U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under
The Securities Exchange Act of 1934
For the Quarter ended October 31, 2000
--------------------
Commission file number 0-29356
------------------------------------------------
Southern States Power Company, Inc.
-------------------------------------------------------------------------
(Name of small business issuer in its charter)
Delaware 33-0312389
----------------------------------- ---------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3400 Inland Empire Blvd, Suite 101
Ontario, CA 91764
-------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (909) 476-3575
---------------------
Securities Registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
None None
------------------- -----------------------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
-------------------------------------------------------------------------
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 outstanding of the issuer's Common Stock as of October 31,
2000 was 8,871,719. Of that amount 2,148,291 were free trading.
<PAGE>
Part I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the six and three-month period
ended October 31, 2000, are attached.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The following discussion should be read in conjunction with the
Company's unaudited financial statements and notes thereto included herein and
its Form 10-KSB as filed on August 7, 2000. 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 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 look statements made by, or on behalf of, the Company. The
Company disclaims any obligation to update forward-looking statements.
Revenues
--------
For the three and six months ended October 31, 2000 the Company
generated revenues in the amount of $5,760 and $10,291, respectively, from
operations as compared with $13,800 and $13,800 for the same periods ended
October 31, 1999. Cost of revenues for the three and six months ended October
31, 2000 was $7,481 and $7,481, respectively, as compared to $11,597 and $11,597
for the same periods in 1999. Accordingly, the company incurred a profit/(loss)
from revenues of ($1,721) and $2,810 during the three and six month period ended
October 31, 2000, respectively. The Company plans to start generating
significant revenues by the second quarter of 2001.
General and Administrative
--------------------------
Operating expenses were $323,129 for the three months ended October 31,
2000, as compared to $314,394 for the same period a year ago. Operating expenses
were $1,241,957 for the six months ended October 31, 2000, as compared to
$577,820 for the same period a year ago. The significant increase is due to the
provision for a doubtful receivable in the amount of $675,000 during the first
quarter. The Company also incurred research and development expense of $50,000
during the quarter ended October 31, 2000.
Other Income
------------
The Company received a one-time non-refundable settlement agreement
income of $250,000 arising from an agreement entered into in 1998. See ANUVU
related comments in Plan of Operations.
Interest Expense
----------------
Interest expense for the three and six months ended October 31, 2000
amounted to $7,500 and $15,000 as compared to no interest expense for the same
period in the prior year.
2
<PAGE>
Net Loss
--------
Net loss for the three and six months ended October 31, 2000 amounted
to $97,458 and $1,002,380 as compared to $311,430 and $574,754 for the same
periods in the prior year, respectively.
The Company
-----------
Southern States Power Company, Inc. ("SSPC" or the "Company") was
formed in March 1998 as a private Louisiana corporation to develop and market
innovative energy and power technologies with a concentration on those products
and services that either improve or preserve the environment on a global basis.
After formation of the private company, Company Management sought out a public
vehicle and executed a merger with Pascal Ventures, Inc., a public reporting
company organized under the laws of the state of Delaware. The merger was
consummated on July 13, 1998. Pascal Ventures, Inc. then changed its name to
Southern States Power Company, Inc. and the private Louisiana corporation was
dissolved. The Company then set out to execute its business plan.
Plan of Operations
------------------
The Company is still focused primarily on the development and
distribution of Biofuels which assist consumers in qualifying under various
alternative fuels programs mandated by local, County, State and Federal
authorities. These alternative fuels contribute substantially to the reduction
in undesirable particulate and pollutants which are generated from stationary
diesel engines (generators) and mobile vehicles powered by diesel engines. Other
interests of the Company have been placed in abeyance, as all efforts have been
focused on this opportunity within the fuels industry. Notwithstanding these
efforts, the Company still has a peripheral interest in the waste recycling
business, as it relates both to the environmental issues surrounding the
benefits of recycling and to the source of feedstocks derived from recycled
grease and spent oils.
The company is continuing to look at opportunities regarding
alternative fuels which can be provided to customers to reduce fuel costs
related to power generation, and to improved methods for recycling of certain
spent products. Additionally, the Company is investigating the possibility of
using ethanol and ethanol based products for consumer use.
ANUVU Transaction: In mid September, 2000 ANUVU Incorporated completed
a purchase transaction of all of the interest owned by SSPC in and to certain
fuel cell technology which was previously owned half by each of the parties. The
consideration paid for SSPC's interest in this technology was $300,000 less 10%
paid as a commission to the party who initiated this transaction. As additional
consideration, ANUVU entered into a licensing agreement which provides in part
that SSPC shall have the exclusive right to build and sell fuel cell modules
under one kilowatt for a period of three years. Additionally, SSPC is to be
provided with a document describing how to make a Membrane Electrode Assembly
("MEA") and instructed on the procedures to make this product.
The Company has further assigned it's rights as granted and conveyed by
ANUVU to Dolphin Automotive Industries Corporation, a Mexican corporation in
exchange for the following consideration: a royalty granted to SSPC equal to 3%
of all gross revenues received from the marketing, sale and/or sublicensing of
the fuel cell technology which was licensed.
As additional consideration, SSPC paid to Dolphin Automotive the sum of
$50,000 to repay and reimburse Dolphin Automotive for the monies and other
consideration contributed by Dolphin when the fuel cell technology was initially
discovered and for its assistance in helping SSPC to acquire this technology
initially.
Millennium Fuels: Effective September 11, 2000 the Company entered into
a Licensing Agreement with Millennium Fuels USA, a Texas limited liability
company. The purpose of this licensing agreement was to grant Millennium Fuels
the authority to develop a blended fuel addition utilizing the Biodiesel product
developed and produced by SSPC and the ethanol product developed by Millennium.
3
<PAGE>
This Licensing Agreement provides, among other things, that if 25% or more of
the blended fuel combination is comprised of Biodiesel, then the blended and
resulting fuel is to be considered as property of SSPC. Subsequent to October
31, 2000, the Memorandum of Understanding executed with Millennium Fuels has not
been satisfied nor fulfilled, and the parties have agreed to terminate and
rescind all understandings and agreements between the two companies. By the
terms of the Memorandum of Understanding, the Licensing Agreement between the
two companies with respect to the White Lightning enhanced fuel product is
likewise terminated.
The Licensing Agreement also provides for a 3% royalty to be paid to
SSPC derived from all revenues generated from the sale or further licensing of
the new combined product. The Agreement also provides that the Licensing
Agreement is to be terminated upon the abandonment of a transaction between
Millennium and SSPC commonly referred to and contained in a Memorandum of
Understanding.
The Memorandum of Understanding outlines the basic purposes and goals
of the two corporations in an attempt to merge Millennium into SSPC, thereby
increasing the effectiveness of the two companies. This document was signed and
executed on October 15, 2000 and contemplates the merger of the Millennium
related entities into SSPC. However, before a final, definitive Agreement is to
be drafted and executed between the parties, the parties have been in the
process of conducting a due diligence investigation of the financial records and
reports, and corporate records, which will assist in making a determination of
the feasibility of transacting such a merger.
Significant Event:
------------------
On August 4, 2000 a bill acknowledging the benefits of using Biodiesel
as an alternative fuel in diesel engines was signed into law by Governor Jane
Hull in Arizona. SSPC was instrumental in getting this bill passed in Arizona,
as it has a significant contract with the Deer Valley School District outside
Phoenix, and has been actively promoting the benefits and use of Biodiesel in
this State since last year. SSPC was represented at the signing ceremony with
the Governor at this momentous event.
During fiscal year 2000, the Company decided to stake a position in the
burgeoning biodiesel fuel market. Company management has recognized that sector
as the most promising of the Company's current ventures and as such has decided
to dedicate all the Company's resources to this division.
Biodiesel fuel is produced by combining vegetable or animal oils with
standard diesel fuel in an effort to eliminate or reduce particulates and other
emissions associated with the burning of straight diesel fuels.
In addition, the Company plans to construct its own facilities.
Proposed locations include Phoenix, Arizona and Riverside, California. The
Phoenix location is warranted by the strong potential for extraordinary growth
in demand for biodiesel in that metropolitan area. Heavy pollution problems and
an environmentally conscious public are creating a market for the Company's
Oxy-GB 60 biodiesel fuel. The Company's first customer in the biodiesel market
was the Deer Valley Unified School District, the largest in Phoenix. The Company
continues to supply biodiesel to DVUSD and has recently submitted bids to other
school districts in the Phoenix area. The Interstate Clean Transportation
Corridor includes Arizona (along with California, Nevada and Utah) so the
Phoenix location is ideal. The Riverside location is warranted by the strict
regulatory requirements extant in Southern California. The Company has an option
to purchase a 90-acre tract in the Agua Mansa development, which is reserved for
environmental development companies. An EcoEnergy Park is planned for this
location, as well. Production from this proposed facility could supply
California and Nevada customers.
Several laws and air quality management agreements are in effect that
will help spur the growth of the Company's biodiesel division. Some of these
regulations and agreements are the California Air Resources Board (recently
ruled that small particulates are a toxic health hazard; fines for exceeding
smoke limits went into effect in April, 1999); the Transportation Equity Act of
the 21st Century (allows fleets or heavy duty equipment affected by alternative
fuel mandates to meet requirements with a diesel engine vehicle operating on 20%
biodiesel, 80% petroleum; off-road heavy-duty equipment using alternative fuels
4
<PAGE>
will be given bid preferences and equipment operating advantages on highway
construction contracts); and the Interstate Clean Transportation Corridor
(consists of interstate highway systems in four Western states {CA, AZ, NV, UT};
the states are working together to provide alternative fuel stations for trucks
in the ICTC).
Biodiesel fuel can be used in existing diesel engines with little or no
modifications as an alternative fuel. Use of the fuel leads to much lower
emissions while also improving engine lubricity and providing other benefits.
The recent change in the alternative fuel requirements that allows 20% biodiesel
to qualify will create a strong demand among the more than 8 million fleet
vehicles in the U.S. All of these fleet vehicles will be impacted in the near
future by alternative fuel rules. Some fleets such as federal, state and utility
fleets must purchase 75-90% alternative fuel vehicles starting this year.
Biodiesel is the lowest cost alternative fuel option for many fleets
because diesel vehicles can be utilized and fueling infrastructure costs are
very low compared to natural gas, ethanol, methanol or electricity. Over 12
million gallons of diesel fuel is consumed daily in California alone. Even a
very small shift in the consumption of diesel represents a tremendous market
opportunity for biodiesel.
At present, government regulations, both state and federal, mandate
deployment of alternative fuel vehicles for certain operators. In certain cases,
government agencies will subsidize the purchase of alternative fuels by
consumers in an effort to offset the increased costs associated with their
manufacture. Over time, as the number of alternative fuel producers and users
increases and a stable market is established, the standard price should
stabilize at a competitive level such that the subsidies can be removed without
adverse effects on this new market.
The Company's other operations, consisting of fuel cells and natural
gas/crude oil production, have been placed on hold until the biodiesel business
plan can be implemented.
Technology Protection Policy and Disclaimers:
It is the Company's policy to protect its technology by, among other
means, filing patent applications to protect technology which it considers
important to the development of its business. The Company will also rely upon
trade secrets and improvements, unpatented know-how, and continuing
technological innovation to develop and maintain its competitive position.
Despite the Company's policy to seek patent protection wherever appropriate,
there can be no assurance that the Company's patent applications will result in
further patents being issued or that, if issued, the patents will afford
protection against competitors with similar technology. There can also be no
assurance that any patent issued to the Company will not be infringed or
circumvented by others or that others will not obtain patents that the Company
would need to license or circumvent. There can be no assurance that licenses,
which might be required for the Company's processes or products, would be
available on reasonable terms or that patents issued to others would not prevent
the Company from developing and marketing its products. In addition, there can
be no assurance that the patents, if issued, would be held valid by a court of
competent jurisdiction. To the extent the Company also relies upon unpatented
trade secrets, there can be no assurance that others will not independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to the Company's trade secrets or disclose such
technology.
Confidentiality Policy and Disclaimers:
Company agents and officials interact with many different technology
development entities and concerns. It is the policy of the Company to obtain
executed confidentiality agreements from those persons or entities to whom
Company trade secrets are revealed. The standard agreement includes provisions
prohibiting disclosure of proprietary information, both patented and unpatented.
With respect to Company employees and consultants, the agreements include
provisions prohibiting competition with the Company. It should be noted that
these agreements do not provide an absolute protection against the
misappropriation of Company information and secrets.
5
<PAGE>
ITEM 3. LIQUIDITY AND CAPITAL RESOURCES
Net cash used for operating activities for the six months ended
October 31, 2000 was $79,294 compared with $394,326 for the same period during
1999. The change is attributed to provisions for doubtful accounts not present
over the same period last year.
The Company's investing activities for the six months ended October
31, 2000 provided cash of $14,015 compared with ($4,483) for the same period
last year. The increase is due to a loan made to the Company by a related party.
The Company's financing activities are limited to private placements
of the Company's common stock pursuant to option agreements. For the six months
ended October 31, 2000, the Company received $70,300 from the Hemisphere Group
pursuant to an option agreement. This compares to $349,000 for the same period
in 1999. The difference is attributed to the individual option holders'
decisions whether to exercise their options. All proceeds derived from the
option placements were used for operating expenses.
At present the Company has no committed lines of credit.
Cash and cash equivalents at present are $6,021.
The Company anticipates that future cash flow from operations plus
funds derived from the private placement of common stock pursuant to option
agreements will be adequate to support the cash requirements of the Company. The
Company anticipates that it will require additional capital contributions to
fund its operations during the Year 2001. The Company intends to seek investors
or go to the original group of investors for additional capital for continued
operations. In addition, the Company will seek institutional type investors as a
source of funding and growing the business. In the event the Company does not
attract such capital, and is unable to generate revenues sufficient to support
its expenses, then the Company would be required to eventually curtail or even
cease operations. The Company's substantial financial losses since its inception
have raised a substantial doubt with the Company's auditors as to the Company's
ability to continue as a going concern.
The Company's common stock trades on the OTC Bulletin Board under
the symbol "SSPC." The Company's securities have been moderately traded during
this reporting period.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Alvis v. SSPC et al: Norman Alvis filed a Complaint in Superior Court
against the Company and other defendants for Breach of Contract, Breach of
Fiduciary Obligation and other causes of action. This Complaint was filed on
December 21, 1999 in the Superior Court of Sacramento. One of the defendants,
B.A.T. International, Inc. filed a parallel lawsuit in Utah, and as a result,
restricted any trading of SSPC shares which were previously owned by BAT and
subsequently transferred to Norman Alvis.
The parties to the two pending lawsuits entered into and executed a
Settlement and Mutual Release Agreement on September 14, 2000 whereby the suits
were dismissed as to all defendants, including SSPC, and Plaintiff Alvis agreed
to return all of the shares of SSPC he received from B.A.T., with the exception
of 150,000 shares of common stock which were to be released from any further
restriction on transfer.
The result of this Settlement, other than release from the pending
lawsuit, was to reduce the number of shares owned and held by Norman Alvis from
630,000 to 150,000 thereby retiring the shares and returning them to treasury
stock of the Company. Additionally, another related party, Gene Bunnell,
6
<PAGE>
agreed to return all but 45,000 shares of SSPC stock owned by him, which totaled
90,000 shares at the time of the Agreement.
As part of the Agreement, SSPC has been granted an option to repurchase
the remaining shares owned by Alvis and Bunnell according to a specified
schedule, and for the exercise price of $1.00 per share. As of the end of the
reporting period, no options have been exercised nor shares of stock
repurchased.
Nichols v. B.A.T. et al: Emerson Nichols commenced an action in the
San Diego Superior Court on November 30, 1999 naming Southern States Power
Company ("SSPC"), among others, as defendants. The Complaint primarily alleged
breach of contract arising out of an employment agreement between Nichols and
B.A.T.
After some discovery, the parties finally agreed to enter into a
Settlement Agreement and Broad-Form Mutual Release which was executed on or
about August 15, 2000. The result of this Settlement Agreement is a mutual
release and dismissal by all parties. No monetary consideration was required to
be paid by SSPC.
NOPEC Corporation: After careful review of the circumstances
surrounding the lack of cooperation and failure to communicate exhibited by
NOPEC Corporation in Lakeland, Florida, SSPC has determined that it would be in
it's best interest to retain the services of counsel to seek redress for alleged
tortious interference caused by OceanAir Environmental, LLC.
OceanAir had been hired as an independent contractor to SSPC earlier in
the year, and accompanied SSPC to Lakeland, Florida on several occasions to
assist in evaluating the operations and feasibility of the NOPEC plant facility
to produce Biodiesel for and on behalf of SSPC. In the latter part of June, 2000
SSPC temporarily suspended funding NOPEC under the terms of a Loan and Merger
Agreement to allow time to reassess the financial and operational strategies
involved in combining the two companies.
During the brief hiatus in July, and unbeknownst to SSPC at the time,
OceanAir Environmental circumvented SSPC to conduct it's own negotiations to
acquire the NOPEC facility, and interfered materially with the Agreement which
existed between NOPEC and SSPC.
SSPC has determined that it has been irreparably harmed by the acts and
alleged tortious interference of OceanAir Environmental, Inc. and is in the
process of seeking counsel to proceed with litigation to seek redress for the
serious harm and injury incurred by the Company. Subsequent to October 31, 2000,
the Company, OceanAir Environmental LLC and NOPEC Corporation have entered into
and executed a Mutual Release and Settlement Agreement effective November 20,
2000 settling all potential claims that may involve SSPC, NOPEC and OceanAir
Environmental, LLC.
WJMK, Inc.: A letter has been received by the Company from the counsel
representing WJMK, Inc. demanding payment of $14,500 as a pre-production
scheduling fee for a 3-5 minute video which would highlight the Company.
Services were never expended by WJMK and benefits were never received by SSPC.
Nevertheless, WJMK, a Florida based company, is alleging that this sum is owing
them, and that legal action may be possible if not paid. The Company responded
to this frivolous claim on October 25, 2000, denying any liability under this
agreement.
To the best of management's knowledge, there are no other material
pending or threatened litigation against the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
N/A
7
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Properties:
The Company's principal place of business is located at 3400 Inland
Empire Blvd, Suite 101 , Ontario, California. This space is leased from Yeager
Properties, and includes an executive suite, and a conference room. The lease is
month to month with automatic reconduction absent notice from either the lessor
or lessee of an intent to terminate the lease.
Employees and Officers:
The officers of the Company are Lawrence W. Taggart, President &
Director, Harrison A. McCoy, III, Executive Vice-President & Director, William
O. Shaeffer, Director, and Terri L. Bush, Secretary/Treasurer. None devotes
their full time to Company affairs. Generally, the officers of the Company have
not been paid any regular salaries or bonuses, although the Company occasionally
has authorized compensation to certain officers for services rendered and
expenses personally incurred on the Company's behalf. Both Mr. McCoy and Ms.
Bush have received stock in the Company as compensation for their services. The
Company employs a small staff at the Ontario headquarters (receptionist,
investor relations director, corporate counsel).
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
1. The following Exhibits are filed herein:
27.1 Financial Data Schedule
2. Reports on Form 8-K filed:
None
8
<PAGE>
<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
BALANCE SHEET - October 31, 2000
(Unaudited)
<CAPTION>
ASSETS:
<S> <C> <C>
Current assets:
Cash $ 6,021
Other receivables 8,683
----------
Total current assets $ 14,704
Property and equipment, net of 7,807
accumulated depreciation
Goodwill, net of accumulated amortization 330,800
Notes receivable - NOPEC 675,000
Less allowance for doubtful accounts (675,000)
----------
Total notes receivable - NOPEC -
-------------
$ 353,311
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities-
Accounts payable and accrued expenses $ 50,756
Loan payable, related party 14,014
Notes payable, OceanAir Environmental, LLC,
due on demand 375,000
----------
$ 439,770
Stockholders' deficiency:
Common stock; $0.001 par value, 50,000,000
shares authorized, 8,871,719 shares issued
and outstanding 8,871
Additional paid-in capital 8,266,728
Accumulated deficit (8,249,224)
Accumulated other comprehensive loss (112,834)
----------
Total stockholders' equity (86,459)
----------
$ 353,311
==========
</TABLE>
9
<PAGE>
<TABLE>
SOUTHERN STATES POWER COMPANY, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
For the three For the three For the six For the six
months ended months ended months ended months ended
October October October October
31, 2000 31, 1999 31, 2000 31, 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 5,760 $ 13,800 $ 10,291 $ 13,800
Cost of Revenues 7,481 11,597 7,481 11,597
----------- ----------- ----------- -----------
Gross profit (1,721) 2,203 2,810 2,203
Operating expenses:
Research and development - 32,577 50,000 58,777
Provision for doubtful accounts - - 675,000 -
Consulting fees 33,514 62,776 64,156 87,394
Loss on investment in joint
venture in Mexico
with related party - - - 13,680
General and administrative
expenses 289,614 219,041 452,800 417,969
----------- ----------- ----------- -----------
323,129 314,394 1,241,957 577,820
----------- ----------- ----------- -----------
Loss from operations (324,850) (312,191) (1,239,147) (575,617)
Interest and dividend income (15,108) 761 1,767 863
Interest expense (7,500) - (15,000) -
Settlement income 250,000 - 250,000 -
----------- ----------- ----------- -----------
227,392 761 236,767 863
----------- ----------- ----------- -----------
Net loss $ (97,458) $ (311,430) $(1,002,380) $ (574,754)
=========== =========== =========== ===========
Net loss per share -
basic and diluted $ (0.01) $ (0.03) $ (0.11) $ (0.05)
=========== =========== =========== ===========
Weighted average number
of shares outstanding -
basic and diluted 8,805,472 12,174,393 8,780,492 11,643,018
=========== =========== =========== ===========
</TABLE>
10
<PAGE>
<TABLE>
SOUTHERN STATES POWER COMPANY
STATEMENTS OF CASH FLOWS
<CAPTION>
For the six For the six
months ended months ended
October October
31, 2000 31, 1999
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flows provided by (used for)
operating activities:
Net loss $(1,002,380) $ (574,754)
----------- -----------
Adjustments to reconcile net income
(loss) to net cash provided by
(used for) operating activities:
Depreciation 1,660 42,899
Amortization of goodwill 233,200 233,334
Provision for doubtful accounts 675,000 -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 32,079 (3,800)
Prepaid expenses - (33,161)
Other receivables 7,290 (822)
Notes receivable, NOPEC Corporation - (50,000)
(Increase) decrease in liabilities:
accounts payable and accrued expenses (26,144) (8,022)
----------- -----------
Total adjustments 923,086 180,428
----------- -----------
Net cash used for operating activities (79,294) (394,326)
----------- -----------
Cash flows provided by (used for)
investing activities:
Acquisitiion of property and equipment - (4,483)
Loan payable, related party 14,015 -
----------- -----------
Net cash provided by (used for)
investing activities 14,015 (4,483)
----------- -----------
Cash flows provided by (used for)
financing activities:
Proceeds from issuance of common stocks - -
Proceeds from exercise of options 103,300 -
Common stock subscribed (33,000) 349,000
----------- -----------
Net cash provided by financing activities 70,300 349,000
----------- -----------
Net increase (decrease) in cash 5,021 (49,809)
Cash, beginning of year 1,000 50,153
----------- -----------
Cash, end of year $ 6,021 $ 344
=========== ===========
Supplemental disclosure of non-cash
investing and financing activities:
Issuance of common stock for
investment in GAMM projects $ - $ 1,700,000
=========== ===========
Direct payment made by OceanAir
Environmental, LLC to NOPEC Corporation
on behalf of the Company. OceanAir
received shares of common stock from the
Company for this payment $ 50,000 $ -
=========== ===========
</TABLE>
11
<PAGE>
SOUTHERN STATES POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED OCTOBER 31, 2000 AND 1999
(1) Summary of Significant Accounting Policies:
Going Concern:
The Company's consolidated financial statements are prepared using the
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. This factor raises substantial doubt about the
Company's ability to continue as a going concern. Management recognizes that the
Company must generate additional resources to enable it to continue operations.
The Company intends to begin recognizing significant revenue during the year
2000. Management's plans also include the sale of additional equity securities.
However, no assurance can be given that the Company will be successful in
raising additional capital. Further, there can be no assurance, assuming the
Company successfully raises additional equity, that the Company will achieve
profitability or positive cash flow. If management is unable to raise additional
capital and expected significant revenues do not result in positive cash flow,
the Company will not be able to meet its obligations and will have to cease
operations.
Basis of Preparation:
The accompanying unaudited condensed consolidated interim financial
statements have been prepared in accordance with the rules and regulations of
the Securities and Exchange Commission for the presentation of interim financial
information, but do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. The
audited consolidated financial statements for the two years ended April 30, 2000
was filed on August 7, 2000 with the Securities and Exchange Commission and is
hereby referenced. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
six month period ended October 31, 2000 are not necessarily indicative of the
results that may be expected for the year ended April 30, 2001.
12
<PAGE>
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: December 15, 2000
S/Lawrence W. Taggart
-----------------------------------
Lawrence W. Taggart, President
13
