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 JANUARY 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 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 January 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, 1998 Jan 31, 1999
Assets
Current Assets
Cash $217 $543
Accounts Receivable $1,113,778 $293,974
Note Receivable $69,881 $0
Inventory $70,592 $66,132
Prepaid Expenses $31,864 $22,233
Total Current Assets $1,286,332 $382,882
Capital Assets $960,842 $1,316,615
Goodwill $128,199 $113,958
Total Assets $2,375,373 $1,813,455
Liabilities and Stockholders' Equity
Current Liabilities
Bank Indebtedness $480,848 $80,293
Accounts Payable
and Accrued $454,889 $459,506
Current Portion of
Capital Lease
Obligations $151,619 $4,575
Current Portion
of Bank Loan $27,958 $0
Total Current
Liabilities $1,115,314 $544,374
Long Term Liabilities
Bank Loan $20,941 $341,026
Capital Lease
Obligations $171,739 $66,803
Advance from
related party $146,751 $0
Long Term Debt $791,055 $741,080
Deferred income taxes $62,194 $58,265
Total Long
Term Liabilities $1,192,680 $1,207,174
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) ($2,233,032)
Cumulative Translation
Adjustment $57,420 $156,890
Total Stockholders'
Equity $67,379 $61,907
Total Liabilities and
Stockholders' Equity $2,375,373 $1,813,455
PL Brands, Inc.
Consolidated Statements of Earnings
For the three For the three For the nine For the nine
months ending months ending months ending months ending
Jan 31, 1999 Jan 31, 1998 Jan 31, 1999 Jan 31, 1998
Sales $523,444 $133,760 $1,964,709 $133,760
Cost of Sales $373,186 $90,690 $1,160,589 $90,690
Gross Profit $150,258 $43,070 $804,120 $43,070
Operating Expenses $215,810 $118,135 $712,720 $156,502
Income (Loss) from
operations ($65,552) ($75,065) $91,400 ($113,432)
Other Income
(Expenses) ($3,854) ($54,777) ($103,897) ($67,984)
Amortization $28,521 $10,611 $92,445 $10,611
Income (Loss) before
income taxes ($97,927) ($140,453) ($104,942) ($192,027)
Income tax expense $ - $ - $ - $ -
Loss from continuing
operations $ (97,927) $ (140,453) $ (104,942) $ (192,027)
Discontinued Operations
Income from operations
of Alma Pack
Bottling
Corporation $ - $ 71,581 $ - $ 71,581
Gain on disposal
of Alma Pack
Bottling
Corporation $ - $ 30,550 0 30550
NET EARNINGS
(LOSS) $ (97,927) $ (38,322) $ (104,942) $ (89,896)
PL Brands, Inc.
Consolidated Statements of Cash Flows
For the three For the three For the nine For the nine
months ending months ending months ending months ending
Jan 31, 1999 Jan 31, 1998 Jan 31, 1999 Jan 31, 1998
Operating Activities:
Loss from continuing
operations ($97,927) ($140,453) ($104,942) ($192,027)
Items not requiring
the use of cash
Amortization $33,046 $41,573 $52,596 $0
Foreign Currency
Translation $0 $0 $0 $41,573
Goodwill $919 $0 $14,240 $0
Change in assets and
liabilities affecting cash flows:
Accounts
Receivable $331,189 $80,909 $819,804 $80,909
Inventory $78,304 $2,846 $4,460 $2,846
Prepaid Expenses $3,689 ($3,636) $9,631 ($3,636)
Deposits $0 $0 $0 $0
Accounts Receivable
-Other $0 ($137,540) $69,881 ($137,540)
Accounts Payable $61,386 $82,248 $4,617 $137,143
Note payable $0 $0 $0 $0
Net Cash Provided By
Operating Activities $410,606 ($74,053) $870,287 ($70,732)
Investing Activities:
Acquisition of
Gandalf Graphics $0 ($790,098) $0 ($790,098)
Acquisition of
capital assets ($410,438) ($55,010) ($408,368) ($55,010)
Disposition of
capital assets $0 $0 $0 $0
Net Cash Provided By
Investing Activities ($410,438) ($845,108) ($408,368) ($845,108)
Financing Activities:
Long term debt ($16,129) ($38,538) ($49,975) ($38,538)
Bank Loan $341,026 ($3,321) $292,127 ($3,321)
Capital Lease
Obligations ($174,427) ($17,382) ($251,980) ($17,382)
Shareholder Loan $0 $274,669 $0 $264,951
Deferred Tax $566 ($892) ($3,929) ($892)
Received for Deb's
& Stock $0 $0 $0 $0
Related Party $0 $22,125 ($146,751) $22,125
Net Cash Provided
By Financing
Activities $151,036 $236,661 ($160,508) $226,943
Discontinued
operations $0 $20,794 $0 $13,521
Proceeds from sale
of Alma Pack
Bottling Corp $142,496 $142,496
EFFECT OF EXCHANGE
RATE CHANGES
ON CASH ($13,754) $55,018 $99,470 $67,791
INCREASE (DECREASE)
IN CASH $137,450 ($464,192) $400,881 ($465,089)
CASH BALANCE-
BEGINNING ($217,200) $241 ($480,631) $1,138
CASH BALANCE-
ENDING ($79,750) ($463,951) ($79,750) ($463,951)
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 January 31, 1999, the results of operations of
the three and nine months ended January 31, 1998 and 1999, and the cash
flows for the three and nine months ended January 31, 1998 and 1999. The
results of operations for the three and nine months ended January 31, 1999
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 January 31, 1999 were $523,444, sales
for the nine months ended January 31, 1999 were $1,964,709. Losses from
operations for the quarter ended January 31, 1999 were $97,927, losses for
the nine months ended January 31, 1999 were $104,942.
Liquidity and Capital Resources
As of January 31, 1999, the Company's working capital deficit was
$161,492 and its shareholder equity was $61,907.
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 January 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 10, 2000 By: /s/Robert Brown
Robert Brown,
Vice President - Finance, Secretary,
Treasurer (Principal Accounting and
Financial Officer)