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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 June 30, 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 X No
As of June 30, 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 June 30, 1998
Statements of Operations for the three-month
periods ended June 30, 1998 and 1997
Statements of Cash Flows for the six-month periods
ended June 30, 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 and Subsidiaries
CONSOLIDATED BALANCE SHEET
June 30,
1998
-----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 302,898
Accounts receivable 706,199
Inventories 565,232
Other current assets 101,627
-----------
Total current assets 1,675,957
Intangible assets 99,000
Notes receivable 110,469
Property and equipment, net 9,816,359
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Total assets $11,701,784
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 171,662
Accrued compensation and liabilities 829,007
Dividend payable - preferred stock 75,000
Current portion of notes payable 2,598,927
-----------
Total current liabilities 3,674,596
Long-term liabilities excluding current portion 5,869,885
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Total liabilities 9,544,481
Shareholders' equity:
Common stock 18,937
Preferred stock 10,000
Additional paid-in capital 540,501
Retained earnings 1,687,866
Shareholder receivable (100,000)
-----------
Total shareholders' equity 2,157,304
-----------
Total liabilities and shareholders' equity $ 11,701,784
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See accompanying notes to unaudited financial statements
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Southern Ventures and Subsidiaries
STATEMENTS OF OPERATIONS
Three-Month Periods
Ended June 30,
1998 1997
------------------- ------------------
(Unaudited) (Unaudited)
Product sales $1,157,301 $ 1,040,392
Cost of sales 435,764 344,445
---------------- ------------------
Gross profit 721,536 695,947
Operating expenses:
Selling, general and administrative 325,188 206,486
Interest Expense, net 72,589 65,674
Provision for income tax 129,504 169,515
---------------- ------------------
Net income 194,256 254,272
================= ==================
Basic and diluted net per share $(0.01) $(0.01)
================= ==================
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
June 30
1998 1997
----------- ----------
Net income 308,220 532,125
Income charges (credit) not affecting cash:
Depreciation & Depletion 294,648 196,112
Amortization 3,667 14,850
Changes in certain working capital components:
Decrease (increase) in inventory (100,214) -
Decrease (increase) in accounts receivable (162,610) (88,193)
Decrease (increase) in other current assets (46,530) (29,728)
Increase (decrease) in accrued payroll 262,076 -
Increase (decrease) in accounts payable
notes payable and accrued liabilities 1,700 (195,352)
Cash provided by operations 560,956 766,859
Cash Provided (Used) by Investing Activities
Additions to property, plant and equipment (335,933) (1,200,178)
Disposals of property, plant and equipment 240,032 -
Cash used by investing activities (95,901) (1,200,178)
Cash Provided by Financing Activities
Additions in long-term debt 316,356 850,991
Reductions in long-term debt (660,198) (138,149)
Distributions to shareholders - (325,590)
Cash provided by financing activities (343,842) 387,252
Net increase (decrease) in cash 121,214 (46,066)
Cash at beginning of year 181,685 167,258
Cash at end of peroid 302,898 121,192
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 June 30, 1998, and the statements of operations for the
three month periods ended June 30, 1998 and 1997 and the statements of cash
flows for the six-month period ended June 30, 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.
5. CONSOLIDATION
On June 30, 1998, the Company's mining subsidiaries, Elmore Sand & Gravel,
Inc. and Tuskegee Sand & Gravel, Inc., where merged together to form a single
corporate entity. Elmore Sand & Gravel, Inc. was the surviving corporation.
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
The following table sets forth, as a percentage of net sales, certain
items included in the Company's Income Statements for the periods indicated:
Quarter ended June 30,
1997 1996
---- ----
Statements of Income Data:
Net sales......................... 100.0% 100.0%
Cost of sales..................... 37.7 33.1
Gross profit...................... 62.3 66.9
Operating expenses................ 28.1 19.8
Income from operations............ 34.2 47.0
Other income (expense)............ (6.3) (6.3)
Income before income taxes........ 28.0 40.7
Provision for income taxes........ 11.2 16.3
Net income......................... 16.8 24.4
Quarter Ended June 30, 1996 Compared to Quarter Ended June 30, 1997
Revenue consists of gross revenue less product returns. In the three
months ended June 30, 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 June 30, 1998 increased to $1,157,301 from
$1,040,392 for the three months ended June 30, 1997. Revenue was up from the
previous year due to a increase demand from local contractors. The management
believes that this demand was cause by the usual weather conditions which
impacted the local area during the winter months. Weather has not been a
significant factor in prior years and management does not anticipate similar
conditions in the future. In addition, current shortage of railcars has affect
out of area sells. The company has development additional means of
transportation.
Cost of sales consists primarily of the cost to manufacture the Company's
products. Cost of sales increased to $435,764 in the three months ended June
30, 1998 from $344,446 for the three months ended June 30, 1997. This
difference was the result of lower than normal maintenance costs during the 2nd
quarter of 1997, which was the result of higher than normal maintenance costs
which where accrued during the first quarter of 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 $325,188 for the
three months ended June 30, 1998 from $206,486 for the three months ended June
30, 1997. The increases were primarily the result of additional legal,
accounting and start-up cost associated the Companies' Riverside Grain Products
subsidiary.
Liquidity and Capital Resources:
The company's anticipates satisfying $2,000,000 of its outstanding
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)
<TABLE> <S> <C>
<PAGE>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 308,220
<SECURITIES> 0
<RECEIVABLES> 706,199
<ALLOWANCES> 0
<INVENTORY> 565,232
<CURRENT-ASSETS> 1,675,957
<PP&E> 9,816,359
<DEPRECIATION> 294,648
<TOTAL-ASSETS> 11,701,784
<CURRENT-LIABILITIES> 3,674,596
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<COMMON> 18,937
<OTHER-SE> 2,128,366
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<CGS> 435,764
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