BlueStar Reports Financial Results for Two Months Ended Dec
31, 2000
-- Applies Fresh Start Accounting
-- Update on Private Placement
-- Announces Sale of Remaining Western Canadian Branches and British
Columbia Real Estate
-- Board Approves Sale or Liquidation of Remaining Operating Assets In
Canada
RALEIGH, N.C., March 19 BlueStar Battery Systems International Corp. (CDNX: BSG) ("BlueStar")
announced today that revenues from continuing operations for the two months
ended December 31, 2000 were $3,251. Revenues were significantly affected by
a lack of working capital and low inventory levels due to the Companies'
Creditors Arrangement Act ("CCAA") process and payments to reduce debt. Gross
margin was $241, primarily due to the liquidation of certain inventory below
cost as part of a rationalization of product lines. Sales, general and
administrative expenses for the period were $2,402, and reflect a reduction in
the Company's headcount to 104 as of December 31 from 111 as of September 30.
Interest expense was $392 due to significant bank audit and legal fees
incurred during the period. The net loss for the two-month period was $2,717,
or $0.21 per share. Due to the reorganization of the Company, the results for
the two-month period ending December 31, 2000 are not comparable to the three-
month period ending December 31, 1999.
The Company's unaudited consolidated financial statements as of
December 31, 2000, and the accompanying unaudited consolidated financial
statements as of December 31, 1999, have been presented in conformity with the
Canadian Institute of Chartered Accountants' Handbook Section 1625. The
Predecessor Company comprehensively revalued its assets and liabilities while
under the plan for relief of the CCAA and emerged as of October 31, 2000.
Under a comprehensive revaluation of assets and liabilities, all assets and
liabilities have been restated to reflect their reorganized value, which
approximates fair value. Since a comprehensive revaluation of assets and
liabilities has been reflected in the accompanying consolidated financial
statements as of October 31, 2000, and are those of a reorganized entity,
certain material aspects of these financial statements are not comparable to
such statements of any prior period. A "black line" has been drawn between
the Successor Company's financial statements and those of the Predecessor.
Due to the CCAA Plan becoming effective, the Common Shares (of the
Company's then-existing common shareholders) were consolidated on an
approximate 21.725:1 basis (such that 32,587,730 pre-consolidation shares were
consolidated into 1,500,000 post-consolidation shares). In addition,
12,500,000 post-consolidation shares were issued in exchange for approximately
$50,353 of liabilities subject to compromise.
"The Company has a critical need for new funds to provide working capital.
The biggest challenge facing BlueStar is obtaining this capital to 'jump
start' our remaining operations. Because of our recent history, we must
revalidate the potential of our business model," said James A. Risher,
BlueStar's Chairman and CEO. "BlueStar continues to downsize and sell various
assets in order to raise capital. Our current headcount stands at 49. During
the first quarter, the Company entered into agreements to sell the branches in
Ottawa, Metivier and Granby. Additionally, during February 2001, the Company
sold the remaining branches in Western Canada and the land and building held
for sale in Surrey, British Columbia. The Company continues to maintain close
ties with its former Canadian operations through various agreements. These
agreements help to ensure consistent customer service and promotion of the
Company's primary brands. On March 14, the Company's Board of Directors
approved the sale or liquidation of the three remaining branch locations in
Eastern Canada. When this occurs, then the Company would effectively cease
operations in Canada. Our focus would then be to strengthen our primary U.S.
distribution operation in Indiana and to generate investment capital for
Pan08(TM)." Pan08(TM) is BlueStar's business-to-business e-commerce system
that will be able to provide timely, comprehensive information, including
ordering, tracking and core recovery.
Mr. Risher continued, "Our private placement has not met with the initial
success that we anticipated, due to very poor market conditions. Even proven
companies are finding it difficult to obtain capital. BlueStar has been
unable to finance our e-commerce business plan, which is a central theme of
our new strategic vision. If the Company is unsuccessful in its private
placement or other efforts to raise capital in the next few weeks, then the
Company will continue downsizing and, possibly, liquidate its remaining assets
to pay off its secured debt." During 1999, the Company had entered into a
secured loan facility with Finova Capital Corporation. During February 2001,
a company funded in part by certain of the Company's Directors and Officers
entered into an agreement with Finova to assume the Company's credit facility.
BlueStar sells power and charging systems in North America. The Company
markets battery products and certain related components from several of the
world's leading manufacturers. BlueStar's common stock currently trades on
the Canadian Venture Exchange under the symbol BSG.
BLUESTAR BATTERY SYSTEMS INTERNATIONAL CORP.
CONSOLIDATED BALANCE SHEETS
(CDN$ in thousands)
Predecessor Co. Successor Co.
September 30, December 31,
(unaudited) 2000 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,257 $ 297
Restricted cash 560 326
Accounts receivable, net 4,636 1,730
Assets held for sale 3,759 3,576
Inventories, net 5,327 2,232
Prepaid expenses and other assets 1,006 1,295
16,545 9,456
Capital assets, net 2,136 1,872
Goodwill and customer lists 10,529 --
Deferred costs associated with CCAA proceedings 1,168 --
Contract deposits and deferred costs 283 284
TOTAL ASSETS $ 30,661 $ 11,612
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 10,207 $ 12,087
Credit facility 6,894 2,627
Current portion of debt and capital leases 3,010 3,014
20,111 17,728
Liabilities subject to compromise 50,353 --
SHAREHOLDERS' EQUITY (DEFICIT)
Share capital 85,634 --
Revaluation adjustment -- (15,072)
Obligation to issue shares -- 11,577
Currency translation adjustment 283 96
Deficit (125,720) (2,717)
SHAREHOLDERS' EQUITY (DEFICIT) (39,803) (6,116)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 30,661 $ 11,612
BLUESTAR BATTERY SYSTEMS INTERNATIONAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(CDN$ in thousands, except per share amounts)
Predecessor Co. Successor Co.
Three months ended One month ended Two months ended
December 31, October 31, December 31,
1999 2000 2000
REVENUES $ 26,491 $ 3,048 $ 3,251
Cost of products 21,291 3,806 3,010
Gross Margin 5,200 (758) 241
SALES, GENERAL &
ADMINISTRATIVE 3,973 1,253 2,402
OTHER EXPENSES (INCOME):
Foreign exchange -- 60 (149)
Loss on sale of assets -- 97 206
Interest expense (net) 1,131 690 392
Other expense (income) -- (87) (53)
Depreciation and
amortization 1,807 164 127
2,938 924 523
Loss from continuing
operations before income
taxes (1,711) (2,935) (2,684)
Income taxes -- -- (33)
Loss from continuing
operations (1,711) (2,935) (2,717)
Earnings from discontinued
operations 686 -- --
Net loss for the period (1,025) (2,935) (2,717)
Deficit, beginning of
period (27,621) (125,720) --
Deficit, end of period (28,646) (128,655) (2,717)
Earnings (loss) per
share (A) NM NM $ (0.21)
(A) Loss per share has not been presented for the three months ended
December 31, 1999 and the one-month ended October 31, 2000, because
this information is not meaningful due to the share consolidation
effective February 2, 2001.
