<PAGE>
[LOGO] SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the quarterly period ended 30 APRIL 1996, or
--- Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from __________ to __________.
COMMISSION FILE NUMBER 0-18163
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 L3R 0B9
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP / POSTAL CODE)
905-479-5683
800-769-3733 (800-POWERED) 905-479-8911
(TELEPHONE NUMBERS) (FAX NUMBER)
- --------------------------------------------------------------------------------
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
--- ---
As of 18 June 1996 there were 39,761,238 shares of the registrant's Common Stock
outstanding.
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$1.00 = US$0.73.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 2
FORM 10-Q INDEX
-----------------
PART I - FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
Item 1. Consolidated Interim Financial Statements 3
Consolidated Statements of Changes in Financial Position - 30 April 1996 and 1995
Consolidated Balance Sheets - 30 April 1996 and 31 January 1996
Consolidated Statements of Operations - 30 April 1996 and 1995
Notes to Consolidated Financial Statements
Item 2. Management's Discussion, and Analysis of Financial Condition and Results of Operations 6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 8
Index to Exhibits none
</TABLE>
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 3
ITEM 1. INTERIM FINANCIAL STATEMENTS
QUARTER 1
(ended 30 April 1996)
FISCAL 1997
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED 30 APRIL
---------------------------
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS) 1996 1995
---- ----
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
(Loss) for period $ (477,167) $(1,115,699)
Items not affecting cash
Amortization 15,739 66,680
---------- -----------
(461,428) (1,049,019)
---------- -----------
CHANGES IN NON CASH OPERATING ITEMS
Accounts receivable 0 (118,852)
Inventory (99,993) 383,177
Prepaid expenses 0 18,061
Accounts payable and accrued liabilities (77,911) 337,385
---------- -----------
(639,332) (429,248)
---------- -----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
Issue of common shares and warrants 2,750,000 244,100
---------- -----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchase of capital assets (66,034) (5,665)
Purchase of deferred assets (340,000) 0
Purchase of other assets (175,500) (641)
---------- -----------
(581,534) (6,306)
---------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DURING PERIOD 1,529,134 (191,454)
Cash and cash equivalents, beginning of period 1,288 330,254
---------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,530,422 $ 138,800
---------- -----------
---------- -----------
</TABLE>
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 4
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET, AS AT
- ---------------------------------
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS) 30 APRIL 1996 31 JANUARY 1996
------------- ---------------
(UNAUDITED) (audited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,530,422 $ 1,288
Accounts receivable 64,001 64,001
Inventory 99,993 0
Prepaid expenses 19,760 19,760
----------- -----------
1,714,176 85,049
Capital assets, net 66,034 0
Deferred charges, net 569,247 244,986
Other assets 175,500 0
----------- -----------
$ 2,524,957 $ 330,035
----------- -----------
LIABILITIES
Accounts payable and accrued liabilities $ 429,297 $ 507,208
----------- -----------
2,954,254 507,208
SHAREHOLDERS' EQUITY/(DEFICIENCY)
Share capital and warrants 28,766,484 26,016,484
Deficit 26,670,824 26,193,657
----------- -----------
2,095,660 (177,173)
----------- -----------
$ 2,524,957 $ 330,035
----------- -----------
----------- -----------
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTH AND YEAR TO DATE
PERIOD ENDED 30 APRIL
---------------------
(AMOUNTS ARE EXPRESSED IN CANADIAN DOLLARS) 1996 1995
---- ----
<S> <C> <C>
SALES $ 14,782 $ 2,171,525
Cost of sales 6,235 935,401
----------- -----------
GROSS PROFIT 8,547 1,236,124
EXPENSES
Operating and administration 469,975 2,285,143
Amortization 15,739 66,680
----------- -----------
(LOSS) FROM OPERATIONS AND FOR PERIOD (477,167) (1,115,699)
Deficit, beginning of period 26,193,657 21,652,106
----------- -----------
DEFICIT, END OF PERIOD $26,670,824 $22,767,805
----------- -----------
----------- -----------
LOSS PER SHARE $0.01 $0.03
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 39,628,643 34,694,521
</TABLE>
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1: 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 Item 2. -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS herein). 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 US, were conducted through the Subsidiaries and all of its
capital assets were owned by the Subsidiaries. Accordingly, at 31
January 1996 and during a part of the first quarter of Fiscal 1997
the Company had no ongoing operations nor operating assets.
However, as described hereinafter, management has developed a
reorganization plan with the intent of re-commencing operations.
Accordingly, the results of operations are presented on the basis
that the Company has recommenced operations. During the first
quarter of Fiscal 1997 (see Item 2. --MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS herein),
the Company acquired assets and operated one store in Canada for
part of the period. There were no operations in the US in this
quarter although the Company has entered into an agreement which
has been accepted to acquire a certain lease for a location in the
Pittsburgh Airport airmall, which is scheduled to open during the
second quarter of Fiscal 1997.
Note 2: For the first quarter of Fiscal 1997, the consolidated balance sheet
as at 30 April 1996 and the consolidated statements of operations
and changes in financial position for the three month and year to
date period ended 30 April 1996 and 1995, in the opinion of
management, include all adjustments necessary for a fair
presentation of such financial statements. Such adjustments
consisted only of normal recurring items. Interim results are not
necessarily indicative of results for a full year.
The consolidated balance sheet as at 30 April 1996 and the
consolidated statements of operations and changes in financial
position for the three month and year to date period ended 30 April
1996 and 1995 are unaudited. The consolidated balance sheet for
the fiscal year ended 31 January 1996 was audited and reported in
the Company's Annual Report to Shareholders and Fiscal 1996 FORM
10-K.
The consolidated financial statements and notes are presented as
permitted by FORM 10-Q, and do not contain certain information
included in the Company's annual consolidated financial statements
and the notes thereto.
Loss per share is based on the weighted average outstanding common
shares for the period.
Note 3: On 1 March 1996, the Agent and the Company completed a Special Warrant
Private Placement Financing, comprised of up to 45 million Special
Warrants representing $4.5 million. Initially, 38.5 million
Special Warrants were subscribed for, representing gross proceeds
of $3.85 million. Of this amount, $1.1 million had been previously
received in the third quarter of Fiscal 1996, and the balance of
$2.75 million has been received in cash. The remaining Special
Warrants representing 6.5 million units and additional capital of
$650,000 are anticipated to be fully subscribed by July 1996 (see
ITEM 2. --MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, herein).
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
By the last quarter of Fiscal 1996 (the year ended 31 January 1996) it had
become apparent to management that on the basis of the Company's current
share capitalization, and considering the continued unprofitability of
Batteries Etc., Inc. ("Etc.") (the wholly-owned subsidiary of the Company
which formerly operated the business in the US), notwithstanding its best
efforts, the Company regrettably was not able to complete the financing of
its 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 Battery
One-Stop International Inc. ("BOSI") (the wholly-owned subsidiary of the
Company which formerly operated the business in Canada), to its serious
detriment. (Etc. and BOSI are referred to collectively as the "Subsidiaries".)
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
is the largest creditor of the 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-related products to consumers, were conducted through the
Subsidiaries, and all of its capital assets were owned by the Subsidiaries.
At year end 31 January 1996 the Company, therefore, had no ongoing operations
nor operating assets.
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 US, 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.
The Consolidated Statements of Operations included in this Report reflects
that during the first quarter of Fiscal 1997 (see below) the Company acquired
assets and operated one store in Canada for part of the period. There was no
store operating in the US although the Company has acquired a certain lease
and plans to open its first US store during the second quarter of Fiscal 1997.
Accordingly, the historical financial statements for the prior period
included in this report have little relevance to the Company's operations at
present.
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.
The Reorganization Plan has received the conditional approval of The Alberta
Stock Exchange as required. Selected aspects of the Reorganization Plan and
the related plan of arrangement require shareholder approval at the upcoming
July 24th annual and special meeting, and final court and regulatory approval
thereafter.
The Reorganization Plan is subdivided into two parts: PLAN 2000 prescribing
how the Company proposes to 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
manner in which the Company proposes to finance PLAN 2000'S requirements. As
part of its Reorganization Plan, the Company proposes to: change its name;
reduce its stated capital by all or virtually all of the accumulated deficit;
and, reorganize and consolidate its capitalization on the basis of twenty
(20) pre-consolidation shares for one (1) post-consolidation share and an
exchange right, that is to 1,988,062 post-consolidation shares from the
existing 39,761,238 pre-consolidation shares.
C.M. Oliver & Company Limited (the "Agent") has been engaged as fiscal
advisor and agent to assist the Company to arrange PLAN 2000'S financing.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 7
On 1 March 1996, the Agent and the Company completed a Special Warrant
Private Placement Financing, comprised of up to 45 million Special Warrants
representing $4.5 million. Initially, 38.5 million Special Warrants were
subscribed for, representing gross proceeds of $3.85 million. Of this amount,
$1.1 million had been previously received in the third quarter of Fiscal
1996, and the balance of $2.75 million was received in March and April 1996.
The remaining 6.5 million Special Warrants representing $650,000 are
anticipated to be fully subscribed by July 1996. Each Special Warrant is
convertible at no additional consideration into one common share of the
Company, plus a purchase warrant which itself consists of two entitlements:
firstly, the Class B Warrant entitling holders to acquire equal additional
shares at $0.125 ($2.50 post-consolidation), representing additional capital
in the aggregate of up to $5.625 million on or before 1 March 1997; and
secondly, subject to the exercise of the Class B Warrant, a collateral Class
BB Warrant entitling holders to acquire equal additional shares at $0.15
($3.00 post-consolidation), representing additional capital in the aggregate
of up to $6.75 million on or before 1 March 1998. Therefore, the total
capital derivable from the Special Warrants in the aggregate on a fully
diluted basis over the next two years is potentially $16.875 million,
representing aggregate post-consolidation dilution of up to 6.75 million
shares.
The Company has agreed with the Agent and received conditional regulatory
approval to a best efforts offering of 10% convertible secured fixed and
floating charge debentures in series, with an initial closing set for the end
of June 1996, subject to a minimum placement of $2.5 million and a maximum
placement of $5 million (the "Debentures"). The term of the Debentures is
five years from the initial closing date. Debentures holders have the right
at any time during the term to convert all or any part of the indebtedness
into shares at $0.125 per share ($2.50 post-consolidation), representing
potential post-consolidation dilution in the aggregate of up to 2 million
shares. At any time on or after the third anniversary date, the Company will
have the right on reasonable notice to force conversion of all or any part of
the Debentures into shares on the condition that the shares have traded at a
weighted average price of $4.00 per share or greater (post-consolidation)
during the 10 trading days prior to the Company compelling the conversion -
failing which, the Company may thereafter repay the whole or any part of the
Debentures at any time, on a PRO RATA basis.
Respecting the loyalty of the Company's long-term shareholders and seeking
their continuing support on an equal footing with the Special Warrant
holders, the Company has proposed a plan of arrangement to reorganize and
consolidate the outstanding share capital of the Company on the basis of
twenty (20) existing common shares being exchanged and consolidated for one
(1) new common share and one (1) exchange right (the "Exchange Rights") to
purchase one unit of the Company's equity (the "Exchange Rights Units"), upon
the requisite shareholder, regulatory and court approvals to the share
consolidation being obtained (expected July 1996 - 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 an exercise
price of $2.00 per unit (equivalent to $0.10 per pre-consolidation share),
proposed to be on or before 90 days from the Exchange Rights Issue Date,
representing additional potential capital in the aggregate of up to $4
million this year. 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, a Class A Warrant entitling holders to
purchase equal common shares at an exercise price of $2.50 per share
(equivalent to $0.125 per share on a pre-consolidation basis), on or before 1
March 1997, representing additional capital in the aggregate of up to $5
million; and, secondly, conditional upon the exercise of the Class A Warrant,
a collateral Class AA Warrant, entitling holders again to purchase equal
common shares at an exercise price of $3 per share (equivalent of $0.15 per
pre-consolidation share), on or before 1 March 1998, representing additional
capital in the aggregate of up to $6 million. The total capital from the
Exchange Rights on a fully diluted basis in the aggregate over the next two
years is therefore potentially $15 million.
Combining the potential of the Debentures together with the Special Warrants
and Exchange Rights, if approved, subscribed and exercised, the Company's
Financing Plan provides for sources of new capital in the aggregate of up to
$36.5 million over the next two years to support the implementation of PLAN
2000.
On 8 March 1996, the Company closed a purchase transaction with the Trustee
responsible for the realization of the assets BOSI whereby for $200,000 it
acquired the inventory, furniture and equipment, kiosks, and certain lease
entitlements and proprietary interests of its former Canadian subsidiary.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 8
On 17 May 1996, POWER PLUS USA, INC., a wholly-owned subsidiary of the
Company, acquired for $93,000 the strategic Pittsburgh Airport location
lease, formerly held by Etc., upon approval of the Western District of New
York Bankruptcy Court. This transaction is scheduled to close on 19 June,
providing for the re-opening of 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,
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 Special
Warrants Private Placement Financing described hereinabove.
<PAGE>
[LOGO] BATTERY ONE, INC.
FORM 10-Q Fiscal Year End 1997
Page 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
i) Exhibits
Exhibit 27 Financial Data Schedule
ii) Reports on Form 8-K
1 February 1996 filed on 13 March 1996
15 April 1996 filed on 29 April 1996
SIGNATURES
----------
Pursuant to the requirements 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: 18 June 1996 /s/ R. Bruce Freeman
-----------------------------------------
R. Bruce Freeman
Vice Chairman and Chief Financial Officer
(Duly authorized officer of the Registrant
and its chief financial officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BATTERY ONE,
INC. FIRST QUARTER FISCAL 1997 FOR THE PERIOD ENDING 30 APRIL 1996 UNAUDITED
INTERIM FINANCIAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CURRENCY> CANADIAN
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<EXCHANGE-RATE> 0.73
<CASH> 1530422
<SECURITIES> 0
<RECEIVABLES> 64001
<ALLOWANCES> 0
<INVENTORY> 99993
<CURRENT-ASSETS> 1714176
<PP&E> 81773
<DEPRECIATION> 15739
<TOTAL-ASSETS> 2524957<F1>
<CURRENT-LIABILITIES> 429297<F2>
<BONDS> 0
0
0
<COMMON> 28766484<F3>
<OTHER-SE> (26670874)
<TOTAL-LIABILITY-AND-EQUITY> 2524957<F5>
<SALES> 14782<F1>
<TOTAL-REVENUES> 14782
<CGS> 6235
<TOTAL-COSTS> 6235
<OTHER-EXPENSES> 485714
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0<F4>
<INCOME-CONTINUING> (477167)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (477167)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
<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. 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 was
reported in the year end Common Stock amount. Complete information concerning
the capital reorganization is included in the FORM 10-Q.
<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% Covertible 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-Q.
</FN>
</TABLE>
