U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

                                   (Mark One)

               [X] Annual Report Under Section 13 or 15(d) of the
                 Securities Exchange Act of 1934 for the Fiscal
                            Year Ended April 30, 2001

        [ ] Transition Report Under Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

    For the transition period from                     to                  .
                                   -------------------    -----------------

                         Commission file number 0-29356

                       Southern States Power Company, Inc.
                       -----------------------------------
                 (Name of small business issuer in its charter)

               Delaware                                      33-0312389
               --------                                      ----------
   (State or other Jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                       Identification No.)


          3400 Inland Empire Blvd., Ste. 101, Ontario, California 91764
          -------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

         Issuer's Telephone Number, Including Area Code: (909) 476-3575

         Securities Registered under Section 12(b) of the Exchange Act:

         Title of Each Class      Name of Each Exchange on Which Registered
         -------------------      -----------------------------------------

                None                                  None
         -------------------      -----------------------------------------

         Securities registered under Section 12(g) of the Exchange Act:

                                  Common Stock
                                  ------------
                                (Title of Class)

<PAGE>

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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
                                     ---     ---

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be obtained,  to the best of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB [X].

The Company had $33,197 in revenues  from  operations  during  fiscal year ended
April 30, 2001.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  (4,495,134 shares) is approximately  $449,513.  The aggregate market
value has been  computed by  reference to the average bid and ask prices of such
stock ($0.10 per share) as of August 16, 2001.

The number of shares  outstanding of the issuer's  Common Stock as of the end of
the fiscal year on April 30, 2001 was 15,658,933. The number of shares of Common
Stock outstanding as of August 16, 2001 was 50,753,141.



















                                       2

<PAGE>


                                     PART I

ITEM 1.  BUSINESS OVERVIEW

                                   THE COMPANY

Southern  States  Power  Company,  Inc.  (SSPC)  is  focused  in  the  field  of
alternative  energy.  During the year, SSPC has relocated its headquarters  from
Shreveport,  Louisiana to Ontario, California, and established a regional office
in Phoenix Arizona.  This was accomplished as the major developments were in the
West -- and the operating  officers were located in the Southern  California and
Phoenix areas.

Southern States Power Company has two synergistic divisions:  1) The Alternative
Fuels Division which is responsible for the production,  sales and  distribution
of biodiesel,  and 2) the Energy  Division which is devoted to the generation of
power using alternative fuel products.

Biodiesel  is  a  diesel  fuel  made  from  a  vegetable  oil,   rather  than  a
petrochemical  oil base -- officially  designated by EPA as an alternative  fuel
under the Energy Policy Act.  Biodiesel is a unique  alternative fuel because it
can be used in diesel engines without any change or modifications to the engines
or vehicles, or ground fueling equipment.

Management  believes that tightening clean air standards and growing fossil fuel
costs are  forcing  municipal  and  private  commercial  fleets  to look  toward
alternative fuel products. Major biodiesel initiatives have been passed at state
and federal levels across the United  States.  The Energy Policy Act (EPAct) was
passed in 1992 to accelerate the use of alternative fuels in the  transportation
sector.  In this Act the  government  recognized  fuels derived from  biological
materials as alternative fuels. Prior to the EPAct, the Clean Fuel Fleet Program
was  included  as part of the  Clean Air Act  Amendments  (1990).  This  program
specifically describes clean fuels to include alternative fuels. Executive Order
13149 directs federal agency fleets to use alternative fuel to meet at least 51%
of the  vehicles'  fuel needs,  and requires  agencies to reduce  their  overall
petroleum  consumption by at least 20% over the next five years.  Further, it is
also the goal of the United  States  Department  of Energy that 20% of petroleum
based motor fuel is replaced by alternative fuels by the year 2010.

There are nearly 50 billion  gallons of diesel  fuel  consumed  annually  in the
United States alone, not considering the greater international consumption.

The year has been one of dynamic and positive changes for SSPC. During the year,
the company  liquidated its position with NOPEC in a negotiated  settlement with
Ocean Air  Environmental,  LLC. A portion of these funds and those from the sale
of an interest in a fuel cell company called Anuvu,  helped to fund construction
of a biodiesel  plant in the Imperial  Valley,  in Southern  California.  As the
NOPEC facility is located in Florida,  the move to produce biodiesel on the West
Coast is far better suited to supply the company's customer base in the West.

Imperial Western Products  ("IWP"),  the strategic partner of the Company in the
Imperial  Valley,  where the biodiesel  plant is located,  gathers and processes
recycled cooking oils, termed yellow grease. This allows the Company to have the
lowest cost product  base on site -- which is  converted  to biodiesel  from the
only full production facility in the West.

                                       3
<PAGE>

The company is considering  several additional sites in California,  Arizona and
Nevada,  which are suitable for the  construction  of additional  plants.  These
considerations  include those facilities which are to be located on the client's
property - in some cases utilizing  their recycled  products to produce the fuel
for  their  own  mobile  and  stationary  equipment,  as well as for sale in the
alternative fuel market.  Funding for such projects will be raised from client's
who seek to build biodiesel plants to support their own operations, or from bank
financing and private placements.

A key accomplishment has been the establishment of a distributor base to provide
the fuel either in a pure form, or as a blend with  petrochemical  diesel to the
end user. The Company has secured the services of key  distributors  in Phoenix,
Las Vegas, and Southern California. The service, or handling fees, are typically
included in the cost of the fuel borne by the customer.

The new  Energy  Division  should  prove  to be a  substantial  addition  to the
company's  capabilities and generate additional revenues for the Company.  Power
shortages  have forced  many  operations  to turn to  equipment  which  provides
standby power  generation.  The  innovation  of utilizing  efficient and durable
diesel  power  engines,  fueled  with  clean-burning  biodiesel  will  open  new
opportunities for the Company which did not previously exist.

Investment  in the Gamm  Project  #2-9,  LLC and the  Gamm  Project  #3-24,  LLC
(drilled wells for oil extraction in Shreveport,  Louisiana) remain on the books
as  assets  and  offset  by  a  valuation   reserve   allowance  as  they  were,
non-operational since the acquisition to this past fiscal year.

                  TECHNOLOGY PROTECTION POLICY AND DISCLAIMERS

The  company  relies on  internally  generated  technology  and  confidentiality
agreements  executed by third,  interested parties.  Currently,  the Company has
elected to refrain  from filing for patent  protection  regarding  it's  biofuel
formulation and plant process, as the amount of disclosure which must be made in
the  application  would  disclose  information  which the Company  wants to keep
proprietary. Other components of the mixing and chemical process typically falls
into the public domain.

The company  believes  that gains in  expertise in both the chemical and process
treatment  are highly  complex and would be extremely  difficult to duplicate or
"reverse engineer".

                     CONFIDENTIALITY POLICY AND DISCLAIMERS

As  indicated  above,  the  Company  agents  and  officials  interact  with many
different technology  development entities and concerns. It is the policy of the
Company to obtain  executed  confidentially  agreements  from  those  persons or
entities to whom the Company trade secrets are revealed. The standard agreements
include  provisions  prohibiting  disclosure of  proprietary  information.  With
respect to Company  employees  and  consultants,  agreements  in place include a
provision prohibiting competition with the Company.


                                       4

<PAGE>


                             EMPLOYEES AND OFFICERS

The  officers  of the Company are  Lawrence  W.  Taggart,  President & Director,
Harrison A. McCoy III, Executive Vice-President & Director, William O. Sheaffer,
Vice President Sales and Marketing & Director, and Curtis Wright, Vice President
Engineering and Director. Anthony Miller also serves as an outside Director. The
officers of the Company are paid a salary along with  reimbursement  of expenses
personally  incurred on the Company's behalf. All have received stock options in
the Company for compensation  for their services.  The Company employs a support
staff at its corporate headquarters (one of whom is an administrative  assistant
and the other is a part time investor relations and specialized consultant).

ITEM 2.  PROPERTIES

(a)  Participation  in  Operating  Plant.  The Company is  participating  in the
     construction  of an operating  plant for  purposes of  producing  biodiesel
     (methyl ester) for sale and  distribution  to its  customers.  The plant is
     being  constructed  on property  owned and  occupied  by  Imperial  Western
     Products ("IWP") and is located at 86-600 Ave. 54,  Coachella,  California.
     IWP  processes  yellow  grease which is suitable for  feedstock  from which
     biodiesel can be produced.  The understanding between the two companies for
     the  production  of  biodiesel  is  being   memorialized  into  a  written,
     definitive  agreement.  The  proximity of the two plants saves the costs of
     transporting  the  yellow  grease.  Due to the fact  that the  Company  has
     contributed  funds to purchase the major  equipment and tanks  constituting
     components  of the plant,  as well as a supervisor,  who is a  professional
     engineer,  to oversee the  construction of the plant, and the fact that IWP
     has contributed monies, equipment and labor to construct the plant project,
     the plant is deemed to be owned  jointly  by the two  companies.  Some tank
     leaks and failure of certain  equipment has caused unforeseen  delays,  and
     barring any further  adjustments or repairs,  it is expected that the plant
     will be operational and ready for production in the 3rd Quarter of calendar
     year  2001.  The plant is  configured  to  produce  approximately  five (5)
     million gallons of finished product (biodiesel) annually with yellow grease
     as the feedstock,  or base  component.  Additional  gallons are possible if
     pure soybean or other virgin oils are used.

     Operation of the plant will also  include the right to use the  laboratory,
     which is located at the property.  This lab is being  equipped with testing
     equipment  to insure that the bio-fuel  produced  meets the  standards  and
     criteria required of such alternative fuel.

(b)  The Company's principal office is located at 3400 Inland Empire Blvd., Ste.
     101, Ontario, California. This space is leased from the Yeager Company, and
     includes an  executive  suite,  use of a conference  room,  and kitchen and
     bathroom  facilities.  This lease is on a month to month  tenancy  basis at
     $1,025 per month.  The  Company  has  already  moved once within the office
     complex to occupy a larger office to accommodate growth.

     The Company also  maintains a regional  office in the greater  Phoenix area
     located at 668 North 44th  Street,  Ste.  300.  Officers of the Company can
     readily service new and existing customers in the Arizona market which have
     elected to purchase biodiesel as an alternative fuel. This office is leased
     for a 5 month term at $796 per month.

                                       5
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

Actions  pending during the fiscal year for 2001 which included the Company as a
defendant  have  all  been  dismissed  under  negotiated  settlements  with  the
Plaintiffs. In the matter of Nichols vs. B.A.T.  International,  et al, Case No.
GIC 739485,  filed in the Superior  Court,  County of San Diego in October 1999,
the  settlement  and mutual  release,  which was  executed  on August 15,  2000,
resulted  in a  dismissal  of  the  case  as to all  parties  involved  in  this
Employment  Agreement  litigation.  There was no monetary  consideration  to any
party as a result of the settlement.

The matter of Alvis vs. B.A.T. International, et al, Case No. 99AS06972 filed in
the  Sacramento  Superior  Court in December 1999 was also  dismissed  through a
negotiated settlement which was executed on September 14, 2000. Plaintiff agreed
to return  480,000  shares of common stock as part of the  consideration  of the
settlement  which is to be returned to Treasury of the Company.  The  settlement
also included  return of 45,000 shares of common stock from Gene Bunnell,  which
were returned to Treasury.

In the Fall of 2000, the Company contemplated filing a Complaint against certain
named  defendants who allegedly  interfered with the  contractual  agreement the
Company  had with NOPEC  Corporation  in Florida.  NOPEC has an  existing  plant
capable of producing  about 10 million gallons of biodiesel  annually.  However,
the parties  were able to resolve the  differences,  resulting  in a  negotiated
settlement providing surrender of shares of the Company's stock, and cash, which
provided the operating  capital to carry the Company through the Fall and Winter
months of 2001.

All matters involving  pending or prospective  litigation have been dismissed or
resolved.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

(a)  Market   Information.   The  Company's   common  stock  is  traded  on  the
     over-the-counter  ("OTC")  system under the symbol  "SSPC".  The  following
     depicts the range of high and low bid  information  for each quarter within
     the last two fiscal years:

     Fiscal Year Ended April 30, 2000                     Bid Price
     --------------------------------
                                                      High           Low
                                                     ------         ------

     First Quarter                                   $4.75          $1.25
     Second Quarter                                  $4.75          $1.375
     Third Quarter                                   $4.00          $2.00
     Fourth Quarter                                  $4.50          $0.001

                                       6

<PAGE>

     Fiscal Year Ended April 30, 2001                      Bid Price
     --------------------------------
                                                      High           Low
                                                     ------         ------

     First Quarter                                   $2.75          $0.38
     Second Quarter                                  $1.01          $0.18
     Third Quarter                                   $0.49          $0.14
     Fourth Quarter                                  $0.56          $0.05

     Close on August 16, 2001       $0.10            $0.11          $0.10

     The prices shown above represent  inter-dealer  prices,  without adjustment
     for retail markups,  markdowns, or commissions and may not represent actual
     transactions.  The information was extrapolated from the National Quotation
     Bureau, Inc. which was the primary source for the information.

(b)  Holders. As of April 30, 2001, there were approximately 103 shareholders of
     record as owners of the Company's common stock.

(c)  Dividends.  There  have  been no cash  dividends  paid  on the  issued  and
     outstanding  common shares for the last two fiscal  years,  and the Company
     does not  anticipate  payment  of any cash  dividends  in the near  future.
     Earnings, as they are received,  will be committed to finance the Company's
     growth, and be used for capital expansion and improvements.  Declaration of
     dividends in the future will remain within the  discretion of the Company's
     Board of Directors,  which will periodically  review the dividend policy in
     an effort to ascertain  whether it would be  appropriate  to declare a cash
     dividend.

(d)  Recent  Sales  of  Unregistered  Securities.  The  following  officers  and
     directors of the Company,  and affiliated  parties have  exercised  options
     granted by the Board and purchased the number of shares below:

              Name          Shares Purchased  Exercise Date Exercise Price/Share
     ---------------------  ----------------  ------------- --------------------

     Lawrence W. Taggart          250,000     Feb. 20, 2001       $0.001
     Covenant Trust             2,250,000     Feb. 20, 2001       $0.001
     Harrison A. McCoy III        250,000     Dec. 13, 2001       $0.001
                                2,250,000     Mar 1, 2001         $0.001
     William O. Sheaffer           50,000     Dec. 14,2000        $0.001
                                  750,000     Feb. 7, 2001        $0.001
     Curtis Wright                250,000     Feb. 7, 2001        $0.001
     Anthony Miller               250,000     Mar. 15, 2001       $0.001

     Cash proceeds and  consideration  paid for the shares purchased was used as
     capital for operations.

                                       7

<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

RESULTS OF OPERATIONS:  FISCAL YEAR 2001COMPARED TO FISCAL YEAR 2000

REVENUES

Revenues for both periods were derived primarily from the sale and distribution
of biodiesel. Net revenues amounted to $33,197 and $55,501 for the years ended
April 30,2001 and 2000, respectively. Revenues declined in 2001, primarily due
to the emphasis by the Company to focus on building the base of its core
business.

GROSS PROFITS

Gross  profit/(loss)  for the years ended  April 30, 2001 and 2000,  amounted to
$(13,237)  and  $(27,402),   respectively.   Gross  profit/(loss)   improved  by
approximately 9% from 2000 to 2001.

OPERATING EXPENSES

The Company incurred research and development  expenses during 2001in the amount
of $203,924,  which was  approximately  100% greater that the amount incurred in
2000 of  $101,616  for the  same  period.  Additionally,  the  Company  incurred
consulting fees in the amount of $3,519,444  compared to $1,490,552 for the same
period for 2000. Included in consulting fees on the Statement of Operations,  is
approximately  $3.0 million and $1.4 million of non-cash based  compensation for
the years ended April 30, 2001 and 2000 respectively.

NET LOSS

Net loss

The net loss of the  Company  for fiscal  year 2001 was  $4,362,516or  basic and
diluted net loss per share of $0.46  compared to the  previous  year net loss of
$4,269,683or basic and diluted net loss per share of $0.43.Net loss increased by
$0.03 per share or 7%,  primarily due to the non-cash  stock based  compensation
expense.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal year 2001, the company expended  approximately $110,000 on the new
operating  plant  (see  item  2) and  expects  to  expend  $135,000  more on the
operating  plant  through the fiscal year 2002.  The Company  excepts to finance
these expenditures through current revenues.

The Company's net working capital position for 2001 is negative $314,399,  which
compares  to  negative  $402,848  for fiscal  year  2000,  which  represents  an
improvement  of  $88,449.  Assets as of the end of the fiscal  year  amounted to
$244,298.

Current  liabilities  for 2001 are $324,749  resulting  from  accounts and loans
payable  and  accrued  expenses.  The notes  payable to  OceanAir  Environmental
representing  operational  expenses  and  advances to NOPEC were paid off and/or
satisfied.  The primary loan  remaining at year end on the  Company's  books was
$70,000   which  was  incurred  to  purchase  and  acquire   equipment  for  the
construction of a methyl ester (biodiesel) plant in Coachella.

                                       8
<PAGE>

The Company has maintained  sufficient  liquidity throughout 2001 to pay for and
cover all development and operational expenses incurred. This liquidity has been
maintained  from  advances from private  parties,  sale of  non-earning  assets,
settlement  of claims  and  disputes,  sales of  product  and  private  sales of
corporate debentures.  Additionally, the Company has raised monies from the sale
of debentures.  Cash for services has been  conserved by exchanging  options for
shares of common stock for services.  While  significant  revenues have not been
received nor attained from the sale and distribution of product,  management has
managed to keep the Company  liquid by  effectively  disposing and using certain
corporate assets which have been  non-productive and illiquid.  Revenues for the
fourth quarter improved  significantly over the previous quarters,  due in large
part to the  conversion  of  debentures  which  had been  purchased  by  various
investors.

Other significant financial items include the following: 1) With respect to cash
flow  derived  from  financing  activities,  the net cash  provided by financing
activities for 2001 is $267,751,  compared to $871,600 for fiscal year 2000, and
2) the  number of shares  issued in 2001 in  exchange  for  services  is $85,496
compared to $1,329,532 for fiscal year 2000.

ABANDONMENT OF NOPEC ACQUISITION

Early in the year the Company was  continuing  to fund the  operations  of NOPEC
Corporation,  a private  company  located in Lakeland,  Florida.  At that time a
funding and merger and  acquisition  agreement had been entered into between the
two companies,  whereby NOPEC would be acquired and merged into Southern  States
Power  Company  in  consideration  for cash  and  stock.  In  July,  2000 it was
discovered  that another  company was also  negotiating  for the  acquisition of
NOPEC,  and was  successful  in inducing  NOPEC to attempt to terminate  further
communications or cooperation with the Company.

In the early Fall of 2000,  the Company  was  seriously  contemplating  filing a
Complaint to seek retribution for the damages it had suffered due to the alleged
intentional  interference.  However, further action was avoided, and the Company
entered into a negotiated settlement with OceanAir Environmental LLC whereby the
Company  received cash and  forgiveness  of certain  obligations in exchange for
ceasing any further attempts to recover for alleged damages. The monies received
as consideration for this settlement  provided capital to sustain operations and
support the general and administrative expenses up to early Spring, 2001.

SALE OF INTEREST IN ANUVU

The  Company  had  previously  acquired a half  interest  in  certain  fuel cell
technology also owned by a company called Anuvu. A party interested in acquiring
the Company's half share interest in the fuel cell  technology  made an offer to
purchase this interest for $300,000 in the early Fall of 2000. This  transaction
was successfully  completed and the revenues were received as agreed. Receipt of
these  monies  enabled  the  Company  to pay off and  satisfy  many  outstanding
payables that had accrued.

In addition to the cash  received  from the sale of this  interest,  the Company
also received a five (5%) percent  interest in a new company to be formed called
Cell Power,  Inc. which was charged with the further research and development of
the fuel cell  technology.  Also, the Company  retained the right to develop and
exploit this particular technology to the extent that it was one Watt or less.

                                       9
<PAGE>

RELOCATION OF CORPORATE OFFICES

In October 2000 the Company  relocated  its  principal,  corporate  offices from
Shreveport, Louisiana to Ontario, California. Due to the fact that the principal
officers  of the  Company  resided  in  Southern  California,  and the fact that
customers using biodiesel  supplied by the Company were primarily located in the
Phoenix  region at the time,  it  seemed  preferable  to  relocate  to  Southern
California,  and Ontario was selected  because of it's  convenient  location and
proximity to a major International airport.

Because of it's need to expand  facilities  during the year, the Company has had
to relocate to larger office  facilities  within the same office  complex within
this period of time.

CHANGE IN FOCUS OF BUSINESS OPPORTUNITIES

In  the  late  Fall  of  2000,   (fiscal  year  2001)  the  Company   reassessed
opportunities  within  the  business  community,  and  considered  the  depth of
experiences it had enjoyed in the alternative fuels business,  namely,  the sale
and distribution of biodiesel (technically referred to as methyl ester). This is
a "green", clean burning diesel fuel manufactured and produced from plant stock,
compared to petrol-chemical  diesel from fossil fuels. Biodiesel can be produced
from virgin feedstocks,  which are typically derived from soybean or nut oil, or
from spent vegetable  oils,  such as those processed by rendering  companies and
used for cooking purposes. Both of these sources of feedstock are from renewable
resources,  and  when  blended  with  regular  diesel  or  used  100% as a fuel,
eliminate the typical black particulate  matter which is readily noticeable from
most diesel engines.

It  became  clear to the  management  of the  Company  that in order to insure a
consistent  supply of biodiesel for it's  customer  base at a relatively  stable
price,  it would be necessary to construct it's own plant for  processing  spent
vegetable  oils  (yellow  grease) in a region  which is  convenient  both to the
southern  California and Phoenix  markets.  It was fortunate late in the Fall of
2000 to be introduced to Imperial Western Products ("IWP") located in Coachella,
just East of Indio,  California.  IWP is a large  cotton seed  processing  plant
which also has a facility for processing yellow grease which they typically sell
for use in animal foods. After several introductory  meetings,  an understanding
was reached whereby IWP agreed to participate in the construction of a biodiesel
plant at their facility in Coachella which would utilize their processed  yellow
grease as the basic source of feedstock for conversion to biodiesel.

Due to limited  financial  resources,  the Company  sought  after and  purchased
"previously  owned"  equipment  and tanks which were  suitable  as reactors  and
separation  tanks for the two stages  necessary  to process  the  chemicals  and
feedstock. The Company was able to obtain financing for this equipment from it's
commercial  bank,  and enabled it to  commence  to work with IWP to  construct a
facility.

Throughout  the course of  construction  during the Spring of 2001  considerable
work had been  performed  to  install  the  tanks and  equipment  which had been
purchased.  IWP made substantial  contributions to the plant as well,  expending
time,  laborers,  and capital in an effort to complete the plant which was to be
the first permanent  facility of it's type in the Western region of the U.S. Due
to the  contributions  and joint  efforts by both IWP and Southern  States Power
Company  expended  to  complete  this  plant,  the  nature of  ownership  can be
considered  as joint  ownership  for the  common  purpose of  manufacturing  and
producing biodiesel as an alternative fuel to assist in cleaning up our critical
air resources.

                                       10
<PAGE>

CONVERTIBLE DEBENTURE PROGRAM

In an effort to raise capital to support continued plant construction, equipment
purchases, and general operating expenses, the Company participated in a program
whereby convertible  debentures were sold to various investors,  who had options
to convert  their  debentures  for common  shares in the Company.  Commencing in
March and April, 2001, monies were raised periodically from these investors, who
subsequently issued Notices of Conversion stating their intent to convert.

As of the end of  fiscal  year  2001,  $174,000  had been  raised  through  this
program,  which  helped to provide  capital  needed to  purchase  equipment  and
proceed with the construction of the biodiesel plant in Coachella.

This program also resulted in the issuance of additional  free-trading shares to
those  debenture  holders who  participated  in the  conversions.  These  shares
increased the "float" and the  availability of marketable  shares for the public
at  large.  Additionally,  the  heightened  activity  regarding  trading  of the
Company's  shares  resulted in a relatively  substantial  increase in numbers of
shareholders.

TECHNOLOGY TRANSFER AGREEMENT

The Company entered into an agreement with Green Aero Energy, Ltd., a California
company,  for the transfer and assignment of technology in consideration for the
exchange of shares of Southern  States Power Company.  The technology  which was
transferred to the Company involves the generation of electrical power with wind
as the source of energy.  This  proprietary  technology  differs  somewhat  from
conventional  wind-driven  machines,  or  devices,  in  that it is  designed  to
eliminate many of the modern turbine's limitations relating to wind velocity and
other factors. Additionally,  this technology produces energy that can be stored
without  the  use or  necessity  of  batteries.  It  incorporates  the  use of a
hydraulic system that can possibly achieve 90% efficiency, which is considerably
higher than conventional wind machines which use standard gear boxes.

Of particular  significance to the Company is the fact that the system will also
incorporate the use of standard generators powered by diesel engines for standby
power  generation  when there is  insufficient  wind to drive the wind turbines.
These  generators  will be designed and installed to run on 100% biodiesel to be
provided by the Company.

Southern  States  Power has  licensed  back the rights to Green  Aero  Energy to
develop and commercially exploit the technology,  and has provided funds for the
construction of a working prototype.

ALLIANCES WITH MID-WEST SOYBEAN GROWERS

The Company has  established  an alliance,  or working  relationship,  with West
Central Soy, a cooperative  located in Iowa consisting of many soy bean growers.
West Central Soy processes the beans grown by its members,  and converts the soy
bean oil into biodiesel.

The Company has entered into an understanding  with this co-op for the import of
finished  biodiesel  product for delivery to  customers of the Company.  Company
representatives  also visited and met with other soy bean  cooperatives in South
Dakota and Nebraska to ascertain the feasibility of purchasing  their soy oil as
a feedstock

                                       11

<PAGE>

to produce  biodiesel,  or  alternatively,  to participate in a joint venture to
build and construct a biodiesel plant at one or more soy bean processing plants.

SUBSTANTIAL ORDER FOR BIODIESEL

During  the fourth  quarter  of fiscal  year 2001 the  Company  entered  into an
understanding with Rockland Materials, Inc. in Phoenix, Arizona for the delivery
of 100% biodiesel for use in the company's trucks. Rockland Materials is a large
cement contractor  operating in the Arizona markets,  and being  environmentally
conscious, made a corporate decision to start using a clean, alternative fuel in
their  cement  trucks.  With no  conversion  necessary,  Southern  States  Power
arranged to bring in and deliver 100% biodiesel to Rockland  Materials to assist
in improving the air quality in the greater  Phoenix area. It is estimated  that
Rockland will be ordering and using 1.2 million  gallons of biodiesel  annually,
which is believed to be the largest order in the country to a single user.

SUBSEQUENT EVENTS

Subsequent to the end of fiscal year 2001,  the Company has continued to develop
markets for the sale and  distribution  of biodiesel in the Phoenix and Southern
California regions. It has established  relationships with several  distributors
of fuel in these  regions who are  distributing  biodiesel  to  customers of the
Company.  This  alternative  fuel is typically  delivered as a blended fuel with
standard  #2  diesel  (usually  20%  biodiesel),  or is  distributed  as a  fuel
comprised of 100% biodiesel.

The plant  which is under  construction  in  Coachella  as a joint  effort  with
Imperial  Western  Products  has  been  installed,  and  all  of  the  reactors,
separation  tanks,  and other  equipment  involved in the washing and distilling
processes have been connected. During one of the final recent hydraulic tests to
check for leaks and any other  items  which  might  need  correction,  the large
10,000  gallon  separation  tank was found to have several  leaks from  vertical
cracks in the  stainless,  and is in the  process of being  replaced.  When this
replacement  is  completed,  the plant should be fully  functional  and ready to
produce biodiesel.

Southern  States Power has created a new Energy  Division which is managed by an
individual who is very  experienced  and  knowledgeable  in the field of energy,
power generation. As a consequence,  the Company was successful in financing and
purchasing three (3) two megawatt  Cummins  generators which have been leased to
the  University of California  at Riverside for back-up,  stand-by  power in the
event of  blackouts  or power  outages.  These  units  have been  delivered  and
installed,  and are intended to run on biodiesel as the fuel source  provided by
or through the Company.  It is believed  that this is the first  instance in the
country that stationary  power generators have been permitted to run exclusively
on biodiesel.  Since  installation of these units, there has been a considerable
amount of  interest  expressed  by other  potential  users who desire to install
similar generation plants which will run on biodiesel.

During the first quarter of fiscal year 2002 the Company acquired its first fuel
truck and trailer which have a capacity of  approximately  8800  gallons.  These
vehicles are intended to be used for  distribution  of biodiesel to customers of
the Company.  The trailer is currently  located at the site where the generators
have been  installed,  and is used to supply the fuel to the three  units  being
operated by the Riverside Public Utility district.

                                       12

<PAGE>

The debenture  program has been completed and all of the  debentures  which were
sold to investors  have been  converted  into common shares of the Company on or
about July 10, 2001. This program resulted in raising  approximately one million
dollars  (gross)  exclusive  of fees  and  costs,  which  totaled  approximately
$205,000. Thus, the Company was successful in raising approximately $795,000 net
capital.  The funds were used to purchase  and secure the  purchase of the three
power  generators;  complete  construction  of the  Coachella  plant,  and cover
certain operational costs incurred by the Company.  Additionally,  this resulted
in  issuance  of shares by the  Company,  which when  added to the  outstanding,
issued shares at the start of the program,  equaled the total authorized  shares
of 50  million.  The  Company  filed a 14C  filing  to  amend  the  Articles  of
Incorporation for an increase in the total number of authorized shares up to 250
million  in  the  event  that  additional  shares  are  necessary  for  purposes
beneficial to the Company. The Board approved the action to proceed to amend the
Articles of  Incorporation  on June 1, 2001 and after  approval of  shareholders
holding a majority of shares, the 14C was filed with the SEC. The new, increased
authorization  resulting from the Amended  Articles became effective on or about
July 10, 2001. This filing also included the  authorization to issue a new class
of  Preferred  Shares of the Company  with voting  rights equal to 10X those for
each share of Common Stock..

The Company is looking at and considering sites on which to construct additional
plants for the  manufacture and processing of biodiesel.  Additionally,  several
companies have approached  Southern States Power  expressing  interest in having
the  Company  build or assist in  constructing  biodiesel  plants  and/or  power
generation installations at their respective locations.

FORWARD-LOOKING STATEMENTS

In  connection  with,  and  because it desires  to take  advantage  of the "safe
harbor" provisions of the Private Securities  Litigation Reform Act of 1995, the
company cautions  readers  regarding  certain forward looking  statements in the
following  discussion  and  elsewhere in this report and in any other  statement
made by, or on behalf of the Company,  whether or not in future filings with the
Securities and Exchange  Commission.  Forward-looking  statements are statements
not  based on  historical  information  and which  relate to future  operations,
strategies, financial results or other developments.  Forward-looking statements
are necessarily based upon estimates and assumptions that are inherently subject
to   significant   business,   economic  and   competitive   uncertainties   and
contingencies, many of which are beyond the Company's control and many of which,
with  respect  to future  business  decisions,  are  subject  to  change.  These
uncertainties and contingencies can affect actual results and could cause actual
results  to differ  materially  from  those  expressed  in any  forward  looking
statements  made  by,  or on  behalf  of,  the  Company.  These  forward-looking
statements  can  generally  be  identified  as such  because  the context of the
statement  will  include  words such as the Company  "believes",  "anticipates",
"expects" or words of similar  import.  Similarly,  statements that describe the
Company's future plans, objectives or goals are also forward-looking statements.
Such statements may address future events and conditions concerning, among other
things,  the  Company's  results of  operations  and  financial  condition:  the
consummation of acquisition and financing transactions and the effect thereof on
the Company's business;  capital expenditures;  litigation;  regulatory matters;
and the Company's plans and objectives for future operations and expansion.  The
Company disclaims any obligation to update forward-looking statements.

ITEM 7.  FINANCIAL STATEMENTS

The  financial  statements  are filed and  included at the end of this report as
exhibits,  and are  incorporated  herein by  reference.

                                       13

<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

None

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following  table  identifies the name,  age, and positions of all directors,
officers, and persons nominated by management to become a director:

<TABLE>
<CAPTION>
          Name          Age         Position          Term of Office  Period of Service
----------------------  ---  -----------------------  --------------  ------------------
<S>                     <C>  <C>                      <C>             <C>
Lawrence W. Taggart     58   President, Director           1 yr.      Apr. '00 - Aug.'01
Harrison A. McCoy, III  53   Ex.Vice-Pres., Director       1 yr.      Nov. '99 - Aug.'01
William O. Sheaffer     66   Vice-Pres., Director          1 yr.      Oct. '00 - Aug.'01
Curtis Wright           43   Vice-Pres., Director          1 yr.      Feb. '01- July '01
Anthony Miller          48   Director                      1 yr.      Mr. '01 - Aug. '01
</TABLE>

All current  directors are serving one-year terms and are subject to re-election
at the annual meeting of  shareholders.  The officers of the Company are elected
to  serve,  subject  to  the  discretion  of the  Board,  until  successors  are
appointed.

Biographical Information re Directors

Lawrence W. Taggart is an attorney  licensed to practice law in California since
1973.  Mr. Taggart  received a B.A.  degree from the University of California at
Berkeley in 1964,  and after  spending  nearly  four years in the Army  (highest
grade - Captain),  attended and graduated from Western State University  College
of Law in 1973.  He has  practiced in areas of corporate  and business law, real
estate and civil  litigation for the past five years..  He also has an extensive
background  in Finance,  having been  associated  with a major  savings and loan
association for 12 years. In addition to his professional career as an attorney,
and as legal Counsel for several  companies,  he has assumed positions of senior
management in companies  involved in mortgage banking and merchant banking,  and
technical   companies   which   developed   new   products   in  the  fields  of
telecommunication and automotive  maintenance.  He was President of a subsidiary
company which was part of TCS  Enterprises,  Inc., a reporting,  public company,
and served on the Board of this Company from 1985 until 1989. Mr. Taggart served
on the Board of Westec  Services,  Inc. as an outside  Director for 15 years - a
company  committed  to  environmental  compliance  and  tech  services  to other
companies.  Additionally,  Mr.  Taggart  served on the Board of Octus,  Inc.,  a
reporting, public company from 1997 to 1998.

Harrison A. McCoy III is a former  member of the U.S.  Army Corps of  Engineers.
After serving in Vietnam,  Mr. McCoy obtained a BS in Chemical  Engineering from
Cal Poly - Pomona. He also holds an AS degree in Water/Wastewater Treatment from
San Bernardino  Valley College.  Mr. McCoy has enjoyed a twenty-five year career
in  environment/alternative   fuels/engineering/waste  management  fields.  Most
recently, Mr. McCoy started

                                       14
<PAGE>

and managed his own entrepreneurial firm, Bioenergy Engineering and Technologies
Corporation. This entity specialized in developing technology and site plans for
regional integrated liquid/solid, urban/industrial waste treatment management.

William O.  Sheaffer  joined the Company as Director in 2000.  He is a cum laude
graduate of USC with an MBA from Pepperdine University. Since 1996, Mr. Sheaffer
has served as Vice  President  of  Marketing & Managing  Director  for  Chemical
Products,  Inc.  Prior to that,  he  served  as Senior  Marketing  and  Business
Consulting to IMPCO/KRACO from 1993 to 1996. Between 1992 and 1994, Mr. Sheaffer
served as Vice President of Marketing and Sales for Harvey  Universal,  a dealer
of  industrial  and retail  products.  From 1990 to 1992, he served as Executive
Vice President of Calculated  Industries,  a consumer and commercial electronics
concern.  Mr.  Sheaffer's  extensive  marketing and sales  experience will prove
extremely valuable to the Company,  where he is Marketing Director. For the last
five years Mr.  Sheaffer has been involved  with  marketing and sales of various
retail products, including industrial cleaning products.

Curtis  Wright is a  Professional  Engineer  (PE) who resides with his family in
Phoenix. Mr. Wright has had extensive experience in the area of fuel reclamation
and cleanup, and plant configuration and operations. He is certified to sign off
on equipment and plant processes both in Arizona and  California,  and currently
hold the position of Vice-President, Engineering for the Company. Mr. Wright has
been involved in the fuel and plant business for the past five years.

Anthony  Miller is  President  and a Director of U.S.  Crude,  Ltd.,  a publicly
traded  company  located in Loma Linda,  California.  U.S. Crude has developed a
process  for  injecting  steam down  existing  oil wells to free up the flow and
production  of oil. He is the sole outside  Director of the Company,  and brings
with him considerable experience in areas of corporate management, and knowledge
regarding the operations and requirements imposed on publicly trading companies.
Mr.  Miller  serves on the Board of Directors of U.S.  Crude,  Inc., a reporting
company, and has managed this company for the past two years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the  Securities and Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of the Company's stock, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange  Commission,  Officers,
directors  and  greater  than  ten-percent  owners are  required  by  applicable
regulations  to furnish the Company with copies of all Section  16(a) forms that
they file.

Based solely on a review of the copies of such forms furnished to the Company or
written  representations  from certain persons, the Company believes that during
fiscal year 2001 all filing requirements  applicable to its current officers and
directors were complied with.

ITEM 10.  EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The  following  table sets  forth the  annual  cash  compensation  for  services
rendered by the officers noted for the fiscal years indicated:

                                       15

<PAGE>

                           SUMMARY COMPENSATION TABLE

                               ANNUAL COMPENSATION

   Name and Position        Year     Salary   Bonus   Other Annual Compensation
----------------------  ----------  -------   -----   --------------------------

Lawrence W. Taggart     Fiscal '00    -0-      -0-    -0-
  President & Director  Fiscal '01  $90,000    -0-    Car Allowance  $6,000
                                                      Health Ins Premium  $9,084


Harrison A. McCoy III   Fiscal '00    -0-      -0-    -0-
  Ex Vice-Pres. & Dir.  Fiscal '01  $90,000    -0-    Health Ins Premium $3,000

William O. Sheaffer     Fiscal '00    -0-      -0-    -0-
  Vice Pres. & Director Fiscal '01  $60,000    -0-    Health Ins Premium $2,800

Curtis Wright           Fiscal '01  $30,000    -0-    -0-
  Vice Pres. & Director

Anthony Miller          Fiscal '01    -0-      -0-    -0-
  Director

Employment  agreements were entered into between  Officers  Lawrence W. Taggart,
Harrison A. McCoy III, and William O. Sheaffer on March 14, 2001  reflecting the
fiscal salaries shown in the table above. These agreements also reflect terms of
three (3) years for each named  officer,  with a  severance  scale  equal to one
month  compensation  for each month  employed or working for the Company for any
involuntary termination without cause. These agreements are attached as exhibits
to this report.

Stock Options:  During Fiscal Year 2001, the following Directors and Officers of
the  Company  received   options  to  purchase  stock  as  additional   non-cash
compensation in accordance with the following table:

<TABLE>

<CAPTION>
         Name          Date of Grant of Option    No. of Shares of Option    Exercise Price
---------------------  -----------------------  ---------------------------  --------------

Lawrence W. Taggart          Oct. 4, 2000         250,000 (restricted)           $0.001
                             Oct. 4, 2000         500,000 (100,000 each yr
                                                             restricted)         $0.001
                             Feb. 7, 2001       2,250,000 (restricted)           $0.001
                             Apr. 16, 2001        250,000 (unrestricted S-8)     $0.001
                                                ---------
                                                3,250,000

                                       16
<PAGE>
         Name          Date of Grant of Option    No. of Shares of Option    Exercise Price
---------------------  -----------------------  ---------------------------  --------------
<S>                    <C>                      <C>                          <C>
Harrison A. McCoy III        Oct. 4, 2000         500,000 (100,000 each yr
                                                             restricted)         $0.001
                             Dec. 13, 2000        250,000 (restricted)           $0.001
                             Feb. 7, 2001       2,250,000 (restricted)           $0.001
                             Apr. 16, 2001        150,000 (unrestricted)         $0.001
                                                ---------
                                                3,150,000

William O. Sheaffer          Oct. 4, 2000         250,000 (50,000 each yr
                                                             restricted)         $0.001
                             Oct. 4, 2000          50,000 (restricted)           $0.001
                             Feb. 7, 2001         750,000 (restricted)           $0.001
                             Apr. 16, 2001        100,000 (unrestricted)         $0.001
                                                ---------
                                                1,150,000

Curtis Wright                Feb. 7, 2001         250,000 (restricted)           $0.001
                             Mar. 1, 2001         250,000 (vests 9-1-01
                                                             restricted)         $0.001
                             Apr. 16, 2001        100,000 (unrestricted)         $0.001
                                                ---------
                                                  600,000
</TABLE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL SHAREHOLDERS

The following  table set forth the holdings of Common Stock (the  Company's sole
class of stock) as of April 30, 2001 by (I) each  person who held of record,  or
was known by the  Company  to own  beneficially,  more than five  percent of the
outstanding  Common Shares of Stock of the Company,  (ii) each  director,  (iii)
each director  nominee,  and (iv) all directors and officers as a group.  Unless
otherwise  indicated,  all  shares  are owned  directly.  Common  Stock  that is
"beneficially owned" includes all the Common Stock that the person has the right
to acquire  within 60 days of April 30,  2001 and stock for which the person has
voting rights alone.  The  percentage  ownership for any person assumes that all
the stock that could be acquired by that person,  by option or warrant  exercise
or otherwise, is in fact outstanding and that no other stockholder has exercised
a similar right to acquire  additional  shares. The number of shares of stock in
this table is 18,860,747 which includes  15,658,933 shares  outstanding on April
30, 2001 plus all shares  represented  by options or warrants  currently held by
the directors listed in the table.


                        BENEFICIAL OWNERS OF COMMON STOCK

    Names and Addresses          Amount of Beneficial Ownership      Percentage
of Certain Beneficial Owners          Beneficial Ownership            of Class
----------------------------     ------------------------------      ----------

Hemisphere Group                           2,072,800                    13.3
  Newport Beach, California

                                       17
<PAGE>


    Names and Addresses          Amount of Beneficial Ownership      Percentage
of Certain Beneficial Owners          Beneficial Ownership            of Class
----------------------------     ------------------------------      ----------

Cede & Co.                                 2,540,659                    16.2
  New York, NY

Directors & Officers:

Lawrence W. Taggart                          250,000                     1.5

Covenant Trust                             2,500,000
                               (beneficial interest by Taggart)         15.0

Harrison A. McCoy III                      2,650,000                    16.9

William O. Sheaffer                          900,000                     5.7

Curtis Wright                                250,000                     1.5

Anthony Miller                              250,000                      1.5

All officers and directors as a Group:    6,800,000                     43.4

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Not applicable.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits Required by Item 601 of Regulation S-B.

The following  exhibits  were filed with the  Company's  Amendment No. 2 to Form
10-SB on or about January 22, 1998 and are incorporated herein by reference.

     Exhibit Number     Description
     --------------     --------------------------------------------------------

     3.1                Certificate of Incorporation
     3.2                Bylaws

The following  exhibit was filed with the  Company's  Form 10-KSB for the fiscal
year ended April 30, 1999 on or about August 9, 1999 and is incorporated  herein
by reference:

     Exhibit Number     Description
     --------------     --------------------------------------------------------

     3.3                Certificate of Amendment of Certificate of Incorporation

                                       18

<PAGE>

The following  exhibits  were filed with the Company's  Form 8-K dated April 30,
2001 and are incorporated herein by reference:

     Exhibit Number     Description
     --------------     --------------------------------------------------------

     2.0                Plan of Merger Between Power Acquisition Corp. and
                        Southern States Power Company, Inc.

     10.1               Technology Transfer Agreement dated April 9, 2001
                        Between Green Aero Technology, Inc. and Power
                        Acquisition Corp.

(b)      Form 8-K Filings

The Company filed a Form 8-K dated April 30, 2001,  advising of the  acquisition
by the Company's subsidiary,  Power Acquisition Corp., of certain technology and
complementary  devices  developed by Green Aero Technology,  Inc. for generating
electrical energy from wind  drive/responsive  machines for $150,000,  5% of the
gross  revenues  attributable  to the  sale,  lease,  joint  venture  and  other
dispositions of the devices or technology to  third-parties,  and issuance of 10
shares of Class B Non-Voting  Common Stock.  Subsequent to the  acquisition  the
Company merged its subsidiary, Power Acquisition Corp. into the Company.


                                       19
<PAGE>


                                   SIGNATURES

In accordance  with Section 13 or 15(d) of the Exchange Act, the  registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                       Southern States Power Company, Inc.


                             /s/ Lawrence W. Taggart
                         ------------------------------
                         Lawrence W. Taggart, President


Date:  August 27, 2001

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Signature                    Capacity in Which Signed              Date
-------------------------    ------------------------          ---------------

/s/ Larry W. Taggart          President and Director           August 27, 2001
-------------------------

/s/  William O. Sheaffer      Secretary and Director           August 27, 2001
-------------------------

/s/ Harrison A. McCoy III    Executive Vice President          August 27, 2001
-------------------------           and Director



                                       20
<PAGE>


















                       SOUTHERN STATES POWER COMPANY, INC.

                              FINANCIAL STATEMENTS

                       YEARS ENDED APRIL 30, 2001 AND 2000









                                    CONTENTS

                                                                        Page

Independent Auditors' Report                                              1

Financial Statements:
  Balance Sheet                                                           2
  Statements of Operations                                                3
  Statements of Stockholders' Equity (Deficit)                           4-5
  Statements of Cash Flows                                               6-7
  Notes to Financial Statements                                         8-17


<PAGE>













                          INDEPENDENT AUDITORS' REPORT





Board of Directors
Southern States Power Company, Inc.
Ontario, California


We have audited the accompanying balance sheet of Southern States Power Company,
Inc.  as  of  April  30,  2001,  and  the  related   statements  of  operations,
stockholders'  equity  (deficit)  and cash flows for the two years  then  ended.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Southern States Power Company,
Inc. as of April 30, 2001,  and the results of its operations and its cash flows
for the two years then ended in conformity  with generally  accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As shown in the financial  statements,
the Company has incurred  net losses from  operations,  has negative  cash flows
from operations,  and its current liabilities exceeds its current assets.  These
factors raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 1. The financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.




/s/ Stonefield Josephson, Inc.

CERTIFIED PUBLIC ACCOUNTANTS

Santa Monica, California
August 10, 2001

                                                                               1
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                         BALANCE SHEET - APRIL 30, 2001


                                     ASSETS

Current assets:
  Cash                                           $       1,939
  Prepaid expenses                                       8,411
                                                 -------------

          Total current assets                                   $      10,350

Property and equipment, net of
  accumulated depreciation                                             136,348

Goodwill, net of accumulated amortization                               97,600
                                                                 -------------

                                                                 $     244,298
                                                                 =============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
  Accounts payable and accrued expenses          $     256,518
  Loan payable, related party                            9,564
  Loan payable, other                                   40,000
  Current maturities of loan payable, bank              18,667
                                                 -------------

          Total current liabilities                              $     324,749

Loan payable, bank, less current maturities                             51,333

Stockholders' deficit:
  Common stock; $0.001 par value, 50,000,000
    shares authorized, 15,658,933 shares issued
    and outstanding                                     15,659
  Additional paid-in capital                        11,581,152
  Subscriptions receivable                              (6,400)
  Accumulated deficit                              (11,609,360)
  Accumulated other comprehensive loss                (112,835)
                                                 -------------

          Total stockholders' deficit                                 (131,784)
                                                                 -------------

                                                                 $     244,298
                                                                 =============


See accompanying notes which are an integral part of these financial statements.

                                                                               2
<PAGE>

<TABLE>

                       SOUTHERN STATES POWER COMPANY, INC.

                            STATEMENTS OF OPERATIONS




<CAPTION>
                                                           Year ended     Year ended
                                                         April 30, 2001  April 30, 2000
                                                         --------------  --------------
<S>                                                      <C>             <C>
Revenue                                                  $       33,197  $       55,501

Cost of revenue                                                  46,434          82,903
                                                         --------------  --------------

Gross profit                                                    (13,237)        (27,402)
                                                         --------------  --------------

Operating expenses:
  Research and development                                      203,924         101,616
  Consulting fees (including non-cash compensation)           3,519,444       1,490,552
  Loss on investment in joint venture in Mexico
    with related party                                                -          13,680
  Valuation allowance for investment in GAMM projects                 -       1,700,000
  General and administrative expenses                           702,834         946,287
                                                         --------------  --------------
                                                              4,426,202       4,252,135
                                                         --------------  --------------

Loss from operations                                         (4,439,439)     (4,279,537)
                                                         --------------  --------------

Other income (expense):
  Interest and dividend income                                    1,767          14,020
  Interest expense                                             (174,844)         (4,166)
  Settlement income                                             250,000               -
                                                         --------------  --------------

          Total other income                                     76,923           9,854
                                                         --------------  --------------

Net loss                                                 $   (4,362,516) $   (4,269,683)
                                                         ==============  ==============

Net loss per share - basic and diluted                   $        (0.46) $        (0.43)
                                                         ==============  ==============

Weighted average number of shares outstanding -
  basic and diluted                                           9,567,119       9,926,807
                                                         ==============  ==============

</TABLE>



See accompanying notes which are an integral part of these financial statements.

                                                                               3
<PAGE>

<TABLE>

                       SOUTHERN STATES POWER COMPANY, INC.

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                       YEARS ENDED APRIL 30, 2001 AND 2000



<CAPTION>
                                       Common stock     Additional                 Accumulated                       Total
                                       ------------       paid-in    Subscriptions comprehensive  Accumulated    stockholders'
                                     Shares    Amount     capital     receivable       loss         deficit     equity (deficit)
                                   ----------  -------  -----------  ------------  -------------  ------------  ----------------
<S>                                <C>         <C>      <C>          <C>           <C>            <C>           <C>
Balance at May 1, 1999             10,907,500  $10,907  $ 4,061,343  $          -  $           -  $ (2,977,161) $      1,095,089

Issuance of stock in
  exchange for oil and gas rights
  related to GAMM project             485,447      485    1,699,515                                                    1,700,000

Exercise of common stock options      557,000      557      563,033                                                      563,590

Issuance of common stock from
  private placement                   215,281      215      274,795                                                      275,010

Issuance of stock in exchange
  for services                        519,057      520    1,329,012                                                    1,329,532

Issuance of common stock on
  behalf of related party              22,300       22       69,060                                                       69,082

Shares revoked for non-
  performance by related party     (4,020,800)  (4,021)       4,021

Shares of common stock issued for
  purchase of available for
  sale securities                      45,134       45      112,790                                                      112,835

Unrealized loss on available
  for sale securities                                                                   (112,835)                       (112,835)

Net loss for the year
  ended April 30, 2000                                                                              (4,269,683)       (4,269,683)

                                   ----------  -------  -----------  ------------  -------------  ------------  ----------------
Balance at April 30, 2000           8,730,919    8,730    8,113,569             -       (112,835)   (7,246,844)          762,620

</TABLE>


See accompanying notes which are an integral part of these financial statements.

                                                                               4
<PAGE>

<TABLE>

                       SOUTHERN STATES POWER COMPANY, INC.

            STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT), (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000


<CAPTION>
                                       Common stock     Additional                 Accumulated                       Total
                                       ------------       paid-in    Subscriptions comprehensive  Accumulated    stockholders'
                                     Shares    Amount     capital     receivable       loss         deficit     equity (deficit)
                                   ----------  -------  -----------  ------------  -------------  ------------  ----------------
<S>                                <C>         <C>      <C>          <C>           <C>            <C>           <C>
Stock options exercised               147,800      148      160,152                                                      160,300

Issuance of stock in exchange
  for services                        409,520      410       85,088                                                       85,498

Exercise of options issued
  for services to employees
  and directors                     6,650,000    6,650                     (6,400)                                           250

Shares of common stock issued
  for conversion of debentures      1,120,694    1,121      172,879                                                      174,000

Shares of common stock
  cancelled/redeemed               (1,400,000)  (1,400)     (23,600)                                                     (25,000)

Debt issuance costs and
  intrinsic value of beneficial
  conversion feature related to
  convertible debentures                                    174,000                                                      174,000

Stock options granted to
  employees and directors                                 2,899,064                                                    2,899,064

Net loss for the year
  ended April 30, 2001                                                                              (4,362,516)       (4,362,516)
                                   ----------  -------  -----------  ------------  -------------  ------------  ----------------
Balance at April 30, 2001          15,658,933  $15,659  $11,581,152  $     (6,400) $    (112,834) $(11,609,360) $       (131,784)
                                   ==========  =======  ===========  ============  =============  ============  ================


</TABLE>


See accompanying notes which are an integral part of these financial statements.

                                                                               5
<PAGE>

<TABLE>



                       SOUTHERN STATES POWER COMPANY, INC.

                            STATEMENTS OF CASH FLOWS

                           INCREASE (DECREASE) IN CASH


<CAPTION>
                                                             Year ended      Year ended
                                                           April 30, 2001  April 30, 2000
                                                           --------------  --------------
<S>                                                        <C>             <C>
Cash flows provided by (used for) operating activities:
  Net loss                                                 $   (4,362,516) $   (4,269,683)
                                                           --------------  --------------

  Adjustments to reconcile net loss to net cash
   provided by (used for) operating
    activities:
      Depreciation                                                  3,322           1,789
      Amortization of goodwill                                    466,400         466,000
      Amortization of loan costs and intrinsic value of
        beneficial conversion feature of debentures               174,000               -
      Stocks issued in exchange for services                       85,498       1,329,532
      Non-cash compensation                                     2,899,064               -
      Valuation allowance for investment in GAMM projects               -       1,700,000
      Loss on abandonment of property and equipment                     -          32,000
      Bad debts                                                    54,222          95,396

  Changes in assets and liabilities:
    (Increase) decrease in assets:
      Accounts receivable                                          27,900         (32,079)
      Prepaid expenses                                             (8,411)            375
      Other receivables                                            10,678         (15,974)
      Notes receivable, NOPEC Corporation                         255,250        (250,000)
      Notes receivable, related parties                                 -         (26,314)

    Increase (decrease) in liabilities -
      accounts payable and accrued expenses                       136,270          59,462
                                                           --------------  --------------

          Total adjustments                                     4,104,193       3,360,187
                                                           --------------  --------------

          Net cash used for operating activities                 (258,323)       (909,496)
                                                           --------------  --------------

Cash flows provided by (used for) investing activities:
  Acquisition of property and equipment                           (61,402)        (11,257)
  Loan payable, related party                                       9,564               -
                                                           --------------  --------------

          Net cash used for investing activities                  (51,838)        (11,257)
                                                           --------------  --------------

Cash flows provided by financing activities:
  Proceeds from exercise of options                               160,300         563,590
  Redemption of stock                                             (25,000)              -
  Proceeds from private placement                                       -         275,010
  Proceeds from loan, bank                                          1,200               -
  Proceeds from loan, other                                        40,000               -
  Proceeds from convertible debentures                            174,000               -
  Stock subscriptions payable                                     (33,000)         33,000
  Stock subscriptions receivable                                   (6,400)              -
                                                           --------------  --------------

          Net cash provided by financing activities               311,100         871,600
                                                           --------------  --------------

Net increase (decrease) in cash                                       939         (49,153)
Cash, beginning of year                                             1,000          50,153
                                                           --------------  --------------

Cash, end of year                                          $        1,939  $        1,000
                                                           ==============  ==============

</TABLE>


See accompanying notes which are an integral part of these financial statements.

                                                                               6
<PAGE>

<TABLE>

                       SOUTHERN STATES POWER COMPANY, INC.

                      STATEMENTS OF CASH FLOWS (CONTINUED)

                           INCREASE (DECREASE) IN CASH

<CAPTION>
                                                             Year ended      Year ended
                                                           April 30, 2001  April 30, 2000
                                                           --------------  --------------
<S>                                                        <C>             <C>
Supplemental disclosure of cash flow information -
    Interest paid                                          $          844  $            -
                                                           ==============  ==============
    Income taxes paid                                      $          800  $        2,881
                                                           ==============  ==============

Supplemental disclosure of non-cash investing and
  financing activities:
    Issuance of common stock in exchange for services      $       85,496  $    1,329,532
                                                           ==============  ==============
    Issuance of common stock for investment in
      GAMM projects                                        $            -  $    1,700,000
                                                           ==============  ==============
    Issuance of common stock for purchase of available for
      sale securities                                      $            -  $      112,835
                                                           ==============  ==============
    Non-cash compensation                                  $    2,899,064  $            -
                                                           ==============  ==============
    Note receivable incurred from officers for
      exercise of options                                  $        6,400  $            -
                                                           ==============  ==============
    Debt incurred for purchase of property and equipment   $       68,800  $            -
                                                           ==============  ==============
    Direct payments made by OceanAir Environmental, LLC
      to NOPEC Corporation on behalf of the Company        $       50,000  $      375,000
                                                           ==============  ==============
    Debt issuance cost and beneficial conversion feature   $      174,000  $            -
                                                           ==============  ==============

</TABLE>



See accompanying notes which are an integral part of these financial statements.

                                                                               7
<PAGE>



                       SOUTHERN STATES POWER COMPANY, INC.

                          NOTES TO FINANCIAL STATEMENTS

                       YEARS ENDED APRIL 30, 2001 AND 2000




(1)  Summary of Significant Accounting Policies:

     General:

          Southern States Power Company,  Inc. (the "Company") was  incorporated
          in the State of Louisiana  on March 13, 1998 and has elected  April 30
          as its year-end.

     Merger with Pascal Ventures, Inc.:

          On July 13, 1998, the Company entered into a Share Exchange  Agreement
          and Plan of Reorganization with Pascal Ventures, Inc. Pursuant to this
          share exchange  agreement,  the Company  merged into Pascal  Ventures,
          Inc.  a  publicly  held   corporation  with  no  material  assets  and
          liabilities,  and no operations,  in a stock for stock  exchange.  The
          shareholders  of Southern  States Power Company  maintained  effective
          control through ownership of shares  outstanding after the merger with
          Pascal Ventures, Inc. and therefore, for accounting purposes, Southern
          States Power  Company,  Inc. was treated as the acquirer.  The name of
          Pascal  Ventures,  Inc.  was then  changed to  Southern  States  Power
          Company, Inc. and is the surviving company.

          This  acquisition  was  accounted  for  using the  purchase  method of
          accounting,  and accordingly,  the purchase price was allocated to the
          assets  purchased and  liabilities  assumed based upon their estimated
          fair  values on the date of  acquisition.  The excess of the  purchase
          price over the  estimated  fair values of the net assets  acquired was
          recorded as goodwill,  which is being  amortized  straight line over 3
          years from the date of purchase.

     Business Activity:

          The Company plans to utilize agricultural products and "yellow grease"
          reclamation  by-products to produce and distribute bio-diesel fuels in
          exchange for fees from  customers.  The Company also plans to generate
          and distribute  energy  efficient  electric power supply to individual
          consumers and industrial markets in exchange for fees from customers.

          The  Company  is  principally   involved  in  four  areas  of  product
          development:

          1.   The  distribution  of  biodiesel  fuels under the name brand OxyG
               B-60 Biodiesel utilizing agricultural products and used vegetable
               oils from  restaurants  to produce  biodiesel;

          2.   Research  and  development  of products to reduce  diesel  engine
               emissions,  and  development  of  fuel  cell  technology;  and

          3.   Electric power generation for the new energy deregulation utility
               markets,  and improved energy  production  from renewable  energy
               sources.  The  United  States  Environmental   Protection  Agency
               (USEPA)  and the  California  Air  Resources  Board  (CARB)  have
               approved   OxyG  B-60   Biodiesel  for  sales  and  marketing  in
               California and the United States.





                                                                               8
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(1)  Summary of Significant Accounting Policies, Continued:

     Going Concern:

          The Company's consolidated financial statements are prepared using the
          generally  accepted  accounting   principles  applicable  to  a  going
          concern,  which contemplates the realization of assets and liquidation
          of  liabilities  in the normal course of business.  The Company has no
          material source of revenues and has sustained  significant losses from
          operations.  Without  realization of additional  capital,  it would be
          unlikely for the Company to continue as a going  concern.  This factor
          raises  substantial doubt about the Company's ability to continue as a
          going concern.  Management  recognizes  that the Company must generate
          additional resources to enable it to continue operations.  The Company
          intends to begin recognizing significant revenue during the year 2002.
          Management's   plans  also  include  the  sale  of  additional  equity
          securities.  However,  no assurance can be given that the Company will
          be successful in raising additional capital.  Further, there can be no
          assurance, assuming the Company successfully raises additional equity,
          that the Company will achieve  profitability or positive cash flow. If
          management  is  unable  to  raise  additional   capital  and  expected
          significant  revenues do not result in positive cash flow, the Company
          will  not be able to meet  its  obligations  and  will  have to  cease
          operations.



     Use of Estimates:

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements and the reported amounts of revenues
          and expenses during the reporting period.  Actual results could differ
          from those estimates.

     Fair Value:

          Unless otherwise indicated, the fair values of all reported assets and
          liabilities which represent financial  instruments,  none of which are
          held  for  trading  purposes,  approximate  carrying  values  of  such
          amounts.

     Cash:

          Concentration
          -------------

          The Company  maintains  its cash in bank deposit  accounts  which,  at
          times,  may exceed  federally  insured  limits.  The  Company  has not
          experienced any losses in such accounts.




                                                                               9
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(1)  Summary of Significant Accounting Policies, Continued:

     Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of:

          The Company  evaluates the  recoverability of its long-lived assets in
          accordance with Statement of Financial  Accounting  Standards No. 121,
          "Accounting  for the  Impairment of Long-Lived  Assets and  Long-Lived
          Assets to be Disposed of." SFAS 121 requires recognition of impairment
          of  long-lived  assets in the event the net book value of these assets
          exceeds  the  future  undiscounted  cash flows  attributable  to these
          assets. The Company assesses  potential  impairments to its long-lived
          assets when there is evidence that events or changes in  circumstances
          have made recovery of the asset's  carrying value unlikely.  Should an
          impairment  exist,  the impairment loss would be measured based on the
          excess of the carrying  value of the asset over the asset's fair value
          or discounted estimates of future cash flows.

          During  the two years  ended  April 30,  2000,  the  Company  recorded
          aggregate  losses of  approximately  $1,200,000,  related  to its Otay
          Mesa,  Mexico joint venture,  of which,  $13,680 was incurred in 2000.
          The Company had entered  into a joint  venture  with a  subsidiary  of
          B.A.T.  International,  Inc., a founding  shareholder,  providing cash
          investments  for the  development  of an  electric  vehicle  and  fuel
          efficient  manufacturing  plant.  Due to operating  difficulties,  the
          plant  ceased  operations  in early  1999,  and all  investments  were
          written off to expense.

          In May of 1999,  the Company  issued  approximately  485,447 shares in
          exchange for lease rights to  thirty-five  stripper  wells,  including
          three miles of new gas pipeline and  refurbished  storage,  separation
          and oil facilities on 135 acres of land in Louisiana ("GAMM Project").
          The investment was recorded at cost,  measured by the trading value of
          common  shares  at  the  date  of  acquisition,  totaling  $1,700,000.
          Subsequently,  based on information  obtained from independent sources
          on the  "swabbing"  technique  of gas and oil  production,  management
          concluded that an impairment existed.  The "swabbing"  technique is in
          its experimental stages and based on preliminary  engineering reports,
          modifications  and  perfection of this  technique  would be expensive.
          Accordingly,   the  Company's  management  has  recorded  a  valuation
          allowance of $1,700,000 related to the GAMM Project.



                                                                              10
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(1)  Summary of Significant Accounting Policies, Continued:

     Other Comprehensive Income (Loss):

          Effective  January 1, 1998, the Company adopted Statement of Financial
          Accounting Standards No. 130, "Reporting  Comprehensive Income" ("SFAS
          130"),  which  establishes  new rules for the reporting and display of
          comprehensive income and its components;  however, the adoption had no
          impact on the Company's net loss. SFAS 130 requires  unrealized  gains
          or losses on the Company's available for sale securities,  which prior
          to adoption were reported  separately in stockholders'  equity,  to be
          included  in  other   comprehensive  loss.  Other  comprehensive  loss
          amounted to $112,835 for the year ended April 30, 2001.

     Income Taxes:

          Deferred  income  taxes  are  reported  using  the  liability  method.
          Deferred  tax  assets  are   recognized   for   deductible   temporary
          differences  and deferred tax  liabilities  are recognized for taxable
          temporary  differences.  Temporary  differences  are  the  differences
          between the reported  amounts of assets and  liabilities and their tax
          basis.  Deferred tax assets are reduced by a valuation allowance when,
          in the  opinion of  management,  it is more  likely than not that some
          portion  or all of the  deferred  tax  assets  will  not be  realized.
          Deferred  tax assets and  liabilities  are adjusted for the effects of
          changes in tax laws and rates on the date of enactment.

          As of April 30,  2001,  the  Company had net  federal  operating  loss
          carryforwards  totaling  approximately  $9,000,000,  expiring  through
          2019. Deferred tax assets resulting from the net operating losses have
          been reduced in full by a valuation allowance.

     Major Customer:

          During May 1999, the Company entered into an agreement with an Arizona
          school  district bus service to provide OxyG B-60  bio-diesel fuel for
          all buses in Deer Valley School District. During the years ended April
          30, 2001 and 2000,  substantially  all of the revenues were  generated
          from Deer Valley School District.

     Net Loss Per Share:

          Common stock  equivalents  (approximately 35 million shares) have been
          excluded from the net loss per share calculations because their effect
          would reduce loss per share.


                                                                              11
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(1)  Summary of Significant Accounting Policies, Continued:

     Accounting For Stock-Based Compensation:

          The Financial Accounting Standards Board issued Statement of Financial
          Accounting Standards No. 123, Accounting for Stock-Based Compensation,
          which  applies the fair value  method of  accounting  for  stock-based
          compensation  plans. In accordance  with this  statement,  the Company
          expects  to  continue  to  account  for  stock-based  compensation  in
          accordance with Accounting Principles Board Opinion No. 25, Accounting
          for Stock Issued to  Employees.  The fair value for these  options was
          estimated at the date of grant using a  Black-Scholes  option  pricing
          model with the following weighted-average  assumptions for years ended
          April 30, 2001 and 2000:  weighted average risk-free interest rates of
          6.15%; dividend yields of 0%;  weighted-average  volatility factors of
          the expected  market price of the Company's  common stock of 0%; and a
          weighted average expected life of the option of 4 years.  Based on the
          fair value of these  options using the Black  Scholes  option  pricing
          model,  pro forma  information  regarding  net income and earnings per
          share  under  the  fair-value  method  has not been  presented  as the
          amounts are negligible for the years ended April 30, 2001 and 2000.

     New Accounting Pronouncements:

          Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  133,
          Accounting  for Derivative  Instruments  and Hedging  Activities,  was
          issued in June 1998 and establishes accounting and reporting standards
          for derivative  instruments,  including certain derivative instruments
          embedded in other contracts, (collectively referred to as derivatives)
          and for hedging  activities.  SFAS No. 133 was initially effective for
          all fiscal quarters of fiscal years beginning after June 15, 1999.

          In July 1999, SFAS No.l 137, Accounting for Derivative Instruments and
          Hedging  Activities - Deferral of the Effective Date of FASB Statement
          No. 133, was issued which delays the effective date of SFAS No. 133 to
          fiscal  years  beginning  after June 15,  2000.  The Company  does not
          believe that the  adoption of this new  standard  will have a material
          impact on its financial position or results of operations.

          In December 1999, the SEC staff issued Staff Accounting Bulletin (SAB)
          No. 101,  Revenue  Recognition in Financial  Statements,  which became
          effective  December 2000. SAB No. 101 summarizes the SEC staff's views
          in  applying  generally  accepted  accounting  principles  to  revenue
          recognition in financial  statements.  The application of this SAB did
          not  have a  material  effect  on the  Company's  revenue  recognition
          policies.


                                                                              12
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000





(1)  Summary of Significant Accounting Policies, Continued:

     New Accounting Pronouncements, continued:

          In March 2000, the Financial  Accounting Standards Board (FASB) issued
          Interpretation  No. 44 of Accounting  Principles  Board Opinion No. 25
          Accounting  for Certain  Transactions  Involving  Stock  Compensation,
          which,  among other things,  addressed  accounting  consequences  of a
          modification  that reduces the exercise  price of a fixed stock option
          award (otherwise known as repricing). If the exercise price of a fixed
          stock  option  award is reduced,  the award must be  accounted  for as
          variable  stock option plan from the date of the  modification  to the
          date the award is exercised, is forfeited, or expires unexercised. The
          exercise  price of an option  award has been reduced if the fair value
          of the consideration  required to be paid by the grantee upon exercise
          is  less  than  or  potentially  less  than  the  fair  value  of  the
          consideration  that was  required  to be paid  pursuant to the award's
          original terms.  The requirements  about  modifications to fixed stock
          option awards that directly or indirectly reduce the exercise price of
          an award apply to modifications made after December 15, 1998, and will
          be applied  prospectively  as of July 1, 2000.  The  adoption  of this
          interpretation did not impact the Company's financial statements.

          In January 2001,  the Financial  Accounting  Standards  Board Emerging
          Issues Task Force issued EITF 00-27  effective  for  convertible  debt
          instruments   issued  after  November  16,  2000.  This  pronouncement
          requires the use of the intrinsic  value method for recognition of the
          detachable and imbedded  equity features  included with  indebtedness,
          and  requires   amortization   of  the  amount   associated  with  the
          convertibility  feature  over the life of the debt  instrument  rather
          than the period for which the  instrument  first becomes  convertible.
          All debt instruments  entered into during 2001 have been accounted for
          pursuant to EITF 00-27. (See note 6).


(2)  Property and Equipment:

     A summary is as follows:

          Machinery and equipment                          $      130,202
          Leasehold improvements                                    6,468
          Office equipment                                          4,789
                                                           --------------

                                                                  141,459
          Less accumulated depreciation                             5,111
                                                           --------------
                                                           $      136,348
                                                           ==============

                                                                              13
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(3)  Goodwill:

     A summary is as follows:

          Goodwill                                          $    1,400,000
          Less accumulated amortization                          1,302,400
                                                            --------------

                                                            $       97,600
                                                            ==============

     Amortization  expense amounted to $466,400 and $466,000 for the years ended
     April 30, 2001 and 2000, respectively.

(4)  Loan Payable, Other:

     Loan  payable,  other,  is  payable  on demand,  bears no  interest  and is
     unsecured.


(5)  Loan Payable, Bank and Other:

     Loan  payable,  bank,  bears  interest at 1% over prime  interest  rate, is
     unsecured,  holds the personal  guaranty of a shareholder and is payable in
     monthly installments of $2,333 starting on September 15, 2001 until paid or
     is fully due by February 15, 2004. Interest is payable monthly.

     Aggregate  maturities of the Loan payable,  bank, for each of the next five
     years as of April 30, 2001 are as follows:

          Year ending April 30,
              2002                                           $       18,667
              2003                                                   28,000
              2004                                                   23,333
                                                             --------------

                                                             $       70,000
                                                             ==============



                                                                              14
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(6)  Stockholders' Equity:

     During  January 2000,  the Company sold 215,281  shares of its common stock
     for  approximately  $275,000  through a  private  placement  offering  with
     exemption  from  registration  under  Regulation D of the Securities Act of
     1933.

     During  the year ended  April 30,  2000,  The  Hemisphere  Group  exercised
     544,500 options at approximately $1.00 each.  Subsequent to April 30, 2000,
     the  Hemisphere  Group  exercised an  additional  58,000  options for gross
     proceeds of $58,000.

     During  August 1999,  the Company  issued  45,134 shares for an 8% interest
     (classified  as  available  for  sale   securities)  in  two  oil  and  gas
     exploration ventures, which investments were valued at the trading price of
     the Company's shares at date of acquisition.

     In May of 1999, the Company issued approximately 485,447 shares in exchange
     for lease rights to thirty-five  stripper  wells,  including three miles of
     new gas pipeline and refurbished storage,  separation and oil facilities on
     135  acres of land in  Louisiana.  The  investment  was  recorded  at cost,
     measured by the trading value of common shares at the date of acquisition.

     At  inception,   the  Company  had  issued   5,000,000   shares  to  B.A.T.
     International,  Inc. in exchange for exclusive  worldwide rights to utilize
     the B.A.T. Dolphin Pulse Charge Technology for uses in the power generation
     and natural gas pumping  application.  During fiscal 2000 issues had arisen
     with respect to the  feasibility of this  technology  and B.A.T.  agreed to
     convey  4,020,800 of these shares to the  treasury,  which shares were then
     cancelled.  Inasmuch  as  there  was no  cost  basis  at  inception  to the
     transfers of the technology or oil and gas rights, no amounts were recorded
     in the accompanying financial statements.

     During the year ended April 30, 2001 and 2000,  the Company  issued 409,520
     and 519,057 shares of its restricted common stock to various individuals in
     exchange for services  which were  recorded at the fair value of the shares
     at the date of issuance, respectively.  Compensation expense resulting from
     these  issuances  amounted  to $85,498 and  $1,329,532  for the years ended
     April 30, 2001 and 2000, respectively.

     During March 2001,  the Company  entered into an  agreement  with  Southern
     States Gas Gathering  Systems,  Inc. to terminate  the Company's  rights to
     purchase gas at a contracted rate, however, the Company has rights to lease
     the  stripper  wells.  Pursuant  to this  agreement,  Southern  States  Gas
     Gathering  Systems,  Inc.  returned to the Company 1,150,000 common shares,
     which  were  subsequently  cancelled  and for  which,  no  value  has  been
     assigned.


                                                                              15
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(6)  Stockholders' Equity, Continued:

     Convertible Debentures
     ----------------------

     During April 2001, the Company  initiated a $ 1,000,000  private  placement
     offering of its 8% debt securities  convertible into shares of common stock
     at a conversion  rate equal to 70% of the lowest closing bid prices for the
     Company's  common  stock  for the  preceding  30 days  prior to the date of
     conversion.  During the year  ended  April 30,  2001,  the  Company  raised
     $174,000,  all of which was converted into 1,120,694 common shares in April
     2001.  The Company also recorded an interest  expense of $174,000  (maximum
     amount  is  limited  to the  face  amount  of the  notes  even  though  the
     conversion feature exceeded face value) arising from beneficial  conversion
     feature and debt issue costs.

     Subsequent to April 30, 2001,  the Company  raised an additional  $825,000,
     all of which was converted into  approximately  29,500,000 common shares at
     the  conversion  rate equal to 70% of the lowest closing bid prices for the
     Company's  common  stock  for the  preceding  30 days  prior to the date of
     conversion.  The Company  will also record an interest  expense of $825,000
     (maximum  amount is limited to the face amount of the notes even though the
     conversion feature exceeded face value) arising from beneficial  conversion
     feature and debt issue costs.

     In  connection  with this  offering,  4 million  shares are to be issued to
     third  parties for services to be rendered.  The shares  issuable have been
     valued  using the fair market value at the date of  commitment  and will be
     pro ratably  recorded as debt  issuance  cost. As these shares had not been
     issued as of August 10, 2001, these are not included in outstanding  common
     shares or net loss per share computations.


(7)  Stock Options:

     During March 1998,  the Company raised  $1,000,000  through the issuance of
     1,000,000 shares of its common stock to The Hemisphere  Group. An option to
     purchase an additional  1,500,000 shares of the Company's common stock were
     also granted, with an exercise price of $1.00 each which equaled fair value
     at the date of grant,  and expired in March 2001 (after an  extension  of 1
     year).

     During  March 2000,  the  Company  granted  310,000  options to OceanAir to
     purchase 310,000 shares of restricted  common stock at an exercise price of
     $2.00 per share which equaled fair value at the date of grant.

     During the year ended April 30, 2001, 147,800 options were exercised by The
     Hemisphere Group for gross proceeds of $160,300.  In addition,  the Company
     granted,  to  management  and  directors,  options  to  purchase  8,566,000
     underlying  common  shares at an  exercise  price of $0.001 per  share,  of
     which, 6,650,000 options have been exercised through the execution of notes
     receivables due to the Company. The Company recorded a non-cash stock based
     compensation expense of $2,899,064 during the year ended April 30, 2001.


                                                                              16
<PAGE>


                       SOUTHERN STATES POWER COMPANY, INC.

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED APRIL 30, 2001 AND 2000




(7)  Stock Options, Continued:

     The number and weighted  average exercise prices of options granted for the
     years  ended   April  30,   2001  and  2000  are  as  follows:

                                                    2001              2000
                                             -----------------  ----------------
                                                       Average           Average
                                                      Exercise          Exercise
                                               Number   Price    Number   Price
                                             ---------  -----  ---------  -----

     Outstanding at beginning of the year      803,000  $1.37  1,050,000  $1.00
     Granted during the year                 8,566,000   0.00*   310,000   2.00
     Exercised during the year               6,797,800   0.00*   557,000   1.02
     Cancelled during the year                 655,200   1.37          -      -
     Outstanding at end of the year          1,916,000   0.00*   803,000   1.37
     Exercisable at end of the year          1,916,000   0.00*   803,000   1.37

     * Average exercise price amounted to $0.001.


(8)  Commitments:

     Rent
     ----

     The Company  leases its office  space in Ontario,  California  on a monthly
     basis. Rent expense under all leases amounted to $6,200 and $20,400 for the
     years ended April 30, 2001 and 2000, respectively.

     Termination of Agreement to Purchase of 51% Interest in NOPEC Corporation
     -------------------------------------------------------------------------

     During fiscal 2000,  the Company  agreed to acquire a 51% interest in NOPEC
     Corporation,  a  Lakeland,  Florida  based  state of the art  facility  for
     processing  bio-diesel fuel. The purchase price was  $11,500,000,  of which
     $1,500,000  was to be paid in cash and the balance in the Company's  common
     stock.  During the two years  ended  April 30,  2001,  the Company had paid
     $690,000 of the cash obligation,  which was  characterized as secured notes
     receivable.  During the year ended April 30, 2001,  the Company  terminated
     its agreement to acquire a 51% interest in NOPEC Corporation.  The Company,
     in  settlement,  realized  $250,000  as other  income  on the  accompanying
     statement of operations.





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