UNITED STATES

SECURITIES ANDEXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB

 

QUARTERLY REPORT UNDERSECTION 13 OR 15(f) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLYPERIOD ENDED SEPTEMBER 30, 2004

Commission file number 333-62588

First National PowerCorporation

264 H Street, Suite A

Blaine, WA 98230

(604) 702-5604

 

IRS TAX ID #66-0349372

State ofIncorporation: Delaware

 

Check whether the issuer (1) filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the past 12 months (or for suchshorter 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] [ ]

As of September 30, 2004, there were 73,403,760 shares issued and outstanding ofthe issuer's common stock.

 

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements:

**FIRST NATIONAL POWER CORPORATION**
**(Formerly Capstone International Corporation)
**(A Development Stage Company)
**INTERIM FINANCIAL STATEMENTS
**September 30, 2004
**(Amounts expressed in US Dollars)
**(Unaudited) 
**FIRST NATIONAL POWER CORPORATION
(Formerly Capstone International Corporation)
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
September 30, 2004
(Amounts expressed in US Dollars)
(Unaudited)
TABLE OF CONTENTS 
Interim Balance Sheets as of September 30, 2004 and December 31, 2003                                     1    

 
Interim Statements of Operations    for the three month period ended 

September 30, 2004 and September    30, 2003                                                                                  2 

 
Interim Statements of Operations    for the nine month period ended 

September 30, 2004 and September    30, 2003                                                                                  3 

 
Interim Statements of Cash Flows    for the nine month period ended 

September 30, 2004 and September    30, 2003                                                                                  4

 
Interim Statements of Changes in    Stockholders' Deficiency for the 

nine month period ended September    30, 2004 and the year ended December 31, 2003                        5

 
Condensed Notes to Interim Financial Statements                                                                               6 **FIRST NATIONAL POWER CORPORATION 
(Formerly Capstone International Corporation)
(A Development Stage Company)
Interim Balance SheetsAs of September 30, 2004 and December 31, 2003
(Amounts expressed in US Dollars)
(Unaudited) 
 September 30, 2004   
December 31, 2003  
 
$   
$ **ASSETS     
CURRENT ASSETS     Cash
-   Prepaid expenses and deposits 24,470  
 
 24,470 
-    **LIABILITIES     CURRENT LIABILITIES     Accounts payable and accrued    liabilities 47,565  7,866  Loans from shareholders 44,933  43,394  
 
92,498   
51,260 
**STOCKHOLDERS’ DEFICIENCY**   
 
CAPITAL STOCK  
75,404  
 
10,768 
 
CAPITAL STOCK SUBSCRIBED  
93 
 
 
 
ADDITIONAL PAID-IN-CAPITAL  
102,841  
 
96,186 
 
DEFICIT, ACCUMULATED DURING THE DEVELOPMENT STAGE  
(246,366)  
 
(158,214)  
 (68,028)  (51,260)       
 
24,470  
-
See condensed notes to the interim financial statements. 
** APPROVED ON BEHALF OF THE BOARD Director Director1FIRST NATIONAL POWER CORPORATION
(Formerly Capstone International Corporation)
(A Development Stage Company)
 Interim Statements of Operations
For the three month periods ended September 30, 2004 and September 30, 2003
(Amounts expressed in US Dollars)
(Unaudited)
 
    
**Three months  
**Three months    
      ended  
ended    
      September 30,  September 30,         
      2004  
2003**         
$  
$ **OPERATING EXPENSES        
8,566  
      11,621 General and administrative expenses       
527   
622  Interest 
9,093   
12,243        **NET LOSS  
(9,093)  
(12,243)                Net loss per share, basic and diluted      
$ 
(0.00)  
$
(0.00)         Weighted      average common shares**outstanding  
75,396,424  
73,976,760                            
See condensed notes to the interim financial statements. 
2 **FIRST NATIONAL POWER CORPORATION  
(Formerly Capstone International Corporation)
(A Development Stage Company)  
Interim Statements of Operations
For the nine month periods ended September 30, 2004 and September 30, 2003
(Amounts expressed in US Dollars)
(Unaudited)
 
 **Cumulative        
Nine Months        
Nine Months 
 **Since        
ended        
ended 
 **Inception        
September 30, 2004        
September 30, 2003 
 
**$        
$        
$ 
OPERATING EXPENSES        
       

General and administrative expenses 
243,356        
87,563        
19,665 
Interest 
3,010        
589        
636 

246,366        
88,152        
20,301                                                                                     
NET LOSS 
(246,366)       
(88,152)             
(20,301)      
Net loss per share, basic and diluted 
       
$              (0.00)        
$            (0.00) 
Weighted average common shares outstanding        
75,396,424        
73,973,760 
See condensed notes to the interim financial statements. 
3 
FIRST NATIONAL POWER CORPORATION (Formerly Capstone International Corporation)
(A Development Stage Company) 
Interim Statements of Cash Flows For the nine month periods ended September 30,  2004 and September 30, 2003
(Amounts expressed in US Dollars)
(Unaudited)
  
Cumulative** 
      Nine Months  
      Nine Months 
      Since 
      ended 
      ended 
      Inception 
      September 30, 2004
      September 30, 2003      CASH FLOWS FROM OPERATING ACTIVITIES 
      $
      $ 
      $ 
      Net loss 
      (246,366) 
      (88,152) 
      (20,301)
      Adjustments for items not affecting cash
      Shares issued for services rendered
      15,900
      15,900 
      (Increase) decrease in prepaid expenses
      (24,470) 
      (24,470)
      Increase (decrease) in accounts payable
      and accrued liabilities 
      47,566 
      41,238
(20,875) 
      Loans from Shareholders
      44,932
      41,176
      Net cash used in operating activities
      162,438 
      55,484 
-      CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from capital stock subscriptions
      162,438 
      55,484 

      Net cash provided by financing activities 
      162,438
      55,484 
      -      NET DECREASE IN CASH 
-
-
-
Cash, beginning of period
CASH, END OF      PERIOD
-

-

-INCOME TAXES PAID
-
-
-INTEREST PAID
3,010
589
636
See condensed notes to the interim financial statements. 
4 
FIRST NATIONAL POWER CORPORATION  
(Formerly Capstone International Corporation)
(A Development Stage Company)
Interim Statements of Changes in Stockholders' Deficiency  
For the nine months period ended September 30, 2004 and the year ended December  31, 2003
(Amounts expressed in US Dollars)
(Unaudited)Deficit
        Common         Additional         accumulated 
        Common         Stock         Common         Paid-In         during the        Stock         Number of        Stock         Capital         development Amount Shares Subscribed (Discount) stage $   $  $  $ Balance as of December 31, 2002 2,114  2,113,536   24,840  (50,969)
Stock split 5:1 8,454 8,454,144 (8,454)
Shares issued for services rendered 200 200,000 79,800
Net loss for the year (107,245)            Balance as of December 31, 2003 10,768  10,767,680  
- 96,186  (158,214)
Stock split 7:1 64,606 64,606,080 (64,606)
Shares issued for services rendered 30 30,000 15,870 
Shares subscribed 93 55,391 
Net loss for the period (88,152) Balance as of September 30, 2004 75,404 75,403,760 93 102,841 (246,366) 
See condensed notes to the interim financial statements. 
5 
**FIRST NATIONAL POWER CORPORATION 
(Formerly Capstone International Corporation)
(A Development Stage Company)
Notes to Interim Financial Statements      
September 30, 2004
(Amounts expressed in US Dollars)
(Unaudited) 1  
**NOTES TO INTERIM FINANCIAL STATEMENTS**The accompanying unaudited interim financial statements have been prepared in accordance with the      instructions to Form 10-Q and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of all recurring accruals) considered necessary for fair presentation) have been included. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the year ended December 31, 2004.   Interim financial statements should be read in conjunction with the Company’s annual audited financial statements. **2 
**GENERAL**The Company was incorporated on November 16, 2000 under the laws of the      State of Delaware.      The**business purpose of the Company was to acquire funeral facilities and the      selling of prepaid funeral programs. In January of 2004 the Company      changed its business purpose to provision of wind-driven solutions to power generation requirements. On January 19, 2003 the Company changed its name to First National Power Corporation. **3 
**GOING CONCERN**The Company’s financial statements are prepared using accounting principles generally accepted in the      United States of America and applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has not generated any revenues from its planned principal operations through September 30, 2004. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. **4 
**STOCK SUBSCRIPTION AGREEMENTS**The company has executed subscription agreements to sell 136,000 shares of its common stock at a      price or $.50 per share, a total of $68,000. As of September 30, 2004,      $55,484 has been received by the Company. **5 
**AGREEMENT TO FORM SUBSIDIARY**On July 26, 2004, the company agreed with a Western European investor group, to establish a subsidiary      that would hold the licenses to the Green Oasis and the Propless Wind Power Generation projects and that they would sell 15% of that subsidiary to the investor group for $1 million. As at the date of the release of these statements, the promised funds had not arrived. Management has decided that they will eventually proceed with the establishment of the subsidiary, but they are no longer negotiating with that investor group. **6 
**SUBSEQUENT EVENT**On October 5, 2004, the Company issued an S-8 agreeing to issue 43,500      shares at a price of $.23 per      share in lieu of paying for services.  6 
 

Item 2: Management's Discussion and Analysis:

On October 4, 2004, Christopher Pennell resigned his position as Secretaryand Director; on September 29, 2004, Mr. Darryl Mills resigned is position asPresident and CEO of the Company.  

The company is continuing its review and exploration of opportunities in thepower generation and utilities industry. As previously announced, First Nationalhas a number of projects in various stages of development: the Prop-less WindPowered Generator currently under development by way of a proprietary contractwith world-renown inventor Alvin Snaper and his team at Impactive Technology ofLas Vegas Nevada; the Green Oasis Project with inventor Chaz Haba of LithiumHouse in California; and several biomass power generation projects, one in theNorth Eastern United States and one in the Caribbean area.  While theCompany is still dealing with both Mr. Snaper and Mr. Haba, the focus of theCompany at the emergence of its development stage is going to be as a financingtool for various power development projects.  It is still the intention ofthe Company to roll the technology related ventures into a wholly ownedsubsidiary and while the deal announced this summer to sell 15% of thatsubsidiary is not likely going to close, we believe that as the technology nearscommercial viability, we will be able to revive the sale possibility.

Management intends to continue to work closely with each of these projects,provide encouragement and support and to make timely and efficient strategicchoices when it comes to resource allocation. We are currently completing amanagement audit that will determine a strategic timetable. Once this has beendetermined, we will be better able to focus our attention and resources wherebest spent. Management completed a trip to Las Vegas in May where the progressof the Snaper Project was reviewed. The Green Oasis Project is currently beingreviewed and further details of our plans for that project are expected to bereleased soon.

As mentioned previously, First National is in the midst of discussionsconcerning two biomass power generation projects, one in the North EasternUnited States and one in the Caribbean region. The US project is an existingprivately held facility with all necessary licensing and permits in place. Weare in negotiations to purchase the land and facility.

The final project is a new project. We are in preliminary discussions withthe national government in that jurisdiction and have a meeting planned withthem later this year. While this project is only in its infancy, we are veryencouraged by the progress of the discussions.

We recently reached an agreement with a Western European group to purchase15% of the shares of a soon-to-be-formed subsidiary company that will developone or more specific projects. That agreement is worth $1,000,000 to FNPR. As ofthe date of this report, those funds had not been received.

Item 3. Effectiveness of the registrant's disclosure controls and procedures

Within the 90-day period prior to the filing of this report, the Companycarried out an evaluation of the effectiveness of the Company's disclosurecontrols and procedures (as defined by Rule 13a-14(c) under the SecuritiesExchange Act of 1934) under the supervision and with the participation of theCompany's chief executive officer and chief financial officer. Based on and asof the date of such evaluation, the aforementioned officers have concluded thatthe Company's disclosure controls and procedures were effective.

The Company also maintains a system of internal accounting controls that isdesigned to provide assurance that assets are safeguarded and that transactionsare executed in accordance with management's authorization and properlyrecorded. This system is continually reviewed and is augmented by writtenpolicies and procedures, the careful selection and training of qualifiedpersonnel and an internal audit program to monitor its effectiveness. During thesecond quarter of fiscal year 2004, there were no significant changes to thissystem of internal controls or in other factors that could significantly affectthose controls.

 

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

Exhibits:
Exhibit No.DocumentLocation3.1Articles of    IncorporationPreviously Filed3.2BylawsPreviously Filed31Rule    13a-41(a)/15d-14(a) CertificatesIncluded32Section 1350    CertificationsIncluded
Reports on Form 8-K

Form 8-K filed August 19, 2004, and amended August 23, 2004,reporting under Item 4 a change in accountants.

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrantcaused this report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

FIRST NATIONAL POWER CORPORATION

DATE: November 19, 2004

 

 

***/s/ Peteer Wanner***

Peter Wanner

Chief Financial Officer

 

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