UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
[ ]
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: ____________
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware | 13-4044390 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
4860 Northwood Drive, West Vancouver, British Columbia Canada V7S 3C6
(604) 230-3153
_______________________________________________________________________________
(Address and telephone number of registrant’s principal executive offices and principal
place of business)
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), or (2) has been subject to such filing requirements for the past 90 days.
Yes
[ X ]
No
[ ]
The number of outstanding common shares, $ .001 par value, of the Registrant at:
September 30, 2003: 11,146,177
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
(a Development Stage Company)
Interim Financial Statements
Nine months ended September 30, 2003
(Stated in US Dollars)
Table of Contents
Notice to Reader
Interim Balance Sheet
Interim Statements of Loss and Deficit
Interim Statements of Stockholders’ Equity
Interim Statements of Cash Flows
Notes to the Interim Financial Statements
T. A. ST. DENIS & ASSOCIATES INC.
677 – 999 Canada Place
Vancouver, British Columbia
V6C 3E1
Phone: 604-685-8548
Fax: 604-682-8441
NOTICE TO READER
I have compiled the interim balance sheet of Redcell Power Corporation as at September 30, 2003, the interim statements of operations, the interim statements of stockholders’ equity, and the interim cash flow statements for the nine months ended from information provided by the company’s management. I have not audited, reviewed, or otherwise attempted to verify the accuracy or completeness of such information. Readers are cautioned that these statements may not be appropriate for their purposes.
“Tracey St. Denis”
Certified General Accountant
Vancouver, British Columbia
December 21, 2003
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
(A Development Stage Company)
INTERIM BALANCE SHEET
AS AT SEPTEMBER 30, 2003 WITH AUDITED FIGURES AT DECEMBER 31, 2002
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
September 30, 2003 (Unaudited) | December 31, 2002 (Audited) |
ASSETS
CURRENT ASSETS | ||
Assets of subsidiary held for sale (note 3) | $ 68,421 | $ 68,421 |
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES | ||
Accounts payable and accrued liabilities | $ 13,287 | $ 8,787 |
Advances from related party (note 7) | 483,910 | 483,910 |
Liabilities of subsidiary held for sale (notes 3 and 10) | 1,390,578 | 1,390,578 |
1,887,775 | 1,883,275 |
SHAREHOLDERS’ EQUITY | ||
Common stock, $0.001 par value | ||
25,000,000 shares authorized | ||
11,146,177 shares outstanding | 11,148 | 11,148 |
Additional paid in capital | 2,674,015 | 2,674,015 |
Deficit | (4,504,517) | (4,500,017) |
(1,819,354) | (1,814,854) |
$ 68,421 | $ 68,421 |
Nature of Operations(note 1)
Commitments and Contingencies(notes 4, 6, and 8)
Approved by the Directors:
“Cameron King”
__________________________ Director
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
(A Development Stage Company)
INTERIM STATEMENTS OF LOSS AND DEFICIT
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
Three months ended September 30, 2003 | Three months ended September 30, 2002 | Nine months ended September 30, 2003 | Nine months ended September 30, 2002 |
Administrative expenses | ||||
Accounting | $ 1,500 | $ - | $ 4,500 | $ 680 |
Legal | - | 11,173 | - | 17,879 |
Office | - | - | - | 93 |
Rent | - | - | - | 3,000 |
Filing fees | - | 235 | - | 4,171 |
1,500 | 11408 | 4,500 | 25,823 |
Loss for the period | (1,500) | (11,408) | (4,500) | (25,823) |
Deficit, beginning of period | (4,503,017) | (146,597) | (4,500,017) | (132,182) |
Deficit, end of period | $ (4,504,517) | $ (158,005) | $ (4,504,517) | $ (158,005) |
(See accompanying notes)
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
(A Development Stage Company)
INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY
AS AT SEPTEMBER 30, 2003
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
Number of shares | Par value | Additional Paid in Capital | Accumulated Deficit | Total |
Form the period February 25, 1998 to January 31, 1999 Issue 100,000 common shares May 18, 1998 | 1,000,000 | $ 1,000 | $ 9,000 | $ - | $ 10,000 |
Capital contribution for the period | - | - | 9,000 | - | 9,000 |
Net loss for the period | - | - | - | (19,050) | (19,050) |
Balance January 31, 1999 | 1,000,000 | 1,000 | 18,000 | (19,050) | (50) |
Capital contribution for the period | - | - | 31,050 | - | 31,050 |
Net loss for the year | - | - | - | (34,550) | (34,550) |
Balance January 31, 2000 | 1,000,000 | 1,000 | 49,050 | (53,600) | (3,550) |
Issue 65, 000 common shares February 1, 2000 | 65,000 | 65 | 9,935 | - | 10,000 |
Issue 10,000 common shares August 1, 2000 | 10,000 | 10 | 290 | - | 300 |
2.5 for 1 stock split August 1, 2000 | 1,612,500 | 1,613 | (1,613) | - | - |
Issue 100,000 common shares January 15, 2001 | 100,000 | 100 | 1,900 | - | 2,000 |
Capital contribution for the year | - | - | 35,425 | - | 35,425 |
Net loss for the year | - | - | - | (45,475) | (45,475) |
Balance January 31, 2001 | 2,787,500 | 2,788 | 94,987 | (99,075) | (1,300) |
Issue 50, 000 common shares August 10, 2001 | 50,000 | 50 | - | - | 50 |
Capital contribution for the year | - | - | 32,300 | - | 32,300 |
Net loss for the year | - | - | - | (33,107) | (33,107) |
Balance January 31, 2002 | 2,837,500 | 2,838 | 127,287 | (132,182) | (2,057) |
Stock dividend paid | - | - | (50) | - | (50) |
Reverse stock split 1 for 10 | (2,554,497) | (2,554) | 2,554 | - | - |
Stock cancelled by majority shareholders May 2002 | (257,501) | (2,554) | 2,554 | - | - |
Stock issued to effect the acquisition of subsidiary (note 3) | 8,000,000 | 8,000 | - | - | 8,000 |
Issued | 320,000 | 320 | - | - | 320 |
Mutual release of debt owed to Redmond Capital Corp (note 5) | 2,800,675 | 2,801 | 2,543,967 | - | 2,546,768 |
Net loss for the period | - | - | - | (4,367,835) | (4,367,835) |
Balance December 31, 2002 | 11,146,177 | 11,148 | 2,674,015 | (4,500,017) | (1,814,854) |
Net loss for the period | - | - | - | (4,500) | (4,500) |
Balance September 30, 2003 | 11,146,177 | $ 11,148 | $ 2,674,015 | $ (4,504,517) | $ (1,819,354) |
(See accompanying notes)
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
(A Development Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
Three months ended September 30, 2003 | Three months ended September 30, 2002 | Nine months ended September 30, 2003 | Nine months ended September 30, 2002 |
Cash provided by (used for) | ||||
Operating activities | ||||
Loss for the period | $ (1,500) | $ (11,408) | $ (4,500) | $ (25,823) |
Loss on investment in subsidiary | - | (475,532) | - | (1,460,428) |
(1,500) | (486,940) | (4,500) | (1,486,251) | |
Changes in non-cash working capital items | ||||
Working capital of subsidiary held for sale | - | 475,532 | - | 1,460,428 |
Accounts payable and accrued liabilities | 1,500 | 11,408 | 4,500 | 25,823 |
- | - | - | - |
Financing activity | ||||
- | - | - | - |
Investing activity | ||||
Advances to subsidiary held for sale | - | - | - | - |
Increase (decrease) in cash during the period | - | - | - | - |
Cash, beginning of period | - | - | - | - |
Cash, end of period | $ - | $ - | $ - | $ - |
Supplemental disclosure of non-cash financing and investing activities(notes 3, 4 and 5)
(See accompanying notes)
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
(A Development Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(Unaudited – See Notice to Reader)
(Stated in US Dollars)
1.
Nature of Operations
The Company was incorporated in the State of Delaware in February 1998. On May 23, 2002 the Company changed its name to RedCell Power Corporation.
The Company is in the development stage and following the reverse take over described in note 3, operated as a wholesale supplier of a private brand label of consumable battery products to retailers. The Company operated a warehouse facility based in Indiana U.S.A. and sold to U.S. based retailers.
Subsequent to the acquisition, the Company determined that the operations of RedCell Batteries Inc. were not viable and accordingly adopted a formal plan of disposal. The Company is again looking to locate and consummate a merger or acquisition with an operating entity.
The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern. Accordingly, they do not give effect to adjustment that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying financial statements. The Company’s ability to continue as a going concern is dependent upon achieving profitable operations and/ or upon obtaining additional financing. The outcome of these matters can not be predicted at this time.
2.
Significant Accounting Policies
(a)
Development stage company
The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards No. 7. As of September 30, 2003, the Company is seeking a purchaser for its battery business.
(b)
Consolidation
These consolidated financial statements include the accounts of the Company, the accounts of its wholly owned subsidiary RedCell Batteries Inc. (formerly RedCell Canada Inc.), have been disclosed as an asset and liability held for sale (note 3).
(c)
Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
(d)
Property and equipment
Property and equipment are recorded at historical cost, in the year of acquisition, one-half of normal rates of amortization are used. The declining-balance method is used to amortize these assets at the following annual rates:
Office equipment
20%
Computer hardware
30%
Warehouse equipment
20%
(e)
Goodwill
Goodwill and any other long-lived assets to be held and used by the Company are continually reviewed to determine whether any events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. For long-lived assets to be held and used, the Company bases its evaluation on such impairment indicators as nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements, as well as other external market conditions or factors that may be present. In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized.
(f)
Revenue recognition
Revenue realized from the sale of batteries is recognized at the time an order has been placed and delivered, fees have been determined, and collection is considered probable.
(g)
Foreign currency translation
The Company’s functional currency is the U.S. dollar. Transactions in foreign currency are translated into U.S. dollars as follows:
monetary items at the rate prevailing at the balance sheet date;
non-monetary items at the historical exchange rate;
revenue and expenses at the average rate of exchange in effect during the applicable accounting period.
(h)
Stock-based compensation
SFAS 123 “Accounting for stock based compensation”, defines a fair value based method of accounting for employee stock options. Under this fair value method, compensation cost is measured at the date of grant based on the fair value of the award and is recognized over the vesting period. However SFAS 123 allows an entity to continue to measure compensation costs related to stock option costs in accordance with Accounting Principle Board Statement No. 25 (APB 25). The Company has elected to measure compensation related to stock options in accordance with APB 25. Accordingly, since the fair value of the shares was less than the price of the stock options at the date of grant, there is no compensation to be recognized under US GAAP.
(i)
Loss per share
Basic loss per share is calculated based on the weighted average number of shares outstanding during the period, in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share”. Basic loss per share and comprehensive loss per share have not been disclosed as they are not considered meaningful as the Company did not become widely-held until May 23, 2002.
(j)
Fair value of financial instruments
The Company’s financial instruments consist of cash, accounts receivable, and accounts payable and amounts due to related parties. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximate their carrying values because of their short-term to maturity, unless otherwise noted.
(k)
Income taxes
Income taxes are provided for using the liability method of accounting in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
(l)
Comprehensive loss
In June 1997, the FASB issued SFAS No. 130 “Reporting comprehensive income”. SFAS 130 requires that total comprehensive income and comprehensive income per share be disclosed with equal prominence as net income and net income per share. Comprehensive income is defined as changes in shareholders’ equity exclusive of transactions with owners such as capital contributions and dividends.
3.
Acquisition of RedCell Batteries Inc. (“RBI”) (formerly RedCell Canada Inc.)
RBI was incorporated in Alberta on June 15, 1998, and commenced operations on July 1,1999. The name was changed from RedCell Canada Inc. to RedCell Batteries Inc. on June 28, 2002.
Pursuant to an agreement dated May 23, 2002, the Company issued 8,000,000 shares in exchange for all of the issued and outstanding shares of RBI, a private company. An amending settlement agreement was also signed between the new shareholders of the Company, whereby certain debts were released in exchange for transfers of common shares of the Company (notes 4 and 5).
These transactions resulted in the former shareholders of RBI owning the majority of the issued and outstanding shares of the Company. Accounting principles applicable to reverse takeovers were applied to record this acquisition using the purchase method of accounting in the interim financial statements.
Under this basis of accounting, RBI had been identified as the acquirer and, accordingly, the consolidated entity was considered to be the continuation of RBI with the net liabilities of the Company deemed to have been assumed by RBI.
During the year, it was determined that the operations of RBI were no longer viable and management is actively pursuing a purchaser for this company. Accordingly reverse takeover accounting has been discontinued and is now reflected as an acquisition of an equity investment with losses of the subsidiary recorded as part of the loss on the investment.
Balance sheet of RBI at date of acquisition, May 23, 2003
Current assets | $ 3,165,014 |
Capital assets | 255,349 |
$ 3,420,363 |
Accounts payable | $ 1,472,262 |
Notes payable | 96,660 |
Due to related parties | 2,843,626 |
4,412,548 |
Share capital | 688 |
Paid up capital | 13,026,988 |
Accumulated deficit | (14,019,861) |
(992,185) |
$ 3,420,363 |
The net shareholder deficit of RBI which was purchased by the Company, $992,185, and the paid up capital of the common shares of the Company issued, $8,000, totalling $1,000,185, have been written off due to management’s decision to dispose of this investment.
Balance sheet of RBI at September 30, 2003
Current assets | $ 68,241 |
Accounts payable | $ 1,390,578 |
Due to related parties | 3,011,855 |
4,402,433 |
Share capital | 688 |
Paid up capital | 13,026,988 |
Accumulated deficit | (17,361,688) |
(4,334,012) |
$ 68,421 |
4.
Trademark
The Company’s legal subsidiary, RedCell Batteries Inc., has the worldwide right, title and interest in the trademark, “RedCell”. The Canadian right to the trademark has been abandoned. Costs associated with the trademark in prior years have been expensed as incurred.
The Trademark had been posted as security on a balance due to 771069 Alberta Ltd. (“771069”) of $1,726,000, and was claimed in fiscal 2000 to perfect the security. Pursuant to a trademark priority agreement signed March 1, 2002 the Company was re-assigned the Trademark by 771069, and RBI was released from the debt. In exchange the shareholders of the Company transferred 797,000 restricted common shares to 771069. In the event that these 797,000 common shares of the Company do not realize gross proceeds in excess of $1,726,000, the Trademark will revert back to 771069.
5.
Mutual Release of Debt
Pursuant to a settlement amending agreement dated May 23, 2002, Redmond Capital Corp. (“Redmond”) agreed to forgive debt of $11,300,988 owed to it by the Company’s legal subsidiary, RBI. In exchange the shareholders of the Company transferred 4,510,667 restricted common shares of the Company, to Redmond which released RBI from its obligation.
Pursuant to a settlement agreement dated July 31, 2002, Redmond agreed to forgive debt of $2,800,675 owed to it by the Company’s legal subsidiary RedCell Batteries Inc. In exchange the shareholders of the Company transferred 2,800,675 restricted common shares of the Company to Redmond, which released RBI from its obligation. This forgiveness has been recorded as additional paid in capital in the current fiscal period.
6.
Commitments
The Company’s subsidiary has an Agreement dated October 1, 2000 with the National Association of Car Auto racing (“NASCAR”), whereby the Company is obligated to make payments totaling $375,000 in calendar 2002. Payments of an additional $400,000 are required with respect to the final year of the contract prior to January 1, 2003 that were not paid as at September 30, 2003.
7.
Advances from Related Party
There is a note payable to a related party secured against the assets of the Company in the amount of $483,910 due upon demand and without interest.
8.
Contingencies
At September 30, 2003 the Company’s subsidiary had several legal actions pending, the outcome of which is not determinable at this time. Management is of the opinion that the amount of settlements, if any, are not determinable and accordingly no provision has been made in these financial statements. In the event any loss is recognized, it would be recorded in the accounts in that period.
(a)
Separate actions by Scott Lagasse and Brett Bodine Racing for alleged breach of sponsorship agreements.
(b)
An action by Active Media Services Inc. for alleged non-payment of fees pursuant to an agreement dated November 2000.
(c)
The Company has numerous creditors of long standing, any of which may commence an action.
(d)
The legal subsidiary, RedCell Batteries Inc., has two judgments for CDN$160,000 and CDN$180,000 against it, which it assumed in an asset agreement dated June 1999, neither of which are currently recorded in the records of the Company.
9.
Convertible Notes Payable
During the period ended December 31, 2002 the Company’s subsidiary was advanced funds by two private investors, these loans were formalized in convertible note agreements. The terms of each loan are simple interest at 10%, payable semi-annually, with principal due 10 months from the date of advance. Each lender committed to loan the Company up to a maximum of $450,000, amounts to be advanced within 5 days of request, and funds to be used solely for the business operations of RBI. The loans are convertible, in part or in whole, into restricted common shares of the Company at the option of the Company. The conversion rate to be determined by the lessor of a 30% discount of the average closing price of the Company’s common stock for the five trading days preceding the conversion or $1.00 per shar e.
The notes payable, plus accrued interest, of $155,003 are included in the liabilities of the subsidiary held for sale at December 31, 2002. No further interest has been accrued subsequent to December 31, 2002.
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)
(A Development Stage Company)
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THIS DISCUSSION AND ANALYSIS EXPLAINS REDCELL POWER CORPORATION’S FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND IS INTENDED TO HELP SHAREHOLDERS AND OTHER READERS UNDERSTAND THE DYNAMICS OF THE COMPANY’S BUSINESS AND THE KEY FACTORS UNDERLYING ITS FINANCIAL RESULTS. CERTAIN STATEMENTS IN THIS MANAGEMENT DISCUSSION AND ANALYSIS (“MD&A”) AND CONSOLIDATED CONDENSED FINANCIAL STATEMENTS CONSTITUTE FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS OF THE COMPANY, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: LIQUIDI TY; THE COMPANY’S ABILITY TO RAISE CAPITAL; DISTRIBUTION; PRODUCT DEVELOPMENT; AND COMPETITION.
BACKGROUND
The Company was incorporated in the State of Delaware in February 1998. On May 23, 2002 the Company changed its name to RedCell Power Corporation (“RedCell” or the “Company”)
On May 23, 2002 the Company, formerly known as Infobooth, Inc., acquired 100,000 common shares, $1.00 par value, of RedCell Batteries Inc., (“RBI”) a company incorporated under the laws of the province of Alberta.
The acquisition was consummated by the execution of an Acquisition Agreement dated May 23, 2002. The shares acquired by the Company represented one hundred percent (100%) of all of RBI’s then currently issued and outstanding common stock in a tax free stock-for-stock acquisition. The aggregate purchase price paid by the Company for the RBI common shares was 8,000,000 newly issued shares of post-reverse split shares of voting common shares of the Company, $0.001 par value. These shares were issued to the sellers of the RBI shares subsequent to a 1 for 10 reverse split by the Company of its voting common stock. Additionally, pursuant to the terms of the Acquisition Agreement, the sum of 257,501 common shares of the Company, held by the previous majority shareholders of the Company, were cancelled.
As a result of the foregoing transaction, there was a change in control of the Company to the shareholders of RBI. The shareholders of RBI now hold approximately 99% of the outstanding common shares of the Company. As a result of this acquisition and change of control, the Company changed its name to “RedCell Power Corporation”.
During the eleven months ended December 31, 2002, it was determined that the operations of RBI were no longer viable and management is actively pursuing a purchaser for this company. Accordingly, reverse takeover accounting has been discontinued and the transaction is now reflected as an acquisition of an equity investment with losses of the subsidiary recorded as part of the loss on the investment.
The Company is considered to be in the development stage.
OVERVIEW OF REDCELL POWER CORPORATION
Our name is now RedCell Power Corporation and we are seeking a purchaser for the battery business.
We are a development stage company.
The Company currently maintains an office in Canada at 440 Stevens Drive, West Vancouver, British Columbia, V7S 1C6.
RESULTS OF OPERATIONS
Restructuring
During the eleven months ended December 31, 2002, we suspended our battery operations, sold the entire inventory at a loss, and are now actively seeking a purchaser for the battery business.
Liquidity and Capital Resources
To date we have incurred significant net losses. The net loss for the nine months ended September 30, 2003 is $4,500, the accumulated deficit as at September 30, 2003 is $4,504,517, and we continue to incur losses. These factors raise substantial doubt about our ability to continue as a going concern. We anticipate that we may continue to incur significant operating losses for the foreseeable future. There can be no assurance as to whether or when we will generate material revenues or achieve profitable operations.
During the eleven months ended December 31, 2002, RBI was advanced funds by two private investors through convertible note agreements. The terms of each note are for repayment with interest at an annual rate of 10%, payable semi-annually, with the principal amount due 10 months from the date of the advance. Each lender has committed to loan the Company up to a maximum of $450,000, with the funds to be used solely for the business operations of the Company. The loans are convertible, in part or in whole, into restricted common shares of the Company at the option of the Company. The conversion rate to be determined by the lessor of a 30% discount of the average closing price of the Company’s common stock for the five trading days preceding the conversion or $1.00 per share. Under the convertible notes the Company is restricted from issuing common stock fo r less than $1.00, without the written permission of the Lender. In the event that the Company breaches this provision all principal and interest becomes immediately payable.
During the eleven months ended December 31, 2002, we also were advanced funds of $775,000 from a private investor by way of a loan which is due on demand, without interest, and with a charge against the inventory. When the inventory was sold in December of 2002, some of the proceeds from the sale of the inventory was applied to this loan to reduce the amount owing to $483,910 as at December 31, 2002 and September 30, 2003.
OTHER DEVELOPMENTS
We have submitted an application to the National Association of Securities Dealers (“NASD”) pursuant to Form 15(c)2-11, seeking to obtain a trading symbol for the purpose of having our common shares listed on the Over-the-Counter Bulletin Board (“OTC-BB”). An OTC equity security generally is any equity that is not listed or traded on Nasdaq or a national securities exchange. OTC-BB securities include national, regional, and foreign equity issues, warrants, units, American Depository Receipts (“ADRs”), and Direct Participation Programs (“DPPs”). We are not aware of any quotations for our common shares, now or at any prior time and we currently have no established public trading market for our common shares. We do not have any indication or opinion as to the timetable for the listing of our shares.
RISK FACTORS
There are inherent risk factors associated with an investment in RedCell and management wishes to alert investors to these risks.
Limited Operating History
RedCell has a limited operating history upon which an evaluation of its business and prospects can be based. There can be no assurance that an investment in our Company shall be profitable or that we will realize revenue growth or be profitable on a quarterly or annual basis. In addition, our plans to increase our operating expenses to further develop our operations and increase our administration resources. A relatively high percentage of our expenses will be typically fixed in the short term as our expense levels are based, in part, on its expectations of future revenue. To the extent that such expenses precede or are not subsequently followed by increased revenue, our business, financial condition, operating results, and cash flows would be materially adversely affected. Management believes that period-to-period comparisons of financial results are not ne cessarily meaningful at this stage and should not be relied upon as an indication of future performance.
Foreign Currency Exchange Fluctuation
Our operations outside the United States face additional risks associated with foreign currencies such as fluctuating currency values and exchange rates, hard currency shortages, and controls on currency exchange. RedCell has operations outside the United States and is hedged, to some extent, from foreign exchange risks because of our ability to purchase, develop, and sell in the local currency of those jurisdictions. There can be no assurance, however, that the attempted matching of foreign currency receipts with disbursements or hedging activities will adequately moderate the risk of currency or exchange rate fluctuations which could have a material adverse affect on our business, financial condition, operating results, and cash flows. In addition, our business is subject to the impact of foreign currency fluctuations and exchange rate changes in reporting in our fina ncial statements of the results from such operations outside the United States.
Inflation
As we are a development stage company, inflation has not had a material affect on our operations. In the event we are no longer considered a development stage entity, inflation may affect our ability to generate profits as increased costs may be associated with development and marketing of our products. In the opinion of management, inflation at this time has not and will not have a material affect on our operations. Management will evaluate the possible affects of inflation on RedCell as it relates to our business and operations and will proceed accordingly.
Ability to Raise Capital
Our ability to further develop our business and operations is dependent on our ability to raise capital. RedCell will seek to raise capital through equity funding and private placement of securities as well as securing lines of credit with credit institutions. There is no guarantee that we will be able to raise capital to further develop our business and operations. Additionally, we may encounter significant costs or unfavourable terms in our efforts to raise capital. Investors are further alerted that any efforts to raise capital through a private placement of equity securities will result in dilution to shareholders of the Company.
PART II – OTHER INFORMATION
ITEM 1. – LEGAL PROCEEDINGS
RedCell Power Corporation does not have any legal proceedings pending against it at this time. Our subsidiary, RedCell Batteries Inc. currently has three (3) separate legal actions pending against it filed by Scott Lagasse and Brent Bodine Racing for alleged breach of sponsorship agreements, and by Active Media Services Inc. for alleged non-payment of fees pursuant to an agreement dated November 2000.
ITEM 2. – CHANGES IN SECURITIES
On May 23, 2002, the Company, formerly known as Infobooth, Inc., issued 8,000,000 newly issued shares of post-reverse split shares of voting common stock of the Company, $0.001 par value. These shares were issued to the sellers of the RedCell shares subsequent to a 1 for 10 reverse split by Infobooth, Inc. of its voting common stock. The issuance of these shares, and the 1 for 10 reverse split were in accordance with the terms of the Acquisition Agreement whereby Infobooth, Inc. acquired RedCell IInc.
On May 23, 2002, the sum of 257,501 common shares of Infobooth, Inc. held by the previous majority shareholders of the Company were cancelled with their consent as part of the terms of the Acquisition Agreement whereby Infobooth, Inc. acquired RedCell Batteries Inc.
On July 31, 2002, pursuant to a settlement agreement dated July 31, 2002, Redmond Capital Corp. (“Redmond”) agreed to forgive debt of $2,800,675 owed to it by the Company’s legal subsidiary, RedCell Batteries Inc. In exchange the Company issued 2,800,675 restricted common shares of the Company, to Redmond. This forgiveness has been recorded as additional paid in capital in the current fiscal period.
ITEM 3. – DEFAULTS UPON SENIOR SECURITIES
There have been no default in the payment of principal, interest, or sinking fund, or purchase fund instalments on any senior securities.
ITEM 4. – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 21, 2002, the Company submitted to a vote of its security holders the approval and ratification of the terms of the Acquisition Agreement whereby Infobooth, Inc. acquired RedCell Batteries Inc. The majority of the shareholder of Infobooth, Inc. approved the terms of the Acquisition Agreement and the proposed transaction. As a result of such approval, the shareholders consented to effectuating an amendment to the Certificate of Incorporation of the Company thereby changing the name of Infobooth, Inc. to RedCell Power Corporation. The shareholders also consented to a 1 for 10 reverse stock split of the outstanding shares of common stock of Infobooth, Inc.
ITEM 5. – OTHER INFORMATION
There is no other information to report which is material to the Company’s financial condition not previously reported.
ITEM 6. – EXHIBITS AND REPORTS ON FORM 8-K
On May 29, 2002, the Company filed a Form 8-K disclosing the change in control of the registrant, the acquisition of assets, and other events including Regulation FD disclosure. An amendment to that Form 8-K was filed on June 5, 2002 which attached a copy of the Acquisition Agreement executed by the parties. A further amendment was filed on July 29, 2002 providing consolidated audited financial statements of the Company, subsequent to its acquisition of RedCell Batteries Inc.
On August 5, 2002, the Company filed a Form 8-K disclosing the change in its fiscal year end from January 31st to December 31st to coincide with the year end of its wholly owned subsidiary, RedCell Batteries Inc.
On August 31, 2002, the Company filed a Form 8-K announcing the resignation of one of our directors, Mr. Jannie Retief. There was no disagreement between Mr. Retief on any matters relating to the Company’s operations, policies, or practices. This vacancy on the Board of Directors has been filled by the appointment of Mr. Alain Kardos to the Board of Directors. Mr. Kardos possesses over twelve years of corporate experience in sales and marketing and growing businesses to profitability.
On December 17, 2002, the Company filed a Form 8-K announcing the resignation of one of our directors, Mr. Alain Kardos. There was no disagreement between Mr. Kardos on any matters relating to the Company’s operations, policies, or practices. The Company announced in that same filing that the head office in Vancouver, British Columbia had been moved to 440 Stevens Drive in West Vancouver, British Columbia, V7S 1C6. The Company also announced in that same filing that the inventory was sold to an unrelated third party, Turnstone Holdings LLC, for $675,000.
These filings are incorporated by reference herein.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated this 22nd day of December, 2003.
REDCELL POWER CORPORATION
(Registrant)
“Cameron King”
_______________________________
Cameron King
President and Chief Executive Officer
