<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to section 13 or 15(d) of the Securities
----- ----------
Exchange Act of 1934 for the quarterly period ended 30 April 2000
--------------------
("Q1", "First Quarter" or "Quarter 1 of Fiscal 2001"), or
_____ Transition report pursuant to section 13 or 15(d) of the Securities
----------
Exchange Act of 1934 for the Transition period from __________ to
--------------------
__________.
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Commission file number 0-18163 CUSIP number 693501 10 8
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PPC CAPITAL CORP
(Exact Name of Registrant as Specified in its Charter)
(the "Registrant", or the "Company", or the "Corporation")
-----------------------------------------------------------
Province of Alberta, Canada
(State or other jurisdiction of incorporation)
7850 Woodbine Avenue, Suite 201,
Markham, Ontario, Canada L3R 0B9
(Address of principal executive offices) Postal Code)
905-479-5683
800-769-3733 905-479-8911
(Telephone numbers) (Fax number)
-----------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by (S).13 or (S).15(d) of the Securities Exchange Act of 1934 during
-------------------------------
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
-
As of 30 May 2000, there were 16,913,389 common shares of the Registrant's
common stock (the "Common Shares" or "Common Stock") outstanding. (See ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
--------------------------------------------------------------------------
Operations.)
----------
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 2
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Interim Financial Statements 3
Consolidated Statement of Operations
for the periods ended 30 April 2000 and 1999
Consolidated Balance Sheet as at 30 April 2000 and 31
January 2000
Consolidated Statement of Cash Flows
for the periods ended 30 April 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of 6
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 3
Part I - Financial Information
The Company prepares its consolidated financial statements in Canadian Dollars.
In this report all references to "$" are to Canadian dollars, unless otherwise
noted.
Exchange Rates
Based on the noon buying rates for cable transfers in New York City, certified
for customs purposes by the Federal Reserve Bank of New York, the exchange rate
on 30 May 2000 was C$1.00 = US$0.67
Item 1. Interim Financial Statements
First Quarter
(period ended 30 April 2000)
Fiscal 2001
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
(Amounts are expressed in Canadian Dollars) Three-month and year-to-date
period ended 30 April
--------------------------------------
2000 1999
--------------------------------------
<S> <C> <C>
Interest revenue and sales $4,055 $5,944
Expenses
Operating and administration 75,642 293,340
Financing charges payable in stock - see Note 3 79,775 79,774
--------- ---------
Net (Loss) from operations (151,362) (367,170)
Deficit, beginning of period 5,045,255 4,145,098
--------- ---------
Deficit, end of period $5,196,617 $4,512,268
========== ==========
Earnings per share ($0.01) ($0.02)
Weighted average common shares outstanding 16,913,389 16,913,389
</TABLE>
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 4
CONSOLIDATED BALANCE SHEETS (unaudited)
(Amounts are expressed in Canadian Dollars)
<TABLE>
<CAPTION>
30 April 2000 31 January 2000
------------- ---------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $58,042 $124,829
Accounts and note receivable - see Note 2 77,364 77,364
---------- ----------
$135,406 $202,193
========== ==========
Liabilities
Current accounts payable and accrued liabilities $79,464 $74,664
---------- ----------
Long-term liabilities
Non-cash accrued liabilities and interest payable - see Note 3 943,103 863,328
10% Convertible debentures payable - see Note 3 3,191,000 3,191,000
---------- ----------
4,134,103 4,054,328
---------- ----------
4,213,567 4,128,992
---------- ----------
Shareholders' (deficiency)
Share capital
Authorized at no par value:
An unlimited number of common shares
An unlimited number of preferred shares
Issued: 16,913,389 common shares (1999- 16,913,389) 1,118,456 1,118,456
Deficit (5,196,617) (5,045,255)
---------- ----------
(4,078,161) (3,926,799)
---------- ----------
$135,406 $202,193
========== ==========
</TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
(Amounts are expressed in Canadian Dollars) Three-month and year-to-date
period ended 30 April
--------------------------------------------
2000 1999
--------------------------------------------
<S> <C>
Cash provided by (used in) operating activities
Net (Loss) for period ($151,362) ($367,170)
Adjustments required to reconcile Net Loss with
cash provided by operating activities:
Financing charges payable in stock - see Note 3 79,775 79,774
------ ------
(71,587) (287,396)
Changes in non cash operating items
Accounts receivable 0 179,995
Prepaid expenses 0 14,400
Accounts payable and accrued liabilities 4,800 (147,070)
------ ---------
Increase (decrease) in cash during period (66,787) (240,071)
Cash, beginning of period 124,829 567,614
------- -------
Cash, end of period $58,042 $327,543
======= ========
</TABLE>
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Note 1: The Consolidated Financial Statements are for the three-month year-to-
date period ended 30 April 2000, pertaining to the current fiscal year
ending 31 January 2001 ("Fiscal 2001"), and the corresponding period
ended 30 April 1999, pertaining to the fiscal year ended 31 January
2000 ("Fiscal 2000") of PPC Capital Corp which was formerly named
Power Plus Corporation.
In the opinion of management, the Consolidated Balance Sheet as at 30
April 2000 and the Consolidated Statements of Operations and Changes
in Cash Flows for the three-month year-to-date periods ended 30 April
2000 and 1999, include all adjustments necessary for a fair
presentation of such financial statements. Such adjustments consisted
only of normal recurring items. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimated. Interim results are not necessarily indicative of results
for a full year.
The Consolidated Balance Sheet as at 30 April 2000 and the
Consolidated Statements of Operations and Changes in Financial
Position for the three-month year-to-date periods ended 30 April 2000
and 1999 are unaudited. The Consolidated Balance Sheet for Fiscal 2000
was audited and reported to shareholders (see the SEC FORM 10-K
Registration Statement for Fiscal 2000, as previously filed). These
interim quarterly Consolidated Financial Statements and notes do not
contain certain information included in the Company's Audited Annual
Consolidated Financial Statements and the notes thereto.
Note 2: Accounts receivable includes GST recoverable.
Note 3: The 10% Convertible Debentures, for a maximum principal amount of up
to $5,000,000, are a first secured and fixed and floating charge,
maturing on 31 January 2002 (extended on the same terms and conditions
from those that would have matured on 31 January 2000), bearing
interest at a rate of 10% per annum payable semi-annually in common
shares. The Convertible Debentures, including all principal amounts
advanced thereunder and interest accruing thereon, may be converted,
in whole or in part, on or before maturity, at the option of the
holders, into common shares of the Company at a conversion price equal
to $0.10 per post-consolidation common share. Accrued non-cash
interest payable for Q1 - Fiscal 2001 in the amount of $79,775 (to 31
January 2000 was $863,328) is payable in-kind at the time of repayment
or by the issuance of common shares if converted at the option of the
holders.
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
A) Corporate Overview
Investing is the priority for PPC Capital Corp, formerly named Power Plus
Corporation, a public company currently delisted on the Canadian Venture
Exchange ("CDNX")1 in Canada and trading on the OTC - BB in the United
States. The primary activities of the Company fall into two categories:
investing in operating companies; and carrying on business through
subsidiary operating companies. Accordingly, the Company has been the
parent of subsidiaries that hire employees, procured merchandise for
resale, purchased or built capital assets and carried on business. Since
its inception, the Company has invested in specialty retail businesses
operating in Canada and the US, primarily selling batteries and
battery-related products, wireless telecommunications products and portable
fashion electronics.
The Company was incorporated under the Business Corporations Act, Alberta
-------------------------
(Canada) on 15 December 1986 under the name "Caio Capital Company." Prior
to 1 May 1988, the Company had not conducted any significant operations. On
1 May 1988 the Company acquired all of the issued and outstanding shares of
Battery One-Stop International Inc., ("BOSI") a private company
incorporated under the Business Corporations Act Canada on 6 March 1985,
-------------------------
and changed its name to "Battery One-Stop Inc." BOSI continued to develop
the specialty retail business of marketing and selling batteries and
certain battery-powered products in Canada and the Company commenced doing
business in the US through a subsidiary during Fiscal 1990. However, this
business was unsuccessful and was discontinued late in Fiscal 1992.
In November 1992, the Company formed two US wholly owned subsidiaries.
First Olympia Holdings Inc., a US limited liability company, has never been
active in carrying on a business. The second, Batteries Etc., Inc. ("Etc.")
was incorporated for the purpose of operating a US specialty retail
business of marketing and selling batteries and certain battery-powered
products. On 8 November 1994 the Company changed its name to Battery One,
Inc. and its fiscal reporting period to end on 31 January instead of 30
April. During this time, the Company's business was to retail over 400
types of dry cell batteries, including common and specialized cells, and
battery-powered and battery-related products through Etc. in the US and
BOSI in Canada. By the last quarter of Fiscal 1996 (the year ended 31
January 1996), it had become apparent that on the basis of the Company's
share capitalization and considering the continued non-profitability of
Etc., the Company, notwithstanding its best efforts, could not complete a
crucial financing on the basis contemplated. The poor performance of Etc.
resulted from a number of unproductive stores situated in secondary
locations committed to by prior management. During this period, Etc.'s cash
flow had been subsidized by BOSI, to its serious detriment. (Etc. and BOSI
are hereinafter referred to collectively as the "Former Subsidiaries".)
Accordingly, in December 1995, BOSI made a voluntary assignment into
bankruptcy pursuant to the Bankruptcy and Insolvency Act Canada. Also in
-----------------------------
December 1995, Etc. made a voluntary petition seeking protection under
Chapter 11 of the United States Bankruptcy Code that was subsequently
---------------
converted to a Chapter 7 filing in January 1996. The Company was the
largest creditor of the Former Subsidiaries. Accordingly, at 31 January
1996, the Company had neither ongoing operations nor operating assets.
In July 1996, Power Plus USA, Inc. ("PPUSA"), a wholly owned subsidiary of
the Company, commenced implementing its plan for launching the US Powerful
Stuff chain. Effective 1 September 1996, PPUSA launched its wireless
airtime rebilling business by purchasing more than 20,000 pager customers
under existing contracts and the entitlement to the related future wireless
(pager/beeper airtime) rebilling reve-
__________________
/1/ Effective 29 November 1999 the Canadian Venture Exchange ("CDNX") commenced
operations as a result of the merger of the Vancouver Stock Exchange and
the Alberta Stock Exchange.
<PAGE>
PPC CAPITAL CORP FORM 10-Q
FirsT Quarter of Fiscal 2001
Page 7
nue from Consumer Electronics Specialty Stores, Inc. ("CESS"), located in
Sarasota, Florida. The US retail chain grew to 44 stores and the airtime
rebilling business grew by nearly 50% over the next 18 months. Despite these
accomplishments, the lack of timely financing, in accordance with PLAN 2000,
to support the ongoing operations and growth caused PPUSA to seek protection
under Chapter 11 of the US Bankruptcy Code on 31 January 1998. The Company
---------------
sold certain of PPUSA's capital assets, including its list of pager customers,
to an arm's-length party on 29 June 1998, and PPUSA ceased carrying on the
business. (See ITEM 7 - Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations.)
-----------------------------------
In September 1996, the Company launched its Canadian Powerful Stuff chain
through its wholly owned subsidiary Power Plus Canada, Inc., ("PPCan"). The
immediate expansion thrust was concentrated in Ontario, where the chain grew
to 18 stores, although plans foresaw the addition of several store locations
in British Columbia and Alberta. However, resulting from the same capital
constraint, on 8 May 1998 PPCan sought protection by filing a Notice of
---------
Intention to File a Proposal to Creditors ("Proposal") under Part III Division
-----------------------------------------
I of the Bankruptcy and Insolvency Act Canada. PPCan remained in possession of
-----------------------------
its assets. On 26 November 1998, the Company sold the shares of PPCan and
certain intellectual properties to an arm's length party that conducted a
similar business in Canada. (See ITEM 7 - Management's Discussion and Analysis
------------------------------------
of Financial Condition and Results of Operations.) All of the Company's retail
------------------------------------------------
operations in Canada and the US were conducted through PPCan and PPUSA,
respectively, and these subsidiaries owned all of the capital assets employed
in carrying on the retail businesses. Accordingly, at 31 October 1998 the
Company had neither ongoing retail operations nor operating assets.
Notwithstanding reorganizational proceedings underway since, the Company has
been maintained in good standing from a corporate and regulatory statutory
compliance perspective. Shareholders approved, at the annual and special
shareholders' meeting held on 21 January 1999, the proposed reorganizational
proceedings which management considers in the best interests of the Company
(the "1999 Reorganization Plan"). In summary, the shareholders resolved,
subject to regulatory approval, as to the following matters:
1. To change the name of the Company to "PPC Capital Corp";
2. To authorize the consolidation of the common shares of the Company on
the basis of one (1) common share for each five (5) common shares
heretofore outstanding;
3. To authorize a reduction of the stated capital of the Company by
$20,700,000 effective 31 January 1999;
4. To authorize the conversion of secured debt of the Company in an amount
of up to $5,000,000 into post-consolidation common shares of the
Company at a conversion price of $0.10 per post-consolidation common
share;
5. To authorize the conversion of certain other debts of the Company in an
amount of up to $340,000 into post-consolidation common shares at a
conversion price of $0.10 per post-consolidation share; and,
6. To approve the payment of a finder's fee in the amount of $121,230 by
issuing up to 1,212,300 post-consolidation common shares at a
conversion price of $0.10 per post-consolidation common share.
While management cannot give any assurances as to the future outlook for the
Company, conditional regulatory approval to the 1999 Reorganization Plan was
granted on 29 April 1999. The Company changed its name to PPC Capital Corp
effective 26 August 1999. Other reorganizational matters are pending in the
discretion of management which intends to aggressively pursue diversified
investment opportunities targeting to maximize shareholder value. In
management's opinion, the Company's tax loss
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 8
carry forwards are expected to represent a significant asset/2/ for the
Company which could be material in attracting a suitable candidate for
purposes of restructuring its business affairs.
In the circumstances of these reorganizational proceedings and as previously
reported, CDNX has conducted a review of the financial affairs of the Company
to ascertain whether the Company was maintaining continued listing
requirements. CDNX determined that the Company, having divested what it
considered to be substantially all of its operating assets, did not meet the
continued listing requirements. Therefore, trading of the Company's shares was
initially suspended at the close of business on 30 April 1999 and on 31 May
2000 the securities were delisted from CDNX. The Company, however, is in no
way impaired from continuing on with its day-to-day operations in implementing
the 1999 Reorganization Plan and seeking out new investment opportunities. The
trading in shares of Alberta issuers is typically halted for extended periods
pending closure of transactions by way of reverse take-over. It is open to the
Company to make an application for relisting when it is in a position to meet
CDNX requirements.
B) Results of Operations
1) Q1 - Fiscal 2001
The Company continued in its role as an investment banker and, as
previously reported, is currently seeking new investment opportunities.
Since Q1 - Fiscal 2000 the Company has not owned any active subsidiary
companies. Conformably, the Company's interim financial statements since
Q1-- Fiscal 2000 report the revenue and expenses of essentially the
parent company's activities only and that while the Company has positive
working capital it has no long-term assets. The following limited
discussion and analysis should be read in conjunction with the
previously filed audited Annual Consolidated Financial Statements and
the Notes thereto contained in the SEC FORM 10K - Fiscal 2000 filing,
representing the year ended 31 January 2000.
Consideration of Q1 business results for Fiscal 2001 and Fiscal 1999
The following table highlights items reflected in the Company's
unaudited consolidated statement of operations expressed as percentages
of sales:
<TABLE>
<CAPTION>
Expressed as a
Percentage of Interest Revenue
and Sales
(period ended 30 April)
Three months
-------------------------------
2000 1999
-------------------------------
<S> <C> <C>
Cost of sales n/a n/a
Operating, occupancy & administrative expenses 3775% 6277.2%
Net loss 3775% 6277.2%
</TABLE>
------------------------------
/2/ See Note 7 in the Notes to the audited Consolidated Financial Statements -
Fiscal 2000, as filed.
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 9
The materiality of the operating results of the Company's subsidiaries that
operated retail businesses compared to the business results of the parent
company that operated as an investment banker, meant that measurement,
reporting and comparison of business results historically focused on the
retail operations that were materially more significant than the Company's
investing activities.
2) Q1 - Fiscal 2000
During Q1 - Fiscal 2000 the Company did not own any active subsidiary
companies. Conformably, the Company's interim financial statements for Q1 -
- Fiscal 2000 report the revenue and expenses of essentially the parent
company's activities only and, that while the Company has positive working
capital it has no long-term assets.
The materiality of the operating results of the Company's subsidiaries that
operated retail businesses compared to the business results of the parent
company that operated as an investment banker, meant that measurement,
reporting and comparison of business results historically focused on the
retail operations that were materially more significant than the Company's
investing activities. The significant change between periods reflects the
significant transition of the Company's focus, as discussed above, and as
reflected by abandoning the US subsidiary and selling the Canadian
subsidiary. The changes reported for Q1 -- Fiscal 1999 reflected an
unfavorable increase in cost of sales and decrease in gross profit, which
resulted principally for these reasons:
. PPUSA was operated as a discontinued business since the beginning of
Fiscal 1999 and until it ceased carrying on business in June 1998;
. during Fiscal 1999, PPCan retrenched and was operated on a pared-down
basis, pending and until its sale in November 1998;
. the negative impact of establishing accounting reserves and adjustments
to fair market values for inventory and capital assets carrying values
were included in the Fiscal 1999 accounts in anticipation of the closure
of PPUSA and sale of PPCan; and,
. the deteriorating gross profit and increasing diseconomy reflected the
Company's inability to purchase merchandise inventory to sustain
reasonable sales levels at the stores, in accordance with normal
industry practice.
No corporate income taxes were payable in Q1 -- Fiscal 2000. Management
expects the amount of accrued income tax losses, being carried forward and
available for sheltering future business income accruing from Fiscal 2000,
approximates $44 million, and is not reported in the Audited Consolidated
Balance Sheet./3/
--------------------------
/3/ See Note 7 in the Notes to the audited Consolidated Financial Statements -
Fiscal 2000.
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 10
C) Liquidity and Capital Resources
The FORM 10-K Registration Statement for Fiscal 2000 includes more detailed
discussion concerning changes to the capital resources of the Company. As
well, the Notes to the Consolidated Financial Statements (unaudited)
----------------------------------------------
included with these materials include particular details pertaining to
current activity.
1) Convertible Debentures
a) The Company negotiated the extension of the maturity of the 10%
Convertible Debentures for an additional two years on the same terms and
conditions. The 10% Convertible Debentures, for a maximum principal
amount of up to $5,000,000, are a first secured and fixed and floating
charge, maturing on 31 January 2002 (extended on the same terms and
conditions from those that would have matured on 31 January 2000),
bearing interest at a rate of 10% per annum payable semi-annually in
common shares. The Convertible Debentures, including all principal
amounts advance thereunder and interest accruing thereon, may be
converted, in whole or in part, on or before maturity, at the option of
the holders, into common shares of the Company at a conversion price
equal to $0.10 per post-consolidation common share.
b) At the special meeting of shareholders held on 30 January 1998, the
Company's shareholders approved, subject to regulatory approval, the
private placement of a series of first secured and fixed and floating
charge 10% convertible debentures ("1998 Debentures") in the maximum
principal amount of up to $5,000,000. The 1998 Debentures were proposed
to mature on 31 January 2000, bearing interest at a rate of 10% per
annum, payable semi-annually in common shares having a deemed price of
$0.85 each, and secured by way of a first fixed and floating charge
against all the assets of the Company. The 1998 Debentures were proposed
to be convertible, in whole or in part, at the option of the holder,
into units of the Company at a conversion price of $0.85 per unit, each
unit to consist of one common share and one share purchase warrant.
Pending proceeding with the 1998 Debentures, the Company, in the
interim, executed promissory notes evidencing indebtedness in the
aggregate principal amount of $3,191,000 of unsecured loans advanced to
the Company and bearing interest on maturity at an annual rate of 10%
(the "Unsecured Loan Notes"). As a result of market conditions, the
Company abandoned the 1998 Debentures. Subsequently, the Company created
a debenture trust indenture (the "Debenture Trust Indenture") dated 30
September 1998 with Elliott & Associates, Inc., providing for the
issuance of a series of 10% fixed and floating charge secured debentures
in the principal sum not to exceed $5,000,000, originally due 31 January
2000 but was recently extended to 31 January 2002 (see (a) above) (the
"Debentures"), and pledged all present and future debts, liabilities and
obligations of the Company under the Debenture Trust Indenture. The
Unsecured Loan Notes, by agreement with their holders, were replaced by
the Debentures during Q4 -- Fiscal 1999. Management considered it
desirable to provide for the convertibility of the Debentures, including
all principal amounts advanced thereunder and interest accruing thereon,
into Common Shares of the Company on the basis that the Debentures may
be converted, in whole or in part, on or before maturity, at the option
of the holders, into common shares of the Company at a conversion price
equal to $0.10 per post-consolidation common share. In view of the fact
that the possible aggregate issuance of Common Shares issuable upon
conversion of the Debentures represents over 25% of the Company's Common
Shares currently issued and outstanding, shareholder approval was
obtained at the 21 January 1999 meeting of the shareholders. The
required approval of CDNX was granted on 29 April 1999.
c) At the special meeting of shareholders held on 30 January 1998, the
Company's shareholders approved, subject to regulatory approval, the
implementation of a four-tiered revised corporate fi-
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 11
nance plan, including reasonable fiscal advisory and finder's fees and
commissions. The Company and Roxborough Holdings Limited (the "Finder")
agreed to a finder's fee arrangement (the "Finder's Fee Agreement") in
respect of funds raised through the efforts of the Finder, pursuant to
which the Company is obligated to pay the Finder a fee equal to 10% of
the first $300,000 of funds raised, and thereafter 7.5% of funds raised
between $300,000 and $1,000,000, and 5% of funds raised over $1,000,000.
To date the Finder arranged funds of $3,191,000, pursuant to which the
Company is obligated to pay the Finder a fee of $121,230 (the "Finder's
Fee"). Management obtained the approval of the shareholders at the
meeting of shareholders held on 21 January 1999, and subsequent
regulatory approval, to pay the Finder's Fee in full by converting it
into post-consolidation common shares of the Company on the basis of a
conversion price of $0.10 per post-consolidation share, or 1,121,230
post-consolidation common.
2) Consolidation of Share Capital
At the special meeting of shareholders of the Company held on 30 January
1998, the shareholders of the Company approved a resolution approving the
consolidation of the Company's issued and outstanding common shares on a
ratio of one new common share for up to each five common shares
outstanding. In accordance with the 1999 Reorganization Plan, as approved
at the 21 January 1999 meeting of the shareholders, and as approved by
CDNX, it is open to the Company, in management's discretion, to complete
this consolidation from the 16,913,389 common shares outstanding to
3,382,677 post-consolidation common shares.
3) Other
The Company has neither any share purchase warrants, nor options to
purchase shares granted to any officers, directors, employees, advisors or
consultants to the Company, which remain or are outstanding as of the date
hereof.
Commencing in Fiscal 1996, all securities, including the Special Notes that
were converted into Common Shares, were sold by private placement to
accredited investors in Canada. These securities were issued pursuant to
the governing securities laws in the applicable governing jurisdictions in
Canada but were not registered or sold principally in the US. Sales of the
securities in the US were made in reliance upon the exemption from
registration contained in (S)4(2) of the Securities Act of 1933, as
----------------------
amended.
4) Outlook
While management cannot give any assurances as to the future outlook for
the Company, management intends to pursue diversified investment
opportunities targeting to maximize shareholder value. In management's
opinion, the Company's tax loss carry forwards are expected to represent a
significant asset/4/ for the Company which will be material in attracting a
suitable candidate for purposes of restructuring its business affairs.
---------------------------
/4/ See Note 7 in the Notes to the audited Consolidated Financial Statements -
Fiscal 2000.
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The following summarizes, to the best of management's knowledge, potential,
pending or known legal proceedings and litigation, arising primarily from
transactions between third parties and one or both of PPUSA and PPCan, in all
considered ordinary routine litigation incidental to the business.
1) CDA Industries Inc., a Canadian company, and manufacturer and supplier of
store fixtures, commenced an action in the Ontario Court against the
Company for the payment of alleged unpaid amounts due from either or both
PPCan and PPUSA. The Company has disputed this claim considering it
without merit and will vigorously defend it as required and advised. There
has been no activity on this matter in over a year and no further action
is planned.
2) Management is informed of a claim that may have been made against PPUSA in
the United States, after PPUSA ceased carrying on business, by a landlord
pertaining to store premises leased by PPUSA. The details of the claim are
undetermined as of the date hereof, and there is the possibility that
collateral claims may have been made against the Company. The Company has
retained US counsel to advise management and will take all steps necessary
and required.
In management's opinion, and to the best of its knowledge, none of these
potential, pending or known routine legal proceedings are expected to have any
material impact on future operating results or the financial condition of the
Company.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
a.) Exhibits
Exhibit 27 -- Financial data schedule
b.) Reports on Form 8-K
None
<PAGE>
PPC CAPITAL CORP FORM 10-Q
First Quarter of Fiscal 2001
Page 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
-------------------------------
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Power Plus Corporation
Date: 30 May 2000 /s/ R. Bruce Freeman
------------------------------------------
R. Bruce Freeman
Vice Chairman and Chief Financial Officer
(Duly authorized officer of the Registrant
and its chief financial officer)
