U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-9336
STANDARD ENERGY CORPORATION
(Name of Small Business Issuer as specified in its charter)
Utah 87-0338149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
447 Bearcat Drive
Salt Lake City, Utah 84115-2517
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 364-9000
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$.01 Par Value Common Stock
Check whether the Issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1933, as
amended (the "Act") during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No .
Common Stock outstanding at February 10, 2004: 120,836,974 shares
of $0.01 par value Common Stock.
DOCUMENTS INCORPORATION BY REFERENCE:
None
FORM 10-QSB
Financial Statements and Schedules
STANDARD ENERGY CORPORATION
For nine months Ended December 31, 2003
The following table of contents of financial statements and other
information of the registrant and its consolidated subsidiaries are
submitted herewith:
PART I - FINANCIAL INFORMATION
Item Page
Item 1. Consolidated Balance Sheets -
December 31, 2003 and March 31, 2003.............. 3
Consolidated Statements of Operations -
For the nine months
ended December 31, 2003 and 2002.................. 5
For the three months
ended December 31, 2003 and 2002.................. 5
Consolidated Statements of Cash Flows -
For the nine months ended
ended December 31, 2003 and 2002.................. 6
Notes to consolidated financial statements........... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - General...... 8
Results of Operations................................. 9
Financial Condition................................... 10
Plan of Operation..................................... 11
Inflation............................................. 12
Recent Accounting Pronouncements...................... 12
Government Regulations................................ 12
Management's Conflicts of Interest.................... 12
Transactions with Management and Others............... 13
Research and Development of the Biofuels Technology... 13
Forward Looking Statements............................ 14
Item 3. Controls and Procedures............................... 15
PART II - OTHER INFORMATION
Item
Item 1. Legal Proceedings..................................... 15
Item 2. Changes in Securities................................. 15
Item 3. Defaults upon Senior Securities....................... 15
Item 4. Submission of Matters to a Vote of Security Holders... 15
Item 5. Other Information..................................... 15
Item 6. Exhibits.............................................. 16
Signature Page................................................ 18
Exhibit 31.1 Certification of CEO & CFO Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002............... 19
Exhibit 32.1 - Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.......................... 20
PART I - ITEM 1
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31 March 31
2003 2003
(Unaudited)
CURRENT ASSETS
Cash $ 625 $ 873
Total Current Assets 625 873
PROPERTY AND EQUIPMENT, net 13,147 15,892
OTHER ASSETS
Cash surrender value - life insurance 808 5,701
Oil and gas leases held for resale 42,043 42,043
Pledged drilling bonds 25,000 25,000
Total Other Assets 67,851 72,744
TOTAL ASSETS $ 81,623 $ 89,509
The accompanying notes are an integral part of these consolidated financial
statements.
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31 March 31
2003 2003
(Unaudited)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 35,654 $ 107,118
Deferred lease income 0 942
Revolving lines of credit 102,195 110,842
Notes payable and accrued interest
- related party 264,102 238,995
Total Current Liabilities 401,951 457,897
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, par value $.01 per
share: 10,000,000 shares authorized,
no shares issued and outstanding - -
Common Stock, par value $.01 per share:
200,000,000 shares authorized,
120,836,974 shares issued and
outstanding 1,208,369 1,208,369
Additional paid-in capital 7,948,573 7,911,073
Treasury stock (83,253) (83,253)
Accumulated deficit (9,394,017) (9,404,577)
Total Stockholders' Equity (Deficit) (320,328) (368,388)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 81,623 $ 89,509
The accompanying notes are an integral part of these consolidated financial
statements.
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the For the
Nine Months Nine Months
Ended Ended
December 31, December 31,
2003 2002
REVENUES
Oil and gas information services $ 4,050 $ 4,950
Oil production 77,266 16,302
Total Revenues 81,316 21,252
EXPENSES
Oil and gas information services 1,980 5,723
Oil and gas leasehold interests 0 252
Depreciation, depletion and amortization 2,745 4,749
General and administrative 73,033 29,741
Total Expenses 77,758 40,465
OPERATING INCOME (LOSS) 3,558 (19,213)
OTHER INCOME (EXPENSE)
Gain on settlement of debt 30,276 0
Interest and other income 1,343 5,071
Interest expense (24,617) (44,827)
Total Other Income (Expense) 7,002 (39,756)
NET INCOME (LOSS) $ 10,560 $ (58,969)
BASIC INCOME (LOSS) PER SHARE OF COMMON STOCK $ 0.00 $ (0.00)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 120,836,974 113,160,009
The accompanying notes are an integral part of these consolidated financial
statements.
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the For the
Three Months Three Months
Ended Ended
December 31, December 31,
2003 2002
REVENUES
Oil and gas information services $ 1,500 $ 1,350
Oil production 19,924 6,306
Total Revenues 21,424 7,656
EXPENSES
Oil and gas information services 850 3,931
Oil and gas leasehold interests 0 0
Depreciation, depletion and amortization 915 1,976
General and administrative 26,046 7,136
Total Expenses 27,811 13,043
OPERATING INCOME (LOSS) (6,387) (5,387)
OTHER INCOME (EXPENSE)
Gain on settlement of debt 30,276 0
Interest and other income (23) 1,510
Interest expense (7,307) (12,642)
Total Other Income (Expense) 22,946 (11,132)
NET INCOME (LOSS) $ 16,559 $ (16,519)
BASIC LOSS PER SHARE OF COMMON STOCK $ 0.00 $ (0.00)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 120,836,974 119,814,554
The accompanying notes are an integral part of these consolidated financial
statements.
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine For the Nine
Months Ended Months Ended
December 31, December 31,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ 10,560 $ (58,969)
Adjustments to reconcile net loss to
net cash provided by (used by)
operating activities:
Depreciation, depletion and amortization 2,745 4,749
Contributed capital for services
rendered by an officer 37,500 -
Gain on settlement of debt (30,276) -
Changes in assets and liabilities:
Increase in accounts payable
and accrued expenses 4,119 18,958
(Decrease) in deferred lease income (942) 0
Net Cash Provided by (Used by)
Operating Activities 23,706 35,262
CASH FLOWS FROM INVESTING ACTIVITIES - -
Cash Value - Life Insurance 4,893 -
Total Cash Flows Provided by
Investing Activities 4,893 -
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in cash overdraft - 991
Payments on notes payable - related party (40,200) 0
Proceeds from notes payable - related party 20,000 21,370
Net change to lines of credit (8,647) 10,923
Net Cash Provided by (Used by)
Financing activities (28,847) 33,284
NET INCREASE (DECREASE) IN CASH (248) (1,978)
CASH AT BEGINNING OF PERIOD 873 1,978
CASH AT END OF PERIOD $ 625 $ 0
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ -
Income Taxes - -
NON CASH INVESTING AND FINANCING ACTIVITIES:
Contributed capital for services rendered
by an officer 37,500 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
STANDARD ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
(Unaudited)
NOTE A - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United
States of America have been condensed or omitted in accordance with such
rules and regulations. The information furnished in the interim condensed
financial statements include normal recurring adjustments and reflects all
adjustments, which, in the opinion of management, are necessary for a fair
presentation of such financial statements. Although management believes
the disclosures and information presented are adequate to make the
information not misleading, it is suggested that these interim condensed
financial statements be read in conjunction with the Company's most recent
audited financial statements and notes thereto included in its March 31,
2003 Annual Report on Form 10-KSB. Operating results for the nine months
ended December 31, 2003 are not necessarily indicative of the results that
may be expected for the year ending March 31, 2004.
NOTE B - GOING CONCERN
These financial statements have been prepared assuming that the Company
will continue as a going concern. The Company has incurred significant
losses in the past which have resulted in working capital and accumulated
deficits. These deficits have been caused primarily from the Company's
investment in Biomass International, Inc. (a development stage company) and
significantly reduced revenues from sales of its oil and gas leasehold
interests and information services. Because of the currently depressed
conditions in the oil and gas industry, coupled with the Company's cash
flow difficulties, the Company's ability to retain and ultimately recover
its investments in oil and gas leaseholds held for resale and other assets
of the Company, is uncertain at this time. These conditions raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans in this regard are to seek additional
financing through loans or through the issuance of equity securities and to
seek increased sales related to its oil and gas businesses. However,
management can give no assurance that it will be successful in its endeavor
to resolve its cash flow difficulties or that it will be able to retain and
ultimately recover its cost in oil and gas leaseholds held for resale and
the other assets of the Company. The financial statements do not include
any adjustments relating to the recoverably and classification of
liabilities, income or expenses that might be necessary should the Company
be unable to continue as a going concern.
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company's primary oil and gas business, the brokerage of leasehold
interests, has not materially changed during the period ended December 31,
2003 due to the lack of capital to pursue the purchase of new leases. In
light of this lack of capital the Company has been exploring other ways of
generating revenues.
During the 2004 fiscal period, the Company continues to research and
develop ("R&D") its biofuels technologies (the "Biofuels Technology") for
the recycle of ordinary municipal solid waste, garbage, trash, paper and
plastic material streams ("Municipal Waste") into recycled saleable
products and the recovery of cellulosic materials ("Celmat") believed by
the Company to be convertible into electric power and ethanol
transportation fuel. (See "Research and Development of the Biofuels
Technology" below)
As a result of its R&D efforts, and after working with its engineering
and management contractor, W.J. Scales & Company of Boerne, Texas (the
"Scales Group"), management believes that the Company has developed what
appears to be a commercial application of the Biofuels Technology for the
future recovery of inorganic materials and Celmat from the recycle of
Municipal Waste (the "Mayfair Project"). The Mayfair Project would be
located in the Northeast U.S. where Municipal Waste landfills and transfer
stations charge the highest dump rates ("Tip Fee") in the U.S. for the
disposal of Municipal Waste.
If operations commence, it is anticipated that the Mayfair Project
would utilize the Biofuels Technology in a facility that combines a
Municipal Waste recycle plant, an ethanol fuel production plant and an
electrical power plant. The facility would separate Municipal Waste into
separate inorganic and organic recovery streams. The inorganic stream
products would be sold into the existing commercial salvage ("Salvage")
market and the organic stream products would be converted into specialty
products such as electricity and ethanol transportation fuels.
There can be no assurance that the required capital will be available
to construct the Mayfair Project and there can be no assurance that the
Biofuels Technology will perform on a commercial basis. The Company's
future operating results will depend on its ability to obtain adequate
financing to construct the Mayfair Project. Expenses incurred for the
Mayfair Project are currently being accounted for under line item "Project
Cost".
Results of Operations
The Company realized revenues of approximately $81,300 for the nine-
month period ended December 31, 2003, compared with approximately $21,200
for the corresponding period ended December 31, 2002. Cash requirements
during the period were obtained from a combination of internally generated
cash flow from operations, loans, asset sales, and the sale of Rule 144
investment stock to private individuals.
There were no revenues from oil and gas leasehold sales for the nine-
month period ended December 31, 2003, and none for the corresponding period
ended December 31, 2002. There were no leasehold sales due to the Company's
exploration inactivity. Revenues from the sale of the Company's geologic
information services were approximately $4,000 for the nine-month period
ended December 31, 2003, compared with approximately $4,900 for the
corresponding period ended December 31, 2002. Recent world crude oil and
natural gas price increases may stimulate domestic drilling activity which
would, once again, create a need for the Company's geologic information
services. Revenue from oil production was approximately $77,200 for the
nine-month period ended December 31, 2003, compared to approximately
$16,300 for the corresponding period ended December 31, 2002. Oil
production revenues are up as a result of uncertain world crude oil and
natural gas prices.
The Company incurred expenses related to its oil and gas leasehold
sales of zero for the nine-month period ended December 31, 2003, compared
to approximately $250 for the comparable period ended December 31, 2002.
Expenses associated with the Company's geologic information services were
approximately $1,900 for the nine-month period ended December 31, 2003,
compared to approximately $5,700 for the comparable period ended December
31, 2002. Expenses associated with the Company's oil production and
exploration activities were zero for the nine-month period ended December
31, 2003, due to the abandonment of field operations. There were no costs
for the comparable period ended December 31, 2002, due to the Company's
exploration inactivity. General and administrative expense for the nine-
month period ended December 31, 2003 were approximately $73,000, compared
to approximately $29,700 for the comparable period ended December 31, 2002.
These low figures reflect the Company's basic inactivity in its oil and gas
sector.
The Company's net loss for the 2004 fiscal nine-month period ended
December 31, 2003 was approximately $10,500, compared to approximately
$58,900 for comparable 2003 fiscal period and it expects to operate at a
loss for the remainder of the 2004 fiscal period, due to continued R&D
costs incurred for the Mayfair Project, and costs related to its oil and
gas business. (See "Consolidated Financial Statements")
The Company does not expect to realize significant cash flows from the
sale of leasehold interests, geologic information services, or oil
production and exploration activities during fiscal 2004, nor does it
expect significant leasehold sales in the foreseeable future, as the
domestic oil industry activity continues unchanged due to uncertain world
crude oil and natural gas prices.
The Company has available at March 31, 2003, unused tax operating loss
carry forward of approximately $2,058,000 that may be applied against
future taxable income through 2023. No tax benefit has been reported in the
financial statements, because the Company believes there is a 50% or
greater chance the carry forwards will expire unused. Accordingly, the
potential tax benefits of the loss carry forwards are offset by a valuation
account of the same amount.
Financial Condition
Management continues to explore additional financing alternatives for
ongoing and future operations of the Company and has entered into an
agreement with the Scales Group for the engineering, management, and
construction of the Mayfair Project. There is no assurance that the efforts
of management or the Scales Group to locate and secure additional financing
will be successful, and the failure to secure the Mayfair Project financing
would substantially alter management's assumptions as herein presented.
The Company's most significant assets are (1) its oil and gas
production income, (2) its oil and gas leaseholds held for resale,
approximating 10,000 net acres at December 31, 2003, including leaseholds
acquired under its unrelated third-party agreements, and (3) its plan for
the full development of the Mayfair Project. Other assets are; (4) the
$2,058,000 tax loss carry forward, and (5) 5,252,556 shares of Biomass. In
1994, Biomass ceased to exist as an R&D organization and in March 2000,
Biomass was sold as a shell company to an unrelated third-party under a
reorganization plan, ending a 12 year R&D effort.
Due to the proposed issuance of additional shares of Biomass to the
unrelated third-party purchaser, the Company does not expect to hold in
excess of 5% of the common stock of Biomass upon completion of the
transaction and expects to recover little, if any, of its approximate
$4,100,000 investment in Biomass represented by 5,252,556 shares of Biomass
common stock. At December 31, 2003, the Biomass shares had little value at
a bid price of $0.00 and asked $0.005 on the electronic OTC Pink Sheet
market system. With little or no volume on a daily basis, sales of the
Biomass shares appear impractical in the foreseeable future.
In order to continue in existence the Company is in need of additional
financing from outside sources or from internal operations. These
conditions raise substantial doubt about the Company's ability to continue
as a going concern. Management can give no assurances that it will be
successful in its endeavors to resolve its cash flow difficulties or that
it will be able to retain and ultimately recover its costs in oil and gas
leaseholds held for resale. The financial statements do not include any
adjustments relating to the amounts and classification of assets,
liabilities, income or expenses that might be necessary should the Company
be unable to successfully resolve these uncertainties and continue in
existence.
The Company foresees a need for additional equity financing in order
to continue in existence, and may, in the future, seek to raise additional
funds through asset sales, bank and/or other loans, debt, or equity
offerings. Any such equity offerings, asset sales, or other financing may
either be private or public and may result in substantial dilution to the
then existing shareholders of the Company. Because of uncertainties
existing in the domestic oil and gas industry and the Mayfair Project, the
Company is not in a position to forecast future earnings or cash flow. The
Company's future is very fluid and largely dependent on factors outside of
its management's control.
For the period ended December 31, 2003, Dean W. Rowell, the President
of the Company, continues to secure and guarantee loans for the Company:
(1) He has guaranteed two credit cards up to $102,000 with an outstanding
balance of approximately $102,000 at the end of the period, and (2) he
continues to loan the Company funds through his 100% owned privately-held
Utah corporation, Trachyte Oil Company ("Trachyte") with an outstanding
loan balance of approximately $218,795, plus interest of $45,307 for a
total of $264,102 at the period ended December 31, 2003. Expenses incurred
under the use of the credit cards are being accounted for under line item
"Revolving line of credit" and expenses incurred under the loan agreement
are being accounted for under line item "Notes payable - related parties".
The Company also has a note payable to GMAC totalling $14,534 at December
31, 2003, resulting from the purchase of a 2002 Saturn automobile that Mr.
Rowell will drive. (See "Consolidated Financial Statements" above).
Since fiscal 1991, Trachyte has materially supported the Company
financially largely due to Mr. Rowell's efforts to secure loans from
Trachyte for the Company. The several transactions with Trachyte have
provided the financial means for the Company to pursue its R&D of the
Biofuels Technology and the commercialization of the Mayfair Project,
otherwise the Company would have been unable to pursue these goals. Final
plans and final financial arrangements had not been completed for the
Mayfair Project at December 31, 2003.
Plan of Operation
There have been no significant changes in capitalization or financial
status during the past two years that are not reflected in the financial
statements. The Company's plan of operation during the next twelve (12)
months includes the following:
1. Pursue financing for the Mayfair Project.
2. Continue R&D, testing Municipal Waste processing
equipment and testing existing and newly developed
cellulose enzymes.
3. Continue the design and development of the Mayfair
Project into three businesses -- Municipal Waste
recycle, ethanol fuel production and electric power
generation.
4. Pursue oil and gas lease acquisition with
third party investors and investigate the possibility
of entering into the wholesale electric power
generation business.
Inflation
Inflation continues to apply moderate upward pressure on the cost of
goods and services including those purchased by the Company. Management
believes the net effect of inflation on operations has been minimal during
the past two years.
Recent Accounting Pronouncements
There are no recent accounting pronouncements that will have a
material impact on the Company's financial statements.
Government Regulations
The Company's business is subject to extensive federal, state and
local regulation. Management believes that the Company operations are in
material compliance with applicable laws, but is unable to predict what
additional government regulations, if any, affecting the Company's
business, may be enacted in the future; how existing or future laws and
regulations might be interpreted; or whether the Company will be able to
comply with such laws and regulations either in the markets in which it
presently conducts business or wishes to commence business.
There can be no assurance that either the states or the federal
government would not impose additional regulations upon the Company's
activities which might adversely affect the Company's business.
Management's Conflicts of Interest
Material conflicts of interest exist and will continue to exist
between the Company, Trachyte, and Mr. Rowell, who is also the President of
Trachyte, a privately-held Utah corporation, whose current major activities
are the exploration and production of oil and gas resources. The Company's
policy is to offer any new oil and gas property purchase first to the
Company and then to Trachyte if the Company is unable to accept the
financial obligation of any transaction. At December 31, 2003, Mr. Rowell
beneficially owned approximately 54% of the common stock of the Company and
100% of the common stock of Trachyte.
Mr. Rowell owes a duty of due care and fair dealing to both the
Company and Trachyte and the resolution of duties and conflicts in favor of
one company over the other may impair his duties to each company. It is
likely that any conflict of interest between the Company and Trachyte
requiring a determination may have to be settled in favor of the Company to
the detriment of Trachyte, as well as to the detriment of the current and
future shareholders of Trachyte.
Transactions with Management and Others
During past fiscal periods Rowell elected to sell stock in the
Company, due to limited corporate cash flow to partially compensate Rowell
in absence of a salary. Rowell will continue to serve the Company as
determined by the Board of Directors without salary or employment
agreement. The Company recorded $12,500 as an increase to additional paid-
in-capital for services contributed to the Company during the quarter ended
December 31, 2003. Geologic and other information which PIC has or develops
is available to Rowell as an officer of the Company, and he may use such
information for the benefit of the Company in determining which leases to
buy or sell. Such information is also available to Rowell, without cost, in
connection with Rowell's participation in the Leasing Programs.
During the 12-year period since fiscal 1991, Trachyte has helped
financially support the Company largely due to Rowell's efforts to secure
loans from Trachyte for the Company during periodic cash flow difficulties.
During such periods, the several transactions with Trachyte have provided
the financial means for the Company to pursue commercialization of the
Mayfair Project, otherwise the Company would have been unable to pursue
this goal. Final plans and final financial arrangements had not been
completed for the Mayfair Project as of December 31, 2003.
During the period ended December 31, 2003, the Company continued to
experience severe cash flow difficulties which have continued into the 2004
fiscal period. Since the Company has been unable to repay any of the loans
from Trachyte during the past two fiscal periods, Trachyte has received a
demand note from the Company, including interest at 12% per annum, with a
principal and interest balance at December 31, 2003 of approximately
$270,357. Neither Rowell nor Trachyte received any common stock in exchange
for debt forgiveness during the period ended December 31, 2003.
Research and Development of the Biofuels Technology
Essentially, the Company has two principal businesses. They are its
traditional oil and gas exploration and production business that has,
during the past 20-years, provided in excess of $13,000,000 to conduct the
R&D effort to commercialize its second business, the commercial development
of its Biofuels Technology, designed to economically solve the critical
problem of disposing of Municipal Waste through the 100% recycle of
Municipal Waste into useful products saleable at a profit.
Management of the Company believes its R&D efforts have produced trade
secret and know-how protection which, in the future, should produce
valuable patent protection to the Company's technologies from the Company's
long experience and work conducted at its former "Research Center" in Utah.
Based on its R&D efforts, the Company believes the Mayfair Project
would be the first business to economically produce ethanol transportation
fuel from low-cost organic cellulosic materials ("Celmat") consisting of
mostly paper products easily harvested from Municipal Waste through new
generation enviro-friendly manufacturing plants fed by Municipal Waste,
which plants would combine recycling, electric power and ethanol fuel
production at several regional biofuels plant sites.
The Company further believes that its innovative Biofuels Technology
would create a profit generating solution for three major contemporary
domestic issues. First, it would provide an opportunity to significantly
reduce the volume of Municipal Waste that currently must be landfilled or
incinerated. Second, it offers a low-cost method of producing ethanol fuel,
the only known commercially viable and publicly accepted renewable low-
polluting transportation fuel that the Company believes someday will
compete in price at the pump with gasoline. Third, it offers a low-cost
method of producing electric power from clean burning lignin fuel. The
reason for such optimism is the high Tip Fee currently paid by eastern U.S.
municipalities to landfills and to incinerators for the disposal of
Municipal Waste.
On July 15, 1996, the Company formed Biofuels, Inc. ("Biofuels"), a
wholly-owned subsidiary, for the purpose of investing in and developing the
Biofuels Technology for the Mayfair Project. This effort was centered on
management's belief that a Celmat to ethanol technology could be
commercialized, based on the Company's extensive experience at its former
research center from 1982 through 1992, and its experience in developing
the Mayfair Project with the Scales Group through November 10, 2003.
Forward Looking Statements
The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operation" contain forward-looking
statements, within the meaning of Section 27A of the Securities Act of
1933, as amended (the "Act") and Section 21E of the Act, which reflect
Managements current views with respect to the future events and financial
performance. The Company cautions that words used in this document such as
"experts", "anticipates", "believes" and "may" as well as similar words and
expressions identify and refer to statements describing events that may or
may not occur in the future, including among other things, statements
relating to anticipated growth and increased profitability, as well as to
statements relating to the Company's strategic plan, including plans to
develop the Mayfair Project and to selectively acquire other companies.
These forward-looking statements and the matters to which they refer to are
subject to considerable risks and uncertainties that may cause actual
results to be materially different from those described in this document,
including, but not limited to future financial performance and future
events, competitive pricing for services, costs of obtaining capital as
well as national, regional and local economic conditions. Actual results
could differ materially from those addressed in the forward-looking
statements. Due to such uncertainties and risks, readers are cautioned not
to place undue reliance on such forward-looking statements, which speak
only as of the date of this Form 10-QSB report.
PART 1 - ITEM 3
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
Standard Energy's President and Secretary/Treasurer have
evaluated the company's disclosure controls and procedures as of
November 10, 2003, and they concluded that these controls and
procedures are effective.
(b) Changes in Internal Controls.
There are no significant changes in internal controls or in other
factors that could significantly affect those controls subsequent
to November 10, 2003.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On February 4, 2002 a Complaint in Civil Action was filed in the Court
of Common Pleas, Philadelphia, Pennsylvania, against the Company and
Mayfair Energy Corporation, a wholly-owned subsidiary of the Company, in
which the compliant alleges that the Company and its subsidiary are in
default of an amount due to Klehr, Harrison, Harvey, Branzburg & Eller,
LLP, attorney's at law in the amount of $48,275.98. The Company's
Philadelphia counsel, Schafkopf & Burgess, LLC, filed answers to the
complaint, whereby the Company and Mayfair demand judgement in their favor
and have asked for all counts to be dismissed.
On April 23, 2003 a settlement agreement was signed where Klehr and the
company agree to settle the lawsuit for $18,000. $10,000 upon execution of
agreement and eight additional payments of $1,000 each per month until
paid. The settlement agreement terms are dependent on timely payments
being received from the Company. As such, the Company has written down the
amount payable. As of December 31, 2003, the Company recorded zero in
accounts payable to Klehr.
Item 2. Changes in Securities. None.
Item 3. Defaults On Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Administrative Action. None.
Item 6. Exhibits and Reports on Form 8-K, filed during the
quarter ended December 31, 2003.
Exhibit "31.1" - Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
Exhibit "32.1" - Certification of Chief Executive and Chief
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
SIGNA TURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANDARD ENERGY CORPORATION
(Registrant)
By: /s/Dean W. Rowell
Dean W. Rowell, President and
Chief Financial Officer
Date: February 10, 2004
Exhibit 31.1
CERTIFICATE OF CHIEF EXECUTIVE AND CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dean W. Rowell, certify that:
1. I have reviewed this quarterly report on Form 10QSB of Standard Energy
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15e and 15d-15e for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this quarterly report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occured during the registrant's most
recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of registrant's board
of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
/s/Dean W. Rowell
Dean W. Rowell
President, Chief Executive Officer (Chief Financial Officer)
and Director
Date February 10, 2004
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Standard Energy (the "Company")
on Form 10-QSB for the period ending December 31, 2003 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I,
Dean W. Rowell, Chief Executive Officer (Chief Financial Officer) of the
Company, certify, pursuant to 18 U.S.C. subsection 1350, as adopted
pursuant to subsection 906 of the Sarbanes-Oxley Act of 2002, that to the
best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of
operations of the Company.
/s/Dean W. Rowell
Dean W. Rowell
President, Chief Executive Officer (Chief Financial Officer)
and Director
Date February 10, 2004