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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
-----------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from __________ to ___________
Commission File No. 0-17414
ADVANTAGE LIFE PRODUCTS, INC.
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(Name of Small Business Issuer in Its Charter)
<TABLE>
<S> <C>
Delaware 33-0213733
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(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
1509 S. Florida Ave., Suite 3, Lakeland, Florida 33803
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(Address of Principal Executive Offices) (Zip Code)
(941) 686-2621
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(Issuer's Telephone Number, Including Area Code)
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(Former name, former address and former fiscal year, if changed since last
year.)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of August 31, 1997, the
Company had 12,878,095 shares of Common Stock outstanding, $0.16 par value.
10-QSB Report for Period Ended June 30, 1997 Page 1 of 14
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ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
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<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 7,100
Notes receivable 2,122,354
Other receivables 86,782
Other current assets 130,456
-----------
Total current assets 2,346,692
Fixed assets-net 1,705,429
Goodwill-net 2,288,257
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TOTAL ASSETS $ 6,340,378
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable and amounts due individuals $ 91,467
Accounts payable 904,232
Other accrued expenses 264,986
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Total current liabilities 1,260,685
Long-term debt 389,471
Contingent liabilities 1,195,000
Other 325,759
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TOTAL LIABILITIES 3,170,915
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STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 1,250,000 authorized;
1,000,001 shares issued and outstanding 1,100,000
Common stock, $0.16 par value; 25,000,000 shares authorized;
12,878,095 shares issued and outstanding 2,044,495
Additional paid in capital 364,154
Accumulated deficit (339,186)
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TOTAL STOCKHOLDERS' EQUITY 3,169,463
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 6,340,378
===========
</TABLE>
See notes to consolidated financial statements.
10-QSB Report for Period Ended June 30, 1997 Page 2 of 14
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ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1997
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<S> <C> <C>
Revenue $ 212,834 $ 337,095
Cost of sales 125,945 239,424
General and administration 119,044 272,483
Amortization of goodwill 13,002 52,008
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Loss from operations (45,157) (226,820)
Interest expense 10,820 36,604
Interest income (19,156) (68,060)
Other (income) expense 473 473
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NET LOSS $ (37,294) $ (195,837)
============ ============
NET LOSS PER SHARE $ (0.003) $ (0.019)
============ ============
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 11,597,917 10,088,622
============ ============
</TABLE>
See notes to consolidated financial statements.
10-QSB Report for Period Ended June 30, 1997 Page 3 of 14
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ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Common Stock Paid in
Shares $ Shares $ Capital Deficit
---------- ------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997 1,598,497 $ 255,760 $ 7,012,431 $ (143,349)
Adjustment to reflect reverse
purchase acquisition of
Treasure Rockhound
Ranches, Inc. (9,199,735)
Issuance as part of acquisition
costs of Treasure Rockhound
Ranches, Inc. 6,000,000 960,000 466,800
Proceeds from sale of common
stock 4,000,000 640,000 1,070,000
Issuance in settlement of judg-
ment 929,598 148,735 574,043
Issuance for services rendered 250,000 40,000 440,615
Issuance of Series A, Non-
convertible Preferred Stock,
no par value 1,000,000 $ 1,000,000
Issuance of Series B, Convert-
ible Preferred Stock, no par
value, $100,000 face value 1 100,000
Net loss (195,837)
--------- ----------- ---------- ---------- ----------- ----------
BALANCE, June 30, 1997 1,000,001 $ 1,100,000 12,778,095 $2,044,495 $ 364,154 $ (339,186)
========= =========== ========== ========== =========== ==========
</TABLE>
See notes to consolidated financial statements.
10-QSB Report for Period Ended June 30, 1997 Page 4 of 14
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ADVANTAGE LIFE PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997
----------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (195,837)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 70,798
Increase in current assets (160,951)
Increase in accounts payable 405,180
Decrease in other current liabilities (529,323)
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NET CASH USED IN OPERATING ACTIVITIES (410,133)
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Cash flows from investing activities:
Note receivable from stockholder (905,716)
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NET CASH USED IN INVESTING ACTIVITIES (905,716)
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Cash flows from financing activities:
Proceeds from issuance of common and preferred stock 1,251,665
Notes payable (24,300)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 1,227,365
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NET CHANGE IN CASH (88,484)
CASH, BEGINNING OF PERIOD 95,584
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CASH, END OF PERIOD $ 7,100
===========
</TABLE>
See notes to consolidated financial statements.
10-QSB Report for Period Ended June 30, 1997 Page 5 of 14
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ADVANTAGE LIFE PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - GENERAL
The financial statements of Advantage Life Products, Inc. ("Advantage Life" or
the "Company") as of June 30, 1997 and for the three and six months then ended
are unaudited and, in the opinion of Advantage Life, reflect all adjustments
necessary for a fair presentation of such data and have been prepared on a
basis consistent with the April 30, 1996 Audited Financial Statements. All such
adjustments made were of a normal recurring nature. Advantage Life's
significant accounting policies are described in the notes to the April 30,
1996 Audited Financial Statements and there have been no material changes in
significant accounting policies from those described therein. On April 25, 1997
the Company's Board of Directors approved a change of the Company's year end
from April 30 to December 31, to match the fiscal year end of its only
operating subsidiary, Treasure Rockhound Ranches, Inc. ("Treasure Rockhound").
In mid-1995, Advantage Life entered into an agreement and plan of merger under
which Environmental Professionals, a New Jersey based environmental services
firm would merge with Advantage Acquisition, Inc., a newly formed acquisition
subsidiary of Advantage Life. The surviving entity would be Environmental
Professionals, Inc. ("Environmental Professionals"). Environment Professionals
provided various environmental remediation services to industrial clients,
major oil companies and environmental consultants. In May 1996, as the result
of the insolvency of a major customer, and Environmental Professionals'
inability to obtain other sources of funding, Environmental Professionals was
unable to meet its current obligations and ceased operations. Environmental
Professionals had pledged vehicles on loans to a bank, and in addition, had
pledged all other assets, including its accounts receivable, tangible and
intangible assets on a line of credit to the same bank. The bank filed an
action and took possession of Environmental Professionals assets, and a
Statutory Receiver was appointed in August of 1996. As a result of the
circumstances surrounding the current status of Environmental Professionals,
i.e. Advantage Life does not have control of Environmental Professionals,
management has decided to deconsolidate Environmental Professionals.
On February 21, 1997, Advantage Life and its newly formed subsidiary, Advantage
Life Acquisition One, Inc. ("Advantage Life Acquisition"), a Florida
corporation entered into an Agreement and Plan of Reorganization by and
among Advantage Life and its subsidiary, Advantage Life Acquisition and Channel
America Broadcasting, Inc. and its subsidiary, Technology Holdings, Inc. to
acquire 100% of the issued and outstanding stock of Technology Holding's
subsidiary, Treasure Rockhound (the "Agreement and Plan of Reorganization") for
6,000,000 shares of Advantage Life's restricted common stock, a note payable to
Technology Holdings for $750,000 and Advantage Life assumed certain liabilities
of Technology Holdings totaling approximately $658,000. The primary business of
Treasure Rockhound is owning and operating recreational resorts and
recreational vehicle ("RV") campgrounds located across the United States.
Treasure Rockhound, in business since 1974, operates through its private
membership organization, Camper Ranch Club of America ("Camper Ranch Club"),
offering its members six recreational resorts located in Arizona, New Mexico
and Texas. Treasure Rockhound owns approximately 5,100 acres and leases
approximately 12,000 other acres from individuals, states and the federal
government. Camper Ranch Club has a total membership of over 8,500 with 5,300
active dues-paying members.
NOTE B - COMMON & PREFERRED STOCK
COMMON STOCK - The Company has authorized 25,000,000 shares of common stock at
$0.16 par value. As of June 30, 1997, 12,778,095 shares were issued and
outstanding.
In October 1994, Advantage Life effected a 1 for 3 reverse stock split. In
August 1995, Advantage Life effected a 1 for 20 reverse stock split, and on the
same date effected a 100% stock dividend. On June 24, 1996, Advantage Life
effected a 1 for 20 reverse stock split. All
10-QSB Report for Period Ended June 30, 1997 Page 6 of 14
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common stock transactions have been retroactively restated for all periods
presented as a result of these reverse stock splits and stock dividends.
In June 1996, Advantage Life issued 455 post-split shares to adjust for the 1
for 20 reverse stock split of June 24, 1996. In July 1996, Advantage Life
issued 300,000 post-split shares to Vietri Investments, Ltd. for services
provided to the Company. In October 1996, Advantage Life entered into a Capital
Stock Purchase Agreement for the sale of 1,000,000 post-split shares to Cimtran
for a total consideration of $500,000. Under the terms of this Capital Stock
Purchase Agreement, Advantage received $85,000 in cash and a promissory note
from Cimtran in the principal amount of $415,000 which was to mature August 31,
1997. Pursuant to the terms of the Agreement and Plan of Reorganization, the
promissory note was forgiven.
In February 1997, the Company issued 10,000,000 shares of restricted common
stock for cash and promissory notes receivable to two directors of the Company.
Pursuant to the Agreement and Plan of Reorganization, 6,700,000 shares of the
10,000,000 shares issued to the directors, were returned to the Company in
exchange for the cancellation and/or reduction of the promissory notes
receivable related to this transaction. Also in February 1997, the Company
issued 6,000,000 shares of restricted common stock which was a part of the
total payment to Technology Holdings in the Agreement and Plan of
Reorganization. In March 1997, the Company issued 929,598 shares of restricted
common stock in settlement of an outstanding judgment awarded to Guthy-Renker
Corporation. Also in March 1997, the Company issued shares pursuant to a
Private Offering Memorandum for the sale of 1,000,000 shares of restricted
common stock to an unrelated third party. The Company received an 8% promissory
note for $275,000 (which was to mature on August 15, 1997, and has been
extended to November 15, 1997) and cash of $475,000. In June 1997, the Company
filed a Form S-8, and registered 250,000 shares of common stock in connection
with an employee benefit plan whereby individuals received shares of common
stock in lieu of cash compensation otherwise payable to them.
PREFERRED STOCK - The Company has authorized 1,250,000 shares of preferred
stock at no par value. Without the approval of the stockholders, the Company's
Board of Directors has the power to designate and issue classes of preferred
stock and determine the rights and preferences of each class of the preferred
stock. The rights and preferences of the preferred stock so determined may
adversely affect the voting power and dividends of the common stock. As of June
30, 1997, 1,000,001 shares of preferred stock were issued and outstanding.
SERIES A PREFERRED STOCK - The Board of Directors has established this series
with 1,200,000 shares authorized, no par value. The Series A Preferred Stock
has no voting rights except as provided by operation of law, is not convertible
into common stock, shall be entitled to receive dividends as declared by the
Board of Directors and is redeemable by the Company.
On November 19, 1996, the Company's Board of Directors adopted a resolution
providing for the issuance of a series of its authorized preferred stock,
designated Series A Preferred Stock, having no par value. On February 21, 1997,
the Company sold 1,000,000 shares of Series A Preferred Stock to Advantage
Holdings, Inc., an unrelated entity, owned by Advantage Life's former President
and Chairman of the Board, Alan Lipstein, in exchange for a promissory note
receivable for $1,000,000, the principal of which is payable in three equal
annual installments beginning February 22, 1998. Interest, at an annual rate of
8% shall be payable on the outstanding principal balance of the promissory note
on a quarterly basis, and the preferred shares shall be held by Advantage Life
as collateral for the transaction. Advantage Holdings, Inc. also has an option
to acquire an additional 4,000,000 shares of preferred stock for a purchase
price of $1.00 per share, upon an increase of Advantages Life's authorized
preferred stock from 1,250,000 to 25,000,000 preferred shares.
SERIES B PREFERRED STOCK - The Board of Directors has established this series
with 20 shares authorized, no par value, $100,000 face value. The Series B
Preferred Stock has no voting rights except as provided by operation of law, is
convertible into common stock, shall be entitled to receive dividends as
declared by the Board of Directors and is redeemable by the Company.
10-QSB Report for Period Ended June 30, 1997 Page 7 of 14
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On April 25, 1997, the Company's Board of Directors adopted a resolution
providing for the issuance of a series of its authorized preferred stock,
designated Series B Preferred Stock, having no par value and a face value of
$100,000. On April 28, 1997, the Company issued one share of Series B preferred
stock, in exchange for $100,000 in cash.
NOTE C - ACQUISITION OF TREASURE ROCKHOUND RANCHES, INC.
On February 21, 1997 Advantage Life and its newly formed subsidiary, Advantage
Life Acquisition entered into an Agreement and Plan of Reorganization by and
among Advantage Life and its subsidiary, Advantage Life Acquisition and Channel
America Broadcasting, Inc. and its subsidiary, Technology Holdings, Inc. to
acquire 100% of the issued and outstanding stock of Technology Holding's
subsidiary, Treasure Rockhound Ranches, Inc. for 6,000,000 shares of Advantage
Life's restricted common stock, a note payable to Technology Holdings for
$750,000 and Advantage Life assumed certain liabilities of Technology Holdings
totaling approximately $658,000. The primary business of Treasure Rockhound is
owning and operating RV campgrounds located across the United States. Treasure
Rockhound, in business since 1974, operates through its private membership
organization, Camper Ranch Club, offering its members six recreational resorts
located in Arizona, New Mexico and Texas. Treasure Rockhound owns approximately
5,100 acres and leases approximately 12,000 other acres from individuals,
states and the federal government. Camper Ranch Club has a total membership of
over 8,500 with 5,300 active dues-paying members. Advantage Life assumed the
debts, liabilities and obligations of Treasure Rockhound set forth on the
balance sheet of Treasure Rockhound contained in the Reorganization Agreement
in the same manner as if Advantage had itself incurred them.
10-QSB Report for Period Ended June 30, 1997 Page 8 of 14
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL OVERVIEW
Advantage Life was organized under the laws of the State of Colorado in 1986,
and subsequently reorganized as a Delaware corporation in 1994.
In 1993, Advantage Life acquired the assets of Lasting Cosmetics, Inc.
("Lasting Cosmetics"), a privately owned, New York based cosmetics marketing
company. In 1994, Lasting Cosmetics entered into a marketing and distribution
agreement with Guthy-Renker Corporation ("GRC") for the distribution of a
certain product via infomercials. Due to difficulties with the airing of the
infomercials (See Item 1. Legal Proceedings), Advantage Life attempted to sell
the product directly to salons via direct marketing methods in early 1995.
Direct marketing also failed and Advantage Life decided to discontinue this
operation and is in the process of winding up the affairs of Lasting Cosmetics.
In September 1996, Advantage Life acquired all of the assets of Universal Mica
Furniture, Inc. ("Universal Mica"), a retail home furniture store in
Farmingdale, New York. Advantage Life paid $2,000,000 to Universal Mica by
issuing 480,000 shares of its common stock and its promissory note in the
original principal amount of $800,000 (the "Universal Mica Note"). In January
1997, this acquisition was rescinded, and the common stock of Advantage Life
and the Universal Mica Note were returned to Advantage Life.
On February 21, 1997 Advantage Life and its newly formed acquisition subsidiary
Advantage Life Acquisition entered into the Agreement and Plan of Reorganization
by and among Advantage Life, Advantage Life Acquisition, Channel America
Broadcasting, Inc. and Technology Holdings, Inc., a wholly owned subsidiary of
Channel America Broadcasting, Inc. to acquire 100% of the issued and outstanding
stock of Technology Holdings, Inc.'s wholly owned subsidiary Treasure Rockhound.
To acquire Treasure Rockhound, Advantage Life agreed to pay Technology Holdings,
Inc. 6,000,000 shares of Advantage Life's restricted common stock, a promissory
note payable for $750,000 and Advantage Life assumed certain liabilities of
Technology Holdings, Inc. totaling approximately $658,000. Treasure Rockhound
owns and operates six RV parks and campgrounds in three Southwestern states.
PLAN OF OPERATIONS
The only operating revenues that Advantage Life currently receives are those
generated by Treasure Rockhound, Advantage Life's newly acquired, wholly owned
subsidiary. It is the intention of Advantage Life to expand its RV parks and
campground operation by increasing Treasure Rockhound's marketing efforts and
by acquiring addition RV parks and campgrounds to add to its base of operation.
Treasure Rockhound has had several conversations with potential acquisition
candidates, however, has no binding commitments to acquire said candidates.
There can be no assurance given that Advantage Life will be able to
successfully obtain the debt or equity funding necessary to expand the business
of Treasure Rockhound or acquire additional RV parks and campgrounds, or if so
acquired, successfully operate such RV parks and campgrounds at a profitable
level.
The Company also plans to enter the gaming industry, in the form of gaming
vessels. The Company plans to own and operate cruise ships primarily engaged in
the business of operating day cruises offering casino gambling to its
passengers, after the ship reaches "international waters". The cruises will
include a variety of shipboard activities including dining, sightseeing, live
music and entertainment, however the primary operation of the business will be
its casinos. The Company is currently in negotiations with two companies
involved in the operation of gaming vessels, and expects to enter into a
definitive acquisition or merger agreement shortly. There can
10-QSB Report for Period Ended June 30, 1997 Page 9 of 14
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be no assurance given that Advantage Life will be able to complete said
agreement, or if so completed, successfully operate such gaming vessels at a
profitable level.
LIQUIDITY AND CAPITAL RESOURCES
Advantage Life has incurred operation losses for years ended April 30, 1995 and
1996 of $1,665,000 and $6,466,000 respectively, and for the period from May 1,
1996 to June 30, 1997, the Company has lost approximately $6,000,000, which
have adversely reduced Advantage Life's liquidity and capital resources. Much
of the losses incurred during the 14 month period ended June 30, 1997 is a
result of write-offs, allowances for potential judgments and claims, and the
settlement of lawsuits. The Company anticipates additional losses for the six
months ending December 31, 1997 of approximately $500,000. In addition,
Advantage Life's new acquisition, Treasure Rockhound requires addition capital
infusion to expand its base business and acquire additional RV parks and
campgrounds. The future success of Advantage Life will depend upon management's
ability to attain and maintain profitable operations, to obtain favorable
financing arrangements and to raise additional capital.
Advantage Life has sought to raise capital to expand its business operations by
the sale of its common and preferred stock. In February 1997, Advantage Life
sold 1,000,000 shares of Series A Preferred Stock to Advantage Holdings, Inc.,
an unrelated entity, owned by the Company's former President and Chairman of
the Board, Alan Lipstein, in exchange for a promissory note totaling
$1,000,000. Advantage Holdings, Inc. also has an option to acquire an
additional 4,000,000 shares of preferred stock for a purchase price of $1.00
per share upon an increase of Advantage Life's authorized preferred stock from
1,250,000 to 25,000,000 authorized preferred shares. In March 1997, the Company
sold 1,000,000 shares of common stock in a private sale for cash and a
promissory note. In April 1997, the Company sold one share of Series B
preferred stock for $100,000 in cash. In June 1997, the Company filed a Form
S-8 for 250,000 shares of common stock in connection with an employee benefit
plan whereby individuals received shares of common stock in lieu of cash
compensation otherwise payable to them.
Advantage Life's cash requirements are expected to be obtained from the
proceeds of the issuance of its securities. The timing and nature of the
proposed sale of Advantage Life's debt or equity securities are uncertain as
Advantage Life has not yet received a commitment from a broker-dealer to
underwrite the sale of its securities. While Advantage Life is negotiating with
several broker-dealers to underwrite the sale of its securities, there can be
no assurance given that Advantage Life will be successful in negotiating an
acceptable agreement with a broker-dealer. If the Company is unable to reach an
agreement with a broker-dealer to underwrite its securities, it will likely
attempt to sell its securities without the assistance of a broker-dealer.
Advantage Life's subsidiary, Treasure Rockhound, principally meets its cash
requirements from operating cash flows. Management anticipates making
improvements to properties in this subsidiary. These improvements will be
funded using cash flows from operations and/or bank borrowings.
10-QSB Report for Period Ended June 30, 1997 Page 10 of 14
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company and its subsidiaries are defendants in various legal actions which
arise in the normal course of business. In addition, the Company is a party in
the following legal proceedings:
MICHAEL ACKERMAN VS. ADVANTAGE LIFE PRODUCTS, INC.
In 1994, Michael Ackerman, former President of Lasting Cosmetics filed suit in
the Superior Court of the State of California for the County of Orange against
the Company asserting that the Company defaulted on a note and security
agreement and sought recovery of damages and costs. In June 1996, a judgment by
default was entered against the Company in the amount of $237,755 in
compensatory damages and $122,948 in interest, attorney's fees and costs. The
Company 's management and the Plaintiff's attorney are currently in
negotiations to settle this matter with restricted common stock of the Company.
FIRST CLASS MARKETING, INC. VS. ADVANTAGE LIFE PRODUCTS, INC.
On 1995, First Class Marketing, Inc. filed suit in the Superior Court of the
State of California for the County of San Diego against the Company asserting
that the Company was in breach of contracts entered into between the Company
and First Class Marketing, Inc. and sought recovery of damages and costs. In
February 1997, a judgment by default was entered against the Company in the
amount of $28,367 in principal and $62,420 in attorney's fees and costs. On
September 2, 1997, the Company's management and the Plaintiff entered into a
settlement agreement whereby the Company would issue 200,000 shares of its
restricted common stock with registration rights.
GUTHY-RENKER CORPORATION VS. ADVANTAGE LIFE PRODUCTS, INC.
On 1995, Guthy-Renker Corp. ("GRC") filed suit in the Superior Court of the
State of California for the County of Los Angeles against the Company for
Breach of Written Contract, Conversion, Negligent Misrepresentation, Bad Faith
Denial of the Existence of a Contract, Dissolution and Accounting, False
Designation or Origin and False Description, Rescission and Restitution,
Defamation, Declaratory Relief, and Injunctive Relief. and sought recovery of
damages and costs of approximately $4,500,000. On November 15, 1996, a default
judgment was entered in favor of GRC against the Company providing that among
other things, (a) GRC recover from the Company the sum of $1,924,945 (the
"Monetary Award") and (b) the Company shall provide to GRC a written option
(the "Option Award") entitling GRC to purchase at least 400,000 unrestricted
shares of the Company's common stock at an option price no greater than $0.63
(or, if the common stock is trading at less than $0.75 per share at the time of
the exercise of the option, at a 15% discount from the trading price of the
common stock) (the "Default Judgment"). On January 15, 1997, the Company and
GRC entered into a settlement agreement (the "GRC Settlement Agreement")
whereby the Company would deliver 25,000 unrestricted shares of its stock (the
"Distribution Shares"). The Company also agreed to issue 929,598 shares of
restricted common stock (the "Restricted Stock"). The Company further agreed to
cause the Restricted Stock to be registered (the "Registered Stock") on or
before April 30, 1997 and become unrestricted and marketable on or before
November 1, 1997. In the event that the Restricted Stock has not become
unrestricted and marketable on or before July 1, 1997, GRC shall be entitled to
a cash payment by the Company in the amount of $22,000 per month (the "Monthly
Payment") or at the Company's election, deliver to GRC the equivalent of the
sum of $22,000 in registered, unrestricted and marketable common stock of the
Company, until the earlier of (a) the date GRC is in receipt of the Registered
Stock or (b) November 1, 1997. The parties to the GRC Settlement Agreement
agree that in lieu of collecting the Monthly Payment, GRC may, at its sole
election, add any Monthly Payment(s) to the Default Judgment at twice the
amount of each outstanding Monthly Payment. The Company acknowledges and agrees
that if GRC is required to seek enforcement of the Default Judgment, any
Monthly Payment(s) shall become a part of the Default Judgment as though such
payment(s) were initially awarded to GRC. If liquidation of the Distributed
Shares and the Restricted Shares (the "Liquidation Amount") results in a
payment of less than the Monetary Award, the Company shall pay to GRC the
difference between Monetary
10-QSB Report for Period Ended June 30, 1997 Page 11 of 14
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Award and the Liquidation Amount, in a form agreed to by GRC and the Company.
If and when the GRC Settlement Agreement is completely satisfied by the
Company, GRC shall relinquish and forgo its right to seek enforcement of the
Default Judgment against the Company, including without limitation, enforcement
of the Option Award and the Monetary Award.
NATIONAL NETWORK MARKETING, INC., ET AL. VS. ADVANTAGE LIFE PRODUCTS, INC.
In 1995, National Network Marketing, Inc. ("National Network Marketing") filed
suit in the Superior Court of the State of California for the County of Orange
against the Company asserting that the Company was in breach of contracts
entered into between the Company and National Network Marketing and sought
recovery of damages and costs. In December 1995, a stipulated settlement (the
"Stipulation") was agreed to in the amount of $90,625 (the "Monetary Award").
The Stipulation also provided for the issuance of 25,000 shares of unregistered
common stock ("the Restricted Stock") of the Company, which shares were issued.
The Stipulation further provided that the Company agreed to cause the
Restricted Stock to be registered (the "Registered Stock") and become
unrestricted and marketable on or before September 30, 1996. If liquidation of
the Restricted Shares (the "Liquidation Amount") results in a payment of less
than the Monetary Award, the Company shall pay to National Network Marketing
the difference between Monetary Award and the Liquidation Amount, in a form
agreed to by National Network Marketing and the Company. If the Company fails
to meet any of the terms of the Stipulation, this matter shall be referred to
binding arbitration under the supervision of the American Arbitration
Association upon the election of either party following written notice of
breach from National Network Marketing to the Company. The Company's management
and the Plaintiff's attorney are currently in negotiations to settle this
matter for restricted common stock of the Company.
FELDSOTT, LEE & FEINBERG, A LAW PARTNERSHIP VS. ADVANTAGE LIFE PRODUCTS, INC.
In 1996, Feldsott, Lee & Feinberg ("Feldsott") filed suit in the Superior Court
of the State of California for the County of Orange against the Company
asserting that the Company was in breach of contract and sought recovery of
damages and costs. In April 1997, a judgment by default was entered against the
Company in the amount of $77,135 in principal and $13,241 in interest,
attorney's fees and cost. The Company's management and the Plaintiff's attorney
are currently in negotiations to settle this matter for restricted common stock
of the Company.
MORE DIRECT RESPONSE, INC. VS. ADVANTAGE LIFE PRODUCTS, INC.
On December 1, 1994, More Direct Response, Inc. ("More Direct") filed suit in
the Superior Court of the State of California for the County of Orange against
the Company alleging Breach of Contract, Breach of the Implied Covenant of Good
Faith and Fair Dealing, Breach of Trust, Constructive Fraud, Fraud and
Imposition and Enforcement of Constructive Trust and sought recovery of damages
and costs. Prior to December 1994, the Company entered into a marketing
agreement with Regal Best, Inc. related to the Company's product line,
CigArrest. Regal Best, Inc. defaulted on the terms of said marketing agreement,
which triggered a default on the CigArrest Plan and Gum Distribution Agreement
entered into in January 1989 by and between More Direct and the Company (the
"Distribution Agreement"). Based on the terms of the Distribution Agreement,
both parties submitted to binding arbitration to settle the above mention
allegations. On June 12, 1996, the arbitrator awarded More Direct damages in
the amount of $458,625 plus interest at 10% per annum from September 27, 1993
and administrative and arbitration fees. The Company's management expects
settle this matter for a considerable discount.
LAWSUITS INVOLVING ENVIRONMENTAL PROFESSIONALS
There are various lawsuits against Environmental Professionals, however
Environmental Professionals is an inactive, unconsolidated subsidiary of the
Company, and in the opinion of the Company any claims that creditors have or
may have against Environmental Professionals will not enure to the Company.
Management is not aware of any liabilities of Environmental Professionals that
may incur as a result of the violation of environmental laws.
10-QSB Report for Period Ended June 30, 1997 Page 12 of 14
<PAGE> 13
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION.
Advantage Life intends to file an Information Statement with the Securities and
Exchange Commission to (1) change the Company's name to Advantage Enterprises,
Inc., (2) increase the number of shares of the Company's preferred stock from
1,250,000 to 25,000,000, (3) increase the number of shares of the Company's
common stock from 25,000,000 to 100,000,000.
ITEM 6. EXHIBITS, REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT # DESCRIPTION OF DOCUMENT
3.01 Agreement and Plan of Reorganization by and among Advantage
Life Products, Inc., Advantage Life Acquisition One, Inc.,
Treasure Rockhound Ranches, Inc., Technology Holdings, Inc.,
Channel America Broadcasting, Inc., Alan Lipstein, Gerald Norton,
Vietri Investments and Roscom Limited, dated February 21, 1997.(a)
21 Subsidiaries of the Registrant
27 Financial Data Schedule (for SEC use only)
(B) REPORTS ON FORM 8-K
A report on Form 8-K was filed, reporting events occurring February 21, 1997
reporting the acquisition of the assets of Treasure Rockhound on April 10,
1997, and subsequently amended on Form 8-K/A on April 30, 1997.
- ------------------
(a) Filed as an Exhibit to Report on Form 8-K dated February 21, 1997.
10-QSB Report for Period Ended June 30, 1997 Page 13 of 14
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this 10-QSB report to be signed on its behalf by the undersigned thereunto duly
authorized.
ADVANTAGE LIFE PRODUCTS, INC.
--------------------------------------
(Registrant)
Date September 10, 1997 s/Richard J. Diamond
------------------- --------------------------------------
Richard J. Diamond
Chairman, President & CEO
Date September 10, 1997 s/Donald R. Mastropietro
------------------- --------------------------------------
Donald R. Mastropietro
Vice President of Finance & CFO
10-QSB Report for Period Ended June 30, 1997 Page 14 of 14
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Active Subsidiary
- -----------------
Treasure Rockhound Ranches, Inc.
Inactive Subsidiary
- -------------------
Environmental Professionals, Inc.
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