UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 0-15379
POWER-CELL, INC.
----------------
Exact name of Registrant as specified in its charter
Colorado 84-1029701
-------- ----------
State of Incorporation IRS Employer Identification Number
660 Preston Forrest Center
Box 200
Dallas, Texas 75230
214/373-1887
------------
Address and telephone number of principal executive offices
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes [X] No [ ]
The number of shares of common stock of the Registrant outstanding at March 31,
1996 was 6,216,875.
<PAGE>
POWER-CELL, INC.
INDEX
Part I Financial Information PAGE
Balance sheet - March 31, 1996 (unaudited) 3
Unaudited condensed statements of operations - three and nine
month period ended March 31, 1996 and 1995 and the period
from January 21, 1987 (date of incorporation) to March 31, 1996. 4
Unaudited condensed statements of cash flows - nine months
ended March 31, 1996 and 1995 and the period from
January 21, 1987 (date of incorporation) to March 31, 1996. 5
Note to condensed financial statements 6
Management's discussion and analysis of financial condition and
results of operations 7-8
Part II Other Information 9
Signature Page 10
3
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POWER-CELL, INC.
(a development stage enterprise)
BALANCE SHEETS
March 31,
1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,662
INVESTMENT IN PARTNERSHIP 31,787
-----------
Total Assets $ 45,449
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 26,761
ADVANCES PAYABLE 20,000
STOCKHOLDERS' DEFICIT:
Common stock, par value $.0001 per share; 750,000,000
shares authorized; 6,216,875 shares issued and
outstanding 622
Additional paid-in capital 1,528,898
Deficit accumulated during the development stage (1,530,832)
-----------
Total Stockholders' Deficit (1,312)
Total Liabilities and Stockholders' Deficit $ 45,449
===========
See accompanying notes to financial statements.
4
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period from
January 21, 1987
(Date of
Three Months Ended Nine Months Incorporation) to
March 31, March 31, March 31,
1996 1995 1996 1995 1996
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES - interest and other $ 141 $ 338 $ 682 $ 974 $ 176,426
EXPENSES:
Product development - - - - 225,478
General and administrative 3,158 4,309 13,908 15,018 1,449,074
Interest - - - - 32,706
--------- --------- -------- --------- -----------
Total expenses 3,158 4,309 13,908 15,018 1,707,258
-----------
NET LOSS $ (3,017) $ (3,971) $(13,226) $ (14,044) $(1,530,832)
========= ========= ======== ========= ===========
NET LOSS PER SHARE OF
COMMON STOCK $ * $ * $ * $ *
========= ========= ======== =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period from
January 21, 1987
(date of Incor-
Nine Months Ended poration) to
December 31, March 31,
1996 1995 1996
----------- ----------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (13,226) $ (14,044) $ (1,530,832)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization and depreciation - - 24,644
Other - - 741
Changes in operating asset and
liabilities:
Increase in other current assets 900 - -
Increase in other assets - - (16,400)
Increase (decrease) in accounts
payable and accrued expenses (1,300) (9,025) 26,761
----------- ----------- -------------
NET CASH USED IN OPERATING
ACTIVITIES (13,626) (23,069) (1,495,086)
INVESTING ACTIVITIES:
Purchase of fixed assets - - (8,985)
Investment in partnership - - (11,787)
----------- ----------- -------------
NET CASH USED IN INVESTING
ACTIVITIES - - (20,772)
----------- ----------- -------------
FINANCING ACTIVITIES:
Issuance of common stock and
exercise of warrants - 50,000 1,533,020
Stock issuance costs - (3,500) (3,500)
----------- ----------- -------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES - 46,500 1,529,520
----------- ----------- -------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (13,626) 23,431 13,662
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 27,288 10,537 -
----------- ----------- -------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 13,662 $ 33,968 $ 13,662
=========== =========== =============
</TABLE>
6
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
NOTE TO FINANCIAL STATEMENTS
(Unaudited)
A. Basis of Presentation
---------------------
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although management believes the disclosures are adequate to
make the information presented not misleading. These interim financial
statements should be read in conjunction with the Company's annual report
and most recent audited financial statements included in its report on Form
10-KSB for the year ended June 30, 1995 filed with the Securities and
Exchange Commission.
The interim financial information included herein is unaudited; however,
such information reflects all the adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of results of operations and cash flows for the
interim periods. The results of operations for the three and nine months
ended March 31, 1996 are not necessarily indicative of the results to be
expected for the full year.
7
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
Management's Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources
------------------------------------------
On October 21, 1992, the Company entered into a limited partnership
agreement with several other limited partners and a sole general partner to
provide for management, funding, manufacturing and marketing of the Power
Cell reserve battery unit on a worldwide basis. The Company initially owned
an 11% interest in the limited partnership, which may increase or decrease
due to the occurance of certain events. The interest decreased to 9.47%
during fiscal 1995 due to the addition of outside investors, resulting in a
pro rata dilution. In addition, a separate license royalty agreement
between the Company and the limited partnership provides that the Company
will receive royalty payments on all Power Cell units produced and sold in
the Untied States and its territories. Royalty payments on international
sales of Power Cell units will be paid to individual rights holders, some
of which are affiliates of the Company, and all of which are limited
partners in the Partnership.
The production model Phase I initially required the general partner to fund
$800,000 for this purpose, which was subsequently amended to $1,000,000. As
of June 30, 1994, the general partner had met this requirement. Subject to
satisfactory test results, the general partner was required to provide a
minimum of $1,250,000 to implement Phase II, which is the manufacturing and
marketing of the reserve battery unit. On June 20, 1995, the general
partner had completed this funding requirement.
The contract agreement has no provision for direct funding by Power Cell,
Inc. Its earnings, if any, will be derived from an interest in the limited
partnership together with royalties, if any, from the license royalty
agreement.
The Company had a working capital deficit of $13,099 at March 31, 1996.
Management is currently evaluating its future course of action. It is
anticipated that the general partner will soon announce a manufacturing
program for the reserve battery unit and a comprehensive marketing plan.
This development would assist management in evaluating various alternates
for improvement in its financial condition. The Company is currently
reviewing the possibility of affiliating with other companies through
acquisition or merger combinations that would provide a financial basis for
a public or private placement of debt or equity. There are ongoing
discussions and analysis of several potential candidates that could provide
a solution to the financial requirements of Power Cell, Inc. to proceed as
a viable entity and or an integral part of an existing operation.
The general partner has informed the Company that limited production of the
unit began in December 1995; and it had expected the product to be
introduced to the T.V. and print media market in March 1996, followed by
introduction to the retail market in May 1996. The production and marketing
efforts were both delayed due to litigation issues. On May 2, 1996 the
Company was informed that the initial specialized equipment has the
potential to produce one complete battery every two minutes of actual
production time. Further, the initial marketing introduction will be a
direct response television launch expected in the next few weeks.
The potential for the general partner to withdraw from the limited
partnership is considered to be a negligible possibility. Based upon the
recent funding on June 20, 1995, the production and marketing plans all
indicate a very positive position. However, in the event such action did
occur management believes a replacement funding partner could be obtained
from industry sources and or investors.
8
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
Results of Operations
---------------------
The company has been engaged in organizational and capital raising
activities since inception through March 31, 1996. It has not incurred
major operational expenditures. The losses incurred since inception
primarily reflect legal, accounting, and administrative expenses associated
with the preparation of the merger documents and registration statement,
product development and arranging for the manufacture of its battery
charger product for test marketing purposes.
9
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - Not applicable
Item 2. Changes in Securities - Not applicable
Item 3. Default Upon Senior Securities - Not applicable
Item 4. Submission of Matters to a Vote of Security Holders - Not applicable
Item 5. Other Information - Not applicable
The Company believes the potential market for the Product includes
every operator of a car, truck or boat that uses a battery for
starting purposes. The Company intends to develop, manufacture and
market the Product through one or more third-party companies
specializing in the manufacture and national distribution of
batteries.
Item 6. Exhibits and Reports on Form 8-K - Not applicable
10
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POWER-CELL, INC.
(Registrant)
Date: May 10, 1996 /s/ James C. Rambin
James C. Rambin, President
and Principal Financial Officer
11
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 13,662
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,662
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,449
<CURRENT-LIABILITIES> 26,761
<BONDS> 0
0
0
<COMMON> 1,312
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 45,449
<SALES> 682
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 13,908
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,226)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
