U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB/A
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: January 31, 2000
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 the latest practicable date, March 14, 2000, was 8,594,491
shares.
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PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the nine month period ended January
31, 2000, 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 became 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, two days into the final quarter of the fiscal year. The symbol SSPC
was assigned to the Company. On October 25, 1999, the Company was notified that
its securities were relegated from the bulletin board trading system for failure
to file a report for the first quarter of fiscal year 2000 in a timely fashion.
After a mandatory 30-delay period, the Company filed an application for
readmission. After a review period, the Company's securities were made eligible
for trading on the bulletin board system on March 8, 2000.
Revenues
- --------
The Company generated revenues of $55,501 from operations during the nine
month period ended January 31, 2000, as compared to $0 in the nine month period
ended January 31, 1999. Cost of revenues were $40,861 for the nine month period
ended January 31, 2000, as compared to $0 for the same period in 1999. The
Company generated a gross profit of $14,640 during the nine month period ended
January 31, 2000.
Operating expenses were $2,216,995 for the nine month period ended January
31, 2000, as compared to $1,499,320 for the same period in 1999, an increase of
$717,675. Most of this increase can be attributed to consulting fees as the
Company expanded its technical expertise resource base by assembling a diverse
team of environmental and technological experts for the development of the
biodiesel and ecoenergy park divisions of the Company's business plan.
Plan of Operation
- -----------------
During the third quarter of fiscal year 2000 the Company continued to focus
on developing its alternative fuel division. The management of the Company has
identified that division as the most promising of the three main divisions and
as such is committed to concentrating personnel and resources on that division
until such time as the Company has become a substantial participant in the
burgeoning alternative fuels market.
The other two main divisions, power generation for vehicles and facilities
and environmentally safe waste remediation processes, continue to be areas that
will be developed through joint ventures and strategic alliances.
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The Company has an existing joint venture agreement with Anuvu, Inc. to
develop and market fuel cells. The entity known as Global Fuel Cell Corporation
was formed as a fifty/fifty joint venture between the two companies with SSPC
providing funding for Anuvu to complete its research and development. No
products have been introduced to the market as of this date.
In the area of environmentally safe waste remediation processes, the
Company has developed a conceptual project model for what has been named an
"Eco-Energy Park." The model is based on the principles of natural ecosystems.
In a natural ecosystem, the by-products of each plant and creature provide
essential materials for other members in the system. This same model can work
for an ecoenergy park. One company's waste might be useful for another company
or municipality in the park. For example, the waste and biosolids collected by a
municipality's water treatment plant could be processed by another participant
and turned into an energy-generating product. Another participant could locate
in the park and become a consumer of that product, in turn creating by-products
that would be of use by another participant. The EcoEnergy Park identifies and
builds on the linkages between firms in the system to coordinate the flows of
energy and materials for maximum efficiency. Resources and processes can be
shared, such as refrigerated warehousing, recycling/reclamation equipment, and
heating and cooling systems. Joint purchasing and sales of common products is
more efficient and cost effective. Transportation of goods and products becomes
less expensive. In some cases, the participants could share employees and
consulting costs could be spread over several budgets. In addition to saving
time and money for the companies involved, all of the above possibilities
radically reduce the impact of industry on the local environment.
The Company's securities are currently liquid and are traded on the NASD
OTC:BB system. There are market makers in place for the Company's securities.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 30, 1999, the Company was named as a defendant in a civil
action filed in the Superior Court of the State of California, County of San
Diego, Central Judicial District in a case captioned "Emerson Nichols, an
individual, versus B.A.T. International, a Utah corporation, SuperBAT Inc., a
business entity of unknown form, Joe LaStella, an individual, Bill Wason, an
individual, Global Green Cars, a business entity of unknown form, Ultra Force
Battery Company, a business entity of unknown form, BAT India, a business entity
of unknown form, BAT Northeast, a business entity of unknown form, Dolphin
Automotive Company, a business entity of unknown form, Southern States Power
Company, a business entity of unknown form, William Fowler, an individual,
Starnet, a business entity of unknown form, Ultra Force Battery Co., Ltd.
(India), a business entity of unknown form, Environmental Solutions, Inc., a
business entity of unknown form, Electrobike, a business entity of unknown form,
Propulsion Technologies, a business entity of unknown form and Does 1-25,
inclusive." The case number is GIC 739485. The plaintiff has asserted claims for
breach of contract, fraud, unfair business practices and alter ego liability
arising out of a contractual relationship he had with defendant BAT
International, a former shareholder of the Company. The Company responded to the
complaint with a demurrer alleging that there is no cause of action for the
plaintiff against the Company. At the time of this report, on March 17, 2000,
the court sustained the Company's demurrer and the plaintiff was given leave of
court to amend his pleadings within ten days. The plaintiff filed an amended
complaint within the time permitted and the Company has thirty days to respond
to the amended complaint.
ITEM 2. CHANGES IN SECURITIES
On November 3, 1999, the Board voted to enter into a settlement agreement
with B.A.T. International, Inc. whereby B.A.T. surrendered 4,020,800 shares of
Company stock owned by B.A.T. for nonperformance under the terms of an agreement
dated March 18, 1998. In a simultaneous transaction, shares were issued to
certain B.A.T. personnel for work performed toward the completion of the
Company's projects by those persons. After the surrender and the reissue, a
total of 3,738,300 shares were returned to the treasury.
During the third quarter of fiscal year 2000 a total of 220,500 shares of
stock were issued to the Hemisphere Group pursuant to the terms of an option
agreement in exchange for cash tendered to the Company.
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The Company also closed two other private placements of stock. The first
was to the Jacques S. Yeager Family Trust for 72,728 shares in exchange for
$90,910.00, or $1.25 per share. The second was to Oceanair Environmental, LLC
for 127,280 shares in exchange for $159,100.00, or $1.25 per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE
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 February 4, 2000, the Company filed a report on Form 8-K
wherein the Company announced it had entered into a settlement agreement with
B.A.T. International, Inc. wherein B.A.T. would surrender the stock it held in
the Company due to nonperformance under the terms of the agreement between
B.A.T. and the Company dated March 18, 1998.
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<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
BALANCE SHEET - January 31, 2000
(UNAUDITED)
<CAPTION>
ASSETS:
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,883
Accounts receivable 19,121
Inventory 41,399
Other receivables 8,683
----------
Total current assets $ 76,086
Property and equipment, net of
accumulated depreciation and amortization 292,298
Notes receivable:
B.A.T. and Subsidiaries, related parties 26,814
Less allowance for doubtful accounts 26,814
----------
Total notes receivable -
Investment in GAMM Projects, net of 1,593,750
accumulated amortization
Goodwill, net of
accumulated amortization 680,600
Deposits 50,000
----------
$2,692,733
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities-
accounts payable and accrued expenses $ 15,439
Stockholders' equity:
Common stock; $0.001 par value, 50,000,000
shares authorized, 8,585,084 shares issued
and outstanding 8,585
Additional paid-in capital 7,847,397
Accumulated deficit (5,178,688)
----------
Total stockholders' equity 2,677,294
----------
$2,692,733
==========
</TABLE>
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<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
For the nine For the nine For the three For the three
months ended months ended months ended months ended
January January January January
31, 2000 31, 1999 31, 2000 31, 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 55,501 $ - $ 41,701 $ -
Cost of Revenues 40,861 - 29,264 -
----------- ----------- ----------- -----------
Gross profit 14,640 - 12,437 -
Operating expenses:
Research and development 69,554 175,000 10,777 100,000
Provision for doubtful accounts 26,814 121,000 475 121,000
Consulting fees 1,347,215 251,500 1,253,906 251,500
Loss on investment in joint
venture in Mexico
with related party 13,680 867,698 - 255,000
General and administrative
expenses 759,732 84,122 341,763 37,056
----------- ----------- ----------- -----------
2,216,995 (1,499,320) 1,606,921 764,556
----------- ----------- ----------- -----------
Net loss before other income (2,202,355) (1,499,320) (1,594,484) (764,556)
Other income 828 21,012 (35) 543
----------- ----------- ----------- -----------
Net loss $(2,201,527) $(1,478,308) $(1,594,519) $ (764,013)
=========== =========== =========== ===========
Net loss per share -
basic and diluted $ (0.27) $ (0.17)
=========== ===========
Weighted average number
of shares outstanding -
basic and diluted 8,109,418 8,539,185
=========== ===========
</TABLE>
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<TABLE>
SOUTHERN STATES POWER COMPANY
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>
For the nine For the nine
months ended months ended
January January
31, 2000 31, 1999
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flows provided by (used for) operating activities:
Net loss $(2,201,257) $(1,478,308)
----------- -----------
Adjustments to reconcile net income
(loss) to net cash provided by
(used for) operating activities:
Stocks issued in exchange for services 1,167,500 235,500
Bad debt 69,082 -
Amortization of goodwill 349,401 -
Depreciation and amortization 107,209 -
Provision for doubtful accounts - 121,000
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (19,121) -
Loans receivable 0 (121,000)
Inventory (41,399) -
Prepaid expenses 375 -
Other receivables (8,683) -
Deposits (50,000) -
(Increase) decrease in assets:
accounts payable and accrued expenses (2,000) 11,125
----------- -----------
Total adjustments 1,572,615 246,625
----------- -----------
Net cash used for operating activities (628,921) (1,231,683)
Cash flows used for investing activities:
Purchase of property and equipment (261,326) (12,000)
Cash flows provided by financing activities:
Issuance of common stocks 52,458 -
Proceeds from issuance of common stocks 794,510 548,000
Net cash provided by financing activities 846,968 548,000
----------- -----------
Net decrease in cash (43,270) (695,683)
Cash, beginning of year 50,153 1,000,000
----------- -----------
Cash, end of year $ 6,883 $ 304,317
=========== ===========
Supplemental disclosure of non-cash
investing and financing activities:
Issuance of common stock in
exchange for services $ 1,167,750 $ 235,500
=========== ===========
Issuance of common stock in
exchange for investments $ 1,700,000 $ -
=========== ===========
</TABLE>
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Southern States Power Company, Inc.
(Registrant)
Date: April 12, 2000
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/A 1
For the Quarter Ended January 31, 2000
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 NINE MONTH PERIOD ENDED JANUARY 31, 2000,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> JAN-31-2000
<CASH> 6,883
<SECURITIES> 0
<RECEIVABLES> 19,121
<ALLOWANCES> 0
<INVENTORY> 41,399
<CURRENT-ASSETS> 76,086
<PP&E> 292,298
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,692,733
<CURRENT-LIABILITIES> 15,439
<BONDS> 0
0
0
<COMMON> 8,585
<OTHER-SE> 2,668,709
<TOTAL-LIABILITY-AND-EQUITY> 2,692,733
<SALES> 55,501
<TOTAL-REVENUES> 55,501
<CGS> 40,861
<TOTAL-COSTS> 40,861
<OTHER-EXPENSES> 2,216,995
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,201,527)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,201,527)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,201,527)
<EPS-BASIC> (0.27)
<EPS-DILUTED> (0.27)
</TABLE>
