<PAGE>
[LOGO] SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended 31 JANUARY 1996
COMMISSION FILE NUMBER 0-18163
BATTERY ONE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PROVINCE OF ALBERTA, CANADA
(JURISDICTION OF INCORPORATION)
7850 WOODBINE AVENUE, SUITE 201,
MARKHAM, ONTARIO, CANADA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) L3R 0B9
(ZIP/POSTAL CODE)
905-479-5683
800-769-3733 (800-POWERED) 905-479-8911
(TELEPHONE NUMBERS) (FAX NUMBER)
REGISTRANT'S FORMER ADDRESS AND TELEPHONE NUMBER,
has changed since the last report.
Suite 2, 395 Summit Point Drive
Henrietta, New York, USA 14467
716-334-3070 716-334-3171
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
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 such filing
requirements for the past 90 days. Yes No X
--- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
-----
As of 18 June 1996, the aggregate market value of the voting stock of the
registrant held by non-affiliates was approximately $6,759,410 based upon the
closing price of the shares on The Alberta Stock Exchange of $0.17 per share.
As of such date, 39,761,238 shares of the registrant's Common Stock were
outstanding.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 2
DOCUMENTS INCORPORATED BY REFERENCE
None.
BASIS OF PRESENTATION
The Company prepares its consolidated financial statements in Canadian dollars.
In this report all references to "$" are to Canadian dollars, unless otherwise
noted.
EXCHANGE RATES
Based on the noon buying rates for cable transfers in New York City, certified
for customs purposes by the Federal Reserve Bank of New York, the exchange rate
on 18 June 1996 was C$1 = US$0.73. For additional information on exchange
rates, see "VI. ITEM - SELECTED FINANCIAL DATA - EXCHANGE RATES."
PART I
I. ITEM -- BUSINESS
A. GENERAL DEVELOPMENT OF BUSINESS
Battery One, Inc. (the "Company") was incorporated under the BUSINESS
CORPORATIONS ACT, ALBERTA, Canada, on 15 December 1986 under the name "Caio
Capital Company." However, prior to the 1 May 1988 acquisition of all of the
issued and outstanding shares of Battery One-Stop International Inc., a company
incorporated under the BUSINESS CORPORATIONS ACT, CANADA on 6 March 1985
("BOSI"), the Company had not conducted any significant operations. In
connection with its acquisition of BOSI, the Company changed its name to
"Battery One-Stop Inc." and, since such acquisition, the Company continued to
develop the specialty retail business, begun by BOSI, of marketing and selling
batteries and certain battery-powered products in Canada and the United States.
On 8 November 1994 the Company changed its name to Battery One, Inc.
In November 1992, the Company formed two new US wholly-owned subsidiaries, First
Olympia Holdings Inc. an inactive US company and Batteries Etc., Inc. ("Etc.").
Effective 25 November 1992, the Company purchased from One-Stop Battery, Inc. an
unrelated privately held company, certain of its assets including inventory,
kiosks, fixtures and related equipment and office furnishings through these
subsidiaries. The acquisition included 40 operating locations in the United
States and the leases therefor.
Until December 1995, the Company's operations were conducted through its wholly-
owned subsidiaries, BOSI and Etc., (collectively, the "Subsidiaries."). During
December of the fiscal year ended 31 January 1996, the Subsidiaries were
assigned into bankruptcy.
By the first quarter of the last fiscal year, it had become apparent to
management that on the basis of the Company's current share capitalization, and
in consideration of the continued unprofitability of Etc., the Company,
notwithstanding its best efforts, regrettably was not able to complete the
financing of new management's turnaround program on the basis contemplated. The
poor performance of Etc. resulted from a number of unproductive units situated
in secondary locations committed to by prior management, which were subsidized
by BOSI to its serious detriment.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 3
In December 1995 BOSI made a voluntary assignment into bankruptcy pursuant to
the CANADIAN BANKRUPTCY AND INSOLVENCY ACT. In December 1995, Etc. made a
voluntary petition seeking protection under Chapter 11 of the US BANKRUPTCY
CODE, which in January 1996 was converted to a Chapter 7 filing. Responsibility
for all business and operating matters of the Subsidiaries was assumed by the
trustees upon the respective assignments into bankruptcy. In Canada, the
trustee operated certain locations formerly operated by the Company, pending the
sale of same in the ordinary course of bankruptcy proceedings. In the US, the
trustee closed all operations and proceeded immediately to liquidate the assets
formerly owned by Etc. The Company was the largest creditor of both
Subsidiaries.
All of the Company's operations were conducted through the Subsidiaries and all
of its assets were owned by the Subsidiaries. Accordingly, at 31 January 1996
the Company had no ongoing operations nor operating assets.
The Company is not directly nor indirectly liable for any debt or liability of
the Subsidiaries and has no outstanding guarantees or undertakings with respect
to any third party claim against the Subsidiaries. (See VII. ITEM --
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS for a discussion of general liquidity matters.)
The Company was maintained in good standing, continuing its ongoing statutory
reporting requirements, making all the required disclosures to shareholders,
raising new capital for the purpose of relaunching its operations, and trimming
its overhead leaving a committed management team dedicated to turning the
business around.
In February 1996, the Company reported that it was proposing a Reorganization
Plan to shareholders. The Reorganization Plan is subdivided into two parts:
PLAN 2000 which prescribes how the Company will build its business to in excess
of 1,000 stores by the end of the Year 2000; and, the Financing Plan which sets
out the how the Company will be financed in order to meet the capital needs of
PLAN 2000. (See VII. ITEM - MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
for more discussion concerning financing and general liquidity.)
The Company's business historically has been to sell over 400 types of dry cell
batteries, including common and specialized cells. In addition, the Company has
marketed battery-powered and related products. The Company's products were sold
principally from kiosk-type or in-line stores situated in high traffic areas of
major shopping centers and transportation hubs. In the context of PLAN 2000,
the Reorganization Plan and the redirectoin of the business operations, the
Company's principal products and services are expected to be remerchandized,
with a greater degree of emphasis on wireless communications products.
In accordance with PLAN 2000, the Company's objective is to develop a retail
network of more than 1,000 locations, primarily small kiosk-type stores in major
shopping and transportation centers located in the United States and Canada, for
the purpose of marketing its products and offering sales service by trained and
knowledgeable staff capable of providing a significant level of customer
service.
During most of Fiscal 1996, the Company operated 18 retail locations in Canada
and 33 locations in the United States. On 8 March 1996, the Company closed a
purchase transaction with the Trustee of the Estate of BOSI (the "Estate")
whereby for $200,000 the Company acquired the assets of the Estate including
inventory, furniture and equipment, kiosks, lease entitlements and certain trade
marks and proprietary information. During the recent transition period, the
Company has employed the inventory and certain lease entitlements, trademarks in
its current skeletal operations. However, because the longer term redirection
of the business operations calls for a completely new appearance and substantial
change to merchandise mix, the other assets acquired will be sold over time.
On 24 March 1996, POWER PLUS USA, INC., a wholly-owned subsidiary of the
Company, made an offer to acquire the strategic Pittsburgh Airport location
lease, formerly held by Etc. The requisite approval of the Bankruptcy Court,
Western District of New York was obtained on 16 May 1996 and the transaction for
US$70,000 is scheduled to close 19 June 1996, providing for the re-opening of
this premier location in July.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 4
On 17 June 1996, POWER PLUS USA, INC. agreed to acquire Portronics, a specialty
US retailer, from Consumer Electronics Specialty Stores, Inc. ("CESS") by way of
a purchase all of all capital stock of CESS. Expected to close in July, the
acquisition includes 10 leased retail locations in Florida, inventories, two
warehouses and pager repair facilities, plus the CESS headquarters operations in
Sarasota and CESS's proprietary interests. This strategic acquisition means
that the operations and assets of Portronics will become an integral part of the
Company. The purchase agreement is subject to final due diligence, financing,
and regulatory approval. These 10 Portronics retail stores operate at a level
that would have the potential to generate more than US$3.5 million in annual
revenues for the Company from the sale of pagers -- or beepers as they have more
commonly become known -- plus related paging services and other wireless
communication products. All will be converted to Powerful Stuff stores that
feature Portronics beepers and paging services, and 10 to 20 new stores are
planned for Florida this year. Ken Levin, founder and President of both
Portronics and CESS, has agreed to become Senior Vice President, Retail
Operations for POWERFUL STUFF provided the acquisition is completed as
contemplated. Mr Levin would then play a key management role in the rollout of
PLAN 2000 and assist in developing Powerful Stuff's reseller operations for
wireless services.
As of the date hereof, the Company is operating one location in Canada and is
preparing to open the Pittsburgh Airport US location.
B. PRINCIPAL PRODUCTS AND SERVICES
1. TYPES OF BATTERIES: The Company historically has retailed over 400 types of
dry cell batteries, ranging from common cells (such as AAA, AA, C, D and
9 volt) to highly specialized cells. The Company's inventory has included
an array of chemical batteries such as alkaline, lithium, silver oxide,
nickel cadmium, carbon zinc, zinc chloride, lead acid and gel cells along
with a selection of other batteries for specific scientific and related
applications. These batteries come in a variety of shapes, sizes, voltages
and amperage capacities, from tiny cells, measuring just one-half inch in
size, to full-size lantern batteries. Some of these batteries are
rechargeable. Others may be combined in battery-packs to create a required
voltage for a specialized use. A summary discussion of the chemical battery
types that have been marketed by the Company follows:
i. CARBON ZINC - These are the common, general-purpose cells which are the
least expensive cells sold by the Company. They are primarily used for
intermittent use in flashlights, for example, but their charge runs
down rapidly with steady use and they are inefficient under extreme
temperatures. These types of cells can be prone to have leakage
problems, over prolonged periods of time.
ii. ZINC CHLORIDE - These are heavy duty cells which are stronger and last
longer than carbon zinc cells, but still react the same as the general
purpose type. They are useful for toys and flashlights but have
limited application where extended motor drive is required, such as
radio/cassette players.
iii. ALKALINE (POTASSIUM HYDROXIDE/MANGANESE DIOXIDE) - The most commonly
used and popular type of cell is the alkaline battery, in the AAA, AA,
C, D and 9 volt sizes. The shelf-life of an alkaline cell is at least
two years and it functions well under extreme temperatures. This
chemical type has a longer life than the above two types and is
excellent for applications where a steady power is required over a long
period of time, such as in portable tape players.
iv. LITHIUM - Lithium cells are high performance cells used predominantly
in watches and to power memory back-up for computers. It is common for
these cells to last up to five years in these applications. Lithium
cells are used primarily in watches which have a high drain (higher
than average consumption of power). They are also used in calculators,
electronic games and the computer operated cameras, and to drive
computer clocks. Use of the lithium battery is rapidly increasing,
becoming the benchmark "new technology" in batteries, as an increasing
number of manufacturers discover the power output of this particular
chemical type. Lithium batteries are available today in all forms,
including the button cell (watch batteries). The ongoing development
of lithium cells is anticipated to be very rapid over the next few
years and could eventually overtake the alkaline cells, just as
alkaline batteries overtook general purpose and heavy duty cells in
the late
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 5
1950s. Lithium cells function very well under extreme temperatures
and emit a non-fluctuating current which is ideal for all kinds of
sensitive meters that require voltage precision. Developments in
lithium technology (such as combining Lithium Thionly Chloride)
have created long-lasting cells that are ideal for steady, dependable
power for remote areas (e.g., weather gauges in mountain terrain).
v. SILVER OXIDE - Silver oxide is used primarily in watch batteries,
although some photo cells use this type of chemistry also. Silver
oxide batteries are renowned for their lasting power. A silver oxide
button cell is capable of running an average watch for a one to three
year period.
vi. NICKEL CADMIUM - "Ni-Cad" cells are the rechargeable forms of
batteries. Rechargeable batteries hold charges longer and carry more
"amperage" or effective lasting time. These characteristics have
allowed manufacturers of electronic items to create new battery-powered
devices. Ni-Cads are manufactured in the five common sizes (AAA, AA,
C, D and 9 volt) as well as in a host of unusual sizes. They also
come in the button cell form.
The rechargeable battery is comprised of potassium hydroxide and
nickilous hydroxide in which plates of nickel cadmium are placed.
This combination accepts an electrical charge after being subjected
to a number of hours of electrical current in a battery charger. The
more advanced and higher quality batteries have cinctured plates of
nickel cadmium, which are indented. These plates absorb the gases,
hydrogen and oxygen, which are emitted during the charging period and
help prevent the battery from overheating. This allows the battery to
accept a much faster charge and hence be fully operational quicker.
These batteries also have a venting system which, in the case of an
excessive charge being administered to the cell, allows the gases to
vent or escape and thus prevent explosion. These advances have allowed
the rechargeable battery to be charged much faster than the older
types of cells. The average Ni-Cad cell will charge up to 1,000 times
over a period of five years. These batteries can be charged in a
desk-type charger that generally holds four batteries at a time, or a
wall charger, which can hold four AA cells and a 9 volt cell. Normal
charging time for the average Ni-Cad cell is 12 hours. During this
time, it will charge to its full capacity. Rechargeable batteries are
excellent for toys, photoflash units, electric shavers, hedge clippers,
cassette players, and are now appearing in more sophisticated
applications as technology improves, such as cordless telephones,
mixers and carving knives. Ni-Cad batteries are often packaged in
multiple units, such as hobby car packs and cordless telephone packs.
These combinations of 1.2 volts cells are made into a series to create
a specific voltage.
2. TYPES OF BATTERY-POWERED PRODUCTS: The battery-powered products that have
been marketed by the Company include, but are not limited to, data bank
calculators, lap-top computers, digital diaries, flashlights, electronic
games, pocket televisions, shavers, specialty watches, cellular telephones
and battery chargers. There are also additional battery-powered products
available to be marketed and serviced by the Company. Because battery
technology has improved considerably in both voltage and amperage capacities
over the past five years, and because of the advent of new chemicals such as
lithium, the number of products powered by batteries has increased. A wide
variety of retail and other stores (such as drug, food, hardware, toy,
discount department, jewelry, convenience, camera and audio stores) presently
market all types of battery-powered items, ranging from portable cassette
tape players, radios, clocks, cameras, watches, toys, flashlights and
lanterns to cordless telephones, miniature television sets, pagers, hearing
aids, portable drills, mixers and carving knives, other portable household
appliances, smoke detectors and miniature racing cars. A host of very
specialized battery-powered products, such as depth sounders, metering units
and medical devices, are also available in the marketplace. Meters range
from underground pipe tracers to emergency-locator transmitters for aircraft
and shipping. Medical devices include the recently introduced portable
diabetes machines, hearing aids and nerve stimulators used for reducing pain.
The Company sells these batteries, servicing customers of virtually all
battery-powered products and, its stores are a place where customers can
discuss their battery and product needs with knowledgeable staff. The mix
of battery-powered products marketed by the Company at any given time will
vary among its store locations, to be responsive to the regional needs of
its customers, and also changes over time.
3. SOURCES AND AVAILABILITY OF PRODUCTS: Sourcing batteries (especially rare
cells) and battery-powered products sold by the Company have always been the
major enterprise of the Company. Because batteries for specific applications
are manufactured in many countries around the world (including
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 6
China, England, Israel, Japan, the United States and Germany), the Company
constantly researches new sources of supply and continually updates its
information regarding the availability of rare cells as they appear in new
products. The Company also researches the new battery-powered products which
it may add to the merchandise mix. The Company deals with the world's
largest battery manufacturers (such as Eveready, Duracell, Kodak, and
Ray-O-Vac), as well as with smaller specialty companies. Consequently,
the Company is not dependent upon a single or limited source of supply for
the vast majority of its products. Moreover, many manufacturers make the
same cells for products in different countries. Hence, if one supplier is
short of product, another supplier can be called upon fill the Company's
needs. The Company believes that an adequate supply of all types of
batteries and battery-powered products is available.
4. DEMAND FOR PRODUCTS: A variety of battery-powered products is available
today. Such products and the batteries which power them are in increasing
demand throughout the world. Two factors, emerging in the past few years,
have caused the demand for a variety of specialized batteries and battery
products to increase dramatically. First, the development of the
microcomputer chip has allowed manufacturers to produce battery-powered items
which are smaller, more powerful and not as dependent on plug-in power. Some
of these items are manufactured to require powerful batteries or
battery-packs that have been especially produced for them. Although these
new items are widely sold in the open market, the locations from which an
owner of such products may purchase a replacement battery are often limited.
Various manufacturers of products have long since lost interest in supporting
an after market of batteries. For customers, specialty batteries are
frequently difficult to locate through normal retail locations. Due to the
expertise gained over the past several years, however, the Company is
frequently able to source rare or specialty cells, which often are
manufactured in other countries, to satisfy its customers' special requests.
The increase in the variety of battery-powered products is also a result of
the technological advances that have been made in all areas of battery
production over the past five years. These advances have allowed
manufacturers to produce batteries that have considerably higher "milliamp"
ratings (the ratings which measure the actual lasting capacities of cells)
and that are much smaller than those previously manufactured. When combined
in pack form, these new technology cells result in power centers with
considerable lasting capacities. Examples of applications for this
technology are the rechargeable power packs used with portable drills, the
hobby packs for toy racing cars and the battery-packs required for cellular
phones. (There are now more than twenty-five different battery-packs on the
market for cordless telephones alone, all of which are difficult for the
average customer to locate or install.) The Company is able to provide
battery-packs for almost any particular customer's need. Thus, there have
been major advances recently in both specialty battery production and the
battery-powered products being manufactured which include these batteries.
Providing consumers a single source of supply and service for batteries and
battery products is the basis of the Company's business.
5. MARKETING OF PRODUCTS: Because of the particular locations of the
kiosk-style stores, the Company believes that marketing its merchandise and
services enjoy a competitive advantage compared to other retail and chain
stores. The batteries and other products are displayed prominently in its
stores, which are located primarily in shopping malls. In addition, the
Company has some stores located in business center malls and transportation
hubs such as airports and train stations. Additional advertising is also
featured in each shopping center where a store is located. Such advertising
focuses primarily on special events or promotions during the year. The
Company may also advertise in newspapers of general circulation in the areas
of its operation and the Company may, in the future, make use of television
and radio advertisements.
6. CUSTOMER SERVICES: The technical specifications of specialized batteries
and battery-packs require a high level of technical expertise if customers
are to obtain the proper replacement cell for their particular use. Company
employees often install a battery-pack in a customer's battery-powered item.
Company employees are trained and instructed to advise customers on the
appropriate battery for a particular application, install batteries in
products, such as watches, calculators, photographic equipment, shavers,
hearing aids, cordless telephones and lap-top computers and, in addition
make minor repairs to certain battery-powered products. As well, the Company
maintains a composite cross-reference list of batteries so that customers'
with unique or special needs can be properly serviced.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 7
C. LOCATION OF STORES
In selecting the shopping malls in which to locate its stores, the Company
generally requires that a center meet or exceed two key criteria: (i) gross
leasible area must be greater than 250,000 square feet, and (ii) average
annual gross sales must be at least $300 per square foot. Currently, there
are in excess of 150 shopping malls in Canada and 1,500 shopping malls in
the United States which meet or exceed these criteria. Exceptions to these
criteria may be considered by the Company for specific malls with high
traffic flows.
Selection of the best store location within the mall is based on the local
demographics, the traffic patterns and the location of existing tenants.
Examples of desirable mall locations with high traffic flows are near subway
entrances, at the top or bottom of key escalators and at busy intersections
within the mall.
D. EMPLOYEES
Each standard store is staffed by one manager, one or more full-time (over 25
hours per week) employees and one or more part-time (up to 25 hours per week)
employees. Store managers receive a base salary and a bonus under an
incentive program based on achieving or exceeding the store's sales target.
As of 18 June 1996, the Company had 8 administrative personnel and 5 store
personnel. Up to the time of the bankruptcy, the Company employed 11 area
managers, 53 store managers, 40 full-time employees, 176 part-time employees
and 13 administration and warehouse personnel.
E. COMPETITION
Except for two localized competitors in Toronto, another in Western Canada
and one US competition centralized in Illinois, the Company believes that
there are no other national retail chains of specialty stores which
prioritize and provide its broad range of dry cell batteries and
battery-powered products through kiosks and in-line locations in malls and
transportation hubs coupled with a trained and knowledgeable sales staff.
There are, however, a wide variety of retail and other stores, including
chains, (such as drug, food, hardware, toy, discount department, jewelry and
convenience stores, many of which have financial resources greater than those
of the Company), that carry a selection usually limited to the more common
batteries (i.e., AAA, AA, C, D and 9 volt cells). In addition, specialty
stores, such as camera and audio stores, will usually carry a limited
selection of replacement batteries for the equipment they currently sell.
Competition within the dry cell battery retailing industry substantially
results in the common cells being price-sensitive due to their wide
availability. However, the normal retail price for common cells means that
few customer do comparison shopping. There is less competition and price
sensitivity in providing specialty cells because necessity for battery
replacement often overshadows price concerns.
F. TRADEMARKS
The Company presently holds two service marks registered in the Principal
Register of the United States Patent and Trademark Office. Registrations are
for the mark BATTERY ONE-STOP and BATTERY 1-STOP design in connection with
battery and battery-powered store services. Both service marks cover the use
of the name "Battery One-Stop" in connection with the sale or advertising of
its services in the United States. The Company also holds a Certificate of
Registration from the Registrar of Trade Marks, Consumer and Corporate
Affairs, Canada, covering the stylized use of the name "Battery One-Stop" in
the operation of its business in Canada. In addition, the Company has
registered the name "Battery One-Stop" in the United Kingdom. The Company has
applied for other trademarks in Canada, the United States, the United Kingdom
and other countries, however, such applications are still pending. The
Company has filed applications, which are currently pending, to register the
service marks using the name "Battery One" in the United States and Canada.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 8
G. GOVERNMENTAL REGULATION
Various national, state and local governments have adopted, and may in the
future adopt, laws and regulations regulating contamination of the
environment. These laws and regulations may impact the Company's disposal of
spent batteries which contain toxic compounds and impose liabilities for
pollution resulting from improper disposal.
The Company monitors the adoption of orders, rules, regulations and laws
related to the Company's operations and advises all store managers and
regional managers of any new requirement or change in the law by way of
weekly mailings. The Company believes that all of its store managers are
currently complying, and will continue to comply with, in all material
respects with all orders, the rules and regulations and laws applicable to
the Company's operations. To the Company's best knowledge, there have been
no material violations of any such requirements. The Company has not
incurred significant costs in the past to comply with environmental
regulations and does not anticipate incurring significant costs in the
future. However, the Company cannot predict the effect of any future changes
in applicable regulations on its operations or capital expenditure
requirements.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 9
H. CERTAIN GEOGRAPHIC INFORMATION
The Company's sales and operating losses in Canada and the US for Fiscal 1996,
the transition year ended 31 January 1995 and the fiscal year ended 30 April
1994 are set forth below:
<TABLE>
1996 1995 1994
US Canada US Canada US Canada
-- ------ -- ------ -- -------
<S> <C> <C> <C> <C> <C> <C>
Sales $3,625,836 $1,749,393 $6,132,982 $2,414,991 $7,166,134 $3,057,058
Operating Loss $3,465,227 $1,076,323 $991,292 $498,134 $1,363,691 $700,016
</TABLE>
II. ITEM -- PROPERTIES
During Fiscal 1996 and until the assignments in bankruptcy, the Company's
primary executive and administrative offices were located at Suite 2, 395 Summit
Point Drive, Henrietta, New York. Leased on a month-to-month basis, the
Henrietta offices were approximately 6,000 square feet (including warehouse
space) at a monthly rental of US$2,400.
After the assignments in bankruptcy, the Company closed its Henrietta, New York
offices, consolidating its operations and relocating in Toronto, Canada, where
the primary executive and administrative offices are now maintained, situated at
7850 Woodbine Avenue, Suite 201, Markham, Ontario, L3R 0B9. Leased on a month-
to-month basis, these Toronto executive offices are approximately 3,250 square
feet, at a monthly occupancy cost of approximately $3,200. For purposes of
warehousing, the Company additionally leased strategically proximate space
comprised of approximately 1800 square feet located at 7780 Woodbine Avenue,
Markham, Ontario, including store front and administration offices. Leased on
an annual basis, the monthly occupancy costs for these warehouse premises are
approximately $1,650.
As at 18 June 1996, the Company operated one store in Ontario, Canada and is
preparing to operate another store in Pennsylvania, US.
During most of Fiscal 1996, the Company's 18 locations in Canada were located in
one or more major malls in the following Provinces:
PROVINCE NUMBER OF LOCATIONS
-------- -------------------
Alberta 6
British Columbia 6
Ontario 5
Saskatchewan 1
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 10
During most of Fiscal 1996, the Company's 33 locations in the United States were
located in one or more shopping malls in the following States:
STATE NUMBER OF LOCATIONS
----- -------------------
District of Columbia 2
Florida 11
Illinois 1
New Jersey 1
New York 3
Ohio 6
Pennsylvania 3
Virginia 1
Washington 5
Subject to availability and timing of financing proposed under the Financing
Plan, PLAN 2000 provides for the opening of up to 50 new stores during Fiscal
1997 in a MARKET CLUSTER APPROACH that creates critical mass in certain target
areas that offer particular advantages to the Company, such as under-developed
or under-serviced markets, or under an umbrella of radio advertising. The
Company plans to concentrate growth in 3 geographic regions in the US and Canada
and in always search for premier locations. The areas targeted for immediate
expansion are Florida and Pittsburgh in the US, and Southern Ontario in Canada.
PLAN 2000 establishes a target of over 1,000 stores by the end of the Year 2000.
(See VII. ITEM -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS for a discussion of the Reorganization and related
Financing Plan.)
In general, the terms of the Company's lease agreements have provided for: (i) a
rentable area for each store of 100 to 450 square feet; (ii) a lease term
normally of three, five or eight years; and, (iii) either a fixed annual rent,
or payable monthly or quarterly (ranging from a low of $5,150 in the first year
of the least expensive lease to a high of $100,000 in the last year of the most
expensive lease) and either together with (or, in some cases, in lieu of the
annual rent) payments equal to a percentage, ranging from 7% to 17%, of a
store's adjusted gross sales during the year, or, alternatively in some cases, a
variable annual rent equal of up to 12 % of adjusted annual gross sales, net of
sales taxes, plus rental taxes, if any. The current rental market appears
equally as favorable as in the past. Accordingly, the Company expects to enter
into future leases on economically viable and commercially reasonable terms.
III. ITEM -- LEGAL PROCEEDINGS
Except for the bankruptcy proceedings of the Subsidiaries, the Company is not
presently a party to, nor are any of its properties the subject of, any pending
legal proceedings which would materially affect the financial condition of the
Company.
IV. ITEM -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 11
PART II
V. ITEM-- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
A. COMMON STOCK DATA
The Common Stock is listed on The Alberta Stock Exchange, Province of
Alberta, Canada, and is traded under the symbol "BTB". Prior to January,
1992, the Common Stock was included in the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") and was traded in the
over-the-counter market in the United States System under the symbol "BATTF".
The Common Stock was delisted from NASDAQ trading in January, 1992 due to
the Company's failure to satisfy certain minimum capital requirements for
trading on NASDAQ.
Effective 19 December 1994, the Company resumed over-the-counter trading on
the NASDAQ OTC Bulletin Board under its old symbol BATTF. No trades were
reported for the period 31 December 1994 through 28 February 1995. Beginning
24 April 1995 the trading symbol was changed to "BATT".
From 22 December 1995 to 5 February 1996, trading in the Company's shares was
halted on The Alberta Stock Exchange and during which time the Company
proceeded with matters pertaining to the bankruptcies and to prepare its
reorganization plan. (See VII. ITEM - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF OPERATIONS.) The following table sets forth the reported high and low
sales prices for the Common Shares as quoted by The Alberta Stock Exchange
for each full quarterly period within the fiscal years ended 31 January 1996
and 1995, and 30 April 1994, respectively, expressed in Canadian dollars:
FISCAL 1996 FISCAL 1995 FISCAL 1994
--------------- --------------- ---------------
High Low High Low High Low
----- ----- ----- ----- ----- -----
1st Quarter $0.40 $0.36 $0.38 $0.16 $0.50 $0.29
2nd Quarter $0.33 $0.32 $0.48 $0.26 $0.45 $0.30
3rd Quarter $0.30 $0.28 $0.41 $0.25 $0.49 $0.28
4th Quarter $0.33 $0.30 n/a n/a $0.38 $0.18
Because a substantial number of Common Shares that are held by agents in
"street name", the Company is unaware of exactly how many of the outstanding
Common Shares are held by residents of the United States. As of 18 June
1996, there is a total of approximately 2,700 beneficial holders of the
39,761,238 issued and outstanding Common Shares.
To date, the Company has not paid dividends on its Common Shares.
(See also VII. ITEM - MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS for
more discussion concerning management's Reorganization Plan as it concerns
the Common Shares.)
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 12
B. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS
Acquisitions of control of businesses or corporations in Canada are regulated
by the Investment Canada Act (the "Investment Act"). The Investment Act
created an agency known as Investment Canada. In certain circumstances, an
investment to acquire control of a Canadian business is reviewable by said
agency. In other cases, only notice need be given to said agency and, in
many cases, no action need be taken at all. The Investment Act does not
apply to the acquisition of securities such as shares of the Company where
the acquisition does not constitute an acquisition of "control" within the
meaning of said term in the Investment Act. Generally, the term "control"
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise. Under the
Investment Act, the acquisition of more than 50% of the voting shares of a
corporation is deemed to be an acquisition of control of such corporation,
and the acquisition of one-third or more of the voting shares of a
corporation is presumed to be an acquisition of control of such corporation
unless it can be established that the acquirer does not control the
corporation through the ownership of one-third or more of the voting shares.
The acquisition of less than one-third of the voting shares of a corporation
is deemed not to be an acquisition of control of such entity.
The Company is aware of no Canadian governmental laws, decrees or regulations
nor any foreign exchange controls which restrict the import or export of
capital or which affect the remittance of dividends, interest or other
payments of non-resident holders of the Company's securities, except as
discussed in VII. ITEM - MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS.
The Company knows of no limitation on the rights of nonresident or foreign
owners to hold or vote the Common Shares imposed by foreign laws and there
are no provisions in the Company's charter or by-laws which restrict
ownership of securities or prescribe restrictions on the payment of
dividends, interest or other payments to shareholders.
C. TAXATION
Dividends and other distributions deemed to be dividends paid or deemed to be
paid by a Canadian resident corporation to a non-resident of Canada generally
are subject to non-resident withholding tax equal to 25% of the gross amount
of the dividend or deemed dividend. Also, a non-resident of Canada is
subject to tax in Canada at the rates generally applicable to residents of
Canada on any "taxable capital gain" arising on the disposition of the shares
of a Canadian public corporation if such non-resident, together with persons
with whom he does not deal at arm's length, owned 25% or more of the issued
shares of any class of the capital stock of the Canadian public corporation
at any time in the five years immediately preceding the date of disposition
of the shares. The taxable portion of the capital gain is three-quarters of
the actual gain from the disposition of the shares.
Canadian taxation of dividend and deemed dividend payments to and gains
realized by non-residents of Canada who are residents of the United States
are subject to the 1980 Canada-United States Income Tax Convention (the "1980
Convention"). Under the 1980 Convention, the rate of Canadian non-resident
withholding tax on dividends or deemed dividends paid to a United States
resident may not exceed 15%, and in the case of a United States corporation
that beneficially owns at least 10% of the voting stock of the corporation
paying the dividend may not exceed 10% of the dividend or deemed dividend.
On March 17, 1995, the United States and Canada signed a protocol to the 1980
Convention (the "1995 Protocol"). Ratified on 9 November 1995, the 1995
Protocol reduces the withholding rate on dividends from 15% to 10%, and, in
the case of a dividend paid to a United States corporation that owns at least
10% of the voting stock of the payor corporation, to 7% for dividends paid in
1995, 6% for dividends paid in 1996, and 5% for dividends paid after 1996.
Where the dividends are received by a United States person carrying on
business in Canada through a Canadian permanent establishment and the shares
in respect of which the dividends or deemed dividends are paid are
effectively connected with that permanent establishment, the dividends or
deemed dividends are generally subject to Canadian tax as business profits,
generally without limitation under the 1980 Convention.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 13
The 1980 Convention also provides that gains realized by a United States
resident on the disposition of shares of a Canadian corporation may not
generally be taxed in Canada unless the value of the Canadian corporation is
derived principally from real property situated in Canada or the shares form
part of the business property of a permanent establishment which the United
States shareholder has or had in Canada within the twelve month period preceding
the date of disposition.
Subject to certain limitations, generally Canadian income taxes paid or
accrued by a United States resident to Canada on account of dividends or
deemed dividends paid by the Canadian corporation and gains from the
disposition of the Canadian corporation's shares are eligible for foreign tax
credit treatment in the United States.
VI. ITEM -- SELECTED FINANCIAL DATA
The following selected financial data of the Company are presented for, and
as of the end of Fiscal 1996, the Transition Fiscal 1995, and each of the
former 12 month fiscal years ended 30 April 1994, 1993 and 1992. (During
Fiscal 1995, the Company changed its fiscal year end to 31 January from 30
April.) This information should be read in conjunction with VII ITEM -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS and the Consolidated Financial Statements and the Notes thereto,
included elsewhere herein. The Company's Consolidated Financial Statements
and related information have been prepared according to Canadian Generally
Accepted Accounting Principles (CGAAP), however, these financial statements
comply, in all material respects, with United States Generally Accepted
Accounting Principles, except as described in Note 10 to the Company's
Consolidated Financial Statements included elsewhere herein.
<TABLE>
TRANSITION
FYE FYE ENDED FYE 30 APRIL
31 JANUARY 31 JANUARY -----------------------------------------
1996 1995 1994(2) 1993(1) 1992(2)
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total Revenue $ 5,375,229 $ 8,547,973 $10,223,192 $4,311,591 $1,703,793
Net Income (Loss) $(4,541,551) $(1,489,416) $(2,063,707) $ (727,154) $3,506,093
Net Income (Loss) Per Share $ (0.13) $ (0.05) $ (0.07) $ (0.03) $ 0.26(3)
BALANCE SHEET DATA:
Total Assets $ 330,035 $ 5,182,679 $ 4,739,604 $4,326,026 $ 589,273
Working Capital $ (422,159) $ 611,868 $ 161,473 $ 873,069 $ (227,813)
Long Term Liabilities NIL NIL NIL NIL NIL
Total Liabilities $ 507,208 $ 2,152,401 $ 2,015,312 $ 743,587 $ 513,528
Common Shareholders'
(Deficiency)/Equity (4) $ (177,173) $ 3,030,278 $ 2,724,292 $3,582,439 $ 75,745
</TABLE>
(1) Consolidated results of the Company and its subsidiaries. See VII. ITEM -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION for further
explanation concerning the acquisition of the US business in November 1992.
(2) Consolidated results of the Company and its subsidiaries.
(3) Included gain on cessation of control of a former US subsidiary (Battery
One-Stop Ltd.) to bankruptcy court.
(4) To date, the Company has not paid dividends on its Common Shares.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 14
A. EXCHANGE RATES
The following table sets forth, for the periods and dates indicated, certain
information concerning exchange rates of United States and Canadian dollars.
All figures shown represent noon buying rates for cable transfers in New York
City, certified for customs purposes by the Federal Reserve Bank of New York.
The sources of this data are the Federal Reserve Bulletin and the
International Financial Statistics prepared by the Bureau of Statistics of
the International Monetary Fund.
C$ HIGH C$ LOW AVERAGE FISCAL YEAR END
------------- ------------- ------------- ---------------
C/US US/C C/US US/C C/US US/C C/US US/C
----- ----- ----- ----- ----- ----- ----- -----
1996 $1.36 $0.74 $1.28 $0.78 $1.32 $0.77 $1.32 $0.77
1995 $1.42 $0.70 $1.34 $0.74 $1.37 $0.72 $1.40 $0.71
1994 $1.26 $0.79 $1.40 $0.72 $1.32 $0.76 $1.38 $0.72
1993 $1.18 $0.85 $1.29 $0.78 $1.23 $0.81 $1.27 $0.79
1992 $1.29 $0.78 $1.14 $0.88 $1.21 $0.83 $1.27 $0.79
1991 $1.17 $0.86 $1.13 $0.89 $1.15 $0.87 $1.16 $0.86
VII. ITEM -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and the Notes thereto, which follow
elsewhere herein.
The end of Fiscal 1996 and thus far into Fiscal 1997 has represented a period
of fundamental change for Battery One, Inc. The Company has literally shed
its past by reorganizing and redirecting its business operations, proposed to
be renamed POWER PLUS CORPORATION, a new business venture created and being
launched through BATTERY ONE as restructured.
A. RESULTS OF OPERATIONS
1. FISCAL 1996
By the final quarter of the last fiscal year, it had become apparent to
management that on the basis of the Company's current share capitalization,
and in consideration of the continued unprofitability of Etc., the Company,
notwithstanding its best efforts, regrettably was not able to complete the
financing of new management's turnaround program on the basis contemplated.
The poor performance of Etc. resulted from a number of unproductive stores
situated in secondary locations committed to by prior management, which were
subsidized by BOSI to its serious detriment.
In December 1995 BOSI made a voluntary assignment into bankruptcy pursuant to
the CANADIAN BANKRUPTCY AND INSOLVENCY ACT. In December 1995, Etc. made a
voluntary petition seeking protection under Chapter 11 of the US BANKRUPTCY
CODE, which in January 1996 was converted to a Chapter 7 filing. The Company
was the largest creditor of both Subsidiaries.
The Company is not directly nor indirectly liable for any debt or liability
of the Subsidiaries and has no outstanding guarantees or undertakings with
respect to any third party claim against the Subsidiaries.
All of the Company's operations, which consisted of the sale of batteries
and battery-powered products to consumers via company-owned retail stores in
Canada and the United States, were conducted through the Subsidiaries and all
of its capital assets were owned by the Subsidiaries. As at 31 January 1996
the Company, therefore, had no ongoing operations nor operating assets.
The Consolidated Statements of Operations included together with this Report
reflect the decline in operations experienced by the Subsidiaries during the
current period, as compared to the previous fiscal year. The loss from
operations reported in the Company's Consolidated Financial Statements is
$4.4 million. In addition, the loss on abandonment of Subsidiaries in the
amount of $118,767, increased the net loss to $4.5 million.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 15
As a result of the reorganization and redirection of the business of the
Company, the historical financial statements included in the Consolidated
Financial Statements herein, in practical terms, have little relevance to the
Company's operations at present. The Consolidated Financial Statements for
Fiscal 1996, 1995 and 1994 include the accounts of the Company, BOSI and Etc.
All significant intercompany accounts and transactions between the Company
and the Subsidiaries were eliminated.
On 1 February 1996, the Company announced its Reorganization Plan proposing:
a name change to POWER PLUS CORPORATION; reorganizing and consolidating the
outstanding share capital; raising additional funds; establishing new
divisional operations in Canada and the US; consolidating head office
operations into existing offices in Toronto; revamping its retail efforts and
distribution channels; and putting in place new management.
On 8 March 1996, the Company closed a purchase transaction with the Trustee
of the Estate of BOSI whereby for $200,000 the Company acquired the Estate's
assets of the Estate including inventory, furniture and equipment, kiosks,
lease entitlements and certain trade marks and proprietary information.
During the transition, the Company has employed the inventory, and certain
lease entitlements and trademarks in its current skeletal operations.
However, because the new business strategy calls for a whole new physical
store appearance and a substantial change to the merchandise mix, the other
assets acquired will be liquidated on an orderly basis over time.
On 17 May 1996, POWER PLUS USA, INC., a wholly-owned subsidiary of the
Company, acquired a strategic lease for retail space at the Pittsburgh
Airport upon the approval of the Western District of New York Bankruptcy
Court. The transaction for US$70,000 is scheduled to close on 19 June 1996,
and the Company plans, reopening this premier location in July.
On 17 June 1996, Power Plus USA, Inc. agreed to acquire Portronics, a
specialty US retailer, from Consumer Electronics Specialty Stores, Inc.
("CESS") by way of a purchase all of all capital stock of CESS. Expected to
close in July, the acquisition includes 10 leased retail locations in
Florida, inventories, two warehouses and pager repair facilities, plus the
CESS headquarters operations in Sarasota and CESS's proprietary interests.
This strategic acquisition means that the operations and assets of Portronics
will become an integral part of the Company. The purchase agreement is
subject to final due diligence, financing, and regulatory approval. These 10
Portronics retail stores operate at a level that will generate more than
US$3.5 million in annual revenues for the Company from the sale of pagers --
or BEEPERS as they have more commonly become known -- plus related paging
services and other wireless communication products. All will be converted to
POWERFUL STUFF stores that feature Portronics beepers and paging services,
and 10 to 20 new stores are planned for Florida this year. Ken Levin,
founder and President of both Portronics and CESS, will become Senior Vice
President of Retail Operations for POWERFUL STUFF. Mr Levin will play a key
management role in the rollout of PLAN 2000 and assist in developing POWERFUL
STUFF's reseller operations for wireless services.
Funds for these purchases have been provided by the completion of a Special
Warrants Private Placement Financing discussed hereinbelow, representing
gross proceeds of up to $4.5 million, of which $3.85 million has been
received to date (see B. 1. i. b. below), and of which $1.1 million had been
received prior to 31 January 1996.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 16
The following table sets forth certain items reflected in the Company's
consolidated statement of operations expressed as percentages of sales:
PERCENTAGE OF SALES
-------------------------------------------
FYE Transition FYE FYE
31 January 31 January 30 April
1996 1995 1994
---------- -------------- --------
Cost of sales 42.4% 49.1% 43.1%
Operating, occupancy and
administrative expenses
(including assets,
abandoned in 1996) 133.3% 66.2% 75.3%
Net loss 84.9% 17.4% 20.2%
2. TRANSITION FISCAL 1995
The Company sustained substantial operating losses while attempting to
turn around the US operation during the latter part of Fiscal 1995 and which
continued into Fiscal 1996. The plan, designed to improve operating
efficiencies, strengthen management depth and upgrade the corporate image
with customers, over time proved to be too little too late. During Fiscal
1995, the Company changed its fiscal year end to be more consistent with
other retailers, redesigned its standard kiosks and added new directors and
executive officers.
As a result of the fiscal year end change, sales volume for Fiscal 1995
declined to $8.6 million from $10.2 million for Fiscal 1994. Sales volume
increased $600,000, or 8% over the same nine-month period last year. Fiscal
1995's net loss was $1.5 million, compared to $2.1 million loss reported at
the end of prior year.
The US operations contributed $6.1 million sales to Transition Fiscal Year
1995's consolidated sales (71.7% of the total), compared with $7.2 million in
sales to the Fiscal 1994 consolidated results (70.1% of the total). The
fractionation in sales approximates the proportion of locations in the US and
Canada. Throughout Fiscal 1995, the Company operated 68 stores -- 49 in the
US (72% of the total) and 19 in Canada.
Canadian sales for Fiscal 1995 amounted to $2.4 million, compared to $3.1
million achieved in Fiscal 1994.
The cost of sales increased 18.1% resulting in a decline in the gross
margin to 50.9% from 56.9% in 1994. The gross profit in Fiscal 1995 was $4.3
million compared to $5.8 million for the year ended 30 April 1994.
Improvements in product mix toward higher-margin sales, were more than offset
by increased expenses related to the changes being carried out intended to
improve operating results, including, in particular, merchandise discounting
to clear older inventory and eliminate slow-turning product lines not being
continued under the new merchandising program.
Operating expenses in Fiscal 1995 were $5.7 million compared to $7.7
million in 1994 reflecting, in particular, the benefits derived after
consolidating the less-efficient US operations, despite the inclusion of
certain restructuring costs. These restructuring costs, which were not a
material portion of operating expenses, included the effort to streamline
operations, and costs of moving the offices formerly located in Victoria,
British Columbia and Youngstown, Ohio, consolidated into Rochester, New York
in September 1994.
Operating expenses as a percentage of sales decreased in Fiscal 1995
compared to Fiscal 1994. Operating expenses as a percentage of sales were
66.2% in Transition Fiscal 1995 compared to 75.3% in Fiscal 1994. The
decrease in 1995 reflects the ongoing benefits flowing from consolidating the
administrative functions into one location and streamlining.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 17
The Company's consolidated net loss for 1995 (no taxes were payable in
Fiscal 1995) was $1.5 million compared to $2.1 million in Fiscal 1994. The
US operations accounted for about 66.6% of the 1995 net loss, compared to 66%
of the 1994 net loss. The 1995 and 1994 losses equated to losses per share
of $0.05 and $0.07 on an increased weighted average number of common shares
outstanding of 34,694,521 compared to 31,806,154.
3. FISCAL 1994
Sales rose 137.1% in 1994 to $10.2 million compared with $4.3 million in
Fiscal 1993. The most significant factor accounting for the sales increase
was the Company's purchase on 27 November 1992 of certain operating assets,
from One-Stop Battery Inc., a privately held company operating retail
operations in the US which was not related to the Company.
In 1994, the US operations contributed $7.2 million to the Fiscal 1994
consolidated sales (70.1% of the total). The breakdown in sales approximates
the proportion of locations in the US and Canada. In the fourth quarter of
1994, the Company was operating 68 locations, including 49 in the US (72% of
the total) and 19 in Canada.
Sales in Canada in 1994 amounted to $3.1 million, a 42% increase from the
$2.2 million achieved in the prior year. The increase mainly reflected
improvements made during 1994 in the operations of the established stores,
including expanded product lines and improved merchandising.
While sales rose 137.1% in 1994, the cost of sales increased 188.3%
resulting in a decline in the gross profit to 56.9% from 64.6% in 1993 as
the gross profit increased to $5.8 million from $2.8 million. The 1993
results consolidated the US operations for the final five months of the
fiscal year inclusive of the important Christmas holiday selling season, but
exclusive of the less-profitable earlier months.
Operating expenses rose 126.6% to $7.7 million from $3.4 million in 1993
reflecting, in particular the consolidation of the less-efficient US
operations and certain restructuring costs resulting from the acquisition of
the US assets.
The Company's consolidated net loss (no taxes were payable in 1994) for
Fiscal 1994 amounted to $2.1 million, up 183.8% from the 1993 level of
$727,000. The US operations accounted for about 66% of the 1994 operating
loss compared with 57% in 1993 when they were consolidated for only about 5
months of the fiscal year.
The 1994 loss per share of $0.07 compared to Fiscal 1993's $0.03 on an
increased weighted average number of shares outstanding of 31,806,154 and
27,761,117 in the respective years.
B. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company reported by news release dated 1 February 1996 the details of its
proposed Reorganization Plan, including the proposed change of name to POWER
PLUS CORPORATION, which Plan has received the conditional approval of The
Alberta Stock Exchange as required. Selected aspects of the Reorganization
Plan, including the name change, reduction in stated capital, plan of
arrangement and adoption of a new share option plan, require shareholder
approval at the upcoming July 24th annual general and special meeting, and
final court and regulatory approval thereafter.
The Reorganization Plan should be viewed in two complementary parts: the
corporate finance plan (the "Financing Plan"), designed to facilitate the
implementation of the reorganization; and, the business strategy and plan for
the future called PLAN 2000 prescribing the operational strategy for the
Company to grow to over 1,000 stores by the end of the Year 2000.
Planned new retail outlets will be known as POWERFUL STUFF, a branded
distribution channel for portable energy, including the latest in electronic
communications, calculators, entertainment and lifestyle products, and the
batteries to power them.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 18
POWERFUL STUFF as conceived proposes to combine two merchandising segments --
batteries and beepers -- into a single entity that provides financial
balance and marketplace synergy. The beepers and accessories generate higher
average per sale revenues, earn strong secondary margins through air-time and
activation sales, and generate recurring sales from customer subscriber fees
and renewals. The complementary battery segment of the business supplies the
ongoing revenues and incremental margins necessary to grow POWERFUL STUFF
stores to the point where a customer base is built and recurring revenues are
produced by paging services. In addition, the battery business provides high
margins from specialty batteries and installation services, plus strong
positioning for the sale of innovative battery-powered products.
1. REORGANIZATION PLAN
Particularly salient to the Reorganization Plan are the following points:
i. FINANCING PLAN
In conjunction with the protective steps taken by management to
preserve the Company's assets as herein described, as part of its
Reorganization Plan, the Company has adopted the Financing Plan which lays
the foundation for raising potentially up to $40 million in the aggregate
of new capital over the next two years. The Financing Plan has received
conditional regulatory approval, subject to shareholder approval and court
approval with respect to certain aspects thereof.
a) FISCAL AGENT ENGAGED
The Company engaged C.M. Oliver & Company Limited of Toronto (the
"Agent") effective 1 March 1996 as its fiscal advisor and agent for a
one-year term. The Agent has and will assist the Company on a best
efforts basis in raising the capital required for its Reorganization
Plan. The Agent's compensation includes a warrant to purchase up to
4.5 million pre-consolidation common shares of the Company at $0.10
per share (225,000 post-consolidation shares at $2.00 per share). This
share purchase option considered on a post-consolidation basis
represents potential dilution of up to 675,000 shares (13,500,000
pre-consolidation shares), and the possibility of up to $1.2 million
in the aggregate in additional capital.
b) SPECIAL WARRANT PRIVATE PLACEMENT FINANCING
The Agent and Company completed a Special Warrant Private Placement
Financing (the "Special Warrants") of up to $4.5 million representing
an aggregate of 45 million Special Warrants. The closings of the
first and second tranches took place on 1 March and 2 April 1996
respectively, representing 38.5 million Special Warrants, which were
issued at a purchase price of $0.10 per Special Warrant (or 2.25
million Special Warrants at $2.00 on a post-consolidation basis), for
gross proceeds of $3.85 million, of which $1.1 million had been
received prior to 31 January 1996. Up to an additional 6.5 million
Special Warrants representing gross proceeds of $650,000 are
anticipated to be issued prior to the end of June 1996, completing the
Special Warrant Financing in its entirety.
Each Special Warrant is convertible at no additional consideration
into one common share plus one Class B Warrant which shall consist of
two entitlements: firstly, entitling holders to acquire up to an
aggregate of 2.25 million post-consolidation shares of the Company at
an exercise of $2.50 per share (equivalent to 45,000,000 shares at
$0.125 per share on a pre-consolidated basis), on or before 1 March
1997, representing additional potential capital to the Company in the
aggregate of up to $5.625 million; and, secondly, and subject to the
exercise of the Class B Warrant, a collateral Class BB Warrant,
entitling holders to acquire up to an aggregate of a further 2.25
million post-consolidation shares of the Company at an exercise
purchase price of $3.00 per share (equivalent to 45,000,000 shares at
$0.15 per share on a pre-consolidated basis), on or before 1 March
1998, representing additional potential capital in the aggregate of up
to $6.75 million. The aggregate capital injection potentially to be
derived from the Special Warrants on a fully diluted basis is $16.875
million.
The Special Warrant Financing terms provided that the Company would
incur a 10% penalty payable by the issuance of additional Special
Warrants to the holders of the Special Warrants, that is a further
4.5 million Special Warrants on a pre-consolidation basis in prescribed
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 19
circumstances. Those prescribed circumstances required the Company to
file a prospectus in Ontario and Alberta by 14 June 1996 to qualify the
Special Warrants as free-trading to be lawfully offered to the public,
and to obtain a final prospectus receipt by 26 July 1996, failing which
the penalty would be invoked. The Company was unable to meet such
obligations and the penalty has therefore been incurred. The
entitlements attached to these penalty Special Warrants are the same as
the Special Warrants.
Holders of the penalty Special Warrants will not be required to pay
to receive the common shares included therein, but the Class B and BB
Warrants attached thereto will include the same exercise price required
to be paid for them to be acquired, that is $2.50 per share (post-
consolidation) for the Class B Warrant and $3.00 per share (post-
consolidation) for the Class BB Warrant. The penalty Special Warrants
represent up to an aggregate of 13.5 million additional pre-
consolidation shares in dilution, and the potential of up to an
aggregate of $1.2 million in additional capital on a fully diluted
basis.
The intention remains to qualify the Special Warrants by prospectus
in the Provinces of Ontario and Alberta. The prospectus clearance in
Ontario would qualify the Company as a reporting issuer in Ontario. The
common shares of the Company currently trade on The Alberta Stock
Exchange (Symbol: BTB) and NASDAQ's OTC Bulletin Board (Symbol: BATT).
The Company is currently a reporting issuer in Alberta and British
Columbia, and concurrently reports in the United States under Form 10
of the SECURITIES AND EXCHANGE ACT, 1934.
c) CONVERTIBLE DEBENTURE PRIVATE PLACEMENT FINANCING
The Company has agreed with the Agent and received conditional
regulatory approval to an offering of 10% convertible secured fixed and
floating charge debentures in series, on a best efforts basis, subject
to a minimum placement of $2.5 million and a maximum placement of $5
million (the "Debentures"). The proposed key terms and conditions of
the Debentures are generally as follows:
----------------------------------------------------------------------
PRINCIPAL AMOUNT $5,000,000 10% convertible secured fixed and
& CLOSING: floating charge debentures in series (the
"Debentures Offering"), with a minimum
subscription of $2,500,000, up to a maximum of
$5,000,000. The first closing of the Debentures
Offering is expected to occur not later than 28
June 1996 (the "Closing Date"), with the
completion of the Debentures Offering anticipated
by no later than 30 September 1996, or such other
dates as the parties shall mutually agree.
----------------------------------------------------------------------
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 20
----------------------------------------------------------------------
TYPE OF OFFERING: Debentures Offering to be arranged through C.M.
Oliver as Agent, on the basis of a best efforts
agency offering. Investment units in the
Debentures Offering will be $50,000 each (the
"Debentures Units"), with the minimum subscription
being 3 Debentures Units or $150,000. Debentures
Units shall be sold to subscribers (the
"Debentures Holders") by way of private placement
pursuant to statutory prospectus exemptions
without an offering memorandum.
Any securities into which the Debentures Units may
be converted (the "Subject Securities") shall have
a hold period of 12 months. The Company, however,
recognizes that it is fundamental to Debentures
Holders that the Subject Securities be qualified
under a prospectus in the qualifying jurisdictions
in which the Debentures Units are sold (the
"Qualifying Jurisdictions"), so that the Subject
Securities may be freely tradable in such
provinces without the necessity of the holder
thereof filing a prospectus or effecting the trade
in a manner which falls within one of the various
prospectus exemptions. For these reasons, the
Company will use its reasonable best efforts under
the applicable securities laws of the Qualifying
Jurisdictions to qualify the Subject Securities by
prospectus. Such qualification would enable the
Subject Securities to be lawfully distributed to
the public in the Qualifying Jurisdictions in
connection with any conversion of the Debentures
indebtedness.
----------------------------------------------------------------------
SECURITY RANKING: Debentures will be direct secured obligations of
the Company by way of a first fixed and floating
charge against the Company's assets pursuant to
a Trust Indenture to be administered by Montreal
Trust of Canada, the Company's Transfer Agent and
Depositary. The Company is debt-free and the
Debentures will not therefore be subordinated to
any other indebtedness.
----------------------------------------------------------------------
USE OF PROCEEDS: The proceeds of the Debentures Offering will be
used by the Company to assist in the
implementation of its Reorganization Plan,
including for: retail stores expansion,
merchandising and marketing; and, general working
capital purposes.
----------------------------------------------------------------------
INTEREST RATE: 10% per annum, payable semi-annually, in arrears,
commencing from the Closing Date.
----------------------------------------------------------------------
MATURITY AND The term of the Debentures shall be five years
CONVERSION: from the Closing Date (the "Term"). The Debentures
Holders will have the right at any time during the
Term to convert all or any part of the
indebtedness into Common Shares for $0.125 per
share on a pre-consolidation basis ($2.50 per
share post-consolidation). At any time on or after
the third anniversary date of the Closing Date,
the Company will have the right on reasonable
notice to compel Debentures Holders to convert all
or any part of the indebtedness into Common Shares
for $0.125 per share pre-consolidation ($2.50 per
share post-consolidation); provided the Company's
shares have traded at a weighted average price of
$0.20 per share or greater pre-consolidation
($4.00 per share post-consolidation) during the 10
trading days prior to the Company compelling the
conversion. Failing conversion by Debentures
Holders in the circumstances of such notice, the
Company shall have the right, at any time
thereafter, to prepay the whole or any part of
the Debentures, on a pro rata basis.
----------------------------------------------------------------------
COSTS: The Company shall pay all reasonable costs,
charges and expenses of the Debentures Holders
recovering or enforcing with respect to the
indebtedness and implementing the security
related thereto.
----------------------------------------------------------------------
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 21
----------------------------------------------------------------------
ANTI-DILUTION Appropriate adjustments to be made in respect of
PROVISIONS: any subdivision, redivision, reduction,
combination, consolidation, distribution, issuance
or other events resulting in any adjustment to the
common shares of the Company; provided, however
that Debentures holders shall not be entitled to
receive Exchange Rights as contemplated under the
plan of arrangement.
----------------------------------------------------------------------
PARI PASSU: All Debentures shall rank PARI PASSU with one
another.
----------------------------------------------------------------------
FEES: The Agent shall be paid a fee equal to 8% of the
amount of the Debentures Offering completed.
----------------------------------------------------------------------
d) SHARE CAPITAL REORGANIZATION AND CONSOLIDATION AND
EXCHANGE RIGHTS ENTITLEMENTS
The reorganization and consolidation of the Company's outstanding
share capital pursuant to the Reorganization Plan is proposed by means
of a plan of arrangement under Section 186, BUSINESS CORPORATIONS ACT,
ALBERTA, subject to shareholder and final court and regulatory
approval. In general terms, the Company will reorganize and consolidate
all of its issued common shares (of which 39,761,238 common shares are
issued and outstanding as of the date hereof) on the basis of every
twenty (20) common shares before consolidation being reorganized and
consolidated into one (1) consolidated common share (that is, after
consolidation there would be 1,988,062 issued post-consolidated shares)
and one (1) Exchange Right. Under the terms of this consolidation,
respecting the loyalty of the Company's long-term shareholders and
seeking their continuing support on an equal footing with the Special
Warrant holders, and considering the Company's capital requirements,
each consolidated share is proposed to have attached to it one exchange
entitlement (the "Exchange Rights") to purchase one unit of the
Company's equity (the "Exchange Rights Units"). The actual issue date
of the Exchange Rights is anticipated to be in or about July 1996 (the
"Exchange Rights Issue Date"). The Exchange Rights as proposed shall
entitle holders to purchase up to an aggregate of 1,988,062 Exchange
Rights Units of the Company at an exercise price of $2.00 per unit
(equivalent of $0.10 per unit on a pre-consolidation basis), on or
before 90 days from the Exchange Rights Issue Date (the "Exchange
Rights Shareholder Exercise Expiry Date"; estimated October 1996),
representing additional potential capital to the Company up to an
aggregate of $4 million in Fiscal 1996. Each Exchange Rights Unit
shall consist of one common share plus one purchase warrant,
hereinafter referred to as the Class A Warrants. The Class A Warrants
shall consist of two entitlements: firstly, entitling holders to
purchase 1,988,062 common shares of the Company at an exercise price of
$2.50 per share (equivalent of $0.125 per share on a pre-consolidation
basis), on or before 1 March 1997, representing additional potential
capital to the Company up to an aggregate of $5 million; and, secondly,
conditional upon the exercise of the Class A Warrant, a collateral
warrant, hereinafter referred to as the Class AA Warrant, entitling
holders to purchase up to an aggregate of a further 1,988,062 common
shares of the Company at an exercise price of $3.00 per share
(equivalent of $0.15 per share on a pre-consolidation basis), on or
before 1 March 1998, representing additional potential capital to the
Company in the amount of up to an aggregate of $6 million. The capital
injection potentially to be derived from the Exchange Rights on a fully
diluted basis is $15 million in the aggregate.
e) STATED CAPITAL REDUCTION
As part of the share capital reorganization, the Company further
proposes to reduce its stated capital by all or virtually all of the
accumulated deficit.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 22
ii. FINANCING PLAN, IMPACT SUMMARIZED BY YEAR
a.) FISCAL 1997
While no assurances can be given that calendar 1996 or Year 1 of the
Financing Plan will be successful, the combination of the Special
Warrants plus the Exchange Rights and the Debenture Financing, if
successfully completed and fully drawn down during 1996, potentially
could provide additional new capital in the aggregate of up to $13
million, which would, in the opinion of new management, satisfy the
Company's capital requirements for Fiscal 1997, being Year 1 of PLAN
2000.
b.) FISCAL 1998
To satisfy the Company's financial requirements for calendar 1997 or
Year 2 of PLAN 2000, the Financing Plan provides for the one-year
Class A Warrants attached to the post-consolidated shares proposed
by the Reorganization Plan, as well as the one-year Class B Warrants
attached to the Special Warrants projected to be exercised on or
before 1 March 1997. While no assurances can be given that such
Warrants would be exercised, the Class A and B Warrants if exercised
prior to their expiry date during the first quarter of Calendar
1997, which would provide additional capital in the aggregate as
follows:
Class A Warrants $5.6 million
Class B Warrants $6.8 million
-------------
Total $12.4 million
-------------
-------------
The exercise of the Class A and B Warrants, if successfully
completed in their entirety, supported by the Debenture Financing,
would, in the opinion of new management, satisfy the Company's
capital requirements for Fiscal 1998, being Year 2 of PLAN 2000.
c.) FISCAL 1999
To satisfy the Company's financial requirements for calendar 1998 or
Year 3 of PLAN 2000, the Financing Plan provides for the two-year
Class AA Warrants attached to the post-consolidated shares proposed
by the Reorganization Plan, as well as the two-year Class BB
Warrants attached to the Special Warrants, projected to be exercised
on or before 1 March 1998. While no assurances can be given that
such Warrants would be exercised, the Class AA and BB Warrants if
exercised prior to their expiry date during the first quarter of
Calendar 1998, which would provide additional capital in the
aggregate as follows:
Class AA Warrants $6.2 million
Class BB Warrants $ 7.0 million
-------------
Total $13.2 million
-------------
-------------
The exercise of the Class AA and Class BB Warrants, if successfully
completed in their entirety, supported by the Debenture Financing,
would, in the opinion of new management, satisfy Battery One's
capital requirements for Calendar 1998, being Year 3 of PLAN 2000.
d.) FISCAL 2000 AND BEYOND
PLAN 2000's Financing Plan provides sources of new capital of up to
$40 million in the aggregate during Calendar Years 1996, 1997 and
1998 to support the implementation of PLAN 2000. On the basis of
the successful completion of the Financing Plan through Year 3 of
PLAN 2000, and subject to PLAN 2000 performing on target, the
Company would, in the opinion of management, have sufficient
resources to repay the Debenture Financing during Year 4 of PLAN
2000 (if not by then converted), if desirable and required to do so,
as well as to complete the roll-out of PLAN 2000 as proposed for
Years 4 and 5, without the Company being required to raise
additional capital and incur further financing dilution.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 23
2. SUMMARY OF CHANGES TO SHARES AND SHARE CAPITAL -- POST REORGANIZATION
Accordingly, subject to the successful implementation of the Company's
Reorganization Plan and the completion of the related Financing Plan, the
Company's proposed re-capitalization structure, exclusive of allowable
management incentive options reserves, would then be estimated as follows:
<TABLE>
<CAPTION>
POST-CONSOLIDATION
-------------------------------
CAPITAL EST.
SHARES RAISED TIMING
------ ------ ------
(millions)
<S> <C> <C> <C> <C>
i CONSOLIDATING CURRENT SHARE CAPITALIZATION
(from 39,761,238 shares):
a.) 20:1 post-consolidation number of shares 1,988,062 $0.0
b.) 20:1 consolidation of Exchange Right Units:
i) Exchange Rights Units shares at $2.00 1,988,062 $4.0 Oct. 1996
ii) Class A Warrants to purchase shares at $2.50 1,988,062 $5.0 Mar. 1997
iii) Class AA Warrants to purchase shares at $3.00 1,988,062 $6.0 Mar. 1998
iv) Agent's Option shares at $2.00 225,000 $1.0 Oct. 1996
v) Agent's Option Class A Warrants to purchase shares at $2.50 225,000 $0.6 Mar. 1997
vi) Agent's Option Class B Warrants to purchase shares at $3.00 225,000 $0.7 Mar. 1998
ii CONSOLIDATING SPECIAL WARRANT PRIVATE PLACEMENT FINANCING
(from 45 million pre-consolidation units and assuming maximum offering):
a.) 20:1 post-consolidation Special Warrant common shares net new
capital, at $2.00 2,250,000 $3.4 (1) Mar. 1996
b.) 20:1 Class B Warrants to purchase shares at $2.50 2,250,000 $6.3 Mar. 1997
c.) 20:1 Class BB Warrants to purchase shares at $3.00 2,250,000 $6.8 Mar. 1998
d.) 20:1 Penalty Special Warrants to purchase shares at zero cost 225,000 $0.0
e.) 20:1 Class B Penalty Warrants to purchase shares at $2.50 225,000 $0.6 Mar. 1997
f.) 20:1 Class BB Penalty Warrants to purchase shares at $3.00 225,000 $0.7 Mar. 1998
iii CONVERTIBLE DEBENTURES:
$5 million Debentures convertible into post-consolidation shares at
$2.50 per share 2,000,000 $5.0 1996/1999
iv POST-CONSOLIDATION REORGANIZATION PLAN
Number of Shares, fully diluted (2) 18,052.24
---------
---------
8
-
-
v POST-CONSOLIDATION REORGANIZATION PLAN
Capital Availability assuming full dilution $40.1
-----
-----
</TABLE>
(1) This amount represents $4.5 million gross proceeds minus $1.1 million
received in Fiscal 1996.
(2) This amount does not include allowable management incentive options
reserves.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 24
Over the last several years, the Company experienced significant operating
losses and has been required to meet current cash flow requirements through the
issuance of common shares. The Company raised approximately $1.8 million during
the 9 months ended 31 January 1995. On 29 July 1994, 3 million share purchase
warrants were exercised and the Company issued 3 million common shares for cash
proceeds of $660,000. In addition, on 29 July 1994 the Company completed a
private placement financing of special warrants. The Company issued 6,363,636
SPECIAL WARRANTS at $0.22 each, for cash proceeds of $1.4 million. Each special
warrant entitles the holder to convert the special warrant at no further
consideration into one common share and one-half of one regular warrant. One
regular warrant entitles the holder to purchase one share of common stock at
$1.00 per share on a pre-consolidation basis or $20.00 per share post-
consolidation. During Fiscal 1996, 4,498,454 SPECIAL WARRANTS were exchanged,
1,279,000 SPECIAL WARRANTS were exchanged during the 9 months ended 31 January
1995 and the remainder in February 1996 were exchanged for common shares. To
date, no regular warrant has been exercised and the likelihood of any of the
regular warrants, which expire between July 1996 and January 1997, being
exercised appears remote at this time.
C. OUTLOOK
If the Financing Plan contemplated within the Reorganization Plan for Fiscal
1997 is completed in its entirety, the Company will have raised approximately
$13 million for the purpose of funding up to 50 new POWERFUL STUFF stores for
opening later this year--Year 1 of PLAN 2000; and for putting in place the
infrastructure in preparation for next year's store rollout targeting opening up
to 180 stores in Year 2 of PLAN 2000.
VIII. ITEM -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and schedules listed in Item 14(a) hereof are
incorporated herein by reference and are filed as a part of this report.
IX. ITEM -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The Company's Board of Directors changed the Company's auditors to BDO Dunwoody,
Chartered Accountants, of Toronto, Canada, effective 16 April 1996, on the
recommendation of the Company's Audit Committee and in accordance with the
National Policy No. 31 of the CANADIAN SECURITIES ADMINISTRATION, replacing
Price Waterhouse LLP, Certified Public Accountants, of Pittsburgh, Pennsylvania,
which appointment was approved at the Company's last annual general meeting of
shareholders. By written acknowledgment dated 15 April 1996, Price Waterhouse
LLP advised the Company of its determination that it was no longer in a position
to continue its audit engagement. The resignation arose out of circumstances
surrounding the relocation of the Company's executive offices from the United
States to Toronto, Canada, and the related application of that accounting firm's
governing corporate policies in such circumstances. During the Company's two
most recent fiscal years and the subsequent interim period preceding the
resignation, there were no disagreements with Price Waterhouse LLP on any matter
of accounting principles or practices, financial statement disclosure, nor
auditing scope or procedures.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 25
PART III
X. ITEM -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
A. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names of all directors and executive officers
of the Company as of 18 June 1996, all positions and offices held by each such
person with the Company or each such person's principal occupation or
employment, the name and principal business of any organization by which such
person is employed for the past five fiscal years, and the period during which
he has served as such. Directors are elected annually by the shareholders
(although the Company's by-laws authorize the shareholders to elect directors to
hold office for a term expiring not later than the close of the third annual
meeting of shareholders following the election) and hold office until their
successors are duly elected and qualified. The Company's officers are chosen by
and serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION COMMENCEMENT OF SERVICE
---- --- -------- -----------------------
<S> <C> <C> <C>
J. Douglas Elliott 44 Director of the Company since 1994 and Chairman, CEO and 19 August 1994
President of the Company since December 1995; Lawyer by
background; President of Elliott & Associates, Inc. 1987
to present; Elliott & Associates provides consulting
services to the investment and financial services industries
specializing in the structuring, financing and management of
investment opportunities, and financial public relations.
R. Bruce Freeman 43 Director of the Company since 1989, Vice Chairman of the 13 January 1989
Company since 1993 and CFO and Treasurer since September
1995; Chartered Accountant by background, with degrees in
accounting and law; Managing Partner of Freeman & Associates
which provides consulting services to corporations and
individuals in the investment and financial services industries
specializing in the structuring, financing and management of
special projects; Prior to May 1991, Vice-President and Chief
Financial Officer of Magnasonic Canada, Inc., a corporation
which held major interests in Sanyo Canada, Inc., Major Video
Super Stores and holds an interest in Magnasonic Lloyds Company,
Inc.
Eric D. Sigurdson 44 Director of the Company since March 1995; Chartered Accountant 1 March 1995
by background; Principal of Keystone International, a management
consulting and business development firm, emphasizing mergers
and acquisitions and strategic direction. Prior to 1995 and
since 1992, employed by The Horsham Company and/or its US
subsidiary, Clark Refining & Marketing, Inc., as its Executive
Vice-President. Prior to 1992 and since September 1989, President
of Toronto Dominion Real Estate Inc., a real estate investment
banking venture of the Toronto Dominion Bank, and Director,
Mergers & Acquisitions of Toronto Dominion Securities, Inc.
</TABLE>
There is no arrangement or understanding known to the Company between any person
named in the foregoing table, other than as disclosed herein.
There are no family relationships between any director or executive officer and
any other director or executive officer of the Company.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 26
During the last fiscal year, the Board of Directors held seven meetings, of
which all meetings were attended by all of the Board of Directors. However, the
minutes of such meetings together with all other consent resolutions of the
Board of Directors were distributed to all directors for signature and approval.
The Company is required to have an AUDIT COMMITTEE which currently consists of
R. Bruce Freeman (Chairman), J. Douglas Elliott and Eric D. Sigurdson. The
general function of the Audit Committee is to review the overall audit plan and
system of internal controls of the Company, to review the results of the
external audit and to resolve any problems with the Company's auditors. During
the fiscal year ended 31 January 1996, the audit committee held one meeting at
which all members attended.
The Company's Board of Directors has also established a MANAGEMENT COMMITTEE
which currently consists of J. Douglas Elliott and R. Bruce Freeman. The
Management Committee, during the intervals between meetings of the Board of
Directors, is entitled to exercise all powers of the Board of Directors in
respect of the management and direction of the business and affairs of the
Company (save and except only those specified in Section 111 of the BUSINESS
CORPORATIONS ACT ALBERTA, in all cases in which specific direction shall not
have been given by the Board of Directors). (See XIII. ITEM -- CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.)
In addition, the Company has formed a COMPENSATION COMMITTEE which currently
consists of John S. Bronson (Chairman), Harley Mintz and Eric Sigurdson. The
general function of the Compensation Committee is to review the overall
compensation policy and to ensure an independent review of compensation. None
of the Company's officers participated in any decisions concerning the
compensation of officers.
The Company has also formed an ADVISORY COUNCIL proposed to be composed of a
number of diversified and accomplished business executives, experienced and
acclaimed in their respective fields of endeavor. Mr John S. Bronson of
Greenwich, Connecticut, the Senior Vice-President of Human Resources of
PepsiCola North America, has been appointed Chairman of the Advisory Council and
Managing Advisor, International Relations. The general function of the Advisory
Council is to act as an ACTION-ORIENTED, THINK-TANK resource group to assist and
support the Company's Board of Directors and its management team to execute and
expand upon the strategic corporate business plan. Areas of targeted expertise
include marketing, merchandising, real estate, franchising, human resources,
public relations, finance, and international affairs. The directors will
augment the membership of the Advisory Council from time-to-time, but currently
its members joining Mr Bronson are Fred Ley (human resources), Harley Mintz
(corporate structuring and taxation), and Stephen Mamarchev (market research).
On 29 September 1994, in the US District Court for the Northern District of
California, the US Securities and Exchange Commission ("SEC") issued a complaint
for injunctive and other relief against J. Douglas Elliott, the Chairman, CEO
and President of the Company, in a matter unrelated to the Company. The
complaint alleges that in various periods during 1990 and 1991, Mr Elliott,
while an officer and director of Dimples Group Inc. ("Dimples"), a Canadian
corporation engaged in the manufacture and distribution of diapers, violated
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder
in connection with a general solicitation of US investors in the United States
to purchase Dimples securities. The SEC complaint alleged that Mr Elliott,
among other things, wrote press releases that were materially misleading in that
they included revenue projections and statements regarding the test-marketing of
Dimples' diaper product, Dimples' financing efforts and information on
production and sales figures that did not have a reasonable basis in fact.
Mr Elliott has informed the registrant as follows in regard to the SEC
complaint:
He denies the SEC's allegations and considers that they are themselves
without any reasonable basis in fact. He disputes that the SEC has any
jurisdiction in respect of Dimples and its management. He will vigorously
pursue legal remedies available to him in the circumstances as required
and advised.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 27
Mr Elliott has also advised the Company that he believes the SEC complaint
resulted from an investigation undertaken by the SEC arising out of
unfounded allegations made by former management of Dimples to the SEC in
1991 and these complaints of former management have already been the
subject of legal and administrative proceedings in Canada, in which,
according to Mr Elliott, these allegations were found to be without merit
and to be an abuse of process, the proceedings having been determined in
favor of Dimples and Mr Elliott. Mr Elliott has indicated that Dimples
and its management rely upon these findings in their defense.
This complaint is not expected to have any material impact on future operating
results or the financial conditions of the Company.
B. EXECUTIVE OFFICERS
In addition to certain directors who are also executive officers of the Company,
set forth below is certain information regarding other executive offices of the
Company. To strengthen the Company's new operations, and subject to the
satisfactory completion of the Reorganization Plan, the Company proposes the
following management appointments.
1. G. THOMAS ALISON, a consultant to the Company since March 1995, is currently
acting in the capacity of Chief Operating Officer on an interim basis through
31 July 1996 (the "Interim Consulting Agreement"). Pending the satisfaction
of certain conditions, Mr Alison has agreed to enter into an Executive
Employment Agreement with the Company for a 3 1/2 year term, providing for
him to assume the role of the Company's Chief Operating Officer and
President, responsible for the implementation of PLAN 2000. It is further
proposed Mr Alison be appointed to the Company's Board of Directors and its
Management Committee. Mr Alison's Executive Employment Agreement is
contingent upon the following: its terms being finalized and the remuneration
package being approved by the Company's Compensation Committee and Board of
Directors; shareholder and regulatory approval as required; certain Company
financing thresholds being achieved during the term of the Interim Consulting
Agreement; and, the Reorganization Plan and related plan of arrangement
receiving shareholder, court and regulatory approvals as required. Mr Alison,
President of IMpower Corp. which provides marketing and business development
consulting services to clients worldwide, was formerly Executive
Vice-President of Zoetics, a New York based direct marketing resource group.
Prior to that, Mr Alison was Executive Vice-President, Strategic Development
of Home Shopping Network, and while there he served also as President of HSN
Telemarketing.
2. KENNETH C. MARINO, a consultant to the Company since March 1995, is currently
acting in the capacity of Vice President, Real Estate on an interim basis
through 31 July 1996. Pending the satisfaction of certain conditions,
Mr Marino has agreed in principle to enter into an Executive Employment
Agreement with the Company for a 3 1/2 year term, providing for him to
continue his role of the Company's Vice President, Real Estate, responsible
for the real estate aspects embodied within PLAN 2000. Mr Marino's Executive
Employment Agreement is contingent upon the terms being finalized and his
remuneration package being approved by the Company's Compensation Committee
and Board of Directors, and the Reorganization Plan and related plan of
arrangement receiving shareholder, court and regulatory approvals as
required.
Mr Marino was formerly Director of Real Estate for Sunglass Hut
International, Inc. of Coral Gables, Florida, during a period of exceptional
growth. Responsible for the real estate activities, Mr Marino helped
Sunglass Hut to expand to over 1,000 stores in shopping centers throughout
North America -- stores which have many factors in common to the Company's
stores.
3. JOHN S. BRONSON has agreed in principle to join the Company's Board of
Directors, subject to the fulfillment of certain terms and conditions. The
Company's Board of Directors has approved Mr Bronson's appointment.
Mr Bronson of Somers, New York, associated with the Company during the last
year and currently the Chairman of the Company's Advisory Council and
Compensation Committee, is the Senior Vice-President of Human Resources of
Pepsi-Cola, North America. Mr Bronson brings a depth of multi-unit retail
organizational experience and marketing background with his
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 28
commitment to the Company. Amongst other responsibilities with PepsiCo,
Mr Bronson headed up the Human Resources strategy and implementation for
6,000+ Kentucky Fried Chicken, Pizza Hut, and Taco Bell units in over 80
countries. Spanning a 16 year career with PepsiCo, Mr Bronson has held
the Vice-President Human Resources position at Frito Lay, Pepsi-Cola North
America, and PepsiCo Corporate. Mr Bronson is also on the Board of
Directors of Cornell University's Center for Advanced Human Resources
Studies.
4. HARLEY MINTZ, a Chartered Accountant by background, has agreed in principle
to join the Company's Board of Directors, subject to the fulfillment of
certain terms and conditions and his election by the shareholders. The
Company's Board of Directors has approved Mr Mintz's appointment. Mr Mintz
is Managing Partner of Mintz & Partners, Chartered Accountants, Toronto,
Canada, since 1982. Mintz & Partners ranks in the top 20 firms of Chartered
Accountants in Canada. As a member of NEXIA International, Mintz & Partners
is part of the 15th largest accounting organization in the world with
affiliates in 7 Canadian cities and more than 50 countries.
5. The Company no longer maintains employment associations with:
i. Mr Paul G. Bronson, formerly Chairman, CEO and President;
ii. Mr John R. Pietro, formerly Vice President, Retail Operations;
iii. Mr David M. Pender, formerly Vice President, Finance and
Administration; and,
iv. Ms Debra Ternove, formerly Vice President, Human Resources.
None of the Company's officers or directors have filed reports on Forms 3, 4 & 5
with the Securities and Exchange Commission. Officers and directors file
similar insider reports with The Alberta Stock Exchange if and as required.
XI. ITEM -- EXECUTIVE COMPENSATION
1. During the last fiscal period ended 31 January 1996, the Company employed a
total of five (5) executive officers. The aggregate cash compensation
(including salaries, fees, commissions, bonuses paid for services rendered
during the most recently completed fiscal year, bonuses paid during the most
recently completed fiscal year for services rendered in a previous year, and
any compensation other than bonuses earned during the most recently completed
fiscal year the payment of which was deferred) paid to such executive
officers by the Company and its subsidiaries for services rendered during the
fiscal period ended 31 January 1996 was approximately $200,000. No one
officer received compensation exceeding $100,000. The Company's CEO did not
receive any remuneration in Fiscal 1996.
2. There were no amounts set aside or accrued by the Company during the
Company's fiscal year ended 31 January 1996, to provide pension, retirement
or similar benefits for the officers and directors of the Company, pursuant
to any existing plan, contract, authorization or arrangement provided or
contributed to by the Company.
3. The directors of the Company are entitled to but have not received a fee for
attending meetings and are reimbursed for travel and other expenses properly
incurred while attending meetings of the Board of Directors or any committee
thereof or in the performance of their duties as directors of the Company.
The directors are eligible to receive stock options pursuant to the Company's
Incentive Stock Option Plan described below.
4. As of 18 June 1996, the Company had no outstanding options to acquire Common
Shares.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 29
On 16 December 1986, the Company established an Incentive Stock Option Plan
("Plan") for the directors, management and employees of the Company. On 15
November 1989, the Plan was amended by resolution of the Board of Directors of
the Company. The purpose of the Plan, as amended, is to afford those persons
who provide services to the Company, an opportunity to obtain a proprietary
interest in the Company by permitting them to purchase Common Shares and to aid
the Company in attracting and retaining qualified personnel. Subject to the
terms of the Plan, the Board of Directors has full authority to administer the
Plan upon such terms as the Board of Directors, in its sole discretion, shall
determine, provided no option shall be granted under the Plan after 16 December
1996. Pursuant to the Plan, the aggregate number of shares underlying options
granted cannot exceed 10% of the issued and outstanding shares of Common Stock
from time to time.
None of the Company's officers participated in any decisions concerning the
compensation of officers.
XII. ITEM -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the amount of Common Shares beneficially owned by
directors and executive officers of the Company and each person known by the
Company to be beneficial owner of more than five percent of the Common Shares as
of 18 June 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS (2)
------------------------ ------------------------ --------------------
<S> <C> <C>
G. Thomas Alison NIL NIL
J. Douglas Elliott NIL NIL
R. Bruce Freeman 255,000 Less than 1%
Kenneth C. Marino NIL NIL
Eric D. Sigurdson 100,000 Less than 1%
All executive officers and directors as a group 355,000 Less than 1%
</TABLE>
1. Securities beneficially owned include: securities which the named period
has the right to acquire within 60 days as of the date hereof, such as
through the exercise of any option, warrant or right; securities directly or
indirectly held by the named person or by certain members of his family for
which the named person has sole or shared voting or investment power.
2. Percent of class based on 39,761,238 Common Shares outstanding as of the
date hereof. Common Shares which an individual or group has the right to
acquire within 60 days pursuant to the exercise of options are deemed to be
outstanding for the purpose of computing the percentage ownership of such
individual or group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other individual or group shown in
the table.
XIII. ITEM -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into a 5-year management services agreement, which was
approved by the shareholders, made between the Company and a private management
company beneficially owned and controlled by R. Bruce Freeman, the Vice
Chairman, CFO and Treasurer of the Company, and Elliott & Associates, Inc.,
which provides the services of J. Douglas Elliott, as the Chairman, CEO and
President of the Company. The term of the management services agreement
currently expires on 31 August 1999, however, subject to shareholder, court and
regulatory approval, the Reorganization Plan contemplates extending the terms
through 31 January 2000.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 30
PART IV
XIV. ITEM -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
OF BATTERY ONE, INC. F-1
Auditors' Report dated 17 May 1996 F-2
Consolidated Balance Sheets for the fiscal years ended
31 January 1996 and 1995 F-3
Consolidated Statements of Operations for the fiscal years ended
31 January 1996 and 1995, and 30 April 1994 F-4
Consolidated Statements of Deficit for the fiscal years ended
31 January 1996 and 1995, and 30 April 1994 F-5
Consolidated Statements of Changes in Financial Position for the
fiscal years ended 31 January 1996 and 1995, and 30 April 1994 F-6
Notes to Consolidated Financial Statements F-7
2. INDEX OF FINANCIAL STATEMENT SCHEDULES
None
3. EXHIBITS
The exhibits listed on the accompanying index of exhibits are filed
as part of this Annual Report on Form 10-K.
(b) Reports on Form 8-K
A report on Form 8-K was filed on 12 December 1995 reporting a trading
halt of the Company's shares pending a News Release concerning its
reorganization plans.
(c) Index of Exhibits
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 31
EXHIBIT DESCRIPTION
NUMBER -----------
------
*3.1 Certificate of Incorporation, as amended, of the Company.
*3.2 By-laws of the Company.
*4.1 Specimen Common Share Certificate.
*4.2 Incentive Stock Option Plan.
**16 Letter regarding change in the Company's Auditors from Price
Waterhouse, LLP, of Pittsburgh, Pennsylvania, to BDO Dunwoody,
Chartered Accountants, of Toronto, Canada.
27 Financial Data Schedule
______________________________
* Previously filed as an exhibit to the Company's Annual Report on Form 20-F
with the Securities and Exchange Commission for the fiscal year ending 12
April 1990 and incorporated herein by reference thereto.
** Previously filed as an exhibit to the Company's Form 8-K filed dated 15
April 1996 and incorporated herein by reference thereto.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page 32
SIGNATURES
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.
BATTERY ONE, INC.
Date: 19 June 1996 By: /s/ J Douglas Elliott
---------------------------------
J Douglas Elliott
Chief Executive Officer
Pursuant to the requirements of the SECURITIES EXCHANGE ACT OF 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of the 19h day of June 1996.
/s/ J Douglas Elliott
--------------------------------------------
J Douglas Elliott
Chairman, CEO and President
(Principal Executive Officer)
/s/ R Bruce Freeman
--------------------------------------------
R Bruce Freeman
Vice Chairman, CFO and Treasurer
(Principal Financial and Accounting Officer)
/s/ Eric D Sigurdson
--------------------------------------------
Eric D Sigurdson
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-1
INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Page
-----
Management's Statement of Responsibility F-2
Auditor's Report F-2
Consolidated Balance Sheets for the fiscal years ended
31 January 1996 and 1995 F-3
Consolidated Statements of Operations for the fiscal
years ended 31 January 1996 and 1995 and 30 April 1994 F-4
Consolidated Statements of Deficit for the fiscal years
ended 31 January 1996 and 1995 and 30 April 1994 F-5
Consolidated Statements of Changes in Financial Position
for the fiscal years ended 31 January 1996 and 1995
and 30 April 1994 F-6
Notes to the Consolidated Financial Statements F-7
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-2
MANAGEMENT'S STATEMENT OF RESPONSIBILITY
The management of Battery One, Inc. is responsible for the preparation of the
accompanying financial statements and the preparation and presentation of all
information in the Annual Report. The consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in
Canada and are considered by management to present fairly the financial
position and operating results of the Company.
The Company maintains various systems of internal control to provide
reasonable assurance that transactions are appropriately authorized and
recorded, that assets are safeguarded, and that financial records are
properly maintained to provide accurate and reliable financial statements.
The Company's audit committee meets periodically with the Company's
management and independent auditors to review financial reporting matters and
internal controls and to review the consolidated financial statements and the
independent auditors' report. The audit committee reported its findings to
the Board of Directors who have approved the consolidated financial
statements.
The Company's independent auditor, BDO Dunwoody, Chartered Accountants, have
examined the financial statements and their report follows.
/s/ J. Douglas Elliott /s/ R. Bruce Freeman
- ------------------------------------ ------------------------------------
J. Douglas Elliott R. Bruce Freeman
Chairman, CEO & President Vice Chairman, CFO & Treasurer
________________________________________________
AUDITORS' REPORT
TO THE SHAREHOLDERS OF BATTERY ONE, INC.:
We have audited the consolidated balance sheet of Battery One, Inc. as at 31
January 1996 and the consolidated statements of operations, deficit and
changes in the financial position for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at 31 January
1996 and the results of its operations and the changes in its financial
position for the year then ended in accordance with generally accepted
accounting principles.
The consolidated financial statements as at 31 January 1995 and for the
period then ended and for the year ended 30 April 1994 were audited by other
auditors who expressed an opinion without reservation thereon in their report
dated 16 June 1995.
/s/ BDO Dunwoody
------------------------------------
BDO Dunwoody
Chartered Accountants
Toronto, Canada
17 May 1996
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-3
BATTERY ONE, INC.
CONSOLIDATED BALANCE SHEETS
as at 31 January
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,288 $ 330,254
Accounts receivable 64,001 156,090
Inventory 0 2,086,444
Prepaid expenses 19,760 191,481
---------- ----------
85,049 2,764,269
Capital assets, net - SEE NOTE 4 0 2,382,630
Deferred charges, net - SEE NOTE 5 244,986 35,780
---------- ----------
$ 330,035 $5,182,679
---------- ----------
---------- ----------
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities $ 507,208 $2,108,144
Notes payable 0 44,257
---------- ----------
507,208 2,152,401
---------- ----------
SHAREHOLDERS' (DEFICIENCY)/EQUITY
Share capital - SEE NOTE 6
Authorized at no par value:
An unlimited number of common shares
An unlimited number of preferred shares
Issued: 39,192,975 common shares (1995-33,914,521) 26,016,484 24,682,384
---------- ----------
Deficit 26,193,657 21,652,106
---------- ----------
(177,173) 3,030,278
---------- ----------
$ 330,035 $5,182,679
---------- ----------
---------- ----------
</TABLE>
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-4
BATTERY ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
31 January 1996 and 1995 and 30 April 1994
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
- SEE NOTES 2 & 3 - SEE NOTES 2 & 3 - SEE NOTES 2 & 3
<S> <C> <C> <C>
SALES $5,375,229 $8,547,973 $10,223,192
Cost of sales 2,268,678 4,199,471 4,404,155
---------- ---------- -----------
Gross profit 3,106,551 4,348,502 5,819,037
---------- ---------- -----------
EXPENSES
Operating and administration 7,229,637 5,637,840 7,616,342
Amortization 299,698 200,078 266,402
---------- ---------- -----------
LOSS FROM OPERATIONS 4,422,784 1,489,416 2,063,707
Loss from abandonment of Subsidiaries 118,767 0 0
---------- ---------- -----------
NET LOSS FOR PERIOD $4,541,551 $1,489,416 $ 2,063,707
---------- ---------- -----------
---------- ---------- -----------
NET LOSS PER SHARE $0.13 $0.05 $0.07
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 36,290,672 31,806,154 27,761,117
</TABLE>
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-5
BATTERY ONE, INC.
CONSOLIDATED STATEMENTS OF DEFICIT
31 January 1996 and 1995 and 30 April 1994
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
- SEE NOTES 2 & 3 - SEE NOTES 2 & 3 - SEE NOTES 2 & 3
<S> <C> <C> <C>
Deficit, beginning of period $21,652,106 $20,162,690 $18,098,983
Net loss for period 4,541,551 1,489,416 2,063,707
----------- ----------- -----------
Deficit, end of period $26,193,657 $21,652,106 $20,162,690
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-6
BATTERY ONE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
31 January 1996 and 1995 and 30 April 1994
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS)
<TABLE>
1996 1995 1994
----------- ----------- -----------
- SEE NOTES 2 & 3 - SEE NOTES 2 & 3 - SEE NOTES 2 & 3
<S> <C> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
(Loss) for period $(4,541,551) $(1,489,416) $(2,063,707)
Items not affecting cash
Loss on abandonment of Subsidiaries 118,766 0 0
Amortization 299,698 200,078 266,402
----------- ----------- -----------
(4,123,087) (1,289,338) (1,797,305)
CHANGES IN NON CASH OPERATING ITEMS
Accounts receivable 92,089 (126,329) (14,019)
Inventory 2,086,444 (237,347) (533,861)
Prepaid expenses 171,721 (75,396) (20,553)
Deferred Charges (209,206) (35,780) 0
Accounts payable and accrued liabilities (1,600,936) 142,832 1,321,725
On abandonment of Subsidiaries 2,173,272 0 0
----------- ----------- -----------
(1,409,703) (1,621,358) (1,044,013)
----------- ----------- -----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Issue of common shares and warrants 1,334,100 1,795,402 1,205,560
Notes payable (44,257) (5,743) (50,000)
----------- ----------- -----------
1,289,843 1,789,659 1,155,560
----------- ----------- -----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
(Purchase)/disposal of capital assets 0 (19,889) (119,851)
Capitalization of deferred charges (209,106) 0 0
----------- ----------- -----------
(209,106) (19,889) (119,851)
----------- ----------- -----------
INCREASE (DECREASE) IN CASH DURING PERIOD (328,966) 148,412 (8,304)
Cash, beginning of period 330,254 181,842 190,146
----------- ----------- -----------
CASH, END OF PERIOD $ 1,288 $ 330,254 $ 181,842
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS)
1. NATURE OF BUSINESS
During the fiscal year ended 31 January 1996, Battery One, Inc.'s (the
"Company") wholly-owned subsidiaries Battery One-Stop International Inc.
("BOSI") and Batteries Etc., Inc. ("Etc.") (collectively, the "Subsidiaries")
were assigned into bankruptcy (see Note 3). All of the Company's operations,
which consisted of the sale of batteries and battery-related products to
consumers via company-owned retail stores in Canada and the United States, were
conducted through the Subsidiaries and all of its capital assets were owned by
the Subsidiaries. Accordingly, at 31 January 1996 the Company had no ongoing
operations nor operating assets.
As set out in Note 9, management has developed a reorganization plan with the
intent of re-commencing operations.
2. SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF PRESENTATION
During Fiscal 1995, the Company elected to change its fiscal year end
from 30 April to 31 January. The balance sheets herein are as of 31
January 1996 and 1995. The statement of operations, statement of deficit
and statement of change in financial position are for year ending 31
January 1996, the nine-month period ending 31 January 1995 and the year
ended 30 April 1994.
b. PRINCIPLES OF CONSOLIDATION
These consolidated financial statements include the accounts of the
Company, BOSI and Etc. (See Note 3 below.) All significant intercompany
accounts and transactions between the Company and these subsidiaries were
eliminated.
c. INVENTORY
Inventory consists entirely of finished goods held for resale and is
carried at the lower of cost or net realizable value. Cost was
determined using the first-in, first-out inventory method.
d. FOREIGN CURRENCY TRANSLATION
The Company accounts for the translation of foreign currency transactions
and related financial statement items using the temporal method. Under
this method, monetary items are translated at the rate of exchange in
effect at the balance sheet date, non-monetary items are translated at
historical exchange rates, and revenue and expense items are translated
at average rates of exchange for the period in which they occur.
Exchange gains and losses are included in the determination of net
income.
e. CAPITAL ASSETS
Capital assets are recorded at cost. The provision for amortization is
calculated on a straight-line basis on the original cost over the
following estimated useful lives:
Stores and kiosks 10 years
Equipment 5 years
Costs capitalized for new stores and kiosks include all design, delivery,
installation and construction costs.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-8
f. DEFERRED CHARGES
Deferred charges are recorded at cost. These costs include patent and
trademark filing costs plus site selection, lease negotiation costs,
pre-opening and staff training costs, and staff wages to the time the
store is at full productive use, and such other costs that are properly
deferred to be matched against the result of the expenditure. The
provision for amortization is calculated on a straight-line basis on the
original cost over the following four years. Costs of raising capital
are deferred until such time as the related transactions are completed.
3. CESSATION OF CONTROL OF THE SUBSIDIARIES
In December 1995, BOSI made a voluntary assignment into bankruptcy pursuant to
the CANADIAN BANKRUPTCY AND INSOLVENCY ACT. Also in December 1995, the Company
made a voluntary petition seeking protection under Chapter 11 of the US
BANKRUPTCY CODE, which in January 1996, was converted to a Chapter 7 filing.
The Company was the largest creditor of both Subsidiaries.
As the Subsidiaries were abandoned during Fiscal 1996 and management ceased to
control the affairs of the Subsidiaries, the Company ceased to consolidate the
accounts and operating results of BOSI on 14 December 1995 and Etc. on 8
December 1995.
The Company is not directly nor indirectly liable for any debt or liability of
the Subsidiaries and has no outstanding guarantees or undertakings with respect
to any claim against the Subsidiaries.
4. CAPITAL ASSETS
Included in the stores and kiosks amount for Fiscal 1995, were kiosks not in use
as at 31 January 1995, with a net book value of $638,910. Included in the
equipment amount were cash registers not in use at 31 January 1995 with a net
book value of $75,763. No amortization was provided on assets not currently in
use.
31 JANUARY 1995
------------------------------------
ACCUMULATED
COST AMORTIZATION NET
---------- ------------ ----------
Stores and kiosks $2,818,584 $606,185 $2,212,399
Equipment $ 333,278 $163,047 $ 170,231
---------- ------------ ----------
$3,151,862 $769,232 $2,382,630
---------- ------------ ----------
---------- ------------ ----------
5. DEFERRED CHARGES
Deferred charges consist of the following:
31 JANUARY 1995
------------------------------------
ACCUMULATED
COST AMORTIZATION NET
---------- ------------ ---------
Deferred charges $47,707 $11,927 $35,780
------- ------- -------
------- ------- -------
31 JANUARY 1996
------------------------------------
ACCUMULATED
COST AMORTIZATION NET
---------- ------------ ---------
Deferred charges $256,946 $11,960 $244,986
-------- ------- --------
-------- ------- --------
Included in deferred charges as at 31 January 1996 are amounts pertaining to the
cost of raising capital for the Company, which transactions closed in March 1996
(see Note 9 below).
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-9
6. SHARE CAPITAL
The Company arranges the private placement of warrant financings from time to
time which proceeds are reported as equity upon the receipt thereof. As and
when the warrants are exchanged for common shares, the Company records the
issuance of shares.
SHARES DOLLARS
---------- -----------
30 April 1994 balance 29,332,337 $22,886,982
Shares issued for cash 285,184 72,000
Warrants issued for cash 1,297,000 1,400,000
Warrants exchanged for shares 3,000,000 660,000
Cost of issuing 0 (336,598)
---------- -----------
31 January 1995 balance 33,914,521 25,355,580
---------- -----------
Shares issued for cash 780,000 $ 244,100
Warrants exchanged for shares 4,498,454
Advances in consideration of
Special Warrant issue 1,100,000
Cost of issuing 0 (10,000)
---------- -----------
31 JANUARY 1996 BALANCE 39,192,975 $25,609,680
---------- -----------
---------- -----------
Subject to shareholder and regulatory approval, the Company proposes to
implement a plan of arrangement providing for the reduction of the stated
capital of the common shares of the Company by all or virtually all of the
accumulated deficit. In addition, the plan of arrangement provides for the
reorganization and consolidation of the capital shares of the Company on the
basis of twenty (20) pre-consolidation shares for one (1) post-consolidation
share and one exchange right ("Exchange Rights") to purchase one unit of the
Company's equity ("Exchange Rights Units"), upon the requisite shareholder,
regulatory and court approvals to the share consolidation (the "Exchange Rights
Issue Date"). The Exchange Rights would entitle holders to purchase up to an
aggregate of 1,988,062 Exchange Rights Units of the Company at $2.00 per unit
(equivalent to 39,761,238 pre-consolidation shares of the Company, which are
issued and outstanding as of the date hereof, at $0.10 per share), proposed to
be on or before 90 days from the Exchange Rights Issue Date. Subject to the
exercise of the Exchange Rights, each Exchange Rights Unit would further include
a warrant, which in turn would consist of two entitlements: firstly, entitling
holders to exercise to acquire up to an aggregate of 1,988,062 post-
consolidation shares of the Company at an exercise of $2.50 per share
(equivalent to 39,761,238 pre-consolidation shares at $0.125 per share), in or
before March 1997; and, secondly, and subject to the exercise of the Class A
Warrant, a collateral Class AA Warrant, entitling holders to acquire up to an
additional aggregate of 1,988,062 post-consolidation shares of the Company at an
exercise of $3.00 per share (equivalent to 39,761,238 pre-consolidation shares
at $0.15 per share), in or before March 1998.
On 29 July 1994, 3,000,000 share purchase warrants were exercised and the
Company issued 3,000,000 common share for cash proceeds of $660,000. In
addition, on 29 July 1994, the Company completed a private placement financing
of special warrants whereby it issued 6,363,636 special warrants at $0.22 each
for cash proceeds of $1,400,000. Each special warrant entitles the holder to
convert the special warrant into one common share and one-half of one regular
warrant. One regular warrant entitles the holder to purchase one share of
common stock at $1.00 per share. During Fiscal 1996, 4,498,454 special warrants
were exchanged and during the 9 months ended 31 January 1995, 1,297,000 special
warrants were exchanged for common shares. The 568,182 special warrants which
remained outstanding at year end were exchanged in February 1996.
During the year ended 31 January 1996, the Company received advances of
$1,100,000 in consideration of a special warrant issue which was completed
subsequent to year end.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-10
As of 31 January 1996, there were no outstanding options to purchase common
shares. A summary of stock options activity for the year ended 31 January 1996,
the 9 months ended 31 January 1995, and the year ended 30 April 1994, is as
follows:
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- -------------
30 April 1994 balance 2,246,000 $0.23 - $2.12
Granted 0
Exercised 100,000 $0.23
Canceled or expired 1,047,000 $0.23 - $2.12
---------
31 January 1995 balance 1,099,000 $0.23 - $0.49
Granted 0
Exercised 780,000 $0.23 - $0.49
Canceled or expired 319,000 $0.23 - $0.49
---------
31 JANUARY 1996 BALANCE 0
---------
In addition, there remain 1,000,000 common shares of the Company reserved for
possible issuance to certain principals, pursuant to an earn-out formula
relating to the Company's cash flow from operations and/or additional store
openings. No shares under this plan were issued during the during the past two
years. Entitlement under this plan expires on 15 December 1997 although the
Company does not expect that any additional shares will be issued hereunder.
7. INCOME TAXES
As of 31 January 1996, the Company has incurred losses of $14,982,000 (1995 -
$10,900,000) for Canadian income tax purposes. These losses have not been
recognized for accounting purposes. The loss carry-forwards expire from 1996 to
2003. Losses from subsidiaries are excluded from the foregoing (see Notes 1 and
3).
8. SEGMENTED INFORMATION
The extent of the Company's operations in Canada and the United States for the
year ended 31 January 1996, the 9 months ended 31 January 1995, and for the year
ended 30 April 1994, was as follows:
CANADA UNITED STATES TOTAL
------ ------------- -----
1,996
--------------------------------------
Sales $1,749,393 $3,625,836 $5,375,229
Net loss $1,076,324 $3,465,227 $4,541,551
Assets $ 330,035 -- $ 330,035
1,995
--------------------------------------
Sales $2,414,991 $6,132,982 $8,547,973
Net loss $ 498,134 $ 991,282 $1,489,416
Assets $1,505,984 $3,676,695 $5,182,679
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-11
CANADA UNITED STATES TOTAL
------ ------------- -----
1,994
---------------------------------------
Sales $3,057,058 $7,166,134 $10,223,192
Net loss $ 700,016 $1,363,691 $ 2,063,707
Assets $1,223,603 $3,516,001 $ 4,739,604
9. SUBSEQUENT EVENTS
Subsequent to 31 January 1996, the following events have occurred:
a. REORGANIZATION PLAN
On 1 February 1996 the Company reported that it was proposing to
shareholders, subject to shareholder and regulatory approval, a
reorganization plan that would assist the Company in achieving its
long-term business plan ("Reorganization Plan"). Particularly salient
are the following points:
i) FINANCING PLAN
In conjunction with the steps taken by the management to best
protect the Company's assets, (see Note 3 herein), as part of its
Reorganization Plan, the Company has adopted a multifaceted
corporate finance plan (the "Financing Plan").
A) Fiscal Agent Engaged
The Company engaged C.M. Oliver & Company Limited of Toronto (the
"Agent") effective 1 March 1996 as its fiscal advisor and agent for
a one-year term. The Agent has and will assist the Company on a
best efforts basis in raising the capital required for its
Reorganized Plan.
A part of the Agent's remuneration includes a warrant to purchase
up to 4.5 million common shares of the Company at $0.10 per share
in a transaction expected to conclude by October 1996.
B) Special Warrant Private Placement Financing
The Agent and Company completed the initial $3.85 million of an
approved Special Warrant Private Placement Financing (the "Special
Warrants") of up to $4.5 million. Closing of the first and second
tranches occurred on 1 March and 2 April 1996 for 38.5 million
Special Warrants, which were issued at a purchase price of $0.10
per Special Warrant (or 2.25 million Special Warrants at $2.00 on a
post-consolidation basis), for gross proceeds of $3.85 million, of
which $1.1 million had been received prior to 31 January 1996.
C) Special Warrant Entitlements
Each Special Warrant is convertible into one common share plus one
Class B Warrant which shall consist of two entitlements: firstly,
entitling holders to acquire up to an aggregate of 2.25 million
post-consolidation shares of the Company at an exercise of $2.50
per share (equivalent to 45 million pre-consolidation shares at
$0.125 per share) on or before one year from the Special Warrants
issue date (due March 1997); and, secondly, and subject to the
exercise of the Class B Warrant, a collateral Class BB Warrant,
entitling holders to acquire up to an additional aggregate of 2.25
million post-consolidation shares of the Company at an exercise of
$3.00 per share (equivalent to 45 million pre-consolidation shares
at $0.15 per share on a pre-consolidated basis), on or before two
years from the Special Warrants issue date (due March 1998).
The Company has incurred up to a 10% penalty payable by the
issuance of additional special warrants to the holders of the
Special Warrants subscribed for by them. The entitlements attached
to these penalty Special Warrants are the same as the Special
Warrants.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-12
D) Convertible Secured Debenture Private Placement Financing
The Company has agreed with the Agent and received conditional
regulatory approval to an offering of 10% convertible fixed and
floating charge debentures subject to a minimum placement of $2.5
million and a maximum placement of $5 million (the "Debentures").
The Debentures as proposed provide for a term of five years from
the closing date of the placement(s) (the "Term"). Debentures
holders will have the right at any time during the Term to convert
all or any part of the indebtedness into the Company's common
shares for $0.125 per share on a pre-consolidation basis ($2.50 per
share post-consolidation). At any time on or after the third
anniversary date of the closing date, the Company will have the
right on reasonable notice to compel debenture holders to convert
all or any part of the indebtedness into common shares of the
Company for $0.125 per share pre-consolidation ($2.50 per share
post-consolidation) on the condition that the Company's common
shares have traded at a weighted average price of $0.20 per share
or greater pre-consolidation ($4.00 per share post-consolidation)
during the 10 trading days prior to the Company compelling the
conversion. Failing conversion by debenture holders in the
circumstances of such notice, the Company has the right to repay
the whole or any part of the convertible debentures, on a PRO RATA
basis.
ii) NAME CHANGE
The Company proposes, subject to shareholder approval at the next meeting
of shareholders, to change its name to POWER PLUS CORPORATION.
b. On 8 March 1996, the Company closed a purchase transaction with the
Trustee of the Estate of BOSI (the "Estate") whereby for $200,000 the
Company acquired the assets of the Estate including inventory, furniture
and equipment, kiosks, lease entitlements and certain trade marks and
proprietary information.
c. On 17 May 1996, Power Plus USA, Inc. a wholly-owned subsidiary of the
Company, acquired a lease for retail space upon the approval of the
Bankruptcy Court, Western District of New York. The transaction for
US$70,000 is expected to close on 19 June 1996.
10. US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in Canada. Except as set out below,
these financial statements also comply, in all material respects, with
accounting principles in the United States and the accounting rules and
regulations of the Securities and Exchange Commission.
In the United States under the Financial Accounting Standards Board SFAS No.
109, ACCOUNTING FOR INCOME TAXES, the Company would have used the asset and
liability method of accounting for income taxes, whereas the deferral method of
accounting for income taxes is used under the Canadian basis. Under the asset
and liability method, deferred tax assets and liabilities are recognized for the
future tax consequence attributable to temporary differences between the
financial statements' carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to table income in the years in which
those temporary differences are expected to be recovered or settled.
Under SFAS No. 109, the Company would currently have tax assets as a result of
income tax loss carry-forwards but would have chosen to provide an allowance of
100 percent against all available income tax assets. Accordingly, its adoption
would not have had a material effect on the financial position, results of
operation or cash flows of the Company.
As discussed in Note 1, the Company accounts for translation of foreign currency
transactions using the temporal method, whereby monetary items are translated at
the rate of exchange in effect at the balance sheet date, non-monetary items are
translated at historical exchange rates, and revenue and expense items are
translated at average rates of exchange for the period in which they occur.
Exchange gains and losses are included in the determination of net income for
the period.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-K -- FISCAL 1996
Page F-13
Under generally accepted accounting principles in the United States, both
monetary and non-monetary items would be translated at the rate of exchange at
the balance sheet date, while revenue and expense items would be translated at
the rates in effect on the date such transactions occurred. Translation
adjustments would not be included in determining net income, but rather would be
reflected as a separate component of equity in the balance sheet. As a result,
the reported net loss for the 9 months ended 31 January 1995, would have been
$1,663,168, and the reported net loss in 1994 and 1993 would have been
$2,144,607 and $722,604, respectively. Additionally, the equity section of the
balance sheet would have included cumulative translation adjustments of $343,149
at 31 January 1995, and $237,165 at 30 April 1994.
The Company's financial instruments consist primarily of accounts receivable and
accounts payable. As the fair value of these financial instruments is equal to
their carrying value, they would not have been adjusted under generally accepted
accounting principles in the United States.
<PAGE>
[LOGO]
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
*3.1 Certificate of Incorporation, as amended, of the
Company
*3.2 By-Laws of the Company
*4.1 Specimen Common Share Certificate
*4.2 Incentive Stock Option Plan
**16 Letter regarding change in the Company's Auditors from
Price Waterhouse, LLP, of Pittsburgh, Pennsylvania, to
BDO Dunwoody, Chartered Accountants, of Toronto, Canada.
27 Financial Data Schedule
_______________________
* Previously filed as an exhibit to the Company's Annual Report on Form 20-F
with the Securities and Exchange Commission for the fiscal year ending
12 April 1990 and incorporated herein by reference thereto.
** Previously filed as an exhibit to the Company's Form 8-K filed dated 15
April 1996 and incorporated herein by reference thereto.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BATTERY ONE,
INC. ANNUAL CONSOLIDATED AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING
31 JAN 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CURRENCY> CANADIAN
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-START> FEB-01-1997
<PERIOD-END> JAN-31-1996
<EXCHANGE-RATE> 0.73
<CASH> 1298
<SECURITIES> 0
<RECEIVABLES> 64001
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 85049
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 330035<F1>
<CURRENT-LIABILITIES> 507208<F2>
<BONDS> 0
0
0
<COMMON> 26016484<F3>
<OTHER-SE> (26193657)
<TOTAL-LIABILITY-AND-EQUITY> 330035<F5>
<SALES> 5375229<F1>
<TOTAL-REVENUES> 5375229
<CGS> 2268678
<TOTAL-COSTS> 2268678
<OTHER-EXPENSES> 7529335
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4422784)
<INCOME-TAX> 0<F4>
<INCOME-CONTINUING> (4422784)
<DISCONTINUED> (118767)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4541551)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
<FN>
<F1>DURING THE FISCAL YEAR ENDED 31 JAN 1996, THE CORPORATION'S WHOLLY-OWNED
US SUBSIDIARY BATTERIES ETC., INC. AND CANADIAN SUBSIDIARY BATTERY ONE-STOP
INTERNATIONAL INC. (COLLECTIVELY, THE "SUBSIDIARIES") WERE ASSIGNED INTO
BANKRUPTCY. ALL OF THE CORPORATION'S OPERATIONS, WHICH CONSISTED OF THE SALE
OF BATTERIES AND BATTERY-RELATED PRODUCTS IN CANADA AND THE US WERE CONDUCTED
THROUGH THE SUBSIDIARIES. ACCORDINGLY, AT YEAR END THE CORPORATION HAD NO
ONGOING OPERATIONS NOR OPERATING ASSETS.
<F2>THE CORPORATION IS NOT DIRECTLY NOR INDIRECTLY LIABLE FOR ANY DEBT OR
LIABILITY OF THE SUBSIDIARIES.
<F3>COMMON STOCK INCLUDES AMOUNTS RECEIVED BY THE CORPORATION IN RESPONSE
TO NEW MANAGEMENT'S PLAN OF ARRANGEMENT AND FINANCING PLAN. SUBSEQUENT
TO YEAR END THE CORPORATION CLOSED $3.85 MILLION OF A $4.5 MILLION SPECIAL
WARRANTS PRIVATE PLACEMENT FINANCING. OF THIS AMOUNT, $1.1 MILLION HAD
BEEN RECEIVED PRIOR TO YEAR END AND HAS BEEN REPORTED IN THE COMMON STOCK
AMOUNT. COMPLETE INFORMATION CONCERNING THE CAPITAL REORGANIZATION IS
INCLUDED IN THE FORM 10-K.
<F4>THE CORPORATION HAS INCURRED LOSSES OF APPROXIMATELY $15 MILLION FOR
CANADIAN INCOME TAX PURPOSES. THESE LOSSES HAVE NOT BEEN RECOGNIZED FOR
ACCOUNTING PURPOSES. THE LOSS CARRY-FORWARDS EXPIRE FROM 1996 TO 2003.
LOSSES FROM SUBSIDIARIES ARE EXCLUDED FROM THE FOREGOING.
<F5>SUBSEQUENT TO YEAR END, THE CORPORATION ANNOUNCED TO SHAREHOLDERS ITS
REORGANIZATION PLAN, INCLUDING A PLAN OF ARRANGEMENT, WHICH IS SUBJECT TO
SHAREHOLDER, COURT AND REGULATORY APPROVAL AS TO CERTAIN ASPECTS THEREOF.
THE REORGANIZATION PLAN INCLUDES A FINANCING PLAN. INCLUSIVE IN THE FINANCING
PLAN IS A SPECIAL WARRANT PRIVATE PLACEMENT FINANCING FOR UP TO 45 MILLION
WARRANTS AND $4.5 MILLION; A 10% CONVERTIBLE SECURED DEBENTURE PRIVATE
PLACEMENT FINANCING FOR UP TO $5 MILLION; AND A REORGANIZATION OF THE COMMON
STOCK INCLUDING THE ISSUANCE OF EXCHANGE RIGHTS, A 20:1 REVERSE SPLIT COMMON
STOCK CONSOLIDATION AND STATED CAPITAL REDUCTION TO ELIMINATE THE
SHAREHOLDERS' DEFICIT. COMPLETE INFORMATION CONCERNING THE FINANCING PLAN IS
INCLUDED IN THE FORM 10-K.
</FN>
</TABLE>
