U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Battery Power Online U.S.A., Inc.,
(Exact name of registrant as specified in its charter)
Colorado xxxx 84-1578047
- -------- ---- ----------
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
3376 Burns Avenue, Victoria, British Columbia, Canada V8Z 3P2
- ----------------------------------------------------- -------
(Address of registrant's principal executive offices) (Zip Code)
(250) 920-5588
--------------
(Registrant's Telephone Number, Including Area Code)
Thomas E. Stepp, Jr.
Stepp Law Group
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
(Name, Address and Telephone Number of Agent for Service)
Approximate date of proposed sale to the public: From time to time after this
Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
[ ]
-------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
[ ]
-------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================== =================== ==================== ======================= ================
Title of each class Amount Proposed maximum Proposed maximum Amount of
of securities to be offering price aggregate registration
to be registered registered per share offering price fee
- ---------------------------------- ------------------- -------------------- ----------------------- ----------------
Common Stock, no par value 7,800,000 $.50 $ 3,900,000.00 $ 1,029.60
- ---------------------------------- ------------------- -------------------- ----------------------- ----------------
Common Stock, no par value 4,000,000 $.50 $ 2,000,000.00 $ 528
================================== =================== ==================== ======================= ================
Total Registration Fee $ 1,557.60
The offering price per share for the selling security holders was estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457
of Regulation C.
We will be offering 4,000,000 shares on a "best efforts" basis. We may offer and
sell these shares ourselves or we may use the services of Participating
Brokers/Dealers licensed by the National Association of Securities Dealers, Inc.
Each Participating Broker/Dealer will receive from the proceeds of the Offering
(i) a sales commission equal to ten percent (10%) of the proceeds received from
shares offered and sold by that Participating Broker/Dealer and accepted by us;
(ii) a reimbursement of expenses associated with ongoing due diligence in an
amount equal to two (2%) of the proceeds received from shares offered and sold
by that Participating Broker/Dealer and accepted by us, which fee is intended to
compensate that Participating Broker/Dealer for any and all expenses incurred by
Participating Broker Dealer associated with the due diligence process; and (iii)
a reimbursement of offering expenses in an amount equal to three percent (3%) of
the proceeds received from shares offered and sold by that Participating
Broker/Dealer and accepted by us, which is intended to reimburse that
Participating Broker/Dealer for offering expenses, e.g. postage, legal fees, and
similar expenses.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
1
Preliminary Prospectus
Battery Power Online U.S.A., Inc.,
a Colorado corporation
11,800,000 Shares of Common Stock
This prospectus relates to 11,800,000 shares of common stock of Battery Power
Online U.S.A., Inc., a Colorado corporation, which are issued and outstanding
shares of our common stock, acquired by the selling security holders in private
placement transactions which were exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933 and 4,000,000 shares which
we are offering to raise capital so that we can complete our current business
development plan. No national securities exchange or the Nasdaq Stock Market
lists the common stock being offered by the selling security holders, and we
have not applied for listing or quotation with any national securities exchange
or automated quotation system.
The shares of common stock offered by the selling security holders have not been
registered for sale under the securities laws of any state as of the date of
this prospectus. Brokers or dealers effecting transactions in the shares of our
common stock should confirm the registration thereof under the securities laws
of the states in which transactions occur or the existence of any exemption from
registration.
The selling security holders may from time to time sell the shares on the OTC
Bulletin Board, on any other national securities exchange or automated quotation
system on which the common stock may be listed or traded, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices; however, the shares of our common
stock are not currently quoted, listed or traded on any securities exchange or
automated quotation system. We will not receive any of the proceeds from the
sale of those shares being offered.
See "Risk Factors" beginning on page 5 for factors to be considered before
investing in the shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed. These
securities may not be offered or sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The date of this prospectus is July ___, 2001
Subject to completion.
2
TABLE OF CONTENTS
Prospectus Summary ......................................................4
Risk Factors.............................................................5
Use of Proceeds..........................................................8
Determination of Offering Price..........................................8
Dilution.................................................................9
Selling Security Holder..................................................9
Plan of Distribution....................................................10
Legal Proceedings.......................................................11
Directors, Executive Officers, Promoters and Control Persons............11
Security Ownership of Certain Beneficial Owners and Management..........12
Description of Securities...............................................12
Interest of Named Experts and Counsel...................................13
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities..............................................13
Organization Within Last Five Years.....................................14
Description of Business.................................................14
Management's Discussion and Analysis of Financial Condition
and Results of Operations...............................................16
Description of Property.................................................17
Certain Relationships and Related Transactions.................... .....17
Market for Common Equity and Related Stockholder Matters................17
Executive Compensation..................................................19
Financial Statements....................................................19
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure................................................30
Legal Matters...........................................................30
Experts.................................................................30
Additional Information..................................................30
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers...............................30
Other Expenses of Issuance and Distribution.............................31
Recent Sales of Unregistered Securities.................................31
Exhibits................................................................32
Undertakings............................................................32
Signatures ..........................................................34
Power of Attorney.......................................................35
3
Prospectus Summary
Our Business: Our principal business address is 3376 Burns
Avenue, Victoria, British Columbia, Canada
V8Z 3P2; our telephone number (250) 920-5588.
We sell and distribute various types of
specialized batteries as well as
battery-operated products to customers
worldwide over the Internet by means of our
website. Our principal business activities
are:
o the sale and distribution of specialized
batteries and related products
manufactured by third parties to
customers around the world, and
o the marketing of Battery Power
Centres for in-store retail sales.
The products that we sell and distribute
include many types of specialized batteries,
including primary and rechargeable batteries,
along with cutting-edge electronic
battery-powered items. We have not yet netted
a profit from the sale of those products.
Our current website features more than 3,000
types of batteries from all over the world
manufactured by more than 6,000
manufacturers. Batteries are cross-referenced
to North American battery standards. We have
already completed online orders from all
parts of the United States, and countries
around the world, including Australia, India,
Holland, and countries in South America. Our
database is supported by Remote Access
Software that allows for easy transfer of
data between the customer and the website.
Our ordering system is fast, easy to navigate
and fully secure. Customers can search
quickly and easily for a particular
specialized battery for any application,
including camcorders, cell phones, computers,
watches and calculators, along with
specialized batteries for various metering
and electronic devices. We are also in the
process of marketing complete turnkey units
called Battery Power Centres for installation
in North American retail locations such as
camera stores, convenience stores, and
optical outlets over the next two to three
years.
Our State of Organization: We were incorporated in Colorado on
December 19, 2000.
Number of Shares Being Offered: We are offering 4,000,000 shares of our
common stock. The selling security holders
want to sell 7,800,000 shares of our common
stock. The offered shares were acquired by
the selling security holders in private
placement transactions which were exempt
from the registration and prospectus delivery
requirements of the Securities Act of 1933.
Number of Shares Outstanding 7,800,000 shares of our common stock are
After the Offering: issued and outstanding. We have no other
securities issued. If we sell all of the
4,000,000 additional shares we are
registering, we will have 11,800,000 shares
of our common stock issued and outstanding
after the offering.
Estimated use of We will not receive any of the proceeds from
proceeds: the sale of those shares being offered by the
selling security holders. We intend to use
funds raised by the sale of the 4,000,000
shares we are registering for sale to expand
and develope our website, market and
distribute Battery Power Centers, hire
additional marketing and information
technology staff, and for working capital.
4
RISK FACTORS
In addition to the other information in this prospectus, the following risk
factors should be considered carefully in evaluating our business before
purchasing any of our shares of common stock. A purchase of our common stock is
speculative and involves a lot of risks. No purchase of our common stock should
be made by any person who is not in a position to lose the entire amount of his
investment.
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words, such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "projects",
"expects", "may", "will", or "should" or other variations thereon or similar
words. No assurances can be given that the future results anticipated by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the future results
anticipated by those forward-looking statements. Among the key factors that have
a direct bearing on our results of operations are the effects of various
governmental regulations, the fluctuation of our direct costs and the costs and
effectiveness of our operating strategy. Other factors could also cause actual
results to vary materially from the future results anticipated by those
forward-looking statements.
Because we are a new company with losses since our formation and we anticipate
that we will lose money in the foreseeable future, we may not be able to achieve
profitable operations.
We were incorporated in December 2000. In January, 2001, we merged with Battery
Power Online Inc., a company with limited liability formed under the Province of
British Columbia's Company Act in February, 1999. We were the surviving
corporation. We have a wholly-owned subsidiary, Kwik Sales Limited, which we
acquired on June 30, 2000, for $50,000 in cash and 75,000 of our common shares.
Kwik Sales Limited is a British Columbia corporation which wholesales batteries
on Southern Vancouver Island.
As of December 31, 2000, our net losses were approximately $107,374. Our
Canadian predecessor has been selling batteries and battery-operated products
online to customers around the world since April 1999. We have operated at a
loss thus far, but sales are increasing each month. We are in alliances with
various manufacturers to distribute products in Canada, and are in discussions
with other manufacturers to expand our distribution area. We anticipate
generating increasing levels of revenues in our current fiscal year. Our
prospects must be considered speculative, considering the risks, expenses, and
difficulties frequently encountered in the establishment of a new business,
specifically the risks inherent in the development of e-commerce. We cannot
guaranty that unanticipated technical or other problems will not occur which
would result in material delays in future product and service commercialization
or that our efforts will result in successful product and service
commercialization. We cannot guaranty that we will be able to achieve profitable
operations.
Our officers and directors are engaged in other activities and could have
conflicts of interest with us. Therefore, our officers and directors may not
devote sufficient time to our affairs.
The persons serving as our officers and directors have existing responsibilities
and may have additional responsibilities to provide management and services to
other entities. As a result, conflicts of interest between us and the other
activities of those entities may occur from time to time, in that our officers
and directors shall have conflicts of interest in allocating time, services, and
functions between the other business ventures in which they may be or become
involved and our affairs.
Peter Geoffrey Edmunds resigned as a director of JCI Technologies Inc. on
January 4, 2001 so that he could devote all of his time to our business. JCI
Technologies develops software and specializes in the production of online
Internet services.
John J. Sutherland currently serves as President of JJSJR Enterprises LTD, which
is a business-consulting firm. Mr. Sutherland currently devotes approximately
30% of his time to JJSJR Enterprises LTD. We do not believe that we have any
conflicts of interest with the business or industry of JJSJR Enterprises LTD
other than Mr. Sutherland's duty to provide management and services to JJSJR
Enterprises LTD.
5
We operate in a highly competitive industry and we may not have adequate
resources to market the products that we sell and distribute in order to compete
successfully.
Competition in the battery retail sales industry is intense. We compete directly
with other companies and businesses that sell batteries and battery-operated
products online or are in the process of developing similar businesses which are
functionally equivalent or similar to our website. Other competitors sell the
same batteries and battery-operated products that we sell. Our subsidiary
faces competition from other battery wholesalers. We expect that these
competitors who have developed similar online and in-store methods of selling
batteries and battery-operated products will market those products to our target
customers, which will significantly affect our ability to compete.
Most of our competitors have substantially greater experience, financial and
technical resources and production, marketing and development capabilities than
we do. Many of those competitors with greater financial resources can afford to
spend more resources than we can to market their products. We cannot guaranty
that we will succeed in marketing, selling and distributing specialty batteries
over the Internet or through our Battery Power Centres. We cannot guaranty that
our competitors will not succeed in marketing, selling and distributing their
products to our existing or potential customers.
Our ability to succeed is uncertain because we currently have limited sources of
revenue and minimal marketing activities due to the lack of revenues. Therefore,
investors may lose all or part of their investment, if we do not generate
revenues.
We are currently engaged primarily in online specialty battery sales. Our only
sources of revenue are the sales of specialty batteries. We have generated
revenues but continue to operate at a net loss. Our marketing activities are
significantly limited and, to fund more sophisticated marketing activities, we
need to generate revenues. Our failure to generate revenues may cause an
investor to lose part or all of his investment. We cannot guaranty that we will
generate any revenues.
We are substantially dependent on third party manufacturers for our supply of
batteries.
In the event that we cannot continue in relationships with our current suppliers
of specialty batteries and battery-operated products, we will need to develop
relationships with other suppliers. We cannot guaranty that we would be able to
develop other relationships with different suppliers.
We may not be able to maintain our web domain name, which may cause confusion
among web users and decrease any potential value of our name.
We currently hold the web domain names www.buyabattery.com and
www.battery-power.com. Currently, the acquisition and maintenance of domain
names is regulated by governmental agencies and their designees. The regulation
of domain names in the U.S. and in foreign countries is expected to change in
the near future. As a result, we may not be able to maintain our domain name.
These changes could include the introduction of additional top-level domains,
which could cause confusion among web users trying to locate our sites.
Furthermore, the relationship between regulations governing domain names and
laws protecting trademarks and similar proprietary rights is unclear. We may be
unable to prevent third parties from acquiring domain names that are similar to
ours. The acquisition of similar domain names by third parties could cause
confusion among web users attempting to locate our site and could decrease the
value of our name and the use of our site.
We anticipate that we will need to raise additional capital to market and
distribute Battery Power Centres and continue to develop our business. Our
failure to raise additional capital will significantly limit our marketing
activities and business development.
To market and distribute Battery Power Centres and complete our business
development, we will be required to raise additional funds. We will attempt to
do so through the sale of our common stock in this offering, but there is no
quarantee we will sell any of the stock we are offering.We cannot guaranty that
we will be able to obtain additional financing at commercially reasonable rates.
We anticipate that we will spend significant funds on the marketing and
promotion of Battery Power Centres. The minimum amount necessary to complete our
current business development plans is approximately $2,000,000. Our failure to
6
obtain additional funds would significantly limit or eliminate our ability to
fund our sales and marketing activities. This would have a material adverse
effect on our ability to continue our operation and compete with other battery
providers.
We anticipate that we may seek additional funding through public or private
sales of our securities or from borrowing funds from commercial or private
lenders, or from other commercial or private financing arrangements. At December
31, 2000 we had a bank loan in the amount of approximately $18,569 which was
unsecured, repayable on demand and which bears interest at prime plus 2% per
annum. We also had long-term debt in two loan payables totaling $34,534 and
advances from a shareholder of $67,993 in fiscal 2000 and $9,422 in fiscal 1999.
The advances from the shareholder are unsecured, non-interest bearing and have
no fixed terms for repayment. Additional funds may not be available when needed
or on terms acceptable to us. In the event that we are not able to obtain
additional funding on a timely basis, we may be required to limit any proposed
operations or eliminate certain or all of our marketing programs.
Our ability to raise additional capital through the sale of our stock may be
harmed by competing resales of our common stock by the selling security holders.
The price of our common stock could fall if the selling security holders sell
substantial amounts of our common stock. These sales would make it more
difficult for us to sell equity or equity-related securities in this offering or
in the future at a time and price that we deem appropriate because the selling
security holders may offer to sell their shares of common stock to potential
investors for less than we do. Moreover, potential investors may not be
interested in purchasing shares of our common stock if the selling security
holders are selling their shares of common stock.
Our inability to generate revenues will affect our ability to market our
products.
If we do not obtain adequate financing through the sale of our equity securities
or from other commercial or private financing arrangements, we may not be able
to generate revenues sufficient to enable us to continue to sell specialty
batteries and battery-operated products over the Internet, or to market our
Battery Power Centres effectively. Our failure to sell those products could
adversely affect our business and financial performance. If we are unable to
generate sufficient revenues, we anticipate that our marketing activities will
be very limited. In that instance, our expenses will be limited to the
day-to-day expenditures necessary to conduct business. Our sales revenues have
not yet covered our expenses. We cannot guaranty that our sales will increase
sufficiently in the future to generate a net profit.
Our officers, directors and principal security holders own approximately 86% of
our outstanding shares of common stock. Such concentrated control allows these
shareholders to exert significant influence in matters requiring approval of our
shareholders.
Our directors, officers and principal (greater than 5%) security holders, taken
as a group, together with their affiliates, beneficially own, in the aggregate,
approximately 86% of our outstanding shares of common stock. Geoff Edmunds is
one of our principal shareholders and also our President and one of our
directors. Such concentrated control of the company may adversely affect the
price of our common stock. Mr. Edmunds may be able to exert significant
influence, or even control, matters requiring approval by our security holders,
including the election of directors. Such concentrated control may also make it
difficult for our shareholders to receive a premium for their shares of our
common stock in the event we merge with a third party or enter into a different
transaction which requires shareholder approval.
In addition, certain provisions of Colorado law could have the effect of making
it more difficult or more expensive for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of us.
Because we may be subject to the "penny stock" rules, the level of trading
activity in our stock may be reduced.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on Nasdaq. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market, and monthly
7
account statements showing the market value of each penny stock held in the
customer's account. In addition, broker-dealers who sell these securities to
persons other than established customers and "accredited investors" must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
Consequently, these requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security subject to the
penny stock rules, and investors in our common stock may find it difficult to
sell their shares.
We lack a public market for shares of our common stock, which may make it
difficult for investors to sell their shares.
There is no public market for shares of our common stock. We cannot guaranty
that an active public market will develop or be sustained. Therefore, investors
may not be able to find purchasers for their shares of our common stock. Should
there develop a significant market for our shares, the market price for those
shares may be significantly affected by such factors as our financial results
and introduction of new products and services. Factors such as announcements of
new or enhanced products by us or our competitors and quarter-to-quarter
variations in our results of operations, as well as market conditions in the
high technology sector may have a significant impact on the market price of our
shares. Further, the stock market has experienced extreme volatility that has
particularly affected the market prices of stock of many companies and that
often has been unrelated or disproportionate to the operating performance of
those companies.
Because we lack a public market for shares of our common stock, the offering
price of the shares will be arbitrarily determined by the selling security
holders. Therefore, investors may lose all or part of their investment if the
price they pay for their shares is too high.
Our common stock is not publicly traded and we do not participate in the OTC
Bulletin Board, an electronic quotation medium for securities traded outside the
Nasdaq Stock Market. We cannot guaranty that an active public market for our
stock will develop or be sustained. Therefore, the offering price of shares of
our common stock may be arbitrarily determined by the selling security holders.
Accordingly, purchasers may lose all or part of their investments if the price
of their shares is too high. A purchase of our stock in this offering would be
"unsuitable" for a person who cannot afford to lose his entire investment.
We are registering all of the issued and outstanding shares of common stock,
including those shares owned by our officers and directors. The selling security
holders, including our officers and directors, may sell all of their shares as
soon as possible, which could significantly decrease the price of our common
stock and reduce our officers' and directors' desire to see us succeed.
All of the stock owned by the selling security holders, including our officers
and directors, will be registered by the registration statement of which this
prospectus is a part. The selling security holders, including our officers and
directors, may sell some or all of their shares immediately after they are
registered. In the event that the selling security holders sell some or all of
their shares, the price of our common stock could decrease significantly.
In the event that our officers and directors sell all or some of their common
stock, a conflict of interest will occur between our officers' and directors'
duties to us and their personal interests in selling their shares. In the event
that our officers and directors sell some or all of their shares, they may not
have an incentive to continue as management of the company. We cannot assure you
that the officers and directors will not sell some or all of their shares as
soon as they are registered.
Use of Proceeds
- ---------------
We will not receive any proceeds from the sale of shares of our common stock
being offered by the selling security holders. If we sell all or any portion of
the shares of common stock we are registering in this offering, we will use the
funds to expand and develop our website, to market and distribute Battery Power
Centres, to hire additional marketing and information technology staff, and for
general working capital. Our management has discretion to allocate the funds
raised in the manner they deem appropriate to best effectuate our business plan.
Determination of Offering Price
- -------------------------------
Factors Used to Determine Share Price. The selling security holders may sell our
common stock at prices then prevailing or related to the then current market
price or at negotiated prices. No public market presently exists for our common
stock, and it is not quoted on any electronic quotation service or listed or
traded on any securities exchange. The offering price for the shares we are
registering has
8
no relationship to any established criteria of value, such as book value or
earnings per share. Additionally, because we have no significant operating
history and have not generated any revenues to date, the price of our common
stock is not based on past earnings, nor is the price of the shares of our
common stock indicative of current market value for the assets owned by us. No
valuation or appraisal has been prepared for our business and potential business
expansion.
Dilution
- --------
The shares offered for sale by the selling security holders are already
outstanding and, therefore, do not contribute to dilution. The shareholders
currently have a deficit and therefore the shares of our common stock have a
negative book value. Assuming we sell all 4,000,000 shares being offered at the
offering price of $0.50 per share, our common stock would have a value of
approximately $0.16 per share. Therefore, persons investing in our common stock
at the offering price would have an immediate 68% dilution of their investment.
Selling Security Holders
- ------------------------
The following table sets forth the number of shares which may be offered for
sale from time to time by the selling security holders. The shares offered for
sale constitute all of the shares known to us to be beneficially owned by the
selling security holders. None of the selling security holders has held any
position or office with us, except as specified in the following table. Other
than the relationships described below, none of the selling security holders had
or have any material relationship with us.
===============================================================================
Name of Selling Security Holder Shares of Common Stock
- -----------------------------------------------------------------------------
Peter Geoffrey Edmunds 3,992,100
- -----------------------------------------------------------------------------
Norrlanska Kross, Inc. 1,500,000
- -----------------------------------------------------------------------------
John Stacey 1,000,000
- -----------------------------------------------------------------------------
John Sutherland 250,000
- -----------------------------------------------------------------------------
587686 B.C. Ltd. 100,000
- -----------------------------------------------------------------------------
Ingrid Edmunds 100,000
- -----------------------------------------------------------------------------
David Edmunds 100,000
- -----------------------------------------------------------------------------
Kim Johnson 100,000
- -----------------------------------------------------------------------------
Scott Johnson 100,000
- -----------------------------------------------------------------------------
Gordon Howard 60,000
- -----------------------------------------------------------------------------
Craig Reynolds 51,900
- -----------------------------------------------------------------------------
Mike MacDonald 50,000
- -----------------------------------------------------------------------------
Judith Weaver 50,000
- -----------------------------------------------------------------------------
Geoffrey McCarthy 30,000
- -----------------------------------------------------------------------------
Peter & Christine Shippen 45,000
- -----------------------------------------------------------------------------
Brian Chalmers 20,000
- -----------------------------------------------------------------------------
HSBC Securities in trust for Terrance Fanteux 17,000
- -----------------------------------------------------------------------------
National Bank Financial in trust for Claire Reynolds 17,000
- -----------------------------------------------------------------------------
Robin Herron 17,000
- -----------------------------------------------------------------------------
Nancy Janes 17,000
- -----------------------------------------------------------------------------
Denise Kube 17,000
- -----------------------------------------------------------------------------
Sandra Webb 17,000
- -----------------------------------------------------------------------------
Shirley Helmer 34,000
- -----------------------------------------------------------------------------
Carlos Rocha 17,000
- -----------------------------------------------------------------------------
Peter & Christine Shippen 17,000
- -----------------------------------------------------------------------------
Bonnie Howard 15,000
- -----------------------------------------------------------------------------
Raymond Patterson 10,000
- -----------------------------------------------------------------------------
Denise & Daryl Kube 10,000
- -----------------------------------------------------------------------------
Elizabeth Armstrong 10,000
- -----------------------------------------------------------------------------
Wayne & Joanne Hamilton 10,000
- -----------------------------------------------------------------------------
David & Wendy English 10,000
- -----------------------------------------------------------------------------
James Sim 10,000
- -----------------------------------------------------------------------------
David Ganong 10,000
- -----------------------------------------------------------------------------
Florence Brownlee 5,000
- -----------------------------------------------------------------------------
9
- -----------------------------------------------------------------------------
William Edward Chudyk 4,000
- -----------------------------------------------------------------------------
Josh Kube 2,000
- -----------------------------------------------------------------------------
Alia Kube 2,000
=============================================================================
Plan of Distribution
- --------------------
We are registering 4,000,000 shares of our common stock, which will be offered
and sold on a "best efforts" basis by us or by Participating Broker/Dealers
licensed by the National Association of Securities Dealers. There is no minimum
purchase for each investor. The offering price of the shares was arbitrarily
determined by us. The offering price of our common stock does not have any
relationship to assets, book value, or earnings of the company. We reserve the
right to reject any subscription in whole or in part, for any reason or for no
reason.
The selling security holders may sell our common stock in the over-the-counter
market, or on any securities exchange on which our common stock is or becomes
listed or traded, in negotiated transactions or otherwise. The selling security
holders may sell our common stock at prices then prevailing or related to the
then current market price or at negotiated prices. The shares will not be sold
in an underwritten public offering.
The shares may be sold directly or through brokers or dealers. The methods by
which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions.
Brokers and dealers engaged by selling security holders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from selling security holders (or, if any such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser) in amounts to be
negotiated. Broker-dealers may agree with the selling security holders to sell a
specified number of such shares at a stipulated price per share, and, to the
extent such broker-dealer is unable to do so acting as agent for a selling
security holder, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer's commitment to such selling security
holder. Broker-dealers who acquire shares as principal may resell those shares
from time to time in the over-the-counter market or otherwise at prices and on
terms then prevailing or related to the then-current market price or in
negotiated transactions and, in connection with such resales, may receive or pay
commissions.
The selling security holders and any broker-dealers participating in the
distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale
of shares by the selling security holders and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts. The shares may also be sold pursuant to Rule 144 under the Securities
Act of 1933 beginning one year after the shares were issued.
There can be no assurance that the selling security holders will sell any or all
of the offered shares.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our common stock offered by
this prospectus may not simultaneously engage in market making activities with
respect to our common stock during the applicable "cooling off" periods prior to
the commencement of such distribution. Also, the selling security holders are
subject to applicable provisions which limit the timing of purchases and sales
of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may
be engaged in a distribution of any of the shares we are registering by this
Registration Statement, they are required to comply with Regulation M. In
general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions
10
may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
Legal Proceedings
- -----------------
There are no legal actions pending against us nor are any legal actions
contemplated by us at this time.
Directors, Executive Officers, Promoters and Control Persons
- ------------------------------------------------------------
Executive Officers and Directors. We are dependent on the efforts and abilities
of certain of our senior management. The interruption of the services of key
management could have a material adverse effect on our operations, profits and
future development, if suitable replacements are not promptly obtained. We
anticipate that we will enter into employment agreements with each of our key
executives. We cannot guaranty that each executive will remain with us during or
after the term of his or her employment agreement. In addition, our success
depends, in part, upon our ability to attract and retain other talented
personnel. Although we believe that our relations with our personnel are good
and that we will continue to be successful in attracting and retaining qualified
personnel, we cannot guaranty that we will be able to continue to do so. Our
officers and directors will hold office until their resignations or removal.
Our directors and principal executive officers are as specified on the following
table:
======================== ============ =======================================
Name Age Position
- ------------------------ ------------ ---------------------------------------
Peter Geoffrey Edmunds 61 President and a Director
- ------------------------ ------------ ---------------------------------------
John Stacey 57 Secretary and a Director
- ------------------------ ------------ ---------------------------------------
John Sutherland 51 Director
======================== ============ =======================================
Peter Geoffrey Edmunds. Mr. Edmunds is our President and a director since April,
1999. Mr. Edmunds manages all aspects of our operations, including negotiating
agreements with product manufacturers and suppliers as well as Internet
marketing and sales. From 1991 to 1999, Mr. Edmunds was President and CEO of JCI
Technologies, Inc., a software development company specializing in the
production of online Internet services, and a reporting company. From 1985 to
1990, he was a founding partner of Battery One-Stop, Inc. , a battery and
electronic specialty retailer that went on to establish 155 stores in both
Canada and the United States. Battery One-Stop became one of the most successful
companies listed on the Alberta Stock Exchange. Mr. Edmunds also has an
extensive background in publishing with newspapers and publishers in both Wales
and Canada. Mr. Edmunds has not been a director of any other reporting company.
John W. Stacey. Mr. Stacey has been our Secretary and a director since April
1999. From 1995 to 1998, Mr. Stacey was a business consultant, advising start-up
companies in sales and marketing techniques. In 1991, Mr. Stacey earned his real
estate license, and from 1991 to 1995, Mr. Stacey was a Realtor with Re/Max
Camosun in Victoria, British Columbia. Prior to that, Mr. Stacey worked in
retail management, sales and marketing. He has given numerous seminars and
workshops focusing on management and marketing techniques. Mr. Stacey has not
been a director of any other reporting company.
John J. Sutherland. Mr. Sutherland has been a director since September 1999.
From March 1997 to January 2001, Mr. Sutherland was President and CEO for
Ascavcan Systems Corp. Prior to that he served as Vice President of Finance for
Zen International Resources, Inc. from September 1996 through February, 1997 and
held the same position at Arequepa Resources Inc. from April 1996 through August
1996. Mr. Sutherland is a member of the Certified General Accountants of British
Columbia. Mr. Sutherland has served as Treasurer, Controller and Vice President
of Finance in a variety of industries. He earned a Certificate in General
Accounting from the University of British Columbia in 1976, and prior to that, a
Diploma in Technology from The British Columbia Institute of Technology in 1970.
Mr. Sutherland has previously been a director of International Absorbents, Inc.,
and Polymer Solutions, Inc., both reporting companies.
There is no family relationship between any of our officers or directors. There
are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any
11
license, permit or other authority to engage in the securities business or in
the sale of a particular security or temporarily or permanently restraining any
of our officers or directors from engaging in or continuing any conduct,
practice or employment in connection with the purchase or sale of securities, or
convicting such person of any felony or misdemeanor involving a security, or any
aspect of the securities business or of theft or of any felony. Nor are any of
the officers or directors of any corporation or entity affiliated with us so
enjoined.
Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of June 1, 2001 by each person or entity known
by us to be the beneficial owner of more than 5% of the outstanding shares of
common stock, each of our directors and named executive officers, and all of our
directors and executive officers as a group.
Title of Class Name and Address of Beneficial Amount and Nature of Beneficial Percent of Class
Owner Owner
- -------------------------- ----------------------------------- ------------------------------------ --------------------
Common Stock Peter Geoffrey Edmunds 3,992,100 Shares ___%
3376 Burns Avenue
Victoria, B.C. V8Z 3P2
Common Stock John Stacey 1,000,000 Shares
3376 Burns Avenue 12.8%
Victoria, B.C. V8Z 3P2
Common Stock John Sutherland 250,000 Shares 3.2%
3376 Burns Avenue
Victoria, B.C. V8Z 3P2
Common Stock Norrlanska Kross, Inc. 1,500,000 Shares 19.2%
10077 E. County Line Rd.
Longmont, Colorado 80501
Common Stock All directors and named executive 68.4%
officers as a group
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.
Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.
Description of Securities
- -------------------------
We are authorized to issue 100,000,000 shares of no par value common stock. Each
share of common stock has equal rights and preferences, including voting
privileges. We are authorized to issue 5,000,000 shares of no par value
preferred stock. As
12
of June 1, 2001, 7,800,000 shares of our common stock were issued and
outstanding, and no shares of our no par value preferred stock were issued and
outstanding.
Each shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record on all
matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of our directors or any other matter. Therefore, the
holders of more than 50% of the shares voted for the election of those directors
can elect all of the directors. The holders of our common stock are entitled to
receive dividends when, as and if declared by our Board of Directors from funds
legally available therefor. Cash dividends are at the sole discretion of our
Board of Directors. In the event of our liquidation, dissolution or winding up,
the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of our liabilities
and after provision has been made for each class of stock, if any, having any
preference in relation to our common stock. Holders of shares of our common
stock have no conversion, preemptive or other subscription rights, and there are
no redemption provisions applicable to our common stock.
Dividend Policy. We have never declared or paid a cash dividend on our capital
stock. We do not expect to pay cash dividends on our common stock in the
foreseeable future. We currently intend to retain our earnings, if any, for use
in our business. Any dividends declared in the future will be at the discretion
of our Board of Directors and subject to any restrictions that may be imposed by
our lenders.
Interest of Named Experts and Counsel
- -------------------------------------
No "expert", as that term is defined pursuant to Regulation Section 228.509(a)
of Regulation S-B, or our "counsel", as that term is defined pursuant to
Regulation Section 228.509(b) of Regulation S-B, was hired on a contingent
basis, or will receive a direct or indirect interest in us, except as specified
below, or was a promoter, underwriter, voting trustee, director, officer, or
employee of the company, at any time prior to the filing of this Registration
Statement.
Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
- -----------------------------------------------------------------
Article Eighth of our Articles of Incorporation provides, among other things,
that our directors shall not be personally liable to us or our shareholders for
monetary damages for breach of fiduciary duty as a director, except for
liability:
o for any breach of such director's duty of loyalty to us or our security
holders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or assenting to a
distribution which violates Colorado corporate law; or
o for any transaction from which such director derived any improper
personal benefit.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act of omission, unless the act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Article VI of our Bylaws also provides that our officers and directors shall be
indemnified and held harmless by us to the fullest extent permitted by the
provisions of Sections 7-109-101 through 7-109-110 of the Colorado Business
Corporation Act.
Indemnification Agreements. We will enter into indemnification agreements with
each of our executive officers. We will agree to indemnify each such person for
all expenses and liabilities, including criminal monetary judgments, penalties
and fines, incurred by such person in connection with any criminal or civil
action brought or threatened against such person by reason of such person being
or having been our officer or director or employee. In order to be entitled to
indemnification by us, such person must have acted in good faith and in a manner
such person believed to be in our best interests. With respect to criminal
actions, such person must have had no reasonable cause to believe his or her
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in that
13
Act and is, therefore, unenforceable.
Organization Within Last Five Years
- -----------------------------------
James B. Wiegand was our incorporator. Mr. Wiegand did not receive any
consideration for forming the company.
Description of Business
- -----------------------
Our Background. Battery Power Online, U.S.A., Inc. was incorporated pursuant to
the laws of the State of Colorado on December 19, 2000. On or about January 30,
2001, we entered into a Plan of Merger and Reorganization Agreement with Battery
Power Online Inc., a British Columbia limited liability company, formed in 1999,
wherein we issued 6,300,000 shares of our common stock in exchange for 7,090,900
shares of Battery Power Online U.S.A., Inc. common stock. The shares were issued
in a transaction which we believe satisfies the requirements of an exemption
from the registration and prospectus delivery requirements of the Securities Act
of 1933, which exemption is specified by the provisions of Section 4(2) of that
Act and Rule 506 of Regulation D promulgated pursuant to that Act by the
Securities and Exchange Commission.
Our Business. We currently sell specialty batteries and related products by
means of our website, and intend to become a leader in the development of an
online Internet site for distribution of batteries and battery-operated
products. Our wholly-owned subsidiary wholesales batteries on South Vancouver
Island.
We plan to sell and distribute every type of rare battery, including primary and
rechargeable batteries, along with cutting-edge electronic battery-powered
items, and hope to position ourselves as one of the foremost websites for
specialty battery products. We feature more than 3,000 types of batteries from
over 6,000 manufacturers around the world; our website cross-references these
products to North American battery standards and has already received
significant "hits" and completed online orders from all parts of the United
States, as well as countries such as Australia, India, and Holland. Our
principal business activities include the distribution and sale of rare and
specialty batteries and unique battery-operated products developed and
manufactured by third parties. We have generated revenues from the sales of
these products but have not yet netted a profit.
Products and Services.
Online Battery Sales. The products that we sell and distribute include over
3,000 types of specialty batteries from all over the world, produced by over
6,000 manufacturers. These batteries are cross-referenced to North American
battery standards by our database that is featured on our website. We have
completed online orders from all parts of the United States and other countries
in the world, such as Australia, Holland, India, and countries in South America.
Our database is supported by Remote Access Software that allows for easy
transfer of data between the customer and the website, and features an ordering
system that is fast, easy to navigate and fully secure through e-commerce
security software. Customers are able to search easily and quickly for a
particular specialized battery for any application. We feature rare and
hard-to-find batteries for products such as camcorders, cell phones, laptops, as
well as calculators and watches, and very specialized batteries for a host of
metering and electronic devices. We have built a comprehensive battery search
website featuring full search and invoicing features that is totally automated
and secure. Online purchase of product eliminates the need for receivables and
affords us the advantage of enjoying all-cash transactions, because funds are
deposited directly in our bank account.
Battery Power Centres. We are also in the process of marketing complete turn-key
units that will be installed in camera stores, convenience stores, optical
outlets, and similar retail locations. The goal will be to sell and install up
to 1,000 of these units across Canada and the United States. We have been in
discussions to purchase twelve units currently established in retail outlets in
the Greater Victoria area from the current owners. These units have a high
return rate for storeowners, and are eagerly accepted as an excellent source of
revenue for otherwise "dead" wall space. These attractive units will feature a
full selection of specialized batteries and interesting electronic "gadgets"
with a broad range of appeal. The units will not only add to our bottom-line
profit, but serve as an ongoing permanent advertisement for our website, with
the address featured prominently on each unit.
Internet Advertising. If we generate significant revenues, we anticipate that we
will expand and develop our website as a
14
digital community website for businesses and consumers. If we develop our
website as we anticipate, we believe that we will be able to generate
advertising revenues from battery manufacturers who desire to advertise our on
website. According to the Internet Ad Bureau's article entitled "What
Advertising Works," which was compiled by Forrester Research, Inc., an
independent research firm that analyzes the future of technology change and its
impact on businesses, consumers, and society, the Internet is emerging as an
attractive method for advertisers, due to the growth in the number of Internet
users, the amount of time Internet users spend on the Internet, the increase in
electronic commerce, the interactive nature of the Internet, the Internet's
global reach, the ability to reach targeted audiences and a variety of other
factors.
According to the Internet Ad Bureau's Internet Ad Revenue Report dated April 18,
2000, which is conducted independently by PricewaterhouseCoopers, many of the
largest advertisers in traditional media, including consumer products companies,
automobile manufacturers and others, have increased their use of Internet
advertising. The Internet Ad Revenue Report also specifies that larger companies
will begin to allocate significant portions of their total advertising budgets
for Internet advertising. We believe that significant revenues can be generated
from online advertising, initially from small business service providers and
product vendors and, as use of our website increases, from advertisers, such as
consumer products companies.
Our Target Markets and Marketing Strategy. The battery market in North America
alone is over $70 billion in sales per year. While approximately 80% of this
market is for "common" batteries, such as AA, AAA, C, D, and 9-volt batteries,
the remainder is in the more exotic and hard-to-find products. These batteries
are manufactured with a variety of chemistries that are very difficult for the
average consumer to find. These batteries are often an essential part of daily
life, and are important to individuals in such diverse fields as hospitals,
government agencies and the defense industry, along with everyday requirements
for products such as watches, cell phones, computers, and other common
electronic devices. The need for batteries for these products is increasing.
Hard-to-find, specialized batteries are not price sensitive and have the
potential to render a significant profit margin. Batteries with new, more
powerful chemistries, such as lithium, lithium-ion, nickel metal hydride, and
others, have opened the battery market to manufacturers seeking compact power
sources for an ever-increasing range of hand-held portable devices. Once the
manufacturer has sold the item, however, the consumer is left to his or her own
resources to find replacement batteries. Traditional battery outlets, such as
supermarkets and discount stores, are likely to carry only the five common cells
listed above. There is a pent-up demand for batteries of many kinds, and
frustrated consumers are willing to pay full price to fill an important
specialty battery need. We intend to capture a large part of this market through
our easy-to-use website.
We also intend to introduce a line of attractive battery-operated products
marketed alongside our battery search capability featured on our website. We
anticipate that this market will be significant, and that the marketing plan for
these products will dovetail with the current expansion of online e-commerce .
Growth Strategy. Our objective is to become a leader in the development of an
online Internet site for the distribution of specialty batteries and
battery-operated products. Our strategy is to continue providing clients with
easy access to rare and unique batteries and related products. Key elements of
our strategy include:
o negotiate distribution agreements with third party manufacturers for
batteries and related products ;
o continue toexpand our website;
o increase the number of Internet users to our website;
o increase our relationships with third party providers of batteries and
related products;
o provide additional services for businesses and consumers; and
o market convenient Battery Power Centre product display units in
high-traffic retail stores throughout North America, featuring
hard-to-find battery products in high demand for use in electronic
devices.
15
Our Suppliers. We sell specialty batteries and unique battery-operated products
manufactured by a wide variety of third parties. Because we sell products
manufactured by thousands of suppliers, the loss of any one product or supplier
would not materially affect our business.
Our Competition. The online commerce industry is new, rapidly evolving and has
become significantly competitive. Current and new competitors may be able to
establish products at a relatively low cost and relatively quickly. We compete
directly with other companies and businesses that have developed, and are in the
process of developing, websites that feature batteries and battery products for
sale. Most of these companies specialize in niche markets, focused on batteries
for particular products only, such as camcorders, cell phones or laptop
computers. None of these sites has a definitive and in-depth cross-referencing
system that allows the browser to enter their particular battery number or
manufacturer number and have it referred to a North American standard.
Furthermore, most of these sites do not have a secure online ordering system,
and require the browser to e-mail, fax or phone long distance for any battery
inquiries they may have. We believe that we are currently the only Internet site
that has over 3,000 types of batteries from over 6,000 manufacturers in our
database, featuring a fully cross-referenced system, and a fully secure online
ordering system capable of taking credit card payments directly to a U.S. bank.
We believe we are uniquely positioned to capture a significant portion of the
$70,000,000,000 battery market in North America.
Proprietary Rights. Our success depends in part upon our ability to preserve our
trade secrets and operate without infringing on the proprietary rights of other
parties. We own the Internet domain names "www.buyabattery.com" and "www.
battery-power.com." Under current domain name registration practices, no one
else can obtain an identical domain name, but someone might obtain a similar
name, or the identical name with a different suffix, such as ".org", or with a
country designation. The regulation of domain names in the United States and in
foreign countries is subject to change, and we could be unable to prevent third
parties from acquiring domain names that infringe or otherwise decrease the
value of our domain names.
Our Research and Development. We are not currently conducting any research and
development activities. We do not anticipate conducting such activities in the
near future. If we generate significant revenues, we may expand our product line
by entering into distribution relationships with third party manufacturers.
Government Regulation. We do not believe that we need any governmental approval
for the sales of batteries and battery-operated products. Our business is
subject to Federal Trade Commission regulation and other federal and state laws
relating to e-commerce. We believe that we are in compliance with all laws,
rules and regulations material to our operations.
Employees. As of June 1, 2001, we had 6 employees. We anticipate hiring
additional marketing and information technology staff if we raise sufficient
funds from this offering to do so. We believe our future success depends in
large part upon the continued service of our key senior management personnel and
our ability to attract and retain managerial personnel.
Facilities. Our executive, administrative and operating offices are located at
3376 Burns Avenue, Victoria, British Columbia, Canada V8Z 3P2, which we sublease
by written agreement from Raincoast Sales Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
- ----------------------------------------------------------------
Liquidity and Capital Resources. At December 31, 2000, we had cash of
$12,645.00, accounts receivable of $18,539.00, inventory of $40,791.00, prepaid
expenses of $734.00. We also had income of $4,885.00 from rent and $4,051.00
from miscellaneous sources.
Results of Operations. We have a net operating loss of $145,703.00 from
operations. Our expenses of approximately $151,374 consist of the following:
advertising and promotion $6,388.00; amortization $6,529.00; automotive and
travel $4,604.00; bank charges and interest $8,369.00; freight $10,321.00;
insurance, licenses and dues $629.00; legal and accounting $5,668.00; management
fees $19,500.00; office and sundry $12,767.00; rent $17856.00; sub-contract
$21,595.00; supplies $336.00; telephone $6,820.00; utilities $2,113.00; wages
and benefits $27,879.00; totaling $151,374.00, from formation through December
31, 2000.
16
Our Plan of Operation for the Next Twelve Months. Our goal is to establish the
Battery Power Online website on all of the major search engines, and establish
an eventual presence on a minimum of 100,000 associated websites. We anticipate
starting with ten major search engines. We intend to make significant strides
toward our goal to become positioned as the leading battery website in the world
and acquire a significant share of this $70 billion a year business.
We also plan for our subsidiary, Kwik Sales LTD to acquire more retail accounts
in its local region, while supplying us, the parent company, with a full range
of batteries and hand-held electronic items for sale on our websites. We also
plan to increase the current $200,000 annual sales level of Kwik Sales LTD, our
wholesale battery distributor located in Victoria, British Columbia, by means of
an aggressive marketing plan selling Battery Power Centres to existing and new
clients.
Description of Property
- -----------------------
Property held by Us. As of the date specified in the following table, we held
the following property:
============================================= =================================
Property December 31, 2000
- --------------------------------------------- ---------------------------------
Cash $ 12,645.00
- --------------------------------------------- ---------------------------------
Equipment $ 6,842.00
- --------------------------------------------- ---------------------------------
Furniture and fixtures $ 3,316.00
- --------------------------------------------- ---------------------------------
Website $ 10,000.00
============================================= =================================
Our Facilities. Our facilities are located at 3376 Burns Avenue, Victoria,
British Columbia, Canada V8Z 3P2. The facilities are subleased by written
agreement from Raincoast Sales Inc., an unrelated party, at $1,488 per month,
and the sublease expires in August 2001.
Certain Relationships and Related Transactions
- ----------------------------------------------
Conflicts Related to Other Business Activities. The persons serving as our
officers and directors have existing responsibilities and, in the future, may
have additional responsibilities, to provide management and services to other
entities in addition to us. As a result, conflicts of interest between us and
the other entities may occur from time to time.
John J. Sutherland currently serves as President of JJSJR Enterprises LTD, which
is a business-consulting firm. Mr. Sutherland currently devotes approximately
30% of his time to JJSJR Enterprises LTD. We do not believe that we have any
conflicts of interest with the business or industry of JJSJR Enterprises LTD
other than Mr. Sutherland's duty to provide management and services.
We will attempt to resolve any such conflicts of interest in our favor. Our
officers and directors are accountable to us and our shareholders as
fiduciaries, which requires that such officers and directors exercise good faith
and integrity in handling our affairs. A shareholder may be able to institute
legal action on our behalf or on behalf of that shareholder and all other
similarly situated shareholders to recover damages or for other relief in cases
of the resolution of conflicts in any manner prejudicial to us.
Related Party Transactions. We earned $4,051.00 in miscellaneous income from a
person related to Peter Geoffrey Edmunds, our President and a director. As of
December 31, 2000, there was $3,384.00 owing to this related party. We also
earned $3,000.00 in rental income from a company of which Mr. Edmunds is a
director. As of December 31, 2000, there was $2,140.00 receivable from this
related party. These transactions are not in the normal course of operations,
and the amount of consideration for these transactions was established and
agreed to by the related parties.
17
Market for Common Equity and Related Stockholder Matters
- --------------------------------------------------------
Reports to Security Holders. Our securities are not listed for trading on any
exchange or quotation service. We are not required to comply with the timely
disclosure policies of any exchange or quotation service. The requirements to
which we would be subject if our securities were so listed typically include the
timely disclosure of a material change or fact with respect to our affairs and
the making of required filings. Although we are not required to deliver an
annual report to security holders, we intend to provide an annual report to our
security holders, which will include audited financial statements.
When we become a reporting company with the Securities and Exchange Commission,
the public may read and copy any materials filed with the Securities and
Exchange Commission at the Security and Exchange Commission's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Securities and Exchange Commission. The address of that
site is http://www.sec.gov.
There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. There are no outstanding shares of
our common stock that could be sold pursuant to Rule 144 pursuant to the
Securities Act of 1933 or that we have agreed to register under the Securities
Act of 1933 for sale by security holders. The approximate number of holders of
record of shares of our common stock is twenty-three (23).
There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.
Penny Stock Regulation. Because shares of our common stock are subject to rules
adopted by the Securities and Exchange Commission that regulate broker-dealer
practices in connection with transactions in "penny stocks," any broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from those rules,
is required to deliver a standardized risk disclosure document prepared by the
Securities and Exchange Commission, which contains the following:
o a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;
o a description of the broker's or dealer's duties to the customer and of
the rights and remedies available to the customer with respect to
violation to such duties or other requirements of securities laws;
o a brief, clear, narrative description of a dealer market, including
"bid" and "ask" prices for penny stocks and the significance of the
spread between the "bid" and "ask" price;
o a toll-free telephone number for inquiries on disciplinary actions;
o definitions of significant terms in the disclosure document or in the
conduct of trading in penny stocks; and
o such other information, in such form (including language, type, size and
format), as the Securities and Exchange Commission shall require by rule
or regulation.
Prior to effecting any transaction in a penny stock, the broker-dealer also must
provide the customer the following:
o the bid and offer quotations for the penny stock;
o the compensation of the broker-dealer and its salesperson in the
transaction;
o the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
o monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.
18
Executive Compensation
- ----------------------
Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf.
Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our Chief
Executive Officer and our other executive officers whose total annual salary and
bonus are anticipated to exceed $50,000 during the year ending December 31,
2001. Our Board of Directors may adopt an incentive stock option plan for our
executive officers which would result in additional compensation.
=================================== ======= ============= ============= ===================== =====================
Name and Principal Position Year Annual Bonus ($) Other Annual All Other
Salary ($) Compensation ($) Compensation
- ----------------------------------- ------- ------------- ------------- --------------------- ---------------------
Peter Geoffrey Edmunds, President,
Director 2001 $60,000 None None None
- ----------------------------------- ------- ------------- ------------- --------------------- ---------------------
John W. Stacey,
Secretary, Director 2001 $60,000 None None None
- ----------------------------------- ------- ------------- ------------- --------------------- ---------------------
John Sutherland
Director 2001 None None None None
=================================== ======= ============= ============= ===================== =====================
Compensation of Directors. Our directors who are also our employees receive no
extra compensation for their service on our Board of Directors.
Compensation of Officers. As of June 1, 2001, Mr. Stacey had received $7,000 for
his services provided to us. No other officers have received compensation for
their services provided to us.
Employment Contracts. We anticipate that we will enter into employment contracts
with Mr. Edmunds and Mr. Stacey. We are not presently signatory to any
employment contracts and therefore cannot guarantee that our key management
personnel will remain with us for any specified length of time.
Financial Statements
- --------------------
BATTERY POWER ONLINE INC.
CONSOLIDATED
FINANCIAL STATEMENTS
December 31, 2000
19
AUDITOR'S REPORT
To the Shareholders of Battery Power Online Inc.:
We have audited the consolidated balance sheet of Battery Power Online
Inc. as at December 31, 2000 and the consolidated statements of loss and deficit
and cash flow for the year 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. 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 results of operations and cash flows of the
company for the year ended December 31, 2000 in accordance with generally
accepted accounting principles.
We have not examined, and we do not express an opinion on the financial
statements for the preceding period.
Schibli Stedman King
Chartered Accountants
Victoria, B.C.
February 19, 2001
20
BATTERY POWER ONLINE INC.
CONSOLIDATED BALANCE SHEET
December 31
2000 1999
---- ----
A S S E T S
CURRENT
Cash 12,645 47
Accounts receivable 18,539 2,350
Inventory 40,791 504
Prepaid expenses 734 -
------------ --------------
72,709 2,901
------------ --------------
CAPITAL ASSETS (Note 3) 85,668 5,427
------------ --------------
158,377 8,328
============ ==============
L I A B I L I T I E S
CURRENT
Bank loan (Note 4) 18,569 -
Accounts payable and accrued liabilities 40,244 -
Current portion of long-term debt 20,034 -
------------ --------------
78,847 -
LONG-TERM DEBT (Note 5) 82,493 9,422
------------ --------------
S H A R E H O L D E R S ' D E F I C I T
SHARE CAPITAL (Note 6) 142,740 37,235
DEFICIT (145,703) (38,329)
-------------- --------------
(2,963) (1,094)
-------------- --------------
158,377 8,328
============== ==============
APPROVED BY THE DIRECTORS:
- --------------------------
- --------------------------
21
BATTERY POWER ONLINE INC.
CONSOLIDATED STATEMENT OF LOSS AND DEFICIT
Eleven
Year Ended Months Ended
December 31 December 31
2000 1999
---- ----
SALES 121,261 2,899
COST OF SALES 86,197 1,085
-------------- --------------
GROSS PROFIT 35,064 1,814
OTHER INCOME
Rent 4,885 -
Miscellaneous 4,051 -
-------------- --------------
44,000 1,814
-------------- --------------
EXPENSES
Advertising and promotion 6,388 5,849
Amortization 6,529 461
Automotive and travel 4,604 359
Bank charges and interest 8,369 179
Freight 10,321 355
Insurance, licences and dues 629 590
Legal and accounting 5,668 5,694
Management fees 19,500 2,500
Office and sundry 12,767 8,372
Rent 17,856 3,395
Sub-contract 21,595 7,575
Supplies 336 -
Telephone 6,820 -
Utilities 2,113 553
Wages and benefits 27,879 4,261
-------------- --------------
151,374 40,143
-------------- --------------
NET LOSS (107,374) (38,329)
DEFICIT, beginning (38,329) -
-------------- --------------
DEFICIT, ending (145,703) (38,329)
============== ==============
22
BATTERY POWER ONLINE INC.
CONSOLIDATED STATEMENT OF CASH FLOW
Eleven
Year Ended Months Ended
December 31 December 31
2000 1999
---- ----
OPERATING ACTIVITIES
Net loss (107,374) (38,329)
Item not affecting cash
Amortization 6,529 461
-------------- --------------
(100,845) (37,868)
Changes in non-cash working capital balances
Accounts receivable (16,189) (2,350)
Inventory (40,287) (504)
Prepaid expenses (734) -
-
Accounts payable and accrued liabilities 40,244 -
-------------- --------------
Cash used by operations (117,811) (40,722)
-------------- --------------
FINANCING ACTIVITIES
Bank loan 18,569 -
Loans payable 34,534 -
Advances from a shareholder 58,571 9,422
Issuance of shares 105,505 37,235
-------------- --------------
217,179 46,657
-------------- --------------
INVESTING ACTIVITIES
Purchase of capital assets (86,770) (5,888)
-------------- --------------
INCREASE IN CASH 12,598 47
CASH, beginning 47 -
-------------- --------------
CASH, ending 12,645 47
============== ==============
23
1. Statutes of Incorporation and Nature of Activities
The company was incorporated under the Company Act of British Columbia on
February 4, 1999.
The company sells rare and hard to find batteries through the internet on
its world wide web site and wholesales batteries on Southern Vancouver
Island through its wholly owned subsidiary, Kwik Sales Limited.
2. Significant Accounting Policies
a) Principles of Consolidation
These consolidated financial statements include the accounts of Battery
Power Online Inc. and its wholly owned subsidiary, Kwik Sales Limited. All
intercompany balances and transactions have been eliminated on
consolidation.
b) Inventory
Inventory is valued at the lower of cost or net realizable value. Cost is
determined on the first in first out basis.
c) Capital Assets
Capital assets are recorded at cost and amortized using the following annual
rates and methods:
Equipment 30% declining balance
Furniture and fixtures 20% declining balance
World wide web site 20% straight line
Goodwill arising from the acquisition of Kwik Sales Limited is being
amortized using the straight line method over a period of twenty years.
d) Foreign Currency Translation
All internet battery sales are made in U.S. dollars and are translated
at the exchange rate in effect on the transaction date.
24
3. Capital Assets
2000 1999
------------------------------------------------- --------------
Accumulated Net Book Net Book
Cost Amortization Value Value
-------------- -------------- -------------- --------------
Equipment 6,842 2,366 4,476 3,575
Furniture and fixtures 3,316 811 2,505 1,852
World wide web site 10,000 2,000 8,000 -
Goodwill 72,500 1,813 70,687 -
-------------- -------------- -------------- --------------
92,658 6,990 85,668 5,427
============== ============== ============== ==============
4. Bank Loan
The bank loan is unsecured, repayable on demand and bears interest at prime
plus 2% per annum.
5. Long-Term Debt
2000 1999
---- ----
Loan payable is unsecured, non-interest bearing
and has no fixed terms for repayment 2,034 -
Loan payable is unsecured, non-interest bearing and
repayable in monthly instalments of $1,500 32,500 -
-------------- ---------------
34,534 -
Less current portion 20,034 -
-------------- ---------------
14,500 -
Advances from a shareholder 67,993 9,422
-------------- ---------------
82,493 9,422
============== ===============
The advances from a shareholder are unsecured, non-interest bearing and have
no fixed terms for repayment.
25
6. Share Capital
The authorized and issued share capital of the company is as follows:
Authorized:
100,000,000 common voting shares without par value
Issued: 2000 1999
---- ----
7,103,900 (1999 - 6,572,000) common shares 142,740 37,235
============= ===========
During the year, the company issued 531,900 common shares for net
consideration of $105,505 as follows:
Consideration Received Shares Issued Value
---------------------- --------------- --------------
Cash 286,900 69,005
Goodwill (Note 7) 75,000 22,500
Services 170,000 34,570
---------------- --------------
531,900 126,075
==============
Less share issuance costs 20,570
---------------
Net consideration for shares issued in year 105,505
===============
There is currently $639 of subscriptions receivable included in accounts
receivable as at December 31, 2000.
26
7. Business Acquisition
On June 30, 2000, the company acquired 100% of the issued and outstanding
shares of Kwik Sales Limited, a battery wholesale company. The purchase
price amounted to $72,500 in cash and shares and was broken down as follows:
GOODWILL 72,500
==============
PURCHASE PRICE
Cash 50,000
75,000 common shares 22,500
--------------
72,500
==============
The acquisition was accounted for by the purchase method. The results of
operations of Kwik Sales Limited are included in the consolidated financial
statements from the effective date of acquisition.
8. Lease Commitment
The company is committed to future minimum payments of $11,904 under the
terms of a lease for business premises that expires in the year ending
December 31, 2001.
9. Income Taxes
The company has losses of approximately $145,000 available for income tax
purposes that may be applied against taxable income in future years. These
losses expire as follows:
2006 35,000
2007 110,000
--------------
145,000
==============
The potential income tax benefit of these losses has not been recognized in
the financial statements.
27
10. Related Party Transactions
During the year, the company had the following related party transactions:
a) The company earned $4,051 of miscellaneous income from a person related
to the president of the company. As at December 31, 2000, there was an
amount of $3,384 owing to this related party included in accounts
payable.
b) The company earned $3,000 in rental income from a company which the
president of Battery Power Online Inc. is a director. As at December 31,
2000, there was an amount of $2,140 receivable from this related party
included in accounts receivable.
These transactions are not in the normal course of operations and are
measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties.
11. Correction of Prior Period Error
During the year the company noted an error in the prior period financial
statements in respect to common shares and legal fees incurred in 1999. The
correction of the error was recorded retroactively. The comparative
financial statements have been restated as follows to reflect this
correction:
As Previously
Stated Correction Restated
--------------- -------------- ---------------
ASSETS
Accounts receivable 1,406 944 2,350
============== ============== ==============
SHAREHOLDERS' DEFICIT
Common shares 31,201 6,034 37,235
============== ============== ==============
Deficit (33,239) (5,090) (38,329)
============== ============== ==============
EXPENSES
Legal and accounting 604 5,090 5,694
============== ============== ==============
28
12. Future Operations
These financial statements have been prepared on the basis that the company
will continue as a going concern and that the company will realize its
assets and discharge its liabilities in the normal course of business.
Future operations are dependent upon its ability to obtain continuing debt
or equity financing and the attainment of future profitable operations.
13. Subsequent Event
On January 30, 2001, the company entered into a Plan of Merger and
Reorganization Agreement with Battery Power Online U.S.A. Inc., a company
incorporated in the State of Colorado, whereby the two companies plan to
merge into one company in order to access capital markets in the United
States.
Under the plan, the existing shareholders of Battery Power Online Inc.
will receive, on a pro-rata basis, 6,300,000 shares of Battery Power
Online U.S.A. Inc. which will represent approximately 80% of the total
issued shares immediately following the merger.
This plan is subject to regulatory approval.
14. Comparative Figures
Certain of the prior year figures have been reclassified to conform with the
current year presentation.
29
Batttery Power Online Inc.
Income Statement 1/1/01 to 3/31/01
REVENUE
Sales Revenue
Sales Inventory A 0
Sales Inventory B 0
Sales Inventory C 0
Sales 8957.15
Sales Returns 0
Sales Discounts -11.91
Net Sales 8945.24
Other Revenue
Freight Revenue 665.51
Interest Revenue 0
Miscellaneous Revenue 0
Total Other Revenue 665.51
TOTAL REVENUE 9610.75
-------
EXPENSE
Cost of Goods Sold
Inventory A Cost 0
Inventory B Cost 0
Inventory C Cost 0
Inventory Variance 0
Item Assembly Costs 0
Adjustment Write-off 0
Transfer Costs 0
Purchases 0
Purchase Returns 0
Purchase Discounts 0
Net Purchases 0
Freight Expense 50.59
Bags & Packaging Expenses 0
Total Cost of Goods Sold 50.59
Payroll Expenses
Wages & Salaries 6482.96
Consulting Fees 0
Commission Fees 0
Advance to Shareholder 500
EI Expense 0
CPP Expense 0
WCB Expense 0
Employee Benefits 0
Total Payroll Expense 6982.96
General & Administrative Expenses
Accounting & Legal 15758.95
Advertising & Promotions 906.73
Bad Debts 0
Cash Short/Over 0
Courier & postage 4021.62
Credit Card Charges 0
Currency Exchange & Rounding 0.01
Amortization Expense 0
Income Taxes 11.73
Insurance 176.7
Interest & Bank Charges 749.06
Ecom Secure Charges 888.63
Office Supplies 253.26
Property Taxes 0
Miscellaneous 2164.46
Realized Exchange Gain/Loss 0
Rent 5011.2
Repair & Maintenance 31.56
Telephone 3797.05
Travel & Entertainment 0
Utilities 529.61
Uniforms 0
Cleaning Supplies 0
Total General & Admin. Expenses 34300.57
TOTAL EXPENSE 41334.12
--------
NET INCOME -31723.4
========
Generated On: 6/20/01
30
Batttery Power Online Inc.
Balance Sheet As At 3/31/01
ASSETS
Current Assets
Cash Draws 0
Petty Cash 855.68
Saving Bank Account 0
Chequing Bank Account -3378.96
US Dollar Account 3284.1
Total Cash 760.82
Visa 500
MasterCard 0
American Express 0
Other Credit Cards 275
Total Credit Cards Receivable 775
Investments -60865.9
BPO Transfer -1850
Kwik Sales Transfer 1000
Accounts Receivable 2193.61
Allowance for Doubtful Accounts 0
Payroll Advances 0
Total Receivable 2193.61
Prepaid Expense & Deposits 0
Total Current Assets -57986.5
Inventory Assets
Inventory A 0
Inventory B 0
Inventory C 0
Total Inventory Assets 0
Capital Assets
Leasehold Improvements 0
Office Furniture & Equipment 1780.53
Accum. Amort. -Furn. & Equip. 0
Net - Furniture & Equipment 1780.53
Total Capital Assets 1780.53
Other Assets
Computer Software 0
Goodwill 21500
Incorporation Cost 0
Total Other Assets 21500
TOTAL ASSETS -34706
==========
LIABILITIES
Current Liabilities
Accounts Payable 22136.92
Import Duty Clearing -115.52
Bank Loan - Current Portion 3550
Bank Advances -5500
Transfer of Funds to Kwik Sales -3150
Credit Card Payable 0
Corporate Taxes payable 0
Vacation payable 0
EI Payable 0
CPP Payable 0
Federal Income Tax Payable 0
Total Receiver General 0
WCB Payable 0
Deduction A Payable 0
Deduction B payable 0
Deduction C Payable 0
Deduction D Payable 0
Deduction E Payable 0
PST Payable 450.64
GST Charged on Sales 587.32
GST Charged on Sales - Rate 2 0
GST Paid on Purchases -1105.99
GST Payroll Deductions 0
GST Adjustments 0
ITC Adjustments 0
GST Owing (Refund) -518.67
Total Current liabilities 16853.37
Long Term liabilities
Bank Loans 0
Mortgage Payable 0
Loans from Shareholders 8100
Total Long Term liabilities 8100
TOTAL LIABILITIES 24953.37
--------
EQUITY
Share Capital
Common Shares 0
Preferred Shares 0
Total Share Capital 0
Retained Earnings
Retained Earnings - Previous Year -27936
Current Earnings -31723.4
Total Retained Earnings -59659.3
TOTAL EQUITY -59659.3
--------
LIABILITIES AND EQUITY -34706
========
Generated On: 6/20/01
31
Kwik Sales
Income Statement 1/1/01 to 3/31/01
REVENUE
Sales Revenue
Left Over Inventory (2000) Sales 0
Watch & Calculator Battery Sales 1532.41
Photo & Camera Battery Sales 3306.32
Cellular Phone Battery Sales 198.6
Cordless Phone Battery Sales 1496.8
Hearing Aid Battery Sales 492.9
Rechargeable Battery Sales 1205.44
Lead Acid Battery Sales 2277.88
Razor Battery Sales 0
Computer Battery Sales 182.65
Electronic Battery Sales 359.64
Common Battery Sales 17577.63
Miscellaneous Battery Sales 3327.31
Sales 1587.41
Sales Returns 0
Sales Discounts -23.14
Net Sales 33521.85
Other Revenue
Freight Revenue 15.07
Interest Revenue 0
Miscellaneous Revenue 0
Total Other Revenue 15.07
TOTAL REVENUE 33536.92
--------
EXPENSE
Cost of Goods Sold
Batteries Left Over (2000) 271.44
Watch & Calcualtor Batteries 179.53
Photo & Camera Batteries 808.24
Cellular Phone Batteries 1.17
Cordless Phone Batteries 264.9
Hearing Aid Batteries 61.46
Rechargeable Batteries 0
Lead Acid Batteries 1167.17
Razor Batteries 0
Computer Batteries 37.8
Electronic Batteries 0
Common Batteries 918.51
Miscellaneous Batteries 700.56
Inventory Variance 0
Item Assembly Costs 0
Adjustment Write-off -42935.7
Transfer Costs 0
Purchases 103328.3
Purchase Returns 0
Purchase Discounts 0
Net Purchases 103328.3
Freight Expense 264.31
Total Cost of Goods Sold 65067.67
Payroll Expenses
Wages & Salaries 1800
EI Expense 0
CPP Expense 0
WCB Expense 0
Employee Benefits 0
Total Payroll Expense 1800
General & Administrative Expenses
Accounting & Legal 4090.95
Advertising & Promotions 506
Bad Debts 0
Cash Short/Over 0
Courier & postage 464.07
Credit Card Charges 0
Currency Exchange & Rounding 0
Amortization Expense 0
Income Taxes 0
Insurance 0
Workers' Compensation Board 0
Interest & Bank Charges 2464.48
Ecom Secure Charges 131.52
Expense Accounts 0
Office Supplies 136.65
Property Taxes 0
Miscellaneous 272.26
Realized Exchange Gain/Loss 0
Rent 256.8
Repair & Maintenance 31.57
Telephone 934.24
Travel & Entertainment 500
Utilities 331.22
Total General & Admin. Expenses 10119.76
TOTAL EXPENSE 76987.43
--------
NET INCOME -43450.5
========
Generated On: 6/20/01
32
Kwik Sales
Balance Sheet As At 3/31/01
ASSETS
Current Assets
Cash Draws 0
Petty Cash 775
Saving Bank Account 0
Chequing Bank Account 18676.12
Total Cash 19451.12
Visa 4081.78
MasterCard 1666.41
American Express 0
Other Credit Cards 500
Total Credit Cards Receivable 6248.19
Investments 0
Accounts Receivable 13713.71
Allowance for Doubtful Accounts 0
Payroll Advances 0
Total Receivable 13713.71
Prepaid Expense & Deposits 0
Total Current Assets 39413.02
Inventory Assets
Left Over Batteries (2000) -68617.9
Watch & Calculator Batteries 6728.95
Photo & Camera Batteries 5828.25
Cellular Phone Batteries 1756.39
Cordless Phone Batteries 9539.14
Hearing Aid Batteries 1137.2
Rechargeable Batteries 2636.29
Lead Acid Batteries 1293.5
Razor Batteries 468.37
Computer Batteries 2683.4
Electronic Batteries 673.58
Common Batteries 2870.19
Miscellaneous Batteries 6878.77
Total Inventory Assets -26123.9
Capital Assets
Leasehold Improvements 0
Inventory Purchases 5088.56
Office Furniture & Equipment 120.91
Accum. Amort. -Furn. & Equip. 0
Net - Furniture & Equipment 120.91
Total Capital Assets 5209.47
Other Assets
Computer Software 0
Goodwill 5475.68
Incorporation Cost 0
Total Other Assets 5475.68
TOTAL ASSETS 23974.27
===========
LIABILITIES
Current Liabilities
Accounts Payable 38571.6
Import Duty Clearing -93.44
Bank Loan - Current Portion 6918
Bank Advances 3550
BPO Transfer 28651.9
Shareholder Advances -2000
Credit Card Payable 0
Corporate Taxes payable -193.2
Vacation payable 0
EI Payable 0
CPP Payable 0
Federal Income Tax Payable 0
Total Receiver General 0
WCB Payable 0
Deduction A Payable 0
Deduction B payable 0
Deduction C Payable 0
Deduction D Payable 0
Deduction E Payable 0
PST Payable 279.96
GST Charged on Sales 7779.54
GST Charged on Sales - Rate 2 0
GST Paid on Purchases -8208.12
GST Payroll Deductions 0
GST Adjustments 0
ITC Adjustments 0
GST Owing (Refund) -428.58
Total Current liabilities 75256.24
Long Term liabilities
Bank Loans 0
Mortgage Payable 0
Loans from Shareholders 39127.83
Total Long Term liabilities 39127.83
TOTAL LIABILITIES 114384.1
--------
EQUITY
Share Capital
Common Shares 0
Preferred Shares 0
Total Share Capital 0
Retained Earnings
Retained Earnings - Previous Year -46959.3
Current Earnings -43450.5
Total Retained Earnings -90409.8
TOTAL EQUITY -90409.8
-----------
LIABILITIES AND EQUITY 23974.27
===========
Generated On: 6/20/01
33
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
- -------------------------------------------------------------------------
In 1999, our predecessor, Battery Power Online Inc., a British Columbia limited
liability company, appointed Schibli Stedman King, Chartered Accountants,
independent accountants, to audit our financial statements from December 19,
2000 (our date of formation) through December 31, 2000.
There have been no disagreements with our accountants since our formation
required to be disclosed pursuant to Item 304 of Regulation S-B.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by us and by
the selling security holders has been passed upon by the law firm of Stepp Law
Group located in Newport Beach, California.
EXPERTS
Our financial statements for the period ended December 31, 2000 appearing in
this prospectus (which is part of a Registration Statement) have been audited by
Schibli Stedman King, Chartered Accountants, and are included in reliance upon
such reports given upon the authority of Schibli Stedman King, Chartered
Accountants, as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission pursuant to the Securities Act of 1933 with respect to the
common stock offered by us and by the selling security holders. This prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules to the Registration Statement. For further
information regarding us and our common stock offered hereby, reference is made
to the Registration Statement and the exhibits and schedules filed as a part of
the Registration Statement.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers
- -----------------------------------------
Article Eighth of our Articles of Incorporation provides, among other things,
that our directors shall not be personally liable to us or our shareholders for
monetary damages for breach of fiduciary duty as a director, except for:
o any breach of such director's duty of loyalty to us or our security
holders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability for unlawful payments of dividends or distributions; or
o any transaction from which such director derived any improper personal
benefit.
Accordingly, our directors may have no liability to our shareholders for any
mistakes or errors of judgment or for any act or omission, unless such act or
omission involves intentional misconduct, fraud, or a knowing violation of law
or results in unlawful distributions to our shareholders.
Our Articles of Incorporation provide that we will indemnify our directors to
the extent permitted by the Colorado Business Corporation Act, including
circumstances in which indemnification is otherwise discretionary under the
Colorado Business Corporation Act. Our Articles of Incorporation also provide
that to the extent that the Colorado Business Corporation Act is amended to
permit further indemnification, we will so indemnify our directors.
Section 7-108-401 of the Colorado Business Corporation Act provides that a
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to or is involved in any pending,
threatened, or completed civil, criminal, administrative, or arbitration action,
suit, or proceeding, or any appeal therein or any inquiry or investigation
34
which could result in such action, suit, or proceeding, because of his or her
being or having been a director, officer, employee, or agent or of any
constituent corporation absorbed in a consolidation or merger or by reason of
his or her being or having been a director, officer, trustee, employee, or agent
of any other corporation or of any partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or such enterprise, serving as
such at the corporation's request or of any such constituent corporation, or the
legal representative of any such director, officer, trustee, employee, or agent,
from and against any and all reasonable costs, disbursements, and attorney's
fees, and any and all amounts paid or incurred in satisfaction of settlements,
judgments, fines, and penalties, incurred or suffered in connection with any
such proceeding.
Article VI of our Bylaws also provides that our officers and directors shall be
indemnified and held harmless by us to the fullest extent permitted by the
Colorado Business Corporation Act.
Indemnification Agreements. We anticipate that we will enter into
indemnification agreements with each of our executive officers pursuant to which
we will agree to indemnify each such officer for all expenses and liabilities,
including criminal monetary judgments, penalties and fines, incurred by such
person in connection with any criminal or civil action brought or threatened
against such person by reason of such person being or having been our officer or
director or employee. To be entitled to indemnification by us, such officer must
have acted in good faith and in a manner such officer believed to be in our best
interests and, with respect to criminal actions, such person must have had no
reasonable cause to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
Other Expenses of Issuance and Distribution
- -------------------------------------------
We will pay all expenses in connection with the registration and sale of the
common stock by us and by the selling security holders. The estimated expenses
of issuance and distribution are set forth below.
======================================= ===================== ===============
Registration Fees Approximately $ 1,557.60
- --------------------------------------- --------------------- ---------------
Transfer Agent Fees Approximately $ 250.00
- --------------------------------------- --------------------- ---------------
Costs of Printing and Engraving Approximately $ 200.00
- --------------------------------------- --------------------- ---------------
Legal Fees Approximately $ 15,000.00
- --------------------------------------- --------------------- ---------------
Accounting Fees Approximately $ 10,000.00
======================================= ===================== ===============
Recent Sales of Unregistered Securities
- ---------------------------------------
There have been no sales of unregistered securities within the last three (3)
years which would be required to be disclosed pursuant to Item 701 of Regulation
S-B, except for the following:
On or about January 30, 2001, we entered into a Plan of Merger and
Reorganization Agreement with Battery Power Online Inc., a British Columbia
limited liability company, formed in 1999, wherein we issued 6,300,000 shares of
our common stock in exchange for 6,300,000 shares of Battery Power Online
U.S.A., Inc. common stock. The shares were issued in a transaction which we
believe satisfies the requirements of that exemption from the registration and
prospectus delivery requirements of the Securities Act of 1933, which exemption
is specified by the provisions of Section 4(2) of that Act and Rule 506 of
Regulation D promulgated pursuant to that Act by the Securities and Exchange
Commission. Specifically, the offer was made to "accredited investors", as that
term is defined under applicable federal and state securities laws, and no more
than 35 non-accredited investors. The value of the shares was arbitrarily set by
us and had no relationship to our assets, book value, revenues or other
established criteria of value. There were no commissions paid on the sale of
these shares.
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Exhibits
- --------
Copies of the following documents are filed with this Registration
Statement as exhibits:
Exhibit No.
- -----------
1. Underwriting Agreement (not applicable)
2. Plan of Reorganization
3.1 Articles of Incorporation
(Charter Document)
3.2 Bylaws
5. Opinion Re: Legality
8. Opinion Re: Tax Matters (not applicable)
11. Statement Re: Computation of Per Share Earnings*
15. Letter on unaudited interim financial information
21. Subsidiaries of the Registrant
23.1 Consent of Auditors
23.2 Consent of Counsel**
24. Power of Attorney is included on the Signature Page
of the Registration Statement
* Included in Financial Statements
** Included in Exhibit 5
Undertakings
- ------------
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by
our director, officer or controlling person in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
B. We hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
36
(ii) To specify in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement; and
(iii) To include any additional or changed material
information with respect to the plan of distribution
not previously disclosed in the Registration
Statement or any material change to such information
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
37
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended,
we certify that we have reasonable grounds to believe that we meet all of the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on our behalf by the undersigned, in the city of Victoria British
Columbia on July 9, 2001.
Battery Power Online U.S.A., Inc.,
a Colorado corporation
By: /s/Peter Geoffrey Edmunds
-------------------------
Peter Geoffrey Edmunds
Its: President and Director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed on this 9th day of July, 2001, the following
persons in the capacities and on the dates stated:
/s/ Peter Geoffrey Edmunds July 9, 2001
- ------------------------------------
Peter Geoffrey Edmunds
President, Director
/s/ John Stacey July 9, 2001
- ------------------------------------
John Stacey
Secretary, Director
/s/ John Sutherland July 9, 2001
- ------------------------------------
John Sutherland
Director
38
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and hereby
authorizes Peter Geoffrey Edmunds with the full power of substitution, as
attorney-in-fact, to sign in such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this Registration Statement.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
Battery Power Online U.S.A., Inc.
/s/ Peter Geoffrey Edmunds July 9, 2001
- ------------------------------------
Peter Geoffrey Edmunds
President and Director
/s/ John Stacey July 9, 2001
- ------------------------------------
John Stacey
Secretary, Director
/s/ John Sutherland July 9, 2001
- ------------------------------------
John Sutherland
Director
35