<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: OCTOBER 31, 1995 Commission File Number: 0-17414
ADVANTAGE LIFE PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0213733
-------- ----------
(State of incorporation) (IRS Employer I.D. #)
13902 N. DALE MABRY HWY, SUITE 119, TAMPA, FL 33618
- - ---------------------------------------------- -----
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (813) 969-2002
--------------
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common stock outstanding on December 20, 1995: 5,929,518
---------
<PAGE>
ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------------ PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1995 3,869,056 $31,752 $6,051,837 ($5,761,124) $322,485
Issuance of stock for acquisition 9,261,130 73,988 73,988
1 for 20 reverse stock split (12,588,677) 0
Stock dividend (100%) 661,509 0
Acquisition of Environmental Professional 100 3,999,900 (1,468,235) 2,531,765
Advantage life Products elimination (3,438,435) 4,282,546 844,111
Net Loss (472,688) (472,688)
----------------------------------------------------------------------------------
Balance, July 31, 1995 1,323,018 105,840 6,613,302 (3,419,501) 3,299,641
Shares issued under employment
agreements and other (Note) 525,000 4,200 2,488,750 2,492,950
Stock subscribed (Note) 4,000,000 32,000 2,968,000 3,000,000
Additional acquisition costs 81,500 852 397,458 398,110
(397,312) (397,312)
Net Loss (2,787,740) (2,787,740)
----------------------------------------------------------------------------------
Balance, October 31, 1995 5,929,518 $ 142,692 $ 12,070,198 $ (8,207,241) $ 6,005,649
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ADVANTAGE LIFE PRODUCTS, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, April 30,
ASSETS 1995 1995
- - ------ ------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 117,717 $ 83,538
Accounts receivable, net 1,816,492 80,839
Income tax receivable 87,214 0
Receivable from officer 25,000 25,000
Inventory 86,833 180,849
Prepaid expenses 216,461 63,246
Advance to affiliate 128,806 0
------------ ------------
TOTAL CURRENT ASSETS 2,478,523 433,472
Fixed assets, net 607,120 22,131
Intagible assets, net 2,338,516 1,163,794
Note receivable - related party 30,500 0
Net deferred tax asset 35,026 0
Deferred expenses 900,000 0
Other 3,713 0
------------ ------------
TOTAL ASSETS $ 6,393,398 $ 1,619,397
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES:
Notes payable $ 512,530 $ 6,625
Accounts payable 2,092,927 480,111
Accrued product returns 107,715 226,564
Accrued royalties 458,165 374,255
Other accrued expenses 149,658 209,377
Notes payable - current portion 38,013 0
------------ ------------
TOTAL CURRENT LIABILITIES 3,359,008 1,296,932
------------ ------------
Notes payable - long term 28,741 0
------------ ------------
STOCKHOLDERS' EQUITY:
Common Stock 142,692 31,752
Additional Paid-in Capital 12,070,198 6,051,837
Accumulated Deficit (6,207,241) (5,761,124)
------------ ------------
Sub-total 6,005,649 322,465
Less common stock subscribed, but not paid (Note ) (3,000,000) 0
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 3,005,649 322,465
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 6,393,398 $ 1,619,397
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ADVANTAGE LIFE PRODUCTS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six months Six months
ended October 31 ended October 31
1995 1994
---------------- ----------------
<S> <C> <C>
REVENUES:
Gross Revenue $ 4,128,014 $ 1,784,539
Returns & Allowances (575,951) (154,502)
---------------- ----------------
NET REVENUES 3,552,063 1,630,037
COST AND EXPENSES:
Cost of sales 1,992,888 576,768
Selling, general & administrative 3,907,609 1,401,878
---------------- ----------------
TOTAL COSTS AND EXPENSES 5,900,497 1,978,646
---------------- ----------------
OPERATING (LOSS) (2,348,434) (348,609)
Other Income 88,007 127,710
Write-off of Goodwill (1,000,000)
---------------- ----------------
(LOSS) BEFORE INCOME TAXES (3,260,427) (220,899)
Income tax provision 0 0
---------------- ----------------
NET (LOSS) $ (3,260,427) $ (220,899)
---------------- ----------------
---------------- ----------------
Earnings (loss) per common shares:
Primary $ (1.42) $ (0.63)
---------------- ----------------
---------------- ----------------
Fully diluted $ (1.42) $ (0.63)
---------------- ----------------
---------------- ----------------
Weighted average number of common shares
used in computation:
Primary 2,303,421 351,597
---------------- ----------------
---------------- ----------------
Fully diluted 2,303,421 351,597
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ADVANTAGE LIFE PRODUCTS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months Three months
ended October 31 ended October 31
1995 1994
---------------- ----------------
<S> <C> <C>
Gross Revenue $ 2,403,845 $ 1,682,832
Returns & Allowances (235,336) (140,253)
---------------- ----------------
NET REVENUES 2,168,509 1,542,579
COST AND EXPENSES:
Cost of sales 1,323,861 496,965
Selling, general & administrative 2,693,576 1,159,147
---------------- ----------------
TOTAL COSTS AND EXPENSES 4,017,437 1,656,112
---------------- ----------------
OPERATING PROFIT (LOSS) (1,848,928) (113,533)
---------------- ----------------
Other Income 61,554 38,405
Write-off of Goodwill (1,000,000)
---------------- ----------------
(LOSS) BEFORE INCOME TAXES (2,787,374) (75,128)
Income tax provision 0 0
---------------- ----------------
NET (LOSS) $ (2,787,374) $ (75,128)
---------------- ----------------
---------------- ----------------
Earnings (loss) per common shares:
Primary $ (0.71) $ (0.21)
---------------- ----------------
---------------- ----------------
Fully diluted $ (0.71) $ (0.21)
---------------- ----------------
---------------- ----------------
Weighted average number of common shares
used in computation:
Primary 3,951,023 352,400
---------------- ----------------
---------------- ----------------
Fully diluted 3,951,023 352,400
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ADVANTAGE LIFE PRODUCTS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six months Six months
ended October 31 ended October 31
1995 1994
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES
Net Profit (Loss) $ (3,260,427) $ (220,899)
---------------- ----------------
Adjustments to reconcile net (loss) to
cash provided by operating activities:
Depreciation and amortization 1,481,616 65,843
Allowance for doubtful accounts 651
Non-cash charges & other 1,593,750 44,000
Changes in assets and liabilities:
Accounts receivable & other receivable 434,634 830,047
Inventory 174,516 56,231
Prepaid expenses and other (82,309) 45,628
Accounts payable (307,258) (1,178,310)
Accrued royalties (118,850)
Accrued product returns 83,909 (30,207)
Accrued other expenses (113,347) (52,179)
---------------- ----------------
Net cash (used by) operating activities (113,766) (439,195)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Receivable from officer 0 250,000
Cash received from acquisition 100,000
Additions to fixed assets - net (13,884) (2,000)
---------------- ----------------
Net cash from investing activities 86,116 248,000
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payment of note (4,480)
Principal payment of note to shareholder
Issuance of notes payable 66,309 60,000
Receivable from sale of common stock
Proceeds from issuance of common stock 387,506
Principal payments on obligations under capital lease(s)
---------------- ----------------
Net cash from (used in) financing activities 61,829 447,506
NET INCREASE(DECREASE) IN CASH 34,179 256,311
CASH, BEGINNING OF PERIOD 83,538 34,868
---------------- ----------------
CASH, END OF PERIOD $ 117,717 $ 291,179
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
<PAGE>
ADVANTAGE LIFE PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995
UNAUDITED INFORMATION
- - ---------------------
The consolidated financial statements have been prepared by Registrant,
without audit, except for the balance sheet as of April 30, 1995, which has
been derived from the audited financial statements for the year ended April
30, 1995, and include all adjustments which are, in the opinion of
management, necessary for a fair presentation of the results of operations
for the three and six month periods ended October 31, 1995 and 1994. Such
adjustments are of a normal recurring nature. Certain information and
footnote disclosure normally included in the financial statements have been
condensed or omitted pursuant to such rules and regulations, although
Registrant believes that the disclosures in such financial statements are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the Company's annual financial
statements included in its Annual Report on Form 10-K for the year ended
April 30, 1995.
Unless otherwise indicated, all numbers relating to shares are post-split,
to reflect the one-for-twenty (1 for 20) reverse stock split that was
completed on August 1, 1995, and a 100% stock dividend that was completed on
August 1, 1995.
On July 6, 1995, Advantage Life Products, Inc. ("Company") completed an
acquisition of Environmental Professionals, Inc. ("EPI") from Eagle Vision,
Inc. in exchange for 926,113 shares of the Company's common stock. The
transaction with Environmental Professionals was a purchase whereby a wholly
owned subsidiary of Advantage Life Products, Advantage Acquisition, Inc.,
acquired Environmental Professionals. Included in the consolidated
financial statements of the Company are the accounts of EPI from July 1,
1995 to October 31, 1995.
EPI was founded in October 1988, engaging in contract waste removal, which
entails arranging for the transportation and disposal of waste materials for
clients. Currently, EPI provides a full range of environmental remediation
services to industrial clients, major oil companies and environmental
consultants. These services can be broken down into four categories, which
are; (1) Environmental Site Remediation, (2) Drummed Waste Management, (3)
Transportation and Disposal of Hazardous and Non-hazardous Waste Materials,
and (4) Groundwater Treatment Service and Equipment Supply. Environmental
Professionals market area includes New Jersey, New York, Delaware, Maryland,
and Eastern Pennsylvania.
The exchange has been accounted as a reverse acquisition because the
shareholders of EPI obtained control of the surviving company. The
unaudited balance sheet at October 31, 1995 has been prepared assuming the
Acquisition Agreement with EPI was effective as of July 1, 1995. The
unaudited statement of operations for the thee and six month periods ended
October 31, 1995 include accounts of the Company for the three and six month
periods, and as to EPI for
<PAGE>
one month ended July 31, 1995, and the three months for the period ended
October 31, 1995.
ACQUISITION
- - -----------
On June 28, 1995, the Company entered into a definitive agreement and plan
of merger (the "Merger Agreement") under which Environmental Professionals,
Inc., a New Jersey-based environmental services firm ("EPI") was purchased
from Eagle Vision, Inc., and merged into Advantage Acquisition, Inc., a
newly formed acquisition subsidiary of the Company. The merger became
effective as of July 6, 1995.
Eagle Vision, Inc., a Florida corporation ("Eagle") and, prior to the
merger, the sole shareholder of EPI, received 926,113 shares of the
Company's voting common stock upon the consummation of the merger,
representing 70% of the 1,323,018 shares of such common stock then
outstanding. The exchange has been accounted as a reverse acquisition
because the shareholders of EPI obtained control of the surviving company.
The Company's pre-merger shareholders, who owned 396,906 shares of its
voting common stock, obtained the contingent right to receive up to an
additional 101,761 shares, dependent upon the Company's net recovery, if
any, under pending litigation filed against Guthy-Renker Corporation, Revlon
Corporation, and others. (See "Legal Proceedings").
EPI was founded in October 1988, and since its formation has engaged in
contract waste removal. Currently, it provides a full range of
environmental remediation services to industrial clients, major oil
companies and environmental consultants. These services consist principally
of four categories: environmental site remediation, drummed waste
management, transportation and disposal of hazardous and non-hazardous waste
materials, and groundwater treatment service and equipment supply. EPI's
market area includes New Jersey, New York, Delaware, Maryland, and Eastern
Pennsylvania. The Company intends to continue utilizing EPI's acquired
assets in the same manor as they were used prior to the merger.
GOODWILL
- - --------
Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight-line basis over the expected
periods to be benefited. The Company recognizes an impairment of goodwill
when it is determined that the goodwill balance will not be recovered
through projected undiscounted cash flows. The amount of goodwill
impairment, if any, is measured based on the difference between the recorded
goodwill balance and the amount of undiscounted cash flows, and is
recognized as a charge to operations. Goodwill is being amortized over a
three to seven year period. Included in the statement of operations is a
charge of $1,000,000 representing a reduction of Goodwill relating to the
Company's consumer product activities. These operations are being curtailed
in that the Company will allocate its future resources to expanding its
environmental business operations.
<PAGE>
COMPONENT REPORTING
- - -------------------
Included in sales and cost of sales for the three and six month periods
ended October 31, 1995 are sales for Advantage Life Products, Inc, for the
three months ended October 31, 1995 of $690,016 and cost of sales for the
same period of $136,093. Sales for Advantage Life Products, Inc, for the six
months ended October 31, 1995 of $1,466,214 and cost of sales for the same
period of $350,915. For EPI, sales and cost of sales which are in the
consolidated results for the three month period ended October 31, 1995 were
$1,478,493 and $1,187,768 respectfully. For EPI, sales included in the six
month period ended October 31, 1995 were $2,085,849 and cost of sales for
the same period of $1,641,973. During the periods sales and cost of sales
for EPI are from July 1, 1995, the effective date of the acquisition.
EQUITY TRANSACTIONS
- - -------------------
In order to provide working capital to enable the Company to continue its
operations as a going concern, 4,000,000 shares of common stock have been
contracted to be sold for $3,000,000. Such funds will provide working
capital needed to continue operations as a "going concern" and eliminate the
significant negative working capital position of the Company.
The Company issued 400,000 shares of common stock to two of its senior
officers representing compensation under five year employment agreements.
For accounting purposes, those contracts are being amortized over two years.
An additional 81,500 shares of common stock were issued to advisors who
represented the Company in its acquisition of Environmental Professionals;
and issued 125,000 shares to two directors and a consultant for services
rendered.
STOCK OPTIONS
- - -------------
Stock options transactions for the quarter are summarized as follows:
Balance at April 30, 1995 176,838 $13.10 - $93.75
Activity for the period
April 30, 1995 to October 31, 1995:
Granted 70,400 $5.00
Cancelled 59,856 $14.10 - 14.25
------ --------------
Balance at October 31, 1995 187,382 $5.00 - $40.20
------- --------------
------- --------------
<PAGE>
Management's Discussion and Analysis or Plan of Operation.
OVERVIEW
The Company provides environmental remediation services through Environmental
Professionals, Inc., ("EPI") an entity acquired effective July 6, 1995, (see
"Stock Transactions"), and develops and markets consumer products, focusing on
cosmetic and beauty and health products.
EPI provides a full range of environmental remediation services to industrial
clients, major oil companies and environmental consultants. These services
include site remediation, waste management, transportation, the disposal of both
hazardous and non-hazardous waste materials and groundwater treatment products
and services. EPI's market area includes New Jersey, New York, Delaware,
Maryland, and Eastern Pennsylvania.
As a result of the recent acquisition of EPI and the attendant diversity of
operations, two separate divisions are being operated under the corporate
umbrella of Advantage Life Products, Inc. (the public entity).
The Company intends to focus its future operations in the environmental
industry. The Company's future plans for the environmental division include
development of EPI's groundwater treatment capability and continue to expand the
remediation business and groundwater treatment business. Additional
acquisitions in the environmental industry are also being considered and
evaluated, although there are no assurances that any will be completed.
The Company markets a line of hair products, focusing on the Secret Hair -TM-
brand, through (1) direct response television via 30 minute infomercials, (2)
select beauty salons, and (3) international sales channels. On May 9, 1994 the
Company entered into a marketing and distribution agreement with Guthy-Renker
Corporation ("GRC") of Palm Desert, California for the electronic media
distribution of Secret Hair. Pursuant to the terms of the agreement, the Company
and GRC would each receive 50% of the net profits from the sales of the Secret
Hair product. Effective January 31, 1995, due to difficulties the Company
experienced with GRC, the Company commenced airing the infomercial itself and
began selling directly to salons via direct
<PAGE>
marketing methods. See "Legal Proceedings". GRC is a developer and distributor
of infomercials. GRC has produced and distributed infomercials and products such
as Tony Robbin's Personal Power programs, The Principal Secret skin and hair
care products with Victoria Principal, and Perfect Smile with Vanna White.
Additionally, management is working on developing or acquiring other products
which it feels can provide future sources of revenues and earnings. Management
is also developing strategic alliances to take advantage of the international
sales potential for all of its products.
OPERATING RESULTS
Net consumer product division revenues for the six months ended October 31, 1995
were $1,466,214 as compared to $1,630,037 for the similar period ended October
31, 1994. Net consumer product division revenues for the three months ended
October 31, 1995 were $690,016 as compared to $1,542,579 for the similar period
ending October 31, 1994.
The decrease in consumer product division revenues is attributed to the
Company's deemphasis on its consumer product activities. Going forward, the
Company is going to allocate its resources in expanding the environmental
business.
Consolidated net revenues of $3,552,063 for the six months ended October 31,
1995 include $2,085,849 of EPI's sales from July 1, 1995, date of acquisition.
Consolidated net revenue of $2,168,509 for the quarter ended October 31, 1995
include $1,478,493 of EPI's sales for that quarter.
Cost and expenses for the consumer products division was $3,634,997 for the six
months ended October 31, 1995, as compared to $1,978,646 for the similar 1994
period. Cost and expenses for the three month period ended October 31, 1995
were $2,352,653 as compared to $1,656,112 for the similar 1994 period. Cost and
expense increases are primarily attributed to amortization of long term
employment contracts. The contracts were entered into by issuing common stock
totaling 400,000 shares. in lieu of cash and cover a period of five years. For
accounting purposes $1,500,000 has been charged to operations in the current
period.
<PAGE>
Consolidated costs and expenses of $5,900,497 for the six months ended October
31, 1995 include $2,265,500 of EPI cost and expenses from July 1, 1995, date of
acquisition. Consolidate cost and expenses of $4,017,437 for the quarter ended
October 31, 1995 included $1,664,784 of EPI's cost for that quarter.
For the six month period ended October 31, 1995, the Company realized a net loss
of $3,260,427 ($1.42 per share) as compared to a net loss of $220,899 ($.13 per
share) for the similar period in 1994. For the three months ended October 31,
1995, the Company realized a net loss of $2,787,374 ($.71 per share) as compared
to a net loss of $75,128 ($.21 per share) for the similar period in 1994. The
increase in net loss for both the three and six month periods is attributable to
the decline in sales relating to the consumer products division and the
additional write off of goodwill, and the charge to operations for the
employment contracts.
STOCK TRANSACTIONS
On June 28, 1995, the Company entered into a definitive agreement and plan of
merger (the "Merger Agreement") under which Environmental Professionals,
Inc.,("EPI") a New Jersey-based environmental services firm was purchased from
Eagle Vision, Inc., and merged into Advantage Acquisition, Inc., a newly formed
acquisition subsidiary of the Company. The merger became effective as of July
6, 1995.
Eagle Vision, Inc., a Florida corporation ("Eagle") and, prior to the merger,
the sole shareholder of EPI, received 926,113 shares of the Company's voting
common stock upon the consummation of the merger, representing 70% of the
1,323,018 shares of such common stock then outstanding. The Company's pre-merger
shareholders, who owned 396,906 shares of its voting common stock, obtained the
contingent right to receive up to an additional 101,761 shares, dependent upon
the Company's net recovery, if any, under pending litigation filed against
Guthy-Renker Corporation, Revlon Corporation, and others. (See "Legal
Proceedings").
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net working capital deficiency was at $880,485 on October 31, 1995, as compared
to $863,460 at April 30,1995. The increase in the working capital deficiency is
due to the Company's loss from operations affecting working capital offset by a
modest positive working capital position of EPI at October 31, 1995. EPI's
working capital included in the Company's consolidated position at October 31,
1995 was $55,614. The significant increase in working capital components at
October 31, 1995 as compared to April 30, 1995 are pursuant to the inclusion of
EPI's components in the consolidated balance sheet at October 31, 1995.
To eliminate its negative working capital position and to provide the necessary
liquidity to continue as a "going concern" the Company has contracted to sell
4,000,000 shares of its common stock and raise $3,000,000.
These funds will provide the immediate liquidity needed by the Company to remain
in business and provide the necessary capital to expand through internal growth
and acquisitions in the environmental business.
PART II - Other Information
Item 1. LEGAL PROCEEDINGS
-----------------
The Company and it subsidiaries are defendants in various legal actions which
arise in the normal conduct of business. In addition, the Company is a party in
the following legal proceedings:
Advantage Life Products, Inc. and Lasting Cosmetics, Inc., a Delaware
Corporation v. Michael Ackerman and Lasting Cosmetics, Inc., a New York
Corporation, Case No. 730085 filed in Orange County Superior Court on May 23,
1994. This is a suit by Advantage Life Products, Inc. (hereinafter "ALP") and
Lasting Cosmetics, Inc. (Delaware) (hereinafter "LCD") against Michael Ackerman
(hereinafter "ACKERMAN") and Lasting Cosmetics, Inc. (New York) (hereinafter
"LCNY") for Fraud and Deceit, Negligent Misrepresentation,
<PAGE>
Suppression of Facts, Conspiracy, Breach of Warranty, and Declaratory Relief.
Plaintiffs' complaint seeks recovery of $17,000,000 from Defendants. In this
action, Defendants Ackerman and LCNY unsuccessfully sought to compel, inter
alia, Advantage into an arbitration. Defendants Ackerman and LCNY have appealed
to the 4th District Court of Appeal this refusal by the trial court to grant
them arbitration, and the trial judge has taken the position that the trial
court proceedings have been stayed by virtue of this appeal. This appeal is
presently being briefed. The facts of which the Company has knowledge indicate
that any defense by Defendants ACKERMAN and LCNY will ultimately be found to be
without merit.
Ackerman v. Advantage Life Products, Inc., Case No. 739547, filed on December 6,
1994, in the Orange County Superior Court. This action is a claim by ACKERMAN
which the Company's legal counsel believes should have been filed by ACKERMAN as
a Cross-Complaint in Case No. 730085, but which could not have been filed by
Ackerman therein without waving his theretofore unsuccessful claims that he is
entitled to go to arbitration. ACKERMAN asserts this action is on a note and
stock security agreement, and seeks a recovery in the sum of $300,000. In this
action, ALP and LCD have cross-complained against ACKERMAN and LCNY asserting
the same claims as in Case No. 730085. Given the facts of which the Company has
knowledge, it does not believe ACKERMAN and LCNY will have any more success in
this litigation than in Case No. 730085
More Direct Response, Inc., a California Corporation v. Advantage Life Products,
Inc., Case No. 739343, filed December 1, 1994. This is an action in the Orange
County Superior Court by the Plaintiff alleging Breach of Contract, Breach of
the Implied Covenant of Good Faith and Fair Dealing, Breach of Trust,
Constructive Fraud, Fraud, Imposition and Enforcement of Constructive Trust.
The action asserts that Regal Best, Inc., defaulted on a marketing agreement
with ALP, relative to the CigArrest product line which had previously been
assigned to Regal Best, Inc., and ALP had some ongoing obligation to More Direct
Response, Inc., given Regal Best's default. On February 9, 1995, the trial
judge, on the request of Defendant ALP, ordered the entire matter to binding
arbitration. More Direct Response, Inc., seeks a recovery which is vaguely
pleaded at between $75,000 and $170,000. No date for this arbitration has yet
been set but, based on the facts of which the Company is aware of, it is
anticipated that More Direct Response, Inc. will not be successful in this
arbitration.
<PAGE>
National Network Marketing, Inc. v. Advantage Life Products, Inc., Case No.
739776, filed originally in Venture County Superior Court on August 4, 1994, and
transferred on the motion of Defendant ALP to the Orange County Superior Court
on December 12, 1994. This is an action by National Network Marketing, Inc.,
dba Maui Production for an accounting from ALP. National Network Marketing,
Inc. alleges that it assisted ALP in the creation of certain television
commercials for Advantage's products. The complaint seeks a recovery in an
unspecified amount of an alleged 2% commission. The claims of National Network
Marketing, Inc., are denied by the Company, and based on the facts of which the
Company is aware of, the Company does not believe there is any merit to the
claims of National Network Marketing, Inc. in this suit.
Sherry Guimond, a previous employee of the Company, brought an action against
Advantage Life Products, Inc., Don Danks, Parker Dale, James Stapleton, Robert
Fredericks, George Carras, Case No. 740250, on December 21, 1994 in the Orange
County Superior Court. The suit alleges Breach of Contract, Breach of Covenant
of Good Faith and Fair Dealing, Sex Discrimination, Fraud and Deceit, Tortious
Inducement of Breach of Contract, Defamation, Specific Performance. Ms. Guimond
seeks unspecified damages in an amount greater than $500,000. The Company
vigorously denies any wrongdoing, and believes the allegations are without
merit.
<PAGE>
Advantage Life Products, Inc. v. Guthy-Renker Corporation; Tri-star Products,
Inc., Revlon Consumer Products Corporation; Revlon General Wig, Inc., American
Telecast Corporation; First Class Marketing, Inc., case number BC127193 filed in
Los Angeles County Superior Court, Central District on May 4, 1995. This is a
suit by the Company against the parties listed above for Complaint for
Accounting, Declaratory Relief, Breach of Contract, Breach of Implied Good Faith
and Fair Dealing, Conversion, Deceit, Constructive Fraud, Misappropriation of
Trade Secrets, Interference with Economic Relationship, Unfair Competition,
Untrue/Misleading Advertising, Trademark Dilution, False Designation of Orgin
and False Description, and for Civil RICO for Damages and for Restitutionary,
Injunctive and other Relief. Plaintiffs' complaint seeks recovery of at least
$3,000,000 from Defendants. The facts of which the Company has knowledge
indicate that any defense by the defendants will be found to be without merit.
Guthy Renker Corporation v. Advantage Life Products, Inc., and Don Danks, Cross
complaint filed June 16, 1995 in Los Angeles Superior Court, for Breach of
Written Contract, Conversion, Negligent Misrepresentation, Bad Faith Denial of
the Existence of a Contract, Dissolution and Accounting, False Designation or
Orgin and False Description, Recission and Restitution, Defamation, Declaratory
Relief, and Injunctive Relief. Guthy-Renker is seeking approximately $4,500,000
in damage and reimbursement. The Company believes the facts of which it has
knowledge of will enable it to prevail on all claims from Guthy-Renker.
OTHER EVENTS
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) EXHIBITS
--------
None
(b) REPORTS ON FORM 8-K
-------------------
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVANTAGE LIFE PRODUCTS, INC.
December 20, 1995 by: /s/ ALAN LIPSTEIN
-------------------------
Alan Lipstein
Chief Executive Officer
December 20, 1995 by: /s/ GEORGE CARRAS
-------------------------
George Carras
Chief Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> OCT-31-1995
<CASH> 117,717
<SECURITIES> 0
<RECEIVABLES> 1,816,429
<ALLOWANCES> 0
<INVENTORY> 86,833
<CURRENT-ASSETS> 2,478,523
<PP&E> 607,120
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,393,398
<CURRENT-LIABILITIES> 3,359,008
<BONDS> 0
<COMMON> 142,692
0
0
<OTHER-SE> 2,862,957
<TOTAL-LIABILITY-AND-EQUITY> 6,393,398
<SALES> 3,552,063
<TOTAL-REVENUES> 3,552,063
<CGS> 1,992,888
<TOTAL-COSTS> 5,900,497
<OTHER-EXPENSES> 1,088,007
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,260,427)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,260,427)
<EPS-PRIMARY> (1.42)
<EPS-DILUTED> (1.42)
</TABLE>
