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, 2000
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: $ 4,089.
<PAGE>
Aggregate market value of voting stock held by non-affiliates as of March
31, 2000: $-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 16,
2000: 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.
2
<PAGE>
COGENCO INTERNATIONAL, INC.
FORM 10-KSB
PART I
STATEMENTS MADE IN THIS FORM 10-KSB THAT ARE NOT HISTORICAL OR CURRENT
FACTS ARE "FORWARD-LOOKING STATEMENTS" MADE PURSUANT TO THE SAFE
HARBOR PROVISIONS IN THE FEDERAL SECURITIES LAWS. THESE STATEMENTS
OFTEN CAN BE IDENTIFIED BY THE USE OF TERMS SUCH AS "MAY," "WILL,"
"EXPECT," "ANTICIPATE," "ESTIMATE," OR "CONTINUE," OR THE NEGATIVE
THEREOF. SUCH FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE
MADE. ANY FORWARD-LOOKING STATEMENTS REPRESENT MANAGEMENT'S BEST
JUDGMENT AS TO WHAT MAY OCCUR IN THE FUTURE. HOWEVER, FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES AND IMPORTANT FACTS
BEYOND THE CONTROL OF THE COMPANY THAT COULD CAUSE ACTUAL RESULTS AND
EVENTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OF OPERATIONS AND
EVENTS AND THOSE PRESENTLY ANTICIPATED OR PROJECTED. THE COMPANY
DISCLAIMS ANY OBLIGATION SUBSEQUENTLY TO REVISE ANY FORWARD-LOOKING
STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH
STATEMENT OR TO REFLECT THE OCCURRENCE OF ANTICIPATED OR UNANTICIPATED
EVENTS.
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
3
<PAGE>
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, the Company's
president has 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
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
4
<PAGE>
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.
Year 2000 Issue
---------------
The Company's management does not believe that the Company will be
materially adversely affected by the computer software Year 2000 issue. The
Company has not had any problems in connection with the Year 2000 issue. The
Company's vendors and suppliers may have some exposure to the issue but at this
time, management does not anticipate any adverse impact on the Company's
operations. The Company believes that some of its software and hardware may not
be Year 2000 compliant and intends to upgrade its hardware and software, as
necessary to achieve Year 2000 compliance. It is believed that costs to upgrade
the Company's hardware and software will not materially effect the results of
operations.
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.
5
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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.
6
<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 10, 2000 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 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 31,1999 and 2000.
-----------------------------------
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 $(23,662) for the
fiscal year ended March 31, 1999 as compared to a net loss of $(8,177) for the
fiscal year
7
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ended March 31, 2000. The larger net loss during the 1999 fiscal year was due to
travel expenses of $7,515 paid to the Company's President in 1999 as compared to
$-0- paid in 2000, legal fees of $12,336 in 1999 and $4,211 in 2000, and general
and administrative of $7,904 in 1999 and $7,555 in 2000. 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, the Company may propose other investments in companies having
interests other than oil and gas. 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 invest in other business opportunities.
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, 2001. For more information, see Item 1 - "Description of
Business."
8
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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, 1999 and 2000.......................... F-2
Statement of Operations - For the Years
Ended March 31, 1999 and 2000 and
Cumulative Amounts from Inception of
the Development Stage (July 26, 1990)
through March 31, 2000......................................... F-3
Statement of Stockholders' Equity (Deficit) -
For the Period from Inception of the Development
Stage (July 26, 1990) through March 31, 2000................... F-4
Statement of Cash Flows - For the Years
Ended March 31, 1999 and 2000 and
Cumulative Amounts from Inception of
the Development Stage (July 26, 1990) through
March 31, 2000................................................. F-7
Notes to Financial Statements - For the
Years Ended March 31, 1999 and 2000 ........................... 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.
9
<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 44 Director, President, Secretary
and Treasurer
The sole director intends to appoint additional directors when appropriate.
David W. Brenman, age 44, has been since 1988 engaged as an independent
financial consultant. From 1984 until the present Mr. Brenman has served as
president and director of the Company and also serves, as Treasurer and
Secretary of the Company. From 1987 to 1988 Mr. Brenman was a vice president of
Lloyds International Corporation, the merchant banking subsidiary of Lloyds Bank
Plc. 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. Since 1994 he has served as
President of Taltos S.p.A., a Company engaged in the production of light-weight
stone products.
(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.
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<PAGE>
(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.
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 $-0-, $7,515 and $-0- for travel
expenses incurred by him during the 1998, 1999 and 2000 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 1998, 1999 and
2000 fiscal years. Mr. Brenman is currently devoting such time as is necessary
to the affairs of the Company to seek out a merger candidate or an investment
opportunity.
11
<PAGE>
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, 2000 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
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 31, 2000, 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
12
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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 of
Class Owner Owner Class
----- ----- ----- -----
Common David W. Brenman 497,042 (1) 27.8%
Stock 1775 Sherman Street
Suite 1001
Denver, CO 80203
Common International Penta Financial 543,334 (1) 30.4%
Stock Services A.G.
c/o Harold A.M.A. Janssen
Hintergass 19
P.O. Box 174 FL-9490. Vaduz
Liechtenstein, Europe
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)
-----------
(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, Secretary, Assistant Treasurer, a director
and shareholder of Brenman Bromberg & Tenenbaum, P.C. See "Item 12. Certain
Relationships and Related Transactions."
13
<PAGE>
(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.
14
<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.
15
<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 1, 2000
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 1, 2000 By /s/ David W. Brenman
-----------------------
David W. Brenman, President, Principal
Executive Officer, Principal Accounting
Officer, Principal Financial Officer
and sole Director
16
<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, 1999 and 2000, 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, 1999. 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, 1999 and 2000, 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, 2000, in conformity with generally
accepted accounting principles.
/s/ CAUSEY DEMGEN & MOORE INC.
------------------------------
Denver, Colorado CAUSEY DEMGEN & MOORE INC.
May 15, 2000
F-1
<PAGE>
<TABLE>
<CAPTION>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
BALANCE SHEET
March 31, 1999 and 2000
ASSETS
------
1999 2000
---- ----
<S> <C> <C>
Current asset:
Cash, in interest bearing accounts $ 94,735 $ 87,058
Computer equipment, at cost, net of accumulated
depreciation of $2,569 (1999) and $3,069 (2000) 1,003 503
----------- -----------
$ 95,738 $ 87,561
=========== ===========
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 $615,266 deficit
accumulated during the development stage at
March 31, 2000) (1,976,550) (1,984,727)
----------- -----------
Total stockholders' equity $ 95,738 $ 87,561
=========== ===========
See accompanying notes.
F-2
</TABLE>
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Years Ended March 31, 1999 and 2000 and Cumulative Amounts from
Inception of the Development Stage (July 26, 1990) Through March 31, 2000
Cumulative
amounts from
1999 2000 Inception
---- ---- ------------
Revenues:
Interest income $ 4,873 $ 4,089 $ 37,106
Costs and expenses:
Legal fees - related party (Note 4) 12,336 4,211 165,004
Consulting and travel expenses -
related party 7,515 - 152,380
Dry hole costs (Note 5) - - 123,086
General and administration 7,904 7,555 208,833
Depreciation 780 500 3,069
--------- --------- ---------
Total costs and expenses 28,535 12,266 652,372
--------- --------- ---------
Net loss (Note 3) $ (23,662) $ (8,177) $(615,266)
========== ========== =========
Basic and diluted loss per common share $ (0.01) $ (*) $ (0.46)
========== ========= =========
Weighted average number of common
shares outstanding 1,788,756 1,788,756 1,325,031
========== ========== =========
* Less than $.01 per share
See accompanying notes.
F-3
<PAGE>
<TABLE>
<CAPTION>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from Inception of the Development Stage (July 26, 1990)
Through March 31, 2000
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 ($.50 per share)
July 26, 1990 13,600 136 6,664 - 6,800
Sales of common stock to an unrelated entity
for cash ($.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 period 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)
See accompanying notes.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from Inception of the Development Stage (July 26, 1990)
Through March 31, 2000
Common stock Additional Total
---------------------- paid-in Accumulated stockholders'
Shares Amount capital deficit equity
--------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sale of common stock to two individual to cash
and cash payments to the Company's president
in March 1993 ($.11 per share) (Note 2) 1,610,000 16,100 158,900 -- 175,000
Net loss for the period 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 payments to the
Company's president in April 1993 (Note 2) -- -- 10,000 -- 10,000
Sale of stock to an individual for cash ($10.00
per share) (Note 2) 50,000 500 499,500 -- 500,000
Net loss for the period 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
Net loss for the period 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 period 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
(Continued)
See accompanying notes.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from Inception of the Development Stage (July 26, 1990)
Through March 31, 2000
Common stock Additional Total
---------------------- paid-in Accumulated stockholders'
Shares Amount capital deficit equity
--------- -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net loss for the period 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
Net loss for the period ended March 31, 1998 - - - (9,234) (9,234)
--------- -------- ---------- ----------- --------
Balance at March 31, 1998 1,788,756 17,888 2,054,400 (1,952,888) 119,400
Net loss for the period ended March 31, 1999 - - - (23,662) (23,662)
--------- -------- ---------- ----------- --------
Balance at March 31, 1999 1,788,756 17,888 2,054,400 (1,976,550) 95,738
Net loss for the period ended March 31, 2000 - - - (8,177) (8,177)
--------- -------- ---------- ----------- ---------
Balance at March 31, 2000 1,788,756 $ 17,888 $2,054,400 $(1,984,727) $ 87,561
========= ======== ========== =========== ========
See accompanying notes.
F-6
</TABLE>
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Years Ended March 31, 1999 and 2000 and Cumulative Amounts from
Inception of the Development Stage (July 26, 1990) Through March 31, 2000
Cumulative
amounts from
1999 2000 Inception
---- ---- ------------
Cash flows from operating activities:
Net loss $(23,662) $(8,177) $(615,266)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation expense 780 500 3,069
Consulting fees paid directly by
common stock purchasers - - 50,000
Increase in accounts payable - - 4,997
-------- -------- --------
Net cash used in operations (22,882) (7,677) (557,200)
Cash flows from investing activities:
Purchase of computer equipment - - (3,572)
-------- -------- --------
Net cash used in investing activities - - (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 (22,882) (7,677) 87,028
Cash and cash equivalents at
beginning of year 117,617 94,735 30
-------- -------- --------
Cash and cash equivalents at
end of year $ 94,735 $ 87,058 $ 87,058
======== ======== ========
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
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 and 2000
1. Significant accounting policies
----------------------------------
Organization:
Cogenco International, Inc. (the "Company") was incorporated in the State of
Colorado on June 27, 1983. 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 accounts for income taxes using 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, 1999 and 2000
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).
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. 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.
F-9
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 and 2000
3. Income taxes
---------------
No provision for income taxes is required for the years ended March 31, 1999
and 2000 or the period from inception of the development stage (July 26,
1990) through March 31, 2000 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
2005 5,000
2006 14,000
2007 103,000
2008 367,000
2009 42,000
2010 26,000
2011 11,000
2012 12,000
2013 9,000
2019 24,000
2020 8,000
--------
$676,000
========
As of March 31, 1999 and 2000, total deferred tax assets and valuation
allowance are as follows:
1999 2000
---- ----
Deferred tax assets resulting from loss
carryforward $237,000 $240,000
Valuation allowance (237,000) (240,000)
-------- --------
$ - $ -
======== ========
A 100% valuation allowance has been established against the deferred tax
asset, as utilization of the loss carryforwards cannot be reasonably assured.
F-10
<PAGE>
COGENCO INTERNATIONAL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 and 2000
4. Related party transactions
-----------------------------
For the years ended March 31, 1999 and 2000 and during the period 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, 1999 and 2000 and during the period from
inception of the development stage, the Company incurred legal costs of
$12,336, $4,211 and $76,783, respectively, from a law firm in which a
principal of the law firm is a relative of an officer and director of the
Company.
5. 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
