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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______________
FORM 10K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal Year Ended..................................Commission File
March 31, 2003...........................................Number 0-1587
GNC ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1050549
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
8235 Douglas Avenue Suite 1201
Dallas, Texas 75225
(Address of principal executive offices) (Zip Code)
(214)691-9436
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock - Par Value $0.40 per share None
Securities registered pursuant to Section 12(b) of the Act: None
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 (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________
On March 31, 2003, there were 5,203,706 shares of the registrant's common
stock issued and outstanding. The aggregate market value of the registrant's
common stock held by non-affiliates of the registrant (computed by reference to
the closing sale price in the over-the-counter market) on 3/31/95 was
approximately $325,231.63.
GNC ENERGY CORPORATION
2002 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I. Page
Item 1. Business................................................ 3
Item 2. Properties.............................................. 3
Item 3. Legal Proceedings....................................... 4
Item 4. Submission of Matters to a Vote of Security
Holders............................................ 5
PART II.
Item 5. Market for the Registrant's Securities and Related
Stockholder Matters................................ 6
Item 6. Selected Financial Data................................. 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 7
Item 8. Financial Statements and Supplementary Data............. 8
Item 9. Disagreements on Accounting and Financial Disclosure.... 8
PART III.
Item 10. Directors and Executive Officers of the Registrant...... 8
Item 11. Management Remuneration................................. 9
Item 12. Security Ownership of Certain Beneficial Owners
and Management..................................... 9
Item 13. Certain Relationships and Related Transactions.......... 10
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K............................... 10
PART I
Items 1. and 2. BUSINESS AND PROPERTIES
(a) General Development of Business
GNC Energy Corporation was incorporated in Delaware in 1954. Its
principal executive offices are located at 8235 Douglas Ave., Suite 1201,
Dallas, Texas 75225. The term "GNC" or "Company" as used herein refers to GNC
Energy Corporation except as the context may otherwise indicate.
The Company was engaged in various segments of the energy industry. In
1987 its wholly-owned subsidiary, Plateau Supply, Inc., was sold. Its coal
business had not operated since 1985 and was sold in 1987. This left a small
oil and gas producing division.
The Company was incorporated in 1954 under the name of American Tidelands,
Inc. In 1959, American Tidelands, Inc., was merged and changed its corporate
name to Marine Drilling, Inc. The company changed its name to Great National
Corporation in 1964 and in August, 1981, changed its name to GNC Energy
Corporation.
Due to the economic conditions in the oil and gas and coal mining
industries, the curtailment of the Company's operations and other factors,
including the disposal of the majority of the Company's income-producing
properties in satisfaction of debt, the Company feels that it is unable to
absorb the expense of an audit at this time. Therefore, the consolidated
financial statements included herein for the year ended March 31, 2003, are
unaudited.
(b) Financial Information about Industry Segments
Financial data for the last three fiscal years with respect to sales,
income (loss) from operations, identifiable assets and capital expenditures
attributable to each business segment appears in Note 6 to the financial
statements.
(c) Narrative Description
Supply and Equipment
The construction, mining and industrial supply business was sold on
February 12, 1987.
Coal Mining
The coal mining subsidiaries were sold on September 30, 1987.
Oil and Gas
The company maintains a small oil and gas production and exploration
effort. The Ohio oil and gas properties were sold in satisfaction of debt.
Employees
As of March 31, 2003, the Company had no employees.
Item 3. LEGAL PROCEEDINGS
The following judgments are taken against the company as of this filing:
Judgment Creditors Judgment Amount
D. W. Campbell, T. J. Fouts, Jr.,
George Bristol, Charles Kuhn, A. Gary Muir,
and Larvena Investments, Inc. 571,362
Rocanville Corp. (formerly held by Halliburton ) 247,631
Rocanville 147,321
Hudson trust (formerly held by Aetna) 207,800
Total Judgment Creditors $1,174,114
No bonds have been filed by the Company to preclude judgment creditors from
exercising their rights to writs of execution, garnishment, etc.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter during the fiscal year covered by
this report to a vote of security holders, through solicitation of proxies or
otherwise.
Executive Officers of the Registrant
The following is a list of the Company's executive officers, their ages,
and their positions and offices as of March 31, 2003.
Name of Officer Age Position
W. H. Hudson 73 Chairman of the Board of Directors
President and Chief Executive
Officer
Andrew C. Hudson 42 Secretary
The following is a summary of the business background of the executive
officers of the Company for the past several years:
Mr. W. H. Hudson was elected Chairman of the Board, President and Chief
Executive Officer of the Company in March 1979. During the past twenty-four
years, in addition to his activities with the Company, his principal business
has been the management of his personal investments in real estate and oil and
gas properties.
Mr. Andrew Hudson was elected Secretary of the Company in 1988. Since
that time he has devoted part of his business time to the activities of the
Company.
PART II
Item 5. MARKET FOR THE REGISTRANT'S SECURITIES AND RELATED
STOCKHOLDER MATTERS
(a) Principal Market
The Company's common stock was listed and began trading on the American
Stock Exchange during September, 1981. Effective December 3, 1985, the
Company's common stock was delisted from the American Stock Exchange and since
such date has been trading in the over-the-counter market.
(b) Stock Price and Dividend Information
The table below presents the range of high and low prices on the over-the-
counter market as quoted in the "pink sheets" from April 1, 1991, through March
31, 1993.
Quarter Ended Fiscal 1992 Fiscal 1993
High Low High Low
June 30 $1/16 $ 1/32 $ 1/4 $ 1/32
September 30 1/16 1/32 1/4 1/32
December 31 1/16 1/32 1/4 1/32
March 31 1/16 1/32 1/4 1/32
The Company has not and does not contemplate the payment of cash dividends
with respect to its common stock. The Company intends to utilize any profits it
might generate in its business operations.
(c) Approximate Number of Holders of Common Stock
The approximate number of holders of record of the Company's common stock
as of March 31, 2003, is 3,861.
Item 6. SELECTED FINANCIAL DATA
The following table presents a five-year summary of selected financial
data for the years ended March 31:
2003 2002 2001 2000 1999
(in thousands except per share amounts)
Revenues $ 0 $ 6 $ 18 $ 15 $ 13
Income (Loss) from
operations 0 2 9 0 1
Extraordinary Income (Loss) 339 50 20 16 18
Interest Expense 126 141 141 141 155
Net Income (Loss) 199 (102) (128) (139) (152)
Weighted average number
of common shares
outstanding 5,204 5,204 5,204 5,204 5,204
Earnings (Loss) per common
share .04 (.02) (.02) (.03) (.03)
Working capital (deficit) (7,120) (7,319) (7,217) (7,090)
(6,951)
Long-term debt - - - - -
Stockholders' equity
(deficit) (7,120) (7,319) (7,217) (7,090)
(6,950)
Total Assets - - - - -
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At March 31, 2003, the Company had a working capital deficit of $7,120,041
and no long-term obligations.
No new oil and gas wells were drilled in fiscal 2003. There were no
capital expenditures.
The Company does not have sufficient liquid resources to meet the present
judgment creditor claims against the Company.
Results of Operations
Declining demand seriously impacted the supply business in 1987, resulting
in a sale of the division. Plateau Supply Company filed for reorganization
under Chapter 11 of the Bankruptcy Act. No recovery was made on the $3,479,580
note receivable resulting from the sale of that company.
Coal mining operations ceased in 1985 and were sold in September 1987.
The remaining oil and gas properties were not profitable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this
report (page 11).
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
An attempt was made to update and correctly record the Company's assets
and liabilities during the fiscal year ended 3-31-91. This accounts for the
extraordinary income and other changes to Retained Earnings that year.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
Common
Served As Shares
Director Beneficially Percent
Name Age Position Since Owned of Class
W. H. Hudson 73 Chairman of the 1979 576,878* 11.09
Board of Directors,
President and Chief
Executive Officer
of the Company,
Dallas, Texas
R. H. Rosen 65 President, Advanced 1981 12,000 0.23
Energy Technology,
Inc., Cambridge,
Massachusetts
_______________________
*See "Principal Stockholders."
Unless otherwise indicated, the nominees have sole voting and investment
power with respect to their shares of the Company's Common Stock listed
hereinabove.
As of March 31, 2003, the directors and officers of the Company, as a
group, (2 persons) held an aggregate of 588,878 shares of Common Stock, or
11.32% of the outstanding shares of that class.
Mr. W. H. Hudson was elected Chairman of the Board, President and Chief
Executive Officer of the Company in March, 1979. During the past twenty-four
years, in addition to his activities with the Company, his principal business
has been the management of his personal investments in real estate and oil and
gas properties.
Dr. Rosen has been President of Advanced Energy Technology, Inc., since
1982. He was President, Chief Executive Officer and a Director of Energy
1983. Resources Co., Inc., from 1974 to 1982. He has also been President
1984. and Chairman of the Board of Texas Resources, Inc., since 1980.
Executive Officers
The listing of executive officers included in this report is shown at Part
I, Item 4.
Item 11. MANAGEMENT REMUNERATION
There was no remuneration accrued by the Company and its subsidiaries to
individual executive officers of the Company for fiscal year ended 3-31-03.
Profit-Sharing Plan
At March 31, 2003, there were no outstanding stock options, under the
Company's 1974 Qualified Stock Option Plan.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The listing of security ownership of certain beneficial owners and
management in this Report is shown at Part III, Item 10.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company reimburses W. H. Hudson, Chairman of the Board, President and
Chief Executive Officer of the Company a portion of certain overhead expenses
incurred in its day-to-day operations. The Company paid Mr. Hudson a total of
approximately $4,575 during the year ended March 31, 2003, for these services.
The Board of Directors believes that this billing arrangement is advantageous
to the Company and offers an economical office operation.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
Financial Statements and Financial Statement Schedules
The Consolidated Financial Statements and Financial Statement Schedules of
the Company included in this Report are listed at Part II, Item 8.
Exhibits
The listing of previously filed exhibits has been excluded from this
annual report to stockholders. Such listing will be furnished upon request and
payment of the Company's reasonable copying and mailing expenses.
Reports on Form 8-K
There were no reports filed on Form 8K for the fiscal year ended March 31,
2003.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this Annual Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GNC ENERGY CORPORATION
Date: ______________ 2003
W. H. Hudson, Chairman of the Board
President and Chief Executive Officer
Pursuant to the requirements of 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.
Signatures Titles Date
W. H. Hudson Chairman of the Board, __________ 2003
President, Chief
Executive Officer and
Chief Financial Officer
R. H. Rosen Director __________ 2003
ITEM 8 - Financial Statements and Supplementary Data
ITEM 8(a) - Index to Financial Statements and Schedules
Page
Financial statements and supplementary information:
Consolidated balance sheets....................................13-14
Consolidated statements of operations............................ 15
Consolidated statements of changes in stockholders'
equity (deficit)............................................ 16
Consolidated statements of changes in financial position......... 17
Notes to consolidated financial statements....................... 18
Schedules:
Consolidated property, plant and equipment....................... 22
Consolidated accumulated depreciation, depletion and
amortization of property, plant and equipment.................. 23
Valuation and qualifying accounts and reserves................... 23
All other schedules have been omitted because they are not required under
the instructions or the information requested as set forth in the consolidated
financial statements or related notes thereto.
GNC ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
March 31 March 31
2003 2002
Current assets:
Cash $ - $ -
Recoverable deposits - -
Prepaid Expenses - -
Total current assets - -
Property, plant and equipment
at cost, substantially pledged:
Oil and gas - -
Less accumulated depreciation,
depletion and amortization - - - -
Total Assets $ - $ -
GNC ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31 March 31
2003 2002
Current liabilities:
Accounts payable 2,863,044 2,995,184
Accrued expenses 2,011,726 2,011,726
Accrued interest expense 2,245,271 2,312,554
Total current liabilities 7,120,041 7,319,464
Stockholders' equity (deficit):
Common stock, $.40 par value
Authorized - 10,000,000 shares
Issued and outstanding - 5,203,706
shares in 1989 and 1988 2,081,482 2,081,482
Capital in excess of par value 17,000,421 17,000,421
Accumulated deficit (26,201,944) (26,401,367)
(7,120,041) (7,319,464)
$ 0 $ 0
GNC ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Years Ended March 31,
2003 2002 2001
Net Sales $ - $ 6,292 $ 17,866
Costs and Expenses
Cost of sales 308 1,602 8,534
General, administrative, other 13,544 15,881 15,539
Depreciation, depletion, amort. - 17 45
Total Costs and Expenses (13,852) 17,500 24,118
Income (loss) from
operations (13,852) (11,208) (6,252)
Other Income (Expense)
Interest (126,161) (140,770) (140,770)
Gain (loss) on debt write-off 339,542 - -
Miscellaneous Income - - -
Other - - -
Taxes and penalties (107) (62) (172)
Extraordinary Income - 50,011 19,526
Total Other Income (Loss) 213,274 (90,821) (121,416)
Gain (Loss) 199,422 (102,029) (127,668)
Gain (Loss) per share $ .04 $ (.02) $ (.02)
GNC ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED)
Capital in
Common Stock excess of Accumulated
Shares Amount par value deficit
Balance at March 31,
1999 5,203,706 $2,081,482 $17,000,421 $(26,032,284)
Adjustments -
Net Gain(loss) (139,385)
Balance at March 31,
2000 5,203,706 $2,081,482 $17,000,421 $(26,171,669)
Adjustments -
Net Gain(Loss) (127,669)
Balance at March 31,
2001 5,203,706 $2,081,482 $17,000,421 $(26,299,338)
Adjustments -
Net Gain(Loss) (102,029)
Balance at March 31,
2002 5,203,706 $2,081,482 $17,000,421 $(26,401,367)
Adjustments -
Net Gain(Loss) 199,422
Balance at March 31,
2003 5,203,706 $2,081,482 $17,000,421 $(26,201,944)
GNC ENERGY CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(UNAUDITED)
Years Ended March 31,
2003 2002 2001
Financial resources were applied to:
Net (loss) before extraordinary
item $ (140,120) (152,040) $ (147,194)
Fixed Assets - -
Items not affecting working
capital: Depreciation,
depletion, and amortization - 17 45
Working capital applied to
(provided by) operations (140,120) (152,023) (147,149)
Extraordinary items:
Gain/Loss on disposition of assets - 50,012 19,526
Gain on expired debt 339,542 - - -
199,422 (102,011) (127,623)
Leasehold Costs - - -
199,422 (102,011) (127,623)
Financial resources were provided by:
Sales and retirements of
property, plant and equipment,
net of accum. depreciation,
depletion - 92 -
Decrease in liabilities - - -
Decrease in tar sands value - - -
Decrease in other assets - - -
- 92 -
Increase (decrease) in
working capital $ 199,422 $ (101,919) $ (127,623)
Increase (decrease) in elements of working capital:
Cash $ - $ - $ -
Recoverable deposits - - -
Prepaid Expenses - - -
Notes payable and current
maturities on long-term debt - - -
Accounts payable and accrued
expenses 132,139 38,851 13,147
Accrued interest expense 67,283 (140,770) (140,770)
Increase (decrease) in
working capital $ 199,422 $ (101,919) $ (127,623)
GNC ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003, 2002 AND 2001
(UNAUDITED)
1. Summary of significant accounting policies
This summary of significant accounting policies of GNC Energy Corporation
(Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management, which is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting principles
applied on a consistent basis.
Principles of consolidation
The consolidated financial statements include the accounts of GNC Energy
Corporation. All significant intercompany balances and transactions have been
eliminated from the consolidated financial statements.
Property, plant and equipment
Property, plant and equipment is carried at cost and includes expenditures
for new facilities and those which substantially increase the useful lives of
existing property, plant and equipment. Maintenance, repairs and minor renewals
are expensed as incurred. When properties are retired or otherwise disposed of,
the related cost and accumulated depreciation is removed from the respective
accounts and any gain or loss on disposition is credited or charged to
operations.
The Company follows the full-cost method of accounting for its oil and gas
operations. Under the full-cost method, all productive and nonproductive
acquisition, exploration, and development costs are capitalized as incurred.
Capitalized costs required to develop proved undeveloped reserves are amortized
by the unit-of-production method using proved reserves (revenue method).
However, reserves have not been audited currently due to the expense involved
in doing so. Therefore, depletion as allowed by tax law is used, where
applicable.
1. Summary of significant accounting policies (continued)
Income taxes
No provision has been made for income taxes, as the Company has net
operating losses to carry forward, in the amount of $11,435,147, the last of
which is due to expire in 2023 if not used prior to that time.
2. Inventories
At March 31, 2003, there were no inventories.
3. Notes payable
Notes payable include a secured note due on demand, which is included in
accounts payable. There are no long-term debts.
4. Information regarding industry segments
2003 2002 2001
(000somitted)
Net Sales:
Oil and gas $ 0 $ 6 $ 18
Administrative fees on operations - - -
$ 0 $ 6 $ 18
Loss (income) from operations:
Oil and gas $ 0 $ 5 $ (9)
Other Loss - - -
Other Gains 339 50 20
339 45 29
General corporate expenses 14 16 16
Interest expense 126 141 141
Net (Gain) Loss $ 199 $ 112 $ 128
Identifiable assets:
Oil and gas - - 73
$ - $ - $ 73
Capital expenditures:
Oil and gas $ - $ - $ -
Depreciation, depletion and
amortization:
Oil and gas $ - $ 17 $ 72
5. Leases
The final combined hydrocarbon lease, which contained tar sands, expired, and
the remaining asset value in tar sands was written off.
6. Commitments and contingencies
Continuation of the Company as a going concern is dependent upon the
Company obtaining additional capital or its ability to attain profitable
operations adequate to meet its financial obligations. The Company's
consolidated financial statements have been prepared on a going concern basis
which contemplates the realization of assets and liquidation of liabilities in
the ordinary course of business and do not include any adjustments that might be
necessary should the Company be unable to continue as a going concern.
7. Profit-sharing plan
The Company's profit-sharing plan ceased with the sale of Plateau Supply, Inc.,
in 1987.
8. Transactions with affiliated parties
During the year ended March 31, 2003, the Company incurred overhead
allocation fees of approximately $ 8,919 to a corporation controlled by a major
stockholder of the Company for the use of office space.
Additionally, the Company incurred debt to an entity controlled by major
stockholders for approximately $11,726 during the year ended March 31, 2003, for
working capital advances to the Company.
During 1985, a director of the Company purchased unregistered, restricted
stock from the Company. 57,000 and 7,000 shares of the Company's common stock
were purchased for $3.50 and $3.00 per share respectively, with the market value
on those dates being $5.625 and $4.125 per share, respectively.
9. Income taxes
The Company has federal income tax loss carryforwards of approximately
$11,435,147 which will expire through 2023.
10. Gain/Loss per share
Gain/loss per share has been computed by dividing the net gain/loss for
the years ended March 31, 2003, 2002, and 2001, by the weighted average number
of shares outstanding of 5,203,706 shares. Shares issuable in connection with
employee stock options and convertible debt have not been included in the
computation of earnings per share, as their effect is antidilutive.
11. Interest
Net interest consists of the following:
2003 2002 2001
Total interest $ 126,161 $ 140,770 $ 140,770
Interest income - - -
$ 126,161 $ 140,770 $ 140,770
GNC ENERGY CORPORATION
SUPPLEMENTARY INFORMATION ON RESERVES OF OIL AND GAS
Years Ended March 31, 2003, 2002 and 2001
(UNAUDITED)
Reserves of Oil and Gas
The Company's oil and gas interests have been sold in satisfaction of
debt.
GNC ENERGY CORPORATION
SCHEDULE V - CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT
Balance at Other Balance at
beginning Additions Retire- changes end of
Classification of period at cost ments add(deduct) period
Year ended
March 31, 2003:
Oil and gas leasehold & equipment
- full cost $ - $ - $ - $ -$
-
Tar Sands - - - -
$ - $ - $ - $ -
$ -
Year ended
March 31, 2002:
Oil and gas leasehold & equipment
- full cost $ 72,575$ - $ (72,575) - $ -
Tar Sands - - - - -
$ 72,575$ - $ (72,575) $ $ -
Year ended
March 31, 2001:
Oil and gas leasehold & equipment
- full cost $ 186,406 $ - $(113,831)$ - $ 72,575
Tar Sands - - - - -
$ 186,406 $ - $(113,831) $ - $ 72,575
GNC ENERGY CORPORATION
SCHEDULE VI - CONSOLIDATED ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Additions
Balance at Charged to Other Balance at
Beginning Costs and Retire- Changes end of
Classification of Period Expenses ments Add(Deduct) Period
Year ended
March 31, 2003:
Oil and gas
- full cost - - - - -
$ - $ - $ - $ - $ -
Year ended
March 31, 2002:
Oil and gas
- full cost 72,466 - ( 72,466) - -
$ 72,466 $ - $ ( 72,466) $ - $ -
Year ended
March 31, 2001:
Oil and gas
- full cost $ 186,252 $ - $ (113,786) $ - $ 72,466
$ 186,252 $ - $ (113,786)$ - $ 72,466
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
There are no receivables and therefore no allowance for doubtful accounts.