-----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, IgDPg/Wtk5uqCSht0NOYThi0RAT72AUt/FHYcTOH2sbkHOaQrRsiTYMfL4YrisvR u4V8ca00EgwJgfgp1pW7KA== 0000950147-01-501501.txt : 20010823 0000950147-01-501501.hdr.sgml : 20010823 ACCESSION NUMBER: 0000950147-01-501501 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010822 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: 1934 Act SEC FILE NUMBER: 000-29780 FILM NUMBER: 1721127 BUSINESS ADDRESS: STREET 1: 7309 EAST STETSON DRIVE STREET 2: STE 102 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 4809476366 MAIL ADDRESS: STREET 1: 7309 EAST STETSON DR STREET 2: STE 102 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 10QSB 1 e-7277.txt QUARTERLY REPORT FOR THE QTR ENDED 06/30/2001 ================================================================================ 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 June 30, 2001 [ ] 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 incorporation or organization) Identification No.) 4247 West Adams Street, Suite 2 Phoenix, Arizona 85009 (Address of principal executive offices) (602) 447-9979 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of each of the issuer's classes of common equity was 31,274,419 shares of common stock, par value $0.01, as of June 30, 2001. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] ================================================================================ SOLPOWER CORPORATION INDEX TO FORM 10-QSB FILING FOR THE QUARTER ENDED JUNE 30, 2001 TABLE OF CONTENTS PART I FINANCIAL INFORMATION Page ---- Item 1. Financial Statements................................................ 2 Consolidated Balance Sheets June 30, 2001 (unaudited) and March 31, 2001...................... 2 Consolidated Statements of Operations For the Three Months Ended June 30, 2001 (unaudited) and 2000 (unaudited).............................................. 3 Consolidated Statements of Cash Flows For the Three Months Ended June 30, 2001 (unaudited) and 2000 (unaudited).............................................. 4 Statement of Stockholders' Equity For the Three Months Ended June 30, 2001 (unaudited).............. 6 Notes to the Financial Statements................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................... 8 PART II OTHER INFORMATION Item 2. Changes in Securities............................................... 10 Item 5. Other Information .................................................. 10 Item 6. Exhibits............................................................ 10 SIGNATURES PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SOLPOWER CORPORATION CONSOLIDATED BALANCE SHEETS JUNE 30, 2001 (UNAUDITED) AND MARCH 31, 2001 ASSETS June 30, March 31, 2001 2001 ----------- ----------- (Unaudited) Current Assets: Cash and cash equivalents $ 13,873 $ 14,259 Accounts receivables 674,722 375,640 Accounts receivable - affiliate 2,692 -- Tax credit receivable 19,038 23,108 Prepaid expenses 5,738 33,341 Inventory 489,329 538,253 ----------- ----------- Total Current Assets 1,205,392 984,601 ----------- ----------- Property and Equipment, net 499,305 559,538 ----------- ----------- Other Assets: Marketing licenses, net 1,953,333 2,098,333 Formula and customer list, net 9,848 10,833 Deferred income tax asset 16,340 54,838 Goodwill, net 302,446 320,593 ----------- ----------- Total Other Assets 2,281,967 2,484,597 ----------- ----------- $ 3,986,664 $ 4,028,736 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Bank revolving line of credit $ 113,179 $ 216,917 Current portion of long-term debt 26,356 42,264 Accounts payable - trade 955,946 649,430 - related party 25,728 95,461 Accrued expenses 267,032 289,562 Customer deposits payable 68,221 63,336 ----------- ----------- Total Current Liabilities 1,456,462 1,356,970 ----------- ----------- Long-Term Liabilities: Loan payable, net of current portion 715,788 694,447 Loans payable to related parties 400,000 403,379 ----------- ----------- Total Long-Term Liabilities 1,115,788 1,097,826 ----------- ----------- Total Liabilities 2,572,250 2,454,796 ----------- ----------- Minority Interest in Subsidiary 110,146 74,007 ----------- ----------- Commitments and Contingencies Stockholders' Equity: Preferred stock; $0.001 par value, 5,000,000 shares authorized; issued and outstanding, none -- -- Common stock; $0.01 par value, 100,000,000 shares authorized; issued and outstanding 31,274,419 shares and 31,255,064, respectively 312,745 312,551 Common stock subscribed 388,500 256,000 Additional Paid in Capital 10,124,824 10,120,179 Accumulated Deficit (9,516,621) (9,182,640) Foreign currency translation adjustment (5,180) (6,157) ----------- ----------- Total Stockholders' Equity 1,304,268 1,499,933 ----------- ----------- $ 3,986,664 $ 4,028,736 =========== =========== 2 SOLPOWER CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2001 (UNAUDITED) AND 2000 (UNAUDITED) Three Months Ended June 30, ------------------------------ Revenues: 2001 2000 ------------ ------------ Sales - fuel additive $ 226,319 $ 121,339 Sales - refrigerant & cylinders 996,915 -- ------------ ------------ Total Revenues 1,223,234 121,339 ------------ ------------ Cost of Sales: Fuel additive 152,436 92,534 Refrigerant & cylinders 756,170 -- ------------ ------------ 908,606 92,534 ------------ ------------ Gross Profit 314,628 28,805 Expenses: General and administrative 484,060 387,754 ------------ ------------ Operating (Loss) (169,432) (358,949) ------------ ------------ Other Income (Expense): Interest income 1 233 Interest expense (91,133) (15,350) Foreign currency transaction gain -- 7,794 Settlement costs -- (60,000) ------------ ------------ Total Other Income (Expense) (91,132)) (67,323) ------------ ------------ Net Loss Before Provision for Income Taxes and Minority Interest (260,564) (426,272) Provision for Income Taxes (40,689) -- Minority Interest (32,728) -- ------------ ------------ Net Loss $ (333,981) $ (426,272) ============ ============ Basic Loss Per Share $ (0.01) $ (0.02) ============ ============ Weighted Average Number of Shares Outstanding 31,255,064 27,322,010 ============ ============ 3 SOLPOWER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2001 (UNAUDITED) AND 2000 (UNAUDITED)
Three Months Ended June 30, --------------------------- 2001 2000 --------- --------- Cash Flows From Operating Activities: Net Loss $(333,981) $(426,272) Adjustments to reconcile net loss to net cash used by Operating activities: Depreciation and amortization 236,010 50,048 Non-cash transactions 67,339 348,908 Minority interest 32,728 -- Changes in operating assets and liabilities: Accounts receivable - trade (299,082) 9,859 Accounts receivable - affiliate (2,692) -- Tax credit receivable 4,070 -- Prepaid expenses 27,603 -- Inventory 48,924 (39,727) Deferred income taxes 38,498 -- Accounts payable - trade 306,516 (59,760) - related parties (69,733) 129,063 Accrued expenses (22,530) (266,964) Customer deposits payable 4,885 -- --------- --------- Net Cash Provided (Used) by Operating Activities 38,555 (254,845) --------- --------- Cash Flows from Investing Activities: Capital Expenditures (3,132) (60,805) --------- --------- Net Cash Used by Investing Activities: (3,132) (60,805) --------- --------- Cash Flows from Financing Activities: Proceeds from debt 5,670 -- Advances from related parties -- 308,000 Decrease in revolving line of credit (103,738) -- Common stock subscribed 70,000 -- Payments on debt (3,577) -- Payments on loans payable to related parties (3,379) (2,941) --------- --------- Net Cash Provided (Used) by Financing Activities (35,024) 305,059 --------- --------- Effect of Exchange Rate Changes on Cash (785) -- --------- --------- Increase (decrease) in Cash and Cash Equivalents (386) (10,591) Cash and Cash Equivalents, Beginning of Period 14,259 34,299 --------- --------- Cash and Cash Equivalents, End of Period $ 13,873 $ 23,708 ========= =========
4 SOLPOWER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 2001 (UNAUDITED) AND 2000 (UNAUDITED) (CONTINUED) Supplemental Information: 2001 2000 - ------------------------- -------- -------- Cash Paid For: Interest $ -- $ 140 Income Taxes $ 2,191 $ -- Non-cash Investing and Financing: Issuance of common stock for conversion of debt $ 4,839 $203,500 Issuance of common stock for settlement costs $ -- $ 75,350 Issuance of common stock for equipment $ -- $ 35,000 Issuance of warrants $ 46,500 $ -- Common stock subscribed for financing costs $ 16,000 $ -- Issuance of common stock pursuant to employment Agreements $ -- $ 70,058 5 SOLPOWER CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED JUNE 30, 2001 (UNAUDITED)
Additional Common Cumulative Common Stock Paid In Stock Accumulated Translation Shares Amount Capital Subscribed Deficit Account Total ---------- -------- ----------- -------- ----------- --------- ---------- Balance, March 31, 2001 31,255,064 $312,551 $10,120,179 $256,000 $(9,182,640) (6,157) $1,499,933 Issuance of common stock for conversion of debt 19,355 194 4,645 -- -- 4,839 Common stock subscriptions received -- -- -- 132,500 -- 132,500 Change in cumulative translation account -- -- -- -- -- 977 977 Loss for the three months ended June 30, 2001 (unaudited) -- -- -- -- (333,981) -- (333,981) ---------- -------- ----------- -------- ----------- --------- ---------- Balance, June 30, 2001 (unaudited) 31,274,419 $312,745 $10,124,824 $388,500 $(9,516,621) $ (5,180) $1,304,268 ========== ======== =========== ======== =========== ========= ==========
6 SOLPOWER CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDING JUNE 30, 2001 NOTE 1 - BASIS OF PREPARATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. These statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended March 31, 2002. The unaudited consolidated financial statements should be read in conjunction with the audited financial statements and footnotes thereto for the year ended March 31, 2001 included in the Company's report on Form 10-KSB. NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS In June 2001 the Financial Accounting Standards Board adopted Opinion No. 141, Business Combinations, and Opinion No. 142, Goodwill and Other Intangibles. The pronouncements provide for the cessation of the pooling method of accounting for business combinations as well as providing that goodwill and other intangible assets that have indefinite useful lives will not be amortized but rather will be tested at least annually for impairment. The Company has yet to determine what effect, if any, the adoption of these financial standards will have on the financial statements. The effective dates for Financial Accounting Standards Nos. 141 and 142 are July 1, 2001 and for fiscal years beginning after December 15, 2001, respectively. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except for historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, but are not limited to, statements regarding future events, our plans and expectations, financial projections and performance and acceptance of our products and services in the marketplace. Our actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Form 10-QSB or incorporated herein by reference. See "FACTORS AFFECTING FUTURE PERFORMANCE" below. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000 Revenues for the three months ended June 30, 2001 were $1,223,234 as compared to revenues of $121,339 for the three months ended June 30, 2000. The increase in revenues resulted from increased fuel additive sales totaling $226,319 for the three months ended June 30, 2001 as compared to $121,339 for the three months ended June 30, 2000 and the addition of our subsidiary's refrigerant sales of $996,915 for the three months ending June 30, 2001. Cost of sales as a percentage of revenues decreased from 76.3% for the three months ended June 30, 2000 to 74.3% for the three months ended June 30, 2001. The decrease in cost of sales as a percentage of revenue is primarily attributable to improved margins on our fuel additive sales. General and administrative costs were $484,060 for the three months ended June 30, 2001 compared to $387,754 for the three months ended June 30, 2000. The increase of $96,306, or 24.8% is not indicative of administrative cost reductions that have been implemented. Administrative costs consisted of $353,698 attributable solely to Solpower operations and $130,362 attributable to our subsidiary. The $353,698 includes increased non-cash intangible amortization of approximately $120,000. These added costs are offset by reductions of approximately $68,000 in consulting fees and approximately $39,000 in investor relation fees in the three months ended June 30,2001 as compared to the three months ended June 30, 2000. Interest expense increased from $15,350 in the three months ended June 30, 2000 to $91,133 for the three months ended June 30, 2001. The approximately $76,000 increase was comprised primarily of a $62,500 non-cash charge related to our stock placements. We experienced a net loss of $333,981 for the three months ended June 30, 2001 as compared to a net loss of $426,272 for the three months ended June 30, 2000. The 21.7% decrease was due to increased sales and gross margin, a reduction of administrative personnel and other administrative cost efficiencies. 8 LIQUIDITY AND CAPITAL RESOURCES At June 30, 2001, we had cash and cash equivalents of $13,873 as compared to $23,708 at June 30, 2000. Cash provided by operations was $38,555 for the three months ending June 30, 2001, as compared to $254,845 utilized in operations for the comparative prior year period. The increase was primarily attributable to increased sales and margins on sales. We utilized $3,132 cash in investing activities for the three months ended June 30, 2001 as compared to $60,805 for the three months ended June 30, 2000. Cash flow used by financing activities of $35,024 for the three months ended June 30, 2001 resulted primarily from a reduction of our subsidiaries line of credit in the amount of $103,738 offset by share subscriptions totaling $70,000. This compares to $305,059 of cash flow generated during the three months ended June 30, 2000 from net advances from related parties. As our operations move toward break-even and profitability we anticipate that future liquidity needs for product production and operations will be met through increased product sales supplemented by equity and debt financings. FACTORS AFFECTING FUTURE PERFORMANCE Except for historical information contained herein, this Form 10-QSB contains express or implied forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend that such forward-looking statements be subject to the safe harbors created thereby. We may make written or oral forward-looking statements from time to time in filings with the SEC, in press releases, quarterly conference calls or otherwise. The words "BELIEVES," "EXPECTS," "ANTICIPATES," "INTENDS," "FORECASTS," "PROJECTS," "PLANS," "ESTIMATES" and similar expressions identify forward-looking statements. Such statements reflect our current views with respect to future events and financial performance or operations and speak only as of the date the statements are made. Forward-looking statements involve risks and uncertainties and readers are cautioned not to place undue reliance on forward-looking statements. Our actual results may differ materially from such statements. Factors that cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Form 10-QSB. Additional factors are also discussed in our most recent Form 10-KSB, including those in the Notes to the Consolidated Financial Statements and in the "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS" and "DESCRIPTION OF BUSINESS - FACTORS AFFECTING FUTURE PERFORMANCE" sections of our which are incorporated herein by reference. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in such forward-looking statements will be realized. The inclusion of such forward-looking information should not be regarded as a representation that the future events, plans or expectations contemplated will be achieved. We undertake no obligation to publicly update, review or revise any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statements are based. Our filings with the SEC, including our Form 10-KSB referenced above, may be accessed at the SEC's Web site, www.sec.gov. 9 PART II OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES During the period ended June 30, 2001, we sold an additional 350,000 units under a private placement offering commenced January 31, 2001. Prior to April 1, 2001, we had sold 1,000,000 units. Each unit consisted of one share of common stock and a warrant to purchase one share of stock at $0.20. Each unit was sold at $0.20. The units were offered in reliance on the exemption from registration provided under Regulation D as promulgated under the Securities Act. ITEM 5. OTHER INFORMATION On March 31, 2001, we agreed to issue 19,355 restricted shares of our common stock to Renshaw Travel Ltd. for cancellation of $4,839 of debt. The shares were issued on August 8, 2001 in reliance on the exemption from registration provided by Section 4(2) of the Securities Act. ITEM 6. EXHIBITS 10.38 Letter Re: Agreement for Conversion of Debt into Shares between Renshaw Travel Ltd and Solpower Corporation dated March 31, 2001. 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: August 21, 2001 By /s/ James H. Hirst ------------------------------------- James H. Hirst Chief Executive Officer 10 EX-10.38 3 ex10-38.txt AGREEMENT FOR CONVERSION OF DEBT Exhibit 10.38 March 31, 2001 Renshaw Travel Ltd. 2175 West 4th Avenue Vancouver, BC V6K 1N7 Dear Sirs: Re: AGREEMENT FOR CONVERSION OF DEBT INTO SHARES OF SOLPOWER CORPORATION (THE "AGREEMENT") Renshaw Travel Ltd., ("Renshaw") is a creditor of Solpower Corporation ("Solpower"). Solpower hereby agrees to issue 19,355 shares of common stock of Solpower (the "Shares") to Renshaw. The Shares will be duly authorized, validly issued, fully paid, non-assessable, and free of preemptive rights, and will be issued to Renshaw at a value of $0.25 per share, in full settlement of a bona fide outstanding debt in the amount of US$4,838.76 (the "Debt"). Renshaw hereby agrees that, upon the (a) issuance of the Shares by Solpower, and (b) delivery of the Shares to Renshaw, free and clear of all liens and encumbrances the Debt will be fully satisfied and extinguished and Renshaw will remise, release and forever discharge Solpower and its directors, officers, employees, administrators, successors and assigns of and from all manner of actions, causes of action, suits, debts, accounts, bonds, covenants, contracts, claims and demands whatsoever which Renshaw has ever had, now has, or which its heirs, executors, administrators or assigns, or any of them, can, shall or may have for or by reason of any cause, matter or thing whatsoever existing up to the present time. Renshaw acknowledges that the issuance of the Shares has not been registered under the Securities & Exchange Act or any state securities law and have not been approved or disapproved by the United States Securities and Exchange Commission ("SEC") or other federal or state regulatory authority. These Shares are issued pursuant to an exemption from registration under the Securities & Exchange Act and are subject to restrictions on resale or transfer. As soon as practicable Solpower, at its sole expense, will use its best efforts to file with the SEC a registration statement on appropriate form registering the Shares for resale (the "Registration"). Solpower shall use its best efforts to cause the registration statement upon which the Shares are registered to become effective and shall keep the registration statement effective and updated for at least two years after the date of this Agreement. Solpower and Renshaw agree that a) they will execute such further assurances and other documents and instruments and do such further and other things as may be necessary to implement and carry out the intent of this Agreement, b) the provisions herein contained constitute the entire agreement between the parties and supersede all previous understandings, communications, representations and agreements, whether written or verbal, between the parties with respect to the subject matter of the Agreement, c) this Agreement shall be governed and construed in accordance with the laws of the State of Arizona, and d) this Agreement shall inure to the benefit of and be binding upon each of the parties and their respective heirs, executors, administrators, successors and assigns. IN WITNESS WHEREOF, the parties hereto have executed these presents effective this 31st day of March, 2001. SIGNED, SEALED & DELIVERED ) By SOLPOWER CORPORATION in the presence ) of: ) Per: /s/ James H. Hirst ) --------------------------------- /s/ Giesle Hirst ) (Signature of Authorized Officer) - ---------------------------------------- ) (Witness) ) 4127 West Adams, Suite 2 ) - ---------------------------------------- ) (Address) ) Phoenix, Arizona 85009 ) - ---------------------------------------- ) (Zip Code) SIGNED, SEALED & DELIVERED By ) RENSHAW TRAVEL LTD. in the presence ) of: ) Per: /s/ Don Renshaw, Jr. ) --------------------------------- /s/ ) (Signature of Authorized Officer) - ---------------------------------------- ) (Witness) ) 2175 West 4th Ave. ) - ---------------------------------------- ) (Address) ) Vancouver, B.C. V6K 1N4 ) - ---------------------------------------- ) (Zip Code) -----END PRIVACY-ENHANCED MESSAGE-----