UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2005
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 000-30065
INTREPID TECHNOLOGY & RESOURCES, INC., AND SUBSIDIARIES
-------------------------------------------------------
(exact name of registrant as specified in its charter)
IDAHO 82-0230842
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
501 West Broadway, Suite 200,
Idaho Falls, Idaho 82304
(Address of principal executive offices)
(208) 529-5337
(Issuer's telephone number)
IDAHO
-----
(State or other jurisdiction of incorporation or organization)
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 [_]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date:
148,679,745 shares of common stock, $0.005 par value per share, as of May 13,
2005.
Transitional Small Business Disclosure Format (check one): Yes [_] No [X]
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets . . . . . . . . . . . . . . . . . . . . . 3
Statements of Operations . . . . . . . . . . . . . . . . 4
Statements of Cash Flows . . . . . . . . . . . . . . . . 5
Notes to Unaudited Financial Statements. . . . . . . . . 6
Item 2. Management's Discussion and Analysis . . . . . . . . . . 11
Results of Operations. . . . . . . . . . . . . . . . . . 11
Capital Requirements . . . . . . . . . . . . . . . . . . 14
Item 3. Controls and Procedures. . . . . . . . . . . . . . . . . 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 19
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . 19
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . 19
Item 4. Submission of Matters to a Vote of Security Holders. . . 19
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . 19
Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . 19
Signature Page . . . . . . . . . . . . . . . . . . . . . 20
Certifications . . . . . . . . . . . . . . . . . . . . . 21
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTREPID TECHNOLOGY & RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ IN WHOLE DOLLARS EXCEPT PER SHARE AMOUNTS)
MARCH 31, JUNE 30,
2005 2004
UNAUDITED AUDITED
------------ ------------
ASSETS
Current Assets:
Cash $ 10,565 $ 134,856
Receivables, net of allowance for doubtful
accounts of $0 and $0 respectively 49,697 195,352
Investments -- 17,794
Prepaid expenses 534,556 --
Other assets 5,186 3,986
------------ ------------
Total current assets 600,004 351,988
Equipment, net 83,853 92,064
Construction in progress 934,622 273,996
Issuance costs, net accumulated amortization $15,182 112,342 --
------------ ------------
Total Assets $ 1,730,821 $ 718,048
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 203,049 $ 202,028
Accrued liabilities 172,867 81,295
Deferred compensation 98,763 138,962
Term loan 123,221 162,965
Long term debt - current portion 77,094 76,203
------------ ------------
Total current liabilities 674,994 661,453
Long term debt 750,000 --
------------ ------------
Total liabilities 1,424,994 661,453
Commitments and contingencies
Shareholders' equity:
Common stock, $.005 par value, 360,000,000 authorized, 138,207,435 and
112,216,953 shares issued and outstanding 661,209 531,084
Additional paid-in capital 5,232,620 4,253,050
Notes receivable - shareholders (16,200) (51,200)
Retained earnings (deficit) (5,571,802) (4,676,339)
------------ ------------
Total shareholders' equity 305,827 56,595
------------ ------------
Total Liabilities and Shareholders' Equity $ 1,730,821 $ 718,048
============ ============
The accompanying notes are an integral part of these financial statements.
3
INTREPID TECHNOLOGY & RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ IN WHOLE DOLLARS EXCEPT PER SHARE AMOUNTS)
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
2005 2004 2005 2004
----------------- ----------------- ----------------- -----------------
UNAUDITED Unaudited UNAUDITED Unaudited
----------------- ----------------- ----------------- -----------------
Revenue $ 39,287 $ 414,987 $ 187,060 $ 1,849,398
Direct operating costs 46,565 288,956 185,403 1,133,607
----------------- ----------------- ----------------- -----------------
Gross profit (loss) (7,278) 126,031 1,657 715,791
Selling, general and administrative expenses 355,136 223,546 866,736 720,719
----------------- ----------------- ----------------- -----------------
Loss from operations (362,414) (97,515) (865,079) (4,928)
Interest revenue 1 333 993 333
Interest expense (3,599) (5,117) (18,633) (19,304)
Disposition of assets -- -- (12,744) --
----------------- ----------------- ----------------- -----------------
Net income (loss) before income taxes (366,012) (102,299) (895,463) (23,899)
Provision for income taxes (benefit) -- (32,788) -- (8,366)
----------------- ----------------- ----------------- -----------------
Net loss $ (366,012) $ (69,511) $ (895,463) $ (15,533)
================= ================= ================= =================
Net loss to common shareholders $ (366,012) $ (69,511) $ (895,463) $ (15,533)
================= ================= ================= =================
Basic earnings (loss) per share $ (0.0027) $ (.0007) $ (0.007) $ (.00012)
================= ================= ================= =================
Diluted earnings per share $ (0.0027) $ -- $ (0.007) $ --
================= ================= ================= =================
Dividends paid per common share $ -- $ -- $ -- $ --
================= ================= ================= =================
The accompanying notes are an integral part of these financial statements
4
INTREPID TECHNOLOGY & RESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ IN WHOLE DOLLARS EXCEPT PER SHARE AMOUNTS)
For the nine months Ended March 31,
2005 2004
--------------------- ---------------------
UNAUDITED Unaudited
--------------------- ---------------------
Cash flows from operating activities:
Net income (loss) $ (895,463) $ (15,533)
Adjustments to reconcile net loss to net cash provided by (used by)
operating activities:
Depreciation and amortization 23,393 7,445
Expenses in exchange for issuance of common stock 72,023 55,813
Changes in assets and liabilities:
Accounts receivable, net 145,655 195,018
Investments 17,794 5,000
Prepaids and other assets (20,757) --
Deferred tax asset -- (8,366)
Accounts payable 1,021 (100,108)
Accrued liabilities 91,572 (77,247)
Deferred compensation (40,199) (54,269)
--------------------- ---------------------
Net cash provided by (used by) operating activities (604,961) 7,753
Cash flows from investing activities:
Construction in progress (660,625) --
Purchase of office equipment -- (76,626)
--------------------- ---------------------
Net cash used by investing activities (660,625) (76,626)
Cash flows from financing activities:
Common stock proceeds 522,672 376,194
Note receivable for stock collected 35,000 20,700
Debenture issuance 750,000 --
Payments on line of credit / term loan (39,744) (27,664)
Deferred debenture costs (127,524)
Increase on notes payable 891 4,767
--------------------- ---------------------
Net cash provided by financing activities 1,141,295 373,997
--------------------- ---------------------
Increase (decrease) in cash and cash equivalents (124,291) 305,124
Cash and cash equivalents at beginning of period 134,856 27,175
--------------------- ---------------------
Cash and cash equivalents at end of period $ 10,565 $ 332,299
===================== =====================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest paid $ 1,834 $ 1,834
Non cash investing and financing transactions
Common stock issued for services, prepaid assets and debt repayments $ 587,023 65,813
The accompanying notes are an integral part of these financial statements
5
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with United States generally accepted accounting principles ("U.S.
GAAP") for interim financial information and with instructions to Form 10-QSB of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by U.S. GAAP for complete financial statements. The
preparation of the consolidated financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from estimates. In the opinion of management,
all adjustments, which consist of normal and recurring adjustments, necessary
for fair presentation have been included. These financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's 2004 Annual Report on Form 10-KSB for the year ended June 30,
2004, as filed with the Securities and Exchange Commission.
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant inter-company transactions and
balances have been eliminated in consolidation.
Note 2. Description of Business
Intrepid Technology & Resources, Inc. and Subsidiaries, (the "Company"), an
Idaho corporation, is a biofuels renewable and alternative energy development
and operating company with strengths in engineering and technology. While the
Company's primary source of current revenue has been the sale of engineering
services to a variety of clients, it is posturing itself for a primary business
purpose of developing, constructing, and operating a portfolio of projects in
the Renewable and Alternative Energy sector, with a special emphasis on
production of biofuels - particularly, biogas (methane), ethanol, biodiesel and,
eventually, hydrogen. The Company's strategy is to provide the overall technical
and integration management for planning, developing, operating and, in some
cases, owning such projects. The Company's initial emphasis is on establishing
several complexes in the Southern Idaho region and then expanding to other
locations within Idaho and the Western United States. The Company provides
credit in the normal course of business to its customers and performs ongoing
credit evaluations of those customers. It maintains allowances for doubtful
accounts based on factors surrounding the credit risk of specific customers,
historical trends, and other information. Credit losses, when realized, have
been within the range of the Company's expectations and, historically, have not
been significant.
Customers
In 2004, the Company managed several engineering services contracts with Idaho
National Engineering and Environmental Laboratory ("INEEL") at Idaho Falls,
Idaho, and with the Oak Ridge Associated Universities ("ORAU") based in Oak
Ridge, Tennessee. These contracts generated the majority of the Company's
revenue. Profits realized from this revenue were used to help develop the
Biofuels business line. The Company expects to continue providing such
supplemental engineering and technical services in the future, but with
decreased emphasis on government contracts and increased emphasis on biofuels
related engineering services for private clients.
Additionally, the Company is well into its major transition from being primarily
a provider of engineering services to becoming a producer and distributor of
biogas products and facilities. Its first facility is now operational and
undergoing initial startup and testing evaluation. Process heat for the facility
is being supplied entirely from its own biogas and gas is being produced at
better than expected levels and rates. The first delivery of high quality gas to
a commercial pipeline is anticipated by summer. The contract for a second
facility has been signed and construction is expected to be underway in the 4th
quarter. This second facility will have 3 times the capacity of the first and
revenue generation is expected by 4th quarter 2006. The Company will own both
facilities and the initial customer for the gas produced will be a local natural
gas utility. Management expects that the construction of these first two biogas
plants will stimulate orders for other dairy and cattle feeding operations in
the area and increase demand for Company's services to design construct and
operate other plants. The Company will retain the option to maintain an equity
position in each facility built, thus adding to future revenue streams derived
from sales of biogas products.
6
Note 3. Summary of Significant Accounting Policies
The significant accounting policies applied in the annual financial statements
of the Company as of June 30, 2004, are applied consistently in these financial
statements. In addition, the following accounting policy is applied:
The accompanying unaudited consolidated financial statements for the three
months ended March 31, 2005 reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of the financial position and operating results for the
interim period. The condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of the financial condition
and results of operations, contained in the Company Annual Report on Form 10-KSB
for the fiscal year ended June 30, 2004. The results of operations for the three
months ended March 31, 2005 are not necessarily indicative of the results for
the entire fiscal year ending June 30, 2005.
Note 4. Stock Base Compensation
At the December 5, 2002 Annual Shareholder Meeting, the Company approved a
stock-based employee compensation plan. The stock option plan allows officers,
directors, employees and consultants of the Company to receive non-qualified and
incentive stock options for a total of 25 million shares. In its October 28,
2004 Schedule 14A Proxy Filing, the Company presented a proposal to amend the
compensation plan to increase the number of shares available by 15 million,
making the total 40 million in the aggregate. However, the Board of Directors
subsequently elected to withdraw that proposal and it was not presented for vote
at the December 14, 2004 Annual Shareholder Meeting. The Company awarded
2,100,000 options during the quarter ended March 31, 2005. A total of 43,900
options were available for future option grants as of March 31, 2005.
The Company accounts for employee stock-based compensation using the intrinsic
value method for each period presented under the recognition and measurement
principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees,"
and related interpretations. No compensation cost is reflected in net income for
options granted to employees, as all options granted under those plans had an
exercise price equal to the fair market value of the underlying common stock on
the date of grant. The Company accounts for stock options granted to
non-employees using the fair value method under SFAS No. 123, "Accounting for
Stock-Based Compensation."
The following table illustrates the effect on net income (loss) and earnings
(loss) per share as if the fair value method had been applied to all outstanding
and unvested awards in each period:
Quarter Ended March 31,
--------------------------------
2005 2004
--------------- ---------------
Net income / (loss) $ (366,012) $ (69,511)
=============== ===============
Deduct: Stock based employee
Compensation expense determined
under fair value based method, net
of tax (131,783) (593,787)
=============== ===============
Pro forma net income / (loss) $ (497,795) $ (663,298)
=============== ===============
Basic earnings per share as recorded $ (0.0027) $ (.0007)
=============== ===============
Basic earnings per share pro forma $ (0.0036) $ (.0007)
=============== ===============
Note 5. Earnings Per Common Share
Basic earnings per share are computed based on net income and the weighted
average number of common shares outstanding. The Company has outstanding
debentures that would cause diluted earnings per share however, the losses for
both the three and nine months ended March 31, 2005 do not result in further
diluted earnings per share.
7
(000's except per share amounts) (000's except per share amounts)
Three Months Ended March 31, Nine Months Ended March 31,
---------------------------------- ----------------------------------
2005 2004 2005 2004
---------------- ---------------- ---------------- ----------------
Net income / (loss) $ (366) $ (70) $ (895) $ (16)
Weighted average shares outstanding-
Common shares 136,622,162 99,050,700 120,280,146 93,457,667
Basic earnings per share $ (.0027) $ (.0007) $ (.007) $ (.00012)
================ ================ ================ ================
Diluted earnings per share $ (.0027) $ -- $ (.007) $ --
================ ================ ================ ================
Note 6. Equipment.
Equipment consists of the following as of March 31, 2005:
Computers and software $ 41,032
Furniture 11,259
Other Equipment 1,525
Pumping Station 64,500
Vehicles 3,000
----------
Subtotal $ 121,316
Less accumulated depreciation (37,463)
----------
Total Equipment, net $ 83,853
==========
During the quarter ended March 31, 2005 the Company continued work on certain
alternative energy projects. These projects included the WOBF fueling station
and the startup and testing activities associated with the Whitesides anaerobic
digester located at a 4,000-head dairy north of Rupert, Idaho. This digester is
being used as the prototype facility to generate natural gas for sale as a
renewable energy source of heat and power. From this prototype digester more
information will become available for optimization of sizing, and equipment
specification and selection to generate the maximum energy value. This will
better enable the Company to determine the most effective business model for
utilizing the gas produced - i.e. direct conversion to electricity and sale to
local power company or direct distribution and sale as natural gas to local
commercial and industrial users. The Company also expects revenue to be
generated from the Whiteside operations.
Note 7. Long Term Debt.
Term Loan - The Company had a term loan as of March 31, 2005 of which $123,221
- ----------
was outstanding at March 31, 2005. The loan is in the form of a three-year note
and bears a fixed 5.75% interest rate. The credit is secured by all business
assets and personally guaranteed by the principals of the Company. The following
employees of the Company have given unlimited personal guarantees of the loan:
Dennis Keiser (President), Jacob Dustin (Vice President), Donald Kenoyer, and C.
Scott Francis. As of March 31, 2005 the loan was in good standing.
Shareholder Notes - The following shareholders who are also officers, employees
- ------------------
or directors have personally lent money to the Company. The notes are unsecured
demand notes. It is not anticipated by the Company that the notes will be called
in the next year. The following are shareholder creditors to the Company: Mr.
Kenoyer has made two loans to the company and as of March 31 2005, the total
balance due him was $23,937. The first loan accrues interest at the rate of 10
percent and has a balance of $407. The second accrues interest at the rate of 7
percent and has a balance of $23,530. Mr. Dustin has also made two loans to the
company and as of March 31 2005, the total balance due him was $46,660. The
first loan accrues interest at the rate of 10 percent and has a balance of
$15,624.
8
The second accrues interest at the rate of 7 percent and has a balance of
$31,036. The balance of the loan amount is $6,174 for Reggie Hall.
Debenture Debt - On October 13, 2004, the Company entered into a Securities
- ---------------
Purchase Agreement with Cornell Capital Partners, LP. Pursuant to the Securities
Purchase Agreement, the Company issued convertible debentures to Cornell Capital
Partners, LP in the original principal amount of $750,000. The $750,000 was
disbursed as follows: (i) $450,000 was paid October 22, 2004, and (ii) $300,000,
was paid December 28, 2004, upon the filing of a registration statement with the
SEC related to the shares issued under the Standby Equity Distribution Agreement
as described below and the convertible debentures. The debentures are
convertible at the holder's option any time up to maturity at a conversion price
equal to the lower of (i) 120% of the Volume Weighted Average Price of the
common stock on the date of the debentures or (ii) 80% of the Volume Weighted
Average Price of the common stock of the Company for the five trading days
immediately preceding the conversion date. The debentures are secured by the
assets of the Company. The debentures have a three-year term and accrue interest
at 5% per year. Cornell Capital Partners, LP received 10% of the gross proceeds
of the convertible debentures, paid directly from escrow upon each fund
disbursement described above. At maturity if not repaid, the debentures will
automatically convert into shares of common stock at a conversion price equal to
the lower of (i) 120% of the Volume Weighted Average Price of the common stock
on the date of the debentures or (ii) 80% of the Volume Weighted Average Price
of the common stock of the Company for the five trading days immediately
preceding the conversion date.
NOTE 8. NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued the following
pronouncements.
Statement No. 123 (revised 2004) Share-Based Payment. This Statement supersedes
APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related
implementation guidance. This Statement establishes standards for the accounting
for transactions in which an entity exchanges its equity instruments for goods
or services. It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value
of the entity's equity instruments or that may be settled by the issuance of
those equity instruments. This Statement focuses primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. The effect on the Company's financial statements is dependent upon
the amount of stock options granted by the Company.
Summary of Statement No. 153 Exchanges of Nonmonetary Assets-an amendment of APB
Opinion No. 29This Statement amends Opinion 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. The Company does not expect any material effect to its
financial statements.
NOTE 9. GOING CONCERN CONTINGENCY.
The Company was not profitable in the third quarter of the fiscal year ending
June 30, 2005 and incurred a significant loss of $366,012. The loss was
primarily a result of the Company's focus on the Biofuels market and having
construction in progress for the Biogas digester combined with the shortage of
engineering services work. The Company's ability to continue as a Going Concern
is dependent on ongoing operations, bringing the Whitesides Biofuels digester on
line to generate revenue and be profitable, obtaining additional financing, and
successfully concluding the sale of the existing mining rights. Management will
continue its efforts in seeking new and additional engineering contracts, and is
in the process of obtaining additional financing as well as completing the
Whitesides Digester project. The Company has mitigated the Going Concern as a
result of entering into the agreement with Cornell Capital as explained in Note
10 below. However, these plans may not be successful.
NOTE 10. EQUITY AGREEMENT.
Standby Equity Distribution Agreement. On October 13, 2004, the Company entered
- -------------------------------------
into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP.
Pursuant to the Standby Equity Distribution Agreement, the Company could have,
at its discretion, periodically sold to Cornell Capital Partners, LP shares of
common stock for a total purchase price of up to $25.0 million. For each share
of common stock purchased under the Standby Equity Distribution Agreement,
Cornell Capital Partners LP would have paid the Company 99% of, or a 1%
9
discount to, the lowest closing bid price of our common stock on the
Over-the-Counter Bulletin Board or other principal market on which the Company's
common stock is traded for the five days immediately following the notice date.
Cornell Capital Partners LP would have retained 5% of each advance under the
Standby Equity Distribution Agreement and received $500,000 worth of common
stock of the Company as a fee under the Standby Equity Distribution Agreement.
On January 28, 2005, the Company entered into a Termination Agreement with
Cornell Capital Partners, whereby the Standby Equity Distribution Agreement,
dated October 13, 2004, and related Registration Rights Agreement, Placement
Agent Agreement and Escrow Agreement of even date therewith were terminated.
On March 10, 2005, the Company entered into a Termination Agreement with Cornell
Capital Partners, whereby the Standby Equity Distribution Agreement, dated
January 28, 2005, and related Registration Rights Agreement, Placement Agent
Agreement and Escrow Agreement of even date therewith were terminated.
Upon execution of the Termination Agreement dated March 10, 2005, the Company
entered into a new Standby Equity Distribution Agreement with Cornell Capital
Partners on March 10, 2005. Pursuant to the Standby Equity Distribution
Agreement, the Company may, at its discretion, periodically sell to Cornell
Capital Partners shares of common stock for a total purchase price of up to
$25.0 million. For each share of common stock purchased under the Standby Equity
Distribution Agreement, Cornell Capital Partners will pay the Company 99% of, or
a 1% discount to, the lowest closing bid price of the common stock during the
five consecutive trading period immediately following the notice date. Further,
Cornell Capital Partners will retain a fee of 5% of each advance under the
Standby Equity Distribution Agreement. Cornell Capital Partners' obligation to
purchase shares of the Company's common stock under the Standby Equity
Distribution Agreement is subject to certain conditions, including the Company
obtaining an effective registration statement for shares of common stock sold
under the Standby Equity Distribution Agreement and is limited to $350,000 per
weekly advance. The Company's SB-2 registration became effective May 2, 2005.
On January 28, 2005, the Company and Cornell Capital Partners terminated the
Investor's Registration Rights Agreement entered into on October 13, 2004 with
the Cornell Capital Partners, which related to the Securities Purchase Agreement
entered into on October 13, 2004 with the Cornell Capital Partners, as described
in Note 7 above.
On March 10, 2005, the Company and Cornell Capital Partners terminated the
Securities Purchase Agreement entered into on October 13, 2004 with Cornell
Capital Partners, and the related Convertible Debentures, Security Agreement,
Escrow Agreement and Irrevocable Transfer Agent Instructions of even date
therewith were terminated.
Upon execution of the Termination Agreement, the Company entered into a new
Securities Purchase Agreement with Cornell Capital Partners on March 10, 2005.
Pursuant to the Securities Purchase Agreement, the Company issued convertible
debentures to Cornell Capital Partners in the original principal amount of
$750,000. The debentures are convertible at the holder's option any time up to
maturity at a fixed conversion price equal to $0.055 (the "Fixed Price"). The
debentures are secured by the assets of the Company. The debentures have a
three-year term and accrue interest at 5% per year. Cornell Capital Partners
received 10% of the gross proceeds of the convertible debentures, paid directly
from escrow upon the funding of the convertible debentures. At maturity, the
debentures will automatically convert into shares of common stock at a
conversion price equal to the Fixed Price.
NOTE 11. SUBSEQUENT EVENT.
On April 15, 2005 the Company filed its amended SB-2/A registration with the
U.S. Securities and Exchange Commission. The Commission accepted this filing as
effective May 2, 2005. At the effective date May 2, 2005 the Company had
outstanding 148,679,745 common shares of which 10,000,000 common shares were
issued to Cornell Capital Partners on April 15, 2005. Those 10,000,000 shares
will be held in an escrow account as the Company makes draws from the Standby
Equity Distribution Agreement. On April 20, 2005 the Company signed a Promissory
note with Cornell Capital Partners in the amount of $500,000. The note will be
repaid with exchange for nine periodic SEDA draws of $50,000 each and one of
$64,712.33 beginning June 6, 2005 and every 7 calendar days thereafter until
paid in full. The final draw will include the accrued interest on the Promissory
note. The actual timing and amount of those draws may vary slightly.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that involve known
and unknown risks and uncertainties which may cause actual results in future
periods to differ materially from those indicated herein as a result of a number
of factors, including, but not limited to, those set forth under Legal
Proceedings, and the discussion below. When the Company uses words like "may,"
"believes," "expects," "anticipates," "should," "estimate," "project," "plan,"
their opposites and similar expressions, the Company is making forward-looking
statements. These expressions are most often used in statements relating to
business plans, strategies, anticipated benefits or projections about the
anticipated revenues, earnings or other aspects of our operating results. We
make these statements in an effort to keep stockholders and the public informed
about our business and have based them on our current expectations about future
events. Such statements should be viewed with caution. These statements are not
guarantees of future performance or events. As noted elsewhere in this report,
all phases of our business are subject to uncertainties, risks and other
influences, many of which the Company has no control over. Additionally, any of
these factors, either alone or taken together, could have a material adverse
effect on the Company and could change whether any forward-looking statement
ultimately turns out to be true. The Company undertakes no obligation to
publicly release updates or revisions to these statements. The following
discussion should be read in conjunction with audited consolidated financial
statements and the notes filed thereto on Form 10-KSB with the U.S. Securities
and Exchange Commission for the year ending June 30, 2004.
RESULTS OF OPERATIONS
- ---------------------
REVENUE
Revenue for the quarter ended March 31, 2005, decreased 90% to $39,287 compared
to $414,987 for the same period of 2004. Revenue for the nine months ended March
31, 2005 was $187,060 compared to $1,849,398 for the same nine months ended
March 31, 2004. This decrease for both the three and nine months ended March 31,
2005 was mainly the result of the reduction in outside contracting by the INEEL
and the Company's shifting of resources from engineering services to designing
and building of Company-owned biogas facilities. The Company's principal focus
is on the Biogas fuels facility, therefore revenue will be minimal until the
facility comes on line and is producing biofuels.
In fiscal year 2004, the Company's primary customers were Idaho National
Engineering and Environmental Laboratory ("INEEL") at Idaho Falls, Idaho and Oak
Ridge Associated Universities (ORAU). INEEL and ORAU both provided more than ten
percent of the total revenue recognized by the Company in fiscal year 2004.
DIRECT OPERATING COSTS
Direct operating costs for the three months ending March 31, 2005 and 2004, were
$46,565 and $288,956 respectively, representing an 84% decrease. For the nine
months ended March 31, 2005 direct operating costs also declined 84% to $185,403
from $1,133,607 in 2004. The reason that direct operating costs decreased is due
to the large drop in engineering services work and direct operating costs that
paralleled this work. Additionally, the Company made further efforts to reduce
direct costs by using less subcontracted services, eliminating certain rental
fees, closing the Montana and Washington offices, making better use of supplies,
and exercising better management of direct payroll costs.
GROSS PROFIT
The Company had a loss in gross profit of $7,278 in the third quarter ended
March 31, 2005 compared to a gross profit of $126,031 for the same quarter in
2004, representing a 106% decrease. Similarly, for the nine months ended March
31, 2005 gross profit decreased by 99.7% to $1,657 compared to $715,791 for the
same period in 2004. This decrease in gross profit is a result of the reduction
in engineering service work, the loss of revenue and the Company also outsourced
engineering service contracts by the INEEL. Also, in the 4th quarter of fiscal
year
11
2004, the Company shifted its resources and capital into the design and
construction of Company-owned biogas production facilities.
SELLING GENERAL AND ADMINISTRATIVE EXPENSES
For the three months ended March 31, 2005, general, selling and administrative
expenses were $355,136 compared to $223,546 for the same quarter ended March 31,
2004. This 59% increase was the result of increased administrative expenses that
were not covered by previous engineering services work. The Company also
increased efforts in expanding the Biogas operations, which resulted in more
administrative expenses. For the nine months ended March 31, 2005, general,
selling and administrative expenses increased 20% to $866,736 compared to
$720,719 for the same period of 2004.
INTEREST REVENUE
For the three and nine months ended March 31, 2005, the Company received $1 and
$993 of interest income on investment capital compared to $333 and $333 for the
same respective periods in 2004.
INTEREST EXPENSE
For the three months ended March 31, 2005, the Company had interest expense of
$3,599 compared to $5,117 for the same period ending March 31, 2004. For the
nine months ended March 31, 2005 the Company had interest expense of $18,633
compared to $19,304 for the same period ending March 31, 2004. The interest
expense was for interest paid on the term loan and interest accrued on notes
payable to officers and employees of the Company. The Company has reduced the
term loan and therefore incurs less interest expense.
NET LOSS
For the three months ended March 31, 2005, the Company had a net loss of
$366,012 compared to net loss of $69,511 for the same period ended March 31,
2004. For the nine months ended March 31, 2005 the Company had a net loss of
$895,463 compared to a net loss of $15,533 for the same period ended March 31,
2004. In 2004, the Company eliminated a deferred tax asset and the selling
general and administrative expenses were not offset by revenue that was seen
from engineering services work in 2003. The Company has changed its focus to the
Biogas industry and it is unlikely to receive comparable revenue for engineering
services going forward.
MANAGEMENT'S PLAN OF OPERATION
- ------------------------------
Providing engineering and technical services has been the primary source of
revenue, and hence the primary business focus, in the past. The Company expects
to continue providing such supplemental services in the future, but with
decreased emphasis. In fiscal year 2005, the Company will complete its major
transition from being primarily a provider of engineering services to becoming a
significant producer and distributor of biogas products and facilities. The
following discussion provides an overview of how that transition will unfold.
The fundamental aspects of the Company's business model are:
- Utilize cutting edge, but established, technology for the
production of biogas from large animal operations
- Utilize off-the-shelf equipment for clean-up of the biogas to
meet pipeline-quality specifications and produce liquid products
- Maintain equity positions on all biogas projects
- Begin operations in known territory (Idaho), and expand into
other western states as resources allow
- Maximize the utilization of our public company status in the
financing of our projects
- Market biogas products to local gas utilities, industrial users,
and transportation users
- Team with experienced companies for the marketing and
distribution of biogas products
12
DEVELOPMENT PLAN
Over the next four years, the Company plans to place 250,000 head of dairy and
beef cattle into biogas production. The Company will design, construct and
operate these facilities consistent with the business model parameters described
above.
The centerpiece of this development plan is an exclusive geographic and
case-by-case national sub-licensing agreement for anaerobic digestion technology
that produces biogas with nearly a 33% higher concentration of methane than
competing processes. This technology has a successful 5-year operational history
and has been demonstrated with both cow and swine waste.
This plan involves discrete projects that the Company has organized or is in the
process of organizing that will allow the Company to systematically build and
operate biogas facilities over the next four years. These projects are organized
as follows:
WHITESIDES PROJECT. This 4,000-cow dairy located 8 miles northeast of Rupert,
- --------------------
Idaho was chosen as the location for the first biogas facility. Construction of
the initial phase (2 of 4 planned digester tanks) is complete and gas from the
digester is currently being used to provide process heat to run the facility.
The quantity of gas production continues to increase as the bacteria within the
tanks mature and will further increase as additional tanks are brought on line,
resulting in a commercial revenue/profit stream. This initial project serves
four primary purposes:
1. Establish the Company's credibility in the biogas industry
2. Provide a "model home" for other dairymen to visit ("try before you
buy")
3. Provide a full-scale working facility with which the Company can
continue to optimize performance and demonstrate/test new concepts for
both enhanced gas production and alternative means of product use
4. Initiate a modest revenue/profit stream
WESTSIDE PROJECT. This project will be carried out in phases and will be
- ------------------
anchored by a large dairy of 6,000 animals. It is anticipated that other dairies
in the immediate vicinity will be joined in, resulting in an eventual combined
size of 19,000 cows. These dairies, located west of Wendell, Idaho, will be
networked together via an underground gas collection/distribution pipeline
system to route biogas to existing pipelines owned by the local gas utility. The
first phase will be the construction of twelve digester tanks at the WestPoint
dairy. The contract for this facility has been signed and construction should
begin during 4th quarter. Once this "anchor dairy" is completed, follow-on
digesters will be constructed at the surrounding dairies along with the
connecting pipeline. The project serves the following purposes:
1. Increase production from 4,000 to a total of 23,000 head
2. Improve on economies of scale for higher operating margins
LINCOLN COUNTY PROJECT. This project is being planned for siting on a 12,000-cow
- -----------------------
dairy located in a geographically isolated region but very close to a major gas
utility transmission line and in close proximity to a large industrial user of
propane - two ready-made customers for gas produced. The size of this operation
is sufficient to demonstrate conclusively the viability of the Company business
model and, potentially, economically justify production of Liquid Natural Gas
(LNG), a product that it is imperative the Company gain first hand experience
with in order to meet future market demands. The project serves the following
purposes:
1. Further expand the limits to which digesters can be scaled up
2. Provide entry into the LNG production business
3. Increase production from 23,000 to 35,000 head
13
EASTSIDE PROJECT. This project is in the organizing state and will be developed
- -----------------
similarly to the Westside project, where multiple dairies will be connected to a
pipeline that in turn will deliver gas to the local gas utility's pipeline. This
Eastside grouping consists of several dairies totaling 18,000 head of cattle
located east of Wendell, Idaho. Construction is planned for 2007 with operations
beginning in the last quarter of 2007. The project serves the following
purposes:
1. Increase production from 35,000 to 53,000 head
2. Build upon the Westside project approach and share support
resources
BEEF FEEDLOT PROJECT. This project is envisioned as one that will be undertaken
- ----------------------
in partnership with a major beef feedlot agribusiness company. Given the
differences in manure outputs between beef and dairy cattle and given that this
is an open lot operation, the gas production capacity for this project is
expected to be equivalent to an approximate 45,000-cow dairy. This large
operation makes LNG the product of choice because of the higher margins of LNG
over pipeline gas. Construction is estimated to begin in late 2006 and the
facility will become operational the first quarter of 2008. The project serves
the following purposes:
1. Increase production from 53,000 to 198,000 head
2. Provide entry into feedlots for a source of waste manure;
3. Team the Company with an international agribusiness partner
4. Allow expansion into other significant feedlots outside of Idaho
EXPORT PROJECT. As the above projects begin to attract greater national
- ----------------
attention due both to their size and their operational flexibility and
efficiency, we expect there will be considerable opportunity to export our
system to other regions of the country where conditions favor our business
model. The Company anticipates taking advantage of those opportunities beginning
late in 2007 or early 2008. Potential also exists to export the Company's
feedlot biogas facilities to other states. The Export Project serves the
following purposes:
1. Increase production from 193,000 head to 250,000
2. Provide entry into a dairy community five times the size of
Idaho's
3. Provide entry into the West Coast renewable energy market, the
largest in the nation
ADDITIONAL INFORMATION
The Company also plans to increase sales and expand its engineering and
scientific services base via new customer contracts. Revenue generated will be
used to meet cash flow requirements with any excess being used to support and
develop the Company's biofuels production initiatives.
At the present time the Company does not anticipate paying dividends, cash or
otherwise, on its Common Stock in the foreseeable future. Future dividends will
depend on earnings, if any, of the Company, its financial requirements and other
factors. The Company's main focus is now in the biofuels market, specifically
the production of biogas. The Company has made two acquisitions for the vertical
integration of the business and the ability to have a ready available access to
sell the gas production into the market place. The Company believes that it has
also taken the proper steps to sell certain assets including the mining and
mineral rights of the Garnet mine in Montana to provide working capital to see
the production through to completion. The Company is currently seeking other
investment capital to support the existing and ongoing operations of the Company
and these projects.
CAPITAL RESOURCES AND LIQUIDITY
The Company has made reasonable efforts to meet cash flow demands from ongoing
operations but the Company still may not be able to obtain funds under the
Standby Equity Distribution Agreement or obtain sufficient amounts to satisfy
the Company's working capital or other needs in its capital position over that
of one year ago. The
14
Company finished the second quarter ending March 31, 2005 with cash available of
$10,565 compared to $134,856 at June 30, 2004 and $332,299 for the same period
of 2004. The Company believes that it will be necessary to continue to
supplement the cash flow from operations with the use of outside resources such
as investment capital by issuance of debenture notes and stock. The Company has
filed an SB-2 registration with the U.S. Securities and Exchange Commission
related in part to the Standby Equity Distribution Agreement. The impact of the
SB-2 registration cannot be said with certainty but the Company plans to use any
additional funding to assist in the Biogas production facility that is shown on
the balance sheet as Construction in Progress.
As of March 31, 2005, the Company had negative working capital of $74,990
compared to a deficit of $309,465 for the year ending June 30, 2004 and a
working capital deficit of $68,561 for the same period ending March 31, 2004.
The current ratio at March 31, 2005 was: 0.889:1 and 0.53:1 at June 30, 2004 and
at March 31, 2004. This change in working capital is mainly attributed to
$534,556 of prepaid expenses. These prepaid expenses all relate to the
prepayments in stock as a result of the Standby Equity Agreement.
The Company had a term loan with a fixed rate of 5.75% as of March 31, 2005 with
a balance was $123,221. The credit is secured by all business assets and
personally guaranteed by the principals of the Company. As of March 31, 2005,
the loan was in good standing, and as of the date of this filing the term loan
is also in good standing. The Company also has shareholder notes payable from
certain officers, employees or directors. The notes are unsecured demand notes.
It is not anticipated by the Company that the notes will be called in the next
year. The following are shareholder creditors to the company: Mr. Kenoyer has
made two loans to the company and as of March 31, 2005, the total balance due
him was $23,937. The first loan accrues interest at the rate of 10 percent and
has a balance of $407. The second accrues interest at the rate of 7 percent and
has a balance of $23,530. Mr. Dustin has also made two loans to the company and
as of March 31, 2005, the total balance due him was $46,660. The first loan
accrues interest at the rate of 10 percent and has a balance of $15,624. The
second accrues interest at the rate of 7 percent and has a balance of $31,036.
The balance of the loan amount is $6,174 to Reggie Hall.
During the nine months ended March 31, 2005, the Company used net cash of
$604,961 for operating activities, compared to $7,753 of net cash provided by
operating activities for the 2004 period. The increase of cash used by operating
activities is mainly result of the Company's $895,463 net loss in the nine month
period ending March 31, 2005.
During the nine months ended March 31, 2005, the Company used $660,625 by
investing activities, accounted for as Construction in Progress for the Biogas
facility, compared to $76,626 used in the year earlier period. In 2004, the
Company purchased property and equipment towards the Biogas production.
During the nine months ended March 31, 2005, financing activities provided
$1,141,295 in net cash, consisting of $522,672 from the sale of common stock,
$35,000 from the net change of stock subscriptions, $750,000 from debenture
sales, offset in part by $39,744 of payments on a term loan, deferred debenture
costs of $127,524 and $891 increase of notes payable. In the comparable period
for 2004, the Company had $373,997 of net cash provided by financing activities,
which consisted of $376,194 in proceeds from stock sales, $20,700 in note
receivable from stock collected and $4,767 increase in notes payable, offset in
part by $27,664 payments on a line or credit and term loan.
Standby Equity Distribution Agreement. On October 13, 2004, the Company entered
- -------------------------------------
into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP.
Pursuant to the Standby Equity Distribution Agreement, the Company could have,
at its discretion, periodically sold to Cornell Capital Partners, LP shares of
common stock for a total purchase price of up to $25.0 million. For each share
of common stock purchased under the Standby Equity Distribution Agreement,
Cornell Capital Partners LP would have paid the Company 99% of, or a 1% discount
to, the lowest closing bid price of our common stock on the Over-the-Counter
Bulletin Board or other principal market on which the Company's common stock is
traded for the five days immediately following the notice date. Cornell Capital
Partners LP would have retained 5% of each advance under the Standby Equity
Distribution Agreement and received $500,000 worth of common stock of the
Company as a fee under the Standby Equity Distribution Agreement.
On January 28, 2005, the Company entered into a Termination Agreement with
Cornell Capital Partners, whereby the Standby Equity Distribution Agreement,
dated October 13, 2004, and related Registration Rights Agreement, Placement
Agent Agreement and Escrow Agreement of even date therewith were terminated.
15
Upon execution of the Termination Agreement, the Company entered into a new
Standby Equity Distribution Agreement with Cornell Capital Partners on January
28, 2005. Pursuant to the Standby Equity Distribution Agreement, the Company
may, at its discretion, periodically sell to Cornell Capital Partners shares of
common stock for a total purchase price of up to $25.0 million. For each share
of common stock purchased under the Standby Equity Distribution Agreement,
Cornell Capital Partners will pay the Company 99% of, or a 1% discount to, the
lowest closing bid price of the common stock during the five consecutive trading
period immediately following the notice date. Further, Cornell will retain a fee
of 5% of each advance under the Standby Equity Distribution Agreement. Cornell
Capital Partners' obligation to purchase shares of the Company's common stock
under the Standby Equity Distribution Agreement is subject to certain
conditions, including the Company obtaining an effective registration statement
for shares of common stock sold under the Standby Equity Distribution Agreement
and is limited to $350,000 per weekly advance.. The Company's SB-2 registration
became effective May 2, 2005, but the Company still may not be able to obtain
funds under the Standby Equity Distribution Agreement or obtain sufficient
amounts to satisfy the Company's working capital or other needs.
Securities Purchase Agreement.On October 13, 2004, the Company entered into a
- --------------------------------
Securities Purchase Agreement with Cornell Capital Partners. Pursuant to the
Securities Purchase Agreement, the Company issued convertible debentures to
Cornell Capital Partners, in the original principal amount of $750,000.The
$750,000 was disbursed as follows: (i) $450,000 was paid October 22, 2004, which
was contingent upon the closing of all the transaction documents with Cornell
Capital Partners, and (ii) $300,000, was paid December 28, 2004, pursuant to the
filing of a registration statement with the SEC related to the shares issued
under the Standby Equity Distribution Agreement and the convertible debentures.
The debentures are convertible at the holder's option any time up to maturity at
a conversion price equal to the lower of (i) 120% of the Volume Weighted Average
Price of the common stock on the date of the debentures or (ii) 80% of the
Volume Weighted Average Price of the common stock of the Company for the five
trading days immediately preceding the conversion date. The debentures are
secured by the assets of the Company. The debentures have a three-year term and
accrue interest at 5% per year. Cornell Capital Partners, LP received 10% of the
gross proceeds of the convertible debentures, paid directly from escrow upon
each funds disbursement described above. At maturity if not repaid, the
debentures will automatically convert into shares of common stock at a
conversion price equal to the lower of (i) 120% of the Volume Weighted Average
Price of the common stock on the date of the debentures or (ii) 80% of the
Volume Weighted Average Price of the common stock of the Company for the five
trading days immediately preceding the conversion date.
On January 28, 2005, the Company and Cornell Capital Partners terminated the
Investor's Registration Rights Agreement entered into on October 13, 2004 with
the Cornell Capital Partners, which related to the Securities Purchase Agreement
entered into on October 13, 2004 with the Cornell Capital Partners.
Material Commitments for Capital Expenditures - The Company has outstanding
- -------------------------------------------------
commitments for the purchase and installation of equipment and services
incidental to completing the balance of plant construction at the Whitesides
biogas facility. The Company also anticipates additional expenditures related to
the design and construction of follow-on facilities of like kind. The primary
source of funding will be outside capital.
Seasonal Changes -The Company's operating revenue is generally not affected by
- ----------------
seasonal changes.
RISK FACTORS
The Company's current and primary focus is obtaining permits and developing
favorable properties for alternative and renewable energy production, and
providing the associated engineering design and construction management services
required to support the construction and operation of related facilities, and
cannot provide any guarantees of profitability at this time. The Company will
continue to expand its engineering services base, "work for others" to generate
additional revenue to augment working capital requirements in support of its
alternative and renewable energy efforts. The realization of profits is
dependent upon successful execution of new business opportunities and the
development of prototype digester models and implementation of the digester
project for renewable energy. The Company is dependent upon inducing larger
companies or private investors to purchase these "turn-key" alternative
renewable energy generation and production facilities. These projects when
developed and depending on their success will be the future of the Company. The
Company may not be successful in these efforts.
16
Our operating results are difficult to predict in advance and may fluctuate
significantly, and a failure to meet the expectations of analysts or our
stockholders would likely result in a substantial decline in our stock price.
Factors that are likely to cause our results to fluctuate include the following:
- - the amount and timing of our operating expenses and capital expenditures;
- - the success or failure of the alternative energy and biofuels projects
currently underway;
- - the timing, rescheduling or cancellation of engineering customer's work
orders;
- - our ability to specify, develop, complete, introduce and market biofuels and
bring them to volume production in a timely manner;
- - the rate of adoption and acceptance of new industry standards in our target
markets;
- - any other unforeseen activities or issues.
There is a limited public market for our common stock. Our common stock is
listed on the OTC Bulletin Board, and there is a limited volume of sales, thus
providing a limited liquidity into the market for our shares. As a result of the
foregoing, stockholders may be unable to liquidate their shares.
We are subject to various risks associated with the development of the biofuels
and alternative energy market place and if we do not succeed our business will
be adversely affected.
Our performance will largely depend on our ability to develop and implement the
anaerobic digester and generate energy and gas to sale. We intend to respond to
technological advances and emerging industry standards and practices on a timely
and cost-effective basis however, we cannot predict if we will be effective or
succeed in the development of the biofuels and alternative energy markets. If we
are unable, for technical, legal, financial or other reasons, to adapt in a
timely manner to develop and operate in the biofuels market, our business,
results of operations and financial condition could be materially adversely
affected.
If we need additional financing, we may not be able to raise further financing
or it may only be available on terms unfavorable to us or to our stockholders.
Available cash resources may not be sufficient to meet our anticipated working
capital and capital expenditure requirements, if the anaerobic digester does not
produce revenue for at least 12 months. It may become necessary to raise
additional funds to respond to business contingencies, which could include the
need to:
- - fund additional project expansion for the biofuels production;
- - fund additional marketing expenditures;
- - develop additional alternative energy projects or enhance the WOBF gas
products;
- - enhance our operating infrastructure;
- - hire additional personnel;
- - acquire other complementary businesses or technologies.
If we raise additional funds through the issuance of equity or convertible debt
securities, the percentage ownership of our stockholders would be reduced, and
these newly issued securities might have rights, preferences or privileges
senior to those of existing stockholders. Additional financing might not be
available on terms favorable to us, or at all. If adequate funds were not
available or were not available on acceptable terms, our ability to fund our
operations, take advantage of unanticipated opportunities, develop or enhance
our products or otherwise respond to competitive pressures would be
significantly limited.
ITEM 3. CONTROLS AND PROCEDURES
(a) Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and procedures, as such term
is defined under Rule 13a-14(c) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as of the end of the period covered by
this report. Based on this evaluation, our principal executive officer and
principal financial officer concluded that our disclosure controls and
procedures are effective
17
in alerting them on a timely basis to material information relating to our
Company (including its consolidated subsidiaries) required to be included in our
reports filed or submitted under the Exchange Act.
(b) There have been no changes in our internal controls over financial reporting
that has materially affected or could materially affect these internal controls
over financial reporting.
18
PART II OTHER INFORMATION
-------------------------
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
The Company issued 10,000,000 common shares to Cornell Capital Partners LP, on
April 15, 2005.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS
- --------------------------------------------------------------------------------------------------------------
Exhibit Description Incorporated by Reference from
No. Registrant's
- --------------------------------------------------------------------------------------------------------------
31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer May 13, 2005
- --------------------------------------------------------------------------------------------------------------
31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
by Vice-President, Secretary and Treasurer May 13, 2005
- --------------------------------------------------------------------------------------------------------------
32 Certification pursuant to 18 U.S.C. SECTION 1350 by Chairman and
Chief Executive Officer and Vice-President, Secretary and Treasurer May 13, 2005
- --------------------------------------------------------------------------------------------------------------
19
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 thereunto duly authorized.
INTREPID TECHNOLOGY & RESOURCES, INC.
(Registrant)
Date: May 13, 2005 By: /s/ Dr. Dennis D. Keiser,Chief Executive Officer &
President
Date: May 13, 2005 By: /s/ Dr. Jacob D. Dustin,Vice President, Secretary,
and Treasurer
20