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 December 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 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 December
31, 1996 was 6,216,875.
<PAGE>
POWER-CELL, INC.
INDEX
Part I Financial Information PAGE
Balance sheet - December 31, 1996 (unaudited) 3
Unaudited condensed statements of operations - three months
ended December 31, 1996 and 1995 and the period from
January 21, 1987 (date of incorporation) to December 31, 1996. 4
Unaudited condensed statements of cash flows - three months
ended December 31, 1996 and 1995 and the period from
January 21, 1987 (date of incorporation) to December 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
2
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
BALANCE SHEET
(Unaudited)
December 31,
1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,290
INVESTMENT IN PARTNERSHIP 31,787
Total Assets $ 35,077
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 27,561
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 1,552,992
Deficit accumulated during the development stage (1,566,098)
Total Stockholders' Deficit (12,484)
Total Liabilities and Stockholders' Deficit $ 35,077
See accompanying note to financial statements
3
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Period from
January 21, 1987
(Date of
Incorporation)
Three Months Ended Six Months to
December 31, December 31, December 31, 1996
1996 1995 1996 1995 1996
---- ---- ---- ---- ----
REVENUES - interest and other $ 60 $ 187 $ 154 $ 541 $ 176,689
EXPENSES:
Product development - - - - 225,478
General and administrative 5,903 6,594 19,645 10,750 1,484,603
Interest - - - 32,706 -
------- ------- -------- -------- -----------
Total expenses 5,903 6,594 19,645 10,750 1,742,787
NET LOSS $(5,843) $(6,407) $(19,491) $(10,209) $(1,566,098)
</TABLE>
See accompanying note to financial statements
4
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Period from
Six Months Ended January 21, 1987
December 31, (date of incorporation)
to
1996 1995 December 31, 1996
---- ---- -----------------
OPERATING ACTIVITIES:
Net loss $ (19,491) $ (10,209) $(1,566,098)
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:
Decrease in other assets - 900 (16,400)
Increase (decrease) in accounts payable and
accrued expenses 1,300 (800) 27,561
--------- -------- ----------
NET CASH USED IN OPERATING ACTIVITIES (7,082) (10,109) (1,505,458)
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 (7,082) (10,109) 3,290
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 10,372 27,288 -
--------- -------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 3,290 $ 17,179 $ 3,290
</TABLE>
See accompanying note to financial statements
5
<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 and six months ended December 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
6
<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 and 7.28%
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 December 31, 1996 of $24,271.
7
<PAGE>
Results of Operations
The company has been engaged in organizational and capital raising activities
since inception through December 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.
8
<PAGE>
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
9
<PAGE>
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
10
<PAGE>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 3,290
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,290
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 35,077
<CURRENT-LIABILITIES> 23,761
<BONDS> 0
0
0
<COMMON> 1,553,614
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 35,077
<SALES> 0
<TOTAL-REVENUES> 60
<CGS> 0
<TOTAL-COSTS> 5,903
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,843)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,843)
<EPS-PRIMARY> 0
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