UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM _________ TO _________
COMMISSION FILE NUMBER: 33-18778
POTENCO, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEVADA 99-0259494
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
3730 KIRBY SUITE 1200
HOUSTON, TEXAS 77098
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 587-4645.
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
ACT: COMMON STOCK, PAR VALUE $0.001 PER SHARE.
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED
BY SECTION 13 OR 15(d) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR
SUCH SHORTER PERIOD THAT THE ISSUER WAS REQUIRED TO FILE SUCH REPORTS), AND
(2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES
. NO X .
CHECK IF THERE IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO
ITEM 405 OF REGULATION S-B IS NOT CONTAINED IN THIS FORM, AND NO DISCLOSURE
WILL BE CONTAINED, TO THE BEST OF THE 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. [ ]
THE ISSUER HAD NO REVENUES IN ITS MOST RECENT FISCAL YEAR.
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
COMPUTED BY REFERENCE TO THE PRICE AT WHICH STOCK WAS SOLD, OR THE AVERAGE BID
AND ASKED PRICES OF SUCH STOCK, AS OF MARCH 31, 1999 WAS: $0.00
THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON EQUITY, AS OF MARCH 31, 1999, WAS: 16,600,000.
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
TABLE OF CONTENTS
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . ....................... . 1
Item 1. Description of Business . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . ........... .1
General . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . ........................ . . . . . 1
Employees . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . ......................1
Executive Officers of the Registrant. . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . ....1
Item 2. Description of Property . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . ...1
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .. . 1
Item 4. Submission of Matters to a Vote of Security Holders . . . .
. . . . . . . . . . . . . . . ... . 1
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 2
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters . . . 2
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .............3
General . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . ....................... .3
Liquidity . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .......................3
Results of Operations . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . ................4
Item 7. Financial Statements . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . ..............4
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . ............... 4
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . ...................... 4
Item 9 Directors, Executive Officers, Promoters and Control
Persons;
Compliance With Section 16(a) of the Exchange Act. .
. . . . . . . . . . . . . . . . . . . 4
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .......5
Compensation of Directors . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . ............ 5
Item 11. Security Ownership of Certain Beneficial Owners and
Management . . . . . .. . . . .5
Item 12. Certain Relationships and Related Transactions . . . . . .
. . . . . . . . . . . . . . . . . . . .6
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . ..6
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . ..............7
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
POTENCO, Inc., (the "Company" or the "Registrant") is a Nevada
corporation. As used herein, the terms the "Company" and the "Registrant"
refer to the Company, unless the context otherwise requires.
For financial information regarding the segments of the Registrant's
operations, see the information contained in the Consolidated Financial
Statements incorporated by reference in Item 7 hereof. The Registrant has not
had any revenues since 1990.
The Registrant was incorporated on September 25, 1987 under the name
of Potenco, Inc., Inc. as a development stage company. In August 1988, the
Registrant participated in the time-share resort real estate business through
its then wholly-owned subsidiary, Colonial Properties, Inc., a Florida
corporation. As a result of adverse business circumstances, no material
business operations have been conducted by the Registrant since 1990.
EMPLOYEES
At December 31, 1998, the Registrant had no employees.
EXECUTIVE OFFICERS OF THE REGISTRANT
At December 31, 1998, the Registrant had no executive officers.
ITEM 2. DESCRIPTION OF PROPERTY.
Not applicable.
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Registrant is or will be involved in
litigation relating to claims arising out of its operations in the normal
course of its business. The Registrant believes that it is not presently a
party to any litigation the outcome of which would have a material adverse
effect on its results of operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Registrant's Common Stock trades on the OTC Pink Sheets of the
National Association of Securities Dealers, Inc. (the "NASD") in the United
States. The range of the high and low bid information for the Common Stock
for
each full quarterly period within the two most recent fiscal years is shown on
the following table. As of December 31, 1998, the Registrant was authorized
to
issue 50,000,000 shares of the Common Stock, of which there were issued and
outstanding 16,600,000 shares.
COMMON STOCK
BID PRICE
- ---------------------- ------------------------
CALENDAR YEAR 1997
Low High
------------------
- ---------------------- ------------------------
First
Quarter
$0.00 $0.00
Second Quarter
$0.00 $0.00
Third
Quarter
$0.00 $0.00
Fourth Quarter
$0.00 $0.00
Calendar Year 1998
Low High
------------------
- ---------------------- ------------------------
First
Quarter
$0.00 $0.00
Second Quarter
$0.00 $0.00
Third Quarter
$0.00 $0.00
Fourth Quarter
$0.00 $0.00
As of March 31,1999 the high and low bids with respect to the price
of the Common Stock were no trades made.
As of December 31, 1998, there were 57 holders of record of the
Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion of the Registrant's financial condition
and results of operations. This discussion should be read in conjunction with
the Consolidated Financial Statements of the Registrant appearing under Item 7
of this Report. Statements contained in this "Management's Discussion and
Analysis of Financial Conditions and Results of Operations," which are not
historical facts may be forward-looking statements. Such information involves
risks and uncertainties, including those created by general market conditions,
competition and the possibility that events may occur which could limit the
ability of the Registrant to maintain or improve its operating results or
execute its primary growth strategy. Although management believes that the
assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could be inaccurate, and there can therefore be no assurance
that the forward-looking statements included herein will prove to be
accurate. The inclusion of such information should not be regarded as a
representation by management or any other person that the objectives and plans
of the Registrant will be achieved. Moreover, such forward-looking statements
are subject to certain risks and uncertainties which could cause actual
results to differ materially from those projected. Readers are cautioned not
to place undue reliance on these forward-looking statements that speak only as
of the date hereof.
GENERAL
Management intends for the Registrant to proceed in its efforts to
expand holdings through the purchase of existing, profitable, private,
companies where there is a demonstrable gain in productivity through the
minimization of general and administrative costs which are duplicative.
Management will seek to implement a capital structure which affords the
greatest flexibility for future acquisitions while maintaining an adequate
base of equity to cushion against fluctuations in the business cycle.
Currently the company is a developement stage corporation.
LIQUIDITY AND CAPITAL RESOURCES
In order to complete the any acquisitions, the Registrant will
require additional funding. Management believes that this funding is
available through investment bankers who may expressed an interest in
providing equity and debt funding. There can be no assurance as to the
availability or terms of this financing.
Certain transactions may require the Registrant to incur additional debt, and
the degree to which the Registrant may be leveraged could have important
consequences, including the following: (i) the possible impairment of the
Registrant's ability to obtain financing in the future for potential
acquisitions, working capital, capital expenditures or general corporate
purposes; (ii) the necessity for a substantial portion of the Registrant's
cash flow from operations to be dedicated to the payment of principal and
interest on its indebtedness; (iii) the potential for increased interest
expense due to fluctuations in interest rates; and (iv) the potential for
increased vulnerability of the Registrant to economic downturns and possible
limitation of its ability to withstand competitive pressures. The
Registrant's ability to meet its debt service obligations will be dependent
upon the Registrant's future performance, which will be subject to general
economic conditions and to financial, business and other factors affecting the
operations of the Registrant, many of which are beyond its control.
RESULTS OF OPERATIONS
The Registrant has generated no revenues since 1990, and has had no
activity since 1990.
ITEM 7. FINANCIAL STATEMENTS.
The information required by this Item 7 appears on pages 10 through
12
of this Report, and is incorporated herein by reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The information set forth under "Item 1. Description of Business
- -Executive Officers of the Registrant" is incorporated herein by reference.
At the date of this Report, there are no officers of the Registrant..
In the years prior to December 31, 1998, various officers and
directors of the Registrant have failed to file a Form 3 on a timely basis
upon becoming an executive officer and director of the Registrant.
Set forth below are the directors of the Registrant, together with
their ages as of the date of this Report. Each director is elected for a one
year term and serves until his successor is elected and qualified.
Name Age
Position Director Since
---- ---
- -------- --------------
L. Mychal Jefferson II 31Chairman, Chief Executive Officer, December
30, 1999
President and Director
Phillip G. Cohen60Treasurer and Director December 30, 1999
Monica W. Jefferson25Secretary and Director December 30, 1999
Certain information with respect to the members of the Board of
Directors of the Registrant is set forth above in "Item 1. Description of
Business - Executive Officers of the Registrant."
ITEM 10. EXECUTIVE COMPENSATION.
Since 1990, the Registrant has not paid salaries or other form
compensation to any of its officers or directors.
COMPENSATION OF DIRECTORS
The Registrant does not compensate any of its directors for their
services to the Registrant as directors. However, the Registrant does
reimburse its directors for expenses incurred in attending board meetings.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table presents certain information regarding the
beneficial ownership of all shares of the Common Stock at March 31, 1999 (i)
each person who owns beneficially more than five percent of the outstanding
shares of the Common Stock, (ii) each director of the Company, (iii) each
named executive officer, and (iv) all directors and officers as a group.
Shares Beneficially Owned
- -------------------------
Name of Beneficial Owner (1)
Number Percent (2)
-----------------------
- ------ -------
First Consumers Inc. 4,040,00024.34
Ulysses Herrington 880,500 5.30
Joseph Spirer 8,330,00050.18
All directors and
officers -- --
as a group (N/A)
(1) Unless otherwise indicated, each person named in the above-described table
has the sole voting and investment power with respect to his shares of the
Common Stock beneficially owned.
(2) Unless otherwise provided, the calculation of percentage ownership is
based on the total number of shares of the Common Stock outstanding as of
March 31, 1999 any shares of the Common Stock which are not outstanding as of
such date but are subject to options, warrants, or rights of conversion
exercisable within 60 days of March 31, 1999 shall be deemed to be outstanding
for the purpose of computing percentage ownership of outstanding shares of the
Common Stock by such person but shall not be deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) List of Documents Filed with this Report.
(1) Consolidated Financial Statements, POTENCO, Inc. and
subsidiary companies--
Report of Schvaneveldt & Company, P.C., independent
certified public accountants, dated December 30, 1999. . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.11
Balance Sheet-for the Years Ended December 31, 1998 . . . .
. . . . . . . . . . . . . . . ...12 Notes to
Consolidated Financial Statements as of December 31, 1998 . . . . . . . . . 17
All schedules have been omitted since the information required to be
submitted has been included in the financial statements or notes or has been
omitted as not applicable or not required.
(2) Exhibits-- The exhibits indicated by an asterisk (*) are
incorporated by reference.
EXHIBIT NO. IDENTIFICATION OF
EXHIBIT
-----------
- -------------------------
3(a)* Articles of Incorporation of Potenco, Inc. filed on September 25,
1987 with the Secretary of State of Nevada, described in the Registration
Statement on Form S-18 of the Registrant effective May 23, 1988. Commission
File No. 33-18778.
23(a)* Consent of Schvaneveldt & Company, P.C., certified public
accountants.
27* Financial Data Schedule.
(c) Financial Statement Schedules.
No schedules are required as all information required has been presented
in the audited financial statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
POTENCO, INC.
By /s/ L. Mychal Jefferson
II
- -----------------------------------
L. Mychal Jefferson II,
President
December 30, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature
Title Date
---------
- ----- ----
/s/ L. Mychal Jefferson II Chairman, Chief Executive Officer,
December 30, 1999
President and Director
/s/ Phillip G. CohenTreasurer and Director December 30, 1999
/s/ Monica W. JeffersonSecretary and DirectorDecember 30, 1999
Potenco, Inc.
(A Development Stage Company)
Financial Statements
December 31, 1998 & 1997
Independent Auditors Report
Board of Directors
Potenco, Inc.
(A Development Stage Company)
I have audited the accompanying balance sheets of Potenco, Inc., (a
development stage company), as of December 31, 1998 and 1997, and the related
statements of operations, stockholders' equity, and cash flows accumulated
from September 25, 1987 (Inception) to December 31, 1998 and the years ended
December 31, 1998 and 1997. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. 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 the
significant estimates made by management, as well as evaluating the overall
financial statements presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of Potenco, Inc., (a development
stage company), as of December 31, 1998 and 1997, and the results of its
operations and its cash flows accumulated from September 25, 1987 (Inception)
to December 31, 1998 and the years ended December 31, 1998 and 1997, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note #4 to the financial
statements, the Company has an accumulated deficit and a negative net worth at
December 31, 1998. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also discussed in Note #4. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Schvaneveldt & Company
Salt Lake City, Utah
December 30, 1999
/* WordPerfect WARNING - No Equivalent EDGAR Representation */
/* WordPerfect Structure - Footer A Beginning */
The accompanying notes are an integral part of these financial statements.
11
/* WordPerfect Structure - Footer A Ending */
Potenco, Inc.
(A Development Stage Company)
Balance Sheets
December 31, 1998 and 1997
December December
31, 1998 31, 1997
Assets
Current Assets$ -0- $ -0-
Total Assets$ -0- $ -0-
Liabilities & Stockholders' Equity
Current Liabilities
Taxes Payable$ 900 $ 800
Stockholders' Equity
Common Stock; 50,000,000 Shares Authorized
at $0.001 Par Value, 16,600,00 Shares Issued
and Outstanding 16,600 16,600
Paid In Capital 1,650,271 1,650,271
Deficit Accumulated in the Development Stage( 1,667,771)(
1,667,671)
Total Stockholders' Equity( 900)( 800)
Total Liabilities & Stockholders' Equity$ -0- $ -0-
<PAGE>Potenco, Inc.
(A Development Stage Company)
Statement of Operations
Accumulated from September 25, 1987 (Inception) to December 31, 1998
and the Years Ended December 31, 1998, 1997 and 1996
Accumulated 1998 1997 1996
Revenues $ -0- $ -0- $ -0- $ -0-
Expenses
Filings & Fees 900 100 100 100
Interest Expenses 14,993 -0- -0- -0-
Time Share Activities 240,113 -0- -0- -0-
Motel Activities 162,108 -0- -0- -0-
Administrative Expenses 158,596 -0- -0- -0-
Loss of Subsidiaries 1,091,061 -0- -0- -0-
Total Expenses 1,667,771 100 100 100
Net Loss ($ 1,667,771)($ 100)($ 100)($ 100)
<PAGE>Potenco, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
From September 25, 1987 (Inception) to December 31, 1998
Deficit
Accumulated
Paid In Development
Common Stock Capital Stage
Balance, September 25, 1987 -0- $ -0- $ -0- $ -0-
Shares Issued to Incorporators
for $0.02 Per Share 750,000 750 14,250
Net Loss for Year Ended
December 31, 1987 ( 67)
Balance December 31, 1987 750,000 750 14,250 ( 67)
Contributed Capital 119
Shares Issued with Public Offering
at $0.10 Per Share 2,500,000 2,500 247,500
Cost of Public Offering ( 28,860)
Shares Issued in Connection
with Reverse Acquisition 13,350,000 13,350 1,417,262
Net Loss for Year Ended
December 31, 1988 ( 304,825)
Balance, December 31, 1988 16,600,000 16,600 1,650,271 (
304,892)
Net Loss for Year Ended
December 31, 1989 ( 1,361,979)
Balance, December 31, 1989 16,600,000 16,600 1,650,271 (
1,666,871)
Net Loss for Year Ended
December 31, 1990 ( 100)
Balance, December 31, 1990 16,600,000 16,600 1,650,271 (
1,666,971)
Net Loss for Year Ended
December 31, 1991 ( 100)
Potenco, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity -Continued-
From September 25, 1987 (Inception) to December 31, 1998
Deficit
Accumulated
Paid In Development
Common Stock Capital Stage
Balance, December 31, 1991 16,600,000 16,600 1,650,271
( 1,667,071)
Net Loss for Year Ended
December 31, 1992 ( 100)
Balance, December 31, 1992 16,600,000 16,600 1,650,271 (
1,667,171)
Net Loss for Year Ended
December 31, 1993 ( 100)
Balance, December 31, 1993 16,600,000 16,600 1,650,271 (
1,667,271)
Net Loss for Year Ended
December 31, 1994 ( 100)
Balance, December 31, 1994 16,600,000 16,600 1,650,271 (
1,667,371)
Net Loss for Year Ended
December 31, 1995 ( 100)
Balance, December 31, 1995 16,600,000 16,600 1,650,271 (
1,667,471)
Net Loss for Year Ended
December 31, 1996 ( 100)
Balance, December 31, 1996 16,600,000 16,600 1,650,271 (
1,667,571)
Net Loss for Year Ended
December 31, 1997 ( 100)
Balance, December 31, 1997 16,600,000 16,600 1,650,271 (
1,667,671)
Net Loss for Year Ended
December 31, 1998 ( 100)
Balance, December 31, 1998 16,600,000 $ 16,600 $ 1,650,271 ($
1,667,771)
Potenco, Inc.
(A Development Stage Company)
Statements of Cash Flows
Accumulated from September 25, 1987 (Inception) to December 31, 1998
and the Years Ended December 31, 1998, 1997 and 1996
Accumulated 1998 1997 1996
Cash Flows from Operating Activities
Net Loss ($ 1,667,771)($ 100)($ 100)($ 100)
Loss on Subsidiaries 852,554 -0- -0- -0-
Amortization 17,825 -0- -0- -0-
Change in Operating Liabilities;
Increase in Accounts Payable 900 100 100 100
Net Cash Used by Operating
Activities( 796,492) -0- -0- -0-
Cash Flows from Investing Activities
Organization Costs( 17,825) -0- -0- -0-
Net Cash Used in Investing
Activities( 17,825) -0- -0- -0-
Cash Flows from Financing Activities
Proceeds of Sales of Common
Stock 240,177 -0- -0- -0-
Contributed Capital 119 -0- -0- -0-
Cash from Revenue Acquisition 574,021 -0- -0- -0-
Net Cash Provided by
Financing Activities 814,317 -0- -0- -0-
Net Increase (Decrease)
In Cash -0- -0- -0- -0-
Cash at Beginning of Period -0- -0- -0- -0-
Cash at End of Period$ -0- $ -0- $ -0- $ -0-
Disclosures from Operating Activities
Interest$ 14,993 $ -0- $ -0- $ -0-
Taxes -0- -0- -0- -0-
Potenco, Inc.
(A Development Stage Company)
Notes to Financial Statements
NOTE #1 - Organization
Potenco, Inc., (Potenco) was organized in the state of Nevada on September 25,
1987. The Articles of Incorporation state the purpose of the corporation is
to conduct business in the field of financial and business consulting and
operation; to seek for and acquire business opportunities in the financial
field; or transact any lawful business, or to promote or conduct any
legitimate object or purpose, under and subject to the laws of the state of
Nevada.
NOTE #2 - Significant Accounting Policies
A.The Company uses the accrual method of accounting.
B.Revenues and directly related expenses are recognized in the period when the
goods are shipped to the customer.
C.The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D.Basic Earnings Per Shares are computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be computed
by including contingently issuable shares with the weighted average shares
outstanding during the period. When inclusion of the contingently issuable
shares would have an antidilutive effect upon earnings per share no diluted
earnings per share shall be presented.
E.Inventories: Inventories are stated at the lower of cost, determined by
the FIFO method or market.
F.Depreciation: The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is amortized over the lesser of the length of the lease of the
related assets of the estimated lives of the assets. Depreciation and
amortization is computed on the straight line method.
G.Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Potenco, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
NOTE 3# - Income Taxes
Potenco, Inc., has adopted FASB 109 to account for income taxes. Potenco,
Inc., currently has no issues that create timing differences that would
mandate deferred tax expense. Net operating losses would create possible tax
assets in future years. Due to the uncertainty as to the utilization of net
operating loss carryforwards an evaluation allowance has been made to the
extent of any tax benefit that net operating losses may generate. Subsequent
to the report Potenco had a change in officers and a change in control. When
control of an entity changes net operating losses generally can be used only
by the tax payer (Officers) who sustained the losses. There can be no
assurance that the net operating losses sustained before the change in control
will be available for future benefits.
Potenco, Inc., has incurred losses that can be carried forward to offset
future earnings if conditions of the Internal revenue Codes are met. These
losses are as follows:
Year of Loss Amount Expiration Date
1987 - 1998$ 1,667,771 2007 - 2008
1998
Current Tax Asset Value of Net Operating Loss Carryforwards
at Current Prevailing Federal Tax Rate $ 567,042
Evaluation Allowance ( 567,042)
Net Tax Asset$ -0-
Current Income Tax Expense -0-
Deferred Income Tax Benefit -0-
NOTE #4 - Going Concern
Potenco, Inc., has no assets and no operations from which it can obtain
working capital. Potenco, Inc., recognizes that it must find a source of
working capital or Potenco, Inc., may not be able to continue its existence.
Current officers of Potenco, Inc., are seeking a business opportunity through
merger or acquisition that would provide operations with a revenue flow and
the possibility of additional capital investment.
NOTE #5 - Stockholders' Equity
Potenco, Inc., is authorized to issue 50,000,000 shares of $0.001 par value
stock.
Pursuant to Form S-18 Registration statement Potenco, Inc., issued 2,500,000
shares at $0.01 per Potenco, Inc.
(A Development Stage Company)
Notes to Financial Statements -Continued-
share for gross proceeds of $250,000, cost of the offering was $28,860.
In the year ended December 31, 1988, Potenco, Inc., issued 13,350,000 shares
in a reverse acquisition transaction with Colonial Properties & Development
Corp., and Subsidiaries, a Florida Corporation. Colonial Properties &
Development Corp., and Subsidiaries, ceased operations in 1989 and were
suspended by the state of Florida for failure to file an Annual Report in
1991.
NOTE #6 - Subsequent Events
On November 17, 1999, Potenco, Inc., held a special shareholders meeting to
reorganize the Company. The Officers of Potenco, Inc., prior to the meeting
submitted their resignations and new Officers and Board Members were elected.
At the meeting shareholders approved a one for two hundred seventy five (1 for
275) share reverse split, with provisions that no one shareholder would
receive less than one hundred shares. After the reverse split, Potenco, Inc.,
issued to its new President 500,000 shares of its common stock for monies
loaned to Potenco, Inc., for reorganization costs incurred and services
rendered to Potenco, Inc.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Consent of Darrell T. Schvaneveldt, C.P.A.
Independent Auditor
I consent to the use, of our report dated December 29, 1999, on the
financial statements of Potenco, Inc., (a development stage company), dated
December 31, 1998, included herein and to the reference made to me.
Salt Lake City, Utah
January 12, 2000
INDEX TO EXHIBITS
Exhibit No. Identification of Exhibit
- - ----------- -------------------------
3(a)* Articles of Incorporation of Potenco, Inc. filed on September 25,
1987 with the Secretary of State of Nevada, described in the Registration
Statement on Form S-18 of the Registrant effective May 23, 1988. Commission
File No. 33-18778.
11 Computation of Per Share Earnings.
27 Financial Data Schedule.
COMPUTATION OF PER SHARE EARNINGS
The table below presents information necessary for the computation of
loss per share of the Common Stock, on both a primary and fully diluted basis,
for the three months ended September 30, 1999 and 1998 and the years ended
December 31, 1997, 1996 and 1995.
Three Months Ended Sept.
30, Year Ended December 31,
----------------------------
- ----------------------------------------
1999 1998
1997 1996 1995
---- ----
- ---- ---- ----
Net loss applicable to shares of
Common Stock and Common
Stock equivalents $-0- $-0-
$-0- $-0- $-0-
Average number of shares of
Common Stock outstanding 16,600,000 16,600,000 16,600,000
16,600,000 16,600,000
Common Stock equivalents -- --
- -- -- --
------ ----------
- ---------- ---------- ----------
Total shares of Common Stock
and
Common Stock equivalents
16,600,000 16,600,000
16,600,000 16,600,000 16,600,000
=== ========== ==========
========== ========== Primary and fully diluted loss
per share of Common Stock $-0- $-0-
$-0- $-0- $-0-
Common Stock equivalents are considered anti-dilutive because of the net
losses incurred by the Company.
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 1998 10-KSB
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] MAR-31-1999
[CASH] 0
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 0
[DEPRECIATION] 0
[TOTAL-ASSETS] 0
[CURRENT-LIABILITIES] 900
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 16,600
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 0
[SALES] 0
[TOTAL-REVENUES] 0
[CGS]
0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 0
[EPS-BASIC] .00
[EPS-DILUTED] .00
