-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MmV4VBBFMVdl7LGCI8BHptvuZHNErCyuO/EHEsPtXHfKobh34hLV+i976C2TX75i o0v9GRr8Bf8kAYUxwutYVg== 0000950147-98-000970.txt : 19981124 0000950147-98-000970.hdr.sgml : 19981124 ACCESSION NUMBER: 0000950147-98-000970 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOLPOWER CORP CENTRAL INDEX KEY: 0001068618 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 870384678 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-29780 FILM NUMBER: 98757538 BUSINESS ADDRESS: STREET 1: 7309 EAST STETSON DRIVE STREET 2: STE 102 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 6029476366 MAIL ADDRESS: STREET 1: 7309 EAST STETSON DR STREET 2: STE 102 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 10QSB 1 QUARTERLY REPORT FOR THE QTR ENDED 9/30/98 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT For the transition period from _____________ to _______________ Commission File Number 001-14439 SOLPOWER CORPORATION (Exact name of small business issuer as specified in its charter) Nevada 87-0384678 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 7309 East Stetson Drive, Suite 102 Scottsdale, Arizona 85251 (Address of principal executive offices) (602) 947-6366 (Issuer's Telephone Number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X] The number of shares outstanding of each of the issuer's classes of common equity was 23,391,560 shares of common stock, par value $.01, as of September 30, 1998. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] SOLPOWER CORPORATION INDEX TO FORM 10-QSB FILING FOR THE QUARTER ENDED SEPTEMBER 30, 1998 TABLE OF CONTENTS PAGE NUMBER PART I FINANCIAL INFORMATION Item 1. Financial Statements............................................ 3 Balance Sheet September 30, 1998 (unaudited) and March 31, 1998............. 3 Statements of Operations Three Months and Six Months Ended September 30, 1998 (unaudited)............................................. 4 Statement of Cash Flows Six Months Ended September 30, 1998 (unaudited) and 1997 (unaudited)......................................... 5 Notes to the Financial Statements............................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 7 PART II OTHER INFORMATION None.................................................................... 8 SIGNATURES -2- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SOLPOWER CORPORATION BALANCE SHEET Six Months Ended Year Ended September 30, 1998 March 31, 1998 ------------------ -------------- (UNAUDITED) ASSETS Current Assets Cash $ 47,816 $ 183,842 Inventory 91,445 101,906 License Fee Receivable 4,600,987 2,160,000 Stock Subscription Receivable 100,000 600,000 Prepaid Expenses -- 2,917 ---------- ---------- Total Current Assets $4,840,248 $3,048,665 Property and Equipment, Net 238,683 131,942 Other Assets Marketing Rights 90,833 35,833 Security Deposits 14,422 14,422 ---------- ---------- Total Other Assets $ 105,255 $ 50,255 ---------- ---------- Total Assets $5,184,186 $3,630,862 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable $ -- $ 2,432 Capital Lease Obligation, Current Portion 2,459 4,575 Income Taxes Payable $ 892,273 14,914 ---------- ---------- Total Liabilities $ 894,732 $ 21,921 Long Term Liabilities Capital Lease Obligation, Noncurrent Portion $ 5,167 $ 5,167 Advances Payable, Related Party 240,901 39,725 ---------- ---------- Total Long Term Liabilities $ 246,068 $ 44,892 ---------- ---------- Total Liabilities $1,140,800 $ 66,813 ---------- ---------- Commitments and Contingencies Stockholders' Equity Preferred Stock; $0.001 Par Value, 5,000,000 Authorized; Issued and Outstanding, NONE Common Stock; $0.01 Par Value, 30,000,000 Authorized; Issued and Outstanding, 23,391,560 Shares at September 30, 1998 and 17,391,560 Shares at March 31, 1998 $ 233,915 $ 173,916 Additional Paid In Capital $3,410,904 $3,410,904 Less: Subscription Receivable (300,000) (400,000) Accumulated Profits (Deficit) 698,567 (20,771) ---------- ---------- Total Stockholders' Equity $4,043,386 $3,164,049 ---------- ---------- Total Liabilities and Stockholders' Equity $5,184,186 $3,230,862 ========== ========== The Accompanying Notes are an Integral Part of the Financial Statements -3- SOLPOWER CORPORATION STATEMENT OF OPERATIONS (UNAUDITED)
Six Months Ended Three Months Ended September 30, September 30, 1998 1997 1998 1997 ---- ---- ---- ---- Revenues $ 2,445,307 $ -- $ 19,505 $ -- Expenses General and Administrative 849,877 95,838 464,060 36,642 ----------- ----------- ----------- ----------- Operating Income (Loss) 1,595,430 (95,838) (444,555) (36,642) Other Income (Expense) Interest Income 2,189 -- 1,881 -- Interest Expense (925) -- (462) -- ----------- ----------- ----------- ----------- Total Other Income (Expense) 1,264 -- 1,419 -- ----------- ----------- ----------- ----------- Net Income (Loss) Before Provision for Income Taxes 1,596,694 (95,838) (443,136) (36,642) Provision for Income Taxes 877,359 -- -- -- ----------- ----------- ----------- ----------- Net Income (Loss) Available to Common Shareholders $ 719,335 $ (95,838) $ (443,136) $ (36,642) =========== =========== =========== =========== Net Income (Loss) Per Common Share Equivalents $ 0.04 $ (0.01) $ (0.02) $ 0.00 =========== =========== =========== =========== Weighted Number of Common Shares and Common Share Equivalents Outstanding 18,891,560 11,311,560 18,891,560 11,311,560 =========== =========== =========== ===========
The Accompanying Notes are an Integral Part of the Financial Statements -4- SOLPOWER CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended September 30, 1998 1997 ---- ---- Cash Flows From Operating Activities: Net Income (Loss) $ 719,335 $ (95,838) Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: Depreciation and Amortization 18,739 9,154 Other Non-Cash Items -- 529,000 Changes in Assets and Liabilities: (Increase) Decrease in Accounts Receivable 43,225 -- (Increase) Decrease in License Fee Receivable (2,397,761) -- (Increase) Decrease in Inventory 10,461 -- (Increase) Decrease in Prepaid Expenses 2,917 -- (Increase) Decrease in Security Deposits -- (15,260) (Increase) Decrease in Accounts Payable 2,432 -- (Increase) Decrease in Income Taxes Payable 877,359 -- ----------- --------- Total Adjustments (1,533,943) 513,894 ----------- --------- Net Cash Used in Operating Activities (814,608) 418,056 Cash Flows From Investing Activities: Capital Expenditures 120,480 (17,024) ----------- --------- Net Cash Flows Provided By (Used In) Investing Activities 120,480 (17,024) Cash Flows From Financing Activities: Proceeds From Issuance of Common Stock 600,000 -- Capital Lease Obligations (2,116) 15,172 Net Advances (Repayments) from Stockholders 201,178 (413,858) ----------- --------- Net Cash Provided by (Used In) Financing Activities 799,062 (398,686) Increase (Decrease) in Cash and Cash Equivalents (136,026) 2,346 Cash and Cash Equivalents Beginning of Year 183,842 437 ----------- --------- Cash and Cash Equivalents End of Year $ 47,816 $ 2,783 =========== --------- Supplemental Information: Cash Paid For: Interest $ 925 $ -- =========== ========= Income Taxes $ -- $ -- =========== ========= Non-Cash Investing and Financing: Issuance of Common Stock for Marketing Rights (Note 2) $ 60,000 $ -- =========== ========= Issuance of Common Stock in Exchange for Cancellation of a Portion of Advances Payable $ -- $ 520,000 =========== ========= The Accompanying Notes are an Integral Part of the Financial Statements -5- NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - BASIS OF PREPARATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. These statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended September 30, 1998 are not necessarily indicative of the results that may be expected for the year ended March 31, 1999. The unaudited condensed financial statements should be read in conjunction with the financial statements and footnotes thereto for the year ended March 31, 1998 included in the Company's report on Form 10- SB. NOTE 2 - MARKETING RIGHTS On June 17, 1998, the Company issued 6,000,000 shares of common stock at $.01 per share, or $60,000 in exchange for the exclusive North America sales, distribution, marketing and manufacturing rights for SP34E, a direct drop-in replacement refrigerant gas for R-12 and R-134a. The Company also will make royalty payments of $2.25 per kilogram of SP34E sold. -6- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS SIX MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30, 1998 Revenues for the six months ended September 30, 1998 were $2,445,307 as compared to no revenues for the six months ended September 30, 1997. Revenues from the sale of Territory Licenses represented 98.1% of the Company's total revenues with the remainder representing the commencement of sales of the product Soltron(TM) through its corporate territory as well as to its licensees. The increase in revenues resulted primarily from the signing of Territory Licenses during the six months ended September 30, 1998 as compared to the start up stage the Company was in during the six months ended September 30, 1997. On June 30, 1998 the Company had entered into licensing agreements with Houston Mercantile Exchange, Inc. ("HME") which provided for the exclusive use and distribution by HME of the Company's product Soltron(TM) in the South and Mexico Territories. The license fee was $1,800,000 and $600,000, respectively, with a down payment of $180,000 and $60,000 respectively due upon the signing of the agreements. HME signed promissory notes for the amounts outstanding, with the notes bearing interest at one half percent (0.5%) on the unpaid principal balance, with all unpaid principal and interest due on or before June 30, 2000. The licensee is required to pay the Company the greater of the amount payable per a payment schedule in the agreements or the product of $5.50 times the number of liters of concentrate shipped by the Company to the licensee during the immediately preceding calendar month. General and Administrative expenses were $849,877 during the six months ended September 30, 1998 as compared to $95,838 during the six months ended September 30, 1997. The increase in expenses was related to the organization of the corporate offices and business plan; organization and production of licensing agreements and related materials; identification and qualification of territory licensees; permitting and equipping the Phoenix production facility; locating and leasing the Elkhart production facility; financing and investor relations activities; and requisite trademark and product registration. Cash flow of $801,178 was provided from shareholder advances and the placement of the Company's stock as compared to $520,000 for the six months ended September 30, 1997 which resulted from shareholder advances. The Company experienced an after tax profit of $719,335 for the six months ended September 30, 1998 compared to an after tax loss of $95,838 for the six months ended September 30, 1997, at which point in time, the Company was in a start up phase with no revenues or licensees in place. On a weighted average per share basis, earnings were $0.04 per share for the six months ended September 30, 1998 compared to a loss of $0.01 per share for the six months ended September 30, 1997. THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1997 Revenues for the three months ended September 30, 1998 were $19,505 compared to no revenues for the three months ended September 30, 1997. Sales of the Company's product were $19,505 for the quarter ended September 30, 1998 as compared to no sales for the same quarter of 1997, at which point in time the Company was still in its start up phase and had no licensees or product available for sale. Sales of product during the quarter ended September 30, 1998 represented 91.2% of revenue, with no sales having occurred in the quarter ended September 30, 1997. The balance of revenues for the Company consisted of interest income. General and administrative expenses for the quarter ended September 30, 1998 were $464,060 as compared to $95,838 for the quarter ended September 30, 1997 during the start up phase of the Company. The utilization of cash resources continued during the quarter ended September 30, 1998, in the Company's major activity of permitting and equipping the Phoenix production facility; locating and leasing the Elkhart facility; financing and investor relations activities; organization and production of licensing agreements and related materials; and identification and qualification of territory licensees. The net loss for the quarter ended September 30, 1998 was $443,136 or $0.02 per share compared to a loss of $36,642 or $0.00 per share for the quarter ended September 30, 1997 being the start up phase of the Company. During the remainder of the 1999 fiscal year the Company will pursue the identification of potential Territory Licensees for the remaining territories; completion of the Phoenix and Elkhart production facilities and the implementation of appropriate marketing strategies to gain market penetration and acceptance of its products. -7- LIQUIDITY AND CAPITAL RESOURCES The Company anticipates future liquidity needs will continue to be met through equity and debt financings primarily from its major shareholder, Dominion Capital, Pty Ltd., until such time as cash flow from operations are sufficient to meet the Company's capital requirements for product production and operations. PART II. OTHER INFORMATION None. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed by the undersigned, thereunto duly authorized. SOLPOWER CORPORATION (Registrant) Dated: November 23, 1998 By /s/ Leif Schipper --------------------------------- Leif Schipper, Chief Financial Officer and Secretary -8- EX-27 2 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 6-MOS MAR-31-1999 APR-01-1998 SEP-30-1998 1 47,816 0 4,700,987 0 91,445 4,840,248 238,683 0 5,184,186 894,732 0 0 0 233,915 3,310,904 5,184,186 46,460 2,445,307 0 849,877 (1,264) 0 925 1,596,694 877,359 719,335 0 0 0 719,335 0.04 0
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