-----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, U/vPqkStXdYlaK1cRY1SwkBZ+J/vA+dyL0NNm6zVve49ipLartS+4Dyqg2XdMQot TR3ckafQm5OmuV35u7kpDw== 0000950147-02-000298.txt : 20020414 0000950147-02-000298.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950147-02-000298 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020220 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: 02554139 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-8167.txt QUARTERLY REPORT FOR THE QTR ENDED 12/31/2001 ================================================================================ 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 December 31, 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 32,931,919 shares of common stock, par value $.01, as of December 31, 2001. Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] ================================================================================ SOLPOWER CORPORATION INDEX TO FORM 10-QSB FILING FOR THE QUARTER ENDED DECEMBER 31, 2001 TABLE OF CONTENTS PART I FINANCIAL INFORMATION Page ---- Item 1. Financial Statements............................................... 2 Consolidated Balance Sheets December 31, 2001 (Unaudited) and March 31, 2001................. 2 Consolidated Statements of Operations For the Three and Nine Months Ended December 31, 2001 (Unaudited) and 2000 (Unaudited)............................................. 3 Consolidated Statements of Cash Flows For the Nine Months Ended December 31, 2001 (Unaudited) and 2000 (Unaudited)............................................. 4 Statement of Stockholders' Equity For the Nine Months Ended December 31, 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 SIGNATURES PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SOLPOWER CORPORATION CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2001 (UNAUDITED) AND MARCH 31, 2001 ASSETS
December 31, 2001 March 31, (Unaudited) 2001 ------------ ------------ Current Assets: Cash and cash equivalents $ -- $ 14,259 Accounts receivables 137,646 375,640 Accounts receivable - affiliate 18,669 -- Tax credit receivable 8,690 23,108 Prepaid expenses 39,604 33,341 Inventory 390,244 538,253 ------------ ------------ Total Current Assets 594,853 984,601 ------------ ------------ Property and equipment, net 367,166 559,538 ------------ ------------ Other Assets: Marketing licenses, net 1,680,000 2,098,333 Formula and customer list, net 12,499 10,833 Deferred income tax asset 81,202 54,838 Goodwill, net 266,152 320,593 ------------ ------------ Total Other Assets 2,039,853 2,484,597 ------------ ------------ $ 3,001,872 $ 4,028,736 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Bank overdraft $ 14,328 $ -- Bank revolving line 6,039 216,917 Current portion long-term debt 25,116 42,264 Short-term notes payable 110,000 -- Accounts payable - trade 697,296 649,430 - related party 114,592 95,461 Accrued expenses 203,825 289,562 Customer deposits payable 179,383 63,336 ------------ ------------ Total Current Liabilities 1,350,579 1,356,970 ------------ ------------ Long-Term Liabilities: Long-term debt, net of current portion 696,115 694,447 Loans payable to related parties 400,000 403,379 ------------ ------------ Total Long-Term Liabilities 1,096,115 1,097,826 ------------ ------------ Total Liabilities 2,446,694 2,454,796 ------------ ------------ Minority Interest in Subsidiary 55,011 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 32,931,919 shares and 31,255,064, respectively 329,320 312,551 Common stock subscribed -- 256,000 Additional paid-in capital 10,573,689 10,120,179 Accumulated deficit (10,401,748) (9,182,640) Foreign currency translation adjustment (1,094) (6,157) ------------ ------------ Total Stockholders' Equity 500,167 1,499,933 ------------ ------------ $ 3,001,872 $ 4,028,736 ============ ============
SEE THE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS 2 SOLPOWER CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2001 (UNAUDITED) AND 2000 (UNAUDITED)
Three Months Ended Nine Months Ended December 31, December 31, ---------------------------- ---------------------------- 2001 2000 2001 2000 ------------ ------------ ------------ ------------ Revenues: Sales - fuel additive $ 62,827 $ 56,431 $ 451,684 $255,8637 Sales - refrigerant & cylinders 260,066 369,195 1,626,228 482,845 ------------ ------------ ------------ ------------ Total Revenues 322,893 425,626 2,077,912 738,708 ------------ ------------ ------------ ------------ Cost of Sales: Fuel additive 105,828 71,152 412,617 240,874 Refrigerant & cylinders 174,884 257,945 1,299,866 333,350 ------------ ------------ ------------ ------------ 280,712 329,097 1,712,483 574,224 ------------ ------------ ------------ ------------ Gross Profit 42,181 96,529 365,429 164,484 ------------ ------------ ------------ ------------ Expenses: General and administrative 458,427 582,686 1,474,268 1,460,794 ------------ ------------ ------------ ------------ Operating Loss (416,246) (486,157) (1,108,839) (1,296,310) ------------ ------------ ------------ ------------ Other Income (Expense): Interest income 4 2,329 10 2,686 Interest expense (21,791) (20,635) (156,534) (124,478) Foreign currency transaction gain -- 119 -- 15,446 Settlement cost -- -- -- (60,000) ------------ ------------ ------------ ------------ Total Other Income (Expense) (21,787) (18,187) (156,524) (166,346) ------------ ------------ ------------ ------------ Net Loss Before Provision for Income Taxes and Minority Interest (438,033) (504,344) (1,265,363) (1,462,656) Income Taxes 13,391 -- 27,530 -- Extraordinary Item - Relief of Debt - Related Party 81,595 81,595 Minority Interest 10,717 7,730 18,725 8,079 ------------ ------------ ------------ ------------ Net Loss $ (413,925) $ (415,019) $ (1,219,108) $ (1,372,982) ============ ============ ============ ============ Basic Loss Per Share $ (0.01) $ (0.01) $ (0.04) $ (0.05) ============ ============ ============ ============ Weighted Average Number of Shares Outstanding 32,931,919 28,418,388 32,212,028 27,505,159 ============ ============ ============ ============
SEE THE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS 3 SOLPOWER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2001 (UNAUDITED) AND 2000 (UNAUDITED)
Nine Months Ended December 31, ------------------------------ 2001 2000 ----------- ----------- Cash Flows From Operating Activities: Net Loss $(1,219,108) $(1,372,982) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation and amortization 692,299 419,767 Non-cash transactions 102,250 243,783 Minority interest (18,725) (8,079) Changes in operating assets and liabilities: Accounts receivable - trade 237,995 56,795 - affiliated party (17,212) -- Tax credit receivable 14,418 205 Prepaid expenses (6,263) (3,623) Inventory 148,009 23,244 Bank overdraft 14,328 81,916 Accounts payable - trade 47,865 (38,196) - related parties 19,131 (51,947) Accrued expenses (85,737) (37,580) Customer deposits payable 116,047 (28,810) Deferred income tax asset (26,364) (163) ----------- ----------- Net Cash Provided (Used) by Operating Activities 18,933 (715,670) ----------- ----------- Cash Flows from Investing Activities: Capital Expenditures (21,131) (116,696) Cash acquired with acquisition -- 72,819 Investment in subsidiary -- (508,350) ----------- ----------- Net Cash Used by Investing Activities: (21,131) (552,227) ----------- ----------- Cash Flows from Financing Activities: Advances from related parties -- 1,325,092 Decrease in revolving line of credit (210,878) -- Proceeds from sale of common stock 113,500 -- Proceeds from short-term debt 110,000 -- Payments on long-term debt (19,847) (17,094) Payments to related parties (4,836) (40,145) ----------- ----------- Net Cash Provided (Used) by Financing Activities (12,061) 1,267,853 ----------- ----------- Decrease in Cash and Cash Equivalents (14,259) (44) Cash and Cash Equivalents, Beginning of Period 14,259 34,299 ----------- ----------- Cash and Cash Equivalents, End of Period $ -- $ 34,255 =========== ===========
SEE THE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS 4 SOLPOWER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2001 (UNAUDITED) AND 2000 (UNAUDITED) (CONTINUED)
Supplemental Information: 2001 2000 - ------------------------- -------- -------- Cash Paid For: Interest $ 50,439 $ 4,474 Income taxes $ 2,191 $ -- Non-cash Investing and Financing: Issuance of common shares for settlement costs $ -- $ 75,350 Issuance of common shares for conversion of debt $ 4,839 $995,638 Issuance of common shares for equipment $ -- $ 35,000 Issuance of warrants pursuant to debt agreements $ 84,250 $ 80,000 Amortized discounted loan interest $ 9,701 $ -- Issuance of common shares pursuant to stock grant $ 6,650 $ -- Issuance of shares for acquisition of customer list and formula $ -- $ 19,818 Issuance of common stock pursuant to employment agreements $ -- $ 88,433 Issuance of common for formula $ 5,040 $ -- Change in cumulative translation account $ (3,190) $ --
SEE THE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS 5 SOLPOWER CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, 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 Conversion of debt to equity 19,355 194 4,645 4,893 Common stock subscribed 197,750 197,750 Issuance of common stock subscribed 1,567,500 15,675 438,075 (453,750) -- Common stock issued for purchase of formula 40,000 400 4,640 5,040 Common stock issued for services 50,000 500 6,150 6,650 Change in cumulative translation account 5,063 5,063 Loss, period ended December 31, 2001 -- -- -- -- (1,219,108) -- (1,219,108) ---------- --------- ------------ --------- ------------ -------- ----------- Balance, December 31, 2001 (unaudited) 32,931,919 $ 329,320 $ 10,573,689 $ -- $(10,401,748) $ (1,094) $ 500,167 ========== ========= ============ ========= ============ ======== ===========
SEE THE ACCOMPANYING NOTES TO THESE FINANCIAL STATEMENTS 6 SOLPOWER CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDING DECEMBER 31, 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 nine-month period ended December 31, 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 consolidated 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 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 the 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. NOTE 3 - GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern. However, the Company has sustained significant losses from operations and has a working capital deficit of approximately $756,000 as of December 31, 2001. The above conditions indicate that the Company may be unable to continue in existence. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. 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 NINE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO NINE MONTHS ENDED DECEMBER 31, 2000 Revenues for the nine months ended December 31, 2001 were $2,077,912 as compared to $738,708 for the nine months ended December 31, 2000, or an increase of $1,339,204. The increase resulted from increased fuel additive sales primarily in new markets amounting to approximately $195,821 and increased sales of our subsidiary's refrigerant sales amounting to approximately $1,143,383. Revenues from refrigerant sales for the nine months ended December 31, 2000 include revenues from August 2000, the date of acquisition. Cost of sales as a percentage of revenues increased from 77.7% for the nine months ended December 31, 2000 to 82.4% for the nine months ended December 31, 2001. The cost of sales of the refrigerant & cylinders increased as a percentage of refrigerant & cylinder sales from 69.0% for the nine months ended December 31, 2000 to 79.9% for the nine months ended December 31, 2001. This increase is primarily attributable to increased costs of cylinder sales. The cost of sales of the fuel additive decreased as a percentage of sales to 91.4% for the nine months ended December 31, 2001 from 94.1% for the nine months ended December 31,2000. Fixed costs comprised of labor, rent and amortization and depreciation were included in fuel additive costs of sales. These costs were $255,836 for the nine months ended December 31, 2001 or 62.0% of the total of fuel additive costs of sales as compared to $148,609 or 61.7% of the total of fuel additive costs of sales for the nine months ended December 31, 2000. General and administrative costs were $1,474,268 for the nine months ended December 31, 2001 compared to $1,460,794 for the nine months ended December 31, 2000. The increase of $13,474 or 0.9% includes our subsidiary's administrative costs of $380,414 and an increase in amortization of intangibles of $123,375 for the nine months ended December 31, 2001. The subsidiary's administrative costs were only present for four months in the period ended December 31, 2000 and with the increase in amortization of the intangibles in the current period, the cost savings that management has implemented are not fully reflected. Interest expense increased from $124,478 for the nine months ended December 31, 2000 to $156,534 for the nine months ended December 31, 2001. The increase is comprised of an $84,250 non-cash charge related to our stock placements. We experienced a net loss of $1,219,108 for the nine months ended December 31, 2001 as compared with a net loss of $1,372,982 for the nine months ended December 31, 2000. The 11% decrease was due to increased sales and a reduction in administrative expenses as a percentage of sales and other administrative cost efficiencies. The nine-month period ending December 31, 2000, only included four months related to our subsidiary. 8 THREE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2000 Revenues for the three months ended December 31, 2001 were $322,893 as compared to $425,626 for the three months ended December 31, 2000. The decrease of revenues amounting to $102,733 resulted mainly from a decreased in our subsidiary's refrigerant revenues of $109,129. For the three months ending December 31, 2001, a decrease in revenues in both product lines occurred after the September 11, 2001 terrorist attacks. Cost of sales as a percentage of revenues increased from 77.3% for the three months ended December 31, 2000 to 86.9% for the three months ended December 31, 2001. The cost of sales of the refrigerant & cylinders decreased as a percentage of refrigerant & cylinder sales to 67.3% for the three months ended December 31, 2001 from 69.9% for the three months ended December 31, 2000. The cost of sales of the fuel additive increased as a percentage of sales to 168.4% for the three months ended December 31, 2001 from 126.1% for the three months ended December 31, 2000. This increase is due to decreased sales and the corresponding increased percentage of the fixed costs component of the fuel additive costs of sales. Fixed costs comprised of labor, rent and amortization and depreciation were included in fuel additive costs of sales. These costs were $86,103 for the three months ended December 31, 2001 or 81.4% of the total of fuel additive costs of sales as compared to $48,713 or 68.5% of the total of fuel additive costs of sales for the three months ended December 31, 2000. General and administrative costs were $458,427 for the three months ended December 31, 2001 compared to $582,686 for the three months ended December 31, 2000. The decrease of $124,259, or 21%, is indicative of administrative cost reductions that have been implemented. Interest expense increased $1,156, or 6%, to $21,791 for the three months ended December 31, 2001 as compared to $20,635 for the three months ended December 31, 2000. We experienced a net loss of $413,925 for the three months ended December 31, 2001 as compared with a net loss of $415,019 for the three months ended December 31, 2000. For the three months ended December 31,2000 the Company recognized an extraordinary item of relief of debt from a related party which amounted to $81,595 and reduced the loss for the period. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2001, we had cash and cash equivalents of $0 as compared to $34,255 at December 31, 2000. Cash provided by operations was $18,933 for the nine months ending December 31, 2001, as compared to $715,670 utilized by operations for the comparative prior year period. The decrease of $734,603 of cash utilized in operations was primarily attributable to increased sales, accounts receivable turn, inventory reduction and an increase in depreciation, amortization and other non-cash items. We utilized $21,131 cash in investing activities for the nine months ended December 31, 2001 as compared to $552,227 for the nine months ended December 31, 2000, which includes the Company's $508,350 investment in its subsidiary. Cash flow utilized in financing activities was $12,061 for the nine months ended December 31, 2001 compared to $1,267,853 of cash flow generated from financing activities during the nine months ended December 31, 2000. The cash flow generated for the nine months ended December 31, 2000 was attributable to advances from related parties. As our operations move towards break-even and profitability we anticipate that future liquidity needs for product production and operations will be met through increased product sales and supplemented by equity and debt financings. 9 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 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. 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: February 19, 2002 By /s/ James H. Hirst ------------------------------------- James H. Hirst Chief Executive Officer 10 -----END PRIVACY-ENHANCED MESSAGE-----