UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: DECEMBER 31, 2000
Commission file Number: 0-24989
AMERICAS POWER PARTNERS, INC.
(Exact Name of Registrant as Specified in its Charter)
COLORADO 05-0499526
(State or Other Jurisdiction) (I.R.S. Employer
of Incorporation Identification Number)
710 NORTH YORK ROAD, HINSDALE, IL 60521
(Address of Principal Executive Offices) (Zip code)
(630) 325-9111
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, no par value - 10,017,100 shares as of December 31, 2000.
Transitional Small Business Disclosure Format: YES [X] NO [ ]
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FORWARD LOOKING STATEMENTS
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THIS FORM 10-QSB AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
AMERICAS POWER PARTNERS, INC. (HEREINAFTER REFERRED TO AS "APPI"AND/OR
"COMPANY" AND/OR "REGISTRANT") OR ITS REPRESENTATIVES CONTAIN STATEMENTS
WHICH MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, FIFTEEN U.S.C.A.
SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS
REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF APPI AND MEMBERS OF
ITS MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE
BASED.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN
FORWARD-LOOKING STATEMENTS INCLUDE:SUPPLY/DEMAND FOR PRODUCTS, COMPETITIVE
PRICING PRESSURES, AVAILABILITY OF CAPITAL ON ACCEPTABLE TERMS, CONTINUING
RELATIONSHIPS WITH STRATEGIC PARTNERS, DEPENDENCE ON KEY PERSONNEL, CHANGES
IN INDUSTRY LAWS AND REGULATIONS, COMPETITIVE TECHNOLOGY, AND FAILURE TO
ACHIEVE, COST REDUCTION TARGETS OR COMPLETE CONSTRUCTION PROJECTS ON
SCHEDULE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE
FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF
UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAS POWER PARTNERS, INC.
CONSOLIDATED BALANCE SHEET
December 31, 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 327,602
Accounts receivable 1,305,452
Receivable from related parties - Note D 391,640
Current portion of net investment in leases 259,939
Prepaid expenses and deferred contract costs 357,544
----------
TOTAL CURRENT ASSETS 2,642,177
EQUIPMENT AND FIXTURES
Computer equipment 166,281
Office equipment 83,627
Equipment leased to clients 783,195
Leasehold improvements 7,773
----------
1,040,876
Less accumulated depreciation and amortization (42,243)
----------
TOTAL EQUIPMENT AND FIXTURES 998,633
OTHER ASSETS
Net investment in leases, less current portion 530,174
Deposits 31,682
Deferred contract costs, net of accumulated
amortization of $111,248 134,387
Note receivable from related party - Note D 1,000,000
----------
TOTAL OTHER ASSETS 1,696,243
----------
TOTAL ASSETS $5,337,053
See accompanying Notes to Consolidated Financial Statements.
AMERICAS POWER PARTNERS, INC.
CONSOLIDATED BALANCE SHEET
December 31, 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 419,769
Due to related party in connection with client contracts 437,221
Current maturities of long-term debt 138,315
Deferred compensation - Note D 296,449
TOTAL CURRENT LIABILITIES 1,291,754
LONG-TERM DEBT - net of current maturities
10 1/2 % note payable to bank, due May 2005 - Note B 465,473
Capital leases 51,903
TOTAL LIABILITIES 1,809,130
MINORITY INTEREST 434,304
STOCKHOLDERS' EQUITY - Note D
Preferred Stock, no par value,
10,000,000 shares authorized;
2,725,000 Series A authorized;
2,709,519 shares issued and outstanding 3,952,250
Common Stock, no par value,
40,000,000 shares authorized;
10,017,100 shares issued and outstanding 3,497,200
Retained earnings deficit (4,355,831)
TOTAL STOCKHOLDERS' EQUITY 3,093,619
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,337,053
See accompanying Notes to Consolidated Financial Statements.
AMERICAS POWER PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Six Months
Ended Ended
DECEMBER 31, DECEMBER 31,
2000 1999
Contract revenues $ 334,955 $ -
Cost of client services 193,331 -
Gross profit 141,624 -
Costs and expenses:
Payroll and employee benefits 854,652 173,579
Management and consulting fees - Note D 134,425 390,000
Write-off project contract costs 85,865 -
Other professional fees 144,374 156,477
General and administrative 463,423 225,268
Total expenses 1,682,739 945,324
LOSS FROM OPERATIONS (1,541,115) (945,324)
Interest income (49,047) ( 1,262)
Interest expense 28,250 1,346
Total interest income, net (20,797) ( 84)
LOSS BEFORE MINORITY INTEREST (1,520,318) (945,408)
Minority interest in earnings of limited
liability corporation (46,559) -
NET LOSS ($ 1,566,877) $(945,408)
Net loss per share - basic and diluted ($0.13) ($0.14)
Weighted average number of common
shares outstanding - Note F 12,288,776 6,766,694
See accompanying Notes to Consolidated Financial Statements.
AMERICAS POWER PARTNERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
DECEMBER 31, 2000 DECEMBER 31, 1999
Contract revenues $ 235,777 $ -
Cost of client services 98,537 -
Gross profit 137,240 -
Costs and expenses:
Payroll and employee benefits 570,138 173,579
Management and consulting fees - Note D 28,333 172,007
Write-off project contract costs (18,340) -
Other professional fees 64,477 7,282
General and administrative 290,965 144,157
Total expenses 935,573 497,025
LOSS FROM OPERATIONS (798,333) (497,025)
Interest income (31,206) (265)
Interest expense 20,609 1,346
Total interest income, net (10,597) (1,081)
LOSS BEFORE MINORITY INTEREST (787,736) (498,106)
Minority interest in earnings of limited
liability corporation (43,478) -
NET LOSS ($ 831,214) ($498,106)
Net loss per share - basic and diluted ($0.06) ($.07)
Weighted average number of common
shares outstanding - Note F 13,646,445 6,782,396
See accompanying Notes to Consolidated Financial Statements.
AMERICAS POWER PARTNERS, INC.
STATEMENTS OF CASH FLOWS
Six Months Six Months
Ended Ended
DECEMBER 31, 2000 DECEMBER 31, 1999
Cash Flows from Operating Activities:
Net loss ($1,566,877) ($945,408)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Provision for depreciation and amortization 123,333 527
Common Stock issued for services 37,500 -
Minority interest 46,559 -
Change in accounts receivable (1,013,871) -
Change in prepaid expenses and deposits (48,239) (2,352)
Change in accounts payable (98,501) 16,576
Change in accrued expenses (3,432) 100,000
Change in advances from investors - 250,000
Change in deferred compensation 296,449 -
Total adjustments (660,202) 364,751
Net cash used in operating activities (2,227,079) (580,657)
Cash Flow from Investing Activities:
Purchase of equipment and fixtures (811,052) -
Purchase of equipment underlying lease agreements (488,600) -
Payments from lessees regarding finance lease receivables 79,977 -
Increase in deposits (2,979) (13,710)
Payment of deferred contract costs (279,411) -
Repayments from related parties 156,581 -
Net cash used in investing activities (1,345,484) (13,710)
Cash Flow from Financing Activities:
Payment on capital leases (5,845) -
Payment on note payable to bank (33,244) (1,878)
Minority interest investment in limited liability company 387,745 -
Payments on insurance financing - (6,905)
Proceeds of related party loans - 67,000
Proceeds from issuance of note payable to bank 600,000 -
Proceeds from issuance of Common Stock 2,000,000 376,250
Net cash provided by financing activities 2,948,656 434,467
Net Decrease in Cash (623,907) (159,900)
Cash at beginning of period 951,509 306,658
CASH AT END OF PERIOD $ 327,602 $ 146,758
See accompanying Notes to Consolidated Financial Statements.
AMERICAS POWER PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF THE BUSINESS AND DEVELOPMENT STAGE ACTIVITIES
The Company was in the development stage since its inception on January 27,
1998. There was no financial statement activity between the date of
inception and June 30, 1998, except for the issuance of Common Stock,
resulting in a credit to Common Stock of $100. During the third quarter of
the fiscal year ended June 30, 2000, the Company emerged from its
development stage with the signing of two client contracts, billings under
these contracts and the raising of additional capital through a private
placement Preferred Stock offering.
The Company was formed to develop, optimize, own and operate power plant
systems (steam, electric, compressed air, water, waste water and condensate
return) for industrial, commercial and institutional clients. The Company
has formed strategic alliances with several recognized energy companies in
the areas of power plant optimization, operations and maintenance, fuel
supply and electric power marketing. These strategic relationships bring key
skill sets to the development process, as well as a steady flow of project
opportunities from their established client base. The Company generates
revenue primarily from fees produced from structuring and financing these
energy projects. All of the Company's customers are in the United States.
The Company is prepared to participate in the private energy market through
two distinct avenues, namely, financing upgrades, or purchasing powerhouse
assets and selling utilities back to clients through long-term contracts.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its newly-formed, 50%-owned limited liability corporation, Armstrong-
Americas I, LLC. The limited liability corporation agreement provides that
the Company has management control over the operations of the LLC. All
material intercompany accounts and transactions are eliminated.
USE OF ESTIMATES AND BASIS OF PRESENTATION
The financial statements have been prepared in conformity with generally
accepted accounting principles and, as such, include amounts based on
informed estimates and judgments of management. Changes in such estimates
may affect amounts reported in future periods.
The interim financial information presented in the accompanying financial
statements reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods. Results shown for interim
periods are not necessarily indicative of the results for a full fiscal
year. The interim financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
Form 10-KSB for the fiscal year ended June 30, 2000.
AMERICAS POWER PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Company evaluates the terms of the energy services agreements (ESA) and
operation and maintenance agreements (O&M) which it executes with clients to
determine the applicable accounting treatment on an individual case basis.
To the extent that ESA's provide for fixed minimum payments and terms that
qualify as a capital lease as defined in Statement of Financial Accounting
Standards No. 13, "Accounting for Leases", the net investment in the
contract is recorded on the balance sheet and unearned income is amortized
over the term of the agreement using the interest method. Revenue from
ESA's that qualify as operating leases under SFAS No. 13 is recorded on a
straight-line basis over the term of the contract. O&M revenue also is
recognized on a straight-line basis, which coincides with the monthly
payments to vendors that provide the operations and maintenance service.
The Company grants credit to all of its customers.
PER SHARE OF COMMON STOCK
Primary earnings (loss) per share of Common Stock are computed based on the
weighted average number of shares of Common Stock and common stock
equivalents outstanding during the year. For fiscal 2001 and 2000, the
fully diluted loss per share computation was antidilutive; therefore, the
amount reported for primary and fully diluted loss per share is the same.
NOTE B - NOTE PAYABLE
On August 9, 2000, the Company obtained a loan in the amount of $606,000
from a bank to finance an optimization project. The note is payable in 57
monthly installments of $13,593, including interest at a rate of 10.651% per
annum.
NOTE C - MERGER AND EXCHANGE OF COMMON STOCK
On August 17, 1999, the Company completed a reverse merger with Oak Brook
Capital II, Inc., a fully reporting public "shell" company under the
Securities and Exchange Commission's Securities Act of 1934. Upon
completion of the merger, Oak Brook Capital II, Inc. changed its name to
Americas Power Partners, Inc., and issued 10,000 shares of common stock for
each share of the former Americas Power Partners, Inc. then outstanding.
All shares of the former Americas Power Partners, Inc. were retired.
The merger was accounted for as a pooling of interests. At the time of the
merger, Oak Brook Capital II, Inc. had no assets, had recognized no revenue,
and had incurred expenses of $11,925. All other expenses up to the date of
the combination were incurred by the original Americas Power Partners, Inc.
AMERICAS POWER PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000
NOTE D - RELATED PARTY TRANSACTIONS
On April 24, 1999, the Company entered into a three-year contract with a
management consulting firm owned by two officers and directors of the
Company that provides for payment of various consulting fees. The contract
provided for minimum monthly consulting fees of $15,000 and an annual
expense allowance of $125,000. The agreement also provided for additional
minimum consulting fees totaling $150,000 upon completion of a reverse
merger, such as that described in Note C, plus 550,000 shares of the
Company's Common Stock. Subsequent to June 30, 2000, this contract was
amended and extended, as further described below.
The Company also had independent contractor agreements with three
individuals who are officers and directors of the Company. These agreements
provided for consulting services related to business development and the
day-to-day management of the Company. Each agreement provided for a monthly
payment to the independent contractor of $10,000. Subsequent to June 30,
2000, these contracts were voluntarily cancelled, as further described below.
On October 13, 2000, the board of directors of the Company authorized a
special committee of the board to review prior related party transactions
that occurred during a period when all of the Company's directors also were
consultants or employees of the Company. The special committee reported
the following matters, among others, to the board of directors on November
13, 2000:
1. 2,848,186 options previously granted to purchase Common Stock for one-
cent per share were deemed to be invalid, as the full board of
directors had not approved an option plan or the issuance of the
options. The special committee recommended and the full board agreed
to adopt an omnibus option plan as of November 13, 2000 and to grant
1,140,645 options at the market price of $1.25 per share on that date
to partially substitute for the invalid options. All persons holding
the one-cent options voluntarily agreed to return those options and
acknowledged that they were not valid.
The Company had not previously recorded any expense related to the
granting of the 2,848,186 options and, because they were not validly
issued, the Company will not restate expenses for the respective prior
quarterly periods.
In addition, the board granted 994,101 options on November 13, 2000 at
$1.25 per share to new employees and other parties.
2. 930,000 shares of Common Stock were awarded to related party
consultants and employees subsequent to the Company raising outside
capital, and these shares were not properly approved by the board of
directors. The individuals who received these shares have agreed
AMERICAS POWER PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000
NOTE D - RELATED PARTY TRANSACTIONS (CONTINUED)
to voluntarily return the shares to the treasury. In return, the board
agreed to grant options to purchase 597,000 shares of stock at the
market price on November 13, 2000 of $1.25 per share.
The Company had not previously recorded any expense in connection with
the above shares and, in light of their issuance subsequently being
determined invalid, prior quarterly results will not be restated.
The Company had issued 60,000 shares of Common Stock to vendors in
consideration of services rendered that were previously valued at
$155,000. The committee determined that 25,000 of these shares were
not authorized and these shares have been returned to the treasury.
3. Under the valid contract referred to above, the Company had paid
consulting fees of $505,770 in connection with the raising of equity
in the third quarter of fiscal 2000 and the reverse merger in the
first quarter of fiscal 2000. However, the special committee found
that provisions of a Preferred Stock Purchase Agreement did not allow
the Company to pay fees on that issue, and, accordingly, the Company will
receive a refund of $300,000. The third quarter of fiscal 2000 will be
restated to record this reduction of consulting expense.
4. The board has agreed to renegotiate payments for past services, and
amend and extend for two years the contract with the related party
consulting firm referred to above. In consideration of this, the
consulting firm has agreed to reduce its past consulting fees by
$306,639. The employment contract of another officer/director also
was renegotiated, resulting in a refund to the Company of $93,000. The
December 31, 2000 consolidated balance sheet includes the remaining
receivable of $391,640 from the aforementioned related parties.
On September 13, 2000, the Company signed an executive employment agreement
with an individual that provides that the individual will be employed as the
chief executive officer and will be named as a member and chairman of the
board of directors. Concurrently, the individual acquired 2,400,000 shares
of Common Stock for $2,000,000 cash and a $1,000,000 promissory note. The
note is secured by 1,200,000 of the underlying shares. The agreement also
provides that the employee's first year salary and bonus will be earned and
accrued ratably during the period, but payment will be deferred, with interest
accruing and paid annually, until the earlier of the employee's termination
or tenth anniversary.
AMERICAS POWER PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
December 31, 2000
NOTE E - CUSTOMER CONCENTRATION
On September 1, 2000, the Company signed a contract with a food processing
corporation to purchase certain of its energy generation assets and, in
turn, provide the company's full requirement energy services for the next
sixteen years at estimated annual billings of $4 million, of which an
approximately $400,000 will be recognized as annual revenues. The Company
began recognizing revenue from this contract in the second quarter of fiscal
2001.
NOTE F - RECLASSIFICATION
For comparability, the fiscal 2000 financial statements reflect
reclassifications where applicable to conform to the financial statement
presentation used in fiscal 2001. The weighted average number of common
shares outstanding for fiscal 2000 has been adjusted to reflect the
equivalent number of shares after the effect of the reverse merger referred
to in Note C.
NOTE G - SUBSEQUENT EVENT
On January 24, 2001, the Company entered into an agreement that provided for
the following effective on that date:
* The purchase of 2,899,000 shares of Common Stock from the chief
executive officer and another employee. Concurrently, the chief
executive officer and three other employees resigned effective January
15, 2000.
* The sale to a company formed by the aforementioned group of former
employees of the development rights related to large power projects in
the carbon black and calcined carbon industries.
Accordingly, the deferred contract costs relating to the abovementioned sold
projects and the deferred compensation applicable to the former chief
executive officer are classified as current assets and liabilities on the
December 31, 2000 consolidated balance sheet.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the historical
financial information and the notes thereto included in Item 1 of this
Quarterly Report.
During the period from January 27, 1998 (date of inception) through December
31, 1999, the Company engaged in no significant operations other than
organizational activities, acquisition of capital and preparation for
registration of its securities under the Securities Exchange Act of 1934, as
amended. The Company recorded no revenues during this period.
During the third quarter of fiscal 2000, the Company signed its first two
contracts for the monetization and optimization of steam generation
facilities, and recognized revenue and expenses associated with the
contracts. Three additional contracts were signed in the quarter ended
September 30, 2000, with two of these resulting in revenues and costs
recorded in that quarter. Services provided under the third contract, signed
between the Company's majority controlled limited liability corporation and
a food processing company, began in October 2000 and generated revenues of
approximately $100,000 for the quarter ended December 31, 2000.
During the period of six months ended December 31, 2000, the Company
incurred a net loss of $1,566,877, compared to a net loss of $945,408 for
the corresponding prior year period. For the current three-month period,
the Company recorded a loss of $831,214, compared to a loss of $498,106 for
the 1999 second quarter. In the current fiscal 2001 periods, the Company
recorded the following expenses that were either not present in or changed
over the corresponding amounts recorded during the respective periods of
fiscal 2000.
PAYROLL AND BENEFITS: The Company's first employee was hired and placed on
the payroll in October 1999. As of the end of December 2000, payroll
expense included ten employees. In addition, payroll expense for the
quarter ended December 2000 increased approximately 285,600 over the
previous quarter, principally as a result of a provision for deferred
compensation as required by an agreement signed at the end of the first
fiscal quarter (see Note D of Notes to Consolidated Financial Statements).
MANAGEMENT AND CONSULTING FEES: Management and consulting fees decreased
approximately $255,500 for the six months ended December 31, 2000, compared
to the corresponding period of the prior year, principally as a result of
the renegotiation of a contract with the venture capital/management firm
responsible for orchestrating the August 1999 reverse merger with a
publicly-traded corporate entity and certain other capital formation
activities (see Note D of Notes to Consolidated Financial Statements). A
decrease of approximately $143,700 was realized between the three month
periods ended December 31, 2000 and 1999 for the same reason.
WRITE-OFF PROJECT CONTRACT COSTS: During the period of three months ended
September 30, 2000, management concluded that several client projects were
no longer economically feasible or did not justify further investment of
resources and, accordingly, approximately $104,200 of previously deferred
development costs relating to these projects was written-off. In the
subsequent three month period, the Company received a $20,000 vendor
retainer credit to apply against the aforementioned charge.
OTHER PROFESSIONAL FEES: Professional fees decreased approximately $12,100
during the current six month period compared to the prior year as a result
of the decision in the fourth quarter of the prior fiscal year to internally
perform the Company's legal function, offset by a $60,000 increase in public
relations expense in fiscal 2001. Professional fees increased approximately
$57,000 during the current three month period ended December 31, 2000
compared to the corresponding period of the prior year as a result of the
internal legal function involvement with an increased volume of activity.
GENERAL AND ADMINISTRATIVE: General and administrative expenses in the six
and three month periods ended December 31, 2000 increased approximately 100%
over the corresponding prior year periods with the additional expenditures
relating to increased personnel, rental of office facilities, depreciation
of Company-owned and client-leased equipment, accounting fees associated
with the reporting requirements of a publicly-held company, and the
initiation of marketing programs.
INTEREST INCOME: Interest income increased approximately $45,000 and
$31,000, respectively, in the six and three month periods ended December 31,
2000 over the corresponding prior year periods as a result of the higher
cash balances available from the sale of Common Stock in September 2000, and
the outside investment made in the Company's majority controlled 50%-owned
limited liability company.
INTEREST EXPENSE: Interest expense in the six and three month fiscal 2001
periods increased $27,000 and $19,200, respectively, as a result of a bank
loan entered into early in the current fiscal year and capital leases for
equipment signed subsequent to December 1999.
LIQUIDITY AND CAPITAL RESOURCES
The working capital of the Company at December 31, 2000 was $1,350,423,
compared to $743,482 at June 30, 2000. Cash balances at December 31
decreased $624,000 from the prior year-end principally as a result of
payments made for the first time by the 50%-owned limited liability company
on behalf of a client, for which it was not reimbursed as of the end of the
period. The initiation of billing activity by the aforementioned affiliate
resulted in a $1,230,000 increase in accounts receivable over the prior year
end.
The Company has signed one bank note, in the amount of $606,000, relating to
the financing of a client project. The Company has no line of credit at
December 31, 2000.
Management believes that, in order to attract and finance additional
optimization and monetization projects, significant amounts of new capital
will be needed. In addition, working capital financing will be needed to
facilitate the Company's utility invoice processing service for current and
future clients. The Company intends to secure such additional capital to
sustain its project development plans, which may include acquisition of
client energy facilities, through bank financing or equity markets. The
Company cannot be certain that it will be successful in efforts to raise
such new funds.
On January 24, 2001, the Company entered into an agreement pursuant to which
2,899,000 shares of Common Stock were repurchased from the chief executive
officer and another employee of the Company for $600,000 and the development
rights related to certain large power projects in the carbon black and
calcined carbon industries. The transaction results in a decrease in the
monthly operating expenses of the Company and reduces the number of
outstanding shares of Common Stock. However, the transaction also has
reduced the Company's cash balance available to meet future capital
requirements.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." This statement established standards for reporting
comprehensive income in the financial statements. The Company's adoption of
this new standard in June 2000 did not result in material changes to the
financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement established
standards for the way companies report information about operating segments
and requires that those enterprises report selected information about
operating segments in the financial reports issued to shareholders. The
Company's operations are deemed to be one reportable segment for purposes of
this disclosure.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires companies to recognize
all derivatives as assets and liabilities measured at their fair value. The
accounting for changes in the fair value of a derivative depends on the
intended use of the derivative and whether it qualifies for hedge
accounting. The Company believes adoption of this statement as amended by
SFAS No. 137, which will occur by July 2001, will not have an affect on the
financial statements, as the Company currently does not hold any derivative
instruments.
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
Neither the Registrant nor any of its affiliates are a party, nor is any of
their property subject, to material pending legal proceedings or material
proceedings known to be contemplated by governmental authorities.
ITEM 2. Changes in Securities
During the period of three months ended December 31, 2000, there were no
changes in the Company's outstanding securities.
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
1) Exhibits:
10. Agreement dated January 24, 2001 between Americas Power
Partners, Inc., Thomas R. Casten, the Casten Family
Partnership, Larry Cox, and Private Power LLC,
27.0 Financial Data Schedule
* Reports on Form 8-K:
There were no Form 8-K filings during the three months ended
December 31, 2000.
SIGNATURES
In accordance with 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 hereunto duly authorized.
AMERICAS POWER PARTNERS, INC.
February 14, 2001 /s/ Thomas W. Smith
THOMAS W. SMITH, President
February 14, 2001 /s/ Tom F. Perles
TOM F. PERLES, Chief Accounting Officer