<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
[ ] 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 0-11546
COM-TEK Resources, Inc.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Colorado 84-0832977
- --------------------------------------------------------------------------------
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
1624 Market Street, Suite 303, Denver, Colorado 80202
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(303) 595-8555
- --------------------------------------------------------------------------------
(ISSUER'S TELEPHONE NUMBER)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
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 the past 90 days.
YES XXX NO
--- ---
As of March 31, 1995, there were 140,798,740 shares of the Company's $0.01 par
value common stock issued and outstanding.
<PAGE>
COM-TEK RESOURCES, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The consolidated financial statements of COM-TEK Resources, Inc. included herein
have been prepared, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and notes normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. IT IS SUGGESTED THAT THESE FINANCIAL STATEMENTS BE READ IN
CONJUNCTION WITH THE AUDITED FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED
IN COM-TEK'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED SEPTEMBER 30, 1994.
Because of a recent financing and other activities involving the Company, as
well as the seasonal nature of COM-TEK's domestic operations, among other
factors, the results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for an entire year.
1
<PAGE>
COM-TEK Resources, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
MARCH 31, 1995
(unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash and Cash Equivalents $ 2,058,976
Contract Notes Receivable 2,584,609
Accounts Receivable - Oil and Gas Sales 32,056
Note Receivable, Net of Allowance of $15,000 50,000
Other Current Assets 11,190
--------------
Total Current Assets 4,736,831
--------------
Property, Plant and Equipment:
Oil and Gas Properties (Full cost method) 8,958,492
Accumulated Depletion, Amortization and Impairment (2,858,156)
--------------
6,100,336
--------------
Gas Gathering System 170,652
Building, Equipment and Land 124,498
--------------
295,150
Accumulated Depreciation (15,065)
--------------
280,085
--------------
Furniture and Fixtures 130,548
Accumulated Depreciation (108,168)
--------------
22,380
--------------
Power Plants in Process 1,030,822
--------------
Net Property, Plant and Equipment 7,433,623
--------------
Other Assets:
Restricted Cash 25,000
Power Plant Licenses 196,545
Deferred Financing Costs 299,981
--------------
Total Other Assets 521,526
--------------
Total Assets $12,691,980
--------------
--------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable, Trade $288,125
Accrued Expenses 35,794
Payable to Related Parties 33,750
Notes Payable 135,055
--------------
Total Current Liabilities 492,724
--------------
Note Payable - Long-term 44,045
--------------
Stockholders' Equity:
Preferred Stock, Par Value $1.00
20,000,000 Shares Authorized, 3,262,500 Shares Issued 3,262,500
Preferred Stock to be Issued in Connection with Access
Power Agreement 291,867
Common Stock, Par Value $0.01
150,000,000 Shares Authorized, 140,798,740 Shares
Issued 1,407,987
Additional Paid-in Capital 16,734,784
Accumulated Deficit (9,541,927)
--------------
Total Stockholders' Equity 12,155,211
--------------
Total Liabilities and Stockholders' Equity $12,691,980
--------------
--------------
</TABLE>
2
<PAGE>
COM-TEK RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31 Six Months Ended March 31
--------------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Oil and Gas Sales $ 72,699 $ 113,122 $ 150,129 $ 235,176
Operating Fees - 24,962 - 54,933
Other Income 65,214 1,631 67,382 3,258
---------------------------------------------------------------------------
137,913 139,715 217,511 293,367
---------------------------------------------------------------------------
Expenses:
Oil and Gas Operations 48,116 60,905 77,844 131,052
General and Administrative 386,949 230,009 552,272 412,387
Depreciation and Depletion 53,745 32,183 87,710 66,148
Interest 15,673 8,857 25,192 18,376
Foreign Currency Translation Loss 11,302 68,177 5,895 62,769
---------------------------------------------------------------------------
515,785 400,131 748,913 690,732
---------------------------------------------------------------------------
Net Loss $ (377,872) $ (260,416) $ (531,402) $ (397,365)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Loss per Share of Common Stock $ * $ * $ * $ *
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Weighted Average Number of Common
Shares Outstanding 120,445,407 72,643,740 100,117,073 72,643,740
---------------------------------------------------------------------------
---------------------------------------------------------------------------
<FN>
* Less than $0.01 per share.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
COM-TEK RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 1994 AND THE SIX MONTHS ENDED MARCH 31, 1995
(unaudited)
Common Stock Preferred Stock Preferred
------------ --------------- Stock to be
Shares Amount Shares Amount Issued
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Balance, October 1, 1993 72,768,740 $ 727,687 - $ - $ -
Issuance of common stock in satisfaction of debt 300,000 3,000 - - -
Issuance of common stock 6,700,000 67,000 - - -
Foreign currency translation adjustment - - - - -
Net loss - - - - -
-------------------------------------------------------------------------
Balance, September 30, 1994 79,768,740 797,687 - - -
Offer and placing, net of offering costs (Note 3) 61,000,000 610,000 3,262,500 3,262,500 -
Preferred stock to be issued in connection with
Access Power agreement (Note 4) - - - - 291,867
Stock options exercised 30,000 300 - - -
Foreign currency translation adjustment - - - - -
Net loss - - - - -
-------------------------------------------------------------------------
Balance, March 31, 1995 140,798,740 $1,407,987 3,262,500 $ 3,262,500 $ 291,867
-------------------------------------------------------------------------
-------------------------------------------------------------------------
<CAPTION>
Foreign
Currency Total
Additional Accumulated Translation Stockholders'
Paid-in Capital Deficit Adjustment Equity
--------------- ------- ---------- ------
<S> <C> <C> <C> <C>
Balance, October 1, 1993 $ 13,240,706 $(6,167,182) $ 15,071 $ 7,816,282
Issuance of common stock in satisfaction of debt 12,000 - - 15,000
Issuance of common stock 441,953 - - 508,953
Foreign currency translation adjustment - - 41,819 41,819
Net loss - (2,843,343) - (2,843,343)
-----------------------------------------------------------------
Balance, September 30, 1994 13,694,659 (9,010,525) 56,890 5,538,711
Offer and placing, net of offering costs (Note 3) 3,038,175 - - 6,910,675
Preferred stock to be issued in connection with
Access Power agreement (Note 4) - - - 291,867
Stock options exercised 1,950 - - 2,250
Foreign currency translation adjustment - - (56,890) (56,890)
Net loss - (531,402) - (531,402)
-----------------------------------------------------------------
Balance, March 31, 1995 $ 16,734,784 $(9,541,927) $ - $ 12,155,211
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>
<PAGE>
COM-TEK RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOW
(unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended March 31,
----------------------------------
1995 1994
---- ----
<S> <C> <C>
Cashflows from Operating Activities:
Net Loss $ (531,402) $(397,365)
Plus adjustments to reconcile net loss to net cash
used in operating activities:
Depletion, Depreciation and Amortization 87,710 66,148
Foreign Currency Transaction (Gain) Loss (56,868) 62,769
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (12,210) (80,737)
(Increase) Decrease in Other Current Assets (996) (3,610)
Increase (Decrease) in Accounts Payable and
Accrued Expenses (448,150) 40,804
Increase (Decrease) in Payable to Related Parties (130,705) 30,437
-----------------------------
Net Cash (Used in) Operating Activities (1,092,621) (281,554)
-----------------------------
Cashflows from Investing Activities:
Additions to Oil and Gas Properties (4,360) (156,835)
Additions to Gas Gathering System (1,184) -
Additions to Equipment, Building and Land (51,766) -
Additions to Furniture and Fixtures (23,025) -
Additions to Power Plant in Process (1,030,822) -
Proceeds from Sale of Oil and Gas Properties 150,000 450,000
-----------------------------
Net Cash (Used in) Provided by Investing Activities (961,157) 293,165
-----------------------------
Cashflows from Financing Activities:
Proceeds from Offer and Placing, Net of Expenses 4,421,388 -
Proceeds from Stock Subscriptions Receivable 508,953 -
Proceeds from Stock Options Exercised 2,250 -
Payment of Deferred Financing Costs (299,981) -
Repayment of Notes Payable (526,667) -
-----------------------------
Net Cash Provided by Financing Activities 4,105,943 -
-----------------------------
Effect of Exchange Rate Changes on Cash - (873)
-----------------------------
Increase in Cash and Cash Equivalents 2,052,165 10,738
Cash and Cash Equivalents, Beginning of Period 6,812 66,598
-----------------------------
Cash and Cash Equivalents, End of Period $ 2,058,977 $ 77,336
-----------------------------
-----------------------------
</TABLE>
5
<PAGE>
COM-TEK RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) BASIS OF PRESENTATION
The financial statements as presented are unaudited. However, in the opinion of
management, all material adjustments for a fair presentation of the financial
condition and results of operations have been made. Such adjustments are of a
normal and recurring nature. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
Securities and Exchange Commission's rules and regulations. Management believes
the disclosures made are adequate, but suggests that these financial statements
be read in conjunction with the financial statements and notes contained in the
Company's September 30, 1994 annual report on Form 10-KSB.
Certain reclassifications were made to conform the prior year's financial
statements to the current year presentation. These reclassifications had no
effect on net income.
2) SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest was $41,925 and $41,925 for the three and six months
ended March 31, 1995 and $-0- and $-0- for the three and six months ended March
31, 1994.
Non-cash transactions:
Notes payable totaling $88,518 were issued in exchange for equipment, building
and land located in Kansas.
3) STOCKHOLDERS' EQUITY
On February 14, 1995, English Trust Company Limited completed a placing and
underwriting in the United Kingdom of 61,000,000 shares of the Company's Common
Stock (at 4 pence per share) and an open offer and placing of 3,262,500 shares
of its Preferred Stock (at 80 pence per share) resulting in gross offering
proceeds of L5,050,000 (about $8,080,000 U.S. at then prevailing exchange
rates). Commissions and offering costs incurred were approximately $1,169,000.
All shares were qualified for dealing on the Unlisted Securities Market ("USM"),
a facility of the International Stock Exchange of the United Kingdom and
Republic of Ireland, Ltd. ("London Stock Exchange").
Each share of Preferred Stock is convertible into 22 shares of Common Stock. A
resolution to increase the number of shares of authorized Common Stock is set
for a vote at the Annual General Meeting of the Company. Upon approval of the
resolution by the shareholders, the 3,262,500 shares of Preferred Stock will be
automatically converted into 71,775,000 shares of Common Stock, and all
preferences will be extinguished. If no approval to increase authorized common
stock is obtained, the Company is obligated to register the preferred shares in
the U.S.
6
<PAGE>
At March 31, 1995, approximately $2,585,000 of a total of $8,080,000 in proceeds
from the stock offer and placing in the U.K. had not been collected from certain
sub-underwriters. Such amounts were represented by legally binding contract
notes from the sub-underwriters. Subsequent to quarter-end, these notes were
collected in full and deposited into the account of the Company.
4) ACQUISITION OF ACCESS POWER
In November, 1994, the Company reached an agreement in principle, which was
subsequently executed in definitive form on January 17, 1995, to acquire the
entire issued share capital of Access Power, Ltd., along with Access Power's
interests in certain joint ventures. Access Power is currently in the
development stage, seeking to develop, or participate in the development of,
small scale power projects, principally in the Peoples Republic of China and
elsewhere in the Far East. The Company acquired Access Power concurrent with
the closing of the offer and placing described above on February 14, 1995.
Under the terms of the Access Power agreement the Company is required to issue
30,303 shares of Preferred Stock, and 8,250,000 Warrants to purchase the
Company's Common Stock (at $0.075 per share), for each one of three power plant
projects which Access Power has presently entered into joint venture agreements
for and for which the joint ventures have received licenses to construct the
power plants. The Preferred Stock and Warrants are to be issued in three
installments as certain benchmarks are achieved related to the development of
each project. The first 1/3 of such Preferred Stock and Warrants are to be
issued upon execution of all appropriate contracts and receipt of the business
license for each project. The second 1/3 of such Preferred Stock and Warrants
are to be issued upon issuance of the completion certificate for each project.
The last 1/3 of such Preferred Stock and Warrants are to be issued upon receipt
of revenue from each project. A total of 90,909 shares of Preferred Stock
(convertable into approximately 2,000,000 shares of Common Stock) and 24,750,000
Warrants are to be issued in connection with the initial three power plant
projects.
Also under the terms of the Access Power agreement, the Company has agreed to
issue an additional 30,303 shares of Preferred Stock and an additional 8,250,000
Warrants to purchase Common Stock at $0.075 per share, for each of up to nine
additional projects in Guangdong Province, China, that the principals may
introduce to the Company. A total of 272,727 shares of Preferred Stock
(convertable into approximately 6,000,000 shares of Common Stock) and 74,250,000
Warrants may be issued in connection with up to nine subsequent power plant
projects in China.
The principals have also been issued a total of 30,303 shares of Preferred Stock
and 8,250,000 Warrants to purchase the Company's Common Stock (at $0.075 per
share) and have received reimbursement of expenses of $25,000 in consideration
for Access Power's 10% interest in the western joint venture partner which has a
54% interest in a 50 megawatt power plant project in China.
The acquisition of Access Power has been accounted for as a purchase. The
Preferred Stock to be issued attributable to the first three power plants and
the Preferred Stock to be issued attributable to the interest in the 50 megawatt
power plant project, has been
7
<PAGE>
recorded at its aggregate market value, determined by reference to the price of
the Preferred Stock issued in the offer and placing that closed concurrent with
the Access Power agreement. No value has been attributed to the Warrants that
are to be issued along with the Preferred Stock. The Company believes that the
value of such Warrants is nominal, since the exercise price of the Warrants was
more than 20% above the then market price of the Common Stock. Access Power had
no assets or liabilities at the time of the acquisition; accordingly, the entire
amount of the consideration for the Acquisition has been recorded as an
intangible asset (Power Plant Licenses), to be amortized over the 15 year term
of the associated power purchase agreements.
Under the terms of separate agreements, the principals received 73,454 shares of
Preferred Stock in connection with services provided by them relating to the
offer and placing. The value of the shares issued was recorded as a cost of the
offering and placing. The principals are also entitled to a commission of
1 1/2% (payable in Preferred Stock) for arranging multi-project financing
packages of up to $20 million for the proposed power plant projects.
Additionally, the agreement requires the Company to pay to the principals
consideration of up to 10% of the gross projected project cost of other projects
introduced, with certain limitations. The consideration is payable in Preferred
or Common Stock of the Company.
Upon becoming directors of the Company, each of the principals became entitled
to participate in the Company's stock option plan. Each principal can receive
options to purchase up to 22,500,000 shares of Common Stock at $0.075 per share.
Options for 2,500,000 shares of Common Stock are to be issued to each of the
principals upon Access Power entering into a joint venture agreement for the
construction and operation of each of up to nine 4 megawatt power plants in
China. All options will become exercisable in equal installments as the
benchmarks described above for the Warrants are achieved. Options for a total
of 15,000,000 shares of Common Stock have been issued in connection with the
three initial power plant projects. The options expire three years from the
date of issuance.
Additional shares, if any, of Preferred Stock (or equivalent shares of Common
Stock) that are issued to the principals of Access Power in connection with
future power plant projects will be recorded at then market value of the shares
issued. Any additional Warrants and Options that are issued in connection with
such power plant projects will be accounted for in accordance with the
provisions of Accounting Principles Board Opinion No. 25, and compensation
expense will be recorded as the Warrants and Options are issued and become
exercisable, to the extent that the then market price of the Common Stock
exceeds the exercise price of the Warrants and Options.
8
<PAGE>
5) NOTES PAYABLE
Notes payable consists of the following:
<TABLE>
<CAPTION>
March 31, 1995 September 30, 1994
-------------- ------------------
(Unaudited)
<S> <C> <C>
Note payable, including interest of
$ 15,000, to an individual to purchase a
pipeline, due October 10, 1994.
Collateralized by the pipeline and oil and
gas properties. Paid in full October 1994. $ -0- $ 315,000
Note payable to a vendor, with interest at
12%, payable semi-annually, principal was
due August 31, 1993. The note is
currently in default and is not collateralized. 28,368 240,035
Note payable to a former director, non-
interest bearing, payable semi-annually,
principal was due September 30, 1994.
The note is currently in default and is
not collateralized. 50,000 50,000
Note payable to a vendor, with interest
at 10%, payable in 36 monthly installments,
to purchase a building and land
associated with the pipeline. This note
is collateralized by the land. 44,045 -0-
Note payable to a vendor, with interest
at 10%, payable in 3 monthly installments.
to purchase equipment associated with
the pipeline. This note is collateralized
by the equipment. 28,687 -0-
Note payable to a former director,
with interest at 10%, payable on May 1,
1994 and 1995. Principal is due May 1,
1995. The note is not collateralized. 28,000 28,000
------- -------
$ 179,100 $ 633,035
------- -------
------- -------
</TABLE>
All of the above notes, except for the note to purchase a building and land, are
classified as current obligations.
9
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994
REVENUES - Total revenues of the Company decreased by approximately $139,000 or
47%, from $293,367 to $154,748, when comparing the six months ended March 31,
1995 with the six months ended March 31, 1994. Oil and gas sales decreased
approximately $85,000 or 36% from $235,176 in 1994 to $150,129 in 1995,
primarily due to the following factors:
- January 1994 sale of the Company's 54% working interest and the October
1994 sale of the Company's 12.5% overriding royalty interest in the Shelby,
Montana wells.
- June 1994 sale of the Company's working interest in the Wyoming properties.
- Management's decision to settle the lawsuit involving the Company's
Canadian properties. As a result of the settlement the Company has no
activities in Canada. The Company had previously accrued production
revenues and expenses attributable to these properties during the period of
the suit.
The effect of these sales is somewhat mitigated by the Company successfully
renegotiating its gas purchase contract in Leavenworth County, Kansas to a price
of $2.45 per mcf effective for gas sold beginning in October, 1994 through
September 1995. The contract price previously was $1.35 per mcf. However, gas
prices on the spot market have been very soft, resulting in decreased revenues
from the Company's production in Texas which is sold on the spot market.
EXPENSES - Total expenses of the Company were $686,150 for the six months ended
March 1995, compared with $690,732 for the six months ended March 31, 1994, a
decrease of $4,600, or 1%.
For the period, administrative expenses increased by $140,000, or 34%. Included
in the current period's administrative expense of $552,272 is $133,300
attributable to the Company's newly acquired subsidiary, Access Power Ltd.. Of
that total, approximately $108,700 relates to salary and consulting fees, and
$15,900 relates to travel costs. These costs were anticipated and are
associated with the Company's joint venture activities in China.
Also contributing to the increase in administrative expense for this year
relative to the comparative period of a year ago are the following costs:
- a fee to NASDAQ of approximately $26,000 for share issuances.
- approximately $7,000 in engineering fees required by the placing activities
in London.
For the six months ended March 31, 1995, the Company realized net foreign
currency translation losses of $5,895. The losses resulted primarily from the
effect of changes in foreign currency exchange rates on bank balances maintained
in local currencies in London and in Hong Kong and on the contract notes
receivable which are denominated in pounds sterling, net of the effect of
exchange rate changes on notes payable denominated in pounds sterling. Foreign
currency translation losses reported in the six months ended March 31, 1994 of
$62,769 relate primarily to the Company's Canadian operations, which have been
disposed of.
The Company maintains a significant portion of its cash balances in foreign
currencies and is exposed to effects of the changes in foreign currency exchange
rates on those balances.
The Company anticipates that as its investment activity increases in the PRC and
other Far Eastern locations, the Company's exposure to foreign currency exchange
risk will increase. The extent to which the Company is exposed to such risks
will depend, among other things, on how its business activities are conducted
and how its activities are financed, some of which are yet to be determined.
10
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED).
- approximately $43,000 in audit fees.
- approximately $16,400 of legal fees, of which $6,500 relate to the February
1995 UK placing and $9,900 relate to the defense of the lawsuit brought
against the Company by its former President.
Oil and gas lease operating expenses decreased by $53,200 for the year, as a
result of the property dispositions outlined above. Also, during the fiscal
fourth quarter, approximately $15,500 was spent to rework certain of the
Company's newly acquired wells located in Kansas. Additional work of a similar
nature is contemplated in the coming months, both in Kansas and in Texas.
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
REVENUES - Total revenues of the Company decreased by approximately $64,500 or
46%, from $139,715 to $75,150, when comparing the three month period ended March
31, 1995 with the three months ended March 31, 1994. Oil and gas sales
decreased approximately $40,400 or 36% from $113,122 in 1994 to $72,699 in 1995,
primarily due to the factors discussed above.
As discussed above, the effect of these sales is somewhat mitigated by the
Company successfully renegotiating its gas purchase contract in Leavenworth
County, Kansas to a price of $2.45 per mcf effective for gas sold beginning in
October, 1994 through September 1995. The contract price previously was $1.35
per mcf.
EXPENSES - Total expenses of the Company were $453,022 for the three months
ended March 1995, compared with $400,131 for the three months ended March 31,
1994, an increase of $52,900, or 12%.
For the quarter, administrative expenses increased by $156,900, or 68%.
Included in the current quarter's expense of $386,949 is $133,300 of expenses
attributable to the Company's newly acquired subsidiary, Access Power Ltd.. Of
that total, approximately $108,700 relates to salary and consulting fees, and
$15,900 relates to travel costs. These costs were anticipated and were in
connection with the Company's joint venture activity in China.
See above for a discussion of additional administrative expenses incurred.
Oil and gas lease operating expenses decreased by $12,800 during the quarter.
This is the result of the 1994 property dispositions outlined above. Increases
in operating expenses for future periods are expected due to planned workovers,
which if successful, would increase future production volumes.
For the three months ended March 31, 1995, the Company realized foreign currency
losses of $11,302. The losses resulted primarily from the effect of changes in
foreign currency exchange rates on bank balances maintained in local currencies
in London and in Hong Kong and on the contract notes receivable which are
denominated in pounds sterling. Foreign currency translation losses reported in
the three months ended March 31, 1994 of $68,177 relate primarily to the
Company's Canadian operations, which have been disposed of.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On February 14, 1995, English Trust Company Limited completed a placing and
underwriting in the United Kingdom of 61,000,000 shares of the Company's Common
Stock (at 4 pence per share) and an open offer and placing of 3,262,500 shares
of its Preferred Stock (at 80 pence per share) resulting in gross offering
proceeds of L5,050,000 (about $8,080,000 U.S. at then prevailing exchange
rates). All shares were qualified for dealing on the Unlisted Securities Market
("USM"), a facility of the International Stock Exchange of the United Kingdom
and Republic of Ireland, Ltd. ("London Stock Exchange").
Concurrent with the placing, the Company completed the acquisition of Access
Power, Ltd. and began the implementation of an expanded business plan, which
includes domestic oil and gas operations as well as power generation projects,
primarily located in the Asia-Pacific region. For further information regarding
Access Power, see Note 4.
As a result of the placing discussed above, the Company was able to repay a
number of vendors and creditors during the quarter ended March 31, 1995, as well
as notes to third parties of approximately $527,000. The Company reduced its
amounts payable to outside vendors by over $448,000. The Company also began
construction of its first three power plants. Costs to date of $1,030,822
represents payments to MAN for the generators for the power plants.
The Company has working capital of $4.7 million at March 31, 1995 which it
considers adequate to finance the Company's operations and developmental plans
in the near term. However, the ability of the Company to finance its activities
over the longer term is dependent on the successful development and profitable
operations of these power plant projects, of which there can be no assurance.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
1) FORMER PRESIDENT AND CHAIRMAN
In September 1994, Mr. John James Ellerton (the "Plaintiff"), a founder of the
Company, and Chairman and President of the Company until his resignation on
March 10, 1994, filed a lawsuit in Arapahoe District Court in the State of
Colorado against the Company, members of its Board of Directors and one former
Director (collectively, the "Defendants"). The suit alleges breach of his
employment contract, violations of various U.S. and Colorado securities laws,
fraud, civil conspiracy, loss of business opportunity, and conduct designed to
oppress the Plaintiff as a minority shareholder of the Company. The Plaintiff
seeks damages, attorney's fees, interest, costs, exemplary damages, expert
witness fees and an order of court setting aside any unlawful, unauthorized or
non-disclosed action by the Defendants which damaged the Plaintiff. The Company
believes it has meritorious defenses to the claims filed by Mr. Ellerton.
On October 18, 1994, the Company filed its motion to Dismiss, or in the
alternative, for Summary Judgment and Motion for Sanctions and Attorney's Fees,
requesting dismissal of each and every claim asserted in the complaint and
seeking attorney's fees and costs against the Plaintiff as a sanction for filing
claims which are not well grounded in fact nor supportable under existing law.
The Company may have substantial counterclaims to assert against Mr. Ellerton.
2) CANADIAN PROPERTIES
At present, the Company has an agreement in principle with Backer Petroleum to
settle a lawsuit involving the sale of the Company's properties in Canada,
whereby the Company would receive approximately $5,000. This agreement has not
yet been finalized.
3) KANSAS PROPERTY
In September, 1994, the Company purchased a gathering system, along with related
producing wells, a building and equipment, from the party which had previously
purchased gas produced by the Company. Subsequently, it was determined that
material differences existed between volumes reported to the state regulatory
authority and actually paid to the Company prior to the sale, by this party.
Consequently, the Company withheld payment of its obligations under the sale
agreement, and a suit was filed by the other party. The Company believes it
will prevail in this dispute.
The Company knows of no other material legal proceedings either pending or
threatened, or judgments entered against the Company or any Director or Officer
of the Company in their capacity as such.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
COM-TEK Resources, Inc.
Registrant
By: /s/ Dennis C. Dowd
-------------------
Dennis C. Dowd,
President
Dated: June 13, 1995
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