10QSB 1 filing.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED September 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 0-9336 STANDARD ENERGY CORPORATION (Name of Small Business Issuer as specified in its charter) Utah 87-0338149 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 363 Bearcat Drive Salt Lake City, Utah 84115-2517 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (801) 364-9000 Securities registered pursuant to Section 12(b) of the Exchange Act: None Securities registered pursuant to Section 12(g) of the Exchange Act: $.01 Par Value Common Stock Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1933, as amended (the "Act") 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. Yes X No . Common Stock outstanding at November 12, 2002: 120,851,974 shares of $0.01 par value Common Stock. DOCUMENTS INCORPORATION BY REFERENCE: None FORM 10-QSB Financial Statements and Schedules STANDARD ENERGY CORPORATION For six months Ended September 30, 2002 The following table of contents of financial statements and other information of the registrant and its consolidated subsidiaries are submitted herewith: PART I - FINANCIAL INFORMATION Item Page Independent Accounts Review Report............................ 3 Item 1. Consolidated Balance Sheets - September 30, 2002 and March 31, 2002.............. 4 Consolidated Statements of Operations - For the six months ended September 30, 2002........................... 6 Consolidated Statements of Operations - For the three months ended September 30, 2002........................... 7 Consolidated Statements of Cash Flows - For the six months ended ended September 30, 2002........................... 8 Notes to consolidated financial statements............ 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - General...... 10 Results of Operations................................. 11 Financial Condition................................... 12 Plan of Operation..................................... 14 Inflation............................................. 14 Recent Accounting Pronouncements...................... 14 Government Regulations................................ 14 Management's Conflicts of Interest.................... 15 Transactions with Management and Others............... 15 Research and Development of the Biofuels Technology... 16 Forward Looking Statements............................ 17 Item 3. Controls and Procedures............................... 17 PART II - OTHER INFORMATION Item Item 1. Legal Proceedings..................................... 18 Item 2. Changes in Securities................................. 18 Item 3. Defaults upon Senior Securities....................... 18 Item 4. Submission of Matters to a Vote of Security Holders... 18 Item 5. Other Information..................................... 18 Item 6. Exhibits.............................................. 18 Item 7. Certification of CEO & CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002....................... 19 Signature Page........................................ 20 Exhibit 99 - Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002............................ 21 INDEPENDENT ACCOUNTANTS REVIEW REPORT To the Board of Directors Standard Energy Corporation & Subsidiaries Salt Lake City, Utah We have reviewed the accompanying condensed consolidated balance sheet of Standard Energy Corporation and Subsidiaries as of September 30, 2002 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the three and six months ended September 30, 2002 and 2001. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim consolidated financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note B to the consolidated financial statements, the Company has incurred significant losses, which have resulted in working capital deficits and accumulated deficits, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note B. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. HJ & Associates, LLC Salt Lake City, Utah November 4, 2002 PART I - ITEM 1 STANDARD ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30 March 31 2002 2002 (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $ 749 $ 1,978 TOTAL CURRENT ASSETS 749 1,978 PROPERTY AND EQUIPMENT, net 18,783 3,000 OIL AND GAS LEASEHOLD INTERESTS HELD - - OTHER ASSETS Cash surrender - life insurance 1,673 1,673 Oil and gas leases held for resale 71,653 71,653 Pledged drilling bonds 25,000 25,000 TOTAL OTHER ASSETS 98,326 98,326 TOTAL ASSETS $ 117,858 $ 103,304 The accompanying notes are an integral part of these consolidated financial statements. STANDARD ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30 March 31 2002 2002 (Unaudited) (Audited) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable and accrued expenses $ 84,554 $ 192,511 Deferred lease income 3,524 5,208 Notes payable 123,794 87,350 Notes payable - related parties 319,551 489,350 TOTAL CURRENT LIABILITIES 531,423 774,419 STOCKHOLDERS' EQUITY (DEFICIT) Common Stock, par value $.01 per share: Authorized 200,000,000 shares; issued and outstanding 120,851,974 shares at September 30, 2002 1,208,519 1,058,519 Preferred Stock, par value $.01 per share; Authorized 10,000,000 shares 0 0 Additional paid-in capital 7,629,073 7,479,073 Treasury stock (at cost) ( 83,253) ( 83,253) Retained earnings (deficit) (9,167,904) (9,125,454) TOTAL STOCKHOLDERS EQUITY (DEFICIT) (413,515) (671,115) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 117,858 $ 103,304 The accompanying notes are an integral part of these consolidated financial statements. STANDARD ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Six months Ended September 30 2002 2001 REVENUES Oil and gas information services $ 3,600 $ 3,336 Sales of oil and gas leasehold interests 0 0 Oil production 9,996 20,765 Other income 3,561 3,249 17,157 27,350 COSTS AND EXPENSES Oil and gas information services 1,792 3,818 Oil and gas leasehold interests 252 (5,647) Oil production 0 0 Depreciation, depletion and amortization 2,773 2,000 Interest 32,185 32,240 Project Cost 0 23,377 General and administrative 22,605 46,502 TOTAL COSTS AND EXPENSES 59,607 102,290 NET INCOME (LOSS) $ (42,450) $ (74,940) BASIC LOSS PER SHARE OF COMMON STOCK $ (0.00) $ (0.00) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 120,851,974 105,851,974 The accompanying notes are an integral part of these consolidated financial statements. STANDARD ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three months Ended September 30 2002 2001 REVENUES Oil and gas information services $ 1,950 $ 1,500 Sales of oil and gas leasehold interests 0 0 Oil production 3,676 8,390 Other income 2,999 2,241 8,625 12,131 COSTS AND EXPENSES Oil and gas information services 1,260 2,069 Oil and gas leasehold interests 0 0 Oil production 0 0 Depreciation, depletion and amortization 1,773 1,000 Interest 14,242 16,525 Project Cost 0 0 General and administrative 11,016 23,281 TOTAL COSTS AND EXPENSES 28,291 42,875 NET INCOME (LOSS) $ (19,666) $ (30,744) BASIC LOSS PER SHARE OF COMMON STOCK $ (0.00) $ (0.00) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 120,851,974 105,851,974 The accompanying notes are an integral part of these consolidated financial statements. STANDARD ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months Ended September 30 2002 2001 Cash Flows From Operating Activities Net income (loss) $ (42,450) $ (74,940) Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and depletion 2,773 2,000 Changes in: Operating assets and liabilities 13,913 25,551 Net cash provided by (used in) operating activities (29,132) (47,389) Cash Flow From Investment Activities (Increase) decrease to long-term investments $ 0 $ 0 (Increase) decrease oil & gas leasehold interests 0 0 Net cash provided by (used in) investing activities $ 0 $ 0 Cash Flows From Financing Activities Increase (decrease) in notes payable and notes payable-related party $ 10,015 $ 44,714 Proceeds from line of credit 17,888 0 Net cash provided by (used in) Financing activities $ 27,903 $ 44,714 Net Increase (Decrease) in Cash $ (1,229) $ (2,675) Cash at Beginning of Period 1,978 10,106 Cash at End of Period $ 749 $ 7,431 The accompanying notes are an integral part of these consolidated financial statements. STANDARD ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 (Unaudited) NOTE A - BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed financial statements be read in conjunction with the Company s most recent audited financial statements and notes thereto included in its March 31, 2002 Annual Report on Form 10-KSB. Operating results for the six months ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending March 31, 2003. NOTE B - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. A related party will continue to loan the Company necessary operating expenses. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. PART I - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The Company's primary oil and gas business, the brokerage of leasehold interests, has not materially changed during the period ended September 30, 2002 due to the lack of capital to pursue the purchase of new leases. In light of this lack of capital the Company has been exploring other ways of generating revenues. During the 2003 fiscal period, the Company continues to research and develop ("R&D") its biofuels technologies (the "Biofuels Technology") for the recycle of ordinary municipal solid waste, garbage, trash, paper and plastic material streams ("Municipal Waste") into recycled saleable products and the recovery of cellulosic materials ("Celmat") believed by the Company to be convertible into electric power and ethanol transportation fuel. (See "Research and Development of the Biofuels Technology" below) As a result of its R&D efforts, and after working with its engineering and management contractor, W.J. Scales & Company of Boerne, Texas (the "Scales Group"), management believes that the Company has developed what appears to be a commercial application of the Biofuels Technology for the future recovery of inorganic materials and Celmat from the recycle of Municipal Waste (the "Mayfair Project"). The Mayfair Project would be located in the Northeast U.S. where Municipal Waste landfills and transfer stations charge the highest dump rates ("Tip Fee") in the U.S. for the disposal of Municipal Waste. If operations commence, it is anticipated that the Mayfair Project would utilize the Biofuels Technology in a facility that combines a Municipal Waste recycle plant, an ethanol fuel production plant and an electrical power plant. The facility would separate Municipal Waste into separate inorganic and organic recovery streams. The inorganic stream products would be sold into the existing commercial salvage ("Salvage") market and the organic stream products would be converted into specialty products such as electricity and ethanol transportation fuels. There can be no assurance that the required capital will be available to construct the Mayfair Project and there can be no assurance that the Biofuels Technology will perform on a commercial basis. The Company's future operating results will depend on its ability to obtain adequate financing to construct the Mayfair Project. Expenses incurred for the Mayfair Project are currently being accounted for under line item "Project Cost". Results of Operations The Company realized revenues of approximately $17,000 for the six- month period ended September 30, 2002, compared with approximately $27,000 for the corresponding period ended September 30, 2001. Cash requirements during the period were obtained from a combination of internally generated cash flow from operations, loans, asset sales, and the sale of Rule 144 investment stock to private individuals. There were no revenues from oil and gas leasehold sales for the six- month period ended September 30, 2002, and none for the corresponding period ended September 30, 2001. Leasehold sales were zero, due to the Company's exploration inactivity. Revenues from the sale of the Company's geologic information services were approximately $3,600 for the six-month period ended September 30, 2002, compared with approximately $3,300 for the corresponding period ended September 30, 2001. Recent world crude oil and natural gas price increases may stimulate domestic drilling activity which would, once again, create a need for the Company's geologic information services. Revenue from oil production was approximately $10,000 for the six-month period ended September 30, 2002, compared to approximately $20,500 for the corresponding period ended September 30, 2001. Oil production revenues are down as a result of decreased world crude oil and natural gas prices. The Company incurred expenses related to its oil and gas leasehold sales of approximately $200 for the six-month period ended September 30, 2002, compared to approximately $(5,600) for the comparable period ended September 30, 2001. Expenses associated with the Company's geologic information services were approximately $1,700 for the six-month period ended September 30, 2002, compared to approximately $3,800 for the comparable period ended September 30, 2001. Expenses associated with the Company's oil production and exploration activities were zero for the three-month period ended September 30, 2002, due to the abandonment in fiscal 1998 of the Company's last operated well. There were no costs for the comparable period ended September 30, 2001, due to the Company's exploration inactivity. General and administrative expense for the six- month period ended September 30, 2002 were approximately $22,600, compared to approximately $46,500 for the comparable period ended September 30, 2001. These low figures reflect the Company's basic inactivity in its oil and gas sector. During the previous three year period all of the Company's R&D costs were expensed under line item General and Administrative expense. During the 2001 fiscal period, the Company created a line item for R&D costs to better distinguish expenses between general and administrative expenses and the expenses related to its various biofuels plant projects. These costs are being accounted for under line item "Project Cost" and were zero for the six-month period ended September 30, 2002, compared to approximately $23,000 for the comparable period ended September 30, 2001. The Company's net loss for the 2003 fiscal six-month period ended September 30, 2002 was approximately $42,000, compared to approximately $74,000 for comparable 2002 fiscal period and it expects to operate at a loss for the remainder of the 2003 fiscal period, due to continued R&D costs incurred for the Mayfair Project, and costs related to its oil and gas business. (See "Consolidated Financial Statements") The Company does not expect to realize significant cash flows from the sale of leasehold interests, geologic information services, or oil production and exploration activities during fiscal 2003, nor does it expect significant leasehold sales in the foreseeable future, as the domestic oil industry activity continues unchanged due to uncertain world crude oil and natural gas prices. The Company has available at March 31, 2002, unused tax operating loss carry forward of approximately $2,257,192 that may be applied against future taxable income through 2020. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry forwards will expire unused. Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation account of the same amount. Financial Condition Management continues to explore additional financing alternatives for ongoing and future operations of the Company and has entered into an agreement with the Scales Group for the engineering, management, and construction of the Mayfair Project. There is no assurance that the efforts of management or the Scales Group to locate and secure additional financing will be successful, and the failure to secure the Mayfair Project financing would substantially alter management's assumptions as herein presented. The Company's most significant assets are (1) its oil and gas production income, (2) its oil and gas leaseholds held for resale, approximating 11,000 net acres at September 30, 2002, including leaseholds acquired under its unrelated third-party agreements, and (3) its plan for the full development of the Mayfair Project. Other assets are; (4) the $2,257,192 tax loss carry forward, and (5) 5,252,556 shares of Biomass. In 1994, Biomass ceased to exist as an R&D organization and in March 2000, Biomass was sold as a shell company to an unrelated third-party under a reorganization plan, ending a 12 year R&D effort. Due to the proposed issuance of additional shares of Biomass to the unrelated third-party purchaser, the Company does not expect to hold in excess of 5% of the common stock of Biomass upon completion of the transaction and expects to recover little, if any, of its approximate $4,100,000 investment in Biomass represented by 5,252,556 shares of Biomass common stock. At November 12, 2002, the Biomass shares had little value at a bid price of $0.00 and asked $0.005 on the electronic OTC Pink Sheet market system. With little or no volume on a daily basis, sales of the Biomass shares appear impractical in the foreseeable future. In order to continue in existence the Company is in need of additional financing from outside sources or from internal operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management can give no assurances that it will be successful in its endeavors to resolve its cash flow difficulties or that it will be able to retain and ultimately recover its costs in oil and gas leaseholds held for resale. The financial statements do not include any adjustments relating to the amounts and classification of assets, liabilities, income or expenses that might be necessary should the Company be unable to successfully resolve these uncertainties and continue in existence. The Company foresees a need for additional equity financing in order to continue in existence, and may, in the future, seek to raise additional funds through asset sales, bank and/or other loans, debt, or equity offerings. Any such equity offerings, asset sales, or other financing may either be private or public and may result in substantial dilution to the then existing shareholders of the Company. Because of uncertainties existing in the domestic oil and gas industry and the Mayfair Project, the Company is not in a position to forecast future earnings or cash flow. The Company's future is very fluid and largely dependent on factors outside of its management's control. For the period ended September 30, 2002, Dean W. Rowell, the President of the Company, continues to secure and guarantee loans for the Company: (1) He has guaranteed two credit cards up to $110,000 with an outstanding balance of approximately $105,000 at the end of the period, and (2) he continues to loan the Company funds through his 100% owned privately-held Utah corporation, Trachyte Oil Company ("Trachyte") with an outstanding loan balance of approximately $313,295, plus interest of $6,256 for a total of $319,551 at the period ended September 30, 2002. Expenses incurred under the use of the credit cards are being accounted for under line item "Revolving line of credit" and expenses incurred under the loan agreement are being accounted for under line item "Notes payable - related parties". The Company also has a note payable to GMAC totalling $18,556 at September 30, 2002, resulting from the purchase of a 2002 Saturn automobile that Mr. Rowell will drive. (See "Consolidated Financial Statements" above). Since fiscal 1991, Trachyte has materially supported the Company financially largely due to Mr. Rowell's efforts to secure loans from Trachyte for the Company. The several transactions with Trachyte have provided the financial means for the Company to pursue its R&D of the Biofuels Technology and the commercialization of the Mayfair Project, otherwise the Company would have been unable to pursue these goals. Final plans and final financial arrangements had not been completed for the Mayfair Project at November 12, 2002. Plan of Operation There have been no significant changes in capitalization or financial status during the past two years that are not reflected in the financial statements. The Company's plan of operation during the next twelve (12) months includes the following: 1. Pursue financing for the Mayfair Project. 2. Continue R&D, testing Municipal Waste processing equipment and testing existing and newly developed cellulose enzymes. 3. Continue the design and development of the Mayfair Project into three businesses -- Municipal Waste recycle, ethanol fuel production and electric power generation. 4. Pursue oil and gas lease acquisition with third party investors and investigate the possibility of entering into the wholesale electric power generation business. Inflation Inflation continues to apply moderate upward pressure on the cost of goods and services including those purchased by the Company. Management believes the net effect of inflation on operations has been minimal during the past two years. Recent Accounting Pronouncements There are no recent accounting pronouncements that will have a material impact on the Company's financial statements. Government Regulations The Company's business is subject to extensive federal, state and local regulation. Management believes that the Company operations are in material compliance with applicable laws, but is unable to predict what additional government regulations, if any, affecting the Company's business, may be enacted in the future; how existing or future laws and regulations might be interpreted; or whether the Company will be able to comply with such laws and regulations either in the markets in which it presently conducts business or wishes to commence business. There can be no assurance that either the states or the federal government would not impose additional regulations upon the Company's activities which might adversely affect the Company's business. Management's Conflicts of Interest Material conflicts of interest exist and will continue to exist between the Company, Trachyte, and Mr. Rowell, who is also the President of Trachyte, a privately-held Utah corporation, whose current major activities are the exploration and production of oil and gas resources. The Company's policy is to offer any new oil and gas property purchase first to the Company and then to Trachyte if the Company is unable to accept the financial obligation of any transaction. At November 12, 2002, Mr. Rowell beneficially owned approximately 54% of the common stock of the Company and 100% of the common stock of Trachyte. Mr. Rowell owes a duty of due care and fair dealing to both the Company and Trachyte and the resolution of duties and conflicts in favor of one company over the other may impair his duties to each company. It is likely that any conflict of interest between the Company and Trachyte requiring a determination may have to be settled in favor of the Company to the detriment of Trachyte, as well as to the detriment of the current and future shareholders of Trachyte. Transactions with Management and Others During past fiscal periods Rowell elected to sell stock in the Company, due to limited corporate cash flow to partially compensate Rowell in absence of a salary. Rowell will continue to serve the Company as determined by the Board of Directors without salary or employment agreement. Geologic and other information which PIC has or develops is available to Rowell as an officer of the Company, and he may use such information for the benefit of the Company in determining which leases to buy or sell. Such information is also available to Rowell, without cost, in connection with Rowell's participation in the Leasing Programs. During the 12-year period since fiscal 1991, Trachyte has helped financially support the Company largely due to Rowell's efforts to secure loans from Trachyte for the Company during periodic cash flow difficulties. During such periods, the several transactions with Trachyte have provided the financial means for the Company to pursue commercialization of the Mayfair Project, otherwise the Company would have been unable to pursue this goal. Final plans and final financial arrangements had not been completed for the Mayfair Project as of November 12, 2002. During the period ended September 30, 2002, the Company continued to experience severe cash flow difficulties which have continued into the 2003 fiscal period. Since the Company has been unable to repay any of the loans from Trachyte during the past two fiscal periods, Trachyte has received a demand note from the Company, including interest at 12% per annum, with a principal and interest balance at September 30, 2002 of approximately $499,050. Neither Rowell nor Trachyte received any common stock in exchange for debt forgiveness during the period ended September 30, 2002. On July 31, 2002, Trachyte agreed to accept 15,000,000 newly issued shares of the Company's investment common stock in exchange for $300,000 of partial debt settlement of cash paid to the Company through July 31, 2002 and to accept a replacement note for the balance owed to Trachyte in the amount of $311,395 with interest at 12% per annum dated August 1, 2002. The shares were issued at $0.02 per share, a one-third discount from the closing market bid price on July 31, 2002 of $0.03 per share, because the shares are required to be held at least two years for investment purposes. Research and Development of the Biofuels Technology Essentially, the Company has two principal businesses. They are its traditional oil and gas exploration and production business that has, during the past 20-years, provided in excess of $13,000,000 to conduct the R&D effort to commercialize its second business, the commercial development of its Biofuels Technology, designed to economically solve the critical problem of disposing of Municipal Waste through the 100% recycle of Municipal Waste into useful products saleable at a profit. Management of the Company believes its R&D efforts have produced trade secret and know-how protection which, in the future, should produce valuable patent protection to the Company's technologies from the Company's long experience and work conducted at its former "Research Center" in Utah. Based on its R&D efforts, the Company believes the Mayfair Project would be the first business to economically produce ethanol transportation fuel from low-cost organic cellulosic materials ("Celmat") consisting of mostly paper products easily harvested from Municipal Waste through new generation enviro-friendly manufacturing plants fed by Municipal Waste, which plants would combine recycling, electric power and ethanol fuel production at several regional biofuels plant sites. The Company further believes that its innovative Biofuels Technology would create a profit generating solution for three major contemporary domestic issues. First, it would provide an opportunity to significantly reduce the volume of Municipal Waste that currently must be landfilled or incinerated. Second, it offers a low-cost method of producing ethanol fuel, the only known commercially viable and publicly accepted renewable low- polluting transportation fuel that the Company believes someday will compete in price at the pump with gasoline. Third, it offers a low-cost method of producing electric power from clean burning lignin fuel. The reason for such optimism is the high Tip Fee currently paid by eastern U.S. municipalities to landfills and to incinerators for the disposal of Municipal Waste. On July 15, 1996, the Company formed Biofuels, Inc. ("Biofuels"), a wholly-owned subsidiary, for the purpose of investing in and developing the Biofuels Technology for the Mayfair Project. This effort was centered on management's belief that a Celmat to ethanol technology could be commercialized, based on the Company's extensive experience at its former research center from 1982 through 1992, and its experience in developing the Mayfair Project with the Scales Group through November 12, 2002. Forward Looking Statements The foregoing discussion in "Management's Discussion and Analysis of Financial Condition and Results of Operation" contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Act") and Section 21E of the Act, which reflect Managements current views with respect to the future events and financial performance. The Company cautions that words used in this document such as "experts", "anticipates", "believes" and "may" as well as similar words and expressions identify and refer to statements describing events that may or may not occur in the future, including among other things, statements relating to anticipated growth and increased profitability, as well as to statements relating to the Company's strategic plan, including plans to develop the Mayfair Project and to selectively acquire other companies. These forward-looking statements and the matters to which they refer to are subject to considerable risks and uncertainties that may cause actual results to be materially different from those described in this document, including, but not limited to future financial performance and future events, competitive pricing for services, costs of obtaining capital as well as national, regional and local economic conditions. Actual results could differ materially from those addressed in the forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Form 10-QSB report. PART 1 - ITEM 3 CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. Standard Energy's President and Secretary/Treasurer have evaluated the company's disclosure controls and procedures as of November 6, 2002, and they concluded that these controls and procedures are effective. (b) Changes in Internal Controls. There are no significant changes in internal controls or in other factors that could significantly affect those controls subsequent to November 5, 2002. PART II - OTHER INFORMATION Item 1. Legal Proceedings. On February 4, 2002 a Complaint in Civil Action was filed in the Court of Common Pleas, Philadelphia, Pennsylvania, against the Company and Mayfair Energy Corporation, a wholly-owned subsidiary of the Company, in which the compliant alleges that the Company and its subsidiary are in default of an amount due to Klehr, Harrison, Harvey, Branzburg & Eller, LLP, attorney's at law in the amount of $48,275.98. The Company's Philadelphia counsel, Schafkopf & Burgess, LLC, filed answers to the complaint, whereby the Company and Mayfair demand judgement in their favor and have asked for all counts to be dismissed. At November 12, 2002 this action is still pending. Item 2. Changes in Securities. None. Item 3. Defaults On Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Administrative Action. None. Item 6. Exhibits and Reports on Form 8-K, filed during the quarter ended September 30, 2002. Exhibit "99" - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Item 7. Certification of Chief Executive and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Item 7. CERTIFICATE OF CHIEF EXECUTIVE AND CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Dean W. Rowell, certify that: 1. I have reviewed this quarterly report on Form 10QSB of Standard Energy Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have; a) designed such disclosure controls and procedures to ensure hat 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 quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days of this quarterly report )the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. SIGNATURE 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. STANDARD ENERGY CORPORATION (Registrant) By: /s/Dean W. Rowell Dean W. Rowell, President and Chief Financial Officer Date: November 12, 2002 EXHIBIT "99" CERTIFICATION 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 Standard Energy (the "Company") on Form 10-QSB for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Dean W. Rowell, Chief Executive Officer (Chief Financial Officer) of the Company, certify, pursuant to 18 U.S.C. subsection 1350, as adopted pursuant to subsection 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/Dean W. Rowell Dean W. Rowell Chief Executive Officer (Chief Financial Officer) Date November 12, 2002