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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER: 0-24857
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POWER TECHNOLOGY, INC.
(Name of small business issuer in its charter)
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NEVADA 88-0395816
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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1000 WEST BONANZA ROAD, LAS VEGAS, NEVADA 89106
(Address of principal executive offices)
ISSUER'S TELEPHONE NUMBER: (702) 382-3385
SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE
N/A ON WHICH REGISTERED
N/A
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SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
COMMON STOCK, PAR VALUE $.001
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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 is not contained in this form, and no disclosure will be
contained, 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. / /
State issuer's revenues for its most recent fiscal year:
$-0-.
The aggregate market value of voting stock held by non-affiliates of the
registrant as of January 31, 2000:
Common stock, $.001 par value: $8,258,106
The number of shares of the registrant's common stock outstanding as of
January 31, 1999:
16,817,500 shares.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format:
Yes / / No /X/
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Power Technology, Inc. (the "Company"), a Nevada corporation, was
incorporated on June 3, 1996. However, the Company did not conduct any
significant operations until March 1998 when it acquired all of the issued and
outstanding capital stock and assets of PowerTek Technology Corporation, Inc.
(formerly called Power Technology, Inc.) which is presently a wholly-owned
subsidiary of the Company. The Company changed its corporate name from "Zepplin
Production Corp." to Power Technology, Inc. during March 1998 to reflect the
change in the purposes and nature of its business.
The Company is a research and development company. It is presently engaged
in research and development activities regarding (i) batteries for the
automotive and electric car industries, (2) electronic sensors, and
(3) pipeline connection technology.
BATTERIES
GENERAL. The primary business of the Company has been to develop advanced
technology for batteries to be used in the automotive and electric car industry,
and other uses. Its battery technology has recently passed from the "proof of
principle" stage to the "preliminary prototype" stage of development.
The goal of the Company has been the development of batteries that (i) are
substantially lighter than conventional car batteries, (ii) have a high
charge/quicker recharge rate, (iii) provide greater range, (iv) will be more
cost effective, and (v) will be more environmentally friendly.
Electric cars currently being produced have battery packs that last between
25,000 and 30,00 miles, weight about 1,100 pounds, require a two to three hour
recharge period using a 220-volt outlet (or six to ten hours using a 110-volt
outlet) and cost about $2,000 to $2,500 to replace. These operating and recharge
statistics only apply to electric cars or batteries operating at room
temperature. At higher temperatures, like those found on sun-soaked asphalt
highways (approximately 50% of North America), battery life of conventional
batteries is drastically diminished. At lower temperatures (the other half of
North America), there is power loss in conventional batteries. Using today's
state-of-the-art technology, the 1998 electric vehicles will run on lead-acid
batteries and carry two people about 50 miles on a hot day. In order to meet the
demands being placed on auto makers for electric cars, management expects
significant demand for an advanced battery that: (1) has a quicker recharge
rate; (2) is lighter weight with higher energy density; (3) is more cost
effective; and (4) carries a charge for distances longer than two hundred miles
in any temperature.
The strategy of the Company has been to develop automotive battery products
that have technological advantages over available alternatives and that are
capable of being produced commercially on an economically competitive basis. The
Company intends to continue its development efforts to be funded in part through
licensees and industrial joint venture partners in order to broaden and build
upon its products and technological base.
The Company recognizes the need to protect its technology and has a patent
pending covering its battery structure and materials.
The importance of electric vehicles in the Untied States and abroad has
increased because of concerns regarding air pollution, global climatic changes,
ozone layer depletion, noise abatement and dependence on imported oil. However,
because of the costs and limited range of currently available batteries, the
production and sales of electric vehicles has been very limited (47,000 vehicles
estimated to be produced during 1998). There appears to be substantial demand
for a high power, durable, high charge/discharge rate battery for electric cars
and other hybrid electric vehicles (such as two and three wheeled vehicles that
are numerous in Europe and third world countries) that are more cost effective,
lighter and smaller.
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The Company's future business prospects are substantially dependent upon the
ability of the Company, its joint venture partners and licensees to develop,
manufacture and sell products based on the Company's battery technologies.
Additional development efforts will be required before products based on the
Company's technologies can be manufactured and sold commercially. There can be
no assurance that certain products based on the Company's technologies can be
manufactured cost effectively on a commercial scale, that such products will
gain market acceptance or that competing products and technologies will not
render products based on the Company's technologies obsolete or noncompetitive.
In certain fields, the Company may enter into licensing or joint venture
agreements with established companies. Any revenues or profits which may be
derived by the Company from these arrangements will be substantially dependent
upon the willingness and ability of the Company's licensees and joint venture
partners to devote their financial resources and manufacturing and marketing
capabilities to commercialize products based on the Company's technologies.
The Company's ability to compete effectively with other companies will
depend, in part, on its ability to protect and maintain the proprietary nature
of its technology. There can be no assurance that the Company's patents or other
proprietary rights will be determined to be valid or enforceable if challenged
in court or administrative proceedings or that the Company patents or other
proprietary rights, even if determined to be valid, will be broad enough in
scope to enable the Company to prevent third parties from producing products
using similar technologies or processes. There can also be no assurance that the
Company will not become involved in disputes with respect to the patents or
proprietary rights of third parties.
BATTERY TECHNOLOGY. The battery being developed by the Company is an
electrochemical battery of the type having a positive plate, a negative plate,
an electrolyte contacting and bridging the plates, and a transducer in contact
with the plate(s) to apply electronic energy to the plate(s). Each plate is
comprised of a rigid metal structure which significantly increases the exposed
surface area of the plates for the electrolyte to be in contact. The metal
structure of the plates are specially coated with an electrically conductive
metal.
Electrochemical batteries typically include a pair of oppositely charged
plates (positive and negative) with electrolyte to convey ions from one plate to
the other when the circuit is completed. This is a well developed technology,
typically utilizing a lead-acid electrolyte which is more expensive, more
volatile, and environmentally unfavorable than the Company's battery technology.
Because the capability of a battery is directly related to the surface area
of its plates which is in contact with electrolyte, their capability is usually
enhanced by sculpting their surfaces to increase and open up their surface
areas. The technology of the Company further increases the surface areas of the
plates without compromising their strength or resistence to vibration, erosion
and loss of material. Because the Company's plates can be placed closer together
due to their rigidity, the size of the battery and the amount of required
electrolyte is significantly reduced. For this reason, it also increases the
power density for both the weight and size of the battery.
The physical movement of electrolyte at the interface of the plates is
increased which materially enhances the ion migration and transfer between the
plates. Stagnation of electrolyte at the plates of conventional batteries is a
problem because it inhibits the transfer and migration of ions between the
plates, commonly known as ion depletion.
Based upon these technologies, the batteries of the Company are smaller and
lighter weight and provide increased electrical charge/discharge, higher power,
durability, and environmental acceptability.
PROTOTYPE BATTERIES. The Company is in the process of producing preliminary
prototype versions of its battery that will be built and tested in a variety of
configurations. Preliminary testing by the Company indicates that various
configurations of the battery meet or exceed some of the performance goals
established by major governmental and industry groups for electric vehicle
batteries. The Company
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also believes its battery has a number of applications other than electric
vehicles, such as hybrid powered vehicles, portable power tools, electric power
management, uninterruptible power and for starting, lighting and ignition
("SLI") batteries for automobiles, aircraft and marine craft. The Company is
designing various prototype batteries for such applications.
GLOSSARY OF TECHNICAL TERMS. Certain technical terms used herein have the
following meanings:
Cycle Life--the number of times a rechargeable battery can be charged and
discharged.
Electrode (battery)--the chemically active portions of a battery.
Energy Density--the amount of energy stored in a specific volume or
weight.
EV (Electric Vehicle)--a vehicle propelled exclusively by an electric
drive system powered by an electrochemical energy storage device,
typically a rechargeable battery.
HEV (Hybrid Electric Vehicle)--a vehicle that is propelled both by an
electrochemical energy storage device coupled to an electric drive and an
auxiliary power unit powered by a conventional fuel such as reformulated
gasoline, direct injection diesel or compressed natural gas.
Hydrides--solid materials that store hydrogen.
Power Density--the amount of power a battery can delivery per unit volume
or weight.
BATTERY COMPETITION. The market for batteries and other proposed products of
the Company is highly competitive, subject to rapid change and significantly
affected by new product introductions and other market activities of industry
participants. The Company's proposed battery products are targeted at an
emerging market of electric powered automobiles and other vehicles, and the
Company's competitors offer a variety of products and services to address this
market. Further, the Company currently faces direct and indirect competition
from traditional batteries.
The battery industry is mature, well-established and highly competitive. The
industry is characterized by a few major domestic and foreign producers
including Exide, Delphi, A.C. Delco, Johnson Controls, Inc., GNB,
Electrosource, Inc., Energy Conversion Devices, Inc., Hawker and Yuasa, all of
which have substantially greater financial resources than the Company.
Accordingly, the Company's ability to succeed in this market depends upon its
ability to demonstrate superior performance and cost attributes of its
technology. The Company has historically concentrated its activities in the
electric vehicle segment of the market with a view to demonstrating improved
energy to weight and longer battery life in comparison to traditional lead-acid
batteries. The principal competitors of the Company in the electric vehicle
market have directed their efforts to other battery types, such as
nickel-cadmium, nickel-metal hydride, nickel-iron and sodium-sulfur batteries,
rather than lead-acid formulations, although at least one major automobile
manufacturer and one major battery company are known to have research and
development projects underway to develop lead-acid batteries for electric
vehicles.
In the future, because there are relatively low barriers to entry in the
battery industry, the Company could experience additional competition from other
established or emerging companies as the market continues to develop and expand.
Many potential competitors may have well-established relationships with the
Company's potential customers, have extensive knowledge of the industry, better
name recognition and significantly greater financial, technical, sales,
marketing and other resources and are capable of offering batteries which have
multiple applications. It is also possible that new competitors or alliances
among competitors may emerge and rapidly acquire significant market share. The
Company also expects that competition will increase as a result of industry
consolidations. The Company's competitors may be able to respond more quickly to
new or emerging technologies and changes in customer requirements, or to devote
greater resources to the development, promotion and sale of their battery
products.
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Increased competition may result in price reductions, reduced gross margins
and loss of market share, any of which could adversely affect the Company's
business, financial condition or results of operations. There can be no
assurance that the Company will be able to compete successfully against current
or future competitors or that competitive pressure will not adversely affect its
business, financial condition or results of operations.
The Company believes that the principal competitive factors affecting its
market include features such as functionality, weight, adaptability, ease of
use, product reputation, quality, price, performance, customer service and
support, effectiveness of sales and marketing efforts and company reputation.
Although the Company believes that it will compete favorably with respect to
such factors, there can be no assurance that the Company can establish a
competitive position against current and potential competitors, especially those
with greater financial, marketing, service, support, technical and other
resources than the Company.
PIPELINE CONNECTION TECHNOLOGY
The Company is conducting research and development operations regarding its
patented pipeline connection technology. The Company is developing equipment
designed to join large diameter pipe utilizing magnetic pulse methods, a cold
form method joining a metal sleeve around the ends of two abutting pipes.
A hinged magnetic work coil developed by the Company is clamped around the
sleeve joining two pipes to produce a ringed shaped crimping force forcing a
uniform joint with uniform stress distributions. The pipes may have annular
grooved ends, grooved to approximately 1/3 of its depth, to be gripped by the
grooves of the sleeve. A pressure sensitive adhesive may be applied to the pipe
ends to improve the performance and seal of the splice. When the magnetic pulse
is applied by the equipment, it instantly crushes the sleeve onto the pipe and
into the shallow grooves milled into the pipe ends, which improves its pullout
resistence.
This pipeline connection technology is particularly useful for joining oil
and gas pipelines, oil and gas well casings, and other large pipe connections
such as those at refineries, chemical plants and other industrial operations.
Because arc welding or other forms of extreme heat are hazardous which are
avoided by the Company's technology, there are substantial advantages in safety,
avoidance of property damage, and avoidance of microcracks that can form splits
and rupture under stress. The cold magnetic impulse method creates a uniform
joint connection between pipes. The process is significantly faster than arc
welding, requires less operator skill than welding, and avoids costly and
complicated post-welding inspections. The magnetic impulse method also has the
advantage that it can be performed in the field in any weather condition.
The Company's pipeline connection technology is based upon the principle
that whenever a rapidly changing magnetic flux cuts across a conductive
material, such as the grooved sleeve to be used by the Company, a current is
induced in the material. The current is proportional to the initial intensity
and time rate of change of the magnetic flux. The induced current creates an
associated magnetic field of such polarity as to oppose the magnetic field of
such polarity as to oppose the magnetic field producing the current, creating
very significant forces of repulsion. This effect is commonly called "Lenz's Law
of Repulsion". This repulsion force of the Company's work coil pinches the
conductive sleeve around the pipes.
The Company intends to construct a preliminary prototype of its pipeline
connection equipment during 1998, and intends to seek a joint venture partner to
further develop and market its equipment.
ALLOY SENSOR TECHNOLOGY
The Company is conducting research and development operations regarding its
patented alloy sensor technology.
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The Company has been developing its alloy sensor technology as a permanently
installed water detection device to check for the presence of water in storage
tanks, fuel tanks and other systems. The alloy sensor is mounted on a valve
socket that is connected to a meter. A plug inserted into the value permits
periodic inspection and reads the meter. Only a short time is necessary to check
a number of fuel tanks, for example by the use of the plug and single ammeter
without opening a drain valve (unless it is necessary to drain detected water
out of the tank).
The alloy sensors of the Company provides positive detection of water
wherever needed and can be connected to a flow system or moisture alarms to
detect leaks.
RESEARCH AND DEVELOPMENT
The Company has committed, and expects to continue to commit in the future,
substantial resources for the development of its products. Research and
development efforts are directed at improving the performance and expanding the
capability of its prospective products. Although the Company expects that
certain of its products will be developed internally, the Company may, based on
timing and cost considerations, acquire technology and products from third
parties or retain consultants.
The Company's future success will depend in part upon its ability to enhance
its current products and to develop and introduce new products on a timely basis
that keep pace with technological developments, emerging industry standards and
the increasingly sophisticated needs of its future customers. There can be no
assurance that the Company will be successful in developing or marketing product
enhancements or new products that respond to technological change or evolving
industry standards, that the Company will not experience difficulties that could
delay or prevent the successful development, introduction and marketing of these
products or that its new products or enhancements will adequately meet the
requirements of the marketplace and achieve market acceptance. If the Company is
unable, for technological or other reasons, to develop and introduce new
products or enhancements, the Company's business, financial condition or results
of operations could be materially adversely affected.
PROPRIETARY RIGHTS AND LICENSING
The Company's success is heavily dependent upon proprietary technology. The
Company will rely primarily on a combination of patents, trade secrets,
confidentiality procedures and contractual provisions with its employees,
consultants and business partners and in its license agreements to protect its
proprietary rights. In addition to its patents, the Company seeks to protect its
products, documentation and other written materials under trade secret and
copyright laws, which afford only limited protection. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
reverse engineer or otherwise copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. While the
Company is not aware that any of its products infringe upon the proprietary
rights of third parties, there can be no assurance that third parties will not
claim infringement by the Company with respect to current or future products.
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EMPLOYEES
As of January 31, 2000, the Company had ( ) employees and
consultants. Of the total, ( ) were engaged in product research and
development, and ( ) were in finance and administration. None of the
Company's employees is represented by a labor union with respect to his or her
employment by the Company. The Company has experienced no organized work
stoppages and believes its relationship with its employees is good. The Company
believes that its future success will also depend to a significant extent upon
its ability to attract, train and retain highly skilled technical, management,
sales, marketing and consulting personnel. Competition for such personnel in the
industry in the United States is intense. There can be no assurance that the
Company will be successful in attracting or retaining such personnel, and the
failure to attract or retain such personnel could have a material adverse effect
on the Company's business or results of operations.
BANKING ARRANGEMENTS
The Company has no banking arrangements for a line of credit or other
borrowings to finance the Company. The Company intends to rely primarily upon
equity financing and joint ventures to finance its operations.
ITEM 2. DESCRIPTION OF PROPERTY.
EXECUTIVE OFFICES. The Company currently leases its executive and research
and development facilities located at 1000 West Bonanza Road, Las Vegas, Nevada
89106 on a month-to-month basis. The lease covers approximately 5,000 square
feet at a monthly rental of approximately $2,000 per month. The Company believes
that its current facilities are adequate for its needs through 2000, and that,
should it be needed, suitable additional or alternative space is expected to be
available in the future on commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS.
The Company is engaged in various legal proceedings which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to those proceedings will not be material to the
Company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
GENERAL
The Common Stock of the Company is traded on the Electronic Bulletin Board
over-the-counter market, and is quoted under the symbol PWTC.
MARKET PRICE
When the trading price of the Company's Common Stock is below $5.00 per
share, the Common Stock is considered to be "penny stocks" that are subject to
rules promulgated by the Securities and Exchange Commission (Rule 15g-1 through
15g-9) under the Securities Exchange Act of 1934. These rules impose significant
requirements on brokers under these circumstances, including: (a) delivering to
customers the Commission's standardized risk disclosure document; (b) providing
to customers current bid
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and offers; (c) disclosing to customers the brokers-dealer and sales
representatives compensation; and (d) providing to customers monthly account
statements.
The following table sets forth the range of high and low sale prices per
share of the Common Stock of the Company as reported by National Quotation
Bureau, L.L.C. for the periods indicated. Prior to September 1997, there was no
public market for the trading of the Common Stock of the Company.
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<CAPTION>
YEAR ENDED DECEMBER 31, 1997 HIGH BID(2) LOW BID(2)
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4(th) Quarter.......................................... $ 3.125 $ .50
YEAR ENDED DECEMBER 31, 1998
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1(st) Quarter (1)...................................... $3.4375 $ 3.025
2(nd) Quarter.......................................... $ 5.25 $ 1.625
3(rd) Quarter.......................................... $ 2.50 $ .625
4(th) Quarter.......................................... $ .83 $ .25
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<CAPTION>
YEAR ENDED DECEMBER 31, 1997 HIGH BID(2) LOW BID(2)
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1(st) Quarter.......................................... $ .75 $ .25
2(nd) Quarter.......................................... $ 2.375 $ .45
3(rd) Quarter.......................................... $ .86 $ .375
4(th) Quarter.......................................... $ .82 $.34375
YEAR ENDING DECEMBER 31, 2000
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lst Quarter............................................ $1.84375 $ .40
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(1) During March 1998, the Company effectuated a one for five (1:5) reverse
stock split. The above prices have been revised to reflect this split.
(2) The Company is unaware of the factors which resulted in the significant
fluctuations in the prices per share during the periods being presented,
although it is aware that there is a thin market for the Common Stock, that
there are frequently few shares being traded and that any sales activity
significantly impacts the market.
The closing bid price of the Common Stock of the Company on January 31, 2000,
was $.76 per share.
DIVIDENDS
The Company has not paid any dividends on its Common Stock and does not
expect to do so in the foreseeable future. The Company intends to apply its
earnings, if any, in expanding its operations and related activities.
The payment of cash dividends in the future will be at the discretion of the
Board of Directors and will depend upon such factors as earnings levels, capital
requirements, the Company's financial condition and other factors deemed
relevant by the Board of Directors. In addition, the Company's ability to pay
dividends may become limited under future loan agreements of the Company which
may restrict or prohibit the payment of dividends.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION.
The following discussion is intended to assist in an understanding of the
Company's consolidated financial position for its fiscal years ended
January 31, 1999 and 2000, and the results of its operations for the periods
then ended.
GENERAL
Power Technology, Inc. (the "Company"), a Nevada corporation, was
incorporated on June 3, 1996.
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The Company is in the development stage of developing its batteries and
other products. The Company is in the process of building its initial prototypes
of its batteries, but has not commenced any commercial production or sales of
batteries, pipeline connection equipment or alloy sensors.
Historically, the Company has used capital contributions from various
stockholders to fund its operations. To this point, the Company has not had
adequate funds to commercially produce, market and sell its batteries, pipeline
connection equipment and alloy sensors.
There are no assurances that the Company will be able to obtain a profitable
level of operations.
RESULTS OF OPERATIONS
You should read the following discussion and analysis of financial condition
and results of operations of the Company together with the financial statements
and notes to the financial statements which appear elsewhere in this
Form 10-KSB.
The following table sets forth certain operating information regarding the
Company:
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YEAR ENDED YEAR ENDED
JANUARY 31, 2000 JANUARY 31, 1999
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Revenues....................................... $ 0 $ 0
General and administrative expense............. $ 803,311 $ 515,588
Research and development....................... $ 105,164 $ 166,936
Interest expense............................... $ 0 $ (16,916)
Net Loss....................................... $(908,475) $(700,909)
Net Loss Per Share............................. $ (.05) $ (.07)
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YEAR ENDED JANUARY 31, 2000 COMPARED TO 1999
Total revenues for fiscal years 2000 and 1999 were $0, as the operations of
the Company continued to be focused on research and development. To date, the
Company has not established any commercial products nor commenced any commercial
production operations.
General and administrative expenses increased from $515,588 in fiscal year
1999 to $803,311 during the fiscal year ended January 31, 2000, an increase of
approximately 55.8%. The principal reason for the increase was the issuance of
common stock of the Company in exchange for consulting services, the value of
the stock ($536,350) being charged to administrative expense, compared to
$134,799 being charged during fiscal 1999.
Research and development expenses decreased from $166,936 in fiscal year
1999 to $105,164 during the fiscal year ended January 31, 2000, a decrease of
approximately 37%, as a result of decreased research activities regarding the
Company's battery development.
Interest expense decreased from $16,916 in fiscal 1999 to $0 during the
fiscal year ended January 31, 2000, because stockholder indebtedness, including
interest, was exchanged for common stock during the fiscal year.
The net loss of the Company increased from $700,909 during fiscal year 1999
compared to a net loss of $908,475 during the fiscal year ended January 31,
2000, an increase of approximately 29.6%. The increase in the net loss of the
Company is attributable primarily to an increase in general and administrative
expenses of the Company during the fiscal year ended January 31, 2000, and its
continued lack of revenues.
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The following summary table presents comparative cash flows of the Company
for the years ended January 31, 1999 and 2000.
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<CAPTION>
YEAR ENDED YEAR ENDED
JANUARY 31, 2000 JANUARY 31, 1999
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<S> <C> <C>
Net cash provided (used) in
operating activities........................... $(466,832) $(571,207)
Net cash provided (used) in
investing activities........................... $ 192,348 $ (58,294)
Net cash provided (used) by
financing activities........................... $ 290,000 $ 690,000
</TABLE>
CASH FLOWS OF FISCAL 2000 COMPARED TO FISCAL 1999
During the fiscal year ended January 31, 2000, the Company cash used in
operations decreased from $571,207 in fiscal 1999 to $466,832 during the year
ended January 31, 2000, a decrease of approximately 18.2%, resulting primarily
from decreased research and development activities.
Net cash provided (used) in investing activities increased from $(58,294) in
fiscal 1999 to $192,348 in the fiscal year ended January 31, 2000, an increase
of approximately 430%, resulting primarily from advances from an affiliate in
the amount of $86,067 for research and development fees and a loan advance to
the Company from Lee A. Balak in the amount of $110.000.
Net cash provided by financing activities declined from $690,000, realized
in fiscal 1999 from a Rule 504/Regulation D Common Stock offering, to $290,000
during the fiscal year ended January 31, 2000, which was comprised primarily of
the exchange of stockholder debt for Common Stock of the Company, a decrease in
financing activity of approximately 58%
CAPITAL EXPENDITURES. The Company has incurred capital expenditures for
equipment and office furniture used in its operations. Capital expenditures
during the year ended January 31, 2000 were $17,013, compared to $13,294 during
the year ended January 31, 1999.
CAPITAL RESOURCES. The Company's capital resources have been provided by
capital contributions and loans from its stockholders. The Company raised
$690,000 in capital during fiscal 1999 through a limited offering of its Common
Stock and warrants which have been used to purchase additional equipment, to
further develop its products, to establish its marketing activities, and to
provide additional working capital to fund operations. The Company did not
conduct any securities offerings during the fiscal year ended January 31, 2000,
however, $258,500 in stockholder debt and interest was exchange for 1,034,000
shares of Common Stock and $40,000 was realized through the exercise of a stock
option by a consultant to the Company.
WORKING CAPITAL AND LIQUIDITY. At January 31, 2000, the Company had negative
working capital of approximately $207,220 compared to January 31, 1999, in the
amount of $128,647, an increase of 61%. The Company believes that it will be
necessary to increase it working capital to continue its research and
development activities which may be achieved by incurring additional
indebtedness from stockholders or others ((see Note 6) or by the sale of common
stock or other securities of the Company.
The ability of the Company to satisfy its obligations will depend in part
upon its ability to successfully complete the offer and sale of additional
shares of its Common Stock and in part upon its ability to reach a profitable
level of operations.
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PLAN OF OPERATIONS
Because of the costs of development of its battery systems and other
products, and the continuing costs of its battery prototype production, the
Company expects that it will incur a loss during its fiscal year ending
January 31, 2001.
The Company believes that additional equity capital will be required to
accomplish its plan of operations during the next 12 months. As a result, the
Company intends to offer and sell its Common Stock in an exempt offering under
federal and state securities laws to further capitalize the Company, and may
also borrow from banks and others to the extent necessary to provide liquidity
for its operations, although no arrangements for any additional borrowings have
been made.
The Company has maintained its research and development activities and the
associated costs consistent with its plan of operations in order to develop its
batteries for proposed commercial production. However, the Company expects to
continue the development of its batteries and other products to incorporate
technical changes and improvements. In addition, as the Company establishes its
marketing activities, the Company will incur additional operating and equipments
costs.
The Company's plan of operations provides for an expansion of its battery
business, and research and development regarding its other products. The scope
of this expansion is dependent upon the amount of additional capitalization to
be realized by the Company in its future securities offerings, the amount of
credit lines that may become available to finance such activities, and its
ability to enter into agreements with licensees, joint venture partners, and
others. To the extent that the operations of the Company substantially increase,
it will be necessary to make significant changes in the number of additional
employees of the Company.
UNCERTAINTIES
DEVELOPMENT STAGE COMPANY. The Company is in the development stage. There is
no assurance that the Company's activities will be profitable. The likelihood of
the success of the Company must also be considered in light of the problems,
expenses, difficulties, complications, delays and all of the inherent risks
frequently encountered in the formation and operation of a relatively new
business.
COSTS OF CONDUCTING BUSINESS. The Company will be required to incur
substantial costs for research and development and equipment, establishing
production and marketing operations, and related costs. A substantial portion of
those costs must be paid whether or not any of its batteries or other products
prove to be commercially successful on a broad scale. The ability to generate a
profit depends, among other factors, on the amount of equipment acquisition
costs incurred, the amount of revenues from the sale of batteries and other
products by the Company, and its operating costs.
COMPETITION. The battery business is highly competitive. Companies in the
industry have substantially greater financial, marketing, and technical
resources than the Company. Further, the entry into this industry does not
necessarily require a large capital expenditure and, accordingly, it can be
expected that additional competitors may enter the industry in the future. It
may be particularly difficult for a relatively small independent company to
compete with larger companies which have significantly greater resources. There
can be no assurance that the Company will be able to successfully compete if
such an environment develops.
TECHNOLOGICAL CHANGE. The Company expects that many new technologies and
products will be introduced in the battery industry over the next several years.
The Company's success will depend, among other things, on its ability to develop
maintain a competitive position technologically. There can be no assurance that
the Company will have access to subsequently developed technology by other
persons. Technological advances by a competitor may result in the Company's
present or future products becoming noncompetitive or obsolete. The Company
cannot be assured that competitors will not develop functionally similar or
superior batteries, which event could have an adverse effect on the Company's
business.
11
<PAGE>
CONTRACTS. The Company has no current contracts for the manufacture or sale
of its batteries or other products, and has no back-log. There can be no
assurance that the Company will be able to obtain sufficient and suitable
contracts for its business plan.
FLUCTUATIONS IN OPERATING RESULTS. The Company's revenues and results of
operations may vary significantly in the future. The Company's revenues and
results of operations are difficult to forecast and could be materially
adversely affected by many factors, some of which are outside the control of the
Company, including, among others, the expected relatively long sales and
implementation cycles for the Company's products; the size and timing of
individual license transactions and joint venture arrangements; seasonality of
revenues; changes in the Company's operating expenses; changes in the mix of
products sold; timing of introduction or enhancement of products by the Company
or its competitors; market acceptance of new products; technological changes in
technology; personnel changes and difficulties in attracting and retaining
qualified sales, marketing, technical and consulting personnel; changes in
customers' budgeting cycles; quality control of products sold; and economic
conditions generally and in specific industry segments, particularly the
automotive industry.
There can be no assurance that the Company's products will achieve broad
market acceptance or that the Company will be successful in marketing its
products or enhancements thereto. In the event that the Company's current or
future competitors release new products that have more advanced features, offer
better performance or are more price competitive than the Company's products,
demand for the Company's products would decline. A decline in demand for, or
market acceptance of, the Company's batteries or other products as a result of
competition, technological change, or other factors would have a material
adverse effect on the Company's business, financial condition or results of
operations.
MANAGEMENT OF EXPANDING OPERATIONS. The Company's business may grow rapidly.
In addition, the Company may experience significant growth in the number of its
employees, the scope of its operating and financial systems and the geographic
area of its operations, which will place a significant strain on the Company's
management. The Company's future results of operations will depend in part on
the ability of its officers and other key employees to continue to implement and
expand its operational, customer support and financial control systems and to
expand, train and manage its employee base. In order to successfully manage its
future growth, if any, the Company will be required to hire additional general
and administrative personnel and to augment its existing financial and
management systems or to implement new such systems. There can be no assurance
that the existing and new management will be able to augment or to implement
such systems efficiently or on a timely basis, and the failure to do so could
have a material adverse effect on the Company's business, financial condition or
results of operations. There can be no assurance that the Company will be able
to manage any future expansion successfully, and any inability to do so would
have a material adverse effect on the Company's business, financial condition or
results of operations. In addition, the Company believes that its future success
will also depend to a significant extent upon its ability to attract, train and
retain highly skilled technical, management, sales, marketing and consulting
personnel. Competition for such personnel is intense, and the Company expects
that such competition will continue for the foreseeable future. There can be no
assurance that the Company will be successful in attracting or retaining such
personnel, and the failure to attract or retain such personnel could have a
material adverse effect on the Company's business, financial condition or
results of operations.
RAW MATERIALS
The basic raw materials and components for the batteries and other products
being developed by the Company are readily available. The Company does not
expect to experience any material delays in obtaining timely delivery of its
materials and components.
SEASONALITY
The Company does not expect to experience material seasonal variations in
revenues or operating costs, except that sales activity for its batteries may
increase in the summer and winter seasons which is expected to cause the
operations of the Company to increase during such periods.
12
<PAGE>
ITEM 7. FINANCIAL STATEMENTS.
The consolidated financial statements for its fiscal years ended
January 31, 2000 and 1999, are provided with this Form 10-KSB.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements regarding accounting and financial
disclosure matters with independent certified public accountants of the Company.
However, the Company has changed its independent certified public accountants
for its fiscal year ended January 31, 2000, to G. Brad Beckstead, Certified
Public Accountant, from its former firm of Crouch, Bierwolf & Chisholm.
Reference is made to the Form 8-K report of the Company filed May 1, 2000.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
DIRECTORS AND OFFICERS
The directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME(1)(2) AGE POSITION
- ---------- -------- ----------------------------------------------------------
<S> <C> <C> <C>
Lee A. Balak 45 Director and President
Alvin A. Snaper 70 Director, Vice President--Development, Secretary and
Treasurer
William E. McNerney 67 Director and Executive Vice President
Bryson F. Farrill 72 Director
Hugo P. Pomrehn, Ph.D. 61 Director
</TABLE>
- ------------------------
(1) The Company presently has no executive committee, nominating committee or
audit committee of the Board of Directors.
(2) The officers of the Company hold office until their successors are elected
and qualified, or until their death, resignation or removal.
The background and principal occupations of each director and officer of the
Company are as follows:
Mr. Balak became a director and the President of the Company during
February 1996. From February 2000 to the present, Mr. Balak has been a director
and the President of Fluidic/Microwave Systems, Inc., a Nevada corporation. From
1993 to the present, Mr. Balak has been the owner and President of No. 90
Corporate Ventures, a Canadian corporation located in Vancouver, B.C. From 1983
to 1993, he was a corporate finance consultant. From 1977 to 1982, he was a
registered representative of Canarim Investment Corporation (currently named
Canacord Investment Corporation). While employed by Canarim Investment
Corporation, Mr. Balak was the subject of an administrative proceeding by the
British Columbia Securities Commission regarding various alleged violations of
the Securities Act, S.B.C. 1985, c.83 of British Columbia (the "Act"); and in
November 1990, he undertook and agreed that certain trading exemptions under the
Act would not apply or be available for a period of three years and that he
would not be a director or officer of any reporting issuer for a period of three
years, which period was subsequently reduced to February, 1992, by a variance
order. In 1991, he was discharged in bankruptcy by the Supreme Court of British
Columbia. Mr. Balak attended the University of Winnipeg.
Mr. Snaper became a director, Vice President--Development, Secretary and
Treasurer of the Company in March 1998; and has been a director and President of
PowerTek Technologies Corporation, Inc., a subsidiary of the Company, since its
incorporation in 1996. From February 2000 to the present, Mr. Snaper has been a
director and Treasurer of Fluidic/Microwave Systems, Inc., a Nevada corporation.
From 1979 to 1983, he was a director of American Methyland Homogenized Fuels
Corporation. From 1980 to the
13
<PAGE>
present, he has been the Vice President of Neo-Dyne Research, Inc., a research
and development company. From 1985 to the present, he has also been the Vice
President of Inventrex Corp. Mr. Snapper was a founder of Advanced Patent
Technology, Inc., a public company now known as Alliance Gaming, and was its
Vice President and Director of Research and Development from 1968 to 1980. From
1952 to 1955, he was the chief Chemist for McGraw Colorgraph Company, a division
of the Carnation Company. From 1949 to 1951, he was employed by the Bakelite
Division of Union Carbide, where he assisted in its development of the pilot
plant for plastics manufacture. During his 30 years of scientific research and
development, Mr. Snapper's interdisciplinary technology activities have resulted
in over 600 patents, products, processes and innovations. He has been awarded
the Design News Best Patent of the year award on three separate occasions.
Mr. Snaper graduated from McGill University with a bachelor of science degree in
1950. He is a registered professional engineer in the State of California.
Mr. McNerney became a director and Executive Vice President of the Company
in March 1998. From February 2000 to the present, Mr. McNerney has been a
director and Secretary of Fluidic/Microwave Systems, Inc., a Nevada corporation.
From 1993 to the present, he has been the owner and Chief Executive Officer of
Revolutionary Technology Industries, Inc. From 1984 to 1993, he was retired.
From 1974 to 1984, Mr. McNerney owned an oil and gas operating company, Golden
Exploration, Inc. From 1954 to 1976, Mr. McNerney was a pilot employed by
Northwest Airlines.
Mr. Farrill became a director of the Company on October 25, 1999. From 1990
to the present, Mr. Farrill has been a financial consultant to high technology
companies and other companies. Mr. Farrill is a director of Future Link
Distributing, Inc. From 1968 to 1964, he was the President and Chairman of
McLeod Young Weir International, a brokerage firm, until it was acquired by
Scotia Capital Markets. From 1962 to 1979, he was employed by McCleod Young
Weir Ltd in Toronto, and was a director and member of its executive committee
from 1964 to 1989. Mr. Farrill received a B.A. decree in political science and
economics from the University of Toronto in 1951.
Dr. Pomrehn became a director of the Company during July 1998.
Dr. Pomrehn is the Chairman of the Board and a director of Stayhealthy
Incorporated, a closely held health products company. From November 1997 to
August 1999, he was Executive Vice President of Special Projects of American
Technologies Group, Inc. ("ATG"), a public company engaged in research and
development activities; and has been a consultant to ATG since August 1999 to
the present. Dr. Pomrehn previously served as President, Chief Operating
Officer, Vice Chairman and a director of ATG from April 1995 to November 1997.
He was appointed as Under Secretary of Energy by President George Bush in 1992.
He was employed by Bechtel Corporation from 1967 to 1992, and was a Vice
President and Manager of its Los Angeles regional office from 1990 to 1992.
Dr. Pomrehn graduated from the University of Southern California with a bachelor
of science degree in mechanical engineering in 1960; received a masters degree
in mechanical engineering from George Washington University in 1965; received a
masters degree in industrial engineering from the University of Southern
California in 1969; and received a doctorate in engineering from the University
of Southern California in 1975. Dr. Pomrehn is a member of the American Nuclear
Society and American Society of Mechanical Engineers, and is a registered
professional mechanical and nuclear engineer in the State of California.
14
<PAGE>
ITEM 10. COMPENSATION FOR EXECUTIVE OFFICERS
The following table sets forth the total cash compensation, paid or accrued,
by the Company during its fiscal year ended January 31, 2000, to each executive
officer and all executive officers as a group for services in all capacities to
the Company.
<TABLE>
<CAPTION>
CASH COMPENSATION(1) STOCK COMPENSATION
-------------------- ------------------
<S> <C> <C>
Lee A. Balak............................ $0 $ 92,000(4)
William E. McNerney..................... $0 $ 18,000(5)
Alvin A. Snaper......................... $0 $ 92,000(4)
All executive officers as a group
(3 persons)(2)........................ $0 $202,000
</TABLE>
- ------------------------
(1) Personal benefits received by the Company's executive officers are valued
below the levels which would otherwise require disclosure under the rules of
the U.S. Securities and Exchange Commission. See "Transactions with
Management".
(2) The Company does not currently provide any contingent or deferred forms of
compensation arrangements, annuities, pension or retirement benefits.
(3) The Company has no employment contracts with its executive officers or
employees; however, the Company has a consulting agreement with William E.
McNerney, the Executive Vice President and a director of the Company, and
with Hugo P. Pomrehn, a director of the Company.
(4) Represents a year-end stock bonus of 200,000 shares of Common Stock that was
awarded by the Board of Directors as compensation, in lieu of salary and
bonuses, effective December 31, 1999.
(5) Represents 30,000 shares of Common Stock issued under the terms of the
consulting agreement between Mr. McNerney and the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
STOCK COMPENSATION COMMITTEE. The Stock Compensation Committee of the Board
of Directors administers the Company's Stock Compensation Option Plan. Lee A.
Balak, Alvin A. Snaper, and William E. McNerney serve as members of the Stock
Compensation Committee.
OTHER COMMITTEES. The Company does not have an audit committee,
compensation committee, nominating committee, an executive committee of the
Board of Directors, or any other committees. However, it is expected that the
Board of Directors will establish various committees during the 2001 fiscal
year.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the Company
believes that during the year ended January 31, 2000, all such filing
requirements applicable to its officers and directors (the Company not being
aware of any ten percent holder other than Lee A. Balak, the President and a
director of the Company) were complied with, except that Lee A. Balak, Alvin A.
Snaper and William E. McNerney were late in filing certain Form 4's during the
fiscal year.
BENEFIT PLANS
The Company does not have any pension plan, profit sharing plan, or similar
plans for the benefit of its officers, directors or employees. However, the
Company reserves the right to establish any such plans in the future.
15
<PAGE>
BOARD COMPENSATION
Directors of the Company who do not serve as officers thereof are not
currently compensated by the Company for meeting attendance or otherwise, but
are entitled to reimbursement for their travel expenses. From time to time,
directors who are not employees of the Company may receive grants of stock
bonuses or stock options to purchase the Company's Common Stock. The Company
does not pay additional amounts for committee participation or special
assignments of the Board of Directors.
STOCK COMPENSATION PLAN
The Company has a Stock Compensation Plan to compensate directors, officers,
employees and consultants of the Company through the grant of stock options,
stock bonuses and SAR's for up to 2,100,000 shares of Common Stock of the
Company.
During the year ended January 31, 2000, no stock options, stock bonuses or
SAR's were granted to any directors or officers of the Company under the Stock
Compensation Plan.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The total number of shares of Common Stock of the Company beneficially owned
by each of the officers and directors, and all of such directors and officers as
a group, and their percentage ownership of the outstanding Common Stock of the
Company as of January 31, 2000, are as follows:
<TABLE>
<CAPTION>
SHARES PERCENT OF
MANAGEMENT BENEFICIALLY COMMON
SHAREHOLDERS(1) OWNED(1) STOCK
- --------------- ------------ ----------
<S> <C> <C>
Lee A. Balak.................................... 4,502,000 26.8%
15 Ocean View Road
Lions Bay, B.C. V0N2XE0
Canada
Bryson F. Farrill............................... 0 0%
77 Verplank Avenue
Stanford, Connecticut 06902
William E. McNerney(2).......................... 495,416 2.9%
953 E. Sahara, #9B
Las Vegas, Nevada 89104
Hugo P. Pomrehn, Ph.D........................... 50,000 0.3%
1017 South Mountain
Monrovia, California 91016
Alvin A. Snaper................................. 904,155 5.4%
2800 Cameo Circle
Las Vegas, Nevada 89107
Directors and officers as a group (5 persons,
including the above).......................... 5,951,571 35.4%
</TABLE>
- ------------------------
(1) Except as otherwise noted, it is believed by the Company that all persons
have full voting and investment power with respect to the shares indicated.
Under the rules of the Securities and Exchange Commission, a person (or
group of persons) is deemed to be a "beneficial owner" of a security if he
or she, directly or indirectly, has or shares the power to vote or to direct
the voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one
16
<PAGE>
person may be deemed to be a beneficial owner of the same security. A person
is also deemed to be a beneficial owner of any security which that person
has the right to acquire within 60 days, such as options or warrants to
purchase the Common Stock of the Company.
(2) Includes 24,000 shares of Common Stock owned by Revolutionary Technology
Industries, Inc., a company owned by Mr. McNerney.
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock by each shareholder who beneficially
owns more than five percent (5%) of the Company's Common Stock, the number of
shares beneficially owned by each and the percent of outstanding Common Stock so
owned of record as of January 31, 2000. It is believed by the Company that all
persons listed have sole voting and investment power with respect to their
shares, except as otherwise indicated.
<TABLE>
<CAPTION>
SHARES PERCENT
TITLE OF OUTSTANDING BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER CLASS COMMON STOCK OWNED
- ------------------------------------ --------------- -------------- ------------
<S> <C> <C> <C>
Lee A. Balak.......................... Common Stock 4,502,000 26.8%
15 Ocean View Road
Lions Bay, B.C. V0N2XE0
Canada
Alvin A. Snaper(1).................... Common Stock 904,155 5.4%
2800 Cameo Circle
Las Vegas, Nevada 89107
Cede & Co............................. Common Stock 10,341,727 61.4%
P.O. Box 222
Bowling Green Station
New York, New York 10274
</TABLE>
- ------------------------
(1) Cede & Co. is a depository that holds securities as nominee for various
broker-dealers and others to facilitate stock transfers.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In June 1998, the Company leased approximately 5,000 square feet of offices
and research facilities on a month-to-month basis from Mr. Alvin A. Snaper, a
director, Vice President, Secretary and Treasurer of the Company and his
partner. During the fiscal year ended January 31, 2000, the Company paid
$139,395 in lease payments for these facilities.
Mr. Lee A. Balak, the President and a director of the Company, had
previously loaned and advanced approximately $258,500 to the Company as of
December 22, 1999, for research and development fees. The research and
development fees were paid by the Company to Neo-Dyne Research, Inc.
("neo-Dyne"), a research and development company owned by Alvin A. Snaper, a
director and a Vice President, Secretary and Treasurer of the Company. Neo-Dyne
has conducted substantially all of the research and development activities
regarding the principal products of the Company, including its batteries, its
pipeline connection technology, and its allow sensor technology, which provided
continuity for such services. On December 22, 1999, the Company authorized the
issuance of 1,034,000 shares of restricted Common Stock at $.25 per share to
Mr. Balak in exchange for the cancellation of this debt, including accrued
interest.
In June 1999, the Company acquired rights to advanced microwave technology
designed to reduce the moisture content of agricultural products, from Alvin A.
Snaper and William E. McNerney, directors and
17
<PAGE>
officers of the Company, who each received 100,000 shares of restricted Common
Stock of the Company in exchange for this technology.
Effective April 1, 1999, the Company entered into a consulting agreement for
a term of one year with William E. McNerney, a director and Vice President of
the Company for $5,000 per month, payable quarterly in the Common Stock of the
Company, in lieu of cash, valued at 85% of its lowest closing bid price during
the quarter. During the year ended January 31, 2000, the Company issued 30,000
shares of Common Stock to Mr. McNerney under the terms of the consulting
agreement. Mr. McNerney receives no salary or other compensation from the
Company as a director and officer, except reimbursement of expenses.
The Company entered into a consulting agreement with Mr. Hugo P. Pomrehn, a
director of the Company, effective September 1, 1998, for research and
development services. The consulting fee is charged at a rate of $150 per hour,
and he is reimbursed for travel and other expenses. During the year ended
January 31, 2000, Mr. Pomrehn did not receive any compensation from the Company.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by the Registrant during its fiscal year
ended January 31, 2000.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
(i) Articles of Incorporation of the The Articles of Incorporation are
Registrant incorporated herein by reference to
Exhibit 3(i) to the Form 10-SB of the
Registrant (File No. 0-24857)
(ii) Amendment to Articles of Incorporation The Amendment to the Articles of
Incorporation are incorporated herein by
reference to Exhibit 3(ii) to the Form 10-SB
of the Registrant (File No. 0-24857)
(iii) By-Laws of the Registrant The By-Laws are incorporated herein by
reference to Exhibit 3(iii) to the
Form 10-SB of the Registrant (File
No. 0-24857)
10. Material Contracts
10(a) Plan of Reorganization and Acquisition dated
2/15/98 is incorporated herein by reference
to Exhibit 6(a) to the Form 10-SB of the
Registrant (File No. 0-24857)
10(b) Various consulting agreements with Registrant
are incorporated herein by reference to the
Form S-8 Registration Statement (File
No. 333-66845) of the Registrant
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
10(c) Consulting agreement with SeaWay Trading,
Inc. dated April 19, 1999 is incorporated by
reference to Exhibit 10(c) to the
Form 10-KSB of the Registrant for its fiscal
year ended January 31, 1999.
10(d) Consulting agreement with William McNerney/
RevTec of April 1, 1999. is incorporated by
reference to Exhibit 10(d) to the
Form 10-KSB of the Registrant for its fiscal
year ended January 31, 1999.
10(e) Various consulting agreements are
incorporated by reference to Exhibit 4.1 of
the Form S-8 registration statement of the
Registrant (File No. 333-66845).
11. Statement re: computation of per share Reference is made to the Consolidated
earnings Statements of Operations of the Registrant
for its fiscal year ended January 31, 2000,
which are incorporated by reference herein.
21. A description of the subsidiary of the A description of the subsidiary of the
Registrant Registrant is incorporated herein by
reference to Exhibit 21 of the Form S-8
Registration Statement (0-24857) of the
Registrant
27. Financial Data Schedule
</TABLE>
19
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
See Independent Auditor's Report and Notes to Financial Statements
F-1
<PAGE>
C O N T E N T S
<TABLE>
<S> <C>
Independent Auditors' Report................................
Consolidated Balance Sheets.................................
Consolidated Statements of Operations.......................
Consolidated Statements of Stockholders' Equity.............
Consolidated Statements of Cash Flows.......................
Notes to the Consolidated Financial Statements..............
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements
F-2
<PAGE>
G. BRAD BECKSTEAD
CERTIFIED PUBLIC ACCOUNTANT
330 E. Warm Springs
Las Vegas, NV 89119
702.528.1984
425.928.2877efax
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Power Technology, Inc.
I have audited the accompanying consolidated balance sheet of Power
Technology, Inc. (a development stage company) as of January 31, 2000 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. My responsibility is to express an opinion on these
financial statements based on my audit. The financial statements of Power
Technology, Inc. as of January 31, 1999 and January 19, 1996 (date of inception)
through January 31, 1999, were audited by other auditors whose report dated
April 19, 1999, expressed an unqualified opinion on those statements.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audits to obtain
reasonable assurance about whether the financial statement 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Power
Technology, Inc. (a development stage company) as of January 31, 2000 and the
results of its operations, stockholders' equity and cash flows for the years
then ended in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has had recurring operating
losses for the past several years. These factors raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Las Vegas, Nevada
May 2, 2000
See Independent Auditor's Report and Notes to Financial Statements
F-3
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JANUARY 31,
-----------------------
2000 1999
----------- ---------
<S> <C> <C>
Current Assets
Cash.................................................... $ 76,015 $ 60,499
Accounts receivable..................................... -- 2,500
----------- ---------
Total Current Assets.................................... 76,015 62,999
----------- ---------
Property & Equipment, Net (Note 2).......................... 12,831 11,384
----------- ---------
Other Assets
Prepaid expenses........................................ 20,000 20,000
Organizational costs (Note 1)........................... 5,000 10,000
Patents (Note 7)........................................ 65,000 65,000
----------- ---------
Total Other Assets...................................... 90,000 95,000
----------- ---------
TOTAL ASSETS............................................ $ 178,846 $ 169,383
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable--trade..................................... $ 5,184 $ 10,492
Accounts payable--related party (Note 6).................... 65,515 164,685
Advances from MikroDri (Note 6)............................. 86,067 --
Accrued expenses............................................ 16,469 16,469
Loan payable (Note 6)....................................... 110,000 --
----------- ---------
Total Liabilities....................................... 283,235 191,646
----------- ---------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value; 25,000,000 shares authorized;
16,817,500 and 12,535,000 shares issued and outstanding as
of 1/31/00 and 1/31/99, respectively...................... 16,818 12,535
Additional paid-in capital.................................. 1,659,458 857,392
Deficit accumulated during the development stage............ (1,800,665) (892,190)
Prior period adjustment (Note 8)............................ 20,000 --
----------- ---------
Total Stockholders' Equity................................ (104,389) (22,263)
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.............. $ 178,846 $ 169,383
=========== =========
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements
F-4
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JANUARY 31, 2000 AND 1999
AND FOR THE PERIOD
JANUARY 19, 1996 (DATE OF INCEPTION) THROUGH JANUARY 31, 2000
<TABLE>
<CAPTION>
FROM
FOR THE YEARS ENDED INCEPTION ON
JANUARY 31, JANUARY 19, 1995
---------------------- TO JANUARY 31,
2000 1999 2000
---------- --------- ----------------
<S> <C> <C> <C>
REVENUES............................................... $ -- $ -- $ 1,663
---------- --------- -----------
EXPENSES
General & Administrative............................. 803,311 515,588 1,511,843
Research & Development............................... 105,164 166,936 272,100
---------- --------- -----------
TOTAL EXPENSES..................................... 908,475 682,524 1,783,943
---------- --------- -----------
NET OPERATING LOSS..................................... (908,475) (682,524) (1,783,943)
OTHER (EXPENSE):
Interest Expense..................................... -- (16,469) (16,469)
Loss on Foreign currency translation................. -- (1,916) (1,916)
---------- --------- -----------
NET LOSS............................................... $ (908,475) $(700,909) $(1,800,665)
========== ========= ===========
LOSS PER SHARE......................................... $ (.05) $ (.07) $ (.11)
========== ========= ===========
WEIGHTED AVERAGE SHARES OUTSTANDING.................... 16,817,500 9,667,208 16,817,500
========== ========= ===========
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements
F-5
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
JANUARY 19, 1996 (DATE OF INCEPTION) THROUGH JANUARY 31, 2000
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING THE
--------------------- PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE
---------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Balance January 19, 1996......................... 2,500,000 $ 2,500 $ 22,500 $ --
Net (loss) from inception to January 31, 1997.... -- -- -- (139,907)
---------- ------- ---------- ----------
Balance--January 31, 1997........................ 2,500,000 2,500 22,500 (139,907)
Net (loss) for the year ended January 31, 1998... -- -- -- (51,374)
---------- ------- ---------- ----------
Balance--January 31, 1998........................ 2,500,000 2,500 22,500 (191,281)
Reorganization of Company, Reverse acquisition of
Zepplin, Inc................................... 2,800,000 2,800 (2,573) --
Common stock issued for cash..................... 6,900,000 6,900 683,300 --
Common stock issued for patents.................. 200,000 200 19,800 --
Common stock issued for services................. 134,700 135 134,565 --
Net (loss) for the year ended January 31, 1999... -- -- -- (700,909)
---------- ------- ---------- ----------
Balance--January 31, 1999........................ 12,534,700 $12,535 $ 857,592 $ (892,190)
Common stock issued for cash..................... 2,900,000 2,900 287,099 --
Common stock issued for services................. 548,800 549 329,001 --
Common stock issued to stockholder in exchange
for debt....................................... 1,034,000 1,034 205,766 --
Prior period adjustment.......................... (200,000) (200) (20,000) --
Net (loss) for the year ended January 31, 2000... -- -- -- (908,475)
---------- ------- ---------- ----------
Balance--January 31, 2000........................ 16,817,500 $16,818 $1,659,458 $1,800,665
========== ======= ========== ==========
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements
F-6
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
JANUARY 19, 1996
FOR THE YEARS ENDED (DATE OF INCEPTION)
JANUARY 31, THROUGH
--------------------- JANUARY 31,
2000 1999 2000
--------- --------- -------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss............................................ $(908,475) $(700,909) $(1,800,665)
Less non-cash items:
Prior period adjustment........................... 20,000 -- 20,000
Amortization & Depreciation Expense............... 7,272 7,137 24,409
(Increase) decrease in accounts receivable........ 2,500 (2,500) --
(Increase) decrease in prepaid expenses........... -- (20,000) (20,000)
Increase (decrease) in accounts payable........... (5,308) (6,104) 169,869
Increase (decrease) in accounts payable--related
party........................................... (99,170) -- (99,170)
Increase (decrease) in accrued expenses........... -- 16,469 16,469
Common stock issued for services.................. 516,349 134,700 651,049
--------- --------- -----------
Net Cash Provided (Used) by Operating
Activities.................................... (466,832) (571,207) (1,038,039)
--------- --------- -----------
Cash Flows from Investing Activities
Purchase of Equipment............................. (3,719) (13,294) (17,013)
Cash paid for patent.............................. -- (45,000) (45,000)
Advances from MikroDri............................ 86,067 -- 86,067
Loan payable--related party....................... 110,000 -- 100,000
--------- --------- -----------
Net Cash Provided (Used) by Investing
Activities.................................... 192,348 (58,294) 134,054
--------- --------- -----------
Cash Flows from Financing Activities
Cash from stock issuances......................... 290,000 690,000 980,000
--------- --------- -----------
Net Cash Provided (Used) by Financing
Activities.................................... 290,000 690,000 980,000
--------- --------- -----------
Increase in Cash.................................. 15,516 60,499 76,015
Cash and Cash Equivalents at Beginning of Period...... 60,499 -- --
--------- --------- -----------
Cash and Cash Equivalents at End of Period............ $ 76,015 $ 60,499 $ 76,015
========= ========= ===========
Supplemental Non-Cash Financing Transactions:
Cash paid for:
Interest.......................................... $ -- $ -- $ --
Income taxes...................................... $ -- $ -- $ --
</TABLE>
See Independent Auditor's Report and Notes to Financial Statements
F-7
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The Company was incorporated under the name of Zeppelin Production
Corporation on June 3, 1996 under the laws of the State of Nevada. The
Company was organized to provide aerial photography and advertising
promotion through the use of helium filled remote control blimps, however
operations were never secured.
Pursuant to a plan of reorganization and acquisition agreement, dated
February 15, 1998, the Company acquired Powertek Technology, Inc. (Powertek)
and changed it's name to Power Technology, Inc. Because the management and
operations of Powertek became the management and operations of Zeppelin,
this business combination has been recorded as a reverse acquisition, thus
Powertek is the surviving accounting entity presented on the financial
statements. The historical information provided in these financial
statements prior to the acquisition are those of Powertek.
Powertek was incorporated under the laws of the State of Nevada on
January 19, 1996. The Company was organized primarily for the purpose of
developing an advanced battery technology for use in the growing electric
car industry. As of the date of these statements, the Company has been able
to advance the battery technology to a proof of principle stage and is
currently seeking additional capital to finance the development of the
technology to a preliminary prototype stage.
b. Recognition of Revenue
The Company recognizes income and expense on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes have been recorded due to net operating
loss carryforwards totaling approximately $1,800,665 that will be offset
against future taxable income. These NOL carryforwards will begin to expire
in the year 2012. No tax benefit has been reported in the financial
statements because the Company believes there is a 50% or greater chance the
carryforward will expire unused.
f. Organization Costs
Organization expenses are recorded at cost and are being amortized on a
straight-line basis over five years. The expenses represent
pre-incorporation cost to establish the entity and develop various sales
venues.
See Independent Auditor's Report and Notes to Financial Statements
F-8
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2000 AND 1999
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. Principles of Consolidation
These financial statements include the books of Power Technology, Inc
(formerly Zeppelin) and its wholly owned subsidiary Powertek
Technologies, Inc. All intercompany transactions and balances have been
eliminated in the consolidation.
h. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and expenses during the reporting period. In these financial
statements, assets, liabilities and expenses involve extensive reliance on
management's estimates. Actual results could differ from those estimates.
NOTE 2--GOING CONCERN
The accompanying financial statements have been prepared assuming that
the company will continue as a going concern. The company has had recurring
operating losses for the past several years and is dependent upon financing
to continue operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 3--PROPERTY AND EQUIPMENT
Property and equipment consists of the following at January 31, 2000 and
1999:
<TABLE>
<CAPTION>
JANUARY 31,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Office Equipment.......................................... $10,773 $ 8,863
Manufacturing Equipment................................... 4,076 2,267
Leasehold Improvements.................................... 2,164 2,164
------- -------
17,013 13,294
Less Accumulated Depreciation........................... (4,182) (1,910)
------- -------
Total Property & Equipment................................ $12,831 $11,384
======= =======
</TABLE>
Depreciation expense for the period ended January 31, 2000 and 1999 is
$2,272 and $1,910, respectively.
NOTE 4--CAPITALIZATION
Prior to the reverse acquisition of Power Technology, Inc. (formerly
Zepplin Production Corp.) and Powertek Technology, Inc. (Powertek) the
Company authorized 2,500,000 shares at a par value of
See Independent Auditor's Report and Notes to Financial Statements
F-9
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2000 AND 1999
NOTE 4--CAPITALIZATION (CONTINUED)
$.01 and had 2,500,000 issued and outstanding. The par value in these
financial statements have been retroactively restated to show the new par
value.
In the reverse acquisition the 2,500,000 shares of Powertek were
exchanged for 5,000,000 shares of Power Technology, Inc. (formerly Zepplin
Production Corp.). The total number of post-acquisition shares authorized
are 25,000,000 at a par value of $.001. Total number of post-acquisition
shares issued and outstanding are 5,300,000 shares.
During June 1998, the Company issued 200,000 shares of common stock for
patents valued at $20,000.
During the year ended January 31, 1999, the Company issued 6,900,000
shares of common stock for cash of $690,000.
During November 1998, the Company issued 134,700 shares of common stock
in exchange for services valued at $134,700.
During the year ended January 31, 2000, the Company issued 2,900,000
shares of common stock for cash of $290,000.
During the year ended January 31, 2000, the Company issued 548,800
shares of common stock in exchange for services valued at $329,550.
On December 22, 1999, the Company issued 1,034,000 shares of restricted
Common Stock at $.25 per share to Mr. Lee A. Balak, the President and a
director of the Company, in exchange for cancellation of a $258,500 note,
including accrued interest.
NOTE 5--DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating
substantially all of its efforts in raising capital, in order to generate
significant operations.
NOTE 6--ACCOUNTS AND LOANS PAYABLE--RELATED PARTY
The Company had $65,515 of research and development fees paid for by a
majority shareholder. The balance was non-interest bearing through
January 31, 1998. For the year ending January 31, 2000, the balance was
interest bearing at 10% per annum. The Company intends to repay the balance
within one year.
The Company had $86,067 of research and development fees advanced by
MikroDri, Inc., a related entity with common shareholders and management.
The Company will continue to perform research and development procedures
which will be invoiced against the fee advancements.
Mr. Lee A. Balak, the President and a director of the Company, loaned
and advanced approximately $258,500 to the Company as of December 22, 1999,
for research and development fees. The
See Independent Auditor's Report and Notes to Financial Statements
F-10
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2000 AND 1999
NOTE 6--ACCOUNTS AND LOANS PAYABLE--RELATED PARTY (CONTINUED)
research and development fees were paid by the Company to Neo-Dyne
Research, Inc. ("Neo-Dyne"), a research and development company owned by
Alvin A. Snaper, also a director, Vice President, Secretary and Treasurer of
the Company. Neo-Dyne has conducted substantially all of the research and
development activities regarding the principal products of the Company,
including its batteries, pipeline connection technology, and its allow
sensor technology. On December 22, 1999, the Company authorized the issuance
of 1,034,000 shares of restricted Common Stock at $.25 per share to
Mr. Balak in exchange for the cancellation of the $258,500 debt, including
accrued interest.
Mr. Lee A. Balak, the President and a director of the Company, loaned
$110,000 to the Company. The note is due on demand, and the balance is
non-interest bearing through January 31, 2000.
The Company rents a facility in Las Vegas, Nevada, from Bonanza West
Properties, a partnership that is 50% owned by Alvin A. Snaper, a director
and Vice President of the Company. Rents for the year ended January 31,
2000, totaled approximately $139,000.
NOTE 7--PATENTS
On June 9, 1998, the Company acquired patent number 4,107,997 issued by
the U.S. Patent office in 1978. The Company paid $45,000 and 100,000 shares
of common stock valued at $10,000 for the patent. The patent is for an alloy
sensor which generates a current when in contact with water or other aqueous
composition.
Also during 1998, the Company acquired patent number 5,442,846 for
100,000 shares of common stock valued at $10,000. This patent is a procedure
and apparatus for cold joining of metallic pipes.
NOTE 8--PRIOR PERIOD ADJUSTMENT
An adjustment in the amount of $20,000 has been recorded on the books as
of January 31, 2000. The adjustment is due to an over-reported shareholders'
equity amount in the prior year ended January 31, 1999. The entry has been
recorded to reduce additional paid-in capital and to offset the overstated
expense in the prior year.
NOTE 9--COMMITMENTS
In connection with the acquisition of patent number 5,442,846, the
Company is committed to a 3% royalty on Gross Sales.
NOTE 10--SUBSEQUENT EVENT
The Company entered into an Investment Agreement dated April 17, 2000 (the
"Agreement") with Swartz Private Equity, LLC of Roswell, Georgia ("SPE"). The
Agreement provides for SPE to commit to purchase up to an aggregate of
$35,000,000 of the Common Stock of the Company, not to exceed 9.9% of the then
total issued and outstanding shares of Common Stock of the Company, as requested
from time to
See Independent Auditor's Report and Notes to Financial Statements
F-11
<PAGE>
POWER TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
JANUARY 31, 2000 AND 1999
NOTE 10--SUBSEQUENT EVENT (CONTINUED)
time by the Company as its equity capital needs arise during the term of the
Agreement. Upon written notice from the Company, SPE is committed to purchase
Common Stock of the Company at a purchase price equal to the lesser of the
(i) then current market price minus $.25, or (ii) 91% of the then current market
price. Market price is defined to mean the lowest bid price for Common Stock on
the last business day during a pricing period (the date following the notice
from the Company and ending on the 20th day thereafter). Unless the Company
specifically requests SPE to purchase its Common Stock by written notification
to SPE, SPE has no right to acquire any securities of the Company and the
Company has no obligation to offer and sell its securities to SPE. Under the
terms of the Agreement, the Company will be issuing to SPE a warrant to purchase
490,000 shares of the Common Stock of the Company at an exercise price of $.8125
per share, payable in cash or in a cashless exercise based upon a formula
adjusted by such exercise price and the average closing price for five trading
days prior to the exercise date, (with price reset provisions) during a term of
five years. The Company will be issuing additional warrants to SPE to purchase a
number of shares equal to 10% of each purchase of shares made by SPE during the
term of the Agreement. The shares of Common Stock and warrants of the Company to
be issued to SPE are covered by a Registration Rights Agreement requiring the
Company to file a registration statement with the U.S. Securities and Exchange
Commission to register such securities under the Securities Act of 1933.
See Independent Auditor's Report and Notes to Financial Statements
F-12
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
POWER TECHNOLOGY, INC.
<TABLE>
<S> <C> <C>
Date: May 15, 2000
By: /s/ Lee A. Balak /s/ Alvin A. Snaper
----------------------------------------- -----------------------------------------
Lee A. Balak Alvin A. Snaper
Director, President, Chief Financial Director and Vice President--Development,
Officer Treasurer and Secretary
and Principal Accounting Officer
/s/ William E. McNerney
-----------------------------------------
William E. McNerney
Director and Executive Vice President
</TABLE>
____________/s/ Bryson F. Farrill____________
Bryson F. Farrill
Director
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> JAN-31-2000
<CASH> 76,015
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 76,015
<PP&E> 17,013
<DEPRECIATION> 2,272
<TOTAL-ASSETS> 178,846
<CURRENT-LIABILITIES> 283,235
<BONDS> 0
0
0
<COMMON> 16,817,500
<OTHER-SE> 1,659,458
<TOTAL-LIABILITY-AND-EQUITY> 178,846
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 803,311
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (908,475)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (908,475)
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
