FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1997
Commission file number: 333-16247
PURO WATER GROUP, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 1-325396-8
------------------------------- --------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
56-24 58th Street, Maspeth, New York 11378
-----------------------------------------
(Address of principal executive offices)
(718) 326-7000
-------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes |X| No |_|
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING
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 |X|
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:
3,476,789 as of August 11, 1997
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Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PURO WATER GROUP, INC.
BALANCE SHEET
AS OF MARCH 31, AND JUNE 30 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
March 31, June 30,
1997 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 736,890 $ 387,610
Accounts receivable, less allowance for doubtful accounts
of 201,205 2,911,683 2,997,416
Inventory 550,243 571,528
Current Tax Asset 0 0
Prepaid expenses 312,226 537,196
----------- -----------
Total current assets 4,511,042 4,493,750
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation of 1,103,602 5,846,160 5,171,730
INTANGIBLE ASSETS, net of accumulated amortization of 826,043 7,670,463 7,763,035
OTHER ASSETS 121,396 120,229
----------- -----------
TOTAL ASSETS 18,149,061 $17,548,744
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 624,007 657,679
Accrued expenses and other current liabilities 165,625 198,235
Accrued Registration Costs 197,872 0
Current Income Taxes Payable 32,782 145,535
Deferred income 239,644 236,184
Short-term borrowings 50,000 365,000
Current portion of long-term debt 1,093,746 1,000,972
Current portion of capital lease obligations 210,410 209,304
----------- -----------
Total current liabilities 2,614,086 2,812,909
LONG-TERM LIABILITIES:
Long-term debt 3,654,245 2,702,428
Capital lease obligations 155,718 192,520
Deferred tax liability 765,000 765,000
Other liabilities 111,273 46,693
----------- -----------
Total long-term liabilities 4,686,236 3,706,641
STOCKHOLDERS' EQUITY:
Common stock, $.0063 par value; 10,000,000 shares authorized;
3,476,789 shares issued and outstanding 21,904 21,904
Additional paid-in capital 9,427,880 9,420,019
Retained earnings 1,398,955 1,587,271
----------- -----------
Total stockholders' equity 10,848,739 11,029,194
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 18,149,061 17,548,744
=========== ===========
</TABLE>
<PAGE>
PURO WATER GROUP, INC.
STATEMENT OF OPERATIONS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUE:
Bottled water sales and other
revenues 2,553,494 2,197,158 4,852,744 4,010,633
Rental revenue 529,667 567,346 1,053,916 1,052,164
---------- ---------- ---------- ----------
3,083,161 2,764,504 5,906,660 5,062,797
COST OF GOODS SOLD:
Cost of goods sold (excluding
depreciation) 1,089,629 671,170 2,082,492 1,317,959
Depreciation 148,080 134,183 296,160 243,537
---------- ---------- ---------- ----------
GROSS PROFIT 1,845,452 1,959,151 3,528,008 3,501,301
OPERATING EXPENSES:
Operating expense (excluding
depreciation and amortization) 882,221 502,426 1,555,582 1,070,260
General and administrative
expenses 496,184 779,046 1,037,411 1,496,628
Depreciation and amortization 130,889 104,907 261,663 202,452
---------- ---------- ---------- ----------
Total operating expenses 1,509,294 1,386,379 2,854,656 2,769,340
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 336,158 572,772 673,352 731,961
OTHER INCOME/(EXPENSE):
Other Income (Expense) 54,192 11,774 64,189 4,184
Interest expense (89,281) (189,976) (236,907) (329,684)
---------- ---------- ---------- ----------
(35,089) (178,202) (172,718) (325,500)
---------- ---------- ---------- ----------
INCOME BEFORE PROVISION FOR
INCOME TAXES 301,069 394,570 500,634 406,461
PROVISION FOR INCOME TAXES 112,753 165,719 200,253 170,000
---------- ---------- ---------- ----------
NET INCOME 188,316 228,851 300,381 236,461
---------- ---------- ---------- ----------
PER SHARE INFORMATION:
Earnings per share $ 0.05 $ 0.10 $ 0.09 $ 0.11
========== ========== ========== ==========
Weighted average common shares
outstanding 3,587,678 2,237,679 3,289,043 2,237,679
========== ========== ========== ==========
</TABLE>
<PAGE>
PURO WATER GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE AND SIX MONTH- PERIODS ENDED JUNE 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Common Stock
--------------------
Number of Additional Retained
Shares Par Value Paid-in Capital Earnings Total
------ --------- --------------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 1,971,361 12,420 2,842,694 659,728 3,514,842
Issuance of Common Stock 98,568 621 499,379 -- 500,000
Exercise of Stock Warrants 56,860 358 642 -- 1,000
Net income -- -- -- 627,163 627,103
--------- ------ --------- ---------- ----------
BALANCE, December 31, 1996 2,126,789 13,399 3,342,715 1,286,891 4,643,005
========= ====== ========= ========== ==========
Issuance of Common Stock 1,350,000 8,505 6,085,165 -- 6,093,670
Net Income -- -- -- 112,064 112,064
--------- ------ --------- ---------- ----------
BALANCE, March 31, 1997
(unaudited) 3,476,789 21,904 9,427,880 1,398,955 10,848,739
--------- ------ --------- ---------- ----------
Costs related to
issuance of
common stock -- -- (7,861) -- (7,861)
Net Income -- -- -- 188,316 188,316
--------- ------ --------- ---------- ----------
BALANCE, June 30, 1997
(unaudited) 3,476,789 21,904 9,420,019 1,587,271 11,029,194
========= ====== ========= ========== ==========
</TABLE>
<PAGE>
PURO WATER GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six months
Ended Ended Ended Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income $ 188,316 $ 228,851 $ 300,380 $ 236,461
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 278,969 239,090 557,823 445,989
Deferred tax liability -0- 50,000 -0- 50,000
Provision for allowance for doubtful accounts -0- (9,773) -0- 36,195
Changes In Assets And Liabilities-
Increase in accounts receivable (85,733) (312,971) (469,501) (806,006)
Increase in inventory (21,285) -- (21,285) (93,632)
Increase in prepaid expenses and other assets (224,970) (16,675) (333,168) (280,912)
Increase (Decrease) in accounts payable, accrued
expenses and other liabilities (112,717) 34,718 (410,697) 510,939
Increase in deferred income (3,460) (7,948) -0- 110,625
----------- ----------- ----------- ----------
Net cash (used) provided by operating
activities 19,120 205,292 (376,448) 209,659
----------- ----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (613,058) (429,550) (840,846) (1,983,924)
Advance on acquisition -0- (500,000) -0- (500,000)
Net assets acquired 1,168 (378,761) 1,168 (4,583,085)
Sale of building 989,550 -0- 989,550 -0-
----------- ----------- ----------- ----------
Net cash used in investing activities 377,660 (1,308,311) 149,872 (7,067,009)
----------- ----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 315,000 500,000 315,000 2,500,000
Repayment of capital lease obligations (36,802) (2,890) (89,404) (93,806)
Repayment of short-term debt -0- (166,432) (2,050,000) (570,868)
Repayment long-term debt (1,016,397) 500,000 (4,334,422) 500,000
Proceeds from issuance of common stock (7,861) 229,430 6,556,052 4,000,000
----------- ----------- ----------- ----------
Net cash provided by financing
activities (746,060) 1,060,108 397,226 6,335,326
----------- ----------- ----------- ----------
NET (DECREASE) IN CASH (349,280) (42,911) 170,650 (522,024)
CASH, beginning of period 736,890 210,219 216,960 689,332
=========== =========== =========== ==========
CASH, end of period 387,610 167,308 387,610 167,308
=========== =========== =========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest 276,142 209,729 463,003 317,684
----------- ----------- ----------- ----------
Income taxes 287,235 218,624 521,375 218,624
----------- ----------- ----------- ----------
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations incurred 100,350 39,145 100,350 80,395
----------- ----------- ----------- ----------
Deferred offering costs not yet paid -0- -0- 197,872 -0-
----------- ----------- ----------- ----------
</TABLE>
<PAGE>
Puro Water Group, Inc.
Notes to the Financial Statements
(Unaudited)
1. Reference should be made to the Company's financial statements for the
year ended December 31, 1996 for a description of the accounting policies
which have been continued without change. Also, reference should be made
to the notes to the Company's December 31, 1996 financial statements for
additional details of the Company's financial condition, results of
operations and cash flows. All adjustments (of a normal and recurring
nature) which are, in the opinion of management, necessary to a fair
presentation of the results of the interim period have been included.
2. The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share". This Statement
establishes standards for computing and presenting earnings per share
("EPS") and applies to all entities with publicly held common stock or
potential common stock. This statement replaces the presentation of
primary EPS and fully diluted EPS with a presentation of basic EPS and
diluted EPS, respectively. Basic EPS excludes dilution and is computed by
dividing earnings available to common stockholders by the weighted-average
number of common shares outstanding for the period. Similar to fully
diluted EPS, diluted EPS reflects the potential dilution of securities
that could share in the earnings. This Statement is not expected to have
a material effect on the Company's reported EPS amounts. This Statement is
effective for the Company's financial statements for the year ended
December 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section and other parts of this Quarterly Report on Form 10-QSB
contain forward-looking statements that involve risks and uncertainties. The
issuer's actual results may differ significantly from the results discussed in
the forward-looking statements. The following discussion and analysis should be
read in conjunction with the Company's financial statements and the notes
thereto included elsewhere in this Report.
This Management's Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) should be read in conjunction with the MD&A
contained in the Puro Water Group, Inc.'s (the "Company") 1996 Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1996.
Results of Operations
The Company derives its revenues from two major sources: bottled water
sales and the rental and service of water coolers, filtration systems and
plumbed-in fountains. While most other bottled water companies sell only
pre-packaged bottled water, the Company also rents water treatment equipment
which processes and dispenses drinking water at the point of use which enables
the consumer to enjoy quality drinking water with reduced contaminants.
Additionally, in contrast to most other water treatment dealers and
distributors that have historically sold their water treatment equipment
outright, the Company creates long-term relationships with its own customers by
renting or placing the equipment under lease/service agreements. These
agreements result in revenue streams which provide the Company with a base of
recurring revenue.
In the quarter ended June 30, 1997, the Company purchased the routes and
related assets of Savoy Refreshment Services, Inc. d/b/a Dial Refreshment
Services, Ozone Water Company, and American Water Group, Inc. d/b/a Virgin
Springs. Estimated annual revenues of these operations are $885,000. On June 30,
1997, the Company also sold its 23,000 square foot Maspeth, New York bottling
facility and leased 7,500 square foot premises in the area for sales,
distribution, cooler repair, and executive offices.
The Year ended December 31, 1995, Year ended December 31, 1996, Quarters ended
June 30, 1996 and Quarter ended June 30, 1997
Revenues.
Revenues for the year ended December 31, 1996 increased by 93% to $10.6
million from $5.5 million for the year ended December 31, 1995. This increase in
revenues reflects the acquisition of Electrified's operations in East Orange,
New Jersey for eleven of the twelve months ended December 31, 1996 and the
acquisition of the five-gallon routes from Mountainwood for the six months
beginning July 1, 1996 through December 31, 1996. Moreover, this increase
occurred notwithstanding an abnormally harsh winter in 1996 evidenced by a
record snow fall and unusually cold spring and summer seasons during the same
year. This factor is even more significant when considering the significantly
higher than normal temperatures experienced in the summer of 1995.
Revenues for the quarter ended June 30, 1997 increased by 12% to $3.1
million from $2.8 million for the quarter ended June 30, 1996. This increase in
revenues reflects increases in both five gallon and and case goods sales from
the Commack and East Orange plants as well as the office refreshment sales of
the Dial Refreshment division acquired in April. Revenues for the six months
ended June 30, 1997 increased 16.7% to $5.9 million from $5.1 million for the
six months ended June 30, 1996.
Cost of Goods Sold.
Cost of goods sold (excluding depreciation) for the year ended December
31, 1996 increased to $3.5 million from $1.6 million, or 118% over that incurred
in 1995. This increase results principally from increases in volume relating to
the acquisitions referred to previously. Cost of goods sold (excluding
depreciation) as a percentage of revenues for the year ended December 31, 1996
increased to 33% from 29% for the same period in 1995. The increase reflects
entry into the case goods product market which is traditionally a more costly
product due to packaging.
Cost of goods sold (excluding depreciation) for the quarter ended June
30, 1997 increased by 62.3% to $1.1 million from $0.7 million for the quarter
ended June 30, 1996. This increase results principally from the increase in
total water revenues. Cost of goods sold (excluding depreciation) as a
percentage of revenues for the quarter ended June 30, 1997 increased to 35.3%
from 24.3% for the same period in 1996. This reflects an increase in the amount
of water sales of one gallon case goods from the Company's American Eagle
bottling facility and the higher cost of goods associated with office coffee
services from the Dial acquisition. Cost of goods sold (excluding depreciation)
as a percentage of revenues for the six months ended June 30, 1997 increased to
35.3% from 26.0% for the same period in 1996.
<PAGE>
Operating Expenses.
Operating expenses (excluding depreciation and amortization) increased
by 46% to $1.9 million for the year ended December 31, 1996 from $1.3 million
for the year ended December 31, 1995. The increase reflects the acquisition of
Electrified's operations for eleven of the twelve months ended December 31,
1996, and the acquisition of Mountainwood's delivery routes for the six months
from July 1, 1996 through December 31, 1996. However, operating expenses
(excluding depreciation and amortization) decreased as a percentage of revenues
to 18% for the year ended December 31, 1996 compared to 24% from the year ended
December 31, 1995. This decrease was also due primarily to the efficiencies
achieved in the Company's bottling operations, route delivery and servicing
system. It was also reflective of entry into the case goods product market,
delivery costs of which are less intensive than the five gallon market.
Operating expenses (excluding depreciation and amortization) for the
quarter ended June 30, 1997 increased by 75.6% to $0.9 million from $0.5 million
for the quarter ended June 30, 1996. This increase reflects the increase in
total revenues. Operating expenses (excluding depreciation and amortization )
increased as a percentage of revenues to 28.6% for the quarter ended June 30,
1997 from 18.2% for the same period in 1996. This increase reflects additional
delivery commissions, temporary help, salary expense, and route setup and
consolidation efforts associated with the acquisition Dial, Ozone and Virgin
Springs. Operating expenses (excluding depreciation and amortization ) as a
percentage of revenues for the six months ended June 30, 1997 increased to 26.3%
from 21.1% for the same period in 1996.
General and Administrative Expenses.
General and administrative expenses increased by 69% to $2.2 million in
the year ended December 31, 1996 from $1.3 million for the same period in 1995
due to the acquisitions referred to above. However, such expenses decreased as a
percentage of revenues to 20% for the year ended December 31, 1996 from 24% for
the same period in 1995. This decrease in general and administrative expenses
reflects efficiencies gained from the Electrified and Mountainwood transactions
with respect to office and clerical staffing.
General and administrative expenses for the quarter ended June 30, 1997
decreased by 36.3% to $0.5 million from $0.8 million for the quarter ended June
30, 1996. General and administrative expenses decreased as a percentage of
revenues to 16.1 % for the quarter ended June 30, 1997 from 28.2% for the same
period in 1996. This decrease reflects a portion of the bottling plant
relocation charges incurred in 1996 and efficiencies gained from consolidation
of office and clerical staffing, and was achieved notwithstanding increased
expenses incurred in connection with the Company's status as a public company.
General and administrative expenses as a percentage of revenues for the six
months ended June 30, 1997 decreased to 17.6% from 29.6% for the same period in
1996.
Total Depreciation and Amortization.
Total depreciation and amortization for the year ended December 31, 1996
increased by 100% to $1.0 million from $0.5 million for the same period in 1995.
Total depreciation and amortization increased as a percentage of revenues to 9%
for the year ended December 31, 1996 from 8% for the same period in 1995. This
increase resulted primarily from the Electrified acquisition, which included a
modern high-capacity bottling facility and the opening of a new bottling
facility in Commack, Long Island, New York.
Total depreciation and amortization for the quarter ended June 30, 1997
increased by 16.7% to $0.3 million from $0.2 million for the quarter ended June
30, 1996. Total depreciation and amortization rose as a percentage of revenues
to 9.0% for the quarter ended June 30, 1997 from 8.6% for the same period in
1996. This increase results primarily from the Electrified acquisition and the
opening of a new bottling facility in Commack, New York. Total depreciation and
amortization as a percentage of revenues for the six months ended June 30, 1997
increased to 9.4% from 8.8% for the same period in 1996.
Income from Operations. Decreases in income from operations for all
periods discussed above relate to increases in sales, the cost of consolidation
of routes, the higher cost of goods sold in the office refreshment division, and
the decrease in general and administrative expenses.
Interest Expense.
For the year ended December 31, 1996, interest expense increased by 167%
to $0.8 million for the same period in 1995. Interest expense increased as a
percentage of revenues to 7% for the year ended December 31, 1996 from 6% for
the same period in 1995. This increase was due to additional borrowings in
connection with the acquisitions discussed previously. Approximately $5.3
million of the $10.0 million total debt outstanding at December 31, 1996 was
repaid with proceeds from the Company's initial public offering as further
discussed below.
Interest expense for the quarter ended June 30, 1997 decreased by 53.0%
to $0.09 million from $0.19 million for the quarter ended June 30, 1996.
Interest expense decreased as a percentage of revenues to 2.9% for the quarter
ended June 30, 1997 from 6.4% for the same period in 1996. This reflects the use
of proceeds from the Company's Initial Public Offering available in late
February 1997 to reduce $5.2 million of indebtedness incurred in connection with
the Company's acquisitions.
Plant Relocation Charges. During the year ended December 31, 1996, the
Company relocated all bottled water production from its plants in Maspeth, New
York, and Port Jefferson, New York, to the Electrified facility in East Orange,
New Jersey, and the newly opened bottling plant in Commack, Long Island, New
York. The Maspeth and Port Jefferson bottling plants were subsequently closed.
Non-recurring plant relocation charges of $0.3 million or 2% of revenues for the
period ended December 31, 1996 were incurred.
<PAGE>
Provision for Income Taxes. The effective income tax rate was 42% for the
year ended December 31, 1996 and 36% for the year ended December 31, 1995. The
increase in the effective rate in 1996 is primarily attributable to
non-recurring write-offs of certain accounts receivable for income tax purposes
in 1995.
Liquidity and Capital Resources
The Company's primary sources of liquidity and capital resources have been
cash flow from operations, proceeds from the sale of equity securities to the
Company's current stockholders, purchase money financing for business
acquisitions and borrowings under the Company's bank agreement described below.
In February 1997, the Company completed an initial public offering of
1,350,000 shares of common stock raising net proceeds of $6.1 million. The
Company used substantially all of the proceeds to retire $5.4 million of debt
related primarily to the acquisitions referred to below. As a result of the
offering, the Company is now able to borrow an additional $1.5 million under its
bank agreement.
During the quarter ended June 30, 1997 net cash provided by operating
activities was $0.02 million, and net cash used by operating activities for the
six months ended June 30, 1997 was $0.4 million. During the quarter ended June
30, 1997 the Company used $0.6 million to purchase capital equipment, and for
the six months ended June 30, 1997 cash used to purchase capital equipment was
$0.8 million. The sale of the Maspeth building generated net cash of $0.03
million after mortgage retirement and expenses. Cash at the end of the period
was $0.4 million.
During 1996 and 1995, net cash provided by operating activities was $0.7
million and $0.4 million, respectively. During 1996, the Company made capital
expenditures in the amount of $2.8 million. In addition, the Company acquired
the net assets of two of its competitors whose aggregate purchase price was $5.5
million. The equipment purchases and the acquisitions were funded by operations
as well as seller financing. In 1995, the Company made capital expenditures for
coolers, other equipment and routes aggregating $2.8 million, which was funded
by cash from operations, private equity placement, purchase money financing of
business acquisitions and borrowings under the Company's bank agreement.
At December 31, 1996, cash totaled $0.2 million and no additional
borrowing was available under the Company's bank agreement. As of December 31,
1995, cash totaled $0.7 million, and approximately $1.0 million of additional
borrowings were available under the Company's bank agreement.
The Company's bank agreement provides for aggregate long-term borrowings
of up to $3.0 million, approximately all of which was currently outstanding as
of December 31, 1996, maturing between May 31, 1997 and December 31, 2001,
bearing interest at prime plus .25%-.50% per annum, secured by substantially all
of the assets of the Company and guaranteed by certain stockholders of the
Company. The Company has also borrowed $0.5 million from the same lender under
another agreement. These borrowings are also secured by certain stockholders of
the Company and were used for the acquisitions referred to above. In addition,
the bank agreement contains covenants that include requirements to maintain
certain working capital, debt coverage and other financial ratios and
restrictions and limitations on the payment of dividends, guaranty payments,
additional borrowings and the amount of compensation paid to employees who are
stockholders.
The Company's continued success is dependent upon the maintenance of its
delivery truck fleet and bottling equipment and its access to water sources.
These activities are currently funded through operations and bank financing. The
Company believes that it has sufficient sources of funding to achieve its
business objectives in the future.
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
On April 14, 1997, the Company acquired certain assets of Savoy
Refreshment Services, Inc. d/b/a Dial Refreshment Services (hereinafter "Dial"),
a New Jersey corporation engaged in the Company's industry. The Company acquired
these assets for stock and a promissory note.
On May 29, 1997, the Company acquired certain assets of Ozone Water
Company of Newark, Inc. (hereinafter "Ozone"), a New Jersey corporation engaged
in the Company's industry. The Company acquired these assets for cash and a
promissory note.
On June 6, 1997, the Company acquired certain assets of The American
Water Group, Inc. d/b/a Virgin Springs (hereinafter "Virgin"), a New Jersey
corporation engaged in the Company's industry. The Company acquired these assets
for cash and a promissory note.
On June 6, 1997, Mr. Wilmer J. Thomas, Jr. resigned from the Company's
Board of Directors citing his desire to reduce the responsibilities attendant to
his membership on the board of directors of a public company. Mr. Thomas
reported on a Form 4 filed with the Securities and Exchange Commission that
Thomas Limited Partnership, an affiliate of Mr. Thomas, had sold all of its
shares of the Company's common stock at its original acquisition price to Peter
T. Dixon, Chairman of the Company's Board of Directors, the Company's largest
shareholder and a long time friend of Mr. Thomas. Said shares remain subject to
transferability and other restrictions.
On June 30, 1997, the Company sold its premises located at 56-45 58th
Street, Maspeth, New York 11378 for a price of $1,100,000. In addition to
achieving a profit of $39,000 on the sale, this transaction allowed the Company
to reduce its future monthly overhead expenses by $8,000. In connection with
that transaction, the Company relocated its principal offices to 56-24 58th
Street, Maspeth, New York 11378, and consolidated operations at its Commack, New
York and East Orange, New Jersey facilities.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during this quarter.
<PAGE>
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.
Signature Title Date
- ------------------- ------------------------------- ---------------
/s/ Jack C. West President and Director August 14, 1997
- -------------------
Jack C. West
/s/ Scott Levy Chief Executive Officer and August 14, 1997
- ------------------- Director
Scott Levy
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 387,810
<SECURITIES> 0
<RECEIVABLES> 2,997,416
<ALLOWANCES> 201,205
<INVENTORY> 571,528
<CURRENT-ASSETS> 4,493,760
<PP&E> 5,171,730
<DEPRECIATION> 1,197,837
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0
0
<COMMON> 21,904
<OTHER-SE> 11,007,290
<TOTAL-LIABILITY-AND-EQUITY> 17,548,744
<SALES> 5,908,659
<TOTAL-REVENUES> 5,906,659
<CGS> 2,378,652
<TOTAL-COSTS> 2,378,652
<OTHER-EXPENSES> 2,854,658
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<INTEREST-EXPENSE> 236,907
<INCOME-PRETAX> 500,633
<INCOME-TAX> 200,253
<INCOME-CONTINUING> 300,380
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 300,380
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
