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, 1999
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
10711 Preston Road
Suite 250
Dallas, Texas 75230
214/692-9921
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,
1999 was 6,419,540.
<PAGE>
<TABLE>
<CAPTION>
POWER-CELL, INC.
(a development stage enterprise)
POWER-CELL, INC.
INDEX
Part I Financial Information PAGE
--------------------- ----
<S> <C>
Balance sheet - March 31, 1999 (unaudited) 3
Unaudited condensed statements of operations - three and nine month
periods ended March 31, 1999 and 1998 and the period from
January 21, 1987 (date of incorporation) to March 31, 1999 4
Unaudited condensed statements of cash flows - nine months ended
March 31, 1999 and 1998 and the period from
January 21, 1987 (date of incorporation) to March 31, 1999 5
Note to condensed financial statements 6
Management's discussion and analysis of financial condition and
results of operations 7
Part II Signature Page 8
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
POWER-CELL, INC.
(a development stage enterprise)
BALANCE SHEET
(Unaudited)
March 31, 1999
--------------
<S> <C>
ASSET
ASSETS $ --
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES - Accounts payable and accrued expenses $ 32,198
STOCKHOLDERS' DEFICIT:
Common stock, par value $.0001 per share, 750,000,000 shares
authorized; 6,419,540 shares issued and outstanding 642
Additional paid-in capital 1,571,340
Deficit accumulated in the development stage (1,604,180)
-----------
Total Stockholders' Deficit (32,198)
Total Liabilities and Stockholders' Deficit $ --
===========
</TABLE>
See accompanying note to financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended Ended For the Period From
March 31, March 31, January 21, 1987 (Date
----------- ----------- of Incorporation) to
1999 1998 1999 1998 March 31, 1999
------ ------ ------ ------ ---------------
<S> <C> <C> <C> <C> <C>
REVENUE -
Interest and other income $ -- $ -- $ -- $ -- $ 176,724
EXPENSES:
Product development -- -- -- -- 225,478
General and administrative 952 1,350 7,796 15,176 1,510,933
Interest -- -- -- -- 32,706
Impairment of investment -- -- -- -- 11,787
----------- ----------- ----------- ----------- -----------
Total expenses 952 1,350 7,796 15,176 1,780,904
----------- ----------- ----------- ----------- -----------
NET LOSS $ (952) $ (1,350) $ (7,796) $ (15,176) $(1,604,180)
=========== =========== =========== =========== ===========
</TABLE>
See accompanying note to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
POWER-CELL, INC.
(a development stage enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Period from
Nine Months Ended January 21, 1987
March 31, (Date of Incorporation)
----------- to
1999 1998 March 31,1999
------ ------ ----------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (7,796) $ (15,176) $(1,604,180)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization and depreciation -- -- 24,644
Issuance of stock options for services -- -- 24,094
Loss on theft of equipment -- -- 741
Impairment of investment in Partnership -- -- 11,787
Expenses paid by stockholder 2,429 13,939 18,368
Changes in operating asset and liabilities:
Other assets -- -- (16,400)
Accounts payable and accrued expenses 4,250 587 32,198
----------- ----------- -----------
NET CASH USED IN OPERATING
ACTIVITIES (1,117) (650) (1,508,748)
----------- ----------- -----------
INVESTING ACTIVITIES:
Purchase of office equipment -- -- (8,985)
Investment in limited 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 (1,117) (650) --
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,117 942 --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ -- $ 292 $ --
=========== =========== ===========
</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 and 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 financial statements included in its report
on Form 10-KSB for the year ended June 30, 1998 filed with the Securities
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 nine months ended March
31, 1999 are not necessarily indicative of the results to be expected for
the full year.
6
<PAGE>
POWER-CELL, INC.
(a development stage enterprise)
NOTE TO FINANCIAL STATEMENTS
(Unaudited)
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 occurrence
of certain events. The interest decreased to 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 United States and its territories. Royalty
payments on international sales of Power Cell units will be paid to individual
international rights holders, or their designees, some of which are affiliates
of the Company, and all of which are limited partners in the partnership, as
follows: one-third (33 1/3%) to J. C. Rambin; one-third (33 1/3%) to Rudy
Marich; one-third to Howard Farkas (75% of 1/3) and Burt Kanter (25% of 1/3).
These royalty payments will be due and payable when, and if, royalty funds are
received.
The contract agreement has no provision for direct funding of 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.
Subsequently, the Company was informed by Reserve Battery, Inc. that all
marketing and operations activities have ceased as a result of its inability to
source sufficient capital to sustain operations.
In April, 1999, Power-Cell, Inc. and Park Pharmacy, Inc. jointly announced the
signing of a definitive agreement for Power-Cell, Inc. to acquire 100% of Park
Pharmacy, Inc. in exchange for 80% of the then outstanding shares of Power-Cell,
Inc. in a tax free exchange. The parties will submit the agreement as soon as
possible to the stockholders of Power-Cell, Inc. for approval. The stockholders
will also be asked to vote for a new board of directors who will be designated
by Park Pharmacy.
Park Pharmacy, Inc. is a Dallas, Texas based development stage company that
plans to acquire several independent retail pharmacies and associated home
healthcare facilities. Park Pharmacy was established in June 1998 to acquire
independent pharmacies that have a demonstrated history of profitability. In
addition to prescription drugs and general merchandise, the pharmacies will
provide the more profitable, higher technical products such as compounded
prescriptions and specialty medications, such as infusion therapy.
Results of Operations
- ---------------------
The Company has been engaged in organizational and capital raising activities
since inception through March 31, 1999. 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.
The Company had a working capital deficit as of March 31, 1999 of $32,198.
7
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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: April 27, 1999 /s/ James C. Rambin
-------------------------------
James C. Rambin, President
and Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0000798539
<NAME> Power-Cell, Inc.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 32,198
<BONDS> 0
0
0
<COMMON> 1,571,982
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,796
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,796)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,796)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,796)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
