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, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _______________
Commission File No. 000-29477
D'ANGELO BRANDS, INC.
(exact name of registrant as specified in its charter)
Nevada 87-063686
(state of organization) (I.R.S. Employer Identification No.)
14 Brewster Road, Brampton, Ontario, Canada, L6T 5B7
(address of principal executive offices)
(905) 794-0335
Registrant's telephone number, including area code
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ]No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 23,449,589 Class A Common shares and
28,887,670 Class B Common shares as at September 15, 2003.
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This quarterly report on Form 10-QSB contains statements that are forward-
looking statements within the meaning of the federal securities laws. These
include statements about our expectations, beliefs, intentions or strategies for
the future, which we indicate by words or phrases such as "anticipate,"
"expect," intend," "plan," "will," "believe" and similar language. These
statements involve known and unknown risks, including whether or not we will be
able to obtain the funding we need to continue our operations, whether or not we
are able to attract and retain qualified personnel to help us in developing our
business, whether or not we will be able to compete with larger, well-funded
competitors in the industry, whether or not consumer tastes for juice drinks
will change and other business conditions, and are subject to uncertainties and
assumptions set forth elsewhere in this report. Our actual results may differ
materially from results anticipated in these forward-looking statements. We
base our forward looking statements on information currently available to us,
and we assume no obligation to update these statements.
PART I -FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Index Page
- ---------- -------
Consolidated Balance Sheets as at July 31, 2003
(Unaudited) and April 30, 2003.................................F-2
Consolidated Statements of Operations and
Comprehensive Loss for the three months ended
July 31, 2003 and 2002 (Unaudited).............................F-3
Consolidated Statements of Stockholder's
Equity (Deficiency) (Unaudited)................................F-5
Consolidated Statements of Cash Flows for the
three months ended July 31, 2003 and 2002 (Unaudited)..........F-6
Notes to the Consolidated Financial Statements (Unaudited)..F-6-17
<page>F-1
=======================================================================
D'Angelo Brands, Inc. And Subsidiaries
Consolidated Balance Sheets
As at July 31, 2003(Unaudited)and April 30, 2003
<table>
<caption>
<s> <c> <c>
July April
2003 2003
------------ ------------
ASSETS
Current
Accounts receivable $ 43,658 $ 5,825
Inventories 102,362 65,673
Prepaid expenses and deposits (note 8) 391,393 274,774
------------- ------------
537,413 346,272
Capital Assets, Net(note2) 6,218,301 $ 6,114,446
------------ ------------
$ 6,755,714 $ 6,460,718
============ ============
LIABILITIES
Current
Accounts payable and accrued liabilities (note 8) $ 4,596,684 $ 4,441,732
Mortgages and other debt(note 3) 6,090,338 4,877,288
------------ ------------
10,687,022 9,319,020
Long Term Debt (note 4) 3,608,329 3,505,763
Commitment & Contingencies (note 9) - -
------------ ------------
$ 14,295,351 $ 12,824,783
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, par value $0.001;
Class A - 200,000,000 shares authorized;
23,449,589 and 23,449,589 shares issued and outstanding $ 23,450 $ 23,450
Class B - 50,000,000 shares authorized;
28,887,670 and 28,887,670 shares issued and outstanding 28,888 28,888
Additional paid-in capital 3,653,677 3,653,677
Accumulated Other Comprehensive Gain (Loss) (536,596) (367,945)
Accumulated Deficit (10,709,056) (9,702,135)
------------ ------------
(7,539,637) (6,364,065)
------------ ------------
$ 6,755,714 6,460,718
============ ============
</table>
<page>F-2
D'Angelo Brands, Inc. And Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
for the three months ended July 31
<table>
<caption>
<s> <c> <c>
2003 2002
-------- ---------
Sales 729,889 743,978
Cost of Sales 884,592 860,427
---------- ----------
Gross Profit (154,703) (116,449)
---------- ----------
Selling, Marketing, Distribution and Warehousing Expenses 211,133 153,749
General and Administrative Expenses 372,488 270,958
---------- ----------
583,621 424,707
---------- ----------
Loss before other expenses (738,324) (541,156)
Other Expenses
Financing Expenses 23,204 288,000
Interest 245,393 107,218
--------- ----------
268,597 395,218
--------- ----------
Loss before income taxes (1,006,921) (936,374)
Provision for income taxes - -
Net Loss (1,006,921) ((936,374)
----------- -----------
Other comprehensive gain (loss), net of taxes -
foreign currency translation (168,651) 23,361
----------- -----------
Comprehensive Loss (1,175,572) (913,013)
=========== ===========
Loss per common share, basic and diluted (0.04) (0.06)
=========== ===========
Weighted average number of common shares
outstanding, basic and diluted 23,449,589 15,598,033
=========== ===========
</table>
<page>F-3
D'ANGELO BRANDS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<table>
<caption>
<s> <c> <c> <c> <c> <c>
Common Stock
------------- Additional
Paid-In
Class A Amount Class B Amount Capital
--------- ------------- ----------- --------- -----------
Balance at April 30, 2002 15,487,259 $15,487 35,950,000 $35,950 $3,573,577
Conversion of Class-B to Class-A shares 5,095,604 5,096 (5,095,604) (5,096)
Stock Subscription Receivable
Advances to Director
Foreign Currency Translation Adj
Net Loss
-------------------------------------------------------------
Balance at July 31, 2002 20,582,863 $20,583 30,854,396 $30,854 $3,573,577
Stock Subscription Receivable
Advances to Director
Foreign Currency Translation Adj
Net Loss
-------------------------------------------------------------
Balance at October 31, 2002 20,582,863 $20,583 30,854,396 $30,854 $3,573,577
Conversion of Class-B to Class-A shares 1,966,726 1,967 (1,966,726) (1,967)
Shares issued for cash 500,000 500 32,212
Expense for shares sold below market value 12,288
Shares issued as per agreement 400,000 400 35,600
Advances to Director
Foreign Currency Translation Adj
Net Loss
-------------------------------------------------------------
Balance at January 31, 2003 23,449,589 $23,450 28,887,670 $28,888 $3,653,677
Advances to Director
Foreign Currency Translation Adj
Net Loss
-------------------------------------------------------------
Balance at April 31, 2003 23,449,589 $23,450 28,887,670 $28,888 $3,653,677
Foreign Currency Translation Adj
Net Loss
-------------------------------------------------------------
Balance at July 31,2003 23,449,589 $23,450 28,887,670 $28,888 $3,653,677
Stock Advances to Accumulated Other Accumulated Stockholders
Subscription Director Comprehensive Deficit Equity/
Receivable Gain (Loss) (Deficiency)
------------- ------------ ------------------- ------------- --------------
Balance at April 30, 2002 (96,774) $(291,080) $ 34,172 ($5,758,005) ($2,486,673)
Conversion of Class-B to Class-A shares -0-
Stock Subscription Receivable 63,472 $ 63,472
Advances to Director (42,403) (42,403)
Foreign Currency Translation Adj 23,361 $ 23,361
Net Loss (936,374) (936,374)
-------------------------------------------------------------------------
Balance at July 31, 2002 $(33,302) $(333,483) $ 57,533 $(6,694,379) $(3,378,617)
Stock Subscription Receivable 33,302 33,302
Advances to Director $ (88,581) $ (88,581)
Foreign Currency Translation Adj (24,247) $ (24,247)
Net Loss $(1,251,969) $(1,251,969)
--------------------------------------------------------------------------
Balance at October 31, 2002 $ -0- $(422,064) $ 33,286 $(7,946,348) $(4,710,112)
Conversion of Class-B to Class-A shares $ -0-
Shares issued for cash $ 32,712
Expense for shares sold below market value $ 12,288
Shares issued as per agreement $ 36,000
Advances to Director $ 280,642 $ 280,642
Foreign Currency Translation Adj $ (104,166) $ (104,166)
Net Loss $ (940,867) $ (940,867)
--------------------------------------------------------------------------
Balance at January 31, 2003 $ -0- $(141,422) $ (70,880) $ (8,887,215) $(5,393,503)
Advances to Director $ 141,422 $ 141,422
Foreign Currency Translation Adj $ (297,065) $ (297,065)
Net Loss $ (814,919) $ (814,919)
--------------------------------------------------------------------------
Balance at April 31, 2003 $ -0- $ -0- $ (367,945) $ (9,702,135) $(6,364,065)
Foreign Currency Translation Adj $ (168,651) $ (168,651)
Net Loss $ (1,006,921) $(1,006,921)
--------------------------------------------------------------------------
Balance at July 31,2003 $ -0- $ -0- $ (536,596) $(10,709,056) $(7,539,637)
==========================================================================
</table>F-4
D'Angelo Brands, Inc. And Subsidiaries
Consolidated Statements of Cash Flows
for the three months ended July 31
2003 2002
----------- -----------
Cash Flows from Operating Activities
Net loss (1,006,921) (936,374)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation 115,181 33,832
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (37,833) (59,118)
Inventories (36,689) (23,511)
Prepaids, deposits and other receivables (116,619) (49,326)
Increase (decrease) in liabilities:
Accounts payable and accrued charges 154,952 690,031
---------- ---------
Net cash used for operating activities: (927,929) (344,466)
Cash Flows from Investing Activities
Additions to capital assets (219,036) (31,752)
----------- -----------
Net cash used for investing activities: (219,036) (31,752)
Cash Flows from Financing Activities
Mortgages and other debt 1,213,050 331,788
Issuance of debentures 102,566 -
Decrease in stock subscription receivable - 63,472
Advances from to Director - (42,403)
--------- ----------
Net cash provided from financing activities: 1,315,616 352,857
Change in foreign currency
translation adjustment (168,651) 23,361
Increase (decrease) in cash
and cash equivalents - -
Cash and cash equivalents,
beginning of period - -
---------- -----------
Cash and cash equivalents,
end of period - -
========== ===========
Supplemental disclosure of
cash flow information:
Interest paid 46,828 85,132
========== ==========
Income taxes paid - -
========== ==========
<page>F-5
D'Angelo Brands, Inc.
Notes to Financial Statements
July 31, 2003
==============================
1. Summary of Significant Accounting Policies
Company Background and Nature of Business:
D'Angelo Brands, Inc. ("the Company") (formerly Playandwin, Inc.) was
incorporated under the laws of the State of Nevada on June 9, 1995. The Company
was incorporated under the name Cambridge Funding Group Inc. The Company
changed its name to Agriceutials Technologies, Inc., then to Playandwin, Inc.
and then to D'Angelo Brands, Inc.
D'Angelo Acquisitions Inc. is a wholly owned subsidiary of the Company and
D'Angelo Brands Ltd. is wholly owned by D'Angelo Acquisitions Inc. D'Angelo
Brands Ltd. produces and markets branded apple juice, apple cocktail and iced
tea. These products are distributed to major retail grocery chains in the
Ontario, Canada market.
1540633 Ontario Inc. ("Ontario") is a wholly owned subsidiary of the Company
which can produce concentrates, juices, purees and blends, many of which can be
used in the various lines of D'Angelo beverages.
Acquisition and Change in Control:
The Company incorporated a wholly owned subsidiary named D'Angelo Acquisitions
Inc., ("Acquisitions") an Ontario corporation , which entered into a Share
Exchange Agreement (" the Agreement") with D'Angelo Brands Ltd. ("Brands"), an
Ontario Corporation. Pursuant to the Agreement dated October 29, 2001,
Acquisitions acquired 100% of the outstanding shares of common stock of Brands
in exchange for a total of 36,000,000 Exchangeable shares. The Exchangeable
shares means Class B Special Shares of Acquisitions, being subordinate, non-
voting special shares authorized in an unlimited number. The terms of the
Exchangeable shares are outlined in more detail in note 5 below. Pursuant to
the Agreement, the historical financial history of the Company is that of
Brands, therefore April 30, the fiscal year end of Brands was adopted.
In connection with the Share Exchange Agreement, the Company assigned to its
wholly owned subsidiary, Playandwin Canada Inc (Playandwin Canada), all of its
licenses and rights to the racing wager game known as "RACINGO". The Company
also distributed, in the form of a stock dividend, all of the common shares of
its wholly owned subsidiary Playandwin Canada Inc. to stockholders of record of
the Company immediately before the closing of the Share Exchange Agreement. The
stock dividends were payable November 20, 2001 to stockholders of record on
October 29, 2001. On October 29, 2001 there were 701,257 Class B Special Shares
of Playandwin Canada Inc. outstanding. Each of these Class B shares may be
exchanged for one common share of the Company. To accommodate the exchange of
shares, the Company issued a sufficient number of common shares to a trustee for
the benefit of the holders of the Class B Playandwin Canada shares. The trustee
will hold the common shares in trust until all the conditions for the exchange
of the Class B Playandwin Canada shares have been satisfied.
<page>F-6
Basis of Presentation:
The financial statements are prepared in accordance with generally accepted
accounting principles in the United States of America with the assumption that
the Company will be able to realize its assets and discharge its liabilities in
the normal course.
As reflected in the accompanying financial statements, the Company has had
recurring losses from operations, a negative cash flow from operations, and its
current liabilities exceed its current assets. These matters raise substantial
doubt about the Company's ability to continue as a going concern.
In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying
consolidated balance sheet is dependent upon continued operations of the
Company, which, in turn, is dependent upon the Company's ability to continue to
raise capital and generate positive cash flows from operations. The consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classifications of liabilities that might be necessary should the Company be
unable to continue its existence.
Management plans to take the following steps that it believes will be sufficient
to provide the Company with the ability to continue in existence:
- - The Company is continuing to develop its business plan and Management
does expect the Company to become profitable by the fourth quarter of
its fiscal year ended April 30, 2004.
- - Management expects to fund any negative cash flows or capital
expenditures from debt or equity financing or a combination thereof
as deemed appropriate by the Company's Board of Directors.
Basis of Consolidation:
The consolidated financial statements include the accounts of the Company and
its wholly owned and controlled subsidiaries. On consolidation all material
inter company transactions have been eliminated.
Use of Estimates:
In preparing the Company's financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts for revenue and expenses during
the period. Actual amounts could differ from those estimates.
<page>F-7
Fair Value:
For certain of the Company's financial instruments, none of which are held for
trading, including cash, accounts receivable, accounts payable and liabilities,
the carrying amounts approximate fair value due to their short maturities. The
amounts shown for mortgages and other debt also approximate fair value because
current interest rates and terms offered to the Company for similar debt are
substantially the same.
Cash Equivalents:
For purposes of the statement of cash flows, cash equivalents include all highly
liquid debt instruments with original maturities of three months or less which
are not securing any corporate obligations.
Concentration of Credit Risk:
Financial instruments, which potentially subject the company to concentrations
of credit risk, consist of cash and accounts receivable. The Company places its
cash with a financial institution in Canada which is not covered by the Canada
Deposit Insurance Corporation. The Company extends credit based on an evaluation
of the customer's financial condition, generally without collateral. Exposure to
losses on receivables is principally dependent on each customer's financial
condition. The Company monitors its exposure for credit losses and maintains
allowances for anticipated losses, if required.
Inventories:
Inventories are valued at the lower of cost (first-in, first-out basis) or
market.
Capital Assets:
Capital assets are stated at cost or net replacement amount. Depreciation, based
on the estimated useful lives of the assets, is provided on a straight line
basis over the following periods:
Building 20 years
Manufacturing Equipment 10 years
Trucks 3 years
Depreciation expense was $115,181 and $33,832 for the quarters ended July 31,
2003 and 2002, respectively.
<page>F-8
Revenue Recognition:
The Company recognizes sales upon shipment of goods to customers.
Impairment of Long-Lived Assets:
In accordance with SFAS No. 144, "Accounting for the Impairment or disposal of
Long-Lived Assets", long-lived assets to be held and used are analyzed for
impairment whenever events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. The Company evaluates at each balance
sheet date whether events and circumstances have occurred that indicate possible
impairment. If there are indications of impairment, the Company uses future
undiscounted cash flows of the related asset or asset grouping over the
remaining life in measuring whether the assets are recoverable. In the event
such cash flows are not expected to be sufficient to recover the recorded asset
values, the assets are written down to their estimated fair value. Long- lived
assets to be disposed of are reported at the lower of carrying amount or fair
value of asset less cost to sell.
Translation of Foreign Currency:
The Company translates the foreign currency financial statements of its
subsidiaries in accordance with the requirements of SFAS No. 52, "Foreign
Currency Translation". Assets and liabilities are translated at current exchange
rates and related revenues and expenses are translated at average exchange rates
in effect during the period. Resulting translation adjustments are recorded as a
separate component in stockholders' equity (deficiency). Foreign currency
transaction gains and losses are included in determining net income.
Income Taxes:
The Company accounts for income taxes pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". Deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences, and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.
<page>F-9
Net Loss per Common Share:
The Company calculates net loss per share based on SFAS No. 128, "Earnings Per
Share". Basic loss per share is computed by dividing net loss attributable to
common stockholders by the weighted average number of common shares outstanding.
Diluted loss per share is computed similar to basic loss per share except that
the denominator is increased to include the number of additional common shares
that would have been outstanding if the potential common shares had been issued
and if the additional common shares were dilutive. At July 31, 2003, the
weighted average common shares outstanding would have been increased by
28,887,670 shares of the Company's common stock if the Exchangeable Shares would
have been dilutive.
Comprehensive Income:
SFAS No. 130 "Reporting Comprehensive Income", establishes standards for the
reporting and displaying of comprehensive income and its components in the
financial statements. In accordance with SFAS No. 52, the Company has a Foreign
Currency Translation Adjustment. This is a component of the Company's
Comprehensive Loss, which is displayed as a component of the Statement of
Operation and Comprehensive Loss.
Recently Issued Accounting Pronouncements:
In June 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS No.
141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Goodwill and certain intangible
assets will remain on the balance sheet and not be amortized. On an annual
basis, and when there is reason to suspect that their values have been
diminished or impaired, these assets must be tested for impairment, and write
downs may be necessary. The Company adopted SFAS No. 141 on July 1, 2001 and the
adoption did not have an effect on the Company's financial position or results
of operations.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 changes the accounting for goodwill from an amortization
method to an impairment-only approach. Amortization of goodwill, including
goodwill recorded in past business combinations, will cease upon adoption of
this statement. The Company was required to implement SFAS No. 142 on January 1,
2002 and the adoption did not have an effect on the Company's financial position
or results of operation.
<page>F-10
In October 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which requires companies to record the fair value of a liability
for asset retirement obligations in the period in which they are incurred. The
statement applies to a company's legal obligations associated with the
retirement of a tangible long-lived asset that results from the acquisition,
construction, and development or through the normal operation of a long-lived
asset. When a liability is initially recorded, the company would capitalize the
cost, thereby increasing the carrying amount of the related asset. The
capitalized asset retirement cost is depreciated over the life of the respective
asset while the liability is accreted to its present value. Upon settlement of
the liability, the obligation is settled at its recorded amount or the company
incurs a gain or loss. The statement is effective for fiscal years beginning
after June 30, 2002. The Company does not expect the adoption to have a material
impact to the Company's financial position or results of operations.
In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". Statement 144 addresses the accounting and
reporting for the impairment or disposal of long-lived assets. The statement
provides a single accounting model for long-lived assets to be disposed of. New
criteria must be met to classify the asset as an asset held-for-sale. This
statement also focuses on reporting the effects of a disposal of a segment of a
business. The Company does not expect the adoption to have a material impact to
the Company's financial position or results of operations.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Correction
(issued 4/02)," which the Company does not believe will materially affect its
financial statements.
2. Capital Assets
<table>
<caption>
July 2003 April 2003
----------------------------------- ------------
Cost Accumulated Net Carrying Net Carrying
Amortization Amount Amount
----------- ------------ ------------ ------------
<s> <c> <c> <c> <c>
Land 1,197,328 - 1,197,328 1,163,294
Building 1,906,625 144,806 1,761,819 1,711,610
Manufacturing Equipment 3,597,152 337,998 3,259,154 3,239,542
Trucks 53,518 53,518 - -
------------------------------------------ ------------
6,754,623 536,322 6,218,301 6,114,446
</table>
<page>F-11
3. Mortgages and Other Debt
<table>
<caption>
<s> <c> <c>
July 2003 April 2003
------------- --------------
First mortgage on the property located at 14 Brewster Road, Brampton Ontario,
Canada ("the Property"). The mortgage matures on May 1, 2003. The interest rate
is 10.5% per annum and is payable monthly on the first of every month. Effective
May 2, 2003 the mortgage has been renewed for the further term of one year under
the same terms. 1,783,930 1,733,222
Second mortgage on the Property owed to D. Dunsmuir Investments Canada Limited.
The mortgage bears interest at 16% per annum and is payable monthly. The
principal was due February 9, 2002 but was renewed on a month to month basis
after this date under the same terms. 463,822 450,638
Third mortgage on the Property owed to Reagens Canada Ltd. The mortgage bears
interest at 20% per annum payable monthly. The principal was due January 28,
2002 but was renewed on a month to month basis after this date under the same
terms. 132,011 128,258
Promissory demand note owed to D. Dunsmuir Investments Canada Limited jointly
and severally with an officer of the Company ("The Note"). The Note bears
interest at 16% per annum up to May 1, 2002 and 20% per annum thereafter until
the date of repayment. The principal may be repaid, in whole or in part, at any
time with or without notice. The Note is secured by: 784,929 762,618
i) a general security agreement covering all assets of D'Angelo Brands Ltd.
including a first charge on all equipment and a second charge on inventory and
accounts receivable.
ii) fourth registered charge on the Property
iii) first registered charge on all production equipment
Promissory demand note owed to David Stewart jointly and severally with an
officer of the company. The note bears interest at 5% per annum to the date of
payment. The principal may be repaid, in whole or in part, at any time with or
without notice. 178,393 173,322
Demand promissory note advanced from D. Dunsmuir Investments Canada Limited.
Interest on the promissory note is payable monthly at the rate of 14% per annum
up to and including August 21, 2002 and at the rate of 20% per annum from August
22, 2002 to the date of repayment in full. 356,786 346,644
Demand promissory note advanced from D. Dunsmuir Investments Canada Limited.
Interest on the promissory note is payable monthly at the rate of 20% per annum
from October 1, 2002 to the date of repayment in full. 856,287 831,947
<page>F-12
Demand loan (the "Loan") advanced from Wasanda Enterprises Inc. (the "Holder").
Interest on the demand loan is payable monthly on the last day of each month, at
the rate of 10% per annum from January 31, 2003 to the date of repayment in
full. The Loan is evidenced by a debenture in the principal amount of
$7,135,721. After existing encumbrances already in place outlined above,
security for the payment of principal and interest payable under this debenture
from the Loan and all other obligations owed to the Holder is:
a) a specific charge of real and personal property by way of a fixed and
specific mortgage and charge to and in favour of the Holder on all lands, other
real and immovable property, all goods, chattels, fixtures, plants, vehicles,
machinery, equipment and accessories of every nature of the Company and D'Angelo
Brands Ltd.
b) a floating charge in favour of the Holder on all property and assets of every
nature of the Company and D'Angelo Brands Ltd.
1,534,180 450,638
------------- ------------
Total Mortgages and Other Debt 6,090,338 4,877,288
============ =============
Interest incurred during the quarter on mortgages and other debts amounted to
$203,564 for the three months ended July 31, 2003 and $108,372 for the three
months ended July 31, 2002.
</table>
4. Long Term Debt
On September 23, 2002, 1540633 Ontario Inc. issued a debenture with the
principal amount of $3,608,329 ("Principal Amount") to Wasanda Enterprises Inc.
The Principal Amount of the debenture is due May 19, 2004, provided that Ontario
may repay the Principal Amount in whole or in part at any time without notice or
bonus. The Principal Amount shall bear interest, at the interest rate charged
by the Bank of Montreal (Toronto Main Branch) for demand loans in Canadian
dollars to its most creditworthy commercial borrowers ("Interest Rate").
Interest on the Principal Amount shall accrue, compound and be added to the
Principal Amount from September 19, 2002 to December 19, 2002. Thereafter
interest shall be paid on the Principal Amount then outstanding from January 19,
2003 on the last day of every month until the debenture is due.
<page>F-13
Security for the payment of the principal and interest payable under this
debenture is:
a) a specific charge of real and personal property by way of a fixed and
specific mortgage and charge to and in favour of Wasanda on all lands,
other real and immovable property, all goods, chattels, fixtures,
plant, vehicles, machinery, equipment and accessories of every
nature of "Ontario".
b) a floating charge in favour of Wasanda on all property and assets of
every nature of "Ontario".
Interest incurred during the quarter on long term debt amounted to $40,927 for
the three months ended July 31, 2003 and $0 for the three months ended July 31,
2002.
5. Common Stock
Class A Common Stock
For the three months ended July 31, 2003, there were no transactions for Class A
Common Stock.
For the three months ended July 31, 2002 the Company had the following Class A
Common Stock transactions:
Converted 5,095,604 Class B Exchangeable shares for 5,095,604 Class A Common
shares of the Company.
Class B Common Stock
In connection with the Company's acquisition of D'Angelo Acquisitions Inc., as
outlined in note 1 above, 36,000,000 Exchangeable Shares of Acquisitions were
issued. The Exchangeable Shares issued were further described as Class B
Special, subordinated, non-voting special shares. Each share is exchangeable
into one share of the Company's common stock subject to the terms as follows:
a) each exchangeable share may be exchanged for one common share of the
Company at any time during the period ending on and including the day of the
fifth anniversary of the closing date.(October 29, 2001)
<page>F-14
b) each exchangeable share may be exchanged for one common share at the
request of Acquisitions :
i) on the occurrence of a take over bid for all of the issued and
outstanding shares of the Company; or
ii) after the fifth anniversary of the closing date;
c) in case the Company shall :
i) subdivide its outstanding common shares into a greater number
of shares; or
ii) consolidate its outstanding common shares into a smaller
number of shares; or
iii) issue common shares of the Company to the holders of its outstanding
common shares by way of a stock dividend, then the number of Company
shares into which the Exchangeable Shares may be converted on the
effective date of such subdivision or consolidation or on the record
date for such stock dividend, as the case may be, shall, in the case
of the events referred to in i) and ii) above, be decreased in
proportion to the total number of common shares of the Company
resulting from such subdivision or issue, or shall, in the case of the
event referred to in ii) above, be increased in proportion to the total
number of outstanding common shares of the Company resulting from
such consolidation; and
d) the adjustments provided for in c) above are cumulative and shall apply
to successive dividends, distributions, subdivisions, consolidations, issues or
other events resulting in any adjustment under the provisions of c) above;
e) all of the foregoing rights, privileges and conditions and the exercise
or fulfillment thereof shall be subject to the relevant securities laws.
For the three months ended July 31, 2003, there were no transactions for Class B
Common Stock of the Company.
For the three months ended July 31, 2002, 5,095,604 Exchangeable Shares were
converted to Class A common shares of the Company.
<page>F-15
6. Significant Customer
For the three months ended July 31, 2003, one customer accounted for
approximately 88% and another customer approximately 10% of the Company's sales.
7. Warrants
On September 23, 2002, the Company issued a warrant to Wasanda Enterprises Inc.
to acquire, at any time in whole or in part, until September 23, 2007, fifteen
million (15,000,000) common shares from the Company with an exercise price of
thirty cents ($0.30) per common share.
On December 20, 2002, the Company issued a warrant to Wasanda Enterprises Inc.
to acquire, at any time in whole or in part, until December 19, 2007, five
million (5,000,000) common shares from the Company with an exercise price of six
cents ($0.06) per common share.
8. Related Party Transactions
D'Angelo Brands Ltd. has entered into a 25 year Royalty Agreement for the use of
intellectual property (i.e. Trademarks etc.) held by a related Company under
common control. The agreement requires Brands to pay 3% of gross revenue from
sales of all branded products. D'Angelo Brands Ltd. is obligated to pay a
minimum of $214,072 to a maximum of $570,858 in royalties during each calendar
year.
During the quarter, the Company advanced amounts totaling $98,441 to 783234
Ontario Limited, a related party owned by two of the Directors of the Company.
As at July 31, 2003, the balance owing to the Company is $304,003 and was
included in Prepaids, deposits and other receivables. The balance bears no
interest and has no fixed terms of repayment.
As at the quarter end date, the Company had a balance outstanding and owing to
an officer of the company in the amount of $103,881 and was included in Accounts
payable and accrued liabilities. The balance bears no interest and has no fixed
term of repayment. The amount has been repaid in the following quarter.
In connection with the Share Exchange Agreement outlined in note 1 above, the
Company entered into a Settlement Agreement with Stewart Garner, its former
President. Under the terms of the agreement, the Company is to pay Mr. Garner
the sum of $70,000 in ten equal monthly payments of $7,000 each. The payments
are payable on the 15th of each month commencing on November 15th 2001. As of
July 31, 2003, the $70,000 has been accrued but no payments had been made.
<page>F-16
9. Commitments and Contingencies
A claim was issued in the Ontario Supreme Court of Justice on August 7, 2001 on
behalf of D'Angelo Brands Ltd. v. Les Aliments Lexus Foods Inc. ("Les
Aliments"). The claim is an action for outstanding commissions in the amount of
$63,000 plus $319,000 in general damages for breach of contract. Les Aliments
Lexus Foods defended the claim and subsequently counterclaimed for damages and
breach of contract in the amount of $191,000 and for fraud and negligent
misrepresentation for the same amount. Les Aliments has amended its statement
of defense and counterclaim to include the same claims as before and, in
addition, a declaration that Les Aliments has the right, title and interest in
the D'Angelo trademarks. Les Aliments has taken out an order to add the Company
as a defendant to the claim. It is the opinion of management and legal counsel
that the counterclaim by Les Aliments is spurious and simply an attempt to
discourage pursuit of the commissions owing to D'Angelo Brands Ltd. It is the
opinion of management that the claims will be settled without any significant
cost to the Company other than legal expenses.
In connection with the promissory demand note for $784,929 to D. Dunsmuir
Investments Canada Limited, outlined in note 3 above, a commitment was made to
issue 1,000,000 shares of the Company, which shares were to be restricted from
trading until April 7, 2003 and 600,000 shares of the Company which are to be
free trading shares. The shares have not been issued but a finance charge has
been accrued.
On June 21, 2002, $356,786 was advanced from D. Dunsmuir Investments Canada
Limited for a demand promissory note in the same amount. In consideration of
the advance, the Company agreed to issue 500,000 free trading shares of the
Company's common stock, with a fair market value of $120,000, to D. Dunsmuir
Investments Canada Limited. Although the shares have not yet been issued, the
expense related to the issuance of these shares of $120,000 has been accrued as
a financing expense.
On September 13, 2002, $856,287 was advanced from D. Dunsmuir Investments Canada
Limited for a demand promissory note owed jointly and severally by the Company
and an officer of the Company. In connection with promissory note the Company
agreed to issue 500,000 free trading shares of the Company's common stock and
issue warrants to purchase in total 4,000,000 free trading shares of the Company
at any time prior to September 13, 2007 at $.175 per share. Although the shares
have not yet been issued, the expense related to the issuance of these shares of
$100,000 has been accrued as a financing expense.
On September 23, 2002, in conjunction with Wasanda Enterprises Inc. providing
financial support to "Ontario" in the form of vendor take-back security to
finance the acquisition of the Tiverton Facility, the Company and "Brands",
jointly and severally, guaranteed the payment of all interest and principal
owing under the debenture and any other indebtedness or liability owed to
Wasanda.
The Company's future minimum annual lease payments required under operating
leases that have initial or non cancelable lease terms in excess of one year
owing over the next 5 years are as follows:
Three months ended
-------------------
July 31, 2004 $387,213
July 31, 2005 384,215
July 31, 2006 386,262
July 31, 2007 382,634
July 31, 2008 342,427
10. Income Taxes
The components of the provision for income taxes is as follows:
2003 2002
Current tax expense:
Canada - -
United States _-__ _-__
Total Current __-___ -___
Deferred tax expense:
Canada - -
United States __-___ _-___
Total Deferred ___-__ __-___
Total tax provision from
continuing operations __-___ __-___
Deferred tax assets and liabilities reflect the net effect of temporary
differences between the carrying amount of assets and liabilities for book
purposes and amounts used for income tax purposes.
11. Subsequent Events
During the period from August 1st to September 15, 2003:
An additional $1,070,358 was advanced on the demand loan from Wasanda
Enterprises Inc. The loan bears interest at the rate of 10% per annum.
The promissory demand note owed to David Stewart was assigned to Wasanda
Enterprises Inc. on the same terms and conditions. The payment to David Stewart
increased the Wasanda debenture and the interest rate became 10% per annum.
The second mortgage on the property at 14 Brewster Road owed to D.Dunsmuir
Investment Canada Limited was assigned to Wasanda Enterprises Inc. on the same
terms and conditions. The payment to D.Dunsmuir Investment Canada Ltd. increased
the Wasanda debenture and the interest rate became 10% per annum.
Promissory demand notes and accrued interest (as indicated below) in the amount
of $2,403,884 owed to D.Dunsmuir Investment Canada Limited were assigned to
Wasanda Enterprises Inc. on the same terms and conditions. The payment to
D.Dunsmuir Investment Canada Ltd. increased the Wasanda debenture and the
interest rate became 10% per annum.
D.Dunsmuir Investment Canada Limited forgave $428,143 of a promissory demand
note owing. The forgiven amount will be recorded in the quarter ended October
31, 2003. D.Dunsmuir Investments Canada Limited agreed to reduce the interest
payable on all outstanding debt to 8% per annum. In conjunction with the
repayments made by Wasanda Enterprises Inc., D.Dunsmuir Investments Canada
Limited agreed to forgive and waive all previous commitments to receive common
shares and warrants from the Company.
<page>F-17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS GENERAL
The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and related footnotes for the
quarterly period ended July 31, 2003 included in its Quarterly Report on Form 10
- -QSB.
RESULTS OF OPERATIONS
Comparing the three months ended July 31, 2003 to the three months ended July
31, 2002
Sales.
For the three months ended July 31, 2003, sales were $729,889,
a decrease of $14,089 over the $743,978 sales for the three months ended July
31, 2002.
Gross Profit.
Gross profit was ($154,703) for the three months ended July 31, 2003, a decrease
of $38,254 compared to gross profit of ($116,449) for the three months ended
July 31, 2002. The decrease in gross profit was primarily attributable to lower
sales and higher fixed production overhead costs.
Selling, Marketing, Distribution and Warehousing Expenses.
Selling, marketing, distribution and warehousing expenses were $211,133 for the
three months ended July 31, 2003, an increase of $57,384 over selling,
marketing, distribution and warehousing expenses of $153,749 for the three
months ended July 31, 2002. The increase was as a result of higher salaries and
warehouse costs.
General and Administrative Expenses.
General and administrative expenses were $372,488 for the three months ended
July 31, 2003, an increase of $101,530 over general and administrative expenses
of $270,958 for the three months ended July 31, 2002. The increase was due to
higher salaries, depreciation and office expenses.
Financing Expenses.
Financing expenses were $23,204 for the three months ended July 31, 2003, a
decrease of $264,796 over financing expenses of $288,000 for the three months
ended July 31, 2002. The expense for the same period last year was due to shares
to be issued below market value.
Interest.
Interest was $245,393 for the three months ended July 31, 2003, an increase of
$138,175 over interest of $107,218 for the three months ended July 31, 2002. The
increase was a result of financing the losses and the Tiverton facility which
was acquired in September 2002.
Provision for Income Taxes.
As the Company generated losses, no provision has been made for income taxes.
Net Loss.
Net Loss was $1,006,921 for the three months ended July 31, 2003, an increase of
$70,547 over the net loss of $936,374 for the three months ended July 31, 2002.
The increase in the net loss was a result of lower gross profit, higher selling,
marketing, distribution, warehousing, general and administrative expenses and
interest partially offset by lower financing expenses.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 2003, the Company had a working capital deficiency of $10,149,609
compared to a working capital deficiency of $8,972,748 as of April 30, 2003.
The decrease in working capital was a result of financing the cash losses
through the use of short term financing in the form of accounts payable, accrued
liabilities and other short term debt.
Net cash used for operating activities was $927,929 for the three months ended
July 31, 2003, an increase of $583,463 from the $344,466 net cash used for
operating activities for the three months ended July 31, 2002. The increase in
net cash used for operating activities as compared to the prior year was a
result of a smaller increase in accounts payable and accrued liabilities and
larger increase in other receivables compared to the same period last year.
Net cash used for investing activities for the three months ended July 31, 2003
was $219,036, an increase of $187,284 from the $31,752 net cash used for
investing activities for the three months ended July 31, 2002. The increase in
net cash used for investing activities as compared to the prior year was a
result of investing in processing equipments in both manufacturing facilities
and the foreign exchange impact of the stronger Canadian dollar.
Net cash provided from financing activities for the three months ended July 31,
2003 was $1,315,616 as compared to the $352,857 net cash provided from financing
activities for the three months ended July 31, 2002. The increase in net cash
provided from financing activities was a result of the increase in mortgages and
other debt and the foreign exchange impact of the stronger Canadian dollar.
During the quarter ended July 31, 2003, an additional demand loan of $1,070,358
was advanced from Wasanda Enterprises Inc. The loan bears interest at the rate
of 10% per annum.
The Company has certain cash requirements to expand its business, execute its
sales and marketing goals; fund working capital needs and pay down commitments
including interest and principal payments on the debt. Management estimates
that in excess of $11,000,000 will need to be repaid or refinanced over the next
fiscal year in addition to the current trade liabilities it is incurring.
The Company is currently in discussions and negotiations to obtain the financing
required to meet these obligations as they become due. The financing may be in
the form of debt or equity or a combination thereof. As a result of the
Company's current financial condition, there is no assurance that the financing
will be obtainable on favourable terms or at all.
ITEM 3. CONTROLS AND PROCEDURES
Within 90 days prior to the date of this report, management concluded its
evaluation of the effectiveness of our disclosure controls and procedures. As of
that date, our Chief Executive Officer and acting Chief Financial Officer
concluded that we maintain effective disclosure controls and procedures that
ensure information required to be disclosed in our reports under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms. Specifically, the
disclosure controls and procedures assure that information is accumulated and
communicated to our management, including our Chief Executive Officer and acting
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. There have been no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of management's evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A claim was issued in the Ontario Supreme Court of Justice on August 7, 2001 on
behalf of D'Angelo Brands Ltd. v. Les Aliments Lexus Foods Inc. The claim is an
action for outstanding commissions in the amount of $63,000 plus $319,000 in
general damages for breach of contract. Les Aliments Lexus Foods defended the
claim and subsequently counterclaimed for damages and breach of contract in the
amount of $191,000 and for fraud and negligent misrepresentation for the same
amount. Les Aliments has amended its statement of defense and counterclaim to
include the same claim as before and, in addition, a declaration that Les
Aliments has the right, title and interest in the D'Angelo trademarks. Les
Aliments has taken out an order to add the Company as a defendant to the claim.
It is the opinion of management and legal counsel that the counterclaim by Les
Aliments is spurious and simply an attempt to discourage pursuit of the
commissions owing to D'Angelo Brands Ltd. It is the opinion of management that
the two claims will be settled without any significant cost to the Company other
than legal expenses.
ITEM 2. CHANGES IN SECURITIES
Recent Issuances of Unregistered Securities
With respect to the issuances and transfers made, the registrant relied on
Section 4(2) of the Securities Act of 1933, as amended. No advertising or
general solicitation was employed in offering the shares. The securities were
offered for investment only and not for the purposes of resale or distribution,
and the transfer thereof was appropriately restricted.
On November 13, 2002 the Company issued 1,549,541 shares of its common stock,
restricted, in exchange for 1,549,541 Exchangeable Shares. Exchangeable Shares
are Class B Special Shares of D'Angelo Acquisitions Inc. which are subordinate,
non-voting special shares authorized in an unlimited number, each Exchangeable
Share entitling its owner to one share of the Company's common stock on the
following terms:
a) each exchangeable share may be exchanged for one common share of the
Company at any time during the period ending on and including the day of the
fifth anniversary of the closing date.(October 29, 2001)
b) each exchangeable share may be exchanged for one common share at the
request of Acquisitions :
i) on the occurrence of a take over bid for all of the issued and
outstanding shares of the Company or;
ii) after the fifth anniversary of the closing date;
On November 14, 2002, the Company issued 357,587 shares of its common stock,
restricted, in exchange for 357,587 Exchangeable shares.
On November 22, 2002 the Company issued 500,000 shares of its common stock,
restricted, for consideration of $32,712. The share price was below the current
market value of the shares on the date of issuance based on the closing price
for the Company's common stock. Therefore the Company recorded a financing
charge of $12,288 with a corresponding offset to additional paid in capital for
the difference between the current market value and the gross proceeds.
On November 22, 2002, the Company issued 400,000 shares of its common stock,
restricted, valued at $36,000, the market value of the stock on the date the
shares were issued. The shares were issued pursuant to a registration rights
agreement and a financing charge had been recorded by the Company at the time
the commitment to issue the shares arose.
On December 2, 2002, the Company issued 59,598 shares of its common stock,
restricted, in exchange for 59,598 Exchangeable shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Interest payments on mortgage and other debt and long term debt as of July 31,
2003 were in arrears as follows:
D. Dunsmuir Investments Canada Limited $ 405,882
David Stewart $ 13,206
Wasanda Enterprises Inc. $ 185,083
------------------
$ 604,171
------------------
ITEM 5. OTHER INFORMATION
During the period from August 1st to September 15, 2003:
An additional $1,070,358 was advanced on the demand loan from Wasanda
Enterprises Inc. The loan bears interest at the rate of 10% per annum.
The promissory demand note owed to David Stewart was assigned to Wasanda
Enterprises Inc. on the same terms and conditions. The payment to David Stewart
increased the Wasanda debenture and the interest rate became 10% per annum.
The second mortgage on the property at 14 Brewster Road owed to D.Dunsmuir
Investment Canada Limited was assigned to Wasanda Enterprises Inc. on the same
terms and conditions. The payment to D.Dunsmuir Investment Canada Ltd. increased
the Wasanda debenture and the interest rate became 10% per annum.
Promissory demand notes and accrued interest (as indicated below) in the amount
of $2,403,884 owed to D.Dunsmuir Investment Canada Limited were assigned to
Wasanda Enterprises Inc. on the same terms and conditions. The payment to
D.Dunsmuir Investment Canada Ltd. increased the Wasanda debenture and the
interest rate became 10% per annum.
D.Dunsmuir Investment Canada Limited forgave $428,143 of a promissory demand
note owing. The forgiven amount will be recorded in the quarter ended October
31, 2003.
D.Dunsmuir Investments Canada Limited agreed to reduce the interest payable on
all outstanding debt to 8% per annum. In conjunction with the repayments made by
Wasanda Enterprises Inc., D.Dunsmuir Investments Canada Limited agreed to
forgive and waive all previous commitments to receive common shares and warrants
from the Company.
ITEM 6. EXHIBITS
Exhibit No. Description
- ------------ -------------------
2.1 Share Exchange Agreement (incorporated by reference to exhibit 2.1 to
the Company's Current Report on Form 8-K filed with the Commission on January
15, 2002).
3.1(a) Articles of Incorporation (incorporated by reference to Exhibit 3.1 to
the Amended Form 10-SB filed with the Commission on May 31, 2000).
3.1(b) Certificate of Change in Authorized Shares Pursuant to NRS 78.209
(incorporated by reference to Exhibit 4.3 to the Company's Registration
Statement on Form S-8 filed with the Commission October 9, 2001).
3.1(c) Certificate of Amendment re Name Change (incorporated by reference to
Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the
Commission on January 15, 2002).
3.2 Restated By-laws (incorporated by reference to Exhibit 4.4 tothe
Company's Registration Statement on Form S-8 filed with the Commission on
October 9, 2001).
10.1 Assignment of Licenses to Playandwin Canada Inc. from the Company
(incorporated by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed with the Commission on January 15, 2002).
10.2 Settlement Agreement between Stewart Garner and the Company
(incorporated by reference to Exhibit 10.2 to the Company's Current Report on
Form 8-K filed with the Commission on January 15, 2002).
10.3 Declaration of Trust and Escrow Agreement (incorporated by reference to
Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the
Commission on January 15, 2002).
10.4 Demand promissory note to D. Dunsmuir Investment Canada Limited dated
June 21, 2002 (attached to 10QSB filing for quarter ended July 31, 2002)
10.5 Demand promissory note to D. Dunsmuir Investment Canada Limited dated
September 13, 2002 (attached to 10QSB filing for quarter ended October 31, 2002)
10.6 Agreement to pay loan commitment fee, issue warrants and free trading
shares to D. Dunsmuir Investments Canada Limited, dated September 13,
2002 (attached to 10QSB filing for quarter ended October 31, 2002)
10.7 Warrant, dated September 23, 2002, from the Company to Wasanda
Enterprises Inc. (Incorporated by reference to exhibit 99.2 to the Schedule
13D/A filed with the Commission on October 9, 2002)
10.8 Form of Offer, dated September 23, 2002, from 1540633 Ontario Inc. to
Mintz & Partners Limited to purchase property and fixed assets of QTF Foods
Inc. (Incorporated by reference to exhibit 99.3 to the Schedule 13D/A filed with
the Commission on October 9, 2002)
10.9 Debenture, dated September 23, 2002, issued by 1540633 Ontario Inc. to
Wasanda Enterprises Inc. (incorporated by reference to exhibit 99.4 to the
Schedule 13D/A filed with the Commission on October 9, 2002)
10.10 Guarantee and Postponement of Claim dated, September 23, 2002, issued by
the Company and D'Angelo Brands Ltd. jointly and severally to Wasanda
Enterprises Inc. (incorporated by reference to exhibit 99.5 to the Schedule
13D/A filed with the Commission on October 9, 2002)
10.11 Warrant, dated December 19, 2002, from the Company to Wasanda
Enterprises Inc. (Incorporated by reference to exhibit 99.6 to the Schedule
13D/A filed with the Commission on December 27, 2002)
10.12 Debenture, dated December 19, 2002, issued by the Company and D'Angelo
Brands Ltd. to Wasanda Enterprises Inc. (incorporated by reference to
exhibit 99.7 to the Schedule 13D/A filed with the Commission on December 27,
2002)
10.13 Priority Agreement, dated December 19, 2002 among Wasanda Enterprises
Inc., D. Dunsmuir Investments Canada Limited, D'Angelo Brands Ltd.,
D'Angelo Brands Inc., and Frank D'Angelo, (attached to 10QSB filing for quarter
ended January 31, 2003)
99.1 Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 attached.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
D'Angelo Brands, Inc.
By: /s/ Frank D'Angelo
- -----------------------
Frank D'Angelo,
President and Principal Accounting Officer
Date: September 15, 2003
CERTIFICATIONS PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I Frank D'Angelo, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of D'Angelo Brands,
Inc;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date"); and
c. presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on
my evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
registrant's auditor's and the audit committee of registrant's board
of director's (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: September 15, 2003
/s/ Frank D'Angelo
-------------------
Frank D'Angelo,
President and Principal Accounting Officer