ENERGY POWER SYSTEMS LIMITED
Consolidated Financial Statements
September 30, 2001
(Unaudited)
(Expressed in Canadian Dollars)
Energy Power Systems Limited
Consolidated Balance Sheet
(Expressed in Canadian dollars)
Sept 30, 2001 June 30, 2001
(unaudited) (audited)
ASSETS
Current
Cash $1,348,357 $1,242,621
Marketable securities 379,618 221,213
Receivables 4,820,976 4,331,086
Due from co-venturer 483,810 208,652
Inventories and work in progress2,022,307 1,039,853
Prepaid expenses 102,341 67,329
Investments 3,500,000 3,500,000
Future income tax asset 235,000 235,000
Total current assets 12,892,409 10,845,754
Oil and gas interests 2,119,077 2,017,493
Capital assets 3,236,702 3,268,096
Future income tax asset 862,749 862,000
Goodwill 1,991,514 2,056,832
$21,102,451 $19,050,175
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness $1,415,599 $829,001
Accounts payable and
accrued liabilities 4,457,702 4,200,868
Due to shareholders 1,162,580 1,162,403
Current portion of long-term
Debt 182,151 182,151
Future income tax liability 266,000 266,000
Total current liabilities 7,484,032 6,640,423
Due to shareholders,
July 31, 2001 350,000 350,000
Long-term debt 621,713 646,311
Future income tax liability 56,000 56,000
Total liabilities 8,511,745 7,692,734
Shareholders' equity
Capital stock 33,030,535 32,207,289
Deficit (20,439,829) (20,849,848)
Total shareholders' equity $12,590,706 $11,357,441
$21,102,451 $19,050,175
The accompanying notes to the financial statements are an integral
part of these financial statements
Energy Power Systems Limited
Consolidated Statement of Earnings (Loss) and Deficit
(Unaudited)
(Expressed in Canadian dollars) For the three month period
ending Sept 30
2001 2000
Sales $5,540,561 $4,523,967
Cost of sales (including depreciation and
depletion of $61,587; 2000 - $53,044) 4,540,241 3,831,508
Gross profit 1,000,320 692,459
Administrative expenses 660,023 686,088
Amortization of goodwill 65,314 65,314
Amortization of capital assets 39,810 36,057
Interest and bank charges 32,015 29,872
Interest on long-term debt 17,426 24,790
814,588 842,121
Earnings (loss) before the following 185,732 (149,662)
Other income 224,287 1,728
Net earnings (loss) from Continuing Operations $410,019 ($147,934)
Discontinued Operations - (88,950)
Net earnings (loss) $410,019 ($236,884)
Deficit, beginning of period (20,849,848)(17,214,932)
Deficit, end of period ($20,439,829)($17,451,816)
Net earnings (Loss) from Continuing Operations per Common Share
Net earnings (loss) per share $0.07 ($0.05)
Weighted average common shares
outstanding (thousands) 6,300 3,168
Fully Diluted net earnings (loss) from Continuing Operations per Common Share
Net earnings (loss) per share $0.05 ($0.05)
Weighted average fully diluted shares
outstanding (thousands) 8,695 3,168
The accompanying notes to the financial statements are an integral
part of these financial statements
Energy Power Systems Limited
Consolidated Statement of Cash Flows
(Unaudited)
(Expressed in Canadian dollars) For the three month period
ending Sept 30
2001 2000
Operating activities
Net loss from continuing operations $410,019 ($147,934)
Adjustments to reconcile net loss to
net cash provided by operating activities
Amortization of goodwill 65,314 65,314
Amortization of capital assets 101,397 89,101
Income taxes (745) -
575,985 6,481
Net change in non-cash working capital
Receivables (489,890) 301,261
Inventories and work in progress (982,454) (783,244)
Due from co-venturer (275,158) (328,086)
Prepaid expenses (35,012) 29,399
Accounts payable & accrued liabilities 256,834 (146,257)
Cash used in continuing operations (949,695) (920,446)
Cash used in discontinued operations - (88,950)
Cash used in operating activities (949,695) (1,009,396)
Financing activities
Advances of bank indebtedness 586,598 664,624
Repayment of long term debt, net (52,485) (63,493)
Payments to related parties, net - (30,975)
Advances from (repayment to) shareholders 177 (600,000)
Issue of common shares 823,246 -
Cash provided by (used in) financing activities 1,357,536 (29,844)
Investing activities
Purchase of capital assets (27,762) (80,606)
Purchase of oil and gas interests (115,938) -
Marketable securities (158,405) -
Cash provided by investing activities (302,105) (80,606)
Net increase (decrease) in cash 105,736 (1,119,846)
Cash, beginning of period 1,242,621 1,771,047
Cash, end of period $1,348,357 $651,201
The accompanying notes to the financial statements are an integral
part of these financial statements
Cash, end of period consists of:
Cash $1,348,357 $651,201
Energy Power Systems Limited
Notes to Unaudited Consolidated Financial Statements
For the Three Month Period Ending September 30, 2001
(Expressed in Canadian Dollars)
1. Basis of Presentation
These unaudited interim consolidated financial statements have been prepared
following the same accounting policies and methods of computation as the
consolidated financial statements for the year ended June 30, 2001.
These interim financial statements should be read in conjunction
with the Company's consolidated financial statements together with
notes for the year ended June 30, 2001.
2. Segmented information
The Company's operations are separated into two distinct segments; the
engineering and offshore division, consisting of the operations of M&M,
and the oil and gas division performing oil and gas exploration and
production. M&M is an engineering and construction company,
performing installation, erection, welding, maintenance and
ancillary fabrication services. The following is the Company's
segmented information:
For the three months ending September 30, 2001
Engineering
and Offshore Oil & Gas Corporate Total
Revenue 5,402,224 138,337 - 5,540,561
EBITDA 524,737 52,283 49,151 626,171
Amortization & depletion 152,357 14,354 - 166,711
Segment operating margin 372,380 37,929 49,151 459,460
Interest and income taxes 48,942 - 499 49,441
Net earnings (Loss) from
continuing operations 323,438 37,929 48,652 410,019
Capital assets and
Oil & Gas Interests 3,236,702 2,119,077 - 5,355,779
For the three months ending September 30, 2000
Engineering
and Offshore Oil & Gas Corporate Total
Revenue 4,523,967 - - 4,523,967
EBITDA 211,634 - (150,491) 61,143
Amortization 154,415 - - 154,415
Segment operating margin 57,219 - (150,491) (93,272)
Interest and income taxes 53,896 - 766 54,662
Net earnings (Loss) from
continuing operations 3,323 - (151,257) (147,934)
Capital assets 4,936,035 - - 4,936,035
3. Discontinued operations
Effective June 30, 2001 the Company adopted a formal plan to dispose of
its power segment of business (the "Power Division"). The Company
intends to exercise its option under the terms of the Revised VBC
Agreement to cause VBC to purchase the Company's equity shares in
the Konaseema EPS Oakwell Power Limited and has adopted a formal
plan of disposition of its interest in the Karnataka Project.
4. Subsequent Events
a.) Subsequent to the period ending September 30, 2001 24,000 options
were exercised at a price of $4 per share, 20,000 options were
exercised at $4.25 per share and 35,000 options were exercised at
$1.50 per share.
b.) Subsequent to the period ending September 30, 2001 7,726 shares
were issued in settlement of professional fees of $150,413.
c.) Subsequent to the period ending September 30, 2001 350,000 units
were issued from treasury to an arms length party with an ascribed
value of US$4.00 in a private placement. Each unit consisted of one
common share and 1/10 common share purchase warrant. Each
warrant is exercisable at US$4.45 for a period of six months
from the date of issue.
5. Share Capital
(a) Authorized and Issued:
Authorized:
Unlimited number of Common Shares, without par value
Unlimited number of Class B Special Shares, without par value
Unlimited number of Class A Preference Shares, Series I
Unlimited number of Class A Preference Shares, Series II
Issued:
September 30, 2001 - 7,288,419 common shares issued for
consideration of $31,830,535
September 30, 2000 - 3,167,670 common shares issued for
consideration of $29,322,289
September 30, 2001 - 960,000 Class A Preferred Shares, Series II,
for consideration of $1,200,000
a.) Common share purchase warrants outstanding consist of the following:
Exercise Expiry 2001 2000
Price Date # #
$40.00 October 7, 2000 - 6,250
$13.60 January 21, 2002 - 333,331
$10.00 July 2, 2002 - 423,500
$8.00 March 9, 2002 222,917 222,917
$9.00 September 27, 2002 - 37,500
$9.60 October 4, 2002 96,000 96,000
318,917 1,19,498
b.) Common share purchase options outstanding consist of the following:
Exercise Expiry 2001 2000
Price Date Holder # #
$14.00 October 1, 2004 Employee -
62,500
$20.00 October 1, 2004 Employees & director - 26,875
$12.00 August 15, 2001 Employee - 2,500
$12.00 February 15, 2001 Director - 2,500
$1.50 February 6, 2005 Directors and Employees 105,000 -
$4.00 June 14, 2005 Directors, employees and
consultants 110,000 -
215,000 94,375