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 OCTOBER 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
PART I - FINANCIAL INFORMATION
PL BRANDS, INC. AND SUBSIDIARIES
Index to Financial Information
Period Ended October 31, 1999
(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, 1999 Oct 31, 1999
Assets
Current Assets
Cash $415 $1,391
Accounts Receivable $533,895 $0
Other Receivable $0 $0
Inventory $282,325 $0
Prepaid Expenses $40,932 $0
Total Current Assets $857,567 $1,391
Capital Assets $1,579,362 $0
Goodwill $117,332 $0
Total Assets $2,554,261 $1,391
Liabilities and Stockholders' Equity
Current Liabilities
Bank Indebtedness $273,977 $0
Accounts Payable and Accrued $855,394 $68,975
Current Portion of
Capital Lease Obligations $1,101,626 $0
Current Portion of Bank Loan $20,772 $0
Total Current Liabilities $2,251,769 $68,975
Long Term Liabilities
Bank Loan $0 $0
Capital Lease Obligations $49,126 $0
Advance from related party $0 $0
Long Term Debt $0 $0
Deferred income taxes $122,512 $0
Total Long Term Liabilities $171,638 $0
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) ($2,113,108) ($2,256,459)
Cumulative Translation
Adjustment $105,913 $50,826
Total Stockholders' Equity $130,854 ($67,584)
Total Liabilities and
Stockholders' Equity $2,554,261 $1,391
PL Brands, Inc.
Consolidated Statements of Earnings
For the three For the three For the six For the six
months ending months ending months ending months ending
Oct 31, 1999 Oct 31, 1998 Oct 31, 1999 Oct 31, 1998
Sales $9,211 $0 $9,211 $0
Cost of Sales $0 $0 $0 $0
Gross Profit $9,211 $0 $9,211 $0
Operating Expenses $50,873 $40,256 $105,811 $155,909
Income (Loss)
from operations ($41,662) ($40,256) ($96,600) ($155,909)
Other Income (Expenses) $0 $0 $0 $0
Amortization $0 $0 $0 $0
Income (Loss)
before income taxes ($41,662) ($40,256) ($96,600) ($155,909)
Income tax expense $ - $ - $ - $ -
Loss from continuing
operations $ (41,662) $ (40,256) $(96,600) $(155,909)
Discontinued Operations
Income from operations of Gandalf Graphics
Limited $ - $ 51,578 $ - $148,894
NET EARNINGS (LOSS) $ (41,662) $ 11,322 $ (96,600) $ (7,015)
PL Brands, Inc.
Consolidated Statements of Cash Flows
For the three For the three For the six For the six
months ending months ending months ending months ending
Oct 31, 1999 Oct 31, 1998 Oct 31, 1999 Oct 31, 1998
Operating Activities:
Loss from continuing
operations $ (41,662) $ (40,256) $(96,600) $ (155,909)
Items not requiring
the use of cash
Amortization $0 $0 $0 $0
Foreign Currency Translation $0 $0 $0 $0
Goodwill $0 $0 $0 $0
Change in assets and
liabilities affecting cash flows:
Accounts Receivable $0 $0 $0 $0
Inventory $0 $0 $0 $0
Prepaid Expenses $0 $0 $0 $0
Deposits $0 $0 $0 $0
Accounts Receivable
-Other $103,834 $1,212 $130,405 $74,427
Accounts Payable ($26,683) $123 ($28,848) ($35,000)
Note payable $0 $0 $0 $0
Net Cash Provided By
Operating Activities $35,489 ($38,921) $4,957 ($116,482)
Investing Activities:
Acquisition of Gandalf Graphics $0 $0 $0 $0
Acquisition of capital assets $0 $0 $0 $0
Disposition of capital assets $0 $0 $0 $0
Net Cash Provided
By Investing Activities $0 $0 $0 $0
Financing Activities:
Long term debt $0 $0 $0 $0
Bank Loan $0 $0 $0 $0
Capital Lease Obligations $0 $0 $0 $0
Shareholder Loan $0 $0 $0 $0
Deferred Tax $0 $0 $0 $0
Received for Deb's & Stock $0 $0 $0 $0
Related Party $0 $0 $0 $0
Net Cash Provided By
Financing Activities $0 $0 $0 $0
Discontinued operations $0 $0 $0 $0
EFFECT OF EXCHANGE
RATE CHANGES ON CASH ($36,609) $31,140 ($3,981) $116,937
INCREASE (DECREASE)
IN CASH ($1,120) ($7,781) $976 $455
CASH BALANCE-BEGINNING $2,511 $8,453 $415 $217
CASH BALANCE-ENDING $1,391 $672 $1,391 $672
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 October 31, 1999, the results of operations of
the three and six months ended October 31, 1998 and 1999, and the cash
flows for the three and six months ended October 31, 1998 and 1999. The
results of operations for the three and six months ended October 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 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 $400,000
which was paid by issuing a promissory note to Downey for $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.
<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 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 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 $400,000 which was paid by issuing a promissory note
to Downey for $400,000 (the "Note") with the principal due and payable on
January 1, 2000. Gandalf Graphics 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. 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. For the six months
ended October 31, 1999, the Company had no material business operations.
In May 2000, however, the Company entered into an agreement to acquire all
of the assets of Oth.net, Inc., a Florida corporation, in exchange for 4.5
million shares of the Company's Common Stock. Oth.net, Inc. is an internet
based search engine for music on the world wide web. Upon completion of
the transaction, it is contemplated that there will be a change in
management of the Company.
Unless otherwise noted all information herein is given in U.S.
dollars.
Results of Operations/Plan of Operation
The Company reported revenues of approximately $9,200 for the six
months ended October 31, 1999 as compared to no revenues for the six
months ended October 31, 1998. Such lack of revenues is due to the return
of the Note to the Company in exchange for the return of the Gandalf Shares
as of May 1, 1999. As a result, the Company had no material business
operations for the period covered by this report. In May 2000, and as
mentioned above, the Company entered into an agreement to acquire all of
the assets of Oth.net, Inc., a Florida corporation, in exchange for 4.5
million shares of the Company's Common Stock. Oth.net, Inc. is an internet
based search engine for music on the world wide web. Upon completion of
the transaction, it is contemplated that there will be a change in
management of the Company.
Liquidity and Capital Resources
On October 31, 1999, the Company had a working capital deficit of
approximately $(67,600) and stockholders' deficit of approximately
$(67,600).
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.
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 October 31, 1999.
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 13, 2000 By: /s/Robert Brown
Robert Brown,
Vice President - Finance, Secretary,
Treasurer (Principal Accounting and
Financial Officer)
