UNITED STATES
ECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended December 31, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 0-9083
Enercorp, Inc.
------------------------------
(Exact name of Registrant as specified in its Charter)
Colorado 84-0768802
---------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
32751 Middlebelt Road, Suite B
Farmington Hills, Michigan 48334
--------------------------------- ------------------------
(Address of principal executive offices) (Zip Code)
(248) 851-5651
------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares of common stock outstanding at February 18, 2003: 695,897
Enercorp, Inc.
Form 10-QSB Filing for the First Quarter Ended December 31, 2002
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Assets and Liabilities
December 31, 2002 (Unaudited) and June 30, 2002 3
Schedule of Investments September 30, 2002 (Unaudited)
And December 31, 2002 4-6
Statements of Operations (Unaudited) for the Three
and Six Months Ended December 31, 2002 and 2001 7
Statements of Cash Flows (Unaudited) for the Six
Months Ended December 31, 2002 and 2001 8
Notes to Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3 Controls and Procedures. 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Exhibits and Reports on Form 8-K 12
Signature Page 13
Certification pursuant to 18 USC, Section 1350,
as adopted pursuant to Sections 302 and 906 of
the Sarbanes-Oxley Act of 2002 14-15
2
Enercorp, Inc.
Statements of Assets and Liabilities
December 31 June 30
2002(Unaudited) 2002
--------------- -----------
ASSETS
Investments, at fair value, cost of $1,231,638
And $1,231,638 at December 31,
2002 and June 30,2002 $ 736,531 $1,045,842
Cash 892 1,123
Furniture and fixtures, net of accumulated
depreciation of $11,736 at Dec. 31, 2002
and 11,503 at June 30, 2002 respectively 0 0
Other assets 0 0
----------- -----------
$ 737,423 $ 1,046,965
=========== ===========
LIABILITIES AND NET ASSETS
Liabilities
Note payable-Related Party $ 33,150 $27,000
Note payable-Wen Group 30,000 30,000
Accounts payable and accrued liabilities 17,496 15,403
Interest Payable-related party 4,330 -0-
Accrued management fees-related party 35,000 20,000
Accrued salaries payable 60,000 -0-
--------- ---------
179,976 92,403
--------- ---------
Net assets
Common stock, no par value: 10,000,000
shares authorized, 695,897 shares issued
and outstanding at December 31, 2002 and
June 30, 2002 1,888,251 1,888,251
Preferred stock, no par value: 1,000,000
shares authorized, -0- issued and
outstanding -0- -0-
Accumulated deficit (835,697) (747,893)
Unrealized net loss on investments, net of
deferred income taxes at December 31, and
June 30, 2002 (495,107) (185,796)
----------- ----------
557,447 954,562
----------- ----------
$ 737,423 $ 1,046,965
========== ==========
See notes to financial statements
3
Enercorp, Inc.
Schedule of Investments
December 31, 2002(Unaudited)
Affiliated Description Expir. No. of Share Cost
Fair Mkt Net Fair
Companies of Business Date Restrictions Shares Price Equity
Value Discount Market Value
Common Stocks-Public Market Method of Valuation
-----------------------------------------------
CompuSonics Video
Corp Digital Video
Product & Web 1,751 0.011
19 19
Site Dev. 10,000,000 0.011 106,477
110,000 (33,000) 77,000
Ajay Sports, Golf & Casual 294,118 0.006 600,000
1,765 1,765
Furniture
Manufacturer 16,667 0.006 37,500
100 100
Preferred Stocks-Public Market Method of Valuation
--------------------------------------------------
Ajay Sports, Golf & Casual 2,000 0.019 20,000
38 38
Furniture Manufacturer
Common Stocks-Board Appraisal Method of Valuation
-------------------------------------------------
Pro Golf Franchisor of a & b 7,450 195,000
447,000 (89,400) 357,600
Intern'l Retail Golf Stores
ProGolf.com, Web Sales of a & b 300,000 2.5 252,000
750,000 (450,000) 300,000
Inc. Golf Equipment
--------------
--------------------------------------
Subtotal $1,210,977
1,308,922 (572,400) 736,522
Warrants and Stock Options-Board Appraisal Method of Valuation
==============================================================
CompuSonics Digital Video
Video Product
Corporation 300,000
Williams Manuf. Of Sensors &
Controls, Control Systems
Inc. 08/04/04 b 25,000
05/03/05 b 25,000
09/13/06 b 50,000
03/12/06 b 50,000
10/02/08 b 50,000
4
Unaffiliated Companies
Common Stocks-Public Market Method of Valuation
-----------------------------------------------
Vitrio Diagnostics 300 .03 1,500
.9 9
Proconnextions, Inc.-Sports Memor'blia a 191,610 - 19,161
-
-----------------------------
-----------------------------------------
Total All Companies $1,231,638
$1,308,931 (572,400) 736,531
==============
===================================
a No public market for this security
b Subject to Rule 144
See notes to financial statements
5
Enercorp, Inc.
Schedule of Investments
June 30, 2002
,
Affiliated Description No. of Share Cost Fair Mkt
Net Fair
Companies of Business Restrictions Shares Price Equity Value
Discount Market Value
Common Stocks-Public Market Method of Valuation
------------------------------------------------
CompuSonics Video
Corp Digital Video
Product & Web 1,751 96
96
10,000,000 $0.055 106,477 550,000
(165,000) 385,000
Ajay Sports, Golf & Casual 294,118 $0.055 600,000 2,941
2,941
Furniture
Manufacturer 16,667 $0.01 37,500 167
167
Preferred Stocks-Public Market Method of Valuation
==================================================
Ajay Sports, Golf & Casual 2,000 20,000 20
20
Common Stocks-Board Appraisal Method of Valuation
-------------------------------------------------
Pro Golf Franchisor of a & b 7,450 195,000 447,000
(89,400) 357,600
Intern'l Retail Golf Stores
ProGolf.com, Web Sales of b 300,000 2.5 252,000 750,000
(450,000) 300,000
Inc. Golf Equipment
---------------------
Subtotal $1,210,977 1,750,224
(694,400) 1,045,824
Unaffiliated Companies
Common Stocks-Public Market Method of Valuation
-----------------------------------------------
Vitrio Diagnostics 300 1,500 170
170
Proconnextions, Inc.-Sports Memor'blia 191,610 19,161
-------------------
-----------------------
Total All Companies $1,231,638 $1,750,242
$(694,400) $1,045,842
========================
=======================
a No public market for this security
b Subject to Rule 144
See notes to financial statements
6
Enercorp, Inc.
Statements of Operations
(Unaudited)
For the three Months For Six Months
Ended Dec. 31 ended Dec.31.
2002 2001 2002 2001
REVENUES
Miscellaneous Income $-0- $1,700 $-0- $3,875
-------- ------- ------ -------
-0- 2,175 -0- 3,875
EXPENSES
Officer salaries 30,000 -0- 60,000 -0-
Legal, accounting and other professional
Fees 9,118 7,931 10,832 4,633
Management fees related 7,500 7,500 15,000 15,000
Interest expense - other 796 223 1,477 273
Other general and administrative
expenses 222 3,040 495 3,709
------ ------- ----- ------
47,636 18,694 87,804 23,615
------ ------- ------ ------
Net gain (loss) from operations
before taxes (47,636) (16,994) (87,804) (19,740
Income taxes -0- -0- -0- -0-
-------- ------- ------- -------
Net gain (loss) from operations
after taxes (47,636) (16,994) (87,804) (19,740)
------ ------- ------- --------
Net unrealized gain (loss) on investments
Before Taxes 2,956 146,841 (309,311) 49,150
Income taxes -0- -0- -0- -0-
------- -------- ------- -------
Net unrealized gain (loss) on
investment after taxes 2,956 146,841 (309,311) 49,150
------- ------- -------- ------
Increase (decrease) in net assets
resulting from operations $(44,681) $129,847 (397,116) $ 29,410
======== ======== ======== ========
Increase (decrease) in net assets
per share $ (0.06) $0.19 $ (0.57) $ 0.04
========== ======= ======= =======
See notes to financial statements
7
Enercorp, Inc.
Statements of Cash Flows
(Unaudited)
For Six Months Ended December 31
2002 2001
--------- -----------
Cash flows from operating activities
Increase (decrease) in net assets $(397,116) $29,410
Adjustments to reconcile net income to net
Cash provided by operating activities:
Depreciation -0- 467
Bad debt provision on notes receivable
and interest net of write offs -0- -0-
Gain on sale of investments -0- -0-
(Gain) Loss on sale of fixed assets -0- -0-
Unrealized (gain) loss on
Investments 309,311 (49,150)
(Increase) Decrease in other assets -0- -0-
Increase (Decrease) in accounts payable
and accrued expenses 81,423 (35,609)
Increase (Decrease) in deferred taxes -0- -0-
-------- --------
Total adjustments 390,734 (84,292)
-------- --------
Net cash (used) by operating activities (6,381) (54,882)
-------- --------
Cash flows from investing activities:
Purchase of investments -0- -0-
-------- --------
Net cash provided (used) by investing
Activities -0- -0-
-------- --------
Cash flows from financing activities:
Proceeds from notes payable 6,150 57,000
Net cash provided by investing activities -0- -0-
-------- -------
Net cash provided by investing
Activities 1,500
--------- --------
Increase (Decrease) in cash (231) 2,118
Cash, beginning of period 1,123 342
-------- --------
Cash, end of period $ 892 $ 2,460
========= =========
Supplemental disclosures of cash flow
information:
Interest paid $ -0- $ 88
========= ========
Taxes Paid $ -0- $ -0-
=========== ==========
See notes to financial statements
8
NOTES TO FINANCIAL STATEMENTS
Note 1. Financial Statements
--------------------
The accompanying interim unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included, and the
disclosures are adequate to make the information presented not misleading.
Operating results for the three months ended December 31, 2002 are not
necessarily indicative of the results that may be expected for the year
ending June 30, 2003. These statements should be read in conjunction with
the financial statements and notes thereto included in the Annual 10-K
Report (filed with the Securities and Exchange Commission) for the year ended
June 30, 2002
Note 2: Investments
-----------
The Registrant holds its principal common stock investments in CompuSonics
Video Corporation (10,001,751 shares), Ajay Sports, Inc. (310,785 common and
2,000 preferred shares), ProGolf.com (300,000 common shares) and Pro Golf
International, Inc. (7,450 shares), and continues to hold 200,000 warrants in
Williams Controls, Inc., which are fully vested at the time of this filing.
Note 3: Capital Stock Transactions
--------------------------
There were no capital stock transactions during quarter ended December 31,
2002.
Note 4: Board of Director Changes .
--------------------------
Mr. Salvatore M. Parlatore and Dr. Jeffrey E. Ratio are the new elected
directors of Enercorp, Inc. They were elected on October 16, 2002. They will
serve until their successors be duly elected and qualified.
Note 5: Related Party Transactions
---------------------------
The Registrant has Note Payable of $33,150 to Dearborn Wheels, Inc. in which
the Chairman's daughter is the President. The note was issued on December 6,
2001 at 10% interest rate per annum, and is renewed on December 23,2002. The
note is due after 180 days. The terms were approved by the independent
directors. Also, as of 12/31/02 balance of interest payable on this note is
$4,330.
The Company is accruing $2,500 per month in management fees, due to Acrodyne
Corporation a company in which the President has an interest and is also
President. As of 12/31/02 balance of accrued fees due to Acrodyne Corporation
is $ 35,000.
The Company is also accruing $30,000 salary owed to Mr. Itin, CEO, as officer
salaries for this quarter. Balance of accrued salaries at the end of this
quarter is $ 60,000.
9
Note 6: Note payable Wen Group.
----------------------
The Registrant has outstanding the $30,000 promissory note to Wen Group. The
note was issued on December 12, 2001 and is not bearing any interest.
Item 2. Management's Discussion and Analysis of Financial Condition / Results
---------------------------------------------------------------------
of Operations
--------------
Material Changes in Financial Condition:
---------------------------------------
The Registrant's liquidity is affected primarily by the business success,
securities prices and marketability of its investee companies and by the amount
and timing of new or incremental investments it makes, as well as the
availability of borrowing under the credit line.
The only change in the Registrant's financial condition for the six month
period ending 12/31/02 is the decrease in investments value. This change is
mainly due to decrease in market value of CompuSonics Video Corporation and
Ajay Sports, Inc. stock.
Liquidity and Capital Resources.
--------------------------------
The Registrant has outstanding the promissory note of $30,000 to Wen Group.
There are no general terms as to how the $30,000 note will be paid or how
the Registrant intends to raise the funds for repayment or how to fund current
operations. The validity of the Wen Group claim is under review. The
Registrant's current plan is to bring in other investors, borrow against
collateral or sell a portion of its holdings.
Material Changes in Results of Operations:
-----------------------------------------
The Registrant's revenues were $0 and $1,700 for the quarter ended December 31,
2002 and 2001, respectively. The changes in revenues were mainly due to the
lack of operations. There was no sale of investment, no consulting services
provided to other parties, no dividend or interest income from other parties
for this quarter.
The Company recorded $30,000 of officer salaries for the quarter ended December
2002 compared to officer salaries of $0 for the quarter ended December 31,
2001. Salary is due to Mr. Itin, the CEO of the Company. This change is due to
the employment agreement between Mr. Itin and the Company, which was negotiated
and approved by the independent directors.
The Registrant's interest expenses were $ 796 and $ 223 for the quarter ended
Dec. 2002 and 2001 respectively. The change is due to the increase in principal
of a note payable to a related party, therefore there is an increase in
interest expense for this quarter compared to the previous quarter.
The Registrant recorded general and administrative expenses of $ 222 for this
quarter ended December 31, 2002 compared to general and administrative expenses
of $ 3,040 the quarter ended December 31, 2001. This change is due to the
decrease in the company's activity related to such expenses. General and
administrative expenses include travel, telephone and other miscellaneous
expenses.
10
The Registrant recorded an unrealized gain on investments of $ 2,956 for the
quarter ended December 31, 2002 compared to a gain of $ 146,841 for the quarter
ended December 31, 2001. This is mainly due to the changes in fair market
value of the Registrant's investment in the publicly traded companies
CompuSonics Video Corporation and Ajay Sports, Inc. The Registrant is also
taking higher discount rates for this quarter for its investment in ProGolf
International, Inc., ProGolf. Com, Inc. and CompuSonics Video Corporation.
The Board of Directors after careful deliberation decided that the new discount
rates are more reasonable and fair. (See schedule of investment, page 5)
The Registrant's revenues were $0 and $3,875 for the six months period ended
December 31, 2002 and 2001, respectively. The changes in revenues were mainly
due to the lack of operations. There was no sale of investment, no consulting
services provided to other parties, no dividend or interest income from other
parties for this period.
The Company recorded $60,000 of officer salaries for the six month period ended
December 2002 compared to officer salaries of $0 for the six month period ended
December 31, 2001. Salary is due to Mr. Itin, the CEO of the Company. This
change is due to the employment agreement between Mr. Itin and the Company.
The Registrant's interest expenses were $ 1,477 and $ 273 for the six months
period ended Dec. 2002 and 2001 respectively. The change is due to the increase
in principal of note payable to a related party, therefore there is a increase
in interest expense for this period compared to the previous one.
The Registrant recorded general and administrative expenses of $ 495 for the
six months period ended December 31, 2002 compared to general and
administrative expenses of $ 3,709 the six month period ended December 31,
2001. This change is due to the decrease in the company's activity related to
such expenses. General and administrative expenses include travel, telephone
and other miscellaneous expenses.
The Registrant recorded an unrealized loss on investments of $ 309,311 for the
six month period ended December 31, 2002 compared to a gain of $ 49,150 for the
period ended December 31, 2001. This is mainly due to the changes in market
value of the Registrant's investment in the publicly traded companies
CompuSonics Video Corporation and Ajay Sports, Inc. Also the Registrant is
taking higher discount rates for this quarter for its investment in ProGolf
International, Inc., ProGolf Com, Inc. and CompuSonics Video Corporation. The
Board of Directors after careful deliberation decided that the new discount
rates are more reasonable and fair. (See schedule of investment, page 5)
Item 3. Controls and Procedures.
-----------------------
a) Evaluation of Disclosure Controls and Procedures.
Within the 90 days prior to the date of this report, Enercorp, Inc. carried out
an evaluation under supervision of the Company's management of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Exchange Act Rule 13a-14. The management concluded
that the internal controls and procedures are effective.
11
b) Changes in Internal Controls
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these internal controls
subsequent to the date of the most recent evaluation.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Exhibits and Reports on Form 8-K
--------------------------------
A) Exhibits
None
B) Form 8-K
None
12
Enercorp, Inc.
Form 10-QSB
For the Quarter Ended December 31, 2002
Signature Page
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.
Enercorp, Inc.
----------------------
(Registrant)
By: /s/ Thomas W. Itin
----------------------
Thomas W. Itin
President
Date: February 28, 2003
13
CERTIFICATION PURSUANT TO 18 USC, SECTION 1350, AS ADOPTED PURSUANT TO
SECTIONS 302 AND 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Enercorp, Inc. (the "Company")
on Form 10-QSB for the quarter ended December 31, 2002 (the "Report"), as filed
with the Securities and Exchange Commission on the date hereof, we, Thomas W.
Itin, Chief Executive Officer and Majlinda Xhuti, Chief Financial Officer of
the Company, certify to the best of our knowledge, pursuant to 18 USC 1350, as
adopted pursuant to Sec.302 and promulgated as 18 USC 1350 pursuant to Sec.906
of the Sarbanes-Oxley Act of 2002, that:
1. The Report referenced above has been read and reviewed by the
undersigned.
2. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934.
3. The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
4. Based upon our knowledge, the Report referenced above does not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which such statements were made, not misleading.
5. Based upon our knowledge, the financial statements, and other such
financial information included in the Report, fairly present in all material
respects the financial condition and results of operations of the Company as
of, and for, the periods presented in the Report.
6. We acknowledge that the Chief Executive Officer and Chief Financial
Officer:
A. are responsible for establishing and maintaining "disclosure
controls and procedures" for the Company;
B. have designed such disclosure controls and procedures to ensure
that material information is made known to us, particularly
during the period in which the Report was being prepared;
C. have evaluated the effectiveness of the Company's disclosure
controls and procedures within 90 days of the date of the
Report; and
D. have presented in the Report our conclusions about the effectiveness
of the disclosure controls and procedures based on the
required evaluation.
E. have disclosed to the issuer's auditors and to the audit committee
of the Board of Directors of the Company (or persons
fulfilling the equivalent function):
14
(i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Company's
ability to record, process, summarize, and report financial
data and have identified for the Company's auditors any
material weaknesses in internal controls; and
(ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the issuer's
internal controls; and
F. have indicated in the Report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
/s/ Thomas W. Itin
-----------------------
Chief Executive Officer
/s/ Majlinda Xhuti
-----------------------
Chief Financial Officer
Dated: February 28, 2003
15