UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10Q
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 2001.
( ) Transition report pursuant of Section 13 or 15(d) of the Securities
Exchange Act of 1939 for the transition period ____ to______
COMMISSION FILE NUMBER 0-21322
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OUT TAKES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 95-4363944
- ---------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3811 Turtle Creek Blvd., Suite 350
Dallas, Texas 75219 Telephone (214)528-8200
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(Address of Principal Executive Offices, including Registrant's zip code
and telephone number)
NONE
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Former name, former address and former fiscal year, if changed
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
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The number of shares of the registrant's common stock as of June 30, 2001:
20,788,122 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
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TABLE OF CONTENTS
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Item 1. Financial Statements
(a) Balance Sheet
(b) Statement of Operations
(c) Statement of Changes in Financial Position
(d) Statement of Shareholders' Equity
(e) Notes to Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Item 3. Risks
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults On Senior Securities
Item 4. Submission of Items to a Vote
Item 5. Other Information
Item 6
(a) Exhibits
(b) Reports on Form 8K
SIGNATURES
FINANCIAL DATA SCHEDULE
PART I. FINANCIAL INFORMATION
OUT-TAKES, INC.
CONSOLIDATED BALANCE SHEETS
June 31, March 31,
2001 2001
--------- ---------
ASSETS
Current Assets
Cash $ (335) $ 52,745
Accounts receivable (net) 128,190 132,118
--------- ---------
Total Current Assets 127,885 184,863
--------- ---------
Property and Equipment (net) 173,085 183,712
--------- ---------
Other Assets
Deposits and advances 26,110 23,148
Goodwill (net of amortization) 4,035,178 4,062,321
--------- ---------
Total Other Assets 4,061,288 4,085,469
--------- ---------
Total Assets $ 4,362,228 4,454,044
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 72,636 25,766
Accrued expenses 225,026 251,567
Accrued interest 928,022 858,843
Accrued interest-related parties
Compensation payable-related parties 171,978 81,274
Notes Payable-Short-Term 1,084,739 1,213,856
Deferred Income 6,971 6,971
--------- ---------
Total Current Liabilities 2,489,373 2,438,277
--------- ---------
Long-Term Liabilities
Notes payable-long term 4,004,000 4,000,459
--------- ---------
Shareholders' Equity
Common Stock, par value $.01 per share
35,000,000 shares authorized; 20,788,122
shares issued and outstanding of which
292,396 are in treasury 207,882 207,882
Preferred stock, par value $301 per share
5,000,000 shares authorized; none issued -
Additional Paid in Capital 9,913,230 9,913,230
Accumulated deficit (12,143,851) (11,997,398)
--------- ---------
Total Shareholders' Equity (2,022,739) (1,876,286)
--------- ---------
Treasury stock, as cost (108,406) (108,406)
--------- ---------
Total Liabilities and Shareholders' Equity $ 4,362,228 4,454,044
========== ===========
OUT-TAKES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
June 30,
2001 2000
------------------------
(Unaudited)
Revenues $ 121,906 $ 53,258
Cost of revenues 54,636 76,795
--------- ---------
Gross margin 67,270 (23,537)
Operating expenses 113,723 44,734
--------- ---------
Loss from operations (46,453) (68,271)
--------- ---------
Other Expenses
Interest income - 509,945
Interest expense 100,000 129,712
--------- ---------
Total Other Expenses 100,000 639,657
--------- ---------
Provision for income - -
--------- ---------
Total Income Tax Expense - -
--------- ---------
Net income (loss) $(146,453) $ (707,928)
========== ============
Net loss per share $ (0.01) $ (0.03)
========== ============
OUT-TAKES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Common Stock Additional
Number of Paid-In Accumulated Treasury
Shares Amount Capital Deficit Stock Total
------ ------ ---------- ----------- -------- ----------
Balance, March 31, 1998 20,788,122 $ 207,882 $9,905,430 $(11,091,161) $(108,406) (1,086,255)
Acquisition of subsidiary 342,784 342,784
Adjustments 7,800 7,800
Net loss for the year
ended March 31, 1999 (382,184) (382,184)
------ ------ ---------- ----------- -------- ----------
Balance, March 31, 1999 20,788,122 207,882 9,913,230 (11,130,561) (108,406) (1,117,855)
Net loss for the year
ended March 31, 2000 (884,110) (884,110)
------ ------ ---------- ----------- -------- ----------
Balance, March 31, 2000 20,788,122 207,882 9,913,230 (12,014,671) (108,406)(2,001,965)
Adjustments (4,634)
Net loss for the year
ended March 31, 2001 17,273 17,273
------ ------ ---------- ----------- -------- ----------
Balance March 31, 2001 20,788,122 $ 207,882 $ 9,908,596 $(11,997,398) $(108,406)(1,984,692)
Net Loss - June 31, 2001 (146,453) (146,453)
------ ------ ---------- ----------- -------- ----------
20,788,122 $ 207,882 $ 9,908,596 $ (12,1,851) $(108,406)(2,131,145)
========== ========= ============ ============ ========== =========
OUT-TAKES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months
ended June 30,
2001 2000
---------------------
(Unaudited)
Operating Activities:
Net Loss $ (146,453) $ (197,983)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 37,770 40,915
Changes in operating assets and liabilities:
Accounts receivable 3,928 20,428
Deposits (2,961)
Accounts payable, accrued expenses 20,329 (9,789)
Interest payable-related party - 94,103
Accrued Interest 69,179 19,998
Compensation payable - related party 90,704 22,500
---------- -----------
Net cash provided by (used in)
operating activities 72,496 (9,828)
---------- -----------
Investing Activities:
Note Receivable - (11,000)
Equipment Purchase -
Net cash used in investing activities - (11,000)
Financing Activities:
Proceed from issuance of stock
Advances from related parties - 14,449
Payments to related parties - (88,760)
Capital contribution 5,000
Proceeds from short term debt - 29,827
Notes & contracts payable (125,576) (5,000)
---------- -----------
Net cash provided by (used in)
financing activities (125,576) (44,484)
---------- -----------
Increase (decrease) in cash and cash
equivalents (53,080) (65,312)
---------- -----------
Cash and cash equivalents
-beginning of year 52,745 77,265
Cash and cash equivalents- end of year (335) 11,953
========== ===========
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
- ------------------
The Company's principal business activity is the collection and distribution of
waste natural gas in the State of California, and the conversion of such
natural gas into electricity, which is then sold to retail providers of
consumer electricity.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates that affect the
reported amounts of assets, liabilities, revenues, expenses and the disclosure
of contingent assets and liabilities. Actual results could differ from these
estimates.
Basis of Presentation
- ---------------------
The accompanying financial statements include the accounts of Out-Takes, Inc.
and its wholly owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated.
Property, Plant and Equipment
- -----------------------------
Plant and equipment are recorded at cost. Depreciation is provided over the
estimated useful asset lives using the straight-line method over 5-7 years.
Cash and cash equivalents
- -------------------------
The Company classifies all highly liquid debt instruments, readily convertible
to cash and purchased with a maturity of three months or less at date of
purchase, as cash equivalents. The Company had no cash equivalents at June 30,
2001.
Accounts Receivable
- -------------------
Accounts receivable are shown net of the allowance for bad debts of $117,239 at
June 30, 2001.
Goodwill and acquisition related intangibles
- --------------------------------------------
Goodwill is recorded when the consideration paid for acquisitions exceeds the
fair value of net tangible and intangible assets acquired. Goodwill is
amortized on a straight-line basis over 40 years. Net goodwill at the
reporting dates is as follows:
June 30, 2001 March 31, 2001
-------------- --------------
Goodwill $4,342,874 $4,342,784
Accumulated amortization (307,696) (280,553)
--------- ---------
Net Goodwill $4,035,178 $4,062,321
========= =========
Amortization expense $ 27,143 $108,570
========= =========
Earnings per share
- ------------------
Earnings per share data in the financial statements have been calculated in
accordance with SFAS No. 128. Earnings per share reflects the amount of
earnings for the period available to each share of common stock outstanding
during the reporting period, while giving effect to all dilutive potential
common shares that were outstanding during the period, such as common shares
that could result from the potential exercise or conversion of securities into
common stock. As of June 30, 2001 and 2000, no contingently issuable shares
qualified as dilutive to be included in the earnings per share calculation.
NOTE 2 - MERGERS AND ACQUISITIONS
On August 31, 1998, Out-Takes, Inc. acquired all of the issued and outstanding
equity interests of Los Alamos Energy, LLC, a California limited liability
company (LAE). This acquisition has been accounted for as an exchange between
companies under common control. The investment has been recorded at historical
cost in a manner similar to a pooling of interest, and the face value of the
note given has been adjusted down to the net equity value of LAE at the date of
the exchange.
The Company has executed a letter of intent with Atlas Engineering, LLC to the
effect that the Company shall acquire Atlas Engineering, LLC pursuant to the
provisions of a Purchase Agreement. As of June 30, 2001, the merger is in
process but had not yet been completed.
NOTE 3 - PROPERTY AND EQUIPMENT
The components of property and equipment are as follows:
June 30, 2001 March 31, 2001
------------- --------------
Computers and software 5,589 5,589
Equipment and furniture 350,633 350,633
Leased asset 19,000 19,000
Motor vehicle 2,500 2,500
------------- --------------
Total - At Cost 377,722 377,722
Less: Accumulated depreciation (204,637) (194,010)
------------- --------------
Net $ 173,085 $ 183,712
============= ==============
NOTE 4 - NOTES PAYABLE
Note Payable - Consultant
- -------------------------
This is an unsecured note payable to a former financial consultant to the
Company pursuant to a settlement agreement dated August 17, 1994. The note is
non-interest bearing and payment is subject to availability of future cash
flows from the Company's operations. The note holder has threatened to
commence legal action, however management has advised the note holder that no
amount is due at the present time as the Company has not generated positive
cash flow. Counsel has advised the Company that no litigation has commenced
and counsel is unable to assess a possible outcome, should litigation be
commenced. The payable amount as of June 30, 2001 is $48,000.
Note Payable - Radovich
- -----------------------
This is an unsecured promissory note dated September 27, 1996. The note's
original maturity dated was thirty (30) days, no interest. The note's maturity
date has been extended indefinitely without interest. The payable amount as of
June 30, 2001 is $30,557.
Note Payable - Reeves
- ---------------------
This is an unsecured promissory note dated March 30, 1998. The note's original
maturity date was sixty days with interest at 10% per annum and is convertible
into Out-Takes, Inc. common stock at a rate to be negotiated between the
parties. The payable amount as of June 30, 2001 is $25,000.
Note Payable - Boyd
- -------------------
This is an unsecured promissory note dated August 14, 1998. The note's
original maturity date was sixty (60) days, 10% annum simple interest. The
note's maturity date was extended to December 31, 1999 with interest and the
parties are in negotiation for an additional extension. The payable amount as
of June 30, 2001 is $45,000
Note Payable - Atlas Engineering
- --------------------------------
This is an unsecured promissory note dated March 19, 1999. The note is
convertible into Out-Takes, Inc. common stock pursuant to a non-binding share
purchase agreement executed between the parties. The note includes interest at
10% per annum until paid or converted. The payable amount as of June 30, 2001
is $62,984.
Note Payable - Coastal Resources Corp.
- --------------------------------------
This note, dated June 15, 1999 is secured by the property, plant and equipment
of Los Alamos Energy, LLC and includes interest at 8% per annum beginning
October 1, 1999. The master loan agreement specifies a $300,000 maximum
financing amount and was entered into pursuant to a non-binding merger
agreement between the parties. If the merger is consummated, then the loan
balance at that date shall be credited to Coastal Resources Corp. as part of
its proportionate equity interest in Out-Takes, Inc. If the merger is not
consummated, then the principal and interest is due and payable on the first
anniversary date of each advance ranging from June 2000 through August 2000.
The payable amount as of June 30, 2001 is $219,036.
Note Payable - Los Alamos Energy, LLC Equity Holders
- ----------------------------------------------------
This note, dated August 31, 1998, is pursuant to a share Purchase Agreement
executed between Los Alamos Energy, LLC (LAE) and Out-Takes, Inc. The note
specifies interest at 10% per annum and is convertible into a aggregate ninety
percent of the issued and outstanding shares of common stock of Out-Takes, Inc.
as of the date of conversion. The agreement also requires as a condition of
the conversion that Out-Takes, Inc. effect a reverse stock split of one share
for every one-hundred issued and outstanding shares at the conversion date. As
of June 30, 2001, this conversion and reverse stock split has not been
completed. The payable amount as of June 30, 2001 is $4,000,000.
Note Payable - Joint Venture Working Interest
- ---------------------------------------------
These notes are pursuant to a Joint Venture Agreement executed between Los
Alamos Energy, LLC and the participants in development and generation of
electricity from waste natural gas activities. The agreement specifies that
participants may be required to convert their working interest into an equity
position when the Company merges with a publicly traded entity. Those
participants electing not to convert would be repaid their original
consideration plus a non-compounded annual yield of 12%. As of March 31, 2000,
this conversion or repayment has not been completed. The payable amount as of
June 30, 2001 is $250,279.
Note Payable - Hall
- --------------------
This is an unsecured promissory note dated January 4, 2000. The note's
maturity date is January 4, 2001 without interest. The payable amount as of
June 30, 2001 is $4,000.
Lease Payable - Fairfield Energy Corp.
- ---------------------------------------
The company is the lessee of a transformer under a capital lease expiring July
2003. The asset and liability under the capital lease is recorded at the
present value of the minimum lease payments. The asset is depreciated over the
lease term of 50 months. Depreciation of the asset under the capital lease is
included in depreciation expense for the year ended June 30, 2001. The
equipment held under capital lease at June 30, 2001 is valued at $19,000 less
accumulated depreciation of $5,202.
Future minimum lease obligations are as follows:
Year ended March 31
-------------------
2001 $ 6,137
2002 6,137
2003 6,137
2004 2,046
--------
Total $ 20,457
Less interest 5,162
--------
Present value of net
minimum lease payment $ 15,295
=======
NOTE 5 - RELATED PARTY TRANSACTIONS AND ASSET LEASE ASSIGNMENT
The Company holds an asset lease agreement that generates annual income for the
Company. On March 30, 2001, the Company assigned this asset lease agreement in
lieu of cash to payoff the loan payable to Photo Corporation Group (PCG),
including the accrued interest that was due to related party. In addition, the
related party also issued a $150,000 promissory note, dated June 30, 2001. The
note bears 10% interest per annum. Both principal and interest are due in 180
days.
NOTE 6 - COMMITMENTS AND CONTIGENCIES
The Company has an extended 12 month non-cancelable operating lease agreement
for an office facility.
Future minimum lease obligations are as follows:
Year ended March 31
-------------------
2002 $ 10,200
--------
Total $ 10,200
=========
The Company's facilities are subject to federal, state and local provisions
relating to the discharge of materials into the environment. Compliance with
these provisions has not had, nor does the Company expect such compliance to
have, any material effect on the capital expenditures, revenues or expenses, or
financial condition of the Company. Management believes that its current
practices and procedures for the control and disposition of materials comply
with all applicable federal, state and local requirements.
Los Alamos Energy, LLC (LAE) participates in certain agreements with respect to
the generation of electricity from waste natural gas whereby its managing
member also acts as the operator of the electrical power plant's development
and production activities. As its managing member and operator, LAE is
contingently liable for the activities of this venture.
NOTE 7 - INCOME TAXES
As of June 30, 2001, the Company has a net operating loss (NOL) carry forward
of approximately $12,143,851. The net operating loss carry forwards expire
between 2007 and 2016. No deferred tax asset has been recorded for these losses
since a valuation allowance has been recorded for the portion of the NOL that
is not expected to be realized.
NOTE 8 - NEW AUTHORITATIVE PRONOUNCEMENTS
The Company intends to adopt Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities," as of
the beginning of its fiscal year 2001. The standard will require the Company
to recognize all derivatives on the balance sheet at fair value. The effect of
adopting the standard is not expected to have a material effect on the
Company's financial position or overall results in operations.
NOTE 9 - GOING CONCERN
The Company has been unsuccessful in generating net cash from operations. The
Company incurred a net loss from operation of $344,578 for the year ended March
31 2001 and has a working capital deficit as of March 31, 2001 of $2,254,565.
The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. The continuation
of the Company as a going concern is dependent upon its ability to generate net
cash from operations. The Company's recurring operating losses and net working
capital deficiency raises substantial doubt about the entity's ability to
continue as a going concern.
Management plans to expand its existing power plant to a four or five mega watt
facility, reduce expenses, expand operations to include direct service of
consumer electricity, and convert $4,250,279 of existing debt to equity which
will substantially reduce interest expense.
NOTE 10 - CONCENTRATIONS OF CREDIT RISK
All of the consolidated revenue of Out-Takes, Inc. is generated from the
leasing of photographic equipment to one customer and the sale of electricity
to Pacific Gas and Electric Company and Texaco.
NOTE 11 - SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash flows from operating activities include the following cash payments:
March 31, March 31, March 31,
2001 2000 1999
--------- --------- ---------
Income taxes $ - $ - $ -
Interest $ - $2,516 $7,650
Noncash investing and financing activities include the following amounts:
March 31, March 31, March 31,
2001 2000 1999
--------- --------- ---------
Capital lease of equipment $ - $19,000 $ -
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
On August 31, 1998, the Company entered into a Share Purchase Agreement (the
"Acquisition Agreement") whereby the Company acquired (the "Acquisition")
all of the issued and outstanding equity interests in Los Alamos Energy,
LLC, a California limited liability company ("LAE"). The purchase price to
be paid for the equity interests of LAE is Four Million Dollars
($4,000,000), which was paid by Promissory Notes (the "Notes") to the
holders of LAE equity (the "Equity Holders") calling for interest on all
outstanding amounts to accrue at the rate of ten percent (10%) per annum.
Payments of principal and accrued interest under the Notes shall be made
monthly in arrears up to the maturity date, which is the fifth anniversary
of the Notes. The Notes may be prepaid at any time without premium or
penalty.
The Acquisition Agreement provides that, in the event the Equity Holders
shall desire to do so, they may convert their indebtedness to common stock
of the Company representing in the aggregate ninety percent (90%) of the
issued and outstanding shares of such common stock as of the date of such
conversion. The Acquisition Agreement provides that it is a condition of the
conversion that the Company effect a reverse stock split of one (1) share
for every one hundred (100) shares issued and outstanding as of such date.
LAE contemplates that a significant number of persons currently holding
promissory notes and/or working interests in its electricity production
(collectively, "Interest Holders") will exercise their rights to convert
such interests into the equity of LAE, and subsequently to join in the
conversion of the Notes into common stock of the Company. Presently,
management of LAE anticipates that, prior to the conversion of the Notes and
after giving effect to the contemplated reverse stock split, the Company
will issue approximately three million (3,000,000) additional shares of
common stock, and that subsequent to completing the conversion, the Equity
Holders and Interest Holders will own, in the aggregate, approximately two
million eight hundred eighty thousand (2,880,000) shares of the Company's
common stock, representing ninety percent (90%) of the total amount of
common stock estimated to be issued and outstanding as of the date such
conversion rights are exercised. As of March 31, 2000, the holders have not
yet exercised their right to convert the note to common stock.
The indebtedness represented by the Notes is secured by (a) a Security
Agreement, granting a first lien and security interest upon all of the
assets of the Company; and (b) a pledge of the common stock of the Company
held by Photo Corporation Group Pty Limited, an Australian corporation,
which is the controlling stockholder of the Company. The stock pledge grants
the Holders specific rights under certain circumstances, including the right
to receive distributions made by the Company in respect of its common stock
and the right to vote the pledged shares, for so long as the Notes are in
force.
The purchase price to be paid by the Company for all of the issued and
outstanding equity of LAE was negotiated based upon several factors,
including, without limitation, the asset value of LAE and its projected
income from operations based, in part, upon management's estimates of its
natural gas reserves and its current contracts.
LAE is engaged in the collection and distribution of natural gas from
properties owned or leased by it in the State of California, and management
of LAE intends to position LAE to become an important independent power
producer, and to benefit as a principal provider of electricity to consumers
in California and elsewhere as deregulation is implemented. LAE will be
operated as a wholly-owned subsidiary of the Company.
Through its subsidiary, Atlas Power, the company is engaged in the business of
power system and control system engineering for owners, engineers,
manufacturers and construction companies serving the power industry.
Atlas provides electrical design, project management, acceptance testing,
startup and system studies for power plants and industrial facilities both
domestically and internationally. Atlas offers in house electrical
engineering and on-site development.
RECENT DEVELOPMENTS
California has experienced a power crisis as demand for power far
outstripped supply. Since June 2000, wholesale power prices in California
have steadily increased to an average cost of 18.16 cents per kWh for the
seven month period of June 2000 through December 2000, as compared to an
average cost of 4.23 cents per kWh for the same period in 1999. Rolling
blackouts have occurred as a result of a broken deregulated electricity
market.
PG&E has decided that neither its parent holding company nor any of the
parent's other subsidiaries are affected by PG&E's bankruptcy filing. PG&E
cited as reasons for its bankruptcy filing the failure by the State of
California to assume full procurement responsibility for PG&E's net short
position, the CPUC's actions on March 27 and April 3, 2001, that created new
payment obligations for PG&E, lack of progress in negotiations with the state
to provide recovery of power purchase costs, the CPUC's adoption of an illegal
and retroactive accounting change, and the slow progress of discussions with
representatives of Governor Davis.
On April 9, 2001, the SCE and the California Department of Water Resources
(CDWR) executed a Memorandum of Understanding (MOU) which sets forth a
comprehensive plan calling for legislation, regulatory action and definitive
agreements to resolve important aspects of the energy crisis, and which, if
implemented, is expected to help restore the utilities' creditworthiness and
liquidity. The Governor of the State of California and his representatives
participated in the negotiation of the MOU, and the Governor endorsed
implementation of all the elements of the MOU. If required legislation is
not adopted and definitive agreements executed by August 15, 2001, the MOU
may be terminated by SCE or the CDWR. Implementation of the MOU will require
numerous actions by the parties and by other California state agencies and
the FERC, and would require significant changes in the regulatory decisions
and other actions.
Some key elements of the MOU include: (1) SCE will sell their transmission
assets to the CDWR, or another authorized California state agency, at a
price equal to 2.3 times their aggregate book value, or approximately $2.76
billion. SCE will agree to operate and maintain the transmission assets for
at least three years, for a fee to be negotiated. (2) Two dedicated rate
components will be established to assist IOUs in recovering the net
undercollected amount of its power procurement costs through January 31,
2001. (3) SCE will continue to own its generation assets, which will be
subject to cost-based ratemaking, through 2010. SCE will be entitled to
collect revenues sufficient to cover its costs from January 1, 2001,
associated with the retained generation assets and existing power contracts.
(4) The CDWR will assume the entire responsibility for procuring the
electricity needs of retail customers through December 31, 2002, to the
extent that those needs are not met by generation sources owned by or under
contract to SCE (The unmet needs are referred to as SCE's "net short
position.") The IOUs will resume procurement of its net short position after
2002.
After the other elements of the MOU are implemented, SCE may enter into a
settlement of or dismiss its federal district court lawsuit against the
CPUC, the State of California or any of its agencies, or against the federal
government seeking recovery of past undercollected costs.
On April 6, 2001, PG&E filed for bankruptcy protection under Chapter 11 of
the United States Bankruptcy Code. As of March 31, 2001, Los Alamos Energy
had recorded approximately $228,000 in accounts receivable with PG&E as a
bad debt. Therefore, Los Alamos Energy has provided for a reserve against
collection uncertainties for these PG&E receivables.
Los Alamos Energy has historically sold power to PG&E, which is one of the
California utilities that is subject to the rate freeze. Due to
uncertainties arising form PG&E's bankruptcy, Los Alamos Energy elected to
terminate its contract with PG&E, and instead entered into a Participating
Generator Agreement with the California Independent System Operator
("CAISO"), and is currently selling power to the CAISO through the Automated
Power Exchange as its Scheduling Agent.
RESULTS OF OPERATIONS
Period ended June 30, 2000 compared with June 30, 2001.
The net loss for the period ended June 30, 2001, was $146,453 compared with
$707,928 for the period ended June 30, 2000.
The Company overall generated $121,906 in revenues in the period ended June 30,
2001 compared to revenues of $53,258 in the fiscal year ended March 31, 2000.
Management attributes this increase to the sale of power to entities other than
PG&E and the acquisition of the Atlas Power revenue stream.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2001 the Company had a working capital deficit of $2,361,578 as
compared to a working capital deficit on March 31, 2001 of $2,254,565. The
Company sees this changes as insignificant.
Net cash provided by operating activities was $72,496 for the period ended June
30, 2001 compared to the utilization of $9,828 of cash for the same period last
year.
The Company does not anticipate that it will have any problems in meeting its
obligations for continuing fixed expenses, materials procurement or operating
labor.
PART II. OTHER INFORMATION
Item 1. Legal proceedings NONE
Item 2. Changes in securities and use of proceeds NONE
Item 3. Defaults on senior securities NONE
Item 4. Submission of items to a vote NONE
Item 5. Other information NONE
Item 6.
a) Exhibits NONE
b) Reports on 8K
Current Report on Form 8-K dated April 6, 2001
Current Report on Form 8-K dated January 23, 2001
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Out-Takes, Inc.
Dated: August 15, 2001 By: Jody P. Lenihan
--------------------------------
Jody P. Lenihan, Vice President