SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB/A
(Amendment No. 1)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JANUARY 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-26454
PL BRANDS, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
Delaware 98-0142664
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
260 Bartley Drive
Toronto, Ontario, Canada M4A 1G5
(Address of Principal Executive Offices)
(416) 750-9656
(Issuer's Telephone Number, Including Area Code)
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:
Common, $.001 par value per share:
9,143,279 outstanding as of June 8, 2000
<PAGE>
EXPLANATORY NOTE
PL Brands, Inc. is filing this Amendment No. 1 on Form 10-QSB/A to
its Quarterly Report of Form 10-QSB for the quarter ended January 31, 2000 to
reflect the restatement of its unaudited interim consolidated condensed
financial statements for the three and nine months ended January 31, 2000
and 1999. See the Financial Information and Notes thereto included
elsewhere herein.
PART I - FINANCIAL INFORMATION
PL BRANDS, INC. AND SUBSIDIARIES
Index to Financial Information
Period Ended January 31, 2000
(Unaudited)
Item
Page Herein
Item 1 - Financial Statements:
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statements of Earnings 4
Consolidated Condensed Statements of Cash Flows 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 - Management's Discussion and
Analysis or Plan of Operation 7
<PAGE>
PL BRANDS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
================================================================================
April 30, January 31,
1999 2000
----------- -----------
(Restated -
See Note 2)
ASSETS
CURRENT
Cash $ 415 $ 1,803
NET ASSETS OF DISCONTINUED OPERATIONS 1,525,056 --
-------------------------------------------------------------------------------
$ 1,525,471 $ 1,803
===============================================================================
LIABILITIES
CURRENT
Accounts payable $ 97,828 $ 66,729
Net liabilities of discontinued operations 1,374,750 --
-------------------------------------------------------------------------------
1,472,578 66,729
-------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (DEFICIT)
CAPITAL STOCK 9,143 9,143
ADDITIONAL PAID-IN CAPITAL 2,128,906 2,128,906
ACCUMULATED DEFICIT (2,085,156) (2,202,975)
-------------------------------------------------------------------------------
52,893 (64,926)
-------------------------------------------------------------------------------
$ 1,525,471 $ 1,803
===============================================================================
See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
PL BRANDS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(unaudited)
================================================================================
For the three months ended For the nine months ended
January 31, January 31,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Restated - See Note 2) (Restated - See Note 2)
<S> <C> <C> <C> <C>
NET SALES $ -- $ -- $ -- $ --
OPERATING EXPENSES 19,011 15,689 139,044 50,173
----------------------------------------------------------------------------------------
LOSS BEFORE UNDERNOTED ITEMS (19,011) (15,689) (139,044) (50,173)
OTHER INCOME (EXPENSES) 21,225 -- 21,225 --
----------------------------------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS 2,214 (15,689) (117,819) (50,173)
DISCONTINUED OPERATIONS
Income from operations of
Gandalf Graphics Limited -- (161,444) -- 44,703
----------------------------------------------------------------------------------------
NET EARNINGS (LOSS) 2,214 (177,133) (117,819) (5,470)
ACCUMULATED DEFICIT,
BEGINNING OF PERIOD (2,205,189) (1,899,007) (2,085,156) (2,070,670)
----------------------------------------------------------------------------------------
ACCUMULATED DEFICIT,
END OF PERIOD $(2,202,975) $(2,076,140) $(2,202,975) $(2,076,140)
========================================================================================
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PL BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
================================================================================
For the three months ended For the nine months ended
January 31, January 31,
------------------------- -------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Restated - See Note 2) (Restated - See Note 2)
<S> <C> <C> <C> <C>
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Income (loss) from
continuing operations $ 2,214 $ (15,689) $ (117,819) $ (50,173)
Changes in assets and liabilities
affecting cash flows
Accounts receivable - other -- -- -- 69,881
Accounts payable (1,777) 16,040 (31,099) (18,960)
-------------------------------------------------------------------------------------------------
Net cash (used for) provided
by operating activities 437 351 (148,918) 748
Net cash flows from
discontinued operations -- 367,689 150,306 557,512
-------------------------------------------------------------------------------------------------
437 368,040 1,388 558,260
INVESTING ACTIVITIES
Net cash flows from
discontinued operations -- (368,169) -- (419,395)
FINANCING ACTIVITIES
Net cash flows from
discontinued operations -- -- -- (138,539)
-------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 437 (129) 1,388 326
CASH, BEGINNING OF PERIOD 1,366 672 415 217
-------------------------------------------------------------------------------------------------
CASH, END OF PERIOD $ 1,803 $ 543 $ 1,803 $ 543
=================================================================================================
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
PL BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying interim financial statements are unaudited, but
in the opinion of the management of the Company, contain all adjustments,
consisting of only normal recurring accruals, necessary to present fairly
the financial position at January 31, 2000, the results of operations of
the three and nine month periods ended January 31, 1999 and 2000, and the
cash flows for the three and nine month periods ended January 31, 1999 and
2000. The results of operations for the three and nine month periods ended
January 31, 2000 are not necessarily indicative of the results of
operations to be expected for the full fiscal year ended April 30, 2000.
Reference is made to the Company's Form 10-KSB/A for the year ended April
30, 1999.
Until January 1998, the Company's traditional line of business had
been bottling water through its subsidiary Alma Pack Bottling Corporation.
The subsidiary was never able to attain profitability and there continued
to be a stockholders deficit. In 1998, the Company revised its strategy and
sold all of the shares of Alma Pack Bottling Corporation and acquired all
of the issued and outstanding shares (the "Gandalf Shares") of Gandalf
Graphics Limited ("Gandalf") from Marcella Downey ("Downey") for Canadian
$400,000 which was paid by issuing a promissory note to Downey for Canadian
$400,000 (the "Note") with the principal due and payable on January 1,
2000. Gandalf provides digital pre-press services and digital print
services. Pursuant to an agreement made as of May 1, 1999 wherein the
Company acknowledged that it has not and shall not repay the principal
amount of the Note and any accrued and unpaid interest to Downey on January
1, 2000, the parties decided to resolve any controversy that would result
from the inability of the Company to pay, and agreed that Downey return the
Note to the Company in exchange for the return of the Gandalf Shares.
NOTE 2 - RESTATEMENT OF FINANCIAL STATEMENTS
Subsequent to the issuance of the Company's financial statements as
of and for the three and nine month periods ended January 31, 2000, the
Company's management determined that the disposal of Gandalf effective as
of May 1, 1999 was indicative of conditions existing at the April 30, 1999
balance sheet date. Therefore, the financial statements for April 30, 1999
should have reflected such disposal as a discontinued operation, and the
cumulative foreign currency translation account related to the discontinued
operation should have been reclassified from accumulated other
comprehensive income and recorded as an expense as of April 30, 1999. As a
result, the consolidated condensed financial statements as of and for the
three and nine month periods ended January 31, 2000 have been restated to
reverse the foreign currency translation adjustment previously recorded.
Additionally, the 1999 financial statements have been recast to
appropriately report Gandalf as a discontinued operation.
A summary of the significant effects of the restatement is as
follows:
January 31, 2000
As
Previously
Reported As Restated
Accumulated Deficit (2,231,014) (2,202,975)
Accumulated Other
Comprehensive Income 27,330
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operation.
The following discussion should be read in conjunction with the
Financial Information and Notes thereto included in this report. See Note
2 of the notes to the financial statements for a discussion of the effects
of the restatement of the financial statements as of and for the three and
nine month periods ended January 31, 2000.
Background
PL Brands, Inc. (the "Company") was originally incorporated under
the name "Malone Road Investments, Ltd." on August 6, 1990 in the Isle of
Man. The Company was redomesticated in the Turks and Caicos Islands on
April 21, 1992, and subsequently domesticated as a Delaware corporation on
May 12, 1994. Pursuant to Delaware law the Company is deemed to have been
incorporated in Delaware as of August 6, 1990. The Company changed its
name to PL Brands, Inc. on June 6, 1994.
Unless the context otherwise requires, all references herein to the
"Company" refer to PL Brands, Inc. and its consolidated subsidiaries.
The Company's principal business was initially in development,
production and marketing of private label prepared foods. Prior to January
1, 1994 the Company's activities were primarily limited to research and
development of its business plan and recruitment of personnel. Full-time
operations began in March 1994. On August 19, 1994 the Company purchased
100% of the outstanding shares of Alma Pack Bottling Corporation ("Alma
Pack"). Until January 1998, Alma Pack's bottling business comprised the
Company's principal operation. Under this strategy, the Company was never
able to attain profitability and the continued stockholder's deficiency
raised doubt about the Company's ability to continue as a going concern.
In 1998 the Company revised its strategy and sold all of the shares
of Alma Pack and acquired all of the issued and outstanding shares (the
"Gandalf Shares") of Gandalf Graphics Limited ("Gandalf") from Marcella
Downey ("Downey") for Canadian $400,000 which was paid by issuing a
promissory note to Downey for Canadian $400,000 (the "Note") with the
principal due and payable on January 1, 2000. Gandalf provides digital
pre-press services and digital print services. Pursuant to an agreement
made as of May 1, 1999 wherein the Company acknowledged that it has not and
shall not repay the principal amount of the Note and any accrued and unpaid
interest to Downey on January 1, 2000, the parties decided to resolve any
controversy that would result from the inability of the Company to pay, and
agreed that Downey return the Note to the Company in exchange for the
return of the Gandalf Shares.
As a result of the transactions discussed above with Alma Pack and
Gandalf, the net assets (liabilities) of each have been segregated from
continuing operations in the consolidated balance sheets included within
the accompanying financial statements, and operating results of each are
segregated and reported as discontinued operations in the consolidated
statements of earnings and consolidated statements of cash flows included
within the accompanying financial statements.
Unless otherwise noted all information herein is given in U.S.
dollars.
Results of Operations/Plan of Operation
The Company reported no sales from continuing operations for the
three and nine months ended January 31, 2000 and three and nine months
ended January 31, 1999. This was due to the disposal of Gandalf, the
Company's only operating segment through the return of the Note to the
Company in exchange
<PAGE>
for the return of the Gandalf Shares as of May 1, 1999. As a result, the
Company had no business operations for the period covered by this report.
Operating expenses were approximately $19,000 and $139,000, respectively,
for the three and nine months ended January 31, 2000 compared to
approximately $16,000 and $50,000, respectively, for the three and nine
months ended January 31, 1999. The Company had income from continuing
operations of approximately $2,000 for the three months ended January 31,
2000 compared to a loss from continuing operations of approximately $16,000
for the three months ended January 31, 1999. For the nine months ended
Janaury 31, 2000, the Company had a loss from continuing operations of
approximately $118,000 compared to a loss from continuing operations of
approximately $50,000 for the nine months ended January 31, 1999. For the
three months ended January 31, 2000, the Company reported net earnings of
approximately $2,000 compared to a net loss of approximately $177,000 for
the three months ended January 31, 1999. For the nine months ended January
31, 2000, the Company reported a net loss of approximately $118,000
compared to a net loss of approximately $5,000 for the nine months ended
January 31, 1999. The change is primarily due to a loss from operations of
Gandalf being reported of approximately $161,000 for the three months ended
January 31, 1999 compared to no income or a loss from operations of
Gandalf being reported for the three months ended January 31, 2000, and
income from operations of Gandalf being reported of approximately $44,000
for the nine months ended January 31, 1999 compared to no income or a loss
from operations of Gandalf being reported for the nine months ended January
31, 2000, all due to Gandalf's disposal as of May 1, 1999.
In May 2000, the Company entered into an agreement to acquire
substantially all of the assets of Oth.net, Inc., a Florida corporation, as
well as the Oth.net domain name, in exchange for 4,500,000 shares of the
Company's Common Stock and $500,000, which funds were paid on June 30,
2000. Oth.net, Inc. is an internet based search engine for music on the
world wide web. Such transaction was completed as of July 21, 2000. As a
result, it is contemplated that there will be a change in management of the
Company.
Liquidity and Capital Resources
On January 31, 2000, the Company had a working capital deficit of
approximately $65,000 and stockholders' deficit of approximately $65,000.
Year 2000 Issue
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using Year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect the entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the Company,
including those related to the efforts of customers, suppliers or other
service providers, will be fully resolved.
Prior to the year 2000, the Company determined that its critical
software (primarily widely-used software packages) and all of its critical
business systems were already year 2000 compliant, and as of the date of
this report, no significant problems had been encountered. However, the
Company continues to monitor the situation.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
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.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
There are no exhibits applicable to this Form 10-QSB.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the
fiscal quarter ended January 31, 2000.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned
thereunto duly authorized.
PL BRANDS, INC.
(Registrant)
Dated: November 3, 2000 By: /s/Robert Brown
Robert Brown,
Vice President - Finance, Secretary,
Treasurer (Principal Accounting and
Financial Officer)
