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 JULY 31, 1999
[ ] 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 July 31, 1999 to
reflect the restatement of its unaudited interim consolidated condensed
financial statements for the three months ended July 31, 1999 and 1998.
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 July 31, 1999
(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, July 31,
1999 1999
----------- -----------
(Restated -
See Note 2)
ASSETS
CURRENT
Cash $ 415 $ 2,521
Other receivable -- 104,270
-------------------------------------------------------------------------------
415 106,791
NET ASSETS OF DISCONTINUED OPERATIONS 1,525,056 --
-------------------------------------------------------------------------------
$ 1,525,471 $ 106,791
===============================================================================
LIABILITIES
CURRENT
Accounts payable $ 97,828 $ 95,876
Net liabilities of discontinued operations 1,374,750 --
-------------------------------------------------------------------------------
1,472,578 95,876
-------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
CAPITAL STOCK 9,143 9,143
ADDITIONAL PAID-IN CAPITAL 2,128,906 2,128,906
ACCUMULATED DEFICIT (2,085,156) (2,127,134)
-------------------------------------------------------------------------------
52,893 10,915
-------------------------------------------------------------------------------
$ 1,525,471 $ 106,791
===============================================================================
See accompanying notes to the consolidated condensed financial statements.
<PAGE>
PL BRANDS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(unaudited)
================================================================================
For the three months ended
July 31,
--------------------------
1999 1998
----------- -----------
(Restated - See Note 2)
NET SALES $ -- $ --
OPERATING EXPENSES 41,978 26,188
-------------------------------------------------------------------------------
LOSS BEFORE UNDERNOTED ITEMS (41,978) (26,188)
OTHER INCOME (EXPENSES) -- --
-------------------------------------------------------------------------------
LOSS FROM CONTINUING OPERATIONS (41,978) (26,188)
DISCONTINUED OPERATIONS
Income from operations of Gandalf Graphics Limited -- 97,310
-------------------------------------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS -- 97,310
-------------------------------------------------------------------------------
NET (LOSS) EARNINGS (41,978) 71,122
ACCUMULATED DEFICIT, BEGINNING OF PERIOD (2,085,156) (2,070,670)
-------------------------------------------------------------------------------
ACCUMULATED DEFICIT, END OF PERIOD $(2,127,134) $(1,999,548)
===============================================================================
See accompanying notes to the consolidated condensed financial statements.
<PAGE>
PL BRANDS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
================================================================================
For the three months ended
July 31,
-------------------------
1999 1998
------------ -----------
(Restated - See Note 2)
CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES
Loss from continuing operations $ (41,978) $ (26,188)
Changes in assets and liabilities affecting cash flows
Accounts receivable - other (104,270) 69,881
Accounts payable (1,952) (35,123)
-------------------------------------------------------------------------------
Net cash (used for) provided by operating activities (148,200) 8,570
Net cash flows from discontinued operations 150,306 304,704
-------------------------------------------------------------------------------
2,106 313,274
INVESTING ACTIVITIES
Net cash flows from discontinued operations -- (166,499)
FINANCING ACTIVITIES
Net cash flows from discontinued operations -- (138,539)
-------------------------------------------------------------------------------
NET INCREASE IN CASH 2,106 8,236
CASH, BEGINNING OF PERIOD 415 217
-------------------------------------------------------------------------------
CASH, END OF PERIOD $ 2,521 $ 8,453
===============================================================================
See accompanying notes to the consolidated condensed financial statements.
<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 July 31, 1999, the results of operations of the
three months ended July 31, 1998 and 1999, and the cash flows for the three
months ended July 31, 1998 and 1999. The results of operations for the
three months ended July 31, 1999 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 month period ended July 31, 1999, 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 months ended July 31, 1999 have been restated to reverse the foreign
currency translation adjustment previously recorded. Additionally, the
1998 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:
July 31, 1999
As
Previously
Reported As Restated
Accumulated Deficit (2,168,239) (2,127,134)
Accumulated Other
Comprehensive Income 40,877
<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
month period ended July 31, 1999.
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 months ended July 31, 1999 and three months ended July 31, 1998.
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 for the
return of the Gandalf
<PAGE>
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 $42,000 for the three months ended
July 31, 1999 compared to approximately $26,000 for the three months ended
July 31, 1998. The Company had a loss from continuing operations of
approximately $42,000 for the three months ended July 31, 1999 compared to
a loss from continuing operations of approximately $26,000 for the three
months ended July 31, 1998. For the three months ended July 31, 1999, the
Company reported a net loss of approximately $42,000 compared to net
earnings of approximately $71,000 for the three months ended July 31, 1998.
The change is primarily due to income from operations of Gandalf being
reported of approximately $97,000 for the three months ended July 31, 1998
compared to no income from operations of Gandalf being reported for the
three months ended July 31, 1999 due to its 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 July 31, 1999, the Company had working capital of approximately
$10,900 and stockholders' equity of approximately $10,900.
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 July 31, 1999.
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)
