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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from _____________ to _______________
Commission File Number 001-14439
SOLPOWER CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 87-0384678
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)
7309 East Stetson Drive, Suite 102
Scottsdale, Arizona 85251
(Address of principal executive offices)
(480) 947-6366
(Issuer's telephone number)
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 each of the issuer's classes of common
equity was 23,391,560 shares of common stock, par value $.01, as of December 31,
1998.
Transitional Small Business Disclosure Format (check one):
Yes [X] No [ ]
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<PAGE>
SOLPOWER CORPORATION
INDEX TO FORM 10-QSB/A FILING
FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements............................................... 2
Balance Sheet
June 30, 1999 (unaudited) and March 31, 1999..................... 2
Statements of Operations
Three Months Ended June 30, 1999 (unaudited) and 1998 (unaudited) 4
Statement of Cash Flows
Three Months Ended June 30, 1999 (unaudited) and 1998 (unaudited) 5
Notes to the Financial Statements................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................... 6
PART II.
OTHER INFORMATION
None.
SIGNATURES
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOLPOWER CORPORATION
BALANCE SHEET
JUNE 30, 1999 (UNAUDITED) AND MARCH 31, 1999
ASSETS
June 30, 1999 March 31, 1999
------------- --------------
(unaudited) (audited)
Current Assets
Cash and Cash Equivalents $ 33,833 $ 2,228
Accounts Receivables 46,336 50,145
Inventory 82,532 92,178
---------- ----------
Total Current Assets 162,701 144,551
---------- ----------
Property & Equipment, net 389,202 399,262
---------- ----------
Other Assets
Marketing Rights 2,633,333 2,658,333
Security Deposits 13,922 13,922
License Fee Receivable 2,400,000 2,400,000
---------- ----------
Total Other Assets 5,047,255 5,072,255
Total Assets $5,599,158 $5,616,068
========== ==========
The accompanying notes are an integral part of these financial statements.
2
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SOLPOWER CORPORATION
BALANCE SHEET
JUNE 30, 1999 (UNAUDITED) AND MARCH 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 1999 March 31, 1999
------------- --------------
(unaudited) (audited)
Current Liabilities
Lease Payable - Current $ 2,677 $ 4,060
Loans Payable - Related Parties 14,958 13,500
Accounts Payable 380,485 429,409
Accrued Expenses 233,327 213,792
----------- -----------
Total Current Liabilities 631,447 660,761
----------- -----------
Long Term Liabilities
Loans Payable - Related Parties 863,218 407,219
Accrued Expenses Noncurrent 70,000 70,000
Deferred Revenue 2,400,000 2,400,000
----------- -----------
Total Long Term Liabilities 3,333,218 2,877,219
----------- -----------
Total Liabilities 3,964,665 3,537,980
----------- -----------
Commitments and Contingencies
Stockholders' Equity
Preferred Stock; $0.001 Par Value, 5,000,000 Shares
Authorized; -- --
Issued and Outstanding, None
Common Stock; $0.01 Par Value, 30,000,000
Shares Authorized; 234,566 234,566
Issued and Outstanding 23,456,560 Shares at
June 30, 1999 and March 31, 1999
Additional Paid in Capital 6,736,525 6,736,525
Accumulated Deficit (5,336,598) (4,893,003)
----------- -----------
Total Stockholders' Equity 1,634,493 2,078,088
----------- -----------
Total Liabilities and Stockholders' Equity $ 5,599,158 $ 5,616,068
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
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SOLPOWER CORPORATION
STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED
JUNE 30, 1999 (UNAUDITED) AND 1998 (UNAUDITED)
For the Three Month Periods Ended
---------------------------------
June 30, 1999 June 30, 1998
------------- -------------
(unaudited) (audited)
Revenue
Sales - Product $ 25,439 $ 25,802
License Fees -- --
------------ ------------
Total Revenues 25,439 25,802
Cost of Sales 132,966 --
------------ ------------
Gross Profit (107,526) 25,802
Expenses
General and Administrative 335,928 458,779
------------ ------------
Operating Loss (443,454) (432,977)
------------ ------------
Other Income (Expense)
Interest Income 0 309
Interest Expense 140 (462)
------------ ------------
Total Other Income (Expense) (140) (153)
------------ ------------
Net Loss Before Provision for Income Taxes (443,454) (433,130)
Provision for Income Taxes -- --
------------ ------------
Net Loss $ (443,454) $ (433,130)
============ ============
Basic (Loss) Per Share $ (0.02) $ (0.02)
============ ============
Weighted Average Number of Shares Outstanding 23,443,492 17,891,560
============ ============
The accompanying notes are an integral part of these financial statements.
4
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SOLPOWER CORPORATION
STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED
JUNE 30, 1999 (UNAUDITED) AND 1998 (UNAUDITED)
For the Three Month Periods Ended
---------------------------------
June 30, 1999 June 30, 1998
------------- -------------
(unaudited) (audited)
Cash Flows From Operating Activities:
Net Loss $(443,595) $ (433,130)
Adjustments to reconcile net loss to net
cash by operating activities
Depreciation and amortization 50,714 71,869
Changes in operating assets and liabilities
Accounts receivables (3,808) (38,803)
License fee receivable -- (2,397,762)
Prepaid expense -- 2,917
Inventory 9,646 7,076
Accounts payable (48,924) (2,432)
Accrued expense 19,535 --
Deferred revenue -- 2,400,000
--------- -----------
Net cash used by operating activities (408,816) (390,265)
--------- -----------
Cash Flows from Investing Activities:
Purchase of property and equipment (15,653) (22,383)
--------- -----------
Net cash used by investing activities (15,653) (22,383)
--------- -----------
Cash Flows from Financing Activities
Payment received on stock subscriptions -- 100,000
Payments on lease payable (1,383) (1,058)
Loans and Advances from related parties 457,457 130,169
--------- -----------
Net cash provided by financing activities 456,074 229,111
--------- -----------
Increase (Decrease) in Cash and Cash Equivalents $ 31,604 ($ 183,537)
Cash and Cash Equivalents, Beginning of Period 2,228 183,842
--------- -----------
Cash and Cash Equivalents, End of Period $ 33,832 $ 305
--------- -----------
SUPPLEMENTAL INFORMATION
Cash Paid For:
Interest $ 140 $ 462
========= ===========
Income Taxes 0 0
========= ===========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
SOLPOWER CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDING JUNE 30, 1999
NOTE 1 - BASIS OF PREPARATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. These statements do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the year ended March 31, 2000. The unaudited
condensed financial statements should be read in conjunction with the financial
statements and footnotes thereto for the year ended March 31, 1999 included in
the Company's report on form 10-KSB.
NOTE 2 - LICENSE FEE RECEIVABLES
On May 14, 1999, the Company terminated its Master License Agreement with
Masters Marketing Group, holder of the Great Lakes (Ohio, Indiana, Illinois,
Michigan, Wisconsin) license. The Company regains the right to operate the Great
Lakes territory as a corporate sales territory in exchange for cancellation of
the Promissory Note of $1,080,000, issuance of 15,000 shares of stock and
repayment of the license fee downpayment of $120,000. The downpayment is to be
repaid at $5,000 per month without interest. See Note 4 of the footnotes
accompanying the March 31, 1999 audited financial statements. This transaction
is reflected in the financial statements as of March 31, 1999.
On September 7, 1999, the Company terminated its Master License Agreement
with Solpower Southeast Corporation. The Company regains the right to operate
the Southeast territory (Alabama, Arkansas, Florida, Georgia and Mississippi) as
a corporate sales territory in exchange for cancellation of the Promissory Note
of $1,080,000, repayment of the license fee downpayment of $120,000 and the
issuance of 20,000 shares of stock. The downpayment is expected to be refunded
by October 30, 1999. See Note 4 of the footnotes accompanying the March 31, 1999
audited financial statements. This transaction is reflected in the financial
statements as of March 31, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
Revenues for the three months ended June 30, 1999 were $25,439 as compared
to revenues of $25,082 for the three months ended June 30, 1998. The Company
recovered the Territorial Licenses previously sold to Solpower Southeast
Corporation and Masters Marketing Group and is operating those areas as Company
territories. The increase in revenues resulted primarily from improved sales in
several expanding regional markets during the three-month period ended June 30,
1999 compared to the year ended March 31, 1999.
6
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The Company's operation of the areas formerly covered by Territorial
Licenses are expected to generate substantially more revenue for the Company
than with the licensee arrangement.
General and administrative costs were $295,929 for the quarter ended June
30, 1999 compared to $458,779 for the three months ended June 30, 1998. The 35%
reduction in costs were due, to a reduction in the number of area sales managers
and a reduction in the other non-recurring expenses associated with starting
operations.
Cash flow of $416,074 was provided by related party advances and
convertible notes payable for the three months ended June 30, 1999 as compared
with $230,169 received from related party advances and stock subscription
payments for the three month period ended June 30, 1998.
The Company experienced a net loss of $403,595 for the three months ended
June 30, 1999 as compared with $433,130 for the three months ended June 30,
1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates future liquidity needs will continue to be met
through equity and debt financings primarily from its major shareholder,
Dominion Capital Pty Ltd., until such time as cash flow from operations are
sufficient to meet the Company's capital requirements for product production and
operations.
PART II
OTHER INFORMATION
NONE.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed by the undersigned, thereunto duly authorized.
SOLPOWER CORPORATION
(Registrant)
Dated: December 18, 1999 By /s/ James H. Hirst
--------------------------------
James H. Hirst
Chief Executive Officer
7
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<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 33,833
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<OTHER-SE> 1,399,927
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