The debenture is $1 million:
freedgar.com
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Southern States Power Company, Inc.(the "Company") is in the business of producing Biodiesel fuel. Biodiesel fuel is produced by converting vegetable or animal oils into a biofuel which can be blended with standard diesel fuel in an effort to eliminate or reduce particulates and other emissions associated with the burning of straight diesel fuels.
To that end, the Company's subsidiary, Power Acquisition Corp. ("Acquisition Corp."), entered into a contract (the "Technology Transfer
Agreement") with Green Aero Technology Inc. ("Green Aero") on April 9, 2001, to purchase certain technology(the "Technology") and complimentary devices (the "Device" or "Devices") developed by Green Aero for generating electrical energy from wind drive/responsive machines, with backup generator units fueled by Biodiesel fuel. This acquisition was made because the use of Biodiesel as an alternative fuel in backup generators and generation of electrical energy utilizing wind power is complimentary to the Company's business.
Acquisition Corp.'s capital structure consisted of 10,000 authorized shares of Class A Voting Common Stock, Par Value $0.001 per share (the "Class A" or, sometimes, the "Class A Common"), and 1,000 authorized shares of Class B NonVoting Common Stock, Par Value $0.001 per share (the "Class B" or, sometimes, the "Class B NonVoting Common"), with 90 shares of the Class A issued and outstanding and held by the Company, and with 10 shares of the Class B issued and outstanding and held by Green Aero, as is explained in the succeeding paragraph.
Pursuant to the Technology Transfer Agreement, (a) Acquisition Corp. will pay to Green Aero the sum of $150,000.00; (b) Acquisition Corp. will pay to Green Aero a royalty equal to 5% of gross revenues attributable to sales, leases, joint ventures with respect to, and all other dispositions of the Devices or of the Technology to third-parties; and (c) Acquisition Corp. issued and delivered to Green Aero the 10 shares of Class B NonVoting referred to in the preceding paragraph.
To fund the acquisition of the Device and the Technology, on April 3, 2001, Acquisition Corp. issued its 8% Series A $1,000,000.00 Senior Subordinated Convertible Redeemable Debentures due April 3, 2003 (the "Acquisition Corp. Debentures"), together with underlying shares of Acquisition Corp.'s Class A Common Stock, Par Value $0.001, into which the Acquisition Corp. Debentures may be convertible from time to time.
After deducting the expenses of the investment, including projected interest payments, the net proceeds to be received by Acquisition Corp. will aggregate approximately $795,000.00. The first installment of proceeds was received on April 6, 2000; the second has yet to be received. From these net proceeds, (a) $150,000.00 will be used to acquire the Technology; (b) $150,000.00 will be used as working capital to develop the Technology; (c) $150,000.00 will be used to develop a prototype; and (d) $345,00.00 will be used to develop and construct the Biodiesel Plant.
Following the acquisition of the Device and the Green Aero Technology by Acquisition Corp., on April 11, 2001, Acquisition Corp. was merged into the Company. Pursuant to the Merger, and by operation of law, the rights and obligations of Acquisition Corp. with respect to all entities would inure to the benefit of and be binding upon the Company. Consequently, as a result of the Merger,
(a) the rights and obligations of Acquisition Corp. with respect to the Technology Transfer Agreement will inure to the benefit of and be binding upon the Company;
(b) all of the issued and outstanding shares of the Class A Common Stock of Acquisition Corp. (i.e., 90 shares) were surrendered to and canceled by the Company;
(c) all of the issued and outstanding shares of the Class B NonVoting Common Stock (i.e., 10 shares) held by Green Aero were surrendered to and exchanged by the Company for 4,000,000 shares of Common Stock, Par Value $0.001 per share, of the Company, which shares of the Company will now be owned by Green Aero; and
(d) the Acquisition Corp. Debentures, together with the underlying shares of Acquisition Corp.'s common stock, Par Value $0.001 per share, into which the Acquisition Corp. Debentures were convertible from time to time, were converted into identical debentures of the Company (the "the Company Debentures"), together shares of underlying common stock, Par Value $0.001 per share, of the Company into which the Company Debentures may be converted.
As is the case when any Convertible Debentures are issued, it can be anticipated that the holder thereof will seek repayment via a conversion of debt to equity, and that, accordingly, most of the debt evidenced by the Debentures will be converted into shares of the Company, a substantial amount which will then be sold in the open market. This could have a depressing effect on the
price of shares of the Company. |
