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: January 31, 2001
[ ] 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 registrant as specified in its charter)
DELAWARE 98-0142664
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
421 North Wabasha Street, Suite 260, St. Paul, Minnesota 55102
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (651) 291-2993
Indicate by check mark whether the registrant (1) has 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 X No
--- ---
PL BRANDS, INC. AND SUBSIDIARIES
QUARTER ENDED JANUARY 31, 2000
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of January 31, 2001 (unaudited)
and April 30, 2000 (audited) 3
Condensed Consolidated Statements of Earnings for the three months
and nine months ended January 31, 2001 (unaudited) and 2000 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the nine months ended
January 31, 2000 (unaudited) and 1999 (unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
2
PL Brands, Inc.
Condensed Consolidated Balance Sheets
January 31, 2001 April 30, 2000
---------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 1,020,008 $ 3,039
Accounts receivable 15,132
Prepaid expenses 55,875
----------- -----------
Total current assets 1,091,015 3,039
----------- -----------
Office furniture and equipment 49,489
Less accumulated depreciation 4,910
----------- -----------
Net fixed assets 44,579 -
----------- -----------
Intellectual Property, net
Proprietory Information Database and Search Engine 2,416,267
----------- -----------
Total assets $ 3,551,861 $ 3,039
=========== ===========
Liabilities and shareholders' equity (deficit)
Current liabilities:
Accounts payable - trade $ 123,371 $ 84,480
Salaries and vacation payable 18,000
Accrued payroll taxes 8,178
----------- -----------
Total current liabilities 149,549 84,480
----------- -----------
Shareholders' equity (deficit)
Common Stock 16,899 9,143
Additional paid-in capital 7,564,973 2,128,906
Accumulated Deficit (4,179,560) (2,219,490)
----------- -----------
Total shareholders' equity (deficit) 3,402,312 (81,441)
----------- -----------
Total liabilities and shareholders' equity $ 3,551,861 $ 3,039
=========== ===========
3
PL Brands, Inc.
Condensed Consolidated Statements of Earnings
For the three months ended For the nine months ended
January 31, January 31,
-------------------------- --------------------------
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net sales $ 10,352 $ - $ 28,782 $ -
Operating expenses:
Amortization 249,955 583,233
General and administrative 625,038 1,415,822
Other 11,926 19,011 35,926 139,044
----------- ----------- ----------- -----------
Total operating expenses 886,919 19,011 2,034,981 139,044
----------- ----------- ----------- -----------
Loss before other income (expenses) (876,567) (19,011) (2,006,199) (139,044)
----------- ----------- ----------- -----------
Other income (expenses) 16,815 21,225 46,129 21,225
----------- ----------- ----------- -----------
Net earnings (loss) $ (859,752) $ 2,214 $(1,960,070) $ (117,819)
=========== =========== =========== ===========
Accumulated deficit - beginning (3,319,808) (2,205,189) (2,219,490) (2,085,156)
Accumulated deficit - ending $(4,179,560) $(2,202,975) $(4,179,560) $(2,202,975)
=========== =========== =========== ===========
Net loss per basic and diluted shares $ (0.05) $ - $ (0.13) $ (0.01)
=========== =========== =========== ===========
Weighted average shares outstanding 16,899,279 9,143,279 15,175,726 9,143,279
=========== =========== =========== ===========
4
PL Brands, Inc.
Condensed Consolidated Statements of Cash Flows
For the nine months ended
January 31,
-----------------------------------
2001 2000
----------- -----------
Operating activities
Net loss $(1,960,070) $ (117,819)
Adjustments to reconcile net loss to net cash
used in operating activities:
Common shares issued in lieu of cash compensation 500,000
Depreciation and amortization 588,145
Net cash flows from discontinued operations 150,306
Changes in operating assets and liabilities:
Prepaid expenses (55,877)
Accounts receivable (15,132)
Accounts payable 38,891 (31,099)
Accrued salaries payable 18,000
Accrued payroll taxes 8,178
----------- ----------
Net cash used in operating activities (877,865) 1,388
----------- ----------
Investing activities
Purchase of intellectual property - Oth.net (500,000)
Purchase of office furniture and equipment (49,489)
----------- ----------
Net cash used in investing activities (549,489) -
----------- ----------
Financing activities
Net proceeds from sale of Common Stock 2,444,323
----------- ----------
Net cash provided by financing activities 2,444,323 -
----------- ----------
Increase/(decrease) in cash 1,016,969 1,388
Cash at the beginning of the period 3,039 415
----------- ----------
Cash at the end of the period $ 1,020,008 $ 1,803
=========== ==========
NON-CASH TRANSACTIONS
Issuance of 1,500,000 common shares for services provided $ 748,500 -
Issuance of 4,500,000 common shares for purchase of intellectual
property, database and search engine $ 2,250,000 -
5
NOTE 1 - UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying interim condensed 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, 2001, the results of operations for the three
and nine month periods ended January 31, 2000 and 2001, and the cash flows for
the nine month periods ended January 31, 2000 and 2001. The results of
operations for the three and nine month periods ended January 31, 2001 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending April 30, 2001. Reference is made to the Company's Form 10-
KSB for the year ended April 30, 2000. All amounts are U.S. dollars except for
the reference to Canadian $400,000 in the following paragraph.
NOTE 2 - DESCRIPTION OF BUSINESS
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 there
continued to be a stockholders deficit which 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 for approximately $142,000 and
acquired all of the issued and outstanding shares (the "Gandalf Shares") of
Gandalf Graphics Limited ("Gandalf") from Marcella Downey ("Downey") which was
paid by issuing a promissory note to Downey in the aggregate amount of Canadian
$400,000 (the "Note") with the principal due and payable on January 1, 2000.
Gandalf's primary business was as a provider of digital pre-press services and
digital print services. From January 1998 through the end of fiscal 1999, the
Company's business activities consisted primarily of the Gandalf business.
Pursuant to an agreement made as of May 1, 1999, wherein the parties mutually
agreed to rescind the Gandalf transaction, the parties agreed that Downey would
return the Note to the Company in exchange for the return of the Gandalf Shares.
During the fiscal year ended April 30, 2000, the Company had no material
business operations.
In May 2000, the Company entered into an agreement (the "Oth.net
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 cash in the aggregate amount
of $500,000. The parties are in the process of finalizing an agreement to
confirm certain aspects of this transaction. The primary asset of Oth.net, Inc.
was an Internet based search engine for music on the world wide web.
Pursuant to the terms of the Oth.net Agreement, the Company has recognized,
in exchange for the 4,500,000 shares of Common Stock, an asset of intellectual
property (the "Intellectual Property"). The Intellectual Property has been
valued at $2,999,500. The final allocation between the asset and goodwill
purchased has not been determined to date. Both the Intellectual Property and
goodwill, if any, will be amortized over three years.
In June 2000, the Company also issued 500,000 shares of Common Stock to
Eagle Ridge Partners in exchange for services rendered in connection with the
acquisition of Oth.net, Inc. and cash in the aggregate amount of $500. The
deemed value of these shares was $250,000 and has been capitalized as a cost of
the acquisition and not expensed.
As a result of the acquisition of substantially all of the assets of
Oth.net, Inc., the Company intends to expand the Oth.net business beyond its
primary business or providing an Internet based search engine for music on the
world wide web into a more diverse digital entertainment business organization
providing music, video and movie content on the Internet. The Company is in the
process of rewriting its web site and is developing new software that will be
directed at the peer-to-peer environment.
6
During the quarter ended July 31, 2000, the Company issued, in separate
transactions to a total of nine investors, (1) 1,000,000 shares of Common Stock
for an aggregate purchase price of $500,000, and (2) 756,000 shares of Common
Stock for an aggregate purchase price of $2,268,000 These funds, together with
the proceeds from other capital raising activities, will be used for operations
and development and implementation of the Company's business strategy.
In August 2000, an employment compensation arrangement was finalized
between the Company and Richard Barbari. The term of employment under the
agreement is two years and provides that Mr. Barbari will serve as the Company's
Chief Executive Officer. The agreement also provides that, in the event of a
"change in control" as defined in the agreement, the Company shall pay Mr.
Barbari an amount equal to one year's base salary. In addition, upon the
occurrence of certain termination events, Mr. Barbari would be entitled to the
pro rata portion of any applicable bonus for the then current year. Mr. Barbari
is subject to noncompetitive, nonsolicitation and nondisclosure covenants under
his employment agreement. As an incentive to join the Company, Mr. Barbari and
his nominees were offered the right to purchase 1,000,000 shares of the
Company's Common Stock for an aggregate purchase price of $1,000. The deemed
value of these shares was $500,000 and the compensation expense recognized by
the Company in connection with the issuance of these shares was $499,000.
The following unaudited pro forma results of operations combine the results
of operations for PL Brands for the nine months ended January 31, 2001 and 2000,
with the results of operations of Oth.net, Inc. for the same period and gives
effect to the acquisition as if it had occurred on April 30, 1999.
This unaudited pro forma financial information is presented for
illustrative purposes only and is not necessarily indicative of the combined
results of operations in future periods or the results that actually would have
been realized had PL Brands and Oth.net, Inc. been a combined company during the
period presented.
Nine months ended Nine months ended
January 31, 2001 January 31, 2000
----------------- -----------------
Revenue $ 46,577 $ 224,134
Net loss $(1,732,504) $(1,438,376)
Basic and diluted net loss per share $ (0.10) $ (0.09)
Shares outstanding 16,899,279 16,899,279
7
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
The following discussions should be read in conjunction with the Financial
Information and Notes thereto included in this report.
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.
Prior to January 1, 1994, the Company's principal business consisted of the
development, production and marketing of private label prepared foods. Prior to
that time, the Company's activities were primarily limited to research and
development of its business plan and recruitment of personnel. The Company
commenced operations 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 business strategy and sold all of the
shares of Alma Pack for approximately $142,000 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's primary business was
as a provider of digital pre-press services and digital print services. From
January 1998 through the end of fiscal 1999, the Company's business activities
consisted primarily of the Gandalf business. Pursuant to an agreement made as of
May 1, 1999, wherein the parties mutually agreed to rescind the Gandalf
acquisition, the parties agreed that Downey would return the Note to the Company
in exchange for the return of the Gandalf Shares.
During the fiscal year ended April 30, 2000, the Company had no material
business operations. Since that time, the Company has acquired Oth.net, Inc., a
Florida corporation, ("Oth.net"), completed a restructuring and is pursuing a
new business strategy as an online digital entertainment site for exchanging
electronic files, with an emphasis on entertainment content.
Results of Operations
The Company reported sales from operations for the three and nine months
ended January 31, 2001 of approximately $10,000 and $29,000, respectively. The
Company had no revenue for the comparable periods in the prior year.
Operating expenses were approximately $886,000 and $2,035,000 for the three
and nine months ended January 31, 2001, respectively, and were comprised
primarily of amortization, contract labor and payroll. This compared to
operating expenses of approximately $19,000 and $139,000 for the comparable
periods in the prior year. The significant increase was primarily attributable
to the acquisition of Oth.net and the subsequent development of the new business
strategies. For the nine months ended January 31, 2001, the Company recognized
an expense of $499,000 in connection with the issuance of 1,000,000 shares of
its Common Stock to Richard Barbari and his nominees as well as $588,000 from
depreciation and amortization. The remaining increase in operating expenses
consisted primarily of contract labor and payroll costs.
The Company had interest income of approximately $17,000 and $46,000 for
the three and nine months ended January 31, 2001, respectively. The Company had
no interest income for the comparable periods in the prior year.
For the three months ended January 31, 2001 and 2000, the Company had a net
loss of approximately $860,000 and net income of $2,000, respectively. For the
nine months ended January 31, 2001 and 2000, the Company had a net loss of
approximately $1,960,000 and $118,000, respectively. The increase in net loss is
primarily due to an increase in operating expenses resulting from the
acquisition of Oth.net.
Liquidity and Capital Resources
On January 31, 2001, the Company had cash and working capital of
approximately $1,020,000 and $941,000, respectively. The Company's primary
source of liquidity has been cash provided through equity offerings and interest
income.
In May 2000, the Company entered into an agreement (the "Oth.net
Agreement") to acquire substantially all of the assets of Oth.net, as well as
the Oth.net domain name, in exchange for 4,500,000 shares of the Company's
Common Stock and cash in the aggregate amount of $500,000. The parties are in
the process of finalizing an agreement to confirm certain aspects of this
transaction. The Oth.net assets
8
included certain intellectual property which has been valued at $2,999,500. The
final allocation between the asset and goodwill purchased has not been
determined to date. Both the intellectual property and goodwill, if any, will be
amortized over three years.
During the quarter ended July 31, 2000, the Company issued 500,000 shares
of Common Stock to Eagle Ridge Partners in exchange for services rendered in
connection with the acquisition of Oth.net and cash in the aggregate amount of
$500. The deemed value of these shares was $250,000 and has been capitalized as
a cost of the acquisition and not expensed.
During the quarter ended July 31, 2000, the Company also issued, in
separate transactions to a total of nine investors, (1) 1,000,000 shares of
Common Stock for an aggregate purchase price of $500,000, and (2) and 756,000
shares of Common Stock for an aggregate purchase price of $2,268,000. These
funds will be used for operations and development of the Company's business
strategy.
In August 2000, an employment compensation arrangement was finalized
between the Company and Richard Barbari. The term of employment under the
agreement is two years and provides that Mr. Barbari will serve as the Company's
Chief Executive Officer. The agreement also provides that, in the event of a
"change in control" as defined in the agreement, the Company shall pay Mr.
Barbari an amount equal to one year base salary. In addition, upon the
occurrence of certain termination events, Mr. Barbari would be entitled to the
pro rata portion of any applicable bonus for the then current year. Mr. Barbari
is subject to noncompetitive, nonsolicitation and nondisclosure covenants under
his employment agreement. As an incentive to join the Company, Mr. Barbari and
his nominees were offered the right to purchase 1,000,000 shares of the
Company's Common Stock for an aggregate purchase price of $1,000. The deemed
value of these shares was $500,000 and the compensation expense recognized by
the Company in connection with the issuance of these shares was $499,000.
Cash used in operating activities was approximately $879,000 for the nine
months ended January 31, 2001 which was primarily the result of a loss of
$1,960,000. This loss was partially offset by noncash charges totaling
$1,088,000 for depreciation, amortization and compensation. This compares to a
source of $1,000 for the nine months ended January 31, 2000, which was primarily
related to a loss of $118,000, offset by changes in current assets and
liabilities. For the nine months ended January 31, 2001, the company also
obtained $2,444,000 from financing activities from the sale of common stock, and
used $550,000 in investing activities, primarily for the purchase of Oth.net,
Inc.
Management believes that the Company's funds are adequate to meet cash
requirements through at least the next six months. However, such funds together
with any operating revenues that may be recognized may be insufficient to
implement the business plan beyond that time. Thus, substantial additional
capital will, in all likelihood, be needed in order to fund operations beyond
that time. Management is currently contemplating raising additional capital in
the next three to six months that will be used to complete the software
development, build the management team and take the Company through a phased
launch. Management has had discussions with certain parties and investment
banking firms concerning capital raising alternatives, but as of the date hereof
none of these discussions have advanced beyond the preliminary stage.
Other Factors Affecting our Operating Results
The following risk factors and other information included in this Form 10-Q
should be carefully considered. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks occur, our business, financial
condition, operating results and cash flows could be materially adversely
affected.
We May Need to Raise Additional Capital, Which May Not Be Available
We may need to raise additional funds, and we cannot be certain that we
will be able to obtain additional financing on favorable terms or at all. If we
need additional capital and cannot raise it on acceptable terms, we may not be
able to:
9
. Enhance our infrastructure and leveragable assets;
. Hire, train and retain employees;
. Respond to competitive pressures or unanticipated requirements; or
. Pursue acquisition opportunities.
Our failure to do any of these things could seriously harm our operations
and financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
Evaluating Our Business is Difficult Because We Do Not Have an Operating History
PL Brands was formed in August 1990 and began operations in March 1994. We
have recently completed a restructuring and have not yet begun to implement our
new business strategy. As a result, we do not have an operating history on which
to base an evaluation of our business and prospects. Our prospects must be
considered in the light of the risks, uncertainties, expenses and difficulties
frequently encountered by companies in their early stages of development,
particularly companies in new and rapidly evolving markets, such as online
commerce, using new and unproven business models. To address these risks and
uncertainties, we must, among other things:
. attract leading sellers and consumers to the Oth.net service;
. maintain and enhance our brand, and expand our product and service
offerings;
. attract, integrate, retain and motivate qualified personnel; and
. adapt to meet changes in our markets and competitive developments.
We may not be successful in accomplishing these objectives.
We Are Not Profitable and Will Continue to Incur Losses
We have not achieved profitability and will continue to incur losses. We
expect to increase significantly our operating expenses in order to increase our
customer base, enhance our brand image and support our growing infrastructure.
For us to make a profit, our revenues and gross profit margins will need to
increase sufficiently to cover these and other future costs. Otherwise, we may
not achieve profitability.
Our Business Model is Relatively Novel and Unproven
The Oth.net service is based on a relatively novel and unproven business
model. We will be successful only if consumers adopt and actively use this
service. It is difficult to predict the degree, if at all, to which consumers
will use the Oth.net service over time.
Many of the factors influencing consumers' willingness to use the Oth.net
service are outside our control. For example, a breach of security on the
Internet, even if we were not involved, could make consumers unwilling to place
orders online with a credit card. Also, recent adverse publicity surrounding the
recording industry's opposition to file sharing services may affect consumers'
willingness to use our service. Consequently, it is possible that consumers may
not utilize the Oth.net service to the degree necessary for us to achieve
profitability.
If We Lose Our Key Personnel or Cannot Recruit Additional Personnel, Our
Business May Suffer
Competition for personnel with experience in Internet commerce is intense.
We depend on the continued services and performance of our executive officers
and other key personnel. We do not have "key person" life insurance policies. If
we do not succeed in attracting new employees or retaining and motivating
current and future employees or executive officers, our business could suffer
significantly.
10
Intense Competition Could Reduce Our Market Share and Harm Our Financial
Performance
We potentially face competition from a number of large Internet companies
and services that have expertise in developing online commerce and in
facilitating Internet traffic, including Amazon.com, America Online, Microsoft
and Yahoo!, who could choose to compete with us either directly or indirectly
through affiliations with other e-commerce companies. Other large companies with
strong brand recognition, technical expertise and experience in Internet
commerce could also seek to compete with us.
Many of our potential competitors, including Internet directories and
search engines and large traditional retailers, have longer operating histories,
larger customer bases, greater brand recognition and significantly greater
financial, marketing, technical and other resources than we have. Some of these
competitors may be able to secure products and services on more favorable terms
than we can. In addition, many of these competitors may be able to devote
significantly greater resources to: (1) marketing and promotional campaigns, (2)
attracting traffic to their Web sites, (3) attracting and retaining key
employees, (4) securing vendors and inventory and (5) Web site and systems
development.
Increased competition could result in reduced operating margins and loss of
market share and could damage our brand. There can be no assurance that we will
be able to compete successfully or that competition will not have a material
adverse effect on our business, results of operations and financial condition.
We May Not Be Able to Keep Up with Rapid Technological and Other Changes
The markets in which we compete are characterized by rapidly changing
technology, evolving industry standards, frequent new service and product
announcements, introductions and enhancements and changing consumer demands. We
may not be able to keep up with these rapid changes. In addition, these market
characteristics are heightened by the emerging nature of the Internet and the
apparent need of companies from many industries to offer Internet-based products
and services. As a result, our future success will depend on our ability to
adapt to rapidly changing technologies, to adapt our services to evolving
industry standards and to continually improve the performance, features and
reliability of our service in response to competitive service and product
offerings and the evolving demands of the marketplace. In addition, the
widespread adoption of new Internet, networking or telecommunications
technologies or other technological changes could require us to incur
substantial expenditures to modify or adapt our services or infrastructure.
Online Security Breaches Could Harm Our Business
The secure transmission of confidential information over the Internet is
essential in maintaining consumer and supplier confidence in the Oth.net
service. Substantial or ongoing security breaches on our system or other
Internet-based systems could significantly harm our business. As we implement
the Oth.net service, we intend to require buyers to guarantee their offers with
their credit card, either online or through our toll-free telephone service. We
expect to rely on licensed encryption and authentication technology to effect
secure transmission of confidential information, including credit card numbers.
It is possible that advances in computer capabilities, new discoveries or other
developments could result in a compromise or breach of the technology used by us
to protect customer transaction data.
We cannot guarantee that our security measures will prevent security
breaches. A party that is able to circumvent our security systems could steal
proprietary information or cause significant interruptions in our operations.
For instance, several major Web sites have experienced significant interruptions
as a result of improper direction of excess traffic to those sites, and computer
viruses have substantially disrupted e-mail and other functionality in a number
of countries, including the United States. Security breaches also could damage
our reputation and expose us to a risk of loss or litigation and possible
liability. Our insurance policies carry low coverage limits, which may not be
adequate to reimburse us for losses caused by security breaches.
11
We also face risks associated with security breaches affecting third
parties conducting business over the Internet. Consumers generally are concerned
with security and privacy on the Internet and any publicized security problems
could inhibit the growth of the Internet and, therefore, the Oth.net service as
a means of conducting commercial transactions.
12
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements and information
that reflect the Company's expectations about its future operating results,
performance and opportunities that involve substantial risks and uncertainties.
When used in this Form 10-Q, the words "anticipate", "believe", "estimate",
"plan," "intend" and "expect" and similar expressions, as they relate to PL
Brands for its management, are intended to identify such forward-looking
statements. These forward looking statements are based on information currently
available to the Company and are subject to a number of risks, uncertainties,
and other factors that could cause the Company's actual results, performance,
prospects, and opportunities to differ materially from those expressed in, or
implied by, these forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, the Company's
need for additional capital, the Company's lack of an operating history, the
fact that the Oth.net business model is unproven, rapid technological changes in
the electronic commerce market and the other factors discussed under "Risk
Factors." Except as required by the Federal Securities law, the Company does not
undertake any obligation to release publicly any revisions to any forward-
looking statements to reflect events or circumstances after the date of this
Form 10-Q or for any other reason.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following exhibits are filed with this report:
Exhibit No. Description
----------- -----------
2.1 Agreement dated as of May 1, 1999 by and between Private Label
Brands Canada Inc. and Marcella Downey.
2.2 Form of Confirmation Agreement by and between PL Brands, Inc.
(the "Company"), Oth.net, Inc. and Christopher Pearson.
4.1 Form of Subscription Agreement between the Company and nine
investors entered into at various times during the quarter ended
July 31, 2000.
4.2 Form of Investment Agreement executed by Richard A. Barbari and
his nominees and Eagle Ridge Partners during the quarter ended
July 31, 2000.
10.1 Employment Agreement between the Company and Richard Barbari
dated as of August 21, 2000.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the fiscal
quarter ended January 31, 2001.
13
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.
Dated: March 15, 2001 By: /s/Richard A. Barbari
___________________________
Richard A. Barbari
Chief Executive Officer
14