SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1999
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: 33-18778
_______________________
POTENCO, INC.
(Exact name of Registrant as specified in its charter)
Nevada
99-0259454
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3730 Kirby, Suite 1200 77098
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (281) 587-4645
_______________________
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 ____ . No X .
The number of shares outstanding of each of the Registrant's classes of Common
Stock, as of March 31, 1999 was 16,600,000.
Transitional Small Business Disclosure Format (check one): Yes ____ . No
X.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The information required by this Item 1 appears on pages 5 through 6 of this
Report, and is incorporated herein by reference.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results
of Operations.
The Registrant has had no material business operations since 1990. The
Registrant has had no revenues since 1990.
Part II
OTHER INFORMATION
Item 3. Exhibits
(a) List of Documents Filed with this Report.
----------------------------------------
Page
----
(1) Balance Sheet-for the Years Ended December 31, 1998 . . . . . . . .
. . . . . . . . . . . . . . . . ..5
Notes to Consolidated Financial Statements as of December 31, 1998 .
. . . . . . . . . . . . . 10
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.
3(b)* 10-KSB for the year ended December 31, 1998, filed December 30,
1999. Commission File No.33-18778.
Computation of Per Share Earnings.
Financial Data Schedule.
(b) Reports on Form 8-K. None.
-------------------
(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.
5
/* 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.
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.
3(b)* 10-KSB for the year ended December 31, 1998, filed December 16,
1999. 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
