FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: March 31, 1996
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: 2-87052-D
---------
COGENCO INTERNATIONAL, INC.
--------------------------------------------
(Name of small business issuer in its charter)
Colorado 84-0914754
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Mellon Financial Center
Suite 1001, 1775 Sherman Street
Denver, Colorado 80203
-------------------------------------------------
(Address of principal executive offices)(Zip Code)
Issuer's telephone number: (303) 894-0234
--------------
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Indicate by check mark whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act 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 at least the
past 90 days. Yes X No .
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
Issuer's revenues for its most recent fiscal year: $6,220
<PAGE>
Aggregate market value of voting stock held by non-affiliates as of May 12,
1996: $-0-. There is currently no trading market for the Registrant's
securities.
Number of shares of Common Stock, $.01 par value, outstanding as of May 12,
1996: 1,788,756.
Documents incorporated by reference: No documents are incorporated by
reference into this annual report on Form 10-KSB.
-2-
<PAGE>
COGENCO INTERNATIONAL, INC.
FORM 10-KSB
PART I
Item 1. Description of Business
-----------------------
(a) Business Development.
Cogenco International, Inc. ("Cogenco" or the "Company") was organized
under the laws of the State of Colorado on June 27, 1983, for the purpose of
engaging in the cogeneration business, which is the simultaneous production of
power, either mechanical or electrical, and useful thermal energy, such as
steam, so that the waste heat which is a by-product of one process becomes the
energy source for the other. Cogenco commenced active business operations after
it completed its initial public offering of securities in February of 1985,
pursuant to which the Company realized total net proceeds of approximately
$1,000,000.
Cogenco was not successful in the cogeneration business, although it
completed one cogeneration facility in Arvada, Colorado, and investigated
numerous other cogeneration project opportunities. Cogenco eventually depleted
its financial resources and was not able to secure additional capital to
continue active business operations. Cogenco ceased active business operations
in early 1988. The Company has been attempting to locate a business opportunity
to combine with the Company since that time.
During the time subsequent to cessation of active business activities,
Cogenco has been maintained as a validly existing Colorado corporation. Its
activities have consisted primarily of the settlement of debts incurred by the
Company through the date it ceased active operations and subsequently, and the
maintenance of books and records to allow the Company to obtain audited
financial statements for all years since inception. In addition, certain members
of its management have continuously sought to locate potential business
opportunities for the Company.
Meetings of shareholders of the Company were held in February 1992 and
August 1993 at which restructurings of the Company's authorized and outstanding
capital were approved. Share numbers in this Report have been restated to
reflect the recapitalizations approved by the Company's shareholders in February
1992 (50 for 1 reverse split) and August 1993 (10 for 1 reverse split).
The Company in March of 1993 obtained financing from two persons who, prior
to the financing, were unaffiliated with Cogenco. These persons, Neal B. Stein
and Cary R. Greene (the "Investors"), have advanced $185,000 to, or for the
benefit of Cogenco. Although the arrangement between the Investors and Cogenco
originally contemplated the issuance of preferred stock to Messrs. Stein and
Greene, together with some additional options to acquire Common Stock to the
Investors and to the Company's president, David W. Brenman, this agreement was
restructured in March 1993 to provide for the issuance of 1,610,000 shares of
Common Stock to the Investors, and no issuance of options at that time. In
addition, in February 1993 the Investors loaned the Company an additional
$100,000 as a deposit on a property payment, which amount has been repaid to
them, without interest. Subsequent thereto, Cogenco issued to Tower Operating
Company, Inc. ("Tower") warrants to acquire 750,000 shares of Common Stock at
$10.00 per share until June 30, 1998. Tower is controlled by Mr. Stein.
Subsequently, the Investors sold their shares of Common Stock and Tower sold its
warrants to unaffiliated entities. Thereafter, on April 23, 1996, 543,334 shares
were transferred to the Company's law firm for services performed for Mr. Stein.
See "Item 11. Security Ownership of Certain Beneficial Owners and Management."
-3-
<PAGE>
In April 1993 Cogenco entered into two letters of intent with Cody
Resources, Inc., for the acquisition of interests in Williams-Cody LLC, a
limited liability company engaged in the oil and gas industry, and to obtain
interests in oil and gas royalties in the Arkoma Basin. Since Cogenco was unable
to comply with the requirements of the letters of intent, the agreements lapsed.
(b) Business of Issuer.
Since the time it ceased active business operations in 1988, management of
Cogenco has been actively seeking business opportunities. Several potential
candidates were located between 1988 and the present time; however, no
combination with any of these companies was ever completed.
General Overview
- ----------------
On February 4, 1993, the Board of Directors of Cogenco approved a letter of
intent with two previously unaffiliated persons, Messrs. Neal B. Stein and Cary
S. Greene (the "Investors"), pursuant to which the Investors would obtain
control of Cogenco. Subsequent to the date of the original letter of intent, the
terms of that arrangement were revised and the agreement was completed. Under
the terms of the letter of intent, as effectuated, Messrs. Stein and Greene
purchased 1,610,000 shares of Common Stock (approximately 93% of the total
number of shares then outstanding) for an investment of $185,000. Cogenco also
issued to Tower Operating Company, Inc. ("Tower") warrants to acquire 750,000
shares of Common Stock at $10.00 per share until June 30, 1998. Tower is
controlled by Mr. Stein. The Investors also loaned Cogenco an additional
$100,000 which was used as a deposit for interests in certain oil and gas
properties, but the deposit was returned to the Investors when the property was
abandoned.
The Investors have sold 483,334 shares to David Brenman, president and a
director of Cogenco, for a $52,684 promissory note, due May 1, 1994, bearing
interest at 7% which has been extended to May 1, 1997. Mr. Brenman's note to the
Investors is collateralized by the shares he purchased from them. In addition,
Stephen Calandrella, a former director, purchased 40,000 shares from the
Investors for a $4,360 promissory note on the same terms, which note has been
paid. Subsequently, the Investors sold their shares of Common Stock and Tower
sold its warrants to two unaffiliated entities, Beldin Investments, Inc. and
Saga Investments. Beldin Investments, Inc. subsequently transferred 543,334,
shares to Cogenco's counsel, Brenman Key & Bromberg, P.C., for service rendered
for Mr. Stein. See "Item 11. Security Ownership of Certain Beneficial Owners and
Management." Beldin Investments, Inc. owns 750,000 warrants exercisable at $10
per share until June 30, 1998.
-4-
<PAGE>
Participation in the Oil and Gas Industry
- -----------------------------------------
In April 1993, Cogenco entered into two letters of intent with Cody
Resources, Inc. ("Cody"), a privately-held corporation located in Denver,
Colorado, for acquisition of certain interests which would allow Cogenco's
participation in the oil and gas industry. Both of these letters of intent were
amended on May 18, 1993 and have since expired.
Acquisition of Drilling Prospect. Cogenco entered into another letter of
intent with Cody, dated April 27, 1993, for the drilling of a test well in the
West Pine Prospect, Victoria County, Texas. During July 1993, the Company
received $500,000 from one unaffiliated individual for the purchase of 50,000
shares of the Company's Common Stock. $200,000 of this private placement was
used to fund the development drilling requirements of the West Pine Prospect in
Victoria County, Texas. The balance of $200,000 was furnished by Ohio River
Drilling Ltd. I (a California Limited Partnership (the "Partnership")), an
affiliated party of Mr. Stein, who participated in the Company's interest. The
results of the initial drilling on the West Pine Prospect were unsuccessful and
resulted in a cost to the Company and the Partnership of approximately $125,000
each. Pursuant to the terms of the agreement, Cody refunded to the Company and
the Partnership $150,000 of which the Company received half.
Proposed Operations
- -------------------
Sponsorship of Partnerships and Other Methods of Acquiring Interests in Oil
and Gas Properties. The Company has engaged in limited activities in the oil and
gas business. Cogenco entered into letters of intent with Cody for the
acquisition of interests in oil and gas properties directly and through
Williams-Cody LLC, although participation in these letters of intent required a
substantial amount of additional financing which was not available to the
Company. Cogenco is currently investigating other opportunities in the oil and
gas industry. It is likely that the Company will need a substantial amount of
additional capitalization before it will be able to participate in any
activities in the oil and gas industry. There is no assurance that the Company
will obtain any additional capitalization.
In addition, Cogenco may serve as the sponsor and/or general partner of
programs and/or entities which will actually operate in the oil and gas
business. This may take the form of limited and/or general partnerships, working
interest programs, joint ventures or other methods of acquiring interests in oil
and gas properties and financing the operation thereof.
-5-
<PAGE>
Competition
- -----------
Upon entering the oil and gas business through acquisition of interests in
oil and gas properties as described above (of which, however, there can be no
assurance), the Company will be in competition with numerous companies and firms
which are larger, better established, have greater financial and other
resources, more employees, and more extensive facilities than will the Company.
The Company will therefore be at a competitive disadvantage to these other
entities. The Company cannot expect to be a significant participant in the oil
and gas business within the foreseeable future and will face significant
competition from a substantial number of businesses and individuals who are
engaged in the oil and gas business.
Government Regulation
- ---------------------
The oil and gas business is heavily regulated by statute and regulation by
various government entities, both state and federal. In addition, tax treatment
of investments in oil and gas properties is constantly undergoing change at the
federal level. Although management believes that despite such regulation, the
oil and gas business can be profitable, and that oil and gas companies of the
size anticipated for the Company can and do operate successfully in the
industry, no assurance can be given that such governmental regulation may not
adversely affect the Company in the future.
Employees and Consultants
- -------------------------
The Company's President, Mr. David Brenman, is the only person who is
actively involved in day to day operations of the Company. Management
anticipates that additional employees and/or consultants will be retained as may
be necessary to operate the Company. The Company believes that this arrangement
is adequate to meet the needs of the Company during its process of pursuing
business opportunities.
Item 2. Description of Property
-----------------------
The Company currently maintains its offices at no charge in the business
office of the law firm which represents it in general corporate and securities
law matters. See Item 12 - "Certain Relationships and Related Transactions." The
office facilities are provided to the Company pursuant to an oral agreement, and
the value of such facilities is de minimis. Management believes that this
arrangement will be suitable for its needs for the immediate future.
The Company owns no real property and no material personal property.
-6-
<PAGE>
Item 3. Legal Proceedings
-----------------
The Company is not a party to any legal proceedings and no such proceedings
are known to be contemplated.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None.
-7-
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
--------------------------------------------------------
(a) Market Information.
The Company's Common Stock is not eligible for listing on the NASDAQ
system, and trading, if any, has been strictly limited to the over-the-counter
market. The Common Stock has been quoted from time to time in the "Pink Sheets"
maintained by the National Quotation Bureau, Inc. Since 1988, management
believes that no established trading market has existed for the Company's Common
Stock.
(b) Holders.
(b)(1) The approximate number of record holders of the Company's Common
Stock, $.01 par value, as of May 12, 1996 was 839. This figure does not reflect
an indeterminable number of shareholders whose shares are held in "street name."
(c) Dividends.
The Company has not paid a dividend with respect to its Common Stock and
cannot be expected to pay a dividend on its Common Stock in the foreseeable
future.
The Company's ability to pay dividends is restricted by provisions of the
Colorado Corporation Code which allow a Colorado corporation to pay dividends
only from "capital surplus."
Item 6. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Results of Operations
Years Ended March 31,1995 and 1996.
- -----------------------------------
As stated above, the Company has been essentially inactive since early 1988
until the 1993 fiscal year. The Company raised $500,000 in July 1993 in
consideration for the issuance of 50,000 shares of the Company's Common Stock to
a non-affiliated individual. In addition, the Company began investigating
investment alternatives in the oil and gas industry. As a result, during the
last two fiscal years the Company achieved no operating revenues, but recognized
a net loss of $(42,581) for the fiscal year ended March 31, 1995 as compared to
a net loss of $(25,813) for the fiscal year ended March 31, 1996. The larger net
loss during the 1995 fiscal year was due to travel expenses of $11,770 paid to
the Company's president in 1995 as compared to $10,000 paid in 1996, legal and
accounting fees of $32,873 in 1995 as compared to $23,700 in 1996 and
administration expense of $3,533 in 1995 as compared to $920 in 1996. The
Company also received reimbursement of Dry Hole costs of $2,587 in 1996. The
Company is attempting to finance new business operations at the present time.
-8-
<PAGE>
Liquidity and Capital Resources
The Company has been without adequate funds since 1987. At the time it
ceased active business operations, it was essentially out of money and has been
unable to raise any substantial amounts of money since that time. The Company
settled a substantial portion of its outstanding debt for shares of its stock,
and for cash raised in selling its stock in private placements. In July 1993 the
Company raised $500,000 from one unaffiliated investor.
Plan of Operation
In July 1993, the Company raised $500,000 from the sale of 50,000 shares of
its Common Stock. Certain persons who became control shareholders invested a
total of $185,000 in shares of the Company's Common Stock in early 1993. Such
individuals subsequently have sold their shares of Common Stock to two
unaffiliated entities one of whom has transfered 543,334 to Brenman Key &
Bromberg, P.C. for legal services performed for one of the individuals. Prior to
the disposition of the shares held by these control shareholders, they had
expressed their desire to have the Company consider the acquisition of interests
in oil and gas properties and the entry into the oil and gas industry. As a
result, the Company entered into letters of intent with Cody Resources, Inc.
Since the Company was unable to meet the financial requirements of the letters
of intent, the agreements terminated without additional obligations to the
Company.
The Company will continue reviewing opportunities in the oil and gas
industry, however, and may propose other investments. Because the Company may
need a substantial amount of capital from third parties, there can be no
assurance that the Company will be able to complete any investment obligation.
As of this date, the Company has not identified any properties to be
acquired at the present time. Unless properties are acquired, the Company's
available cash is expected to satisfy its cash requirements during the fiscal
year ending March 31, 1997. For more information, see Item 1 - "Description of
Business."
-9-
<PAGE>
Item 7. Financial Statements
---------------------
The following financial statements are filed as a part of this Form 10-KSB
immediately following the signature page:
Report of Independent Certified Public
Accountants ............................................ F-1
Balance Sheet - March 31, 1995 and 1996 ................ F-2
Statement of Operations - For the Years Ended
March 31, 1995 and 1996 and Cumulative Amounts
from Inception of the Development Stage
(July 26, 1990)through March 31, 1996 ................ F-3
Statement of Stockholders' Equity (Deficit)
For the Period from Inception of the Development
Stage (July 26, 1990) through March 31, 1996 ........ F-4
Statement of Cash Flows - For the Years Ended
March 31, 1995 and 1996 and Cumulative Amounts
from Inception of the Development Stage
(July 26, 1990) through March 31, 1996 ................ F-7
Notes to Financial Statements - For the Years Ended
March 31, 1995 and 1996 F-8-12
Item 8. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
---------------------
Since inception, the Company has not filed a Form 8-K reporting a change of
accountants, nor has there been any material disagreement with its accountants
on any matter regarding accounting or financial disclosure.
-10-
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
-------------------------------------------------------------
Compliance With Section 16(a) of the Exchange Act
-------------------------------------------------
(a) Identification of Directors and Executive Officers.
The directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their respective successors have been
elected and qualified. Officers of the Company are elected by the Board of
Directors and hold office until their successors are elected and qualified.
The current sole officer and director of the Company is:
Name Age Position
- ---- --- --------
David W. Brenman 40 Director, President,
Secretary and Treasurer
The sole director intends to appoint additional directors when appropriate.
David W. Brenman, age 40, is currently engaged as an independent financial
consultant, which he has been since 1988. From 1987 to 1988 Mr. Brenman was a
vice president of Lloyds International Corporation, the merchant banking
subsidiary of Lloyds Bank Plc. From 1984 to 1986 Mr. Brenman served as President
of the Company and from 1984 until the present has served as a director. From
1979 until 1984, Mr. Brenman was an associate with the law firm of Brenman
Raskin & Friedlob, P.C. of Denver, Colorado, where he specialized in the fields
of taxation and securities law. Mr. Brenman received a B.A. degree from the
University of Washington in accounting, a J.D. degree from the University of
Denver, College of Law and an L.L.M. in taxation from New York University. Mr.
Brenman serves on the board of directors of U. S. Energy Corp., a publicly held
corporation engaged in the mining business. Mr. Brenman currently serves, and
since December 1990 has served, as President and Treasurer of the Company and
has served as the Company's Secretary since December 1994.
Stephen Calandrella resigned as an officer and a director of the Company in
December 1994. Albert Brenman served as a director of the Company from December
1994 until March 1995. Mr. Brenman is the father of David W. Brenman, the sole
officer and director of the Company. Albert Brenman is also a principal of
Brenman Key & Bromberg, P.C., a law firm which provides general corporate and
securities law representation to the Company. See Part III, Item 12. "Certain
Relationships and Related Transactions."
-11-
<PAGE>
(b) Significant Employees.
The Company has no significant employees at the present time.
(c) Family Relationships.
Currently there are no family relationships among any of the Company's
officers and/or directors.
(d) Involvement in Certain Legal Proceedings.
During the past five years, no director, executive officer, promoter or
control person of the Company has:
(1) Had any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that date;
(2) Been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) Been subject to any order, judgement, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, where the judgement has not been
reversed, suspended, or vacated.
(e) Compliance with Section 16(a) of the Exchange Act.
Not applicable.
-12-
<PAGE>
Item 10. Executive Compensation
----------------------
Cash Compensation.
The only officer who received any compensation for services rendered to
Cogenco during the last three fiscal years is its president and chief executive
officer, David W. Brenman. Mr. Brenman received total cash compensation of
$10,000, $-0- and $-0- for the 1994, 1995, and 1996 fiscal years, respectively.
The compensation paid to Mr. Brenman in fiscal 1994 was paid to him as an
independent contractor to the Company and was paid by Messrs. Stein and Greene.
Mr. Brenman also received total cash reimbursements of $63,175, $11,770 and
$10,000 for travel expenses incurred by him during the 1994, 1995 and 1996
fiscal years, respectively.
Mr. Brenman has received no stock options, employee benefits, or other form
of direct or indirect remuneration from the Company during the 1994, 1995 and
1996 fiscal years. Mr. Brenman is currently devoting such time as is necessary
to the affairs of the Company to facilitate the reorganization of the Company as
an oil and gas company. It is anticipated that Mr. Brenman may enter into an
employment agreement with the Company in the future. The terms of any such
arrangement or agreement have not yet been determined.
Compensation Under Plans.
Stock Option and Bonus Plans. The Company has a stock option plan and a
stock bonus plan pursuant to which the Board of Directors had the right to issue
stock options and stock bonuses as compensation to qualified employees. One
option was granted under the stock option plan to a director of the Company, but
expired unexercised in 1990. No stock bonuses were ever granted under the stock
bonus plan.
Other Compensation.
Other than as described above, no other compensation was paid or
distributed to any officer or director of the Company for services rendered to
the Company during the last three fiscal years.
Compensation of Directors.
The Company does not pay its directors for their services in that capacity;
however, officers and directors receive reimbursement for out-of-pocket expenses
incurred by them in connection with the business of the Company. Currently, the
Company does not pay any directors fees for attendance at board meetings.
The Company has no other arrangements pursuant to which any director of the
Company was compensated during the fiscal year ended March 31, 1996 for services
as a director.
-13-
<PAGE>
Termination of Employment and Change in Control.
The Company has no compensation plan or arrangement with respect to any
executive officer which plan or arrangement results or will result from the
resignation, retirement or any other termination of such individual's employment
with the Company. The Company has no plan or arrangement with respect to any
such persons which will result from a change in control of the Company or a
change in the individual's respon sibilities following a change in control.
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth information as of May 31, 1996, as to the
beneficial ownership of shares of the Company's only outstanding class of
securities, its Common Stock, by each person who, to the knowledge of the
Company at that date, was a beneficial owner of 5% or more of the outstanding
shares of Common Stock. The table does not include information regarding shares
of Common Stock held in the names of certain depositories/clearing agencies as
nominee for various brokers and individuals. No such broker or individual is
believed to hold greater than 5% of the Company's Common Stock.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
- ------------------- -------------------- ----------------
David W. Brenman
1775 Sherman Street
Suite 1001
Denver, Colorado 80203 497,042 (1)(2) 28%
Beldin Investments, Inc.
c/o Richard Green
9665 Wilshire Blvd.
Suite #410
Beverly Hills, Ca. 90212 750,000 (1)(3) 30%
Saga Investments
c/o Peter Desjardins
Suite 1301, Arbift Tower
P.O. Box 5724
Dubai, United Arab Emirates 543,334 (1) 31%
Brenman Key & Bromberg, P.C.
1775 Sherman Street
Suite 1001
Denver, CO 80203 548,184 (1)(4) 31%
- ------------
(1) Ownership is direct.
-14-
<PAGE>
(2) Includes 483,334 shares which Mr. Brenman has acquired from Neal B.
Stein and Cary S. Greene in exchange for a promissory note
collateralized by those shares. Mr. Brenman has no warrants or options
to acquire shares.
(3) Includes stock purchase warrants to acquire 750,000 shares of the
Company's Common Stock exercisable at $10 per share until June 30,
1998.
(4) Includes 543,334 shares transferred to Brenman Key & Bromberg, P.C. by
Beldin Investments, Inc. and 4,850 shares owned by Albert Brenman who
is president, a director and shareholder of Brenman Key & Bromberg,
P.C.
(b) Security Ownership of Management.
The following table sets forth information as of May 31, 1996, as to the
beneficial ownership of shares of the Company's only outstanding class of
securities, its Common Stock, by each person who is a director and/or executive
officer of the Company, and by all officers and directors of the Company as a
group.
Amount and
Name and Address Nature of
Title of of Beneficial Beneficial Percent of
Class Owner Owner Class
- --------- ---------------- ---------- ----------
Common David W. Brenman 497,042 (1) 28%
Stock 1775 Sherman Street
Suite 1001
Denver, Colorado 80203
Common Officers and 497,042 (1) 28%
Stock directors as a
group (one person)
- ---------
(1) Ownership is direct. Includes 483,334 shares which Mr. Brenman has
pledged to collateralize a $52,684 promissory note he issued to the
order of former control shareholders.
-15-
<PAGE>
(c) Changes in Control.
In March 1993 two previously unaffiliated persons, Mr. Neil B. Stein and
Mr. Cary S. Greene, acquired 1,610,000 shares of the Company's Common Stock, and
sold 523,334 shares to two directors of the Company. In addition, Tower
Operating Company, Inc. ("Tower"), a company owned by Mr. Stein, acquired
750,000 stock purchase warrants to purchase 750,000 shares of the Company's
Common Stock exercisable at $10 per share until June 30, 1998. Subsequently, Mr.
Stein sold his 543,334 shares and Tower sold its 750,000 warrants to Beldin
Investments, Inc., an unaffiliated company of which 543,334 shares were
transferred to Brenman Key & Bromberg, P.C. in April, 1996 and Mr. Greene sold
his 543,334 shares to Saga Investments, an unaffiliated company. Consequently,
these two unrelated entities, Saga Investments and Brenman Key & Bromberg, P.C.,
have the power to elect the entire Board of Directors and to take control of the
Company should they choose to do so.
Item 12. Certain Relationships and Related Transactions
-----------------------------------------------
(a)(b)(c) Transactions with Management and Others.
Legal Representation. The law firm of Brenman Key & Bromberg, P.C. ("BKB")
provides legal representation to the Company. A principal of BKB, Albert
Brenman, is the father of David W. Brenman, the sole officer and director of the
Company. BKB owns 543,334 shares of the Company's Common Stock and employees of
the law firm of BKB own 46,401 shares of the Company's Common Stock. BKB is paid
its standard hourly fees for representation of the Company in general corporate
and securities law matters. BKB currently provides office facilities to the
Company at no charge as the value of such facilities is de minimis. Prior to
March 1994, Raskin & Friedlob, P.C. (formerly, Brenman Raskin & Friedlob, P.C.),
a law firm of which Albert Brenman was a principal, provided legal
representation to the Company at its standard hourly fees.
(d) Transactions with Promoters.
Not applicable.
-16-
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K.
----------------------------------
(a) Exhibits required to be filed are listed below and, except where
incorporated by reference, immediately follow the Financial Statements.
Number Description
- ------ -----------
3.1 Articles of Incorporation, as amended, incorporated by
reference from the Annual Report on Form 10-KSB for the five
fiscal years ended March 31, 1992
3.2 Bylaws, incorporated by reference from the Annual Report on
Form 10-KSB for the five fiscal years ended March 31, 1992
3.3 Articles of Amendment to the Articles of Incorporation,
incorporated by reference from the Form 8-K dated August 16,
1993 filed August 26, 1993.
(b) During the last quarter of the period covered by this report the
Company filed no reports on Form 8-K.
- --------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT:
The Registrant has not sent to its security holders any annual report or proxy
material during the last fiscal year. If such report or proxy material is
furnished to security holders subsequent to the filing of this Form 10-KSB, the
Registrant shall furnish copies of such material to the Commission when it is
sent to security holders.
-17-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: May 31, 1996
COGENCO INTERNATIONAL, INC.
By /s/ DAVID W. BRENMAN
----------------------------------
David W. Brenman, President
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following person on behalf of the Registrant and in the
capacities and on the date indicated.
Date: May 31, 1996
/s/ DAVID W. BRENMAN
----------------------------------------
David W. Brenman, President, Principal
Executive Officer, Principal
Accounting Officer, Principal
Financial Officer and sole Director
-18-
<PAGE>
COGENCO INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1995 AND 1996
WITH
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
Cogenco International, Inc.
We have audited the balance sheet of Cogenco International, Inc. (a development
stage company) as of March 31, 1995 and 1996, and the related statements of
operations, stockholders' equity and cash flows for the years then ended and for
the period from inception of the development stage (July 26, 1990) through March
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cogenco International, Inc. as
of March 31, 1995 and 1996, and the results of its operations and its cash flows
for the years then ended and the period from inception of the development stage
through March 31, 1996, in conformity with generally accepted accounting
principles.
/s/ CAUSEY DEMGEN & MOORE INC.
-------------------------------------
CAUSEY DEMGEN & MOORE INC.
Denver, Colorado
April 16, 1996
F-1
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
BALANCE SHEET
MARCH 31, 1995 and 1996
ASSETS
------
1995 1996
---------- ----------
Current asset:
Cash, interest bearing accounts $ 179,060 $ 141,105
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable - related parties
(Note 5) $ 12,102 $ 450
Accounts payable - other 490 -
---------- ---------
Total current liabilities 12,592 450
Contingencies (Note 2)
Stockholders' equity (Note 3):
Preferred stock, $.01 par value;
10,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.01 par value;
50,000,000 shares authorized,
1,788,756 shares issued and
outstanding 17,888 17,888
Additional paid-in capital 2,054,400 2,054,400
Accumulated deficit (including
$562,172 deficit accumulated
during the development stage) (1,905,820) (1,931,633)
---------- ----------
Total stockholders' equity 166,468 140,655
---------- ----------
$ 179,060 $ 141,105
========== ==========
See accompanying notes.
F-2
<PAGE>
<TABLE>
<CAPTION>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Years Ended March 31, 1995 and 1996 and
Cumulative Amounts from Inception of the Development Stage (July 26, 1990)
Through March 31, 1996
Cumulative
amounts from
1995 1996 Inception
-------- -------- ---------
<S> <C> <C> <C>
Revenues:
Interest income $ 5,595 $ 6,220 $ 19,133
Costs and expenses:
Legal fees - related party
(Note 5) 24,547 18,654 135,397
Consulting and travel expenses -
related party (Note 5) 11,770 10,000 140,637
Dry hole costs (Note 6) - (2,587) 123,086
General and administrative 11,859 5,966 182,185
--------- --------- ---------
Total costs and expenses 48,176 32,033 581,305
--------- --------- ---------
Net loss (Note 4) $ (42,581) $ (25,813) $(562,172)
========= ========= =========
Net loss per common share $ (.02) $ (.01) $ (.55)
========= ========= =========
Weighted average number of common
shares outstanding (Note 3) 1,788,756 1,788,756 1,019,232
========= ========== =========
See accompanying notes.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period from Inception of the Development Stage (July 26, 1990) through March 31, 1996
Total
Common stock Additional stockholders'
------------------ paid-in Accumulated equity
Shares Amount capital deficit (deficit)
------ ------ ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balance at July 25, 1990 72,415 $ 724 $1,358,508 $(1,369,461) $(10,229)
Sale of common stock to employees of
the related law firm for cash ($.50
per share) July 26, 1990 13,600 136 6,664 - 6,800
Sale of common stock to an unrelated
entity for cash ($.50 per share)
July 26, 1990 12,000 120 5,880 - 6,000
Shares of common stock issued in
settlement of an account payable
to the related law firm in October
1990 ($.50 per share) 1,985 20 973 - 993
Net loss for the period ended
March 31, 1991 - - - (11,922) (11,922)
------- ------- --------- ---------- --------
Balance at March 31, 1991 100,000 1,000 1,372,025 (1,381,383) (8,358)
Shares of common stock issued in
settlement of an account payable to
the related law firm ($.50 per
share) in February 1992 28,756 288 13,975 - 14,263
Net loss for the year ended
March 31, 1992 - - - (13,545) (13,545)
--------- ------- ---------- ----------- ---------
Balance at March 31, 1992 128,756 1,288 1,386,000 (1,394,928) (7,640)
(Continued on following page)
See accompanying notes.
F-4
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period from Inception of the Development Stage (July 26, 1990) through March 31, 1996
(Continued from preceding page)
Total
Common stock Additional stockholders'
------------------ paid-in Accumulated equity
Shares Amount capital deficit (deficit)
------ ------ ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1992 128,756 1,288 1,386,000 (1,394,928) (7,640)
Sale of common stock to two
individuals for cash and
cash payments to the Company's
president in March 1993 ($.11
per share) (Note 3) 1,610,000 16,100 158,900 - 175,000
Net loss for the year ended
March 31, 1993 - - - (100,291) (100,291)
--------- ------- ---------- ----------- ---------
Balance at March 31, 1993 1,738,756 17,388 1,544,900 (1,495,219) 67,069
Capital contribution of two
shareholders consisting of
cash payment to the Company's
president in April 1993
(Note 3) - - 10,000 - 10,000
Sale of stock to an individual
for cash ($10.00 per share)
(Note 3) 50,000 500 499,500 - 500,000
Net loss for the year ended
March 31, 1994 - - - (368,020) (368,020)
--------- ------- ---------- ----------- ---------
Balance at March 31, 1994 1,788,756 17,888 2,054,400 (1,863,239) 209,049
(Continued on following page)
See accompanying notes.
F-5
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period from Inception of the Development Stage (July 26,1990) through March 31, 1996
(Continued from preceding page)
Total
Common stock Additional stockholders'
------------------ paid-in Accumulated equity
Shares Amount capital deficit (deficit)
------ ------ ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1994 1,788,756 17,888 2,054,400 (1,863,239) 209,049
Net loss for the year ended
March 31, 1995 - - - (42,581) (42,581)
--------- ------- ---------- ----------- --------
Balance at March 31, 1995 1,788,756 17,888 2,054,400 (1,905,820) 166,468
Net loss for the year ended
March 31, 1996 - - - (25,813) (25,813)
--------- ------- ---------- ----------- --------
Balance at March 31, 1996 1,788,756 $17,888 $2,054,400 $(1,931,633) $140,655
========= ======= ========== =========== ========
See accompanying notes.
F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended March 31, 1995 and 1996 and
Cumulative Amounts from Inception of the Development Stage (July 26, 1990)
Through March 31, 1996
Cumulative
amounts from
1995 1996 Inception
-------- -------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(42,581) $ (25,813) $(562,172)
Adjustments to reconcile net loss to net
cash used in operating activities:
Consulting fees paid directly
by common stock purchasers - - 50,000
Increase (decrease)in account
payable 6,029 (12,142) 5,447
-------- --------- --------
Net cash used in operations (36,552) (37,955) (506,725)
Cash flows from financing activities:
Proceeds from sale of common stock - - 647,800
Short-term borrowings - - 100,000
Repayments of short-term borrowings - - (100,000)
--------- --------- --------
Net cash provided by financing
activities - - 647,800
--------- --------- --------
Net increase (decrease) in cash (36,552) (37,955) 141,075
Cash balance at beginning of year 215,612 179,060 30
--------- --------- --------
Cash balance at end of year $ 179,060 $ 141,105 $141,105
========= ========= ========
Supplemental disclosure of non-cash financing activities:
Consulting fees paid directly
by common stock purchasers $ - $ - $ 50,000
Stock issued in settlement of an
account payable to a related
party $ - $ - $ 15,256
See accompanying notes.
F-7
</TABLE>
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1995 and 1996
1. Significant accounting policies
-------------------------------
Organization:
Cogenco International, Inc. (the "Company") was incorporated in the State
of Colorado on June 27, 1983 as an investment of Scientific Management
Corporation, a privately owned business development company. Prior to July
26, 1990 the Company was engaged in the development of cogeneration of
electricity and the sale of the electricity to end-users on site or to
public utilities. The Company is currently considered to be in the
development stage as more fully defined in the Financial Accounting
Standards Board Statement No. 7. The Company's planned principal operations
of oil and gas exploration and development have commenced but the Company
has not generated significant revenues to date. The Company is currently
seeking business opportunities.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Loss per share:
Net loss per common share is based on the weighted average number of shares
outstanding during each period.
Income taxes:
The Company has adopted Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes. This statement provides for a liability
approach under which deferred income taxes are provided based upon enacted
tax laws and rates applicable to the periods in which the taxes become
payable.
Cash flows:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Concentrations of credit risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash. The Company
places its cash with high quality financial institutions, which deposits
are insured up to $100,000 per institution by the Federal Deposit Insurance
Corporation (FDIC). At March 31, 1996, the Company's cash deposits exceeded
the FDIC insurance limit of $100,000 by $41,105 at one institution.
F-8
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1995 and 1996
2. Cogeneration facilities and equipment
-------------------------------------
In March 1985, the Company entered into an agreement with an unrelated
entity whereby the Company would design, install, operate and maintain
cogeneration equipment at a swimming pool in Arvada, Colorado for a 15-year
period ending in 2000.
On January 9, 1986, the Arvada Pool facility was sold to Anjo Construction
Company (Anjo), a company owned by certain officers and directors of the
Company, and the Company entered into a 60 month leaseback agreement.
The Company assigned its rights to the cogeneration facility, its rights in
several lawsuits (as a plaintiff), and its obligations under the
cogeneration contract to Anjo in January 1990.
3. Stockholders' equity
--------------------
Reverse stock splits:
On February 27, 1992, the Company's shareholders authorized and approved a
1 for 50 reverse stock split. Retroactive effect has been given to the
stock split in all share and per share data in the accompanying financial
statements. In connection with the stock split, the shareholders also
approved an Amendment to the Company's Articles of Incorporation to effect
a change in the par value of both its common and preferred stock to $.01
per share, and also to increase the authorized common stock to 50,000,000
shares and the authorized preferred stock to 10,000,000 shares.
On August 18, 1993, the Company's shareholders authorized and approved
restructuring of the Company's authorized and outstanding capital,
resulting in a reverse stock split of 1 for 10. Retroactive effect has been
given to the stock split in all share and per share data in the
accompanying financial statements. In connection with the stock split, the
shareholders also approved an Amendment to the Company's Articles of
Incorporation to maintain the par value of both its common and preferred
stock at $.01 per share, and also to increase and maintain the authorized
common stock to 50,000,000 shares and the authorized preferred stock to
10,000,000 shares.
F-9
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1995 and 1996
3. Stockholders' equity (continued)
-------------------------------
Stock plans:
On July 15, 1983, the Company's Board of Directors and stockholders
authorized and approved an Incentive Stock Option Plan covering up to 798
shares of the Company's common stock for employees and officers and/or
directors. The Board of Directors is authorized to determine the exercise
price, the exercise period, the number of shares subject to the option and
the individuals to receive the options.
The Company also has a Stock Bonus Plan which has been approved by the
Board of Directors and for which 499 shares of the Company's common stock
have been reserved. As of March 31, 1996, no options have been exercised
and no charges to income have been made in connection with the Incentive
Stock Option Plan or the Stock Bonus Plan.
Stock issuances:
On March 4, 1993, the Company entered into a letter of intent with two
individuals, previously unrelated to the Company, pursuant to which the
individuals agreed to provide funding to the Company of $175,000. The
subscription price consisted of $135,000 which the Company received on
March 25, 1993 plus $40,000 ($10,000 per month) paid to the Company's
President discussed below.
Originally the two individuals were to receive preferred stock and options
to acquire common stock. This agreement was restructured on April 19, 1993
to provide for the issuance of 1,610,000 shares of common stock for the
$175,000 subscription price (approximately $.11 per share) which common
shares are deemed to be outstanding on March 31, 1993. These individuals
have sold 483,334 shares to the Company's president and 40,000 shares to a
former director of the Company. On May 17, 1995 one of the individuals
transferred 543,334 shares to a non affiliated company and on April 2, 1996
the other individual transferred 543,334 shares to the Company's law firm
for services performed for that individual.
The two individuals agreed to advance $10,000 per month to pay the
Company's President for time and services rendered in connection with the
operation of the Company prior to consummation of the above transaction.
The Company's President was paid $50,000 ($10,000 per month) from December
1992 through April 1993 pursuant to the letter of intent. The $50,000 was
recorded as additional paid-in capital and consulting expense. The two
individuals also loaned $100,000 to the Company, due upon demand with no
interest and unsecured. This loan was repaid in full in March 1993.
F-10
<PAGE>
3. Stockholders' equity (continued)
--------------------------------
On July 6, 1993 the Company issued 50,000 shares of its $.01 par value
common stock to a previously unrelated individual for cash consideration of
$500,000, in a private offering. A portion of the proceeds of this offering
($200,000 in the aggregate) was used to fund the initial drilling
requirements of an oil and gas prospect in Texas, as discussed more fully
in Note 6.
On January 15, 1994, a company owned by the two individuals purchased for
$10 warrants to purchase 750,000 shares of the Company's common stock at
$10 per share exercisable through June 30, 1998. These warrants were
transferred to another company on May 11, 1995.
4. Income taxes
------------
No provision for income taxes is required for the years ended March 31,
1995 and 1996 or the period from inception of the development stage (July
26, 1990) through March 31, 1996 because the Company has incurred net
operating losses for the periods. The net operating losses generated may be
carried forward to offset future taxable income. The amount of
carryforwards from 1993 and prior years that may be used in the future will
be limited pursuant to Sections 382 and 383 of the Internal Revenue Code of
1986, as amended. The 1993 and prior aggregate net operating loss
carryforward for Federal income tax reporting purposes is limited to
approximately $177,000, of which only $11,800 may be used in any one year.
If not used to offset future taxable income, the carryforwards will expire
as follows:
2003 $ 19,000
2004 36,000
2006 5,000
2007 14,000
2008 103,000
2009 368,000
2010 43,000
2011 26,000
--------
$614,000
========
As of March 31, 1996, total deferred tax assets and valuation allowance are
as follows:
1995 1996
-------- --------
Deferred tax assets resulting from
loss carryforward $211,000 $221,000
Valuation allowance (211,000) (221,000)
-------- --------
$ - $ -
======== ========
F-11
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1995 and 1996
5. Related party transactions
--------------------------
For the years ended March 31, 1995 and 1996 and from inception of the
development stage, the Company incurred legal costs of $0, $0 and $88,221,
respectively, from a law firm which was formerly a principal stockholder. A
former principal of that law firm is a relative of an officer and director
of the Company.
For the years ended March 31, 1995 and 1996 and from inception of the
development stage, the Company incurred legal costs of $24,547, $18,654 and
$47,176, respectively, from a law firm in which a principal of the law firm
is a relative of an officer and director of the Company. As of March 31,
1995 and 1996, $332 and $450, respectively, was owed to this related law
firm.
As of March 31, 1995, $11,770 was owed to the Company's president for
travel related expenses incurred during the year.
6. Dry hole costs
--------------
The Company entered into a letter of intent with Cody Resources, Inc., a
privately-held corporation engaged in the oil and gas production industry,
in April of 1993, which provided for the drilling of a test well in the
West Pine Prospect, Victoria County, Texas. Pursuant to this agreement, in
July of 1993 the Company prepaid drilling costs in the amount of $200,000,
utilizing a portion of the proceeds of the private offering discussed in
Note 3. An additional $200,000 was prepaid by a limited partnership
affiliated with a principal shareholder of the Company. The results of the
initial drilling were unsuccessful. The Company's share of the related dry
hole costs amounted to $123,086. Unexpended prepaid drilling costs were
refunded according to the terms of the agreement, in the aggregate amount
of $150,000, of which the Company retained half ($75,000) and the balance
was repaid to the drilling participant in August of 1993.
F-12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Audited Financial Statements for the Year Ended March 31, 1996
and is qualified in its entirety by reference to such Form 10-KSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 141,105
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 141,105
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 141,105
<CURRENT-LIABILITIES> 450
<BONDS> 0
0
0
<COMMON> 17,888
<OTHER-SE> 122,767
<TOTAL-LIABILITY-AND-EQUITY> 141,105
<SALES> 0
<TOTAL-REVENUES> 6,220
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32,033
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (25,813)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,813)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
