SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
[ ] 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 0-26454
PL BRANDS, INC.
(Exact Name of Small Business Issuer as specified in its Charter)
Delaware 98-0142664
(State or other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.)
10 Planchet Road, Unit 6, Concord Ontario, Canada LK4 2C8
(Address of principal executive offices) (Zip Code)
(905) 761-0888
Issuer's telephone number)
Check whether the Issuer (1) filed all reports required to be
filed by Section 13 or 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
Indicate the number of shares outstanding of each of the issuer's
classes of Common Equity, as of the latest practicable date.
Common Stock, $.001 par value 4,120,000
Title of Class Number of Shares outstanding
at October 31, 1996
PL BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As At As At
April 30, 1996 Oct. 31, 1996
ASSETS
Current Assets
Cash $ 4,047 $ 131,229
Accounts Receivable 386,811 429,284
Inventory 143,907 171,229
Prepaid expenses 8,429 8,327
Total current assets 543,194 740,069
Fixed Assets
Machinery & Equipment 709,369 720,585
Leasehold Improvements 58,572 59,498
Office Furniture & Equipment 35,882 36,449
803,823 816,532
Less: Accumulated Depreciation 547,827 585,791
Total Fixed Assets 255,996 230,741
Total Assets $ 799,190 $ 970,810
Liabilities and Stockholders' Equity
Current Liabilities
Bank Indebtedness $ 146,843 $ 217,885
Accounts Payable 564,332 513,990
Total Current Liabilities $ 711,175 $ 731,875
Long Term Liabilities
Equipment Bank Loan $ 214,857 $ 210,060
Amounts received for the issuance of Convertible
Debentures and Capital Stock 203,850 313,500
Shareholders' Loan 702,978 842,978
Total Long Term Liabilities $ 1,121,685 $ 1,366,538
Stockholders' Equity
Common Stock: $.001 par value,
20,000,000 authorized $ 4,120 $ 4,120
Additional Paid-In Capital 889,066 889,066
Accumulated Deficit (1,957,998) (1,998,409)
Foreign Currency Translation 31,142 (22,380)
Total Stockholder's Equity $ (1,033,670) (1,127,603)
Total Liabilities and Stockholders' Equity $ 799,190 $ 970,810
See Accompanying Notes
2
PL BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three For the three For the six For the six
months ending months ending months ending months ending
October 31, October 31, October 31, October 31,
1995 1996 1995 1996
Sales $ 558,347 $ 589,626 $ 1,386,736 $ 1,575,594
Cost of Sales $ 508,712 $ 522,361 $ 1,224,992 $ 1,403,759
Gross Profit $ 49,635 $ 67,265 $ 161,744 $ 171,835
Operating Expenses:
Salaries $ 25,000 $ 26,194 $ 70,854 $ 51,681
Accounting & Legal 24,589 21,174 38,507 42,409
Consulting 32,526 15,497 93,715 36,102
Telephone 6,842 7,815 13,647 15,368
Insurance 2,407 1,930 4,237 3,649
Bank Charges & Interest 28,432 7,655 50,831 16,940
Travel 4,455 1,452 14,407 2,747
Vehicles 13,540 7,321 19,711 15,304
Business Taxes 14,506 1,383 33,445 2,566
Office Expenses 12,145 10,374 23,688 14,018
Marketing 3,593 1,869 12,075 1,869
Advertising (44) 0 2,949 0
$ 167,991 $ 102,664 $ 378,066 $ 202,653
Loss from Operations $ (118,356) $ (35,399) $ (216,322) $ (30,818)
Other Income:
Interest income $ 284 $ 0 $ 284 $ 6
Gain (Loss) on Foreign Exchange 32,690 32,131 27,955 19,491
Amortization (2,837) (14,743) (5,586) (29,089)
Total other income $ 30,137 $ 17,388 $ 22,653 $ (9,592)
Net Loss $ (88,219) $ (18,011) $ (193,669) $ (40,410)
See Accompanying Notes
3
PL BRANDS, INC. AND SUBSIDIARIES
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
October 31, October 31, October 31, October 31,
1995 1996 1995 1996
Cash Flow From Operating Activities:
Net income (loss) $ (88,219) $ (18,011) $ (193,669) $ (40,410)
Non-cash items-Depreciation and Amortization 22,754 28,776 32,514 37,964
Non-cash item-Foreign Currency Translation (32,131) 3,090 (19,491)
Change in working capital-Accounts Receivable 210,692 202,013 (31,728) (42,473)
Change in working capital-Inventory (12,593) 13,337 (36,219) (27,322)
Change in working capital-Prepaid Expenses (4,317) (206) (2,299) 102
Change in working capital-Deposits (20,955) 0 (18,432) 0
Bank Indebtedness 0 37,439 0 71,042
Change in working capital-Accounts Payable (280,611) (271,704) (571,133) (50,342)
CASH USED BY OPERATING ACTIVITIES $ (173,249) $ (40,487) $ (817,876) $ (70,930)
Cash Flow From Financing Activities:
Bank Loan-Equipment $ 847 $ 464 $ 10,190 $ (4,797)
Convertible Debentures (829,186) 56,850 (829,186) 109,650
Shareholder Loan (134,960) 140,000 675,980 140,000
Foreign Exchange Gain (Loss) 32,131 19,491
Common Shares (conversion) 922,165 0 922,165 0
CASH PROVIDED BY
FINANCING ACTIVITIES $ (41,134) $ 229,445 $ 779,149 $ 264,344
Cash Flow From Investing Activities:
Machinery & Equipment $ (15,086) $ (20,192) $ (21,059) $ (12,709)
CASH USED IN INVESTING ACTIVITIES (15,086) (20,192) (21,059) (12,709)
EFFECT OF EXCHANGE RATE
CHANGES ON CASH $ 0 $ (39,623) $ 0 $ 53,523
INCREASE (DECREASE) IN CASH $ (229,469) $ 129,143 $ (59,786) $ 127,182
CASH BALANCE - BEGINNING $ 100,759 $ 2,086 $ (68,924) $ 4,047
CASH BALANCE - ENDING $ (128,710) $ 131,229 $ (128,710) $ 131,229
See Accompanying Notes
4
PL BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For The Three and Six Months Ended October 31, 1995 and 1996
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, 1996, the results of operations of the three and six months ended
October 31, 1995 and 1996, and the cash flows for the three and six months ended
October 31, 1995 and 1996. The results of operations for the three months ended
October 31, 1996 are not necessarily indicative of the results of operations to
be expected for the full fiscal year ended April 30, 1997. Reference is made to
the Company's Form 10-KSB, for the year ended April 30, 1996.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL
CONDITION
Results of Operations
Sales increased in the 1996 periods compared to 1995 due to increased sales
volume. Gross margin was essentially unchanged in 1996 as compared to 1995.
Operating expenses were significantly lower in the 1996 period due to management
cost cutting efforts.
Liquidity
As of October 31, 1996, the Company's working capital was $8,194. The
Company's working capital position was enhanced as compared to April 30, 1996 by
the sale of securities and proceeds from a shareholder loan. The Company has
also obtained an operating line of credit from a bank in the amount of $250,000
(CAN). As of October 31, 1996, the amount used on the line of credit was
$71,042.
The Company anticipates its need for cash over the next 12 months for
general and administrative expenses to be $50,000 per month. This amount is
expected to be provided from operations and provided by private placements of
debt or equity. The Company has no specific plans for any placement of its
securities.
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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 MATTER TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
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SIGNATURES
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.
Date: December 11, 1996 /s/ Robert Brown
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Robert Brown
Vice President
Administration
and Finance
(chief
financial
officer and
accounting
officer and
duly
authorized
officer)
7