SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JULY 31, 1998
[ ] 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 No X
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
PART I - FINANCIAL INFORMATION
PL BRANDS, INC. AND SUBSIDIARIES
Index to Financial Information
Period Ended July 31, 1998
(Unaudited)
Item Page Herein
Item 1 - Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2 - Management's Discussion and
Analysis or Plan of Operation 7
PL Brands, Inc.
Consolidated Balance Sheets
As At As At
April 30, 1998 July 31, 1998
Assets
Current Assets
Cash $217 $8,453
Accounts Receivable $1,113,778 $774,661
Note Receivable $69,881 $0
Inventory $70,592 $66,850
Prepaid Expenses $31,864 $18,788
Total Current Assets $1,286,332 $868,752
Capital Assets $960,842 $1,076,409
Goodwill $128,199 $119,334
Total Assets $2,375,373 $2,064,495
Liabilities and Stockholders' Equity
Current Liabilities
Bank Indebtedness $480,848 $314,085
Accounts Payable
and Accrued $454,889 $465,798
Current Portion of Capital
Lease Obligations $151,619 $116,326
Current Portion of
Bank Loan $27,958 $19,857
Total Current
Liabilities $1,115,314 $916,066
Long Term Liabilities
Bank Loan $20,941 $19,831
Capital Lease Obligations $171,739 $162,635
Advance from related
party $146,751 $0
Long Term Debt $791,055 $774,034
Deferred income taxes $62,194 $58,897
Total Long Term
Liabilities $1,192,680 $1,015,397
Stockholders' Equity
Common Stock: $.001 par value,
20,000,000 authorized; $9,143 $9,143
Additional Paid-In
Capital $2,128,906 $2,128,906
Stockholders' Equity
(Deficit) ($2,128,090) ($2,146,427)
Cumulative Translation
Adjustment $57,420 $141,410
Total Stockholders' Equity $67,379 $133,032
Total Liabilities and
Stockholders' Equity $2,375,373 $2,064,495
PL Brands, Inc.
Consolidated Statements of Earnings
For the three For the three
months ending months ending
July 31, 1998 July 31, 1997
Sales $752,345 $0
Cost of Sales $469,892 $0
Gross Profit $282,453 $0
Operating Expenses $242,544 $7,556
Income (Loss) from
operations $39,909 ($7,556)
Other Income (Expenses) ($24,133) $1,359
Amortization $34,113 $0
Income (Loss) before
income taxes ($18,337) ($6,197)
Income tax expense $ - $ -
Loss from continuing
operations $(18,337) $ (6,197)
Discontinued Operations
Income from operations of Alma Pack
Bottling Corporation $ - $ 54,486
Gain on disposal of Alma Pack
Bottling Corporation $ - 0
NET EARNINGS (LOSS) $(18,337) $ 48,289
PL Brands, Inc.
Consolidated Statements of Cash Flows
For the three For the three
months ending months ending
July 31, 1998 July 31, 1997
Operating Activities:
Loss from continuing
operations ($18,337) ($6,197)
Items not requiring the
use of cash
Amortization $10,846 $0
Foreign Currency
Translation $0 $0
Goodwill
Change in assets and liabilities
affecting cash flows:
Accounts Receivable $339,117 $0
Inventory $3,742 $0
Prepaid Expenses $13,076 $0
Deposits $0 $0
Accounts Receivable-Other $69,881 $0
Accounts Payable $10,909 $25,044
Note payable $0 $0
Net Cash Provided By
Operating Activities $429,234 $18,847
Investing Activities:
Acquisition of Gandalf Graphics $0 $0
Acquisition of capital
assets ($117,549) $0
Disposition of capital assets $0 $0
Net Cash Provided By
Investing Activities ($117,549) $0
Financing Activities:
Long term debt $0 $0
Bank Loan ($9,210) $0
Capital Lease Obligations ($44,396) $0
Shareholder Loan ($17,021) $0
Deferred Tax ($3,297) $0
Received for Deb's & Stock $0 $0
Related Party ($146,751) $0
Net Cash Provided By
Financing Activities ($220,675) $0
Discontinued operations $0 ($17,927)
Proceeds from sale of Alma Pack Bottling Corp
EFFECT OF EXCHANGE RATE
CHANGES ON CASH $83,989 ($1,856)
INCREASE (DECREASE) IN CASH $174,999 ($936)
CASH BALANCE-BEGINNING ($480,631) $1,138
CASH BALANCE-ENDING ($305,632) $202
PL BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 UNAUDITED INTERIM FINANCIAL INFORMATION
The unaudited 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, 1998, the results of operations of the
three months ended July 31, 1997 and 1998, and the cash flows for the three
months ended July 31, 1997 and 1998. The results of operations for the
three months ended July 31, 1998 are not necessarily indicative of the
results of operations to be expected for the full fiscal year ended April
30, 1999. Reference is made to the Company's Form 10-KSB for the year
ended April 30, 1998.
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, it
sold all of the shares of Alma Pack Bottling Corporation and purchased all
of the shares of Gandalf Graphics Limited. Gandalf Graphics Limited
provides digital pre-press services and digital print services. Management
believes that Gandalf Graphics Limited will contribute toward attaining
profitability and positive cash flows.
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 and is
qualified in its entirety by the foregoing.
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. As a result of this change in
strategy, the Company sold all of the shares of Alma Pack and purchased all
of the issued and outstanding shares of Gandalf Graphics Limited
("Gandalf"), a company which provides digital pre-press services and
digital print services. The effect of these transactions are appropriately
reflected in the accompanying financial statements.
From January 1998 through the end of the fiscal 1999, the business
of Gandalf comprised the Company's principal operation. See, however,
"Recent Developments" under Part I, Item 1 of the Company's Annual Report
on Form 10-KSB for the fiscal year ended April 30, 1999.
Unless otherwise noted all information herein is given in U.S.
dollars.
Results of Operations
Sales for the quarter ended July 31, 1998 were $752,345, no sales
are shown as comparatives as operations for the former subsidiary were
discontinued. The loss from continuing operations was $18,337.
Liquidity and Capital Resources
As of July 31, 1998, the Company's working capital deficit was
$47,314 and its shareholder equity was $133,032.
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 200 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, there
can be no assurance that this will continue to be the case, and there are
also continuing risks to the Company's operations from year 2000 failures
by third parties, such as suppliers. In this regard, the Company continues
to monitor the situation.
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, 1998.
None.
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: July 10, 2000 By: /s/Robert Brown
Robert Brown,
Vice President - Finance, Secretary,
Treasurer (Principal Accounting and
Financial Officer)
