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, 1999
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)
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, 1999 was 11,741,947 shares.
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PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the six month period ended October
31, 1999, 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 for 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
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total of 10,205,000 common shares of its stock outstanding after concluding the
merger. The Company changed its name from Pascal Ventures, Inc. to Southern
States Power Company, Inc.
On February 2, 1999, the Company was approved for trading on the OTC:BB
exchange. The symbol ASSPC was assigned to the Company. On October 25, 1999 the
Company was notified that its securities were relegated off the bulletin board
trading system for a thirty-day period due to late filing of the first quarterly
report of fiscal year 2000. The Company will be eligible for reapplication for
trading on the bulletin board system on November 25, 1999. 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.
Results of Operations
- ---------------------
The Company generated revenues of $13,800 from operations during the six
month period ended October 31, 1999, as compared to $0 revenues in the six month
period ended October 31, 1998. Cost of revenues were $11,597 for the six month
period ended October 31, 1999, as compared to $0 for the similar six month
period ended October 31, 1998. The Company generated a profit of $2,203 during
the six month period ended October 31, 1999.
Operating expenses were $577,820 for the six month period ended October 31,
1999, as compared to $734,764 for the six month period ended October 31, 1998, a
decrease of $156,944. Even although the Company's consulting and general and
administrative fees increased signficantly, those increases were offset by the
write-off of losses the Company incurred in 1998 from a joint venture in Mexico
with a related party.
Plan of Operation
- -----------------
The Company is a development stage company concerned with power generation
for various applications.
In the previous fiscal year, the Company focused on the development of
a joint venture automobile manufacturing operation with Environmental Process
Advanced, S.A. de C.V. in Otay Mesa, Mexico and cash resources from Company
reserves were allocated to the plant for expenses such as labor, insurance,
parts, equipment and the like.
Subsequently, the Company formed a joint venture with Anuvu, Incorporated
to complete development and demonstration of an advanced proton exchange
membrane (PEM) fuel cell that will be demonstrated in a series of fuel cell
powered electric vehicle
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runs in California and other locations. The joint venture company, Global Fuel
Cell Corporation, is owned 50% by Anuvu and 50% by the Company. The Company has
also completed an electric mini-van with a state of the art AC drive system that
has a fully computerized monitoring system with the fuel cell using a variety of
fuels including hydrogen, natural gas, propane, methanol & gasoline.
In addition, the Company entered into an agreement with Thunder Ranch, Inc.
whereby the Company was irrevocably assigned the rights to manufacture and
distribute the AIsland Car (sometimes referred to as the AWorld Car or the
AWorldStar vehicle). The Company also purchased a soybean oil extraction
facility located near Culiacan, Sinaloa, Mexico, producing biodiesel fuel, with
a production capacity of approximately 7 million gallons of oil/year, plus feed
meal by-product, and has entered into agreements with the farmers in the region
to allow purchase of soybeans at a set price for a 15 year period.
On July 20, 1999, the Company signed a custom production agreement with
NOPEC Corporation of Lakeland, Florida, for the purchase of up to 4 million
gallons of biodiesel fuel for distribution in California with an option to
expand the contract amount to 8 million gallons. NOPEC will be manufacturing the
Company's proprietary "OxyG B-60". The Company has established a fuel
distribution facility with storage tanks in San Bernardino, California.
On July 28, 1999, the Company entered into a lease agreement for an 80,000
multi-use building that is part of the former Norton Air Force Base in
Riverside, California. This facility is part of a "free-trade" zone established
to encourage business to locate on the campus. As such, the Company will be
allowed to import goods from overseas without paying taxes unless the finished
product will be sold in the United States. The Company will begin manufacture
and assembly of its "mining cars" previously manfactured in Otay Mesa, Mexico,
for mining customers in the US at this facility.
Additionally, on July 30, 1999, the Company was awarded a contract from the
Deer Valley Unified School District (Arizona's largest) for the purchase of
biodiesel fuels for school buses serving the district.
During the three month period ended October 31, 1999, the Company continued
to develop its three main areas of proprietary technology: power generation for
facilities and motor vehicles, clean or "green" fuels, and environmentally safe
waste remediation processes. Each division shows tremendous promise with ample
market opportunities for the Company's products.
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Year 2000 Disclosure
- --------------------
The Company has assessed the ability of its various electronic operating
systems, and those of significant third parties, to appropriately consider
periods and dates after December 31, 1999. The Company's senior financial
management has taken responsibility for identifying, addressing and monitoring
its Year 2000 issues. The Company completed a comprehensive analysis of the
operational problems and costs (including loss of revenues) that would be
reasonably likely to result from the failure by the Company and certain third
parties to complete efforts necessary to achieve Year 2000 compliance. A
contingency plan has been developed for dealing with the most reasonably likely
worst case scenario, and such scenario has not yet been clearly identified. The
Company's Year 2000 efforts are expected to significantly reduce the Company's
level of uncertainty about the Year 2000 problem. The Company believes that,
with the implementation of new business systems and completion of the various
above-mentioned tasks as scheduled, the possibility of interruptions to normal
operations should be significantly reduced.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES
On September 16, 1999, the Company issued 150,000 shares of stock from the
treasury to Joseph Wilhelm pursuant to an option agreement entered into by the
Company with Wilhelm on September 16, 1998, bringing the total outstanding
number of shares of Company stock to 11,741,947. The shares were issued in
exchange for cash.
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 1, 1999, Director William C. "Curt" Thurmon resigned from the
Board of Directors. The remaining directors elected Harrison A. McCoy, III, as
his replacement. Director McCoy was also named Executive Vice President of the
Company.
During the second quarter of Fiscal Year 2000, representatives of the
Company participated in seminars and conferences throughout the country where
they were invited to present information about the Company's biodiesel fuel
products to the participants. Presentations were made at the South Coast
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Air Quality Management Board Meeting (Southern California), the Clean Cities
Commission Meeting in Mission Inn (California), and the Alternative Fuels
Seminar in Birmingham, Alabama sponsored by the Chamber of Commerce.
On September 29, 1999, company representatives made a presentation
regarding the biodiesel program to the Society of Automotive Engineers
Conference in Tampa Bay/St. Petersburg, Florida. The session was followed with a
bus trip to nearby Lakeland, Florida, where participants were given an
informational tour of the facility owned and operated by the Company's custom
biodiesel producer, NOPEC Corporation, which produces the Company's proprietary
"OxyG B-60" biodiesel fuel. Western Petroleum, Inc. was named "Master
Distributor" of the Company's OxyG B-60 fuel for the state of Arizona. Western
Petroleum also serves as Master Distributor for ARCO, Texaco and Shell.
On October 28, 1999, the Company was awarded a second biodiesel fuel
purchase contract from the Deer Valley Unified School District, the largest
school district in Arizona. The contract was for the purchase of 20,000 gallons
of OxyG B-60 biodiesel fuel. The order will be filled in the third quarter of
Fiscal Year 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during this period.
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<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
BALANCE SHEET - October 31, 1999
ASSETS:
<CAPTION>
Unaudited
October 31, 1999
----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 344
Accounts receivable 3,800
Inventory 33,161
Prepaid expenses 822
-------------
Total current assets $ 38,127
Property and equipment, net 36,390
Notes receivable:
B.A.T. and Subsidiaries, related parties 26,340
Less allowance for doubtful accounts 26,340
-------------
Total notes receivable -
----------------
Investment in GAMM Projects 1,657,500
Goodwill, net 796,666
Deposits 50,000
----------------
$ 2,578,683
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities-
accounts payable and accrued expenses $ 9,417
Stockholders' deficiency:
Common stock; $0.001 par value, 50,000,000
shares authorized, 11,632,947 shares issued
and outstanding 11,742
Additional paid-in capital 6,109,439
Accumulated deficit (3,551,915)
-------------
Total stockholders' equity 2,569,266
----------------
$ 2,578,683
================
</TABLE>
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<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
STATEMENTS OF OPERATIONS
For the six For the six
months ended months ended
October 31, 1999 October 31, 1998
(Unaudited) (Unaudited)
---------------- ----------------
<S> <C> <C>
Revenue $ 13,800 $ -
Cost of Revenue 11,597 -
---------------- ----------------
Gross profit 2,203 -
Operating expenses:
Research and development 58,777 75,000
Consulting fees 87,394 -
Loss on investment in joint venture in
Mexico with related party 13,680 612,698
General and administrative expenses 417,969 47,066
----------------- ---------------
(577,820) (734,764)
----------------- ---------------
Net loss before dividend income (575,617) (734,764)
Dividend income 863 20,469
----------------- ---------------
Net loss $ (574,754) $ (714,295)
================= ===============
Net loss per share -
basic and diluted $ (0.05) $ (0.09)
================= ===============
Weighted average number of shares
outstanding - basic and diluted 11,643,018 8,162,005
================= ===============
</TABLE>
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<TABLE>
SOUTHERN STATES POWER COMPANY
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
For the six For the six
months ended months ended
October 31, 1999 October 31, 1999
(Unaudited) (Unaudited)
---------------- ----------------
<S> <C> <C>
Cash flows provided by (used for) operating activities:
Net loss $ (574,754) $ (714,295)
---------------- ----------------
Adjustments to reconcile net income (loss) to net cash provided by (used for)
operating activities:
Stocks issued in exchange for services - 117,750
Amortization of goodwill 233,334 -
Depreciation and amortization 42,899 -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (3,800) -
Inventory (33,161) -
Prepaid expenses (822) -
Deposits (50,000) -
(Increase) decrease in assets:
accounts payable and accrued expenses (8,022) 11,125
----------------- ----------------
Total adjustments 180,428 128,875
----------------- ----------------
Net cash provided by operating
activities (394,326) (585,420)
Cash flows provided by (used for) investing activities:
purchase of property and equipment (4,483) -
----------------- ----------------
Cash flows provided by (used for) financing activities:
proceeds from issuance of common stocks 349,000 420,250
----------------- ----------------
Net increase (decrease) in cash (49,809) (165,170)
Cash, beginning of year 50,153 1,000,000
----------------- ----------------
Cash, end of year $ 344 $ 834,830
----------------- ----------------
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock in exchange
for services $ - $ 117,500
================= ================
Issuance of common stock in exchange
for investments $ 1,700,000 -
================= ================
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
Registrant has duly caused this amended report to be signed on its behalf by the
undersigned hereunto duly authorized.
SOUTHERN STATES POWER COMPANY, INC.
By: s/ Heber C. Bishop
------------------------------
Heber C. Bishop,
President
Dated: December 15, 1999
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SOUTHERN STATES POWER COMPANY, INC.
Exhibit Index to Quarterly Report on Form 10-QSB/A 1
For the Quarter Ended October 31, 1999
EXHIBITS Page No.
EX-27 Financial Data Schedule. . . . . . . . . . . . . . . . . . . . . . .12
11
<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, 1999,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> OCT-31-1999
<CASH> 344
<SECURITIES> 0
<RECEIVABLES> 3,800
<ALLOWANCES> 0
<INVENTORY> 33,161
<CURRENT-ASSETS> 38,127
<PP&E> 36,390
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,578,683
<CURRENT-LIABILITIES> 9,417
<BONDS> 0
0
0
<COMMON> 11,742
<OTHER-SE> 2,557,524
<TOTAL-LIABILITY-AND-EQUITY> 2,578,683
<SALES> 13,800
<TOTAL-REVENUES> 13,800
<CGS> 11,597
<TOTAL-COSTS> 11,597
<OTHER-EXPENSES> 577,820
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (574,754)
<INCOME-TAX> 0
<INCOME-CONTINUING> (574,754)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (574,754)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
