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, 1998
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
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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: $4,230.
<PAGE>
Aggregate market value of voting stock held by non-affiliates as of June
30, 1998: $-0-. There is currently no trading market for the Registrant's
securities.
Number of shares of Common Stock, $.01 par value, outstanding as of June
30, 1998: 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).
(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
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<PAGE>
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.
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.
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<PAGE>
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 June 15, 1998 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 31,1997 and 1998.
- ----------------------------------
As stated above, the Company has been essentially inactive since early 1988
until the 1993 fiscal year. During this time the Company was, and since has
been, investigating investment alternatives in the oil and gas industry but has
been unsuccessful. As a result, during the last two fiscal years the Company
achieved no operating revenues, but recognized a net loss of $(12,021) for the
fiscal year ended March 31, 1997 as compared to a net loss of $(9,234) for the
fiscal year
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<PAGE>
ended March 31, 1998. The larger net loss during the 1997 fiscal year was due to
travel expenses of $4,228 paid to the Company's President in 1997 as compared to
$-0- paid in 1998, legal fees of $5,863 in 1997 and $7,197 in 1998, and general
and administrative of $6,074 in 1997 and $5,115 in 1998. 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. 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 an operating oil
company. 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, 1999. 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:
Page No.
--------
Report of Independent Certified Public
Accountants........................................................ F-1
Balance Sheet - March 31, 1997 and 1998............................ F-2
Statement of Operations - For the Years Ended March 31, 1997
and 1998 and Cumulative Amounts from Inception of the
Development Stage (July 26, 1990)
through March 31, 1998........................................... F-3
Statement of Stockholders' Equity (Deficit) -
For the Period from Inception of the Development
Stage (July 26, 1990) through March 31, 1998..................... F-4
Statement of Cash Flows - For the Years
Ended March 31, 1997 and 1998 and
Cumulative Amounts from Inception of
the Development Stage (July 26, 1990) through
March 31, 1998................................................... F-6
Notes to Financial Statements - For the
Years Ended March 31, 1997 and 1998 ............................. F-7
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;
-------------------------------------------------------------
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 42 Director, President, Secretary and
Treasurer
The sole director intends to appoint additional directors when appropriate.
DAVID W. BRENMAN, age 42, 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.
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<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 $10,000, $4,228 and $-0- for
travel expenses incurred by him during the 1996, 1997 and 1998 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 1996, 1997 and
1998 fiscal years. Mr. Brenman is currently devoting such time as is necessary
to the affairs of the Company to seek out a merger candidate.
COMPENSATION UNDER PLANS.
STOCK OPTION AND BONUS PLANS. The Company had 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, both of
which were terminated by the Board of Directors in June, 1997. 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, 1998 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 or arrangement with respect to any
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<PAGE>
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 June 15, 1998, 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.
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of
Title of of Beneficial Beneficial Percent of
Class Owner Owner Class
- --------- ---------------- ---------- ----------
<S> <C> <C> <C>
Common David W. Brenman 497,042(1) 27.8%
Stock 599 Lexington Avenue
23rd Floor
New York, NY 10019
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)(2) 33.2%
Stock 1775 Sherman Street
Suite 1001
Denver, CO 80203
Common Officers and 497,042(1) 27.8%
Stock directors as a
group (one
person)
- ----------------
</TABLE>
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<PAGE>
(1) Ownership is direct.
(2) Includes 543,334 shares owned by Brenman Bromberg & Tenenbaum, P.C.,
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.
("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 autho rized.
Date: June 30, 1998
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 30, 1998 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>
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, 1997 and 1998, 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, 1998. 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, 1997 and 1998, 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, 1998, in conformity with generally accepted accounting
principles.
Denver, Colorado CAUSEY DEMGEN & MOORE INC.
May 18, 1998
F-1
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
BALANCE SHEET
March 31, 1997 and 1998
ASSETS
------
1997 1998
---- ----
Current asset:
Cash, in interest bearing accounts $ 125,699 $ 117,617
Computer equipment, at cost, net of accumulated
depreciation of $637 (1997) and $1,789 (1998) 2,935 1,783
--------- ---------
$ 128,634 $ 119,400
========= =========
STOCKHOLDERS' EQUITY
--------------------
Contingencies (Note 2)
Stockholders' equity:
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 $583,427 deficit
accumulated during the development stage) (1,943,654) (1,952,888)
---------- ----------
Total stockholders' equity $ 128,634 $ 119,400
========== ==========
See accompanying notes.
F-2
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Years Ended March 31, 1997 and 1998 and Cumulative Amounts
from Inception of the Development Stage (July 26, 1990) Through March 31, 1998
Cumulative
amounts from
1997 1998 Inception
---- ---- ------------
Revenues:
Interest income $ 4,781 $ 4,230 $ 28,144
Costs and expenses:
Legal fees - related party (Note 5) 5,863 7,197 148,457
Consulting and travel expenses -
related party 4,228 - 144,865
Dry hole costs (Note 6) - - 123,086
General and administration 6,074 5,115 193,374
Depreciation 637 1,152 1,789
--------- --------- ---------
Total costs and expenses 16,802 13,464 611,571
--------- --------- ---------
Net loss (Note 4) $ (12,021) $ (9,234) $(583,427)
========= ========= =========
Basic and diluted loss per common share $ (0.01) $ (0.01) $ (0.48)
========= ========= =========
Weighted average number of common
shares outstanding 1,788,756 1,788,756 1,219,226
========= ========= =========
See accompanying notes.
F-3
<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, 1998
Common Stock Additional Total
-------------------- paid-in Accumulated stockholders'
Shares Amount capital deficit equity
-------- -------- ---------- ----------- -------------
<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 ($.50 per share) 1,985 20 973 - 993
Net loss for the period ended March 31, 1991 - - - (11,922) (11,922)
--------- ------- ---------- ----------- ---------
Balance at March 31, 1991 100,000 1,000 1,372,025 (1,381,383) (8,358)
Shares of common stock issued in settlement
of an account payable to the related law
firm in February 1992 ($.50 per share) 28,756 288 13,975 - 14,263
Net loss for the year ended March 31, 1992 - - - (13,545) (13,545)
--------- ------- ---------- ----------- ---------
Balance, 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
</TABLE>
See accompanying notes.
F-4
<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, 1998
Common Stock Additional Total
-------------------- paid-in Accumulated stockholders'
Shares Amount capital deficit equity
-------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net loss for the year ended March 31, 1993 - - - (100,291) (100,291)
--------- ------- ---------- ----------- --------
Balance, March 31, 1993 1,738,756 17,388 1,544,900 (1,495,219) 67,069
Capital contribution of two shareholders
consisting of cash payments 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, 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, 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, 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, March 31, 1997 1,788,756 17,888 2,054,400 (1,943,654) 128,634
Net loss for the year ended March 31, 1998 - - - (9,234) (9,234)
--------- ------- ---------- ----------- --------
Balance, March 31, 1998 1,788,756 $17,888 $2,054,400 $(1,952,888) $119,400
========= ======= ========== =========== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended March 31, 1997 and 1998 and Cumulative Amounts
from Inception of the Development Stage (July 26, 1990) Through March 31, 1998
Cumulative
amounts from
1997 1998 Inception
---- ---- ------------
Cash flows from operating activities:
Net loss $(12,021) $ (9,234) $(583,427)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation expense 637 1,152 1,789
Consulting fees paid directly by
common stock purchasers - - 50,000
Increase (decrease) in accounts
payable (450) - 4,997
-------- -------- ---------
Net cash used in operations (11,834) (8,082) (526,641)
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 (15,406) (8,082) 117,587
Cash and cash equivalents at
beginning of year 141,105 125,699 30
-------- -------- ---------
Cash and cash equivalents at
end of year $125,699 $117,617 $ 117,617
======== ======== =========
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-6
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 and 1998
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-7
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 and 1998
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, 1997 and 1998, the Company's cash deposits
exceeded the FDIC insurance limit of $100,000 by $25,699 and $17,617,
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.
F-8
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 and 1998
3. Stockholders' equity
--------------------
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 Compan'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,
1997 and 1998 or the period from inception of the development stage (July
26, 1990) through March 31, 1998 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:
F-9
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997 and 1998
4. Income taxes (continued)
------------------------
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
2013 9,000
--------
$634,000
========
As of March 31, 1997 and 1998, total deferred tax assets and valuation
allowance are as follows:
1997 1998
---- ----
Deferred tax assets resulting from loss
carryforward $ 225,000 $ 228,000
Valuation allowance (225,000) (228,000)
--------- ---------
$ - $ -
========= =========
5. Related party transactions
--------------------------
For the years ended March 31, 1997 and 1998 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, 1997 and 1998 and from inception of the
development stage, the Company incurred legal costs of $5,863, $7,197, and
$60,236, respectively, from a law firm in which a principal of the law firm
is a relative of an officer and director of the Company.
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
amounted to $123,086.
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-KSB FOR THE FISCAL YEAR ENDED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY TO SUCH FORM 10-KSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 117,617
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 117,617
<PP&E> 3,572
<DEPRECIATION> 1,789
<TOTAL-ASSETS> 119,400
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 17,888
<OTHER-SE> 101,512
<TOTAL-LIABILITY-AND-EQUITY> 119,400
<SALES> 0
<TOTAL-REVENUES> 4,230
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,464
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,234)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,234)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
