0.04) $ 1.23
Diluted $ (0.04) $ 1.23
Average Share Outstanding
Basic 5,506,408 634,807
Diluted 5,506,408 634,807
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
CAPCO ENERGY, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 2000
2000 1999
Cash Flow from Operating Activities:
Net Income (Loss) $ (198,782) $ 781,074
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 6,685 5,400
(Gain) loss on disposal of property and
equipment (4,125) -
Deferred Income Taxes (138,504) -
Minority Interest (17,956) -
Decrease (Increase) in:
Accounts Receivable, (net) (646,539) (804,644)
Inventories 97,835 -
Other Current Assets (5,729) -
Increase(Decrease) in Accounts Payable 774,601 5,469
Increase(Decrease) in Accrued Liabilities (20,744) (336)
Increase (Decrease) in Taxes Payable (55,156) -
Decrease (Increase) Other Assets 2,429 2,900
Net Cash Used by Operating Activities (205,985) (10,137)
Cash Flows from Investing Activities:
Acquisition Net of Cash (2,089,499) -
Cash Proceeds from Sale of Property 4,125 -
Purchases of Property and Equipment (929,978) (35,000)
Non-compete Agreement 266 -
Investment in Closely Held Business (698,528) -
Net cash used by investing activities (3,713,614) (35,000)
Continued on Next Page
6
<PAGE>
CAPCO ENERGY, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 2000
(Continued)
2000 1999
Cash Flow from Financing Activities:
Increase(Decrease) in Book Overdraft $ 2,492,749 $ -
Borrowings on Long-Term Debt 2,324,858 -
Sale of Stock 795,875 55,135
Net Cash Provided by Financing Activities 5,613,482 55,135
Net Increase in Cash 1,693,883 9,998
Cash, Beginning of Period 20,860 10,830
Cash, End of Period $ 1,714,743 $ 20,828
Non Cash Transactions
Stock Issued for Acquisitions $14,545,192 $ -
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
CAPCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Capco Energy, Inc. ("CEI") was incorporated as a Colorado corporation on
January 6, 1981. Effective in 1999 CEI acquired 100% of Capco Resource
Corporation ("CRC"), approximately 80% of Capco Resources, Ltd. ("CRL"), 80%
of Zelcom Industries, Inc. ("ZELCOM"), and 100% of Meteor Stores, Inc.
("MSI"). CRL owns 100% of Capco Asset Management, ("CAM"). CRL owns 1,290,000
shares of Greka Energy, Inc. These shares represent approximately 30% of the
outstanding Share Capital of Greka. Greka trades under the symbol GRKA. CAM
owns 1,216,000 shares of Meteor Industries Inc. these shares represent
approximately 35% of the outstanding Share Capital of Meteor Industries, a
petroleum marketing business based in Denver. Meteor trades under the symbol
METR. CAM made a convertible investment in Chaparral, which may result in CAM
owning in excess of 400,000 shares of Chaparral's Common Stock. Chaparral
trades under the symbol CHAR. CAM made a convertible investment in Nevada
Manhattan, which may result in CAM owning 16,000,000 shares of Nevada's
common stock. Nevada trades under the symbol NVMHE.
OIL AND GAS ACCOUNTING
The Company accounts for oil and gas properties using the "full cost" method.
Under this method, all costs associated with property acquisition, exploration
and development activities are capitalized, including costs of unsuccessful
activities. Oil and gas properties are depleted using the units-of-production
method based on the ratio of current period production to estimated proved oil
and gas reserve quantities. No gain or loss resulting from the disposition of
oil and gas properties is recognized unless the relationship between
capitalized costs and reserves in the cost center is significantly changed.
In addition to normal depletion, net capitalized costs are subject to a
ceiling limitation required by the Securities and Exchange Commission (SEC).
Such costs are limited to the present value (discounted at 10%) of the future
net revenues from proved oil and gas properties, using year end costs and
prices, after considering potential future income tax effects. There were no
charges related to the ceiling limitation during the quarter ending February
29, 2000.
Revenue from oil and gas production is recognized upon sale to unaffiliated
purchasers.
CASH EQUIVALENTS
Cash equivalents include money-market accounts or other highly liquid debt
instruments with an original maturity of three months or less.
USE OF ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires the use of estimates. The unaudited oil and
gas reserve estimates prepared by management should be considered as
reasonably possible to change, which can affect depletion and the net carrying
value of oil and gas properties.
8
<PAGE>
INCOME (LOSS) PER SHARE
Basic earnings per common share are computed by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
share are calculated taking into account all potentially dilutive securities.
The company has no dilutive securities. Antidilutive securities are omitted.
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, such interim statements reflect all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial position and the results of operations and cash flows for the
interim periods presented. The results of operations for these interim periods
are not necessarily indicative of the results to be expected for the full
year. These financial statements should be read in conjunction with the
audited consolidated financial statements and footnotes for the year ended May
31, 1999, filed with the Company's Form 10-K.
CONTINGENCIES
The Company is subject to various federal, state and local environmental laws
and regulations. Although Company environmental policies and practices are
designed to ensure compliance with these laws and regulations, future
developments and increasingly stringent regulations could require the Company
to make additional unforeseen environmental expenditures. Environmental
accruals are routinely reviewed on an interim basis as events and developments
warrant.
The Company is a party to certain litigation that has arisen in the normal
course of its business and that of its subsidiaries. In the opinion of
management, none of this litigation is likely to have a material effect on the
Company's financial position or results of operation
BUSINESS SEGMENTS
The Company operates in three business segments: oil production retail
convenience stores and Internet operations. Senior management evaluates and
makes operating decisions about each of these operating segments based on a
number of factors. The following tables reflect the segment information:
9
<PAGE>
<TABLE>
<CAPTION>
For the Nine Months Ended For the Nine Months Ended
February 29, 2000 February 28, 1999
Oil Conven- Oil Conven-
Produc- ience Produc- ience
Total tion Stores Internet Total tion Stores Internet
---------- --------- ---------- -------- -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Sales $3,459,648 $ 164,884 $3,294,764 $ - $816,768 $816,768 $ - $ -
Cost of
Sales 2,634,830 - 2,634,830 - - - - -
Gross
Profit 824,818 164,884 659,934 - 816,768 816,768 - -
EXPENSES
Selling,
General &
Adminin-
strative 1,104,092 400,394 689,525 14,173 30,498 30,498 - -
Amortiza-
tion 3,755 3,755 - - - - - -
Depreciation
/Depletion 2,931 2,931 - - 5,400 5,400 - -
---------- --------- ---------- -------- -------- -------- ------ --------
Total
Expenses 1,110,778 407,080 689,525 14,173 35,898 35,898 - -
Income from
Operations (285,960) (242,197) (29,590) (14,173) 780,870 780,870 - -
Other Income
& (Expenses)
Interest
Income (398) - (398) - 204 204 - -
Interest
Expense (83,783) (34,690) (48,793) - - - - -
Other 12,723 12,723 - - - - - -
Gain on
Sale of
Assets 4,125 4,125 - - - - - -
---------- --------- ---------- -------- -------- -------- ------ --------
Total other
Income (67,033) (17,842) (49,191) - 204 204 - -
Income (loss)
Before
Taxes (352,993) (260,039) (78,781) (14,173) 781,074 781,074 - -
Provision
For income
Taxes (136,255) (100,375) (30,410) (5,470) - - - -
Income before
Minority (216,738) (159,664) (48,371) (8,703) 781,074 781,074 - -
Minority
Interest (17,956) (12,432) - (5,524) - - - -
---------- --------- ---------- -------- -------- -------- ------ --------
Net Income
(Loss) $(198,782) $(147,232) $ (48,371) $ (3,179) $781,074 $781,074 $ - $ -
10
<PAGE>
For the Nine Months Ended For the Nine Months Ended
February 29, 2000 February 28, 1999
Oil Conven- Oil Conven-
Produc- ience Produc- ience
Total tion Stores Internet Total tion Stores Internet
---------- --------- ---------- -------- -------- -------- ------ --------
REVENUES
Sales $3,448,627 $ 153,863 $3,294,764 $ - $809,131 $809,131 $ - $ -
Cost of
Sales 2,634,830 - 2,634,830 - - - - -
Gross
Profit 813,797 153,863 659,934 - 809,131 809,131 - -
EXPENSES
Selling,
General &
Adminin-
strative 1,013,416 309,719 689,524 14,173 5,427 5,427 - -
Amortiza-
tion 3,755 3,755 - - - - - -
Depreciation
/Depletion (798) (798) - - - - - -
---------- --------- ---------- -------- -------- -------- ------ --------
Total
Expenses 1,016,373 312,676 689,524 14,173 5,427 5,427 - -
Income from
Operations (202,576) (158,813) (29,590) (14,173) 801,904 801,904 - -
Other Income
& (Expenses)
Interest
Income (468) (70) (398) - 57 57 - -
Interest
Expense (78,555) (29,762) (48,793) - - - - -
Other 12,723 12,723 - - - - - -
Gain on
Sale of
Assets 70 70 - - - - - -
---------- --------- ---------- -------- -------- -------- ------ --------
Total other
Income (66,230) (17,039) (49,191) - 57 57 - -
Income (loss)
Before
Taxes (268,806) (175,852) (78,781) (14,173) 801,961 801,961 - -
Provision
For income
Taxes (136,255) (100,375) (30,409) (5,471) - - - -
Income before
Minority (132,551) (75,477) (48,372) (8,702) 801,961 801,961 - -
Minority
Interest (17,956) (12,432) - (5,524) - - - -
Net Income
(Loss) $(114,595) $ (63,045) $ (48,372) $ (3,178) $801,961 $801,961 $ - $ -
</TABLE>
11
<PAGE>
1. ACQUISITIONS
Effective in December 1999 the Company acquired 100% of the outstanding common
stock of Capco Resource Corporation ("CRC") in exchange for common stock of
the Company. The transaction was accounted for as a purchase. Effective in
December 1999 the Company acquired approximately 70% of the outstanding stock
of Capco Resources, Ltd. ("CRL") in exchange for common stock of the Company.
Effective in December 1999 the Company acquired 80% of the outstanding common
stock of Zelcom Industries, Inc. ("ZELCOM") in exchange for common stock of
the company. Effective December 31, 1999 the Company acquired 100% of the
outstanding stock of Meteor Stores, Inc. for cash and a note.
2. RELATED PARTY TRANSACTIONS
Ilyas Chaudhary, President and Director, controls directly or indirectly a
majority of the stock of the Company. He also controlled directly or indir-
ectly a majority of the stock of CRL and CRC. He also controlled directly or
indirectly 34% of the parent company of Meteor Stores, Inc. Mr. Chaudhary's
independent son controlled a majority of Zelcom.
During the quarter ended the Company advanced funds to and received funds from
various entities either controlled by Mr. Chaudhary or entities of which he is
an officer or director. At February 28, 2000, the Company had a receivable
from these companies of $2,276,823. Of that amount $1,387,742 relates to fuel
sales to Meteor Industries Inc., $513,478 relates to transactions with
companies that the company has an investment in common stock, and $375,603 are
with private companies.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934 that include, among others, statements concerning: the benefits
expected to result from Capco's acquisition of CRL, CRC and MSI. Including
synergies in the form of increased revenues, decreased expenses and avoided
expenses and expenditures that are expected to be realized by Capco as a
result of the acquisitions, and other statements of: expectations, antici-
pations, beliefs, estimations, projections, and other similar matters that are
not historical facts, including such matters as: future capital, development
and exploration expenditures (including the amount and nature thereof),
drilling of wells, reserve estimates (including estimates of future net
revenues associated with such reserves and the present value of such future
net revenues), future production of oil and gas, repayment of debt, business
strategies, and expansion and growth of business operations.
These statements are based on certain assumptions and analyses made by the
management of Capco in light of: past experience and perception of: His-
torical trends, current conditions, expected future developments, and other
factors that the management of Capco believes are appropriate under the
circumstances. Capco cautions the reader that these forward-looking statements
are subject to risks and uncertainties, including those associated with: the
financial environment, the regulatory environment, and trend projections, that
could cause actual events or results to differ materially from those expressed
or implied by the statements. Such risks and uncertainties include those risks
and uncertainties identified below.
12
<PAGE>
Significant factors that could prevent Capco from achieving its stated goals
include: the failure by Capco to integrate the respective operations of Capco
and its acquisitions or to achieve the synergies expected from the
acquisitions, declines in the market prices for oil and gas, increase in
refined product prices, and adverse changes in the regulatory environment
affecting Capco. The cautionary statements contained or referred to in this
report should be considered in connection with any subsequent written or oral
forward-looking statements that may be issued by Capco or persons acting on
its or their behalf. Capco undertakes no obligation to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
LIQUIDITY AND CAPITAL RESOURCES
At February 29, 2000, the company has a deficit working capital of $965,403,
compared to a deficit of $29,054 at May 31, 1999. This deficit is principally
due to a short-term note related to an acquisition of a producing oil and gas
property. The Company through its subsidiaries has investments in various
public companies. The majority of these investments are restricted and are not
readily saleable. The Company through its subsidiaries is also involved in
litigation regarding the investment in Greka Energy Corporation. (See
Litigation).
Cash flows used in operations for the nine months ended February 29, 2000, and
February 28, 1999, were $205,985 and $10,137 respectively. The increase in
cash used during this period is principally due to the increased activity of
the company.
Cash flows used in investing activities for the nine months ended February
29,2000, were $3,713,614 compared to $35,000 in the prior year. This increase
is principally due to the acquisition of oil and gas properties and
investments in convertible securities.
Cash flows provided by financing activities for the nine months ended February
29, 2000, were $5,613,482 compared to $55,135 in the prior year. This increase
is principally due to the sale of stock and borrowings.
Capco sells most of its oil production to certain major oil companies.
However, in the event these purchasers discontinued oil purchases, Capco has
made contact with other purchasers who would purchase the oil.
The Company is responsible for any contamination of land it owns or leases.
However, the Company may have limitations on any potential contamination
liabilities due to state reimbursement programs.
YEAR 2000
Capco has no proprietary software. The Company did receive updates for its
purchased software and the Company did not incur any significant costs related
to the Year 2000 problem.
13
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 29, 2000 COMPARED TO FEBRUARY 28, 1999
Oil and Gas Production Segment
Capco's revenues from its oil and gas segment decreased to $153,863 in 2000
from $809,131 in 1999. This decrease is primarily due to a management fee in
1999, which was not continued. Selling, general and administrative costs
increased to $309,720 in 2000 from $5,427 in 1999, as the company geared up
for increased activities. Total other income (expense) decreased to $(17,039)
in 2000 from $57 in 1999, principally due to increase interest expense on
increased debt.
Net operating revenues from Capco's oil and gas production are very sensitive
to changes in the price of oil; thus it is difficult for management to predict
whether or not the Company will be profitable in the future.
C-Stores Segment
This is a new segment for the company due to an acquisition this quarter.
There are no comparative numbers for the prior year. Revenues were $3,294,764
and cost of sales were $2,634,830, reflecting a gross profit percentage of
20%. Selling, general and administrative costs were $689,524, due principally
to operating this division. Total other income (expense) is $(49,191) due
principally to interest expense.
Internet Segment
This is a new segment for the company due to an acquisition this quarter.
There are no comparative numbers for the prior year. There have been no
revenues and costs are $14,173 due principally getting started in this
division.
NINE MONTHS ENDED FEBRUARY 29, 2000 COMPARED TO FEBRUARY 28, 1999
Oil and Gas Production Segment
Capco's revenues from its oil and gas segment decreased to $164,884 in 2000
from $816,768 in 1999. This decrease is primarily due to a management fee in
1999, which was not continued. Selling, general and administrative costs
increased to $400,394 in 2000 from $30,498 in 1999, as the company geared up
for increased activities. Total other income (expense) decreased to $(17,842)
in 2000 from $204 in 1999, principally due to increase interest expense due to
borrowings.
Net operating revenues from Capco's oil and gas production are very sensitive
to changes in the price of oil; thus it is difficult for management to predict
whether or not the Company will be profitable in the future.
C-Stores Segment
This is a new segment for the company due to an acquisition this quarter.
There are no comparative numbers for the prior year. Revenues were $3,294,764
and cost of sales were $2,634,830, reflecting a gross profit percentage of
20%. Selling, general and administrative costs were $689,525, due principally
to operating this division. Total other income (expense) is $(49,191) due
principally to interest expense.
14
<PAGE>
Internet Segment
This is a new segment for the company due to an acquisition this quarter.
There are no comparative numbers for the prior year. There have been no
revenues and costs are $14,173 due principally getting started in this
division.
EFFECT OF CHANGES IN PRICES
Changes in prices during the past few years have been a significant factor in
the oil and gas industry. The price received for the oil and gas produced by
Capco has fluctuated significantly during the last year. Changes in the price
that Capco receives for its oil and gas is set by market forces beyond Capco's
control. That uncertainty in oil and gas prices makes it more difficult for a
company like Capco to increase its oil and gas asset bases and become a
significant participant in the oil and gas industry.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Capco Resources, Ltd. v. GREKA Energy Corporation and Randeep S. Grewal
(Case No. 99-8521-R, U.S. District Court, Central District of California). In
August 1999, Capco Resources, Ltd. ("CRL") filed an action against GREKA and
Randeep S. Grewal, the President of GREKA, alleging that GREKA breached, and
GREKA and Mr. Grewal made misrepresentations in connection with, a Stock
Exchange Agreement entered into between Greka, CRL and CRL's affiliates (the
"Exchange"). CRL claims that it is entitled to $12.25 million in damages, plus
interest and costs, and requests that the court require GREKA to file a
registration statement for the resale of 1.29 million shares of GREKA common
stock that CRL received pursuant to the Exchange. GREKA filed the case of
GREKA vs. CRL and Service Asset Management Company d/b/a Penson Financial
Services, Inc. d/b/a Global Hanna Trading in the Denver Colorado District
Court and obtained a temporary restraining order (Case No. 99-CV-6006). Prior
to the preliminary injunction hearing CRL removed the case to the U.S. Federal
District Court in Denver, Colorado (Civil Action No. 99-K-1814) where the
cases were combined. CRL is vigorously pursuing this litigation.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
15
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
Current Report on Form 8-K dated February 15, 2000, which reported events
under Item 5, Other Events.
Current Report on Form 8-K dated February 15, 2000, which reported events
under Item 5, Other Events.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Issuer caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CAPCO ENERGY, INC.
Dated: April 17, 2000 By: /s/ Dennis R. Staal
Dennis R. Staal, Chief
Financial and Accounting Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated balance sheets and consolidated statements of operations found on
Page 2, 3 and 4 of the Company's Form 10-QSB for the quarter ended February
29, 2000, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 1,714,743
<SECURITIES> 0
<RECEIVABLES> 3,054,073
<ALLOWANCES> 0
<INVENTORY> 952,599
<CURRENT-ASSETS> 5,874,969
<PP&E> 6,979,060
<DEPRECIATION> ( 840,322)
<TOTAL-ASSETS> 27,717,420
<CURRENT-LIABILITIES> 6,840,372
<BONDS> 0
<COMMON> 21,304
0
292,947
<OTHER-SE> 15,641,980
<TOTAL-LIABILITY-AND-EQUITY> 27,717,420
<SALES> 3,448,627
<TOTAL-REVENUES> 3,448,627
<CGS> 2,634,830
<TOTAL-COSTS> 2,634,830
<OTHER-EXPENSES> 12,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,555
<INCOME-PRETAX> (268,806)
<INCOME-TAX> (136,255)
<INCOME-CONTINUING> (114,595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (114,595)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
