<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15D OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 21, 1997.
ADVANTAGE LIFE PRODUCTS, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-17414 33-0213733
- ------------------------ ---------------------- -----------------------
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
1509 South Florida Avenue, Suite 3, Lakeland, FL 33803
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 686 - 2621
----------------------
13902 N. Dale Mabry, Suite 119, Tampa, Florida 33618
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
<PAGE> 2
ITEM 5. OTHER EVENTS.
The Advantage Life Products, Inc. ("Advantage Life" or the "Company") intends
to file an Information Statement with the Securities and Exchange Commission to
change the Company's name to Advantage Recreational Resorts, Inc. at its
earliest possible convenience. This change is being made to more clearly align
the Company name with the business of the Company, which is the ownership and
management of recreational resorts and recreational vehicle ("RV") campgrounds.
ITEM 8. CHANGE IN FISCAL YEAR.
It was decided by the Company's Board of Directors to change its fiscal
year-end to that of its accounting acquirer as reported on Form 8K dated April
10, 1997, reporting events first occurring on February 21, 1997. The decision
to change the Company's fiscal year-end was made by the Company's Board of
Directors pursuant to a board resolution dated April 24, 1997. The date of the
new fiscal year-end will be December 31, 1997. The transition period will be
filed as part of Form 10QSB for the quarter ended June 30, 1997.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
On April 10, 1997, Advantage Life filed a Form 8K reporting the acquisition of
Treasure Rockhound Ranches, Inc. ("Treasure Rockhound"), pursuant to an
Agreement and Plan of Reorganization entered into by Advantage Life and its
newly formed acquisition subsidiary dated February 21, 1997. 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. As closing occurred in the middle of a
month on February 21, 1997, the transaction has been recorded as of February
28, 1997. The following unaudited financial statements of Treasure Rockhound
Ranches, Inc. and the proforma financial information are hereby included as
required by Item 7(a) and (b) to Form 8-K.
(a) Financial Statements of Business Acquired.
Unaudited Financial Statements of Treasure Rockhound Ranches, Inc. for
the year ended December 31, 1996 are attached hereto and numbered F-1 through
F-6. The audit for this period is currently in process and is expected to be
completed shortly.
Unaudited Financial Statements of Treasure Rockhound Ranches, Inc. for
the two months ended February 28, 1997 are attached hereto and numbered F-7
through F-12.
(b) Proforma Financial Information.
Condensed Proforma Combined Statement of Operations for the nine
months ended January 31, 1997 is attached hereto and numbered P-1.
Insofar as the proforma information required is as of a date where
actual results are available, this information is included in the attached
Exhibit 99.2, Unaudited Consolidated Financial Statements of Advantage Life
Products, Inc. for the ten month period ended February 28, 1997.
2
<PAGE> 3
(c) Exhibits.
2.1 Agreement and Plan of Reorganization by and among
Advantage Life, Advantage Life Acquisition, Treasure
Rockhound, Channel America Broadcasting, Technology
Holdings, Lipstein, Norton, Vietri and Roscom, dated
February 21, 1997. (a)
99.1 Advantage Life press release dated February 26, 1997.
(a)
99.2 Unaudited Consolidated Financial Statements of Advantage
Life Products, Inc. for the ten month period ended
February 28, 1997.
- -------------------
(a) Filed as an Exhibit to a report filed on Form 8K on April 10,
1997.
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 hereunto duly authorized.
Date: April 30, 1997
ADVANTAGE LIFE PRODUCTS, INC.
By: /s/ Donald R.Mastropietro
-------------------------------
Donald R. Mastropietro,
Chief Financial Officer
3
<PAGE> 4
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 35,640
Amount due from parent 724,422
Note receivable 16,000
Other current assets 17,796
-----------
Total current assets 793,858
-----------
PROPERTY AND EQUIPMENT:
Land and improvements 1,426,592
Buildings and structures 358,127
Machinery and equipment 247,336
Vehicles 51,789
Furniture and fixtures 4,106
Office and computer equipment 7,981
Construction in progress 40,871
-----------
2,136,802
Less: accumulated depreciation (403,826)
-----------
Total property and equipment 1,732,976
-----------
TOTAL ASSETS $ 2,526,834
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 78,369
Accounts payable 70,714
Payroll taxes withheld 12,988
Accrued liabilities 43,096
Other current liabilities 47,830
-----------
Total current liabilities 252,997
-----------
LONG-TERM DEBT:
Long-term debt 437,155
Deferred income - VIP leases 313,570
Refundable memberships 40,000
-----------
Total long-term debt 790,725
-----------
TOTAL LIABILITIES 1,043,722
-----------
STOCKHOLDERS' EQUITY:
Common stock, no par value; 10,000,000 shares authorized; 3,000,000 shares issued
and outstanding 1,626,462
Accumulated deficit (143,350)
-----------
TOTAL STOCKHOLDERS' EQUITY 1,483,112
-----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 2,526,834
===========
</TABLE>
See notes to financial statements.
F-1
<PAGE> 5
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
REVENUES:
Membership revenue-net $ 572,669
Campground revenue-net 305,507
---------
Net revenue 878,176
Cost of ranch operations 487,007
---------
NET MARGIN 391,169
---------
OPERATING EXPENSES:
Selling and marketing 50,695
General and administration 374,774
---------
Total operating expenses 425,469
---------
OPERATING LOSS (34,300)
OTHER INCOME (EXPENSES):
Interest income 1,050
Interest expense (26,845)
Other-net 3,232
---------
NET LOSS $ (56,863)
=========
</TABLE>
See notes to financial statements.
F-2
<PAGE> 6
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
Shares $ Accumulated Deficit
----------------------------- --------------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 3,000,000 $1,626,462 $ (86,487)
Net loss (56,863)
--------- ---------- ---------
BALANCE, DECEMBER 31, 1996 3,000,000 $1,626,462 $(143,350)
========= ========== =========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 7
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<TABLE>
<S> <C>
Net loss $ (56,863)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 62,853
Increase in other current assets (5,700)
Increase in accounts payable 43,620
Increase in other accrued expenses 56,105
---------
Net cash provided by operations 100,015
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (73,457)
Note receivable (36,835)
---------
Net cash used in investing activities (110,292)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings 305,141
Proceeds from borrowings (340,727)
Proceeds from long-term leases 53,435
---------
Net cash provided by financing activities 17,849
---------
NET INCREASE (DECREASE) IN CASH 7,572
CASH, BEGINNING OF PERIOD 28,068
---------
CASH, END OF PERIOD $ 35,640
=========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 8
TREASURE ROCKHOUND RANCHES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE A - GENERAL
The financial statements of Treasure Rockhound Ranches, Inc., a Texas
corporation ("Treasure Rockhound") as of December 31, 1996 and for the twelve
months then ended are unaudited and, in the opinion of Treasure Rockhound,
reflect all adjustments necessary for a fair presentation of such data.
Treasure Rockhound was incorporated in the state of Texas in 1975, and is
currently a wholly-owned subsidiary of Technology Holdings, Inc., a Florida
corporation ("Technology Holdings"). In 1990, Technology Holdings' parent,
Channel America Broadcasting, Inc., fka EVRO Corporation, a Florida corporation
("Channel America"), purchased 100% of the stock of Treasure Rockhound. In
1995, Channel America transferred the ownership of the stock of Treasure
Rockhound to Technology Holdings. Treasure Rockhound, operates 7 recreational
vehicle parks in four southwestern states. Its private membership organization,
Camper Ranch Club of America ("Camper Ranch Club"), offers its approximately
5,300 dues-paying members, daily or long-term leases on improved campsites at
its various locations. Treasure Rockhound owns 5,100 acres and leases 7,300
acres from individuals, states and the federal government.
Treasure Rockhound caters to a growing trend in the hospitality field, namely
remote, independent excursions into naturally pristine areas of the country.
Parks are located in valleys, on mountains or near natural shorelines and offer
RV travelers a different climate and culture in which to enjoy their leisure
time.
The demographics of the RV vacationer are clearly defined, and their growth has
shown steady, although not dramatic increases. Members of the Camper Ranch Club
have year-round access to all of the fully managed Treasure Rockhound sites
which provide electric and water hookups for their convenience and the
opportunity to explore the natural beauty surrounding all ranch locations.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
FISCAL YEAR - Treasure Rockhound has elected a fiscal year ending December
31.
PROPERTY AND EQUIPMENT - Property and equipment is recorded at acquisition
cost. Depreciation is provided using the straight-line method over the
estimated lives of the assets. The costs of replacements, renewals, and
repairs, which neither add materially to the value of the property nor
appreciably prolong its life, are charged to expense as incurred.
REVENUE RECOGNITION - Treasure Rockhound recognizes revenues from dues,
rentals and memberships during the period of service. Revenues from long-term
leases are amortized over the length of the lease.
INCOME TAX - Since 1990, Channel America has consolidated the operations of
Treasure Rockhound into its financials for both tax and financial reporting
purposes. Therefore, no tax has been calculated and reported on the
accompanying statements, nor have corporate tax returns been filed by Treasure
Rockhound as a stand alone entity,
NOTE C - COMMON STOCK
COMMON STOCK - Treasure Rockhound has authorized 10,000,000 shares of common
stock with no par value, of which 3,000,000 shares were issued and outstanding
at December 31, 1996. All shares of common stock are held in escrow as
collateral for the promissory note entered into between Channel America and an
individual as part of Channel America's acquisition of Treasure Rockhound.
F-5
<PAGE> 9
NOTE D - NOTE RECEIVABLE
In 1991, Treasure Rockhound sold a parcel of land and received as partial
payment a promissory note of $70,000, having a mortgage on the land as
collateral. The note bears interest at nine percent per annum, and is payable
in seven annual payments of $10,000 plus interest. As of December 1, 1996, the
outstanding balance was $20,000. In December 1996, Treasure Rockhound
discounted the balance due on the note by 20% to accelerate payment of the
note. As of December 31, 1996, the outstanding balance is $16,000, all of which
is classified as a current asset. In January 1997, the full amount was paid to
Treasure Rockhound.
NOTE E - NOTES PAYABLE AND LONG-TERM DEBT
Notes payable consists of the following:
<TABLE>
<S> <C>
Note payable to a individual at 10.0% per annum interest, payable
in monthly installments of $5,000 including interest, due in
2001, having common stock of Treasure Rockhound
and land as collateral $ 340,727
Note payable to a bank at 10.25% per annum interest, payable in
monthly installments of $2,124 including interest, due in
2000, having land as collateral 78,164
Note payable to a bank at 10.25% per annum interest, payable in
monthly installments of $2,176 including interest, due in
2000, having land as collateral 87,346
Various notes payable 9,287
---------
515,524
Less current portion (78,369)
---------
$ 437,155
=========
</TABLE>
NOTE F - COMMITMENTS AND CONTINGENCIES
Prior to 1990, Treasure Rockhound sold memberships with refund provisions.
Treasure Rockhound estimates that only a small percentage of the members will
request refunds. At December 31, 1996, the total remaining memberships sold
with a refund provision are approximately $200,000. Treasure Rockhound has
recorded a liability for potential refunds of $40,000 as of December 31, 1996.
F-6
<PAGE> 10
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED BALANCE SHEET
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 548
Note receivable 801,638
Other current assets 10,295
----------
Total current assets 812,481
----------
PROPERTY AND EQUIPMENT:
Land and improvements 1,426,592
Buildings and structures 361,662
Machinery and equipment 222,548
Vehicles 51,789
Furniture and fixtures 2,864
Office and computer equipment 8,278
Construction in progress 37,916
----------
2,111,649
Less: accumulated depreciation (388,333)
----------
Total property and equipment 1,723,316
----------
TOTAL ASSETS $2,535,797
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 81,936
Accounts payable 87,020
Payroll taxes withheld 3,175
Accrued liabilities 36,371
Other current liabilities 50,331
----------
Total current liabilities 258,833
----------
LONG-TERM DEBT:
Long-term debt 413,771
Deferred income - VIP leases 313,570
Refundable memberships 40,000
----------
Total long-term debt 767,341
----------
TOTAL LIABILITIES 1,026,174
----------
STOCKHOLDERS' EQUITY:
Common stock, no par value; 10,000,000 shares authorized; 3,000,000 shares
issued and outstanding 1,626,462
Accumulated deficit (116,839)
----------
TOTAL STOCKHOLDERS' EQUITY 1,509,623
----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $2,535,797
==========
</TABLE>
See notes to financial statements.
F-7
<PAGE> 11
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED STATEMENT OF OPERATIONS
TWO MONTHS ENDED FEBRUARY 28, 1997
REVENUES:
Membership revenue-net $ 47,176
Campground revenue-net 98,691
----------
Net revenue 145,867
Cost of ranch operations 87,239
----------
NET MARGIN 58,628
----------
OPERATING EXPENSES:
Selling and marketing 2,695
General and administration 33,252
----------
Total operating expenses 35,947
----------
OPERATING INCOME 22,681
OTHER INCOME (EXPENSES):
Other-net 3,830
----------
NET INCOME BEFORE TAXES $ 26,511
==========
See notes to financial statements.
F-8
<PAGE> 12
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
Shares $ Accumulated Deficit
----------------------------- -------------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 3,000,000 $1,626,462 $(143,350)
Net income 26,511
--------- ---------- ---------
BALANCE, FEBRUARY 28, 1997 3,000,000 $1,626,462 $(116,839)
========= ========== =========
</TABLE>
See notes to financial statements.
F-9
<PAGE> 13
TREASURE ROCKHOUND RANCHES, INC.
UNAUDITED STATEMENT OF CASH FLOWS
YEAR ENDED FEBRUARY 28, 1997
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net income $ 26,511
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 10,630
Decrease in other current assets 7,500
Increase in accounts payable 16,306
Decrease in other accrued expenses (16,037)
---------
Net cash provided by operations 44,910
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures 1,030
Note receivable (61,216)
--------
Net cash used in investing activities (60,186)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings (19,816)
---------
Net cash used in by financing activities (19,816)
---------
NET INCREASE (DECREASE) IN CASH (35,092)
CASH, BEGINNING OF PERIOD 35,640
CASH, END OF PERIOD $ 548
========
</TABLE>
See notes to financial statements.
F-10
<PAGE> 14
TREASURE ROCKHOUND RANCHES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE A - GENERAL
The financial statements of Treasure Rockhound Ranches, Inc., a Texas
corporation ("Treasure Rockhound") as of February 28, 1997 and for the two
months then ended are unaudited and, in the opinion of Treasure Rockhound,
reflect all adjustments necessary for a fair presentation of such data.
Treasure Rockhound was incorporated in the state of Texas in 1975, and is
currently a wholly-owned subsidiary of Advantage Life Products, Inc., a
Delaware corporation ("Advantage Life"). In 1990, Channel America Broadcasting,
Inc., fka EVRO Corporation, a Florida corporation ("Channel America"),
purchased 100% of the stock of Treasure Rockhound. In 1995, Channel America
transferred the ownership of the stock of Treasure Rockhound to its
wholly-owned subsidiary Technology Holdings, Inc., a Florida corporation
("Technology Holdings"). On February 21, 1997, Advantage Life and its
subsidiary, Advantage Life Acquisition One, Inc., a Florida corporation
("Advantage Life Acquisition"), entered into an Agreement and Plan of
Reorganization by and among Advantage Life, Advantage Life Acquisition, Channel
America, Technology Holdings, Vietri Investments, Ltd., a foreign corporation,
Roscom, Ltd., a foreign corporation, Alan Lipstein, an individual and Gerald
Norton, an individual, and acquired 100% of the issued and outstanding stock of
Treasure Rockhound for 6,000,000 shares of Advantage Life's restricted common
stock, a note payable to Technology Holdings for $750,000 and the assumption of
certain liabilities of Technology Holdings totaling approximately $658,000.
Treasure Rockhound, operates 5 recreational vehicle ("RV") parks in three
southwestern states. Its private membership organization, Camper Ranch Club of
America ("Camper Ranch Club"), offers its approximately 5,300 dues-paying
members, daily or long-term leases on improved campsites at its various
locations. Treasure Rockhound owns 5,100 acres and leases 7,300 acres from
individuals, states and the federal government.
Treasure Rockhound caters to a growing trend in the hospitality field, namely
remote, independent excursions into naturally pristine areas of the country.
Parks are located in valleys, on mountains or near natural shorelines and offer
RV travelers a different climate and culture in which to enjoy their leisure
time.
The demographics of the RV vacationer are clearly defined, and their growth has
shown steady, although not dramatic increases. Members of the Camper Ranch Club
have year-round access to all of the fully managed Treasure Rockhound sites
which provide electric and water hookups for their convenience and the
opportunity to explore the natural beauty surrounding all ranch locations.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
FISCAL YEAR - Treasure Rockhound has elected a fiscal year ending December
31.
PROPERTY AND EQUIPMENT - Property and equipment is recorded at acquisition
cost. Depreciation is provided using the straight-line method over the
estimated lives of the assets. The costs of replacements, renewals, and
repairs, which neither add materially to the value of the property nor
appreciably prolong its life, are charged to expense as incurred.
REVENUE RECOGNITION - Treasure Rockhound recognizes revenues from dues,
rentals and memberships during the period of service. Revenues from long-term
leases are amortized over the length of the lease.
INCOME TAX - Since 1990, Channel America has, and now Advantage Life will,
consolidate the operations of Treasure Rockhound into its financials for both
tax and financial
F-11
<PAGE> 15
reporting purposes. Therefore, no tax has been calculated and reported on the
accompanying statements, nor have corporate tax returns been filed by Treasure
Rockhound as a stand alone entity.
NOTE C - COMMON STOCK
COMMON STOCK - Treasure Rockhound has authorized 10,000,000 shares of common
stock with no par value, of which 3,000,000 shares were issued and outstanding
at December 31, 1996. All shares of common stock are held in escrow as
collateral for the promissory note entered into for the acquisition of Treasure
Rockhound.
NOTE D - NOTE RECEIVABLE
At the time of the sale of 100% of the stock of Treasure Rockhound to Advantage
Life, Treasure Rockhound's parent, Technology Holdings, owed Treasure Rockhound
$801,638 in inter-company debt. As part of the transaction, this debt was
converted to a promissory note payable to Treasure Rockhound, and is recorded
as such in current assets on the accompanying financial statements.
NOTE E - NOTES PAYABLE AND LONG-TERM DEBT
Notes payable consists of the following:
<TABLE>
<S> <C>
Note payable to a individual at 10.0% per annum interest, payable
in monthly installments of $5,000 including interest, due
2001, having common stock of the Treasure Rockhound
and land as collateral $338,567
Note payable to a bank at 10.25% per annum interest, payable in
monthly installments of $2,124 including interest, due
2000, having land as collateral 75,219
Note payable to a bank at 10.25% per annum interest, payable in
monthly installments of $2,176 including interest, due 2000,
having land as collateral 73,322
Various notes payable 8,599
--------
495,707
Less current portion (81,936)
--------
$413,771
========
</TABLE>
NOTE F - COMMITMENTS AND CONTINGENCIES
Prior to 1990, Treasure Rockhound sold memberships with refund provisions.
Treasure Rockhound estimates that only a small percentage of the members will
request refunds. At February 28, 1997, the total remaining memberships sold
with a refund provision are approximately $200,000. Treasure Rockhound has
recorded a liability for potential refunds of $40,000 as of February 28, 1997.
F-12
<PAGE> 16
ADVANTAGE LIFE PRODUCTS, INC.
CONDENSED PROFORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JANUARY 31, 1997
The Condensed Proforma Statement of Operations shown below for the
nine months ended January 31, 1997, has been prepared as if Advantage Life had
acquired Treasure Rockhound as of May 1, 1996, adjusted to reflect an increase
in amortization resulting from goodwill recorded pursuant to the acquisition.
<TABLE>
<CAPTION>
Advantage Treasure Proforma
Life Rockhound Adjustment Combined
------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales and revenues 0 $ 671,123 0 $ 671,123
Cost of revenues $ 25,407 407,671 0 433,078
------------------------------------------------------------
Net margin (25,407) 263,452 0 238,045
Operating expenses 666,654 285,726 $ 94,812 1,047,192
------------------------------------------------------------
Operating income (loss) (692,061) (22,274) (94,812) (809,147)
Other income (expenses) (1,412) (16,886) 0 (18,298)
------------------------------------------------------------
Net loss $ (693,473) $ (39,160) $ (94,812) $ (827,445)
============================================================
Net loss per share $ (0.103)
===========
Average number of common
shares outstanding 8,025,687
===========
</TABLE>
P-1
<PAGE> 1
EXHIBIT 99.2
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
OF
ADVANTAGE LIFE PRODUCTS, INC.
FOR THE TEN MONTH PERIOD ENDED
FEBRUARY 28, 1997
<PAGE> 2
ADVANTAGE LIFE PRODUCTS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
FEBRUARY 28, 1997
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 100
Note receivable 1,600,000
Other receivables 11,510
-----------
Total current assets 1,611,610
-----------
PROPERTY AND EQUIPMENT:
Land and improvements 1,426,592
Buildings and structures 361,662
Machinery and equipment 285,479
Construction in progress 37,916
-----------
2,111,649
Less: accumulated depreciation (388,333)
-----------
Total property and equipment 1,723,316
-----------
Unamortized goodwill 2,275,476
-----------
TOTAL ASSETS $ 5,610,402
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt $ 88,561
Accounts payable 1,163,886
Accrued royalties 518,696
Other accrued expenses 209,443
Other current liabilities 235,554
-----------
Total current liabilities 2,216,140
-----------
LONG-TERM DEBT:
Long-term debt 413,771
Deferred income - VIP leases 313,570
Refundable memberships 40,000
-----------
Total long-term debt 767,341
-----------
TOTAL LIABILITIES 2,983,481
-----------
STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 1,250,000 authorized; 1,000,000 shares issued and
outstanding 1,000,000
Common stock, $0.16 par value; 25,000,000 shares authorized; 10,898,497 shares
issued and outstanding 1,743,760
Accumulated deficit (116,839)
-----------
TOTAL STOCKHOLDERS' EQUITY 2,626,921
-----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 5,610,402
===========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 3
ADVANTAGE LIFE PRODUCTS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
TEN MONTHS ENDED
FEBRUARY 28, 1997
-----------------
<S> <C>
REVENUES:
Revenues $ 696,123
Returns and allowances (25,000)
-----------
Net Revenues 671,123
COST AND EXPENSES:
Cost of sales 407,671
Selling, general and administration 285,726
-----------
Operating Loss (22,274)
OTHER INCOME (EXPENSES):
Other income (expense) (16,886)
-----------
NET LOSS $ (39,160)
===========
NET LOSS PER SHARE $ (0.016)
===========
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 2,434,534
===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
ADVANTAGE LIFE PRODUCTS, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - GENERAL
The financial statements of Advantage Life Products, Inc., a Delaware
corporation ("Advantage Life" or the "Company") as of February 28, 1997 and for
the ten 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.
The consolidated financial statements include the accounts of Advantage Life
and its wholly-owned subsidiary, Treasure Rockhound Ranches, Inc., a Texas
corporation ("Treasure Rockhound"). Advantage Life has one wholly-owned,
inactive subsidiary, Environmental Professionals, Inc., a Florida corporation
("Environmental Professionals"), whose operations were discontinued in May,
1996.
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 for the distribution of a certain
product via infomercials. Due to difficulties with the airing of the
infomercials, Advantage Life attempted to sell the product 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 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. 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
assets of Environmental Professionals, 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.
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
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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 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., a Florida corporation
("Channel America") and its subsidiary, Technology Holdings, Inc. ("Technology
Holdings"), Vietri Investments, Ltd., a foreign corporation ("Vietri"), Roscom,
Ltd., a foreign corporation ("Roscom"), Alan Lipstein, an individual
("Lipstein") and Gerald Norton, an individual ("Norton") and acquired 100% of
the issued and outstanding stock of Technology Holdings' 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.
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 Life had itself
incurred them. In conjunction with this Agreement, Vietri, Roscom, Lipstein and
Norton returned to Advantage Life a total of 6,700,000 shares of the Company's
common stock, in return for forgiveness of all indebtedness owed to Advantage
Life by Vietri, Roscom and Norton, and all but $600,000 of indebtedness owed to
Advantage Life by Lipstein. 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 five recreational resorts located in Arizona, New
Mexico and Texas. Treasure Rockhound owns approximately 5,100 acres and leases
approximately 7,300 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.
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 B - ACCOUNTING FOR THE ACQUISITION OF TREASURE ROCKHOUND RANCHES, INC.
On February 21, 1997, the Company acquired 100% of the issued and outstanding
stock of Treasure Rockhound. 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. As closing occurred in the middle of a month on February 21, 1997, the
transaction has been recorded as of February 28, 1997. The only operating
revenues that Advantage Life currently receives are those generated by Treasure
Rockhound.
NOTE C - COMMON AND PREFERRED STOCK
COMMON STOCK - The Company has authorized 25,000,000 shares of common stock at
$0.16 par value. As of February 28, 1997, 10,898,497 common shares are issued
and outstanding.
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In October 1994, Advantage Life effected a one for three reverse stock split.
In August 1995, Advantage Life effected a one for twenty reverse stock split,
and on the same date effected a 100% stock dividend. On June 24, 1996,
Advantage Life effected a one for twenty 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 one for twenty 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 shares to Vietri, an unrelated entity, for a
promissory note from Vietri in the principal amount of $150,000 which matures
August 31, 1997. In August 1996, Advantage Life entered into a Capital Stock
Purchase Agreement for the sale of 200,000 shares to Cimtran, Ltd. ("Cimtran"),
an unrelated entity, for a total consideration of $2,500,000. Under the terms
of the agreement with Cimtran, Advantage Life was to receive $100,000 in cash
and a promissory note from Cimtran in the principal amount of $2,400,000 with a
maturity date of August 31, 1997. This agreement with Cimtran was subsequently
rescinded. In October 1996, Advantage Life entered into a Capital Stock
Purchase Agreement for the sale of 1,000,000 shares to Vietri for a total
consideration of $500,000. Under the terms of this agreement with Vietri,
Advantage received $85,000 in cash and a promissory note from Vietri in the
principal amount of $415,000 which matures August 31, 1997.
During the quarter ended January 31, 1997, Advantage Life issued shares
pursuant to a Capital Stock Purchase Agreement for the sale of 5,000,000 shares
to Alan Lipstein, for a total consideration of $2,500,000. Under the terms of
the agreement with Lipstein, 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. Also during the quarter ended January 31, 1997,
Advantage Life issued shares pursuant to a Capital Stock Purchase Agreement for
the sale of 5,000,000 shares to Gerald Norton, for a total consideration of
$2,500,000. Under the terms of the agreement with Norton, Advantage Life
received a promissory note from Norton in the principal amount of $2,500,000
which matures August 31, 1997.
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 and its subsidiary, Technology Holdings, (the "Agreement") to
acquire 100% of the issued and outstanding stock of Technology Holdings'
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, Roscom,
Lipstein and Norton agreed to return to Advantage Life a total of 6,700,000
shares of the Company's common stock in return for forgiveness of all
indebtedness owed to Advantage Life by Vietri, Roscom and Norton, and all but
$600,000 of indebtedness owed by Lipstein. The amount owed by Lipstein is
classified as a note receivable on the accompanying unaudited consolidated
balance sheet.
As of March 26, 1997, the Company has 10,898,497 common shares 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 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
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approved the issuance of 1,000,000 preferred shares. As of February 28, 1997,
1,000,000 shares of the Company's Series A Preferred Stock were issued and
outstanding.
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. ("Advantage Holdings"), 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. The amount owed by Lipstein is classified as a
note receivable on the accompanying unaudited consolidated balance sheet.
Advantage Holdings 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
shares.
