Southern States Sign (SOST) 10-Q 2014 Q3 Quarterly report

U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

o Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period endedSeptember 30, 2014

o For the transition period from ___ to ____.

Commission File Number 333-171842

Southern States Sign Company
(Exact name of small business issuer as specified in its charter)

Nevada
(State or other jurisdiction of
incorporation or organization) 26-3014345
(I.R.S. employer
identification number)

Viale Bruno Buozzi 83, Rome Italy

(Address of principal executive offices)

39.06.80692582
(Issuer’s telephone number)

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.

YesxNoo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesxNoo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filero	Accelerated filero
Non-accelerated filero (Do not check if a smaller reporting company)	Smaller reporting companyx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YesoNox

As of November 10, 2014, there were 40,151,261 shares of the registrant’s common stock outstanding.

PART I FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data

€’000

SOUTHERN STATES SIGN COMPANY
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2014 & DECEMBER 31, 2014

	September 30,			December 31,
	2014 Unaudited			2013 Audited
ASSET
Current Assets:
Cash	€	956		€	728
Net receivables		1,796			1,986
Related parties receivables		19,305			18,804
VAT Tax receivables		1,012			1,324
Other current assets		1,102			1,270
Total current assets		24,171			24,112
Non - Current Assets:
Net properties, plant and equipment (Including Capital Leased properties € 31,226 and € 32,097, respectively)		57,686			58,375
Goodwill		1,541			1,541
Other non-current assets (Including Related Parties non-current receivables € 8,890 as of September 30, 2014 and December 31, 2013)		10,068			10,492
Total non - current assets		69,295			70,408
Total Assets	€	93,466		€	94,520
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank overdrafts	€	1,039		€	963
Current maturities of long term loans and capital leases		11,687			10,915
Trade payables		8,151			7,207
Related parties payables		6,178			6,609
Others current liabilities		3,365			2,652
Total current  Liabilities		30,420			28,346
Non - current liabilities:
Long term loans and capital leases		35,942			36,581
Shareholder's loans		2,428			2,361
Other non-current liabilities		3,292			4,612
Total non - current  Liabilities		41,662			43,554
Stockholders' Equity
Common stocks		27			27
Additional Paid in Capital		26,059			26,059
Retained earnings/(Accumulated loss)		(4,702	)		(3,466	)
Equity attributable to owners of Southern States Sign Company		21,384			22,620
Non-Controlling interests in the consolidated subsidiaries
Total Stockholders' Equity		21,384			22,620
Total Liabilities and Stockholders' Equity	€	93,466		€	94,520

SOUTHERN STATES SIGN COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014and 2013

€’000, except per share amounts	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
	Unaudited			Unaudited			Unaudited			Unaudited
Revenue from operations	€	2,238		€	648		€	6,822		€	1,807
Direct operating and selling, general and administrative costs
Direct operating costs		1,006			(175	)		3,937			40
Selling, general and administrative costs		668			127			1,276			1,081
Amortization and depreciation		555			552			1,707			1,679
Total direct operating, selling, and administrative costs		2,229			504			6,920			2,800
Operating Profit/(Loss)		9			144			(98	)		(993	)
Interest income		208			476			466			523
Interest expenses		550			495			1,590			1,583
Profit/(Loss) from continuing operations, before income taxes		(333	)		125			(1,222	)		(2,053	)
Income taxes
Profit/(Loss) from continuing operations, net of income taxes		(333	)		125			(1,222	)		(2,053	)
Net loss from operations of discontinued operations, after taxes					(54	)					(161	)
Net income/(loss) on disposal of discontinued operations, after taxes											(32	)
Net profit/(loss) from discontinued operations					(54	)					(193	)
Consolidated net profit/(loss) for the period		(333	)		71			(1,222	)		(2,246	)
Less net loss attributable to non-controlling interests in the consolidated subsidiaries					7						100
Net profit/(loss) attributable to owners of Southern States Sign Company	€	(333	)	€	78		€	(1,222	)	€	(2,146	)
Profit/(Loss) per share of Common Stock
Loss from continuing operations	€	(0.01	)	€	(0.00	)	€	(0.03	)	€	(0.06	)
Profit/(loss) from discontinued operations	€	(0.00	)	€	(0.00	)	€	(0.00	)	€	(0.00	)
Net profit/(loss)	€	(0.01	)	€	(0.00	)	€	(0.03	)	€	(0.06	)
Weighted-average shares outstanding:
Common Stock
Basic and diluted		40,151,261			40,151,261			40,151,261			40,151,261

SOUTHERN STATES SIGN COMPANY

STATEMENT OF COMPREHENSIVE INCOME/(LOSS)

€’000	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013		Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
	Unaudited			Unaudited		Unaudited			Unaudited
Net profit/(loss) for the  period	€	(333	)	€	78	€	(1,222	)	€	(2,146	)
Other comprehensive income
Foreign currency Translation differences		(14	)		5		(14	)		5
Total comprehensive income for the period	€	(347	)	€	83	€	(1,236	)	€	(2,141	)

SOUTHERN STATES SIGN COMPANY

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

€’000

										Equity
										attributable
										to non-
	Common Stock				Additional		Retained			controlling			TOTAL
	Shares		Amount		Paid In Capital		earnings			interests			EQUITY
Balance at December 31, 2012		40,151,261	€	27	€	26,059	€	7,359		€	860		€	34,305
Net profit/(loss) for the year		-		-		-		(11,674	)					(11,674	)
Change in percentage of controlling interests								832			(860	)		(28	)
Foreign currency translation		-		-		-		17			-			17
Balance at December 31, 2013		40,151,261	€	27	€	26,059	€	(3,466	)	€	-		€	22,620
Net profit/(loss) for the year		-		-		-		(1,236	)					(1,236	)
Balance at September 30, 2014		40,151,261	€	27	€	26,059	€	(4,702	)	€	-		€	21,384

€’000

SOUTHERN STATES SIGN COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine months ended September 30, 2014			Nine months ended September 30, 2013
	Unaudited			Unaudited
Cash Flows from Operating Activities:
Net Income/(loss)	€	(1,222	)	€	(2,246	)
Net (income)/loss from operations on discontinued operations		-			161
Net (gain)/loss from discontinued operations		-			32
Net Income/(loss) from continuing operations		(1,222	)		(2,053	)
Depreciation and amortization of non-current assets		1,707			1,678
Other non-cash adjustments		555			434
Cash flows from operations before changes in assets and liabilities		1,040			59
Changes in assets and liabilities:
Change in trade receivables		192			(33	)
Change in related parties receivables		(1,415	)		(1,512	)
Change in other receivables		-			(1	)
Change in advance payment on purchase and other current assets		(4	)		6
Change in other assets		84			64
Change in trade payables		1,806			2,158
Change in related parties payables		(517	)		1,136
Change in other payables		(55	)		(415	)
Change in tax receivable and payable		1,165			527
Change in other liabilities		(1,459	)		5
Net cash provided by/(used in) operating activities of discontinued operations		-			(161	)
Net cash provided by/(used in) Operating Activities (A)		837			1,833
Cash Flows from Investing Activities:
Purchases of intangible assets		143			(159	)
Sale/Purchases of properties, plant and equipment		(1,018	)		(4,953	)
Purchases of/proceeds from sale of associates and other company		(9	)		9
Net cash provided by/(used in) investing activities (B)		(884	)		(5,103	)
Cash Flows from Financing Activities:
Net reimbursements/borrowings from bank overdrafts		76			(2,012	)
Net proceeds from/repayment of issuance of long-term debt		133			2,999
Net proceeds from/repayment of issuance of shareholders loan		66			1,930
Net cash provided by Financing Activities (C )		275			2,917
Net Increase/(decrease) in Cash and Cash Equivalents (A+B+C)		228			(353	)
Cash and cash equivalents at beginning of the year		728			441
Cash and cash equivalents at end of the year	€	956		€	88

SOUTHERN STATES SIGN COMPANY

Notes to audited Consolidated Financial Statements
For the Nine months ended September 30, 2014 and 2013
(Euros, amounts in thousands, unless otherwise indicated)

NOTE 1. ORGANIZATION

Southern States sign Company (“SOST”) is a corporation incorporated in the state of Nevada. SOST operates through its wholly owned subsidiary, Conte Rosso & Partners S.r.l. (“CR&P,” and together with SOST, the “Company”), which is a company incorporated in Italy. Operations are carried out through its subsidiary, CR&P, and mainly consist of investment in the hospitality industry.

On November 1, 2012, the Company entered into the Exchange Agreement with CR&P, pursuant to which the CR&P Shareholders transferred all of the issued and outstanding capital stock of CR&P to the Company in exchange for 21,250,000 newly issued shares of our common stock, resulting in CR&P becoming a wholly owned subsidiary of the Company. For information regarding the Exchange Agreement, see Item 1. – “Business” of this annual report. The transaction was accounted for as a reverse acquisition into a publicly traded shell corporation, and accordingly, no goodwill was recorded. As a result of the reverse acquisition, the historical financial statements of Southern State Sign Company for the periods prior to the date of the transaction are not presented.

As of September30, 2014 the consolidated operating subsidiaries are the following (those entities which are indented represent subsidiaries of the entity under which they are indented):

Subsidiaries

Name of Company	% Ownership		Location	Principal activity
Southern States Sign Company
A.    Conte Rosso & Partners S.r.l.		100.00	Italy	Hospitality Business
1.    Aral Immobiliare S.r.l.		100.00	Italy	Hospitality business
2.    C.R.&P. Service S.c.a.r.l.		100.00	Italy	Group’s Exclusive financial services
3.    Galzignano Terme Golf & Resort S.p.A..		100.00	Italy	Hospitality business
4.    Masseria Santo Scalone Hotel & Resort S.r.l.		100.00	Italy	Hospitality business
5.    Primesint S.r.l.		100.00	Italy	Investment Company
6.    IBH Management Company S.r.l.		100.00	Italy	Hospitality business
7.    IBH Ripa S.r.l		100.00	Italy	Hospitality business
8.    GHG Resorts S.r.l.		100.00	Italy	Hospitality business

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

All majority-owned subsidiaries in which CR&P has both voting share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Subsidiaries over which control is achieved through other means, such as stockholder agreements, are also consolidated even if less than 51% of voting capital is held. The equity attributable to non-controlling interests in subsidiaries is shown separately in the consolidated financial statements.

Basis of presentation

The consolidated financial statements for the nine months ended September30, 2014, unaudited, and for the fiscal year ended December 31, 2013, audited, are prepared in accordance with generally accepted accounting principles generally accepted in the United States of America (“US GAAP”).

The consolidated financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.

The Euro is the functional currency of all companies included in these consolidated financial statements.

The amounts presented have been rounded to the nearest thousand.

Fair value

We disclose the fair value of our financial assets and liabilities based on observable market information where available, or on market participant assumptions. These assumptions which are subjective in nature involve matters of judgment, and, therefore, fair values cannot always be determined with precision. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). “US GAAP” establishes a valuation hierarchy for prioritizing the inputs and the hierarchy places greater emphasis on the use of observable market inputs and less emphasis on unobservable inputs. When determining fair value, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the hierarchy are as follows:

Level One — Fair values based on unadjusted quoted prices in active markets for identical assets and liabilities;

Level Two — Fair values based on quoted market prices for similar assets and liabilities in active markets, quoted prices in inactive markets for identical assets and liabilities, and inputs other than quoted market prices that are observable for the asset r liability;

Level Three—Fair values based on inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. Valuation techniques could include the use of discounted cash flow models and similar techniques.

We utilize the market approach and income approach for valuing our financial instruments. The market approach utilizes prices and information generated by market transactions involving identical or similar assets and liabilities and the income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). For instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy.

The carrying values of cash equivalents, accounts receivable, financing receivable – current, accounts payable and current maturities of long-term debt approximate fair value due to the short-term nature of these items and their close proximity to maturity.

Acquisitions

Assets acquired and liabilities assumed in business combinations are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates.

The results of operations of businesses acquired by us have been included in the consolidated statements of income (loss) since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when we receive final information, including appraisals and other analyses. There were no contingent payments, options, or commitments specified in any of our acquisition agreements.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, cash on current accounts with banks, bank deposits and other highly liquid short-term investments with original maturities of less than three months.

Accounts receivable & Allowance for doubtful accounts

Accounts receivable represents trade obligations from customers that are subject to normal trade collection terms, without discounts. The Company periodically evaluates the collectability of its accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. The Company has determined that as of September30, 2014 and December 31, 2013, € 0 is the allowance for doubtful accounts that was required. The Company does not require collateral to support customer receivables.

Investments

Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for using the equity method.

Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.

Property, plant and equipment

Property, plant and equipment are stated at acquisition cost less accumulated depreciation and adjustments for impairment losses. Property, plant and equipment also include assets under construction and plant and equipment awaiting installation.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures are recognized as expenses in the consolidated statement of income as incurred.

Capitalization ceases when construction is interrupted for an extended period or when the asset is substantially complete.

Depreciation is charged on a straight-line basis over the estimated remaining useful lives of the individual assets.

Depreciation commences from the time an asset is put into operation. Depreciation is not charged on assets to be disposed of or on land. The range of the estimated useful lives is as follows:

- Buildings and constructions: 33 - 66 years

- Machinery and equipment: 2 – 20 years

- Others: 5 years

Long-Lived Assets

We evaluate the carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.

We evaluate the carrying value of our long-lived assets based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition.

Discontinued operations

In connection with the strategy of focusing on hotel ownership, at the end of September, 2012 we divested most of our non-hotel assets to a related party at cost.

The realized value of these assets is higher than the net asset carrying value.

In 2013 we continued to divest some non-hospitality assets, by realizing following divestment:

− We sold the property located in Via Benaco, Milan (Italy), owned by Primesint, S.r.l. The property has been owned under a capital lease contract, which has been transferred to the acquirer.

−	We sold the property located in Via Buozzi, Rome (Italy) owned by Conte Rosso & Partners, S.r.l. to a related party (Valma Immobiliare, S.r.l., owned by Mr.Conte’s family). The property has been owned under a capital lease contract, which has been transferred to the acquirer.
−	In 2013 we also resolved the Masseria Santo Scalone purchase contract, due to non-fulfillment of some conditions precedent, by returning the real estate property and the related debt to the seller.

Goodwill and Other Intangible Assets

We evaluate goodwill for impairment on an annual basis, and do so during the last month of each year using balances as of the end of September and at an interim date if indications of impairment exist. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount in a two-step process with an impairment being recognized only where the fair value is less than carrying value. We define a reporting unit at the individual property level.

When determining fair value in step one, we utilize internally developed discounted future cash flow models, third party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flow, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our capital structure (equity and long-term debt) and is determined at the reporting unit level. Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value.

If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value of goodwill requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination.

We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry.

Leasing

All lease agreements of the Company and its subsidiaries as lessees are accounted for as capital. The Company recognizes the asset and associated liability on its balance sheet. Capital is capitalized at the beginning of the lease at the lower of the fair value of the leased property and the present value of minimum lease payments. Each installment of the lease is apportioned between the liability and finance charges so as to achieve an equal reduction in capital due for each payment made at constant rate on the remaining financial balances.

Derivative financial instruments

The Company uses derivative financial instruments principally for the management of exposure to variable interest rates on long-term financing. All derivative financial instruments are classified as assets or liabilities and are accounted for at trade date. The Company measures all derivative financial instruments based on fair values derived from market prices of the instruments. Changes in the fair value of a derivative that is significant and that is designated and qualifies as a fair value hedge, along with the loss or gain on the hedged asset or liability, are recorded in the income statement.

As of September30, 2014 and for the fiscal year ended December 31, 2013, there are no derivative instruments.

Shareholders loans

Shareholders loans to the Company are all non-interest bearing. Italian law provides that the shareholders loans to a corporation ("S.r.l.") are not preferred and their repayment is subordinated to other categories of debt. As a result all shareholder loans are classified as non-current liabilities.

Severance indemnity fund

According to Italian accounting principles reflecting local law and applicable employment contracts, certain post-employment benefits accrue during the period of employment. Under U.S. GAAP, post-employment benefits are defined either as defined contribution plans or defined benefit plans.

In defined contribution plans, the Company's obligation is limited to the payment of contributions to the government or to a fund. Defined benefit plans are pension, insurance and healthcare programs which cover the Company's obligation, even implicitly, to provide the benefits due to former employees. The liabilities associated with defined benefit plans are determined on the basis of actuarial assumption (discounting) and accrued in the financial statements over the employment period required to obtain the benefits.

The severance indemnity fund required by Italian law is a liability similar to a defined benefit plan, which, however, according to Italian accounting principles, is not subject to discounting. Given the small number of Company employee any difference between the present provisions in the financial statements prepared in accordance with Italian GAAP and discounted value of these benefits is considered to be immaterial.

Revenue Recognition

Our revenues are derived from rent we receive according to rental agreements we have in place with a Hotel Management Company. The majority of our rent is fixed and payable monthly. The fixed agreements with set increasing rental rates is recognized on a straight line-basis. We recognize additional revenue that is variable based on a percentage of the operating profit of our rented hotels only when contingency of the baseline target has been met.

Taxes

Income taxes

We account for income taxes to recognize the amount of taxes payable or refundable for the current year and the amount of deferred tax assets and liabilities resulting from the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is more likely than not to be sustained on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant.

We are subject to income taxes under the tax laws of Italy. The Company accounts for uncertainty in income taxes in accordance with Topic 740, “Income Taxes,” of the Accounting Standards Codification (“ASC 740”). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with generally accepted accounting principles and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in an income tax return. ASC 740 also provides guidance on recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. During the nine months ended September30, 2014 and 2013, the Company recognized no adjustments for uncertain tax positions.

The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. There is no interest or penalties relating to tax positions during the nine months ended September30, 2014 and 2013.

The Company is also subject to examination in Italy where it has filed tax returns for the years 2009 through 2011. On April 11, 2014, Aral Srl. entered into a settlement agreement with the Italian Revenue Agency in relation to a tax assessment concerning certain asserted outstanding taxes (VAT, income taxes etc.), as mentioned below (see Item 2. M.D. & A. – Recent Developments and Events ).

Stockholder’s equity

As of September30, 2014 and for the fiscal year ended December 31, 2013 the share capital of CR&P is represented by 40,151,261 outstanding shares. Mr. Antonio Conte and his wife Maddalena Olivieri contributed 82.44% of the share capital of CR&P.

NOTE 3. RELATED PARTIES RECEIVABLES AND PAYABLES

Related parties current receivables and payables relate to the former CEO and shareholder, Mr. Antonio Conte, both directly and indirectly. As of September30, 2014 the amounts of related parties current receivables of € 16,767 thousand and payables of € 6,039 thousand refers to CR&P Service, S.r.l., a subsidiary incorporated in 2012 that manages the Company’s cash facilities and cash pooling and also for other companies owned by Mr. Conte but not consolidated in CR&P (related parties). During the nine months ended September30, 2014 and the fiscal years ended December 31, 2013, the operations of CR&P Service, S.r.l. did not generate any material impact on the consolidated equity and statement of operations of CR&P. The amounts shown as non-current receivables as of September30, 2014 and December 31, 2013 relate to a receivable from Masoledo, S.r.l., owned by Mr. Conte in connection with the sale of the non-hotel business which occurred in September, 2012.

The amount of related parties current receivables of € 1,207 thousand as of September30, 2014 refers to a sale of two non-hotel assets (buildings of Porto Rotondo e Porto Cervo, OT, Italy), previously owned by Ripa Hotel & Resorts, S.r.l. (a wholly-owned subsidiary merged with Aral S.r.l. on March, 2013), to Valma Immobiliare, S.r.l., a related party owned by Mr. Conte’s family.

NOTE 4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, included in continuing operations, comprises:

€’000

Property, plant and equipment	September30, 2014			December 31, 2013
Hotel Ripa building, plant and equipment	€	43,108		€	42,594
Terme di Galzignano golf, building, plant and equipment		39,139			39,129
Less accumulated depreciation		(24,561	)		(23,348	)
Total, net	€	57,686		€	58,375

The properties owned by the Company as of September30, 2014 have been recently tested for impairment, by a specialized appraisal firm, which provided updated appraisals of their fair value. The methodologies applied in those appraisals mainly consist in the market value method and the discounted future cash flows method. The appraisals show fair value amount of the properties significantly higher than the relevant carrying amount.

NOTE 5. GOODWILL

The table below shown the breakdown of goodwill related to continuing operations:

€’000

	Owned and leased hotel		Others owned properties		Total
Balance as of January 1, 2013
Goodwill, net		1,149		392		1,541
No Activity during the period		-		-		-
Goodwill, net		1,149		392		1,541
Balance as of January 1, 2014
Goodwill, net		1,149		392		1,541
Balance as of September30, 2014
Goodwill, net		1,149		392		1,541

In the nine months ended September30, 2014 and in the fiscal years ended December 31, 2013, the company did not have any new goodwill or any impairment on existing goodwill.

NOTE 6. OTHER NON-CURRENT ASSETS

The table below shown the breakdown of other non-current assets, related to continuing operations:

€’000

	September30, 2014		December 31, 2013
Related parties non-current receivables	€	8,890	€	8,890
Investment in other companies		4		4
Accruals and deferred costs		171		259
Other intangible assets		1,003		1,339
Total Other non-current assets	€	10,068	€	10,492

NOTE 7. BANK OVERDRAFTS AND LONG-TERM DEBT

Amounts of financial debt (related to continuing operations) due to non-related parties are:

€’000

Mortgage & Capital Leases

	September30, 2014		December 31, 2013
Mortgage loan on property	€	21,470	€	21,084
Leases		26,159		26,412
Total	€	47,629	€	47,496

	September30, 2014		December 31, 2013
Current portion of debt	€	11,687	€	10,915
Long term debt		35,942		36,581
Total	€	47,629	€	47,496

BANK OVERDRAFT

The following tables sets out the main terms and conditions and the outstanding overdraft balances as of September 30, 2014 and December 31, 2013 of the financial debts referred to continuing operations:

€’000

Company	Type of debt	Object	Collateral		Outstanding balance as of September 30, 2014		Outstanding balance as  of Dec. 31, 2013
CONTE ROSSO & PARTNERS, S.R.L.	BANK OVERDRAFT	Cash facility	-		-		-
TERME DI GALZIGNANO, S.r.l.	BANK OVERDRAFT	Cash facility		-		1,039		963
				TOTAL		1,039		963

Outstanding non-current loans related to continuing operations
as of September30, 2014 and December 31, 2013

€’000

Company	Type of debt	Object	Collateral	Outstanding. balance as of September 30, 2014		Outstanding balance as of Dec. 31, 2013
CONTE ROSSO & PARTNERS, S.R.L.	UNSECURED LOAN	Cash facility	-		492		507
ARAL IMMOBILIARE, S.r.l.	CAPITAL LEASE	Building purchase	Hotel property in Rome, Italy		26,159		26,279
ARAL IMMOBILIARE, S.r.l.	MORTGAGE LOAN	Building purchase	Building, Porto Cervo (Olbia), Italy		-		308
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN	Building purchase	Hotel property in Galzignano (Padova), Italy		14,843		14,843
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN ("bullet" reimbursement plan)	Cash facility	Hotel property in Galzignano (Padova), Italy		6,135		5,559
			TOTAL		47,629		47,496

The following table sets out the significant term and future payments of long-term loans related to continuing operations:

				€’000
				Installments maturity as  of September 30
Company	Type of debt	Object	Collateral	2015		2016		2017		2018		2019
CONTE ROSSO & PARTNERS, S.R.L.	UNSECURED LOAN	Cash facility	-		468		24		-		-
ARAL IMMOBILIARE, S.r.l.	CAPITAL LEASE	Building purchase	Hotel property in Rome, Italy		1,275		671		702		734		767
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN	Building purchase	Hotel property in Galzignano (Padova), Italy		3,809		1,379		1,379		1,379		1,379
TERME DI GALZIGNANO, S.r.l.	MORTGAGE LOAN ("bullet" reimbursement plan)	Cash facility	Hotel property in Galzignano (Padova), Italy		6,135
			TOTAL	€	11,687	€	2,074	€	2,081	€	2,113	€	2,146

The following table sets out the amounts of the assets held and used by capital lease:

	Asset Balances at			Asset Balances at
Class of property	September30, 2014			December 31, 2013
Building	€	38,730		€	38,730
Less: accumulated depreciation		(7,504	)		(6,633	)
Net balance	€	31,226		€	32,097

The following table sets out the schedule of the undiscounted and discounted future minimum lease payments:

Minimum lease payments (future and net present value)
Twelve months ending September30:		€’000
2015		2,396
2016		1,763
2017		1,763
2018		1,763
2019		1,763
Later years		17,418
Purchase option		11,522
Net minimum lease payments		38,387
Less: Amount representing interest		(12,228	)
Present value of net minimum lease payments	€	26,159

As of September30, 2014, there are no unused credit lines.

NOTE 8. SHAREHOLDER’S LOANS

In order to strengthen the Group’s capital position and taking into account future financial commitments to enable the real estate investment and development projects to be progressed, in the last quarter of 2011, Mr. Conte waived repayment of shareholder’s loans of € 25.9 million.

NOTE 9. OTHER NON CURRENT LIABILITIES

The amount of € 3,292 as of September30, 2014, mainly refers to the following allowances to provisions account:

−	The amount of € 1,016 is related to the settlement of Aral. with the Italian  Revenues Agency, mentioned below (see Item 2. M.D. & A. – Recent Developments and Events ).
−	The amount of € 1,548 refers to a litigation occurred between Galzignano Terme Golf & Resort, S.p.A. and Sercos S.p.A.
−	The amount of € 590 refers to an allowance about a dispute with a supplier.

NOTE 10. COMMITMENTS AND CONTINGENCIES

Our policy for recognizing a loss complies with the guidance outlined within Topic 450-20-25 of the Financial Accounting Standards Codification. The risk provisions or negative adjustments are recognized when in accordance with the opinion of legal counsel the liability is probable and measurable. We specify that we determine a loss from loss contingency by assessing each information available before the financial statements are issued to estimate the likelihood of the asset impairment or liability incurring and to reasonably estimate the amount of loss.

The Company and certain subsidiaries are defendants in legal actions in the normal course of business. Based on the advice of legal counsel, management believes that the amounts recognized and recorded as debt provisions or asset negative adjustments are sufficient to cover probable losses in connection with such actions.

The allowances accrued in connection with the litigation claims mentioned in the Note 9, resulted from the following elements:

- Settlement between Aral and the Italian Revenues Agency. The tax assessment (which arose before the date of the financial statements) accepted by the Agency indicate a total loss contingency of €3,650,000, €1,400,000 of which was paid before December 31, 2013. The remaining amount of €2,250,000 has been accrued as liability in the balance sheet of the year 2013. The agreement includes any tax charge relating to the tax assessment of the Agency. The event definitively occurred and the amount has been precisely indicated in the settlement. The agreement definitively extinguishes any possible future claims related to the periods examined by the Agency.

- Litigation between Galzignano Terme Golf & Resort and Sercos. The litigation arose before the date of the financial statements. The amount accrued (€1,548,000) resulted as the difference between the amount indicated by the judgment of the arbitration court to be paid from Galzignano to Sercos, and the amount previously recognized as liability(Trade payables) vs. Sercos in the balance sheet of Galzignano. The dispute concerns refurbishment works on Galzignano properties. The event definitively occurred. The amount has been precisely indicated in the judgment and is management’s opinion that this amount represents the maximum liability arising from the litigation. However, Galzignano Terme Golf & Resorts intends to challenge the decision of the arbitration court and aims to obtain an out-of-court settlement.

- The amount of € 590,000 refers to an allowance about refurbishment works on the Majestic hotel in Terme di Galzignano, which belong to Galzignano Terme Golf & Resort S.p.A.. The amount accrued results from the recognition of increased costs of execution for additional activities, initially not stated in the contract. The event definitively occurred. The amount has been precisely estimated and accepted by Galzignano Terme Golf & Resort S.p.A. and is management’s opinion that this amount represents the maximum liability arising from the work’s assessment.

NOTE 11. INCOME TAXES

Tax losses carryforwards

Under Italian tax law the operating loss carryforwards available for offset against future profits can be used indefinitely. Operating loss carryforwards are only available for offset against national income tax, in the limit of 80% of taxable annual income (this restriction does not apply to the operating loss incurred in the first three years of the Company’s activity, which are therefore available for 100% offsetting).

Our operating losses carried forward and available for offset against future profits as of September30, 2014 and December 31, 2013 is € 13,547 and €12,325, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Components of the Company’s deferred tax asset are as follows as of September30, 2014 and December 31, 2013:

€’000

	September30, 2014			December 31, 2013
Deferred tax asset – net operating loss carryovers		3,725			3,389
Less Valuation allowance		(3,725	)		(3,389	)
Net deferred tax asset	€	-		€	-

The Company periodically evaluates whether it is more likely than not that it will generate sufficient taxable income to realize the deferred income tax asset. The ultimate realization of this asset is dependent upon the generation of future taxable income sufficient to offset the related deductions. At the present time, management cannot presently determine when the Company will be able to generate sufficient taxable income to realize the deferred tax asset; accordingly, a valuation allowance has been established to offset the asset.

The reconciliation of income tax benefit attributable to continuing operations computed at the Italian statutory tax rates to the income tax benefit recorded is as follows:

	Three Months Ended September 30,			Nine months period ended September30,
	2014			2014			2013
Income tax at Italian statutory rate of 27.5%	€	(92	)	€	(336	)	€	(618	)
Increase in valuation allowance		92			336			618
Income tax benefit	€	-		€	-		€	-

NOTE 13. SUBSEQUENT EVENTS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes and other financial information appearing elsewhere in this Report on Form 10-Q (the “Report”). In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business. All amounts are set forth in euros.

The following discussion and analysis relates to the results of the Company and should be read in conjunction with the financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-Q. For further discussion and analysis related to the results of the Company, please see our Form 10-K for the fiscal year ended December 31, 2013 filed with the SEC on May 16, 2014.

Overview

Southern States Sign Company is a hospitality company that owns and develops hotels and spas in Italy. We operate through our wholly owned subsidiary, Conte Rosso & Partners S.r.l. (“CR&P”) and, as a result, are classified as property investment specialists.

We intend to develop our presence in Italy and abroad with a target of owning 2,000 rooms within the next 3 to 5 years.

We are currently in a negotiations with respect to acquisitions in Rome and Florence and have started searches for investment opportunities in Milan.

In addition to our primary business, we have recently decided to enter into the hotel management business. In this respect we have set up a new entity called IBH Ripa Srl which is directly involved in the management of the Ripa Hotel in Rome.

Recent Developments and Events

On April 11, 2014, Aral Immobiliare Srl (“Aral”), the owner of the Ripa Hotel under a financial lease agreement with Unicredit Leasing S.p.A., entered into a settlement agreement with the Agenzia delle Entrate (the Italian Revenue Agency) in relation to a tax assessment issued by the latter on January 30, 2014. The tax assessment was concerning certain asserted outstanding taxes (VAT, income taxes etc.) related to the financial lease contract mentioned above for the years from 2008 onwards, for an overall amount of € 3,877,056.35. The settlement agreement envisages that, in relation to the first year of the financial lease contract (2008), Aral will pay the overall amount of € 1,234,202,52 plus interest, in twelve quarterly installments. The first installments have been paid on April 30, on July 31 and on October 31, 2014.

For the years from 2009 up to 2013, Aral and the Agenzia delle Entrate entered into a settlement that envisages the following payments:

2009: € 329,278.00

2010: € 189,810.00

2011: € 184,210.00

2012: € 179,710.00

2013 up to 2027: € 151,034.00 (which may be offset by Aral against higher VAT credit, if any)

2028: € 25,172.41 (which may be offset by Aral against higher VAT credit, if any)

On the basis of the above settlement, Aral already set an allowance for € 2,250,000.00 in its 2013 financial statements, which covers all expenses, penalties and interest costs related to this matter.

Critical Accounting Policies and Estimates

We believe the following accounting policies and estimates are most critical to aid in understanding and evaluating our reported financial results.

Basis of consolidation

All majority-owned subsidiaries in which CR&P has both voting share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Subsidiaries over which control is achieved through other means, such as stockholder agreements, are also consolidated even if less than 51% of voting capital is held. The equity attributable to non-controlling interests in subsidiaries is shown separately in the consolidated financial statements.

Basis of presentation

The consolidated financial statements for the nine months ended September30, 2014 and for the fiscal year ended December 31, 2013 are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The consolidated financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.

The Euro is the functional currency of all companies included in these consolidated financial statements.

The amounts presented have been rounded to the nearest thousand.

Acquisitions

Assets acquired and liabilities assumed in business combinations are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates.

The results of operations of businesses acquired by us have been included in the consolidated statements of income (loss) since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when we receive final information, including appraisals and other analyses. There were no contingent payments, options, or commitments specified in any of the following acquisition agreements.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, cash on current accounts with banks, bank deposits and other highly liquid short-term investments with original maturities of less than three months.

Accounts receivable & Allowance for doubtful accounts

Accounts receivable represents trade obligations from customers that are subject to normal trade collection terms, without discounts. The Company periodically evaluates the collectability of its accounts receivable and considers the need to record or adjust an allowance for doubtful accounts based upon historical collection experience and specific customer information. Actual amounts could vary from the recorded estimates. After the recognition of loss on receivables for doubtful accounts in the statement of operations of the nine-months period ended September30, 2014, the Company has determined that as of September30, 2014 and December 31, 2013 no allowance for doubtful accounts was required. The Company does not require collateral to support customer receivables.

Investments

Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for using the equity method.

Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.

Property, plant and equipment

Property, plant and equipment are stated at acquisition cost less accumulated depreciation and adjustments for impairment losses. Property, plant and equipment also include assets under construction and plant and equipment awaiting installation.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in an item of property, plant and equipment. All other expenditures are recognized as expenses in the consolidated statement of income as incurred.

Capitalization ceases when construction is interrupted for an extended period or when the asset is substantially complete.

Where funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of interest costs to be capitalized in a period on that asset is the actual interest cost incurred on the borrowing during the period.

Depreciation is charged on a straight-line basis over the estimated remaining useful lives of the individual assets. Depreciation commences from the time an asset is put into operation. Depreciation is not charged on assets to be disposed of or on land. The range of the estimated useful lives is as follows:

- Buildings and constructions:  33 – 66 years

- Machinery and equipment: 2 – 20 years

- Others: 5 years

Long-Lived Assets

We evaluate the carrying value of our long-lived assets for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value will be charged to earnings.

Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers.

We evaluate the carrying value of our long-lived assets based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition.

Assets and liabilities held for resale

In connection with the strategy of concentrating in the portfolio of hotel, power, and plantations investments, in the periods presented we entered into various negotiations with potential purchasers to sell non-hotel assets. Most of these sales concluded at the end of September 30, 2012, and some residual non-hotel assets sold in 2013.

The realized value of these assets are higher than the net asset carrying value and that resulted in a gain on discontinued operations.

Goodwill and Other Intangible Assets

We evaluate goodwill for impairment on an annual basis, and do so during the last month of each year using balances as of the end of September and at an interim date if indications of impairment exist. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount in a two-step process with an impairment being recognized only where the fair value is less than carrying value. We define a reporting unit at the individual property level.

When determining fair value in step one, we utilize internally developed discounted future cash flow models, third party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates based on the weighted-average cost of capital. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flow, the weighted-average cost of capital and the terminal value growth rate assumptions. The weighted-average cost of capital takes into account the relative weights of each component of our capital structure (equity and long-term debt) and is determined at the reporting unit level. Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value.

If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value of goodwill requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination.

We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry.

Leasing

All lease agreements of the Company and its subsidiaries as lessees are accounted for as finance leases. The Company recognizes the asset and associated liability on its balance sheet. Finance leases are capitalized at the beginning of the lease at the lower of the fair value of the leased property and the present value of minimum lease payments. Each installment of the lease is apportioned between the liability and finance charges so as to achieve an equal reduction in capital due for each payment made at constant rate on the remaining financial balances.

Derivative financial instruments

The Company uses derivative financial instruments principally for the management of exposure to variable interest rates on long-term financing. All derivative financial instruments are classified as assets or liabilities and are accounted for at trade date. The Company measures all derivative financial instruments based on fair values derived from market prices of the instruments. Changes in the fair value of a derivative that is significant and that is designated and qualifies as a fair value hedge, along with the loss or gain on the hedged asset or liability, are recorded in the income statement.

As of September30, 2014 and December 31, 2013, there are no derivative instruments.

Shareholder loans

Shareholder loans to the Company are all non-interest bearing. Italian law provides that the shareholders loans to a limited liability company ("S.r.l.") are not preferred and their repayment is subordinated to other categories of debt. As a result all shareholder loans are classified as non-current liabilities.

Severance indemnity fund

According to Italian accounting principles reflecting local law and applicable employment contracts, certain post-employment benefits accrue during the period of employment. Under U.S. GAAP, post-employment benefits are defined either as defined contribution plans or defined benefit plans.

In defined contribution plans, the Company's obligation is limited to the payment of contributions to the government or to a fund. Defined benefit plans are pension, insurance and healthcare programs which cover the Company's obligation, even implicitly, to provide the benefits due to former employees. The liabilities associated with defined benefit plans are determined on the basis of actuarial assumption (discounting) and accrued in the financial statements over the employment period required to obtain the benefits.

The severance indemnity fund required by Italian law is a liability similar to a defined benefit plan, which, however, according to Italian accounting principles, is not subject to discounting. Given the small number of Company employees any difference between the present provisions in the financial statements prepared in accordance with Italian GAAP and discounted value of these benefits is considered to be immaterial.

Revenue Recognition

Our revenues are derived from rent we receive according to rental agreements we have in place with hotel management companies. The majority of our rent is fixed and payable monthly. The fixed agreements with set increasing rental rates are recognized on a straight line basis. We recognize additional revenue that is variable based on a percentage of the operating profit of our rented hotels only when the contingency of baseline target has been met.

Taxes

Income taxes

We account for income taxes to recognize the amount of taxes payable or refundable for the current year and the amount of deferred tax assets and liabilities resulting from the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is more likely than not to be sustained on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant.

Results of Operations

For the nine months ended September 30, 2014 and September 30, 2013

€’000, except per share amounts	Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
	Unaudited			Unaudited
Revenue from operations	€	6,822		€	1,807
Direct operating and selling, general and administrative costs
Direct operating costs		3,937			40
Selling, general and administrative costs		1,276			1,081
Amortization and depreciation		1,707			1,679
Total direct operating, selling, and administrative costs		6,920			2,800
Operating Profit/(Loss)		(98	)		(993	)
Interest income		466			523
Interest expenses		1,590			1,583
Profit/(Loss) from continuing operations, before income taxes		(1,222	)		(2,053	)
Income taxes
Profit/(Loss from continuing operations, net of income taxes		(1,222	)		(2,053	)
Net loss from operations of discontinued operations, after taxes					(161	)
Net income/(loss) on disposal of discontinued operations, after taxes					(32	)
Net profit/(loss) from discontinued operations					(193	)
Consolidated net profit/(loss) for the period		(1,222	)		(2,246	)
Less net loss attributable to non-controlling interests in the consolidated subsidiaries					100
Net profit/(loss) attributable to owners of Southern States Sign Company	€	(1,222	)	€	(2,146	)

Revenues

Revenues for the nine months ended September30, 2014, increased approximately € 5,015,000, or 277.5%, compared to the nine months ended September30, 2013. This increase is due mainly to the consolidation into the Company’s accounts of the revenues generated by the management of the Ripa Hotel, now directly managed through CR&P’s subsidiary, IBH Ripa Srl.

Direct Operating Costs

Direct Operating Costs for the nine months ended September 30, 2014, increased approximately € 3,895,000 compared to the nine months ended September 30, 2013. Again, this increase is mainly due to the consolidation into the Company’s accounts of the costs related to the management of the Ripa Hotel.

Selling, General and Administrative Costs

Selling, General and Administrative costs for the nine months ended September 30, 2014 and September 30, 2013, were approximately € 1,276,000 and € 1,081,000, respectively. Such expenses consist primarily of salaries and personnel related expenses, occupancy expenses, sales travel, consulting costs and other expenses. The increase is mainly related to the increase of Ripa Hotel management activity.

Amortization and Depreciation

Amortization and depreciation for the nine months ended September 30, 2014 and September 30, 2013 were approximately € 1,707,000 and € 1,678,000, respectively. The increase is immaterial.

Interest Income

Interest income for the nine months ended September 30, 2014 and September 30, 2013 was approximately a gain of € 466,000 and a gain of € 523,000, respectively. The decrease is immaterial.

Interest Expense

Interest expense for the nine months ended September 30, 2014 and September 30, 2013 was approximately € 1,590,000 and € 1,583,000 respectively. The increase is immaterial.

Income Taxes

Income taxes for the nine months ended September 30, 2014 and September 30, 2013 were € 0.00 in both periods.

Going concern considerations

Notwithstanding the losses recorded in 2013 and in the nine months ended September 30, 2014, we expect to remain in operation for the foreseeable future on the basis of the strategies we are currently implementing, which will have a positive impact on the profitability of our business in the future years. Therefore we have the ability to continue as a going concern for a long and reasonable period following the date of the financial statements.

Liquidityand Capital Resources

For the nine months ended September 30, 2014 and 2013

As of September 30, 2014 we had cash and cash equivalents of approximately € 956,000, negative working capital of approximately € 6,250,000 and accumulated loss of approximately € 4,702,000.

Cash Flows from Operating Activities

Net cash provided by operating activities was approximately € 838,000 for the nine months ended September 30, 2014, compared to the net cash provided of approximately € 1,833,000 for the nine months ended September 30, 2013.

The net cash provided by operating activities for the nine months ended September 30, 2014 reflects a net loss of approximately € 1,222,000 offset by a depreciation and amortization of approximately € 1,707,000 and other non-cash adjustments of approximately € 555,000. Changes in assets and liabilities included an increase in trade receivables of approximately € 192,000, a decrease in related party receivables of approximately € 1,415,000, a decrease in advanced payments on purchases of property of approximately € 4, an increase in other assets of approximately € 84,000, an increase in trade payables of approximately € 1,806,000, a decrease in related party payables of approximately € 517,000, a decrease in other payables of approximately € 55,000, an increase in VAT taxes receivable of approximately € 1,165,000 and a decrease in other liabilities of approximately € 1,459,000.

The net cash provided by operating activities for the nine months ended September 30, 2013 reflects a net loss of approximately € 2,246,000, a net loss from discontinued operations of approximately € 193,000 and a depreciation and amortization of approximately € 1,678,000. Changes in assets and liabilities included a decrease in trade receivables of approximately € 33,000, a decrease in related party receivables of approximately € 1,512,000, an increase in other assets of approximately € 64,000, an increase in trade payables of approximately € 2,158,000, an increase in related party payables of approximately € 1,136,000, a decrease in other payables of approximately € 415,000, an increase in VAT taxes receivable of approximately € 527,000 and an increase in other liabilities of approximately € 5,000. The net cash used in operating activities of discontinued operations was approximately € 161,000.

Cash Flows from Investing Activities

The net cash used in investing activities for the nine months ended September 30, 2014 of approximately € 884,000 consist primarily of the cash outflow due to the purchases of plant, equipment and intangible assets related to the hotel-management business.

The net cash used in investing activities for the nine months ended September 30, 2013 of approximately € 5,104,000 consist primarily of the cash outflow due to the purchase of properties.

Cash Flows from Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2014 was approximately € 275,000, which was mainly due to the issuance of long term debt (€ 133,000), the borrowings of bank overdrafts (€ 76,000) and the issuance of shareholders loan (€ 66,000). Net cash provided by financing activities for the nine months ended September 30, 2014 was approximately € 2,917,000, which was mainly due to the reimbursement of bank overdrafts (€ 2,012,000) offset by the issuance of shareholders loan (€ 1,930,000) and the issuance of long-term financial debt (€ 2,999,000).

Future Liquidity Needs

We have evaluated our expected cash requirements over the next twelve months, which includes, but is not limited to, interest payments, capital repayments, capital expenditures and working capital requirements. While we are able to manage certain aspects of these cash requirements, the level of income, rate of repayment of related party receivables and cost of debt, where variable, are outside our control.

In order to optimize our cash flow, we are currently negotiating with the lenders (a pool of four banks) of the mortgage loan in place on the Galzignano property, in order to achieve better terms and conditions (specifically to lengthen the maturity of the loan, currently set for October 2018, and to reduce interest costs).

We have just about to finalize with UniCredit Leasing S.p.A. a moratorium of the financial lease regarding the Ripa Hotel, whereby we will have to pay interests only for a 3,5 year period starting in August 2014. This will make available to us the financial resources required to renovate the last 78 rooms of the hotel which still need to be completed. The closing of the moratorium agreement is envisaged by the end of November, 2014.

We are also planning, but as yet have no contractual commitments, to make acquisitions and while we wish to effect at least some of these acquisitions through the issue of shares there can be no certainty that the vendors will accept such consideration and we may wish, in any case, to effect such acquisitions using cash. Further, we plan to put in place new borrowings to finance the assets to be acquired or take-on existing borrowings secured on the assets planned to be acquired.

Based on existing assets, expected related party receivables repayments, business level, debt and interest rates, we believe our current resources are sufficient for at least the next twelve months.

However, to implement the business plan for the expansion of our assets we will require additional financing in the future. The timing of our need for additional capital will depend on the timing of the completion of the planned acquisitions, the terms of such acquisitions and whether existing lenders are willing to continue to provide financing upon a change of control of such assets.

We are in the process of developing one property which will require capital expenditure – the Green Park Hotel is being converted to apartments.

The development of the Green Park Hotel should start in the first half of 2015. It is expected that the Green Park Hotel conversion will cost approximately €4.4 million to be spent over a period of 1�� years from commencement in 2015.

In each case no work, beyond planning and negotiation of financing, has been undertaken and no work will start until the required financing has been agreed and contracted with lending institutions.

Commitments and contingencies

The Company and certain subsidiaries are defendants in legal actions in the normal course of business. Based on the advice of legal counsel, management believes that the amounts recognized and recorded as debt provisions or asset negative adjustments are sufficient to cover probable losses in connection with such actions.

The risk provisions or negative adjustments are recognized when in accordance with the opinion of legal counsel the liability is probable and measurable.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our principal executive officer and principal financial officer evaluated the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our sole chief executive officer and principal financial officer concluded that as of September 30, 2014, these disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion relating to current legal proceedings of the Company, please see Part II, Item I, “Legal Proceedings” of our Form 10-K, previously filed with the Securities and Exchange Commission on May 16, 2014.

Item 1A. Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number Description of Exhibit

3.1 Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-1 filed on January 25, 2011)

3.2 Bylaws (incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S-1 filed on January 25, 2011)

31.1* Certification of Chief Executive Officer and Principal Financial Officer pursuant to Securities Exchange Act Rule 13a-14 (a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1** Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101* Interactive Data Files of Financial Statements and Notes

* Filed herewith.

** Furnished (and not filed) herewith pursuant to Item 601(b)(32)(ii) of Regulation S-K under the Exchange Act.

SIGNATURES

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.

Southern States Sign Company

November 14, 2014	By:	/s/Sergio Schisani
		Sergio Schisani
		Chief Executive Officer and Principal Financial Officer