-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LjMfZW3V0uky1V3QYxqQZ9+AwPnXkwyeOFhenXh/oseOjBbRM8K9oVU83fd7Xb85 XzZxXg2B1A3AlLD0B5w9UQ== 0001128778-01-500142.txt : 20020411 0001128778-01-500142.hdr.sgml : 20020411 ACCESSION NUMBER: 0001128778-01-500142 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEOTEC THERMAL GENERATORS INC CENTRAL INDEX KEY: 0001087717 STANDARD INDUSTRIAL CLASSIFICATION: [9995] IRS NUMBER: 593357040 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26315 FILM NUMBER: 1795602 BUSINESS ADDRESS: STREET 1: 5956 N.W. 63RD WAY CITY: PARKLAND STATE: FL ZIP: 33067 BUSINESS PHONE: 9543404694 MAIL ADDRESS: STREET 1: 162 EAST RIVERBEND DR CITY: ALTAMONTE SPRINGS STATE: FL ZIP: 32779 FORMER COMPANY: FORMER CONFORMED NAME: KENNSINGTON CAPITAL & EQUITY CORP DATE OF NAME CHANGE: 19990601 10QSB 1 sept302001-10qsb.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 ------------------------------ [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ___________ to ___________ Commission file number GEOTEC THERMAL GENERATORS, INC (Name of Small Business Issuer in Its Charter) FLORIDA 59-3357040 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1615 S. Federal Highway, Suite 101, Boca Raton, Florida 33432 (Address of Principal Executive Offices)(Zip Code) (561) 447-7370 (Issuer's Telephone Number, Including Area Code) Check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 latest practicable date: 22,186,105 shares of Common Stock as of October 5, 2001. Geotec Thermal Generators, Inc. INDEX PART 1. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheet - September 30, 2001 1 Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2001 and 2000 2 Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2001 and 2000 3 Notes to Financial Statements 4-5 Item 2. Management's Discussion and Analysis or Plan of Operation 6-8 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K 9 Signatures 10 GEOTEC THERMAL GENERATORS, INC. BALANCE SHEET Assets September 30, 2001 ------------------ (Unaudited) CURRENT ASSETS Cash $ 1,492 Inventories 50,540 Due from officer, net 111,829 ------------------ TOTAL CURRENT ASSETS 163,861 PROPERTY AND EQUIPMENT, net 35,426 OTHER ASSETS 30,567 ------------------ $ 229,854 ================== LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable and accrued expenses $ 346,905 Notes payable 972,317 ------------------ TOTAL CURRENT LIABILITES 1,319,222 ------------------ SHAREHOLDERS' DEFICIT: Common stock, $.001 par value, 50,000,000 shares authorized; 22,186,108 shares issued and outstanding 22,186 Additional paid-in capital 4,331,346 Accumulated deficit (5,442,900) ------------------ TOTAL SHAREHOLDERS' DEFICIT (1,089,368) ------------------ $ 229,854 ================== See notes to financial statements 1
GEOTEC THERMAL GENERATORS, INC. STATEMENT OF OPERATIONS For the Three Months Ended For the Nine Months September 30 Ended September 30 2001 2000 2001 2000 ---------------- -------------- ------------- ------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) REVENUES $ - $ 80,646 $ - $ 152,261 COST OF GOODS SOLD - 7,890 - 158,308 ---------------- -------------- ------------- ------------ GROSS PROFIT(LOSS) - 72,756 - (6,047) COSTS AND EXPENSES: General and administrative 365,585 948,739 634,807 1,474,327 Stock compensation expense 196,045 - 340,013 1,586,950 ---------------- -------------- ------------- ------------ OPERATING LOSS (561,630) (875.983) (974,820) (3,067,324) ---------------- -------------- ------------- ------------ OTHER EXPENSES Interest (expense) (56,530) (15,989) (76,682) (38,800) ---------------- -------------- ------------- ------------ NET LOSS $ (618,160) $ (891,972) $ (1,051,502) (3,106,124) ================ ============== ============= ============ BASIC AND DILUTED NET LOSS PER SHARE $ (0.03) $ (0.04) $ (0.05) $ (0.15) ================ ============== ============= ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 22,147,597 21,811,066 22,022,604 21,104,934 ================ ============== ============= ============ See notes to financial statements 2
GEOTEC THERMAL GENERATORS, INC. STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2001 2000 ------------------- ----------------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (1,051,302) $ (3,106,124) ------------------- ----------------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 13,195 10,057 Stock issued for services 526,426 2,311,750 Changes in assets and liabilities: Accounts receivable - (76,131) Inventories - 79,420 Prepaid expenses 12,400 (18,700) Due from officer (108,307) (3,522) Other assets (650) (9,908) Accounts payable and accrued expenses 154,403 188,618 ------------------- ----------------- NET CASH USED IN OPERATING ACTIVITIES (453,835) (624,540) ------------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (1,167) (52,609) ------------------- ----------------- NET CASH USED IN INVESTING ACTIVITIES (1,167) (52,609) ------------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of debt - (120,000) Proceeds from issuance of debt 404,973 434,445 Proceeds from issuance of common stock - 374,748 ------------------- ----------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 404,973 689,193 ------------------- ----------------- NET INCREASE (DECREASE) IN CASH (50,029) 12,044 CASH, beginning of period 51,521 24,393 ------------------- ----------------- CASH, end of period $ 1,492 $ 36,437 =================== ================= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for: Income taxes $ - $ - =================== ================= Interest $ - $ 4,825 =================== ================= See notes to financial statements 3
Geotec Thermal Generators,Inc. Notes to Condensed Financial Statements (Unaudited) 1. BASIS OF PRESENTATION The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three and six months ended September 30, 2001 are not necessarily indicative of the results to be expected for the year ended December 31, 2001. The condensed interim financial statements should be read in conjunction with the audited financial statements and notes, contained in the Company's Annual Report on Form 10-KSB for the year-ended December 31, 2000. 2. PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of Septmember 30, 2001 Furniture and Fixtures 5 Years $ 35,158 Data processing equipment 3 Years 30,930 ------------- 66,088 Less: accumulated depreciation 30,662 ------------- $ 35,426 ============= 3. NOTES PAYABLE The Company borrowed a total of $972,317 from an investment trust based in Bermuda. The notes bear interest at 12.5% per annum and payable one year from the date of issuance. 4. STOCK COMPENSATION The Company issued its common stock and warrants to purchase its common stock to several consultants for services rendered. The stock has been valued at its fair market value and has recorded approximately $340,000 in compensation. 5. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, FASB issued Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, which establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In June, 1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments -- Deferral of the Effective date of SFAS Statement No. 133. SFAS No. 137 deferred the effective date of SFAS No. 133 until June 15, 2000. The Company has adopted SFAS No. 133 as required for its first quarterly filing of fiscal year 2001. SFAS No. 133 shall be effective for all subsequent quarters and annual filings. The adoption of SFAS No. 133 did not have a material effect on the financial position or results of operations of the Company. In July 2001, FASB issued SFAS No. 141, "Business Combinations." SFAS No. 141 requires the purchase method of accounting for business combinations initiated after June 30, 2001 and eliminates the pooling-of-interests method. We believe that the adoption of SFAS No. 141 will not have a significant impact on our financial statements. 4 In July 2001, FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets", which is effective for fiscal years beginning after December 15, 2001. SFAS No. 142 requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions upon adoption for the reclassification of certain existing recognized intangibles as goodwill, reassessment of the useful lives of existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the testing for impairment of existing goodwill and other intangibles. We are currently assessing but have not yet determined the impact of SFAS No. 142 on our financial position and results of operations. In June 2001, the Emerging Issues Task Force ("EITF") issued EITF Issue No. 00-25, "Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor's Products." EITF Issue No. 00-25 addresses whether consideration from a vendor to a reseller is (a) an adjustment of the selling prices of the vendor's products and, therefore, should be deducted from revenue when recognized in the vendor's income statement or (b) a cost incurred by the vendor for assets or services received from the reseller and, therefore, should be included as a cost or expense when recognized in the vendor's income statement. The Company will adopt EITF Issue No. 00-25 effective January 1, 2002. The adoption of EITF Issue No. 00-25 is not expected to have a material impact on the Company's financial statements. 5 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS This Quarterly Report on Form 10-QSB contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in or incorporated by reference into this Form 10-QSB, are forward-looking statements. In addition, when used in this document, the words "anticipate," "estimate," "project" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to certain risks, uncertainties and assumptions including risks relating to our limited operating history and operations losses; significant capital requirements; development of markets required for successful performance by the Company as well as other risks described in the Company's Annual Report on Form 10-KSB as well as in this report on Form 10-QSB. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Although the Company believes that the expectations we include in such forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct The following discussion and analysis should be read in conjunction with the financial statements of the Company and the notes thereto appearing elsewhere herein. Overview In the late spring/early summer of 2000, Geotec treated 20 wells to qualify and prove the technology according to the standards established in the Agreement between the Russian Federation and The Company. The purpose of these well treatments was to: o Demonstrate the technology worked according to the representations made by the Russian Federation, the manufacturer of the gas generators; o Prove that the generators communicated with the hydrocarbon reservoir such that increases in hydrocarbons could be reasonably expected in all future well treatments; o Acquire the technology from the Russian technical staff, that treated the wells alongside the Company's staff; o Demonstrate that no damage was done to the well casing, cement around the casing as well as the rock formation; o Prove that the yields could be expected from different rock formations at different depths, for the generators available to the Company for these treatments (future treatments will require a greater inventory of generators for different depths and rock formations); o Show increases in marginal wells, where other methods could not provide economically viable well hydrocarbon increases; o Establish the economies of the well treatment o Train the Company's staff such that the staff could utilize the generators without assistance from the Russian training crews; o Establish data from all the wells, to utilize in publications and with well operators, including the filming of the process, to confirm the technology; 6 RESULTS OF OPERATIONS Since its inception, on February 2, 1998, the Company's efforts has been principally devoted to research, development, initial marketing activities, licensing and raising capital. The Company has incurred substantial operating losses to date, which losses are continuing. Since inception, the Company has sustained cumulative losses of ($5,442,900). In May 2000, the Company began the transfer of technology from Russian Federation and began treating wells in the United States. Revenues for the Company are not immediate. An oil or gas well is treated with all the expense for the Company occurring at the moment of treating the well. It can take 60-90 days after a well treatment before the Company will see the initial revenues. The process requires that well be cleaned (or swabbed), tubing, rods, oil tanks and pump must be replaced or installed and the well flowed, while monitoring fluid levels, for a few weeks to establish the optimum production for the formation. Finally, oil is collected in tanks, and periodically, delivered for payment. The oil wholesaler pays the operator and the Company approximately 30 days later. Revenues decreased from $152,261 for the nine months ended September 30, 2000 to $0 for the nine months ended September 30, 2001. The Company has not treated any additional oil wells since June 2000. The Company is waiting for additional funding, for the return of representatives from the Russian Federation to complete the training of the Company's staff. Cost of goods sold decreased from $158,308 for the nine months ended September 30, 2000 to $0 for the nine months ended September 30, 2001. The Company has not treated any additional oil wells since June 2000. General and administrative expenses decreased from $1,474,327 for the nine months ended September 30, 2000 to $634,807 for the nine months ended September 30, 2001, a decrease of $839,520. The decrease was due to a reduction in professional fees for the nine months ended September 30, 2001 Stock compensation expense was $1,586,950 for the nine months ended September 30, 2000 compared to $340,013 for the nine months ended September 30, 2001. The Company issued common stock for financial consulting and legal services. Interest expense increased from $38,800 for the nine months ended September 30, 2000 to $76,682 for the nine months ended September 30, 2001. The Company has increased it borrowing to fund its operations. 7 LIQUIDITY AND CAPITAL RESOURCES For the nine months ended September 30, 2001, the Company borrowed a total of $404,973 from an Investment Trust located in Bermuda. The notes bear interest at 12.5% per annum and are payable one year from date of issuance. The Company anticipates that its use of cash will be substantial for the foreseeable future. In particular, management of the Company expects substantial expenditures in connection with the treatment of additional wells. The Company expects that funding for these expenditures will be available out of the Company's future cash flow and issuance of equity and/or debt securities during the next 12 months and thereafter. There can be no assurance whether or not such financing will be available on terms satisfactory to management. The Company's financial statements have been prepared assuming that the Company will continue as a going concern. The auditors' report on the Company's 2000 financial statements states that "the Company has suffered recurring losses from operations, has a cash deficiency from operations and is experiencing operating losses that raise substantial doubt about its ability to continue as a going concern." The Company continues to explore the possibility of raising funds through available sources including but not limited to equity and debt markets. It is uncertain that the Company will be successful at raising funds through these sources. 8 PART II. OTHER INFORMATION ITEM 1 Litigation In July 2001 the Company and FR & PC Altai filed suite against Joe Russo, Wayne Snow individually and against their company, UltraDiamond a Massachusetts corporation alleging extortion and conspiracy to defraud Geotec. UltraDiamond, Joe Russo and Wayne Snow were properly served in this action and as of this filing, no response has been received by the Company. UltraDiamond filed a counter suit alleging breach of contract with Altai, and tortuous interference with contractual relationship against Geotec. Geotec and Altai plan to pursue their rights to the fullest extent of the law against Joe Russo, Wayne Snow individually and their Company UltraDiamond. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits required by item 601 of Regulation S-B None (b) Reports on Form 8-K No Reports were filed during the period ended September 30, 2001. 9 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Geotec Thermal Generators, Inc. DATE:November 19, 2001 By: /s/ Daniel Pepe President and COB In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: DATE: November 19, 2001 By: /s/ Daniel Pepe President and COB DATE: August , 2001 By: /s/ W. Richard Lueck CEO, Secretary and Treasurer 10 -----END PRIVACY-ENHANCED MESSAGE-----