UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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 0-9255
DENCOR ENERGY COST CONTROLS, INC.
(Exact name of small business issuer specified in its charter)
Colorado 84-0658020
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1450 West Evans, Denver, Colorado 80223
(Address of principal executive office) (Zip Code)
(303) 922-1888
(Registrant's telephone number, including area code)
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 registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. No par value per share:
3,671,304 shares outstanding at July 31, 1997.
Transitional Small Business Disclosure Format
Yes No X
DENCOR ENERGY COST CONTROLS, INC.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
(Condensed Balance Sheets)
ASSETS June 30 Dec. 31
1997 1996
(unaudited)
CURRENT ASSETS:
Cash $ 2,400 $ 1,600
Accounts Receivable,net of allowance for doubtful
accounts of $8,500 108,600 58,500
Inventories 128,300 143,600
Prepaids and Other 13,000 8,300
TOTAL CURRENT ASSETS 252,300 212,000
Furniture & Equipment 213,300 213,300
Less Accumulated Depreciation (213,300) (211,300)
0 2,000
Other Receivables, net of allowance for doubtful
receivables of $2,300 3,300 3,400
$255,600 $217,400
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable - Shareholders $ 116,400 $ 93,400
Accounts Payable 45,300 33,300
Accrued Compensation and Benefits 24,400 30,600
Accrued Interest - Shareholders 61,500 53,600
Deposits 0 9,900
Warranty Reserve 6,300 6,300
Other 1,200 1,600
TOTAL CURRENT LIABILITIES 255,100 228,700
STOCKHOLDERS' EQUITY
Common Stock, no par value, authorized 5,000,000
shares; issued & outstanding, 3,671,304 shares 1,147,600 1,147,600
Deficit (1,146,600) (1,158,900)
Stockholders' Equity 500 (11,300)
$ 256,100 $ 217,400
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Six Months
Ended June 30 Ended June 30
1997 1996 1997 1996
REVENUES:
Net Sales $ 154,600 $ 96,200 $ 267,700 $ 199,900
Interest and Other 1,700 2,000 3,500 3,900
TOTAL REVENUES 156,300 98,200 271,200 203,800
COSTS AND EXPENSES;
Cost of Products Sold 75,300 52,300 129,900 111,100
Selling 4,700 4,800 10,800 9,200
General and Administrative 36,600 25,200 69,700 56,000
Research and Development 21,400 15,900 39,300 34,800
Provision for doubtful accounts
receivable
Interest 5,000 4,800 9,700 9,200
143,000 103,000 259,400 220,300
NET EARNINGS (LOSS) $ 13,300 $ (4,800) $ 11,800 $(16,500)
NET EARNINGS (LOSS) PER
COMMON SHARE:
Net Earnings (loss) $ .0036 $ (.0014) $ .0032 $ (.0045)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,671,304 3,671,304 3,671,304 3,671,304
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
STATEMENT OF CASH FLOWS
(unaudited)
Six Months Ended June 30
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 11,800 $(16,500)
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation 2,000 2,000
Changes in operating assets and liabilities:
Accounts and other receivables (50,000) 9,100
Inventories 15,300 5,200
Other assets (4,700) (8,600)
Notes payable 23,000 0
Accounts payable 12,000 5,200
Accrued compensation and benefits (6,200) (2,200)
Accrued interest - shareholders 7,900 9,000
Deposits (9,900) 0
Other liabilities (400) (3,000)
Total adjustments 11,000 16,700
Net cash provided by operating activities 800 200
CASH beginning of year 1,600 3,800
CASH end of quarter $ 2,400 $ 4,000
See notes to condensed financial statements
DENCOR ENERGY COST CONTROLS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
A. The condensed Financial Statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. 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 such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading.
In the opinion of the Company, all accompanying unaudited condensed
Financial Statements contain all adjustments, which consist only of recurring
adjustments, necessary to present fairly the financial position as of June 30,
1997, and the results of operations and cash flows for the six months ended
June 30, 1997 and 1996.
The results of operations for the six-month period ended June 30, 1997 and
1996, are not necessarily indicative of the results to be expected for the full
year. It is suggested that these Condensed Financial Statements be read in
conjunction with the Financial Statements and the notes therein included in the
Company's latest annual report on Form 10-KSB.
B. Long-Term Debt:
As of the end of Second Quarter, 1997, the Company had no long-term debt.
C. Common Stock:
During the Second Quarter, 1997, the Company sold no restricted stock.
D. Letter of Intent:
In May 1997, the Company entered into a letter of intent to merge with
Proven Alternatives, Inc. (PAI). PAI is an integrated energy and process
management firm. It provides process knowledge, energy management
capabilities, energy efficiency technologies and capital capabilities to
solve business problems relating to energy usage. Under the letter of
intent, PAI will become a wholly-owned subsidiary of the Company. Subject
to certain provisions, each issued and outstanding share of PAI common
stock will be converted into 1.5 shares of the Company's common stock.
The shares of the Company's common stock issued to stockholders of PAI
will comprise approximately 92% of the total number of shares of the
Company's common stock issued and outstanding after the merger
(approximately 93% on a fully diluted basis assuming the exercise of all
outstanding PAI stock options). The merger is subject to shareholder
approval of both companies and certain other conditions. Although there
is no assurance that the merger will occur, the Company believes that the
transaction will be completed during the third or fourth quarter of 1997.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
Second Quarter sales of $154,600 were approximately 61% greater than the $96,200
for the comparable period in 1996. The increase is primarily a result of a
increase in sales of a new product to utilities.
COST AND EXPENSE
Cost of Products Sold as a percentage of net sales decreased 5.6% for the second
quarter of 1997 compared with the same period in the prior year. This increase
in gross margin is primarily due to a increase in the sales of new products with
higher margins.
Selling expenses for the second quarter of 1997 were essentially the same as
for the same period in the prior year.
General and Administrative expenses as a percentage of net sales for the second
quarter of 1997 decreased 2.5% compared to the same period in the prior year.
Research and Development expenses as a percentage of net sales decreased 2.8%
from the same quarter in the prior year.
EARNINGS
The net earnings for the second quarter were $11,800 compared to a net loss of
$16,500 for the same period in the prior year. The earnings were due to the
decrease in cost of goods sold as a percentage of sales as well as increased
sales.
LIQUIDITY
The Independent Auditor's Report on Dencor Energy Cost Controls, Inc. Financial
Statements for the year ended December 31, 1996 included a "going concern"
explanatory paragraph which means that the Auditors have expressed substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regards to the factors which prompted the explanatory paragraph are
discussed in Note 2 to the Company's December 31, 1996 Financial Statements.
The Company's current ratio is .99 at the Quarter ended June 30, 1997.
Management believes the acid ratio (cash and accounts receivable divided by
current liabilities) of .44 is within the limits of reasonable liquidity.
DENCOR ENERGY COST CONTROLS, INC.
PART II - OTHER INFORMATION
Items 1 through 4 would appear to require no answers according to
the instructions.
Item 5. Other Information
(a) On June 3, 1997, The Registrant announced that it had entered into a
letter of intent to merge with Proven Alternatives, Inc. The
Registrant and Proven Alternatives, Inc. believe that the merger will
be completed in the third or fourth quarter of 1997, although there is
no assurance this will occur. See registrant's Form 8-K dated June 3,
1997.
Item 6. Exhibits And Reports On Form 8-K
(a) The following Exhibit is filed as part of this Quarterly Report on
Form 10-Q:
27. Financial Data Schedule.
(b) During the quarter ended June 30, 1997, the Registrant filed one
report on Form 8-K: Exhibit 99.1 Press release dated June 3, 1997.
SIGNATURE
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, thereunto duly authorized.
DENCOR ENERGY COST CONTROLS, INC.
Registrant
By: Maynard L. Moe
President
Date: August 13, 1997