UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file
number 811-3888
Combined Penny Stock Fund, Inc.
- -------------------------------------------------
Exact name of registrant as specified in charter)
6180 Lehman Drive #103, Colorado Springs, CO 80918
- --------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John R Overturf
6180 Lehman Dr #103
Colorado Springs, CO 80918
- ------------------------------------
(Name and address of agent for service)
Registrant's telephone number including area code:(719)593-2111
-----------------------
Date of fiscal year end: 09/30
--------------------
Date of reporting period: 03/31/05
-------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection and policymaking roles. A registrant is required to disclose the
information specified by Form N-CSR, and the Commission will make this
information public. A registrant is not required to respond to the collection of
information contained in Form N-CSR unless the Form displays a currently valid
Office of Management and Budget ("OMB") control number.
Please direct comments concerning the accuracy of the information collection
burden estimate and any suggestions for reducing the burden to Secretary,
Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC
20549-0609. The OMB has reviewed this collection of information under the
clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS
Combined Penny Stock Fund, Inc.
2005 Semi-Annual Report
3
[THIS PAGE INTENTIONALLY LEFT BLANK]
The Company
Combined Penny Stock Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a closed-end investment company.
Shares of the Fund are bought and sold over-the-counter on the Bulletin Board
under the symbol "PENY". All, or nearly all, capital gains and dividends are
reinvested in the Fund.
To Our Shareholders;
As previously announced in our April 15, 2005 press release, the Fund has begun
the liquidation process. The remainder of the securities have been sold and
converted to cash.
The date of record for payment of the shareholders of common stock will be April
29, 2005. The estimated one time cash distribution will be $.01 per share. The
cash distribution date will be on or before July 31, 2005.
Many thanks again to all our loyal shareholders.
Sincerely
John R. Overturf, Jr.
President
Combined Penny Stock Fund, Inc.
May 30, 2005
Corporate Information
- -------------------------------------- -------------------------------------
Officers and Directors Stock Transfer Agent
John R. Overturf, Jr., President and Director Computershare Investor Services,
Jeffrey J. Kormos, Director Inc.
12039 West Alameda Parkway Suite
#Z-2
Lakewood, CO 80228
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Corporate Headquarters Independent Auditors
Combined Penny Stock Fund, Inc. Ehrhardt Keefe Steiner & Hottman PC
6180 Lehman Drive, Suite 103 7979 E. Tufts Avenue, Suite 400
Colorado Springs, CO 80918-3415 Denver, CO 80237-2843
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Custodian of Portfolio Securities Counsel
US Bank Neuman & Drennen LLC
1507 Pine Street
Boulder, CO 80302
[THIS PAGE INTENTIONALLY LEFT BLANK]
Statement of Assets and Liabilities In Liquidation as of March 31, 2005
Assets
- ------------------------------------------------ ---------- ------------------
- ----------------------------------------------------------- ------------------
Investments at liquidation value:
Investments in securities of unaffiliated issuers
(identified cost $173,526) $ 0
Cash and Equivalents 547,423
-----------
Total Assets 547,423
-----------
Liabilities
Payables:
Accounts Payable 4,975
-----------
Total Liabilities 4,975
-----------
Contingencies
Net Assets in Liquidation $ 542,448
===========
Net Asset Value per Share $ .012
====
Analysis of Net Assets
Common Stock, $.001 par value, 100,000,000 shares
authorized, 45,686,574 issued and outstanding $ 45,687
Additional paid-in capital 5,854,490
----------
Net capital paid in on shares of capital stock $ 5,900,177
==========
Accumulated Loss:
Net investment loss (3,647,516)
Accumulated realized loss (1,536,687)
Net unrealized depreciation of investments (173,526)
----------
Total accumulated loss (5,357,729)
----------
Net Assets in Liquidation $ 542,448
==========
See notes to financial statements
Schedule of Investments in Unaffiliated Issuers Available for Liquidation
as of March 31, 2005
Units,
Shares or
Warrants Value(a)
Common Stocks - 00.00%
Communications - 0%
5,682 Voice It Worldwide, Inc. units $ 0
Food & Beverage - 0%
185 Charlie O Beverage, Inc. $ 0
Manufacturing - 0%
600 Sooner Holding, Inc. $ 0
417 Zapworld.com 0
3,333 Training Devices, Inc. (b) 0
--
Group Subtotal: 0
Mining - 0%
800 Exprofuels, Inc. $ 0
Retail - 0%
70 Usn Corporation $ 0
893 9A Investment Holding Corporation 0
4,000 House2Home, Inc. 0
--
Group Subtotal: 0
Schedule of Investments in Unaffiliated Issuers Available for Liquidation
as of March 31, 2005
TOTAL COMMON STOCKS (Cost $173,526) $ 0
Total Investments in Securities of Unaffiliated Issuers
(Cost $173,526) $ 0
Total Investments in Securities of Unaffiliated 00.00% $ 0
Issuers (Cost $173,526)
Cash and Equivalents, Net of Liabilities 100.00% 542,448
------- -------
Net Assets 100.00% $ 542,448
======= =======
(a) See Notes 1 and 2 of notes to financial statements.
(b) Restricted security, see Note 2 of notes to financial statements.
See notes to financial statements
Statement of Operations in Liquidation for the Six Months Ended March 31, 2005
Investment Loss:
Interest income $ 4,656
------
Total income 4,656
Expenses:
Salaries 6,000
Accounting services and administration 9,000
Audit 707
Office 872
Transfer agent 8,443
Legal 2,348
Custodian 808
Other 61
-------
Total expenses 28,239
-------
Net Investment Loss Before Net Realized and Unrealized
Gain (Loss) on Investments (23,583)
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized loss from investment transactions (200,823)
Net unrealized appreciation of investments 203,820
-------
Net Gain on Investments 2,997
-------
Net Decrease in Net Assets from Operations in Liquidation $ (20,586)
Statements of Changes in Net Assets in Liquidation for the Years Ended
September 30, 2003 and 2004 and the six monthes ended March 31, 2005
For the
unaudited
six months
ended For the Years ended
March 31, September 30,
2005 2004 2003
From Operations:
Net investment loss $ (23,583) $ (64,111) (191,428)
Net realized gain (loss) from
investment transactions (200,823) (847,436) 11,822
Net unrealized appreciation of
investments 203,820 913,957 63,856
-------- -------- -------
Net increase (decrease) in net
assets from operations in liquidation $ (20,586) 2,410 (115,750)
From Capital Stock Transactions:
Purchase of treasury stock
(0 and 228,426 shares in 2005
and 2004, respectively) -- (3,662) (8,705)
Net Assets in Liquidation -
beginning of period 563,034 564,286 688,741
--------- ------- --------
Net Assets in Liquidation -
end of period $ 542,448 $ 563,034 564,286
========= ======= =======
See notes to financial statements
Financial Highlights
For the For the Years Ended
Unaudited Six September 30,
Months Ended
March 31,
2005 2004 2003 2002 2001
Per Share:
Income from investments $ .000 $ .000 $ .000 $ .000 $ .001
Expenses (.001) (.001) (.004) (.003) (.003)
------ ------ ------ ------ ------
Net investment loss (.001) (.001) (.004) (.003) (.002)
Net realized gain and
unrealized appreciation
(depreciation) of investments .001 .001 .001 (.001) (.007)
----- ----- ----- ----- ------
Net increase (decrease) in
net asset value .000 .000 (.003) (.004) (.009)
Net Asset Value:
Begining of period .012 .012 .015 .019 .028
---- ---- ---- ---- -----
End of period $ .012 $ .012 $ .012 $.015 $ .019
---- ---- ----- ---- -----
Total investment return (1) (00.00)% (00.00)% (20.00)% (21.05)% (32.14)%
Ratios:
Expenses to average net assets 5.09% 12.06% 31.44% 17.42% 12.24%
Net investment loss to
average net assets 4.25% 11.39% 30.67% 15.79% 8.69%
Portfolio turnover rate (2) 00.00% 00.00% 00.00% 35.57% 114.47%
(1) Based on the change in net asset value considering there have been no
distributions during the period presented. The Fund does not believe that a
presentation based on changes in the market value of the Fund's common stock is
appropriate considering the limited market for the Fund's stock.
(2) The lesser of purchases or sales of portfolio securities for a period
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities for the six months ended March 31, 2005 were $0
and $185,708, respectively. See notes to financial statements
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Combined Penny Stock Fund, Inc. (the Fund) was incorporated September 7, 1983
and is registered under the Investment Company Act of 1940, as amended, as a
closed-end investment company. The Fund was formed to invest in a broad range of
small, speculative stocks traded in the over-the-counter market and is managed
by the Board of Directors of the Fund.
Securities and Exchange Commission Examination and Liquidation Basis of
Accounting
Pursuant to an examination of the Fund by the Securities and Exchange Commission
(SEC), the SEC has issued a letter to the Fund identifying various asserted
deficiencies and violations of rules and regulations. The Fund has responded to
the SEC and does not believe that the outcome of this matter will have a
material impact on the Fund's financial condition or operations beyond the
liquidation of its assets. However, the ultimate outcome of this matter is not
determinable at this time.
During 2003, the Board of Directors determined after being advised by legal
council that the Company was administratively dissolved, as a result of its
failure to file its corporate report and pay annual fees as required by C.R.S
7-114-201. The effective date of the administrative dissolution was July 1,
2000. As a result of that administrative dissolution, the corporate existence of
the Company continued but the corporation was not lawfully able to carry on
business except such business as is appropriate to wind up and liquidate its
business and affairs in accordance with applicable law. The Company has been
engaged in such process of converting all of its assets to cash for the purpose
of doing a liquidating distribution to its shareholders. The actions are
appropriate and authorized under applicable law notwithstanding the Companys
administrative dissolution. The Board of Directors believes the Company has
complied with all laws and regulations relating to becoming administratively
dissolved, however, if there were violations unknown to the Board of Directors,
the impact, if any, on the accompanying financial statements cannot be
determined at this time.
Basis of Accounting - As a result of the administrative dissolution described
above, the Company changed its basis of accounting for the periods after 2002
from the going concern basis to the liquidation basis which had no material
impact on the accompanying financial statements.
Investment Valuation - Investments in securities traded on national exchanges
and NASDAQ are valued at last reported sales prices. Investments in securities
traded in the over-the-counter market on the Electronic Bulletin Board or Pink
Sheets are valued at the quoted bid as obtained from NASDAQ or at the quoted bid
prices from the brokers that make markets in such securities, on the last
business day of the period. Investments in restricted securities, as well as
certain thinly-traded securities and corporate notes, are valued at their fair
value as determinqqqqqqed by management and the Board of Directors.
Federal Income Taxes - The Fund has not elected to be treated for Federal income
tax purposes as a "regulated investment company" under Subchapter M of the
Internal Revenue Code. Consequently, investment income and realized capital
gains are taxed to the Fund at tax rates applicable to corporations.
The Fund accounts for income taxes in accordance with the Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Under SFAS
No. 109, a current or deferred income tax liability or asset is recognized for
timing differences, which exist in the recognition of certain income and expense
items for financial statement reporting purposes in periods different than for
income tax reporting purposes.
Other - Investment transactions are accounted for on the date the investments
are purchased or sold (trade date). Realized gains and losses from investment
transactions and unrealized appreciation and depreciation of investments are
reported on a first-in, first-out basis. All of the Fund's equity securities as
of March 31, 2005 are non-income producing securities.
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Concentration of Cash - As of March 31, 2005, the Fund had a money market
deposit at a bank of $547,423, which is in excess of the federally insured limit
by approximately $447,423.
Use of Estimates - The preparation of the Fund's financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of income and expenses during the reporting period. Actual results could differ
from those estimates.
2. Restricted and Thinly-Traded Securities
Restricted securities are those securities, which have been acquired from an
issuer without registration under the Securities Act of 1933. Restricted
securities generally cannot be sold by the Fund except pursuant to an effective
registration statement or in compliance with Rule 144 of the Securities Act of
1933. The following schedule provides certain information with respect to
restricted securities held by the Fund as of March 31, 2005 These securities
comprised 2.30% of the Fund's net assets at such time.
Description Date of Acquisition Cost Value
Training Devices, Inc. February 20, 1997 $ 12,500 $ 0 .
The Fund has no right to require registration of the above-restricted
securities.
Valuations for the restricted securities, as well as certain thinly-traded
securities and corporate notes, have been determined in good faith by the Fund's
Board of Directors, in the absence of readily ascertainable market values. Such
investments were valued at $0 as of March 31, 2005 representing 0% of the Fund's
net assets. Because of the inherent subjectivity of these valuations, it is
reasonably possible that a material change in such valuations could occur in the
near term.
3. Unrealized Gains and Losses
At March 31, 2005, the net unrealized depreciation of investments of $173,526
was comprised of gross appreciation of $0 for those investments having an excess
of value over cost and gross depreciation of $173,526 for those investments
having an excess of cost over value.
4. Income Taxes
There is no income tax provision in 2005 as the deferred tax assets relating to
accumulated losses and unrealized depreciation of approximately $689,000
continue to be fully reserved. The deferred tax assets and related valuation
allowance each decreased $1,000 during the six months ended March 31, 2005 due
to the increase in unrealized depreciation. Accumulated net investment loss
carryovers for income tax purposes total approximately $2,271,000 at March 31,
2005, and will expire in varying amounts through 2008.
End of notes to financial statements
PRSRT STD
U.S. POSTAGE
PAID
Co. Spgs., CO
Permit No. 440
Combined Penny Stock Fund, Inc.
6180 Lehman Drive, Suite 103
Colorado Springs, Colorado 80918-3415
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
ITEM 2. CODE OF ETHICS. Not applicable
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable
ITEM 4.PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable
ITEM 5. AUDIT COMMITTEE OF LISTED COMPANIES. Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable - schedule filed with Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END FUNDS.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END FUNDS. Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
ITEM 10. CONTROLS AND PROCEDURES. (a) Based on an evaluation of the registrant's
disclosure controls and procedures within 90 days of filing date of this Form
N-CSR, the disclosure controls and procedures are reasonably designed to ensure
that the information required in filings on Forms N-CSR is recorded, processed,
summarized, and reported on a timely basis. (b) There were no significant
changes in the registrant's internal control over financial reporting that
occurred during the registrant's last fiscal half-year that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Not Applicable
(a)(2) Certifications by the registrant's principal executive officer and
principal financial officer, pursuant to Section 302 of the Sarbanes- Oxley Act
of 2002 and required by Rule 30a-2under the Investment Company Act of 1940 are
filed herewith.
(a)(3)Not Applicable
(b) Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 is filed herewith.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Combined Penny Stock Fund, Inc. By * /s/ John R Overturf
John R Overturf, President Date 05/31/05
- ---------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By * /s/ John R Overturf
John R Overturf President Date 05/31/05
- ---------------------------------------------------------------------------
Fund Directors
Name, Positions Term of Office Principal Number of Other
Address Held with and Length of Occupation(s) Portfolios Director
and Age Fund time served during the in Fund ships
*see(1) *see(2)below past 5 years Complex held
below Overseen for
By each
Director officer
Or or
Nominee nominee
*see (3) for
below Director
- -------- -------- -------------- ------------------- ---------- --------
John R. Overturf*(42) President, Mr. Overturf serves as President
6180 Lehman Dr 103 since of the Combined Penny Stock Fund,
Colorado Springs, August 1996 Inc., a closed-end stock fund, a
Colorado 80918 Director position he has since August 1996.
From March From September 1993 until September
1996 1996, Mr. Overturf served as Vice-
President of the Rockies Fund, Inc.
A closed-end stock market fund. Mr.
Overturf serves as the President
Of R.O.I., Inc., a private
Investment company, a position he
Has held since 1993. From June 1984
until February 1992, Mr. Overturf
served as Vice-President of Colorado
National Bank. Mr. Overturf holds a
Bachelor of Science degree in
Finance from the University of
Northern Colorado. Mr. Overturf
also is a director of BioSource
International, Inc. a California
Corporation.
Jeffrey J. Kormos (62) Director From August, 2001 until present, Mr.
8751 N 51st Ave 115 since Kormos has been employed as an
Glendale, Az 85302 July 1997 account executive with Samco
Financial Services, Inc. From
August 1994 to August 2002, he was
employed as an account executive
with Yee, Desmond, Schroeder & Allen
Inc., an NASD member stockbrokerage
firm. From March 1993 to August
1994, he was employed as an account
executive with G. R. Stuart &
Company, Inc. From December 1992 to
March 1993, Mr. Kormos was employed
as an account executive with
Financial Securities Network, Inc.,
and from April 1987 to December 1992
he was employed as an account
executive with Affiliated Securities
* Mr. Overturf may be deemed interested persons as that term is
defined under Section 2(a)(19) of the Investment Company Act of 1940, as
amended, by virtue of their being officers as well as directors of the Fund.
The Fund Statement of Additional Information includes additional information
about Fund directors and is available by calling the Fund's phone number, at
719-593-2111.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available calling the Fund
phone number, (719-593-2111.
The Fund has adopted a code of ethics applicable to its principal executive
officer and principal financial officer. A copy of this code is available by
calling the Fund phone number, (719)593-2111.
Combined Penny Stock Fund, Inc
6180 Lehman Drive, Suite 103
Colorado Springs, CO 80918
Phone: (719) 593-2111
Fax: (719) 593-2342
Board of Directors
John R. Overturf
Jeffrey J. Kormos
Officers
John R Overturf, President
PRSRT STD
U.S. POSTAGE
PAID
Co. Spgs., CO
Permit No. 440
Combined Penny Stock Fund, Inc.
6180 Lehman Drive, Suite 103
Colorado Springs, Colorado 80918-3415