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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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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 June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
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)
(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 28,250,691 shares of common stock, par value $.01, as of August 31,
2000.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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<PAGE>
SOLPOWER CORPORATION
INDEX TO FORM 10-QSB FILING
FOR THE QUARTER ENDED JUNE 30, 2000
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
PAGE
----
Item 1. Financial Statements................................................ 2
Balance Sheets
June 30, 2000 (unaudited) and March 31, 2000...................... 2
Statements of Operations
For the Three Month Periods Ended June 30, 2000 (unaudited)
and 1999 (unaudited).............................................. 3
Statement of Stockholders' Equity
For the Period From March 31, 2000 to June 30, 2000............... 4
Statements of Cash Flows
For the Three Month Periods Ended June 30, 2000 (unaudited)
and 1999 (unaudited).............................................. 5
Notes to the Financial Statements For the Three Month Period
Ended June 30, 2000................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................... 6
PART II.
OTHER INFORMATION
Item 2. Change in Securities and Use of Proceeds............................ 7
SIGNATURES ................................................................. 7
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SOLPOWER CORPORATION
BALANCE SHEETS
JUNE 30, 2000 (UNAUDITED) AND MARCH 31, 2000
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
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(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 23,708 $ 34,299
Accounts receivable 69,867 79,726
Inventory 61,351 21,624
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Total Current Assets 154,926 135,649
Property & Equipment, net 448,519 377,762
Marketing Rights, net 2,533,333 2,558,333
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Total Assets $ 3,136,778 $ 3,071,744
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Loans payable to related parties $ 181,390 $ 130,390
Accounts payable
- trade 270,333 330,093
- related parties 236,181 107,118
Accrued expenses 42,965 309,929
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Total Current Liabilities 730,869 877,530
Long-Term Liabilities:
Loans payable to related parties, less
current portion 466,173 212,114
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Total Liabilities 1,197,042 1,089,644
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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; issued and outstanding 28,250,691
and 27,316,066, respectively 282,507 273,161
Additional Paid in Capital 9,116,292 8,741,730
Accumulated Deficit (7,459,063) (7,032,791)
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Total Stockholders' Equity 1,939,736 1,982,100
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Total Liabilities and Stockholders' Equity $ 3,136,778 $ 3,071,744
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</TABLE>
2
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SOLPOWER CORPORATION
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED
JUNE 30, 2000 (UNAUDITED) AND 1999 (UNAUDITED)
For the Three Month Periods Ended
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June 30, 2000 June 30, 1999
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(unaudited) (audited)
Revenues
Sales - Product $ 121,339 $ 25,439
Cost of Sales 92,534 132,966
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Gross Profit 28,805 (107,527)
Expenses
General and administrative 387,754 335,928
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Operating Loss (358,949) (443,455)
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Other Income (Expense)
Interest income 233 --
Foreign currency transaction gain 7,794 --
Settlement costs (60,000) --
Interest expense (15,350) (140)
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Total Other Income (Expense) (67,323) (140)
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Net Loss Before Provision for income taxes (426,272) (443,595)
Provision for Income Taxes -- --
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Net Loss $ (426,272) $ (443,595)
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Basic Loss Per Share $ (0.02) $ (0.02)
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Weighted Average Number of Shares Outstanding 27,322,010 23,443,492
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SOLPOWER CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 31, 2000 TO JUNE 30, 2000
<TABLE>
<CAPTION>
Additional
Common Stock Paid In Accumulated
Shares Amount Capital Deficit Total
---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 2000 27,316,066 $273,161 $8,741,730 $(7,032,791) $ 1,982,100
Issuance of common stock for license
terminations, interest and property 784,625 7,846 306,004 -- 313,850
Issuance of common stock pursuant to
employment agreements 150,000 1,500 68,558 -- 70,058
Loss for the three months ended
June 30, 2000 (unaudited) -- -- -- (426,272) (426,272)
---------- -------- ---------- ----------- -----------
Balance, June 30, 2000 (unaudited) 28,250,691 $282,507 $9,116,292 $(7,459,063) $ 1,939,736
========== ======== ========== =========== ===========
</TABLE>
4
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SOLPOWER CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED
JUNE 30, 2000 (UNAUDITED) AND 1999 (UNAUDITED)
For the Three
Month Periods Ended
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June 30, 2000 June 30, 1999
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(unaudited) (audited)
Cash Flows From Operating Activities:
Net loss $(426,272) $(443,595)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 50,048 50,714
Non-cash transactions 348,908 --
Changes in operating assets and liabilities:
Accounts receivable 9,859 3,808
Inventory (39,727) 9,646
Accounts payable
-trade (59,760) (48,924)
-related party 129,063 --
Accrued expenses (266,964) 19,535
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Net Cash Used by Operating Activities (254,845) (408,816)
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Cash Flows from Investing Activities:
Capital Expenditures (60,805) (15,653)
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Net Cash Used by Investing Activities (60,805) (15,653)
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Cash Flows From Financing Activities:
Payment on capital lease -- (1,384)
Loans from related parties 308,000 457,457
Payments to related parties (2,941) --
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Net Cash Provided by Financing Activities 305,059 456,073
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Increase (Decrease) in Cash and Cash Equivalents (10,591) 31,604
Cash and Cash Equivalents, Beginning of Period 34,299 2,228
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Cash and Cash Equivalents, End of Period $ 23,708 $ 33,832
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SUPPLEMENTAL INFORMATION:
Cash Paid for:
Interest $ -- $ 140
Noncash Investing and Financing:
Issuance of shares of common stock for
conversion of debt $ 203,500 --
Issuance of shares of common stock for
settlement costs $ 75,350 --
Issuance of shares of common stock for
equipment $ 35,000 --
Issuance of shares of common stock pursuant
to employment agreements $ 70,058 --
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SOLPOWER CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDING JUNE 30, 2000
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, 2000 are not necessarily indicative of the
results that may be expected for the year ended March 31, 2001. The unaudited
condensed financial statements should be read in conjunction with the financial
statements and footnotes thereto for the year ended March 31, 2000 included in
the Company's report on form 10-KSB.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1999
Revenues for the three months ended June 30, 2000 were $121,339 as compared
to revenues of $25,439 for the three months ended June 30, 1999. The increase in
revenues resulted primarily from improved sales in several expanding regional
markets during the three month period ended June 30, 2000 compared with the
three months ended June 30. 1999.
Cost of sales decreased $40,432 or 30.4% from $132,966 in the quarter ended
June 30, 1999 to $92,534 in the quarter ended June 30, 2000. This decrease is
primarily attributable to closing the plant site in Elkhart, Indiana and a
reduction in plant personnel at the Phoenix, Arizona plant.
General and administrative costs were $387,754 for the quarter ended June
30, 2000 compared to $335,928 for the three months ended June 30, 1999. The 15%
increase in costs were due to an increase in consulting fees associated with
management services and a reduction in other non-recurring expenses associated
with a reorganization of operations.
Cash flow of $308,000 was provided by related parties for the three months
ended June 30, 2000 as compared with $457,457 received from related party
advances for the three month period ended June 30, 1999.
The Company experienced a net loss of $426,272 for the three months ended
June 30, 2000 as compared with $443,595 for the three months ended June 30,
1999. The 4% decrease was due to a reduction in marketing and administrative
personnel and other reorganization efficiencies.
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates future liquidity needs for product production and
operations will be met through increased product sales supplemented by equity
and debt financings primarily from its major shareholder, Dominion Capital Pty
Ltd.
6
<PAGE>
PART II
OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
In June, 2000, Solpower issued 80,000 shares of its common stock to Mark A.
Robinson and 70,000 shares to James H. Hirst. Mr. Robinson is the Chief
Executive Officer and Mr. Hirst is the Secretary and Treasurer of Solpower.
These shares were issued as compensation to Mr. Robinson and Mr. Hirst.
In August, 2000, Solpower issued 500,000 shares of common stock to Solpower
Southeast Corporation in discharge of debt and accrued interest, for repayment
of certain expenses related to the Elkhart, Indiana plant and for purchase of
equipment. The shares were issued at $.40 per share and in reliance on the
exemption from registration under Section 4(2) of the Securities Act.
In August, 2000, Solpower issued 284,625 shares of common stock to Masters
Marketing Group, Inc. The shares were issued at $.40 per share in cancellation
of $113,850 of debt and interest. The shares were issued in reliance on the
exemption from registration under Section 4(2) of the Securities Act.
The shares issued to Solpower Southeast Corporation and Masters Marketing
Group, Inc. were included in the shares outstanding on Solpower's balance sheet
dated June 30, 2000.
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: September 1, 2000 By /s/ Mark A. Robinson
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Mark A. Robinson, Chief Executive Officer
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