U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: October 31, 1998
Commission File Number: 0-29356
SOUTHERN STATES POWER COMPANY, INC.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
33-0312389
(IRS Employer Identification No.)
830 Havens Road
Shreveport, LA
(Address of principal executive offices)
71107
(Zip Code)
(318) 221-5703
(Issuer's Telephone Number)
PASCAL VENTURES, INC.
6 Venture, Suite 207
Irvine, CA
92618
Former Fiscal Year: April 30
(Former name, former address and former fiscal year,
if changed last report)
Check whether the issuer (1) 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 .
--- ---
The number of shares of the registrant's only class of common
stock issued and outstanding, as of October 31, 1998, was
10,205,000 shares.
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PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the six month
period ended October 31, 1998, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction
with the Company's unaudited financial statements and notes
thereto included herein. In connection with, and because it
desires to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Company
cautions readers regarding certain forward looking statements in
the following discussion and elsewhere in this report and in any
other statement made by, or on the behalf of the Company, whether
or not in future filings with the Securities and Exchange
Commission. Forward looking statements are statements not based
on historical information and which relate to future operations,
strategies, financial results or other developments. Forward
looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of
which are beyond the Company's control and many of which, with
respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results
and could cause actual results to differ materially from those
expressed in any forward looking statements made by, or on behalf
of, the Company. The Company disclaims any obligation to update
forward looking statements.
Overview
- --------
The Company was originally organized as Pascal
Ventures, Inc. ("Pascal") in the State of Delaware on August 31,
1988. In January 1998, Pascal's Form 10-SB became effective and
the Company become a reporting company under the Securities
Exchange Act of 1934, as amended. On July 13, 1998, the
shareholders of Pascal and Southern States Power Company, Inc., a
Louisiana corporation ("Southern States") approved the terms of a
Share Exchange Agreement and Plan of Reorganization between the
two entities. As a result of the merger, the total number of
common shares outstanding as of July 13, 1998 (as of the merger
date) was 10,205,000. As a result of the Share Exchange
agreement and Plan of Reorganization between Pascal and Southern
States, the shareholders of Pascal authorized a 4 to 1 forward
split of all pre-merger shares (from 500,000 to 2,000,000) and
issued 8,205,000 shares of its restricted common stock to the
shareholders of Southern States. Accordingly, the Company had a
total of 10,205,000 common shares of its stock outstanding after
2
<PAGE>
concluding the merger. The Company changed its name from Pascal
Ventures, Inc.to Southern States Power Company, Inc.
Revenues
- --------
The Company generated no revenues from operations
during the six month period ended October 31, 1998. All revenues
have been derived from dividend income from cash reserves. The
Company is still in the development stage and management has
concluded that the most prudent use of the Company's cash
reserves at this time is in low risk investments. As the
business plan of the Company develops and funds are allocated
toward revenue-generating activities, cash can be moved from the
investment account to an operating account on an "as-needed"
basis. This will allow the Company to maximize its interest
revenue with a low risk factor.
Plan of Operation
- -----------------
The Company is a development stage company concerned
with power generation for various applications. On July 28,
1998, the Company purchased a forty percent ownership interest in
an automobile manufacturing operation in Otay Mesa, Tijuana,
Mexico, in exchange for cash and engineering consulting services.
Global Green Cars, Inc., a subsidiary of B.A.T. International,
Inc., also owns a forty percent interest in this operation, while
Environmental Process Advanced, S.A. de C.V., a Mexican
corporation, owns the remaining twenty percent. It is
anticipated that over the next twelve months, this manufacturing
operation will produce light automobiles constructed from
composite materials and powered by gas, diesel and/or electric
motors. The Company's technology is applicable to the energy
efficiency ratings for the various power supplies planned for
these vehicles. At the present time, the manufacturing operation
is in a development phase. It is impossible to approximate the
plant's output capacity since workers are still being trained and
vehicle designs are still under review. However, once this data
is available, economic decisions will be made with regard to
duplicating this facility throughout Mexico.
As for the vehicle designs, the Company is negotiating
for acquisition of certain automobile designs that will be unique
and exclusively manufactured by the joint venture between the
Company, Global Green Cars, Inc. and Environmental Process
Advanced, S.A. de C.V. The physical plant is the property of the
joint venture. The participating joint venture partners own a
portion of the operations and output as set forth above. The
obligations of the joint venture partners are to provide capital
funding, technology and consulting services to the operation in
exchange for their participation interests.
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Capital expenditures have been made to support the
automobile manufacturing facility during its development phase.
The Company will continue to support the manufacturing facility
from its cash reserves until such time as it begins to generate
revenue, at which the joint venture should have sufficient income
to support its operations. At the present expenditure rate, the
Company would not have to raise additional funds during the next
twelve months, as sufficient cash is on hand to satisfy the
Company's cash requirements through at least March of 2000.
The Company's securities are currently not liquid.
There are no market makers in the Company's securities and it is
not anticipated that any market will develop in the company's
securities until such time as the company successfully implements
its business plans.
Year 2000 Disclosure
Many existing computer programs use only two digits to
identify a year in the dare field. These programs were designed
and developed without considering the impact of the upcoming
change in the century. If not corrected, many computer
applications could fail or create erroneous results by or at the
Year 2000. As a result, many companies will be required to
undertake major projects to address the Year 2000 issue. Because
the Company has nominal assets, including no personal property
such as computers, it is not anticipated that the Company will
incur any negative impact as a result of this potential problem.
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. OTHER INFORMATION
On August 28, 1998, the Company and Mr. Lorenzo Payan
formed a joint venture company organized under the laws of
Mexico. The company is called "Southern States Power Company -
Mexico, S.A. de C.V." The Company and Mr. Payan each own 50% of
the new entity, which will be used to market the Company's
products and services in Mexico as the Company's business plan is
developed.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
On or about June 24, 1998, the Company filed a
report on Form 8-K, which is incorporated herein by reference,
which report advised, among other things, of the consummation of
a share exchange agreement with Southern States Power Company
("Southern"), a Louisiana corporation, pursuant to which the
Company undertook a forward split of its common stock whereby 4
shares were issued in exchange of each share of common stock
issued and outstanding and acquired all of the issued and
outstanding securities of Southern and the issuance of 8,205,000
shares of its "restricted" common stock to the former
shareholders of Southern in exchange for all of the issued and
outstanding stock of Southern. Southern did not survive the
transaction. The Company also changed its name to "Southern
States Power Company, Inc.." A copy of the Share Exchange
Agreement and Plan of Reorganization was annexed to the Form 8-K
as an Exhibit.
On or about October 15, 1998, the Company filed a
report on Form 8-K, which is incorporated herein by reference,
which report advised of the following: (i) the formation of a
Mexican joint venture entitled "Southern States Power Company -
Mexico, S.A. de C.V." with Lorenzo Payan to promote the Company's
technologies and products in the Mexican market; (ii) the
entering into an agreement with Environmental Process Advanced,
S.A., a Mexican company, and Global Green Cars, Inc. to clarify
the relationships, rights and obligations of the parties with
respect to a vehicle manufacturing joint venture in Tijuana,
Mexico; (iii) change of Company's fiscal year end to December 31;
and (iv) included the consolidated financial statements for the
Company reflecting the financial status of the Company following
the consummation of the share exchange agreement.
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<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
(A Development Stage Company)
(A Delaware corporation)
BALANCE SHEET
<CAPTION>
Unaudited Audited
October 31, 1998 April 30, 1998
---------------- --------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash $ 833,867 $ 0
Inventory 70,000 0
---------------- --------------
Total Current Assets 903,867 0
Investment in Joint
Venture (Note 2) 266,550 0
Organization Costs (net of
$1,333 accumulated
amortization) 8,667 0
---------------- --------------
Total Assets $ 1,179,084 $ 0
================ ==============
LIABILITIES
Current Liabilities:
Accounts Payable 2,616 900
---------------- --------------
Total Current Liabilities 2,616 900
---------------- --------------
Total Liabilities 2,616 900
STOCKHOLDERS' EQUITY
Common Stock; $0.001 par
value; 50,000,000 shares
authorized; 500,00 shares
issued and outstanding as
of April 30, 1998;
10,205,000 shares issued
and outstanding as of
October 3, 1998 10,205 500
Additional Paid-In Capital 1,178,295 0
Retained Earnings (12,032) (1,400)
-------------- --------------
Total Stockholders' Equity 1,176,468 (900)
Total Liabilities and
Stockholders' Equity $ 1,179,084 $ 0
============== ==============
</TABLE>
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<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
(A Development Stage Company)
(A Delaware corporation)
STATEMENT OF REVENUES AND EXPENSES
<CAPTION>
For the For the Period
Six Six 8/31/88
Months Months (Inception)
Ended Ended to
10/31/98 10/31/97 10/31/98
---------- -------- ----------
<S> <C> <C> <C>
REVENUES:
Dividend Income $ 21,970 $ 0 $ 21,970
---------- -------- ----------
Total Revenues 21,970 0 21,970
EXPENSES:
Amortization Expense 1,333 1,000 1,833
Accounting 3,000 0 4,000
Bank Charges 533 0 533
Legal 8,003 0 8,003
Taxes and Licenses 0 100 1,000
Travel Expenses 18,033 0 18,033
Supplies 600 0 600
---------- -------- ----------
Total Expenses 31,502 1,100 34,002
Net Income/(Loss) $ (9,532) $ (1,100) $ (12,032)
========== ======== ==========
Net loss per share $ 0 $ 0 $ 0
========== ======== ==========
Common Shares
Outstanding 10,205,000 500,000 10,205,000
========== ======== ==========
</TABLE>
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<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
(A Development Stage Company)
(A Delaware corporation)
STATEMENT OF CASH FLOWS
<CAPTION>
Period
For the For the 8/31/98
Six Months Six Months (Inception)
Ended Ended to
10/31/98 10/31/97 10/31/98
--------- -------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ (9,532) $ (1,100) $ (12,032)
Adjustments to reconcile
net income to net cash
provided from operating
activities:
Amortization 1,333 0 1,833
Increase in accounts
payable 1,100 2,000
Increase in inventory (70,000) 0 (70,000)
--------- -------- ----------
Net Cash Used by
Operating Activities (78,199) 0 (78,199)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Acquisition of Environ-
mental Process
Advanced (Joint Venture) (266,550) 0 (266,550)
Increase in Intangible
Assets (10,000) 0 (10,500)
--------- -------- ----------
Net Cash Used in Investing
Activities (276,550) 0 (277,050)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from Issuing
Common Stock 1,188,000 0 1,188,500
Proceeds from Loan
Payable 616 0 616
---------- -------- ----------
Net Cash From Financing
Activities 1,188,616 0 1,189,116
---------- -------- ----------
Net Increase in Cash 833,867 0 833,867
Cash at Beginning of Year 0 0 0
---------- -------- ----------
Cash at End of Year $ 833,867 $ 0 $ 833,867
========== ======== ==========
</TABLE>
8
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SOUTHERN STATES POWER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
For the Period Ended October 31, 1998 and October 31, 1997
(1) Summary of Significant Accounting Policies:
General:
The Company was incorporated in the state of Delaware on August 31,
1988. The company changed its corporate year end from April 30 to
December 31. The Company merged with Southern States Power Company,
Inc. on July 13, 1998 and was the surviving company.
Business Activity:
The Company has had no operating activity and plans to generate energy
efficient power supply in exchange for fees from customers.
Organization Costs:
The Company's organization costs consists of legal and filing fees,
which were incurred by Southern States Power Company, Inc., and will be
amortized over a 60-month period.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair Value:
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments, none of which are
held for trading purposes, approximate carrying values of such amounts.
Cash:
The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits. The Company has not experienced
any losses in such accounts.
Income Taxes:
The Company has not filed required federal income tax returns from
inception through 1997. Due to the late filing of these tax returns a
minimum penalty of $1,000 has been accrued and included in accounts
payable on the balance sheet.
9
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SOUTHERN STATES POWER COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Period Ended October 31, 1998 and October 31, 1997
(2) Investment in Joint Venture
The company has jointly invested in manufacturing facilities in Mexico.
The company will hold a forty percent (40%) joint venture interest in
said manufacturing facility.
(3) Stockholders' Equity:
Pascal Ventures, Inc. authorized 50,000,000 shares of common stock at a
par value $.001 per share.
On August 31, 1991, Pascal Ventures, Inc. issued 500,000 shares of stock
at $.001 per share for $500. These shares have been issued to ten
individuals based on the cash contributed.
On July 13, 1998, as a result of the Share Exchange Agreement and Plan
of Reorganization between the Company and Southern States Power
Company, Inc., a Louisiana corporation, the shareholders of the Issuer
authorized a 4 to 1 forward split of all pre-merger shares (from 500,000
to 2,000,000) and issued 8,205,000 shares of its restricted common stock
to the shareholders of Southern States Power Company, Inc. for all of
the issued and outstanding shares of Southern States Power Company, Inc.
The Company had a name change after the merger to Southern States Power
Company, Inc.
(4) Subsequent Events:
The Company entered into a five-year agreement with Southern States Gas
Gathering System, LLC to purchase up to 2,000,000 cubic feet of natural
gas per day at $2,600 per million cubic feet in exchange for 350,000
shares of its common stock. The Company may extend this agreement for
another five years, at the end of the initial term, at a price of 5%
below the spot price of natural gas.
The Company also entered into a five year agreement with Southern States
Oil Production, LLC to purchase up to 4,200 gallons of Louisiana light
sweet crude oil per day at a fixed price of $0.38 per gallon in exchange
for 350,000 shares of its common stock. The Company may extend this
agreement for another five years, at the end of the initial term, at a
price of 5% below the spot price of Louisiana light sweet crude oil.
10
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SOUTHERN STATES POWER COMPANY, INC.
(Registrant)
Dated: January 6, 1999
By: s/Heber C. Bishop
--------------------------------
Heber C. Bishop, President
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SOUTHERN STATES POWER COMPANY, INC.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended October 31, 1998
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . 13
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED OCTOBER 31, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> OCT-31-1998
<CASH> 833,867
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 70,000
<CURRENT-ASSETS> 903,867
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,179,084
<CURRENT-LIABILITIES> 2,616
<BONDS> 0
0
0
<COMMON> 10,205
<OTHER-SE> 1,166,263
<TOTAL-LIABILITY-AND-EQUITY> 1,179,084
<SALES> 0
<TOTAL-REVENUES> 21,970
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31,502
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,532)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,532)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,532)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
