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 September 30, 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 Forest 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 September
30, 1996 was 6,216,875.
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POWER-CELL, INC.
<TABLE>
<CAPTION>
INDEX
<S> <C> <C>
Part I Financial Information PAGE
Balance sheet - September 30, 1996 (unaudited) 3
Unaudited condensed statements of operations - three months
ended September 30, 1996 and 1995 and the period from
January 21, 1987 (date of incorporation) to September 30, 1996. 4
Unaudited condensed statements of cash flows - three months
ended September 30, 1996 and 1995 and the period from
January 21, 1987 (date of incorporation) to September 30, 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
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2
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POWER-CELL, INC.
(a development stage enterprise)
BALANCE SHEET
<TABLE>
<CAPTION>
September 30,
1996
(Unaudited)
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,833
INVESTMENT IN PARTNERSHIP 31,787
----------
Total Assets $ 39,620
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 26,261
ADVANCES PAYABLE 20,000
STOCKHOLDERS' EQUITY:
Common stock, par value $.0001 per share; 750,000,000
shares authorized; 6,216,875 shares issued and
outstanding 622
Additional paid-in capital 1,552,992
Deficit accumulated during the development stage (1,560,255)
----------
Total Stockholders' Deficit (6,641)
Total Liabilities and Stockholders' Deficit $ 39,620
===========
</TABLE>
See accompanying notes to financial statements.
3
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POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 21, 1987
THREE MONTHS ENDED (DATE OF INCEPTION)
SEPTEMBER 30, TO
---------------
1996 1995 SEPTEMBER 30, 1996
---------------- -------------- ------------------
<S> <C> <C> <C>
REVENUES - interest and other $ 94 $ 354 $ 176,629
EXPENSES:
Product development - - 225,478
General and administrative 13,742 4,156 1,478,700
Interest - - 32,706
---------------- -------------- -----------------
Total expenses 13,742 4,156 1,736,884
---------------- -------------- -----------------
NET LOSS $ (13,648) $ (3,802) $ (1,560,255)
================ ============== =================
</TABLE>
See accompanying notes to financial statements.
4
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POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 21, 1987
(DATE OF
THREE MONTHS ENDED INCORPORATION)
SEPTEMBER 30, TO
---------------
1996 1995 SEPTEMBER 30, 1996
------------- -------------- ------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (13,648) $ (3,802) $ (1,560,255)
Adjustments to reconcile net loss to net cash used in
operating activities
Amortization and depreciation - - 24,644
Issuance of stock options for services 11,109 - 24,094
Other - - 741
Changes in operating asset and liabilities:
Increase in other assets - - (16,400)
Increase (decrease) in accounts payable and
accrued expenses - (800) 26,261
--------------- -------------- -------------------
NET CASH USED IN OPERATING ACTIVITIES (2,539) (4,602) (1,500,915)
INVESTING ACTIVITIES:
Purchase of fixed assets - - (8,985)
Investment in partnership - - (31,787)
---------------- -------------- -------------------
NET CASH USED IN INVESTING ACTIVITIES - - (40,772)
---------------- -------------- -------------------
FINANCING ACTIVITIES:
Advance received - - 20,000
Issuance of common stock and exercise of warrants - - 1,533,020
Stock issuance costs - - (3,500)
---------------- -------------- -------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES - - 1,549,520
---------------- -------------- -------------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (2,539) (4,602) 7,833
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 10,372 27,288 -
---------------- -------------- -------------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 7,833 $ 22,686 $ 7,833
================ ============== ===================
</TABLE>
See accompanying notes to financial statements.
<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, 1996 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 months ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
5
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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 and 7.35% during fiscal 1996 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 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.
On July 1, 1996, Reserve Battery Cell, L.P. (Reserve Battery) announced
initial market release in select cities of the Power Cell Reserve Battery
unit. According to Reserve Battery, the product will plug into a cigarette
lighter or attach directly to battery terminals and recharge a battery even
in extreme weather conditions (-10 degrees F to 100 degrees F) in a matter
of minutes. Also, these small units can be stored for years, do not need to
be recharged and never lose their power prior to activation. The Power Cell
has the strength to recharge a battery more than once for a few weeks after
it has been activated. It is a powerful 5 amp Hour battery and, with the
additional purchase of a Power Inverter, will operate small household and
other electronic appliances for hours during a power outage or emergency
situation.
Reserve Battery is currently marketing the product line through Direct
Response Television, magazine print advertising, direct mail, and via their
Web Site at www.safestart.com.
Power Cell, Inc. has received information from Reserve Battery that, as of
June 30, 1996, funds in excess of $4,118,000 had been expended on product
development, capital equipment, operating capital, and marketing
activities.
Management is currently evaluating its future course of action. To improve
its liquidity, the Company is negotiating for a sale of common shares to an
investor. Also, the developments herein should assist the Company in
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
Company had a working capital deficit as of September 30, 1996 of $18,428.
6
<PAGE>
Results of Operations
The company has been engaged in organizational and capital raising
activities since inception through September 30, 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.
7
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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
8
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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: _____________ ______________________________
James C. Rambin, President
and Principal Financial Officer
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,833
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,833
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,620
<CURRENT-LIABILITIES> 26,261
<BONDS> 0
<COMMON> 1,553,614
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 39,620
<SALES> 0
<TOTAL-REVENUES> 94
<CGS> 0
<TOTAL-COSTS> 13,742
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,648)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,648)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
