UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
- -----------------------------------------------------------------
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2002
- -----------------------------------------------------------------
REDCELL POWER CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-4044390
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1250-999 West Hastings
Vancouver, British Columbia V6C 2W2
- -------------------------------- -----------
Address of principal Executive Offices Zip Code
Registrant's Telephone Number (604) 605-8852
Check here whether the issuer (1) has filed all reports required
to be filed by Sections 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 __X____ No_______
As of July 31, 2002, the following shares of the Registrant's
common stock were issued and outstanding:
8,345,502 Voting common stock
Traditional Small Business Disclosure (check one): Yes X No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
August 13, 2002
Mr. Cameron King
RedCell Power Corporation
(formerly Infobooth, Inc.)
1250 999 West Hastings Street
Vancouver BC V6C 2W2
Dear Sirs:
Re: Interim Quarterly financial statements for RedCell Power
Corporation (formerly Infobooth, Inc.)
We have performed a limited review of the interim financial
statements of the Company for the quarter ended June 30, 2002.
Our limited review was solely to conform to the US Securities
Exchange Commission Item 310(b) of Regulation S-B and should not be
used or referred to for any other purpose.
We have not issued a report for the limited review. If, in any
filing with the SEC, the company states that the interim financial
statements have been reviewed by an independent public accountant,
a report must be filed with the interim financial statements.
Yours truly,
MacKay LLP
"Sean Gilbert"
Sean Gilbert, CA
Partner
To the Board of Directors of RedCell Power Corporation, Inc.
I have compiled the consolidated balance sheet of RedCell Power
Corporation as at June 30, 2002, the consolidated statement of
loss and deficit and the consolidated statement of cash flows for
the six 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
/s/ Tracey St. Denis
Vancouver, British Columbia
August 12, 2002
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 2002 WITH AUDITED FIGURES AT DECEMBER 31, 2001
(Unaudited - See Notice to Reader)
(Stated in US Dollars)
As Of As Of
June 30, 2002 Dec. 31, 2001
(Unaudited) (Audited)
--------------------------------
ASSETS
CURRENT
Cash $ 29,932 $ 197,524
Accounts receivable 56,459 49,026
Advances receivable (Note 3) - 9,000
Inventory (Notes 2(d) and 4) 3,084,783 3,059,783
Prepaid expenses 23,701 2,200
---------------------------
3,194,875 3,317,533
CAPITAL ASSETS (Notes 2(e) and 5) 252,594 251,444
TRADEMARK (Note 6) - -
GOODWILL (Notes 2(f) and 3) 19,693 -
---------------------------
$3,467,162 $3,568,977
===========================
LIABILITIES
CURRENT
Accounts payable and accrued
liabilities $1,499,786 $1,394,934
Convertible notes payable (Note 7) 145,750 -
Due to related parties
(Notes 6, 8 and 9) 3,072,024 15,460,118
---------------------------
4,717,560 16,855,052
===========================
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value
25,000,000 shares authorized
8,345,502 shares outstanding 8,688 688
Additional paid in capital 13,026,988 -
Deficit (14,286,074) (13,286,763)
----------------------------
( 1,250,398) (13,286,075)
----------------------------
$ 3,467,162 $ 3,568,977
============================
</table>
The accompanying notes are an integral part of these financial
statements
<Page>
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2002
WITH AUDITED FIGURES AT DECEMBER 31, 2001
(Unaudited - See Notice to Reader)
(Stated in US Dollars)
As Of As Of
June 30, 2002 Dec. 31, 2001
(Unaudited) (Audited)
--------------------------------
SALES $ - $ 2,704,362
COST OF GOODS SOLD - 2,793,225
-----------------------------
GROSS MARGIN - (88,863)
-----------------------------
EXPENSES
Advertising 389,096 1,159,531
Professional fees 344,810 566,830
Warehousing fees 104,847 268,910
Salaries, wages and benefits 68,803 407,157
Travel and promotion 33,860 197,897
Amortization 26,931 47,753
Office and sundry 19,630 83,660
Telephone 4,993 30,623
Insurance 3,913 29,326
Bank charges and interest 2,428 1,128,968
Management fees - 205,434
Trade shows - 47,585
-----------------------------
999,311 4,173,674
-----------------------------
NET LOSS FOR THE PERIOD (999,311) (4,262,537)
DEFICIT, BEGINNING OF PERIOD (13,286,763) (9,024,226)
-----------------------------
DEFICIT, END OF PERIOD $(14,286,074) $(13,286,763)
=============================
The accompanying notes are an integral part of these financial
statements.
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.)(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2002
WITH AUDITED FIGURES AT DECEMBER 31, 2001
(Unaudited - See Notice to Reader)
(Stated in US Dollars)
As Of As Of
June 30, 2002 Dec. 31, 2001
(Unaudited) (Audited)
--------------------------------
OPERATING ACTIVITIES
Net Loss for the period $( 999,311) $(4,262,537)
Items not involving cash
Amortization 26,931 47,753
-----------------------------
Net change in working capital items
Accounts receivable ( 7,433) 423,560
Advances receivable 9,000 216,590
Inventory (25,000) (174,825)
Refundable deposits - 300,000
Prepaid expenses (21,501) 27,746
Accounts payable and
accrued liabilities 104,851 365,885
-----------------------------
Cash used by operating activities (912,463) (3,055,828)
-----------------------------
FINANCING ACTIVITIES
Convertible notes payable 145,750 -
Advances from related companies 627,201 3,326,231
-----------------------------
Cash provided by financing
activities 772,951 3,326,231
-----------------------------
INVESTING ACTIVITIES
Purchase of capital assets (28,080) (130,266)
-----------------------------
Cash used by investing activities (28,080) (130,266)
-----------------------------
NET INCREASE/(DECREASE) IN CASH (167,592) 140,137
CASH, BEGINNING OF PERIOD 197,524 57,387
-----------------------------
CASH, END OF PERIOD $ 29,932 $ 197,524
=============================
The accompanying notes are an integral part of these financial
statements.
REDCELL POWER CORPORATION
(formerly Infobooth, Inc.) (A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
(Unaudited See Notice to Reader)
(Stated in US Dollars)
1. NATURE OF BUSINESS 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 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
of 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 cannot 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 June 30, 2002, the Company is devoting all of its
present efforts to developing its 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 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
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 US dollar.
Transactions in foreign currency are translated into US
dollars as follows:
(i) monetary items at the rate prevailing at the balance
sheet date;
(ii) non-monetary items at the historical exchange rate;
(iii) revenue and expense items at the average rate 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.
(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 June 30, 2002.
(k) Fair Value of Financial Statements
The Company's financial instruments consist of cash,
accounts receivable, and accounts payable and amounts due
to related parties. 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
June 30, 2002 December 31, 2001
Batteries $ 2,584,942 $ 2,559,942
Packaging materials 499,841 499,841
----------------------------------
$ 3,084,783 $ 3,059,783
5. CAPITAL ASSETS
Dec. 31
June 30, 2002 2001
--------------------------------------------
Accumulated Net book Net book
Cost amortization value value
--------------------------------------------
Office equipment $142,609 $ 38,869 $ 103,740 $ 88,785
Computer hardware 17,420 5,575 11,845 10,565
Warehouse equipment 193,590 56,581 137,009 152,094
--------------------------------------------
$353,619 $101,025 $ 252,594 $251,444
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 June 30, 2002, the Company was
advanced funds by two private investors and 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
five 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
June 30, 2002 December 31, 2001
----------------------------------
723958 Alberta Ltd. $ 41,000 $ -
King Capital Corporation 30,349 -
771069 Alberta Ltd. (note 6) - 1,726,000
Redmond Capital Corporation
(note 9) 3,000,675 13,734,118
----------------------------------
$3,072,024 $ 15,460,118
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. 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 $ 30,366
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 ($375,000 paid to June 30, 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.
11. CONTINGENCIES
At June 30, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
FORWARD-LOOKING STATEMENTS THIS DISCUSSION AND ANALYSIS EXPLAINS
REDCELL POWER CORP.'S FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 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'S
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:
LIQUIDITY, THE COMPANY'S ABILITY TO RAISE CAPITAL, DISTRIBUTION,
PRODUCT DEVELOPMENT AND COMPETITION.
BACKGROUND
On May 23, 2002, the Company, formerly known as Infobooth,
Inc., 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 were 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, were 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. As a result
of this acquisition and change in control, the Company changed
its name to "RedCell Power Corporation".
OVERVIEW OF REDCELL POWER CORPORATION
Our name is now RedCell Power Corporation and we have
adopted the business plan of Redcell Canada Inc. which remains
our wholly owned subsidiary.
We are a development stage company which 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 which we have
secured with premier associations and well known entities. We
seek to have our batteries produced by a quality manufacturer who
shall in turn allow us to distribute these power products bearing
the Redcell name and logo. Without the overhead associated with
the manufacture of power products, we believe that we are able to
offer packages, which contain more product than competitors, at
the same price point.
We own or have rights to various trademarks, copyrights and
trade names used in its business, including the following:
RedCell, RedCell Batteries, RedCell.com, "Power of Performance".
We also currently have strategic marketing partnerships with
NASCAR, the Dallas Cowboys, and Mattel products, which are all
well known US household associations and entities, and which
we believe shall allow for a cross-branding of products and
allow us the opportunity to obtain brand name recognition
and demand for its products through these partnerships. We are
seeking to develop further strategic partnership to market and
distribute our power batteries. Our goal is 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 our
quality portable power batteries. Over the past few months, we
have implemented a new look, a new culture, and a tag line, "the
Power of Performance" which seeks to embody our energetic
marketing approach with our strategic partners.
Our batteries and power products are currently manufactured by
Varta of Hamburg, Germany. Varta is regarded as one of the leading
producers of automotive, portable and micro batteries worldwide.
Our relationship with Varta has evolved over the past 12 months and
today is our primary source of our alkaline product line. We also
maintain a relationship with a secondary supplier, Golden Power of
Hong Kong, China which maintains a manufacturing facility in
Jiangmen, Guangdong Province, China. Both of our manufacturers
achieve international ISO quality standards and exceed all US
compliant safety and environmental regulations. Our manufacturers
maintain an inventory position of blisters for battery wrapping at
the time of shipping. Varta maintains a $250,000 inventory of
packaging material. Our experience with both suppliers has been
satisfactory and in the past each has met our delivery requirements
of a four week turn around time commencing from the point of
purchase to landing in the warehouse for final packaging, finishing
and delivery.
We currently outsource the warehousing and distribution of
our products to Warehousing Incorporated ("WI"), which provides
all shipping, storing and receiving services. WI also provides a
sophisticated Product Control System, which interfaces directly
with our accounting and inventory systems. Management believes
that WI has demonstrated an ability to respond to this specialty
niche markets with a state-of-the-art facility and the ability to
oversee several promotional campaigns in concert as well as
operating a complete packaging facility for several products. WI
is also responsible for sourcing all raw materials and packaging
products for each specific client and promotion. We estimate
that by utilizing WI for the warehousing and distribution of our
products that we shall achieve a 10% cost reduction and improve
overall customer service, cost controls, and turn around time.
We have undertaken to initiate and implement a definitive
order fulfillment infrastructure which includes such features as
inventory tracking, order placement, and fulfillment. We have
reviewed our capabilities with Great Plains and outsourced an
outside consultant to initiate updating and training. As of
today, this system is operational and within weeks will have a
full web-enabled fulfillment system that will track orders,
inventory control, re-order of materials and link all modules
into an up to the minute accounting system. The completed custom
designed system will provide immediate job costing, quotation and
profit expectations. We expect that the system will be fully
operational before commencement of the fourth quarter.
Our efforts and the challenges in realizing market demand
and delivery time on product re-ordering have been
evaluated. As a result, we have established three key
distribution centers for our battery and other product lines.
Evansville, Indiana will remain the core hub of our operation
facility consisting of our packaging line and sorting
responsibilities. In addition, Dallas, Texas, and Hemet,
California will operate as finished product centers catering to
fulfill next day re-stocking orders.
We are in the process of negotiating a three-year
promotional contract with the Dallas Cowboys National Football
League team to be designated as "The Official Battery of the
Dallas Cowboys" during the upcoming NFL season. With the Dallas
Cowboys being the most visible and popular sporting franchise
throughout the world, we believe this designation shall be an
effective method to re-introduce our product line throughout
southern United States market. We believe that our network of
brokers in this geographic area shall strongly promote our store
accounts along side the Dallas Cowboys promotions.
Currently, we maintain 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.
RESULTS OF OPERATIONS
- ---------------------
Restructuring
During the past two quarters, we have temporarily suspended
our operations and have elected to restructure them to develop
our infrastructure network, to attract new management and to
implement a new business model. As a result, we have been unable
to secure any restocking orders from our established retailers.
During this restructuring, we have secured approximately $500,000
in financing which has been utilized to offset our overhead
costs, salaries and to reduce immediate account payables.
We have also attracted experienced personnel in key
managerial roles. Each of the management staff is an expert in
their respective areas. The present staff totals seven key
management positions with a support staff of four. The company
has chosen to enter into broker representations in key markets
throughout the United States for the purpose of marketing our
products and securing order. To date the company has entered in
seven such contracts which encompasses our full merchandising
team.
Our restructuring is now complete and we have recently
enacted a broker network which is providing and distributing
promotional material to secure restocking orders for fourth
quarter distribution into established key accounts. In the midst
our restructuring, we researched and identified new product lines
that are compatible to the portable power industry. In order
engage in test marketing and product branding we will require
financing in the of $5 million range. Our board of directors has
yet to approve the method of financing which we shall utilize to
raise these funds.
Liquidity and Capital Resources
To date, we have incurred significant net losses, including
net losses of $999,311 for the quarter ended June 30, 2002. We
had an accumulated deficit of $14,286,074 at June 30, 2002 and,
since that date, we have continued to incur significant 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. Our
independent certified public accountants have indicated in their
report on our financial statements that our ability to continue
as a going concern is dependent upon achieving profitable
operations and/or upon obtaining additional financing. The
outcome of these matters cannot be predicted at this time.
We are seeking arrangements for long-term funding through
additional capital raising activities, including one or more
offerings of equity and/or debt through private placements and/or
public offerings. We believe that we need to obtain
approximately $1.0 million in order to continue our development
strategy as currently planned over the next 12 months, but we
anticipate requiring the aggregate sum of approximately $5.0
million in order to continue our development strategy as
currently planned over the next 12 months. We are also actively
seeking strategic alliances in order to develop and market our
range of products.
During the period ended June 30, 2002, we were 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
principal due 10 months from the date of advance. Each lender
has committed to loan RedCell up to a maximum of $450,000, with
the sums requested to be advanced within five days of request,
and funds to be used solely for our business operations. The
loans are convertible, in part or in whole, into restricted
common shares of RedCell, at our option. Under the terms of the
note, we are 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 become immediately payable.
If we are unable to obtain additional financing in the near
future, or obtain all of the funds we are seeking, our
development strategy will be delayed and our marketing campaign
would be curtailed or delayed as we would then seek to reduce our
rate of expenditure. In either case, our condition, financial and
otherwise, business, operations and prospects will be materially
adversely affected. In any case, we may require additional
financing within this time frame due to unanticipated changes in
economic conditions or other unforeseen circumstances. In the
event our plans change or our assumptions change or prove to be
inaccurate, we could be required to seek additional financing
sooner than currently anticipated. Any additional financing may
not, however, be available to us when needed on commercially
reasonable terms, or at all. If this were to occur, our
condition, financial and otherwise, business, operations and
prospects would be materially and adversely affected.
OTHER DEVELOPMENTS
We have submitted an application to the National Association
of Securities Dealers ("NASD"), pursuant to a Form 15(c)2-11,
seeking to obtain a trading symbol for the purpose of having our
shares of common stock 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. OTCBB securities include national, regional, and
foreign equity issues, warrants, units, American Depositary
Receipts (ADRs), and Direct Participation Programs (DPPs). We
are not aware of any quotations for our common stock, now or at
any prior time and we currently have no established public
trading market for our common stock. 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 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. Our
management believes that period-to-period comparisons of
financial results are not necessarily meaningful at this stage
and should not be relied upon as an indication of future
performance.
Relationships with Manufacturers
Our ability to provide batteries and power supplies is
highly dependent on our relationships with our manufacturers and
suppliers and the abilities of those suppliers to timely provide
us with inventory of battery supplies. In the event our
manufacturers and supplies suffer any loss to their operating
capacity or delays in providing battery supplies to us, then we
believe that, during the short term, we may be negatively
impacted in the sale of our products.
Distribution
Merchandising and servicing our customers is crucial to our
success as we attempt to re-enter the marketplace with our line
of alkaline batteries and promotional capabilities. It is
essential for us to establish a strong broker network that will
service our retailers at the consumer store level, assist with
re-ordering the product and provide immediate feedback on the
effectiveness of our promotional campaigns. When our product
reaches retailers, it must be maintained in good and saleable
condition to ensure that it reaches the consumer in a high
quality form. Our success will be highly contingent on the
accomplishment of these efforts.
Product Development
The success of our company is based on our ability to
diversify our product line and establish consumer acceptable
products that consume our battery power line. Should we become
unable to effectuate a diversification of our product line, we
believe that our profit margin on any sales shall not be realized
and that we shall not be profitable over the long-term.
Competition
RedCell faces intense competition in the power battery
market, primarily from other manufacturers and distributors such
as Duracell and Energizer. These competitors have a solid market
share of the power battery market which makes our goal of gaining
a significant market share of that market very challenging. We
understand that we must develop and introduce, in an expeditious
and cost-effective manner, new products, product features, ideas
and market approaches that outperform products of our
competitors. A failure by RedCell to meet any one of these
demands may have an adverse affect on our ability to gain a
meaningful market share in this area.
Loss of Key Personnel
We have a small team of personnel who manage and operate
our business. Our success and operating results are
substantially dependent on the continued service and performance
of our management and sales personnel. RedCell intends to
hire a significant number of additional sales personnel in the
next year. Competition for such personnel is intense, and there
can be no assurance that we will be able to attract or retain
highly-qualified personnel in the future. The loss of the
services of any of our current management or other key employees
or the inability to attract and retain the necessary technical,
sales and managerial personnel could have a material adverse
effect upon our business, financial condition, operating
results and cash flows. The ability to succeed is wholly
dependent on the contributions and efforts of our personnel.
Change in Technology
Because of the rapid technological change in the power
battery market, and the constant demand for more cost effective
and powerful devices, our success will depend upon our
ability to address the increasingly sophisticated needs of
customers by working with designers to develop, market and sell
enhancements to our products on a rapid that keeps pace with
technological developments, customer requirements and our
competitors.
Foreign Currency Exchange Fluctuation
Because our reporting currency is the United States dollar,
our operations outside the United States face additional risks,
including 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 effect 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 charges in reporting in our financial 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 effect our operations. In the event we are no longer
considered a development stage entity, inflation may affect our
ability to generate profit as increased costs may be associated
with development and marketing of our products.
In the opinion of our management, inflation at this time has
not and will not have a material effect on our operations. Our
management focuses on the long term growth of the Company and
therefore any increase in inflation or jump in costs will not
result in an immediate increase in prices to the consumer.
Management believes that an increase in our prices may
lead to a loss of customers and therefore hinder our long term
growth. At any course however, management will evaluate
the possible effects of inflation on RedCell as it relates to
our business and operations and 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 unfavorable
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 Canada, Inc., currently has two (2)
separate legal actions pending against it filed by Scott Lagasse
and Brett Bodine Racing for alleged breach of sponsorship
agreements.
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 issuable to the sellers of the Redcell shares
subsequent to a 1 for 10 reverse split by Infobooth of its voting
common stock. The issuance of these shares, and the 1 for 10
reverse split of Infobooth's outstanding voting common stock were
in accordance with the terms of the Acquisition Agreement whereby
Infobooth acquired Redcell Canada, Inc.
On May 23, 2002, the sum of 257,501 shares of common stock of
Infobooth, held by the previous majority shareholders of the
company, were canceled with their consent as part of the terms of
the Acquisition Agreement whereby Infobooth acquired Redcell
Canada, Inc.
On July 24, 2002, the company filed a Form S-8 for the purpose of
registering 500,000 shares of common stock which shall be
utilized as compensation to various consultants and to the
company's attorneys for services rendered. The company issued a
total of 360,000 shares of its common stock to consultants and to
its attorneys in lieu of services rendered.
Item 3. Defaults upon Senior Securities
There has been no default in the payment of principal, interest,
sinking or purchase fund installment.
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 acquired Redcell Canada,
Inc. The majority of the shareholders of Infobooth approved the
terms of that 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 of the name of Infobooth to
RedCell Power Corporation. The shareholders also consented to a
1 for 10 reverse split of the outstanding shares of common stock
of Infobooth.
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
The company on May 29, 2002 filed a Form 8-K disclosing the
change in control of the registrant, the acquisition of assets,
and other events and 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 Canada Inc.
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.
REDCELL POWER CORPORATION
(Registrant)
Date: August 14, 2002
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/s/ Cameron King
Chairman and President