UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 23, 2002
REDCELL POWER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-4067173
- ---------------------- ------------------
State of Incorporation IRS Employer ID No.
1250-999 West Hastings
Vancouver, British Columbia V6C 2W2
- -------------------------------- -----------
Address of principal Executive Offices Zip Code
Registrant's Telephone Number (604) 605-8852
Item 1. Changes in Control of Registrant
On May 23, 2002, the Company acquired 100,000 shares of
common stock, $1.00 par value, of Redcell Canada Inc.,
(hereinafter "Redcell") a company incorporated under the
laws of the province of Alberta.
The acquisition was consummated by the execution of an
Acquisition Agreement dated May 7, 2002. The shares acquired by
the Company represented one hundred (100%) percent of all of
Redcell'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 Redcell common shares was
8,000,000 newly issued shares of post-reverse split shares of
voting common stock of the Company, $0.001 par value. These
shares will be issued to the sellers of the Redcell 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 shares of common stock
of the company, held by the previous majority shareholders of the
company, shall be canceled.
As a result of the foregoing transaction, there was a change in
control of the company to the shareholders of Redcell. The
shareholders of Redcell now hold approximately 99% of the
outstanding shares of common stock of the company. Furthermore,
Messrs. Shane Henty Sutton, David Sutton and Peter Moulinos have
resigned as directors of the Company and Messrs. Cameron King and
Johannes Retief have been appointed as directors. The resigning
directors have no disagreement with the registrant and have
resigned as a normal course of change of control.
Item 2. Acquisition or Disposition of Assets
On May 23, 2002, the Company acquired 100,000 shares of common
stock, $1.00 par value, of Redcell Canada Inc., (hereinafter
"Redcell") a company incorporated under the laws of the
province of Alberta.
The acquisition was consummated by the execution of an
Acquisition Agreement dated May 7, 2002. The shares acquired by
the Company represented one hundred (100%) percent of all of
Redcell'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 Redcell common shares was
8,000,000 newly issued shares of post-reverse split shares of
voting common stock of the Company, $0.001 par value. These
shares will be issued to the sellers of the Redcell 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 shares of common stock
of the company, held by the previous majority shareholders of the
company, shall be canceled.
As a result of the foregoing transaction, there was a change in
control of the company to the shareholders of Redcell. The
shareholders of Redcell now hold approximately 99% of the
outstanding shares of common stock of the company. Furthermore,
Messrs. Shane Henty Sutton, David Sutton and Peter Moulinos have
resigned as directors of the Company and Messrs. Cameron King and
Johannes Retief have been appointed as directors. The resigning
directors have no disagreement with the registrant and have
resigned as a normal course of change of control.
There was no material relationship between the Company and
Redcell prior to the acquisition by the company of the Redcell
shares.
Item 5. Other Events and Regulation FD Disclosure.
Control of the company has now passed to the shareholders of
Redcell. The company shall now adopt the business plan
of Redcell and proceed with the business operations of Redcell.
Additionally, the company has changed its name to "RedCell Power
Corporation" and shall file an amendment to its certificate of
incorporation reflecting the name change.
RedCell seeks to market and distribute quality portable power
batteries, such as alkaline, photo lithium, watch, calculator,
hearing aid and cordless telephone batteries, through strategic
partnerships secured by RedCell with premier associations and
well known entities. Redcell will seek to have its batteries
produced by quality manufacturer who shall in turn allow Redcell
to distribute these power products bearing the Redcell name and
logo. Without the overhead associated with the manufacture of
power products, RedCell believes it will be able to offer
packages, which contain more product than competitors, at the
same price point.
RedCell owns or has rights to various trademarks, copyrights and
trade names used in its business, including the following:
RedCell, RedCell Batteries, RedCell.com, "Power of Performance".
Redcell currently has strategic marketing partnerships with
NASCAR, the Dallas Cowboys, and Mattel products, which are all
well known US household associations and entities, and which
Redcell believes shall allow for a cross-branding of products and
allow Redcell the opportunity to obtain brand name recognition
and demand for its products through these partnerships. RedCell
shall also seek to develop further strategic partnership to
market and distribute its power batteries. The goal shall be to
market these products to the public, bearing both the RedCell
brand name and the strategic partner's name, to consumers who are
loyal to the strategic partner and who shall benefit from the use
of RedCell's quality portable power batteries.
RedCell shall outsource its warehousing and distribution of its
products to Warehousing Services Incorporated ("WSI"), which
shall provide all shipping, storing and receiving services. WSI
shall provide a sophisticated Product Control System, which will
interface directly with RedCell accounting and inventory systems.
RedCell maintains a United States office, located at 3875
Industrial Avenue, Hemet, California 92545, and a Canadian office
1250-999 West Hastings Street, Vancouver, British Columbia V6C
2W2.
President and Chief Executive Officer of RedCell is Mr. Cameron
King. He has previously held senior positions at the Bank of
Nova Scotia before joining Durex Camline Wear Technology as
President. Here he obtained significant sales and marketing
experience.
Chief Operating Officer is Dr. Jannie Retief. He is a former
director for Langeberg Foods International, a prominent UK based
exporter to over fifty countries worldwide. He has held the
Chief Executive Officer position at a UK wine wholesaler and the
Marketing and Sales Director role at KWV, one of the largest wine
and spirit producers in the world.
Item 7. Financial Statements and Exhibits
The consolidated financial statements of RedCell Power
Corporation, prepared pursuant to Regulation S-X, appear below as
follows:
Auditors' Report
Consolidated Statements of Loss and Deficit
Consolidated Statements of Stockholders' Equity
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
A copy of the Acquisition Agreement between the Company and
Redcell Canada Inc., is attached hereto as an exhibit.
<page>
AUDITOR'S REPORT
To the Shareholders of
RedCell Power Corporation
(formerly Infobooth, Inc.)
(a Development Stage Company)
We have audited the consolidated balance sheet of RedCell Power
Corporation (formerly Infobooth, Inc.) (a development stage
company) as at May 23, 2002 and the consolidated statements of
loss and deficit, stockholders' equity, and cash flows for the
period then ended. These 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 in the United States of America. 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 May 23, 2002 and the results of its operations and
its cash flows for the period then ended in accordance with
generally accepted accounting principles in the United States of
America.
The financial statements as at December 31, 2000 and for the year
then ended were audited by another auditor who expressed an
opinion without reservation on those statements in their report
dated March 14, 2001.
The accompanying financial statements referred to above have been
prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the financial statements, the
Company is in the development stage, and has no permanently
established source of revenue and is dependent on its ability to
raise capital from shareholders or other sources to sustain
operations. These factors, along with other matters as set forth
in Note 1, raise substantial doubt that the Company will be able
to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of
this uncertainty.
Vancouver, Canada
July 22, 2002 Chartered Accountants
<Page>
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(a Development Stage Company)
Consolidated Statements of Loss and Deficit
(Stated in US Dollars)
<Table>
December 31, December 31,
For the period ended, May 23, 2002 2001 2000
-------------------------------------------
<s> <c> <c> <c>
Sales $ - $ 2,704,362 $1,970,527
Cost of goods sold - 2,793,225 1,469,310
-------------------------------------------
Gross Margin - (88,863) 501,217
-------------------------------------------
Administrative Expenses
Advertising 250,191 1,159,531 3,978,029
Amortization 21,096 47,753 26,341
Bank charges and interest 1,977 1,128,968 (9,858)
Insurance 3,913 29,326 15,074
Management fees - 205,434 -
Office and miscellaneous 8,435 83,660 38,074
Professional fees 247,424 566,830 205,826
Salaries, wages and benefits 68,803 407,157 188,688
Telephone 3,573 30,623 16,073
Trade shows - 47,585 101,917
Travel and promotion 22,839 197,897 196,963
Warehousing fees 104,847 268,910 -
-------------------------------------------
733,098 4,173,674 4,757,127
-------------------------------------------
Loss for the period (733,098) (4,262,537) (4,255,910)
Deficit, beginning of period (13,286,763) (9,024,226) (4,768,316)
-------------------------------------------
Deficit, end of period $(14,019,861) $(13,286,763) $(9,024,226)
===========================================
</table>
<page>
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(a Development Stage Company)
Consolidated Statements of Stockholders' Equity
(Stated in US Dollars)
<table>
Number of Additional Paid Accumulated
Shares Amount In Capital Deficit Total
---------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Capital stock issued 283,003 $ 688 -$(13,286,763)$(13,286,763)
Stock issued to effect
the acquisition of
subsidiary (Note 3) 8,000,000 8,000 8,000
Mutual release of debt
owed to Redmond Capital
Corp. (Note 9) - - 11,300,988 - 11,300,988
Mutual release of debt
owed to 771069 Alberta
Ltd. (Note 6) - - 1,726,000 1,726,000
Net loss for the period - - - (733,098) (733,098)
---------------------------------------------------------
Balance
May 23, 2002 8,283,003 $8,688 $13,026,988$(14,019,861) $ (984,185)
=========================================================
</table>
<page>
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(a Development Stage Company)
Consolidated Balance Sheets
(Stated in US Dollars)
<table>
December 31, December 31,
For the period ended, May 23, 2002 2001 2000
-------------------------------------------
<s> <c> <c> <c>
ASSETS
Current
Cash $ 17,817 $ 197,524 $ 57,387
Accounts receivable 52,220 49,026 472,586
Advances receivable - 9,000 225,590
Inventory (note 4) 3,084,783 3,059,783 2,884,958
Refundable deposit - - 300,000
Prepaid expenses 10,193 2,200 29,946
-------------------------------------------
3,165,013 3,317,533 3,970,467
Capital assets (note 5) 255,349 251,444 168,931
Trademark (note 6) - - -
Goodwill (note 3) 19,693 - -
-------------------------------------------
$ 3,440,055 $ 3,568,977 $ 4,139,398
===========================================
LIABILITIES
Current
Accounts payable and accrued
liabilities $ 1,483,954 $ 1,394,934 $ 1,029,049
Convertible notes payable (note 7) 96,660 - -
Due to related companies
(notes 6 and 8) 2,843,626 15,460,118 12,133,887
-------------------------------------------
4,424,240 16,855,052 13,162,936
===========================================
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value
25,000,000 shares authorized
9,080,003 shares outstanding 8,688 688 688
Additional paid in capital 13,026,988 - -
Deficit (14,019,861) (13,286,763) ( 9,024,226)
-------------------------------------------
(984,185) (13,286,075) ( 9,023,538)
-------------------------------------------
$ 3,440,055 $ 3,568,977 $ 4,139,398
===========================================
</table>
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(a Development Stage Company)
Consolidated Balance Sheets
(Stated in US Dollars)
<table>
December 31, December 31,
For the period ended, May 23, 2002 2001 2000
-------------------------------------------
<s> <c> <c> <c>
Cash provided by (used for)
Operating activities
Loss for the period $ (733,098) $(4,262,537) $(4,255,910)
Adjustments to reconcile net loss
to cash:
Amortization 21,096 47,753 26,341
-------------------------------------------
(712,002) (4,214,784) (4,229,569)
Changes in non-cash working capital items
Accounts receivable (3,194) 423,560 (472,586)
Advances receivable 9,000 216,590 (225,590)
Inventory (25,000) (174,825) (2,884,958)
Refundable deposit - 300,000 (300,000)
Prepaid expenses (7,993) 27,746 (29,946)
Accounts payable and
accrued liabilities 118,327 365,885 700,642
-------------------------------------------
(620,862) (3,055,828) (7,442,007)
-------------------------------------------
Financing activities
Convertible notes payable 96,660 - -
Advances from related companies 369,496 3,326,231 7,724,960
-------------------------------------------
466,156 3,326,231 7,724,960
-------------------------------------------
Investing activity
Purchase of capital assets (25,001) (130,266) (130,313)
-------------------------------------------
Increase(decrease) in cash during
the period (179,707) 140,137 152,640
Cash, beginning of period 197,524 57,387 ( 95,253)
-------------------------------------------
Cash, end of period $ 17,817 $ 197,524 $ 57,387
===========================================
</table>
Supplemental disclosure of non-cash financing and investing
activities (notes 3,6 and 9)
<Page>
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(a Development Stage Company)
Notes to the Consolidated Financial Statements
(Stated in US Dollars)
May 23, 2002, and December 31, 2001 and 2000
- --------------------------------------------
1. Nature of Operations
The Company is in the development stage and following the
reverse take over described in note 4, operates as a wholesale
supplier of a private brand label of consumable battery
products to retailers. The Company operates its warehouse
facility based in Indiana U.S.A. and sells to U.S. based
retailers.
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.
Prior to the reverse take over described in note 3 the
Company's principal business purpose was to locate and
consummate a merger or acquisition with a private 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 May 23, 2002 the Company is devoting
substantially all of its present efforts to developing its
consumable battery business. All losses accumulated from
this date will be considered part of the Company's
development stage activities.
(b) Consolidation
These consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary
RedCell Canada Inc.
(c) Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles 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) Inventory
Inventory is valued at the lower of cost and net realizable
value.
Net realizable value is based on the Company's ability to
continue as a going concern (see note 1) and assumes the
Company will be able to sell its inventory in the normal
course of operations. If this assumption becomes invalid,
the net realizable value may be materially different than
currently recorded.
(e) Capital assets
Capital assets 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 for the
assets at the following annual rates:
Office equipment 20%
Computer hardware 30%
Warehouse equipment 20%
(f) Goodwill
Goodwill is amortized on a straight line basis over a
period of five years.
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.
(g) 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.
(h) 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.
(i) 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.
(j) 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 the date of these consolidated
financial statements, May 23, 2002.
(k) 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.
(l) 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.
(m) 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 Canada Inc. ("RCCI")
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 RCCI, 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 6 and 9).
These transactions resulted in the former shareholders of RCCI
owning the majority of the issued and outstanding shares of the
Company. Accounting principles applicable to reverse takeovers
have been applied to record this acquisition using the purchase
method of accounting.
Under this basis of accounting, RCCI has been identified as the
acquirer and, accordingly, the consolidated entity is
considered to be the continuation of RCCI with the net
liabilities of the Company deemed to have been assumed by RCCI.
These liabilities have been capitalized as goodwill.
The net liabilities assumed are summarized as follows:
Cash $ -
Current liabilities (19,693)
Net liabilities assumed $ (19,693)
RCCI was incorporated in Alberta on June 15, 1998, and
commenced operations on July 1, 1999.
4. Inventory
<table>
December 31, December 31,
May 23, 2002 2001 2000
------------------------------------------
<s> <c> <c> <c>
Batteries $2,584,942 $2,559,942 $2,523,481
Packaging Materials 499,841 499,841 361,477
------------------------------------------
$3,084,783 $3,059,783 $2,884,958
==========================================
</table>
5. Capital Assets
<table>
December 31, December 31,
May 23, 2002 2001 2000
-------------------------------------------------------------
Accumulated Net book Net book Net book
Cost Amortization Value Value Value
-------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Office equipment $ 142,609 $ 36,760 $105,849 $ 88,785 $ 52,833
Computer hardware 14,340 5,016 9,324 10,565 5,411
Warehouse equipment 193,590 53,414 140,176 152,094 110,687
-------------------------------------------------------------
$ 350,539 $ 95,190 $255,349 $ 251,444 $168,931
=============================================================
</table>
6. Trademark
The Company's legal subsidiary, RedCell Canada Inc., has the
worldwide right, title and interest in the trademark, "RedCell".
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 RCCI was released from
the debt. In exchange the shareholders of the Company
transferred 797,000 restricted common shares to 771069. The
release of debt has been recorded as additional paid in capital
during the period. 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.
7. Convertible Notes Payable
During the period ended May 23, 2002 the Company was advanced
funds by two private investors, these loans have been 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 has 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 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 for 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.
8. Due to Related Companies
December 31, December 31,
May 23, 2002 2001 2000
------------------------------------------
723958 Alberta Ltd. $41,000 $ - $ -
696321 Alberta Ltd. - - -
771069 Alberta Ltd.
(note 6) - 1,726,000 1,726,000
Amerind Industries Inc. - - -
Redmond Capital
Corporation(note 6) 2,802,626 13,734,118 10,407,887
------------------------------------------
$2,843,626 $15,460,118 $12,133,887
==========================================
Amounts due to related parties due not bear interest, and have
no stated terms of repayment. Management intends that these
debts will be settled by the issuance of common shares of the
Company from treasury, for a deemed price of $1.00 per share.
9. 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
RedCell Canada Inc. In exchange the shareholders of the
Company transferred 4,510,667 common shares of the Company, of
which 149,084 are currently free-trading, to Redmond which
released RCCI from its obligation. This forgiveness has been
recorded as additional paid in capital in the current fiscal
period.
10. Related Party Transactions
During the year ended December 31, 2001 interest of $1,121,687
was paid to Redmond Capital Corp., at a rate of 10% on the
monthly closing balance.
11. Economic Dependence
During the year ended December 31, 2001, approximately 90%
(2000 - 86%) of the revenue earned by the Company was derived
from sales with a single retailer.
12. Commitments
(a) The Company currently leases office space in Vancouver
Canada. The lease is for a term of 25 months and
commenced on April 1, 2002.
Minimum lease payments including estimated taxes and
operating costs for each of the next three years are as
follows:
Remainder of fiscal 2002 $ 35,427
Fiscal 2003 60,732
Fiscal 2004 25,305
(b) The Company 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 ($300,000 paid to May 23, 2002) 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.
13. Contingencies
At May 23, 2002 the Company 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) The Company has numerous creditors of long standing, any
of which may commence an action.
(c) The legal subsidiary, RedCell Canada 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.
<Page>
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: July 24, 2002
RedCell Power Corporation
(Registrant)
/s/ Cameron King
President and Chief Executive Officer