First quarter financial statements 2003

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934

For the month of       December, 2003

Commission File Number    0-29586

 
(Address of Principal executive offices)


2 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 1L6, Canada
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x        Form 40-F o    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes o         No x    

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes  o        No     x        

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3- 2(b):
82- _________

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.

EnerNorth Industries Inc.
(formerly: Energy Power Systems Limited)


Date: December 1, 2003                     By: ____"Sandra J. Hall"____ ______
Sandra J. Hall,
President, Secretary & Director
 
 
 
 
     
 
 
 
 
 
 

 
 








Consolidated Financial Statements
September 30, 2003
(Unaudited)
(Expressed in Canadian Dollars)







2 Adelaide Street West, Suite 301, Toronto, Ontario M5H 1L6
1-866-230-3305 www.enernorth.com


 
  1  
 
 
 

  
 
 
EnerNorth Industries Inc.
 
 
 
Consolidated Balance Sheets
 
 
 
(Expressed in Canadian dollars)
 
 
 
 
September 30, 2003
June 30, 2003
 
(unaudited)
(audited)
   
 
    
 
  
 
    
 
    
 
  
 
    
 
    
 
  
ASSETS
   
 
    
 
  
Current
   
 
    
 
  
Cash and cash equivalents
 
$
5,593,300
 
$
6,729,283
 
Restricted cash
 
1,218,070
 
 
1,218,070
 
Marketable securities
   
394,539
   
176,804
 
Receivables
   
4,972,619
   
6,503,464
 
Due from co-venturer
   
551,282
   
461,150
 
Inventories
   
780,822
   
713,835
 
Unbilled revenue
   
(110,606
)
 
1,680,806
 
Prepaid expenses
   
234,620
   
240,725
 
   
 
 
Total current assets
   
13,634,646
   
17,724,137
 
 
    
 
    
 
  
Oil and gas interests (net of accumulated
   
 
    
 
  
depletion)
   
4,961,048
   
4,444,038
 
Capital assets (net of accumulated
   
 
    
 
  
depreciation and amortization)
   
3,150,253
   
3,166,786
 
Investment (Note 4)
   
3,500,000
   
3,500,000
 
  
 
 
 
    
 
    
 
  
 
  
$
25,245,947
 
$
28,834,961
 
  
 
 
 
    
 
    
 
  
LIABILITIES AND SHAREHOLDERS' EQUITY
   
 
    
 
  
Current
   
 
    
 
  
Bank indebtedness
 
$
1,289,919
 
$
2,036,933
 
Accounts payable and accrued liabilities
   
3,060,779
   
5,747,414
 
Due to shareholder (Note 3(b))
   
154,676
   
402,419
 
Current portion of long-term debt
   
158,309
   
158,309
 
Deferred revenue
   
2,341,116
   
2,399,086
 
Future income tax liability
   
302,900
   
302,900
 
Oakwell claim (Note 5)
   
5,900,000
   
5,900,000
 
Total current liabilities
   
13,207,699
   
16,947,061
 
 
    
 
    
 
  
Long-term debt
   
503,294
   
528,020
 
Site Restoration
   
106,274
   
106,274
 
Total liabilities
   
13,817,267
   
17,581,355
 
  
 
 
 
    
 
    
 
  
Shareholders' equity
   
 
    
 
  
Capital stock (Note 6)
   
43,339,132
   
43,339,132
 
Deficit
   
(31,910,452
)
 
(32,085,526
)
Total shareholders' equity
 
$
11,428,680
 
$
11,253,606
 
  
 
 
 
    
 
    
 
  
 
  
$
25,245,947
 
$
28,834,961
 
  
 
 
 
    
 
    
 
  
 
    
 
    
 
  
The accompanying notes to the financial statements are an integral part of these financial statements
   
 
    
 
  

 

 
  2  
 
 

 

 
  
 
 
  
 
  
 
 
EnerNorth Industries Inc.
 
 
 
Consolidated Statements of Income and Deficit
 
 
 
(Unaudited)
 
 
 
(Expressed in Canadian dollars)
 
 
 
  
For the three
 
month period
 
ending September 30
 
  
2003
2002
 
    
 
    
 
  
 
    
 
    
 
  
Sales
 
$
6,952,262
 
$
10,462,874
 
Cost of sales (including depreciation
   
 
    
 
  
and depletion of $160,352; 2002 - $117,619)
   
5,956,197
   
9,175,826
 
  
 
 
Gross profit
   
996,065
   
1,287,048
 
  
 
 
 
    
 
    
 
  
Administrative expenses
   
884,664
   
896,717
 
Amortization of capital assets
   
33,661
   
17,179
 
Interest
   
22,995
   
40,208
 
Interest on long-term debt
   
13,209
   
11,466
 
  
 
 
 
    
954,529
   
965,570
 
  
 
 
Income before the following
   
41,536
   
321,478
 
 
    
 
    
 
  
Other income
   
133,538
   
-
 
  
 
 
 
    
 
    
 
  
Net income before tax
 
$
175,074
 
$
321,478
 
 
    
 
    
 
  
Income taxes
   
 
    
 
  
Future
   
66,528
   
-
 
Utilization of loss carryforwards
   
(66,528
)
 
-
 
  
 
 
-
         
-
 
  
 
 
 
    
 
    
 
  
Net income
 
$
175,074
 
$
321,478
 
 
    
 
    
 
  
Deficit, beginning of period
   
(32,085,526
)
 
(24,038,050
)
 
 
 
Deficit, end of period
   
($31,910,452
)
 
($23,716,572
)
 
 
 
 
    
 
    
 
  
 
    
 
    
 
  
Net income per Common Share
   
 
    
 
  
Net income per share
 
$
0.04
 
$
0.09
 
Weighted average common shares
   
 
    
 
  
outstanding (thousands)
   
4,059
   
3,526
 
 
    
 
    
 
  
 
    
 
    
 
  
Fully Diluted net income per Common Share
   
 
    
 
  
Net income per share
 
$
0.04
 
$
0.09
 
Weighted average common shares
   
 
    
 
  
outstanding (thousands)
   
4,592
   
3,670
 
 
    
 
    
 
  
 
    
 
    
 
  
The accompanying notes to the financial statements are an integral part of these financial statements
   
 
    
 
  

 

 
  3  
 
 

 
  
 
 
  
 
  
 
 
EnerNorth Industries Inc.
 
 
 
Consolidated Statements of Cash Flows
 
 
 
(Unaudited)
 
 
 
(Expressed in Canadian dollars)
 
 
 
  
 
  
For the three month period
 

 
ending September 30
 
  
2003
2002
 
 
 
 
    
 
    
 
  
 
    
 
    
 
  
Cash provided by (used in)
   
 
    
 
  
 
    
 
    
 
  
Operating activities
   
 
    
 
  
Net income
 
$
175,074
 
$
321,478
 
Adjustments to reconcile net income to
   
 
    
 
  
net cash provided by operating activities
   
 
    
 
  
Amortization and depletion
   
194,013
   
134,798
 
Gain on sale of marketable securities
   
(14,628
)
 
-
 
  
 
 
 
    
354,459
   
456,276
 
Net change in non-cash working capital
   
 
    
 
  
Receivables
   
1,530,845
   
(6,580,243
)
Inventories and unbilled revenue
   
1,724,425
   
1,671,437
 
Prepaid expenses
   
6,105
   
6,505
 
Accounts payable and accrued liabilities
   
(2,686,635
)
 
3,903,351
 
Deferred revenue
   
(57,970
)
 
-
 
  
 
 
 
    
871,229
   
(542,674
)
 
 
 
 
    
 
    
 
  
Financing activities
   
 
    
 
  
 
    
 
    
 
  
Bank indebtedness
   
(747,014
)
 
763,672
 
Repayments of Long term debt
   
(46,212
)
 
(47,577
)
Repayment to shareholders
   
(247,743
)
 
(313,346
)
 
 
 
 
    
(1,040,969
)
 
402,749
 
  
 
 
 
    
 
    
 
  
Investing activities
   
 
    
 
  
Purchase of capital assets
   
(36,108
)
 
(26,027
)
Oil and gas interests
   
(627,975
)
 
(87,122
)
Due from co-venturer
   
(99,053
)
 
(924,832
)
Marketable securities
   
(203,107
)
 
(435
)
 
 
 
 
    
(966,243
)
 
(1,038,416
)
 
 
 
 
    
 
    
 
  
Decrease in cash
   
(1,135,983
)
 
(1,178,341
)
Cash, beginning of period
   
6,729,283
   
5,610,621
 
  
 
 
Cash, end of period
 
$
5,593,300
 
$
4,432,280
 
  
 
 
 
    
 
    
 
  
 
    
 
    
 
  
 
    
 
    
 
  
Cash, end of period consists of:
   
 
    
 
  
Cash
 
$
2,798,875
 
$
1,719,015
 
Money market funds
 
$
2,794,425
 
$
2,713,265
 
 
    
 
    
 
  
The accompanying notes to the financial statements are an integral part of these financial statements
   
 
    
 
  

 

 
  4  
 
 


 







 
EnerNorth Industries Inc.
Notes to Unaudited Consolidated Financial Statements
For the Three Month Period Ending September 30, 2003
(Expressed in Canadian Dollars)
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
1. Basis of Presentation

These unaudited interim consolidated financial statements have been prepared by management following the same accounting policies and methods of computation as the audited consolidated financial statements for the year ended June 30, 2003. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements together with notes for the year ended June 30, 2003. The unaudited consolidated financial results for the three month period ending September 30, 2003 and 2002 include the accounts of the Company and its wholly owned subsidiary M&M Engineering Limited, a Newfoundland and Labrador company, M&M’s wholly-owned subsidiary M&M Offshore Limited, a Newfoundland and Labrador company, 10915 Newfoundland Limited, 11123 Newfoundland Limited and the proportionate share of its interests in joint ventures whose business focus is construction, mechanical contracting and steel fabrication. Operating results for the three months ended September 30, 2003 are not indicative of the results that may be expected for the full year ending June 30, 2004.

  1. Segmented information

The Company's operations are separated into two distinct segments; the Industrial & Offshore Division, consisting of the consolidated operations of M&M Engineering Limited, a wholly owned subsidiary, and the Oil & Gas Division performing oil and gas exploration and production. M&M is an industrial contracting company performing fabrication and installation of process piping, installation of production equipment, steel tank erection, specialized welding services and industrial maintenance. Results for the three month period ending September 30, 2003 and September 30, 2002 are presented in the Consolidated Statements of Segmented Information below:
 
 

 
  
 
 
 
 
EnerNorth Industries Inc.
 
 
 
 
 
Consolidated Statements of Segmented Information
 
 
 
 
 
(Unaudited) (Expressed in Canadian Dollars)
 
 
 
 
 
 
  
 
 
 
 
 
  
 
 
 
 
For the three months ending September 30, 2003
 
 
 
 
 
  
 
  
 
 
 
 
 
  
Industrial
 
 
 
 

 
& Offshore
Oil & Gas
Corporate
Total
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Revenue
   
6,820,024
   
132,238
   
-
   
6,952,262
 
 
    
 
    
 
    
 
    
 
  
Interest expense
   
35,691
   
-
   
513
   
36,204
 
 
    
 
    
 
    
 
    
 
  
Amortization and depletion
   
83,048
   
110,965
   
-
   
194,013
 
 
    
 
    
 
    
 
    
 
  
Net earnings (loss)
   
360,450
   
(68,543
)
 
(116,833
)
 
175,074
 
 
    
 
    
 
    
 
    
 
  
Capital assets and
   
 
    
 
    
 
    
 
  
oil and gas interests
   
3,150,253
   
4,961,048
   
-
   
8,111,301
 
 
    
 
    
 
    
 
    
 
  
For the three months ending September 30, 2002
   
 
    
 
    
 
    
 
  
  
 
 
 
 
 
    
 
    
 
    
 
    
 
  
 
    
Industrial  

 

 
 

 

 
 

 

 
 

 

 

 

 
& Offshore  

 

 
Oil & Gas

 

 
Corporate

 

 
Total
 
   
 
 
 
 
 
    
 
    
 
    
 
    
 
  
Revenue
   
10,306,317
   
156,557
   
-
   
10,462,874
 
 
    
 
    
 
    
 
    
 
  
Interest expense
   
49,901
   
-
   
1,773
   
51,674
 
 
    
 
    
 
    
 
    
 
  
Amortization and depletion
   
60,849
   
73,949
   
-
   
134,798
 
 
    
 
    
 
    
 
    
 
  
Net earnings
   
689,503
   
(21,761
)
 
(346,264
)
 
321,478
 
 
    
 
    
 
    
 
    
 
  
Capital assets and
   
 
    
 
    
 
    
 
  
oil and gas interests
   
2,800,037
   
4,413,251
   
-
   
7,213,288
 
 
    
 
    
 
    
 
    
 
  

  1. Related Party Transactions
    
a.
During the three month period ending September 30, 2003 a director of the Company was paid US$5,000 under a nine month consulting agreement that commenced September 1, 2003.
 
 
b.
During the three month period ending September 30, 2003 the Company repaid $247,743 to a shareholder and a director of the Company.

    These transactions were in the normal course of business of the Company and were measured at the exchange amount.



 
  5  
 
 

 
EnerNorth Industries Inc.
Notes to Unaudited Consolidated Financial Statements
For the Three Month Period Ending September 30, 2003
(Expressed in Canadian Dollars)
 


  1. Subsequent Events

As of September 30, 2003 the Company owns 11,348,200 shares of Konaseema EPS Oakwell Power Limited ("KEOPL"), a company incorporated in India that is developing a power project in Andhra Pradesh. Pursuant to an Agreement and Arbitration Award passed on October 11, 2003, VBC Ferro Alloys Ltd. ("VBC") agreed to transfer an additional 500,000 equity shares in KEOPL of par value of INR 10 each aggregating to Indian Rupees ("INR") 5 million (approximately Cdn$150,000) to the Company as special consideration arising out of an increase in the equity of KEOPL.

Pursuant to the Arbitration Award, VBC shall be required to buy the 11,348,200 shares in KEOPL for consideration of INR 113,482,000 (approximately Cdn$3.3 million) on or before the earlier event of 60 days after the first disbursal of funds on Financial Closure of the Project and March 31, 2004. The Company shall at its option upon written notice to VBC offer to sell and VBC shall be required to buy the 500,000 equity shares of KEOPL at the par value of INR 5 million on or before the same dates mentioned above. If VBC does not buy back or pay for the shares by March 31, 2004 interest of 12% will be charged per annum.

  1. Oakwell Claim

In August 2002 the Company was named as a defendant in a legal proceeding in the High Court of Singapore. On October 16, 2003, the Company received a decision from the court with respect to a 13 day trial held from May 5, 2003 to May 22, 2003. In his decision, the judge awarded Oakwell Engineering Limited a total award of US$4.16 million (approximately Cdn$5.4 million) plus certain legal costs, estimated at Cdn$0.5 million. On November 13, 2003, the Company filed a Notice of Appeal of the Judgment in the Court of Appeal of the Republic of Singapore. A provision of Cdn$5.9 million was recorded for this claim in the Company’s June 30, 2003 audited consolidated financial statements.


  1. Share Capital
  1. Authorized and Issued:

Authorized:    
Unlimited number of Common Shares, without par value
Unlimited number of Class A Preference Shares, Series I
Unlimited number of Class A Preference Shares, Series II

Issued
Common shares

 
  
#
Consideration
 
 
 
Balance, as at June 30, 2003
   
4,059,009
 
$
43,339,132
 
 
    
 
    
 
  
Balance, as at September 30, 2003
   
4,059,009
 
$
43,339,132
 
  
 
 



  1. Common share purchase warrants outstanding consist of the following:

Exercise
Expiry
2003
2002
Price
Date
#
#
$28.80
October 4, 2002
-
32,000
US$ 13.35
March 13, 2003
-
13,333
US$ 1.80
December 31, 2004
533,332
-
 
 
533,332
45,333


  1. Common share purchase options outstanding consist of the following:

Exercise
Expiry
 
2003
2002
Price
Date
Holder
#
#
$12.00
June 14, 2005
Consultant
-
7,000
$18.90
January 8, 2006
Directors and employees
-
91,333
 
 
 
-
98,333






 
  6