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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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: $4,781.
<PAGE>
Aggregate market value of voting stock held by non-affiliates as of May
15, 1997: $-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
15, 1997: 1,788,756.
Documents incorporated by reference: See Part IV, Item 13 - "Exhibits and
Reports on Form 8-K" for a listing of documents incorporated by reference into
this annual report on Form 10-KSB.
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<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).
-3-
<PAGE>
(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.
The Company has engaged in limited activities in the oil and gas business
but has been hampered in its efforts due to its lack of capital. 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.
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.
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<PAGE>
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.
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.
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<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 15, 1997 was 841. 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 Business Corporation Act which provides that a Colorado corporation may
only pay dividends if, after giving effect to the dividend, the corporation
would be able to pay its debts as they become due in the usual course of
business, or the corporation's total assets would be less than its total
liabilities plus the amount that would be needed, if the corporation were to be
dissolved at the time of the dividend, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the dividend.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
RESULTS OF OPERATIONS
Years Ended March 31,1996 and 1997.
- ----------------------------------
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
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<PAGE>
a net loss of $(25,813) for the fiscal year ended March 31, 1996 as compared to
a net loss of $(12,021) for the fiscal year ended March 31, 1997. The larger net
loss during the 1996 fiscal year was due to travel expenses of $10,000 paid to
the Company's President in 1996 as compared to $4,228 paid in 1997, legal fees
of $18,654 in 1996 and $5,863 in 1997, and general and administrative of $5,966
in 1996 and $6,074 in 1997. 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.
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 transferred 543,334 to Brenman Bromberg &
Tenenbaum, P. C. (formerly 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. Until properties are acquired, the Company's
available cash is expected to satisfy its cash requirements during the fiscal
year ending March 31, 1998. For more information, see Item 1 "Description of
Business."
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<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, 1996 and 1997........................... F-2
Statement of Operations - For the Years Ended March 31, 1996
and 1997 and Cumulative Amounts from Inception of the
Development Stage (July 26, 1990)
through March 31, 1997.......................................... F-3
Statement of Stockholders' Equity (Deficit) -
For the Period from Inception of the Development
Stage (July 26, 1990) through March 31, 1997.................... F-4
Statement of Cash Flows - For the Years
Ended March 31, 1996 and 1997 and
Cumulative Amounts from Inception of
the Development Stage (July 26, 1990) through
March 31, 1997.................................................. F-7
Notes to Financial Statements - For the
Years Ended March 31, 1996 and 1997 ............................ F-8
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.
-8-
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COM-
----------------------------------------------------------------------
PLIANCE 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 41 Director, President, Secretary and
Treasurer
The sole director intends to appoint additional directors when appropriate.
DAVID W. BRENMAN, age 41, 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.
(b) SIGNIFICANT EMPLOYEES.
The Company has no significant employees at the present time.
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<PAGE>
(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.
-10-
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
CASH COMPENSATION.
During the past three (3) fiscal years, no officer of the Company received
any compensation. David W. Brenman, the Company's president and chief executive
officer, received total cash reimbursements of $11,770, $10,000 and $4,228 for
travel expenses incurred by him during the 1995, 1996 and 1997 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 1995, 1996
and 1997 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.
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, 1997 for
services as a director.
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
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<PAGE>
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 responsibilities
following a change in control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
(a)(b) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information as of May 15, 1997, 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, by each person who is an officer and/or director of the
Company and by all officers and directors of the Company as a group. 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.
Amount and
Name and Address Nature of
Title of of Beneficial Beneficial Percent
Class Owner Owner of Class
- --------- ---------------- ---------- --------
Common David W. Brenman 497,042 (1) 27.8%
Stock 599 Lexington Avenue
23rd Floor
New York, NY 10019
Common Beldin Investments, Inc. 750,000(1)(2) 29.5%
Stock c/o Richard Green
9665 Wilshire Blvd.
Suite 410
Beverly Hills, CA 90212
Common Saga Investments, Inc. 543,334(1) 30.4%
Stock c/o Peter Desjardins
Suite 1301, Arbift Tower
P. O. Box 5724
Dubai, United Arab Emirates
Common Brenman Bromberg & Tenenbaum, P.C. 593,476 (1)(3) 33.2%
Stock 1775 Sherman Street
Suite 1001
Denver, CO 80203
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<PAGE>
Common Officers and 497,042 (1) 27.8%
Stock directors as a
group (one
person)
- ----------------
(1) Ownership is direct.
(2) Includes stock purchase warrants to acquire 750,000 shares of the Company's
Common Stock exercisable at $10 per share until June 30, 1998.
(3) Includes 543,334 shares transferred to Brenman Bromberg & Tenenbaum, P.C.
by Beldin Investments, Inc., 4,850 shares owned by Albert Brenman who is
president, a director and shareholder of Brenman Bromberg & Tenenbaum, P.C.
and 45,292 shares owned by A. Thomas Tenenbaum who is Vice President,
Assistant Secretary, Assistant Treasurer, a director and shareholder of
Brenman Bromberg & Tenenbaum, P.C. See "Item 12. Certain Relationships and
Related Transactions."
(c) CHANGES IN CONTROL.
Management is not aware of any arrangements which may result in a change
of control of the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
(a)(b)(c) TRANSACTIONS WITH MANAGEMENT AND OTHERS.
LEGAL REPRESENTATION. The law firm of Brenman Bromberg & Tenenbaum, P. C.
(formerly Brenman Key & Bromberg, P.C.) ("BBT") provides legal representation to
the Company. A principal of BBT, Albert Brenman, is the father of David W.
Brenman, the sole officer and director of the Company. BBT owns 543,334 shares
of the Company's Common Stock and employees of the law firm of BBT own 50,142
shares of the Company's Common Stock. BBT is paid its standard hourly fees for
legal representation of the Company. BBT currently provides office facilities to
the Company at no charge as the value of such facilities is de minimis.
(d) TRANSACTIONS WITH PROMOTERS.
Not applicable.
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<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.
27 Financial Data Schedule
(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 EXCHANGE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE EXCHANGE 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.
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<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: June 18, 1997
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: June 18, 1997 By /s/ David W. Brenman
---------------------------------------
David W. Brenman, President, Principal
Executive Officer, Principal Accounting
Officer, Principal Financial Officer
and sole Director
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<PAGE>
COGENCO INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1996 AND 1997
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, 1996 and 1997, 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, 1997. 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, 1996 and 1997, 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, 1997, in conformity with generally accepted accounting
principles.
/s/ Causey Demgen & Moore Inc.
Denver, Colorado CAUSEY DEMGEN & MOORE INC.
May 5, 1997
F-1
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
BALANCE SHEET
MARCH 31, 1996 and 1997
ASSETS
------
1996 1997
---------- ----------
<S> <C> <C>
Current asset:
Cash, interest bearing accounts $ 141,105 $ 125,699
Computer equipment, at cost, net of
accumulated depreciation of $637 -- 2,935
---------- ----------
$ 141,105 $ 128,634
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable - related parties
(Note 5) $ 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
$574,193 deficit accumulated
during the development stage) (1,931,633) (1,943,654)
---------- ----------
Total stockholders' equity 140,655 128,634
---------- ----------
$ 141,105 $ 128,634
========== ==========
</TABLE>
See accompanying notes.
F-2
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Years Ended March 31, 1996 and 1997 and
Cumulative Amounts from Inception of the Development Stage (July 26, 1990)
Through March 31, 1997
Cumulative
amounts from
1996 1997 Inception
-------- -------- ------------
<S> <C> <C> <C>
Revenues:
Interest income $ 6,220 $ 4,781 $ 23,914
Costs and expenses:
Legal fees - related party
(Note 5) 18,654 5,863 141,260
Consulting and travel expenses -
related party 10,000 4,228 144,865
Dry hole costs (Note 6) (2,587) -- 123,086
General and administrative 5,966 6,074 188,259
Depreciation -- 637 637
---------- --------- ---------
Total costs and expenses 32,033 16,802 598,107
---------- --------- ---------
Net loss (Note 4) $ (25,813) $ (12,021) $(574,193)
========== ========= =========
Net loss per common share $ (.01) $ (.01) $ (.51)
========== ========= =========
Weighted average number of common
shares outstanding (Note 3) 1,788,756 1,788,756 1,134,030
========= ========= =========
</TABLE>
See accompanying notes.
F-3
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period from Inception of the Development Stage (July 26,
1990) through March 31, 1997
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 ($.50 per
share) in February 1992 28,756 288 13,975 -- 14,263
Net loss for the year ended
March 31, 1992 -- -- -- (13,545) (13,545)
--------- ------- ---------- ----------- ---------
Balance at March 31, 1992 128,756 1,288 1,386,000 (1,394,928) (7,640)
</TABLE>
(Continued on following page)
See accompanying notes.
F-4
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period from Inception of the Development Stage (July 26,
1990) through March 31, 1997
(Continued from preceding page)
Total
Common stock Additional stockholders'
------------------ paid-in Accumulated equity
Shares Amount capital deficit (deficit)
------ ------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1992 128,756 1,288 1,386,000 (1,394,928) (7,640)
Sale of common stock to two
individuals for cash and
cash payments to the Company's
president in March 1993 ($.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
</TABLE>
(Continued on following page)
See accompanying notes.
F-5
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Period from Inception of the Development Stage (July 26,
1990) through March 31, 1997
(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
Net loss for the year ended
March 31, 1997 -- -- -- (12,021) (12,021)
--------- ------- ---------- ----------- --------
Balance at March 31, 1997 1,788,756 $17,888 $2,054,400 $(1,943,654) $128,634
========= ======= ========== =========== ========
</TABLE>
See accompanying notes.
F-6
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
For the Years Ended March 31, 1996 and 1997 and
Cumulative Amounts from Inception of the Development Stage (July 26, 1990)
Through March 31, 1997
Cumulative
amounts from
1996 1997 Inception
-------- -------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(25,813) $(12,021) $(574,193)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation expense -- 637 637
Consulting fees paid directly
by common stock purchasers -- -- 50,000
Increase (decrease) in accounts
payable (12,142) (450) 4,997
-------- -------- ---------
Net cash used in operations (37,955) (11,834) (518,559)
Cash flows from investing activities:
Purchase of computer equipment -- (3,572) (3,572)
-------- -------- ---------
Net cash used in
investing activities -- (3,572) (3,572)
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 (37,955) (15,406) 125,669
Cash balance at beginning of year 179,060 141,105 30
--------- -------- ---------
Cash balance at end of year $141,105 $125,699 $ 125,699
======== ======== =========
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
</TABLE>
See accompanying notes.
F-7
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 and 1997
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 has engaged in limited
activities in the oil and gas business, but 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.
Fair value of financial instruments:
The carrying amount of cash and cash equivalents is assumed to approximate
fair value because of the short maturities of those instruments.
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.
F-8
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 and 1997
1. Significant accounting policies (continued)
------------------------------------------
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 and 1997, the Company's cash deposits
exceeded the FDIC insurance limit of $100,000 by $41,105 and $25,699,
respectively, at one institution.
Computer equipment:
Computer equipment is stated at cost. Depreciation is provided by the
Company on straight-line and accelerated methods over estimated useful
lives of three to five years.
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
--------------------
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, 1997, no options have been exercised
F-9
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 and 1997
3. Stockholders' equity (continued)
-------------------------------
and no charges to income have been made inconnection 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. 1,610,000
shares of common stock were issued for the $175,000 subscription price
(approximately $.11 per share). These individuals have sold 483,334 shares
to the Company's president, 40,000 shares to a former director of the
Company, transferred 543,333 shares to a non affiliated company and
transferred 543,333 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.
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,
1996 and 1997 or the period from inception of the development stage (July
26, 1990) through March 31, 1997 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
F-10
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996 and 1997
4. Income taxes (continued)
-----------------------
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
2012 11,000
--------
$625,000
========
As of March 31, 1996 and 1997, total deferred tax assets and valuation
allowance are as follows:
1996 1997
-------- ------
Deferred tax assets resulting from
loss carryforward $221,000 $225,000
Valuation allowance (221,000) (225,000)
-------- --------
$ - $ -
======== ========
5. Related party transactions
--------------------------
For the years ended March 31, 1996 and 1997 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, 1996 and 1997 and from inception of the
development stage, the Company incurred legal costs of $18,654, $5,863, and
$53,039 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,
1996, $450 was owed to this related law firm.
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. The results of the initial
drilling were unsuccessful. The Company's share of the related dry hole
costs amounted to $123,086.
F-11
<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, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-KSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 105,699
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 141,105
<PP&E> 3,572
<DEPRECIATION> 637
<TOTAL-ASSETS> 128,634
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 17,888
<OTHER-SE> 110,746
<TOTAL-LIABILITY-AND-EQUITY> 128,634
<SALES> 0
<TOTAL-REVENUES> 4,781
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,802
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,021)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,021)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
