10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X]	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended November 30, 2012
[ ]	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from __________ to__________
	Commission File Number: 333-165692

Southern Products, Inc.

(Exact name of registrant as specified in its charter)

Nevada	27-1963282
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

115 East Wilson Street, Unit B, Costa Mesa, CA 92627

(Address of principal executive offices)

866-236-8701 ext. 3

(Registrant’s telephone number)

13668-B Valley Blvd., City of Industry, CA 91746

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 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 [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [X] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

[ ] Large accelerated filer Accelerated filer	[ ] Non-accelerated filer
[X] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 111,111,112 as of January 11, 2013.

1

	TABLE OF CONTENTS
		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	5
Item 4:	Controls and Procedures	6
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	6
Item 1A:	Risk Factors	7
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	7
Item 3:	Defaults Upon Senior Securities	7
Item 4:	Mine Safety Disclosures	7
Item 5:	Other Information	7
Item 6:	Exhibits	7

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our financial statements included in this Form 10-Q are as follows:
F-1	Condensed Balance Sheet as of November 30, 2012 and February 29, 2012 (Unaudited);
F-2	Condensed Statements of Operations for the three and nine months ended November 30, 2012 and 2011 (Unaudited);
F-3	Condensed Statements of Cash Flows for the nine months ended November 30, 2012 and 2011 (Unaudited);
F-4	Notes to Condensed Financial Statements (Unaudited);

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended November 30, 2012 are not necessarily indicative of the results that can be expected for the full year.

3

Southern Products, Inc.

Condensed Balance Sheets

(Unaudited)

	November 30,			February 29,
	2012			2012
Assets
Current assets:
Cash	$	66		$	493,759
Accounts receivable		11,013			1,047,023
Inventory		—			494,076
Prepaid expenses		—			37,457
Total current assets		11,079			2,072,315
Fixed assets, net of accumulated depreciation of $200 and $71, respectively		1,000			1,129
Intellectual property		10,000			10,000
Total assets	$	22,079		$	2,083,444
Liabilities and Stockholders’ (Deficit)
Current liabilities:
Accounts payable and accrued expenses	$	2,170,502		$	3,334,383
Accrued compensation – related party		257,362			246,500
Customer deposits		—			3,510
Convertible note payable, net of discount of $451,489 and $0, respectively		—			—
Total current liabilities		2,427,864			3,584,393
Stockholders’ (deficit)
Preferred stock; $0.001 par value; 10,000,000 shares Authorized; no shares issued and outstanding at November 30, 2012 and February 29, 2012, respectively		—			—
Common stock; $0.001 par value; 440,000,000 shares Authorized; 111,111,112 shares authorized and issued at November 30, 2012 and February 29, 2012, respectively		111,112			111,112
Additional paid-in capital		601,858			—
Accumulated (deficit)		(3,118,755	)		(1,612,061	)
Total stockholders’ (deficit)		(2,405,785	)		(1,500,949	)
Total liabilities and stockholders’ (deficit)	$	22,079		$	2,083,444

The accompanying notes are an integral part to these condensed financial statements.

F-1

Southern Products, Inc.

Condensed Statements of Operations

(Unaudited)

	Three Months Ended						Nine Months Ended
	November 30,						November 30,
	2012			2011			2012			2011
Sales revenue	$	10,574		$	1,341,041		$	817,959		$	3,638,921
Cost of goods sold		3,712			1,558,584			1,033,140			3,984,445
Gross profit		6,862			(217,543	)		(215,181	)		(345,524	)
Operating expenses
Commissions		2,000			14,175			17,385			21,753
Consulting fees		—			—			43,929			—
General and administrative		27,058			173,298			221,232			288,468
Professional fees		23,259			25,736			283,384			44,468
Promotional and marketing		—			9,000			119,802			28,833
Rent		6,500			—			29,716			—
Salaries and wages		61,057			73,533			311,319			141,355
Total operating expenses		119,874			295,742			1,026,767			525,034
Net (loss) from operations		(113,012	)		(513,285	)		(1,241,948	)		(870,558	)
Other income (expense)
Finance costs		—			—			(96,295	)		—
Interest expense		(24,246	)		—			(69,299	)		—
(Loss) on debt settlement		(180,486	)		—			(180,486	)		—
(Loss) on asset sale		—			—			(7,555	)		—
Total other income (expense)		(204,732	)		—			(353,635	)		—
Net (loss)	$	(317,744	)	$	(513,285	)	$	(1,595,583	)	$	(870,558	)
Basic and fully diluted (loss) per common share outstanding	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Basic and fully diluted - weighted average shares outstanding		111,111,120			111,111,120			111,111,120			111,111,120

The accompanying notes are an integral part to these condensed financial statements.

F-2

Southern Products, Inc.

Condensed Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	November 30,
	2012			2011
Cash flows from operating activities:
Net (loss)	$	(1,595,583	)	$	(870,559	)
Adjustments to reconcile net (loss) to net cash used by operating activities:
Depreciation		129			—
Amortization of debt discount		27,157			—
Gain (loss) on settlement of debt		180,486			105,432
Decrease (increase) in assets:
Accounts receivable		855,524			(771,691	)
Inventory		494,076			(607,104	)
Prepaid and other assets		37,457			(433,163	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(463,291	)		2,795,862
Accrued compensation – related party		10,862			—
Customer deposits		(3,510	)		—
Net cash (used) by operating activities		(456,693	)		(218,778	)
Cash flows from financing activities:
Proceeds notes payable		—			360,000
Proceeds from convertible note payable		23,000			—
Payments on convertible note payable		(60,000	)		—
Net cash (used) by financing activities		(37,000	)		360,000
Net increase (decrease) in cash		(493,693	)		578,778
Cash - beginning		493,759			13,598
Cash - ending		66			592,375
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	—		$	—
Cash paid for interest	$	—		$	—
Supplemental non-cash disclosures
Accounts payable converted to short-term note payable	$	174,271		$	—
Accounts payable converted to convertible note payable	$	488,489

The accompanying notes are an integral part to these condensed financial statements.

F-3

Southern Products, Inc.

Notes to Condensed Financial Statements

NOTE 1 – Organization, History and Business

Organization

Southern Products, Inc. (the “Company”) was incorporated in Nevada on February 23, 2010 and is doing business as SIGMAC USA. The Company is a consumer electronics company utilizing its d.b.a., SIGMAC USA to develop and brand its products. The Company began its plan of operations by entering into agreements for the sale of branded, low-priced televisions in the United States. The business consists of the design, assembly, import, marketing and sale of our models of Sigmac branded flat panel televisions into the US market. Upon establishment of the SIGMAC brand, management intends to expand its market to international consumers.

NOTE 2 – Significant Accounting Policies and Procedures

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At November 30, 2012 and February 29, 2012, the Company had no cash equivalents.

Concentration of Credit and Business Risk

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts which may at times, exceed federally-insured limits.

Of the Company’s revenue earned during the nine-months ended November 30, 2012, approximately 89% was generated through vendor agreements with two customers, Fry’s Electronics and COSTCO, representing net sales of $718,573.

Accounts receivable

Accounts receivable is reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. As of November 30, 2012, management has deemed all receivables to be collectible, and has not historically recorded bad debt expenses; therefore no allowance has been recorded.

Inventory

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. As of November 30, 2012 and February 29, 2012, finished goods inventory was $0 and $494,076 respectively.

Fixed Assets

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

F-4

Equipment	3-5 years
Furniture	7 years

The Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there were no impairments needed as of November 30, 2012. Depreciation expense for the nine-months ended November 30, 2012 and 2011 was $129 and $0, respectively.

Revenue recognition

The Company recognizes revenue in accordance with ASC subtopic 605-10 (formerly SEC Staff Accounting Bulletin No. 104 and 13A, “Revenue Recognition”) net of expected cancellations and allowances. As of November 30, 2012 and February 29, 2012, the Company evaluated evidence of cancellation in order to make a reliable estimate and determined there were no material cancellations during the years and therefore no allowances has been made.

The Company's revenues, which do not require any significant production, modification or customization for the Company's targeted customers and do not have multiple elements, are recognized when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the Company's fee is fixed and determinable; and (iv) collectability is probable.

Substantially all of the Company's revenues are derived from the sales of LCD and LED televisions. The Company's customers are charged for these products on a per transaction basis. Pricing varies depending on the product sold.  Revenue is recognized in the period in which the products are sold net of any discounts or allowances.

Loss per share

The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise or conversion of stock options, warrants, and debt to purchase common shares, would have an anti-dilutive effect. At November 30, 2012 Company had 4,902,418 potential common shares that have been excluded from the computation of diluted net loss per share.

Income taxes

The Company follows ASC subtopic 740-10 for recording the provision for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

F-5

Fair Value of Financial Instruments

The Company has financial instruments whereby the fair value of the financial instruments could be different from that recorded on a historical basis in the accompanying balance sheets. The Company's financial instruments consist of cash, receivables, accounts payable, accrued liabilities, and notes payable. The carrying amounts of the Company's financial instruments approximate their fair values as of November 30, 2012 due to their short-term nature.

Long-lived assets

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. For the nine-months ended November 30, 2012, the Company determined that none of its long-term assets were impaired.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affects the reported amounts of assets and liabilities and 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 those estimates.

Advertising

The Company expenses advertising costs as incurred. Pursuant to its vendor agreement with Fry’s electronics, the Company contributes 5% of each sale to a co-operative advertising, promotional and marketing campaign. The Company’s advertising and marketing expenses were $119,802 and $28,833 for the nine-months ended November 30, 2012 and 2011, respectively.

Research and development

Research and development costs are expensed as incurred. During the nine- months ended November 30, 2012 and 2011, the Company did not incur any research and development costs.

Share-Based Compensation

The Company accounts for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.

The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns.

The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award.

F-6

For the nine-months ended November 30, 2012 and 2011, the Company has not issued share-based compensation.

Recent accounting pronouncements

No recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company's present or future financial statements

International Financial Reporting Standards:

In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, the Company would be required to prepare financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential impact of IFRS on its financial statements and will continue to follow the proposed roadmap for future developments.

Year-end

The Company has adopted the last day of February, as its fiscal year end.

NOTE 3 - Going concern

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has not yet achieved profitable operations and since its inception (February 23, 2010) through November 30, 2012 the Company had accumulated losses of $3,118,755 and a working capital deficit of $2,416,785. Management expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

The Company expects to continue to incur substantial losses as it executes its business plan and does not expect to attain profitability in the near future. Since its inception, the Company has funded operations through short-term borrowings and equity investments in order to meet its strategic objectives. The Company's future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives, including anticipated cash needs for working capital, for a reasonable period of time. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operation, or if obtained, upon terms favorable to the Company.

F-7

NOTE 4- Accounts receivable

On January 11, 2012, the Company entered into an Accounts Receivable Purchase & Security Agreement with Pacific Business Capital Corporation (“PBCC”), subsequently approved by the board of directors on February 27, 2012. Pursuant to the agreement, PBCC has the option to purchase various trade receivables presented by the Company at a minimum discount of 0.813% of the face value of each account purchased. PBCC has the option to reserve and withhold a minimum of 20% of the gross face amount of all accounts purchased. The reserve account may be held by PBCC and applied against charge-backs or any obligations of the Company to PBCC. In addition, in the event a purchased account remains unpaid more than 15 days from the date of purchase, an additional service discount of 0.54 % per day will be charged to the Company until paid-in full. The agreement with PBCC is secured by all of the Company’s assets, and has been personally guaranteed by the Company’s executive officers. During the nine-months ended November 30, 2012, the Company has sold trade receivables with a face value of $929,303 at a discount of $7,555 to PBCC for proceeds of $767,398, net of reserves. On August 24, 2012, PBCC assigned 100% of their interest in the January 11, 2012 agreement with the Company to a third party, CC Fund, LLC. During the three and nine months ended November 30, 2012, the Company had recorded financing costs of $0 and $96,295, respectively.

On November 18, 2011, the Company agreed to a payment holdback in the amount of $10,000 as a provision to its agreement with Costco. The holdback is to be utilized to cover any future costs attributable to potential returns and or allowances. Per the verbal agreement, Costco calculates the retained amount at their discretion at a rate equal to approximately 5% of each total order and can be held for a period up to nine-months. Any amount remaining after the nine-month period has expired is fully payable to the Company. As of November 30, 2012, the amounts held in reserve were $0.

On November 19, 2012, the Company entered into a Waiver and Release Agreement with Fry’s Electronics (“Fry’s”) whereby, the Company agreed to settle approximately $255,486 in accounts receivable owed by Fry’s for a total of $75,000 comprised of cash in the amount of $60,000 and the return of $15,000 of inventory held by Fry’s at the time of agreement. As of November 30, 2012, Fry’s had paid the $60,000 directly to CC Fund, LLC, the Company’s secured creditor, on behalf of the Company and subsequently, returned $15,000 in inventory to the Company. As of November 30, 2012, the Company had recorded a settlement expense in the amount of $180,486 in connection with the agreement.

Accounts receivable consist of the following:

	November 30,		February 29,
	2012		2012
Trade accounts receivable	$	11,013	$	789,188
Due to/from factoring		—		247,835
Customer hold-back		—		10,000
Less: Allowance for doubtful accounts		—		—
	$	11,013	$	1,047,023

As of November 30, 2012 and February 29, 2012, respectively, the Company had not established an allowance for doubtful accounts.

F-8

NOTE 5 - Property and equipment

The following is a summary of property and equipment:

	November 30,		February 29,
	2012		2012
Furniture and fixtures	$	1,200	$	1,200
Less: accumulated depreciation		200		71
	$	1,000	$	1,129

Depreciation for the nine-months ended November 30, 2012 and 2011 was $129 and $0, respectively.

NOTE 6 - Related party transactions

Employment/Consulting commitments

On June 1, 2011, the Company agreed to pay its two executive officers annual salaries of $240,000 each with 50% to be paid in cash and the remaining $120,000 to accrue until such time the Company has sufficient operating capital to pay the accrued compensation. On June 11, 2012, subsequent to the quarter end, we terminated our chief operating officer. As of November 30, 2012, the Company settled all amounts owing to its former executive in the amount of $212,101 which includes previously accrued compensation.

As of November 30, 2012, the Company has paid executive compensation of $79,700 and accrued $300,000. The balance owed at November 30, 2012 and February 29, 2012 totaled $257,362 and $246,500, respectively.

NOTE 7 – Short-term note and line of credit

Line of credit

On March 15, 2012, the Company signed an addendum to their factoring agreement dated January 11, 2012 with Pacific Business Capital Corporation (“PBCC”). The addendum provides for a short-term line of credit with a limit of $1,000,000 to be advanced based on specific purchase orders presented by the Company. Pursuant to the terms of the agreement, interest will be charged at a rate of 1.5% per month on the unpaid balance. Additionally, any amounts outstanding in excess of thirty-days will have an additional interest charge of 0.05% per day until paid in full. All advances are collateralized with the inventory of the Company. During the nine-months ended November 30, 2012, the Company was advanced and repaid a total of $400,000. As of the balance sheet date the Company has recorded interest expense of $3,200 in connection with the advance.

Note payable

During the nine-months ended November 30, 2012, the Company severed its relationship with a certain supplier in connection with the termination of their chief operating officer. As a result, the then outstanding accounts payable balance was converted to a short-term note. The note is non-interest bearing, unsecured and due on demand. As of November 30, 2012, the Company settled the entire balance and record additional paid-in capital of $174,271 (see related party disclosure above).

Convertible note payable

On June 29, 2012, the Company issued a $488,489 Convertible Promissory Note and Security Interest in favor of a creditor representing the past due invoices of the creditor for professional fees. On August 24, 2012, the Company agreed to amend the note to include an additional $15,000 in the principal balance, which represents an expense paid on behalf of the Company by the holder. On November 30, 2012, the Company together with the holder further amended the note to include additional advances of $8,000, a payment of $60,000 and change to the conversion terms. The amended principal balance of the note is $451,489.

F-9

The note is collateralized through the granting of a Security Interest in all the current and future assets of the Company until such time the note is fully satisfied. The Security Interest was subsequently perfected by the holder through filing. The note bears interest at a rate of 12% per annum and requires monthly installments of $15,000 per month until paid in full commencing on July 10, 2012. Further, at the sole option of the holder, demand for payment can be made with a thirty-day written notice of such demand. In the event of default, the unpaid balance will accrue interest at a default rate of 18% per annum. The Company has not paid in accordance with the terms of the note, and is currently in default and accruing interest at the default rate of 18%. Interest charged to operations relating to this note amounted to $38,753 for the period ended November 30, 2012.

Pursuant to the amended terms of the note, it is convertible into shares of the Company’s common stock at the option of the holder at any time in whole or in part at a fixed conversion rate of $0.10. On the commitment date, management evaluated the conversion feature with respect to the benefit of the holder and determined the value of the conversion feature to be equal to the face value of the amended note, $451,489. This amount has been recorded as a discount against the outstanding balance of the note. The discount is amortized to interest expense over the estimated life of the debt using the effective interest method. Interest charged to operations relating to the amortization of the debt discount as of November 30, 2012 amounted to $27,157.

In addition, as a result of the November 30, 2012 amendment, the debt instrument no longer contains an embedded derivative which had previously resulted from the variable conversion rate indexed to the market price of the Company’s own common stock. As of November 30, 2012, the Company’s derivative liability was $0.

NOTE 8 – Commitments and contingencies

Lease agreements

In April 2011, the Company entered into a month to month sub-lease agreement for office and warehouse space commencing April 1, 2011. Pursuant to the terms of the agreement, the monthly lease amount is $7,000. In August 2011, the Company amended their agreement to acquire additional square footage for conference and office space for an additional $1,000 per month. In addition, from time to time the Company utilizes various storage facilities as needed.

During the nine-months ended November 30, 2012, the Company re-negotiated the amount of square footage necessary for its current operations resulting in and elimination of its warehouse and a significant portion of office space whereby reducing its monthly expense from $8,000 to $1,500. As of November 30, 2012, the Company has recorded rent expense of $29,216.

Proposed Settlement of accounts payable

Subsequent to the period ended November 30, 2012, the Company has been negotiating a settlement in re-payment terms with two of its vendors. Pursuant to the proposed settlement agreements, the vendor will agree to forgive some of the outstanding balance in exchange for re-payment terms involving periodic payments based on a percentage of money received during equity raises and generated from sales revenues.

F-10

NOTE 9 - Fair value measurement

The Company’s financial instruments consist principally of notes payable, convertible debentures and a derivative liability. Notes payable and convertible debentures are financial liabilities with carrying values that approximate fair value. The Company determines the fair value of notes payable and convertible debentures based on the effective yields of similar obligations. The Company determines the fair value of its derivative liability based upon the trading prices of its common stock on the date of commitment and when applicable, on the last day of each reporting period. The Company uses the Black-Scholes Option Model in valuing the fair value of its derivative liability.

The Company adopted ASC Topic 820-10 at the beginning of 2010 to measure the fair value of certain of its financial assets required to be measured on a recurring basis. The adoption of ASC Topic 820-10 did not impact the Company’s financial condition or results of operations. ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

Level I – Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

Level II – Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

The Company’s Level 2 liabilities consist of notes payable, convertible debentures and a derivative liability. The Company determines the fair value of notes payable and convertible debentures based on the effective yields of similar obligations. The Company determines the fair value of its derivative liability based upon the trading prices of its common stock on the date of commitment and when applicable, at each reporting period balance sheet date. The Company uses the Black-Scholes Option Model in valuing the fair value of its derivative liability.

Level III – Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability.

The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of November 30, 2012:

	Level I		Level II		Level III		Fair Value
November 30, 2012
Intellectual property	$	—	$	—	$	10,000	$	10,000
Convertible note		—		—		—		—
	$	—	$	—	$	10,000	$	10,000

F-11

NOTE 10 – Shareholders’ equity

The Company is authorized to issue up to 440,000,000 shares of $0.001 par value common stock and 10,000,000 shares of $0.001 par value preferred stock. The Preferred Stock may be issued in one or more series, with all rights and preferences being determined by the board of directors.

Preferred Stock

The voting rights, rate of dividends preference in relation to other classes or series, and rights in the event of liquidation related to shares of Preferred Stock of any series are determined by the board of directors and may vary from time to time.

Common Stock

Holders of common stock have voting rights equal to one vote for each share of Common Stock held and are entitled to receive dividends when, and if declared by the board of directors subject to the rights of any Preferred Stock having preference as to dividends. In the event of liquidation or dissolution, subject to the rights of Preferred Stock Holders’ are entitled to share ratably in the Corporations assets. Holders of Common Stock do not have conversion, redemption or preemptive rights.

Recapitalization

Effective December 14, 2012, the Company issued a stock dividend equal to a 5-for-1 forward stock split. All share issuances have been retroactively restated.

As of November 30, 2012 and 2011, there were no warrants or options granted or outstanding.

NOTE 11 - Subsequent events

Subsequent to the period ended November 30, 2012, the Company received advances from CC Fund totalling approximately $25,000.

F-12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a consumer electronics company, incorporated in the state of Nevada and doing business under the brand name Sigmac. Our business consists of the design, assembly, import, marketing and sale of our models of Sigmac branded flat panel televisions into the US market.

Results of operations for the three and nine months ended November 30, 2012 and 2011.

We generated gross revenues of $10,574 during the three months ended November 30, 2012. Our cost of goods sold was $3,712 resulting in a gross profit of $6,862. Our total operating expenses during the three months ended November 30, 2012 were $119,874. Our operating expenses during the quarter consisted of salaries and wages of $61,057, general and administrative expenses of $27,058, commissions of $2,000, rent expense of $6,500, and professional fees in the amount of $23,259. In addition, we incurred settlement expenses of $180,486 and net interest expense of $24,246. Our net loss for the three months ended November 30, 2012 was $317,744.

By comparison, during the three months ended November 30, 2011, we generated gross revenues of $1,341,041. Our cost of goods sold was $1,558,584 resulting in a gross loss of $217,543. Our total operating expenses during the three months ended November 30, 2011 were $295,742. Our operating expenses during the quarter consisted of professional fees of $25,736, salaries and wages of $73,533, general and administrative expenses of $173,298, commissions of $14,175, and promotional and marketing expenses of $9,000. Our net loss for the three months ended November 30, 2011 was $513,285.

During the nine months ended November 30, 2012, we generated gross revenues of $817,959. Our cost of goods sold was $1,033,140 resulting in a gross loss of $215,181. Our total operating expenses during the nine months ended November 30, 2012 were $1,026,767. Our operating expenses during the period consisted of salaries and wages of $311,319, professional fees of $283,384, general and administrative expenses of $221,232, commissions of $17,385, rent expense of $29,716, promotional and marketing in the amount of $119,802, and consulting expenses of $43,929. In addition, we incurred finance costs of $96,295, interest expense of $69,299, debt settlement expenses of $180,486, and a loss on sale of assets in the amount of $7,555. Our net loss for the nine months ended November 30, 2012 was $1,595,583.

By comparison, during the nine months ended November 30, 2011, we generated gross revenues of $3,638,921. Our cost of goods sold was $3,984,445 resulting in a gross loss of $345,524. Our total operating expenses during the nine months ended November 30, 2011 were $525,034. Our operating expenses during the quarter consisted of professional fees of $44,468, salaries and wages of $141,335, general and administrative expenses of $288,468, commissions of $21,753, and promotional and marketing expenses of $28,833. Our net loss for the nine months ended November 30, 2011 was $870,558.

4

Our sales and operating expenses were substantially lower during the three and nine months ended November 30, 2012 compared to the same periods last year because during this period our usual Chinese suppliers refused to provide us with additional trade credit, rendering us unable to obtain products to fill orders from our customers. As a result, our total sales and overall level of business activity declined significantly. We are presently negotiating new supplier relationships on better terms with additional manufacturers which we anticipate will be complete in the forth quarter. There can be no assurance, however, that such additional relationships will be established or that we will be able to obtain additional capital or trade credit on acceptable terms, or at all.

Liquidity and Capital Resources

As of November 30, 2012, we had current assets in the amount of $11,079, consisting of cash in the amount of $66, and accounts receivable of $11,013. Our current liabilities as of November 30, 2012 were $2,427,864 consisting of accounts payable and accrued liabilities of $2,170,502, accrued compensation owed to related parties of $257,362, a convertible note payable of $451,489 fully discounted at the balance sheet date. Our working capital deficit as of November 30, 2012 was therefore $2,416,785.

Our ability to obtain finished products and component parts is presently severely constrained by our limited access to sufficient working capital. At present, our previous Chinese suppliers will no longer provide us with additional trade credit, rendering us unable to obtain products to fill orders from our customers. We are presently seeking to establish better relationships with new suppliers. There can be no assurance that such additional relationships will be established or that we will be able to obtain additional capital or trade credit on acceptable terms, or at all with these new suppliers.

We are also seeking equity and debt capital from other sources. With additional capital, we would be able to purchase additional product necessary for our current and expected distribution opportunities as well as negotiate more favorable supplier terms. If we are unable to obtain that additional credit or capital, however, we will be unable to make any additional sales and implementation of our business plan will be adversely affected.

Off Balance Sheet Arrangements

As of November 30, 2012, there were no off balance sheet arrangements.

Going Concern

We have negative working capital and have incurred losses since inception. These factors create substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.

Our ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling our equity securities and obtaining debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful in these efforts.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to include this item.

5

Item 4. Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of November 30, 2012. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, Edward Meadows. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of November 30, 2012, our disclosure controls and procedures were not effective. There have been no changes in our internal controls over financial reporting during the quarter ended November 30, 2012. Management determined that the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly performed due to the lack of staff and resources.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.   Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

As previously disclosed in our Current Report on Form 8-K filed June 26, 2012, we have been named as a Defendant in a lawsuit filed by Zhuhai Yuehua Electronic Co. (“Zhuhai”) in the Superior Court of California for the County of Los Angeles (the “Court”) at case no. BC 473921. The suit centers on a dispute regarding amounts alleged to be due to Zhuhai upon disposition of certain televisions. Although the suit has been pending against other defendants since November 22, 2011, we were added as a party on June 13, 2012 when Zhuhai filed a First Amended Complaint. Our current officer, Edward Meadows, and our former chief operating officer, Edward Wang, are also defendants, as is an entity controlled by Mr. Wang. On August 23, 2012, the same plaintiff, Zhuhai, amended its complaint in a related case, BC 476331, to include us, Mr. Wang and an entity allegedly controlled by Mr. Wang as named defendants. On November 28, 2012, Zuhai filed a dismissal of case no. BC 473921 as against us without prejudice. The litigation is ongoing, however, under case no. BC 476331. We anticipate that we will be adverse to Mr. Wang and the entity he controls if the suit proceeds to trial. We do not anticipate being adverse to Mr. Meadows. At present, the case is in the discovery phase and the parties are in general negotiations for settlement.

On August 23, 2012, the same plaintiff, Zhuhai, amended its complaint in a related case, BC 476331, to include us, Mr. Wang and an entity allegedly controlled by Mr. Wang as named defendants. As with case no. BC 473921, we anticipate that we will be adverse to Mr. Wang and any entities he controls if the suit proceeds to trial. At present, this case is also in the discovery phase and settlement discussions are ongoing.

6

Other than as disclosed above, we are not a party to any other pending legal proceeding. Other than as disclosed above, we are not aware of any other pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A. Risk Factors

A smaller reporting company is not required to include this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2012 formatted in Extensible Business Reporting Language (XBRL).

**Provided herewith

7

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 Products, Inc.
Date:	January 22, 2013
	/s/ Edward Meadows
By:	Edward Meadows
Title:	President, CEO, CFO, and Director

8

EX-31.1

CERTIFICATIONS

I, Edward Meadows, certify that;

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended November 30, 2012 of Southern Products, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 22, 2013

/s/ Edward Meadows

By: Edward Meadows

Title: Chief Executive Officer

EX-31.2

CERTIFICATIONS

I, Edward Meadows, certify that;

1. I have reviewed this quarterly report on Form 10-Q for the quarter ended November 30, 2012 of Southern Products, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 22, 2013

/s/ Edward Meadows

By: Edward Meadows

Title: Chief Financial Officer

EX-32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly Report of Southern Products, Inc (the “Company”) on Form 10-Q for the quarter ended November 30, 2012 filed with the Securities and Exchange Commission (the “Report”), I, Edward Meadows, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods presented.

By:	/s/ Edward Meadows
Name:	Edward Meadows
Title:	Principal Executive Officer, Principal Financial Officer and Director
Date:	January 22, 2013

This certification has been furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XML

Subsequent events (Details Narrative) (USD $)	Dec. 01, 2012
Subsequent Events [Abstract]
Accounts Payable To CC Fund	$ 25,000

XML

Accounts receivable (Details Narrative) (USD $)	3 Months Ended		9 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011	Nov. 19, 2012	Nov. 18, 2011
Notes to Financial Statements
Date agreement signed			Jan. 11, 2012
Date agreement approved by Board of Directors			Feb. 27, 2012
Option to purchase various trade receivables presented by the Company at a minimum discount percentage			0.813%
Option to reserve and withhold percentage of the gross face amount of all accounts purchased			20.00%
Time a purchased account can remains unpaid before discount is applied			15 days
Service discount after time expires			0.54%
Trade receivables sold			$ 929,303
Discount			7,555
Proceeds from sales, net			767,398
Financing costs	0		96,295
Holdback amount						10,000
Percentage Of Order To Be Withheld						5.00%
Amount Held In Reserve	0		0
Account receivable owed by Frys					255,486
Payments on Account Receivable					75,000
Payment on Account Receivable, in cash	60,000		60,000		60,000
Payment on Account Receivable, in return of inventory	15,000		15,000		15,000
(Loss) on debt settlement	$ (180,486)		$ (180,486)

XML

Accounts receivable

9 Months Ended

Nov. 30, 2012

Notes to Financial Statements

Accounts receivable

On January 11, 2012, the Company entered into an Accounts Receivable Purchase & Security Agreement with Pacific Business Capital Corporation (“PBCC”), subsequently approved by the board of directors on February 27, 2012. Pursuant to the agreement, PBCC has the option to purchase various trade receivables presented by the Company at a minimum discount of 0.813% of the face value of each account purchased. PBCC has the option to reserve and withhold a minimum of 20% of the gross face amount of all accounts purchased. The reserve account may be held by PBCC and applied against charge-backs or any obligations of the Company to PBCC. In addition, in the event a purchased account remains unpaid more than 15 days from the date of purchase, an additional service discount of 0.54 % per day will be charged to the Company until paid-in full. The agreement with PBCC is secured by all of the Company’s assets, and has been personally guaranteed by the Company’s executive officers. During the nine-months ended November 30, 2012, the Company has sold trade receivables with a face value of $929,303 at a discount of $7,555 to PBCC for proceeds of $767,398, net of reserves. On August 24, 2012, PBCC assigned 100% of their interest in the January 11, 2012 agreement with the Company to a third party, CC Fund, LLC. During the three and nine months ended November 30, 2012, the Company had recorded financing costs of $0 and $96,295, respectively.

On November 18, 2011, the Company agreed to a payment holdback in the amount of $10,000 as a provision to its agreement with Costco. The holdback is to be utilized to cover any future costs attributable to potential returns and or allowances. Per the verbal agreement, Costco calculates the retained amount at their discretion at a rate equal to approximately 5% of each total order and can be held for a period up to nine-months. Any amount remaining after the nine-month period has expired is fully payable to the Company. As of November 30, 2012, the amounts held in reserve were $0.

On November 19, 2012, the Company entered into a Waiver and Release Agreement with Fry’s Electronics (“Fry’s”) whereby, the Company agreed to settle approximately $255,486 in accounts receivable owed by Fry’s for a total of $75,000 comprised of cash in the amount of $60,000 and the return of $15,000 of inventory held by Fry’s at the time of agreement. As of November 30, 2012, Fry’s had paid the $60,000 directly to CC Fund, LLC, the Company’s secured creditor, on behalf of the Company and subsequently, returned $15,000 in inventory to the Company. As of November 30, 2012, the Company had recorded a settlement expense in the amount of $180,486 in connection with the agreement.

Accounts receivable consist of the following:

	November 30,		February 29,
	2012		2012
Trade accounts receivable	$	11,013	$	789,188
Due to/from factoring		—		247,835
Customer hold-back		—		10,000
Less: Allowance for doubtful accounts		—		—
	$	11,013	$	1,047,023

As of November 30, 2012 and February 29, 2012, respectively, the Company had not established an allowance for doubtful accounts.

XML

Short-Term note and line of credit (Details Narrative) (USD $)	9 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Interest Expense
Line Of Credit
Date factoring agreement signed with PBCC	2012-01-11
Date addendum to factoring agreement signed with PBCC	2012-03-15
Short-term line of credit, maximum limit	1,000,000
Interest rate charged (per month)	1.50%
Additional interest rate charge for outstanding amount (per day)	0.05%
Amount owed pursuant to agreement	400,000
Amount repaid	400,000
Interest Expense	3,200
Note Payable
Amount owed pursuant to agreement	174,271
Convertible Note Payable
Amount owed pursuant to agreement	488,489
Amount owed pursuant to amended agreement	451,489
Interest Expense	38,753
Fixed conversion rate	$ 0.10
Date Convertible Promissory Note and Security Interest was signed	2012-06-29
Interest rate charged (annum)	12.00%
Monthly installments	15,000
Additional interest rate charge for outstanding amount (annum)	18.00%
Value of the conversion feature	451,489
Debt discount	27,157
Derivative liability	$ 0

XML

Related party transactions (Details Narrative) (USD $)	9 Months Ended
	Nov. 30, 2012	Feb. 29, 2012
Related Party Transactions [Abstract]
Date employment agreements with two executive officers signed	Jun. 01, 2011
Annual salaries for each executive officers	$ 240,000
Percent of annual salaries paid in cash	50.00%
Accrued annual salaries amount	120,000
Previously accrued compensation	212,101
Executive Compensation	79,700
Accrued Executive Compensation	300,000
Accrued compensation - related party	$ 257,362	$ 246,500

XML

Commitments and contingencies (Details Narrative) (USD $)	3 Months Ended		4 Months Ended	7 Months Ended	9 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Jul. 31, 2011	Feb. 29, 2012	Nov. 30, 2012	Nov. 30, 2011
Commitments and Contingencies Disclosure [Abstract]
Monthly lease amount			$ 7,000	$ 8,000	$ 1,500
Rent Expense	$ 6,500				$ 29,216

XML

Fair Value Measurement (Details) (USD $)	Nov. 30, 2012
Level 1
Intellectual property
Convertible Note
Total
Level 2
Intellectual property
Convertible Note
Total
Level 3
Intellectual property	10,000
Convertible Note
Total	10,000
Fair Value
Intellectual property	10,000
Convertible Note
Total	$ 10,000

XML

Going concern

9 Months Ended

Nov. 30, 2012

Notes to Financial Statements

Going concern

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has not yet achieved profitable operations and since its inception (February 23, 2010) through November 30, 2012 the Company had accumulated losses of $3,118,755 and a working capital deficit of $2,416,785. Management expects to incur further losses in the development of its business, all of which raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

The Company expects to continue to incur substantial losses as it executes its business plan and does not expect to attain profitability in the near future. Since its inception, the Company has funded operations through short-term borrowings and equity investments in order to meet its strategic objectives. The Company's future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives, including anticipated cash needs for working capital, for a reasonable period of time. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operation, or if obtained, upon terms favorable to the Company.

XML

Shareholders equity (Details Narrative) (USD $)	Dec. 14, 2012	Nov. 30, 2012	Feb. 29, 2012	Nov. 30, 2011
Equity [Abstract]
Common stock, shares authorized		440,000,000	440,000,000
Common stock, par value		$ 0.001	$ 0.001
Preferred stock, shares authorized		10,000,000	10,000,000
Preferred stock, par value		$ 0.001	$ 0.001
Forward Stock Split	5:1
Warrants Outstanding		0		0
Options Granted		0		0

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Condensed Balance Sheets (USD $)	Nov. 30, 2012	Feb. 29, 2012
Current assets:
Cash	$ 66	$ 493,759
Accounts receivable	11,013	1,047,023
Inventory	0	494,076
Prepaid expenses		37,457
Total current assets	11,079	2,072,315
Fixed assets, net of accumulated depreciation of $200 and $71, respectively	1,000	1,129
Intellectual property	10,000	10,000
Total assets	22,079	2,083,444
Current liabilities:
Accounts payable and accrued expenses	2,170,502	3,334,383
Accrued compensation - related party	257,362	246,500
Customer deposits		3,510
Convertible note payable, net of discount of $451,489 and $0, respectively
Total current liabilities	2,427,864	3,584,393
Stockholders (deficit)
Preferred stock; $0.001 par value; 10,000,000 shares Authorized; no shares issued and outstanding at November 30, 2012 and February 29, 2012, respectively
Common stock; $0.001 par value; 440,000,000 shares Authorized; 111,111,112 shares authorized and issued at November 30, 2012 and February 29, 2012, respectively	111,112	111,112
Additional paid-in capital	601,858
Accumulated (deficit)	(3,118,755)	(1,612,061)
Total stockholders (deficit)	(2,405,785)	(1,500,949)
Total liabilities and stockholders (deficit)	$ 22,079	$ 2,083,444

XML

Organization, History and Business

9 Months Ended

Nov. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, History and Business

Organization

Southern Products, Inc. (the “Company”) was incorporated in Nevada on February 23, 2010 and is doing business as SIGMAC USA. The Company is a consumer electronics company utilizing its d.b.a., SIGMAC USA to develop and brand its products. The Company began its plan of operations by entering into agreements for the sale of branded, low-priced televisions in the United States. The business consists of the design, assembly, import, marketing and sale of our models of Sigmac branded flat panel televisions into the US market. Upon establishment of the SIGMAC brand, management intends to expand its market to international consumers.

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Significant Accounting Policies and Procedures (Details Narrative) (USD $)	3 Months Ended		9 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011	Feb. 29, 2012
Accounting Policies [Abstract]
Cash Equivalents	$ 0		$ 0		$ 0
Major customers percentage			89.00%
Proceeds from two major customers			718,573
Inventory Finished Goods	0		0		494,076
Equipment Useful Life Minimum	3 years		3 years
Equipment Useful Life Maximum	5 years		5 years
Furniture Useful Life	7 years		7 years
Depreciation Expense		0	129
Shares Excluded From Computation			4,902,418
Percentage of sales contributed to advertising			5.00%
Marketing And Advertising Expense		$ 28,833	$ 119,802	$ 28,833

XML

Accounts receivable - Schedule of Accounts Receivables (Details) (USD $)	Nov. 30, 2012	Feb. 29, 2012
Notes to Financial Statements
Trade accounts receivable	$ 11,013	$ 789,188
Due to/from factoring		247,835
Customer hold-back		10,000
Less: Allowance for doubtful accounts
Accounts receivable	$ 11,013	$ 1,047,023

XML

Significant Accounting Policies and Procedures

9 Months Ended

Nov. 30, 2012

Accounting Policies [Abstract]

Significant Accounting Policies and Procedures

NOTE 2 – Significant Accounting Policies and Procedures

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At November 30, 2012 and February 29, 2012, the Company had no cash equivalents.

Concentration of Credit and Business Risk

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts which may at times, exceed federally-insured limits.

Of the Company’s revenue earned during the nine-months ended November 30, 2012, approximately 89% was generated through vendor agreements with two customers, Fry’s Electronics and COSTCO, representing net sales of $718,573.

Accounts receivable

Accounts receivable is reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. As of November 30, 2012, management has deemed all receivables to be collectible, and has not historically recorded bad debt expenses; therefore no allowance has been recorded.

Inventory

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. As of November 30, 2012 and February 29, 2012, finished goods inventory was $0 and $494,076 respectively.

Fixed Assets

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

Equipment	3-5 years
Furniture	7 years

The Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there were no impairments needed as of November 30, 2012. Depreciation expense for the nine-months ended November 30, 2012 and 2011 was $129 and $0, respectively.

Revenue recognition

The Company recognizes revenue in accordance with ASC subtopic 605-10 (formerly SEC Staff Accounting Bulletin No. 104 and 13A, “Revenue Recognition”) net of expected cancellations and allowances. As of November 30, 2012 and February 29, 2012, the Company evaluated evidence of cancellation in order to make a reliable estimate and determined there were no material cancellations during the years and therefore no allowances has been made.

The Company's revenues, which do not require any significant production, modification or customization for the Company's targeted customers and do not have multiple elements, are recognized when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the Company's fee is fixed and determinable; and (iv) collectability is probable.

Substantially all of the Company's revenues are derived from the sales of LCD and LED televisions. The Company's customers are charged for these products on a per transaction basis. Pricing varies depending on the product sold. Revenue is recognized in the period in which the products are sold net of any discounts or allowances.

Loss per share

The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise or conversion of stock options, warrants, and debt to purchase common shares, would have an anti-dilutive effect. At November 30, 2012 Company had 4,902,418 potential common shares that have been excluded from the computation of diluted net loss per share.

Income taxes

The Company follows ASC subtopic 740-10 for recording the provision for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Fair Value of Financial Instruments

The Company has financial instruments whereby the fair value of the financial instruments could be different from that recorded on a historical basis in the accompanying balance sheets. The Company's financial instruments consist of cash, receivables, accounts payable, accrued liabilities, and notes payable. The carrying amounts of the Company's financial instruments approximate their fair values as of November 30, 2012 due to their short-term nature.

Long-lived assets

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. For the nine-months ended November 30, 2012, the Company determined that none of its long-term assets were impaired.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affects the reported amounts of assets and liabilities and 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 those estimates.

Advertising

The Company expenses advertising costs as incurred. Pursuant to its vendor agreement with Fry’s electronics, the Company contributes 5% of each sale to a co-operative advertising, promotional and marketing campaign. The Company’s advertising and marketing expenses were $119,802 and $28,833 for the nine-months ended November 30, 2012 and 2011, respectively.

Research and development

Research and development costs are expensed as incurred. During the nine- months ended November 30, 2012 and 2011, the Company did not incur any research and development costs.

Share-Based Compensation

The Company accounts for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.

The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns.

The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award.

For the nine-months ended November 30, 2012 and 2011, the Company has not issued share-based compensation.

Recent accounting pronouncements

No recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company's present or future financial statements

International Financial Reporting Standards:

In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, the Company would be required to prepare financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential impact of IFRS on its financial statements and will continue to follow the proposed roadmap for future developments.

Year-end

The Company has adopted the last day of February, as its fiscal year end.

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Condensed Balance Sheets (Parenthetical) (USD $)	Nov. 30, 2012	Feb. 29, 2012
Statement of Financial Position [Abstract]
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Issued and outstanding	0	0
Common Stock, Par Value	$ 0.001	$ 0.001
Common Stock, Shares Authorized	440,000,000	440,000,000
Common Stock, Issued and outstanding	111,111,112	111,111,112

XML

Significant Accounting Policies and Procedures (Policies)

9 Months Ended

Nov. 30, 2012

Accounting Policies [Abstract]

Cash and cash equivalents

Cash and cash equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At November 30, 2012 and February 29, 2012, the Company had no cash equivalents.

Concentration of Credit and Business Risk

Concentration of Credit and Business Risk

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts which may at times, exceed federally-insured limits.

Of the Company’s revenue earned during the nine-months ended November 30, 2012, approximately 89% was generated through vendor agreements with two customers, Fry’s Electronics and COSTCO, representing net sales of $718,573.

Accounts receivable

Accounts receivable

Accounts receivable is reported at the customers’ outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.

An allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. As of November 30, 2012, management has deemed all receivables to be collectible, and has not historically recorded bad debt expenses; therefore no allowance has been recorded.

Inventory

Inventory

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. As of November 30, 2012 and February 29, 2012, finished goods inventory was $0 and $494,076 respectively.

Fixed Assets

Fixed Assets

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

Equipment	3-5 years
Furniture	7 years

The Company reviews the carrying value of property, plant, and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. Based on this assessment there were no impairments needed as of November 30, 2012. Depreciation expense for the nine-months ended November 30, 2012 and 2011 was $129 and $0, respectively.

Revenue recognition

Revenue recognition

The Company recognizes revenue in accordance with ASC subtopic 605-10 (formerly SEC Staff Accounting Bulletin No. 104 and 13A, “Revenue Recognition”) net of expected cancellations and allowances. As of November 30, 2012 and February 29, 2012, the Company evaluated evidence of cancellation in order to make a reliable estimate and determined there were no material cancellations during the years and therefore no allowances has been made.

The Company's revenues, which do not require any significant production, modification or customization for the Company's targeted customers and do not have multiple elements, are recognized when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the Company's fee is fixed and determinable; and (iv) collectability is probable.

Substantially all of the Company's revenues are derived from the sales of LCD and LED televisions. The Company's customers are charged for these products on a per transaction basis. Pricing varies depending on the product sold. Revenue is recognized in the period in which the products are sold net of any discounts or allowances.

Loss per share

Loss per share

The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed exercise or conversion of stock options, warrants, and debt to purchase common shares, would have an anti-dilutive effect. At November 30, 2012 Company had 4,902,418 potential common shares that have been excluded from the computation of diluted net loss per share.

Income taxes

Income taxes

The Company follows ASC subtopic 740-10 for recording the provision for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company has financial instruments whereby the fair value of the financial instruments could be different from that recorded on a historical basis in the accompanying balance sheets. The Company's financial instruments consist of cash, receivables, accounts payable, accrued liabilities, and notes payable. The carrying amounts of the Company's financial instruments approximate their fair values as of November 30, 2012 due to their short-term nature.

Long-lived assets

Long-lived assets

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. For the nine-months ended November 30, 2012, the Company determined that none of its long-term assets were impaired.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affects the reported amounts of assets and liabilities and 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 those estimates.

Advertising

Advertising

The Company expenses advertising costs as incurred. Pursuant to its vendor agreement with Fry’s electronics, the Company contributes 5% of each sale to a co-operative advertising, promotional and marketing campaign. The Company’s advertising and marketing expenses were $119,802 and $28,833 for the nine-months ended November 30, 2012 and 2011, respectively.

Research and development

Research and development

Research and development costs are expensed as incurred. During the nine- months ended November 30, 2012 and 2011, the Company did not incur any research and development costs.

Share-Based Compensation

Share-Based Compensation

The Company accounts for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.

The Company accounts for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns.

The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award.

For the nine-months ended November 30, 2012 and 2011, the Company has not issued share-based compensation.

Recent accounting pronouncements

Recent accounting pronouncements

No recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company's present or future financial statements

International Financial Reporting Standards

International Financial Reporting Standards:

In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, the Company would be required to prepare financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential impact of IFRS on its financial statements and will continue to follow the proposed roadmap for future developments.

Year-end

Year-end

The Company has adopted the last day of February, as its fiscal year end.

XML

Document and Entity Information	9 Months Ended
	Nov. 30, 2012	Jan. 11, 2013
Document And Entity Information
Entity Registrant Name	Southern Products, Inc.
Entity Central Index Key	0001487659
Document Type	10-Q
Document Period End Date	Nov. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--02-28
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		111,111,112
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

XML

Accounts receivable (Tables)

9 Months Ended

Nov. 30, 2012

Notes to Financial Statements

Schedule of Accounts Receivables

	November 30,		February 29,
	2012		2012
Trade accounts receivable	$	11,013	$	789,188
Due to/from factoring		—		247,835
Customer hold-back		—		10,000
Less: Allowance for doubtful accounts		—		—
	$	11,013	$	1,047,023

XML

Condensed Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011
Income Statement [Abstract]
Sales revenue	$ 10,574	$ 1,341,041	$ 817,959	$ 3,638,921
Cost of goods sold	3,712	1,558,584	1,033,140	3,984,445
Gross profit	6,862	(217,543)	(215,181)	(345,524)
Operating expenses
Commissions	2,000	14,175	17,385	21,753
Consulting fees			43,929
General and administrative	27,058	173,298	221,232	288,468
Professional fees	23,259	25,736	283,384	44,468
Promotional and marketing		28,833	119,802	28,833
Rent	6,500		29,216
Salaries and wages	61,057	73,533	311,319	141,355
Total operating expenses	119,874	295,742	1,026,767	525,034
Net (loss) from operations	(113,012)	(513,285)	(1,241,948)	(870,558)
Other income (expense)
Finance costs			(96,295)
Interest expense	(24,246)		(69,299)
(Loss) on debt settlement	(180,486)		(180,486)
(Loss) on asset sale			(7,555)
Total other income (expense)	(204,732)		(353,635)
Net (loss)	(317,744)	(513,285)	(1,595,583)	(870,558)
Basic and fully diluted (loss) per common share outstanding	$ 0.00	$ 0.00	$ (0.01)	$ (0.01)
Basic and fully diluted - weighted average shares outstanding	$ 111,111,120	$ 111,111,120	$ 111,111,120	$ 111,111,120

XML

Short-term note and line of credit

9 Months Ended

Nov. 30, 2012

Notes to Financial Statements

Short-term note and line of credit

Line of credit

On March 15, 2012, the Company signed an addendum to their factoring agreement dated January 11, 2012 with Pacific Business Capital Corporation (“PBCC”). The addendum provides for a short-term line of credit with a limit of $1,000,000 to be advanced based on specific purchase orders presented by the Company. Pursuant to the terms of the agreement, interest will be charged at a rate of 1.5% per month on the unpaid balance. Additionally, any amounts outstanding in excess of thirty-days will have an additional interest charge of 0.05% per day until paid in full. All advances are collateralized with the inventory of the Company. During the nine-months ended November 30, 2012, the Company was advanced and repaid a total of $400,000. As of the balance sheet date the Company has recorded interest expense of $3,200 in connection with the advance.

Note payable

During the nine-months ended November 30, 2012, the Company severed its relationship with a certain supplier in connection with the termination of their chief operating officer. As a result, the then outstanding accounts payable balance was converted to a short-term note. The note is non-interest bearing, unsecured and due on demand. As of November 30, 2012, the Company settled the entire balance and record additional paid-in capital of $174,271 (see related party disclosure above).

Convertible note payable

On June 29, 2012, the Company issued a $488,489 Convertible Promissory Note and Security Interest in favor of a creditor representing the past due invoices of the creditor for professional fees. On August 24, 2012, the Company agreed to amend the note to include an additional $15,000 in the principal balance, which represents an expense paid on behalf of the Company by the holder. On November 30, 2012, the Company together with the holder further amended the note to include additional advances of $8,000, a payment of $60,000 and change to the conversion terms. The amended principal balance of the note is $451,489.

The note is collateralized through the granting of a Security Interest in all the current and future assets of the Company until such time the note is fully satisfied. The Security Interest was subsequently perfected by the holder through filing. The note bears interest at a rate of 12% per annum and requires monthly installments of $15,000 per month until paid in full commencing on July 10, 2012. Further, at the sole option of the holder, demand for payment can be made with a thirty-day written notice of such demand. In the event of default, the unpaid balance will accrue interest at a default rate of 18% per annum. The Company has not paid in accordance with the terms of the note, and is currently in default and accruing interest at the default rate of 18%. Interest charged to operations relating to this note amounted to $38,753 for the period ended November 30, 2012.

Pursuant to the amended terms of the note, it is convertible into shares of the Company’s common stock at the option of the holder at any time in whole or in part at a fixed conversion rate of $0.10. On the commitment date, management evaluated the conversion feature with respect to the benefit of the holder and determined the value of the conversion feature to be equal to the face value of the amended note, $451,489. This amount has been recorded as a discount against the outstanding balance of the note. The discount is amortized to interest expense over the estimated life of the debt using the effective interest method. Interest charged to operations relating to the amortization of the debt discount as of November 30, 2012 amounted to $27,157.

In addition, as a result of the November 30, 2012 amendment, the debt instrument no longer contains an embedded derivative which had previously resulted from the variable conversion rate indexed to the market price of the Company’s own common stock. As of November 30, 2012, the Company’s derivative liability was $0.

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Related party transactions

9 Months Ended

Nov. 30, 2012

Related Party Transactions [Abstract]

Related party transactions

Employment/Consulting commitments

On June 1, 2011, the Company agreed to pay its two executive officers annual salaries of $240,000 each with 50% to be paid in cash and the remaining $120,000 to accrue until such time the Company has sufficient operating capital to pay the accrued compensation. On June 11, 2012, subsequent to the quarter end, we terminated our chief operating officer. As of November 30, 2012, the Company settled all amounts owing to its former executive in the amount of $212,101 which includes previously accrued compensation.

As of November 30, 2012, the Company has paid executive compensation of $79,700 and accrued $300,000. The balance owed at November 30, 2012 and February 29, 2012 totaled $257,362 and $246,500, respectively.

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Going concern (Details Narrative) (USD $)	Nov. 30, 2012	Feb. 29, 2012
Notes to Financial Statements
Accumulated loss	$ (3,118,755)	$ (1,612,061)
Working capital deficit	$ 2,416,785

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Property and equipment (Tables)

9 Months Ended

Nov. 30, 2012

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

	November 30,		February 29,
	2012		2012
Furniture and fixtures	$	1,200	$	1,200
Less: accumulated depreciation		200		71
	$	1,000	$	1,129

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Shareholders equity

9 Months Ended

Nov. 30, 2012

Equity [Abstract]

Shareholders equity

The Company is authorized to issue up to 440,000,000 shares of $0.001 par value common stock and 10,000,000 shares of $0.001 par value preferred stock. The Preferred Stock may be issued in one or more series, with all rights and preferences being determined by the board of directors.

Preferred Stock

The voting rights, rate of dividends preference in relation to other classes or series, and rights in the event of liquidation related to shares of Preferred Stock of any series are determined by the board of directors and may vary from time to time.

Common Stock

Holders of common stock have voting rights equal to one vote for each share of Common Stock held and are entitled to receive dividends when, and if declared by the board of directors subject to the rights of any Preferred Stock having preference as to dividends. In the event of liquidation or dissolution, subject to the rights of Preferred Stock Holders’ are entitled to share ratably in the Corporations assets. Holders of Common Stock do not have conversion, redemption or preemptive rights.

Recapitalization

Effective December 14, 2012, the Company issued a stock dividend equal to a 5-for-1 forward stock split. All share issuances have been retroactively restated.

As of November 30, 2012 and 2011, there were no warrants or options granted or outstanding.

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Commitments and contingencies

9 Months Ended

Nov. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Lease agreements

In April 2011, the Company entered into a month to month sub-lease agreement for office and warehouse space commencing April 1, 2011. Pursuant to the terms of the agreement, the monthly lease amount is $7,000. In August 2011, the Company amended their agreement to acquire additional square footage for conference and office space for an additional $1,000 per month. In addition, from time to time the Company utilizes various storage facilities as needed.

During the nine-months ended November 30, 2012, the Company re-negotiated the amount of square footage necessary for its current operations resulting in and elimination of its warehouse and a significant portion of office space whereby reducing its monthly expense from $8,000 to $1,500. As of November 30, 2012, the Company has recorded rent expense of $29,216.

Proposed Settlement of accounts payable

Subsequent to the period ended November 30, 2012, the Company has been negotiating a settlement in re-payment terms with two of its vendors. Pursuant to the proposed settlement agreements, the vendor will agree to forgive some of the outstanding balance in exchange for re-payment terms involving periodic payments based on a percentage of money received during equity raises and generated from sales revenues.

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Fair value measurement

9 Months Ended

Nov. 30, 2012

Fair Value Disclosures [Abstract]

Fair value measurement

The Company’s financial instruments consist principally of notes payable, convertible debentures and a derivative liability. Notes payable and convertible debentures are financial liabilities with carrying values that approximate fair value. The Company determines the fair value of notes payable and convertible debentures based on the effective yields of similar obligations. The Company determines the fair value of its derivative liability based upon the trading prices of its common stock on the date of commitment and when applicable, on the last day of each reporting period. The Company uses the Black-Scholes Option Model in valuing the fair value of its derivative liability.

The Company adopted ASC Topic 820-10 at the beginning of 2010 to measure the fair value of certain of its financial assets required to be measured on a recurring basis. The adoption of ASC Topic 820-10 did not impact the Company’s financial condition or results of operations. ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

Level I – Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

Level II – Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

The Company’s Level 2 liabilities consist of notes payable, convertible debentures and a derivative liability. The Company determines the fair value of notes payable and convertible debentures based on the effective yields of similar obligations. The Company determines the fair value of its derivative liability based upon the trading prices of its common stock on the date of commitment and when applicable, at each reporting period balance sheet date. The Company uses the Black-Scholes Option Model in valuing the fair value of its derivative liability.

Level III – Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability.

The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of November 30, 2012:

	Level I		Level II		Level III		Fair Value
November 30, 2012
Intellectual property	$	—	$	—	$	10,000	$	10,000
Convertible note		—		—		—		—
	$	—	$	—	$	10,000	$	10,000

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Subsequent events

9 Months Ended

Nov. 30, 2012

Subsequent Events [Abstract]

Subsequent events

Subsequent to the period ended November 30, 2012, the Company received advances from CC Fund totalling approximately $25,000.

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Organization, History and Business (Details Narrative)	9 Months Ended
	Nov. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Date Of Incorporation	Feb. 23, 2010

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Property and equipment - Schedule of Property and Equipment (Details) (USD $)	Nov. 30, 2012	Feb. 29, 2012
Property, Plant and Equipment [Abstract]
Furniture and fixtures	$ 1,200	$ 1,200
Less: accumulated depreciation	200	71
Property and equipment, Net	$ 1,000	$ 1,129

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Condensed Statements of Cash Flows (USD $)	9 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Cash flows from operating activities:
Net (loss)	$ (1,595,583)	$ (870,559)
Adjustments to reconcile net (loss) to net cash used by operating activities:
Depreciation	129	0
Amortization of debt discount	27,157
Gain (loss) on settlement of debt	180,486	105,432
Decrease (increase) in assets:
Accounts receivable	855,524	(771,691)
Inventory	494,076	(607,104)
Prepaid and other assets	37,457	(433,163)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(463,291)	2,795,862
Accrued compensation - related party	10,862
Customer deposits	(3,510)
Net cash (used) by operating activities	(456,693)	(218,778)
Cash flows from financing activities:
Proceeds notes payable		360,000
Proceeds from convertible note payable	23,000
Payments on convertible note payable	(60,000)
Net cash (used) by financing activities	(37,000)	360,000
Net increase (decrease) in cash	(493,693)	578,778
Cash - beginning	493,759	13,598
Cash - ending	66	592,375
Supplemental disclosure of cash flow information:
Cash paid for income taxes
Cash paid for interest
Supplemental non-cash disclosures
Accounts payable converted to short-term note payable	174,271
Accounts payable converted to convertible note payable	$ 488,489

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Property and equipment

9 Months Ended

Nov. 30, 2012

Property, Plant and Equipment [Abstract]

Property and equipment

The following is a summary of property and equipment:

	November 30,		February 29,
	2012		2012
Furniture and fixtures	$	1,200	$	1,200
Less: accumulated depreciation		200		71
	$	1,000	$	1,129

Depreciation for the nine-months ended November 30, 2012 and 2011 was $129 and $0, respectively.

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Property and equipment (Details Narrative) (USD $)	9 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Property, Plant and Equipment [Abstract]
Depreciation	$ 129	$ 0

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Fair value measurement (Tables)

9 Months Ended

Nov. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurement

	Level I		Level II		Level III		Fair Value
November 30, 2012
Intellectual property	$	—	$	—	$	10,000	$	10,000
Convertible note		—		—		—		—
	$	—	$	—	$	10,000	$	10,000