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: July 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 July 31, 1999 was 10,947,947 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three month period ended
July 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
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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 total of
10,205,000 common shares of its stock outstanding after
<PAGE>
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. 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.
Revenues
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The Company generated no revenues from operations during the three
month period ended July 31, 1999. 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. In the time period between November 1, 1998
and July 31, 1999, the Company focused on the development of its joint venture
automobile manufacturing operation with Environmental Process Advanced, S.A. de
C.V. in Otay Mesa, Mexico. Resources from Company reserves were allocated to the
plant for expenses such as labor, insurance, parts, equipment and the like. Most
of the plant activities in this fiscal quarter were centered on tooling the
plant facility, training the staff and building up an inventory of vehicles with
varying power systems (electric, gas, propane, diesel). The Company also
purchased the twenty-percent interest in the joint venture that was owned by
Global Green Cars, Inc. This acquisition brings the Company's total interest in
the venture to eighty percent. 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 time the joint venture
should have sufficient income to support its operations.
The Company also has 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
<PAGE>
runs in California and other locations. The Company and Anuvu formed the joint
venture company to combine fuel cell technology of Anuvu and electric vehicle
production capabilities of the Company. The joint venture company, Global Fuel
Cell Corporation, is owned 50% by Anuvu and 50% by the Company. SSPC has
provided funding, engineering and marketing support. 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. A series of vehicle runs are planned
over the next few months with the fuel cell using a variety of fuels including
hydrogen, natural gas, propane, methanol & gasoline.
In November 1998, 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 developer of this proprietary vehicle
technology was hired by the Company as a consultant in the areas of vehicle
fabrication at the Otay Mesa manufacturing facility.
In December 1998, the Company placed itself into the burgeoning
biodiesel fuel market with two actions. In the first, the Company purchased a
soybean oil extraction facility located near Culiacan, Sinaloa, Mexico. The
facility was designed with state of the art equipment. The plant is in excellent
condition and has only been in operation a total of 1000 hours. Production
capacity is approximately 7 million gallons of oil/year, plus feed meal
by-product. Equipment in the plant includes oil extraction machinery, rail
siding for transportation, meal and seed/bean unloading and loading equipment,
oil storage tanks, boiler and steam generator equipment and offices and labs.
Immediately upon its acquisition, the Company hired a crew to refurbish the
plant, which is now ready for operation. In the second action, the Company
entered into agreements with the farmers in the region to allow purchase of
soybeans at a set price for a 15 year period. This will provide price certainty
for raw material supplies.
Year 2000 Disclosure
- --------------------
Many existing computer programs use only two digits to identify a year
in the date 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.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES
On May 5, 1999, the Company issued 742,947 shares of stock
from the treasury to various individuals and entities, bringing the total
outstanding number of shares of Company stock to 10,947,947. The shares were
issued in exchange for cash and membership in two energy-related limited
liability companies.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
NONE
ITEM 5. OTHER INFORMATION
On May 15, 1999, the Company donated a hybrid electric vehicle
for emission research to the California Alternative Fuels and Energy Foundation
("CAFE"), which in turn donated the vehicle to the University of California at
Riverside. CAFE funds research into cleaner burning alternative fuels in order
to advance new transportation and energy technologies. Developments from these
studies will prove invaluable to the Company's alternative fuels division. The
testing will be conducted by UCR's College of Engineering Center for
Environmental Research and Technology ("CE-CERT").
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.
NOPEC has been producing biodiesel since 1996 in their state of the art
production facility. The product will be a clean, high performance fuel that
requires no modification of diesel engines to meet alternative fuel of air
quality requirements. Further, unlike other alternative fuels, this fuel does
not require special storage facilities, existing storage facilities being
sufficient for the applicable government standards. Oxy G B-60 has better
performance, a higher cetane level (how quickly diesel ignites), greater
lubricity, and more cleaning action than petroleum diesel. Biodiesel fuels have
been recognized as alternative fuels by the United States Department of Energy
so that use of the Company's Oxy G B-60 in a vehicle qualifies that vehicle for
Alternative Fueled Vehicle Credits (AFV's) under the Energy Policy Act (EPACT).
Also on July 20, 1999, Company representatives were invited by
the National Renewable Energy Laboratory, the United
<PAGE>
States Department of Energy and the National Diesel Board to participate in the
Biodiesel "B20" Workshop held at the South Coast Air Quality Management District
headquarters in Diamond Bar, California. The workshop was attended by a large
number of federal, state, municipal and private fleet owners, air quality
regulators, environmental groups, city managers, legislators, major energy
providers, national park and recreation managers, petroleum suppliers, fleet
mechanics and purchasing managers.
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" for mining customers in the US.
The strong, composite-bodied vehicles now made by the Company in Otay Mesa,
Mexico, can now be made in Riverside. These vehicles resist the inherent
corrosion that is a constant problem in mining.
Finally, 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. The district
purchased 6,000 gallons of the Company's Oxy G B-60 biodiesel and delivery was
made shortly after the bid was accepted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K - a Report on Form 8-K was filed on
August 10, 1999.
<PAGE>
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 hereunto duly authorized.
SOUTHERN STATES POWER COMPANY, INC.
By: s/ Heber C. Bishop
------------------------------
Heber C. Bishop,
President
Dated: October 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED JULY 31, 1999, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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