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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB/A
Amendment No. 1
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(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _______________
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Commission File Number 001-14439
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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)
(602) 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 [ ] No [X]
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<PAGE>
SOLPOWER CORPORATION
INDEX TO FORM 10-QSB/A FILING
FOR THE QUARTER ENDED DECEMBER 31, 1998
TABLE OF CONTENTS
PAGE NUMBER
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.................................................. 3
Balance Sheet
December 31, 1998 (unaudited) and March 31, 1998...................... 3
Statements of Operations
Three Months and Nine Months Ended December 31, 1998 (unaudited)...... 4
Statement of Cash Flows
Nine Months Ended December 31, 1998 (unaudited) and 1997 (unaudited).. 5
Notes to the Financial Statements..................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 7
PART II.
OTHER INFORMATION
None
SIGNATURES.................................................................... 9
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOLPOWER CORPORATION
BALANCE SHEET
Nine Months Ended
December 31, 1998 Year Ended
(Unaudited) March 31, 1998
----------- --------------
ASSETS
Current Assets
Cash $ -- $ 183,842
Inventory 108,240 101,906
License Fee Receivable 38,748 2,160,000
Stock Subscription Receivable 215,000 600,000
Prepaid Expenses -- 2,917
----------- -----------
Total Current Assets 361,988 3,048,665
Property and Equipment, Net 430,914 131,942
Other Assets
Marketing Rights 2,403,333 358,333
Security Deposits 49,422 14,422
License Fee Receivable 4,560,000 --
----------- -----------
Total Other Assets 7,012,755 372,755
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Total Assets $ 7,805,657 $ 3,553,362
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Checks Issued in Excess of Cash $ 4,846 $ --
Accounts Payable 466,374 2,432
Capital Lease Obligation, Current Portion 6,396 4,575
----------- -----------
Total Liabilities 477,616 7,007
Long Term Liabilities
Capital Lease Obligation, Non-current Portion -- 5,167
Advances Payable 11,000 --
Advances Payable, Related Party 252,707 39,725
Deferred Revenues 4,560,000 2,160,000
Total Long Term Liabilities 4,823,707 2,204,892
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Total Liabilities 5,301,323 2,211,899
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Commitments and Contingencies
Stockholders' Equity
Preferred Stock; $0.001 Par Value, 5,000,000
Authorized; Issued and Outstanding, NONE NONE NONE
Common Stock; $0.01 Par Value, 30,000,000
Authorized; Issued and Outstanding, 23,391,560
Shares at December 31, 1998 and 17,391,560
Shares at March 31, 1998 233,916 173,916
Additional Paid In Capital 6,560,904 4,220,904
Less: Subscription Receivable (65,000) (400,000)
Accumulated Profits (Deficit) (4,225,486) (2,653,357)
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Total Stockholders' Equity 2,604,334 1,341,463
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Total Liabilities and Stockholders' Equity $ 7,806,657 $ 3,553,362
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The Accompanying Notes are an Integral Part
of the Financial Statements
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<PAGE>
SOLPOWER CORPORATION
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
December 31, December 31,
------------------------ ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 53,054 $ -- $ 7,747 $ --
Cost of Revenues 22,673 -- 22,673 --
----------- ----------- ----------- -----------
Gross Margin 30,381 -- (14,926) --
Expenses
General and Administrative 1,603,544 257,120 548.669 116,282
----------- ----------- ----------- -----------
Operating Income (Loss) (1,573,163) (257,120) (563,595) (116,282)
Other Income (Expense)
Interest Income 2,249 -- 60 --
Interest Expense (1,215) (593) (290) (593)
----------- ----------- ----------- -----------
Total Other Income (Expense) 1,034 (593) (230) (593)
----------- ----------- ----------- -----------
Net Income (Loss) Before Provision
for Income Taxes (1,572,129) (257,713) (563,825) (116,875)
Provision for Income Taxes -- -- -- --
----------- ----------- ----------- -----------
Net Income (Loss) Available to
Common Shareholders $(1,572,129) $ (257,713) $ (563,825) $ (116,875)
=========== =========== =========== ===========
Net Income (Loss) Per Common Share
Equivalents $ (0.08) $ (0.02) $ (0.03) $ (0.01)
=========== =========== =========== ===========
Weighted Number of Common Shares and
Common Share Equivalents Outstanding 20,891,560 12,361,660 20,891,560 12,351,560
=========== =========== =========== ===========
</TABLE>
The Accompanying Notes are an Integral Part
of the Financial Statements
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<PAGE>
SOLPOWER CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
December 31,
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1998 1997
---- ----
Cash Flows From Operating Activities:
Net Income (Loss) $(1,572,129) $(257,713)
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by (Used in) Operating Activities:
Depreciation and Amortization 388,739 82,259
Other Non-Cash Items -- 520,000
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable -- --
(Increase) Decrease in License Fee Receivable (2,438,748) --
(Increase) Decrease in Inventory` (6,334) --
(Increase) Decrease in Prepaid Expenses 2,917 --
(Increase) Decrease in Security Deposits (35,000) (15,760)
Increase (Decrease) in Checks Issued in Excess
of Cash 4,846 23,326
Increase (Decrease) in Accounts Payable 463,942 --
Increase (Decrease) in Deferred Revenues 2,400,000 --
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Total Adjustments 780,362 609,825
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Net Cash Provided by (Used in) Operating
Activities (791,767) 352,112
Cash Flows From Investing Activities:
Capital Expenditures (332,711) (26,838)
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Net Cash Flows Provided By (Used In)
Investing Activities (332,711) (26,838)
Cash Flows From Financing Activities:
Proceeds From Issuance of Common Stock 720,000 --
Capital Lease Obligations (3,346) 14,714
Other Advances 11,000 --
Net Advances (Repayments) from Stockholders 212,982 (340,425)
----------- ---------
Net Cash Provided by (Used In) Financing Activities 940,636 (325,711)
Increase (Decrease) in Cash and Cash Equivalents (183,842) (437)
Cash and Cash Equivalents Beginning of Period 183,842 437
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Cash and Cash Equivalents End of Period $ -- $ --
=========== =========
Supplemental Information:
Cash Paid For:
Interest $ 1,215 $ 593
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Income Taxes $ -- $ --
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Non-Cash Investing and Financing:
Issuance of Common Stock for Marketing Rights
(Note 2) $ 2,400,000 $ --
=========== =========
Issuance of Common Stock in Exchange for
Cancellation of a Portion of Advances Payable $ -- $ 520,000
=========== =========
The Accompanying Notes are an Integral Part
of the Financial Statements
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<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
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 and nine
month periods ended December 31, 1998 are not necessarily indicative of the
results that may be expected for the year ended March 31, 1999. The unaudited
condensed financial statements should be read in conjunction with the financial
statements and footnotes thereto for the year ended March 31, 1998 included in
the Company's report on Form 10-SB.
NOTE 2 - MARKETING RIGHTS
On June 17, 1998, the Company issued 6,000,000 shares of common stock at $.40
per share, or $2,400,000 in exchange for the exclusive North America sales,
distribution, marketing and manufacturing rights for SP34E, a direct drop-in
replacement refrigerant gas for R-12 and R-134a. The Company also will make
royalty payments of $2.25 per kilogram of SP34E sold.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
NINE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO
NINE MONTHS ENDED DECEMBER 31, 1997
Revenues for the nine months ended December 31, 1998 were $53,054 as compared to
no revenues for the nine months ended December 31, 1997. Revenues from the sale
of Territory Licenses were recognized as deferred revenues during the nine
months ended December 31, 1998. Revenues represent the commencement of sales of
the product Soltron(TM) through its corporate territory as well as to its
licensees. The increase in revenues resulted primarily from the signing of
Territory Licenses during the nine months ended December 31, 1998 as compared to
the start up stage the Company was in during the nine months ended December 31,
1997.
On June 30, 1998 the Company had entered into licensing agreements with Houston
Mercantile Exchange, Inc. ("HME") which provided for the exclusive use and
distribution by HME of the Company's product Soltron in the South and Mexico
Territories. The license fee was $1,800,000 and $600,000, respectively. HME
signed promissory notes for the amounts outstanding, with the notes bearing
interest at one half percent (0.5%) on the unpaid principal balance, with all
unpaid principal and interest due on or before June 30, 2000. The licensee is
required to pay the Company the greater of the amount payable per a payment
schedule in the agreements or the product of $5.50 times the number of liters of
concentrate shipped by the Company to the licensee during the immediately
preceding calendar month.
General and administrative expenses were $1,603,544 during the nine months ended
December 31, 1998 as compared to $257,120 during the nine months ended December
31, 1997. The increase in expenses was related to the organization of the
corporate offices and business plan; organization and production of licensing
agreements and related materials; identification and qualification of territory
licensees; permitting and equipping the Phoenix production facility; locating
and leasing the Elkhart production facility; financing and investor relations
activities; and requisite trademark and product registration.
Cash flow of $943,982 was provided from shareholder advances and the placement
of the Company's stock as compared to $520,000 for the nine months ended
December 31, 1997 which resulted from shareholder advances.
The Company experienced a net loss of $1,572,129 for the nine months ended
December 31, 1998 compared to a loss of $257,713 for the nine months ended
December 31, 1997, at which point in time, the Company was in a start up phase
with no revenues or licensees in place.
THREE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO
THREE MONTHS ENDED DECEMBER 31, 1997
Revenues for the three months ended December 31, 1998 were $7,747 representing
sales of the Company's product, compared to no revenues for the three months
ended December 31, 1997, at which point in time the Company was still in its
start up phase and had no licensees or product available for sale.
General and administrative expenses for the quarter ended December 31, 1998 were
$548,669 as compared to $116,282 for the quarter ended December 31, 1997 during
the start up phase of the Company. The utilization of cash resources continued
during the quarter ended December 31, 1998, in the Company's major activity of
permitting and equipping the Phoenix production facility; locating and leasing
the Elkhart facility; financing and investor relations activities; organization
and production of licensing agreements and related materials; and identification
and qualification of territory licensees.
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<PAGE>
The net loss for the quarter ended December 31, 1998 was $563,825 or $(0.03) per
share compared to a loss of $116,875 or $(0.01) per share for the quarter ended
December 31, 1997 being the start up phase of the Company.
During the remainder of the 1999 fiscal year the Company will pursue the
identification of potential Territory Licensees for the remaining territories;
completion of the Phoenix and Elkhart production facilities and the
implementation of appropriate marketing strategies to gain market penetration
and acceptance of its products.
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.
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<PAGE>
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: April 4, 2000 By /s/ James H. Hirst
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James H. Hirst, Chief Executive Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> (4,846)
<SECURITIES> 0
<RECEIVABLES> 4,813,748
<ALLOWANCES> 0
<INVENTORY> 108,240
<CURRENT-ASSETS> 361,988
<PP&E> 430,914
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,805,657
<CURRENT-LIABILITIES> 477,616
<BONDS> 0
0
0
<COMMON> 233,916
<OTHER-SE> 6,560,904
<TOTAL-LIABILITY-AND-EQUITY> 7,805,657
<SALES> 53,054
<TOTAL-REVENUES> 53,054
<CGS> 22,673
<TOTAL-COSTS> 22,673
<OTHER-EXPENSES> 1,603,544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,215
<INCOME-PRETAX> (1,572,129)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,572,129)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,572,129)
<EPS-BASIC> (0.08)
<EPS-DILUTED> 0
</TABLE>
