<PAGE>   1

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

                                   FORM 10-K

<TABLE>
<S>                   <C>                                               <C>
[X]                     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                           OF THE SECURITIES EXCHANGE ACT OF 1934
                        FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997,
                                             OR
[ ]                   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                           OF THE SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                         COMMISSION FILE NUMBER 0-28060
                             ---------------------

                        BOLDER TECHNOLOGIES CORPORATION
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      84-1166231
       (State or other jurisdiction of                         (IRS Employer
        incorporation or organization)                      Identification No.)
          4403 TABLE MOUNTAIN DRIVE                                80403
                  GOLDEN, CO                                     (Zip Code)
   (Address of principal executive offices)
</TABLE>

                                 (303) 215-7200
              (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:
                    COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (TITLE OF CLASS)

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  [X]  No  [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]

     The aggregate market value of the Common Stock held by non-affiliates of
the Registrant, based upon the closing price of the Common Stock reported on the
Nasdaq Stock Market (National Market) on February 28, 1998 was $40,762,992.

     The number of shares of Common Stock outstanding as of February 28, 1998
was 9,476,415.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Certain portions of the Registrant's definitive proxy statement to be filed
not later than 120 days after December 31, 1997, in connection with the
Registrant's 1998 Annual Meeting of Stockholders is incorporated by reference
into Part III of this Form 10-K.

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<PAGE>   2

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<CAPTION>


                                TABLE OF CONTENTS



                                                                                                          PAGE
                                                                                                          ----
PART I

<S>        <C>                                                                                            <C>
Item 1.    Business.........................................................................................4

Item 2.    Properties......................................................................................20

Item 3.    Legal Proceedings...............................................................................20

Item 4.    Submission of Matters to a Vote of Security Holders.............................................20



PART II

Item 5.    Market for Registrants' Common Equity and Related Stockholder Matters...........................21

Item 6.    Selected Financial Data.........................................................................22

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations...........23

Item 7A.   Quantitative and Qualitative Disclosures about Market Risk......................................23

Item 8.    Financial Statements and Supplementary Data.....................................................27

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure............27



PART III

Item 10.   Directors and Executive Officers of the Registrant..............................................28

Item 11.   Executive Compensation..........................................................................28

Item 12.   Security Ownership of Certain Beneficial Owners and Management..................................28

Item 13.   Certain Relationships and Related Transactions..................................................28



PART IV

Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K ................................29


</TABLE>

                                       3

<PAGE>   3



                                     PART I

ITEM 1.  BUSINESS

NOTE CONCERNING FORWARD-LOOKING INFORMATION

         This Annual Report contains various forward-looking statements and
information that are based on management's beliefs as well as assumptions made
by and information currently available to management. When used in this
document, the words "anticipate," "estimate," "project," "expect" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated, projected or expected. Key factors that may have a direct bearing on
the Company's results include, but are not limited to, those discussed in the
sections entitled "Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" as well as those discussed in the
section entitled "Risk Factors" in the Company's Registration Statement on Form
S-3 filed on December 5, 1997, as amended through February 19, 1998 (the
"Registration Statement"). Any forward-looking statements speak only as of the
date such statements are made.

INTRODUCTION

         BOLDER is an energy technology company that is developing and
commercializing advanced, high power, rechargeable battery systems based on its
patented thin metal film ("TMF(R)") technology. The Company's TMF battery uses
proven lead acid electrochemistry in a proprietary configuration that has higher
power density than any other commercially available battery system. The Company
believes that its TMF batteries, when manufactured in commercial quantities, can
substantially replace NiCd batteries in many high power applications and can
become the battery of choice for certain applications currently powered by
traditional lead acid batteries. The Company believes that the combination of
the following characteristics of its prototype TMF battery systems offers
advantages over commercially available rechargeable batteries in a broad range
of current and future applications:

         High Power. The Company believes its TMF batteries can deliver higher
         sustained power density than any other commercially available battery
         technology. This is important in existing applications such as power
         tools and standby power, and may enable new applications ranging from
         high performance hybrid electric vehicles to an automotive starting
         battery that weighs approximately 90 percent less than conventional
         automotive starting batteries.

         Cost Effective. TMF batteries are manufactured using inexpensive,
         readily available raw materials. In addition, the Company believes its
         high volume manufacturing process under development will be cost
         effective when fully operational.

         No Memory Effect. TMF batteries do not suffer from the memory effect
         that reduces the capacity of nickel cadmium ("NiCd") batteries if they
         are partially discharged and recharged repeatedly.

         Small Size. In high power applications, such as power tools, automotive
         starting and standby power, TMF batteries can do the same amount of
         work as much larger conventional rechargeable batteries. Since the
         battery system typically accounts for a significant part of the
         physical volume and weight of these products, TMF technology can make
         such products easier to use and/or less expensive to manufacture by
         enabling reductions in product size.

         More Useful Work. In high power applications, a TMF battery can do more
         useful work (for example, drill more holes with a portable power drill)
         between recharges than a conventional rechargeable battery of similar
         size.


                                       4
<PAGE>   4

         Faster Recharge. TMF batteries can be recharged to full capacity in
         less than five minutes with an appropriate charger, allowing the device
         to be back to work quickly, thus increasing the "up time" of the
         device.

         Stable Discharge Voltage. In some applications, notably standby power,
         electronic circuits must be used to compensate for the voltage drop
         during discharge of other types of rechargeable batteries. TMF
         batteries have very stable voltage during high rate discharge, and thus
         provide more consistent performance and potentially reduce the need for
         and cost of voltage regulation.

         Cool Operation. High power operation of batteries typically generates
         significant heat that must be accommodated in the design of products
         such as standby power systems or professional power tools. The low
         impedance of TMF batteries greatly reduces the amount of heat generated
         by the battery, thus simplifying product design.

         Multiple Form Factors. TMF batteries may be built in a number of form
         factors, including spiral wound and prismatic, or flat, cells that can
         be used in a wide range of applications. For example, the Company has
         manufactured prototype 1/16-inch thick prismatic cells that may be
         suitable for small format consumer electronic devices and prototype 5
         Ah spiral wound cells suitable for very high power applications such as
         professional power tools.

         Easy to Recycle. Environmental concerns have made recycling of
         batteries increasingly important. Unlike many existing and emerging
         battery technologies, TMF batteries are readily handled by the well
         developed recycling process that is currently used to recycle
         approximately 90 percent of the lead acid batteries in the United
         States.

         The Company has focused its initial product development efforts on its
sub-C cell, which is compatible with a widely used NiCd form factor, and is
currently engaged in product development efforts for new form factors such as
the prismatic, or flat, cell suitable for consumer electronics and the 5 Ah
spiral wound cell suitable for very high power applications such as professional
power tools and hybrid electric vehicles. These efforts have been primarily
funded by both commercial and governmental sources. The Company has produced
over 69,000 prototype TMF batteries in its semi-automated pilot production
facility and during 1997 occupied a new manufacturing facility, located in
Golden, Colorado. This facility has been designed to accommodate five production
lines and two research and development lines, as well as all of the Company's
other operations. The Company contracted with Wright Industries to manufacture
the first line, which will produce sub-C cells. The qualification of the
Company's first high-volume production line is proceeding more slowly than
originally anticipated due to the late delivery and installation of equipment
and the time involved in initial debugging of the line. The Company has now
completed installation of its first manufacturing production line, completed
certain key modifications, and demonstrated the fundamental mechanical
functionality of the entire line. The Company is continuing the debug and
validation of the production line. Additional modifications will likely be
required to fully realize the designed production capacity of this line. BOLDER
expects to complete the production readiness of the line and begin generating
commercial revenues during 1998.

         An integral part of the Company's strategy is to work with OEM
customers and strategic partners to develop market opportunities and leverage
its resources. For example, Bolder intends to channel a significant portion of
its sales through value added partners ("VAPs"), and the Company has established
agreements with six VAPs to market TMF batteries throughout North America and
Europe. The Company believes that VAP sales will provide attractive margins for
the Company and will help the Company develop new applications and market
segments. In addition, the Company has a broad strategic relationship with
Johnson Controls, Inc. ("Johnson Controls"), one of the world's leading
suppliers of automotive batteries.

                                       5
<PAGE>   5

         BOLDER Technologies Corporation was incorporated in Colorado in 1991
and reincorporated in Delaware in 1993. The Company's executive offices are
located at 4403 Table Mountain Drive, Golden, Colorado 80403, and its telephone
number is (303) 215-7200.

MARKET OVERVIEW

         Industry sources estimate that the world market for rechargeable
batteries in 1995 was between $14 and $16 billion. Demand for rechargeable
batteries is being driven by the growing use of portable power tools and
appliances, portable electronics such as cellular telephones and laptop
computers, the increasing importance of standby power for critical systems, and
the increasing demands of the automotive industry.

         The following table illustrates some of the existing applications for
rechargeable batteries. The Company believes that many of these applications
could benefit from the high power capability or other features of the Company's
TMF battery system. Major suppliers in each of these segments are currently
evaluating the Company's battery systems.
<TABLE>
<CAPTION>

                EXISTING APPLICATIONS FOR RECHARGEABLE BATTERIES

PORTABLE TOOLS AND APPLIANCES              STANDBY POWER                             ENGINE STARTING

<S>                                        <C>                                       <C>
Portable Power Drills                      Computer Uninterruptible Power            Automotive Starting
Portable Electric Saws                          Supplies                             Gasoline Powered Lawn
                                                                                           Mowers
Electric Powered Lawn Mowers               Point of Sale Terminals                   Power Boats
Weed Whackers                              ATM Terminals                             Jet Skis
Grass Trimmers                             Telecommunications Equipment              Snowmobiles
Other Power Tools                          Very Small Standby Power Systems          Snowblowers
Razors                                                                               Motorcycles
Toothbrushes                                                                         Small Engine Starting
                                                                                     Portable Generator Sets
                                                                                     Tractors
                                                                                     Emergency and Auxiliary
                                                                                            Starting Equipment

MILITARY AND AEROSPACE                     ELECTRONICS                               OTHER APPLICATIONS

Airplane Starting                          Portable Audio/Video Equipment            Photographic Equipment
Weapons                                    Portable Computers                        Toys
Transport Systems                          Cellular Phones
                                           Portable Patient Monitoring
                                                Equipment
</TABLE>

         In addition, the Company believes that its TMF battery system will
enable the development of new products and continue to expand the market
opportunity for rechargeable batteries. The following table illustrates some new
and emerging applications for TMF batteries.

                 NEW AND EMERGING APPLICATIONS FOR TMF BATTERIES

           Small Automotive Starting Battery for Dual Battery Systems
             Very Small Batteries for Non Automotive Engine Starting
                 Hybrid Electric Vehicles and Electric Vehicles


                                       6
<PAGE>   6

STRATEGY

         The Company's objective is to become a major supplier of innovative
rechargeable batteries. The Company's strategies for achieving this objective
include the following:

         Manage and Accelerate Production Ramp-Up. The Company believes that its
long-term success will in part be determined by the quality of the products it
initially introduces to the market. To ensure that products meet customer
expectations of performance and quality, the Company is carefully qualifying its
high volume production process and is conducting extensive tests and statistical
analyses. The Company intends to carefully control the production ramp-up
process and limit initial production quantities to guarantee consistent delivery
of reliable products. The Company's production ramp-up efforts include the
planned implementation of its first high volume manufacturing production line in
1998. Once the reliability and stability of the production line is fully
established, the Company intends to ramp-up commercial manufacturing capacity to
meet anticipated demand for TMF batteries.

         Target Markets Where TMF Technology is Most Advantageous. During the
first years of commercial production, the Company believes it will have limited
production capacity relative to the ultimate potential demand for its products.
The Company is initially entering those markets where TMF products offer the
greatest performance advantage over competitive battery technologies (primarily
based on very high power density), and therefore can command attractive margins.
Initial target markets include emergency jump-starting systems, standby power
systems, professional photography equipment, small and portable generator
starting and other small engine starting. The Company intends to subsequently
expand its focus to include other applications such as portable tools and
appliances, electronics and medical products where other attributes of the
Company's TMF technology such as multiple form factors, fast recharge, lack of
memory effect or low cost provide performance advantages over competitive
battery technologies.

         Manage Channels to Optimize Margins and Market Development. The Company
has, and will continue to establish, direct relationships with major OEM
customers. In addition, the Company intends to channel a significant portion of
its initial production of TMF batteries through a network of VAPs. The Company
believes that sales to VAPs can provide significantly higher margins than direct
sales to OEMs and can help the Company develop new applications and market
segments.

         Partner with Key OEMs to Define, Test and Introduce Products. The
Company is seeking to maximize the development potential and shorten the sales
cycle for its TMF batteries by working with a limited number of OEMs in targeted
market segments. These OEM customers have helped and will continue to help to
derive the specifications for some of the Company's initial products by
providing useful feedback throughout the development process. The Company hopes
to continue to capitalize on this early interaction with customers to design
additional battery products, which it believes will replace competitive battery
technologies and satisfy the OEMs' rigorous performance criteria. The Company
has entered into agreements with customers for the development of specific
products.

         Use Precision Process Control and Advanced Analytical Tools to Improve
Performance and Cost. The Company is committed to improving process efficiency,
enhancing product quality and performance and reducing manufacturing costs
through the use of advanced process controls and analytical tools. The Company
uses sophisticated process controls to capture multiple data points throughout
the manufacturing process. The Company uses these data points to evaluate,
control and improve the manufacturing process in real time, to optimize and
improve product performance and to reduce product cost. The Company believes
that the resulting improvements in product performance and cost will allow it to
significantly expand the addressable market over time.

         Aggressively Leverage, Grow and Protect the Technology Base. The
Company considers its product and process technology to be one of its most
valuable assets. This technology is applicable to a wide range of battery
products in both spiral wound and prismatic (flat) formats. The Company intends
to fully exploit this technology by developing new products based on market
need. The Company has been developing new prismatic and spiral


                                       7
<PAGE>   7

wound products using both government and customer funding. The Company
aggressively protects and intends to grow its technology base through its
established program for intellectual property documentation and protection. The
Company has five issued patents in the U.S. and a number of pending patents in
the U.S., Europe and Japan. In addition, the Company holds significant trade
secrets in the area of product and process technology.

         Use Strategic Relationships to Leverage Company Resources. The Company
is using, and plans to continue to use, strategic relationships to access
funding, research and development, marketing and other resources and to develop
specific markets. For example, the Company has agreements with six VAPs that
provide for, among other things, marketing and distribution of the products
throughout North America and Europe. In addition, the Company has a strategic
relationship with Johnson Controls, one of the world's leading suppliers of
automotive batteries. The Company expects to access certain markets for TMF
batteries through license rights it has granted to Johnson Controls. The Company
is currently exploring other strategic relationships as a means of entering
foreign markets or specialized markets such as military and aerospace.

         The Company's ability to achieve these strategic objectives depends
upon a number of factors. See the section entitled "Risk Factors" in the
Registration Statement for a discussion of certain of the risks associated with
the Company's ability to achieve these strategic objectives.

TMF MARKET APPLICATIONS

         The Company believes that its TMF battery systems have the following
advantages relative to both of its primary competitors, NiCd and traditional
lead acid batteries: higher power density resulting in smaller/lighter batteries
for high power applications, or greater power from the same size battery; faster
recharging with an appropriate charger; and flatter discharge profile under high
loads. In addition, the Company believes that its TMF batteries have certain
other advantages over NiCd batteries, including the lack of memory effect; lower
manufacturing costs in high volumes because of lower raw material costs; a
simpler manufacturing process; and fewer environmental issues. Compared with
traditional lead acid batteries, the Company believes that its TMF batteries
retain more of their capacity at low temperatures.

         EXISTING APPLICATIONS. The following are market applications for the
Company's TMF batteries:

         Standby Power. Standby power systems, also known as uninterruptible
power supplies ("UPS"), provide assured sources of power for critical systems
such as computers, point of sale terminals, telecommunications equipment and
medical equipment by seamlessly switching to battery power when commercial power
fails. Some very large systems use batteries to carry the load for a short
period of time while a diesel or turbine powered generator comes up to speed.
Given the increased dependence on critical electronic systems, the market for
standby power is growing. According to a 1995 industry survey, it was estimated
that the United States market for batteries used in standby power would be $215
million in 1996, and is expected to grow to approximately $293 million by 2000.
The standby power market is exclusively powered by traditional lead acid
batteries.

         Batteries are typically the largest single component by volume and
weight of any standby power system. Because of the ability of TMF batteries to
deliver very high power relative to their size, they can substantially reduce
the volume and weight of a standby power system. Also, because TMF batteries
have very stable discharge voltage, they can reduce the cost of the voltage
stabilization circuitry that is required in certain standby power systems that
utilize traditional lead acid batteries. Suppliers of standby power systems
include Best Power Technology, Inc., American Power Conversion, Inc., Exide
Electronics and Groupe Schneider, some of which are evaluating the Company's
products. The Company has granted Johnson Controls a non-exclusive license to
make and sell its TMF batteries for standby power applications.

         Engine Starting. According to a 1995 industry survey, it was estimated
that approximately 93.6 million engine-starting batteries would be sold in the
United States in 1996, which, based upon current prices, indicates that the
market size is approximately $3 billion. Engine starting applications include:
car and truck starting, motorcycles, gasoline powered lawn mowers, power boats,
jet skis, snowmobiles, snowblowers, small engine starting and portable generator
sets. Traditional lead acid batteries are used to power these applications.


                                       8
<PAGE>   8

         The Company believes that the high power density, fast recharge,
superior cold weather performance and stable discharge voltage profile of its
TMF batteries make them suitable as direct replacements for the traditional lead
acid batteries used to power some of these applications. The Company is
accessing the car and truck engine primary starting markets through its
strategic partnership with Johnson Controls. Johnson Controls has a limited
exclusive license with respect to these markets until 2001, at which time the
Company may enter such markets. In addition, Johnson Controls has a
non-exclusive license to make TMF batteries for motorcycle starting and a sole
license (exclusive except as to BOLDER which has the right to sell into the
market) for lawn and garden equipment starting applications.

         Emergency and Auxiliary-Starting Systems. This segment includes
batteries for all types of external starting systems used for emergency starting
of cars and trucks, ramp starting of aircraft, and starting engines for a
variety of military equipment. Traditional lead acid batteries are currently
used to power these applications. The Company believes that the compact, high
power capability of TMF batteries may make them an attractive alternative for
applications in this market segment. BOLDER has exclusive rights to the
emergency jump-starting market until July 1999. Thereafter, Johnson Controls
will receive a non-exclusive license to make TMF batteries for emergency
jump-starting applications for cars, trucks, motorcycles and lawn and garden
equipment.

         Portable Tools and Appliances. Battery powered tools, portable
household appliances and lawn and garden equipment require batteries with high
power density to drive electric motors. For example, battery powered electric
drills can draw up to 70 amps of electricity while drilling a hole. According to
a 1995 industry survey, it was estimated that $147 million worth of NiCd and
lead acid batteries would be used in the United States in power tools and
appliances in 1996, and the demand is expected to increase to $167 million by
2000. These applications are currently predominantly powered by NiCd batteries
with traditional lead acid batteries being used on a more limited basis.

         The Company believes that its TMF batteries are particularly applicable
to this market segment. The high power density of TMF batteries means that a
product powered by the Company's batteries can do more work at high discharge
rates with the same size battery (for example, drill more holes with a power
drill), or the same amount of work with a smaller battery, than other
rechargeable battery systems. In addition, the rapid recharge capability of TMF
batteries means that products can be back to work more quickly with an
appropriate high rate charger. The stable discharge voltage of TMF batteries
means that products perform more consistently (for example, the drill turns at a
more consistent speed). Finally, unlike NiCd batteries, TMF batteries do not
suffer from a memory effect. Suppliers of portable tools and appliances include
the following companies: Black & Decker (US) Inc., SB Power Tool Company,
Poulan/Weed Eater, Greenlee Textron, Inc., Milwaukee Electric Tool Company and
Royal Appliance Manufacturing Company. Several of these companies have evaluated
or are in the process of evaluating the Company's battery systems.

         Military and Aerospace. This market includes a wide range of systems
requiring high power density such as aircraft starting, weapons systems and
transportation systems. Both traditional lead acid and NiCd batteries are used
for these applications. The Company believes that there may be a significant
opportunity to apply the TMF technology to applications in the military and
aerospace markets, particularly in the aircraft market, where the weight and
volume of the starting battery are major issues. The United States Army Research
Lab has conducted a preliminary evaluation of the TMF technology for military
applications. The Company plans to address the military and aerospace markets
primarily through strategic relationships.

         Electronics. This segment includes batteries for all types of portable
electronic and medical equipment, such as cellular phones, laptop computers, and
portable patient monitoring equipment. According to an industry source, the
market for NiCd and lead acid batteries used in electronics and medical systems
was estimated at $455 million in 1996 in the United States, and is expected to
grow to $542 million in 2000. Applications in the electronics market are
currently powered by a variety of rechargeable batteries, including traditional
lead acid, NiCd, NiMH and lithium batteries.

         The Company believes that the fast recharge potential, lack of memory
effect and ease of recycling may make TMF battery systems an attractive
alternative to NiCd batteries in certain electronics applications. In


                                       9
<PAGE>   9

addition, the ability of TMF batteries to respond quickly to power demands, and
to deliver high power pulse discharges with good energy density may make them
attractive for certain pulse power applications such as digital radio products.
The Company has engaged in customer funded product development activities in the
electronics market segment.

         Other Applications. Examples of applications in this category include
photographic equipment and toys. There are a variety of rechargeable battery
systems, which are used to power these applications, including traditional lead
acid, NiCd and nickel metal hydride ("NiMH") batteries.

         NEW AND EMERGING APPLICATIONS. The Company believes that new and
emerging applications requiring very high power output from a small volume will
emerge as the Company's TMF battery systems become commercially available.

         Small Automotive Starting Batteries for Dual Battery Systems. United
States automotive manufacturers are currently focused on resolving several
issues related to automotive starting batteries, including very limited space
available under the hood, increasing under-hood temperatures, which can cause
premature battery failure, and growing loads on the battery from accessories
that continue to operate even when the engine is off. Currently, all automakers
use traditional lead acid batteries for automotive starting. Several major
automakers are considering a dual battery system that would include a dedicated
starting battery and a separate "hotel load" battery to provide power for
accessories. The Company believes that the high power to size/weight ratio and
low temperature performance of its TMF battery system are well suited for use in
a small format automotive starting battery. The Company has granted Johnson
Controls a limited exclusive license to sell TMF batteries for car and truck
engine primary starting applications until 2001, when BOLDER has the right to
sell into these markets.

         Very Small Batteries for Non-Automotive Engine Starting. TMF batteries
may be useful to provide push button starting for small internal combustion
engines contained in products such as generators and lawnmowers. These products
currently require pull starting because existing battery systems would be too
large and heavy. The Company has granted Johnson Controls a sole license
(exclusive except as to BOLDER which also has the right to enter this market) to
make and sell TMF batteries for starting small engines in lawn and garden
equipment only.

         Electric Vehicles and Hybrid Electric Vehicles. In response to growing
concerns about pollution and the availability of fossil fuels, the automobile
industry is in the process of developing Electric Vehicles ("EVs") and Hybrid
Electric Vehicles ("HEVs"). EVs would be powered exclusively by a battery
system.

         HEVs would use a small fossil fuel powered engine (typically a diesel
or turbine engine) as a base power source combined with a power storage system
(such as a battery or flywheel) for power boosts to accelerate and climb hills.
In addition, HEVs use "regenerative braking" to capture and to store the energy
generated by the automobile when braking. The objective of HEV design is to
provide car performance similar to current car models, significant reductions in
pollution and large increases in gas mileage. The Company believes that its TMF
batteries are particularly well suited for HEV applications because their low
impedance enables them to capture and store the large amounts of power generated
by braking and quickly deliver large amounts of power to supplement the power of
the internal combustion engine needed for acceleration and hill climbing. The
Company believes that its TMF technology has the potential to provide a viable
power storage solution for HEVs. Chrysler Corporation successfully demonstrated
a prototype HEV powered by BOLDER's TMF batteries, the Dodge Intrepid ESX HEV,
at the 1996 North American Auto Show. Johnson Controls has a non-exclusive
license for HEV applications. The Company is also engaged in a government funded
SBIR program to develop a larger (5Ah) cell and associated manufacturing process
technology for HEV applications.

TECHNOLOGY AND PRODUCTS

         The Company believes that its TMF technology represents a significant
advance over existing rechargeable battery technologies for applications that
require high power in a small package. TMF rechargeable batteries employ a
proprietary configuration of traditional lead acid electrochemistry--the same
electrochemistry


                                       10
<PAGE>   10

that has been used in battery systems for over a century and that is currently
used in batteries for cars and many electronic applications.

         A variety of combinations of chemical and metallurgical materials can
be used to form a rechargeable battery system. For example, rechargeable lead
acid batteries that are used in automobiles include a negative and positive
plate made of lead and lead oxide compounds and an electrolyte of sulfuric acid.
A rechargeable NiCd battery incorporates a positive and negative plate made of
nickel and cadmium compounds with a potassium hydroxide electrolyte. TMF
batteries use the same components as traditional lead acid batteries. This
provides a cost advantage over NiCd batteries because the raw materials for lead
acid batteries are less expensive than those used in NiCds.

         The primary structural innovations of the Company's TMF batteries are
an increased plate surface area within the battery, a short path through the
active material to the negative or positive plates, and patented end cap
connectors. As in a traditional lead acid battery, the TMF battery cell has a
negative and positive plate. However, the TMF plates are unique because they are
comprised of very thin lead foil substrates that are coated with a very thin,
uniform layer of active material (lead oxide paste) (See figure 1.) The negative
and positive plates of the TMF battery are interleaved with a fiberglass
separator. In the spiral wound form factor of the TMF battery, the combination
of the negative and positive plates and the fiberglass separator are wound so
that the negative and positive plates are slightly offset at opposite ends of
the cell. A connector is cast on to each end of the cell (See figure 2.) The
Company designed its patented connector to cap the ends of the spiral wound TMF
battery so that it is in continuous contact with the exposed edge of both the
negative and positive plates.

<TABLE>
<CAPTION>


                             FIGURE 1                                            FIGURE 2
           <S>                                                    <C>
           [A picture of one of the  Company's  battery           [A  picture  of  the   connector   cap
           cells  and its  component  parts,  including           appears here.]
           the positive  plate,  the negative plate and
           the  separator  appears  here.  The  picture
           illustrates   the   slight   offset  of  the
           negative  and  positive  plates at  opposite
           ends of the cell.]

</TABLE>

         The use of thin lead foil substrates significantly increases the
surface area of the lead, thus lowering the impedance of the cell and greatly
increasing the rate at which the cell can be charged and discharged. In
addition, the use of the thin lead foil substrates in combination with the
fiberglass separator provides for a short path through the active material to
the negative or positive plates, allowing for more rapid delivery of the
current, increasing the responsiveness of the cell. The patented end cap
provides a continuous, uniform and dispersed connection between the negative and
positive plates and the device being powered. TMF batteries have been made in
sizes ranging from 0.5-inch diameter (0.4 Ah) cells up to approximately 3 inch
diameter (12 Ah) cells.

         While the TMF technology can be deployed in different formats, the
Company's initial product is a sub-C format (cylindrically shaped, 0.90 inch in
diameter by 2.84 inches in length), which is compatible with the existing NiCd
battery form factor. This form factor is the one most commonly used by power
tool and portable appliance manufacturers and can be assembled into packs of
various sizes and configurations. Due to the higher voltage in the Company's TMF
cell (2.1 volts), only six cells are required to replace ten NiCd cells (1.2
volts) to make a 12 volt pack with similar overall performance characteristics.
In addition, multiple sub-C cells can be configured to increase power and
voltage. For example, the Company has built and delivered to Chrysler
Corporation for use in a prototype HEV two battery packs each consisting of 600
sub-C cells in a series parallel matrix of four cells by 150 cells. In addition,
the Company has successfully fabricated very thin (approximately 1/16 inch)
prismatic, or


                                       11
<PAGE>   11

flat, format TMF cells. These cells can be stacked to achieve various voltages
in an extremely compact format that is useful in products, such as small format
electronic devices, where space is at a premium.

OTHER BATTERY TECHNOLOGIES

         Rechargeable battery systems utilize a number of different
electrochemistries, the most common of which include lead acid, nickel cadmium,
nickel metal hydride and lithium ion. The performance characteristics of battery
systems are interdependent, and all battery systems involve trade-offs among
these performance characteristics and other attributes. For example, battery
systems that are designed to maximize energy density may not have good power
density. Figure 3 illustrates the relationship between energy density and power
density for existing battery systems.



                                    FIGURE 3

           [A graphic appears here plotting the power density and energy density
           characteristics of existing battery systems. The graphic illustrates
           that the Lead Acid batteries have a power density ranging from
           approximately 35-300 W/kg and an energy density of approximately 30
           Wh/kg; the Nickel Cadmium batteries have a power density ranging from
           approximately 100-200 W/kg and an energy density ranging from
           approximately 30-35 Wh/kg; the Nickel Metal Hydride batteries have a
           power density ranging from approximately 140-200 W/kg and an energy
           density of approximately 50 Wh/kg; the Lithium batteries have a power
           density of approximately 100 W/kg and an energy density of
           approximately 90 Wh/kg; and the Company's TMF batteries have a power
           density ranging from approximately 900-1100 W/kg and an energy
           density of approximately 30 Wh/kg.]



         Although there have been significant advances in the design of
rechargeable batteries over recent years, a primary focus of those efforts has
been to increase energy density. Increases in energy density allow longer
periods of use between recharges, but do not increase the sustained power that a
battery system can deliver. By contrast, the Company's TMF technology has been
engineered to optimize power density. Increases in power density allow more high
rate work to be done with a battery of a given size or weight. The following
table describes the performance characteristics of the Company's TMF battery
system as compared with four other rechargeable battery systems that are
commercially available, as well as a brief description of each technology.


                                       12
<PAGE>   12


<TABLE>
<CAPTION>

             SUMMARY COMPARISON OF RECHARGEABLE BATTERY TECHNOLOGIES

                                                      TRADITIONAL
                                          TMF          LEAD ACID         NICD            NIMH        LITHIUM ION
                                      ----------      -----------     ---------       ----------     -----------

<S>                                   <C>             <C>            <C>              <C>            <C>
Sustained Power Density (w/kg)....    900-1100(A)      35-300(B)      100-200(B)      140-200(B)        100(C)
Cell Voltage(v)...................       2.1(A)          2.0(D)         1.2(D)          1.2(D)          4.0(D)
Cycle Life(E).....................    200-1000(A)      250-500(D)     300-700(D)      300-600(D)     500-1000(D)
Fast Recharge Rate (Mins)(F)......        5(A)           60(C)           15(G)          60(G)           120(G)
High-Rate Discharge Profile
  (at 60C rate)...................      Flat(A)        Sloping(H)     Sloping(D)      Sloping(I)      Sloping(J)
Energy Density (wh/kg)............       30(A)           30(D)         30-35(D)         50(D)           90(D)
Raw Material Costs ($/wh)(K)......       $.014           $.014           $.11        Unavailable         $.18
Memory Effect.....................       No(A)           No(A)          Yes(D)          Yes(D)          No(A)


</TABLE>

---------------
         Sources: (A) Based upon experiments conducted with the Company's
current prototypes. There can be no assurance that the Company's batteries, when
manufactured in commercial quantities, will achieve these performance results,
or that other competing technologies that outperform the Company's batteries
will not be developed and successfully introduced. See the section in the
Registration Statement entitled "Risk Factors"; (B) Battery Technology Overview
by New York State Energy Research and Development Authority as published in The
Battery Man, October 1995; (C) Based upon the Company's management estimates;
(D) Handbook of Batteries and Fuel Cells, David Linden, 1989, McGraw Hill; (E)
Depends on depth and rate of discharge; (F) Require specialized chargers; (G)
J.L. Colton "Choosing the Right Chemistry," published in the proceedings of the
3rd International Conference on Power Requirements for Mobile Computing and
Wireless Communications, October 1995; (H) Portable Energy Products Application
Note 9212, December 1992; (I) E. Shariv, "Nickel Metal Hydride Batteries,"
published in the proceedings of the 2nd International Conference on Power
Requirements for Mobile Computing and Wireless Communications, January 1996; (J)
C.K. Huang, et al. paper published in the proceedings of the 11th Annual Battery
Conference on Applications and Advances, January 1996; and (K) International
Lead Zinc Research Organization, Inc., May, 1996.

         The data in the foregoing table was assembled from a variety of sources
that the Company believes to be reliable. The tests from which the data was
derived were not conducted under identical controlled conditions. However, the
Company believes that the table fairly presents the relative performance
characteristics of the rechargeable battery technologies referenced in the
table.

         Traditional Lead Acid. Traditional lead acid batteries have been in
commercial production for over a century. Traditional lead acid batteries come
in two types: flooded and valve regulated. Flooded lead acid batteries are
typically used as automobile batteries or for large standby power systems. These
batteries use a liquid electrolyte and must be stored and used upright. Valve
regulated lead acid batteries are used in security, medical and electronics
applications, and can be used in any position. Lead acid batteries are generally
the least expensive of any battery system, provide moderate energy and power
density and have a nominal voltage of two volts per cell. There is a
well-developed recycling process for lead acid batteries, and over 90 percent of
lead acid batteries (mainly car batteries) are recycled in the United States.

         Nickel Cadmium. NiCd batteries were first introduced in the 1960s, and
have enabled a wide range of portable products, including electronics and
portable power tools. NiCd batteries cost more to produce than lead acid
batteries, in part because of the high cost of nickel and cadmium. While they
deliver good energy density and moderately good power density, NiCd batteries
have relatively low cell voltage (1.2 volts) and lose capacity if they are
repeatedly partially discharged and then recharged (referred to as the memory
effect). In addition, there are growing environmental concerns regarding NiCd
batteries, including the potential for harmful release of highly toxic cadmium.
For example, regulatory agencies in the European Union have proposed limits or
bans on the use of NiCd batteries.

         Nickel Metal Hydride. NiMH batteries, first introduced in the
mid-1980s, provide significantly higher energy density than NiCd batteries. NiMH
batteries are typically used in applications that require low to moderate


                                       13
<PAGE>   13

power output and long run times, such as camcorders and laptop computers. NiMH
batteries are more expensive than NiCd batteries, and are generally less
suitable for high power applications such as power tools.

         Lithium. Both lithium ion batteries, which are now available
commercially, and lithium polymer batteries, which are in the development stage,
can provide substantially greater energy density than other available battery
systems for low rate applications, such as laptop computers. Existing lithium
systems, however, have low sustained power density and are generally unsuitable
for applications that require high power output. In addition, they are
significantly more expensive than other commercial batteries, require relatively
complex monitoring and charging circuitry and raise safety issues due to the
volatility of lithium metal.

STRATEGIC RELATIONSHIPS

         BOLDER uses strategic relationships as a means of accessing funding,
research and development, marketing and other resources and to develop specific
markets. For example, the Company has agreements with six VAPs that market and
distribute the products throughout North America and Europe and provide
value-added services. In addition, the Company has a strategic relationship with
Johnson Controls that is currently focusing on commercialization of the TMF
batteries for specific market segments. See "-- Marketing and Sales" and "-- TMF
Market Applications."

         Johnson Controls, with headquarters in Milwaukee, Wisconsin, is a
global market leader in automotive systems and building controls. Through its
Automotive Systems Group, it supplies seating systems, interior systems and
batteries to the automotive original equipment and replacement markets. The
Controls Group serves the nonresidential buildings market with control systems
and services, and integrated facility management. Founded in 1885, it operates
in more than 500 locations worldwide.

         In June 1995, the Company and Johnson Controls established a joint
venture (the "Joint Venture") to develop high volume manufacturing technology
for TMF batteries, to manufacture TMF batteries for sale by both partners and to
pursue HEV battery development opportunities for TMF batteries. In 1997, having
substantially completed its primary objective of developing the high volume
manufacturing technology, the Company and Johnson Controls announced a new
strategic partnership, which replaced the Joint Venture effective as of July
1996. Under the terms of the new strategic partnership, which was finalized in
July 1997, each party will separately implement TMF battery manufacturing
facilities to best meet the unique requirements of the markets addressed by
each.

         In connection with the agreement to discontinue the Joint Venture,
BOLDER received a cash payment from Johnson Controls, as well as all of the
tangible net assets of the Joint Venture. In return, BOLDER granted Johnson
Controls certain royalty-bearing licenses and committed to provide certain
technology transfer services. All of the licenses are royalty bearing and
certain of the licenses are subject to minimum royalties and minimum performance
criteria. BOLDER and Johnson Controls also entered into a cross supply agreement
with commitments to supply the other party with minimum quantities of TMF
battery products for several years.

         In connection with the original agreement with Johnson Controls,
Johnson Controls purchased 250,000 shares of the Company's preferred stock,
which converted into 250,000 shares of Common Stock at the time of the Company's
initial public offering in May 1996. In addition, Johnson Controls exercised
warrants to purchase an additional 308,666 shares of preferred stock in April
1996. This preferred stock also converted to Common Stock at the time of the
Company's initial public offering. Johnson Controls currently owns approximately
5.9 percent of the outstanding Common Stock of the Company.

MANUFACTURING

         Semi-automated equipment for key production processes was developed and
introduced into the Company's pilot production line nearly two years ago. The
pilot line has been capable of producing up to 200 sub-C cells per day on
semi-automated equipment. The Company has produced more than 69,000 cells. An


                                       14
<PAGE>   14

aggregate of approximately 9,000 cells have been shipped to a total of 91
customers, primarily for evaluation, with the remainder used for product and
process development purposes.

         The knowledge gained in using these semi-automated machines has been
incorporated into the new high volume production line. The qualification of the
Company's first high-volume production line is proceeding more slowly than
originally anticipated due to the late delivery and installation of equipment
and the time involved in initial debugging of the line. The Company has now
completed installation of its first manufacturing production line, completed
certain key modifications, and demonstrated the fundamental mechanical
functionality of the entire line. The Company is continuing the debug and
validation of the production line. Additional modifications will likely be
required to fully realize the designed production capacity of this line. BOLDER
expects to complete the production readiness of the line and begin generating
commercial revenues during 1998.

         The Company is currently producing sub-C cells using the Paste, Wind,
Cast-On, and Assembly stations in the pilot production line (see process
description below), and the Fill, Formation, and Test stations from the high
volume line. Once the front-end (Paste, Wind, Cast-On, and Assembly segments) of
the high volume line is fully qualified and operational, production will shift
entirely to the high volume line.

         A flowchart of the manufacturing process for the spiral wound TMF
battery is shown below.



           [A flowchart appears here summarizing the manufacturing process of
           the Company's spiral wound TMF battery. The flowchart illustrates
           that lead oxide paste is applied to thin lead foil to form the
           positive and negative plates of the cell, the separator is placed
           between the plates, the plates are then wound together, the molten
           lead end connectors are formed on each end of the cell, the cell is
           assembled into a plastic case and filled with electrolyte, and the
           cell is then formed into a sub-C cell.]



                                       15
<PAGE>   15


         The manufacturing process starts with the application of active
material (lead oxide paste) to very thin lead foil to form the positive and
negative plates of the cell. The plates, separated by a thin fiberglass
separator, are wound together using a process similar to that used to wind
capacitors. Each end of the wound cell is immersed in molten lead, which forms
the positive and negative end connectors of the cell. The cell is assembled into
a plastic case and filled with liquid electrolyte. The cell undergoes a process
known as "formation," whereby a proprietary sequence of charges, discharges, and
rests are used to electrochemically make the negative and positive plates
functional. The completed cell is tested to verify that it meets the Company'
specifications.

         The Company is committed to improving process efficiency, enhancing
product quality and performance and reducing manufacturing costs through the use
of advanced process controls and analytical tools. The Company uses
sophisticated process controls to capture multiple data points throughout the
manufacturing process which it uses to evaluate, control and improve the
manufacturing process in real time, to optimize and improve product performance
and to reduce product cost. In addition, the Company employs an extensive
validation program that measures performance criteria critical to customer
applications. Certain elements of the manufacturing process are proprietary to
the Company, and the Company owns the designs to certain equipment used in the
process.


         The principal raw materials used to produce TMF batteries are lead foil
and lead oxide. While these materials are available from multiple sources, the
TMF manufacturing process requires levels of consistency and purity in excess of
those required for many other applications. The Company has developed a vendor
qualification and partnering program and an incoming material inspection system
to evaluate the quality of raw materials.

MARKETING AND SALES

         In order to optimize margins, the Company is initially targeting sales
to customers with applications that benefit from the very high power density of
TMF batteries. These applications include emergency jump-starting starting
systems, standby power systems, professional photography equipment, small and
portable generator starting, and other small engine starting. The Company is
working with a limited number of OEMs in these targeted market segments. The
Company's OEM "customer partners" have helped to develop the specifications of
the Company's initial products by providing input early in the development
process and by testing the Company's products. Some of these customer partners
are developing products based on TMF batteries. In addition, the Company has
engaged in a customer funded custom product development program targeted at the
electronics market. There can be no assurance, however, that this program will
result in a commercial product.

         The Company has a direct sales team that supports the Company's OEM
customers as well as the VAP network. The Company has signed exclusive
distribution agreements with the following VAPs for the following territories:
<TABLE>
<CAPTION>

           VALUE ADDED PARTNERS                        TERRITORIES
           --------------------                        ------------
           <S>                                         <C>
           AVT, Inc.                                   Colorado, Wyoming, Utah, Nevada, Idaho, Montana,
                                                       South Dakota, North Dakota, Nebraska and Kansas
           Engineered Assemblies Corp.                 All states east of the Mississippi
           EXCELL Battery Company                      Canada
           House of Batteries                          California, Arizona and New Mexico
           Southwest Electronic Energy Corp.           Texas, Oklahoma, Arizona and Louisiana
           DMS Technologies                            Europe

</TABLE>

                                       16
<PAGE>   16

         VAPs typically provide value added services such as cell testing,
matching and pack assembly, assembly of the battery pack into a custom housing,
and packaging with an appropriate charger for OEM battery users, as well as
marketing and distribution of the Company's products throughout most of North
America and Europe. The VAP agreements are subject to minimum performance
criteria and standard termination provisions. VAPs may sell competitive
products. In each of the VAP agreements, the Company has reserved the right to
deal with any OEM in North America and Europe directly and expects to service
larger OEMs through its direct sales force, rather than through the VAPs.

RESEARCH AND DEVELOPMENT

         The Company is directing its research and development efforts toward
continuously improving the sub-C cell and the manufacturing process. The Company
believes that the current product is acceptable for certain applications and
that additional improvements to the sub-C cell will increase the potential
number of applications for that product. The Company has a record of continuous
and substantial improvement in the performance of its sub-C cell. These ongoing
improvements are designed to continuously address the expanding market. The
Company has produced prototype products that the Company believes have
performance characteristics that make its sub-C cell attractive for a broad
range of current and future applications. Limited quantities of these products
have been produced in the Company's pilot production line; however, the Company
has not manufactured its batteries in commercial quantities. In addition, to
achieve broad commercialization of its product the Company will need to reduce
manufacturing costs. There can be no assurance that efforts to reduce costs and
improve yields will be successful so that a product with broad commercial
applicability will result.

         The Company has developed and tested prototypes of various form
factors, including larger and smaller spiral wound cells and very thin
(1/16-inch) prismatic, or flat, batteries. While the Company believes that each
of these products may have significant market opportunities, there can be no
assurance that any of these programs will result in a commercial product. In
addition, the Company is engaged in internal research programs to develop
charging procedures and chargers for its batteries and is working with battery
charger suppliers to address the availability of chargers for its batteries.

         The Company has an SBIR research and development agreement valued at up
to $750,000 to develop a large (5 Ah) cell and associated manufacturing process
technology for HEV applications. The Company previously completed a feasibility
study for the program for which it received $100,000.

PATENTS, TRADE SECRETS AND TRADEMARKS

         The Company holds five issued United States patents that expire
beginning in 2009 and ending in 2015. The Company's issued patents cover a
number of inventions including thin non-perforated plates used in lead acid
batteries, and an end connector for establishing electrical continuity between
thin plates and a battery terminal. In addition, the Company has five United
States applications pending and a number of foreign patents pending. Patent
applications in the United States are maintained in secrecy until patents issue,
and since publication of discoveries in the scientific or patent literature
tends to lag behind actual discoveries, the Company cannot be certain that it
was the first creator of inventions covered by pending patent applications or
the first to file patent applications on such inventions. There can be no
assurance that the Company's pending patent applications will result in issued
patents or that any of its issued patents will afford meaningful protection
against a competitor. In addition, patent applications filed in foreign
countries are subject to laws, rules and procedures that differ from those of
the United States, and thus there can be no assurance that foreign patent
applications related to issued United States patents will issue. Furthermore, if
these patent applications issue, some foreign countries provide significantly
less patent protection than the United States.

         The status of patents involves complex legal and factual questions and
the breadth of claims issued is uncertain. Accordingly, there can be no
assurance that patent applications filed by the Company will result in patents
being issued or that its patents, and any patents that may be issued to it in
the future, will afford protection against competitors with similar technology.
In addition, no assurances can be given that others will not infringe or design
around patents issued to the Company or that the Company would need to license
or design around


                                       17
<PAGE>   17

patents that others will obtain. If existing or future patents containing broad
claims are upheld by the courts, the holders of such patents could require
companies to obtain licenses. If the Company is found to be infringing
third-party patents, there can be no assurance that licenses that might be
required for the Company's products would be available on reasonable terms, if
at all.

         The Company could incur substantial costs in defending itself or its
licensees, distributors or customers in litigation brought by others or
prosecuting infringement claims against third parties. If the outcome of any
such litigation is unfavorable to the Company, the Company's business could be
adversely affected. To determine the priority of inventions, the Company may
have to participate in interference proceedings declared by the United States
Patent Office or comparable proceedings in foreign patent offices, which could
result in substantial cost to the Company and may result in an adverse decision
as to the priority of the Company's inventions.

         In addition to patent protection, the Company relies on the law of
unfair competition and trade secrets to protect its proprietary rights. The
Company considers several elements of the TMF manufacturing process to be trade
secrets. The Company attempts to protect its trade secrets and other proprietary
information through agreements with customers and suppliers, proprietary
information agreements with employees and consultants and other security
measures. Although the Company intends to protect its rights vigorously, there
can be no assurance that these measures will be successful. See the section in
the Registration Statement entitled "Risk Factors -- Patents and Proprietary
Rights."

         The Company has registered its trademark "BOLDER" and its trademark
"TMF" as trademarks on the principal federal trademark register.

COMPETITION

         Competition in the battery industry is, and is expected to remain,
intense. The competitors range from development stage companies to major
domestic and international companies. Many of these companies have financial,
technical, marketing, sales, manufacturing, distribution, and other resources
significantly greater than those of the Company. In addition, many of these
companies have name recognition, established positions in the market, and long
standing relationships with OEMs and other customers. While there is significant
development work being done by these competitors on various battery systems
(including electrochemistries such as NiCd, NiMH and lithium), the Company
believes that much of this effort is focused on achieving higher energy
densities for low power applications such as portable electronics. The Company
is aware that Electrosource, Inc., a development stage company, has produced
batteries with higher sustained power density than traditional lead acid
batteries. The sustained power density of the Company's TMF batteries is
substantially higher than the published specifications of Electrosource, Inc.
There can be no assurance that one or more new, higher power battery
technologies will not be introduced which could be directly competitive with or
superior to the Company's TMF technology.

         The Company believes that its primary competitors are existing
suppliers of NiCd and lead acid batteries. In applications such as portable
tools and appliances, and certain electronic and medical products, the Company's
primary competitors will be suppliers of NiCd batteries, including SANYO,
Panasonic, Energizer and SAFT. All of these companies are very large and have
substantial resources and market presence. The Company expects that it will
compete against NiCd batteries in the targeted application segments on the basis
of performance, cost and ease of recycling. There can be no assurance that the
Company will be able to compete successfully against NiCd batteries in any of
the targeted applications.

         In applications such as car starting, standby power, very small
batteries for engine starting, and a few medical and electronics applications,
the Company expects that its primary competition will be from lead acid
batteries. The primary suppliers of small lead acid batteries used in
non-automotive applications are Yuasa, Exide Corporation, Matsushita, Hawker,
CSB Battery of America Corp., and GS Battery. The primary suppliers of
automotive batteries are Johnson Controls, Inc., Exide Corporation, GNB Inc. and
Delphi. All of these companies are very large and have substantial resources and
market presence. The Company expects that it will compete with


                                       18
<PAGE>   18

lead acid batteries on the basis of performance in the targeted application
segments. In addition, under the terms of its new strategic partnership with
Johnson Controls, the Company has granted Johnson Controls certain royalty
bearing license rights which will allow Johnson Controls to compete with the
Company in the lawn and garden starting, motorcycle starting, HEV, standby power
markets and emergency jump-starting markets. There can be no assurance that the
Company will be able to compete successfully against traditional lead acid
batteries in any of the targeted applications.

         The market for batteries, and the evolution of battery technology, is
very dynamic. Other companies are devoting significant resources to improving
existing battery technologies and developing new battery technologies. There can
be no assurance that the Company's products will be able to compete effectively
in any of its targeted market segments. See the section in the Registration
Statement entitled "Competition."

SAFETY AND ENVIRONMENTAL ISSUES

         The Company's operations involve the storage, use and disposal of a
number of toxic and hazardous materials, including lead, lead oxide, sulfuric
acid, solvents and adhesives. As a result, the Company is required to maintain
its research and manufacturing operations in compliance with United States
federal, state, and local standards that govern the storage, use, and disposal
of various chemicals used in and waste materials produced by the manufacture of
its TMF batteries. The Company's new manufacturing facility includes an enclosed
area specifically for the mixing of lead oxide paste, the pasting of the lead
foil and the winding of the cells. Employees operating in these areas are
instructed in the use of safety equipment such as gloves, protective clothing,
and respirators and are required under OSHA guidelines to submit to blood
monitoring tests on a periodic basis. The supervision and analysis of these
tests are undertaken by an outside, independent agency and the results thereof
are communicated to the Company's employees. The Company's activities are also
subject to federal, state and local environmental and safety laws and
regulations, including but not limited to CERCLA, regulations issued and laws
enforced by the Colorado Labor and Employment Department, the U.S. Department of
Transportation, the U.S. Department of Commerce, the U.S. Environmental
Protection Agency and by state and county health and safety agencies. United
States and foreign agencies are considering more stringent regulation of the
disposal of all rechargeable batteries. Although the Company believes that its
activities conform to current environmental and other regulations, there can be
no assurance that the Company will be able to operate in conformity with such
laws and regulations in the future, or that changes in such laws or regulations
will not require the Company to incur substantial capital or operating costs to
achieve and maintain compliance. Any failure by the Company to adequately
control the discharge of its hazardous materials and wastes could also subject
it to future liabilities, which could be significant. See the section in the
Registration Statement entitled "Safety and Environmental Issues."

         Lead acid batteries, regardless of their configuration, are generally
considered to be safer than NiCd and lithium batteries. However, lead acid
batteries, including the Company's TMF battery, may develop significant internal
pressures during severe overcharge conditions due to the release of gases as a
byproduct of the chemical reaction occurring in the cell. In order to prevent
potential pressure build up, the Company's batteries incorporate a Bunsen
pressure relief valve that, under normal overcharge conditions, will allow the
venting of small amounts of gases, primarily hydrogen and oxygen. If the
batteries are subjected to abusive overcharge or overdischarge conditions,
larger amounts of these gases may be vented, which, when mixed with air, can
cause explosions. In addition, under such conditions, toxic gases and/or
sulfuric acid spray may be released. Sulfuric acid can cause burns. While the
Company maintains product liability insurance in amounts which it believes are
reasonable given the associated risks, there is no assurance that such insurance
will be adequate to cover any potential liability relating to one or more claims
of product liability. The Company has tested its batteries under a variety of
conditions and plans to continue to test its products for safety

HUMAN RESOURCES

         As of February 28, 1998, the Company had 105 full-time equivalent
employees. Of the total, 13 employees were engaged in product research and
development, 76 in operations, and 16 in general and administrative and
marketing functions. The Company's success will depend in large part on its
ability to attract



                                       19
<PAGE>   19

and retain skilled and experienced employees. None of the Company's employees
are covered by a collective bargaining agreement, and the Company considers its
relations with its employees to be good.



ITEM 2.  PROPERTIES

         In May 1997, the Company relocated to a 150,000 square foot leased
facility in Golden, Colorado (approximately 15 miles northwest of Denver) that
was built-to-suit for the Company. The Company has an eleven-year lease for the
facility with two five-year renewal options for 120,000 square feet with an
option on the remaining 30,000 square feet. This facility includes all of the
Company's offices and laboratories as well as the Company's first high volume
production line, which has been installed and is currently in the process of
debugging, testing and validation. The facility is designed to accommodate up to
five high volume production lines and two development lines.



ITEM 3.  LEGAL PROCEEDINGS

         The Company has been named in a personal injury action filed in
Superior Court in the County of Los Angeles on March 28, 1996 arising out of a
motor vehicle accident. Management believes that the resolution of this claim
will not have a material adverse effect on the Company's business, results of
operations and financial condition. The Company is not a party to any other
legal proceedings.



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During the fourth quarter of 1997, an aggregate of 280,000 out of
336,200 shares of the Series A Convertible Preferred Stock approved by written
consent an amendment to the Certificate of Designation to delay the initial
dividend payment beyond December 31, 1997. The dividend payment was made on
March 13, 1998 by issuing 77,985 shares of BOLDER Common Stock.


                                       20
<PAGE>   20



                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS.

 MARKET INFORMATION

         The Company's Common Stock, par value $.001 per share, (Nasdaq Stock
Market (National Market) Symbol "BOLD") began trading publicly in the
over-the-counter market effective May 1, 1996. Prior to that date, there was no
public market for the Company's Common Stock. The following table presents
quarterly information on the price range of the Company's Common Stock. This
information indicates the high and low sale prices reported by the Nasdaq Stock
Market (National Market).

<TABLE>
<CAPTION>

                  1996                                                  HIGH                  LOW
                  ----                                                  ----                 ----
           <S>                                                         <C>               <C>
           Second Quarter (from May 1)..............................   $15.38            $   10.50
           Third Quarter............................................   $14.38            $   10.75
           Fourth Quarter...........................................   $17.13            $   13.13


                  1997                                                  HIGH                  LOW
                  ----                                                  ----                  ---
           First Quarter ...........................................   $17.25            $   13.25
           Second Quarter...........................................   $14.25            $   11.00
           Third Quarter............................................   $15.50            $   12.13
           Fourth Quarter...........................................   $14.00            $    8.50
</TABLE>


HOLDERS

         As of February 28, 1998, there were approximately 165 holders of record
of the Common Stock.

DIVIDENDS

         The Company has not paid any dividends on its Common Stock since its
inception and does not intend to pay any dividends on its Common Stock in the
foreseeable future.



                                       21
<PAGE>   21



ITEM 6. SELECTED FINANCIAL DATA

         The selected financial data set forth below with respect to the
Company's statements of operations for the years ended December 31, 1997, 1996,
1995, 1994 and 1993, and balance sheets as of December 31, 1997, 1996, 1995,
1994 and 1993 are derived from audited financial statements of the Company. Such
financial statements were audited by Arthur Andersen LLP, independent public
accountants, whose report with respect to the years ended December 31, 1997,
1996 and 1995 and as of December 31, 1997 and 1996 appears elsewhere herein. The
data set forth below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the Financial
Statements and the Notes related thereto included elsewhere in this document.

<TABLE>
<CAPTION>

                                                                           YEARS ENDED DECEMBER 31,
                                              -----------------------------------------------------------------------------

                                                  1997            1996               1995            1994            1993
                                                  ----            ----               ----            ----            ----
STATEMENTS OF OPERATIONS DATA:
Revenues
<S>                                           <C>               <C>             <C>                <C>           <C>
 Product sales ...........................    $    84,716       $   35,580      $    39,006        $  9,379      $     --

 Research and development services .......      2,446,377          440,324           66,667          33,333            --
                                              -----------      -----------      -----------     -----------     -----------
       Total revenues ....................      2,551,093          475,904          105,673          42,712            --

Cost of revenues..........................        707,606          171,486           49,647          20,954            --
                                              -----------      -----------      -----------     -----------     -----------

                                                1,843,487          304,418           56,026          21,758            --
                                              -----------      -----------      -----------     -----------     -----------

Operating expenses:
  Research and development................      6,743,534        2,863,552        2,479.428       2,212,977       1,377,999
  General and administrative..............      3,697,061        2,132,565          808,724       1,124,101         671,110
  Selling and marketing                           357,716          212,960          163,771           --              --
                                              -----------      -----------      -----------     -----------     -----------
       Total operating expenses...........     10,798,311        5,209,077        3,451,923       3,337,078       2,049,109
                                              -----------      -----------      -----------     -----------     -----------
Income (loss) from operations.............     (8,954,824)      (4,904,659)      (3,395,897)     (3,315,320)     (2,049,109)

Other income (expense):
  Interest income ........................        839,025          798,846          126,546          31,188          54,824
  Interest expense........................       (633,625)         (54,277)         (72,633)        (32,092)         (5,546)
                                              -----------      -----------      -----------     -----------     -----------
Net income (loss).........................    $(8,749,424)     $(4,160,090)     $(3,341,984)    $(3,316,224)    $(1,999,831)
                                              ===========      ===========      ===========     ===========     ===========

Basic net loss per share (1) .............    $     (0.97)     $     (0.64)     $     (3.07)    $     (3.74)    $     (2.66)
                                              ===========      ===========      ===========     ===========     ===========

Shares used in computing
 basic net loss per share (1) ............      9,446,930        6,465,281        1,087,554         886,367         751,438
                                              ===========      ===========      ===========     ===========     ===========

Unaudited, pro forma basic
 net loss per share (1) ..................                     $      (.49)
                                                               ===========
Shares used in computing unaudited,
 pro forma basic net loss per share (1) ..                       8,437,817
                                                               ===========
</TABLE>

<TABLE>
<CAPTION>

                                                                           DECEMBER 31,
                                         -------------------------------------------------------------------------------
                                             1997           1996            1995            1994             1993
                                         -------------- -------------- --------------- ---------------- ----------------
<S>                                       <C>             <C>           <C>             <C>            <C>
    BALANCE SHEET DATA:
    Cash, cash equivalents and
      Available-for-sale securities....   $ 20,394,777    $16,070,677   $ 2,799,697     $   881,609    $    1,146,038
    Working capital ...................     15,016,605     12,403,356     2,532,911         568,959         1,002,473
    Total assets ......................     41,275,589     27,146,116     4,748,347       2,308,606         1,735,987
    Notes and capital leases
    payable ...........................      6,404,903        486,537       558,687         288,495             --
    Mandatorily Redeemable
    Preferred Stock(2).................          --            --        13,433,482       7,893,900         4,391,004
    Convertible, Redeemable Preferred
      Stock ...........................     16,205,046         --            --                --               --
    Total stockholders' equity
      (deficit) .......................     30,286,815     23,070,901    (9,538,565)     (6,134,888)       (2,830,949)
</TABLE>

-----------------
(1) See Note 2 of Notes to Financial Statements for information concerning the
    computation of basic net loss per share and pro forma basic net loss per
    share.
(2) Each share of the Company's Mandatorily Redeemable Preferred Stock
    automatically converted into one share of the Common Stock on May 6, 1996
    upon the closing of the Company's initial public offering.


                                       22
<PAGE>   22



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the section entitled
"Business," as well as those discussed in this section and in the section
entitled "Risk Factors" in the Company's Registration Statement on Form S-3
filed on December 5, 1997, as amended through February 19, 1998 (the
"Registration Statement").

GENERAL

         Since its inception in March 1991, BOLDER Technologies Corporation (the
"Company") has been a development stage company, principally engaged in the
research and development of its Thin Metal Film ("TMF(R)") battery technology,
and has devoted significant resources to the development of its technology and
processes to manufacture its TMF batteries. To date, the Company has produced
more than 69,000 prototype TMF batteries. An aggregate of approximately 9,000
cells has been shipped to a total of 91 customers, primarily for evaluation. In
May 1997, the Company moved to a new leased manufacturing facility and corporate
headquarters in Golden, Colorado. This facility has been designed to accommodate
five production lines and two research and development lines, as well as all of
the Company's other operations. The Company contracted with Wright Industries to
manufacture the first line, which will produce sub-C cells. The qualification of
the Company's first high-volume production line is proceeding more slowly than
originally anticipated due to the late delivery and installation of equipment
and the time involved in initial debugging of the line. The Company has now
completed installation of its first manufacturing production line, completed
certain key modifications, and demonstrated the fundamental mechanical
functionality of the entire line. The Company is continuing the debug and
validation of the production line. Additional modifications will likely be
required to fully realize the designed production capacity of this line. BOLDER
expects to complete the production readiness of the line and begin generating
commercial revenues during 1998. The Company expects to generate revenues
primarily from the sale of its TMF batteries.

         In June 1995, the Company and Johnson Controls established a joint
venture (the "Joint Venture") to develop high volume manufacturing technology
for TMF batteries, to manufacture TMF batteries for sale by both partners and to
pursue HEV battery development opportunities for TMF batteries. In 1997, having
substantially completed its primary objective of developing the high volume
manufacturing technology, the Company and Johnson Controls announced a new
strategic partnership, which replaced the Joint Venture effective as of July
1996. Under the terms of the new strategic partnership, which was finalized in
July 1997, each party will separately implement TMF battery manufacturing
facilities to best meet the unique requirements of the markets addressed by
each.

         In connection with the agreement to discontinue the Joint Venture,
BOLDER received a cash payment from Johnson Controls, as well as all of the
tangible net assets of the Joint Venture. In return, BOLDER granted Johnson
Controls certain royalty-bearing licenses and committed to provide certain
technology transfer services. All of the licenses are royalty bearing and
certain of the licenses are subject to minimum royalties and minimum performance
criteria. BOLDER and Johnson Controls also entered into a cross supply agreement
with commitments to supply the other party with minimum quantities of TMF
battery products for several years.

         The Company believes that its results of operations to date may not be
indicative of results in future periods. Future operating results may be
affected by a wide range of factors and may fluctuate significantly from period
to period.


                                       23
<PAGE>   23



RESULTS OF OPERATIONS

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

         During 1997, the Company received revenues from services provided under
a technology transfer agreement with Johnson Controls, from a Small Business
Innovation Research ("SBIR") research and development agreement, from a
customer-funded development program and from the sale of batteries for testing
and evaluation by customers. Research and development revenues ("services
revenues") increased to $2,446,377 in 1997 from $440,324 in 1996. Approximately
75 percent of the 1997 services revenues resulted from the technology transfer
agreement with Johnson Controls, which agreement did not exist in 1996. The
remaining 25 percent of services revenues in 1997 and all of the 1996 services
revenues resulted from a combination of both private customer-funded and the
SBIR product development programs. Product sales revenues increased to $84,716
in 1997 from $35,580 in 1996 and are expected to remain at nominal levels until
the beginning of high-volume production in 1998.

         Cost of revenues increased to $707,606 in 1997 from $171,486 in 1996.
The increase was a result of increased costs directly related to commercial and
government funded product development programs.

         Research and development expenses increased to $6,743,534 in 1997 from
$2,863,552 in 1996, primarily due to additional technical staff and associated
expenses and new manufacturing facility expenses related to the Company's
increased efforts to commercialize its sub-C cell and prepare to implement
high-volume manufacturing.

         General and administrative expenses increased to $3,697,061 in 1997
from $2,132,565 in 1996. The increase was due to additional administrative
staffing and added expenses for insurance, legal and investor relations. Also,
included in the 1997 expenses were $210,000 of costs (printing, legal and
accounting) associated with the registration statement filed in February 1997
and withdrawn in May 1997.

         Selling and marketing expenses increased to $357,716 in 1997 from
$212,960 in 1996. The increase was primarily due to increased marketing and
business development activities related to the Company efforts to obtain new
customers for future delivery of product.

         Interest income increased to $839,025 in 1997 from $798,846 in 1996.
The increase resulted primarily from slightly higher average cash balances
invested during 1997 than in 1996.

         Interest expense increased to $633,625 in 1997 from $54,277 in 1996.
The increase resulted primarily from increased levels of lease and debt
financing in 1997.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

         During 1996, the Company received revenues from a customer-funded
development program, from the sale of batteries for testing and evaluation by
customers, and from an SBIR research and development agreement. Total revenues
increased to $475,904 in 1996 from $105,673 in 1995, primarily from a
customer-funded product development program. Product sales in 1996 and 1995 were
nominal and are expected to remain at nominal levels until the beginning of
high-volume production.

         Cost of revenues increased to $171,486 in 1996 from $49,647 in 1995.
The increase was a result of increased costs directly related to commercial and
government funded product development programs.

         Research and development expenses increased to $2,863,552 in 1996 from
$2,479,428 in 1995, primarily due to the Company's increased efforts to
commercialize its sub-C cell and develop its manufacturing process.


                                       24
<PAGE>   24

         General and administrative expenses increased to $2,132,565 in 1996
from $808,724 in 1995. The increase was due to additional administrative
staffing and added expenses for insurance, legal and investor relations
associated with becoming a public company.

         Selling and marketing expenses increased to $212,960 in 1996 from
$163,771 in 1995. The increase was primarily due to increased marketing and
business development activities related to the Company's efforts to heighten
customer interest as the Company increased efforts to commercialize its sub-C
cell.

         Interest income increased to $798,846 in 1996 from $126,546 in 1995.
The increase resulted primarily from investment of the net proceeds from the
Company's initial public offering and from the exercise of warrants by
stockholders in April 1996.

         Interest expense decreased to $54,277 in 1996 from $72,633 in 1995. The
decrease resulted primarily from the absence of debt service in 1996 on
convertible promissory notes issued to certain stockholders in March 1995, which
were converted into Common Stock in May 1995.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

         During 1995, the Company received revenues from the sale of batteries
for testing and evaluation by customers and from an SBIR research and
development agreement. Total revenues in 1995 increased to $105,673 from $42,712
in 1994. This improvement was primarily due to higher 1995 revenues from
completion of an SBIR research and development agreement that begin in 1994 and
from sales of two experimental battery packs for HEV research to Chrysler
Corporation.

         Cost of revenues increased to $49,647 in 1995 from $20,954 in 1994,
primarily due to the cost of the HEV battery packs sold in 1995.

         Research and development costs increased to $2,479,428 in 1995 from
$2,212,977 in 1994, primarily as a result of the Company's continued efforts to
commercialize its sub-C cell and develop its manufacturing process. General and
administrative expenses decreased to $808,724 in 1995 from $1,124,101 in 1994,
primarily due to lower expenses in 1995 for recruitment and relocation of
employees. Selling and marketing expenses were $163,771 in 1995, primarily
consisting of costs associated with business development activities.

         Interest income increased to $126,546 in 1995 from $31,188 in 1994,
primarily as a result of income generated from the investment of the proceeds
from the Company's issuance of Series D and Series E Preferred Stock in April
and June 1995, respectively.

         Interest expense increased to $72,633 in 1995 from $32,092 in 1994,
primarily due to debt service on loans obtained in 1995 that were secured by a
portion of the Company's fixed assets.

LIQUIDITY AND CAPITAL RESOURCES

         From its inception through December 31, 1997, the Company has financed
its operations and met its capital requirements primarily through private and
public offerings of its equity securities, raising net proceeds of $52.5 million
from sales of these securities. At December 31, 1997, the Company's balances of
cash, cash equivalents, and available-for-sale securities totaled $20.4 million,
compared to $16.1 million at December 31, 1996. In May 1996, the Company
received approximately $20.9 million in net proceeds from the sale of 2.2
million shares of Common Stock. In April 1996, several stockholders exercised
warrants issuable for an aggregate of 620,462 shares of Common Stock. The net
proceeds to the Company from exercise of the warrants were approximately $2.2
million. In October 1997, the Company received approximately $15.8 million in
net proceeds from the private placement of 336,200 shares of Series A
Convertible Preferred Stock.

         On February 13, 1997, the Company filed a Registration Statement on
Form SB-2 to register for sale 2.6 million shares of Common Stock. This
Registration Statement was withdrawn in May 1997. On December 5, 1997,


                                       25
<PAGE>   25


the Company filed a Registration Statement on Form S-3 to register for sale the
Series A Convertible Preferred Stock issued in October 1997, the underlying
Common Stock to be issued upon conversion of the Series A Convertible Preferred
Stock and the Common Stock to be issued in payment of semiannual dividends on
the Series A Convertible Preferred Stock. The first dividend payment was made on
March 13, 1998, resulting in the issuance of 77,985 shares of BOLDER Common
Stock.

         During 1997, the Company established an equipment financing credit line
with Transamerica Business Credit Corporation ("TBCC") to provide financing for
the Company's first high volume manufacturing line and for tenant improvements
in the new leased facility. At December 31, 1997, the unused portion of the
credit line available to the Company was approximately $5.2 million. In
addition, TBCC was granted a "right of first refusal" with respect to the next
$15 million of equipment financing by the Company.

         As of December 31, 1997, the Company had made progress payments of
$10.9 million to fund the construction of its first high-volume production line
and had a liability for additional payments of $746,000, based upon specific
vendor performance. At December 31, 1997, the Company had financed $2.8 million
of these production line obligations through its credit line with TBCC. The
Company also completed the construction of certain leasehold improvements in its
new facility during 1997. The cost of these leasehold improvements totaled $5.2
million, of which approximately $4.3 million was financed with notes payable to
TBCC. The Company has entered into an 11-year lease agreement for this facility.
The Company also invested approximately $2.2 million in 1997 in other machinery,
equipment, and office furnishings to support its development, production, sales,
and administrative activities.

         Except as noted above, the Company currently has no other significant
capital commitments other than its commitments under notes payable. The Company
believes that its existing sources of liquidity and projected cash generated
from operations will satisfy the Company's capital requirements for at least the
next 12 months. To provide funds for future production capacity expansion, the
Company will need to access additional sources of equity capital or debt. If
these financing sources are not available, the Company would likely delay the
ramp-up of its second and subsequent fully-automated production lines. There can
be no assurance that the Company will generate revenues and operating income
sufficient to satisfy its working capital and equipment expenditure needs in the
future. In addition, the Company is unable to predict the precise amount of
future capital that it may require, and there can be no assurance that any
additional financing will be available to the Company if that need arises or
that financing will be in a form or on terms acceptable to the Company. The
inability to generate revenues and operating income or obtain required financing
on acceptable terms would have a material adverse effect on the Company's
business, financial condition, and results of operations. Consequently, the
Company could be required to significantly reduce or suspend its operations,
seek a merger partner or sell additional securities on terms that could be
dilutive to the Company's stockholders.

INCOME TAXES

         Net operating loss carry-forwards totaling approximately $20.8 million
are available to reduce taxable income as of December 31, 1997. The net
operating loss ("NOL") carry-forwards expire from 2005 through 2012. The Company
has not paid income taxes since its inception. The Tax Reform Act of 1986 and
other income tax regulations contain provisions which may limit the net
operating loss carryforwards available to be used in any given year, if certain
events occur, including significant changes in ownership interests. A change of
ownership of a company greater than 50 percent within a three-year period
results in an annual limitation on the Company's ability to utilize its NOL
carryforwards from tax periods prior to the ownership change. The private
placement sale of Series A Convertible, Redeemable Preferred Stock in October
1997 resulted in such a change of ownership and the Company estimates that the
resulting NOL carryforward limitation will be approximately $6.8 million per
year for periods subsequent to October, 1997. The Company does not believe that
this limitation will affect the eventual utilization of its total NOL
carryforwards. The Company has established a valuation allowance for the entire
amount of its deferred tax asset since inception due to its history of operating
losses.


                                       26

<PAGE>   26

YEAR 2000

         The Company has conducted a preliminary review of its software systems
in both the technical and manufacturing functions and in general and
administrative support areas to determine the potential impact, if any, of the
Year 2000 problem. The Company expects to complete its review during the first
half of 1998. Based on such preliminary review, the Company believes that any
Year 2000 problems would be minor in nature and would not have a material
adverse impact on the Company's operations or financial position.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not applicable.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements and supplementary data of the Company are
provided at the pages indicated in Item 14(a).


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

         There has not been any change of accountants or any disagreements with
the Company's accountants on any matter of accounting practice or financial
disclosure during the reporting periods.




                                       27
<PAGE>   27



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information with respect to executive officers and directors of the
Company appearing in the Proxy Statement under the captions "Election of Class
II Directors," "Executive Officers and Key Employees" and "Section 16(a)
Beneficial Ownership Reporting Compliance" is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information with respect to executive compensation appearing in the
Proxy Statement under the caption "Executive Compensation" is incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is incorporated herein by
reference to the information in the Proxy Statement labeled "Security Ownership
of Certain Beneficial Owners and Management."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item is incorporated herein by
reference to the section in the Proxy Statement labeled "Certain Transactions."



                                       28
<PAGE>   28



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

a)  FINANCIAL STATEMENTS

      The financial statements required by this item are submitted in a separate
section beginning on Page F-1 of this report.

     FINANCIAL STATEMENTS OF BOLDER TECHNOLOGIES CORPORATION
<TABLE>

<S>                                                                                                         <C>
      Report of Independent Public Accountants........................................................    F-1
      Balance Sheets as of December 31, 1997 and 1996.................................................    F-2
      Statements of Operations for the three years ended December 31, 1997,
        1996, and 1995; and the period from inception
        (March 22, 1991) to December 31, 1997.........................................................    F-4
      Statements of Stockholders' Equity (Deficit) from inception
        (March 22, 1991) to December 31, 1997.........................................................    F-5
      Statements of Cash Flows for the years ended December 31,
        1997, 1996, 1995; and the period from inception (March 22,
        1991) to December 31, 1997....................................................................    F-10
       Notes to Financial Statements..................................................................    F-12
</TABLE>

b)  REPORTS ON FORM 8-K

    During the last quarter of its fiscal year ended December 31, 1997, the
Company filed no Report on Form 8-K.

c)    EXHIBITS

     The following management contracts are required to be filed as exhibits to
this Annual Report on Form 10-K pursuant to this item 14(c):

     (i) Employment Agreement between the Company and Daniel S. Lankford, dated
         July 11, 1994.
    (ii) Employment Agreement between the Company and Joseph F. Fojtasek, dated
         February 13, 1996.
   (iii) Employment Agreement between the Company and Arthur S. Homa, dated
         September 19, 1997.

<TABLE>
<CAPTION>

     EXHIBIT
     NUMBER                                               DESCRIPTION
     ------                                               ------------

     <S>               <C>          <C>
      3(i).1*          --           Amended and Restated Certificate of Incorporation of
                                    the Company.
     3(ii).1*          --           Amended and Restated Bylaws of the Company.
         4.1*          --           Reference is made to Exhibits 3(i).1 and 3(ii).1.
         4.2*          --           Specimen stock certificate.
         4.3+          --           Certificate of Designation of the Series A Preferred Stock.
         4.4+          --           Specimen stock certificate representing shares of Series A
                                    Preferred Stock.
         4.5+          --           Amendment to the Certificate of Designation of the Series A
                                    Preferred Stock.
         4.6+          --           Certificate of Designation of the Series B Junior Participating
                                    Preferred Stock (incorporated by reference to Exhibit 99.3 of
                                    The Registrant's Report on Form 8-K filed January 23, 1998).
         4.7+          --           Amendment to the Amended and Restated Bylaws of the
                                    Registrant.
         4.8+          --           Rights Agreement dated as of January 1998 among the
                                    Registrant and American Stock Transfer & Trust Company
                                    (incorporated by reference to Exhibit 99.2 of the Registrant's
                                    Report on Form 8-K filed January 23, 1998).
         4.9+          --           Form of Rights Certificate (incorporated by reference to
                                    Exhibit 99.4 of the Registrant's Report on Form 8-K filed
                                    January 23, 1998).
        10.1*          --           Form of Indemnity Agreement between the Company and
                                    each of its Directors and executive officers, with
                                    Related schedule.
        10.2*          --           1996 Equity Incentive Plan of the Company (the "Option

</TABLE>


                                       29
<PAGE>   29

<TABLE>

        <S>            <C>          <C>
                                    Plan"), including forms of options granted to employees
                                    and non-employee Directors under the Option Plan.
        10.3**         --           Amendments to the Option Plan, dated December 11, 1996.
        10.4**         --           Amendments to the Option Plan, dated January 30, 1997.
        10.5*          --           1996 Employee Stock Purchase Plan of the Company.
        10.6*++        --           Employment Agreement between the Company and Daniel S.
                                    Lankford, dated July 11, 1994.
        10.7*          --           Employment Agreement between the Company and William E.
                                    Younkes, dated April 1, 1993.
        10.8*          --           Employment Agreement Amendment between the Company and
                                    William E. Younkes, dated October 1, 1995.
        10.9*++        --           Letter Agreement between the Company and Joseph F.
                                    Fojtasek, dated February 13, 1996.
        10.10*         --           Promissory Note executed by Tristan E. Juergens, dated
                                    November 1, 1995.
        10.11*         --           Promissory Note executed by Tristan E. Juergens, dated
                                    August 29, 1995.
        10.12*         --           Stock Purchase Agreement
                                    between the Company and Tristan
                                    E. Juergens, dated August 29,
                                    1995.
        10.13*         --           Stock Award Agreement between the Company and Tristan
                                    E. Juergens, dated August 31, 1995.
        10.14*         --           Stock Award Agreement between the Company and Robert F.
                                    Nelson, dated August 31, 1995.
        10.15*         --           Stock Award Agreement between the Company and Sandra D.
                                    Schreiber, dated August 31, 1995.
        10.16*         --           Stock Award Agreement between the Company and William
                                    E. Younkes, dated August 31, 1995.
        10.17*         --           Note Purchase Agreement
                                    between the Company and certain
                                    parties named therein, dated
                                    April 19, 1994.
        10.18*         --           Series C Preferred Stock Purchase Agreement, dated July
                                    19, 1994.
        10.19*         --           Supplemental Agreement to Series C Preferred Stock
                                    Purchase Agreement between the Company and certain
                                    parties named therein, dated September 30, 1994.
        10.20*         --           Note and Warrant Purchase Agreement between the Company
                                    and certain parties named therein, dated March 14, 1995,
                                    including forms of Convertible Promissory Notes and Stock
                                    Purchase Warrants issued to the parties.
        10.21*         --           Series D Preferred Stock Purchase Agreement between the
                                    Company and certain parties named therein, dated May 24,
                                    1995.
        10.22*         --           Guaranty Agreement between the Company and Steven Paul,
                                    dated May 24, 1995.
        10.23*         --           Stock Purchase Warrant issued
                                    to Freedom Ventures Incorporated,
                                    dated May 24, 1995.
        10.24*         --           Letter Agreement among the
                                    Company, Harold Scott and certain
                                    parties named therein, dated
                                    January 18, 1996.
        10.25*         --           Series E Preferred Stock Purchase Agreement between the
                                    Company and Johnson Controls Battery Group, Inc. and
                                    certain other parties named therein, dated June 26, 1995.
        10.26*         --           Purchasers and Principal Stockholder Agreement among
                                    the Company, Tristan E. Juergens and certain other
                                    parties named therein, dated June 26, 1995.
        10.27*         --           Warrant to Purchase Shares of Series E Preferred Stock
                                    issued to Johnson Controls Battery Group, Inc., dated
                                    June 26, 1995.
        10.28*         --           Joint Venture Agreement between the Company and Johnson
                                    Controls Battery Group, Inc., dated June 26, 1995.
        10.29*         --           Johnson Controls/Bolder LLC Operating Agreement between
                                    the Company and Johnson Controls Battery Group, Inc.,
                                    dated June 26, 1995.
        10.30*         --           BTC Johnson Controls License Agreement between the
                                    Company and Johnson Controls Battery Group, Inc., dated
                                    June 26, 1995.
        10.31*         --           Johnson Controls License
                                    Agreement between the Company and
                                    Johnson Controls/Bolder LLC,
                                    dated June 26, 1995.
        10.32*         --           Johnson Controls JV Trade Name License Agreement among
                                    the Company, Johnson Controls/Bolder LLC and Johnson
                                    Controls Battery Group, Inc., dated June 26, 1995.
        10.33*         --           JV BTC/Johnson Controls License Agreement among the
                                    Company, Johnson Controls Battery Group, Inc. and Johnson
                                    Controls/Bolder LLC, dated June 26, 1995.
        10.34*         --           JV BTC/Johnson Controls Manufacturing and Supply
                                    Agreement among the Company, Johnson Controls Battery

</TABLE>


                                       30
<PAGE>   30

<TABLE>

        <S>            <C>          <C>
                                    Group, Inc. and Johnson Controls/Bolder LLC, dated June
                                    26, 1995.
        10.35***       --           Agreement among the Company, Johnson Controls Battery
                                    Group, Inc. and Johnson Controls/Bolder LLC, dated as of
                                    July 31, 1996.
        10.36***       --           Cross Supply Agreement between the Company and Johnson
                                    Controls Battery Group, Inc., dated as of January 22,
                                    1997.
        10.37*         --           Senior Loan and Security Agreement between the Company
                                    and Phoenix Leasing Incorporated, dated July 29, 1994,
                                    including forms of Warrants to Purchase Shares of Series
                                    C Preferred Stock and Promissory Notes issued to Phoenix
                                    Leasing Incorporated.
        10.38*         --           First Amendment to Purchase Agreement between the
                                    Company and Phoenix Leasing Incorporated, dated July 29,
                                    1994.
        10.39*         --           Amendment to Purchase Agreement between the Company,
                                    certain stockholders of the Company and Phoenix Leasing
                                    Incorporated, dated March 25, 1996.
        10.40*         --           Warrant issued to Phoenix Leasing Incorporated, dated
                                    March 25, 1996.
        10.41          --           Security Agreement between the Company and Transamerica
                                    Business Credit Corporation, dated as of March 4, 1997,
                                    including form of Promissory Notes issued to Transamerica
                                    Business Credit Corporation.
        10.42*         --           Service Agreement between the Company and Chemical
                                    Waste Management, Inc., dated October 19, 1993.
        10.43*         --           Lease Agreement between the Company and Jefferson Park
                                    West, dated December 13, 1993.
        10.44*         --           Lease Agreement between the Company and Jefferson Park
                                    West, dated November 14, 1994.
        10.45*         --           Agreement between the Company and Wright Industries,
                                    Dated March 5, 1996.
        10.46+         --           Purchase Agreement, dated October 3, 1997, between the
                                    Registrant and BT Alex. Brown Incorporated.
        10.47+         --           Registration Rights Agreement, dated October 8, 1997,
                                    between the Registrant and BT  Alex. Brown Incorporated.
        10.48++        --           Employment Agreement between
                                    the Company and Arthur S. Homa,
                                    dated September 19, 1997.
        23.1           --           Consent of Arthur Andersen LLP, Independent Auditors.
        27.1           --           Financial Data Schedule for the year ended December 31, 1997.
        27.2           --           Restated Financial Data Schedules for the years ended
                                    December 31, 1993, 1994, 1995 and 1996.
</TABLE>

-------------------------
+Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-3 (Registration No. 333-41625) and incorporated
herein by reference.

++Management contract.

*Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form SB-2 (Registration No. 333-2500-D) and
incorporated herein by reference.

**Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-8 (Registration 33-20989) and incorporated
herein by reference.

*** Previously filed with the Commission as an exhibit to the Company's February
5, 1997 Form 8-K (File No. 0-28060) and incorporated herein by reference.

****Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form SB-2 (Registration No. 333-21753) and
incorporated herein by reference.



                                       31
<PAGE>   31



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                           BOLDER TECHNOLOGIES CORPORATION

         Date:    March 27, 1998           By:/s/ DANIEL S. LANKFORD
                                              ----------------------------------
                                              Daniel S. Lankford
                                              Chief Executive Officer, President
                                              and Chairman of the Board

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

                       SIGNATURE                             TITLE                      DATE
                       ---------                             -----                      ----
        <S>                                        <C>                             <C>
        /s/ DANIEL S. LANKFORD                     Chief Executive Officer,        March 27, 1998
        ----------------------                     President and Chairman of
           (Daniel S. Lankford)                    the Board (Principal
                                                   Executive Officer)

        /s/ JOSEPH F. FOJTASEK                     Chief Financial Officer,        March 27, 1998
        ----------------------                     Vice President of Finance
           (Joseph F. Fojtasek)                    and Administration, Treasurer,
                                                   and Secretary (Principal
                                                   Financial and Accounting
                                                   Officer)

        /s/ WILMER R. BOTTOMS                      Director                        March 27, 1998
        ---------------------
           (Wilmer R. Bottoms)

        /s/ WILLIAM D. CONNOR                      Director                        March 27, 1998
        ---------------------
           (William D. Connor)

        /s/ DONOVAN B. HICKS                       Director                        March 27, 1998
        --------------------
           (Donovan B. Hicks)

        /s/ TRISTAN E. JUERGENS                    Director                        March 27, 1998
        -----------------------
           (Tristan E. Juergens)

        /s/ DAVID L. RIEGEL                        Director                        March 27, 1998
        -------------------
           (David L. Riegel)

        /s/ CARL S. STUTTS                         Director                        March 27, 1998
        ------------------
           (Carl S. Stutts)


</TABLE>


                                       32
<PAGE>   32
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To BOLDER Technologies Corporation:

We have audited the accompanying balance sheets of BOLDER Technologies
Corporation (a Delaware corporation in the development stage) as of December 31,
1997 and 1996, and the related statements of operations, stockholders' equity
(deficit) and cash flows for each year in the three-year period ended December
31, 1997, and for the period from inception (March 22, 1991) to December 31,
1997. 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 audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about 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.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BOLDER Technologies Corporation
(a development stage company) as of December 31, 1997 and 1996, and the results
of its operations and its cash flows for each year in the three-year period
ended December 31, 1997, and for the period from inception to December 31, 1997,
in conformity with generally accepted accounting principles.


Denver, Colorado,                       /s/ ARTHUR ANDERSEN LLP
  February 5, 1998.





                                      F-1
<PAGE>   33
                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)


                                 BALANCE SHEETS
                           December 31, 1997 and 1996

                                     ASSETS

<TABLE>
<CAPTION>

                                                                       1997                 1996
                                                                       ----                 ----
CURRENT ASSETS:
<S>                                                                <C>                  <C>
      Cash and cash equivalents                                    $  5,414,330         $    968,297
      Available-for-sale securities                                  14,980,447           15,102,380
      Inventory                                                         162,828               35,796
      Trade accounts receivable                                          78,453               91,716
      Prepaid expenses                                                  121,656               66,205
                                                                   ------------         ------------

         Total current assets                                        20,757,714           16,264,394
                                                                   ------------         ------------
PROPERTY AND EQUIPMENT, at cost:
      Furniture, fixtures and equipment                               2,893,378            1,738,570
      Leasehold improvements                                          5,206,887              371,731
      Construction in progress                                       13,403,336            9,517,047
                                                                   ------------         ------------

                                                                     21,503,601           11,627,348
      Less- Accumulated depreciation and amortization                (1,230,669)            (947,809)
                                                                   ------------         ------------

         Property and equipment, net                                 20,272,932           10,679,539
PATENTS, net of accumulated amortization of $33,477 and
      $16,304 in 1997 and 1996, respectively                            207,770              150,998
OTHER ASSETS                                                             37,173               51,185
                                                                   ------------         ------------
                    Total assets                                   $ 41,275,589         $ 27,146,116
                                                                   ============         ============
</TABLE>


The accompanying notes to financial statements are an integral part of these
balance sheets.


                                       F-2
<PAGE>   34

                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEETS
                           December 31, 1997 and 1996

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                             1997                1996
                                                                                             ----                ----
<S>                                                                                     <C>                 <C>
CURRENT LIABILITIES:
      Accounts payable                                                                  $  1,061,897        $    244,893
      Construction in progress payables                                                      746,259           2,043,294
      Accrued compensation and other accrued liabilities (Note 8)                            953,791             554,148
      Deferred revenue (Note 5)                                                            1,821,924             746,343
      Current portion of notes payable (Note 6)                                            1,157,238             270,541
      Current portion of capital lease payable (Note 6)                                           --               1,819
                                                                                        ------------        ------------
         Total current liabilities                                                         5,741,109           3,861,038
                                                                                        ------------        ------------

LONG-TERM LIABILITIES:
      Notes payable (Note 6)                                                               5,247,665             214,177
                                                                                        ------------        ------------
         Total long-term liabilities                                                       5,247,665             214,177
                                                                                        ------------        ------------

COMMITMENTS AND CONTINGENCIES (Notes 1 and 7)

STOCKHOLDERS'  EQUITY:
      Convertible, redeemable preferred stock, $0.01 par value, 5,000,000 shares
         authorized; 336,200 and none issued and outstanding at December 31,
         1997 and 1996, with a liquidation and redemption
         value of $16,810,000 and $0, respectively                                        16,205,046                  --
      Common stock, $.001 par value, 25,000,000 shares authorized;
         9,498,440 and 9,447,622 issued at December 31, 1997
         and 1996, respectively                                                                9,498               9,448
      Treasury stock, $.001 par common stock, 33,333 shares at
         December 31, 1997 and 1996                                                          (50,000)            (50,000)
      Additional paid-in capital                                                          36,522,069          36,761,827
      Deficit accumulated during the development stage                                   (22,399,798)        (13,650,374)
                                                                                        ------------        ------------
         Total stockholders' equity                                                       30,286,815          23,070,901
                                                                                        ------------        ------------
                    Total liabilities and stockholders' equity                          $ 41,275,589        $ 27,146,116
                                                                                        ============        ============
</TABLE>


The accompanying notes to financial statements are an integral part of these
balance sheets.



                                      F-3
<PAGE>   35


                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                                                   FOR THE
                                                                                                                 PERIOD FROM
                                                                                                                  INCEPTION
                                                                FOR THE YEAR ENDED DECEMBER 31,              (MARCH 22, 1991) TO
                                                          1997               1996              1995           DECEMBER 31, 1997
                                                          ----               ----              ----           -----------------

REVENUES (Note 10):
<S>                                                   <C>               <C>                <C>                   <C>
     Research and development                         $  2,466,377      $    440,324       $     66,667          $   2,906,701
     Product sales                                          84,716            35,580             39,006                268,681
                                                      ------------      ------------       ------------          -------------
         Total revenues                                  2,551,093           475,904            105,673              3,175,382
                                                      ------------      ------------       ------------          -------------

COST OF REVENUES                                           707,606           171,486             49,647                949,693
                                                      ------------      ------------       ------------          -------------
                                                         1,843,487           304,418             56,026              2,225,689
                                                      ------------      ------------       ------------          -------------

OPERATING EXPENSES:
     Research and development                            6,743,534         2,863,552          2,479,428             16,469,734
     General and administrative                          3,697,061         2,132,565            808,724              8,454,239
     Selling and marketing                                 357,716           212,960            163,771                734,447
                                                      ------------      ------------       ------------          -------------
         Total operating expenses                       10,798,311         5,209,077          3,451,923             25,658,420
                                                      ------------      ------------       ------------          -------------

LOSS FROM OPERATIONS                                    (8,954,824)       (4,904,659)        (3,395,897)           (23,432,731)

OTHER INCOME (EXPENSE):
     Interest income                                       839,025           798,846            126,546              1,853,138
     Interest expense (including $0, $51,737,
         $41,950, and $139,825 in 1997, 1996,
         1995 and from inception, respectively,
         to related parties)                              (633,625)          (54,277)           (72,633)              (820,205)
                                                      ------------      ------------       ------------          -------------

NET LOSS                                              $ (8,749,424)     $ (4,160,090)      $ (3,341,984)         $ (22,399,798)
                                                      ============      ============       ============          =============



     Basic net loss per share (Note 2)                $      (0.97)     $      (0.64)      $      (3.07)
                                                      ============      ============       ============

     Shares used in computing basic
         net loss per share (Note 2)                     9,446,930         6,465,281          1,087,554
                                                      ============      ============       ============

     Unaudited, pro forma basic
         net loss per share (Note 2)                                    $      (0.49)
                                                                        ============

     Shares used in computing unaudited,
         pro forma basic net loss per share (Note 2)                       8,437,817
                                                                        ============


</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

                                      F-4

<PAGE>   36
                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
       FOR THE PERIOD FROM INCEPTION (MARCH 22, 1991) TO DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                   STOCKHOLDERS' DEFICIT
                                                                   ---------------------
                                                    MANDATORILY
                                                    REDEEMABLE
                                                    CONVERTIBLE                                            OPTIONS AND
                                                  PREFERRED STOCK                    COMMON STOCK           WARRANTS
                                               -------------------------         ----------------------     --------
                                               SHARES             AMOUNT         SHARES          AMOUNT      SHARES
                                               ------             ------         ------          ------      ------
<S>                                           <C>            <C>                <C>            <C>            <C>
BALANCES, INCEPTION (March 22,
  1991) .............................               --        $      --               --        $      --        --
  Issuance of common stock to an
    officer for contributed research
    and development, stated at
    historical carrying value of $0,
    recorded at par, in March 1991 ..               --               --          550,000              550        --
  Issuance of common stock to an
    officer for cash ($0.0165 per
    share), recorded at estimated
    fair market value ($0.15 per
    share), in March 1991 ...........               --               --            9,167                9        --
  Issuance of common stock for cash
    ($0.36 per share), net of
    offering costs of $7,650, in
    April 1991 ......................               --               --          137,500              138        --
  Issuance of common stock to lessor,
    recorded at estimated fair market
    value ($0.15 per share), in May .               --               --            8,937                9        --
    1991
  Issuance of Series A preferred
    stock for cash ($0.927 per
    share), net of offering costs of
    $31,100, in June, August and
    November 1991 ...................          337,550          313,000               --               --        --
  Net income (loss) .................               --               --               --               --        --
                                             ---------        ---------        ---------        ---------        --
BALANCES, December 31, 1991 .........          337,550          313,000          705,604              706        --
  Issuance of Series A preferred
    stock for cash ($0.927 per
    share), in April 1992 ...........          234,014          217,000               --               --        --
  Issuance of shares of common stock
    to an officer for services,
    recorded at estimated fair market
    value ($0.15 per share), in
    November 1992 ...................               --               --           45,834               46
  Net income (loss) .................               --               --               --               --        --
                                             ---------        ---------        ---------        ---------        --
BALANCES, December 31, 1992 .........          571,564        $ 530,000          751,438        $     752        --
                                             =========        =========        =========        =========        ==
</TABLE>

<TABLE>
<CAPTION>
                                                            STOCKHOLDERS' DEFICIT
                                                            ---------------------
                                                                                                  DEFICIT
                                             OPTIONS AND                                         ACCUMULATED
                                              WARRANTS     ADDITIONAL      TREASURY STOCK        DURING THE
                                              ------        PAID-IN       ------------------     DEVELOPMENT
                                              AMOUNT        CAPITAL       SHARES      AMOUNT        STAGE
                                              ------        -------       ------      ------        -----
<S>                                           <C>            <C>         <C>          <C>          <C>
BALANCES, INCEPTION (March 22,
  1991) .............................        $  --        $      --         --        $  --        $      --
  Issuance of common stock to an
    officer for contributed research
    and development, stated at
    historical carrying value of $0,
    recorded at par, in March 1991 ..           --            2,450         --           --               --
  Issuance of common stock to an
    officer for cash ($0.0165 per
    share), recorded at estimated
    fair market value ($0.15 per
    share), in March 1991 ...........           --            1,366         --           --               --
  Issuance of common stock for cash
    ($0.36 per share), net of
    offering costs of $7,650, in
    April 1991 ......................           --           42,212         --           --               --
  Issuance of common stock to lessor,
    recorded at estimated fair market
    value ($0.15 per share), in May .           --            1,332         --           --               --
    1991
  Issuance of Series A preferred
    stock for cash ($0.927 per
    share), net of offering costs of
    $31,100, in June, August and
    November 1991 ...................           --          (31,100)        --           --               --
  Net income (loss) .................           --               --         --           --         (194,512)
                                             -----        ---------         --        -----        ---------
BALANCES, December 31, 1991 .........           --           16,260         --           --         (194,512)
  Issuance of Series A preferred
    stock for cash ($0.927 per
    share), in April 1992 ...........           --               --         --           --               --
  Issuance of shares of common stock
    to an officer for services,
    recorded at estimated fair market
    value ($0.15 per share), in .....
    November 1992 ...................                         6,829         --           --               --
  Net income (loss) .................           --               --         --           --         (637,733)
                                             -----        ---------         --        -----        ---------
BALANCES, December 31, 1992 .........        $  --        $  23,089         --        $  --        $(832,245)
                                             =====        =========         ==        =====        =========
</TABLE>

               The accompanying notes to financial statements are
                     an integral part of these statements.




                                      F-5
<PAGE>   37



                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
       FOR THE PERIOD FROM INCEPTION (MARCH 22, 1991) TO DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                   STOCKHOLDERS' DEFICIT
                                                                   ---------------------
                                                    MANDATORILY
                                                    REDEEMABLE
                                                    CONVERTIBLE                                          OPTIONS AND
                                                  PREFERRED STOCK                COMMON STOCK              WARRANTS
                                             ---------------------------   -------------------------      --------
                                               SHARES         AMOUNT         SHARES         AMOUNT         SHARES
                                             ----------     ----------     ----------     ----------     ----------
<S>                                           <C>            <C>           <C>            <C>            <C>
BALANCES, December 31, 1992 ............        571,564     $  530,000        751,438     $      752             --
  Issuance of Series B preferred stock
    ($1.50 per share) in January 1993
    for cash of $3,143,140 and
    conversion of debt of $717,864,
    net of offering costs of $27,524 ...      2,574,003      3,861,004             --             --             --
  Net income (loss) ....................             --             --             --             --             --
                                             ----------     ----------     ----------     ----------     ----------
BALANCES, December 31, 1993 ............      3,145,567      4,391,004        751,438            752             --
  Issuance of Series C preferred stock
    ($3.00 per share) in July and
    September 1994 for cash of
    $2,474,522 and conversion of debt
    and accrued interest totaling
    $1,028,274, net of offering costs of
    $58,871 ............................      1,167,595      3,502,796             --             --             --
  Issuance of warrants to purchase
    10,500 shares of Series C
    preferred stock, in July 1994,
    exercisable at $3.00 per share .....             --             --             --             --         10,500
  Issuance of common stock to
    employees for options exercised
    ($0.09 per share), in January and
    July 1994 ..........................             --             --         19,226             19             --
  Issuance of common stock to an
    officer for cash ($0.375 per
    share), in July 1994 ...............             --             --        133,333            133             --
  Issuance of common stock to an
    officer, in exchange for services
    in accordance with employment
    agreement ($0.128 per share), in
    August 1994 ........................             --             --        124,705            125             --
  Issuance of common stock to
    consultants for services ($0.375
    per share), in August 1994 .........             --             --          7,333              7             --
  Issuance of common stock to
    employees for options exercised
    ($0.15 per share), in July and
    November 1994 ......................             --             --          4,805              5             --
  Net income (loss) ....................             --             --             --             --             --
                                             ----------     ----------     ----------     ----------     ----------
BALANCES, December 31, 1994 ............      4,313,162     $7,893,800      1,040,840     $    1,041         10,500
                                             ==========     ==========     ==========     ==========     ==========
</TABLE>


<TABLE>
<CAPTION>
                                                            STOCKHOLDERS' DEFICIT
                                                            ---------------------
                                                                                                      DEFICIT
                                             OPTIONS AND                                             ACCUMULATED
                                              WARRANTS     ADDITIONAL      TREASURY STOCK            DURING THE
                                              ------        PAID-IN       ------------------         DEVELOPMENT
                                              AMOUNT        CAPITAL       SHARES      AMOUNT            STAGE
                                              ------        -------       ------      ------            -----
<S>                                           <C>            <C>         <C>          <C>          <C>

BALANCES, December 31, 1992 ............        $ --        $    23,089         --        $  --        $  (832,245)
  Issuance of Series B preferred stock
    ($1.50 per share) in January 1993
    for cash of $3,143,140 and
    conversion of debt of $717,864,
    net of offering costs of $27,524 ...          --            (22,714)        --           --                 --
  Net income (loss) ....................          --                 --         --           --         (1,999,831)
                                                ----        -----------         --        -----        -----------
BALANCES, December 31, 1993 ............          --                375         --           --         (2,832,076)
  Issuance of Series C preferred stock
    ($3.00 per share) in July and
    September 1994 for cash of
    $2,474,522 and conversion of debt
    and accrued interest totaling
    $1,028,274, net of offering costs of
    $58,871 ............................          --            (58,871)        --           --                 --
  Issuance of warrants to purchase
    10,500 shares of Series C
    preferred stock, in July 1994,
    exercisable at $3.00 per share .....          --                 --         --           --                 --
  Issuance of common stock to
    employees for options exercised
    ($0.09 per share), in January and
    July 1994 ..........................          --              1,710         --           --                 --
  Issuance of common stock to an
    officer for cash ($0.375 per
    share), in July 1994 ...............          --             49,867         --           --                 --
  Issuance of common stock to an
    officer, in exchange for services
    in accordance with employment
    agreement ($0.128 per share), in
    August 1994 ........................          --             15,830         --           --                 --
  Issuance of common stock to
    consultants for services ($0.375
    per share), in August 1994 .........          --              2,744         --           --                 --
  Issuance of common stock to
    employees for options exercised
    ($0.15 per share), in July and
    November 1994 ......................          --                716         --           --                 --
  Net income (loss) ....................          --                 --         --           --         (3,316,224)
                                                ----        -----------         --        -----        -----------
BALANCES, December 31, 1994 ............        $--         $    12,371         --        $  --        $(6,148,300)
                                                ====        ===========         ==        =====        ===========
</TABLE>





               The accompanying notes to financial statements are
                     an integral part of these statements.


                                      F-6

<PAGE>   38



                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                   STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
       FOR THE PERIOD FROM INCEPTION (MARCH 22, 1991) TO DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                                                   STOCKHOLDERS' DEFICIT
                                                                                         ---------------------------------------
                                                                   MANDATORILY
                                                                    REDEEMABLE
                                                                   CONVERTIBLE                                        OPTIONS AND
                                                                 PREFERRED STOCK                COMMON STOCK            WARRANTS
                                                              ----------------------     -------------------------      --------
                                                               SHARES       AMOUNT         SHARES         AMOUNT         SHARES
                                                              ---------   ----------     ----------     ----------     ----------
<S>                                                           <C>         <C>            <C>          <C>             <C>
BALANCES, December 31, 1994 .............................     4,313,162   $ 7,893,800     1,040,840   $     1,041        10,500
 Issuance of warrants in March 1995, to
   purchase 149,998 shares of common stock,
   exercisable at $0.75 per share for
   five years, in connection with the
   issuance of debt, for a purchase price
   of $0.015 per warrant ................................            --            --            --            --       149,998
 Issuance of Series C preferred stock
   ($3.00 per share) in April 1995 in
   conversion of accrued interest of
   $41,950 ..............................................        13,979        41,950            --            --            --
 Issuance of Series D preferred stock
   ($6.00 per share) in April 1995 for
   cash of $2,000,000 and conversion of
   debt of $1,797,732, net of offering
   costs of $28,819 .....................................       632,951     3,797,732            --            --            --
 Issuance of warrants to purchase
   166,666 shares of common stock,
   exercisable at $1.50 per share for five
   years, in connection with the issuance
   of Series D preferred, in April 1995,
   for a purchase price of
   $.0015 per warrant ...................................            --            --            --            --       166,666
 Issuance of 90-day option to purchase
   166,667 shares of Series D preferred
   stock in April 1995, exercisable at $6
   per share, in connection with the
   issuance of Series D preferred
   stock ................................................            --            --            --            --       166,667
 Partial exercise of option ($6.00 per
   share) in August 1995 for Series D
   preferred stock ......................................        33,333       200,000            --            --      (166,667)
 Issuance of Series E preferred stock
   ($6.00 per share) in June 1995 for
   cash of $1,500,000, net of offering
   costs of $28,963 .....................................       250,000     1,500,000            --            --            --
 Issuance of warrants to purchase
   308,666 shares of Series E preferred
   stock in June 1995, exercisable at $6.00
   per share for one year, in connection
   with the issuance of Series E preferred
   stock, for a purchase price of $.0015 per
   warrant ..............................................            --            --            --            --       308,666
 Purchase of 33,333 shares of treasury
   stock for $1.50 per share for cash
   from a founder, in August 1995 .......................            --            --            --            --            --
 Issuance of common stock to employees
   for options exercised ($.09 per
   share) in August and December
   1995 .................................................            --            --        49,817            50            --
 Issuance of common stock to employees
   for options exercised ($.15 per
   share) in February, April, September
   and December 1995 ....................................            --            --        33,321            33            --
 Issuance of common stock to employees
   ($1.50 per share) in August 1995 for
   cash .................................................            --            --        22,443            22            --
 Net income (loss) ......................................            --            --            --            --            --
                                                            -----------   -----------   -----------   -----------   -----------
BALANCES, December 31, 1995 .............................     5,243,425   $13,433,482     1,146,421   $     1,146       635,830
                                                            ===========   ===========   ===========   ===========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                    STOCKHOLDERS' DEFICIT
                                                             -----------------------------------------------------------------------
                                                                                                                          DEFICIT
                                                              OPTIONS AND                                               ACCUMULATED
                                                               WARRANTS   ADDITIONAL           TREASURY STOCK            DURING THE
                                                                ------      PAID-IN         ---------------------       DEVELOPMENT
                                                                AMOUNT      CAPITAL         SHARES         AMOUNT          STAGE
                                                                ------      -------         ------         ------          -----
<S>                                                         <C>           <C>            <C>            <C>
BALANCES, December 31, 1994 .............................   $        --   $    12,371             --    $        --    $(6,148,300)
 Issuance of warrants in March 1995, to
   purchase 149,998 shares of common stock,
   exercisable at $0.75 per share for
   five years, in connection with the
   issuance of debt, for a purchase price
   of $0.015 per warrant ................................         2,250            --             --             --             --
 Issuance of Series C preferred stock
   ($3.00 per share) in April 1995 in
   conversion of accrued interest of
   $41,950 ..............................................            --            --             --             --             --
 Issuance of Series D preferred stock
   ($6.00 per share) in April 1995 for
   cash of $2,000,000 and conversion of
   debt of $1,797,732, net of offering
   costs of $28,819 .....................................            --       (28,819)            --             --             --
 Issuance of warrants to purchase
   166,666 shares of common stock,
   exercisable at $1.50 per share for five
   years, in connection with the issuance
   of Series D preferred, in April 1995,
   for a purchase price of
   $.0015 per warrant ...................................           250            --             --             --             --
 Issuance of 90-day option to purchase
   166,667 shares of Series D preferred
   stock in April 1995, exercisable at $6
   per share, in connection with the
   issuance of Series D preferred
   stock ................................................            --            --             --             --             --
 Partial exercise of option ($6.00 per
   share) in August 1995 for Series D
   preferred stock ......................................            --            --             --             --             --
 Issuance of Series E preferred stock
   ($6.00 per share) in June 1995 for
   cash of $1,500,000, net of offering
   costs of $28,963 .....................................            --       (28,963)            --             --             --
 Issuance of warrants to purchase
   308,666 shares of Series E preferred
   stock in June 1995, exercisable at $6.00
   per share for one year, in connection
   with the issuance of Series E preferred
   stock, for a purchase price of $.0015 per
   warrant ..............................................           463            --             --             --             --
 Purchase of 33,333 shares of treasury
   stock for $1.50 per share for cash
   from a founder, in August 1995 .......................            --            --        (33,333)       (50,000)            --
 Issuance of common stock to employees
   for options exercised ($.09 per
   share) in August and December
   1995 .................................................            --         4,406             --             --             --
 Issuance of common stock to employees
   for options exercised ($.15 per
   share) in February, April, September
   and December 1995 ....................................            --         4,964             --             --             --
 Issuance of common stock to employees
   ($1.50 per share) in August 1995 for
   cash .................................................            --        33,651             --             --             --
 Net income (loss) ......................................            --            --             --             --     (3,341,984)
                                                            -----------   -----------    -----------    -----------    -----------
BALANCES, December 31, 1995 .............................   $     2,963   $    (2,390)       (33,333)   $   (50,000)   $(9,490,284)
                                                            ===========   ===========    ===========    ===========    ===========


</TABLE>

              The accompanying notes to financial statements are an
                       integral part of these statements.



                                      F-7

<PAGE>   39


                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
       FOR THE PERIOD FROM INCEPTION (MARCH 22, 1991) TO DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                                                   STOCKHOLDERS' DEFICIT
                                                                                         ---------------------------------------
                                                                     MANDATORILY
                                                                      REDEEMABLE
                                                                     CONVERTIBLE                                       OPTIONS AND
                                                                   PREFERRED STOCK                COMMON STOCK           WARRANTS
                                                              -------------------------     -------------------------    --------
                                                               SHARES          AMOUNT         SHARES         AMOUNT        SHARES
                                                              ---------      ----------     ----------     ----------    ----------
<S>                                                           <C>            <C>               <C>           <C>         <C>
 Balances December 31, 1995 ............................      5,243,425      $ 13,433,482      1,146,421     $1,146      635,830
 Issuance of Series D Preferred Stock
   ($6.00 per share) for cash ..........................         16,666           100,000             --         --           --
 Issuance of common stock for options
   exercised ($0.15 per share) .........................             --                --        216,396        216           --
 Issuance of warrants to purchase 8,625
   shares of Series C preferred stock,
   in March 1996, exercisable at $6 per
   share ...............................................             --                --             --         --        8,625
 Issuance of common stock for warrants
   exercised ($6.00 per share) in April ................             --                --        308,666        309     (308,666)
 Issuance of common stock for warrants
   exercised ($1.50 per share) in April ................             --                --        166,666        167     (166,666)
 Issuance of common stock for warrants
   exercised ($0.75 per share) in April ................             --                --        145,137        146     (149,998)
 Conversion of Mandatorily Redeemable
   Preferred Stock into shares of
   common stock in May .................................     (5,260,091)      (13,533,482)     5,260,091      5,260           --
 Issuance of common stock upon an
   Initial Public Offering, net of
   offering costs of $2,060,483 ........................             --                --      2,200,000      2,200           --
 Issuance of common stock to employees
   for options exercised ($0.53 per ....................             --                --             69         --           --
   share) in September 1996
 Issuance of common stock to employees
   for options exercised ($0.38 per
   share) in October and December ......................             --                --            460         --           --
 Issuance of common stock to employees
   for options exercised ($0.75 per ....................             --                --             50         --           --
   share) in October 1996
 Issuance of common stock to employees
   for options exercised ($0.09 per
   share) in October 1996 ..............................             --                --          3,666          4           --
 Net income (loss) .....................................             --                --             --         --           --
                                                             ----------      ------------      ---------     ------     --------
BALANCES, December 31, 1996 ............................             --      $         --      9,447,622     $9,448       19,125
                                                             ==========      ============      =========     ======     ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                 STOCKHOLDERS' DEFICIT
                                                           -----------------------------------------------------------------------
                                                                                                                        DEFICIT
                                                           OPTIONS AND                                                 ACCUMULATED
                                                            WARRANTS     ADDITIONAL           TREASURY STOCK            DURING THE
                                                             ------        PAID-IN         ---------------------       DEVELOPMENT
                                                             AMOUNT        CAPITAL         SHARES         AMOUNT          STAGE
                                                             ------        -------         ------         ------          -----
<S>                                                          <C>          <C>               <C>          <C>           <C>
 Balances December 31, 1995 ............................     $ 2,963      $     (2,390)     (33,333)     $(50,000)     $ (9,490,284)
 Issuance of Series D Preferred Stock
   ($6.00 per share) for cash ..........................          --                --           --            --                --
 Issuance of common stock for options
   exercised ($0.15 per share) .........................          --            32,243           --            --                --
 Issuance of warrants to purchase 8,625
   shares of Series C preferred stock,
   in March 1996, exercisable at $6 per
   share ...............................................          --                --           --            --                --
 Issuance of common stock for warrants
   exercised ($6.00 per share) in April ................        (463)        1,852,150           --            --                --
 Issuance of common stock for warrants
   exercised ($1.50 per share) in April ................        (250)          250,082           --            --                --
 Issuance of common stock for warrants
   exercised ($0.75 per share) in April ................      (2,250)           63,627           --            --                --
 Conversion of Mandatorily Redeemable
   Preferred Stock into shares of
   common stock in May .................................          --        13,528,222           --            --                --
 Issuance of common stock upon an
   Initial Public Offering, net of
   offering costs of $2,060,483 ........................          --        21,037,317           --            --                --
 Issuance of common stock to employees
   for options exercised ($0.53 per ....................          --                37           --            --                --
   share) in September 1996
 Issuance of common stock to employees
   for options exercised ($0.38 per
   share) in October and December 1996 .................          --               175           --            --                --

 Issuance of common stock to employees
   for options exercised ($0.75 per ....................          --                38           --            --                --
   share) in October 1996
 Issuance of common stock to employees
   for options exercised ($0.09 per
   share) in October 1996 ..............................          --               326           --            --                --
 Net income (loss) .....................................          --                --           --            --        (4,160,090)
                                                             -------      ------------      -------      --------      ------------
BALANCES, December 31, 1996 ............................     $    --      $ 36,761,827      (33,333)     $(50,000)     $ 13,650,374)
                                                             =======      ============      =======      ========      ============
</TABLE>



              The accompanying notes to financial statements are an
                       integral part of these statements.


                                      F-8
<PAGE>   40




                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
       FOR THE PERIOD FROM INCEPTION (MARCH 22, 1991) TO DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                                              STOCKHOLDERS' (DEFICIT) EQUITY
                                                                                         ---------------------------------------
                                                                     CONVERTIBLE
                                                                      REDEEMABLE
                                                                   PREFERRED STOCK                COMMON STOCK           WARRANTS
                                                              -------------------------     -------------------------    --------
                                                               SHARES          AMOUNT         SHARES         AMOUNT        SHARES
                                                              ---------      ----------     ----------     ----------    ----------
<S>                                                           <C>            <C>           <C>           <C>             <C>
BALANCES, December 31, 1996 ..............................          --      $       --     9,447,622     $    9,448       19,125
 Issuance of common stock under the
    Employee Stock Purchase Plan ($8.93
    -$11.90 per share) ...................................          --              --        15,375             15          --
 Issuance of common stock to
    employees for options exercised
    ($0.09 - $6.00 per share) ............................          --              --        35,443             35          --
 Issuance of Series A Convertible,
    Redeemable Preferred Stock as part of
    a Private Placement, net of offering
    costs of $1,007,274 in October .......................     336,200      15,802,726            --             --          --
 Issuance of warrants to purchase
    30,641 shares of common stock
    exercisable at $14.50 per share for
    five years, in connection with the
    issuance of the Series A Convertible,
 Redeemable Preferred Stock ..............................          --              --            --             --      30,641
 Accretion of preferred stock offering costs .............          --          50,000            --             --          --
 Accrual of Series A Preferred Stock
     dividend ............................................          --         352,320            --             --          --
 Net loss ................................................          --              --            --             --          --
                                                               -------     -----------     ---------     ----------     -------
BALANCES, December 31, 1997 ..............................     336,200     $16,205,046     9,498,440     $    9,498      49,766
                                                               =======     ===========     =========     ==========     =======
</TABLE>

<TABLE>
<CAPTION>
                                                               STOCKHOLDERS' (DEFICIT) EQUITY
                                             --------------------------------------------------------------------
                                                                                                       DEFICIT
                                                                                                      ACCUMULATED
                                             WARRANTS     ADDITIONAL           TREASURY STOCK         DURING THE
                                             --------      PAID-IN       ------------------------     DEVELOPMENT
                                              AMOUNT       CAPITAL          SHARES        AMOUNT         STAGE
                                             --------    ------------    ------------    --------    ------------
<S>                                          <C>         <C>             <C>             <C>         <C>

BALANCES, December 31, 1996 ..............   $    --     $ 36,761,827         (33,333)   $(50,000)   $(13,650,374)
 Issuance of common stock under the
    Employee Stock Purchase Plan ($8.93
    -$11.90 per share) ...................        --          152,985              --          --              --
 Issuance of common stock to
    employees for options exercised
    ($0.09 - $6.00 per share) ............        --            9,577              --          --              --
 Issuance of Series A Convertible,
    Redeemable Preferred Stock as part of
    a Private Placement, net of offering
    costs of $1,007,274 in October .......        --               --              --          --              --
 Issuance of warrants to purchase
    30,641 shares of common stock
    exercisable at $14.50 per share for
    five years, in connection with the
    issuance of the Series A Convertible,
    Redeemable Preferred Stock ...........        --               --              --          --              --
 Accretion of preferred stock
    offering costs.......................        --          (50,000)             --          --              --
 Accrual of Series A Preferred Stock
    dividend .............................        --         (352,320)             --          --              --
 Net loss ................................        --               --              --          --      (8,749,424)
                                             -------     ------------    ------------    --------    ------------
BALANCES, December 31, 1997 ..............   $    --     $ 36,522,069         (33,333)   $(50,000)   $(22,399,798)
                                             =======     ============    ============    ========    ============
</TABLE>


             The accompanying notes to financial statements are an
                       integral part of these statements.



                                      F-9
<PAGE>   41



                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                      FOR THE
                                                                                                                    PERIOD FROM
                                                                                                                     INCEPTION
                                                                      FOR THE YEAR ENDED DECEMBER 31,            (MARCH 22, 1991) TO
                                                                1997               1996              1995         DECEMBER 31, 1997
                                                                ----               ----              ----         -----------------


<S>                                                         <C>                <C>               <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                                   $ (8,749,424)      $ (4,160,090)     $ (3,341,984)        $ (22,399,798)
 Adjustments to reconcile net loss to net
    cash used in operating activities:
    Depreciation and amortization                                670,672            404,082           324,140             1,635,711
    Loss from operations of joint venture                             --            669,025           164,136               833,161
    Interest expense paid in preferred stock                          --                 --            41,950                70,224
    Common stock issued for research and
        development and general and administrative
        expenses                                                      --                 --                --                29,922
    Preferred stock offering costs charged to expense                 --                 --                --                 4,810
    Changes in
        Trade accounts receivable                                 13,263                452           (81,979)              (78,453)
        Inventory                                               (127,032)               318           (28,937)             (162,828)
        Prepaid expenses and other assets                        (41,439)             1,347           (83,932)             (159,755)
        Accounts payable                                         817,004             90,095            54,318             1,061,897
        Accrued liabilities                                      399,643            414,203           (20,774)              971,655
        Deferred revenue                                       1,075,581            746,343                --             1,821,924
                                                            ------------       ------------      ------------         -------------
           Net cash used in operating activities              (5,941,732)        (1,834,225)       (2,973,062)          (16,371,530)
                                                            ------------       ------------      ------------         -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of available-for-sale securities                   (12,894,062)       (25,717,811)       (8,326,912)          (58,746,804)
 Sale of available-for-sale securities                        13,015,995         12,750,909         6,985,778            43,766,357
 Purchases of property and equipment                         (10,247,985)        (9,759,156)         (305,829)          (21,857,528)
 Construction in progress payables                            (1,297,035)         2,043,294                --               746,259
 Issuance of notes receivable from founder                            --                 --          (152,066)             (152,066)
 Payment of notes receivable from founder                             --            152,066                --               152,066
 Investment in joint venture                                          --           (533,161)         (300,000)             (833,161)
 Patent costs                                                    (72,851)           (61,762)          (57,186)             (240,153)
                                                            ------------       ------------      ------------         -------------
           Net cash used in investing activities             (11,495,938)       (21,125,621)       (2,156,215)          (37,165,030)
                                                            ------------       ------------      ------------         -------------
</TABLE>


The accompanying notes to financial statements are an integral part of these
statements.


                                      F-10

<PAGE>   42




                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                                      FOR THE
                                                                                                                    PERIOD FROM
                                                                                                                     INCEPTION
                                                                      FOR THE YEAR ENDED DECEMBER 31,           (MARCH 22, 1991) TO
                                                               1997               1996              1995         DECEMBER 31, 1997
                                                               ----               ----              ----         ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                          <C>                <C>              <C>                <C>
    Proceeds from issuance of preferred stock                $ 15,921,400       $    100,000     $   3,700,000     $   25,869,062
    Proceeds from issuance of common stock                        162,621         25,296,557            43,126         25,606,129
    Proceeds from issuance of convertible notes payable                 -                  -         1,797,732          3,497,732
    Proceeds from issuance of notes payable                     7,019,749            190,929           384,434          7,882,664
    Payments on notes payable                                  (1,101,383)          (255,960)         (108,650)        (1,479,580)
    Stock issuance costs                                         (118,684)        (2,060,483)          (57,782)        (2,362,094)
    Payments on capital lease                                          --             (7,119)           (5,592)           (15,986)
    Purchase of treasury stock from founder                            --                 --           (50,000)           (50,000)
    Issuance of warrants to purchase common
        or preferred stock                                             --                 --             2,963              2,963
                                                             ------------       ------------     -------------     --------------
           Net cash provided by financing activities           21,883,703         23,263,924         5,706,231         58,950,890
                                                             ------------       ------------     -------------     --------------

NET INCREASE IN CASH AND
    CASH EQUIVALENTS                                            4,446,033            304,078           576,954          5,414,330
CASH AND CASH EQUIVALENTS, beginning of period                    968,297            664,219            87,265                 --
                                                             ============       ============     =============     ==============
CASH AND CASH EQUIVALENTS, end of period                     $  5,414,330       $    968,297     $     664,219     $    5,414,330
                                                             ============       ============     =============     ==============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
    INFORMATION:
    Cash paid for interest                                   $    552,875       $     52,672     $      30,683     $      640,145
                                                             ============       ============     -============     ==============

SUPPLEMENTAL DISCLOSURES OF NONCASH
    INVESTING AND FINANCING ACTIVITIES:

           Accretion of preferred stock offering costs       $     50,000       $         --     $          --     $       50,000
                                                             ============       ============     =============     ==============

           Common stock dividend accrual                     $    352,320       $         --     $          --     $      352,320
                                                             ============       ============     =============     ==============

    Conversion of notes payable and related accrued
    interest to preferred stock                              $         --       $         --     $   1,839,682     $    3,585,820
                                                             ============       ============     =============     ==============

    Property purchased under capital leases                  $         --       $         --     $          --     $       17,805
                                                             ============       ============     =============     ==============

</TABLE>


The accompanying notes to financial statements are an integral part of these
statements.




                                      F-11







<PAGE>   43
                         BOLDER TECHNOLOGIES CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)

                          NOTES TO FINANCIAL STATEMENTS

(1) ORGANIZATION AND DEVELOPMENT STAGE RISKS

    BOLDER Technologies Corporation (the "Company") is a development-stage
energy technology company that is currently involved in the design, development
and marketing of advanced, high power, rechargeable lead acid-based battery
systems based on its Thin Metal Film ("TMF") technology. The Company was
incorporated in the state of Colorado on March 22, 1991 ("Inception") as Bolder
Battery, Inc., and reincorporated as a Delaware corporation on November 19, 1993
and was subsequently renamed BOLDER Technologies Corporation. Its activities to
date have been primarily related to organization, raising capital, personnel
recruitment, research and development, construction of its initial production
line and marketing. The Company is located in Golden, Colorado, and its
customers to date are primarily United States companies and the United States
government. Revenue recorded in 1997 and 1996 relates primarily to a technology
transfer agreement with a strategic partner, Johnson Controls, Inc. ("Johnson
Controls"), Small Business Innovation Research research and development
agreements, a customer-funded research and development agreement, and sales of
demonstration and evaluation units of the Company's product. The Company's
business plan does not contemplate that research and development services will
continue to a significant degree after the Company commences sales of its
product in commercial quantities. Accordingly, such revenue from research and
development services are not considered as recurring or indicative of the
Company's future revenue, if any, from the sale of its battery products in
commercial quantities. The Company has not generated significant revenue from
sales of its battery product to date.

    The Company has incurred losses since its inception, and has an accumulated
development stage deficit of $22,399,798 at December 31, 1997. The Company's
operations are subject to certain development stage risks and uncertainties,
some of which follow. The Company to date has not produced its battery in large
volumes. The Company is currently debugging, testing and qualifying its
commercial-volume production line; however such testing has not yet been
completed, and has taken longer and been more costly than previously
anticipated. The Company must be able to produce its product in commercial
quantities, and commercial acceptance of the Company's product will have to
occur in the marketplace before the Company can attain successful operations.
Further, during the period required to achieve successful operations, the
Company may require additional financing which may not be available to it. The
Company expects to incur additional losses in the future as it continues its
product development efforts, moves toward commercial production and seeks to
establish its manufacturing, sales and marketing capability. There can be no
assurance that the Company will achieve or sustain significant revenues or
profitability in the future. The Company believes that its available cash and
cash equivalents, investments and interest income will be sufficient to satisfy
its funding needs at least through year end 1998.

    Further, the recovery of the carrying amount of the Company's long-lived
assets, primarily assets under construction for the high-volume production of
batteries, is dependent on generating revenue from sales of batteries in
commercial quantities. To date, the Company has not manufactured its batteries
on a commercial scale.



                                      F-12
<PAGE>   44

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Cash and Cash Equivalents

    Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.

    Available-for-Sale Securities

    Debt and equity securities that the Company has both the positive intent and
ability to hold to maturity are classified as held-to-maturity and are reported
at amortized cost. Debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are classified as
trading securities and reported at fair value, with the unrealized gains and
losses included in earnings. Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified as
available-for-sale securities and reported at fair value, with unrealized gains
or losses excluded from earnings and reported as a separate component of
stockholders' equity.

    The Company's available-for-sale securities at December 31, 1997 and 1996,
consist of United States Treasury bills and debt securities of United States
government agencies and are reported at fair value. The fair market value of
these securities approximates their amortized cost.

    Inventory

    Inventories are stated at the lower of cost (first-in, first-out basis) or
market, and primarily consist of raw materials.

    Property and Equipment

    Property and equipment are stated at cost and depreciation is provided using
the straight-line method over the estimated useful lives of the respective
assets, which are three to seven years. Depreciation and amortization expense
related to property and equipment for the years ended December 1997, 1996 and
1995 and since Inception was $654,591, $395,027, $318,061 and $1,610,575,
respectively. Maintenance and repairs are expensed as incurred and improvements
are capitalized. Leasehold improvements are capitalized and amortized over the
shorter of the lease term or their estimated useful life. Maintenance and
repairs that do not improve or extend the life of assets and expenditures for
research and development equipment for which there is no future alternative use
are expensed as incurred. Expenditures which improve or extend the life of
assets are capitalized.

    Patents

    The Company capitalizes direct, external costs associated with patent
applications and filings. Costs associated with successful applications are
amortized over fourteen years beginning with the date of issue. Capitalized
costs are written off at such time as it becomes known that an application will
not be successful or when a particular patent is deemed to no longer be of
value.



                                      F-13
<PAGE>   45
    Research and Development Revenue

    Revenue for research and development services performed under the Company's
technology transfer arrangement with Johnson Controls (totaling $1,748,211 for
1997) is recognized using the percentage of completion method, based on the
actual effort expended for a particular period relative to the total expected
effort to perform the Company's obligations under this arrangement. The
Company's use of the percentage of completion method of revenue recognition
requires estimates of the degree of project completion. To the extent these
estimates prove to be inaccurate, the revenue and gross profits, if any,
reported for periods during which work under the technology transfer arrangement
is ongoing may not accurately reflect the final results of the technology
transfer arrangement, which can only be determined upon its completion.

    For other research and development arrangements, the Company generally
recognizes revenue upon the completion of established milestones or upon project
completion.

    Basic Net Loss Per Share and Unaudited, Pro Forma Basic Net Loss Per Share

    The Company has computed earnings per share in accordance with SFAS No. 128,
Earnings Per Share, which the Company adopted in 1997. Also, the Company has
adopted the guidance of the Securities and Exchange Commission Staff Accounting
Bulletin No. 98 and related interpretations. Accordingly, the Company has
presented basic earnings per share for each period presented. Diluted net loss
per common share is not presented, as the effect of common equivalent shares
from stock options and warrants is antidilutive. Prior to the current year and
pursuant to Securities and Exchange Commission rules, common stock and common
stock equivalent shares issued by the Company at prices below the IPO price
during the twelve month period prior to the offering ("cheap stock") were
included in the calculation as if they were outstanding for 1996, regardless of
whether they were antidilutive. Subsequent to December 31, 1997, guidance was
issued to redefine such stock. As a result, 258,815 shares which were originally
treated as cheap stock and included in the previously reported 1996 weighted
average shares outstanding of 8,696,632 have been excluded in the restated 1996
weighted average shares outstanding of 8,437,817. This change in weighted
average shares increased the pro forma basic net loss per share from $(0.48) to
$(0.49). There was no impact on the 1997 basic net loss per share or weighted
average shares as a result of this new issuance. The pro forma 1996 net loss per
share assumes that preferred stock outstanding on the completion of the
Company's Initial Public Offering ("IPO") in May 1996 (which automatically
converted to common stock on such date) was outstanding as common stock for all
of 1996, as follows:

<TABLE>
<CAPTION>
                                                               For the Year Ended December 31, 1996
                                                               ------------------------------------
                                                             Loss             Shares       Per-share
                                                          (Numerator)      (Denominator)     Amount
                                                          -----------      -------------   ----------
<S>                                                                          <C>
Weighted average common shares outstanding (actual)                           3,177,726
Assumed conversion of  preferred stock...............                         5,260,091
                                                                             ==========
Pro forma basic net loss per share...................     $(4,160,090)        8,437,817    $    (0.49)
                                                          ============       ==========    ==========
</TABLE>


                                      F-14

<PAGE>   46
    The following table provides additional information regarding the
computation of basic earnings per share for 1997:

<TABLE>
<CAPTION>
                                                               For the Year Ended December 31, 1997
                                                              ---------------------------------------
                                                                              Weighted
                                                                              Average
                                                                 Loss          Shares       Per-share
                                                              (Numerator)   (Denominator)     Amount
                                                              ------------  -------------   ---------
<S>                                                           <C>             <C>             <C>
Net loss.............................................         $(8,749,424)
Dividend on preferred stock..........................            (352,320)
Accretion of preferred stock offering costs..........             (50,000)
                                                              -----------
Net loss allocable to common stockholders............         $(9,151,744)    9,446,930       (0.97)
                                                              ===========     =========       =====
</TABLE>

    At December 31, 1997, securities that could potentially dilute basic net
loss per share in the future include 1,139,240 outstanding options to purchase
the Company's common stock, 49,766 outstanding warrants to purchase the
Company's common stock and 336,200 shares of Convertible, Redeemable Preferred
Stock.

    Increase in Authorized Shares -- Reverse Stock Split

    In March 1996, the Board of Directors authorized an amendment to the
Company's Restated Certificate of Incorporation that was effective May 1996 (the
"Effective Date"). The amendment increased the authorized shares of Common Stock
to 25,000,000 shares and authorized the issuance of up to 5,000,000 shares of
Preferred Stock, after canceling references to the series of Preferred Stock
that were converted into Common Stock on the Effective Date. The amendment also
authorized a 1.5 for 1 reverse stock split. Common stock amounts, equivalent
share amounts and per share amounts have been adjusted retroactively to give
effect to the 1.5 for 1 reverse stock split.

    Concentration of Credit Risk

    The Company has no significant off-balance sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements. The Company maintains the majority of its cash and
short-term investment balances with financial institutions in the form of demand
deposits and United States Treasury notes, Treasury bills, and debt securities
of agencies of the United States government.

    The Company performs ongoing credit evaluations of its customers' financial
condition and generally does not require collateral. Its accounts receivable
balances are primarily domestic, and are due from agencies of the United States
government. The Company had three principal customers which accounted for
approximately 99% of its total revenue for the year ended December 31, 1997, two
of which accounted for 98% of its trade accounts receivable at December 31,
1997.

    Fair Value of Financial Instruments

    The Company's financial instruments consist of cash and cash equivalents,
short-term trade receivables and payables and notes and capital leases payable.
The carrying values of cash and cash equivalents and short-term trade
receivables and payables approximate fair value. The fair value of notes and
capital leases payable is estimated based on current rates available for similar
debt with similar maturities and securities, and at December 31, 1997,
approximates the carrying value.

    Use of Estimates

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions may affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.


                                      F-15
<PAGE>   47
    Income Taxes

    The current provision for income taxes represents actual or estimated
amounts payable or refundable on tax returns filed or to be filed each year.
Deferred tax assets and liabilities are recorded for the estimated future tax
effects of temporary differences between the tax basis of assets and liabilities
and amounts reported in the accompanying balance sheets. Deferred tax assets are
also recognized for net operating loss and tax credit carryovers. The overall
change in deferred tax assets and liabilities for the period measures the
deferred tax expense for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustments to tax expense
in the period of enactment. The measurement of deferred tax assets may be
reduced by a valuation allowance based on judgmental assessment of available
evidence if deemed more likely than not that some or all of the deferred tax
assets will not be realized.

Reclassifications

    Certain reclassifications have been made to the prior period financial
statements to conform to the current period presentation.


(3) AVAILABLE-FOR-SALE SECURITIES

    The following is a summary of available-for-sale securities as of December
31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                               1997            1996
                                                          -------------    ------------
  <S>                                                     <C>              <C>
  U.S. government agency debt securities...............   $ 10,934,205     $  6,020,303
  U.S. Treasury notes..................................      4,046,242        9,082,077
                                                          ------------     ------------
                                                          $ 14,980,447     $ 15,102,380
                                                          ============     ============
</TABLE>

     Unrealized gains and losses on available-for-sale securities were
immaterial as of December 31, 1997 and 1996.

     The amortized cost of debt securities at December 31, 1997, by contractual
maturity, are shown below. Expected maturities will differ from contractual
maturities.

<TABLE>
<CAPTION>
<S>                                                                        <C>
          Less than 1 year...........................................      $ 11,920,634
                                                                           ------------
          Between 1 and 2 years                                               3,059,813
                                                                           ============
          Total debt securities......................................      $ 14,980,447
                                                                           ============
</TABLE>


(4) STOCKHOLDERS' EQUITY

    Preferred Stock

    During the period from 1991 through 1996, the Company issued 5,260,091
shares of mandatorily redeemable, convertible preferred stock (Series A through
Series E) for $ 13.5 million. All of these shares were converted to 5,260,091
shares of the Company's common stock upon the IPO in May 1996. In May 1996 the
Board of Directors amended the Company's Restated Certificate of Incorporation,
authorizing issue of up to 5,000,000 shares of preferred stock.

    In October 1997, the Company completed a private placement sale of 336,200
shares of Series A Convertible, Redeemable Preferred Stock, $0.001 par value per
share, for $50 per share. The net proceeds from the offering were approximately
$15.8 million. The placement agents for the Series A Convertible, Redeemable
Preferred Stock received warrants to purchase an aggregate of 30,641 shares of
the Company's common stock at an exercise price of $14.50 per share, in addition
to customary commissions. Cash offering costs related to this private placement
totaled $1,007,247.


                                      F-16
<PAGE>   48
    Dividends on the Series A Convertible, Redeemable Preferred Stock are
cumulative and payable semi-annually on June 30 and December 31, beginning
October 8, 1997, at an annual rate equal to $4 per share if paid in cash and
$4.50 per share if paid in shares of the Company's common stock. The first
dividend payment was made in March 1998, resulting in the issuance of 77,985
shares of the Company's common stock. The shares of Series A Convertible,
Redeemable Preferred Stock are convertible into common stock at the option of
the holder at a conversion price equal to $15 per share subject to adjustment in
certain circumstances. The Series A Convertible, Redeemable Preferred Stock, if
not earlier redeemed, must be redeemed on October 8, 2002 at the redemption
price.

    The redemption price, which is equal to $50 per share plus accrued and
unpaid dividends, may be paid in shares of the Company's common stock or cash or
in a combination of common stock and cash, at the Company's option. It is the
Company's intent, however, to redeem the Series A Convertible, Redeemable
Preferred Stock for shares of the Company's common stock. Accordingly, the
Series A Convertible, Redeemable Preferred Stock is included in stockholders'
equity.

    The carrying amount of the Series A Convertible, Redeemable Preferred Stock
is increased for accrued and unpaid dividends plus periodic accretion of
offering costs, using the effective interest method, such that the carrying
amount will equal the redemption amount on October 8, 2002. The December 31,
1997 balance includes $352,320 of accrued dividends.


    Common Stock

    In May 1996, the Company successfully completed an IPO of 2,200,000 shares
of common stock at $10.50 per share. The Board of Directors authorized an
amendment to the Company's Restated Certificate of Incorporation which increased
the authorized shares of common stock to 25,000,000 shares.

    1996 Equity Incentive Plan

    In March 1996, the Company adopted the 1996 Equity Incentive Plan (the
"Equity Incentive Plan"). The Equity Incentive Plan is a successor to, and
restatement of, the Company's 1992 Incentive Stock Option Plan and its 1992
Non-Qualified Stock Option Plan (the "1992 Plans"). The Equity Incentive Plan
provides for the following types of stock-based awards: incentive stock options
for employees (including officers and employee directors); nonstatutory stock
options for employees (including officers and non-employee directors), directors
and consultants; and restricted stock purchase awards, stock bonuses and stock
appreciation rights to employees (including officers and employee directors) and
consultants. As of December 31, 1997, no grants of stock bonuses, restricted
stock purchase awards or stock appreciation rights have been made.

The Company has reserved 1,678,699 shares of its Common Stock for future
issuance under the Equity Incentive Plan at December 31, 1997. Grants of 539,459
shares may be made under the terms of the Equity Incentive Plan.



                                      F-17
<PAGE>   49
    Employee Stock Purchase Plan

    In March 1996, the Company adopted the Employee Stock Purchase Plan (the
"Purchase Plan") covering an aggregate of 40,000 shares of Common Stock. The
Purchase Plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Internal Revenue Code. Under the Purchase
Plan, the Board of Directors may authorize participation by eligible employees,
including officers, in periodic offerings following the adoption of the Purchase
Plan. The offering period for any offering will be no more than 27 months.

Employees are eligible to participate if they are employed by the Company or an
affiliate of the Company designated by the Board of Directors for at least 20
hours of service per week and are employed by the Company or a subsidiary of the
Company designated by the Board for at least five months of service per calendar
year. Employees who participate in an offering can have up to 10% of their
earnings withheld pursuant to the Purchase Plan. The amount withheld will then
be used to purchase shares of Common Stock on specified dates determined by the
Board of Directors. The price of Common Stock purchased under the Purchase Plan
will be equal to 85% of the lower of the fair market value of the Common Stock
on the commencement date of each offering period or the relevant purchase date.
Employees may end their participation in the offering at any time during the
offering period, and participation ends automatically on termination of
employment with the Company. During 1997 and subsequent to December 31, 1997,
15,375 and 6,717 shares of common stock, respectively, were issued related to
employee participation in 1997 and 1996. At December 31, 1997, 17,908 shares of
common stock were available for future offerings.



    Rights Agreement

    In January 1998, the Board of Directors of the Company declared a dividend
distribution of one preferred share purchase right (a "Right") for each
outstanding share of common stock. Upon certain events, including events which
could result in a change in control of the Company, each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series B Junior Participating Preferred Stock at a price of $100, subject to
adjustment.


Statement of Financial Accounting Standards No. 123 ("SFAS 123")

SFAS No. 123, "Accounting for Stock-Based Compensation," defines a fair value
based method of accounting for employee stock options or similar equity
instruments. However, SFAS 123 allows the continued measurement of compensation
cost for such plans using the intrinsic value based method prescribed by APB
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), provided
that pro forma disclosures are made of net income or loss and net income or loss
per share, assuming the fair value based method of SFAS 123 had been applied.
The Company has elected to account for its stock-based compensation plans for
employees and directors under APB 25. During 1997 and 1996, all options were
granted at fair value, and accordingly, the Company recorded no compensation
expense during 1997 and 1996 under the provisions of APB 25. Accordingly, for
purposes of the pro forma disclosures presented below, the Company has computed
the fair values of all options granted during 1997, 1996 and 1995, using the
Black-Scholes pricing model and the following weighted average assumptions:

<TABLE>
<CAPTION>
                                              1997               1996               1995
                                           -----------        ------------       ----------
<S>                                        <C>                <C>                <C>
Risk-free interest rate ................       6.1%            6.1%               6.3%
Expected dividend yield ................       0.0%            0.0%               0.0%
Expected lives outstanding .............       5.3 years       5.2 years          6.0 years
Expected volatility ....................      22.3%           51.7%              51.7%
</TABLE>

To estimate lives of options for this valuation, it was assumed options will be
exercised upon becoming


                                      F-18
<PAGE>   50
fully vested. All options are initially assumed to vest. Cumulative compensation
costs recognized in pro forma net income or loss with respect to options that
are forfeited prior to vesting is adjusted as a reduction of pro forma
compensation expense in the period of forfeiture. The expected volatility was
based on the Company's volatility since its IPO. Actual volatility of the
Company's common stock varies. Fair value computations are highly sensitive to
the volatility factor assumed; the greater the volatility, the higher the
computed fair value of options granted.

    The total fair value of options granted was computed to be approximately
$1,684,000, $2,742,000 and $84,000 for the years ended December 31, 1997, 1996
and 1995, respectively. These amounts are amortized ratably over the vesting
periods of the options or recognized at date of grant if no vesting period is
required. Pro forma stock-based compensation, net of the effect of forfeitures,
was $619,497, $253,000 and $8,000 for 1997, 1996 and 1995, respectively.

    In addition to the options, there was approximately $38,500 and $29,000 of
compensation related to the Purchase Plan for 1997 and 1996, respectively. The
shares were valued assuming a 22.30% and 51.71% volatility factor and a 5.24%
and 5.00% risk free interest rate for 1997 and 1996, respectively.

    If the Company had accounted for its stock-based compensation plans in
accordance with SFAS 123, the Company's net loss and pro forma net loss per
common share would have been reported as follows:

<TABLE>
<CAPTION>
                                                  1997           1996          1995
                                              -----------    -----------     -----------
<S>                                           <C>            <C>             <C>
Net loss:     As reported .................   $(8,749,424)   $(4,160,090)    $(3,341,984)
                                              ===========    ===========     ===========
              Pro forma....................   $(9,407,421)   $(4,442,090)    $(3,349,984)
                                              ===========    ===========     ===========
EPS:          As reported (Note 2).........   $      (.97)   $      (.64)    $     (3.07)
                                              ===========    ===========     ===========
              Pro forma (Note 2)...........   $     (1.04)   $      (.69)    $     (3.08)
                                              ===========    ===========     ===========

</TABLE>

    Because the fair value method of accounting prescribed by SFAS 123 has not
been applied to options granted prior to January 1, 1995, the resulting pro
forma compensation cost may not be representative of that to be expected in
future years.

    A summary of stock options from inception through December 31, 1997 is
presented below:

<TABLE>
<CAPTION>
                                                                   WEIGHTED
                                                                   AVERAGE
                                                                   EXERCISE
                                                        SHARES       PRICE
                                                       -------     ---------
<S>                                                    <C>         <C>
BALANCES, as of December 31, 1991 ..............          --         --
  Granted ......................................       286,891     $    0.12
                                                      --------
BALANCES, as of December 31, 1992 ..............       286,891     $    0.12
  Granted ......................................       501,405     $    0.15
  Canceled .....................................           (66)    $    0.15
                                                      --------
BALANCES, as of December 31, 1993 ..............       788,230     $    0.14
  Granted ......................................       392,553     $    0.32
  Canceled .....................................      (116,501)    $    0.15
  Exercised ....................................      (282,069)    $    0.25
                                                      --------
BALANCES, as of December 31, 1994 ..............       782,213     $    0.19
  Granted ......................................       106,358     $    1.41
  Canceled .....................................       (80,701)    $    0.15
  Exercised ....................................       (83,138)    $    0.12
                                                      --------
BALANCES, as of December 31, 1995 ..............       724,732     $    0.38
  Granted ......................................       494,399     $   10.56
  Canceled .....................................      (110,740)    $    0.63
  Exercised ....................................      (220,641)    $    0.15
                                                      --------
BALANCES, as of December 31, 1996 ..............       887,750     $    6.07
  Granted ......................................       362,916     $   14.22
  Canceled .....................................       (75,983)    $    8.19
  Exercised ....................................       (35,443)    $    0.27
                                                      --------
BALANCES, as of December 31, 1997 ..............     1,139,240     $    8.70
                                                     =========
Weighted average fair value of options granted--
     1996 ......................................                   $    5.55
                                                                   =========
     1997 ......................................                   $    4.77
                                                                   =========
</TABLE>



                                      F-19
<PAGE>   51
    The following table summarizes information about the options outstanding at
December 31, 1997:

<TABLE>
<CAPTION>
                                               OPTIONS OUTSTANDING                 OPTIONS EXERCISABLE
                                      ---------------------------------------   -----------------------
                                                       WEIGHTED
                                                       AVERAGE       WEIGHTED                  WEIGHTED
                                        NUMBER        REMAINING      AVERAGE       NUMBER      AVERAGE
                                      OUTSTANDING    CONTRACTUAL     EXERCISE    EXERCISABLE   EXERCISE
RANGE OF EXERCISE PRICES              AT 12/31/97       LIFE           PRICE     AT 12/31/97    PRICE
---------------------------          ------------    -----------    ---------    -----------   --------
<S>                                     <C>          <C>             <C>           <C>         <C>
$.09-$.15 .........................      75,520      5.7 years       $  .13         72,837      $  .13
$.38-$.75 .........................     167,905      6.6 years          .40        119,174         .39
$1.50 .............................      86,678      7.5 years         1.50         53,278        1.50
$6.00 .............................     155,479      8.1 years         6.00         41,046        6.00
$10.50-$15.50 .....................     653,658      9.1 years        13.43         84,334       12.51
                                      ---------                                     ------      ------
          Total....................   1,139,240      8.3 years         8.70        370,669      $ 3.88
                                      =========                                    =======      ======
</TABLE>

    As part of an employment agreement, during 1994 an executive purchased
133,333 shares of common stock at its fair market value of $0.375 per share.
Such stock is restricted stock, and may be repurchased by the Company in certain
circumstances.

(5) JOINT VENTURE AND LICENSE AGREEMENTS

    In June 1995, the Company and Johnson Controls formed a joint venture,
Johnson Controls/Bolder LLC (the "Joint Venture"), to develop high volume
manufacturing technology for TMF batteries, to commercialize the TMF technology
and to promote the TMF technology in the hybrid electric vehicle market. In July
1996, having substantially completed its primary objective of developing the
high volume manufacturing technology, the Company and Johnson Controls agreed to
discontinue the Joint Venture and separately implement TMF battery manufacturing
facilities to best meet the unique requirements of the markets addressed by
each. This agreement to discontinue the Joint Venture was formalized on January
22, 1997, but made effective as of July 31, 1996. From inception until it was
terminated, the Joint Venture was primarily engaged in the research and
development of the manufacturing process for TMF batteries and did not generate
any significant revenues. Assets and liabilities of the Joint Venture at the
date of termination were considered to be the property of the Company, and the
net assets attributable to Johnson Controls' ownership interest were considered
to be advance payments on the technology transfer agreement entered into between
the Company and Johnson Controls.

    From the inception of the Joint Venture, through the effective date of its
termination, July 31, 1996, the Company accounted for its investment in the
Joint Venture using the equity method, and recorded its share of the Joint
Venture's losses. For the years ended December 31, 1996 and 1995, respectively,
the Company recorded $669,025 and $164,136 of such losses ($833,161 from
Inception). Subsequent to July 31, 1996, the Company recorded all of the expense
related to the activities formerly conducted by the Joint Venture.

    In the accompanying statements of operations, the Joint Venture losses are
classified as research and development expense and general and administrative
expense. Joint Venture losses classified as research and development expenses
were $0, $520,116, $127,603 and $647,719 for the years 1997, 1996, 1995 and from
Inception. Joint Venture losses classified as general and administrative expense
were $0, $148,909, $36,533 and $185,442 for the years 1997, 1996, 1995 and from
Inception.

    In connection with the termination of the Joint Venture and the
restructuring of the relationship between the Company and Johnson Controls, the
Company agreed to engage in technology transfer services which will allow
Johnson Controls to deploy TMF technology in specified markets in commercial
quantities. In exchange for services to be performed under the technology
transfer agreement, the Company received Johnson Controls' interest in the net
assets of the Joint Venture, and has recorded this amount ($746,343) as deferred
revenue at December 31, 1997 and 1996. Johnson Controls has also made a cash
payment of $2,750,000 to the Company in 1997 in exchange for technology transfer
services to be performed by the Company. In 1997 the Company recognized
$1,748,211 of revenue related to this agreement.


                                      F-20
<PAGE>   52
    In addition, the Company granted Johnson Controls, Inc. a license to make
and sell TMF batteries in markets related to auto/truck primary starting, hybrid
electric vehicles, lawn and garden equipment starting, motorcycle starting and
uninterruptible power supply. The Company will receive royalties on all units
sold by Johnson Controls into these markets which incorporate the Company's TMF
technology, subject to certain minimum royalties payable each year. In 1997, the
Company received $160,000 in minimum royalties. The Company and Johnson Controls
also entered into a cross supply agreement pursuant to which they will supply
each other with TMF battery products.

(6) NOTES AND CAPITAL LEASE PAYABLE

    The Company has entered into a senior loan and security agreement (the
"Agreement") whereby the Company may borrow, in one or more borrowings, an
amount not to exceed $1,500,000 in the aggregate. At December 31, 1997,
cumulative borrowings under the Agreement totaled $862,915. No further
borrowings are allowed under the terms of this Agreement. The Company has
granted a first perfected security interest in certain of its equipment,
machinery and fixtures as collateral to these borrowings. At December 31, 1997,
$259,458 is outstanding under the Agreement.

    The notes payable under the Agreement at December 31, 1997 and 1996, bear
interest at rates varying from 9.1% to 10.0% (weighted average interest rate of
9.9% at December 31, 1997), due on varying dates through July 1999 and require
monthly payments of principal and interest totaling $22,804.

    In connection with the Agreement, the Company issued warrants to the lender.
Under the terms of the warrants, the lender may acquire up to 10,500 shares and
8,625 shares of the Company's Common Stock for $3.00 and $6.00 per share,
respectively.

In March 1997, the Company entered into a senior loan and security agreement
("the Loan Agreement"), whereby the Company may borrow, in one or more
borrowings, an amount not to exceed $13 million in the aggregate. At December
31, 1997, cumulative borrowings under the Loan Agreement totaled $7.02 million.
The Company has a first perfected security interest in certain of its tenant
improvements in its Golden, Colorado facility and in its recently installed
commercial production line as collateral. At December 31, 1997, $6,145,445 is
outstanding under the Loan Agreement.

The notes payable under this Agreement at December 31, 1997 and 1996 bear
interest at rates varying from 12.8% to 17.2% (weighted average interest rate of
14.8% at December 31, 1997), are due on varying dates through June 2003 and
require monthly payments of principal and interest totaling $143,817.


    The aggregate maturities of the notes and capital lease payable are as
follows:

<TABLE>
<S>                                                                       <C>
1998 ......................................................................$.1,157,238
1999 ........................................................................1,250,503
2000 ........................................................................1,587,631
2001                                                                         1,207,344
2002                                                                           681,426
Thereafter                                                                     520,761
                                                                            ----------
                                                                            $6,404,903
                                                                            ==========
</TABLE>


                                      F-21
<PAGE>   53

(7) COMMITMENTS AND CONTINGENCIES

    The Company leases its office space and production facility under an
eleven-year lease with two five-year renewal options. The Company also leases
certain office equipment under lease agreements which terminate in 2002. Future
minimum commitments under these leases are as follows:

1998.................................................     $       625,595
1999.................................................             621,253
2000.................................................             607,892
2001.................................................             574,120
2002.................................................             513,934
Thereafter...........................................           2,483,900
                                                          ---------------
                                                          $     5,426,694
                                                          ===============

Monthly rental payments for the Company's office and manufacturing space are
approximately $45,000. Rent expense for the years ended December 31, 1997, 1996
and 1995 and from Inception was $482,584, $167,726, $158,341 and $986,295,
respectively.

    The Company has entered into employment agreements with certain executives
that provide for specified severance payments should the Company terminate the
executive's employment with the Company, other than for cause. The amount to be
paid is subject to reduction in certain circumstances.

    The Company has a 401(k) plan under which eligible employees may defer up to
15% of their compensation. The Company may make matching contributions and
discretionary contributions if approved by the Board of Directors. For 1997,
1996, 1995 and since Inception, no employer matching or discretionary
contributions were made to the Plan.

    In February 1996, the Joint Venture committed to the construction of a
commercial volume battery production line. The Company was required to
contribute 50% of the capital required to fund such line. In July 1996, the
Company assumed responsibility for 100% of the capital required to complete the
construction of the production line.

    The Company is subject to certain environmental and other regulations
primarily administered by the United States Environmental Protection Agency and
various state agencies. Management of the Company believes it has complied with
all material aspects associated with these regulations.

    The Company is subject to various claims and business disputes in the
ordinary course of business. Management does not anticipate that the ultimate
outcome of these issues will have a material impact on the Company's financial
position or results of operations.

(8) ACCRUED COMPENSATION AND OTHER ACCRUED LIABILITIES

    The components of accrued compensation and other accrued liabilities are as
follows:

<TABLE>
<CAPTION>
                                                       1997              1996
                                                    -----------       ----------
<S>                                                 <C>               <C>
Accrued vacation ...............................    $   179,939       $   86,262
Employee stock purchase plan payable ...........         55,897           90,157
Property taxes payable .........................         36,925           33,674
Accrued commissions and bonuses ................        327,000          264,000
Wages payable ..................................         83,874           10,116
Employee annuities payable .....................           --              4,192
Other ..........................................        270,156           65,747
                                                    -----------       ----------
                                                    $   953,791       $  554,148
                                                    ===========       ==========
</TABLE>


                                      F-22
<PAGE>   54

(9)  INCOME TAXES

     The Company has had losses since Inception, and therefore has not been
subject to federal income taxes. As of December 31, 1997, the Company had an
accumulated net operating loss ("NOL") carryforward for income tax purposes of
approximately $20.8 million. The carryforward is subject to examination by the
tax authorities and expires at various dates through the year 2012. The Tax
Reform Act of 1986 contains provisions that may limit the NOL carryforwards
available for use in any given year upon the occurrence of certain events,
including significant changes in ownership interest. A change of ownership of a
company greater than 50% within a three-year period results in an annual
limitation on the Company's ability to utilize its NOL carryforwards from tax
periods prior to the ownership change. The private placement sale of Series A
Convertible, Redeemable Preferred Stock in October 1997 resulted in such a
change of ownership and the Company estimates that the resulting NOL
carryforward limitation will be approximately $6.8 million per year for periods
subsequent to October, 1997. The Company does not believe that this limitation
will affect the eventual utilization of its total NOL carryforwards.

Deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                    --------------------------------
                                                         1997              1996
                                                         ----              ----
<S>                                                 <C>                <C>
Deferred tax assets:
         Net operating loss carryforwards ......    $   7,938,406      $   4,500,000
         Deferred revenue ......................          696,886            285,476
         Accrued compensation ..................          225,987            150,973
         Other .................................           58,384              5,626
                                                    -------------      -------------
                                                        8,919,663          4,942,075
         Less valuation allowance ..............       (8,496,336)        (4,805,271)
                                                    -------------      -------------
                                                          423,327            136,804
Deferred tax liability:
         Depreciation differences ..............         (343,919)           (79,112)
         Capitalized patent costs ..............          (79,408)           (57,692)
                                                    -------------      -------------
                                                         (423,327)          (136,804)
                                                    -------------      -------------
               Net deferred taxes ..............    $           0      $           0
                                                    =============      =============
</TABLE>


The Company's net deferred tax assets represent a previously unrecognized tax
benefit. Recognition of these benefits requires future taxable income, the
attainment of which is uncertain, and therefore, a valuation allowance has been
established for the entire tax benefit and no benefit for income taxes has been
recognized in the accompanying statements of operations.


(10) SIGNIFICANT CUSTOMERS

        Below is a listing of major customers, each of which comprised more
than 10% of revenues:

<TABLE>
<CAPTION>
                                                                1997                       1996
                                                                ----                       ----
                                                         AMOUNT      PERCENT       AMOUNT        PERCENT
                                                       -----------   -------     ----------      -------
<S>                                                    <C>             <C>       <C>             <C>
Johnson Controls..............................         $ 1,952,367     77%          --
United States Government SBIR Contract........         $   280,786     11%       $ 72,458          15%
Customer 2 ...................................         $   277,500     11%        360,000          76%
</TABLE>



                                      F-23
<PAGE>   55


                                 EXHIBIT INDEX


<TABLE>
<CAPTION>

     EXHIBIT
     NUMBER                                               DESCRIPTION
     ------                                               ------------

     <S>               <C>          <C>
      3(i).1*          --           Amended and Restated Certificate of Incorporation of
                                    the Company.
     3(ii).1*          --           Amended and Restated Bylaws of the Company.
         4.1*          --           Reference is made to Exhibits 3(i).1 and 3(ii).1.
         4.2*          --           Specimen stock certificate.
         4.3+          --           Certificate of Designation of the Series A Preferred Stock.
         4.4+          --           Specimen stock certificate representing shares of Series A
                                    Preferred Stock.
         4.5+          --           Amendment to the Certificate of Designation of the Series A
                                    Preferred Stock.
         4.6+          --           Certificate of Designation of the Series B Junior Participating
                                    Preferred Stock (incorporated by reference to Exhibit 99.3 of
                                    The Registrant's Report on Form 8-K filed January 23, 1998).
         4.7+          --           Amendment to the Amended and Restated Bylaws of the
                                    Registrant.
         4.8+          --           Rights Agreement dated as of January 1998 among the
                                    Registrant and American Stock Transfer & Trust Company
                                    (incorporated by reference to Exhibit 99.2 of the Registrant's
                                    Report on Form 8-K filed January 23, 1998).
         4.9+          --           Form of Rights Certificate (incorporated by reference to
                                    Exhibit 99.4 of the Registrant's Report on Form 8-K filed
                                    January 23, 1998).
        10.1*          --           Form of Indemnity Agreement between the Company and
                                    each of its Directors and executive officers, with
                                    Related schedule.
        10.2*          --           1996 Equity Incentive Plan of the Company (the "Option

</TABLE>


<PAGE>   56



<TABLE>

        <S>            <C>          <C>
                                    Plan"), including forms of options granted to employees
                                    and non-employee Directors under the Option Plan.
        10.3**         --           Amendments to the Option Plan, dated December 11, 1996.
        10.4**         --           Amendments to the Option Plan, dated January 30, 1997.
        10.5*          --           1996 Employee Stock Purchase Plan of the Company.
        10.6*++        --           Employment Agreement between the Company and Daniel S.
                                    Lankford, dated July 11, 1994.
        10.7*          --           Employment Agreement between the Company and William E.
                                    Younkes, dated April 1, 1993.
        10.8*          --           Employment Agreement Amendment between the Company and
                                    William E. Younkes, dated October 1, 1995.
        10.9*++        --           Letter Agreement between the Company and Joseph F.
                                    Fojtasek, dated February 13, 1996.
        10.10*         --           Promissory Note executed by Tristan E. Juergens, dated
                                    November 1, 1995.
        10.11*         --           Promissory Note executed by Tristan E. Juergens, dated
                                    August 29, 1995.
        10.12*         --           Stock Purchase Agreement
                                    between the Company and Tristan
                                    E. Juergens, dated August 29,
                                    1995.
        10.13*         --           Stock Award Agreement between the Company and Tristan
                                    E. Juergens, dated August 31, 1995.
        10.14*         --           Stock Award Agreement between the Company and Robert F.
                                    Nelson, dated August 31, 1995.
        10.15*         --           Stock Award Agreement between the Company and Sandra D.
                                    Schreiber, dated August 31, 1995.
        10.16*         --           Stock Award Agreement between the Company and William
                                    E. Younkes, dated August 31, 1995.
        10.17*         --           Note Purchase Agreement
                                    between the Company and certain
                                    parties named therein, dated
                                    April 19, 1994.
        10.18*         --           Series C Preferred Stock Purchase Agreement, dated July
                                    19, 1994.
        10.19*         --           Supplemental Agreement to Series C Preferred Stock
                                    Purchase Agreement between the Company and certain
                                    parties named therein, dated September 30, 1994.
        10.20*         --           Note and Warrant Purchase Agreement between the Company
                                    and certain parties named therein, dated March 14, 1995,
                                    including forms of Convertible Promissory Notes and Stock
                                    Purchase Warrants issued to the parties.
        10.21*         --           Series D Preferred Stock Purchase Agreement between the
                                    Company and certain parties named therein, dated May 24,
                                    1995.
        10.22*         --           Guaranty Agreement between the Company and Steven Paul,
                                    dated May 24, 1995.
        10.23*         --           Stock Purchase Warrant issued
                                    to Freedom Ventures Incorporated,
                                    dated May 24, 1995.
        10.24*         --           Letter Agreement among the
                                    Company, Harold Scott and certain
                                    parties named therein, dated
                                    January 18, 1996.
        10.25*         --           Series E Preferred Stock Purchase Agreement between the
                                    Company and Johnson Controls Battery Group, Inc. and
                                    certain other parties named therein, dated June 26, 1995.
        10.26*         --           Purchasers and Principal Stockholder Agreement among
                                    the Company, Tristan E. Juergens and certain other
                                    parties named therein, dated June 26, 1995.
        10.27*         --           Warrant to Purchase Shares of Series E Preferred Stock
                                    issued to Johnson Controls Battery Group, Inc., dated
                                    June 26, 1995.
        10.28*         --           Joint Venture Agreement between the Company and Johnson
                                    Controls Battery Group, Inc., dated June 26, 1995.
        10.29*         --           Johnson Controls/Bolder LLC Operating Agreement between
                                    the Company and Johnson Controls Battery Group, Inc.,
                                    dated June 26, 1995.
        10.30*         --           BTC Johnson Controls License Agreement between the
                                    Company and Johnson Controls Battery Group, Inc., dated
                                    June 26, 1995.
        10.31*         --           Johnson Controls License
                                    Agreement between the Company and
                                    Johnson Controls/Bolder LLC,
                                    dated June 26, 1995.
        10.32*         --           Johnson Controls JV Trade Name License Agreement among
                                    the Company, Johnson Controls/Bolder LLC and Johnson
                                    Controls Battery Group, Inc., dated June 26, 1995.
        10.33*         --           JV BTC/Johnson Controls License Agreement among the
                                    Company, Johnson Controls Battery Group, Inc. and Johnson
                                    Controls/Bolder LLC, dated June 26, 1995.
        10.34*         --           JV BTC/Johnson Controls Manufacturing and Supply
                                    Agreement among the Company, Johnson Controls Battery

</TABLE>




<PAGE>   57



<TABLE>

        <S>            <C>          <C>
                                    Group, Inc. and Johnson Controls/Bolder LLC, dated June
                                    26, 1995.
        10.35***       --           Agreement among the Company, Johnson Controls Battery
                                    Group, Inc. and Johnson Controls/Bolder LLC, dated as of
                                    July 31, 1996.
        10.36***       --           Cross Supply Agreement between the Company and Johnson
                                    Controls Battery Group, Inc., dated as of January 22,
                                    1997.
        10.37*         --           Senior Loan and Security Agreement between the Company
                                    and Phoenix Leasing Incorporated, dated July 29, 1994,
                                    including forms of Warrants to Purchase Shares of Series
                                    C Preferred Stock and Promissory Notes issued to Phoenix
                                    Leasing Incorporated.
        10.38*         --           First Amendment to Purchase Agreement between the
                                    Company and Phoenix Leasing Incorporated, dated July 29,
                                    1994.
        10.39*         --           Amendment to Purchase Agreement between the Company,
                                    certain stockholders of the Company and Phoenix Leasing
                                    Incorporated, dated March 25, 1996.
        10.40*         --           Warrant issued to Phoenix Leasing Incorporated, dated
                                    March 25, 1996.
        10.41*****     --           Security Agreement between the Company and Transamerica
                                    Business Credit Corporation, dated as of March 4, 1997,
                                    including form of Promissory Notes issued to Transamerica
                                    Business Credit Corporation.
        10.42*         --           Service Agreement between the Company and Chemical
                                    Waste Management, Inc., dated October 19, 1993.
        10.43*         --           Lease Agreement between the Company and Jefferson Park
                                    West, dated December 13, 1993.
        10.44*         --           Lease Agreement between the Company and Jefferson Park
                                    West, dated November 14, 1994.
        10.45*         --           Agreement between the Company and Wright Industries,
                                    Dated March 5, 1996.
        10.46+         --           Purchase Agreement, dated October 3, 1997, between the
                                    Registrant and BT Alex. Brown Incorporated.
        10.47+         --           Registration Rights Agreement, dated October 8, 1997,
                                    between the Registrant and BT  Alex. Brown Incorporated.
        10.48++        --           Employment Agreement between
                                    the Company and Arthur S. Homa,
                                    dated September 19, 1997.
        23.1           --           Consent of Arthur Andersen LLP, Independent Auditors.
        27.1           --           Financial Data Schedule for the year ended December 31, 1997.
        27.2           --           Restated Financial Data Schedules for the years ended
                                    December 31, 1993, 1994, 1995 and 1996.
</TABLE>

-------------------------
+Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-3 (Registration No. 333-41625) and incorporated
herein by reference.

++Management contract.

*Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form SB-2 (Registration No. 333-2500-D) and
incorporated herein by reference.

**Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form S-8 (Registration 33-20989) and incorporated
herein by reference.

*** Previously filed with the Commission as an exhibit to the Company's February
5, 1997 Form 8-K (File No. 0-28060) and incorporated herein by reference.

****Previously filed with the Commission as an exhibit to the Company's
Registration Statement on Form SB-2 (Registration No. 333-21753) and
incorporated herein by reference.

*****Previously filed with the Commission as an exhibit to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1996.