<PAGE> 1
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 January 31, 1997
------------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
------------------ ----------------------
Commission File No. 0-17414
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ADVANTAGE LIFE PRODUCTS, INC.
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(Name of Small Business Issuer in Its Charter)
Delaware 33-0213733
- ---------------------------------------- ------------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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)
13902 N. Dale Mabry Highway, Suite 119, Tampa, Florida, 33618
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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
--------- ---------
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of April 7, 1997, the
Company had 10,898,497 shares of Common Stock outstanding, $0.16 par value.
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10-QSB Report for the Period Ended January 31, 1997 Page 1 of 14
<PAGE> 2
ADVANTAGE LIFE PRODUCTS, INC.
UNAUDITED
BALANCE SHEET
JANUARY 31, 1997
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<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 10,585
Note Receivable 2,400,000
Accounts receivable 6,862
Inventory 2,043
Other current assets 37,189
-----------
Total current assets 2,456,679
Deferred compensation 900,000
-----------
TOTAL ASSETS $ 3,356,679
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable and amounts due individuals $ 483,625
Accounts payable 419,413
Accrued Royalties 518,696
Other accrued expenses 153,198
-----------
TOTAL CURRENT LIABILITIES 1,574,932
-----------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 1,250,000 authorized
Common stock, $0.16 par value; 25,000,000 shares authorized; 11,598,497 shares
issued and outstanding 1,855,760
Additional paid in capital 20,450,331
Accumulated deficit (14,834,344)
Common Stock Subscribed (5,690,000)
-----------
TOTAL STOCKHOLDERS' EQUITY 1,781,747
-----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 3,356,679
===========
</TABLE>
See notes to financial statements.
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10-QSB Report for Period Ended January 31, 1997 Page 2 of 14
<PAGE> 3
ADVANTAGE LIFE PRODUCTS, INC.
UNAUDITED
STATEMENTS OF OPERATIONS
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<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-----------------------------------------------------
1/31/97 1/31/96 1/31/97 1/31/96
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Revenues $ 0 $ 1,062,788 $ 1,225 $ 5,190,802
Returns and allowances (180,122) (16,973) (756,073)
------------ ----------- ----------- -----------
NET REVENUES 0 882,666 (15,748) 4,434,729
COST AND EXPENSES:
Cost of Sales 0 667,547 9,659 2,660,435
Selling and general and administration 713,000 1,359,496 1,160,533 5,267,125
----------- ----------- ----------- -----------
OPERATING LOSS (713,000) (1,144,377) (1,185,940) (3,492,831)
OTHER INCOME (EXPENSES):
Other income (expense) (20,833) (2,727) 67,174
Write-off of goodwill (3,354,015) - (3,354,015) (1,000,000)
----------- ----------- ----------- -----------
NET LOSS $(4,067,015) $(1,165,210) $(4,542,682) $(4,425,657)
=========== =========== =========== ===========
NET LOSS PER SHARE $ (1.22) $ (3.93) $ (2.98) $ (25.20)
=========== =========== =========== ===========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 3,337,628 296,476 1,522,611 175,606
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
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10-QSB Report for Period Ended January 31, 1997 Page 3 of 14
<PAGE> 4
ADVANTAGE LIFE PRODUCTS, INC.
UNAUDITED
STATEMENT OF STOCKHOLDERS' EQUITY
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<TABLE>
<CAPTION>
Common Stock Common
---------------------- Paid in Stock Accumulated
Shares $ Capital Subscribed Deficit
---------------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1996 296,476 $ 47,437 $16,707,654 $(2,775,000) $(10,291,662)
Adjustment to
opening balance 2,021 323 (323)
Common shares issued:
Purchased 5,300,000 848,000 1,703,000
Common stock subscribed 6,000,000 960,000 2,040,000 (2,915,000)
Net loss - - - - (4,542,682)
---------- ---------- ----------- ----------- ------------
Balance, January 31, 1997 11,598,497 $1,855,760 $20,450,331 $(5,690,000) $(14,834,344)
========== ========== =========== =========== ============
</TABLE>
See notes to financial statements.
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10-QSB Report for Period Ended January 31, 1997 Page 4 of 14
<PAGE> 5
ADVANTAGE LIFE PRODUCTS, INC.
UNAUDITED
STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
1/31/97 1/31/96
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,542,682) $(4,425,657)
Adjustments to reconcile net income to
net cash :
Depreciation and amortization 391,922 1,723,183
Non-cash charges and other 3,000,433 1,594,998
Decrease in receivables and current assets 31,475 1,365,362
Decrease in inventories 213,746
Increase (decrease) in accounts payable 1,800 (703,978)
Decrease in other current liabilities (101,090) (127,593)
----------- -----------
Net cash used in operating activities (1,218,142) (359,939)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received from acquisition 325,000
Note receivable
Additions to fixed assets - net (75,529)
----------- -----------
Net cash used in investing activities 0 249,471
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 651,000
Proceeds from notes payable 477,000 66,309
Repayment of notes payable (64,561)
Advances to affiliates 128,806
----------- -----------
Net cash provided by financing activities 1,128,000 130,554
----------- -----------
NET INCREASE (DECREASE) IN CASH (90,142) 20,086
CASH, BEGINNING OF PERIOD 100,727 83,538
----------- -----------
CASH, END OF PERIOD $ 10,585 $ 103,624
=========== ===========
</TABLE>
See notes to financial statements.
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10-QSB Report for Period Ended January 31, 1997 Page 5 of 14
<PAGE> 6
ADVANTAGE LIFE PRODUCTS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
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NOTE A - GENERAL
- ----------------
The financial statements of Advantage Life Products, Inc. ("Advantage Life" or
the "Company") as of January 31, 1997 and for the three and nine 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. The
Company'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.
In mid-1995, Advantage Life entered into an agreement and plan of merger under
which Environmental Professionals, Inc. ("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. Environmental
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 and tangible and
intangible assets on a line of credit to the same bank. The bank filed an
action and took possession of the Environmental Professionals assets, and a
Statutory Receiver was appointed in August of 1996. In light of the fact that
Advantage Life does not have control of Environmental Professionals, and due to
the fact that it is a non-operating subsidiary, management has decided to
deconsolidate Environmental Professionals.
On February 21, 1997 Richard J. Diamond was appointed President and Chief
Executive Officer and Donald R. Mastropietro was appointed Vice President of
Finance, Chief Financial Officer, Treasurer and Secretary of Advantage Life.
Mr. Diamond and Mr. Mastropietro, in an effort to timely file this Form 10QSB,
have prepared this Form 10QSB with limited information provided by the former
Chief Financial Officer of Advantage Life. It is the intention of Mr. Diamond
and Mr. Mastropietro to continue the due diligence process in preparation for
the April 30, 1997 financial audit and Form 10KSB, and will amend this Form
10QSB if any substantive changes or corrections arise from the aforementioned
due diligence.
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 January 31, 1997, 11,598,497 common 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 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 various
shareholders to adjust for the 1 for 20 reverse stock split of June 24, 1996.
In July 1996, Advantage Life entered into a Capital Stock Purchase Agreement
for the sale of 300,000 post-split shares to Vietri Investments, Ltd.
("Vietri"), an unrelated entity, for a promissory note in the principal amount
of $150,000 which matures August 31, 1997. The shares related to this
transaction shall be held by Advantage Life as collateral for the promissory
note. The issuance of common stock and the corresponding note receivable has
been classified as common stock subscribed in the Stockholders' Equity section
of
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10-QSB Report for Period Ended January 31, 1997 Page 6 of 14
<PAGE> 7
the accompanying Financial Statements as of January 31, 1997. In August 1996,
Advantage Life entered into a Capital Stock Purchase Agreement for the sale of
5,000,000 post-split shares to Cimtran, Ltd. ("Cimtran"), an unrelated entity,
for a total consideration of $2,500,000. Under the terms of the Capital Stock
Purchase Agreement, Advantage Life was to receive $100,000 in cash and a
promissory note from Cimtran in the principal amount of $2,400,000 which
matured August 31, 1997. This Capital Stock Purchase Agreement was
subsequently rescinded. In October 1996, Advantage Life entered into a Capital
Stock Purchase Agreement for the sale of 1,000,000 post-split shares to Vietri
Investments, Ltd. for a total consideration of $500,000. Under the terms of
this Capital Stock Purchase Agreement, Advantage Life received $85,000 in cash
and a promissory note from Vietri in the principal amount of $415,000 which
matures August 31, 1997. The shares related to this transaction shall be held
by Advantage Life as collateral for the promissory note. The issuance of
common stock and the corresponding note receivable has been classified as
common stock subscribed in the Stockholders' Equity section of the accompanying
Financial Statements as of January 31, 1997.
During the third quarter Advantage Life issued shares pursuant to a
Capital Stock Purchase Agreement for the sale of 5,000,000 post-split shares to
Alan Lipstein ("Lipstein"), for a total consideration of $2,500,000. Under the
terms of this Capital Stock Purchase Agreement, Advantage Life received $100,000
in cash and a promissory note from Lipstein in the principal amount of
$2,400,000 which matures August 31, 1997. The shares related to this transaction
shall be held by Advantage Life as collateral for the promissory note. Based
upon the receipt of Lipstein's personal financial statement, the corresponding
promissory note has been classified as a note receivable in the Current Assets
section of the accompanying Financial Statements as of January 31, 1997.
During the third quarter Advantage Life issued shares pursuant to a Capital
Stock Purchase Agreement for the sale of 5,000,000 post-split shares to Gerald
Norton ("Norton"), for total consideration of $2,500,000. Under the terms of
this Capital Stock Purchase Agreement, Advantage Life received a promissory
note from Norton in the principal amount of $2,500,000 which matures August 31,
1997. The shares related to this transaction shall be held by Advantage Life
as collateral for the promissory note. The issuance of common stock and the
corresponding note receivable has been classified as common stock subscribed in
the Stockholders' Equity section of the accompanying Financial Statements as of
January 31, 1997.
On February 21, 1997, Advantage Life and its newly formed acquisition
subsidiary, Advantage Life Acquisition One, Inc. ("Advantage Life
Acquisition"), entered into an Agreement and Plan of Reorganization (the
"Agreement") by and among Advantage Life and its subsidiary, Advantage Life
Acquisition and Channel America Broadcasting, Inc. and its subsidiary,
Technology Holdings, Inc. ("Technology Holdings"), Vietri Investments, Ltd.,
Roscom, Ltd., Lipstein and Norton to acquire 100% of the issued and outstanding
stock of Technology Holding's subsidiary, Treasure Rockhound Ranches, Inc.
("Treasure Rockhound") for 6,000,000 post-split 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. In conjunction with this Agreement, Vietri Investments,
Ltd., Roscom, Ltd., Lipstein and Norton returned to Advantage Life a
total of 6,700,000 post-split shares of the Company's common stock in return
for forgiveness of all indebtness owed to Advantage Life by Vietri Investments,
Ltd., Roscom, Ltd., Lipstein and Norton. Also in conjunction with this
Agreement, Advantage Life agreed to sell Lipstein or his assigns a total of
5,000,000 shares of Advantage Life's Series A Preferred Stock for $1.00 per
share.
As of March 26, 1997, 10,898,497 common shares are issued and outstanding.
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 April 30, 1996, no preferred shares were issued and outstanding.
During the nine month period ended January 31, 1997, the Company's Board of
Directors approved the issuance of 1,000,000 preferred shares. As of January
31, 1997, no preferred shares have been issued.
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10-QSB Report for Period Ended January 31, 1997 Page 7 of 14
<PAGE> 8
SERIES A PREFERRED STOCK- The Board of Directors has established this series
with 1,250,000 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 February 21, 1997 Advantage Life 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 totaling $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 Advantage Life's
authorized preferred stock from 1,250,000 to 25,000,000 preferred shares.
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 to acquire
100% of the issued and outstanding stock of Technology Holding's subsidiary,
Treasure Rockhound 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. In conjunction with this Agreement, Vietri Investments, Ltd.,
Roscom, Ltd., Lipstein and Norton returned to Advantage Life a total of
6,700,000 post-split shares of the Company's common stock, in return for
forgiveness of all indebtness owed to Advantage Life by Vietri Investments,
Ltd., Roscom, Ltd., Lipstein and Norton. Also in conjunction with this
Agreement, Advantage Life agreed to sell Lipstein or his assigns a total of
5,000,000 shares of Advantage Life's Series A Preferred Stock for $1.00 per
share. 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.
Advantage Life will assume 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 (See Note D- Proforma Financial Information).
The executive officers of Advantage Life, after the effective date of the
Reorganization Agreement are: Richard J. Diamond, President and Chief Executive
Officer and Donald R. Mastropietro, Vice President of Finance, Chief Financial
Officer, Treasurer, and Secretary.
NOTE D- PROFORMA FINANCIAL INFORMATION
- --------------------------------------
For financial reporting purposes, the acquisition of Treasure Rockhound was
accounted for as a reverse purchase acquisition under which the companies are
recapitalized to include the historical financial information of Treasure
Rockhound and the assets and liabilities of Advantage Life revalued to reflect
the market value of Advantage Life's outstanding shares. To more clearly
reflect the effect of the acquisition for financial reporting purposes,
management has elected to include a Condensed Proforma Balance Sheet dated
January 31, 1997 and a Condensed Proforma Statement of Operations for the nine
months ended January 31, 1997 for Advantage Life.
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10-QSB Report for Period Ended January 31, 1997 Page 8 of 14
<PAGE> 9
The Condensed Proforma Balance Sheet shown below includes the accounting for
the reverse purchase acquisition of Treasure Rockhound.
ADVANTAGE LIFE PRODUCTS, INC.
CONDENSED PROFORMA
BALANCE SHEET
JANUARY 31, 1997
<TABLE>
<S> <C>
Current assets $718,000
Property & equipment-net 1,729,000
Unamoritzed goodwill 1,569,000
----------
Total assets $4,016,000
==========
Current liabilities $1,138,000
Long-term debt 774,000
----------
Total liabilities 1,912,000
==========
Preferred stock 1,000,000
Common stock 1,206,000
Accumulated deficit (102,000)
----------
Total stockholders' equity 2,104,000
----------
Total liabilities and stockholders'
equity $4,016,000
==========
</TABLE>
The Condensed Proforma Statement of Operations shown below for the nine months
ended January 31, 1997 has been prepared as if Advantage Life and Treasure
Rockhound had been acquired as of May 1, 1996, adjusted to reflect an increase
in amortization resulting from goodwill recorded in the transaction.
ADVANTAGE LIFE PRODUCTS, INC.
CONSENSED PROFORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED JANUARY 31, 1997
<TABLE>
<S> <C>
Revenue $ 599,000
Cost and expenses 1,451,000
----------
Loss from operation (852,000)
Other expenses (23,000)
----------
Net loss $ (875,000)
==========
</TABLE>
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10-QSB Report for Period Ended January 31, 1997 Page 9 of 14
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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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 Legal Proceedings), Advantage Life attempted to sell the
product directly to salons via direct marketing methods in early 1995. When
direct marketing failed, the Company discontinued this operation and is
currently 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 an Agreement and Plan of Reorganization
(the "Agreement") by and among Advantage Life, Advantage Life Acquisition,
Channel America Broadcasting, Inc. and Technology Holdings, a wholly owned
subsidiary of Channel America Broadcasting, Inc. to acquire 100% of the issued
and outstanding stock of Technology Holding's wholly owned subsidiary, Treasure
Rockhound. To acquire Treasure Rockhound, Advantage Life paid 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. (See Note C- Acquisition of Treasure Rockhound Ranches,
Inc.)
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.
RESULTS OF OPERATIONS
- ---------------------
Following is a discussion of Advantage Life's results of operations for the
three month and nine month period ended January 31, 1997 and 1996. Advantage
Life's net loss increased from $1,165,000 during the three months ended January
31, 1996 to $4,067,000 for the same period ended January 31, 1997. Advantage
Life's net loss increased from $4,426,000 during the nine months ended January
31, 1996 to $4,543,000 for the same period ended January 31, 1997. Such
changes are attributed to discontinuance of operations of both Lasting
Cosmetics and Environmental Professionals and the settlement of disputes over
employment agreements with three former employees.
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10-QSB Report for Period Ended January 31, 1997 Page 10 of 14
<PAGE> 11
Net revenues for the nine months ended January 31, 1997 were $(16,000) compared
to $4,435,000 for the same period ended January 31, 1996, while net revenues
for the three months ended January 31, 1997 were zero compared to $883,000 for
the same period ended January 31, 1996. This significant reduction in revenues
is a direct result of Advantage Life's decision to discontinue operation of
its two subsidiaries, Lasting Cosmetics and Environmental Professionals.
Cost of sales and selling, general and administrative for the nine months ended
January 31, 1997 were $1,171,000 compared to $2,027,000 for the same period
ended January 31, 1996, while cost of sales and selling, general and
administrative for the three months ended January 31, 1997 were $713,000
compared to $7,928,000 for the same period ended January 31, 1996. This
significant reduction in expenses is a direct result of Advantage Life's
decision to discontinue operation of its two subsidiaries, Lasting Cosmetics
and Environmental Professionals, and the settlement of disputes over employment
agreements with three former employees.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Advantage Life has incurred operational losses for years ended April 30,
1995 and 1996 and for the nine months ended January 31, 1997 of $1,665,000,
$6,466,000, and $4,543,000, respectively, which have adversely reduced Advantage
Life's liquidity and capital resources. The Company anticipates that
operational losses for the year ended April 30, 1997 will be significantly
reduced based on the Company's acquisition of Treasure Rockhound (See Note C-
Acquisition of Treasure Rockhound Ranches, Inc. and Note D- Proforma Financial
Information). In addition, Advantage Life's new acquisition, Treasure Rockhound
will require 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's subsidiary Treasure Rockhound principally meets its operational
cashflow requirements from membership dues, new membership sales and its RV
campground operations. However, Advantage Life does not currently meet its
operational cashflow requirements, and anticipates losses for year ended April
30, 1998 of approximately $600,000.
Advantage Life has sought to raise capital to expand its business operations by
the sale of its common and preferred stock. On February 21, 1997 Advantage Life
has 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 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.
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 Advantage Life is unable to
reach an agreement with a broker-dealer to underwrite its securities, Advantage
Life 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 January 31, 1997 Page 11 of 14
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
- ------- ----- ------------
The Company and its 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:
a. [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.] A judgment was entered against Advantage Life in the approximate amount
of $400,000 in July 1996. This judgment was entered against Advantage Life
after its counsel withdrew and Advantage Life intends to attempt to have this
judgment overturned. Additionally, Advantage Lie has begun negotiations with
Mr. Ackerman's counsel to settle the judgment at a considerable discount.
b. [More Direct Response, Inc., a California Corporation v. Advantage Life
Products, Inc. Case No. 739343, filed December 1, 1994.] A default judgment was
entered against Advantage Life in this matter in the amount of $458,000 in June
1996. This judgment was entered against Advantage Life after its counsel
withdrew and Advantage Life intends to attempt to have this judgment
overturned. Additionally, Advantage Life intends to settle the judgment at a
considerable discount.
c. [Feldsott, Lee & Feinberg v. Advantage Life Products, Inc., Case No.
771103 filed in Orange County Superior Court.] Feldsott, Lee & Feinberg filed a
lawsuit against Advantage Life for the collection of attorney fees in the
approximate amount of $78,000. Advantage Life has not obtained counsel to
represent it in this matter and, in all likelihood, the plaintiffs will obtain
default judgment in this matter.
d. There are various lawsuits against Environmental Professionals,
however, Environmental Professionals will be an inactive subsidiary of
Advantage Life and it is the opinion of management that the claims that any
creditor has against Environmental Professionals will not permit that creditor
to obtain any relief against Advantage Life.
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
- ------- -----------------
None.
- --------------------------------------------------------------------------------
10-QSB Report for Period Ended January 31, 1997 Page 12 of 14
<PAGE> 13
ITEM 6. EXHIBITS, REPORTS ON FORM 8-K
- ------- -----------------------------
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT # DESCRIPTION OF DOCUMENT
- --------- -----------------------------------------------------------
<S> <C>
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)
27 Financial Data Schedule (for SEC use only)
</TABLE>
(B) REPORTS ON FORM 8-K
A report on Form 8-K was filed on April 10, 1997, reporting events
occurring February 21, 1997 reporting the acquisition of Treasure Rockhound.
- ------------------
(a) Filed as an Exhibit to a Report on Form 8-K reporting events occurring
February 21, 1997.
- --------------------------------------------------------------------------------
10-QSB Report for Period Ended January 31, 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 April 15, 1997 /s/ Richard. J. Diamond
--------------------------------- --------------------------------------
Richard J. Diamond
Chairman, President &
Chief Executive Officer
Date April 15, 1997 /s/ Donald R. Mastropietro
--------------------------------- --------------------------------------
Donald R. Mastropietro
Vice President of Finance &
Chief Financial Officer
- --------------------------------------------------------------------------------
10-QSB Report for Period Ended January 31, 1997 Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 10,585
<SECURITIES> 0
<RECEIVABLES> 2,406,862
<ALLOWANCES> 0
<INVENTORY> 2,043
<CURRENT-ASSETS> 37,189
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,356,679
<CURRENT-LIABILITIES> 1,574,932
<BONDS> 0
0
0
<COMMON> 1,855,760
<OTHER-SE> 25,987
<TOTAL-LIABILITY-AND-EQUITY> 1,781,747
<SALES> (15,748)
<TOTAL-REVENUES> (15,748)
<CGS> 0
<TOTAL-COSTS> 9,659
<OTHER-EXPENSES> 1,160,533
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,542,682)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,542,682)
<EPS-PRIMARY> (2.98)
<EPS-DILUTED> 0
</TABLE>
