TALISMAN ENTERPRISE INC, 424B3, 2000-01-14

TALISMAN ENTERPRISE INC
424B3, 2000-01-14
MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES

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<PAGE>
Filed Pursuant to Rule 424(b)(3)

Registration No. 333-83123

PROSPECTUS
JANUARY 13, 2000

TALISMAN ENTERPRISES INC.

1,024,627 SHARES OF COMMON STOCK
AND
1,014,627 SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF
CLASS A COMMON STOCK PURCHASE WARRANTS
----------------------------------------------------------------------

TALISMAN ENTERPRISES INC.:

- Talisman manufactures and distributes private label alkaline batteries.

- Talisman Enterprises Inc.
2330 Southfield Road
Mississauga, Ontario
Canada L5N 2W8
(905) 826-3995

- NASDAQ SMALLCAP MARKET SYMBOL: BATT

THE OFFERING:

- This prospectus relates to the possible sale, from time to time, by
certain stockholders, the "selling stockholders" of Talisman of up to
1,024,627 shares of common stock, and 1,014,627 shares of common stock
underlying class A common stock purchase warrants.

- There is no underwriter or coordinating broker acting in connection with
the offering of common shares by the selling stockholders.

- Concurrently with the commencement of this offering, Talisman is offering
by separate prospectus, 900,000 shares of Common Stock through Capital
West Securities, Inc. on a firm commitment basis.

- Talisman will not receive any proceeds from sales by the selling
stockholders, except when warrantholders choose to exercise their
warrants, in which case Talisman will receive the exercise price of the
warrants. See "Plan of Distribution" for futher details concerning the
possible sale of these shares.

-------------------------------------------

THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 5.

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Neither the SEC nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
-------------------------------------------
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
BEFORE MAKING AN INVESTMENT DECISION, YOU SHOULD READ THE ENTIRE PROSPECTUS
CAREFULLY, INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES, IN
ORDER TO UNDERSTAND OUR BUSINESS AND THIS OFFERING FULLY.

REFERENCES IN THIS PROSPECTUS TO "TALISMAN," "WE," "OUR," AND "US," REFER TO
TALISMAN ENTERPRISES INC., AN ONTARIO, CANADA CORPORATION, TOGETHER WITH ITS
SUBSIDIARY AND THEIR PREDECESSORS. UNLESS OTHERWISE INDICATED, ALL REFERENCES TO
DOLLAR ($) AMOUNTS ARE TO U.S. DOLLARS. REFERENCES TO CDN.$ ARE TO CANADIAN
DOLLARS. ALL INFORMATION IN THIS PROSPECTUS HAS BEEN ADJUSTED TO REFLECT A
1-FOR-25 REVERSE STOCK SPLIT OF THE COMMON STOCK EFFECTED IN JANUARY 1999.

TALISMAN ENTERPRISES INC.

OUR BUSINESS

Talisman Enterprises Inc., through our wholly-owned operating subsidiary,
Talisman International Inc., manufactures and distributes high-quality
disposable alkaline batteries. These batteries are used in products such as
toys, flashlights and Walkmans(R), for private label sale by medium to large
retail chains. We are currently, to our knowledge, the only North American-based
battery manufacturer that focuses primarily on the private label market. Our
objective is to leverage our unique strategic position to capitalize on the
North American private label market and significantly increase the private label
share of the overall alkaline battery market.

OUR MARKET

Alkaline batteries are the most widely used type of battery in North America
with a greater than 65% share of the overall battery market. Industry analysts
estimate that the North American market for disposable alkaline batteries was
approximately $3 billion in 1997, representing consumption of approximately
4 billion batteries. An estimated 40% increase in battery-operated devices has
driven growth in the use of disposable batteries over the past 10 years.
According to industry data, within the North American battery market, the
alkaline segment is the fastest growing. Frost & Sullivan, Inc. estimates that
the consumption of alkaline batteries is expected to continue to grow at a rate
of 5-8% per year.

The market for private label products has grown significantly in recent
years. In order to generate greater customer loyalty, many retailers have sought
to develop private label or corporate brands in numerous consumer product
categories. Private label affords retailers an opportunity to enhance their
chains' identity by offering high quality products that are less expensive than
brand-name alternatives. According to information supplied by the Private Label
Manufacturers Association, in a number of product categories, including light
bulbs, disposable cameras and tape, private label items have achieved a market
share of 20-25%. The study also shows that, on average, retailers are projecting
a private label category growth rate of 24% over the next three years.

While private label batteries now comprise only approximately 9% of the
overall disposable alkaline battery market, batteries are one of the fastest
growing segments within the private label market. We believe, that despite a
limited supply of private label product, the battery segment has grown at nearly
double the rate of other private label categories. Currently, most private label
batteries are supplied either by offshore manufacturers or by brand-name battery
manufacturers such as Duracell, Inc., a subsidiary of The Gillette Company, and
Eveready Battery Co., a subsidiary of Ralston Purina Company. It is our belief
that offshore battery suppliers, however, have limited available alkaline
production capacities, suffer from high shipping and transportation costs, have
long lead times and large quantity purchase requirements, and often produce
carbon zinc technology batteries that have a much shorter life than alkaline
batteries.
<PAGE>
We believe companies such as Duracell and Eveready have participated in
private label manufacturing only when pressured by certain large retailers. This
is primarily because it is not in the best interest of current branded
manufacturers to produce private label products. The growth of private label
sales comes at the expense of higher margin branded product sales. Profit
margins are significantly reduced due to the lower retail price of private label
batteries, while advertising expenses remain high and line changeovers result in
substantial manufacturing inefficiencies. Consequently, brand-name manufacturers
do not actively solicit sales of private label batteries, but provide such
products reactively in order to satisfy demands by their large retail accounts.
Private label batteries are therefore generally sold to such accounts as a way
of improving the branded suppliers position.

OUR MARKET OPPORTUNITY

We believe we are the only dedicated private label alkaline battery
manufacturer in North America. Our manufacturing technology and expertise enable
us to produce batteries of comparable quality to leading brand-name batteries.
Our location allows us to streamline logistics costs and develop close marketing
and sales relationships with leading North American retailers. During 1998, we
supplied private label batteries to 15 customers, including A&P Canada, Drug
Emporium and Discount Drug Mart. Management estimates that we currently have the
capacity to ship in excess of 25 million batteries annually. Through the end of
1998, we manufactured approximately 5.4 million AA batteries. During the first
eight months of 1999, we manufactured approximately 4.1 million AA batteries.

OUR GROWTH STRATEGY

We intend to utilize our unique market position and substantial
manufacturing capabilities to capitalize on the growth in private label alkaline
battery product sales. Talisman's mission is to be the predominate supplier of
high-quality, private-label alkaline batteries to all retail channels in North
America.

OUR HISTORY

We were incorporated under the laws of the Province of Ontario on July 28,
1978 under the name Firespur Explorations Ltd. In May 1989, we changed our name
to Firesand Explorations Ltd. and, in September 1997, our name changed to its
present name. Our offices are located at 2330 Southfield Road, Unit 3-4,
Mississauga, Ontario, Canada, L5N 2W8; our telephone number is (905) 826-3995.

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THE OFFERING

<TABLE>
<S> <C>
Common stock offered by the Selling
Stockholders........................... 1,024,627 shares of common stock and 1,014,627
shares of common stock underlying class A common
stock purchase warrants

Common stock outstanding before
offering............................... 1,055,560 shares

Common stock outstanding after
offering............................... 3,040,187 shares

Use of proceeds.......................... Talisman will not receive any proceeds from the
sale of securities by the selling stockholders,
although it could realize as much as
$7,609,702.50 if all class A common stock
purchase warrants are exercised. The proceeds
from the exercise of the warrants will be used
for working capital and general corporate
purposes.

Risk factors............................. Investing in these securities involves a high
degree of risk and immediate substantial
dilution of your investment. As an investor, you
should be able to bear a complete loss of your
investment. See "Risk Factors" and "Dilution"
for a more detailed discussion.

Proposed NASDAQ Symbol................... BATT
</TABLE>

The 3,040,187 shares of common stock to be outstanding after this offering
is based on the 1,055,560 shares of common stock outstanding prior to the
offering, 900,000 shares of common stock being sold by Talisman in the public
offering, 1,014,627 shares of common stock to be issued upon the automatic
conversion of $5,073,135 principal amount of 8% convertible subordinated
promissory notes upon listing of Talisman's common stock on a U.S. based
exchange and the issuance of 70,000 shares of common stock on conversion of a
$350,000 promissory note. The shares of common stock to be outstanding after
this offering excludes:

- 135,000 shares of common stock subject to the underwriters' over-allotment
option

- 90,000 shares of common stock issuable upon the exercise of the
underwriters' warrants

- 31,200 shares of common stock reserved for issuance pursuant to our 1997
Stock Option Plan

- 225,000 shares of common stock reserved for issuance pursuant to our 1999
Senior Executive Stock Option Plan

- 84,770 shares of common stock reserved for issuance pursuant to our 1999
Directors Company Stock Plan

- 1,014,627 shares of common stock issuable upon the exercise of 1,014,627
class A warrants, all of which are currently exercisable

- 1,048,615 shares of common stock issuable upon the exercise of additional
warrants and options, all of which are currently exercisable

The proposed trading symbol does not imply that a liquid and active market
will be developed or sustained for the securities upon completion of this
offering.

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SUMMARY FINANCIAL DATA

The summary financial data set forth below for the years ended December 31,
1997 and 1998 and at December 31, 1997 and 1998 is derived from and should be
read in conjunction with Talisman's consolidated financial statements, including
the notes thereto, appearing elsewhere in this prospectus. The summary financial
data set forth below for the interim periods ended August 31, 1999 and 1998 has
been prepared from Talisman's books and records and reflects, in our opinion,
all adjustments necessary for a fair presentation of the financial position,
results of operations, and cash flows of Talisman, as at the periods indicated
therein. Results for interim periods are not necessarily indicative of results
which can be expected for the entire year.

CONSOLIDATED STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
SEVEN MONTHS YEAR EIGHT MONTHS
ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, AUGUST 31,
------------- ------------- ----------------------------
1997 1998 1998 1999
------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues............................................. $ 139,646 $ 748,254 $ 228,659 $ 385,629
Operating Expenses................................... 180,582 1,487,052 745,020 1,135,256
Gross Profit......................................... (40,936) (738,798) (516,361) (749,627)
Expenses:
Selling, general and administrative................ 597,558 1,136,516 339,051 1,285,526
Amortization....................................... 27,670 304,182 246,355 607,927
Interest and bank charges.......................... 11,236 99,292 41,177 120,883
Total expenses................................... 636,464 1,539,990 626,583 2,014,336
Loss for the period.................................. (640,340) (2,274,202) (1,139,821) (2,725,349)
Deficit, beginning of period......................... (324,440) (964,780) (964,780) (3,238,483)
Deficit, end of period............................... (964,780) (3,238,982) (2,104,601) (5,964,332)

Loss per share....................................... (1.35) (3.69) (2.04) (2.63)
</TABLE>

CONSOLIDATED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
AS AT DECEMBER 31, AS AT AUGUST 31, 1999
--------------------------- ---------------------------
1997 1998 ACTUAL ADJUSTED(1)
------------ ------------- ------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Working capital(2)...................................... $ (90,957) $ (1,063,387) $ (3,828,157) $ 4,315,528
Total current assets.................................... 354,591 839,659 2,592,273 5,662,948
Total current liabilities............................... 445,548 1,903,046 6,420,430 1,347,420
Total shareholder's equity.............................. 1,961,368 1,142,461 (1,422,734) 7,070,951
</TABLE>

- ------------------------

(1) As adjusted to reflect (i) the issuance of 1,014,627 shares of common stock
upon conversion of $5,073,135 principal amount of 8% convertible
subordinated promissory notes, (ii) the issuance of the 900,000 shares of
common stock offered hereby and the application of the net proceeds
therefrom and (iii) the issuance of 70,000 shares of common stock on
conversion of a $350,000 promissory note issued to a principal shareholder
of the Company.

(2) Working capital represents current assets less current liabilities.

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<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER EACH OF THE FOLLOWING RISKS AND ALL OF THE
OTHER INFORMATION SET FORTH IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN
SHARES OF OUR COMMON STOCK. SOME OF THE FOLLOWING RISKS RELATE PRINCIPALLY TO
OUR BUSINESS IN GENERAL AND THE INDUSTRY IN WHICH WE OPERATE. OTHER RISKS RELATE
PRINCIPALLY TO THE SECURITIES MARKETS AND OWNERSHIP OF OUR STOCK. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING OUR COMPANY.
ADDITIONAL RISKS THAT GENERALLY APPLY TO PUBLICLY TRADED COMPANIES, THAT ARE NOT
YET IDENTIFIED OR THAT WE CURRENTLY THINK ARE IMMATERIAL, MAY ALSO IMPAIR OUR
BUSINESS OPERATIONS AND ADVERSELY AFFECT OUR BUSINESS.

IF ANY OF THE FOLLOWING RISKS AND UNCERTAINTIES DEVELOP INTO ACTUAL EVENTS,
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY
ADVERSELY AFFECTED. IN SUCH A CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD
DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.

RISK FACTORS RELATING TO OUR BUSINESS

OUR BUSINESS IS SUBJECT TO THE FOLLOWING RISKS, WHICH INCLUDE RISKS RELATING
TO THE INDUSTRY IN WHICH WE OPERATE.

WE ARE IN AN EARLY STAGE OF DEVELOPMENT AND WE EXPECT TO ENCOUNTER RISKS
ASSOCIATED WITH EARLY-STAGE COMPANIES.

Our company was incorporated under the name Firesand Resources Ltd. on
July 28, 1978, but has only been engaged in the manufacture and sale of private
label alkaline batteries since September 1997. Accordingly, we have a limited
operating history in the battery business. Our proposed business operations will
be subject to numerous risks associated with early stage enterprises that you
should consider. For example, there is no assurance that our operations will be
profitable, and that substantial losses will not be sustained or that the we
will be able to obtain additional financing when needed. If we fail to
adequately address these risks, our business, financial condition and results of
operations will be materially adversely affected and the trading price of our
common stock could decline, and you may lose all or part of your investment.

WE HAVE A HISTORY OF OPERATING LOSSES, AND OUR GROWTH PROGRAM AND FUTURE
PROFITABILITY REMAINS UNCERTAIN.

Our company generated revenues of $139,646 and $748,254 for the seven months
ended December 31, 1997, and the year ending December 31, 1998, and we incurred
net losses from our operations of $640,340 and $2,274,202 for such periods,
respectively. In addition, Talisman generated revenues of $228,659 and $385,629
for the eight months ended August 31, 1998, and the eight months ended
August 31, 1999, and we incurred net losses from our operations of $1,139,821
and $2,725,349 for such periods, respectively. We expect our operating expenses
to increase significantly in connection with our proposed growth program and,
accordingly, our future profitability may depend on corresponding increases in
revenues from our expanded business operations, of which there can be no
assurance. We believe that operating results will be adversely effected if
start-up expenses associated with our new product lines are incurred without
sufficient offsetting revenues. Moreover, future events, including unanticipated
expenses or increased competition could have an adverse effect on our long-term
operating margins and results of operations. There can be no assurance that our
company's growth program will result in an increase in the profitability of our
operations.

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<PAGE>
WE ARE DEPENDENT UPON THE CONTINUED SUPPORT OF OUR LENDERS AND SHAREHOLDERS
AND THE GENERATION OF PROFITABLE OPERATIONS.

The notes to our audited financial statements state that we are in the early
stages of our operations and have, therefore, not generated revenues on a
consistent basis. The notes further state that the recoverability of our assets
is, therefore, dependent on the continued support of our lenders and
shareholders and the generation of profitable operations. We may require
substantial additional funds in the future, and there can be no assurance that
our future financial statements will not include a similar explanatory paragraph
if we are unable to raise sufficient funds or generate sufficient cash flow from
operations to cover the cost of our operations. The existence of the explanatory
paragraph may materially adversely affect our relationship with prospective
customers and suppliers, and therefore could have a material adverse effect on
our business, financial condition and results of operations.

WE ARE DEPENDENT UPON THE PROCEEDS OF THIS OFFERING TO FINANCE OUR EXPANDING
BUSINESS OPERATIONS.

Our ability to complete the expansion of our operations into the production
and marketing of AAA batteries, increase the production capacity of our AA cell
size, and to commence the expansion of our operations into the production and
marketing of C and D battery cell sizes is dependent upon the receipt of the
proceeds of this offering. In addition, our ability to complete the proposed
expansion of our operations into the production and marketing of C and D battery
cell sizes is dependent upon obtaining additional financing. In the event that
this offering is not completed and additional financing is not obtained, we may
be unable to complete and/or implement our plans to expand our operations, and
our business, financial condition and results of operations may be materially
adversely affected.

OUR SUCCESS DEPENDS ON MAINTAINING RELATIONSHIPS WITH KEY CUSTOMERS.

Our company has several large customers upon which we depend on for the sale
of our battery products. Specifically, for the eight months ended August 31,
1999, sales to Blockbuster Video represented 50.3%, sales to McLanes (a
subsidiary of WalMart) represented 13.9%, Drug Emporium represented 11.1%, Amcon
Distribution Co. represented 9.7% and A&P Fireco represented 9.0%. In addition,
for the year ended December 31, 1998, sales to Discount Drug Mart represented
28.6%, Drug Emporium represented 23.7%, Zellers Inc. represented 9.1% and A&P
Fireco represented 7.0% of our overall sales. Further, no other retail customer
accounted for more than 5% of our overall sales for either the eight months
ended August 31, 1999 or the year ended December 31, 1998. Customers' orders are
dependent upon their markets and customers and may vary significantly in the
future based upon the demand for our products. The loss of one or more of such
customers, or a declining market in which such customers reduce orders or
request reduced prices, could have a material adverse effect on our business.

WE DO NOT HAVE ANY CUSTOMER AGREEMENTS.

We do not have any agreements with our customers for any fixed or minimum
amount of sales or revenues. All of our customers order products from us by way
of purchase orders. Accordingly, there can be no assurance of a minimum amount
of sales which we may expect to achieve. In addition, although we have not, to
date, experienced any material cancellations, in the event of the cancellation
of a customer order, we may incur losses to the extent that we have produced but
not shipped such customer's private label branded batteries.

WE DEPEND UPON OUR SUPPLIERS FOR RAW MATERIALS AND MAY NOT BE ABLE TO
REPLACE THEM.

We rely on other companies to supply us with raw materials. Our company has
a number of key suppliers who are also shareholders of the company. They include
Burlington Stamping Inc. of Burlington, Ontario and Hibar Systems Limited of
Richmond Hill, Ontario. BSI supplies all of our

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<PAGE>
battery cans while Hibar supplies all of our battery pre-assemblies. If we lose
one or more of such suppliers or are unable to obtain the raw materials or
products in the quantities required by us, our business, financial condition and
results of operations may be materially adversely affected.

WE CANNOT PREDICT OUR SUCCESS BECAUSE WE HAVE A LIMITED MANUFACTURING
HISTORY.

We have a limited operating history upon which to evaluate our ability to
manufacture profitably alkaline batteries. Although we have two AA cell lines
capable of producing at a rate of 100 pieces per minute, or 24,000,000 pieces
per year, to date, our company has only manufactured approximately 9.5 million
AA batteries. Our existing manufacturing capabilities for AA alkaline cells
currently exceed the market for our AA battery products, however there can be no
assurance that we will be able to expand successfully our operations in response
to a rapid increase in market demand for our products. Following the offering,
we intend to introduce a third cell line in 1999, capable of producing 100 AAA
cells per minute. Subject to financing, our current plans include building a
D line in early 2000 followed by a C line in mid 2000. Our expanded
manufacturing facilities may be subject to risks of delay or difficulty in
manufacturing and may require substantial additional capital to establish the
expanded facilities. Accordingly, there can be no assurance that we will be
successful in implementing and expanding our manufacturing capabilities, or
that, once implemented, the expanded manufacturing capabilities will generate
substantial revenues or attain profitable operations.

BECAUSE WE HAVE LIMITED MARKETING AND SALES CAPACITY WE MAY HAVE TO RELY ON
THIRD PARTIES FOR SUCH SERVICES.

After completion of the development of our new battery cell lines, in order
to generate additional revenues, we will be required to market successfully our
alkaline batteries to customers. We currently have a full time sales
organization consisting of four qualified sales professionals who generate a
majority of business through a network of brokers. We have developed a
relationship with two out of the four major, national, private label brokers
dedicated to the food class of trade. In addition, we have established
relationships with twelve independent regional sales agencies, which handled a
myriad of non-food, and drug battery customers throughout Canada and the United
States. Our agreements with our independent sales representative groups and
brokers are on mutually cancelable terms. There can be no assurance that we will
be able to market successfully our alkaline batteries. Further, to the extent
that we arrange with third parties to market our proposed products, the success
of such products may depend on the efforts of such third parties.

WE MAY BE UNABLE TO COMPETE FAVORABLY IN THE HIGHLY COMPETITIVE BATTERY
INDUSTRY.

- the quality of the product

- price

- technological developments

- turn around time for production orders

- payment terms of customers

- marketing and sales

Most of our competitors are large, well-established companies with considerably
greater financial, marketing, sales and technical resources than those available
to us. Additionally, many of our present and potential competitors have research
and development capabilities that may allow such competitors

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<PAGE>
to develop new or improved products that may compete with our product lines.
These companies may succeed in developing proposed products that are more
effective or less costly than our proposed products or such companies may be
more successful in manufacturing and marketing their proposed products. An
increase in competition could result in a loss of market share.

OUR BATTERY PRODUCTS MAY HAVE A POTENTIAL FOR TECHNOLOGICAL OBSOLESCENCE.

The battery industry is characterized by intense competition. Our battery
products could be rendered obsolete or uneconomical by the development of new
products, technological advances affecting the cost of production, or marketing
or pricing actions by one or more of our competitors. Any one or more of the
foregoing developments or a fundamental shift in technology in our product
markets could have a material adverse effect on our business, financial
condition or results of operations.

WE DEPEND UPON CERTAIN KEY PERSONNEL TO SUCCEED.

We are highly dependent on the experience of our management in the
continuing development of our retail operations. The loss of the services of
certain of these individuals, particularly James Ogle, President, or Garry Syme,
Senior Vice President, may have a material adverse effect on the company's
business. We have employment agreements with Mr. Ogle and Mr. Syme, which expire
in December 2002 and January 2002, respectively. Further, we have purchased
key-man life insurance in the amount of Cdn.$1,500,000 on the lives of each of
Mr. Syme and Mr. Ogle, with our company as the named beneficiary.

WE MAY NOT BE ABLE TO ATTRACT AND RETAIN THE QUALIFIED PERSONNEL WE NEED TO
SUCCEED IN THE FUTURE.

Our future success will depend in part on our ability to attract and retain
qualified personnel to manage the development and future growth of our company.
There can be no assurance that we will be successful in attracting and retaining
such personnel. The failure to recruit additional key personnel could have a
material adverse effect on our business, financial condition and results of
operations.

MANAGEMENT HAS BROAD DISCRETION AS TO THE USE OF PROCEEDS OF THE OFFERING.

Our management may spend the proceeds from this offering in ways which
differ from the specific proposed uses described in this prospectus. We have
allocated a large portion of the proceeds from this offering to discretionary
uses. You will be relying on the judgement of our management regarding the
application of the proceeds of this offering. As a stockholder, you may not
agree with management's spending decisions. Please see "Use of Proceeds."

CHANGES IN GOVERNMENT REGULATIONS MAY ADVERSELY AFFECT OUR BUSINESS.

Federal, state, provincial and local laws, particularly relating to the
protection of the environment, may materially affect our operations. We have
made every attempt to ensure that our manufacturing facilities do not contravene
any environmental laws. Although we believe that we are in compliance with
existing laws and regulations, there can be no assurance that substantial costs
for compliance will not be incurred if there are changes in government
regulations. Any substantial violations of these rules and regulations could
have an adverse affect upon our operations.

WE HAVE NO REGISTERED TRADEMARKS AND THERE MAY BE CLAIMS OF INFRINGEMENTS.

We are aware that the use or registration of trademarks entails the risk of
claims of infringement or opposition from third parties. Although there are no
pending lawsuits against us regarding claims of trademark infringement, there
can be no assurance that third parties will not initiate such litigation against
us or that any such litigation will be resolved in our favor.

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<PAGE>
WE HAVE A LIMITED AMOUNT OF INSURANCE COVERAGE AND MAY NOT BE ABLE TO COVER
LIABILITY CLAIMS.

Our company carries product liability insurance coverage on its battery
products in the amount of Cdn.$1,000,000, with an additional umbrella protection
of Cdn.$14,000,000. There can be no assurance that such insurance will be
adequate to cover potential product liability claims or that a loss of insurance
coverage or the assertion of a product liability claim or claims would not
materially adversely affect our business, financial condition and results of
operations. See "Business--Product Liability Insurance."

WE MAY BE ADVERSELY AFFECTED IF OUR YEAR 2000 REMEDIATION EFFORTS ARE NOT
SUCCESSFUL.

Our business could be adversely impacted by information technology issues
related to the Year 2000. We have been engaged in assessing this Year 2000 issue
as it relates to our business. This review covers information and
non-information technology systems of both our own operating systems and the
systems of our third party vendors and manufacturers. We have completed
surveying our suppliers and service providers for Year 2000 compliance.

We currently believe that the most reasonably likely worst case scenario is
that there will be some localized disruptions of systems that will affect
individual, process, facilities or suppliers for a short time rather than
systematic or long-term problems affecting our business operations as a whole.

There is still uncertainty about the broader scope of the Year 2000 issue as
it may affect our company and third parties, including our suppliers and
customers, that are critical to our operations. For example, lack of readiness
by electrical and water utilities, financial institutions, governmental agencies
or others, pose significant impediments to our ability to carry on our normal
operations. In the event that we are unable to complete our remedial actions and
are unable to implement adequate contingency plans in the event problems are
encountered, there could be a material adverse effect on our business, results
of operations or financial condition. For more information regarding our Year
2000 program see "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Year 2000."

RISK FACTORS RELATING TO SECURITIES MARKETS

THERE ARE RISKS RELATING TO THE SECURITIES MARKET THAT YOU SHOULD CONSIDER
IN CONNECTION WITH YOUR INVESTMENT IN AND OWNERSHIP OF OUR STOCK.

FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY NEGATIVELY IMPACT OUR
STOCK PRICE.

Our quarterly operating results have generally fluctuated, with the highest
results coinciding with increased production and sales in anticipation of peak
buying periods events such as back-to-school and holidays such as Christmas. The
Company has experienced a substantial increase in sales in these seasons as a
result of increases in sales of third party products requiring battery power
including battery-operated toys, appliances and audio/video equipment. Our
results of operations may vary significantly in the future depending on factors
which may include:

- the size, timing and recognition of revenue derived from customer's sales
of its products;

- increased competition;

- changes in our pricing policies or those of its competitors;

- the financial stability of major customers; new product introductions or
enhancements by competitors;

- the degree of success of new products;

- any changes in operating expenses; and

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- general economic conditions.

As a result, there may be significant fluctuations in our revenues from period
to period. Our expense levels are based, in part, on our expectations for future
orders and sales, and if sales are below expectations, operating results are
likely to be adversely affected. Net income may be disproportionately affected
by a reduction of sales because a significant portion of our expenses do not
vary with revenues. We may also choose to reduce prices or increase spending in
response to competition or in order to pursue new market opportunities. These
issues could affect our operating margins in the future and our company may be
materially adversely affected.

OUR COMMON STOCK PRICE MAY BE VOLATILE, WHICH COULD RESULT IN LOSSES OR
DIFFICULTIES IN LIQUIDATING SHARES FOR STOCKHOLDERS.

No assurance can be given that an active market will be available for our
common stock or as to the liquidity of the trading market for our common stock.
If a trading market is not maintained, holders of our common stock may
experience difficulty in reselling their shares or may be unable to resell them
at all. Any such market may be discontinued at any time. In addition, there is
no assurance that the price of our common stock in the market will be equal to
or greater than the offering price hereof. See "Description of Securities."

THE EXERCISE OF OUR CLASS A WARRANTS MAY ADVERSELY EFFECT THE MARKET PRICE
OF OUR SECURITIES.

We have an aggregate of approximately 1,055,560 shares of common stock
outstanding, an unlimited number of shares of common stock authorized but
unissued, 1,014,627 shares of common stock unissued but reserved for issuance
upon exercise of the class A warrants, and 1,014,627 shares of common stock
unissued but reserved for issuance upon conversion of promissory notes. The
exercise of the class A warrants and the sale of the underlying shares of common
stock may have a depressive effect on the market price of our securities.
Moreover, the terms upon which we will be able to obtain additional equity
capital may be adversely affected since the holders of outstanding warrants can
be expected to exercise them, to the extent they are able, at a time when we
would, in all likelihood, be able to obtain any needed capital on terms more
favorable to us than those provided in the class A warrants. For a complete
description of the terms and conditions of exercise of the class A warrants, see
"Description of Securities."

WE DO NOT ANTICIPATE PAYING ANY DIVIDENDS.

To date, we have paid no cash dividends. Payment of dividends is up to the
discretion of our board of directors. For the foreseeable future, the board of
directors intends to retain earnings generated from our operations for use in
our business and do not anticipate paying any dividends.

THE REDEMPTION OF OUR CLASS A WARRANTS HAS THE POTENTIAL TO ADVERSELY EFFECT
OUR COMPANY.

Our class A warrants are redeemable at a price of $0.10 provided that
(A) prior notice of not less than 30 days is given to the class A warrant
holders, (B) the last sale price of our common stock shall have been at least
$9.00 per share for a period not less than 30 consecutive days trading period
ending on the third day prior to the date on which the notice of redemption is
given. class A warrant holders have these exercise rights until the close of the
business day preceding the date fixed for redemption. Notice of redemption of
the class A warrants could force the holders to exercise the class A warrants at
the current market price when they might otherwise wish to hold them, or to
accept the redemption price, which may be substantially less than the market
value of the class A warrants at the time of redemption. For a complete
description of the terms and conditions of redemption of the class A warrants,
see "Description of Securities--class A warrants."

10
<PAGE>
WE WILL CONTINUE TO BE CONTROLLED BY PRESENT SHAREHOLDERS.

Our present shareholders of common stock have acquired a controlling
interest in Talisman at a cost of substantially less than that which the
investors pursuant to this offering may purchase their securities. Therefore,
the investors pursuant to this offering will bear a substantial portion of the
risk of loss, while control of Talisman will remain in the hands of the current
shareholders.

WE MAY ISSUE ADDITIONAL SECURITIES THEREBY DILUTING SHAREHOLDERS' INTERESTS.

The board of directors of Talisman will have authority to issue further
common stock or other securities without the consent or vote of the shareholders
of the company. The issuance of additional common stock by our management,
whether in respect of a transaction involving a business opportunity or
otherwise, may have the effect of further diluting the proportionate equity
interest and voting power of holders of our common stock, including investors
under this offering. Although, we are prohibited from issuing any additional
securities, except pursuant to our 1997 Stock Option Plan, 1999 Senior Executive
Stock Option Plan and 1999 Directors Company Stock Plan, for a period of two
years from March 19, 1999 without the prior written consent of Spencer Trask
Securities, Inc.

THE BOOK VALUE OF THE SHARES PURCHASED IN THIS OFFERING WILL IMMEDIATELY BE
SUBSTANTIALLY DILUTED.

Investors purchasing shares in this offering will incur immediate and
substantial dilution in net tangible book value per share. For a complete
description, see "Dilution."

11
<PAGE>
FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. These statements relate to:

- our future plans;

- objectives;

- expectations and intentions; and

- the assumptions underlying or relating to any of these statements.

We use words such as "expects," "anticipates," "intends," and "plans" and
similar expressions to identify forward-looking statements. Our actual results
could differ materially from those discussed in these statements as a result of
certain factors, as more fully described below and elsewhere in this prospectus.
We believe that our forward-looking statements are within the meaning of the
safe harbor provided by the Securities Exchange Act of 1934.

WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION

Talisman files reports, proxy statements and other information with the
Commission. Those reports, proxy statements and other information may be
obtained:

- At the public reference room of the Commission, Room 1024--Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;

- At the public reference facilities at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048
or Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661;

- By writing to the Commission, Public Reference Section, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549;

- At the offices of The Nasdaq Stock Market, Reports Section, 1735 K Street,
N.W., Washington, D.C. 20006; or

- From the Internet site maintained by the Commission at http://www.sec.gov,
which contains reports, proxy and information statements and other
information regarding issuers that file electronically with the
Commission.

Talisman has filed with the Commission a registration statement under the
Securities Act of 1933, as amended, with respect to the common stock offered
hereby. This prospectus, which is a part of the registration statement, does not
contain all the information set forth in, or annexed as exhibits to, such
registration statement, certain portions of which have been omitted pursuant to
rules and regulations of the Commission. For further information with respect to
Talisman and the common stock, reference is made to such registration statement,
including the exhibits thereto, copies of which may be inspected and copied at
the aforementioned facilities of the Commission. Copies of such registration
statement, including the exhibits, may be obtained from the Public Reference
Section of the Commission at the aforementioned address upon payment of the fee
prescribed by the Commission. Information regarding the operation of the
Commission's public reference facilities may be obtained by calling the SEC at
1-800-SEC-0330.

Talisman intends to distribute to its stockholders annual reports containing
financial statements audited and reported upon by its independent public
accountants after the close of each fiscal year, and will make such other
periodic reports as the company may determine to be appropriate or as may be
required by law. Talisman's fiscal year ends December 31st of each year.

12
<PAGE>
USE OF PROCEEDS

Talisman will not receive any proceeds from the sale of securities by the
selling stockholders. Talisman intends to use the proceeds received from the
exercise of any class A common stock purchase warrants for working capital and
general corporate purposes. The maximum amount of proceeds that Talisman will
receive upon the exercise of the class A common stock purchase warrants is
$7,609,702.50 (assuming the current exercise price of $7.50 per share). There
can be no assurance that any or all of the class A common stock purchase
warrants will be exercised and that Talisman will receive any proceeds
therefrom. This is Talisman's best estimate of the use of proceeds generated
from the possible exercise of class A common stock purchase warrants based on
the current state of its business operations, its current plans and current
economic and industry conditions. Any changes in the projected use of proceeds
will be made at the sole discretion of Talisman's board of directors.

13
<PAGE>
DILUTION

At August 31, 1999, the net tangible deficit attributable to exchange of
indebtedness and additional share issuance of Talisman was $(4,032,835), or
approximately $(3.82) per share. After giving effect to (i) the conversion of a
$350,000 promissory note into 70,000 shares of common stock at $5.00 per share
and (ii) conversion of the outstanding promissory notes into an aggregate of
1,014,627 shares of common stock upon listing of Talisman's common stock on the
Nasdaq SmallCap Market, our net tangible book value as of August 31, 1999, was
approximately $1,783,868 or $0.83 per share of common stock. After giving effect
to the sale by Talisman of the 900,000 shares of common stock offered hereby, at
the public offering price of $5.00 per share, the net tangible book value of
Talisman is $5,383,868, or $1.77 per share. This represents an immediate
increase in the pro forma net tangible book value of $5.59 per share to existing
stockholders and an immediate dilution in pro forma net tangible book value of
$3.23 per share to new investors. Please see "Certain Transactions" and
"Description of Securities." The following table illustrates this per share
dilution.

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $ 5.00
Net tangible book value per share as of August 31, 1999... $ (3.82)
Increase in net tangible book value attributable to
exchange of indebtedness and additional share
issuance................................................ 4.65
Increase in net tangible book value per share attributable
to new investors........................................ 0.94
---------
Net tangible book value per share after the offering........ 1.77
Dilution per share to new investors......................... $ 3.23
=========
</TABLE>

The following table summarizes, as of August 31, 1999, the differences
between the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid by existing stockholders
and by new investors at the offering price of $5.00 per share and before
deducting estimated underwriting discounts and commissions and estimated
offering expenses for new investors:

<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE AVERAGE
OF TOTAL AGGREGATE OF TOTAL PRICE
SHARES PURCHASED SHARES CONSIDERATION CONSIDERATION PER SHARE
---------------- -------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Existing Shareholders................ 1,055,560 54% $ 2,653,362 37% $ 2.51
New Investors........................ 900,000 46% $ 4,500,000 63% $ 5.00
------------ ---------- ----------- ---------
Total................................ 1,955,560 100.0% $ 7,153,362 100.0%
============ ========== =========== =========
</TABLE>

The foregoing discussion and table does not give effect to:

- 150,000 shares of common stock subject to the underwriters' over-allotment
option

- 100,000 shares of common stock issuable upon the exercise of the
underwriters' warrants

- 31,200 shares of common stock reserved for issuance pursuant to our 1997
Stock Option Plan

- 225,000 shares of common stock reserved for issuance pursuant to our 1999
Senior Executive Stock Option Plan

- 84,770 shares of common stock reserved for issuance pursuant to our 1999
Directors Company Stock Plan

- 1,014,627 shares of common stock issuable upon the exercise of 1,014,627
class A warrants, all of which are currently exercisable

- 1,443,705 shares of common stock issuable upon the exercise of additional
warrants and options, all of which are currently exercisable

- the automatic conversion of $5,073,135 principal amount of 8% convertible
subordinated promissory notes into 1,014,627 shares of common stock upon
listing of Talisman's common stock on a U.S. based exchange

- the conversion of a $350,000 promissory note into 70,000 shares of common
stock at $5.00 per share by a principal shareholder of the Company

14
<PAGE>
CAPITALIZATION

The following table sets forth the actual capitalization of Talisman as of
August 31, 1999, and as adjusted to reflect (i) the sale of 900,000 shares of
common stock offered hereby at an initial public offering price of $5.00 per
share, after deducting the underwriting discounts and estimated offering
expenses payable by Talisman, (ii) the application of the net proceeds from this
offering, (iii) the automatic conversion of all outstanding 8% convertible
subordinated promissory notes into 1,014,627 shares of common stock upon listing
of Talisman's common stock on the Nasdaq SmallCap Market and (iv) the conversion
of a $350,000 promissory note into 70,000 shares of common stock.

This table should be read in conjunction with the consolidated financial
statements and the notes thereto appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
AUGUST 31, 1999
---------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
------------- ------------
Total current liabilities............................................................ $ 6,420,430 $ 1,347,420
Total long-term liabilities.......................................................... 898,048 898,048
Shareholders equity:
Common stock, an unlimited number of shares authorized; 1,055,560 shares issued and
outstanding on an actual basis; 3,040,187 shares issued and outstanding as
adjusted........................................................................... 2,653,362 11,248,510
Class A special shares, an unlimited number of shares authorized; 3,300 shares issued
and outstanding on an actual and as adjusted basis................................. 1,687,083 1,687,083
Class A warrants, 1,014,627 outstanding.............................................. 101,463 --
Retained earnings (accumulated deficit).............................................. (5,964,332) (5,964,332)
Accumulated other comprehensive loss................................................. (209,564) (209,564)
Contributed surplus.................................................................. 309,254 309,254
Total shareholders' equity........................................................... (1,422,734) 7,070,951
Total capitalization................................................................. 5,895,744 9,316,419
</TABLE>

The 3,040,187 shares as adjusted for this offering excludes:

- 135,000 shares of common stock subject to the underwriters' over-allotment
option

- 90,000 shares of common stock issuable upon the exercise of the
underwriters' warrants

- 31,200 shares of common stock reserved for issuance pursuant to our 1997
Stock Option Plan

- 225,000 shares of common stock reserved for issuance pursuant to our 1999
Senior Executive Stock Option Plan

- 84,770 shares of common stock reserved for issuance pursuant to our 1999
Directors Company Stock Plan

- 1,014,627 shares of common stock issuable upon the exercise of 1,014,627
class A warrants, all of which are currently exercisable

- 1,443,705 shares of common stock issuable upon the exercise of additional
warrants and options, all of which are currently exercisable

15
<PAGE>
EXCHANGE RATE DATA

We maintain our books of account in Canadian dollars, but have provided the
financial data in this prospectus in United States dollars with our audit
conducted in accordance with generally accepted auditing standards in the United
States of America.

The following table sets forth, for the periods indicated, certain exchange
rates based on the noon buying rate in New York City for cable transfers in
Canadian dollars. Such rates are the number of United States dollars per one
Canadian dollar and are the inverse of rates quoted by the Federal Reserve Bank
of New York for Canadian dollars per US$1.00. The average exchange rate is based
on the average of the daily exchange rates during such periods. On August 31,
1999, the exchange rate was approximately Cdn.$1.00 per US$0.6682.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998
--------- --------- --------- --------- ---------
Rate at end of period............................................ $ .7128 $ .7323 $ .7301 $ .6999 $ .6505
Average rate during period....................................... .7320 .7288 .7333 .7222 .6740
High............................................................. .7632 .7527 .7513 .7487 .7104
Low.............................................................. .7103 .7023 .7235 .6945 .6422
</TABLE>

PRICE RANGE FOR COMMON STOCK AND DIVIDEND POLICY

On December 30, 1997, Talisman's common stock began trading on the Canadian
Dealing Network Inc., a subsidiary of The Toronto Stock Exchange, under the
symbol "TALS." The Canadian Dealing Network is a trade reporting and quotation
system for over-the-counter trading in the Province of Ontario, Canada. On
January 27, 1999, Talisman effected a 1-for-25 reverse split of our common
stock, which upon consummation, Talisman requested the Canadian Dealing Network
to formally halt public quotation of the shares of Talisman. This requested
suspension does not affect the ability of market makers and other dealers to
report trades of the common shares of Talisman through the facilities of the
Canadian Dealing Network. We have applied for quotation of our common stock on
the Nasdaq SmallCap Market under the symbols "BATT." The following table sets
forth, for the periods indicated, the high and low closing trading prices of the
common stock as reported by the Canadian Dealing Network.

<TABLE>
<CAPTION>
MONTH HIGH LOW
- ------------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
December, 1997................................................................................... 34.03 34.03
January, 1998.................................................................................... 34.03 22.12
February, 1998................................................................................... 23.65 14.46
March, 1998...................................................................................... 12.76 8.50
April, 1998...................................................................................... 13.61 7.66
May, 1998........................................................................................ 11.06 7.66
June, 1998....................................................................................... 7.66 5.96
July, 1998....................................................................................... 6.81 3.40
August, 1998..................................................................................... 6.47 4.25
September, 1998.................................................................................. 4.25 3.06
October, 1998.................................................................................... 3.91 2.70
November, 1998................................................................................... 3.40 2.21
December, 1998................................................................................... 5.10 2.04
January, 1999.................................................................................... 5.10 3.40
</TABLE>

16
<PAGE>
The closing trading prices set forth above have been stated in dollars, and
have been calculated based upon the Exchange Rate in effect as of August 31,
1999, which was approximately Cdn.$1.00 per US$0.6682.

As of September 1, 1999, there were 1,055,560 shares of common stock
outstanding, there were approximately 2,000 registered holders of Talisman's
common stock.

DIVIDEND POLICY

To date, Talisman has paid no dividends on any shares of its common stock
and Talisman's board of directors has no present intention of paying any
dividends on its common stock in the foreseeable future, as we intend to use our
earnings, if any, to generate increased growth. The payment by Talisman of
dividends in the future, if any, rests solely within the discretion of the board
of directors and will depend upon, among other things, Talisman's earnings,
capital requirements and financial condition, as well as other factors deemed
relevant by Talisman's board of directors. Although dividends are not limited
currently by any agreements, it is anticipated that future agreements, if any,
with institutional lenders or others may also limit Talisman's ability to pay
dividends.

17
<PAGE>
SELECTED FINANCIAL DATA

The selected financial data set forth below for the years ended
December 31, 1997 and 1998 and at December 31, 1997 and 1998 is derived from and
should be read in conjunction with Talisman's consolidated financial statements,
including the notes thereto, appearing elsewhere in this prospectus. The summary
financial data set forth below for the interim periods ended August 31, 1999 and
1998 has been prepared from Talisman's books and records and reflects, in our
opinion, all adjustments necessary for a fair presentation of the financial
position, results of operations, and cash flows of Talisman, as at the periods
indicated therein. Results for interim periods are not necessarily indicative of
results which can be expected for the entire year.

CONSOLIDATED STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
EIGHT MONTHS
YEAR ENDED
SEVEN MONTHS ENDED ENDED AUGUST 31,
DECEMBER 31, DECEMBER 31, ----------------------------
1997 1998 1998 1999
------------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED)
Revenues....................................... $ 139,646 $ 748,254 $ 228,659 $ 385,629
Operating Expenses............................. 180,582 1,487,052 745,020 1,135,256
Gross Profit................................... (40,936) (738,798) (516,361) (749,627)
Expenses:
Selling, general and administrative........ 597,558 1,136,516 339,051 1,285,526
Amortization............................... 27,670 304,182 246,355 607,927
Interest and bank charges.................. 11,236 99,292 41,177 120,883
Total expenses......................... 636,464 1,539,990 626,583 2,014,336
Loss for the period............................ (640,340) (2,274,202) (1,139,821) (2,725,349)
Deficit, beginning of period................... (324,440) (964,780) (964,780) (3,238,483)
Deficit, end of period......................... (964,780) (3,238,982) (2,104,601) (5,964,332)
Loss per share................................. (1.35) (3.69) (2.04) (2.63)
</TABLE>

CONSOLIDATED BALANCE SHEET DATA:
<TABLE>
<CAPTION>
AS AT DECEMBER 31, AS AT AUGUST 31, 1999
------------------------- ---------------------------
<S> <C> <C> <C> <C>
1997 1998 ACTUAL ADJUSTED(1)
---------- ------------- ------------- ------------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
Working capital(2)....................................... $ (90,957) $ (1,063,387) $ (3,828,157) $ 4,315,528
Total current assets..................................... 354,591 839,659 2,592,273 5,662,948
Total current liabilities................................ 445,548 1,903,046 6,420,430 1,347,420
Total shareholder's equity............................... 1,961,368 1,142,461 (1,422,734) 7,070,951
</TABLE>

- ------------------------

(2) Working capital represents current assets less current liabilities.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The statements contained in this prospectus that are not historical are
forward looking statements, including statements regarding our expectations,
intentions, beliefs or strategies regarding the future. Forward looking
statements include statements regarding liquidity, anticipated cash needs and
availability and anticipated expense levels. All forward looking statements
included in this prospectus are based on information available to us on the date
hereof and we assume no obligation to update any such forward looking
statements. It is important to note that our actual results could differ
materially from those in such forward looking statements. Among the factors that
could cause actual results to differ materially are the factors detailed in the
risks discussed in the "Risk Factors" section included in this prospectus
beginning at page 5.

GENERAL

Talisman was incorporated in July 1978 and for almost 20 years carried on
business as a junior mineral exploration company in the Province of Ontario,
Canada. In September 1997, Talisman (then known as Firesand Resources Ltd.)
entered into a share exchange agreement with Talisman International Inc.
pursuant to which Talisman acquired all of the issued and outstanding shares of
common stock of Talisman International in exchange for shares of Talisman. Upon
completion of the share exchange, Talisman changed its name to its current name,
Talisman Enterprises Inc. The share exchange was accounted for as a reverse
takeover and accordingly, the results of Talisman (formerly constituted as
Firesand) have been included with those of Talisman International from the date
of the share exchange.

RESULTS OF OPERATIONS

EIGHT MONTHS ENDED AUGUST 31, 1999 COMPARED TO EIGHT MONTHS ENDED AUGUST 31,
1998

REVENUES. Total revenues for the eight months ended August 31, 1999
increased 69% to $385,629 from $228,659 for the eight months ended August 31,
1998. This increase was primarily attributable to orders shipped in July and
August to two new customers, Blockbuster Video and McLanes (a subsidiary of
Walmart).

OPERATING EXPENSES AND GROSS MARGINS. Operating expenses increased 52% to
$1,135,256 for the eight months ended August 31, 1999, from $745,020 for the
eight month period ended August 31, 1998. The increase was caused by incremental
variable costs associated with the increase in sales and the rental of an
additional 39,000 sq. foot facility required to support the expansion of
production.

Gross margins, as a percentage of revenues, increased to (194%) for the
eight months ended August 31, 1999, from (226%) for the eight month period ended
August 31, 1998. The increase in gross margin percentage resulted from the
increase in sales volume which increased coverage of the fixed overhead included
in operating expense.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense for the eight months ended August 31, 1999 increased 279%
to $1,285,526 from $339,051 for the eight month ended August 31, 1998. This
increase in selling, general and administrative expenses was primarily
attributable to the following:

- the hiring of new management personnel;

- the relocation costs associated with the retention of such new managment
personnel;

- the severance costs associated with the termination of a former management
employee;

- the institution of a management bonus program in January 1999; and

- an increase in sales and marketing necessitated by the growth in
operations

Specifically, in January 1999, James A. Ogle and Christian H. Bunger were hired
as President and Chief Executive Officer, and Vice President of Sales--U.S.,
respectively, in May 1999, Randy O. Curtis

19
<PAGE>
was hired as the new Vice President of Sales--Canada, and in July 1999,
Thomas O'Dowd was hired as Vice President and Chief Financial Officer.
Accordingly, the increase in selling, general and administrative expenses
incurred for the eight months ended August 31, 1999 consisted of $257,000
attributable to the hiring of new management personnel, $159,000 attributable to
the one time cost incurred in connection with the recruitment and relocation of
the new management personnel as well as severance cost for the former Vice
President of Sales--Canada, and $220,000 attributable to the accrued dollar
amount associated with the institution of a management bonus program. In
addition to the foregoing expenses, we increased marketing expenditures by
$100,000 to promote new business.

AMORTIZATION EXPENSE. Amortization expense for the eight months ended
August 31, 1999 increased 147% to $607,927 from $246,355 for the eight month
ended August 31, 1998 due to the five months amortization of the deferred
financing costs associated with the convertible promissory note.

INTEREST EXPENSE AND BANK CHARGES. Interest expense and bank charges for
the eight months ended August 31, 1999 increased 194% to $120,883 from $41,177
for the eight month ended August 31, 1998. This increase was primarily
attributable to higher term loan principal balance in 1999 due to replacing
credit institutions from the Hongkong Bank of Canada and Canadian Imperial Bank
of Commerce to General Electric Capital Canada Inc.

YEAR ENDED DECEMBER 31, 1998 AS COMPARED TO THE SEVEN MONTHS ENDED DECEMBER 31,
1997

REVENUES. Revenues increased to $748,254 for the year ended December 31,
1998, from $139,646 for the seven month period ended December 31, 1997. This
increase in sales was attributable to a growth in Talisman's customer base from
11 to 34 customers, as a result of the increased ability of Talisman to supply
our customers.

For the year ended December 31, 1998, approximately 77% of Talisman's sales
(representing an aggregate of approximately $576,159 of revenues) were made to
customers located in the United States, including sales to Drug Emporium,
Discount Drug Mart, and Save-On. For the seven month period ended December 31,
1997, Talisman had only minimal sales to customers located in the United States
(representing an aggregate of approximately $6,204 of revenues).

OPERATING EXPENSES AND GROSS MARGINS. Operating expenses increased to
$1,487,052 for the year ended December 31, 1998, from $180,582 for the seven
month period ended December 31, 1997. Gross margins, as a percentage of
revenues, decreased to (99%) for the year ended December 31, 1998, from (29%)
for the seven month period ended December 31, 1997.

The gross margin percentage (99%) is in a negative position because these
expenses were incurred in advance of the increase in the customers sales base
(approximately 50% of sales occurred during the last 2 months of the period).

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased to $1,136,516 for the year ended December 31,
1998, as compared to $597,558 for the seven month period ended December 31,
1997. The increase reflects the impact of a full year of selling, general and
administrative expense compared to seven months manufacturing overhead and
selling, general and administrative expense for the prior period.

AMORTIZATION EXPENSE. Amortization expense consisting exclusively of
equipment depreciation, was $304,182 for the year ended December 31, 1998, as
compared to amortization expense of $27,670 for the seven month period ended
December 31, 1997. This increase is attributable to the fact that manufacturing
did not begin until the last quarter of 1997. Therefore, only a small amount of
equipment depreciation was recognized for the period ended December 31, 1997.

INTEREST EXPENSE AND BANK CHARGES. Interest expense and bank charges
increased to $99,292 for the year ended December 31, 1998 from $11,236 for the
seven month period ended December 31, 1997. For the year ended December 31,
1998, two loans were outstanding namely a term loan and an operating loan. The
term loan had an average principal balance for the period of $386,536 bearing

20
<PAGE>
interest at a rate of 7.75% per annum. The operating loan had an average
principal balance for the period of $221,563 bearing interest at a rate of 7.75%
per annum. Both loans were outstanding for the entire period consequently
interest expense totaled $47,137. The remaining $52,155 includes service charges
of $8,877, short term bridge loans of $12,415 and financing charges of $30,863.
The only interest charge relative to the seven month period ending December 31,
1997 is the term loan with a principal balance of $320,401 at December 31, 1997
bearing interest at a rate of 7.75%, which was outstanding from August 1997
through December 1997.

FOREIGN EXCHANGE

Historically, Talisman had minimal sales (approximately $6,204 of revenues)
to United States customers for the period ended December 31, 1997. Accordingly,
Talisman did not experience any material foreign exchange gains or losses in its
operations in the period ended December 31, 1997. For the year ended
December 31, 1998, Talisman had a foreign exchange gain of approximately $500,
which was included in Talisman's earnings. This amount consisted of foreign
exchange gains on sales/ receivables to/from U.S. customers offset by losses on
U.S. purchases/payables from U.S. suppliers.

As Talisman's sales to foreign customers grow, Talisman may be subjected to
increased risks of foreign currency gains or losses. Currently, a majority of
the revenues from sales are received in US dollars and a majority of expenses
from goods purchased for resale are purchased in US dollars. Since Talisman is
based in Ontario, Canada, approximately 75% of Talisman's combined operational
and selling, general and administrative expenses for the period ended
December 31, 1998 were incurred in Canadian dollars. Upward variations in the
value of the Canadian dollar, as compared to the value of the US dollar, could
adversely effect Talisman's results.

STOCK BASED COMPENSATION

We account for our stock options and warrants under APB Opinion 25. If
Talisman was required to account for the stock options and warrants using the
fair value method, the net loss for the seven months ended December 31, 1997
would have increased by $497,706. Such amounts represent the fair value of
options and warrants at the time they vested. Since these options and warrants
vested at the time they were granted, there will be no future charge to income
with respect to these options and warrants.

INFLATION

Talisman has experienced minimal impact from inflation and changing prices
on its net sales and on its income from continuing operations for the periods it
has been engaged in business.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the completion of the share exchange with Talisman International,
Talisman had limited working capital and its prospects were severely limited.
Upon completion of the share exchange, Talisman International became a
wholly-owned subsidiary of Talisman. Up until the completion of the share
exchange, Talisman International had sustained its operations from its inception
(September 26, 1996) primarily from the sale of equity. Specifically, from
September 1996 to immediately prior to the share exchange (September 1997),
Talisman International sold (i) 428,371 shares of common stock for an aggregate
of Cdn.$1,518,264 in cash, (ii) 50,000 shares of common stock for machinery and
equipment having a fair market value of Cdn.$200,000 and inventory having a fair
market value of Cdn.$50,000 and (iii) 3,300 Class A Special shares for machinery
and equipment having a fair market value of Cdn.$2,300,000 and technological and
intellectual property having a fair market value of Cdn.$1,000,000 for Canadian
GAAP purposes. It should be noted, however, that no value has been ascribed to
the technological and intellectual property assets for U.S. GAAP purposes.
International also had operating credit facilities (both term and revolving)
from the Hongkong Bank of Canada, such facilities being secured by all the
assets of International.

21
<PAGE>
Subsequent to the completion of the share exchange, Talisman sold an
additional 542,787 shares of common stock for an aggregate of Cdn.$3,293,208 in
cash. Of this new equity, Cdn.$2,395,000 was provided by Talisman Partners, a
private investment partnership, through the completion of two separate private
placements. For a complete description of the private placement completed with
Talisman Partners, see "CERTAIN TRANSACTIONS." The proceeds of such financings
were used by Talisman (i) to pay approximately Cdn.$670,000 owing to a prior
short term secured lender to Talisman, (ii) to expand Talisman's battery
manufacturing capabilities and (iii) for general working capital purposes.

From December 1998 through March 1999, Talisman completed a $700,000
convertible note financing. The notes were converted into securities of Talisman
in connection with the first closing of Talisman's private placement offering
which was completed in March 1999. For a complete description of the private
placement completed in March 1999, see "CERTAIN TRANSACTIONS." The holders of
the notes also received warrants to acquire an aggregate of 72,465 shares of
common stock of Talisman exercisable at $7.50 per share.

In July 1999, Talisman established new financing arrangements with General
Electric Capital Canada Inc. In connection with the implementation of such new
facilities, Talisman paid out, in full, its previous secured lender, Canadian
Imperial Bank of Commerce. The financing facilities provided by General Electric
Capital currently consist of (1) a Cdn.$940,800 term loan, of which Cdn.$705,000
was outstanding as of the date hereof; (2) a revolving credit line of up to
Cdn.$7,500,000, and (3) a "capex" loan of up to Cdn.$2,059,200. The term loan is
due and payable on or before June 30, 2002. Interest charged on the General
Electric Capital facilities is, (i) with respect to funds advanced in Canadian
dollars, calculated at the average rate per annum established by the Royal Bank
of Canada as its discount rate for 30-day Canadian bankers acceptances plus 4.0%
per year, and (ii) with respect to funds advanced in U.S. dollars, the latest
rate for 30-day dealer placed commercial paper, which normally is published in
the "Money Rates" section of the Wall Street Journal. Furthermore, all
indebtedness of Talisman under the General Electric Capital facilities is
secured by Talisman's assets.

In November 1999, Talisman borrowed $350,000 from Kevin Kimberlin pursuant
to a promissory note in the principal amount of $350,000, bearing interest at an
annual rate of 10%, and due on February 17, 2000. Such loan is being converted
into 70,000 shares of common stock at $5.00 per share concurrently with this
offering.

Talisman's working capital deficit at August 31, 1999 was ($3,828,157). The
negative working capital represents the indebtedness incurred in connection with
the closing of a recently completed private placement offering. The private
placement offering, which was completed with Spencer Trask Securities, Inc. as
placement agent, resulted in the sale of an aggregate of 50.72985 units solely
to U.S. investors for gross proceeds to Talisman of $5,174,472.70 (such proceeds
being inclusive of the $700,000 raised from December 1998 through March 1999
described above). The units consisted of an aggregate of (1) $5,073,135
principal amount of 8% convertible promissory notes, and (2) 1,014,627 warrants
to purchase shares of common stock, which warrants are exercisable at $7.50 per
share. In connection with such closings, Spencer Trask received a placement fee
equal to 10% of the aggregate purchase price of the securities sold by it, plus
a non-accountable expense allowance equal to three percent of the aggregate
purchase price of the securities sold and a warrant, granted by Talisman for
$1.00 consideration, to purchase an amount of common stock equal to 20% of the
common stock sold in the offering at an exercise price equal to 120% of the
price of the common stock sold. Additionally, upon the first closing of the
offering, Talisman entered into (1) an agreement whereby Spencer Trask was
granted a right of first refusal to act as underwriter or agent for any proposed
private or public offering of Talisman's securities by Talisman or by any of its
principal stockholders, and (2) a non-exclusive finder's agreement pursuant to
which Spencer Trask is entitled to receive a fee based upon a percentage of the
value of any business combination or financing arrangement, including but not
limited to a merger or purchase of assets, which is introduced to Talisman by
Spencer Trask. In accordance with the non-exclusive finder's agreement, a fee in
the amount of $200,000 is due to Spencer Trask Securities, Inc. for arranging
the financing with General Electric Capital Canada Inc., of

22
<PAGE>
which one-third was due in September 1999 and the balance of which is due on or
before October 31, 1999. For a complete description of the agreements entered
into between Talisman and Spencer Trask, see "CERTAIN TRANSACTIONS."

We have, with the proceeds of the recently completed private placement
offering, commenced expanding our operations into the production and marketing
of AAA batteries. We intend to use a portion of the proceeds from this offering
to complete the expansion of our operations into the production and marketing of
AAA batteries, to increase the production capacity of our AA cell size, and to
commence the expansion of our operations into the production and marketing of C
and D battery cell sizes. Our ability to complete the proposed expansion of our
operations into the production and marketing of C and D battery cell sizes is
dependent upon obtaining additional financing.

Except for this offering and the existing financing arrangements with
General Electric Capital Canada Inc., Talisman has no other current arrangements
in place with respect to financing. Moreover, no assurance can be given that
this offering will be achieved. If this offering is not successfully completed
and additional financing arrangements are not obtained, we may be unable to
fully fund our operations, pursue our business strategy, take advantage of new
opportunities, develop or enhance our products, or respond to competitive
pressures and financial or marketing hurdles. Such inability could have a
materially adverse effect on Talisman's business, operating results and
financial condition. Moreover, the estimated cost of the proposed expansion of
our production and marketing activities is subject to numerous uncertainties,
including the problems, expenses, difficulties, complications and delays, many
of which are beyond our control, frequently encountered in connection with the
establishment and development of new business activities, and may be affected by
the competitive environment in which we are operating. Accordingly, there can be
no assurance that we will complete the proposed expansion of our production and
marketing activities described herein.

Talisman's management believes that upon full implementation of Talisman's
business plan, sufficient revenues will be generated to meet operating
requirements. However, no assurance can be given that such goal will be obtained
or that any expected revenues will be realized.

YEAR 2000

Our business could be adversely impacted by information technology issues
related to Year 2000. We have been engaged in assessing this Year 2000 issue as
it relates to our business. This review covers information and non-information
technology systems of both Talisman's own operating systems and the systems of
Talisman's third party vendors and manufacturers.

Talisman does not currently utilize any equipment in our battery assembly
process which utilizes programmable logic controllers (PLC). Accordingly, such
systems do not require any Year 2000 solutions. In addition, we have replaced
our phone system in the summer of 1999; therefore, any Year 2000 issues relating
to our phone system are now covered. Finally, Talisman currently utilizes only
several personal computers and individualized software programs which, in the
event some are not Year 2000 compliant, are easily replaceable without any
significant delay or cost to Talisman. Talisman estimates that the cost
associated with replacing nine personal computers will not exceed an aggregate
of $50,000.

We do not expect to encounter any long-term Year 2000 problems from our
customers, most of which are major retail corporations. Any loss of information
or data by such customers can be easily replaced by Talisman manually providing
them with relevant information. Except for three single sourced vendors,
Talisman utilizes multiple suppliers from whom we obtain the raw materials which
are used in the manufacturing process. Talisman intends to monitor carefully
these sources and carry additional inventory until the end of the first quarter
of Year 2000.

With the exception of the cost which we expect to incur for replacing nine
personal computers, we do not believe that we will incur any additional costs in
connection with implementing solutions to year 2000 issues which could have a
material impact on our financial results or position.

23
<PAGE>
OUR HISTORY

Talisman was incorporated under the laws of the Province of Ontario on
July 28, 1978 under the name Firespur Explorations Ltd. In May 1989, we changed
our name to Firesand Explorations Ltd. and, in September 1997, our name changed
to our present name.

From 1978 to early 1997, Talisman operated as a mineral exploration company
in the Province of Ontario, Canada. During such period, Talisman conducted
various exploration programs on patented mining claims held by us on lands
situated in Esquega Township, Province of Ontario, Canada. In spite of our
exploration efforts, no significant ore deposit or other mineralized targets
were identified which justified additional exploration expenditures. Effective
January 1997, Talisman wrote-off the value of all mineral exploration assets
then held and, as a result of such actions, Talisman now has no mining assets or
other mineral related interests.

In August 1997, Talisman entered into a share exchange agreement with the
shareholders of Talisman International pursuant to which the shareholders of
Talisman International exchanged 11,959,265 common shares of Talisman
International for 478,371 of Talisman's common shares. Prior to the share
exchange, there was no affiliation between Firesand and Talisman International.
As a result of the share exchange, Talisman International became a wholly-owned
subsidiary of Talisman. Upon completion of such transaction in September 1997,
we changed our name from Firesand to our present name--Talisman
Enterprises Inc.

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<PAGE>
BUSINESS

OVERVIEW

Talisman, through our wholly-owned operating subsidiary, Talisman
International Inc., manufacturers high-quality AA size disposable alkaline
batteries for private label sale by retailers. We are currently, to our
knowledge, the only North American-based battery manufacturer that focuses
primarily on the private label market. Our objective is to leverage our unique
strategic position to build market share in the private label battery market and
capitalize on the significant growth in private label battery sales in North
America.

INDUSTRY BACKGROUND

The worldwide battery market is predominately comprised of four major
chemical systems:

1. Alkaline

2. Heavy Duty--Zinc Chloride

3. General Purpose--Zinc Carbon

4. Rechargeable--Nickel Cadmium

Alkaline batteries offer the best performance and are the most widely used type
of battery in North America with a greater than 65% market share. Industry
analysts estimate the North American market for disposable alkaline batteries
was approximately $3 billion in 1997, representing consumption of an estimated
4 billion batteries. An estimated 40% increase in battery-operated devices has
driven growth in the use of disposable batteries over the past 10 years.
Furthermore, industry data reveals that within the North American market, the
alkaline segment is the fastest growing. Consumption of alkaline batteries is
expected to continue to grow at a rate of 5-8% per year.

The consumer battery market consists primarily of five major cell sizes--AA,
AAA, C, D and 9 volt. The AA cell accounts for approximately 65% of the total
unit sales, the AAA cell accounts for approximately 15% and the C, D and 9 volt
cell sizes account for approximately 7% each. We believe branded manufacturer
gross margins on the AA and AAA (80%) are approximately double that of the C, D
and 9 volt (40%). We believe that, upon implementation of our business plan, our
gross margin for our AA batteries will be approximately 33%, compared to an
approximately 80% gross margin for branded manufacturers.

Duracell Inc. and Eveready Battery Co., Inc. are the major manufacturers of
alkaline batteries and currently supply approximately 83% of the alkaline
batteries sold in the North American market.

PRIVATE LABEL BATTERY MARKET OPPORTUNITY

The market for private label consumer products has grown significantly in
recent years. In order to generate greater customer loyalty, many retailers have
sought to develop private label or corporate brands in numerous consumer product
categories. Private label affords retailers an opportunity to enhance their
store's identity by offering high quality products that are significantly less
expensive than brand-name alternatives. According to information supplied by the
Private Label Manufacturers Association, in a number of product categories,
including light bulbs, disposable cameras and tape, private label items have
achieved a market share of 20-25%. On average, the study also shows retailers
are projecting a private label category growth rate of 24% over the next three
years across all major product categories.

While private label batteries only comprise approximately 9% of the overall
disposable alkaline battery market, batteries are the fastest growing segment
within the private label market (source: PLMA). We believe, that despite a
limited supply of private label product, the battery segment has grown at almost
double the rate of other private label products. Currently, most private label
batteries

25
<PAGE>
are supplied either by offshore manufacturers or by brand-name battery
manufacturers such as Duracell and Eveready. It is our belief that offshore
battery suppliers, however, have limited available alkaline production
capacities, suffer from higher logistics costs, and typically produce batteries
with less than 25% of the life of alkaline batteries because of their use of
carbon zinc technology. Offshore manufacturers are those manufacturers not
located in the three North American Free Trade Agreement countries (USA, Mexico,
Canada). While there are several manufacturers in Europe, most are located in
Asia. Among the large number of manufacturers in Asia, a large majority,
particularly those located in the Peoples Republic of China, only produce old
technology general purpose or heavy duty batteries, or produce alkaline
batteries with mercury added to the formula. Testing done by Talisman identified
fewer than ten mercury-free producers.

Management of Talisman believes that, for brand-name manufacturers,
supplying private label batteries represents a significant conflict of interest:
the growth of private label sales comes at the expense of higher margin branded
product sales. To date, major companies such as Duracell and Eveready have, in
our opinion, participated in private label manufacturing only when pressured by
certain large retailers. This is primarily because it is not in the best
interests of current branded manufacturers to provide a private label product.
Due to the lower retail prices of private label batteries, profit margins are
lowered significantly and line changeovers result in manufacturing
inefficiencies. Accordingly, Talisman believes that brand-name manufacturers do
not actively solicit private label sales, but serve demand reactively in order
to maintain or secure large retail accounts for branded products. Accounts
requesting private label product from a major branded supplier are therefore
generally sold with the understanding that their branded product be carried as a
preferred or exclusive product line.

Given the general reluctance of major suppliers to provide private label
product to their customers, Talisman believes that a tremendous growth
opportunity exists.

OUR STRATEGY

Our objective is to become the industry leader in the marketing, sale and
manufacture of private label alkaline batteries in North America. We believe we
are the first and only dedicated private label alkaline battery manufacturer in
North America. We intend to utilize our unique market position to capitalize on
the growth in private label product sales.

Our manufacturing technology and expertise enables us to produce batteries
of comparable quality to leading brand-name batteries. In addition, our location
in Southern Ontario allows us to streamline logistics costs and develop close
working marketing and sales relationships with leading North American retailers.
We currently supply private label batteries to 15 customers. Management
estimates that we have the capacity to ship in excess of 25 million batteries
during 1999.

The key elements of our strategy include plans to:

- Focus exclusively on alkaline batteries;

- Manufacture batteries that are equivalent in performance to brand-name
batteries;

- Sell batteries exclusively for private label purposes at a lower cost than
brand-name alternatives;

- Initially manufacture AA size batteries, which comprise the largest
percentage of the market and provide high gross margins;

- Expand into the production and marketing of AAA, C and D battery cell
sizes and increase production capacity of the AA cell size. We believe
that the addition of other cell sizes (i.e. AAA, C and D) will allow us to
expand existing customer sales and enhance sales opportunities with new
customers that require all cell sizes;

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<PAGE>
- Further develop an already established North American sales broker
network;

- Focus on private label retail customers with sales potential that will
optimize production run costs and thereby maximize margins.

In addition to selling high-quality products with the name of our customers on
them, it is our belief that our retail customers typically improve their
profitability from 30-35% on the sale of a branded equivalent product to 50-60%
for private label. This also typically results in more profit per unit measured
in dollars and cents than typically realized from the sale of a branded
equivalent.

PRIVATE LABEL MANUFACTURING

We currently manufacture a high quality AA alkaline cell for sale to an
established and growing customer base.

We currently have two (2) cell lines capable of producing AA alkaline cells
at the rate of 100 pieces per minute per cell line. Subject to financing, our
current plans include building a D line in early 2000 followed by a C line in
mid 2000.

We believe that our AA cell is:

- Comparable in performance to the competition on a majority of applications
(source: ACTS Testing Labs Ltd.);

- Advantageously priced compared to branded products, resulting in prices
which are approximately 20-25% lower in retail price;

- Environmentally friendly because we do not add mercury or cadmium.

Supply of the AAA, C, D and 9 volt is currently "out sourced" by Talisman
for certain accounts that desire to carry all five cell sizes. Such sourced
product is labeled, packaged and shipped by us. We have, with the proceeds of
the recently completed private placement offering, commenced expanding our
operations into the production and marketing of AAA batteries. We intend to use
a portion of the proceeds from this offering to complete the expansion of our
operations into the production and marketing of AAA batteries, to increase the
production capacity of our AA batteries, and to commence the expansion of our
operations into the production and marketing of C and D battery cell sizes. Our
ability to complete the proposed expansion of our operations into the production
and marketing of C and D battery cell sizes is dependent upon obtaining
additional financing. We intend to continue to out source our need for 9 volt
battery cells from other manufacturers as the volume requirements for the 9 volt
cell size are not sufficient to justify the expense of producing the product in
house.

Our strategy is to manufacture bare cell batteries in bulk in anticipation
of receipt of customer orders. Such bare cell batteries are kept on hand and
make up a substantial portion of our inventory. We are then in a position to
prepare finished goods upon receipt of customer orders. Further, after such
goods are packaged and labeled they are shipped to customers. To date, we have
been able to fill orders as they are received, and we have not experienced any
delays due to lack of manufacturing capacity or otherwise. Moreover, as
previously stated, we intend to expand our production capacity with the proceeds
from our financing activities. Accordingly, we do not expect that we will
encounter any delays due to lack of manufacturing capacity or otherwise.

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<PAGE>
BATTERY CUSTOMERS

The following is a list of customer accounts for the eight month period
ended August 31, 1999 and the year ended December 31, 1998:

<TABLE>
<S> <C> <C>
A&P Fireco--Canada Drug Emporium--U.S. Amcon Distribution Co.--U.S.
Robert & James--U.S. RedCell--Canada Blockbuster Video--U.S.
Cash Convertors--Canada Save-On--U.S. Bradlees Distribution--U.S.
Win--Leader--Canada Pirate Wholesale--U.S. McLanes (a Subsidiary
Daisytek--U.S. Discount Drug Mart--U.S. of WalMart)--U.S.
Murphy Distributor--Canada Best Buy--Canada Smoker Friendly--U.S.
Zellers--Canada North Carolina Mutual Drug--U.S.
</TABLE>

All of our sales are made to our customers pursuant to purchase orders. Our
company has several large customers upon which we depend on for the sale of our
battery products. For the eight months ended August 31, 1999, sales to
Blockbuster Video represented 50.3%, sales to McLanes (a subsidiary of WalMart)
represented 13.9%, Drug Emporium represented 11.1%, Amcon Distribution Co.
represented 9.7% and A&P Fireco represented 9.0%. For the year ended
December 31, 1998, sales to Discount Drug Mart represented 28.6%, Drug Emporium
represented 23.6%, Zellers Inc. represented 9.1% and A&P Fireco represented 7.0%
of our overall sales. No other retail customer accounted for more than 5% of our
overall sales for either the eight months ended August 31, 1999 or the year
ended December 31, 1998.

COMPETITION

The manufacture and sale of alkaline batteries is highly competitive and there
are no substantial barriers to entry into the market. We believe that the
principal competitive factors affecting the market for battery products are the
quality of the product, price, environmental issues, turn around time for
production orders, payment terms for customers, and marketing and sales.

The private label AA alkaline battery products which we currently produce
compete with products imported from the Pacific Rim countries of Indonesia,
China, Hongkong, Japan and South Korea. We believe we offer to our customers key
advantages over offshore suppliers. Such advantages include:

- PROVIDING SUPERIOR AND CONSISTENT PRODUCT PERFORMANCE. It is our
observation that some Pacific Rim producers utilize domestic raw materials
which result in sub-standard performance.

- PRICE. Our private label batteries offer our customers an attractively
priced alternative to the batteries sold by their competitors.

- WE DO NOT ADD MERCURY TO OUR BATTERIES. Mercury is considered to be
environmentally hazardous and, accordingly, the disposal of used batteries
to which mercury has been added is problematic.

- EFFICIENT TURN AROUND TIME. It is our experience that offshore suppliers
generally require a minimum of 30 to 60 days notice prior to producing an
order. Delivery time is a minimum of 30 days beyond that and full
container loads are required. In contrast, we inventory "bare" cells and
can package required orders within a 2-10 day period, depending on the
order size.

- CONSUMER PRODUCTS' INDUSTRY STANDARD PAYMENT TERMS. We provide
creditworthy customers with terms calling for payment within 30-45 days of
shipment of its product to retailers. By comparison, it is our experience
that off-shore suppliers require either a deposit in advance of shipping
or full payment prior to shipping in the form of a letter of credit or
bank transfer.

- MARKETING AND SALES SUPPORT. We provide retailers with on-going sales
expertise and promotional concepts in order to maximize sales and profits.
Various pack sizes are available to meet the needs of retailers and
product displays are supplied to ensure greater in-store visibility and

28
<PAGE>
product movement. In contrast, offshore suppliers, generally speaking,
only supply product and do not offer any on-going marketing support.

We believe that approximately two-thirds (66.6%) of the private label
battery market is controlled by our three major competitors (Duracell, Eveready
and Ray-O-Vac), while the remaining one-third (33.3%) is controlled by offshore
manufacturers.

At present, we do not directly compete (nor do we seek to) with any major
North American battery manufacturer (such as Duracell, Eveready and Ray-O-Vac)
to supply private label batteries to large retail chains. This is because we
have, at present, limited production capability and limited marketing resources
compared to the significant and dominant market capabilities of the established
branded manufacturers. We believe that the overall private label market is
sufficiently large enough that we have an opportunity to penetrate significantly
into this market, and thereby gain significant market share.

STRATEGIC PARTNERS AND KEY SUPPLIERS

Our battery manufacturing lines have been custom made by Pragmatek Inc. of
Mississauga, Ontario, Turning Point Inc. of Oakville, Ontario and Gwinnett
Industrial Machine Inc. of Norcross, Georgia. These companies have over
25 years of combined experience in the manufacture of reliable battery equipment
to numerous established battery manufacturers. Pragmatek, Turning Point and
Gwinnett are all shareholders of Talisman.

We have a number of key suppliers of raw materials who are also shareholders
in Talisman. They include Burlington Stamping Inc. of Burlington, Ontario and
Hibar Systems Limited of Richmond Hill, Ontario. Burlington Stamping supplies
all of our battery cans while Hibar supplies all of our battery pre-assemblies.
James C. McGavin, a director of Talisman, is also a director, officer and
shareholder of Burlington Stamping. In September 1996, we purchased certain
equipment from Burlington Stamping, consisting of battery can molds, in exchange
for shares of common stock of Talisman. The equipment purchased by us from
Burlington Stamping has been provided to Burlington Stamping by us for the
purpose of having Burlington Stamping manufacture additional battery cans from
dies.

PERSONNEL

As of September 1, 1999, we employed a total of 40 full time employees and
one part time employee. Twelve of such persons are engaged in the areas of
administration, finance, production planning, marketing and sales. In addition,
20 of our 40 employees have prior battery industry experience. None of our
employees are represented by a union. Management considers its relations with
its employees to be satisfactory.

MARKETING, SALES AND DISTRIBUTION

Talisman currently has an established North American sales network that is
directed by individuals with considerable experience in selling private label
batteries to established customers. With the exception of Randy O. Curtis and
Christian H. Bunger, all sales agents and brokers are compensated on a
commission basis only (generally 5%). We currently have a full time sales
organization consisting of four qualified sales professionals who generate a
majority of business through a network of brokers. We have developed a
relationship with two out of the four major, national, private label brokers
dedicated to the food class of trade. In addition, we have established
relationships with twelve independent regional sales agencies, which handled a
myriad of non-food, and drug battery customers throughout Canada and the United
States.

In addition, we support our product merchandised in retail outlets with a
variety of packaging designs and displays intended to create consumer interest
in retail customers' private label disposable

29
<PAGE>
alkaline battery product line. We also develop special pack sizes and styles
intended to coincide with peak buying periods such as back-to-school and
Christmas.

We have made every effort to ensure that key positions at Talisman are
filled by qualified individuals with previous battery or private label
experience. These individuals include:

<TABLE>
<S> <C>
Garry J. Syme, Sr. Vice President Former Project Manager Duracell
Duncan C. MacFadyen, VP Finance Former Controller Bossman
Randy O. Curtis, VP Mktg. Canada Former Managing Director--Eveready de Mexico
Sales
Christian H. Bunger, VP Sales--US Former South East Regional Mgr.--Eveready
Dennis Hughey, Bus. Dev. Consultant Former President--Beatrice Private Label
David J. Trudel, VP Mkt. Dev. Former VP Business Dev. BTI
Billie Burke, Purchasing Mgr. Former Purchasing Dept. Duracell
Stan Jackson, Whrhse. Mgr. Former Whrhse. Mgr. Bossman
</TABLE>

For a more detailed description of the professional backgrounds of many of the
above noted persons, see "Management."

PRODUCT LIABILITY INSURANCE

We carry product liability insurance coverage on our battery products in the
amount of Cdn.$1,000,000, with an additional umbrella protection of
Cdn.$14,000,000. We believe that the amount of insurance which we maintain is
adequate.

ENVIRONMENTAL AND SAFETY ISSUES

We have made every attempt to ensure that our manufacturing facilities do
not contravene any environmental laws. Our AA battery cell is mercury free and
currently meets North American standards. Certain materials used in our battery
products, as well as one product used in the manufacturing process, are
considered hazardous under the Occupational Safety and Health Act hazard
communication standards as to workplace care and employee notification.
Employees handling these chemicals are required to wear appropriate over
protective gear. Once the product is assembled, chemicals are sealed within a
metal container that seals the chemicals from both the environment and the
atmosphere. All product designated for "waste disposal," including defective
goods, are neutralized immediately and stored in an isolated location at our
premises prior to final disposal. As required by provincial regulations, we have
adopted a procedure of registering all hazardous waste products requiring
disposal. We receive a registration number for all such products and communicate
such registration number to the approved waste disposal company before the
product is transported to a certified landfill waste site. We have factored into
our budgeting process an average cost per battery of Cdn.$0.001 for waste
disposal purposes.

TECHNOLOGICAL ISSUES/SCIENTIFIC ADVISORS

We constantly test our product to ensure consistent quality of production.
Qualified Talisman employees test samples of each production run and additional
samples are sent to an independent consultant for evaluation. Our batteries also
meet the standard as set by the National Electronic Distributors Association and
the American National Standards Institute, which are European and North American
standardization groups that are comprised of representatives of battery
manufacturers around the world.

Product improvement is on-going through in-house quality control protocols
and through independent consulting contracted to Dr. Klaus Tomantschger,
President, Rosecreek Technologies Inc., of Mississauga, Ontario.
Dr. Tomantschger was the co-inventor of the rechargeable alkaline battery and
has a wealth of knowledge in the area of battery performance improvements.

30
<PAGE>
FACILITIES

We are currently housed in a 21,000 square foot leased head office and
production facility located at 2330 Southfield Road, Units 3-4, Mississauga,
Ontario, Canada. The location is situated close to major highways and is only 15
minutes from Toronto's Pearson International Airport. Significant leasehold
improvements have been undertaken to accommodate state-of-the-art quality
control facilities, manufacturing facilities, and sales and marketing offices.

Our current lease expires July 31, 2002; however, an understanding has been
reached with our landlord that should additional space be required, then a new
facility would be made available to us without penalty. In addition, we have
leased an additional 39,400 sq. ft. of manufacturing space adjacent to our
current facility. The extra space was considered necessary to accommodate the
planned addition of the AAA, C and D cell lines into our manufacturing
operations. We pay approximately Cdn.$43,000 rent per month.

LEGAL PROCEEDINGS

We are not a party to any material legal proceeding.

ENFORCEABILITY OF CIVIL LIABILITY AGAINST FOREIGN PERSONS

Talisman's headquarters are located in, and its officers, directors and
auditors are residents of, Canada and a substantial portion of Talisman's assets
are, or may be, located outside the United States. Accordingly, it may be
difficult for investors to effect service of process within the United States
upon non-resident officers and directors, or to enforce against them judgments
obtained in the United States courts predicated upon the civil liability
provision of the Securities Act or state securities laws. Talisman has been
advised by its Canadian legal counsel, Aird & Berlis, that there is doubt as to
the enforceability in Canada against Talisman or against any of its directors,
controlling persons, officers or the experts named herein, who are not residents
of the United States, in original actions or in actions for enforcement of
judgments of U.S. courts, of liabilities predicated solely upon U.S. federal
securities laws. Service of process may be effected, however, upon Talisman's
duly appointed agent for service of process, Sichenzia, Ross & Friedman LLP, New
York, New York. If investors have questions with regard to these issues, they
should seek the advice of their individual counsel. Talisman has also been
informed by its legal counsel, Aird & Berlis, that pursuant to the Currency Act
(Canada), a judgment by a court in any Province of Canada may only be awarded in
Canadian currency. Pursuant to the provision of the Courts of Justice Act
(Ontario), however, a court in the Province of Ontario shall give effect to the
manner of conversion to Canadian currency of an amount in a foreign currency,
where such manner of conversion is provided for in an obligation enforceable in
Ontario.

31
<PAGE>
MANAGEMENT

The following table sets forth certain information concerning the directors
and executive Officers of Talisman:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------ ----------- ----------------------------------------------------------
<S> <C> <C>
James A. Ogle 52 President, Chief Executive Officer & Director
Norman R. Proulx 51 Chairman of the Board
Garry J. Syme 47 Senior Vice-President, Manufacturing
Thomas O'Dowd 40 Vice-President & Chief Financial Officer
Duncan C. MacFadyen 47 Vice-President, Finance & Controller
Randy O. Curtis 43 Vice-President, Global Marketing & Canada Sales
Christian H. Bunger 54 Vice-President, Sales--U.S.
David J. Trudel 45 Vice-President, Market Development
James C. McGavin 57 Director
Donald L. Matheson 49 Director
Thomas A. Fenton 39 Director
</TABLE>

Set forth below is a biographical description of each director and senior
executive officer of Talisman based on information supplied by each of them.

JAMES A. OGLE, 52, has been the President, CEO, and a director of Talisman
since January 21, 1999. Prior thereto, from January 1998 to January 1999,
Mr. Ogle was Vice President of Operations for U.S. Industries, Inc., Elger
Plumbingware/U.S. Brass Division, a leading manufacturer of bath and kitchen
china and cast iron fixtures. From 1992 to 1997, Mr. Ogle was Senior Vice
President, Operations, for Tyco Toys, Inc., a leading international toy
manufacturer and distributor. From 1989 to 1992, Mr. Ogle was Vice President,
Operations for Wilkinson Sword, Inc., an international producer of shaving
products and disposable lighters. From 1978 to 1989, Mr. Ogle held various
positions with BIC Corporation, a leading producer of disposable pens, razors
and disposable lighters. Prior thereto, Mr. Ogle held various positions with
General Motors Corporation. Mr. Ogle obtained an Executive MBA from the
University of New Haven.

NORMAN R. PROULX, 51, is the Chairman of the Board of Talisman. Mr. Proulx
was first appointed a director of Talisman in August 1998. From December 1998
through January 1999, Mr. Proulx was the interim President and CEO of Talisman
replacing the former President and CEO, David R. Guy. Since March 1998,
Mr. Proulx has been a managing director of Spencer Trask Securities
Incorporated, a New York based venture capital investment firm that provides
financial and operational support to start-up and early-stage companies. In such
position, Mr. Proulx concentrates his efforts on consumer products and
retailing. In 1997, Mr. Proulx was a managing director of the Cortec Group
("Cortec"), a private New York equity investment firm which makes controlling
investments in middle-market manufacturing and distribution businesses. In
connection with same, Mr. Proulx was responsible for overseeing Cortec's
investment in Gemeinhardt, Inc., a US based company which is a market leader in
the manufacture and distribution of flutes and piccolos. Mr. Proulx was also
responsible for overseeing Cortec's investment in Manco Products, Inc., a US
based company which is a leading designer and manufacturer of fun karts. From
1990 to 1996, Mr. Proulx was President and CEO of Seymour Housewares Corporation
of Seymour, Indiana, a leading manufacturer of ironing boards. Prior thereto,
Mr. Proulx was, from 1984 to 1990, the President, North America of Wilkinson
Sword Limited. Prior thereto, Mr. Proulx held different positions from 1969 to
1984 with Scripto/Wilkinson Sword and The Gillette Company. Mr. Proulx obtained
his Bachelor of Science, Business Administration degree from Boston College in
1969.

GARRY J. SYME, 47, is the Senior Vice President, Manufacturing of Talisman
and has been since September 1997. Between August 1996 and September 1997,
Mr. Syme was the Senior Vice President

32
<PAGE>
Operations for International, Talisman's wholly-owned subsidiary. Prior thereto,
Mr. Syme was the Vice President Operations, from January 1996 to August 1996, at
Infinity Plus Battery Corporation of Mississauga, Ontario. Prior thereto, from
1992 to 1995, Mr. Syme was President of GJS International Inc., a company
providing consulting advice to major battery manufacturers. In such capacity,
Mr. Syme was responsible for the development of manufacturing facilities for
Cegasa (Spain), Power Plus Battery Corporation (United States), Euram (Europe),
Infinity Plus (Canada) and two facilities in the Peoples Republic of China. In
addition, Mr. Syme was retained as President of Power Plus of America Inc. to
implement a 100,000 sq. ft. $20 U.S. million dollar manufacturing plant in
Georgia, USA. Mr. Syme has also spent approximately 20 years with Duracell,
8 years of which were with the Duracell U.S. R&D Centre and 12 of which were
with Duracell Canada Inc. of Mississauga, Ontario.

THOMAS O'DOWD, 40, is Vice President and Chief Financial Officer of Talisman
and has been since July 1999. From August 1992 to June 1998, Mr. O'Dowd was a
Financial Analyst for Seymour Housewares Corporation, the world's largest
manufacturer of ironing boards and covers and pads. From October 1990 to
August 1991, Mr. O'Dowd was a Senior Auditor for Forstman Little & Co. From
April 1986 to September 1990, Mr. O'Dowd held senior level accounting positions
for two subsidiaries of GenCorp, a $3 billion Fortune 100 conglomerate. From
June 1981 to March 1986, Mr. O'Dowd was a Corporate Audit Supervisor for AMF
Incorporated. Mr. O'Dowd obtained a B.S. in Accounting from Marist College.

DUNCAN C. MACFADYEN, 47, is Vice President Finance of Talisman and has been
since October 1, 1997. Prior thereto, Mr. MacFadyen was, from September 1996 to
September 1997, a financial planer with Investors Group, a Canadian based
financial planner and mutual fund company. Prior thereto, from May 1991 to
September 1996, Mr. MacFadyen was comptroller for Glen Oak Inc., a wholesale
supplier of various consumer products including "Bossman" batteries and
flashlights. Mr. MacFadyen obtained a C.M.A. and B.A. from the University of
Waterloo.

RANDY O. CURTIS, 43, is Vice President of Global Marketing and Canadian
Sales of Talisman, since May 1999. From January 1997 to April 1998, Mr. Curtis
was a Principal at R.O. Curtis Associates Inc. From February 1992 to
December 1997, Mr. Curtis was Managing Director for Eveready de Mexico. From
November 1979 to January 1992, Mr. Curtis held senior level positions at
Eveready Canada. Mr. Curtis obtained a degree in Industrial Engineering
Technology from Ryerson Polytechnical Institute.

CHRISTIAN H. BUNGER, 54, has been the Vice President of Sales--U.S., since
January 1999. Since 1992, Mr. Bunger has been the Southeast Regional Manager
(Atlanta, Georgia) for the Eveready Battery Company, a subsidiary of the Ralston
Purina Corporation. From 1986 through 1992, Mr. Bunger was the South East
Division Manager (Atlanta, Georgia) of the Eveready Battery Company and from
1980 through 1986 he had held the title of South Central Division
Manager(Atlanta, Georgia). Mr. Bunger joined the Eveready Battery Company in
1974 as a Manager of National Accounts (New York, New York) and has also held
positions of Product Manager as well as District Manager and merchandising
positions in Portland Oregon, Boston Massachusetts and Providence Rhode Island.
Mr. Bunger obtained a B.B.A. from Tulane University.

DAVID J. TRUDEL, 45, is Vice President Market Development for Talisman,
currently responsible for the marketing, sales and administration of alkaline
equipment turnkey systems. Prior thereto, Mr. Trudel was, from May 1995 to
August 1997, Vice President Market Development with Battery Technologies Inc.
responsible for licensing RAM (Rechargeable Alkaline Manganese) Technology,
equipment sales and development of industrial markets for RAM batteries. Prior
thereto, Mr. Trudel was, from November 1993 to April 1995, President of RMI
International Inc., a private battery marketing consulting company. Prior
thereto, Mr. Trudel was Vice President of Operations and Sales of a division of
Indal Limited.

33
<PAGE>
JAMES C. MCGAVIN, 57, is the President and a major shareholder of Burlington
Stamping Inc. of Burlington, Ontario and has been since December 1981. BSI
manufacturers small deep drawn shells and stampings principally sourcing the
alkaline, rechargeable, military and OEM battery cell markets. Prior to founding
Burlington, Mr. McGavin was a partner in the public accounting firm Ward
Mallette (now BDO Dunwoody Ward Mallette) for approximately 10 years.
Mr. McGavin obtained his Chartered Accountant designation in 1970.

DONALD L. MATHESON, 49, a director of Talisman, is the President of Imark
Corporation (a Toronto Stock Exchange listed company) and has been since
August 1997. Prior thereto, Mr. Matheson was, from December 1994 to July 1997,
Vice President Finance and Chief Financial Officer of Imark Corporation. Prior
thereto, Mr. Matheson was, from January 1992 to December 1994, the Director of
Finance for a heating and air-conditioning business operated through Clare
Brothers of Cambridge, Ontario. Mr. Matheson is also an officer and director of
Animazing Entertainment Inc., a childrens entertainment company.

THOMAS A. FENTON, 39, a director of Talisman, is a partner in the Toronto
based law firm of Aird & Berlis and has been since June, 1997. Prior thereto,
Mr. Fenton was a partner in another Toronto based law firm and prior thereto, an
associate with such firm. His practice encompasses corporate and securities law.
Mr. Fenton acquired his LL.B. degree from the University of Western Ontario in
1986 and was called to the Bar in Ontario in 1988. Mr. Fenton is a director of a
number of public and private companies.

The term of office of each Director is until the next annual meeting of
stockholders and until a successor is elected and qualified or until the
Director's earlier death, resignation or removal from office. Executive Officers
hold office until their successors are chosen and qualified, subject to earlier
removal by the board of directors.

AUDIT COMMITTEE

The Board of Directors has established an Audit Committee consisting of
Donald L. Matheson, Thomas A. Fenton and James C. McGavin, all of whom are
directors who are not salaried officers of the Company. The purpose of the Audit
Committee is to review the results and scope of the audit and other services
provided by Talisman's independent accountants, and to provide general oversight
of legal compliance and potential conflict of interest matters.

34
<PAGE>
EMPLOYMENT AGREEMENTS

On January 4, 1999, James Ogle entered into an employment agreement with
Talisman pursuant to which Mr. Ogle has been retained as the President and Chief
Executive Officer of Talisman. The term of the employment agreement commenced on
January 21, 1999 and continues until December 31, 2002; provided, however, that
the termination date may be extended for an additional one year period at each
anniversary of Mr. Ogle's employment agreement dated January 21, 1999. Pursuant
to the employment agreement, Mr. Ogle will receive an annual salary of $182,000
based on the exchange rate in effect on January 21, 1999. The exchange rate upon
which Mr. Ogle's annual salary is based shall be adjusted as of June 14 and
December 14 of each year during Mr. Ogle's employment by Talisman. Mr. Ogle will
also receive a bonus of a maximum of 50% of one year's base salary, which bonus
shall be payable within 30 days of the completion of the audit of Talisman's
financial statements, provided Talisman achieves financial objectives as
determined by the Talisman's board of directors. The employment agreement also
provides for additional compensation and/or benefits to be paid or provided to
Mr. Ogle as follows:

- On the first anniversary of January 21, 1999, Mr. Ogle shall receive an
additional bonus, to be paid in the form of shares of the Talisman's
common stock, in an amount equal to $45,000. The shares are to be valued
at the price per share at the close of the January 20, 1999 trading day.

- On the first anniversary of January 21, 1999, Mr. Ogle shall also be
obligated to purchase from Talisman shares of common stock having a total
market value on January 21, 1999 equal to $55,000 and Talisman has agreed
to loan Mr. Ogle the necessary funds to purchase such shares.

- Talisman shall pay Mr. Ogle a tax adjustment in an amount equal to the
amount by which the actual income taxes to be paid by Mr. Ogle exceed his
hypothetical United States income tax (assuming certain deductions to
which he would be entitled to) if he were living in Texas.

- Mr. Ogle shall be granted options to purchase shares of Talisman's common
stock equal to 5% of Talisman's total outstanding shares as of
January 21, 1999 (on a fully diluted basis), which options shall be
exercisable at a price equal to Cdn.$1.25 (which price is equal to 25% of
the average of the high bid and low asked prices per share on the Canadian
Dealing Network on January 21, 1999). The exercisability and vesting of
such options are subject to certain conditions, including, but not limited
to (i) Mr. Ogle's continued employment by Talisman, (ii) the achievement
of specified levels of annual performance to be established by the board
of directors, and (iii) the achievement of specified levels of investor
returns. The employment agreement also provides that in the event that
Mr. Ogle exercises any of the options while he is employed by Talisman,
Talisman shall loan him the amount of the exercise price for the options
at an interest rate equal to the applicable federal rate, such loan to be
repaid within six months of the exercise of the options. The note shall be
forgiven in the event that Mr. Ogle remains in the employment of Talisman
for a period of at least six months following the exercise of the options
or his employment is terminated as a result of death, disability or other
termination entitling Mr. Ogle to severance under the terms of the
employment agreement.

- Mr. Ogle is entitled to participate in any benefit plans extended to
Talisman's employees or executives.

- Mr. Ogle is entitled to receive reimbursement for all reasonable expenses
incurred by him in the course of his employment by Talisman.

The Employment Agreement may be terminated (i) by Talisman for cause;
(ii) at any time by Talisman, without cause, by paying to the employee up to a
maximum of his then current base salary and the annual bonus to be paid in an
amount pro-rated through the date of termination calculated as if all
performance goals for the year have been achieved; or (iii) at any time by the
employee upon written notice. The employment agreement also contains a
prohibition against competing with Talisman

35
<PAGE>
for a period of one year after the termination of the agreement and soliciting
customers or employees from Talisman for a period of two years after the
termination of the agreement.

On January 6, 1999, Garry J. Syme entered into an employment agreement with
Talisman. Mr. Syme has been retained as the Senior Vice President, Manufacturing
of Talisman. The term of his employment agreement is until January 4, 2002, and
thereafter, is renewable for successive one year terms. Pursuant to the
employment agreement, Mr. Syme will receive an annual salary of $150,000, which
shall be reviewed annually, and Mr. Syme shall be entitled to receive a bonus up
to a maximum of 40% of his annual base salary, payable within 30 days of the
completion of the audit of Talisman's financial statements, provided Talisman
achieves financial objectives as determined by Talisman's board of directors.
The employment agreement also provides for additional compensation and/or
benefits to be paid or provided to Mr. Syme as follows:

- Mr. Syme shall be granted options to purchase shares of Talisman's common
stock equal to 2% of Talisman's total outstanding shares as of
January 21, 1999 (on a fully diluted basis), which options shall be
exercisable at a price equal to Cdn.$1.25 (which price is equal to 25% of
the average of the high bid and low asked prices per share on the Canadian
Dealing Network on January 21, 1999). The exercisability and vesting of
such options are subject to certain conditions, including, but not limited
to (i) Mr. Syme's continued employment by Talisman, (ii) the achievement
of specified levels of annual performance to be established by the board
of directors, and (iii) the achievement of specified levels of investor
returns. The employment agreement also provides that in the event that
Mr. Syme exercises any of the options while he is employed by Talisman,
Talisman shall loan him the amount of the exercise price for the options
at an interest rate equal to the applicable federal rate, such loan to be
repaid within six months of the exercise of the options. The note shall be
forgiven in the event that Mr. Syme remains in the employment of Talisman
for a period of at least six months following the exercise of the options
or his employment is terminated as a result of death, disability or other
termination entitling Mr. Syme to severance under the terms of the
employment agreement.

- Mr. Syme is entitled to participate in any benefit plans extended to
Talisman's employees or executives.

The employment agreement may be terminated (i) by Talisman for cause;
(ii) at any time by Talisman, without cause, by paying to the employee a maximum
of one year's current annual salary; or (iii) at any time by the employee upon
written notice. The employment agreement also contains a prohibition against
competing with Talisman for a period of one year after the termination of the
agreement.

On January 7, 1999, Christian H. Bunger entered into an employment agreement
with Talisman. Mr. Bunger has been retained as Vice President, Sales--U.S. of
Talisman. The term of the employment agreement commenced on January 25, 1999.
Pursuant to the employment agreement, Mr. Bunger will receive an annual salary
of $75,000, which shall be reviewed annually, and Mr. Bunger shall be entitled
to receive a bonus up to a maximum of 35% of his annual base salary at the end
of each calendar year. The bonus award will be based on the attainment of
profitability targets and other objectives approved by the board of directors.
The employment agreement also provides for additional compensation and/or
benefits to be paid or provided to Mr. Bunger as follows:

- Mr. Bunger shall be granted options to purchase shares of Talisman's
common stock equal to 1.5% of Talisman's total outstanding shares as of
January 21, 1999 (on a fully diluted basis), which options shall be
exercisable at a price equal to Cdn.$1.25 (which price is equal to 25% of
the average of the high bid and low asked prices per share on the Canadian
Dealing Network on January 21, 1999). The exercisability and vesting of
such options are subject to certain conditions, including, but not limited
to (i) Mr. Bunger's continued employment by Talisman, (ii) the achievement
of specified levels of annual performance to be established by the board
of

36
<PAGE>
directors, and (iii) the achievement of specified levels of investor
returns. The employment agreement also provides that in the event that
Mr. Bunger exercises any of the options while he is employed by Talisman,
Talisman shall loan him the amount of the exercise price for the options
at an interest rate equal to the applicable federal rate, such loan to be
repaid within six months of the exercise of the options. The note shall be
forgiven in the event that Mr. Bunger remains in the employment of
Talisman for a period of at least six months following the exercise of the
options or his employment is terminated as a result of death, disability
or other termination entitling Mr. Bunger to severance under the terms of
the employment agreement.

- Mr. Bunger is entitled to receive a car allowance of $600 payable on the
first day of each month.

The employment agreement may be terminated (i) by Talisman for cause;
(ii) at any time by Talisman, without cause, by paying to the employee a maximum
of six months severance pay; or (iii) at any time by the employee upon written
notice. The employment agreement also contains a prohibition against competing
with Talisman for a period of six months after the termination of the agreement.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning all cash and
non-cash compensation for the years ended December 31, 1998 and 1997 paid by
Talisman to our chief executive officer and all other executive officers whose
total cash compensation exceeded $100,000 in the year ended December 31, 1998

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ALL OTHER LONG-TERM
SALARY COMPENSATION* COMPENSATION
NAME AND PRINCIPAL POSITION YEAR (IN CDN.$) BONUS (IN CDN.$) AWARDS/OPTIONS
- ----------------------------------------------------- --------- ----------- ----------- --------------- --------------
<S> <C> <C> <C> <C> <C>
David R. Guy, President(1)........................... 1998 94,000 Nil 8,213(5) Nil
1997 33,333 Nil 2,245(5) 500,000(6)

Norman R. Proulx, Interim President(7)............... 1998 Nil Nil Nil Nil

James W. Gemmell, President(2)....................... 1997 13,000(3) Nil Nil Nil
1996 Nil Nil 100(4) Nil
</TABLE>

- ------------------------

* Talisman does not have any pension, retirement or similar benefits for
directors and officers. The benefit plans which Talisman currently has for
its employees consist of health and disability insurance plans, which
benefits are included in the dollar amounts set forth hereunder.

(1) Mr. Guy became the President and a director of Talisman on
September 26, 1997. Effective December 1, 1998, Mr. Guy ceased to be the
interim President and CEO of Talisman. The amounts indicated above for
Mr. Guy in 1997 are for the period September 26, 1997 to December 31,
1997. All payments made to date to Mr. Guy have been on account of
consulting fees.

(2) Mr. Gemmell resigned as the President and a director of Talisman on
September 26, 1997.

(3) Received on account of management and consulting services rendered to
Talisman.

(4) Received on account of director's fees.

(5) Paid on account of car allowance and other normal course benefits.

(6) Mr. Guy also holds warrants to acquire 20,000 common shares at an
exercise price of Cdn.$16.25 per share exercisable until August 15, 2000.

(7) Mr. Proulx, a director of Talisman, served as the interim President and
Chief Executive Officer of Talisman from December 1998 to January 1999.
To date, Mr. Proulx has not been paid any remuneration by Talisman for
acting in such capacity.

37
<PAGE>
The following table shows the value at December 31, 1998, of unexercised
options held by the named executive officer:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
-------------------- ---------------------
SHARES ACQUIRED VALUE REALIZED EXERCISABLE / EXERCISABLE /
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------- ------------------- ----------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
David R. Guy(1).................... Nil Nil 20,000/Nil Nil/Nil
</TABLE>

- ------------------------

(1) Mr. Guy ceased to be the President, Chief Executive Officer and director of
Talisman effective December 1, 1998.

COMPENSATION OF DIRECTORS

To date, no amount has been paid to a director for the services of such
individual on the board of directors except for Mr. Gemmell. In 1996 and 1997,
Mr. Gemmell received Cdn.$100 on account for director's fees. Talisman has a
Stock Option Plan (more particularly described below) for which directors may
participate. To date, options under the Talisman's Stock Option Plan have been
awarded to three (3) directors. They are Donald L. Matheson, D. Graham Avery and
Thomas A. Fenton. Each director holds options to acquire 1,000 shares at
Cdn.$16.25 per share until November 13, 2002.

STOCK OPTION PLANS

1997 STOCK OPTION PLAN

Talisman has in place a stock option plan as an incentive for directors,
officers and key employees and other persons who provide ongoing services to
Talisman and its subsidiaries. Under the stock option plan, non-assignable
options may be granted by the board of directors of Talisman, to directors,
officers, key employees and other persons who provide ongoing services to
Talisman to purchase common shares of Talisman for a term not exceeding five
(5) years (subject to earlier termination of the optionee's employment, upon the
optionee ceasing to be a director, officer or other service provider, as
applicable, or upon the optionee retiring, becoming disabled or dying) at an
exercise price not less than the market price for common shares of Talisman. The
granting of options is subject to the further conditions under the stock option
plan that: (i) not more than 10% of the number of shares issued and outstanding
from time to time may be reserved for the granting of options to insiders at any
time or to insiders in any one-year period; (ii) that no more than 5% of the
outstanding issue may be issued to any one insider of Talisman in a one-year
period, and (iii) the maximum number of common shares issuable under the stock
option plan is 31,200 shares. The options are non-transferrable.

As of September 1, 1999, options were outstanding to acquire 10,760 common
shares under the stock option plan, at exercise prices ranging between
Cdn.$16.25 and Cdn.$31.25.

1999 SENIOR EXECUTIVE STOCK OPTION PLAN

The 1999 Senior Executive Stock Option Plan acts as an incentive to selected
senior executives and employees of Talisman and any of its subsidiary companies
by enabling such individuals to acquire a proprietary interest in Talisman and
thereby to increase their efforts on behalf of Talisman and to promote the
success of Talisman's business. The maximum number of shares that may be granted
under the 1999 Senior Executive Stock Option Plan is, initially, not to exceed
225,000. Under the terms of the 1999 Senior Executive Stock Option Plan, options
are non-transferrable, except pursuant to the laws of descent and distribution.

38
<PAGE>
Any options granted under the 1999 Senior Executive Stock Option Plan is
subject to certain vesting and other requirements contained in the 1999 Senior
Executive Stock Option Plan. Specifically, any options granted under the 1999
Senior Executive Stock Option Plan will vest (and therefore become exercisable):
(i) with respect to one-third of all options granted, in sixty (60) equal
monthly installments, (ii) with respect to one-third of all options granted,
upon the attainment of prescribed annual performance targets over a five
(5) year period as established by the board of directors for the optionee(s) in
question and, (iii) with respect to the remaining one-third of all options
granted, only in the event of an "Investor Sale" (as such term is defined in the
Plan).

The 1999 Senior Executive Stock Option Plan is administered by a committee
of the board of directors which consists of two (2) members who are non-employee
directors and thereby not entitled to participate under the 1999 Senior
Executive Stock Option Plan.

The committee shall have all powers necessary to administer the 1999 Senior
Executive Stock Option Plan including, without limitation, the authority to
grant options, to determine the type and number of options to be granted, the
number of shares of common stock to which an option may relate and the exercise
price, terms and conditions and restrictions relating to any option.

Eligible participants under the 1999 Senior Executive Stock Option Plan
shall not be entitled to participate in any other share compensation arrangement
or other plan established by Talisman.

To date, three senior officers and employees of Talisman have been granted
options under the 1999 Senior Executive Stock Option Plan in connection with
employment agreements entered into between Talisman and such individuals.
Specifically, James A Ogle, President and Chief Executive Officer, Garry J.
Syme, Senior Vice President of Manufacturing, and Christian H. Bunger, Vise
President of Sales--U.S., have been granted 82,955, 44,477 and 24,886 options,
respectively under the 1999 Senior Executive Stock Option Plan. Such options
vest incrementally over a period of five years commencing on the date of their
employment agreements.

1999 DIRECTORS COMPANY STOCK PLAN

The 1999 Directors Stock Plan provides a compensation program for
non-employee directors of Talisman (currently four (4) in number) that will
allow Talisman to attract and retain highly qualified individuals to serve as
non-employee members of Talisman's board of directors. The maximum number of
shares that may be granted under the directors stock plan is, initially, not to
exceed 100,000. Under the terms of the directors stock plan, options are
non-transferrable, except pursuant to the laws of descent and distribution.

Under the 1999 Directors Stock Plan, each non-employee director of Talisman
who served as such on June 30, 1999 has the right to receive, subject to certain
conditions, 15,230 common shares of Talisman for no consideration. For each
director, 3,046 of such shares (or a total of 15,230) have been issued while
additional installments of 3,046 shares will be granted to each non-employee
director upon the first, second, third and fourth anniversary dates of the
June 30, 1999 date. In order to earn the right to receive subsequent installment
grants on the aforesaid anniversary dates, each director recipient must have
continuously served as a director for the year ending on such anniversary.

As of the date of this prospectus, the candidates for participation under
the directors stock plan are Norman R. Proulx, James C. McGavin, Donald L.
Matheson and Thomas A. Fenton.

The directors stock plan is administered by a committee of the board of
directors which consists of three (3) members, one of which is the President and
Chief Executive Officer of Talisman. The Committee shall have responsibility for
interpreting the directors stock plan and taking all other action necessary for
the administration of the directors stock plan.

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<PAGE>
Eligible participants under the 1999 Directors Stock Plan shall not be
entitled to participate in any other share compensation arrangement or plan
established by Talisman.

SHAREHOLDERS RIGHTS PROTECTION PLAN

On September 26, 1997, the shareholders of Talisman approved a shareholders
rights protection plan. The plan applies to all common shares and all future
issues of common shares. The term of the plan is five (5) years, subject to
reconfirmation by the shareholders at the first annual meeting of shareholders
called after September 26, 2000. The Plan is intended to ensure that, in the
event of a bid which could affect control of Talisman, holders of common shares
will receive full and fair value for their shares and that there will be
sufficient time for the fairness of the bid to be properly assessed, to
negotiate with the bidder and to explore, develop and evaluate alternatives to
maximize shareholder value.

Under the terms of the plan, one right has been granted for each common
share. Each right entitles the registered holder to purchase additional shares
of common stock for Cdn.$1,500 but is not exercisable until certain events
occur. If a person or group wishes to acquire 20% or more of Talisman's common
shares, the plan effectively requires the acquiring person to (i) negotiate
terms which the Directors approve as being fair to the shareholders or,
alternatively, (ii) without board approval, make a "permitted bid" which must
contain certain provisions and which must be accepted by more than 50% of the
common shares not held by the acquiring person.

In the event that an acquiring person acquires 20% or more of Talisman's
voting shares other than as described in (i) and (ii) above, then the rights
become exercisable and will automatically allow all holders except the acquiring
person to purchase, upon payment of the exercise price, shares of common stock
with a total market value of two times (x) the exercise price (i.e., at a 50%
discount from the then current market price of the common stock).

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<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information concerning beneficial
ownership of Talisman common stock as of September 1, 1999 and as adjusted to
reflect the sale of the shares offered hereby (1) by each person owning 5% or
more of the outstanding shares of common stock, (2) each director, (3) each
executive officer named in the Summary Compensation Table under "Management",
and (4) all directors and officers as a group:

The applicable percentage is based on 1,055,560 shares outstanding on
September 1, 1999 and 3,040,187 to be outstanding upon consummation of this
offering. The percentage calculations do not include shares to be issued if the
over-allotment option is exercised.

OUTSTANDING COMMON STOCK BENEFICIALLY OWNED

<TABLE>
<CAPTION>
PERCENTAGE BENEFICIALLY
OWNED*
NUMBER OF ------------------------
SHARES OF PRIOR TO AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK OFFERING OFFERING
- ------------------------------------------------------------------------- -------------- ----------- -----------
<S> <C> <C> <C>
Kevin Kimberlin.......................................................... 896,416(1) 58.3% 26.0%
New York, New York

Norman R. Proulx......................................................... 74,272(2) 6.8% 2.4%
New York, New York

James A. Ogle............................................................ 3,226(3) ** **
Mississuaga, Ontario

Ray Rivers............................................................... 71,226(4) 6.5% 2.3%
New York, New York

Garry J. Syme............................................................ 41,632(5) 3.9% 1.4%
Mississauga, Ontario

James C. McGavin......................................................... 28,046(7) 2.6% **
Burlington, Ontario

Donald L. Matheson....................................................... 4,046(8) ** **
Toronto, Ontario

Thomas A. Fenton......................................................... 4,092(9) ** **
Mississauga, Ontario

John E. Aderhold......................................................... 400,000(10) ** 12.2%
Atlanta, Georgia

Directors and Officers as a Group (9 persons)............................ 160,361(11) 13.6% 5.0%
</TABLE>

- ------------------------

* Percentages are based upon the assumption that the named shareholder has
exercised all of the currently exercisable options he or she owns which are
currently exercisable or exercisable within 60 days and that no other
shareholder has exercised any options he or she owns. The information with
respect to shares owned beneficially by those named above not being within
the knowledge of Talisman, has been furnished by each shareholder
respectively.

Unless otherwise provided herein, Talisman believes that all persons named
in the table have sole voting and investment power with respect to all
shares of common stock beneficially owned by them.

* * Less than One Percent.

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<PAGE>
(1) Includes (i) 362,332 shares owned by Kimberlin Family Partners LP and 50,876
shares owned by Spencer Trask Securities, Inc., (ii) 362,332 shares and
50,876 shares which may be issued pursuant to options owned by Kimberlin
Family Partners LP and Spencer Trask Securities, Inc., respectively, which
options are currently exercisable, and (iii) 70,000 shares of common stock
which are being issued upon conversion of a $350,000 promissory note
concurrently with this offering.

(2) Includes 35,613 shares which may be issued pursuant to options owned by
Mr. Proulx, which options are currently exercisable.

(3) Includes 3,226 shares which may be issued pursuant to options issued to
Mr. Ogle under the 1999 Senior Executive Stock Option Plan, which options
are currently exercisable. Does not include an additional 79,729 shares
which may be issued pursuant to options issued to Mr. Ogle under the 1999
Senior Executive Stock Option Plan, which options are not currently
exercisable.

(4) Includes 35,613 shares of common stock and 35,613 shares which may be issued
pursuant to options owned by Mr. Rivers and his wife, which options are
currently exercisable.

(5) Includes (i) 3,902 shares which may be issued pursuant to options issued to
Mr. Syme under the 1997 Stock Option Plan, and (ii) 1,730 shares which may
be issued pursuant to options issued to Mr. Syme under the 1999 Senior
Executive Stock Option Plan, all of which options are currently exercisable.
Does not include an additional 42,747 shares which may be issued pursuant to
options issued to Mr. Syme under the 1999 Senior Executive Stock Option
Plan, which options are not currently exercisable.

(6) Includes 1,000 shares which may be issued pursuant to options owned by
Mr. Avery, which options are currently exercisable.

(7) Includes 20,000 shares which may be issued pursuant to options owned by
Mr. McGavin, which options are currently exercisable.

(8) Includes 1,000 shares which may be issued pursuant to options owned by
Mr. Matheson, which options are currently exercisable.

(9) Includes (i) 3,046 shares of common stock own by Aird & Berlis,
Barristers & Solicitors, in which Mr. Fenton is a member, and (ii) 1,000
shares which may be issued pursuant to options owned by Mr. Fenton, which
options are currently exercisable.

(10) Includes 200,000 shares to be issued upon the automatic conversion of
$1,000,000 principal amount of 8% convertible subordinated promissory note
and 200,000 shares to be issued upon the exercise of outstanding class A
common stock purchase warrants held by Mr. Aderhold.

(11) Includes 35,613 shares which may be issued pursuant to options beneficially
owned by Norman R. Proulx, which options are currently exercisable,
(ii) 3,902 shares which may be issued pursuant to options owned by Garry
Syme, which options are currently exercisable, (iii) 20,000 shares which may
be issued pursuant to options owned by James C. McGavin, which options are
currently exercisable, (iv) 1,000 shares which may be issued pursuant to
options owned by Donald L. Matheson, which options are currently
exercisable, (v) 1,000 shares which may be issued pursuant to options owned
by Thomas A. Fenton, (vi) 80 shares owned by Duncan C. MacFadyen and 4,000
shares which may be issued pursuant to options owned by Duncan C. MacFadyen,
(vii) 3,226 shares which may be issued pursuant to options owned by James A.
Ogle, which options are currently exercisable, and (viii) 1,730 shares which
may be issued pursuant to options owned by Garry J. Syme, which options are
currently exercisable and (ix) 967 shares which may be issued pursuant to
options owned by Christian H. Bunger, which options are currently
exercisable. Does not include (i) an additional 79,729 shares which may be
issued pursuant to options issued to Mr. Ogle, which options are not
currently exercisable,(ii) an additional 42,747 shares which may be issued
pursuant to options issued to Mr. Syme, which options are not currently
exercisable, and (iii) an additional 23,919 shares which may be issued
pursuant to options issued to Mr. Bunger, which options are not currently
exercisable.

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<PAGE>
CERTAIN TRANSACTIONS

Thomas A. Fenton, LL.B., a director of Talisman, is a partner of the Toronto
based law firm Aird & Berlis, Barristers and Solicitors, which is Canadian legal
counsel to Talisman. During the fiscal period ended December 31, 1997, Talisman
paid to Aird & Berlis Cdn.$45,695 in consideration of legal services performed,
and during fiscal period ended December 31, 1998, Talisman paid to Aird & Berlis
Cdn.$66,425 in consideration of legal services performed.

James C. McGavin, a director of Talisman, is a director, officer and
shareholder of Burlington Stamping Inc., a key supplier to Talisman. During
fiscal period ended December 31, 1997, Talisman paid to Burlington Stamping an
aggregate of approximately Cdn.$108,836 in consideration of battery cans
manufactured and sold by Burlington Stamping to Talisman, and during fiscal
period ended December 31, 1998, Talisman paid to Burlington Stamping an
aggregate of approximately Cdn.$50,790 in consideration of battery cans
manufactured and sold by Burlington Stamping to Talisman. In addition, during
fiscal period ended December 31, 1997, Talisman paid to James C. McGavin an
aggregate of approximately Cdn.$4,320 in consideration of a car allowance, and
during fiscal period ended December 31, 1998, Talisman paid to James C. McGavin
an aggregate of approximately Cdn.$6,480 in consideration of a car allowance.

On January and March 1998, Garry J. Syme exercised warrants to acquire
16,098 common shares, in aggregate, for gross cash consideration of Cdn.$104,098
and Cdn.$160,500 in property and equipment.

On August 5, 1998, Talisman raised Cdn.$1,495,000 in connection with a
private offering of 263,504 shares of Talisman's common stock and warrants to
purchase an additional 263,504 shares of common stock at an exercise price of
Cdn.$7.50 per share, with Talisman Partners. Prior to the private offering with
Talisman Partners, there was no affiliation between Talisman and Talisman
Partners. Talisman Partners is a private investment partnership located in New
York, New York. Effective with the completion of the private offering, Norman R.
Proulx, the appointed nominee of Talisman Partners, became a director of
Talisman. Effective December 4, 1998, Mr. Proulx was appointed Talisman's
interim President and Chief Executive Officer. Mr. Proulx was a partner with a
minority interest in Talisman Partners and an employee of Spencer Trask
Securities Inc., a securities dealer based in New York, New York. Talisman
Partners was majority owned by the Kevin Kimberlin Partnership, L.P., a New York
limited partnership, which was controlled by Kevin Kimberlin, Chairman of
Spencer Trask, and minority owned by certain other Spencer Trask employees.

On October 19, 1998, Talisman raised a further Cdn.$900,000 in connection
with a private offering of 240,000 shares of Talisman's Common stock and
warrants to purchase an additional 240,000 shares of Common stock at an exercise
price of Cdn.$5.00 per share, with Talisman Partners.

From December 1998 to March 1999, Talisman sold an aggregate of $700,000 of
8% convertible promissory notes to nineteen persons. The principal amount of the
notes were converted into securities of Talisman in connection with the
completion of the first closing of Talisman's private placement offering with
Spencer Trask in March 1999. The holders of the notes also received warrants to
acquire an aggregate of 72,465 shares of common stock of Talisman exercisable at
$7.50 per share.

In June 1999, David R. Guy, a former officer and director of Talisman, and
Garry J. Syme each contributed 15,000 shares of common stock to the settlement
of a lawsuit involving Talisman, Talisman International, and Messrs. Guy and
Syme.

On January 4, 1999, Talisman entered into an employment agreement with James
A. Ogle, a senior officer of Talisman. For a complete description of the terms
and conditions of the employment agreement between Talisman and Mr. Ogle, see
"Management--Employment Contracts."

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<PAGE>
On January 6, 1999, Talisman entered into an employment agreement with Garry
J. Syme, a senior officer of Talisman. For a complete description of the terms
and conditions of the employment agreement between Talisman and Mr. Syme, see
"Management--Employment Contracts."

On January 7, 1999, Talisman entered into an employment agreement with
Christian H. Bunger, an officer of Talisman. For a complete description of the
terms and conditions of the employment agreement between Talisman and
Mr. Bunger, see "Management--Employment Contracts."

In March, April and June 1999, Talisman completed three closings of a
private placement offering, with Spencer Trask Securities, Inc., as placement
agent, in which it sold an aggregate of 50.72985 units solely to U.S. investors
for gross proceeds to Talisman of $5,174,472.70 (such proceeds being inclusive
of the $700,000 raised from December 1998 through March 1999 described above).
The units consisted of an aggregate of (1) $5,073,135 principal amount of 8%
convertible promissory notes, and (2) 1,014,627 warrants to purchase shares of
common stock, which warrants are exercisable at $7.50 per share. In connection
with such closings, Spencer Trask received a placement fee equal to 10% of the
aggregate purchase price of the securities sold by it, plus a non-accountable
expense allowance equal to three percent of the aggregate purchase price of the
securities sold and a warrant, granted by Talisman for $1.00 consideration, to
purchase an amount of common stock equal to 20% of the common stock sold in the
offering at an exercise price equal to 120% of the price of the common stock
sold. Additionally, upon the first closing of the offering, Talisman entered
into (1) an agreement whereby Spencer Trask has the right of first refusal to
act as underwriter or agent for any proposed private or public offering of
Talisman's securities by Talisman or by any of its principal stockholders, and
(2) a non-exclusive finder's agreement pursuant to which Spencer Trask is
entitled to receive a fee based upon a percentage of the value of any business
combination or financing arrangement, including but not limited to a merger or
purchase of assets, which is introduced to Talisman by Spencer Trask. In
accordance with the non-exclusive finder's agreement, a fee in the amount of
$200,000 is due to Spencer Trask Securities, Inc. for arranging the financing
with General Electric Capital Canada Inc., of which one-third was due in
September 1999 and the balance of which is due on or before October 31, 1999.

In November 1999, Talisman borrowed $350,000 from Kevin Kimberlin pursuant
to a promissory note in the principal amount of $350,000, bearing interest at an
annual rate of 10% and due on February 17, 2000. Such loan is being converted
into 70,000 shares of common stock at $5.00 per share concurrently with this
offering.

None of the transactions with officers or shareholders of Talisman and their
affiliates were made on terms less favorable to Talisman than those available
from unaffiliated parties. In future transactions of this nature, Talisman will
ensure that more favorable terms are not available to it from unaffiliated third
parties before engaging officers or shareholders of Talisman or their
affiliates. Talisman presently has four independent directors and Talisman will
continue to maintain at least two independent directors on its board of
directors. Transactions Talisman entered into with its officers and directors
and their affiliates were unanimously approved by Talisman's board of directors,
which included at least two independent directors who were uninterested with
respect to each respective transaction. Such independent directors had access to
Talisman's counsel at Talisman's expense. All future material affiliated
transactions and loans will be made or entered into on terms that are no less
favorable to Talisman than those that can be obtained from unaffiliated third
parties. All future material affiliated transactions and loans, and any
forgiveness of loans, will be approved by a majority of Talisman's independent
directors who do not have an interest in the transactions and who had access, at
Talisman's expense, to Talisman's counsel or independent legal counsel.

44
<PAGE>
DESCRIPTION OF SECURITIES

Our authorized capital stock consists of an unlimited number of shares of
common stock, with no par value. The following descriptions contain all material
terms and features of our securities, are qualified in all respects by reference
to our Certificate of Incorporation and Bylaws, copies of which have been filed
with the Securities and Exchange Commission.

COMMON STOCK

We are authorized to issue an unlimited number of shares of common stock, no
par value per share, of which as of the date of this prospectus, 1,055,560
shares of common stock are outstanding, not including the 900,000 shares offered
concurrently with this offering by Talisman under a separate prospectus or
1,014,627 of the shares offered by the selling stockholders.

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Holders of common
stock are entitled to receive ratably dividends as may be declared by the board
of directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of Talisman, holders of the common stock
are entitled to share ratably in all assets remaining, if any, after payment of
liabilities. Holders of common stock have no preemptive rights and have no
rights to convert their common stock into any other securities.

Pursuant to the Business Corporation Act (Ontario), a shareholder of an
Ontario Corporation has the right to have the corporation pay the shareholder
the fair market value for his shares of the corporation in the event such
shareholder dissents to certain actions taken by the corporation such as
amalgamation or the sale of all or substantially all of the assets of the
corporation and such shareholder follows the procedures set forth in the
Business Corporation Act (Ontario).

CLASS A WARRANTS

Each class A warrant entitles the holder to purchase one share of common
stock from Talisman at the exercise price of $7.50 per share. The number of
shares of common stock issuable upon exercise of the warrants and the exercise
price will be adjusted in the event of stock splits, stock dividends or
recapitalization. The class A warrants are exercisable at any time within five
years after March 19, 1999. Class A warrants not exercised by that time will
expire. The class A warrants do not confer upon the holder any voting rights,
preemptive rights or any other rights as Talisman stockholder. Upon notice to
the holders of the warrants, Talisman has the right to reduce the exercise price
or extend the expiration date of the warrants.

The class A warrants are redeemable by Talisman commencing on June 21, 2000
(or sooner with the consent of Spencer Trask Securities, Inc.) at a redemption
price of $0.10 per class A warrant on not less than 30 days written notice,
provided that the last sale price per share of common stock, for 20 consecutive
trading days ending on the third business day prior to the date of redemption
notice, is at least $9.00 (subject to adjustment for certain events). The
class A warrants shall be exercisable until the close of the business day
preceding the date fixed for redemption.

No class A warrant will be exercisable unless at the time of exercise
Talisman has filed with the Securities and Exchange Commission a current
prospectus covering the issuance of common stock issuable upon the exercise of
the class A warrant and the issuance of shares has been registered or qualified
or is deemed to be exempt from registration or qualification under the
securities laws of the state of residence of the holder of the class A warrant.
This prospectus covers the proposed offering by the selling stockholders of the
1,014,627 shares of common stock underlying the outstanding class A common stock
purchase warrants. Talisman has undertaken to use its best efforts to maintain a
current prospectus relating to the issuance of the shares of common stock upon
the exercise of the class A warrants until the expiration of the class A
warrants. While it is Talisman's intention to maintain a current prospectus,
there is no assurance that it will be able to do so.

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<PAGE>
CLASS A SPECIAL SHARES

Talisman's subsidiary, Talisman International, has class A special shares,
which shares are without par value and are entitled to receive if, as and when
declared by the board of directors of Talisman International, a fixed
preferential 6% non-cumulative cash dividend. The class A special shares are not
retractable by the holders, but rather are redeemable only by Talisman
International at Cdn.$1,000 per Class "A" share plus all declared and unpaid
preferential dividends. The class A special shares are non-voting, non
convertible and, in the event of the liquidation, dissolution or winding up of
Talisman International, are entitled to receive a sum equivalent to the
redemption amount (plus all accrued and unpaid dividends) attaching to such
shares in priority to any payment on the common stock. No dividends on the
class A special shares have ever been declared by the board of directors of
Talisman International, and no dividends are anticipated to be declared in the
future. At present, there are 3,300 Class "A" special shares outstanding.

OTHER WARRANTS AND OPTIONS

As of September 1, 1999, the Company had outstanding warrants to acquire
approximately 632,005 shares of common stock, exercisable at prices ranging
between Cdn.$5.00 and Cdn.$62.50. All of such options and warrants are currently
exercisable and are fully vested. In addition, Spencer Trask Securities, Inc.
received warrants to purchase an aggregate of 405,850 shares and 405,850
class A warrants, which warrants are exercisable at $6.00 per share and $.12 per
warrant. The class A warrants issuable to Spencer Trask upon exercise of the
warrant issued to Spencer Trask are identical to the class A warrants described
above. See "Certain Transactions".

No warrant or option will be exercisable more than five years from the date
of this prospectus.

TRANSFER AGENT

The transfer agent for the common stock is Equity Transfer Services, Inc.,
Toronto, Ontario.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this offering, Talisman will have 3,040,187 shares
of common stock outstanding. In addition, Talisman has reserved for issuance the
following shares:

- 31,200 shares upon the exercise of options eligible for grant under
Talisman's 1997 Stock option plan;

- 225,000 shares upon the exercise of options eligible for grant under
Talisman's 1999 Senior Executive Stock Option Plan;

- 84,770 shares upon the exercise of options eligible for grant under
Talisman's 1999 Directors Company Stock Plan;

- 1,014,627 shares upon the exercise of 1,014,627 class A warrants; and

- 1,443,705 shares upon the exercise of additional warrants and options.

All the shares to be issued and outstanding after this offering (plus any
additional shares sold upon exercise of the over-allotment option and any shares
to be issued upon exercise of the class A warrants) will be freely tradeable
without restriction or further registration under the Act, except for
168,608 shares and 220,390 options and warrants held by promoters ("Promotional
Shares") and any shares purchased or held by an "affiliate" of Talisman (in
general, a person who has a control relationship with Talisman) which will be
subject to the limitations of Rule 144 adopted under the Act ("Rule 144"). The
Promotional Shares are subject to a Lock-In Agreement with selected state
securities departments and pursuant thereto, may not be released for sale until
one year from the completion date of this offering, after which the Promotional
Shares may be released in quarterly increments of 2 1/2% per quarter, with the
remainder of such Promotional Shares available for sale on the second year

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<PAGE>
anniversary of the completion of this offering. Under Rule 144, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
Talisman, who has beneficially owned restricted shares of common stock for at
least one year is permitted to sell in a brokerage transaction, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares of the same class, or if the common stock
is quoted on Nasdaq or a stock exchange, the average weekly trading volume
during the four calendar weeks preceding the sale. Rule 144 also permits a
person who presently is not and who has not been an affiliate of Talisman for at
least three months immediately preceding the sale and who has beneficially owned
the shares of common stock for at least two years to sell such shares without
regard to any of the volume limitations as described above. Notwithstanding the
foregoing, the owners of 1,014,627 shares and 1,014,627 class A warrants, being
offered pursuant to this prospectus, have agreed not to sell or otherwise
dispose their securities except as follows:

- 75% of 1,014,627 shares are currently subject to a lock-up which expires
on March 21, 2000; and

- all the shares to be issued upon exercise of the outstanding class A
common stock purchase warrants are currently subject to a nine month
lock-up, which expires on March 21, 2000.

In addition to the foregoing, in connection with our recently completed
private placement offering, we entered into a Stockholders' Agreement with the
Spencer Trask Securities, Inc., Talisman Partners, and Messrs. Garry J. Syme, D.
Graham Avery, James C. McGavin, Donald L. Matheson, Thomas A. Fenton, James A.
Ogle, Christian Bunger and Norman R. Proulx pursuant to which the parties to the
Stockholders' Agreement, who own an aggregate of 544,550 shares and 532,553
options or warrants, agreed not to sell, transfer, or otherwise dispose of any
shares of our common stock owned by them or issuable to them pursuant to the
exercise of options or warrants for a 24 month period ending on March 19, 2001
(and Talisman Partners and Norman Proulx agreed under the Stockholders'
Agreement not to sell, transfer, or otherwise dispose of any shares of the
Company's Common Stock owned by them or issuable to them pursuant to the
exercise of options or warrants for a 12 month period ending on March 19, 2000)
without the prior written consent of Spencer Trask, not to be unreasonably
withheld or delayed, provided that Spencer Trask may require that any such
permitted transferees be made subject to a voting agreement pursuant to which
the transferring stockholder retains the right to vote transferred shares until
March 19, 2001.

Talisman will not grant options and warrants in excess of 15% of the
outstanding shares to officers, directors, employees, 5% shareholders and
affiliates for a one year period following this offering.

Sales of Talisman's common stock by certain of the present stockholders in
the future, under Rule 144, may have a depressive effect on the price of
Talisman's common stock.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following describes the principal United States federal income tax
consequences of the purchase, ownership and disposition of the common stock and
the warrants and upon the exercise, redemption or expiration of the warrants by
a warrant holder, that is a citizen or resident of the United States or a United
States domestic corporation or that otherwise will be subject to United States
federal income tax. This summary is based on the United States Internal Revenue
Code of 1986, as amended, administrative pronouncements, judicial decisions and
existing and proposed treasury regulations, changes to any of which subsequent
to the date of this prospectus may affect the tax consequences described herein.
This summary discusses only the principal United States federal income tax
consequences to those beneficial owners holding the securities as capital assets
within the meaning of Section 1221 of the Code and does not address the tax
treatment of a beneficial owner that owns 10% or more of the common stock. It
does not address the consequences applicable to certain specialized classes of
taxpayers such as certain financial institutions, insurance companies, dealers
in securities or foreign currencies, or United States persons whose functional
currency (as defined in Section 985 of the Code) is not the United States
dollar. Persons considering the purchase of these securities should consult
their tax advisors with regard to the application of the United States and other

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<PAGE>
income tax laws to their particular situations. In particular, a U.S. Holder
should consult his tax advisor with regard to the application of the United
States federal income tax laws to his situation.

COMMON STOCK

A U.S. Holder generally will realize, to the extent of Talisman's current
and accumulated earnings and profits, foreign source ordinary income on the
receipt of cash dividends, if any, on the common stock equal to the United
States dollar value of such dividends determined by reference to the exchange
rate in effect on the day they are received by the U.S. Holder (with the value
of such dividends computed before any reduction for any Canadian withholding
tax). U.S. Holders should consult their own tax advisors regarding the treatment
of foreign currency gain or loss, if any, on any dividends received which are
converted into United States dollars on a date subsequent to receipt. Subject to
the requirements and limitations imposed by the Code, a U.S. Holder may elect to
claim Canadian tax withheld or paid with respect to dividends on the common
stock as a foreign credit against the United States federal income tax liability
of such holder. Dividends on the common stock generally will constitute "passive
income" or, in the case of certain U.S. Holders, "financial services income" for
United States foreign tax credit purposes. U.S. Holders who do not elect to
claim any foreign tax credits may claim a deduction for Canadian income tax
withheld. Dividends paid on the common stock will not be eligible for the
dividends received deduction available in certain cases to United States
corporations.

Upon a sale or exchange of a share of common stock, a U.S. Holder will
recognize gain or loss equal to the difference between the amount realized on
such sale or exchange and the tax basis of such common stock. Any such gain or
loss will be capital gain or loss, and will be long term capital gain or loss if
at the time of sale or exchange the common stock has been held for more than one
year.

WARRANTS

No gain or loss will be recognized by the holder of a warrant upon the
exercise of the warrant. The cost basis of the common stock acquired upon such
exercise will be the cost basis of the warrant plus any additional amount paid
upon the exercise of the warrant. Gain or loss will be recognized upon the
subsequent sale or exchange of the common stock acquired by the exercise of the
warrant, measured by the difference between the amount realized upon the sale or
exchange and the cost basis of the common stock so acquired.

If a warrant is not exercised, but is sold or exchanged (whether pursuant to
redemption or otherwise), gain or loss will be recognized upon such event,
measured by the difference between the amount realized by the holder of the
warrant as a result of sale, exchange or redemption and the cost basis of the
warrant.

If a warrant is not exercised and is allowed to expire, the warrants will be
deemed to be sold or exchanged on the date of expiration. In such event, the
holder of the warrant will recognize a loss to the extent of the cost basis of
the warrant.

Generally, any gain or loss recognized as a result of the foregoing will be
a capital gain or loss and will either be long-term or short-term depending upon
the period of time the common stock sold or exchanged or the warrant sold,
exchanged, redeemed, or allowed to expire, as the case may be, was held. A
holding period of more than one year results in long-term gain or loss
treatment. If a warrant is exercised, the holding period of the common stock so
acquired will not include the period during which the warrant was held.

THIS SUMMARY IS OF GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT
BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PROSPECTIVE INVESTOR AND NO
REPRESENTATION WITH RESPECT TO THE TAX CONSEQUENCES TO ANY PARTICULAR INVESTOR
IS MADE.

48
<PAGE>
INVESTMENT CANADA ACT

The Investment Canada Act is a federal Canadian statute which regulates the
acquisition of control of existing Canadian businesses and the establishment of
new Canadian businesses by an individual, a government or entity that is a
"non-Canadian" as that term is defined in the Investment Canada Act.

Talisman believes that it is not currently a "non-Canadian" for purposes of
the Investment Canada Act. If Talisman were to become a "non-Canadian" in the
future, acquisitions of control of Canadian businesses by Talisman would become
subject to the Investment Canada Act. Generally, the direct acquisition by a
"non-Canadian" of an existing Canadian business with gross assets of
CDN$5,000,000 or more is reviewable under the Investment Canada Act, with a
threshold of CDN$184 million for transactions closing in 1999 for "WTO
investors" as defined under the Investment Canada Act. If Talisman were to
become a "non-Canadian" in the future, Talisman believes that it would likely
become a "non-Canadian" which is a "WTO investor." Generally, indirect
acquisitions of existing Canadian businesses (with gross assets over certain
threshold levels) are reviewable under the Investment Canada Act, except in
situations involving "WTO investors" where indirect acquisitions are generally
not reviewable. In transactions involving Canadian businesses engaged in the
production of uranium, providing financial services, providing transportation
services or which are cultural businesses, the benefit of the higher "WTO
investor" thresholds do not apply.

Acquisitions of businesses related to Canada's cultural heritage or national
identity (regardless of the value of assets involved) may also be reviewable
under the Investment Canada Act. In addition, investments to establish new,
unrelated businesses are not generally reviewable. An investment to establish a
new business that is related to the non-Canadian's existing business in Canada
is not notifiable under the Investment Canada Act unless such investment relates
to Canada's cultural heritage or national identity.

Investments which are reviewable under the Investment Canada Act are
reviewed by the Minister, designated as being responsible for the administration
of the Investment Canada Act. Reviewable investments, generally, may not be
implemented prior to the Minister's determining that the investment is likely to
be of "net benefit to Canada" based on the criteria set out in the Investment
Canada Act. Generally investments by non-Canadians consisting of the acquisition
of control of Canadian businesses which acquisitions are otherwise
non-reviewable or the establishment of new Canadian businesses require that a
notice be given under the Investment Canada Act in the prescribed form and
manner.

To date, the Investment Canada Act has had no practical affect on Talisman's
operations and/or financial condition. Moreover the Investment Canada Act has
not and will not create an impediment to an unsolicited take-over of Talisman as
Talisman's asset base is approximately CDN$6,900,000 as at March 31, 1999.
Accordingly any proposed take-over of Talisman by a "non-Canadian" would likely
be subject only to the simple "notification" requirements of the Investment
Canada Act as in all likelihood that non-Canadian would be a "WTO investor" for
purposes of the Investment Canada Act. Generally, a "WTO investor" is an
individual, other than a Canadian, who is a national of a country which is a
member of the World Trade Organization. In the case of a person which is not an
individual, a WTO investor is a person which, generally, is ultimately
controlled by individuals, other than Canadians, who are nationals of a WTO
member. Currently there are 134 countries which are members of the WTO,
including virtually all countries of the Western world. Talisman would have to
have an asset base of at least CDN$184 million before the "reviewable"
transaction provisions of the Investment Canada Act became relevant for
consideration by a third party non-Canadian acquiror, which is not a WTO
investor.

49
<PAGE>
SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of Talisman at September 1, 1999 on a pro forma basis adjusted to
reflect the automatic conversion of $5,073,135 of 8% convertible subordinated
promissory notes into 1,014,627 shares of common stock upon listing of
Talisman's common stock on a U.S. based exchange and the issuance of 1,014,627
shares upon the exercise of outstanding class A common stock purchase warrants.
It should be noted that 75% of 1,014,627 shares are currently subject to a
lock-up which expires March 21, 2000. It also should be noted that all the
shares to be issued upon exercise of the outstanding class A common stock
purchase warrants are currently subject to a nine month lock-up, which expires
on March 21, 2000.

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED OWNED
PRIOR TO AFTER
THE SHARES THE
SELLING STOCKHOLDERS OFFERING OFFERED OFFERING
- -------------------- ------------ -------- ------------
<S> <C> <C> <C>
Bloom JT/WROS, Lee & Lisa................................... 10,000 10,000 --
Bloom, Roslyn............................................... 10,000 10,000 --
Frischling, Carl............................................ 20,000 20,000 --
Hurwitz--Tenants by the Entirety, Robert & Connie........... 10,000 10,000 --
Lerner, Lawrence............................................ 10,000 10,000 --
Bel Air Associates LLC...................................... 40,000 40,000 --
Grohowski, Frank............................................ 10,000 10,000 --
Gross, Donald............................................... 20,000 20,000 --
Persson Tenants in Common, Stig & Anita..................... 10,000 10,000 --
Francis, Baylus M........................................... 80,000 80,000 --
Peed, Wayne L............................................... 4,000 4,000 --
Pou, James W................................................ 10,000 10,000 --
Rolinski, Sylvia J.......................................... 5,000 5,000 --
Walker, Thomas E............................................ 4,000 4,000 --
Wooten III, John E.......................................... 4,000 4,000 --
Badgett IRA, DCG&T FBO of Jack T............................ 5,000 5,000 --
Baroni, Philip.............................................. 10,000 10,000 --
Kessel MD, Daniel........................................... 5,000 5,000 --
Keys, Shirley............................................... 5,000 5,000 --
Mandell JT/WROS, Richard & Audrey........................... 20,000 20,000 --
Schrodt, Joseph............................................. 20,000 20,000 --
Advent Fund LLC............................................. 40,000 40,000 --
Bernard Oleyar Trust--UAD 2/1/96--Bernard Oleyar, TTEE...... 10,000 10,000 --
Butler, Marshall............................................ 20,000 20,000 --
Estate of Mary Goodman...................................... 5,000 5,000 --
Mennie, Hubert J............................................ 5,000 5,000 --
Weir, Paul J................................................ 20,000 20,000 --
Arnett, Dr. Jan............................................. 40,000 40,000 --
De Nigris IRA, Bear Stearns Custodian for Peter............. 40,000 40,000 --
Gruverman, Irwin............................................ 10,000 10,000 --
Humphrey, Layton............................................ 5,000 5,000 --
Low, Nathan................................................. 20,000 20,000 --
Rusbasan JT/WROS, Charles J. & Susan H...................... 20,000 20,000 --
</TABLE>

50
<PAGE>

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED OWNED
PRIOR TO AFTER
THE SHARES THE
SELLING STOCKHOLDERS OFFERING OFFERED OFFERING
- -------------------- ------------ -------- ------------
<S> <C> <C> <C>
Sanders, Arthur D........................................... 15,000 15,000 --
Schantz, Philip L........................................... 10,000 10,000 --
Weinberger, Mark S.......................................... 10,000 10,000 --
Windsor Partners............................................ 40,000 40,000 --
Bain II, Travis W........................................... 5,000 5,000 --
Cardwell Jr. J.A............................................ 20,000 20,000 --
Cardwell, Jack A............................................ 40,000 40,000 --
Karpoff IRA, DCG&T c/f Marilyn.............................. 10,000 10,000 --
Karpoff, Marilyn............................................ 10,000 10,000 --
Katzenstein Community Property Trust, The Henry S.
Katzenstein & Constance A................................. 20,000 20,000 --
Koehler, Roger L. & Susan E................................. 10,000 10,000 --
Terral, W. Timothy.......................................... 9,802 9,802 --
Ward, David A............................................... 20,000 20,000 --
Brensilver JT/WROS, Howard & Marcia......................... 5,000 5,000 --
Investment Fund, LLC........................................ 19,606 19,606 --
Martelli Jr,Vincent A....................................... 5,882 5,882 --
Rego, Richard............................................... 5,000 5,000 --
Garfield Associates LLC..................................... 19,608 19,608 --
Dacus, Lanny................................................ 19,608 19,608 --
Egan, George................................................ 19,608 19,608 --
Elkin, Richard.............................................. 9,804 9,804 --
Farley, Don F............................................... 19,608 19,608 --
Jansen, Vic................................................. 19,608 19,608 --
Greenbaum Doll & McDonald PLLC (Carmin D. Grandinetti)...... 9,804 9,804 --
Greenbaum Doll & (McDonald PLLC (Patrick J. Welsh).......... 9,804 9,804 --
Greenebaum Doll & McDonald PLLC (Edwin Perry)............... 9,804 9,804 --
Greenebaum Doll & McDonald PLLC (Ivan M. Diamond)........... 9,804 9,804 --
Greenebaum Doll & McDonald PLLC (Lawrence K. Banks)......... 9,804 9,804 --
Greenebaum Doll & McDonald PLLC (Mark S. Ament)............. 9,804 9,804 --
Greenbaum Doll & McDonald PLLC (P. Richard Anderson)........ 9,804 9,804 --
Raesly JT/ WROS, Lee H. & Janet............................. 9,804 9,804 --
Sura, Dr. Steven M.......................................... 9,804 9,804 --
Black Trust, The George L................................... 9,804 9,804 --
Family Revocable Trust, The ABR............................. 19,608 19,608 --
Garnick, Michael............................................ 29,412 29,412 --
John & Janet Morse JT/WROSZ................................. 20,000 20,000 --
Bernardet, Sophie........................................... 3,920 3,920 --
Doyle, William.............................................. 3,920 3,920 --
Joyce Kramer TTEE Joyce Kramer Rev Trust dtd 6/15/89........ 3,920 3,920 --
Wiesenberg, James H......................................... 10,000 10,000 --
Zelman, Martin.............................................. 20,000 20,000 --
Mazurosky, Rudolph.......................................... 10,000 10,000 --
</TABLE>

51
<PAGE>

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED OWNED
PRIOR TO AFTER
THE SHARES THE
SELLING STOCKHOLDERS OFFERING OFFERED OFFERING
- -------------------- ------------ -------- ------------
<S> <C> <C> <C>
Moran, John A............................................... 100,000 100,000 --
Fischhoff, Brian & Andrea................................... 4,000 4,000 --
Holmes, Donnie & Donna...................................... 5,000 5,000 --
Krueger Trust, John D....................................... 10,000 10,000 --
Shrawder, J. Edward......................................... 15,000 15,000 --
Millison, David R........................................... 4,000 4,000 --
Aderhold, John E............................................ 400,000 400,000 --
KL Rabinoff-Goldman, DC, PC Defined Benefit Pension Trust... 5,000 5,000 --
Haboush, Howard............................................. 80,000 80,000 --
Johnson Jr. C. Gordon....................................... 10,000 10,000 --
Quick, Carl J............................................... 10,000 10,000 --
Seplowitz, Sheldon.......................................... 10,000 10,000 --
Stollwerk JT/WROS........................................... 10,000 10,000 --
Winoker, Sidney............................................. 10,000 10,000 --
Incontro IRA. DCG&T fbo Richard............................. 5,000 5,000 --
Koplan Henry................................................ 5,000 5,000 --
Sango, Jason A & Brenda L................................... 5,000 5,000 --
Donald B. Shackelford Trust................................. 40,000 40,000 --
Watts Jr., James............................................ 5,000 5,000 --
Dean L. Patrick Revocable Trust............................. 5,000 5,000 --
Mathis L. Becker, MD, P.A. Profit Sharing Trust FBO Mathis
L. Becker, M.D............................................ 10,000 10,000 --
McInerney, Timothy.......................................... 10,000 10,000 --
Reilly, K.L................................................. 10,000 10,000 --
Schreiber, Joel M........................................... 5,000 5,000 --
Domino, Carl J.............................................. 40,000 40,000 --
Jutta & Peter Scholla JT/ WROS.............................. 5,000 5,000 --
R & S Limited Partnership................................... 2,500 2,500 --
Richard S. Incandela Trust dtd 9/15/91...................... 4,900 4,900 --
Fifth Third Bank Custodian for Stephen Bachelder IRA........ 10,000 10,000 --
Karnofsky, Neil............................................. 5,000 5,000 --
Paul M. Brown & Annette J. Brown Family Trust............... 4,900 4,900 --
Reardon, Robert............................................. 20,000 20,000 --
Toombs, Walter F............................................ 10,000 10,000 --
Schulte IRA, DCG&T FBO Scott F.............................. 5,000 5,000 --
Williams, John.............................................. 20,000 20,000 --
Sichenzia, Ross & Friedman LLP.............................. 10,000 10,000 --
</TABLE>

52
<PAGE>
PLAN OF DISTRIBUTION

Sales of the shares may be effected by or for the account of the selling
stockholders from time to time in transactions (which may include block
transactions) on the Nasdaq SmallCap Market, in negotiated transactions, through
a combination of such methods of sale, or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale or at negotiated
prices. The selling stockholders may effect such transactions by selling the
shares directly to purchasers, through broker-dealers acting as agents of the
selling stockholders, or to broker-dealers acting as agents for the selling
stockholders, or to broker-dealers who may purchase shares as principals and
thereafter sell the shares from time to time in transactions (which may include
block transactions) on the Nasdaq SmallCap Market, in negotiated transactions,
through a combination of such methods of sale, or otherwise. In effecting sales,
broker-dealers engaged by a selling stockholder may arrange for other
broker-dealers to participate. Such broker-dealers, if any, may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders and/or the purchasers of the shares for whom such
broker-dealers may act as agents or to whom they may sell as principals, or
both, which compensation may not exceed 8% of the proceeds of the sale of such
shares.

The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in the distribution of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933. Any
commissions paid or any discounts or concessions allowed to any such persons,
and any profits received on the resale of the shares purchased by them may be
deemed to be underwriting commission or discounts under the Securities Act of
1933.

We have agreed to bear all expenses of registration of the shares other than
legal fees and expenses, if any, of counsel or other advisors of the selling
stockholders. The selling stockholders will bear any commissions, discounts,
concessions or other fees, if any, payable to broker-dealers in connection with
any sale of their shares.

We have agreed to indemnify the selling stockholders, or their transferees
or assignees, against certain liabilities, including liabilities under the
Securities Act of 1933 or to contribute to payments the selling stockholders or
their respective pledgees, donees, transferees or other successors in interest,
may be required to make in respect thereof.

LEGAL MATTERS

Certain legal matters relating to Ontario law, including the validity of the
issuance of the shares offered hereby, will be passed upon for Talisman by
Aird & Berlis, Barristers and Solicitors, Ontario Canada. Members of the firm of
Aird & Berlis, Barristers and Solicitors own 3,092 shares of common stock of
Talisman, and Mr. Fenton, a member of the firm, owns 1,000 options to purchase
shares of common stock of Talisman. The validity of the issuance of the shares
offered hereby will be passed upon for Talisman by its United States Counsel,
Sichenzia, Ross & Friedman LLP, New York, New York. Sichenzia, Ross & Friedman
LLP owns 10,000 shares of common stock of Talisman. Certain legal matters in
connection with this offering will be passed upon for the underwriters by Day,
Edwards, Federman, Propester & Christensen, P.C., Oklahoma City, Oklahoma.

EXPERTS

The consolidated financial statements of Talisman Enterprises Inc. at
December 31, 1998 and 1997, and for each of the two years in the period ended
December 31, 1997, appearing in this prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein.

53
<PAGE>
TALISMAN ENTERPRISES INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Public Accountants................................................................... F-2

Consolidated Balance Sheets--As at December 31, 1997 and December 31, 1998................................. F-3

Consolidated Statements of Loss and Deficit--For the seven months period ended December 31, 1997 and year
ended December 31, 1998.................................................................................. F-4

Consolidated Statements of Shareholders' Equity............................................................ F-5

Consolidated Statement of Cash Flows--For the seven months period ended December 31, 1997 and year ended
December 31, 1998........................................................................................ F-6

Notes to Consolidated Financial Statements................................................................. F-7

Consolidated Balance Sheets--As at August 31, 1998 and August 31, 1999..................................... F-19

Consolidated Statement of Loss and Deficit--For the eight months ended August 31, 1998 and August 31,
1999..................................................................................................... F-20

Consolidated Statement of Cash Flows--For the eight months ended August 31, 1998 and August 31, 1999....... F-21

Notes to Consolidated Financial Statements................................................................. F-22
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of
TALISMAN ENTERPRISES INC.

We have audited the accompanying consolidated balance sheets of Talisman
Enterprises Inc. as of December 31, 1998 and 1997 and the related consolidated
statements of loss and deficit, shareholders' equity and cash flows for the year
ended December 31, 1998 and the seven months ended December 31, 1997. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and perform
an audit to obtain reasonable assurance 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 consolidated financial position of Talisman
Enterprises Inc. as at December 31, 1998 and 1997 and the consolidated results
of its operations and cash flows for the year ended December 31, 1998 and the
seven months ended December 31, 1997, in conformity with accounting principles
generally accepted in the United States.

On March 29, 1999, we reported separately to the Shareholders of Talisman
Enterprises Inc. on the consolidated financial statements for the same periods,
prepared in Canadian dollars and in accordance with accounting principles
generally accepted in Canada.

[LOGO]

Hamilton, Canada, Chartered Accountants

March 29, 1999 [except as to NOTE 16
which is as at December 3, 1999].

F-2
<PAGE>
TALISMAN ENTERPRISES INC.

INCORPORATED UNDER THE LAWS OF ONTARIO

CONSOLIDATED BALANCE SHEETS

[IN U.S. DOLLARS]

AS AT DECEMBER 31

<TABLE>
<CAPTION>
1998 1997
$ $
----------- ----------
<S> <C> <C>
ASSETS
CURRENT
Cash.................................................................................... 16,701 26,739
Accounts receivable..................................................................... 361,826 55,030
Inventories [NOTE 3].................................................................... 409,180 258,737
Prepaid expenses........................................................................ 51,952 14,085
----------- ----------
Total current assets.................................................................... 839,659 354,591
----------- ----------
Capital assets [NOTE 4]................................................................. 2,752,663 2,892,617
----------- ----------
3,592,322 3,247,208
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank operating line..................................................................... 423,656 --
Accounts payable and accrued liabilities................................................ 905,169 295,572
Note payable [NOTE 5]................................................................... -- 80,073
Current portion of long-term debt [NOTE 6].............................................. 574,221 69,903
----------- ----------
TOTAL CURRENT LIABILITIES............................................................... 1,903,046 445,548
----------- ----------
Long-term debt [NOTE 6]................................................................. -- 250,498
Deferred income tax liability........................................................... 546,815 589,794
Shareholders' equity [STATEMENT]........................................................
Share capital [NOTE 7].................................................................. 4,277,370 3,025,230
Contributed surplus..................................................................... 309,233 --
Deficit................................................................................. (3,238,982) (964,780)
Accumulated other comprehensive loss.................................................... (205,160) (99,082)
----------- ----------
TOTAL SHAREHOLDERS' EQUITY.............................................................. 1,142,461 1,961,368
----------- ----------
3,592,322 3,247,208
=========== ==========
</TABLE>

Commitments and contingencies [NOTE 11]

SEE ACCOMPANYING NOTES

On behalf of the Board:

Director Director

F-3
<PAGE>
TALISMAN ENTERPRISES INC.

CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT

[IN U.S. DOLLARS]

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
------------ --------------
<S> <C> <C>
REVENUES........................................................................... 748,254 139,646
Operating expenses [exclusive of amortization shown separately below].............. 1,487,052 180,582
---------- ----------
Gross profit....................................................................... (738,798) (40,936)
---------- ----------
EXPENSES
Selling, general and administrative................................................ 1,136,516 597,558
Amortization....................................................................... 304,182 27,670
Interest and bank charges [NOTE 6]................................................. 99,292 11,236
---------- ----------
1,539,990 636,464
---------- ----------
Loss before income taxes........................................................... (2,278,788) (677,400)
Income taxes--deferred............................................................. (4,586) (37,060)
---------- ----------
LOSS FOR THE PERIOD................................................................ (2,274,202) (640,340)

Deficit, beginning of period....................................................... (964,780) (324,440)
---------- ----------
DEFICIT, END OF PERIOD............................................................. (3,238,982) (964,780)
========== ==========
Loss per share..................................................................... (3.69) (1.35)
========== ==========
</TABLE>

SEE ACCOMPANYING NOTES

F-4
<PAGE>
TALISMAN ENTERPRISES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

[IN U.S. DOLLARS]
<TABLE>
<CAPTION>
ACCUMULATED
CLASS "A" OTHER
COMMON NUMBER OF SPECIAL CONTRIBUTED COMPREHENSIVE
NUMBER OF SHARES CLASS "A" SHARES SURPLUS DEFICIT LOSS
COMMON SHARES $ SPECIAL SHARES $ $ $ $
-------------- --------- --------------- ------------- ------------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE MAY 31, 1997... 452,600 801,089 3,300 1,687,083 -- (324,440) (159,108)
Issuance of Firesand
shares on acquisition
of Talisman.......... 478,371 20,112 -- -- -- -- --
Elimination of prior
number of shares of
Talisman............. (478,371) -- -- -- -- -- --
Prior common shares of
Firesand............. 34,970 -- -- -- -- -- --
Issued for cash and
exercise of
warrants............. 28,386 516,946 -- -- -- -- --
Cumulative translation
adjustment........... -- -- -- -- -- -- 60,026
Net loss............... -- -- -- -- -- (640,340) --
---------- --------- --------- --------- --------- --------- ---------
BALANCE DECEMBER 31,
1997................. 515,956 1,338,147 3,300 1,687,083 -- (964,780) (99,082)
---------- --------- --------- --------- --------- --------- ---------
Issued for exercise of
warrants............. 10,893 119,391 -- -- -- -- --
Issued for cash [net of
expenses] services
and capital assets... 503,481 1,132,749 -- -- 309,233 -- --
Cumulative translation
adjustment........... -- -- -- -- -- -- (106,078)
Net loss............... -- -- -- -- -- (2,274,202) --
---------- --------- --------- --------- --------- --------- ---------
BALANCE DECEMBER 31,
1998................. 1,030,330 2,590,287 3,300 1,687,083 309,233 (3,238,982) (205,160)
========== ========= ========= ========= ========= ========= =========

TOTAL
$
---------
<S> <C>
BALANCE MAY 31, 1997... 2,004,624
Issuance of Firesand
shares on acquisition
of Talisman.......... 20,112
Elimination of prior
number of shares of
Talisman............. --
Prior common shares of
Firesand............. --
Issued for cash and
exercise of
warrants............. 516,946
Cumulative translation
adjustment........... 60,026
Net loss............... (640,340)
---------
BALANCE DECEMBER 31,
1997................. 1,961,368
---------
Issued for exercise of
warrants............. 119,391
Issued for cash [net of
expenses] services
and capital assets... 1,441,982
Cumulative translation
adjustment........... (106,078)
Net loss............... (2,274,202)
---------
BALANCE DECEMBER 31,
1998................. 1,142,461
=========
</TABLE>

SEE ACCOMPANYING NOTES

F-5
<PAGE>
TALISMAN ENTERPRISES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

[IN U.S. DOLLARS]

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
------------ --------------
<S> <C> <C>
OPERATING ACTIVITIES
Loss for the period................................................................ (2,274,202) (640,340)
Charges to income not affecting cash
Amortization of capital assets..................................................... 304,182 27,670
Deferred income taxes.............................................................. (4,586) (37,060)
Change in non-cash working capital items........................................... 114,490 (89,304)
---------- ----------
CASH USED IN OPERATING ACTIVITIES.................................................. (1,860,116) (739,034)
---------- ----------
INVESTING ACTIVITY
Purchase of capital assets......................................................... (286,862) 13,324
---------- ----------
FINANCING ACTIVITIES
Issuance of long-term debt......................................................... 609,430 358,423
Repayment of long-term debt........................................................ (325,894) (29,869)
Repayment of note payable.......................................................... -- (60,932)
Reduction in note payable.......................................................... (77,233) (104,269)
Issue of common shares............................................................. 1,493,441 537,059
Bank operating line................................................................ 437,196 --
---------- ----------
CASH PROVIDED BY FINANCING ACTIVITIES.............................................. 2,136,940 700,412
---------- ----------
DECREASE IN CASH DURING THE PERIOD................................................. (10,038) (25,298)
Cash, beginning of period.......................................................... 26,739 52,037
---------- ----------
CASH, END OF PERIOD................................................................ 16,701 26,739
========== ==========
NON-CASH INVESTING ACTIVITY
Contribution by shareholders of capital assets..................................... 68,000 --
========== ==========
NON-CASH FINANCING ACTIVITY
Contribution by shareholders of professional services.............................. 241,233 --
========== ==========
SUPPLEMENTARY INFORMATION
Cash interest paid................................................................. 26,431 8,746
Cash income taxes paid............................................................. -- --
========== ==========
</TABLE>

SEE ACCOMPANYING NOTES

F-6
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Talisman Enterprises Inc. is a company incorporated to primarily produce
premium private label alkaline batteries. The company is in the early stages of
its operations and has, therefore, not generated revenues on a consistent basis.
The recoverability of the company's assets is, therefore, dependent on the
continued support of its lenders and shareholders and the generation of
profitable operations.

BASIS OF PRESENTATION

The consolidated financial statements have been prepared in United States
dollars and in accordance with accounting principles generally accepted in the
United States and include certain estimates based on management's judgments.
These estimates affect the reported amounts of assets and liabilities at the
date of the consolidated financial statements and the reported amount of
revenues and expenses during the period. Actual results may differ from those
estimates.

Consolidated financial statements prepared in Canadian dollars and in
accordance with accounting principles generally accepted in Canada were
previously made available to shareholders and filed with various securities
regulatory authorities.

For purposes of these consolidated financial statements, the company has
adopted the U.S. dollar as the reporting currency. This improves investors'
ability to compare the company's results with those of most other publicly
traded businesses in the industry. These consolidated financial statements have
been translated from Canadian dollars to U.S. dollars by translating assets and
liabilities at the rate in effect at the respective balance sheet date and
revenues and expenses at the average rate for the period. Any resulting foreign
exchange gains or losses are recorded in accumulated other comprehensive income
(loss).

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the company
and its wholly-owned subsidiary, Talisman International Inc.

INVENTORIES

Inventories are valued at the lower of average cost and net realizable
value.

CAPITAL ASSETS

Capital assets are stated at cost. Amortization is provided at rates
designed to write-off the assets over their estimated useful lives at the
following rates:

<TABLE>
<S> <C>
Production and warehouse equipment basis 10 years straight-line
Dies and molds basis 5 years straight-line
Furniture and fixtures basis 5 years straight-line
Computer equipment basis 3 years straight-line
Leasehold improvements Straight-line basis over the term of the
lease
</TABLE>

F-7
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION

Revenue from the sales of products is recognized at the time title
transfers, which is generally when the goods are shipped.

LOSS PER SHARE

The calculation of loss per common share is based on the reported net loss
divided by the weighted average number of shares outstanding during the period.
The weighted average number of common shares outstanding for the year ended
December 31, 1998 was 615,581 [474,446 for the seven months ended December 31,
1997].

FINANCIAL INSTRUMENTS

The carrying amount of cash, accounts receivable, bank operating line and
accounts payable and accrued liabilities are considered to be representative of
their respective fair values due to their short maturities.

The company has no derivative financial instruments or any financial
instruments that potentially subject the company to concentrations of credit
risk. The company is exposed to credit risk on the accounts receivable from its
customers. Management has adopted credit policies in an effort to minimize those
risks. The company does not have a significant exposure to any individual
customer or counter-party.

INCOME TAXES

The company follows the liability method of accounting for income taxes.
Under this method, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.

2. ACQUISITION

On September 26, 1997, Firesand Resources Ltd. ["Firesand"] which was a
public company with a year-end of December 31, trading on the Canadian Dealer
Network, acquired 100% of Talisman International Inc., which was incorporated on
September 26, 1996 and had a year-end of May 31, through the issuance of 478,371
common shares. The transaction was accounted for as a reverse takeover, with the
results of Firesand being included from the date of acquisition. For periods
prior to the date of acquisition, the information presented is that of Talisman
International Inc. The following is

F-8
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

2. ACQUISITION (CONTINUED)
a summary of the net assets acquired and values assigned thereto based on an
allocation of the purchase price to Firesand's assets and liabilities:

<TABLE>
<CAPTION>
$
---------
<S> <C>
Working capital......................................................................................... 20,112
Common shares issued.................................................................................... (20,112)
---------
--
=========
</TABLE>

Contemporaneously with the transaction, Firesand changed its name to
Talisman Enterprises Inc. ["Talisman"].

3. INVENTORIES

<TABLE>
<CAPTION>
1998 1997
$ $
--------- ---------
<S> <C> <C>
Raw materials and packaging................................................................. 243,801 201,968
Finished goods.............................................................................. 165,379 56,769
--------- ---------
409,180 258,737
========= =========
</TABLE>

F-9
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

4. CAPITAL ASSETS

<TABLE>
<CAPTION>
1998
------------------------------------
<S> <C> <C> <C>
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
$ $ $
---------- ---------- ----------
Production equipment...................................................... 2,741,827 292,910 2,448,917
Warehouse equipment....................................................... 32,568 3,196 29,372
Computer equipment........................................................ 11,763 4,028 7,735
Dies and molds............................................................ 26,112 2,968 23,144
Furniture and fixtures.................................................... 20,657 4,525 16,132
Leasehold improvements.................................................... 59,718 12,355 47,363
Construction in progress.................................................. 180,000 -- 180,000
---------- ---------- ----------
3,072,645 319,982 2,752,663
========== ========== ==========
</TABLE>

<TABLE>
<CAPTION>
1997
-------------------------------------
<S> <C> <C> <C>
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
$ $ $
---------- --------- ----------
Production equipment...................................................... 2,796,787 24,607 2,772,180
Warehouse equipment....................................................... 25,560 210 25,350
Computer equipment........................................................ 10,095 280 9,815
Dies and molds............................................................ 9,396 140 9,256
Furniture and fixtures.................................................... 21,350 560 20,790
Leasehold improvements.................................................... 56,414 1,188 55,226
---------- --------- ----------
2,919,602 26,985 2,892,617
========== ========= ==========
</TABLE>

Certain of the above production equipment was acquired pursuant to a s.85
rollover under the Canadian tax laws. Although the equipment was recorded in the
financial statements based on its fair value, it has no tax basis to the
company.

In total, the above capital assets have an estimated tax value at
December 31, 1998 of $695,200.

5. NOTE PAYABLE

The non-interest bearing note payable to a shareholder was repaid during
1998.

F-10
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

6. LONG-TERM DEBT AND LINES OF CREDIT

<TABLE>
<CAPTION>
1998 1997
$ $
--------- ---------
<S> <C> <C>
Term loan, bearing interest at prime plus 1 1/4% [8% at December 31, 1998] with monthly
principal repayments of $12,500 Cdn., maturing October 23, 2003........................... 474,221 --

Term demand loan, bearing interest at prime plus 1 1/4% [8% at December 31, 1998] with
monthly principal repayments of $8,333 Cdn., maturing March 31, 2001, repaid during
1998...................................................................................... -- 320,401

Convertible U.S. dollar promissory note bearing interest at 8%, interest and principal on
the note shall be paid in cash one year from the date of issuance of the note, or interest
on the conversion of the note into securities of the company.............................. 100,000 --
--------- ---------
574,221 320,401
Less current portion........................................................................ 574,221 69,903
--------- ---------
Long-term debt.............................................................................. -- 250,498
========= =========
</TABLE>

The company has available operating line of credit of $490,000 [$66,344 was
available at December 31, 1998] which bears interest at prime plus 1 1/4%. In
addition, the company may draw down an additional $653,400 term loan facility
for the purchase of battery manufacturing equipment up to 75% of cost, payable
over 5 years, at prime plus 1 1/4% provided the company has an additional equity
injection of a minimum of $2,940,200. All indebtedness of the company is
collaterialized by the company's assets.

Under the operating line of credit and term loan facility, the company has
undertaken to maintain certain financial covenants. As at December 31, 1998, the
company was not in compliance with certain of the financial covenants and
accordingly, the loan has been reflected as a current liability.

Pursuant to a confidential private placement memorandum prepared by the
company dated January 28, 1999, a minimum of 25 units and a maximum of 50 units
may be sold to accredited investors for net proceeds, after deducting agent fees
and placement allowance but before the expenses of the offering of $2,118,500
and $4,337,000. The units will be offered for a period of 90 days, which period
may be extended for up to an additional 90 days. Each unit consists of an 8%
convertible subordinated promissory note in the principal amount of $100,000 and
20,000 Class "A" common stock purchase warrants to purchase common shares of the
company until 2004. The notes are convertible into common shares at a conversion
rate of one common share for every $5 in principal amount of note, and the
warrants are exercisable at a price of $7.50 per share, subject to adjustments
in certain events. In addition, the notes shall be automatically converted into
common shares of the company upon the company's common shares becoming traded on
the OTC Bulletin Board in the United States or any other U.S. based securities
exchange.

Subsequent to the year-end, the company completed a first closing in which
it sold an aggregate of 26 units for net proceeds of $2,220,390, after deducting
agents fee and placement allowance [such proceeds being inclusive of the
$100,000 convertible debenture outstanding at December 31, 1998].

F-11
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

6. LONG-TERM DEBT AND LINES OF CREDIT (CONTINUED)
The fair value of the long-term debt has been calculated on the contractual
cash flows of the financial instruments discounted using market rates currently
available to the company. At December 31, 1998, the fair value of the long-term
debt approximated the carrying value. During the year, interest on long-term
debt amounted to $26,431 [$8,746 for the seven months ended December 31, 1997].

7. SHARE CAPITAL

AUTHORIZED

Unlimited 6% non-cumulative, non-voting Class "A"
special shares, redeemable at the company's
option, with a redemption value of $1,000 each

Unlimited common shares without nominal par value

On January 27, 1999, the company implemented a consolidation of the
outstanding common shares on the basis of exchanging 1 new common share for each
25 common shares previously held.

Reverse takeover accounting requires that the amount shown as the issued
capital in the consolidated balance sheet be calculated by adding to the issued
capital of the legal subsidiary company, Talisman International Inc., the amount
of the cost of the purchase. However, the number of common shares reflect that
of the legal parent company, Talisman Enterprises Inc.

During 1998, shareholders transferred 45,000 common shares to individuals in
exchange for machinery and professional services, the value of which [$309,233]
was contributed to capital.

The company has in place a stock option plan [the "Stock Option Plan"] as an
incentive for directors, officers and key employees and other persons who
provide ongoing services to the company and its subsidiaries. Under the Stock
Option Plan, non-assignable options may be granted by the board of directors of
the company, to directors, officers, key employees and other persons who provide
ongoing services to the company to purchase common shares of the company for a
term not exceeding 5 years [subject to earlier termination of the optionee's
employment, upon the optionee ceasing to be a director, officer of other service
provider, as applicable, or upon the optionee retiring, becoming disabled or
dying] at an exercise price not less than the market price for common shares of
the company. The granting of options is subject to the further conditions under
the Stock Option Plan that: [i] not more than 10% of the number of shares issued
and outstanding from time to time [the "Outstanding Issue"] may be reserved for
the granting of options to insiders at any time or to insiders in any one-year
period; [ii] that no more than 5% of the outstanding issue may be issued to any
one insider of the company in a one-year period; and, [iii] the maximum number
of common shares issuable under the Stock Option Plan is 31,200 shares. The
options are non-transferrable.

In connection with the private placements during the year, the company
granted 618,006 warrants to acquire common shares of the company.

F-12
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

7. SHARE CAPITAL (CONTINUED)

The company options and warrants to acquire common shares at various
exercise prices are summarized below:

<TABLE>
<CAPTION>
EXERCISE
PRICE EXPIRATION
NUMBER $ DATE
--------- ----------- ----------------
<S> <C> <C> <C>
[CANADIAN]
Options.................................................................... 10,000 16.25 Nov. 13, 2001
760 31.25 Nov. 13, 2001
Warrants................................................................... 4,600 62.50 Sept. 15, 1999
2,000 12.50 Apr. 15, 2000
2,000 20.00 Apr. 15, 2000
93,902 16.25 Aug. 15, 2000
12,000 12.50 June 7, 2001
263,504 7.50 July 31, 2001
240,000 5.00 Oct. 14, 2001
--------- --------- ----------------
Total options and warrants................................................. 628,766
========= ========= ================
</TABLE>

8. SHAREHOLDERS RIGHTS PLAN

On September 26, 1997, the shareholders approved a Shareholders Rights
Protection Plan [the "Plan"]. The Plan applies to all common shares and all
future issues of common shares. The term of the Plan is for 5 years, subject to
reconfirmation by the shareholders at the first annual meeting of shareholders
called after September 26, 2000. The Plan is intended to ensure that, in the
event of a bid which could affect control of the company, holders of common
shares will receive full and fair value for their shares and that there will be
sufficient time for the fairness of the bid to be properly assessed, to
negotiate with the bidder and to explore, develop and evaluate alternatives to
maximize shareholder value.

Under the terms of the Plan, one Right has been granted for each common
share. Each Right entitles the registered holder to purchase additional shares
of common stock for $1,500 Cdn. but is not exercisable until certain events
occur. If a person or group wishes to acquire 20% or more of the company's
common shares [an "acquiring person"], the Plan effectively requires the
acquiring person to [i] negotiate terms which the Directors approve as being
fair to the shareholders or, alternatively, [ii] without Board approval, make a
"permitted bid" which must contain certain provisions and which must be accepted
by more than 50% of the common shares not held by the acquiring person.

In the event that an acquiring person acquires 20% or more of the company's
voting shares other than as described in [i] and [ii] above, then the Rights
become exercisable and will automatically change to allow all holders except the
acquiring person to purchase, upon payment of the exercise price, shares of
common stock with a total market value of two times the exercise price [ie. at a
50% discount from the then current market price of the common stock].

F-13
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

9. STOCK BASED COMPENSATION

The company applies APB Opinion 25 in accounting for its employee stock
options and warrants.

The exercise price of all employee stock options and warrants is equal to
the market price of the stock at the time of granting. Accordingly, no
compensation cost has been recognized in the financial statements for its
employee stock options and warrants.

For purposes of meeting requirements of FASB Statement No. 123, the fair
value was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions for 1998 and 1997,
respectively; risk-free interest rates of 6%, 6%, dividend yields of 0%, 0%,
volatility factors of the expected market price of the company's common stock of
30%, 30%, and weighted average expected life per option and warrant of 4 years.

The Black-Scholes option pricing model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option pricing models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the company's employee stock options and warrants have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's options, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options and warrants.

For purposes of the pro-forma disclosures, the estimated fair value of the
options and warrants is amortized to expense over their vesting period. The
company's pro-forma net loss would be increased by $497,706 for the 7 months
ended December 31, 1997. The company's pro-forma loss per share would be [$2.03]
for the 7 months ended December 31, 1997. There were no employee stock options
and warrants issued or which vested during 1998.

F-14
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

9. STOCK BASED COMPENSATION (CONTINUED)
A summary of the company's stock option and warrant activity and related
information is as follows:

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
[CANADIAN] [CANADIAN]
----------------------------- -----------------------------
WEIGHTED WEIGHTED
-AVERAGE -AVERAGE
EXERCISE PRICE EXERCISE PRICE
--------------- ---------------
<S> <C> <C> <C> <C>
EMPLOYEE OPTIONS
Outstanding, beginning of period....................... 10,760 17.25 -- --
Granted................................................ -- -- 10,760 17.25
---------- --------- ---------- ---------
OUTSTANDING AND EXERCISABLE, END OF PERIOD............. 10,760 17.25 10,760 17.25
---------- --------- ---------- ---------
EMPLOYEE WARRANTS
Outstanding, beginning of period....................... 44,798 16.25 -- --
Granted................................................ -- -- 50,000 16.25
Exercised.............................................. (10,896) 16.25 (5,202) 16.25
---------- --------- ---------- ---------
OUTSTANDING AND EXERCISABLE, END OF PERIOD............. 33,902 16.25 44,798 16.25
---------- --------- ---------- ---------
TOTAL EMPLOYEE OPTIONS AND WARRANTS OUTSTANDING AND
EXERCISABLE, END OF PERIOD........................... 44,662 16.50 55,558 16.50
---------- --------- ---------- ---------
WEIGHTED--AVERAGE FAIR VALUE OF EMPLOYEE OPTIONS AND
WARRANTS GRANTED DURING THE PERIOD................... -- -- 10,760 12.25
---------- --------- ---------- ---------
OTHER WARRANTS
Outstanding, beginning of period....................... 68,600 -- 68,600 --
Granted................................................ 515,504 -- -- --
---------- --------- ---------- ---------
584,104 -- 68,600 --
---------- --------- ---------- ---------
TOTAL OPTIONS AND WARRANTS, END OF PERIOD.............. 628,766 -- 124,158 --
========== ========= ========== =========
</TABLE>

10. INCOME TAXES

The significant components of the company's deferred tax liabilities and
assets are as follows:

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
------------ --------------
<S> <C> <C>
DEFERRED TAX ASSETS
Income tax losses available for carryforward....................................... 537,500 122,800
Share issue costs.................................................................. 191,441 32,087
---------- ----------
728,941 154,887
</TABLE>

F-15
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

10. INCOME TAXES (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
---------- ----------
<S> <C> <C>
Less valuation allowance........................................................... 728,941 154,887
---------- ----------
NET DEFERRED TAX ASSETS............................................................ -- --
========== ==========
DEFERRED TAX LIABILITIES
Temporary differences on capital assets............................................ 546,815 589,794
---------- ----------
TOTAL DEFERRED TAX LIABILITIES..................................................... 546,815 589,794
========== ==========
</TABLE>

The operating company has a tax year-end of May 31(st) which differs from
its reporting year of December 31(st). As at May 31, 1998, the company has
available non-capital loss carryovers of approximately $1,493,000 [$2,285,000
Cdn.] available to offset future taxable income. These non-capital loss
carryovers expire as follows:

11. COMMITMENTS AND CONTINGENCIES

The minimum lease payments for building and equipment leases over the next
5 years are as follows:

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
------------ ---------------
<S> <C> <C>
Rent expense....................................................................... 125,480 57,993
========== =========
</TABLE>

In the ordinary course of business activities, the company may be
contingently liable for litigation and claims with third parties. Management
believes that adequate provisions have been recorded in the accounts where
required. Although it is not possible to estimate the potential costs and
losses, if any,

F-16
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
management believes that the ultimate resolution of such contingencies will not
have a material adverse effect on the consolidated financial statements or
financial position of the company.

12. SEGMENTED INFORMATION

The company is organized and managed as a single business segment being the
production of batteries and the company is viewed as a single operating segment
by the chief operating decision maker for the purposes of resource allocations
and assessing performance.

The geographic sources of the company's revenues based on location of
customers is as follows:

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
------------ --------------
<S> <C> <C>
Canada............................................................................. 172,098 134,060
United States...................................................................... 576,156 5,586
---------- ----------
748,254 139,646
========== ==========
</TABLE>

In addition, sales to two of the company's largest customers accounted for
28.6%, and 23.7% of revenues for the year ended December 31, 1998.

13. RELATED PARTY TRANSACTIONS

During the year, the company had $120,900 of loans due from a former senior
executive officer bearing interest at 8% per annum. The amount was repaid by
December 31, 1998.

The company had the following transactions with a company that is a
shareholder, key supplier and whose president is also a director and officer of
the company:

<TABLE>
<CAPTION>
YEAR ENDED 7 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
$ $
------------- -------------------
<S> <C> <C>
Acquisition of raw materials....................................................... 34,246 --
</TABLE>

In addition, in 1996 the company purchased capital assets [$73,400] which
remain in the possession of the related party who uses them to produce raw
materials for the company.

14. RECENT REPORTING DEVELOPMENTS

The Financial Accounting Standards Board has issued FAS133, Accounting for
Derivative Instruments and Hedging Activities which introduces revised standards
for the recognition and measurement of derivatives and hedging activities. The
company must adopt this standard in the first quarter of fiscal 2001.
Implementation of this standard is currently expected to have no impact on the
company's financial position or results of operation since the company has no
derivative financial instruments or hedging activities.

F-17
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[IN U.S. DOLLARS]

DECEMBER 31, 1998 AND 1997

15. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE [UNAUDITED]

Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by, or at, the Year
2000. Management has assessed the Year 2000 issue and has determined that the
company may have to replace nine personal computers for proper functioning in
the Year 2000 and thereafter. As at December 31, 1998, no amounts had been
expensed relating to becoming Year 2000 compliant. The estimated future costs to
become Year 2000 compliant will not exceed an aggregate of $50,000.

Management has determined that it has no exposure to contingencies related
to Year 2000 issues for the products it has sold. Management has used its best
estimate of the Year 2000 issues, and there is no guarantee that these estimates
will be achieved and actual results could differ from those anticipated. In
addition, disruptions in the economy generally resulting from the Year 2000
could also materially adversely affect the company.

16. SUBSEQUENT EVENTS

On December 3, 1999, the company filed a registration statement with the SEC
for the issue of 2,149,627 common shares and 1,014,627 common stock purchase
warrants.

F-18
<PAGE>
TALISMAN ENTERPRISES INC.

INCORPORATED UNDER THE LAWS OF ONTARIO

CONSOLIDATED BALANCE SHEET

[IN U.S. DOLLARS]

AS AT AUGUST 31

Unaudited

<TABLE>
<CAPTION>
1999 1998
$ $
----------- -----------
<S> <C> <C>
ASSETS
CURRENT
Cash................................................................................... 21,848 --
Accounts receivable.................................................................... 260,992 54,918
Inventories [NOTE 2]................................................................... 1,320,641 386,320
Prepaid expenses and deferred charges.................................................. 459,467 518,486
Deferred financing costs............................................................... 529,325 --
----------- -----------
TOTAL CURRENT ASSETS................................................................... 2,592,273 959,724
----------- -----------
Capital assets......................................................................... 3,303,471 2,404,242
----------- -----------
5,895,744 3,363,966
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank operating line.................................................................... 18,959 396,544
Accounts payable and accrued liabilities............................................... 1,234,197 354,576
Convertible promissory note............................................................ 5,073,010 --
Current portion of long-term debt...................................................... 94,264 249,120
----------- -----------
TOTAL CURRENT LIABILITIES.............................................................. 6,420,430 1,000,240
----------- -----------
Long term debt......................................................................... 377,056 --
Deferred income tax liability.......................................................... 520,992 533,743
SHAREHOLDERS' EQUITY
Share capital.......................................................................... 4,340,445 3,885,034
Warrants............................................................................... 101,463 --
Contributed surplus.................................................................... 309,254 332,854
Deficit................................................................................ (5,964,332) (2,104,601)
Accumulated other comprehensive loss................................................... (209,564) (283,304)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY............................................................. (1,422,734) 1,829,983
----------- -----------
5,895,744 3,363,966
=========== ===========
</TABLE>

SEE ACCOMPANYING NOTES

On behalf of the Board:

Director Director

F-19
<PAGE>
TALISMAN ENTERPRISES INC.

CONSOLIDATED STATEMENT OF LOSS AND DEFICIT

[IN U.S. DOLLARS]

FOR THE EIGHT MONTHS ENDED AUGUST 31

Unaudited

<TABLE>
<CAPTION>
1999 1998
$ $
----------- -----------
<S> <C> <C>
REVENUES............................................................................... 385,629 228,659
Operating expenses [exclusive of amortization shown separately below].................. 1,135,256 745,020
----------- -----------
Gross profit........................................................................... (749,627) (516,361)
----------- -----------
EXPENSES
Selling, general and administrative.................................................... 1,285,526 339,051
Amortization........................................................................... 607,927 246,355
Interest and bank charges.............................................................. 120,883 41,177
----------- -----------
2,014,336 626,583
----------- -----------
Loss before income taxes............................................................... (2,763,963) (1,142,944)
Income taxes--deferred................................................................. (38,614) (3,123)
----------- -----------
LOSS FOR THE PERIOD.................................................................... (2,725,349) (1,139,821)
Deficit, beginning of period........................................................... (3,238,983) (964,780)
----------- -----------
DEFICIT, END OF PERIOD................................................................. (5,964,332) (2,104,601)
----------- -----------
LOSS PER SHARE......................................................................... (2.63) (2.04)
=========== ===========
</TABLE>

SEE ACCOMPANYING NOTES

F-20
<PAGE>
TALISMAN ENTERPRISES INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

[IN U.S. DOLLARS]

FOR THE EIGHT MONTHS ENDED AUGUST 31

Unaudited

<TABLE>
<CAPTION>
1999 1998
$ $
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Loss for the period.................................................................... (2,725,349) (1,139,821)
Charges to income not affecting cash
Amortization......................................................................... 607,927 246,355
Deferred income taxes................................................................ (38,614) (3,123)
Change in non-cash working
capital items........................................................................ (919,158) (620,729)
----------- -----------
CASH USED IN OPERATING ACTIVITIES...................................................... (3,075,194) (1,517,318)
----------- -----------
INVESTING ACTIVITY
Purchase of capital assets............................................................. (717,587) 68,527

FINANCING ACTIVITIES
Issue of convertible promissory note and warrants...................................... 5,174,473 --
Deferred financing costs............................................................... (907,413) --
Repayment of long-term debt............................................................ (116,542) (45,765)
Decrease in note payable............................................................... -- (78,633)
Issue of common shares................................................................. 63,075 1,119,056
Bank operating line.................................................................... (415,665) 427,394
----------- -----------
CASH PROVIDED BY FINANCING ACTIVITIES.................................................. 3,797,928 1,422,052
----------- -----------
INCREASE (DECREASE) IN CASH DURING THE PERIOD.......................................... 5,147 (26,739)
Cash, beginning of period.............................................................. 16,701 26,739
----------- -----------
CASH, END OF PERIOD.................................................................... 21,848 --
=========== ===========
</TABLE>

See accompanying notes

F-21
<PAGE>
TALISMAN ENTERPRISES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[IN U.S. DOLLARS]

AUGUST 31, 1999

Unaudited

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

BASIS OF PRESENTATION

2. INVENTORIES

<TABLE>
<CAPTION>
1999 1998
$ $
---------- ---------
<S> <C> <C>
Raw materials and packaging........................................... 479,792 134,475
Finished goods........................................................ 840,849 251,845
---------- ---------
1,320,641 386,320
========== =========
</TABLE>

3. SUBSEQUENT EVENTS

On December 3, 1999, the company filed an amended registration statement
with the SEC for the issue of 2,149,627 common shares and 1,014,627 common stock
purchase warrants.

F-22
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON
TO PROVIDE PROSPECTIVE INVESTORS WITH INFORMATION OR REPRESENTATIONS DIFFERENT
FROM THAT CONTAINED IN THIS PROSPECTUS. PROSPECTIVE INVESTORS SHOULD NOT RELY ON
ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL ANY
SECURITY OTHER THAN THE COMMON STOCK AND COMMON STOCK PURCHASE WARRANTS OFFERED
BY THIS PROSPECTUS, NOR DOES THIS PROSPECTUS OFFER TO BUY OR SELL ANY SECURITIES
IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS
CURRENT AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF
THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 5
Use of Proceeds........................ 13
Dilution............................... 14
Capitalization......................... 15
Exchange Rate Data..................... 16
Dividend Policy........................ 17
Selected Financial Data................ 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Our History............................ 24
Business............................... 25
Management............................. 32
Principal Stockholders................. 41
Certain Transactions................... 43
Description of Securities.............. 45
Investment Canada Act.................. 49
Selling Stockholders................... 50
Plan of Distribution................... 53
Legal Matters.......................... 53
Experts................................ 53
Index to Financial Statements.......... F-1
</TABLE>

------------------------

UNTIL FEBRUARY 7, 2000 (25 DAYS AFTER DATE OF THIS PROSPECTUS), ALL DEALERS
THAT BUY, SELL OR TRADE THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
OFFERING MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE
DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT O THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

[LOGO]

1,024,627 SHARES

OF COMMON STOCK

AND

1,014,627 SHARES

OF COMMON STOCK

ISSUABLE UPON EXERCISE OF

CLASS A

COMMON STOCK

PURCHASE WARRANTS

---------------------

PROSPECTUS

---------------------

JANUARY 13, 2000
- -------------------------------------------
- -------------------------------------------