[DESCRIPTION]FORM 10-QSB
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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Period Ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 of 15(d) of the Securities
Exchange Act of 1934 For the Transition Period
From ____________ to ______________
Commission File number: 333-40621
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SOUTHERN VENTURES, INC.
(Exact name of Registrant as specified in its charter)
NEVADA 63-1185800
(State of Incorporation) (I.R.S. Employer
Identification No.)
1322 Maron Spillway Rd.
Elmore, AL 36025
(Address of principal executive offices)
(702) 341-7211
(Registrant's telephone number)
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Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding
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 No X
As of March 31, 1998 there were 18,937,000 shares of Common Stock
outstanding.
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INDEX
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PART I. FINANCIAL INFORMATION (unaudited)
Item 1. Balance Sheet as of March 31, 1998
Statements of Operations for the three-month
periods ended March 31, 1998 and 1997
Statements of Cash Flows for the three-month periods
ended March 31, 1998 and 1997
Notes to the Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1 - Item 6.
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PART I. FINANCIAL INFORMATION (unaudited)
Item 1. Financial Statements:
SOUTHERN VENTURES, INC.
CONSOLIDATED BALANCE SHEET
March 31,
1998
-----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 183,548
Accounts receivable 525,760
Inventories 593,494
-----------
Total current assets 1,302,802
Intangible assets assets 100,833
Property and equipment, net 9,868,778
Other assets 205,684
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Total assets $11,478,095
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 187,399
Accrued compensation and liabilities 738,278
Current portion of notes payable 2,634,670
-----------
Total current liabilities 3,560,347
Long-term liabilities excluding current portion 6,831,566
-----------
Total liabilities 10,391,913
Shareholders' equity:
Common stock 18,937
Preferred stock 10,000
Additional paid-in capital 509,438
Retained earnings 939,035
Shareholder receivable (100,000)
-----------
Total shareholders' equity 1,408,473
-----------
Total liabilities and shareholders' equity $ 11,478,095
===========
See accompanying notes to unaudited financial statements
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SOUTHERN VENTURES, INC.
STATEMENTS OF OPERATIONS
Three-Month Periods
Ended March 31,
1998 1997
------------------- ------------------
(Unaudited) (Unaudited)
Product sales $ 856,857 $ 1,014,988
Cost of sales 428,555 528,709
---------------- ------------------
Gross profit 428,302 486,279
Operating expenses:
Selling, general and administrative 336,019 311,028
Interest Expense, net 73,938 67,568
Provision for income tax 7,338 43,073
---------------- ------------------
Net income 11,007 64,609
================= ==================
Basic and diluted net per share $(0.00) $(0.00)
================= ==================
Shares outstanding 18,937,000 18,937,000
================= ==================
See accompanying notes to unaudited financial statements
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Southern Ventures and Subsidiaries
Consolidated Statement of Cash Flows
March 31
1998 1997
- - ----------- ----------
Net income 4,174 107,418
Income charges (credit) not affecting cash: - -
Depreciation & Depletion 102,702 100,910
Amortization 1,190 9,258
Changes in certain working capital components: - -
Decrease (increase) in inventory (185,094) -
Decrease (increase) in accounts receivable 27,303 57,242
Decrease (increase) in prepaid interest 10,693 (23,786)
Decrease (increase) in other current assets (124,087) (225,562)
Increase (decrease) in accounts payable - -
notes payable and accrued liabilities 252,070 (18,370)
Cash provided by operations 88,951 7,110
Cash Provided (Used) by Investing Activities
Additions to property, plant and equipment (236,399) (1,001,753)
Disposals of property, plant and equipment 238,810 -
Cash used by investing activities 2,411 (1,001,753)
Cash Provided by Financing Activities
Additions in long-term debt - 1,366,237
Reductions in long-term debt (224,022) (84,074)
Proceeds from issuance of stock - 9,501
Distributions to shareholders 142,749 (59,418)
Cash provided by financing activities (81,273) 1,232,245
Net increase (decrease) in cash 10,089 237,603
Cash at beginning of year 178,225 167,258
Cash at end of year 188,314 404,861
See accompanying notes to unaudited financial statements
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Southern Ventures,Inc.
NOTES TO THE FINANCIAL STATEMENTS, (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Southern Ventures,
Inc. (the "Company"), have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instruction for Form 10-QSB Item 310b and Article 10 of regulation S-X. The
balance sheet as of March 31, 1998, and the statements of operations for the
three month periods ended March 31, 1998 and 1997 and the statements of cash
flows for the three-month periods ended March 31, 1998 and 1997
are unaudited but include all adjustments (consisting only of normal recurring
adjustments) which the Company considers necessary for a fair presentation of
the financial position at such date and the operating results and cash flows for
those periods. Although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading, certain information normally included in financial statements and
related footnotes prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission
Results for any interim period are not necessarily indicative of results
for any other interim period or for the entire year.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These assumptions affect the reported amounts of assets and
liabilities, the 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 these estimates.
3. INVENTORIES
Inventories are stated at the lower of cost or market, determined by using
the last-in, first-out (LIFO) method.
4. INCOME TAXES
Pro forma income tax provision gives effect to income tax considerations
assuming that each of the subsidiary entities had been a "C" Corp. for the
reported period. No income is reflected on a pro forma basis for the Starch
and Gluten Plant since the acquired plant has been closed since 8/15/96 and
that management plans to operate the assets in a materially different manner
than the prior owner.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto included in Part I - Item 1 of this
Quarterly Report and the audited financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's prospectus.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Revenue consists of gross revenue less product returns. In the three
months ended March 31, 1998, substantially all of the Company's revenue was
derived from the sale of its subsidiary, Elmore Sand & Gravel, Inc. products.
Revenue for the three months ended March 31, 1998 decreased to $856,857 from
$1,014,988 for the three months ended March 31, 1997. Revenue was down from the
previous year due to a show down of the local construction cause by the usual
weather condition during the winter months. Weather has not been a significant
factor in prior year and management does not anticipate similar conditions in
the future. In addition, current shortage of railcars has affect out area
sells. The company is currently development additional means of transportation.
Cost of sales consists primarily of the cost to manufacture the Company's
products. Cost of sales decreased to $428,555 in the three months ended March
31, 1998 from $528,709 for the three months ended March 31, 1997. These
decreases were the result of higher productivity levels provided by the company
processing plant. The weather further effected the achieving of certain
manufacturing efficiencies, the Company's gross margin increased only slightly
to 50% in the three months ended March 31, 1998 compared to 48%% in the three
months ended March 31, 1997.
General and administrative expense consists of general management and
finance personnel costs, occupancy expense, accounting expense and legal
expense. General and administrative expenses increased to $336,019 for the
three months ended March 31, 1998 from $311,028 for the three months ended March
31, 1997. The increases were primarily the result of additional legal,
accounting and printing expenses and increases in executive salaries.
Liquidity and Capital Resources:
The company anticipates satisfying $2,000,000 of its outstanding liabilities
current liabilities through the issuance of common stock. The company is
currently satisfying its working capital need from its mining subsidiary, Elmore
Sand & Gravel. The company anticipates meeting all future working capital
needs by operating its starch and gluten facility in Thunder Bay, Canada.
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 Shareholders
None
ITEM 5. Other Information
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
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 thereunto duly authorized.
Southern Ventures, Inc.
/s/ Chester Wright III
Chief Financial Officer
(Principal Financial and Accounting Officer)
[DESCRIPTION]FINANCIAL DATA SCHEDULE
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[ARTICLE] 5
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-30-1998
[PERIOD-START] JAN-01-1998
[PERIOD-END] MAR-31-1998
[CASH] 3,749,371
[SECURITIES] 0
[RECEIVABLES] 104,329
[ALLOWANCES] (18,078)
[INVENTORY] 896,572
[CURRENT-ASSETS] 234,162
[PP&E] 113,219
[DEPRECIATION] 0
[TOTAL-ASSETS] 5,079,575
[CURRENT-LIABILITIES] 583,877
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 3,540
[OTHER-SE] 4,492,158
[TOTAL-LIABILITY-AND-EQUITY] 5,079,575
[SALES] 1,272,470
[TOTAL-REVENUES] 1,272,470
[CGS] 914,952
[TOTAL-COSTS] 914,952
[OTHER-EXPENSES] 1,439,637
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 2,420
[INCOME-PRETAX] (972,627)
[INCOME-TAX] 0
[INCOME-CONTINUING] (972,627)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (972,627)
[EPS-PRIMARY] (0.42)
[EPS-DILUTED] (0.42)
