10QSB 1 reliable3310210q.htm MARCH 31, 2002 FORM 10-QSB Reliable Power Systems, Inc. March 31, 2002 10-QSB HTML

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

     (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

    For the quarterly period ended March 31, 2002

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

                                              For the transition period from _______________ to ______________.

Commission File No. 0-9255

RELIABLE POWER SYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)

                                                               Colorado                                                                                                                                    84-0658020
                                                 (State or other jurisdiction                                                                                                 (I.R.S. Employer File Number)
                                                  of incorporation or organization)                        

10 South Riverside Plaza, #2220, Chicago, IL        60606
(Address of principal executive offices)                      (Zip Code)

(720) 733-8970
(Registrant's telephone number, including area code)

        Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  X      No    

APPLICABLE ONLY TO CORPORATE ISSUERS

        State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. No par value per share: were 8,321,679 shares issued at May 10, 2002.

        Transitional Small Business Disclosure Format

Yes       No  X  





References in this document to “us,” “we,” “our” or “the Company” refer to Reliable Power Systems, Inc. and our predecessor company, Dencor Energy Cost Controls, Inc.



PART 1 - FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements:

RELIABLE POWER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS

                                                                         March 31,    December 31,
                                                                           2002          2001
                                                                         ---------    -----------
                                                                        (Unaudited)
CURRENT ASSETS:
       Cash .......................................................   $     5,020    $   128,732
       Accounts receivable, net ...................................        22,500         24,422
       Inventories ................................................       135,912        132,108
       Notes receivable, net ......................................         1,922          1,922
       Deposits ...................................................       585,000        585,000
       Other current assets .......................................        30,559         37,270
                                                                      -----------    -----------

                     Total Current Assets .........................       780,913        909,454

PROPERTY AND EQUIPMENT, net .......................................        56,461         73,359


GOODWILL, net of accumulated amortization of $3,125 and $0,
            respectively ..........................................       246,875        250,000
                                                                      -----------    -----------

                                                                      $ 1,084,249    $ 1,232,813
                                                                      ===========    ===========

CURRENT LIABILITIES:
       Accounts payable ...........................................   $   300,660    $   212,866
       Accrued liabilities ........................................       315,142        216,310
       Warranty reserve ...........................................         3,181          3,181
       Private placement bridge loan ..............................       895,000        895,000
       Note payable, related party ................................       508,879        350,000
       Accrued interest ...........................................        69,127         42,615
       Estimated liability for disposal of discontinued subsidiary         36,504         36,504
                                                                      -----------    -----------

                     Total Current Liabilities ....................     2,128,493      1,756,476

LONG - TERM DEBT
       Capital lease obligations, net of current portion ..........         4,062          4,126
       Note payable, related party ................................       685,000        685,000
                                                                      -----------    -----------

                     Total Liabilities ............................     2,817,555      2,445,602
                                                                      -----------    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT):
       Preferred stock, no par value, 15,000,000 shares authorized:
           Series A, -0- issued and outstanding ...................          --             --
           Series B, 300,000 issued and outstanding ...............       300,000        300,000
       Common stock, no par value, 65,000,000 shares authorized,
           8,321,679 issued and outstanding .......................     2,216,900      2,116,900
       Stock payable ..............................................          --          100,000
       Additional paid-in capital .................................       747,818        739,818
       Accumulated (deficit) ......................................    (4,998,024)   $(4,469,507)
                                                                      -----------    -----------

                     Total Stockholders' Equity (Deficit) .........    (1,733,306)   $(1,212,789)
                                                                      -----------    -----------

                                                                      $ 1,084,249    $ 1,232,813
                                                                      ===========    ===========

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS



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RELIABLE POWER SYSTEMS, INC.
STATEMENTS OF OPERATIONS

                                                              Three Months    Three Months
                                                                  Ended           Ended
                                                              March 31, 2002  March 31, 2001
                                                              --------------  --------------
                                                                (Unaudited)    (Unaudited)
REVENUES:
    Net sales ..............................................   $    12,600    $      --
    Interest and other .....................................           352            700
                                                               -----------    -----------

           Total Revenues ..................................        12,952            700
                                                               -----------    -----------

COSTS AND EXPENSES:
    Cost of goods sold .....................................         3,034           --
    Selling, general and administrative ....................       461,295        210,070
    Research and development ...............................        18,882         17,267
    Interest expense, related party ........................        40,584          6,005
    Depreciation ...........................................        20,523         10,095
                                                               -----------    -----------

           Total Costs and Expenses ........................       544,318        243,437
                                                               -----------    -----------

(LOSS) FROM CONTINUING OPERATIONS ..........................      (531,366)      (242,737)
                                                               -----------    -----------


DISCONTINUED OPERATIONS:
    Income (Loss) from operations of discontinued subsidiary
         (less applicable  taxes of $-0-) ..................         2,849        (50,635)
                                                               -----------    -----------


NET (LOSS) .................................................   $  (528,517)   $  (293,372)
                                                               ===========    ===========


NET LOSS PER SHARE - BASIC AND DILUTED:
    Continuing operations ..................................   $     (0.06)   $     (0.25)
    Discontinued operations:
         Income (Loss) from operations .....................             *          (0.05)
                                                               -----------    -----------

                                                               $     (0.06)   $     (0.30)
                                                               ===========    ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
BASIC  AND DILUTED .........................................     8,368,346        972,211
                                                               ===========    ===========

*Less than $(.01) per share

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS



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RELIABLE POWER SYSTEMS, INC.
STATEMENTS OF CASH FLOWS

                                                                 Three Months     Three Months
                                                                     Ended            Ended
                                                                 March 31, 2002   March 31, 2001
                                                                 --------------   --------------
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
    Net (loss) from continuing operations .....................   $(531,366)      $(242,737)
    Adjustments to reconcile net (loss) to net cash provided by
         (used in) operating activities:
         Depreciation and amortization ........................       7,412          10,095
         Stock options issued for services ....................       8,000         261,000
         Loss on write off of leasehold improvements ..........      12,610
    Changes in operating assets and liabilities:
         Accounts receivables .................................       1,922          15,100
         Inventory ............................................      (3,804)          7,700
         Other current assets .................................       6,711        (205,446)
         Accounts payable .....................................      87,795          15,741
         Accrued liabilities ..................................      98,832            --
         Accrued interest .....................................      26,512            --
                                                                  ---------       ---------
           Net cash flows (to) continuing operations ..........    (285,376)       (138,547)
           Net cash flows from (to) discontinued operations ...       2,849         (50,635)
                                                                  ---------       ---------

               Net Cash (Used in) Operating Activities ........    (282,527)       (189,182)
                                                                  ---------       ---------

CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
    Purchase of equipment .....................................        --            (6,186)
    Acquisition ...............................................        --          (315,400)
    Loan to Employee ..........................................        --           (50,000)
                                                                  ---------       ---------
           Net cash flows (to) continuing operations ..........        --          (371,586)
                                                                  ---------       ---------

               Net Cash (Used in) Investing Activities ........        --          (371,586)
                                                                  ---------       ---------

CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
    Repayments of capitalized lease obligations ...............         (64)           --
    Proceeds from note payable, related party .................     158,879         255,000
    Sale of common stock ......................................        --           320,000
                                                                  ---------       ---------
           Net cash flows from continuing operations ..........     158,815         575,000
                                                                  ---------       ---------

               Net Cash Provided by Financing Activities ......     158,815         575,000
                                                                  ---------       ---------

NET INCREASE (DECREASE) IN CASH ...............................    (123,712)         14,232

CASH, beginning of period .....................................     128,732            --
                                                                  ---------       ---------

CASH, end of period ...........................................       5,020          14,232
                                                                  ---------       ---------

See Note

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS



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RELIABLE POWER SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Basis of Presentation:

The consolidated Financial Statements of the Company as of March 31, 2002 and for the three-month period ended March 31, 2002 have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been consolidated or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of the Company, the accompanying unaudited consolidated Financial Statements contain all adjustments, which consist only of normal and recurring adjustments, necessary to present fairly the financial position as of March 31, 2002, and the results of operations and cash flows for the three months ended March 31, 2002 and 2001.

The results of operations for the three-month period ended March 31, 2002 are not necessarily indicative of the results to be expected for the full year. These consolidated financial statements should be read in conjunction with a reading of the financial statements and the notes therein included in the Company’s latest annual report on Form 10-KSB.

2.     Significant Accounting Policies

Discontinued Operations
The Company has reported the operations of Dencor as discontinued operations. The Board of the Directors determined that it was in the best interest of the Company and its stockholders to attempt to sell the Dencor subsidiary and is currently negotiating such a sale. On November 14, 2001 (the measurement date), the Company entered into an Asset Purchase Agreement for the sale of Dencor but certain conditions were not met and the agreement was not completed. The Company anticipates completing a sale of Dencor by June 15, 2002. Dencor had assets of approximately $138,000 and liabilities of approximately $573,000 as of March 31, 2002. The Company estimates the loss on the disposal of Dencor to be $36,000.

Reclassification
Certain amounts reported in the Company’s financial statements for the periods ended December 31, 2001 and March 31, 2002 have been reclassified to conform to the presentation.

Goodwill
Goodwill represents the excess of cost over the fair value of assets acquired and is amortized using the straight-line method over 20 years. The Company assesses the recoverability of its goodwill whenever adverse events or changes in circumstances or business climate indicate that expected future cash flows (undiscounted and without interest charges) for individual business units may not be sufficient to support recorded goodwill. If undiscounted cash flows are not sufficient to support the recorded asset, impairment is recognized to reduce the carrying value of the goodwill based on the expected discounted cash flows of the business unit. Expected cash flows are discounted at a rate commensurate with the risk involved. Amortization expense for the periods ended March 31, 2002 and 2001 was $3,125 and $-0-, respectively.



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Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has recently issued Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, SFAS No. 142, Goodwill and Other Intangible Assets, SFAS No. 143, Accounting for Asset Retirement Obligations and SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, is effective for the Company for the fiscal year beginning January 1, 2002, and addresses accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and APB Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business. SFAS No. 144 retains the fundamental provisions of SFAS No. 121 and expands the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be eliminated from the ongoing operations of the entity in a disposal transaction. The Company estimates that the new standard will not have a material impact on its financial statements but is still in the process of evaluating the impact on its financial statements.

SFAS No. 143, Accounting for Asset Retirement Obligations, addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 will be effective for the Company for the fiscal year beginning January 1, 2002 and early adoption is encouraged. SFAS No. 143 requires that the fair value of a liability for an asset’s retirement obligation be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The Company estimates that the new standard will not have a material impact on its financial statements but is still in the process of evaluating the impact on its financial statements.

SFAS No. 141, Business Combinations, requires the use of the purchase method of accounting for all business combinations initiated after June 30, 2001. SFAS No. 142, Goodwill and Other Intangible Assets, addresses accounting for the acquisition of intangible assets and accounting for goodwill and other intangible assets after they have been initially recognized in the financial statements, which is effective for fiscal years beginning after December 15, 2001; however, certain provisions of this Statement apply to goodwill and other intangible assets acquired between July 1, 2001 and the effective date of SFAS 142.

Major provisions of these Statements and their effective dates for the Company are as follows:

  All business combinations initiated after June 30, 2001 must use the purchase method of accounting, with the pooling of interest method of accounting prohibited.



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  Intangible assets acquired in a business combination must be recorded separately from goodwill if they arise from contractual or other legal rights or are separable from the acquired entity.

  Goodwill, as well as intangible assets with indefinite lives, acquired after June 30, 2001, will not be amortized. In the year of adoption, all previously recognized goodwill and intangible assets with indefinite lives would no longer be subject to amortization.

  Goodwill, tested by business segment and intangible assets with indefinite lives will be tested for impairment annually and whenever there is an impairment indicator.

  Management has not yet determined the possible impact on the financial statements of the foregoing recent accounting pronouncements.

In 1999 the FASB issued Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The adoption by the Company of Statement 133 did not impact the Company’s financial statements.

The Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 101, Revenue Recognition in Financial Statements, in December 1999. The SAB summarizes certain of the SEC staff’s views in applying generally accepted accounting principles to revenue recognition in financial statements. In June 2000, the SEC issued SAB 101B, which delays the implementation date of SAB 101 until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The adoption of this SAB did not impact the Company’s financial statements.

Severance Agreements
Subsequent to year-end, when the Company reorganized and moved to Chicago, these employment agreements were terminated. The Company is liable to two employees for severance payments totaling $180,000. In addition, the Company is in default of the terms of the employment agreements of two employees. Their salaries were deferred until the first quarter of 2002. The payment has not been made and the employees are owed approximately $142,000.



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FORWARD-LOOKING STATEMENTS

        The following discussion contains forward-looking statements regarding us, our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that may affect such forward-looking statements include, without limitation: our ability to successfully develop new products for new markets; the impact of competition on our revenues, changes in law or regulatory requirements that adversely affect or preclude clients from using our products for certain applications; delays our introduction of new products or services; and our failure to keep pace with emerging technologies.

        When used in this discussion, words such as “believes”, “anticipates”, “expects”, “intends” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.

GENERAL

        Our results of operations have been and will probably continue to be subject to significant variations. The results for a particular period may vary as a result of a number of factors. These include:

  ° the overall state of the energy segment of the economy,
  ° the development status of and demand for our products,
  ° economic conditions in our markets,
  ° the timing of orders,
  ° the timing of expenditures in anticipation of future sales,
  ° the mix of products sold by us,
  ° the introduction of new products,
  ° product enhancements by us or our competitors, and
  ° pricing and other competitive conditions.


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OVERVIEW AND RECENT DEVELOPMENTS

        We are a manufacturer of power protection devices. Along with this service, we incorporate power savings technologies to solve power problems for our target markets. On February 7, 2001 Dencor Energy Costs Controls and Reliable Power Systems, Inc. entered into a merger. As a result of the accounting treatment of that merger, the historical accounting information for Dencor Energy Costs Controls, was eliminated and replaced with the historical accounting information of Reliable Power Systems, Inc. This accounting treatment resulted in the elimination of accumulated deficit of Dencor Energy Costs Controls and the creation of approximately $1.4 million in goodwill.

        Under the merger agreement and plan of reorganization, Dencor Energy Cost Controls, Inc. issued 12,600,000 shares of no par value common stock and 3,348,000 shares of no par value Series A Convertible Preferred Stock to the then sole shareholder of Reliable Power Systems, Inc. A total of $339,589 of its debt was converted into Series B Redeemable Preferred Stock. At the time of closing, Reliable was required to have $300,000 of unrestricted cash in excess of its liabilities. This cash was immediately loaned to us and used to pay $300,000 in liabilities.

        The articles of merger were filed with the Colorado Secretary of State on February 8, 2001.

        Our shareholders approved and ratified the transaction in a shareholders’ meeting on April 10, 2001.

        As a result of the shareholders meeting, we made some changes to our capital structure. We authorized a total of 195,000,000 shares of common stock to allow the conversion of our Series A Convertible Preferred Stock into common stock and to comply with the terms of the merger agreement. Next, we did a one-for-eighteen reverse split of our outstanding common shares. Finally, we amended our articles of incorporation to decrease the authorized common stock from 195,000,000 shares, no par value to 65,000,000 shares, no par value and to increase the authorized preferred stock from 5,000,000 shares, no par value to 15,000,000 shares, no par value.

        In April 2001, we changed our name to Reliable Power Systems, Inc.

        During 2001 we concentrated our efforts on building our management team, identifying strategic partners and adding experience executives to our board of directors.

        As of October 5, 2001, Messrs. John R. Walter, Joseph D. Livingston, and David H. Hoffmann each acquired 2,000,000 shares of stock from Mr. Wiens and his affiliated entities. In addition Mr. Wiens and his affiliated entities returned a total of 2,787,000 shares to be retired by us. First Western Industries, LLC, a company affiliated with Mr. Wiens, continues to own 1,213,000 shares.

        In February 2002, our President and Chief Executive Officer, Mr. Joseph Livingston, resigned as Vice Chairman of the Board and Chief Executive Officer. Also in February, 2002, we scaled back our operations, laid off most of our employees, and moved our headquarters to Chicago, Illinois.



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ACCOUNTING POLICIES AND PRACTICES

        We recognize revenue on the delivery of our products to our customers. Our net sales are made up of sales to our customers net of any returns. We do not sell on consignment and offer returns only in those isolated instances when our products are damaged and do not meet the customer’s written specifications.

        The merger between Reliable Power Systems, Inc and Dencor Energy Cost Controls was accounted for using the purchase method of accounting. Under this method, the acquired assets and liabilities have been recorded at their estimated fair values at the date of the merger. Our intangible assets consist of the excess of the purchase price over the fair value of the tangible assets acquired. The excess of the purchase price over the fair value of the tangible assets acquired was approximately $1.4 million as calculated under the provisions of purchase accounting, and is being amortized on a straight-line basis over an estimate life of 20 years.

        The following describes the line items set forth in our statements of operation:

        Net Sales. We recognize revenue from sales upon delivery of the products to the customer. We sell power protection devices and technologies.

        Cost of Goods Sold. Our cost of goods sold include the cost of raw material, direct labor, and direct material, along with the cost of products we purchase and then resell to our customers.

        Selling Expenses. These expenses include salaries and benefits of sales personnel, and incentives paid to independent dealers for the sale of our products.

        General and administrative expenses. These expenses include executive salaries and benefits, marketing costs, travel and facilities costs.

        Research and development expenses. These expenses relate to engineering salaries for the modification of our products, and developing potential new products.

        Interest expense. This expense relates to the interest on our long-term debt and note payable outstanding as of March 31, 2002.

        Amortization expense. This expense relates to the excess of the purchase price over the fair value of the tangible assets acquired in the merger between Reliable Power Systems, Inc. and Dencor Energy Cost Controls.

RESULTS OF OPERATIONS, THREE MONTHS ENDED MARCH 31, 2002.

RESULTS OF OPERATIONS

        We were not profitable for the three months ended March 31, 2002. For the three months ended March 31, 2002, we had total revenues of $12,592, compared to total revenues of $700 for the same period ended March 31, 2001. Total costs and expenses for the three months ended March 31, 2002 were $544,318, compared to total costs and expenses of $243,437 for the same period ended March 31, 2001. The major components of operating expenses are selling, general and administrative, which include independent contractor fees.



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        As a result, we had a net loss of $528,517 for the three months ended March 31, 2002, compared to a net loss of $293,372 for the same period ended March 31, 2001. The net loss per share for the three months ended March 31, 2002 was $0.06 per share, compared to a net loss of $0.30 per share for the same period ended March 31, 2001.

        Liquidity and Capital Resources

        As of the end of the reporting period, we had cash or cash equivalents of $5,020, compared to $14,232 for the previous year.

        Net cash used by our operating activities was to $282,527 for the three months ended March 31, 2002, compared to net cash used of $189,182 for the three months ended March 31, 2001.

        Cash flows provided from investing activities were zero for the three months ended March 31, 2002, compared to $371,586 used in investing activities for the three months ended March 31, 2001.

        A total of $158,815 was provided for financing activities for the three months ended March 31, 2002, compared to $575,000 for the three months ended March 31, 2001.

        On November 2, 2001 we signed a technology development agreement with a third party developer for the development of a continuous power machine. This term of the agreement is for a period from November 1, 2001 until the development of a continuous power machine is complete that is generally acceptable for sale to the public. We will pay the developer a monthly design fee of $15,000 per month and the related design and operating costs associated with the development of a continuous power machine. We have granted the developer 200,000 options to purchase shares of our common stock at $1.00 per share. The total estimated costs to develop and build the continuous power machine are approximately $1.3 million. We will own all of the intellectual property developed under the agreement in perpetuity and will pay the developer royalties for sales of products sold using the intellectual property. The above described contract was terminated and we are negotiating new technology and manufacturing agreements with outside sources. The successful completion of these agreements are critical to our future. Otherwise, we have made no current capital or purchase commitments.

        Our long-term capital requirements will depend in large part on our results of operations, operating cash flow, capital expenditures, availability of debt or other financing, and the timing of these factors. Our plans and the related expenditures will depend upon factors outside of our control, including the price of electricity, developments in the power protection market and the availability of expansion opportunities. We may not be able to obtain financing on acceptable terms, or at all, when we need it, which could adversely, impact its operations and business plan.

        We feel that we have inadequate working capital to pursue any business opportunities other than seeking additional clients. During the next twelve months, we plan to investigate an offering of our securities, whether through a private placement or a public offering. At the present time, we have no firm arrangements with regard to either type of offering. We do not intend to pay dividends in the foreseeable future.

        Other than as disclosed herein, there are no plans, proposals, arrangements, or understandings with respect to the sale or issuance of additional securities by us.

        We do not intend to pay dividends in the foreseeable future.



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PART II - OTHER INFORMATION

ITEM 1.    Legal Proceedings.

        In March, 2002, the landlord of our former principal office, Castle Centerstone News #1, LLC, filed suit against us in Colorado State District Court for non-payment of rent and is seeking a judgment in the amount of approximately $27,000. We have not yet responded to this suit.

        Otherwise, we are not aware of any legal matter or claim pending or threatened that would have a material adverse effect on our consolidated financial position or results of operations. There are no other legal proceedings to which we are a party which could have a material adverse effect on us.

ITEM 2.     Changes in Securities and Use of Proceeds. None

ITEM 3.     Defaults upon Senior Securities. None.

ITEM 4.     Submission of Matters to a Vote of Security Holders. None

ITEM 5.     Other Information. None.

ITEM 6.     Exhibits and Reports on Form 8-K.

        We filed one report on Form 8-K for the fiscal quarter ended March 31, 2002, dated March 25, 2002, which announced the change in our auditors.



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RELIABLE POWER SYSTEMS, INC.
SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Reliable Power Systems, Inc.
Registrant


By: David A. Mazur                          
        President

Date: May 20, 2002



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