<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1998
REGISTRATION NO. 333-33369
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SNOWDANCE, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 7011 04-338-3839
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
ROUTE 44
BROWNSVILLE, VERMONT 05037
(802) 484-7000
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
STEVEN H. PLAUSTEINER
CHIEF EXECUTIVE OFFICER
SNOWDANCE, INC.
ROUTE 44
BROWNSVILLE, VERMONT 05037
(802) 484-7000
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
DENNIS N. BERMAN, ESQ. LAWRENCE B. FISHER, ESQ.
SONNENSCHEIN NATH & ROSENTHAL ORRICK, HERRINGTON & SUTCLIFFE LLP
1221 AVENUE OF THE AMERICAS 666 FIFTH AVENUE
NEW YORK, NEW YORK 10020 NEW YORK, NEW YORK 10103
(212) 768-6700 (212) 506-5000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF NUMBER OF SHARES OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED TO BE REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock(2)............... 1,725,000 shares $11.00 $18,975,000 $ 5,597.63
- ---------------------------------------------------------------------------------------------------------
Representatives' Warrants..... 150,000 Warrants(3) $ .001 $ 150 (3)
- ---------------------------------------------------------------------------------------------------------
Common Stock underlying the
Representatives' Warrants
(4)......................... 150,000 shares(4) $13.20 $ 1,980,000 $ 584.10
- ---------------------------------------------------------------------------------------------------------
Totals........................ -- -- $20,955,150 $ 6,181.73
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Includes 225,000 shares of Common Stock subject to the Underwriters'
over-allotment option.
(3) No fee due pursuant to Rule 457(g).
(4) Pursuant to Rule 416, the Registration Statement also covers such additional
shares of Common Stock as may be issued as a result of the anti-dilution
provisions of the Representatives' Warrants.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
SNOWDANCE, INC.
CROSS REFERENCE SHEET SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF PART I OF FORM SB-2
<TABLE>
<CAPTION>
FORM SB-2 ITEM NUMBER AND CAPTION CAPTION OR LOCATION IN PROSPECTUS
--------------------------------------------------------------- ------------------------------------------
<C> <S> <C>
1. Front of Registration Statement and Outside Front Cover Page of
Prospectus................................................... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of Prospectus........ Inside Front and Outside Back Cover Pages
3. Summary Information and Risk Factors........................... Outside Front Cover Page; Prospectus
Summary; Risk Factors
4. Use of Proceeds................................................ Use of Proceeds
5. Determination of Offering Price................................ Outside Front Cover Page; Risk Factors;
Underwriting
6. Dilution....................................................... Dilution; Risk Factors
7. Selling Security Holders....................................... Not Applicable
8. Plan of Distribution........................................... Underwriting
9. Legal Proceedings.............................................. Business
10. Directors, Executive Officers, Promoters and Control Persons... Management
11. Security Ownership of Certain Beneficial Owners and
Management................................................... Principal Stockholders
12. Description of Securities to be Registered..................... Description of Capital Stock; Underwriting
13. Interest of Named Experts and Counsel.......................... Not Applicable
14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities................................... Description of Capital Stock
15. Organization Within Last Five Years............................ Prospectus Summary; Business; Certain
Transactions
16. Description of Business........................................ Prospectus Summary; Business
17. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description of Property........................................ Business
19. Certain Relationships and Related Transactions................. Business; Certain Transactions
20. Market For Common Equity and Related Stockholder Matters....... Outside Front Cover Page; Risk Factors;
Dividend Policy; Description of Capital
Stock; Shares Eligible for Future Sale
21. Executive Compensation......................................... Management
22. Financial Statements........................................... Index to Financial Statements
23. Changes in and Disagreements With Accountants and Financial
Disclosure................................................... Not Applicable
</TABLE>
<PAGE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 30, 1998
PROSPECTUS
1,500,000 SHARES
[LOGO]
COMMON STOCK
Snowdance, Inc., a Delaware corporation (the 'Company'), hereby offers
1,500,000 shares of common stock, par value $0.001 per share (the 'Common
Stock'). Prior to this offering (the 'Offering'), there has been no public
market for the Common Stock, and there can be no assurance that such a market
will develop or be sustained after completion of this Offering. It is presently
anticipated that the initial public offering price will be between $10.00 and
$11.00 per share. For information regarding the factors considered in
determining the initial public offering price of the Common Stock, see
'Underwriting.' The Common Stock has been approved for listing on the American
Stock Exchange under the symbol 'SND.'
------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE AND SUBSTANTIAL DILUTION. SEE 'RISK FACTORS'
BEGINNING ON PAGE 7 AND 'DILUTION.'
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................................................... $ $ $
- ---------------------------------------------------------------------------------------------------------------------------
Total(3)............................................................ $ $ $
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not include compensation payable to Josephthal & Co. Inc.
('Josephthal') and Cruttenden Roth Incorporated ('Cruttenden', which
together with Josephthal are the representatives of the several underwriters
(collectively, the 'Representatives')) in the form of a non-accountable
expense allowance equal to 2.5% of the gross proceeds of this Offering.
Josephthal may be deemed to have a 'conflict of interest' with the Company
as defined by Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc. ('NASD'). Therefore, Cruttenden is acting as a
Qualified Independent Underwriter as that term is defined in Rule 2720. See
'Underwriting' for information concerning indemnification and contribution
arrangements with, and other compensation payable to, the Underwriters.
(2) Before deducting estimated expenses of $1,367,500 payable by the Company
which includes the non-accountable expense allowance payable to the
Representatives.
(3) The Company has granted to the Underwriters a 45-day option to purchase up
to an additional 225,000 shares of Common Stock upon the same terms and
conditions as set forth above, solely to cover over-allotments, if any. If
such over-allotment option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ ,
$ , and $ , respectively. See 'Underwriting.'
------------------------
The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if delivered to and accepted by the Underwriters, and
subject to approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify this Offering and to reject any order in whole or in part. It is expected
that delivery of the shares of Common Stock offered hereby will be made against
payment on or about , 1998 at the offices of Josephthal & Co.
Inc., New York, New York.
------------------------
<TABLE>
<S> <C>
JOSEPHTHAL & CO. INC. CRUTTENDEN ROTH
INCORPORATED
</TABLE>
, 1998
<PAGE>
<PAGE>
[Inside Front Cover]
[PHOTOS]
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES
OF THE COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE 'UNDERWRITING.'
THE COMPANY WILL FURNISH ITS STOCKHOLDERS WITH ANNUAL REPORTS CONTAINING
AUDITED FINANCIAL STATEMENTS CERTIFIED BY AN INDEPENDENT PUBLIC ACCOUNTING FIRM
AND WILL MAKE AVAILABLE QUARTERLY REPORTS CONTAINING UNAUDITED FINANCIAL
STATEMENTS FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR.
2
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise noted, all information in this
Prospectus assumes: (i) that the Underwriters' over-allotment option to purchase
up to 225,000 shares of Common Stock from the Company has not been exercised;
(ii) that the acquisition of Hogback Mountain has been consummated (the 'Hogback
Acquisition'); (iii) that the Representatives' Warrants to purchase 150,000
shares of Common Stock have not been exercised; (iv) that all of the interests
in each of Ascutney Mountain Resort, L.P. and its affiliates, directly or
indirectly, shall have been exchanged for shares of common stock of Snowdance,
Inc. (the 'Combination Transaction') and (v) the conversion of a portion of the
Related Loans (as defined in 'Certain Transactions') to a capital contribution
to the Company. See 'Business -- Business Strategy -- Opportunities For Further
Development,' 'Certain Transactions' and 'Underwriting.'
Unless the context otherwise requires, the term 'Company' refers to (a)
Ascutney Mountain Resort, L.P. and its affiliates, as such entities existed
prior to the consummation of this Offering and the Combination Transaction, when
used with respect to historical information herein contained, and (b) Snowdance,
Inc. and its subsidiary as such entities exist immediately following this
Offering, when used with respect to information about events occurring upon
completion of or after this Offering and the Hogback Acquisition or when giving
pro forma effect thereto.
This Prospectus includes forward-looking statements which involve known and
unknown risks and uncertainties or other factors that may cause actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Factors that might cause such differences include,
but are not limited to, those discussed under the heading 'Risk Factors.' An
investment in the securities offered hereby involves a high degree of risk. See
'Risk Factors.'
THE COMPANY
Snowdance, Inc. owns and operates one of the premier fully-integrated, all
season mountain resorts in New England and further seeks to develop and operate
other fully-integrated year-round recreational resorts focusing on affordable
family vacations. The Company intends to develop resorts that emphasize skiing,
snowboarding and other winter recreational activities as well as warm weather
activities such as golf, tennis and hiking, thereby offering true year-round
amenities. The Company believes that the opportunity to develop and sell the
property surrounding these amenities could provide it with its greatest
potential source of cashflow and income. Such property related development is
expected to include weekly vacation ownership interval ('VOI') sales (also known
as time shares), and may also include condominium construction and sales, and
second home and land sales.
While the Company's strategy is to offer its guests many of the benefits
provided by the larger ski destination resorts, it retains a family-oriented
personal atmosphere. The Company's emphasis on affordable family vacations
permeates most aspects of its business. The Company believes that, as compared
to its competitors, it charges lower fees for the various amenities it offers,
and the prices of its lodging and meals are more reasonable.
To date, the Company has focused its resources on developing its first
fully-integrated family-oriented property, the Ascutney Mountain Resort
('Ascutney' or the 'Resort') located in Brownsville, Vermont. Recently, the
Company agreed to acquire its second property for potential future development
called Hogback Mountain in Marlboro, Vermont. Upon successful implementation of
its strategy at Ascutney, the Company intends to seek other opportunities that
fit its strategy of developing and operating year-round affordable, family
resorts.
ASCUTNEY MOUNTAIN RESORT
Ascutney was ranked among the top three ski resorts in the eastern United
States for value by Skiing magazine in its 1995 survey. It was also ranked one
of the top four ski resorts for families in the
3
<PAGE>
<PAGE>
same survey. Ascutney is a four-season destination resort. Its 750 acres contain
one of Vermont's major ski areas, a 212-room hotel (the fourth largest resort
hotel in Vermont) which is particularly well suited for timeshare sales due to
its large number of suites with lock-out features, an 18,000 square foot
comprehensive sports and fitness center, approximately 30,000 square feet of
conference facilities, several restaurants and condominium units, all set in a
charming New England style village.
While the Resort offers its guests many of the benefits provided by larger
ski facilities, it also retains a family-oriented, friendly atmosphere. The
Company provides a comprehensive destination resort experience by combining
quality ski facilities and resort services, including convenient ski-on/ski-off
lodging, with attractive four season amenities. The Resort attracts guests
primarily due to its affordable family-oriented vacations in a self-contained
resort village with easy accessibility from most major metropolitan areas in the
northeastern United States.
Since 1983, more than $85 million was invested in connection with the
expansion and development of the Resort. The Resort is one of Vermont's 14 major
ski resorts, with a 1,530 foot vertical rise on Mt. Ascutney. The ski area
includes four chairlifts, 31 trails and 115 skiable acres. Snowmaking capability
covers approximately 75% of the skiable terrain. There are approximately 20
miles of cross-country trails which range from open meadows suitable for
beginners to mountain touring trails suitable for more advanced skiers. At the
base of the mountain, tubing, ice skating, children's programs and apres ski
entertainment are available. The Resort's skier days exceeded 53,000 during the
1996-97 ski season, representing an increase of approximately 26% since the
commencement of operations in 1993 under its current management team.
To enhance the marketing and sales of the Resort's real estate, the
Company's expansion plans for the Resort include the development of an 18-hole
golf course with surrounding residential units, as well as additional commercial
development. The Company also plans to continue to enhance the skiing experience
at Ascutney through additional expansion of skiable terrain and upgrades to ski
lifts, snowmaking and grooming.
A key objective of the Company is to begin selling weekly VOIs in its hotel
at the base of Mt. Ascutney. The Company has entered into a marketing and sales
agreement with Westerly Resorts Group, Inc., an experienced VOI developer and
marketer with projects in the Caribbean and Colorado. Marketing of more than
5,000 VOIs in Ascutney's hotel is anticipated to commence in 1998. The Company
believes its hotel is an attractive VOI property due to, among other reasons,
the high number of suites in its hotel (many of which are duplex units), the
presence of existing and planned year-round amenities and Ascutney's proximity
to most major population centers of the Northeast, all of which can be reached
within 2 to 5 hours of driving time. (Air transportation is available at the
Lebanon, New Hampshire airport near Dartmouth College less than 20 miles away.)
HOGBACK MOUNTAIN
Upon closing of this Offering, the Company will acquire substantially all
of the assets of Hogback Mountain ('Hogback Mountain'), which comprises
approximately 800 acres of land located in southern Vermont, approximately 20
miles from the Mt. Snow and Haystack ski areas. The assets of Hogback Mountain
also include buildings whose tenants are currently a restaurant, a gift shop and
a nature museum. As Hogback Mountain offers an unobstructed, panoramic view of
three states and is within 30 minutes driving distance to several ski areas,
golf courses, large lakes, annual music festivals and other attractions, the
Company believes that Hogback Mountain offers attractive development potential.
Hogback Mountain is one of the tallest mountains in southern Vermont and is
situated on both sides of Route 9, a primary east-west thoroughfare in Vermont.
The Company intends to explore possible development opportunities regarding the
land at Hogback Mountain, including an examination of zoning and other
regulatory approvals necessary for any development. The Company also intends to
lease the buildings including the restaurant and gift shop at Hogback Mountain
to the current owner and operator of such businesses, the Vermont Natural
Company.
4
<PAGE>
<PAGE>
As consideration for the purchase of the Hogback Mountain assets, the
Company will issue an aggregate of 292,500 shares of Common Stock to Skyline
Partners, L.P., a New York limited partnership and the owner of the Hogback
Mountain assets. Additionally, the Company will pay up to approximately $75,000
of expenses related to the property. Skyline Partners, L.P. and Vermont Natural
Company are affiliates of Josepththal. See 'Underwriting.'
OTHER POSSIBLE OPPORTUNITIES
The Company believes there are other possible development opportunities
available to it. The Company further believes that there is strong interest in
families seeking affordable vacations in year-round resorts near their primary
residences that offer many of the amenities found at larger destination resorts
but on a friendlier, more personal level. The Company's management team combines
experience in ski resort operation, mountain resort development and finance, and
the Company believes that its management is well suited to carry out its
business strategy.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered......................... 1,500,000 shares
Common Stock to be outstanding after the
Offering................................... 3,000,000 shares(1)
Use of proceeds by the Company............... The Company intends to apply the net proceeds of the Offering to:
upgrades of ski lifts, snowmaking, grooming and trail systems;
hotel and Resort improvements including VOIs; commence
permitting, development and marketing of a golf course and
related Resort real estate; repayment of borrowings; and working
capital and general corporate purposes, including possible
business acquisitions. See 'Use of Proceeds.'
Risk factors................................. This Offering involves a high degree of risk and immediate and
substantial dilution. See 'Risk Factors' and 'Dilution.'
American Stock Exchange Symbol............... SND
</TABLE>
- ------------
(1) Excludes 150,000 shares of Common Stock underlying options available for
future grants under the Company's 1997 Stock Option Plan for Non-Employee
Directors and 40,000 shares of Common Stock underlying options granted
pursuant to an advisory and consulting agreement with Tallwood Associates,
Inc. See 'Management -- Advisory and Consulting Agreement' and
'Management -- 1997 Stock Option Plan for Non-Employee Directors.'
Snowdance, Inc. was incorporated in 1997, as successor to each of Ascutney
Mountain Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and Ascutney
Mountain Resort Realty, L.P. The Company's principal executive offices are
located at Route 44, Brownsville, Vermont 05037, and its telephone number is
(802) 484-7000. The Company maintains a web site at http://www.ascutney.com. The
contents of the Company's web site are not a part of this Prospectus.
5
<PAGE>
<PAGE>
SUMMARY FINANCIAL DATA
The summary financial information set forth below should be read in
conjunction with financial statements appearing elsewhere in this Prospectus.
The summary historical financial data presented below has been derived from the
Company's financial statements. The unaudited pro forma and as adjusted summary
financial data are derived from the unaudited pro forma and as adjusted
financial data presented elsewhere in this Prospectus. The statement of
operations data for the nine-month period ended September 30, 1997 is not
necessarily indicative of the results of operations that may be expected for the
full year.
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL HISTORICAL PRO FORMA HISTORICAL NINE MONTHS NINE MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED SEPTEMBER 30, ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, ----------------------- SEPTEMBER 30,
1995 1996 1996(1) 1996 1997 1997(1)
------------ ------------ ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................. $3,866,418 $3,983,218 $ 3,983,218 $2,863,429 $2,976,014 $ 2,976,014
Net loss.................................. (576,689) (1,500,819) (1,500,819 ) (1,017,921) (541,185) (541,185)
Weighted average shares outstanding....... 1,207,500 1,207,500 1,500,000 1,207,500 1,207,500 1,500,000
Loss per common share..................... $(.48) $(1.24) $(1.00 ) $(.84) $(.45) $(.36)
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA AS ADJUSTED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1997(2) 1997(3)
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $1,589,366 $ 1,551,027 $ 4,622,277 $16,700,277
Long-term debt............................................ 2,481,025 2,219,109 1,038,542 1,038,542
Total liabilities......................................... 3,638,521 4,066,142 2,885,575 1,683,575
Stockholders' equity (deficit)............................ (2,049,155) (2,515,115) 1,736,702 15,016,702
</TABLE>
- ------------
(1) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans (as defined in 'Certain
Transactions') to a capital contribution to the Company as if such
transactions had occurred on January 1, 1996.
(2) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans to a capital contribution to
the Company as if such transactions had occurred on September 30, 1997.
(3) As adjusted to give effect to the closing of the Offering and the
application of the estimated net proceeds therefrom as if the Offering had
occurred on September 30, 1997, as well as to give effect to the
transactions described in footnote (2) above.
6
<PAGE>
<PAGE>
RISK FACTORS
An investment in the securities offered hereby is speculative in nature and
involves a high degree of risk. Each prospective purchaser of the Common Stock
should carefully consider the following risk factors, as well as the other
information contained, and incorporated by reference, in this Prospectus before
making an investment decision. Information contained or incorporated by
reference in this Prospectus contains 'forward-looking statements' which can be
identified by the use of forward-looking terminology such as 'believes,'
'expects,' 'intends,' 'may,' 'will,' 'should' or 'anticipates' or the negative
thereof or other variations thereon or comparable terminology, or by discussions
of strategy or plans. See, e.g., 'Business -- Business Strategy.' No assurance
can be given that the future results covered by the forward-looking statements
will be achieved. The following matters constitute cautionary statements
identifying important factors with respect to such forward-looking statements,
including certain risks and uncertainties, that could cause actual results to
vary materially or adversely from the future results covered in such
forward-looking statements. Factors that could cause actual results to vary
materially or adversely from the future results covered in such forward-looking
statements include, but are not limited to, those discussed below as well as
those discussed elsewhere in the Prospectus.
Limited Operating History; Significant and Continuing Losses. The Company
was formed in August 1993 in connection with the purchase of the assets of the
Ascutney Mountain Resort in an auction by the United States Bankruptcy Court for
the District of Vermont in accordance with Chapter 7 of the United States
Bankruptcy Code. The Ascutney Mountain Resort was purchased by three limited
partnerships, the predecessors in interest to the Company: Ascutney Mountain
Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and Ascutney Mountain Resort
Realty, L.P. (collectively, the 'Limited Partnerships'). The Resort has only
operated under current management since September 1993 and, accordingly, the
Company has a limited operating history upon which an evaluation of the
Company's performance and prospects can be made. Since the inception of the
Limited Partnerships, the predecessors in interest to the Company, significant
annual losses have been incurred, including losses of $576,689 and $1,500,819,
for the years ended December 31, 1995 and 1996, respectively, and $541,185 for
the nine months ended September 30, 1997. It is possible that losses and
negative cash flow will continue until such time, if ever, as the Company is
able to generate sufficient revenues to offset its operating costs. The
Company's prospects must be considered in light of the numerous risks, expenses,
delays, problems and difficulties frequently encountered in the establishment of
a new business, particularly in an industry characterized by vigorous
competition. To address these risks, the Company must, among other things,
establish and increase market acceptance of its products and services, respond
effectively to competitive pressures and successfully market its products and
services. There can be no assurance that the Company will generate significant
revenues or maintain profitable operations. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and Financial
Statements.
Seasonality of Operations. Ski resort operations are highly seasonal. In
fiscal 1996 approximately 56% of the Company's operations revenue was generated
in the months of January, February, March and December, with approximately 44%
generated during the period from April to November. Furthermore, a significant
portion of operations revenue is generated on certain holidays, particularly
Christmas, President's Day and school spring breaks, and on weekends. Problems
during these peak periods, such as adverse weather conditions and equipment
failures, could have a material adverse effect on the Company's business,
financial condition and results of operations. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations.'
Unfavorable Weather Conditions. The Company's ability to attract visitors
to the Resort is substantially influenced by weather conditions and the amount
of snowfall during the ski season. Adverse weather conditions typically
discourage visitors from participating in outdoor activities at the Resort. In
addition, unseasonably warm weather may result in inadequate snowfall, which
increases the cost of snowmaking, and could render snowmaking wholly or
partially ineffective in maintaining quality skiing conditions. Prolonged
periods of adverse weather conditions, or the occurrence of such conditions
during peak periods of the ski season, could have a material adverse effect on
the Company's business, financial condition and results of operations.
7
<PAGE>
<PAGE>
Economic Downturn. Both skiing and golf are discretionary recreational
activities with relatively high participation costs. An economic downturn could
reduce spending on resort vacations and result in declines in the number of ski
visitors and revenues per visit at the Resort. A decrease in Resort visitors may
also result in a decrease in demand for Resort real estate. There can be no
assurance that an economic downturn will not have a material adverse effect on
the Company's business, financial condition and results of operations.
Uncertainty of Development of Vacation Ownership Intervals and Golf Course
Development. The Company's strategy is designed, in large part, to increase and
balance year-round utilization and to enhance real estate values at the Resort.
Accordingly, the Company's success will depend, in large part, upon its ability
to develop a more comprehensive resort experience beyond its ski operations,
including the development of vacation ownership intervals ('VOIs') at its
Resort. In connection with such efforts, the Company is expected to be largely
dependent upon an experienced developer and operator of resort real estate. The
Company has entered into a marketing and sales agreement (the 'Joint Venture')
with Westerly Resorts Group, Inc. (the 'Joint Venture Partner'), an experienced
VOI developer and marketer with projects in the Caribbean and Colorado. There
can be no assurance that the Company will sell any VOIs or construct any
additional units, nor can there be any assurance that vacation ownership
operations would be suitably developed and commenced in a timely manner or that
the Company would realize any benefits from such an operation or that the Joint
Venture Partner will not default on any of its obligations. See
'Business -- Vacation Ownership Program.' The Company's business strategy also
includes the possible development and construction of a golf course. Although
the previous owner of the Resort had obtained a conceptual Land Use Permit under
Vermont's principal environmental law, Act 250, for a golf course at the Resort,
no design or formal development program has commenced or previously commenced
for such golf course nor have any current permits been obtained. The conceptual
Land Use Permit formerly received under Act 250 has expired. Accordingly, there
can be no assurance that the Company will develop a golf course in a timely
manner, upon acceptable terms favorable to the Company or at all. See
'Business -- Regulation and Legislation.'
Vacation Ownership Industry Operating Risks. 'The Company, through the
Joint Venture, intends to commence the sale of VOIs in the Resort's hotel,
designed to increase destination visitors to the Resort and increase total
Resort revenue. Accordingly, the Joint Venture's business is expected to be
subject to all of the operating risks inherent in the vacation ownership
industry. These risks include, but are not limited to, the possibility of an
oversupply of VOIs, a reduction in demand for VOIs, changes in travel and
vacation patterns, changes in governmental regulation of the vacation ownership
industry and increases in taxes or construction costs for new construction, as
well as negative publicity concerning the industry generally. The vacation
ownership industry is highly fragmented, containing a large number of
developers. In the past, the vacation ownership industry as a whole has
experienced a negative image as a result of various developers employing high
pressure sales and marketing tactics, constructing low quality units and
engaging in other potentially misleading practices. Consequently, negative
publicity with respect to any one or more developers in the vacation ownership
industry could have a disproportionate effect on all of the developers and
marketers in the industry.
Risks of Joint Venture Operations. The Company's Joint Venture Partner may
from time to time have economic or business interests or goals which are
inconsistent with the business interests or goals of the Company. Further, the
Company may be required to consider the interests of such Joint Venture Partner
in connection with decisions concerning the operations of the Joint Venture. In
addition, the Company also faces the risks that its Joint Venture Partner may be
unable to meet its economic or other obligations and that the Company may be
required or choose to fulfill those obligations.
Inexperience of the Company in Vacation Ownership Industry. As part of the
Company's business strategy, the Company, through the Joint Venture, plans on
entering a line of business that is not currently part of its core business. As
a result, the Company, with its Joint Venture Partner, may co-manage the
development of a VOI program constituting a line of business in which the
Company has not previously participated. Although the Company entered into the
Joint Venture with the Joint Venture Partner in order to mitigate risks
associated with the VOI program, the arrangement is expected to require the
significant involvement of the Company's senior management and also involve the
investment of additional capital. The Company's senior management has no
experience in the
8
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vacation ownership industry. There can be no assurance that the Company will
successfully implement its VOI program. See 'Business -- Business Strategy.'
Growth Initiatives. The Company is currently engaged in and has plans for a
variety of development projects relating to the Resort's ski and hotel
operations as well as real estate operations. Additionally, the Company intends
to explore possible development projects regarding the land at Hogback Mountain.
There can be no assurance (i) as to when or whether such projects will be
completed, (ii) that the Company's estimated costs associated with such projects
will prove to be accurate, (iii) that the Company will receive the expected
benefits from such projects, or (iv) that the Company will receive the necessary
regulatory approvals for such projects. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and
'Business -- Business Strategy.'
Capital Expenditures and Possible Need for Additional Capital. The Company
operates in a capital intensive industry and requires significant capital
expenditures to maintain its competitive position. The Company expects to make
significant capital expenditures in the future to enhance and maintain the
operations of the Resort and to develop its real estate holdings. The Company
anticipates that, based on its present plans, the net proceeds of this Offering,
when combined with the Company's existing capital resources and anticipated
revenues from operations, will be sufficient to enable it to maintain its
current and planned operations for a period of at least 12 months after
consummation of this Offering. In the event that the Company's plans change or
its assumptions change or prove to be inaccurate or if the net proceeds of this
Offering or cash flow prove to be insufficient (due to unanticipated expenses or
otherwise), the Company may seek to minimize cash expenditures and/or obtain
additional financing in order to support its plan of operations. Additional
funding, whether obtained through public or private debt or equity financings,
or from strategic alliances, may not be available when needed or may not be
available on terms acceptable to the Company, if at all. Additional financings
may result in dilution to existing stockholders. Failure to secure needed
additional financing, if and when needed, may have a material adverse effect on
the Company's business, financial condition and results of operations.
Furthermore, at such time, when and if the Company should decide to purchase an
additional resort or property, the Company may require significant amounts of
additional capital in order to consummate any such transaction. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources' and 'Business -- Business
Strategy.'
Risks Associated with Possible Development Opportunities. Upon the
successful implementation of its strategy at Ascutney, the Company intends to
seek additional acquisition opportunities, some of which may be material. Future
acquisitions could be financed through a combination of internally generated
funds, bank borrowings, public offerings or private placements of equity (which
may cause dilution to existing holders of capital stock of the Company) or debt
securities, the combination of which will depend on the size of the acquired
resort or property and the Company's capital structure at the time of an
acquisition. However, there can be no assurance that attractive acquisition
candidates will be identified, that the Company will be able to make additional
acquisitions on terms favorable to it, that necessary financing will be
available on suitable terms, if at all, or that such acquisitions will be
permitted under applicable law. If the Company completes any acquisitions, it
will encounter various associated risks, including the possible inability of the
Company to integrate the acquired business into the Company's operations,
increased goodwill amortization and the possibility of significant losses during
the start-up phase of a new resort that could negatively impact the Company's
earnings. Significant management resources and time may be required to develop
and operate any acquired resorts or property and unanticipated problems or
liabilities with respect to such resorts or properties may further divert
management's attention from the Company as a whole, which could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Competition in the Ski Resort Industry. The industry in which the Company
operates is highly competitive. The Resort competes for both destination and day
skiers with other mountain resorts in the United States, Canada and Europe,
including other ski resorts in Vermont (many of which have greater financial
resources, greater name recognition and a greater share of the market). The
competitive position of the Resort is dependent upon many variables, including
location and accessibility, quality of snow conditions and terrain, extent and
quality of Resort facilities, quality of
9
<PAGE>
<PAGE>
service, price for services and nature of reputation. There can be no assurance
that the Company's principal competitors will not be successful in capturing a
share of the Company's present or potential customer base. The Company also
faces competition for destination visitors from other leisure industry
companies. Such competitors may be better positioned to withstand adverse
weather or economic conditions and they may have greater financial resources to
develop new attractions. With respect to day skiers, the Resort faces
competition from alternative recreational activities, many of which have lower
participation costs. See 'Business -- Competition.'
Control by Principal Stockholders. Following the Offering, Steven and Susan
Plausteiner, the Company's Chief Executive Officer and Chief Financial Officer,
respectively (the 'Principal Stockholders') will collectively beneficially own
or control (via proxy or otherwise) approximately 50% of the Company's
outstanding shares of Common Stock, giving the Principal Stockholders
approximately 50% of the combined voting power with respect to all matters
submitted for a vote of all stockholders. Subsequent to the closing of the
Offering, the Principal Stockholders will collectively be able to significantly
influence the election of the Board of Directors of the Company, the approval of
matters requiring approval by the Board of Directors and decisions on matters
submitted for stockholder consideration. This concentration of ownership under
certain circumstances could have the effect of delaying or preventing a change
in control of the Company. See 'Underwriting.'
Dependence on Key Employees. The success of the Company depends
significantly on its senior management, including Steven Plausteiner, the
Company's Chairman and Chief Executive Officer, Susan Plausteiner, the Company's
Chief Financial Officer, and Dusan Plausteiner, the Company's Chief Operating
Officer. Although the Company will have entered into employment agreements prior
to the consummation of the Offering with the Company's Chief Executive Officer
and the Chief Financial Officer, there can be no assurance that such individuals
will continue in their respective capacities with the Company for any particular
period of time. See 'Management -- Employment Agreements.' The unanticipated
departure of any key member of the Company's management team could have a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company does not have, and does not
contemplate securing, 'key-man' life insurance for any of its key employees. The
Company's future success also depends on its ability to attract and retain
additional highly qualified personnel experienced in the industry. Competition
for qualified personnel is intense and there can be no assurance that the
Company will be able to attract or retain personnel in the future. See
'Management.'
Permits and Regulatory Matters. The Company is subject to various laws and
regulations relating to the operation of its Resort and related activities,
which are administered by numerous federal, state and local governmental
agencies. In particular, development of the Company's property in Vermont is
subject to comprehensive Vermont environmental legislation, commonly referred to
as Act 250, as well as other state administrative regulations. This regulatory
framework, in general, encompasses such areas as water quantity and quality, air
quality, traffic considerations, availability of municipal services, use of
natural resources, impact of growth, energy conservation and utility services,
conformity with local and regional plans, and public building approvals,
together with a number of other safety and health regulations. Additionally,
each municipality has its own planning and zoning requirements. Permits and
approvals mandated by such regulation for development of any magnitude are often
numerous, significantly time-consuming and onerous to obtain and not guaranteed.
The permit processes are administered by numerous state, regional and local
boards and agencies with independent jurisdictions. Permits, when received, are
subject to appeal or collateral attack and, in some cases, are of limited
duration, after which review is necessary. These requirements have a direct
bearing on the ability of the Company or others to further develop their resorts
in Vermont. While the Company believes that its operations are in full
compliance in all material respects with applicable federal, state and local
requirements, the Company's growth and development opportunities in Vermont may
be limited and more costly as a result of legislative, regulatory or municipal
requirements. In particular, to further expand the Resort's ski operations to
the peak of Mt. Ascutney, the Company would be required to lease land from
either the State of Vermont and/or the Town of West Windsor. Under the terms of
such lease, either the Vermont Department of Forests and Parks or the Town of
West Windsor or both would be expected to have the right to review and comment
on the location, design and construction of improvements on the leased land and
on many operational matters. If the Company does enter into
10
<PAGE>
<PAGE>
such a lease, a termination of the lease could have a material adverse effect on
the Company's business, financial condition and results of operations. See
'Business -- Regulation and Legislation.'
Regulation of Marketing and Sales of Vacation Ownership Intervals. The
marketing and sales of VOIs and related operations are subject to extensive
regulation by the federal government and states in which the Joint Venture's
VOIs are expected to be marketed and sold. The federal government and many
states have adopted specific laws and regulations regarding the sale of VOIs,
telemarketing and certain of the Joint Venture's other potential related
activities. However, no assurance can be given that the cost of complying with
laws and regulations in all jurisdictions in which the Joint Venture may conduct
sales of VOIs would not be significant, would not impair the cost-effectiveness
of the marketing programs, or that the Joint Venture would in fact be in
compliance with all applicable laws and regulations. See 'Business -- Regulation
and Legislation.'
Competition in Vacation Ownership Intervals. As the Joint Venture develops
its marketing plan of VOIs, the Joint Venture may experience significant
competition for customers and for qualified personnel from other entities
engaged in the business of resort development, sales and operations, including
vacation interval ownership, condominiums, hotels and motels. Many well-known
lodging, hospitality and entertainment companies have begun to develop and sell
VOIs in resort properties, including ski resorts and other vacation resorts.
While many of the companies have targeted a different market segment than the
Company's market segment, there can be no assurance that the Company and those
companies will not compete on a direct or indirect basis or more broadly. In
such event, the Company will be required to compete with companies that may have
significantly greater resources. See 'Business -- Competition.'
Uncertainty of Adequacy of Insurance Coverage. The Company is insured
against property damage, business interruption and general liability. There can
be no assurance that such insurance will remain available to the Company at
commercially reasonable rates or that the amount of such coverage will be
adequate to cover any liability incurred by the Company. If the Company is held
liable for amounts exceeding the limits of its insurance coverage or for claims
outside the scope of that coverage, its business, financial condition and
results of operations could be materially adversely affected.
Potential Conflict of Interest of Josephthal. Under Rule 2720 of the
Conduct Rules of the National Association of Securities Dealers, Inc. ('NASD'),
Josephthal may be deemed to be an 'affiliate' of the Company and to have a
'conflict of interest' with the Company by virtue of the fact that affiliates of
Josephthal may be deemed to beneficially own approximately 10% of the voting
stock of the Company as a result of the consummation of the Hogback Acquisition.
See 'Underwriting.'
Ongoing Influence of the Representatives. Upon completion of the Offering,
(a) Josephthal and its affiliates will have beneficial ownership of 292,500
shares of Common Stock of the Company, (b) the Representatives will hold in the
aggregate warrants to purchase 150,000 shares of the Common Stock of the Company
and (c) Dan Purjes, Chairman and CEO of Josephthal will serve as a Director of
the Company. Josephthal also is the exclusive financial advisor of the Company
in connection with the Company's discussions and negotiations with timeshare
developers. These factors may result in the Representatives having significant
influence over the Company and/or result in the Company having difficulty
engaging any other investment advisor or underwriter which may result in the
failure of the Company to secure additional financing if and when needed and
therefore may have a material adverse effect on the Company's business,
financial condition and results of operations. See 'Underwriting.'
No Prior Public Market; Possible Volatility of Stock Price. Prior to the
Offering, there has been no public market for the Common Stock, and no assurance
can be given that an active public market for the Common Stock will develop or
be sustained after the Offering. Since there has been no active public market,
the initial public offering price may not bear any relationship to the actual
value of the Common Stock. The initial public offering price per share of the
Common Stock was determined by negotiations between the Company and the
Representatives, in accordance with the recommendation of the Qualified
Independent Underwriter, and is not necessarily related to the Company's asset
value, net worth or other established criteria of value, and may not be
indicative of the prices that will prevail in the public market. The Company
believes that there are relatively few comparable companies that have
publicly-traded equity securities which may also impact the trading price of the
Common Stock after the Offering. See 'Underwriting.' In addition, the stock
market has from time to time experienced price
11
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<PAGE>
and volume fluctuations that are often unrelated to the operating performance of
particular companies. The market price of the Common Stock, similar to that of
securities of other developing companies, may be highly volatile. The market
price of the Common Stock could be subject to significant fluctuations in
response to the Company's operating results and other factors, and there can be
no assurance that the market price of the Common Stock will not decline below
the initial public offering price.
Shares Eligible for Future Sale. Upon completion of this Offering, the
Company will have 3,000,000 shares of Common Stock outstanding. The 1,500,000
shares of Common Stock sold in this Offering will be freely tradeable without
restriction under the Securities Act of 1933, as amended (the 'Securities Act'),
except for any shares which may be purchased by an 'affiliate' of the Company.
The Company and the Company's officers, directors and existing stockholders have
agreed not to, directly or indirectly, offer to sell, sell, transfer,
hypothecate or otherwise encumber any shares of Common Stock or securities
convertible into Common Stock for a period of nine (9) months following the date
of the final Prospectus without the prior written consent of Josephthal and the
Company (except Skyline Partners, L.P., which has agreed, in connection with
those shares issued in connection with the Hogback Acquisition, not to, directly
or indirectly, offer to sell, sell, transfer, hypothecate or otherwise encumber
226,436 shares of Common Stock, representing those shares beneficially owned by
principals and employees of Josephthal, for a period of twenty four (24) months,
and 66,064 shares of Common Stock, representing those shares owned by
individuals not affiliated with Josephthal for a period of thirteen (13) months
without the prior written consent of the Company). Upon consummation of the
Offering, Skyline Partners, L.P. has agreed to grant an irrevocable proxy to the
Principal Stockholders allowing them to vote the respective number of shares of
Common Stock set forth above held by Skyline Partners, L.P. for the respective
periods of time during which the above restrictions apply. After nine (9) months
1,207,500 of the shares subject to the restrictions above, after thirteen (13)
months an additional 66,064 of the shares subject to the restrictions above, and
after twenty four (24) months an additional 226,436 of the shares subject to the
restrictions above will be eligible for sale in the public market pursuant to
Rule 144 under the Securities Act, subject to volume limitations and other
restrictions contained in Rule 144. No prediction can be made as to the effect,
if any, that future sales of shares, or the availability of shares for future
sale, will have on the market price of the Common Stock from time to time. Sales
of substantial amounts of Common Stock in the public market, or the perception
that such sales could occur, could adversely affect prevailing market prices for
the Common Stock and could impair the Company's ability to raise additional
capital through an offering of its equity securities. See 'Shares Eligible for
Future Sale.'
Potential Adverse Effect of Representatives' Warrants. At the consummation
of this Offering, the Company will sell to the Representatives for nominal
consideration the Representatives' Warrants to purchase 150,000 shares of Common
Stock (the 'Representatives' Warrants'). The Representatives' Warrants will be
exercisable for a period of four years commencing one year from the date of this
Prospectus at an exercise price equal to 120% of the initial public offering
price per share of Common Stock. For the term of the Representatives' Warrants,
the holders thereof will have, at nominal cost, the opportunity to profit from a
rise in the market price of the Common Stock without assuming the risk of
ownership, with a resulting dilution in the interest of other security holders.
As long as the Representatives' Warrants remain unexercised, the Company's
ability to obtain additional capital might be adversely affected. Moreover, the
holders of the Representatives' Warrants may be expected to exercise such
Warrants at a time when the Company would, in all likelihood, be able to obtain
any needed capital through a new offering of its securities on terms more
favorable than those provided by the Representatives' Warrants. See
'Underwriting.'
Possible Adverse Effects of Authorization of Preferred Stock; Anti-takeover
Provisions. The Company's Certificate of Incorporation authorizes the issuance
of 100,000 shares of 'blank check' preferred stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common Stock. In the event of issuance,
the preferred stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control of the Company.
Although the Company has
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no present intention to issue any shares of its preferred stock, there can be no
assurance that the Company will not do so in the future. The issuance of such
preferred stock could make the possible takeover of the Company or the removal
of management of the Company more difficult, discourage hostile bids for control
of the Company in which stockholders may receive premiums for their shares of
Common Stock or otherwise dilute the rights of holders of Common Stock and the
market price of the Common Stock.
Dividends. The Company has not paid any cash dividends on its Common Stock
and does not anticipate paying any cash dividends in the foreseeable future.
Additionally, under the terms of the Company's loan agreement with the Vermont
Economic Development Authority ('VEDA'), the Company may not make distributions,
except certain distributions with respect to the offset of income tax
liabilities, without the consent of VEDA. See 'Dividend Policy.'
Dilution. The assumed initial offering price of $10.50 is substantially
higher than the net tangible book value per share of Common Stock. Investors
purchasing shares of Common Stock in this Offering will incur immediate and
substantial dilution of approximately $5.49 (52%) per share of Common Stock from
the assumed initial public offering price (approximately $5.11 (49%) per share
if the Underwriters' over-allotment option is exercised in full). In the event
the Company issues additional Common Stock in the future, investors of Common
Stock pursuant to this Offering may experience further dilution. See 'Dilution.'
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USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock offered hereby are estimated to be approximately $13,280,000
($15,418,063 if the Underwriters' over-allotment option is exercised in full)
based on an assumed initial public offering price of $10.50 per share, after
deducting underwriting discounts and commissions and estimated offering expenses
payable by the Company. The table below sets forth the intended application of
net proceeds of the Offering, the approximate dollar amount of such application
and the percentage of net proceeds of the Offering allocable to each intended
application.
<TABLE>
<CAPTION>
APPROXIMATE
APPROXIMATE PERCENTAGE OF
APPLICATION OF PROCEEDS DOLLAR AMOUNT NET PROCEEDS
- ------------------------------------------------------------------------ ------------- -------------
<S> <C> <C>
Upgrades of ski lifts, snowmaking, grooming and trail systems........... $ 3,000,000 23%
Hotel and Resort improvements including VOIs............................ 2,500,000 19%
Purchase of mountain equipment and vehicles............................. 500,000 4%
Commence permitting, development and marketing of a golf course and
related Resort real estate............................................ 3,000,000 23%
Preliminary feasibility study and development of Hogback Mountain....... 250,000 2%
Repayment of borrowings................................................. 2,000,000 15%
Working capital and general corporate purposes, including possible
business acquisitions and internal financing of VOI receivables....... 2,030,000 15%
------------- ---
Total.............................................................. $13,280,000 100%
------------- ---
------------- ---
</TABLE>
The foregoing represents the Company's best estimate of its allocation of
the net proceeds of this Offering based upon the current status of its business
operations, its current plans and current economic and industry conditions.
Future events as well as changes in economic or competitive conditions or the
Company's business and the results of the Company's sales and marketing
activities may make shifts in the allocation of funds within or between each of
the items referred to above, or to new or other applications, necessary or
desirable. Furthermore, from time to time, the Company may evaluate possible
acquisitions of or investments in businesses, assets, products and technologies
that are complementary to those of the Company, for which a portion of the net
proceeds from this Offering may be used. The Company has no plans, commitments
or agreements with respect to any such investments or acquisitions, except as
set forth in this Prospectus.
In the event the Underwriters exercise the over-allotment option, the
Company will use the additional net proceeds for general corporate purposes.
The Company anticipates, based on its present plans and assumptions
relating to its operations, that the net proceeds of this Offering, when
combined with the Company's existing capital resources and anticipated revenues
from operations, will be sufficient to enable it to maintain its current and
planned operations for a period of at least 12 months after the consummation of
this Offering. In the event that the Company's plans change or its assumptions
change or prove to be inaccurate or if the net proceeds of this Offering or cash
flow prove to be insufficient (due to unanticipated expenses or otherwise), the
Company may seek to minimize cash expenditures and/or obtain additional
financing in order to support its plan of operations. However, there can be no
assurance that additional financing will be available to the Company when needed
or on terms acceptable to the Company, if at all. See 'Risk Factors -- Capital
Expenditures and Possible Need for Additional Capital.'
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DIVIDEND POLICY
The Company intends to retain all future earnings for the operation and
expansion of its business and does not anticipate paying any cash dividends on
the Common Stock in the foreseeable future. Any future determination as to the
payment of cash dividends will depend on a number of factors, including future
earnings, results of operations, capital requirements, the financial condition
and prospects of the Company and any restrictions under credit agreements
existing from time to time, as well as such other factors as the Board of
Directors may deem relevant. No assurance can be given that the Company will pay
any dividends in the future. Under the terms of the Company's loan agreement
with VEDA, the Company may not make distributions, except certain distributions
with respect to the offset of income tax liabilities, without the consent of
VEDA.
DILUTION
The difference between the initial public offering price per share of
Common Stock and the pro forma net tangible book value per share after this
Offering constitutes the dilution to investors in this Offering. Net tangible
book value per share is determined by dividing the net tangible book value of
the Company (total tangible assets less total liabilities) by the number of
outstanding shares of Common Stock.
At September 30, 1997, the net tangible book value of the Company, after
giving effect to the Combination Transaction, the Hogback Acquisition and the
conversion of a portion of the Related Loans (as defined in 'Certain
Transactions') to a capital contribution to the Company was $1,736,702, or $1.16
per share. After giving effect to the Combination Transaction, the Hogback
Acquisition, the conversion of a portion of the Related Loans (as defined in
'Certain Transactions') to a capital contribution to the Company and the sale of
1,500,000 shares of Common Stock offered hereby at an assumed initial public
offering price of $10.50 per share and deducting underwriting discounts and
estimated expenses (including the non-accountable expense allowance payable to
the Representatives) of the Offering, the pro forma net tangible book value of
the Company as of September 30, 1997 would have been $15,016,702, or $5.01 per
share. This represents an immediate increase in net tangible book value of $3.85
per share to the existing stockholders and an immediate dilution of $5.49 (52%)
per share to new investors. The following table illustrates this dilution, on a
per share basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price of Common Stock................................. $10.50
------
Net tangible book value before Offering.......................................... $1.16
Increase attributable to new investors........................................... 3.85
-----
Pro forma net tangible book value after Offering...................................... 5.01
------
Total dilution to new investors....................................................... $ 5.49
------
------
</TABLE>
If the Underwriters' over-allotment option is exercised in full, the as
adjusted net tangible book value per share after the Offering would be $5.39 and
dilution per share to new investors in the Offering would be $5.11 (49%).
15
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CAPITALIZATION
Set forth below is the capitalization of the Company at September 30, 1997,
after giving pro forma effect to the Hogback Acquisition and the conversion of a
portion of the Related Loans to a capital contribution to the Company and as
adjusted to reflect the closing of the Offering and the application of the
estimated net proceeds therefrom.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -----------
<S> <C> <C> <C>
Long-term debt, excluding current installments............. $ 2,219,109 $ 1,038,542 $ 1,038,542
Stockholders' equity (deficit):
Preferred Stock, $.01 par value; 100,000 shares
authorized; none issued and outstanding............. -- -- --
Common Stock, $0.001 par value; 4,900,000 shares
authorized; 1,207,500 shares issued and outstanding
(actual), 1,500,000 shares issued and outstanding
(pro forma) and 3,000,000 shares issued and
outstanding (as adjusted)(1)........................ 1,208 1,500 3,000
Additional paid in capital................................. 1,125,225 5,376,750 18,655,250
Accumulated deficit........................................ (3,641,548) (3,641,548) (3,641,548)
----------- ----------- -----------
Total stockholders' equity (deficit).................. (2,515,115) 1,736,702 15,016,702
----------- ----------- -----------
Total capitalization............................. $ (296,006) $ 2,775,244 $16,055,244
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------
(1) Excludes 150,000 shares of Common Stock underlying options available for
future grants under the Company's 1997 Stock Option Plan for Non-Employee
Directors and 40,000 shares of Common Stock underlying options granted
pursuant to an advisory and consulting agreement with Tallwood Associates,
Inc. See 'Management -- Advisory and Consulting Agreement' and
'Management -- 1997 Stock Option Plan for Non-Employee Directors.'
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SELECTED FINANCIAL DATA
The following table sets forth selected financial information for the
Company for the periods and at the dates indicated. The selected historical
statement of operations and balance sheet data, at or for each of the full
fiscal years presented below was derived from the financial statements of the
Company, which were audited by Deloitte & Touche LLP, independent auditors. The
selected financial data presented below should be read in conjunction with
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and with the audited financial statements, including the notes
thereto, and other financial information appearing elsewhere in this Prospectus.
The unaudited pro forma and as adjusted selected financial data are derived from
the unaudited pro forma and as adjusted financial data presented elsewhere in
this Prospectus. The statement of operations data for the nine-month period
ended September 30, 1997 is not necessarily indicative of the results of
operations that may be expected for the full year.
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL HISTORICAL PRO FORMA HISTORICAL NINE MONTHS NINE MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED SEPTEMBER 30, ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, ---------------------- SEPTEMBER 30,
1995 1996 1996(1) 1996 1997 1997(1)
------------ ------------ ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $3,866,418 $3,983,218 $ 3,983,218 $2,863,429 $2,976,014 $ 2,976,014
Net loss..................................... (576,689) (1,500,819) (1,500,819 ) (1,017,921) (541,185) (541,185)
Weighted average shares outstanding.......... 1,207,500 1,207,500 1,500,000 1,207,500 1,207,500 1,500,000
Loss per common share........................ $(.48) $(1.24) $(1.00 ) $(.84) $(.45) $(.36)
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA AS ADJUSTED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1997(2) 1997(3)
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $1,589,366 $ 1,551,027 $ 4,622,277 $16,700,277
Long-term debt............................................ 2,481,025 2,219,109 1,038,542 1,038,542
Total liabilities......................................... 3,638,521 4,066,142 2,885,575 1,683,575
Stockholders' equity (deficit)............................ (2,049,155) (2,515,115) 1,736,702 15,016,702
</TABLE>
- ------------
(1) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans (as defined in 'Certain
Transactions') to a capital contribution to the Company as if such
transactions had occurred on January 1, 1996.
(2) Pro forma to give effect to (i) the Hogback Acquisition and (ii) the
conversion of a portion of the Related Loans to a capital contribution to
the Company as if such transactions had occurred on September 30, 1997.
(3) As adjusted to give effect to the closing of the Offering and the
application of the estimated net proceeds therefrom as if the Offering had
occurred on September 30, 1997, as well as to give effect to the
transactions described in footnote (2) above.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
In September 1993, the Company purchased the Resort and commenced
operations shortly thereafter. Since its first full year of operations in 1994,
the Company has increased revenues to $3.98 million in 1996. The increase in
revenues was attributable to more guests utilizing the Resort and higher average
prices for lift tickets and hotel room rates. In addition, with the start of its
fourth ski season in December 1996, management has been able to better control
costs while experiencing growth in revenues. The Company expects this trend to
continue which should positively affect the Company's net income. The Company
has a diversified revenue base which, for the past two fiscal years, has
averaged approximately 43% from room occupancy, 27% from skiing and fitness, 24%
from food and beverage and 6% from other revenue.
RESULTS OF OPERATIONS
The financial condition and results of operations of the Company (without
giving effect to the Hogback Acquisition) are described below. For information
regarding the financial condition of the Company and its results of operations
on a combined basis with those of Hogback Mountain, which will be purchased by
the Company concurrent with the closing of this Offering, please refer to the
Unaudited Pro Forma Financial Information and the Selected Financial Data
presented elsewhere in this Prospectus. The Company anticipates that the impact
of the purchase of Hogback Mountain on its statement of operations will be
immaterial.
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED) COMPARED TO THE
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1996 (UNAUDITED)
Revenue and Gross Profit. Revenue for the first three quarters of 1997 was
$2,976,014, an increase of $112,585 or 3.9% compared to the first three quarters
of 1996. The increase was attributable to a higher volume of ski business as
well as to price increases of lift tickets and hotel room rentals. Rooms revenue
increased by 5.5% and ski and fitness revenue increased by 21.5%. Food and
beverage revenue decreased by 13.9% and other revenue decreased by 8.8%. The
increase in lodging revenue was primarily a result of an 8.2% increase in the
average hotel room rates, as compared to the first three quarters of 1996. The
increase in ski and fitness revenue was primarily attributable to a 13.4%
increase in the number of lift tickets sold, an increase of 7.2% in the average
lift ticket price, a 35.7% increase in ski school revenues and a 31.7% increase
in season pass revenues. Fitness revenue for the first three quarters of 1997
was $83,915 accounting for 9.0% of ski and fitness revenue. During the first
three quarters of 1997, the volume of conference business declined as compared
to the first three quarters of 1996, which resulted in a decline of conference
related food and beverage revenues of $109,510 and a decline of conference rooms
revenue of $17,310. Food and beverage revenues and rooms revenue, other than
those generated by conference business, increased by 1.9% and 5.4%,
respectively, in the first three quarters of 1997 as compared to the first three
quarters of 1996.
Gross profit as a percentage of total revenues increased from 28.1% in the
first three quarters of 1996 to 41.1% in the first three quarters of 1997. This
is primarily due to better control of expenses combined with an 3.9% increase in
revenue as compared to the first three quarters of 1996. The Company believes
that it should be able to continue to increase revenues without a significant
increase in the cost of sales, which should positively affect the Company's
gross profit.
Operating Expenses. Operating expenses were $1,546,106 for the first three
quarters of 1997, representing a decrease of $126,854 or 7.6%, as compared to
the first three quarters of 1996. As a percentage of revenue, operating expenses
declined from 58.4% in the first three quarters of 1996 to 52.0% in the first
three quarters of 1997. Since a majority of the operating expenses do not
fluctuate significantly with the level of revenues, the Company believes its net
income should continue to be positively affected by increasing revenues.
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Net Operating Loss. The Company had a net operating loss in the first three
quarters of 1997 of $323,383 as compared to a net operating loss of $869,743 in
the first three quarters of 1996, representing a decrease in loss of $546,360 or
an improvement of 62.8%.
FISCAL YEAR ENDED DECEMBER 31, 1996 ('FISCAL 1996') COMPARED TO FISCAL YEAR
ENDED DECEMBER 31, 1995 ('FISCAL 1995')
Revenue and Gross Profit. Revenue increased from $3,866,418 in Fiscal 1995
to $3,983,218 in Fiscal 1996. This increase was due to a higher number of guests
utilizing the Resort as well as price increases of lift tickets and hotel room
rates. Lodging revenue increased by 10.1%, ski and fitness revenue increased by
6.7%, other revenue decreased by 20.6% and food and beverage revenue decreased
by 4.0%. This decrease in food and beverage revenue resulted primarily from a
decline in banquet revenues attributable to one large, multi-day conference held
in Fiscal 1995 that was not repeated in Fiscal 1996.
Gross profit as a percentage of total revenues decreased from 37.3% in
Fiscal 1995 to 30.5% in Fiscal 1996. The increase in the cost of sales was
primarily attributable to an increase in labor and other expenses associated
with expanded resort activities and programs.
Operating Expenses. Operating expenses were $2,493,238 for Fiscal 1996,
representing an increase of $118,086 or 5.0%, as compared to Fiscal 1995. As a
percentage of revenue, operating expenses increased slightly from 61.4% in
Fiscal 1995 to 62.6% in Fiscal 1996.
Net Operating Income Loss. The Company incurred a net operating loss in
Fiscal 1996 of $1,277,145 as compared to a net operating loss of $933,944 in
Fiscal 1995. The increase in the net loss was primarily due to the increase in
the cost of sales.
LIQUIDITY AND CAPITAL RESOURCES
Since acquiring the Resort in 1993, the Company has funded operations from
debt and equity financing provided by its Principal Stockholders, a bank line of
credit and other loans guaranteed by its Principal Stockholders, the sale of
real estate and cash flow from operations. During Fiscal 1995 the Company
financed its shortfalls primarily with the sale of six condominium units, each
at a price of $110,000 and through $400,000 of additional equity financing from
its Principal Stockholders. In November 1995 the Company transferred ownership
of its remaining condominium units to its Principal Stockholders, which were
subsequently financed with individual loans secured by mortgages, the proceeds
of which were then loaned by the Principal Stockholders to the Company. In
Fiscal 1995, such loan proceeds totalled $500,500 of which $280,000 was used by
the Company to repay existing Company financing secured by the condominium
units. In Fiscal 1996, such additional loan proceeds totalled $700,000 of which
$99,915 was used to repay the remaining financing that was secured by the
condominium units. In addition, the Principal Stockholders contributed an
additional $650,000 of equity in Fiscal 1996. In the first six months of 1997,
the Principal Stockholders made loans to the Company totaling $537,000.
Beginning January 1, 1998, the loans accrue interest at a rate of 8% per annum
and mature on January 1, 2008. See 'Certain Transactions' and Note 5 of Notes to
Financial Statements.
In January, 1998, in connection with the commencement of the marketing and
sales of its VOIs, the Company borrowed $50,000 from each of Richard R. Frary
and Joel A. Mael pursuant to a promissory note. Under the terms of the
promissory notes, the loans accrue interest at the rate of 8% per annum and have
a maturity date of the earlier of (a) one year from the date thereof and (b) the
completion by the Company of a public offering in which gross proceeds of
$5,000,000 are raised from the sale of its securities. Should the Company not
complete a public offering by June 30, 1998, Mr. Frary and Mr. Mael each have
the option, exercisable until the maturity date of the loans, to exchange the
principal and interest owed thereunder for 2.5% of the limited partnership
interests of each of Ascutney Mountain Resort Hotel, L.P., Ascutney Mountain
Resort, L.P. and Ascutney Mountain Resort Realty, L.P. The Company intends to
repay the loans in full from the proceeds of the Offering. Mr. Frary will serve
as a director of the Company upon the closing of the Offering. The Company has
entered into an advisory and consulting agreement with Tallwood Associates, Inc.
('Tallwood') of which Mr. Frary and
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Mr. Mael are the principal stockholders. See 'Management -- Advisory and
Consulting Agreement' and 'Management -- Executive Officers and Directors.'
Additionally, in December 1997, the Company borrowed $57,000 from
International Merona, Inc. pursuant to a promissory note. Under the terms of the
promissory note, the loan accrues interest at the rate of 10% per annum and has
a maturity date of the earlier of (a) December 8, 1998 and (b) the date upon
which the Company receives $5,000,000 from the sale of its securities. The
proceeds of this loan were used by the Company for expenses in connection with
the Offering, and the Company intends to repay the loan in full from the
proceeds of the Offering.
In July 1997, the Company obtained a $1.5 million line of credit from
Mascoma Savings Bank bearing interest at the prevailing prime rate plus 1.75%,
as adjusted from time to time (effective rate of 10.25% as of September 30,
1997). Approximately $900,000 was used to prepay the existing Fleet Bank line of
credit and to pay closing costs leaving an additional $600,000 of borrowing
capacity for working capital purposes. The Company intends to repay a portion of
the amount outstanding under the line of credit with the net proceeds of the
Offering. See 'Use of Proceeds.'
The Company also obtained a block grant loan in November 1994, having an
initial principal amount of $240,000 from the Town of West Windsor, Vermont. The
loan accrues interest at a rate of 5.0% per annum and has a maturity date of
February 20, 2010. The loan is guaranteed by the Company's Principal
Stockholders.
Additionally, the Company obtained a loan in May 1994, having an initial
principal amount of $400,000 from VEDA. The loan accrues interest at a rate of
5.5% per annum and has a maturity date of June 3, 2004. The loan is guaranteed
by the Company's Principal Stockholders and has a balloon payment due at
maturity of $171,639.
The net proceeds from the Offering will be used for upgrades and expansion
to the Resort's ski lifts, snowmaking, grooming and trail systems, purchase of
additional mountain equipment and vehicles, hotel and Resort improvements,
development of a golf course on Resort property, development of a vacation
ownership intervals program, repayment of debt, and for working capital
(including possible business acquisitions). In addition, the 17 condominium
units currently owned by the Company's owners will be leased to Snowdance, Inc.,
and approximately $1,180,000 of the related party debt will be contributed as
capital.
Upon the closing of the Offering, Snowdance, Inc. will acquire
approximately 800 acres of land known as Hogback Mountain, located in Marlboro,
Vermont. The Company plans to explore possible development opportunities for
this land. As consideration for the purchase of this land, the Company will
issue 292,500 shares of Common Stock to the owners of the assets. Additionally,
the Company will pay up to approximately $75,000 of expenses related to the
property.
The Company believes that based on its present plans, the net proceeds of
this Offering, when combined with the Company's existing capital resources and
anticipated revenues from operations, will be sufficient to enable it to
maintain current and planned operations for a period of at least 12 months after
the consummation of this Offering. In the event that the Company's plans change
or its assumptions change or prove to be inaccurate or if the net proceeds of
this Offering or cash flow prove to be insufficient (due to unanticipated
expenses or otherwise), the Company may seek to minimize cash expenditures
and/or obtain additional financing in order to support its plan of operations.
Sources of capital may include additional equity or debt financings.
Additionally, future acquisitions could be financed through a combination of
internally generated funds, bank borrowings, public offerings or private
placements of equity (which may cause dilution to existing holders of capital
stock of the Company) or debt securities, the combination of which will depend
on the size of the acquired resort or property and the Company's capital
structure at the time of an acquisition.
Cash used by operating activities was $760,604 for the nine months ended
September 30, 1997 compared to cash flow used for operating activities of
$1,069,435 for the same period in 1996. Cash used for operating activities was
$1,087,760 and $1,347,597 in Fiscal 1996 and 1995, respectively. The 28.9%
improvement in the first three quarters of 1997 compared to the first three
quarters of 1996 was primarily due to lower overall operating costs and to a
lesser extent, increased revenues.
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The Company's capital expenditures for the years ended December 31, 1995
and December 31, 1996 were $34,466 and $44,576, respectively. Assuming that the
Offering is successfully completed, management expects capital expenditures to
total approximately $6,000,000 over the next 12 months, approximately 50% of
which is intended to be spent upgrading the ski lifts, snowmaking, grooming and
trail systems.
Upon closing of the Offering, the Company will enter into three-year
employment agreements with Steven Plausteiner and with Susan Plausteiner. Steven
Plausteiner's agreement will provide for an annual base salary of $100,000 plus
a bonus determined by the Company's Board of Directors, and certain other
benefits. Susan Plausteiner's agreement will be substantially identical. See
'Management -- Employment Agreements.'
Management is not aware of any trends or events, commitments or
uncertainties which have not otherwise been disclosed that will or are likely to
impact liquidity in a material way.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company's operating results may fluctuate from quarter to quarter as a
result of the seasonal nature of the ski resort operations. The Company
recognizes its highest revenue levels during its first fiscal quarter. This
quarter accounted for approximately 36.6% and 40.6% for Fiscal 1995 and Fiscal
1996 total revenues, respectively.
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BUSINESS
OVERVIEW
Snowdance, Inc. owns and operates one of the premier fully-integrated, all
season mountain resorts in New England and further seeks to develop and operate
other fully-integrated year-round recreational resorts focusing on affordable
family vacations. The Company intends to develop resorts that emphasize skiing,
snowboarding and other winter recreational activities as well as warm weather
activities such as golf, tennis and hiking, thereby offering true year round
amenities. The Company believes that the opportunity to develop and sell the
property surrounding these amenities could provide it with its greatest
potential source of cashflow and income. Such property related development is
expected to include weekly vacation ownership interval ('VOI') sales (also known
as time shares), and may also include condominium construction and sales, and
second home and land sales. The Company has entered into a marketing and sales
agreement with Westerly Resorts Group, Inc., an experienced VOI developer and
marketer with projects in the Caribbean and Colorado. Marketing of more than
5,000 VOIs in Ascutney's hotel is anticipated to commence in 1998.
To date, the Company has focused its resources on developing its first
fully-integrated family-oriented property, the Ascutney Mountain Resort located
in Brownsville, Vermont. Recently, the Company agreed to acquire its second
property for potential future development called Hogback Mountain in Marlboro,
Vermont. Upon successful implementation of its strategy at Ascutney, the Company
intends to seek other opportunities that fit its strategy of developing and
operating year-round affordable, family resorts.
THE MOUNTAIN RESORT INDUSTRY
There are approximately 800 ski areas in North America, approximately 500
of which are located in the United States and approximately 300 of which are
located in Canada. During the 1996-97 ski season, these U.S. ski areas accounted
for approximately 52.5 million skier days (of which approximately 12.1 million
skier days were attributed to northeastern United States ski areas). A 'skier
day' is defined as one day representing a single day or night visit to a ski
area. The Company believes that of the 800 North American ski areas, only a
small number are fully-integrated, destination resorts.
North American ski resorts range from small regional ski areas which
primarily attract day skiers from nearby populations to large amenity-filled
resorts focused on destination visitors who seek a comprehensive vacation
experience. Day visitors generally tend to focus primarily on lift ticket prices
and resort accessibility. Destination visitors generally stay for one or more
nights, and primarily focus on the number of amenities and activities offered as
well as the perceived overall quality of their vacation experience. The Company
believes that destination visitors spend more on non-lift ticket items than day
visitors and may be less likely to change their skiing plans because of changes
in local weather conditions. As a result of these differences, destination
visitors generate significantly higher revenue per day than day visitors and
provide desirable balance to a resort's revenue mix.
While skier days generated by the Resort have grown by approximately 26%
since the 1993-94 ski season, total skier days generated by all United States
mountain resorts have decreased by a total of approximately 3.8% during the same
period. The Company believes that the primary reasons for the Resort's growth in
skier days since its acquisition by the current management team in 1993 relative
to the rest of the United States include the quality of the resort village, the
improved skiing experience and easy access from major metropolitan areas. See
'Risk Factors -- Limited Operating History; Significant and Continuing Losses.'
The mountain resort industry is characterized by significant barriers to
entry since the number of attractive sites is limited, the cost of resort
development is high and environmental regulations impose significant
restrictions on new development.
The Company believes that it benefits from current trends which favorably
affect the North American mountain resort industry, including (i) new innovative
equipment for skiers, such as parabolic or shaped skis which facilitate learning
and enhance performance, (ii) increased participation in mountain resort sports
such as snowboarding, mountain biking and hiking which are among the fastest
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growing sports in North America and (iii) demographics under which (a) the large
'baby boom' generation is entering the 45-65 year age category which
traditionally is the age group with the largest number of buyers of vacation
property and (b) the 'echo boom' generation is entering the teenage years, one
of the age groups with the most skiing and snowboarding activity. Moreover, the
Company believes that these trends will continue to attract additional
destination guests and increase demand from families for vacation real estate in
mountain resorts.
The Company believes that new ski equipment technologies, including
parabolic skis, will facilitate wider participation in downhill skiing.
Parabolic skis have a narrower mid-section than standard designs, generally
allowing for an easier curve and better control into parallel turns. Parabolic
skis are more flexible than standard skis and require less muscle strength to
turn, decreasing skier fatigue. The Company believes that as a result of the new
equipment technologies, it is easier for beginners to learn to ski, and for
intermediate and advanced skiers to perform beyond their present abilities. The
Company expects to benefit from the increased utilization of parabolic skis
which the Resort offers in its retail and rental shops and for which it provides
instruction through its ski school.
The Company believes that the growth in snowboarding will also have a
positive impact on the ski industry and will continue to be an important source
of lift ticket, ski school, retail and rental revenue growth for the Company. In
the United States, skier days attributable to snowboarders have increased an
average of 19% per year over the past 3 years and snowboarders are currently
estimated to represent 18% of all skier days in the United States. The
snowboarding population is expected to double as a percentage of skier days over
the next five years according to the 1995-96 survey of Transworld SNOWboarding
Business/National Ski Areas Association Resort Survey. Much of this growth can
be attributed to the greater acceptance of snowboarding as a competitive amateur
sport. In 1985, only 7% of U.S. ski resorts allowed snowboarding, while
approximately 93% do as of 1997. Also, the International Olympic Committee
recently designated snowboarding as a demonstration event at the 1998 Winter
Games in Nagano, Japan.
While snowboarding has increased interest in 'on-snow' sports among 13 to
24 year old males, the sport is increasingly appealing to a wider group of
enthusiasts. According to a recent survey by Ski Industries America, the average
age of snowboarders has risen to approximately 24 years old, and nearly
one-third of all current snowboarders is female. The Company further believes
that the growth in snowboarding among children and teens, who influence family
vacation decisions, should allow the Resort to attract additional family
destination guests. Consequently, the Resort has constructed a 'snowboard park,'
offers snowboarding lessons through its ski school and provides snowboarding
equipment in its retail and rental shops. The Company generally intends to place
greater emphasis on the Resort's snowboard attractions, programs and events.
RESORT OPERATIONS
The Company currently owns and controls all of the Resort's operations
enabling it to capture a high percentage of the total spending by its year-round
guests during their visit to the Resort. Accordingly, while lift ticket sales
are traditionally the largest source of revenues for most ski resorts, the
Company has a diversified revenue mix, including lodging, food services, lift
tickets, ski school, sports and fitness center, day care and retail shops.
Lodging revenue was the largest source of revenue in 1996, accounting for
approximately 43% of total Resort revenue. The Company expects non-lift ticket
revenue will continue to grow at a greater rate than lift ticket revenue as a
result of the ongoing expansion of activities and services offered by the
Company at the Resort.
ASCUTNEY MOUNTAIN RESORT
In 1995, Ascutney was ranked among the top three ski resorts for value and
the top four ski resorts for families, in the eastern United States by Skiing
magazine (October 1995). Since 1983, more than $85 million was invested in
connection with the expansion and development of the Resort. Ascutney is a
four-season, fully-integrated, destination resort that includes one of Vermont's
major ski areas, a 212-room hotel (the fourth largest resort hotel in Vermont)
which is suited for timeshare sales due to its larger number of suites, an
18,000 square foot comprehensive sports and fitness center, a three-story
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base lodge, a ski and rental shop, four restaurants, approximately 30,000 square
feet of conference facilities, and 17 slope-side condominium units to be leased
from the present owners, all set in a charming New England style village.
While the Resort offers its guests many of the benefits provided by larger
ski facilities, it also retains a family-oriented, friendly atmosphere. The
Company provides a comprehensive destination resort experience by combining
quality ski facilities and resort services, including convenient ski-on/ski-off
lodging, with attractive four season amenities. The Resort attracts guests
primarily due to its affordable family-oriented vacations in a self-contained
resort village with easy accessibility from most major metropolitan areas in the
northeastern United States.
The Resort is conveniently located in central Vermont's Connecticut River
Valley in Brownsville, Vermont, at the foot of Mt. Ascutney. The Resort is six
miles from, and is the closest major Vermont ski resort to, Interstate I-91, one
of the two main highways in Vermont. The Resort is easily accessible from most
major metropolitan areas in the northeastern United States from which it
attracts the majority of its visitors. During the 1996-97 ski season, the
majority of the Resort's visitors resided in Connecticut, Massachusetts, Vermont
and New York. Hartford, Boston and Albany are within a 2 1/2 hour drive and
Providence, Montreal and New York City are within a 4 1/2 hour drive. The Resort
is 18 miles from the Lebanon, New Hampshire airport which provides regular
service to and from Boston, New York, Newark and Albany and five miles from the
Amtrak train station in Windsor, Vermont. Approximately 15 miles from the Resort
lies Woodstock, Vermont, a quaint New England village where guests can visit
numerous art galleries, antique and specialty shops. The town of Manchester,
Vermont, located approximately 50 miles from the Resort, is one of Vermont's
busiest summer tourist attractions featuring designer discount outlets as well
as specialty shops.
ASCUTNEY MOUNTAIN SKI AREA
The Ascutney Mountain ski area is one of Vermont's 14 major ski resorts
with a 1,530 foot vertical rise on Mt. Ascutney. Ascutney Mountain's skier days
exceeded 53,000 during the 1996-97 ski season, representing an increase of
approximately 26% since the commencement of the Company's operations in 1993
under its current management team. The ski area includes 4 chairlifts, 31
trails, and 115 skiable acres with an approximately equal distribution of
beginner, intermediate and expert terrain, including an International Skiing
Federation-sanctioned giant slalom trail. The ski area is supported by a
three-story base lodge with a cafeteria and lounge seating a total of 500
persons, a two-story ski and rental shop and various maintenance and storage
buildings. Snowmaking capability covers approximately 75% of the skiable
terrain. There are approximately 20 miles of cross-country trails which range
from open meadows suitable for beginners to mountain touring trails suitable for
more advanced skiers. At the base of the mountain, tubing, ice skating,
children's programs and apres ski entertainment are available. Unlike many
Vermont ski resorts, the Company owns all of the land on which the ski
facilities are currently located. The Company operates its facilities 7 days a
week for skiing and related winter activities from approximately mid-November
until the following mid-April.
Lift Ticket Sales. The Company's goal is to manage lift ticket yields to
obtain premium prices during peak periods and increase aggregate lift ticket
revenue during non-peak periods. Accordingly, the Company offers a wide
selection of lift tickets which vary in price and usage. In all categories there
is a reduced price for junior tickets. Unlike the majority of ski resorts, the
Company sells junior priced tickets for guests up to the age of 16 years old as
opposed to the traditional 12 years; this expanded discount is intended to
attract the family market that largely frequents the Resort. Discounted lift
tickets and programs, including local school programs, group purchases, Vertical
Value discount card purchases and co-promotions with local and national
businesses are designed to bolster business during non-peak periods. Introduced
in 1995, the Vertical Value discount card was implemented to increase lift
ticket revenues as well as to encourage non-peak usage by offering greater
discounts during midweek and early and late seasons. The Company also markets
and sells hotel packages which combine accommodations, lift tickets and dining.
Such packages facilitate vacation planning while providing the Resort with
multi-day lift ticket sales.
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Ski School. The Company operates a ski school at the Resort that offers a
variety of programs to skiers, targeted to different ability levels and age
groups, including Flying D.U.C.K.S., Young Olympians and Mini Olympians
children's programs. The Company anticipates further growth in ski school
revenue resulting from technological advances in alpine skiing equipment, for
which the ski school has qualified instructors, and from the growth in
snowboarding. The Company has approximately 60 instructors on its ski school
staff. The Company has adopted a compensation incentive program to reward
instructors based on guest satisfaction.
ASCUTNEY MOUNTAIN RESORT HOTEL, LODGING AND RELATED OPERATIONS
Lodging. The Ascutney Mountain Resort Hotel is a 212-room hotel,
constructed in 1984, situated in five buildings at the base of Mt. Ascutney. The
rooms are approximately equally divided between standard hotel rooms and suites
which through lock-out capabilities may be rented as 1, 2 or 3-bedroom suites.
Each suite has a full kitchen, a dining room and a living room with a fireplace
and deck. The hotel is located along the lower ski slopes with each building
having direct ski-on/ski-off access to the slopes. The main hotel building
houses the 140-seat Harvest Inn Restaurant, Brown's Tavern, Biscotti's pizzeria
and game room, the two-story Crow's Nest lounge/function room, additional retail
space and conference space. The conference space in the hotel can accommodate
groups of up to 500 people. In addition, the Resort also includes approximately
17 condominium units at the base of the mountain, to be leased from the present
owners, which together with the hotel, can accommodate up to approximately 700
people.
Food and Beverage Service. Food and beverage service is an increasingly
important component in providing a satisfying guest experience at the Resort and
has been a significant source of revenue for the Company. The Company owns and
operates the Resort's four on mountain food and beverage facilities with more
than 500 seats. As a year-round mountain resort, the Resort generates food and
beverage revenues throughout the non-ski season, including banquet revenues from
groups utilizing the Resort's conference facilities and from wedding receptions.
Retail Shops. The Company owns and leases commercial space for a retail and
ski rental shop (with two locations at the Resort) containing approximately
3,500 square feet of sale/service area which is operated on a concession basis
by a third party only during the ski season. The shop sells ski accessories such
as goggles, sunglasses, hats and gloves as well as hard goods such as skis,
snowboards, boots and ski apparel.
ASCUTNEY MOUNTAIN RESORT SPORTS AND FITNESS CENTER
The Resort's sports and fitness center of approximately 18,000 square feet,
refurbished in the fall of 1993, is located adjacent to the hotel. The center
includes one indoor and one outdoor Olympic-sized swimming pool, seven outdoor
tennis courts (five har-tru and two all weather), an aerobics studio, two
racquetball courts, saunas, free-weights, nautilus and aerobic equipment. The
Company believes that the center is the only comprehensive sports and fitness
facility of this size in the area and attracts membership from a 20 mile radius.
The center, which is complimentary to hotel guests, sells monthly and
annual memberships. In addition, the center offers daily walk-in passes and
coupon books for single admissions. While the number of memberships varies
seasonally, on a monthly basis the number of club memberships ranges from
approximately 150 to 400 members. Additional fitness center revenues are derived
from personal training sessions, massage fees, racquetball fees and tennis and
swim instruction.
OPERATING STRENGTHS
The Company believes that the following operating strengths provide
competitive advantages which should enable it to achieve significant growth.
Upon the successful implementation of its strategy at Ascutney, the Company
intends to seek to acquire resorts or properties that are well suited to utilize
the operating strengths of the Company.
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CONTROL OF RESORT OPERATIONS
The Company controls multiple revenue sources at the Resort, thereby
diversifying its revenue mix and ensuring consistency and quality of its
operations. In addition to operating the ski lifts, the Company currently
manages virtually all ancillary operations at the Resort, including lodging,
food services, the ski school, the sports and fitness center and a day care
program. The Company's ownership of the commercial property at the Resort allows
it to ensure that its retail space enhances the overall appeal of the Resort.
APPEAL TO FAMILY VISITORS
While the Company's strategy is to offer its guests many of the benefits
provided by the larger ski destination resorts, it retains a family-oriented
personal atmosphere. The Company's emphasis on affordable family vacations
permeates most aspects of its business. The Company believes that, as compared
to its competitors, it charges lower fees for the various amenities it offers,
and the prices of its lodging and meals are more reasonable. The Company's
special programs and services are principally targeted to family destination
guests who tend to generate higher and more diversified revenues per guest than
day skiers. Programs range from the Mini Olympian and Young Olympian ski
schools, which are separate from the adult ski school, to supervised evening
programs such as Cheddar's Happy Hours, movies, puppet shows and Parents' Night
Out. In addition, the Company believes that the convenience of the
self-contained Resort village which offers ski-on/ski-off lodging in large
suites, coupled with virtually all facilities being located within walking
distance, is particularly attractive to families. Based on a survey by the
National Skier Opinion Survey for the 1996-97 ski season, more of the Resort's
visitors had children under the age of 16 and a higher percentage of visitors to
the Resort were accompanied by their children than the regional average of other
ski resorts.
ACCESSIBILITY AND LOCATION
The Resort is strategically located in central Vermont and is within
several hours driving distance from most major metropolitan areas in the
northeastern United States. The Company believes that the Resort's proximity to
Interstate I-91, one of the two main highways in Vermont, provides it with a
significant competitive advantage relative to most of the other major Vermont
mountain resorts. From the 1978-79 through the 1996-97 ski seasons, the
northeastern corridor has had the second largest number of skier/snowboarder
visits in the United States. Vermont had the largest number of skier days during
the 1995-96 ski season of all the northeastern states. Additionally, Vermont
benefits from an average of 250 inches of snowfall annually.
VACATION OWNERSHIP INTERVALS
The Company believes that its hotel is an attractive VOI property due to,
among other reasons, the high number of suites in its hotel (many of which are
duplex units), the presence of existing and planned year-round amenities and
Ascutney's proximity to most major population centers in the northeastern United
States, all of which can be reached within 2 to 5 hours of driving time. The
Company further believes that there is strong interest in families seeking
affordable vacations in year-round resorts near their primary residences that
offer many of the amenities found at larger destination resorts but on a
friendlier, more personal level. Marketing of more than 5,000 VOIs in Ascutney's
hotel is anticipated to commence in 1998. The Company also plans to further
develop its real estate holdings, including the construction of additional
residential units that could be sold as VOIs. The Company believes that the
opportunity to develop and sell the property surrounding its existing and
year-round amenities could provide it with its greatest potential source of
cashflow and income.
MANAGEMENT TEAM
Members of the Company's senior management team are recognized leaders in
the mountain resort industry. The Company's senior management team consists of
three individuals who are responsible for strategic direction, as well as
oversight of its business, including Resort operations and real estate
development activities. Together, the senior management team has over 50 years
of experience in the
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mountain resort industry, and have held positions on the Boards of Directors of
such recognized public and private organizations as the Vermont Ski Areas
Association and Vermont Economic Development Authority. Also, the Company's
Chief Operating Officer during a 20-year period held various positions at Mount
Snow, a leading Vermont ski resort, including Vice President -- Operation and
Planning of Mount Snow Development Corporation, Vice President for Planning and
Maintenance of Mount Snow Hotel Corporation and Operations Manager of Mount
Snow. In addition, the Company's Chief Operating Officer served as the Director
of Whiteface Mountain Ski Center responsible for planning and development of the
Ski Center in preparation for the 1980 Winter Olympics in Lake Placid, New York.
He was later promoted to Vice President for the Olympic Regional Development
Authority in charge of planning and construction for all of the 1980 Winter
Olympic venues.
Additionally, the Company entered into an advisory and consulting
arrangement with Tallwood for a one year period commencing on January 1, 1998.
Mr. Richard S. Frary and Mr. Joel A. Mael, the principals of Tallwood, have
extensive experience in real estate finance and development. Mr. Frary served as
head of Drexel Burnham Lambert Inc.'s Corporate Finance Department's real estate
group which was responsible for in excess of $15 billion of corporate and
mortgage financing for public and private real estate companies and corporate
clients. See 'Management -- Advisory and Consulting Agreement' and 'Management
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources.'
BUSINESS STRATEGY
The Company's operating formula links the staged expansion of its mountain
ski facilities at the Resort with the strategic development of its real estate.
The Company's primary objective is to maximize and diversify its revenue sources
by capitalizing on its operating strengths and through expansion of the Resort
and the development of its real estate as described below. This strategy is
designed to increase and balance year-round utilization and to enhance real
estate values at the Resort. The implementation of this strategy begins with the
continued enhancement of the skiing experience coupled with hotel improvements.
In addition, the Company has the capacity to expand ski operations to the peak
of Mt. Ascutney.
The Company intends to implement a multi-stage plan to realize the
significant value of its real estate. The Company plans to commence the sale of
VOIs in the Resort's hotel, designed to increase destination visitors to the
Resort and increase total Resort revenue. The intended sale of VOIs, commonly
known as timeshares, in the Resort's hotel is expected to be carefully managed
by the Company, in conjunction with its Joint Venture Partner. To enhance the
marketing and sales of the Resort's real estate, the Company's expansion plans
include the addition of an 18-hole golf course with additional adjacent
residential units, as well as additional commercial development. Finally, the
Company also intends to explore possible development opportunities regarding its
other real estate holdings, including examinations of zoning and other
regulatory approvals necessary for any such development. The Company believes
that the integration of the Resort with further real estate development should
attract increasing numbers of visitors and buyers of real estate.
The expansion of the Resort's mountain facilities, the offering of vacation
ownership intervals and the Company's further development of its real estate
holdings should together add to the Company's ability to increase year-round
utilization of the Resort. Specifically, the Company's strategy to maximize
revenues is as follows:
EXPANSION OF SKI AND YEAR-ROUND OPERATIONS
An important component of the Company's business strategy is the expansion
and enhancement of its core ski operations, while at the same time increasing
the range of complementary activities and services offered to its guests
throughout the year. The Company plans to enhance the skiing experience at the
Resort through major upgrades to the ski lifts, snowmaking, grooming and trail
systems. Principal improvements include the addition of one new high-speed quad
chairlift as well as the relocation of one of the existing chairlifts, which
will increase the mountain's total uphill capacity by more than 45% to
approximately 6,350 skiers per hour. In addition, the Company plans to increase
snowmaking
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capabilities at the Resort, bringing coverage to approximately 95% of the
skiable terrain. Major trail modifications have been designed to allow different
levels of skiers to utilize more of the mountain when combined with the planned
increased snowmaking. Further, the Company intends to explore expanding the
Resort's operations to a higher elevation on Mt. Ascutney, which if successfully
achieved would result in the Resort having the fourth highest vertical rise of
any Vermont ski operation. The plan also provides for the acquisition of Resort
equipment and is expected to include both on-road and off-road vehicles such as
snow groomers. See 'Use of Proceeds.'
The Company also seeks to increase year-round utilization of the Resort by
developing more summer and shoulder season activities and amenities. The Company
believes that increases in utilization during the summer and shoulder seasons
should enhance the Company's ability to attract additional restaurants and
shops, thereby enhancing the four-season appeal of the Resort and the demand for
and market value of its Resort real estate property. The Resort offers guests a
variety of activities during the non-ski season, including mountain biking (on
approximately 20 miles of the Resort's cross country trails), outdoor tennis,
swimming and hiking. Canoeing, horseback riding and fishing can be arranged for
at nearby facilities. Additionally, visitors during the summer and shoulder
seasons can take advantage of golf courses, historic sites, museums and antique
shops located near the Resort area. The 'shoulder season' is defined as the
off-season periods between the winter and summer seasons.
RESORT HOTEL IMPROVEMENTS
The Company plans hotel improvements as well as the acquisition of Resort
equipment and computer systems. The major components of the improvements include
selected refurbishing of hotel rooms and common areas, expanded activity areas
for children's programs, expansion of hotel dining facilities and infrastructure
improvements to roads and hotel parking lots. See 'Use of Proceeds.' With the
improvements contemplated by the Company's plan, the Resort is expected to
attract more hotel guests thereby increasing hotel occupancy and increasing
utilization of other existing Resort services such as food services, ski school,
day care and children's programs.
VACATION OWNERSHIP PROGRAM
The Company has entered into a marketing and sales agreement, dated as of
December 30, 1997 (the 'Joint Venture'), with Westerly Resorts Group, Inc.
regarding the marketing and sale of VOIs in the Resort's hotel. It is
contemplated that the Joint Venture will sell up to 5,000 VOIs in the Resort's
hotel. The Company believes its hotel is an attractive VOI property due to,
among other reasons, the high number of suites in its hotel (many of which are
duplex units), the presence of existing and planned year-round amenities and
Ascutney's proximity to most major population centers of the Northeast, all of
which can be reached within 2 to 5 hours of driving time (Air transportation is
available at the Lebanon, New Hampshire airport near Dartmouth College less than
20 miles away). Westerly Resorts Group, Inc. (the 'Joint Venture Partner') is an
experienced VOI developer and marketer with projects in the Caribbean and
Colorado. Under the terms of the Joint Venture, the Company will be responsible
for the management of the operations of the Ascutney Mountain Resort Hotel and
the Joint Venture Partner will be responsible for the marketing and sale of all
VOIs in the hotel. Further, pursuant to the Joint Venture, the Company will
retain as a fixed fee 25% of the gross sales price of each VOI sold.
Additionally, after payment and/or reimbursement for certain expenses of the
Company and all of the expenses of the Joint Venture Partner, all net profits
from sales pursuant to the Joint Venture, subject to certain limitations and
adjustments with respect to the calculation of expenses, will be distributed as
follows: 67.5% to be retained by the Company and 32.5% to the Joint Venture
Partner. Additionally, the Joint Venture Partner will receive a monthly expense
advance equal to 45% of the previous month's gross sales less certain
chargebacks and other amounts owed to the Company. Such expense advance will be
offset on a quarterly basis against the monies that the Joint Venture Partner is
entitled to receive as computed using the above formula. The Joint Venture is
for an initial term of 5 years from the date thereof, with the option to renew,
subject to the approval in writing by the Company and the Joint Venture Partner,
for 5 year increments thereafter. Upon an event of default, which includes the
failure to comply with the agreement by one party, the other party, upon giving
written notice, may terminate the Joint Venture. The Joint Venture may also be
terminated by the mutual agreement in writing by the
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parties or by either party individually. Should the Company exercise its right,
in its sole discretion, to terminate the Joint Venture, the Company will be
prohibited from selling VOIs in the Resort's hotel for a period of two years.
Similarly, should the Joint Venture exercise its right, in its sole discretion,
to terminate the Joint Venture, the Joint Venture Partner will be prohibited
from engaging in the timeshare business in the State of Vermont for a period of
two years. Additionally, the Company may terminate the Joint Venture upon 60
days' notice should the Joint Venture Partner fail to meet certain sales goals.
While the Joint Venture is only for the sale of VOIs in the Resort's hotel,
should the Company decide to sell other timeshare products in the Resort, the
Company has agreed to negotiate on an exclusive basis for a period of two months
after notice with the Joint Venture Partner regarding engaging it as a marketing
partner. By entering into the Joint Venture with the Joint Venture Partner, the
Company intends to mitigate its risks associated with the VOI program.
Additionally, the Company, along with the Joint Venture Partner, intends to
manage its inventory risk by initially offering for sale only part of the
Resort's hotel on a VOI basis, while operating the remainder of the Resort's
hotel on a traditional overnight basis. See 'Risk Factors -- Uncertainty of
Development of Vacation Ownership Intervals and Golf Course Development.'
The Company plans to initiate a VOI program for the Resort's hotel prior to
any new construction of additional units at the Resort, whereby fixed weekly
intervals will be sold in fully-furnished vacation units. The offering program
is expected to begin in 1998. When the Company's VOI program commences, the
Resort will be one of only two fully-integrated, destination resorts in Vermont
that offers a VOI program. The Company believes that the offering of VOIs in its
existing hotel will increase destination visitors to the Resort, which should
increase revenues for the Resort including lift tickets, food and beverage,
retail and other sources.
The Joint Venture is expected to direct its marketing and sales efforts for
VOIs in the Resort's hotel generally to family households in the middle and
upper middle income brackets who previously have visited the Resort or prefer
outdoor recreational activities at destination locations. It is anticipated that
the Joint Venture will spend significant amounts of money in the future on
marketing and sales as it offers VOIs in the Resort's hotel. The primary method
of marketing the Resort's vacation ownership property is expected to be through
direct mail mini-vacation invitations. The Joint Venture intends to provide
hotel accommodations to prospective purchasers at reduced prices while they tour
the Resort. Sales personnel are expected to be generally experienced in VOI
sales and to participate in ongoing training.
The resort component of the vacation industry is serviced primarily by two
alternatives for overnight accommodations: (i) commercial lodging establishments
and (ii) timeshare or 'vacation ownership' resorts. Commercial lodging consists
of hotels and motels in which a room is rented on a nightly, weekly or monthly
basis for the duration of the visit and is supplemented by rentals of
privately-owned condominium units or homes. For many vacationers, particularly
those with families, a lengthy stay at a quality commercial lodging
establishment can be very expensive. In addition, availability of commercial
lodging may be limited during peak periods.
VOIs have been one of the fastest growing segments of the hospitality
industry over the past two decades. The number of vacation ownership resorts
throughout the world increased from approximately 630 in 1981 to approximately
4,350 in 1996. During the years 1988 through 1996 worldwide vacation ownership
sales grew at about 15% per year, from under $500 million in 1988 to
approximately $5 billion in 1996. The Company believes there is substantial
capacity for additional growth since less than 2% of all households in the
United States owned a VOI as of 1996. According to the American Resort
Development Association, the typical vacation interval owner is
upper-middle-income, middle-aged, and well-educated. Additionally, of VOI owners
in the United States, 69.5% have incomes over $50,000, and 67.5% are 45 years of
age or older. The median annual household income of owners of VOIs in the United
States is approximately $71,000. The Company believes that its Resort can
capitalize on the growth of VOIs because its visitors' demographics are similar
to those of the typical VOI purchaser. In addition, over one-third of VOI owners
are from the northeast, the region from which the Resort draws approximately 75%
of its visitors.
The Company believes that a significant part of the success of the vacation
ownership industry may be attributable to the growth of timeshare exchanges
which have increased flexibility to owners of
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VOIs. Such timeshare exchange companies allow owners to exchange weeks and
locations. Of the 4,350 worldwide vacation ownership resorts, approximately 95%
are associated with an exchange company, with such companies arranging
approximately 80% of the timeshare vacations taken worldwide each year. The
Company expects that the Joint Venture will associate itself with one of the
leading exchange companies. The Company believes that another significant factor
contributing to the current success of the vacation ownership industry is the
entry into the vacation ownership market of some of the world's major lodging,
hospitality and entertainment companies, such as Marriott International, Inc.,
The Walt Disney Company, Hyatt Corporation, Four Seasons Hotels and
Inter-Continental Hotels and Resorts.
The Company anticipates that the Joint Venture will offer financing to
purchasers of up to approximately 90% of the purchase price of a VOI. Such
financing may be provided primarily by the Company and, if appropriate, through
third party lenders. It is anticipated that a significant number of purchasers
of the Company's VOIs will avail themselves of such financing. The Company
believes that such financing is expected to be attractive to purchasers who find
it convenient to handle all facets of the purchase of VOIs through a single
source and because down payments required by such financing are intended to be
similar to those required by banks and mortgage companies which offer such type
of credit. The typical financing extended by the Joint Venture is intended to be
a term of approximately seven years and at a fixed interest rate. For
information regarding the regulation of VOIs see 'Business -- Regulation and
Legislation.'
DEVELOPMENT OF REAL ESTATE
In light of the Resort's existing amenities, significant amount of
developable land and attractive location, the Company believes that the Resort
has numerous potential opportunities for further real estate development. The
Company believes that similar factors which motivate skier visits to the Resort,
such as accessibility, four-season attractions, amenities and proximity to major
markets, should also tend to enhance values of the Company's real estate over
time. Approximately 400 of the approximately 750 acres of the Company's land at
the Resort are currently undeveloped. The Company also owns related
infrastructure such as water and wastewater systems (which can support an
additional 390 residential units at the Resort), certain roads, parking lots and
maintenance facilities.
The Company plans to further develop its real estate holdings as part of
the overall expansion of the Resort. The original master development plan of the
previous owner of the Resort contemplated approximately 560 residential units
(172 of which have already been built), an 18-hole golf course, and further
commercial development. The Company believes that its current supply of land at
the Resort can support real estate development activities for approximately 10
to 15 years. The Company may also consider opportunities to add to its inventory
of available land. By carefully managing the number and mix of new real estate
interests it markets each year, the Company intends to achieve attractive
returns through a balanced utilization of the Resort and its real estate.
Previous plans for the Resort included the future construction of an
18-hole golf course to be surrounded by 100 to 140 townhouse units. In 1986, the
previous owner of the Resort had applied for conceptual approval in accordance
with Vermont's principal environmental law, Act 250, for a golf course at the
Resort and was issued a conceptual Land Use Permit on the basis of the
application, which permit has since expired. The District Environmental
Commission which issued the conceptual Land Use Permit found that the proposed
golf course and residential units were in conformance with the West Windsor Town
Plan. While these plans and projects were never completed, the Company believes
that potential opportunities still exist for these and other projects to be
constructed on the approximately 400 acres currently available for development
at the Resort. The Company is assessing the development of an 18-hole golf
course with additional adjacent residential units, all on land currently owned
by the Company.
Typically, golf is a primary attraction for mountain resorts in the summer
and shoulder seasons, generating revenues from greens fees, cart rentals and
pro-shop sales and should increase the overall demand for Resort real estate. In
addition, in such resorts, golf is also responsible for generating a significant
portion of the food and beverage and lodging revenues during the summer. The
developable land parcels adjacent to a golf course generally achieve higher
selling prices than other real estate.
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OPPORTUNITIES FOR FURTHER DEVELOPMENT
Upon the closing of this Offering, the Company will acquire substantially
all the assets of a former day ski area known as Hogback Mountain, which covers
approximately 800 acres of land located in southern Vermont and includes
buildings whose tenants are currently a restaurant, a gift shop and two small
museums, the businesses of which are not being acquired by the Company. Hogback
Mountain is located within 20 miles of the Mount Snow and Haystack ski areas and
offers an unobstructed, panoramic view of three states. Hogback Mountain is
within 30 minutes driving distance to several ski areas, golf courses, large
lakes, annual music festivals and other attractions. The Company believes that
Hogback Mountain offers attractive development potential.
One of the tallest mountains in southern Vermont, Hogback Mountain is
situated adjacent to Route 9, a primary east-west thoroughfare in Vermont. Route
9 connects Brattleboro in the southeast corner of Vermont with Bennington in the
southwest corner and is one of the most traveled roads in Vermont.
Over the years, the Hogback Mountain property developed in a number of
ways. A small ski area with a total of 24 trails and slopes and a base lodge was
developed. The ski area has not been operating since the mid 1980's. In
addition, a restaurant and gift shop as well as a few rental cottages were
built. Two small museums were also established, one of which is currently
expanding to a newer facility at Hogback Mountain. The Company believes that
Hogback Mountain could support cross-country and downhill skiing, snowmobiling
and other winter activities as well as certain summer and shoulder season
activities in the event that the necessary regulatory approvals were obtained
and appropriate development resources were expended. Hogback Mountain is
currently registered with VAST, the Vermont Association of Snow Travelers, a
snowmobiling association. The Company intends to explore possible development
opportunities regarding the land at Hogback Mountain, including an examination
of zoning and other regulatory approvals necessary for any development.
As consideration for the purchase of Hogback Mountain, the Company will
issue an aggregate of 292,500 shares of Common Stock to Skyline Partners, L.P.,
a New York limited partnership and the owner of the 800 acres of land at Hogback
Mountain and the buildings whose tenants are currently the Skyline Restaurant,
gift shop and the two small museums at Hogback Mountain. Additionally, the
Company will pay up to approximately $75,000 of expenses related to the
property. An independent appraisal, dated November 7, 1997, has valued Hogback
Mountain at approximately $3,500,000. There can be no assurance, however, that
such appraisal represents the fair market value of Hogback Mountain. Pursuant to
the purchase and sale agreement, subsequent to the closing of the Offering, at
the option of the Company, Skyline Partners, L.P. may manage the Hogback
Mountain property in accordance with a management agreement between the Company
and Skyline Partners, L.P., pursuant to which the Company shall pay a monthly
fee to Skyline Partners, L.P. in an amount to be mutually agreed upon by the
parties. The Company also intends to lease the buildings including the Skyline
Restaurant and gift shop at Hogback Mountain to the Vermont Natural Company, the
current owner and operator of such businesses. The lease will be on a
month-to-month basis, terminable by the Company or by the tenant on 30 days
notice, at a rent in an amount to be mutually agreed upon by the parties. The
Company will not, however, be purchasing any portion of the businesses operating
on such premises. Skyline Partners, L.P. and, its wholly owned subsidiary,
Vermont Natural Company, are affiliates of Josephthal. See 'Certain
Transactions' and 'Underwriting.'
Upon the successful implementation of its strategy at Ascutney, the Company
intends to seek other opportunities that fit its core strategy of developing and
operating year-round affordable, family resorts. The Company believes there are
other possible development opportunities available to it. The Company further
believes that there is strong interest in families seeking affordable vacations
in year-round resorts near their primary residences that offer many of the
amenities found at larger destination resorts but on a friendlier, more personal
level. The Company's management team combines experience in ski resort
operation, mountain resort development and finance, and the Company believes
that its management is well suited to carry out its business strategy.
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RESORT MARKETING AND SALES
The primary objectives of the Company's marketing strategy for its
operations include (i) increasing the Company's market share of northeastern ski
visitors by continuing to increase the recognition associated with the Resort,
(ii) building demand during both peak and non-peak periods and (iii) expanding
the summer and shoulder season business of the Resort.
The Company's marketing methods include print media advertising in ski
industry and lifestyle publications whose readership the Company believes
generally reflects the demographic profile of the Resort's customers. The
Company is also active in a number of promotional programs such as discount
programs offered through local retailers designed to attract local day skiers.
Since 1995, the Company has produced its own magazine which promotes the
Resort's features and attractions while promoting the surrounding region as
well. In addition, the Company uses direct mail advertising and is placing
increasing emphasis on its web site which has generated up to 44,000 hits in a
single month.
Given the Resort's characteristics and layout, the Company's marketing
efforts concentrate on both the family vacation market and the conference
market. With the convenience of a self-contained resort village, coupled with
large hotel suites, the Company believes that the Resort is particularly well
suited for families with young children. In addition, the Resort has also
attracted group and conference business including corporate meetings,
conventions, weddings and ski groups. The Resort has fifteen function rooms that
range in size from approximately 500 square feet to over 4,000 square feet and
can accommodate groups from as small as 20 to as large as 500. The Company
believes that the Resort ranks among the top four conference centers in Vermont.
To increase awareness of the Ascutney name, the Company has entered into
sponsorship relationships with local and national companies and has hosted
several entertainment events, including concerts of the Vermont Symphony
Orchestra. The Resort has also hosted a number of sporting events including the
Mountain Dew'tm' Vertical Challenge and the Boston College Winter Carnival.
REGULATION AND LEGISLATION
The Company is subject to various laws and regulations relating to the
operation of its Resort and related activities, which are administered by
numerous federal, state and local governmental agencies. Additionally, the
mountain resort industry is subject to extensive regulation. The Company is or
may be subject to various federal, state and local environmental, zoning and
other statutes and regulations regarding the sale, subdivision, and acquisition
of real estate and timeshare interests and their financing. The Company believes
that it is in full compliance in all material respects with such applicable laws
and regulations.
Development of the Company's property in Vermont is subject to
comprehensive environmental legislation, commonly referred to as Act 250, as
well as state administrative regulations. This regulatory framework, in general,
encompasses such areas as water quantity and quality, air quality, traffic
considerations, availability of municipal services, use of natural resources,
impact of growth, energy conservation and utility services, conformance with
local and regional plans, and public building approvals, together with a number
of other safety and health regulations. Additionally, each municipality has its
own planning and zoning requirements.
Permits and approvals mandated by such regulation for development of any
magnitude are often numerous, significantly time-consuming and onerous to obtain
and not guaranteed. The permit processes are administered by numerous state,
regional and local boards and agencies with independent jurisdictions. Permits
when received are subject to appeal or collateral attack and, in some cases, are
of limited duration, after which review is necessary. These requirements have a
direct bearing on the ability of the Company or others to further develop their
resorts in Vermont. All other Vermont ski areas are also subject to similar
processes. While the Company believes that its operations and development goals
are and will be in full compliance in all material respects with applicable
federal, state and local requirements, it must be recognized that growth and
development opportunities within Vermont may be limited and more costly as a
result of these legislative, regulatory or municipal requirements.
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An application for an Act 250 Permit was filed by the previous owner of the
Resort for conceptual approval of a master plan for the Resort, including 560
condominiums and an 18-hole golf course. The District Environmental Commission
of the State of Vermont (the 'Commission') issued a conceptual Land Use Permit
in response to such application. The Commission found that the project described
in the application would not cause or result in a detriment to public health,
safety or general welfare under the criteria described in 10 V.S.A., Section
6086(a). However, the conceptual Land Use Permit issued by the Commission in
August 1987 has expired. A new application and subsequent approval thereof, as
well as other regulatory approvals, would be needed if the Company decided to
develop a golf course.
The Company would need to lease additional land from either the State of
Vermont or the Town of West Windsor or both if it were to expand ski operations
to the peak of Mt. Ascutney. Under the terms of the lease, either the Vermont
Department of Forests and Parks and/or the Town of West Windsor would be
expected to have the right to review and comment on the location, design and
construction of improvements on the leased land and on many operational matters.
The Vermont Department of Forests and Parks leases land to 7 of the 19 ski areas
in Vermont. The terms of such leases are substantially similar for all ski areas
and the payment is calculated as a percentage of gross lift ticket revenues
based on the number of lifts that a ski area builds on state-owned land. To the
Company's knowledge, no lease for a ski resort has ever been terminated by the
Vermont Department of Forests and Parks. See 'Risk Factors -- Permits and
Regulatory Matters.'
Many state and local authorities have imposed restrictions and additional
regulations on developers of vacation ownership properties. The Company is
subject to various regulatory requirements including state and local approvals.
These restrictions are expected to generally increase the cost of selling VOIs.
In compliance with state laws, the Company expects that the Joint Venture will
provide its vacation ownership purchasers with a public disclosure statement
which contains, among other items, detailed information about the surrounding
vicinity, the Resort and the purchaser's rights and obligations as an interval
owner. While permissible under Vermont law, the State of Vermont does not
expressly regulate VOIs. However, condominium regulations are applicable to VOIs
in the State of Vermont. The Company has set up the VOIs so as to comply in all
material respects with the Vermont Condominium Ownership Act as well as other
applicable state regulations. Accordingly, the Company has obtained local zoning
approval and has also applied for and expects to receive state land use
approval.
The Company expects that the Joint Venture's customer financing activities
will also be subject to extensive regulation, which may include the
Truth-in-Lending -- Regulation Z, the Fair Debt Collection Practices Act, the
Equal Credit Opportunity Act -- Regulation B, the Electronic Funds Transfer
Act -- Regulation E, the Home Mortgage Disclosure Act -- Regulation C, Unfair or
Deceptive Acts or Practices -- Regulation AA, the Real Estate Settlement
Procedures Act, the Consumer Credit Protection Act and the Right to Financial
Privacy Act. The Company believes that the Joint Venture will be in compliance
in all material respects with such regulations.
COMPETITION
The ski industry is highly competitive. The Company competes with mountain
resort areas in the United States, Canada and Europe for both destination and
day skiers, including mountain resorts in Vermont (many of which have greater
financial resources, greater name recognition and a greater share of the
market). The Company also competes with other leisure industry companies,
including warm weather resorts, for the vacation guest. The Company's major
North American competitors include the major New England ski areas, Colorado and
Utah mountain resorts, the Lake Tahoe mountain resorts in California and Nevada,
the Quebec mountain resorts and the major ski areas in the Canadian Rockies.
Many of the Company's current competitors have longer operating histories,
greater name recognition, larger customer bases and significantly greater
financial and marketing resources than the Company. The Company believes that
the Resort is one of a relatively small number of ski areas in North America
able to attract both the day skier and the destination guest by providing a
comprehensive vacation experience. The competitive position of the Resort is
dependent upon many diverse factors such as proximity to major metropolitan
areas, prevailing weather conditions, availability and cost of transportation to
the Resort, pricing of ski services offered, snowmaking capabilities, type
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and quality of skiing offered, duration of the ski season, the number, quality
and price of related services and lodging facilities, and the reputation of the
Resort.
Additionally, as the Company through the Joint Venture develops the VOI
program at the Resort, it may experience significant competition for customers
and for qualified personnel from other entities engaged in the business of
resort development, sales and operations, including vacation interval ownership,
condominiums, hotels and motels. Beginning in 1984 with the successful entry of
Marriott International, Inc. into the VOI business, many of the world's leading
lodging and hospitality companies have begun to develop and sell VOIs. Major
companies which now operate or are developing VOI resorts include The Walt
Disney Corporation, Hilton Hotels Corporation, Hyatt Corporation, Four Seasons
Hotels and Inter-Continental Hotels and Resorts. These companies possess
significantly greater financial, marketing, personnel and other resources than
those of the Company. Nevertheless, the vacation ownership industry remains
highly fragmented with many of North America's vacation ownership resorts owned
and operated by small, regional companies. Furthermore, there are other hotels
and vacation resorts in the Company's market that provide competitive
alternatives to the purchase of a VOI at the Resort.
EMPLOYEES
As of September 30, 1997, the Company had approximately 75 full-time,
year-round employees (approximately 30% engaged in hotel operations,
approximately 12% engaged in mountain operations, approximately 19% engaged in
food and beverage operations and approximately 39% engaged in administrative and
other miscellaneous operations) and approximately 175 additional peak-season
employees (approximately 17% engaged in hotel operations, approximately 56%
engaged in mountain operations, approximately 14% engaged in food and beverage
operations and approximately 13% engaged in administrative and other
miscellaneous operations). The Company believes that its employee relations are
satisfactory.
LEGAL PROCEEDINGS
The Company from time to time is involved in litigation in the ordinary
course of its business. The Company does not believe that it is involved in any
litigation that will, individually or in the aggregate, have a material adverse
effect on its business, financial condition or results of operations.
The athletic nature of the Company's ski operations subjects the Company to
litigation in the ordinary course of business, including claims for personal
injury. The Company maintains liability insurance that it considers adequate to
insure claims related to usual and customary risks associated with the operation
of a ski resort. See 'Risk Factors -- Adequacy of Insurance Coverage.'
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning the executive
officers and directors of the Company upon the closing of the Offering:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH COMPANY
- ------------------------------------ ----- -----------------------------------------------------------
<S> <C> <C>
Steven H. Plausteiner............... 37 Chairman of the Board and Chief Executive Officer
Susan D. Plausteiner................ 37 Director, Chief Financial Officer and Secretary
Dusan Plausteiner................... 63 Director and Chief Operating Officer
David N. Deutsch.................... 38 Director - Nominee
Richard S. Frary.................... 50 Director - Nominee
Henry B. Lunde...................... 53 Director - Nominee
Dan Purjes.......................... 47 Director - Nominee
</TABLE>
STEVEN H. PLAUSTEINER co-founded the Company and has served as its Chairman
of the Board and its Chief Executive Officer since its inception. From April
1993 to January 1994, Mr. Plausteiner served as Senior Managing Director in
charge of Mortgage Backed Securities Sales and Trading at Smith Barney Inc. From
May 1991 to April 1993, Mr. Plausteiner served as a Managing Director of Daiwa
Securities America Inc. in the Collateralized Mortgage Obligations (CMO) area.
From September 1982 to February 1991, Mr. Steven Plausteiner held various
positions, including Senior Vice President -- Mortgage Trading Desk, of
Prudential Securities, Inc., formerly Prudential-Bache Securities, Inc. In 1995,
Mr. Plausteiner was elected to serve a one-year term on the Board of Directors
of the Vermont Ski Areas Association, the leading trade association of the
Vermont ski industry, and has been re-elected twice to serve successive one-year
terms. Mr. Plausteiner holds a Bachelor of Arts degree from Boston College.
SUSAN D. PLAUSTEINER co-founded the Company and has served as its Chief
Financial Officer since its inception. In September 1996, Ms. Plausteiner was
appointed by the Governor of Vermont to serve on the Board of Directors of the
Vermont Economic Development Authority, which promotes business development
through low cost and attractive loans. From October 1994 through September 1997,
Ms. Plausteiner served on the Board of Directors of the Vermont Chamber of
Commerce and in November 1994, she was appointed to the Board of Incorporators
for David's House, a charitable organization having its principal offices in
Hanover, New Hampshire. From September 1985 to June 1990, Ms. Plausteiner held
various positions, including Vice President -- Financial Institutions Group, of
Prudential Securities, Inc. Ms. Plausteiner is a graduate of Tufts University
from which she received a Bachelor of Arts degree and holds a Masters of
Business Administration degree from the Wharton School at the University of
Pennsylvania.
DUSAN PLAUSTEINER co-founded the Company and has served as its Chief
Operating Officer since its inception. Prior to joining the Company, he has held
numerous senior operation positions at several ski resorts in the northeastern
United States. From July 1990 to October 1993, Mr. Plausteiner served as Vice
President of Planning and Construction for the Olympic Regional Development
Authority, where he was in charge of planning and construction for the Whiteface
and Gore Mountain Ski Areas, all of the 1980 Winter Olympic venues including the
bobsled and luge runs, the biathlon and cross-country complex, and the Olympic
ice arena in Lake Placid, New York. From October 1976 to June 1990, Mr.
Plausteiner held various positions, including Director and Associate Manager of
the Whiteface Ski Center in Lake Placid, New York, where he was, among other
things, responsible for planning and development of the Ski Center in
preparation for the 1980 Winter Olympics. From 1957 to 1976, Mr. Plausteiner
held various positions at Mount Snow, a leading Vermont ski resort, including
Vice President -- Operation and Planning of Mount Snow Development Corporation,
Vice President for Planning and Maintenance of Mount Snow Hotel Corporation and
Operations Manager of Mount Snow. In 1971, he was appointed to the Board of
Directors of the Mount Snow Corporation, the parent company for the Mount Snow
resort and ski operations, on which he served until June 1976. In 1973, Mr.
Plausteiner was appointed by the Governor of Vermont to the Vermont Tramway
Board where he chaired the Tramway Code Revision until June 1976.
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DAVID N. DEUTSCH will serve as a Director of the Company commencing with
the closing of this Offering. Mr. Deutsch is the founder and President of David
N. Deutsch & Company, Inc. ('DND & Co.'), a private investment banking and
strategic advisory firm. Prior to founding DND & Co. in September 1993, Mr.
Deutsch was Managing Director, Investment Banking at Congress Financial
Corporation ('Congress'), an asset-based lender specializing in the structuring,
financing and refinancing of middle market leveraged acquisitions and troubled
companies from May, 1990 to August, 1993. Before joining Congress, Mr. Deutsch
held positions with Bear, Stearns & Co. Inc., where he was a Vice President
specializing in debt and equity financings and Drexel Burnham Lambert
Incorporated, where he was a member of the Corporate Finance and High Yield and
Convertible Bond departments. Mr. Deutsch received his B.A. from Middlebury
College and his MBA from Columbia University School of Business.
RICHARD S. FRARY will serve as a Director of the Company commencing with
the closing of this Offering. Mr. Frary is one of the founding partners and a
managing director of Tallwood Associates, Inc. which advises real estate
companies on capital markets transactions and acquisitions and restructuring
opportunities and identifies and structures principal transactions for Tallwood
and outside investors. Prior to founding Tallwood in March 1990, Mr. Frary was a
managing director at Drexel Burnham Lambert Inc. During his eleven years at
Drexel, Mr. Frary was head of the Drexel Corporate Finance Department's real
estate group which was responsible for in excess of $15 billion of corporate and
mortgage financing for public and private real estate companies and corporate
clients and was a member of Drexel's Executive Committee. Mr. Frary is currently
serving on the Boards of Directors of Washington Homes, Inc., a publicly-held
homebuilding Company, Value Property Trust, a real estate investment company,
and CGA Group LTD., a Bermuda based real estate company. Mr. Frary received his
MBA from Harvard Business School. Mr. Frary is a principal of Tallwood. See
'Certain Transactions.'
HENRY B. LUNDE will serve as a Director of the Company commencing with the
closing of this Offering. Mr. Lunde is currently President and a Director of
Stowe Mountain Resort, a leading ski resort in North America. From 1969 to 1996,
Mr. Lunde held numerous positions at SKI Ltd., a mountain resort holding company
which owned ski resorts across the country including Killington, Vermont, Mount
Snow, Vermont, Haystack, Vermont, Waterville Valley, New Hampshire,
Sugarloaf/USA, Maine, and Bear Mountain, California, including President, Chief
Operating Officer and Director. Mr. Lunde has previously served on the Boards of
Directors of the Vermont Ski Areas Association, Resort Technology, Inc., a
designer and manufacturer of Snowmaking systems and equipment, Rutland Regional
Medical Center and the Proctor Bank. Mr. Lunde is currently serving on the
Boards of Directors of Fletcher Allen Health Care, a major regional medical
center located in Burlington, Vermont and The Vermont Health Plan, a non-profit,
Vermont-based health maintenance organization.
DAN PURJES will serve as a Director of the Company commencing with the
closing of this Offering. Mr. Purjes has been Chairman and CEO of Josephthal, an
investment banking and brokerage firm and a member of the New York Stock
Exchange and other principal exchanges since 1988. Previous to his appointment
as CEO of Josephthal, he served as its Director of Investment Banking. Prior to
joining Josephthal in 1985, Mr. Purjes was a Vice President with a number of
securities firms including Bear Stearns & Co. and L.F. Rothschild Unterberg
Towbin. Mr. Purjes is also Chairman of NUR Advanced Technologies, Ltd., a
digital jet printer company. Mr. Purjes has B.S. and M.S. degrees in Computer
Sciences from the City College of New York School of Engineering. Mr. Purjes is
an affiliate of Josephthal. See 'Certain Transactions.'
Ms. Susan Plausteiner is the wife of Mr. Steven Plausteiner and
daughter-in-law of Mr. Dusan Plausteiner. Mr. Steven Plausteiner is the son of
Dusan Plausteiner. There are no other family relationships among the officers
and directors of the Company.
Committees of the Board of Directors. Effective upon the closing of this
Offering, the Company will establish an Audit Committee which will consist of
such non-employee directors appointed upon the closing of the Offering as
designated by the Board of Directors. The Audit Committee will be responsible
for reviewing and making recommendations regarding the Company's employment of
independent auditors, the annual audit of the Company's financial statements and
the Company's
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internal accounting controls, practices and policies. Additionally, the Company
will establish a Compensation Committee which will consist of those non-employee
directors appointed upon the closing of the Offering as designated by the Board
of Directors. It will be responsible for making recommendations to the Board of
Directors regarding compensation arrangements for executive officers of the
Company, including annual bonus compensation, and will consult with management
of the Company regarding compensation policies and practices. The Compensation
Committee will also make recommendations concerning the adoption of any
compensation plans in which management is eligible to participate, including the
granting of stock options or other benefits under such plans.
Directors' and Officers' Terms and Directors' Fees. Effective upon the
closing of this Offering, the Company's Board of Directors will consist of six
members. Each director is elected for a period of one year at the Company's
annual meeting of stockholders and serves until his or her successor is duly
elected and qualified. Directors who are not employees of the Company will
receive an annual retainer of $1,000 and options to purchase shares of the
Company's Common Stock pursuant to the Company's 1997 Stock Option Plan for
Non-Employee Directors. Each option will have a term of five (5) years from the
date of grant, unless earlier terminated. The options are exercisable in whole
or in part on the earlier of (i) the first anniversary of the grant date of the
option, or (ii) death, or (iii) disability. See 'Management -- 1997 Stock Option
Plan for Non-Employee Directors.' All directors will be reimbursed for
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board of Directors or committees thereof. Directors who are also officers of the
Company will not be compensated for their services as directors.
Each of the executive officers serves at the pleasure of the Company's
Board of Directors. See 'Management -- Employment Agreements.'
EXECUTIVE COMPENSATION
No compensation was paid or was payable to the Chief Executive Officer
('CEO') of the Company and none of the Company's most highly compensated
executive officers had combined salaries and bonuses that equalled or exceeded
$100,000 for the years ended December 31, 1994, 1995 and 1996 (collectively,
with the CEO, the 'Named Executive Officers'). The primary reason that the
Company incurred such limited salary expense was due to the need to make
significant investment in its business during the period of the commencement of
the Company's operations under its new management team.
EMPLOYMENT AGREEMENTS
Steven H. Plausteiner will enter into a three-year employment agreement
with the Company which is to commence upon the closing of the Offering. Under
the terms of his employment agreement, Steven Plausteiner will be entitled to
receive an annual base salary of $100,000, which may be increased at the sole
discretion of the Board of Directors, plus a bonus determined by the Board of
Directors after considering the Company's profitability, the CEO's performance,
and the total compensation given to executives in a similar position at
companies similar to the Company. Steven Plausteiner will also be entitled to
receive benefits offered to the Company's senior executives generally by the
Company.
In the event of the termination of Steven Plausteiner's employment by the
Company, other than for 'cause', the termination of employment by Steven
Plausteiner for 'good reason' or the termination by Steven Plausteiner following
a breach by the Company of any material provision of the agreement, Steven
Plausteiner will be entitled to a lump sum payment equal to the annual base
salary for the remaining term of the employment agreement. In the event of the
death of Steven Plausteiner during the term of his employment agreement, his
designated beneficiary (or if none, his estate) shall receive a lump sum payment
equal to the annual base salary for the remaining term of the employment
agreement. The Company will pay the premiums for life insurance on behalf of
Steven Plausteiner.
Susan D. Plausteiner will enter into a three-year employment agreement with
the Company which is to commence upon the closing of the Offering. Susan
Plausteiner's employment agreement will be substantially identical to Steven
Plausteiner's employment agreement with the Company with the only difference
being the amount of the premium for term life insurance.
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ADVISORY AND CONSULTING AGREEMENT
The Company has entered into an advisory and consulting agreement with
Tallwood for a one year period commencing January 1, 1998. Tallwood will advise
the Company on real estate finance and development. Mr. Frary, who is a
principal and managing director of Tallwood, will serve as a director of the
Company commencing with the closing of this Offering. As compensation for its
services to be rendered under the advisory and consulting agreement, Tallwood
was granted on January 1, 1998 options to purchase 40,000 shares of Common
Stock. The options have a term of 5 years from the date of the closing of the
Offering and are exercisable, in whole or in part, from the first anniversary of
the closing of the Offering at an exercise price of $5.00 per share of Common
Stock. The options grant to the holders thereof certain rights of registration
for the securities issuable upon the exercise thereof. See 'Description of
Capital Stock -- Registration Rights.' Tallwood has agreed not to sell or
transfer, other than to family members or a trust for the benefit of family
members, any of its options for a period of twelve (12) months commencing on the
closing of the Offering, without the prior written consent of the Company. Mr.
Frary and Mr. Mael, the principal stockholders of Tallwood, have each made a
loan to the Company. See 'Management Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources.'
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS (THE '1997 PLAN')
The 1997 Plan was approved by the Board of Directors in August 1997 and is
expected to be approved by the stockholders prior to the closing of the
Offering.
The purpose of the 1997 Plan is to promote the interests of the Company and
its stockholders by increasing the proprietary and vested interest of
non-employee Directors in the growth and performance of the Company.
The 1997 Plan provides for awards of nonqualified options to individuals
who are non-employee Directors of the Company or its affiliates (other than Mr.
Dan Purjes who may only receive awards after serving on the Board of Directors
for twelve consecutive months) as of the date of grant of the option ('Eligible
Directors'). Unless earlier terminated pursuant to the terms of the 1997 Plan,
each option shall have a term of 5 years from the date of grant. The options are
exercisable in whole or in part on the earlier of (i) the first anniversary of
the grant date of the option, or (ii) death, or (iii) disability. The exercise
price per share of Common Stock shall be the greater of 100% of the fair market
value per share on the date the option is granted and the initial public
offering price of the Common Stock as set forth herein.
Pursuant to the 1997 Plan, each Eligible Director will be awarded an Annual
Grant (as defined below). Upon first election or appointment to the Board of
Directors at other than an annual meeting, each newly elected Eligible Director
will be granted an option to purchase a number of shares of Common Stock (the
'Initial Grant') determined by multiplying 7,500 by a fraction the numerator of
which is the number of whole months until the next Annual Grant and the
denominator of which is 12. Immediately following each annual meeting of the
stockholders commencing with the meeting in calendar year 1998, each Eligible
Director, provided that such Eligible Director has attended a required minimum
number of Board of Directors and committee meetings during the year, will be
granted an option to purchase 7,500 shares of Common Stock (an 'Annual Grant').
No Eligible Director may be awarded more than one Initial Grant.
The maximum number of shares of Common Stock with respect to which awards
may be granted under the 1997 Plan is 150,000. There are no outstanding awards
or options. Shares of Common Stock subject to options that terminate or expire
without the delivery of Common Stock will again be available for awards. Also,
shares tendered to the Company in satisfaction or partial satisfaction of the
exercise price of any award will increase the number of shares available for
awards except to the extent prohibited by Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'). The shares of Common
Stock to be delivered under the 1997 Plan will be made available from the
authorized but unissued shares of Common Stock or from treasury shares.
The Company has agreed with the Representative that for a nine (9)-month
period commencing on the date of this Prospectus, that it will not, without the
consent of the Representative, adopt or propose
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to adopt any plan or arrangement permitting the grant, issue or sale of any
shares of its Common Stock or issue, sell or offer for sale any of its Common
Stock, or grant an option for its Common Stock, except for options to purchase
up to an aggregate of 150,000 shares of Common Stock which shall have an
exercise price per share no less than the greater of (a) the initial public
offering price of the Common Stock set forth herein and (b) the fair market
value of the Common Stock on the date of grant. No option or other right to
acquire Common Stock granted, issued or sold during this period shall permit (a)
the payment with any form of consideration other than cash, (b) payment of less
than the full purchase price or exercise price for such shares of Common Stock
or other securities of the Company on or before the date of issuance, or (c) the
existence of stock appreciation rights, phantom options or similar arrangements.
The 1997 Plan is administered by the Board of Directors. Subject to the
provisions of the 1997 Plan, the Board is authorized to interpret the 1997 Plan,
to establish, amend and rescind any rules and regulations relating to it and to
make all other determinations necessary or advisable for its administration;
provided, however, that the Board has no discretion with respect to the
selection of Directors to receive options, the number of shares of Common Stock
subject to any such options, the purchase price thereunder or the timing of
grants of options. The determinations of the Board in the administration of the
1997 Plan, as described herein, shall be final and conclusive.
The exercise price of options may be satisfied in cash or, if permitted by
the Board with respect to options granted after the nine (9) month period that
commences on the date of this Prospectus, at the time of grant, by exchanging
shares of Common Stock which have been owned by the optionee for at least six
months, or by a combination of cash and shares of Common Stock.
The options granted under the 1997 Plan may not be assigned or transferred,
except by will or the laws of descent and distribution.
No award may be granted under the 1997 Plan after the day following the
tenth annual meeting of stockholders at which Directors are elected.
The Board of Directors may amend or revise the 1997 Plan in whole or in
part at any time, subject to certain limitations set forth in the 1997 Plan.
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CERTAIN TRANSACTIONS
COMBINATION TRANSACTION
Prior to the consummation of the Offering, the Resort was owned by three
Delaware limited partnerships which are affiliates of the Company: Ascutney
Mountain Resort Hotel, L.P., Ascutney Mountain Resort, L.P. and Ascutney
Mountain Resort Realty, L.P. (collectively, the 'Limited Partnerships'). In
addition, Ascutney Mountain Resort Foods, Inc., a Vermont corporation and
affiliate of the Company ('Foods'), is the holder of a liquor license for the
Resort. Further, Ascutney Mountain Resort Services, Inc., a Delaware corporation
and affiliate of the Company ('Services'), managed the Resort on behalf of the
Limited Partnerships. Immediately prior to the closing of this Offering, the
Company will acquire all of the partnership interests of each of the Limited
Partnerships and all of the outstanding shares of capital stock of Foods. It is
expected that Services will be dissolved.
Immediately prior to the closing of the Offering, all of the partnership
interests in each of the Limited Partnerships will be exchanged for an aggregate
of 1,207,500 shares of Common Stock of Snowdance, Inc. (the 'Combination
Transaction'). The amount of shares of Common Stock that will be issued by the
Company in exchange for all of the partnership interests in each of the Limited
Partnerships was determined by the parties. The factors considered in
determining such consideration included, in addition to prevailing market
conditions, the history of and the prospects for the industry in which the
Company competes, an assessment of the Company's management, the prospects of
the Company, its capital structure and such other factors that were deemed
relevant. Each of the Limited Partnerships has a corporate general partner which
has a 1% interest in the Limited Partnership of which it is general partner. All
of the issued and outstanding shares in each of the corporate general partners
are owned by Susan D. Plausteiner. All other interests in the Limited
Partnerships are owned by Steven H. Plausteiner or Susan D. Plausteiner. As a
result of the Combination Transaction, immediately prior to the closing of this
Offering, all of the outstanding shares in the Company will be owned by Steven
H. Plausteiner or Susan D. Plausteiner. Based on discussions with its tax
advisor, the Company's management expects that the Combination Transaction will
be treated as an Internal Revenue Code Section 351 transaction and be tax free
to the Company and the Limited Partnerships. The Company has been advised by its
tax advisor that in the event the Combination Transaction is not treated as a
tax free transaction, any resulting tax liability would be the responsibility of
the Principal Stockholders, not of the Company or the Limited Partnerships. In
addition, immediately prior to the closing of this Offering, Steven H.
Plausteiner and Susan D. Plausteiner will contribute all of the outstanding
shares of capital stock of Foods to Snowdance, Inc. as a capital contribution
and Foods will become a wholly-owned subsidiary of Snowdance, Inc. As part of
the Combination Transaction, the Company will receive an ownership interest in
3/4 of 1 condominium unit which was previously owned by Ascutney Mountain Resort
Realty, L.P.
Immediately prior to the closing of this Offering, the Company, as lessee,
will enter into a 'net' lease agreement with Steven H. Plausteiner and Susan D.
Plausteiner, as lessors, to lease 17 slope side condominium units. It is
contemplated that the Company will pay all expenses associated with each of the
condominium units other than debt service on the underlying mortgage loans and
that the Company will have an option to buy each condominium unit for a net
purchase price of $110,000 at any time during the initial lease term or any
renewal term. The Company expects that the annual rent for each condominium unit
will be approximately $6,000 to $8,000 and that the lease will have a term of 5
years with an option to renew for 5 years. The foregoing lease transaction,
though not the result of arms-length negotiations, is on terms that the Company
believes are at least as favorable as those which the Company could have
obtained from an independent third party.
Upon the closing of the Offering, the Company will have a policy to deal
with conflicts of interest by requiring that the affirmative vote of at least a
majority of the distinterested members of the Board of Directors present at any
meeting be required for any action of the Board of Directors and such policy
shall otherwise be in accordance with Delaware General Corporation Law.
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AFFILIATE INVESTMENTS
Since acquiring the Resort in 1993, Steven and Susan Plausteiner have: (i)
provided cash to the Company of approximately $3,153,400 in the form of equity
financing, (ii) guaranteed loans for the Company having an aggregate initial
principal amount of $2,140,000 through September 30, 1997 and (iii) loaned the
Company approximately $1,737,500 through September 30, 1997 (the 'Related
Loans'). It is expected that approximately $1,180,000 of the Related Loans
currently outstanding will be converted, prior to the closing of the Offering,
by Steven and Susan Plausteiner to a capital contribution to the Company,
without any additional shares being issued to Steven and Susan Plausteiner in
connection with such capital contributions. The remaining $537,000 of Related
Loans which were made by Steven and Susan Plausteiner in the first six months of
1997 will continue to be obligations of the Company. Beginning January 1, 1998,
the Related Loans accrue interest at a rate of 8% per annum and mature on
January 1, 2008. All of the foregoing funds were used by the Resort to
recommence operations in the winter of 1993-94, to improve the Resort's
infrastructure, including upgraded snowmaking and grooming capabilities and for
working capital.
HOGBACK ACQUISITION
Upon the consummation of this Offering, the Company will exchange an
aggregate of 292,500 shares of Common Stock for Hogback Mountain which is
currently owned by Skyline Partners, L.P. Additionally, the Company will pay up
to approximately $75,000 of expenses related to the property. An independent
appraisal, dated November 7, 1997, has valued Hogback Mountain at approximately
$3,500,000. There can be no assurance, however, that such appraisal represents
the fair market value of Hogback Mountain. Hogback Mountain was acquired by
Skyline Partners, L.P. in February 1994 pursuant to a purchase agreement dated
October 1993 at a purchase price of $1,879,000 in cash. The Company will lease
certain buildings located at Hogback Mountain to Vermont Natural Company. See
'Business -- Business Strategy -- Opportunities for Further Development.'
Skyline Partners, L.P. and its wholly-owned subsidiary, Vermont Natural Company
are controlled by Mr. Dan Purjes, the Chairman and Chief Executive Officer of
Josephthal, and a director of the Company upon the closing of this Offering.
Certain other affiliates of Josephthal are also beneficial owners of Skyline
Partners, L.P. See 'Underwriting.'
TALLWOOD AGREEMENTS
The Company has entered into a one year advisory and consulting agreement
with Tallwood. Mr. Frary, who is a principal and managing director of Tallwood,
will serve as a director of the Company upon the closing of the Offering. The
Company has borrowed $50,000 from each of Mr. Frary and Mr. Mael, the principal
stockholders of Tallwood, pursuant to a promissory note. The Company intends to
repay the loans in full out of the proceeds of the Offering. See
'Management -- Consulting Agreements' and 'Management Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources.'
41
<PAGE>
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, assuming that the Combination
Transaction and the Hogback Acquisition have been consummated as of the date
hereof, before and after giving effect to the sale of the shares of Common Stock
offered hereby, by (i) each person who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
Director of the Company, (iii) each of the Named Executive Officers and (iv) all
Directors, Director-Nominees and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENT BENEFICIALLY OWNED
NAME AND ADDRESS NUMBER OF SHARES ---------------------------------------
OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) BEFORE OFFERING(1) AFTER OFFERING(1)
- ------------------------------------------- --------------------- ------------------ -----------------
<S> <C> <C> <C>
Steven H. Plausteiner(2) .................. 1,500,000 100% 50%
c/o Snowdance, Inc.
Route 44
Brownsville, VT 05037
Susan D. Plausteiner(2) ................... 1,500,000 100% 50%
c/o Snowdance, Inc.
Route 44
Brownsville, VT 05037
Skyline Partners, L.P.(3)(6) .............. 292,500 20% 10%
c/o Josephthal & Co. Inc.
200 Park Avenue
New York, NY 10166
Dusan Plausteiner ......................... 0 -- --
c/o Snowdance, Inc.
Route 44
Brownsville, VT 05037
David N. Deutsch .......................... 0 -- --
c/o David N. Deutsch & Company, Inc.
150 East 58th St.
New York, NY 10155
Richard S. Frary .......................... 0 -- --
c/o Tallwood Associates, Inc.
1350 Avenue of the Americas
New York, NY 10019
Henry B. Lunde ............................ 0 -- --
RD #1
Box 1022
Pittsford, VT 05763
Dan Purjes(3)(4)(5)(6) .................... 292,500 20% 10%
c/o Josephthal & Co. Inc.
200 Park Avenue
New York, NY 10166
All Directors, Director-nominees and
Executive Officers as a group (6
persons)................................. 1,500,000 100% 50%
</TABLE>
- ------------
(1) Unless otherwise indicated, each person has sole investment and voting power
with respect to the shares listed in the table.
(2) Represents 603,750 shares held by Steven H. Plausteiner, 603,750 held by
Susan D. Plausteiner, each a Director and a Named Executive Officer of the
Company and 292,500 shares over which the Principal Stockholders have voting
control for a limited time through an irrevocable proxy to be given to the
Principal Stockholders by Skyline Partners, L.P. upon consummation of the
Offering. See 'Underwriting.'
(3) Skyline Partners, L.P. is an entity controlled by Mr. Dan Purjes, who will
serve as a Director of the Company commencing with the closing of the
Offering. The general partner of Skyline Partners, L.P. is Skyline Partners,
Inc. Mr. Dan Purjes is the sole director of Skyline Partners, Inc. Skyline
Partners, L.P. will grant, upon the consummation of the Offering, an
irrevocable proxy to the Principal Stockholders for all of its 292,500
shares for a limited time. See 'Underwriting'.
(4) Mr. Purjes will serve as a Director of the Company commencing with the
closing of the Offering.
(5) Represents 292,500 shares of Common Stock held by Skyline Partners, L.P., an
entity which Mr. Purjes controls, and, accordingly he may be deemed to
beneficially own such shares.
(6) The directors and executive officers of Josephthal & Co. Inc. are Dan
Purjes, Lawrence Rice, Charles Roden and Scott Weisman.
42
<PAGE>
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 4,900,000 shares of
Common Stock, par value $0.001 per share, and 100,000 shares of preferred stock,
par value $.01 per share, issuable in series (the 'Preferred Stock'). As of
September 30, 1997, there were no shares of Common Stock outstanding. Upon the
completion of this Offering and consummation of the Hogback Acquisition, there
will be 3,000,000 shares of Common Stock outstanding (3,225,000 shares if the
Underwriters' over-allotment option is exercised in full) and no shares of
Preferred Stock outstanding.
The following description of the Company's capital stock does not purport
to be complete and is subject in all respects to applicable Delaware law and to
the provisions of the Company's Certificate of Incorporation and By-Laws, in
each case as amended to date.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor. Upon the liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to receive ratably
the net assets of the Company available after the payment of all debts and other
liabilities. Holders of Common Stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are, and
the shares offered by the Company in this Offering will be, when issued and paid
for, fully paid and nonassessable.
PREFERRED STOCK
The Company's Certificate of Incorporation provides that the Board of
Directors (or a committee designated by the Board of Directors) is authorized,
subject to certain limitations prescribed by law, without further stockholder
approval, to issue from time to time up to an aggregate of 100,000 shares of
Preferred Stock in one or more series and to fix or alter the designations,
powers, preferences, rights and any qualifications, limitations and restrictions
of the shares of each such series thereof, including the dividend rights,
conversion rights, voting rights and the number of shares constituting any
series or designations of such series. The issuance of Preferred Stock may have
the effect of delaying, deferring or preventing a change in control of the
Company. The rights, preferences and privileges of holders of Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of Preferred Stock which the Company may designate and
issue in the future. The Company has no present plans to issue any shares of
Preferred Stock.
REGISTRATION RIGHTS
The Representatives of the Underwriters, as holder of the Representatives'
Warrants, have 'piggyback' rights to include the shares underlying the
Representatives' Warrants in any registration statement filed by the Company
during the period commencing one (1) year from the date of this Prospectus and
ending six (6) years from the date of this Prospectus and also has 'demand'
rights during the period commencing one (1) year from the date of this
Prospectus and ending five (5) years from the date of this Prospectus to
require, by action of not less than the holders of a majority of the
Representatives' Warrants, up to one 'demand' registration by the Company, of
the shares underlying the Representatives' Warrants. Furthermore, any holder of
the Representatives' Warrants has 'demand' rights during the period commencing
one (1) year from the date of this Prospectus and ending five (5) years from the
date of this Prospectus to require one 'demand' registration of the shares
underlying such holder's warrants, solely at the expense of such holder.
Additionally, Tallwood, as the holder of options to purchase 40,000 shares of
Common Stock, has 'piggyback' rights to include the shares underlying its
options in any registration statement filed by the Company during the period
starting one (1) year from the closing of this Offering and ending five (5)
years from the closing of this Offering.
43
<PAGE>
<PAGE>
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law (the 'DGCL'). Subject to certain exceptions, Section 203
prohibits a publicly-held Delaware corporation from engaging in a 'business
combination' with an 'interested stockholder' for a period of three years
following the time that such stockholder became an interested stockholder,
unless the interested stockholder attained such status with the approval of the
Board of Directors, owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (subject to certain
exclusions), or unless the business combination is approved in a prescribed
manner. A 'business combination' includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to certain exceptions, an 'interested stockholder' is a person who,
together with affiliates and associates, owns, or within three years did own,
15% or more of the corporation's voting stock.
As permitted by the DGCL, the Certificate of Incorporation and By-Laws
provide that directors of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which
the director shall derive an improper personal benefit. In addition, the
Certificate of Incorporation provides that the Company shall, to the fullest
extent authorized by the DGCL, as amended from time to time, indemnify and hold
harmless all directors and officers against all expense, liability and loss
reasonably incurred or suffered by such indemnitee in connection therewith. Such
indemnification shall continue as to an indemnitee who has ceased to be a
director or officer and shall inure to the benefit of the indemnitee's heirs,
executors and administrators. The right to indemnification includes the right to
be advanced funds from the Company for expenses incurred in defending any
proceeding for which a right to indemnification is applicable.
The Company's By-Laws provide that special meetings of the stockholders may
be called at any time by resolution of the Board of Directors, or by the
Chairman of the Board, or at the request of stockholders owning 50% or more of
the issued and outstanding capital stock of the Company and entitled to vote,
but may not generally be called by other persons.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock of the Company is
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York
10004.
44
<PAGE>
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this Offering, the Company anticipates that it
will have 3,000,000 shares of Common Stock outstanding (3,225,000 if the
Underwriters' over-allotment option is exercised in full), excluding the shares
of Common Stock issuable upon exercise of the Representatives' Warrants. The
1,500,000 shares of Common Stock offered hereby (1,725,000 if the Underwriters'
over-allotment option is exercised in full), will be freely tradeable without
restriction or further registration under the Securities Act, except for any
shares purchased by an 'affiliate' of the Company (in general, a person who has
a control relationship with the Company) which will be subject to the
limitations of Rule 144 adopted under the Securities Act. All of the remaining
1,500,000 shares are deemed to be 'restricted securities,' as that term is
defined under Rule 144 promulgated under the Securities Act, in that such shares
were issued and sold by the Company in private transactions not involving a
public offering.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or other persons whose shares are aggregated), who has owned
restricted shares of common stock beneficially for at least one year is entitled
to sell, within any three-month period, a number of shares that does not exceed
the greater of one percent of the total number of outstanding shares of the same
class or the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has not been an affiliate of the Company for at
least the three months immediately preceding the sale and who has beneficially
owned shares of common stock of the Company for at least two years is entitled
to sell such shares under Rule 144 without regard to any of the limitations
described above.
All of the Company's officers, directors and existing stockholders have
agreed not to, directly or indirectly, offer to sell, sell, transfer,
hypothecate or otherwise encumber any of their shares of Common Stock of the
Company for a period of nine (9) months from the date of this Prospectus,
without the prior written consent of Josephthal and the Company (except Skyline
Partners, L.P. which has agreed, in connection with the 292,500 shares of Common
Stock issued in connection with the Hogback Acquisition, not to, directly or
indirectly, offer to sell, sell, transfer, hypothecate or otherwise encumber
226,436 shares of Common Stock, representing those shares beneficially owned by
principals and employees of Josephthal, for a period of twenty four (24) months,
and 66,064 shares of Common Stock, representing those shares owned by
individuals not affiliated with Josephthal for a period of thirteen (13) months
without the prior written consent of the Company). Upon consummation of the
Offering, Skyline Partners, L.P. has agreed to grant an irrevocable proxy to the
Principal Stockholders allowing them to vote the respective number of shares of
Common Stock set forth above held by Skyline Partners, L.P. for the respective
periods of time during which the above restrictions apply.
In addition, prior to this Offering, there has been no market for the
Common Stock and no prediction can be made as to the effect, if any, that market
sales of shares of Common Stock or the availability of such shares for sale will
have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of common stock of the Company may be sold
in the public market may adversely affect prevailing market prices for the
Common Stock and could impair the Company's ability to raise capital through the
sale of its equity securities. See 'Risk Factors -- No Prior Public Market;
Possible Volatility of Stock Price' and 'Risk Factors -- Shares Eligible for
Future Sale.'
45
<PAGE>
<PAGE>
UNDERWRITING
The Underwriters named below (the 'Underwriters'), for whom Josephthal &
Co. Inc. and Cruttenden Roth Incorporated are acting as the representatives (the
'Representatives'), have severally agreed, subject to the terms and conditions
of the Underwriting Agreement (the 'Underwriting Agreement'), to purchase from
the Company and the Company has agreed to sell to the Underwriters on a firm
commitment basis the respective number of shares of Common Stock set forth
opposite their names:
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ------------------------------------------------------------------------------------- ----------------
<S> <C>
Josephthal & Co. Inc.................................................................
Cruttenden Roth Incorporated.........................................................
----------------
Total...................................................................... 1,500,000
----------------
----------------
</TABLE>
The Underwriters are committed to purchase all shares of the Common Stock
offered hereby if any of such shares are purchased. The Underwriting Agreement
provides that the obligations of the several Underwriters are subject to
conditions precedent specified therein.
The Company has been advised by the Representatives that the Underwriters
propose to initially offer the shares of Common Stock to the public at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less concessions of not in excess of $. per
share. Such dealers may reallow a concession not in excess of $. per share
of Common Stock to other dealers. After the initial distribution of the shares
of Common Stock offered hereby has been completed, the public offering price,
concession and reallowance may be changed by the Representatives. No such
change, however, shall change the amount of proceeds to be received by the
Company as set forth on the cover page of this Prospectus.
The Representatives have advised the Company that they do not anticipate
sales to discretionary accounts by the Underwriters to exceed five percent of
the total number of shares offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in connection with this
Offering. The Company has also agreed to pay to the Representatives an expense
allowance on a non-accountable basis equal to two and one-half percent (2 1/2%)
of the gross proceeds derived from the sale of the Common Stock underwritten,
none of which has been paid to date.
The Underwriters have been granted an option by the Company, exercisable
within forty-five (45) days after the date of this Prospectus, to purchase up to
an additional 225,000 shares of Common Stock at the initial public offering
price per share of Common Stock offered hereby, less underwriting discounts and
the non-accountable expense allowance. Such option may be exercised only for the
purpose of covering over-allotments, if any, incurred in the sale of the Common
Stock offered hereby. To the extent such option is exercised in whole or in
part, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase the number of the additional shares of Common Stock
proportionate to its initial commitment.
Josephthal may be deemed an affiliate of the Company by virtue of the fact
that (i) an affiliate of Josephthal has entered into a business transaction with
the Company and has been issued 292,500 shares of Common Stock in connection
therewith, (ii) Josephthal may provide advisory services to the Company in the
future and (iii) an affiliate of Josephthal shall serve on the Company's Board
of Directors upon the closing of the Offering.
Neither Josephthal nor any of its affiliates will act as a 'market maker'
in the Common Stock nor will Josephthal or any of its affiliates conduct any
'dealer' transaction in which any of them act as principal after the
consummation of this Offering. All trading in the secondary market will be
conducted through a specialist on the American Stock Exchange. Josephthal and
its affiliates will participate in the secondary market in the Common Stock
solely as brokers in transactions exempt under Section 4(4) of the Securities
Act.
46
<PAGE>
<PAGE>
All of the Company's officers, directors and existing stockholders have
agreed not to, directly or indirectly, offer to sell, sell, transfer,
hypothecate or otherwise encumber any of their securities for nine (9) months
following the date of this Prospectus, without the prior written consent of
Josephthal and the Company (except Skyline Partners, L.P. which has agreed, in
connection with those shares issued in connection with the Hogback Acquisition,
not to, directly or indirectly, offer to sell, sell, transfer, hypothecate or
otherwise encumber 226,436 shares of Common Stock, representing those shares
beneficially owned by principals and employees of Josephthal, for a period of
twenty four (24) months, and 66,064 shares of Common Stock, representing those
shares owned by individuals not associated or affiliated with Josephthal for a
period of thirteen (13) months without the prior written consent of the
Company). Upon consummation of the Offering, Skyline Partners, L.P. has agreed
to grant an irrevocable proxy to the Principal Stockholders allowing them to
vote the respective number of shares of Common Stock set forth above held by
Skyline Partners, L.P. for the respective periods of time during which the above
restrictions apply. An appropriate legend shall be marked on the face of the
certificates representing all of such securities.
The Company has also agreed that in connection with the Company's
discussions and negotiations with timeshare developers, Josephthal shall act as
the Company's exclusive financial advisor. Josephthal will receive a fee to be
mutually and reasonably agreed upon in good faith by the Company and Josephthal,
upon the consummation of a transaction with the Company and a timeshare
developer that Josephthal introduced to the Company.
In connection with this Offering, the Company has agreed to sell to the
Representatives, for nominal consideration, the Representatives' Warrants to
purchase from the Company 150,000 shares of Common Stock. The Representatives'
Warrants are initially exercisable for shares of Common Stock at a price per
share equal to 120% of the initial public offering price per share of Common
Stock for a period of four (4) years commencing one (1) year from the date of
this Prospectus and are restricted from sale, transfer, assignment, or
hypothecation for a period of twelve (12) months from the date hereof, except to
officers of the Representatives. The Representatives' Warrants grant to the
holders thereof certain rights of registration for the securities issuable upon
exercise of the Representatives' Warrants. See 'Description of Capital
Stock -- Registration Rights.'
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to a copy
of each such agreement which are filed as exhibits to the Registration
Statement. See 'Available Information.'
In connection with this Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M, pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company, and in such case may purchase
Common Stock in the open market following completion of the Offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short positions, up to 225,000 shares of Common Stock, by
exercising the over-allotment option. In addition, the Representatives may
impose 'penalty bids' under contractual arrangements with the Underwriters,
whereby it may reclaim from an Underwriter (or dealer participating in the
Offering) for the account of other Underwriters, the selling concession with
respect to Common Stock that is distributed in the Offering but subsequently
purchased for the account of the Underwriters in the open market. Any of the
transactions described in this paragraph may result in the maintenance of the
price of the Common Stock at a level above that which might otherwise prevail in
the open market. None of the transactions described in this paragraph is
required, and, if they are undertaken, they may be discontinued at any time.
Upon the consummation of this Offering, the Company will exchange an
aggregate of 292,500 shares of its Common Stock for Hogback Mountain which is
currently owned by Skyline Partners, L.P. Additionally, the Company will pay up
to approximately $75,000 of expenses in connection with the property. An
independent appraisal, dated November 7, 1997, has valued Hogback Mountain at
47
<PAGE>
<PAGE>
approximately $3,500,000. There can be no assurance, however, that such
appraisal represents the fair market value of Hogback Mountain. The Company also
intends to lease the buildings including the Skyline Restaurant and gift shop at
Hogback Mountain to Vermont Natural Company, the current owner and operator of
such businesses. The lease will be on a month-to-month basis, terminable by the
Company or the tenant on 30 days notice at a rent in an amount to be mutually
agreed upon by the parties. See 'Business -- Business Strategy -- Opportunities
For Further Development.' Skyline Partners, L.P. and, by its wholly-owned
subsidiary, the Vermont Natural Company are controlled by Mr. Dan Purjes, the
Chairman and Chief Executive Officer of Josephthal and a director of the Company
upon the closing of this Offering. Certain other affiliates of Josephthal are
also beneficial owners of Skyline Partners, L.P. and Vermont Natural Company.
Since Josephthal may have a 'conflict of interest' with the Company as
defined in Rule 2720 of the NASD's Conduct Rules, the Offering is being made in
conformity with certain applicable provisions of Rule 2720 of the NASD.
Accordingly, the initial public offering price of the shares of Common Stock may
not be higher than as recommended by an independent investment banking firm
which qualifies as a 'qualified independent underwriter' and 'which shall also
participate in the preparation of the registration statement and prospectus
. .. and which shall exercise the usual standards of due diligence.' Cruttenden
Roth Incorporated is acting as a 'qualified independent underwriter.'
Pursuant to Rule 2720 of the NASD, Cruttenden Roth Incorporated, a member
of the NASD, is required, in acting as a 'qualified independent underwriter,' to
undertake to the NASD the legal responsibilities and liabilities of an
underwriter under the Securities Act, specifically including those inherent in
Section 11 thereof. The Company will indemnify Cruttenden Roth Incorporated
against such liabilities, if any, to the extent permitted by law.
Prior to this Offering, there has been no public market for the Common
Stock. Accordingly, the initial public offering price of the Common Stock was
determined by negotiation between the Company and the Qualified Independent
Underwriter. The factors considered in determining such prices and terms, in
addition to the prevailing market conditions, include the history of and the
prospects for the industry in which the Company competes, an assessment of the
Company's management, the prospects of the Company, its capital structure and
such other factors that were deemed relevant. The offering price does not
necessarily bear any relationship to the assets, appraised value, results of
operations or net worth of the Company.
LEGAL MATTERS
The validity of the Common Stock offered hereby and certain legal matters
in connection with the Offering will be passed upon for the Company by
Sonnenschein Nath & Rosenthal, New York, New York. Orrick, Herrington &
Sutcliffe LLP, New York, New York has acted as counsel for the Underwriters in
connection with this Offering.
EXPERTS
The financial statements as of December 31, 1996 and for the years ended
December 31, 1996 and 1995 included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein, and have been so included in reliance upon the report of such firm given
upon their authority as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form SB-2 relating to the Common Stock
offered hereby. This Prospectus, which is part of the Registration Statement,
does not contain all of the information included in the Registration Statement
and the exhibits and schedules thereto. For further information with respect to
the Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits and schedules thereto. Statements
contained in this Prospectus concerning the provisions or contents of any
contract, agreement or any other document referred to herein are not necessarily
complete. With respect to each such contract, agreement or document filed as an
exhibit to
48
<PAGE>
<PAGE>
the Registration Statement, reference is made to such exhibit for a more
complete description of the matters involved and each such statement shall be
deemed qualified in its entirety by such reference.
The Registration Statement, including the exhibits and schedules thereto,
may be inspected without change at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Washington, DC 20549 and at the
Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
As a result of this Offering, the Company will become subject to the
information and periodic reporting requirements of the Exchange Act, and, in
accordance therewith, will file periodic reports, proxy statements and other
information with the Commission. Such periodic reports, proxy statements and
other information will be available for inspection and copying at the public
reference facilities and regional offices referred to above. The Commission also
maintains a Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the Commission. The Common Stock is expected to be listed on
the American Stock Exchange and, upon such listing, such reports, proxy
statements and other information can also be inspected and copied at the offices
of the American Stock Exchange, 86 Trinity Place, New York, NY 10006.
The Company intends to furnish to its stockholders annual reports
containing audited consolidated financial statements certified by independent
public accountants for each fiscal year and will make available quarterly
reports containing unaudited consolidated financial statements for the first
three quarters of each fiscal year.
Any person receiving a copy of this Prospectus may obtain, without charge,
upon written or oral request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents (other than the
exhibits expressly incorporated in such documents by reference). Requests should
be directed to: Snowdance, Inc., Route 44, Brownsville, Vermont 05037,
Attention: Steven H. Plausteiner (telephone (802) 484-7000).
49
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-------------
<S> <C>
Independent Auditors' Report....................................................................... F-2
Financial Statements:
Balance Sheets as of December 31, 1996 and September 30, 1997................................. F-3
Statements of Operations for the Years Ended December 31, 1995 and 1996 and the Nine Months
Ended September 30, 1996 and 1997............................................................ F-4
Statements of Changes in Stockholders' Deficit for the Years Ended December 31, 1995 and 1996
and the Nine Months Ended September 30, 1997................................................. F-5
Statements of Cash Flows for the Years Ended December 31, 1995 and 1996 and the Nine Months
Ended September 30, 1996 and 1997............................................................ F-6
Notes to Financial Statements................................................................. F-7 - F-12
Pro Forma Financial Information.................................................................... F-13 - F-17
</TABLE>
F-1
<PAGE>
<PAGE>
The accompanying financial statements give effect to the consummation of
the Combination as described in Note 1 to the financial statements. The
following report is in the form that will be furnished by Deloitte & Touche LLP
upon consummation of the Combination assuming that no other material events have
occurred that would affect the accompanying financial statements or required
disclosures therein.
DELOITTE & TOUCHE LLP
New York, New York
January 29, 1998
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
SNOWDANCE, INC.
We have audited the accompanying balance sheet of Snowdance, Inc. (formerly
Ascutney Mountain Resort, L.P. and affiliated entities) (see Note 1 to the
financial statements) as of December 31, 1996 and the related statements of
operations, stockholders' deficit and cash flows for the years ended December
31, 1995 and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Snowdance, Inc. (formerly Ascutney Mountain
Resort, L.P. and affiliated entities -- See Note 1) as of December 31, 1996 and
the results of its operations and its cash flows for the years ended December
31, 1995 and 1996 in conformity with generally accepted accounting principles.
New York, New York
July 11, 1997 (February , 1998 as to Note 1)
F-2
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash.......................................................................... $ 38,480 $ 13,576
Accounts receivable (less allowance for doubtful accounts of $8,000 in both
periods)..................................................................... 131,437 83,689
Other receivables............................................................. 44,492 90,966
Inventories................................................................... 47,402 32,623
Prepaid expenses.............................................................. 33,237 40,774
------------ -------------
Total current assets..................................................... 295,048 261,628
Property and equipment -- net...................................................... 1,210,376 1,156,238
Deferred financing costs -- net.................................................... 77,118 66,140
Other assets....................................................................... 6,824 67,021
------------ -------------
Total assets....................................................................... $ 1,589,366 $ 1,551,027
------------ -------------
------------ -------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable.............................................................. $ 610,194 $ 238,654
Accrued expenses and other liabilities........................................ 179,354 198,212
Advance deposits.............................................................. 151,328 150,873
Current portion of long-term debt............................................. 216,620 1,259,294
------------ -------------
Total current liabilities................................................ 1,157,496 1,847,033
------------ -------------
Long-term debt:
Line of credit................................................................ 750,000 --
Loans payable................................................................. 550,458 522,675
Notes to related party........................................................ 1,180,567 1,696,434
------------ -------------
Total long-term debt..................................................... 2,481,025 2,219,109
Commitments and contingencies......................................................
Stockholders' deficit
Preferred stock (par value $.01 per share, 100,000 shares authorized, none
outstanding)................................................................. -- --
Common stock (par value $.001 per share, 4,900,000 shares authorized,
1,207,500 shares outstanding)................................................ 1,208 1,208
Additional paid-in capital.................................................... 1,050,000 1,125,225
Accumulated deficit........................................................... (3,100,363 ) (3,641,548)
------------ -------------
Total stockholders' deficit.............................................. (2,049,155 ) (2,515,115)
------------ -------------
Total liabilities and stockholders' deficit........................................ $ 1,589,366 $ 1,551,027
------------ -------------
------------ -------------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- -------------------------
1995 1996 1996 1997
---------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Lodging............................................ $1,540,267 $ 1,695,845 $ 1,191,037 $1,255,965
Food and beverage.................................. 1,010,076 970,086 745,975 642,398
Ski and fitness.................................... 997,978 1,064,720 767,569 932,707
Other.............................................. 318,097 252,567 158,848 144,944
---------- ----------- ----------- ----------
Total revenues................................ 3,866,418 3,983,218 2,863,429 2,976,014
---------- ----------- ----------- ----------
Cost of Sales:
Lodging............................................ 630,158 827,620 636,254 513,164
Food and beverage.................................. 745,099 848,513 667,634 523,964
Ski and fitness.................................... 857,001 950,239 660,112 628,497
Other.............................................. 192,952 140,753 96,212 87,666
---------- ----------- ----------- ----------
Total cost of sales........................... 2,425,210 2,767,125 2,060,212 1,753,291
---------- ----------- ----------- ----------
Gross profit.................................. 1,441,208 1,216,093 803,217 1,222,723
---------- ----------- ----------- ----------
Operating Expenses:
Administrative and general......................... 522,321 478,411 349,155 355,111
Sales and marketing................................ 572,351 592,732 405,554 381,560
Depreciation....................................... 116,656 122,714 93,019 93,536
Heat, light and power.............................. 582,025 633,173 370,391 366,349
Insurance.......................................... 103,181 145,842 101,013 96,069
Real estate and other taxes........................ 106,162 149,610 84,868 68,463
Repairs and maintenance............................ 372,456 370,756 268,960 185,018
---------- ----------- ----------- ----------
Total operating expenses...................... 2,375,152 2,493,238 1,672,960 1,546,106
---------- ----------- ----------- ----------
Net Operating Loss...................................... (933,944) (1,277,145) (869,743) (323,383)
---------- ----------- ----------- ----------
Other Income (Expense):
Interest income.................................... 386 2,174 1,163 830
Gain on sale of assets............................. 562,267 18,115 18,701 --
Related party interest expense..................... (16,275) (85,027) (63,771) (74,147)
Interest expense................................... (189,123) (158,936) (104,271) (144,485)
---------- ----------- ----------- ----------
Total other income (expense).................. 357,255 (223,674) (148,178) (217,802)
---------- ----------- ----------- ----------
Net Loss................................................ $ (576,689) $(1,500,819) $(1,017,921) $ (541,185)
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Loss per Common Share................................... $ (.48) $ (1.24) $ (.84) $ (.45)
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Weighted average number of shares outstanding........... 1,207,500 1,207,500 1,207,500 1,207,500
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P AND AFFILIATED ENTITIES -- SEE NOTE 1)
STATEMENTS OF STOCKHOLDERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL ACCUMULATED
COMMON STOCK PAID-IN CAPITAL DEFICIT TOTAL
------------ --------------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, January 1, 1995........................... $1,208 $ (939,025) $ (937,817)
Capital contributions......................... $ 400,000 400,000
Distributions................................. (78,361) (78,361)
Net loss...................................... (576,689) (576,689)
------------ --------------- ----------- -----------
Balance, December 31, 1995......................... 1,208 400,000 (1,594,075) (1,192,867)
Capital contributions......................... 650,000 650,000
Distributions................................. (5,469) (5,469)
Net loss...................................... (1,500,819) (1,500,819)
------------ --------------- ----------- -----------
Balance, December 31, 1996......................... 1,208 1,050,000 (3,100,363) (2,049,155)
Capital contributions (unaudited).................. 75,225 75,225
Net loss (unaudited).......................... (541,185) (541,185)
------------ --------------- ----------- -----------
Balance, September 30, 1997
(unaudited)...................................... $1,208 $ 1,125,225 $(3,641,548) $(2,515,115)
------------ --------------- ----------- -----------
------------ --------------- ----------- -----------
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- --------------------------
1995 1996 1996 1997
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss......................................... $ (576,689) $(1,500,819) $(1,017,921) $ (541,185)
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Depreciation................................ 116,656 122,714 93,019 93,536
Amortization................................ 10,743 10,726 8,057 16,863
Gain on sale of assets...................... (562,267) (18,115) (18,701) --
Executive services contributed.............. -- 75,000
Changes in assets -- (increase) decrease:
Accounts receivable.................... (105,181) 85,867 108,215 47,748
Other receivables...................... (50,404) 24,268 (53,456) (46,474)
Inventories............................ (5,439) 1,856 12,500 14,779
Prepaid expenses....................... 15,354 (10,167) (30,098) (7,537)
Other assets........................... (2,345) (2,476) (2,476) (60,197)
Changes in liabilities -- increase
(decrease):
Accounts payable....................... 145,002 155,488 (60,874) (371,540)
Advance deposits....................... 47,067 36,674 (42,911) (455)
Accrued expenses and other............. (380,094) 6,224 (64,789) 18,858
----------- ----------- ----------- -----------
Net cash used in operating
activities...................... (1,347,597) (1,087,760) (1,069,435) (760,604)
----------- ----------- ----------- -----------
Cash Flows from Investing Activities:
Purchases of property and equipment.............. (34,466) (44,576) (15,771) (39,398)
Sales of property and equipment.................. 587,653 19,053 19,595 --
----------- ----------- ----------- -----------
Net cash provided by (used in) investing
activities..................................... 553,187 (25,523) 3,824 (39,398)
----------- ----------- ----------- -----------
Cash Flows from Financing Activities:
Cash distributions............................... (5,172) (5,469) -- --
Increase in deferred financing costs............. (32,788) -- (543) (5,885)
Loan borrowings.................................. 3,537,515 3,215,000 1,890,000 3,877,328
Loan repayments.................................. (2,999,204) (2,826,000) (1,300,908) (3,096,570)
Capital contributions from owners................ 400,000 650,000 450,000 225
----------- ----------- ----------- -----------
Net cash provided by financing activities........ 900,351 1,033,531 1,038,549 775,098
----------- ----------- ----------- -----------
Net Increase (Decrease) in Cash....................... 105,941 (79,752) (27,062) (24,904)
Cash, Beginning of Period............................. 12,291 118,232 118,232 38,480
----------- ----------- ----------- -----------
Cash, End of Period................................... $ 118,232 $ 38,480 $ 91,170 $ 13,576
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Supplemental Disclosure of Non-Cash Investing and
Financing Activity:
Distribution of property to owners............... $ 73,189 $ -- $ -- $ --
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Capital contributed via executive services....... $ -- $ -- $ -- $ 75,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest......... $ 200,324 $ 194,605 $ 109,361 $ 113,481
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements.
F-6
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
1. BASIS OF PRESENTATION
Snowdance, Inc. is a Delaware corporation formed on August 7, 1997. On
, 1998, immediately prior to the date of this Prospectus,
Snowdance, Inc., in a transaction hereinafter referred to as the 'Combination,'
issued 603,750 shares of its common stock to each of Susan Plausteiner and
Steven Plausteiner in exchange for all of the partnership interests in three
limited partnerships: Ascutney Mountain Resort, L.P., Ascutney Mountain Resort
Hotel, L.P., and Ascutney Mountain Resort Realty, L.P. (the 'Partnerships'),
which together owned the Ascutney Mountain Resort in Brownsville, Vermont, and
for the common stock of Ascutney Mountain Foods, Inc. ('Foods'), the holder of
the resort's liquor license.
Each of the Partnerships had a general partner which had a 1% interest in
the limited partnership of which it was the general partner. All of the issued
and outstanding shares in each of the general partners (Snowdance Hotel Company,
Snowdance Ski Company and Snowdance Realty Company) were owned by Susan
Plausteiner. All of the limited partnership interests of the Partnerships and
all of the outstanding shares of Foods were owned by Susan and Steven
Plausteiner.
The Combination was accounted for as a reorganization of entities under
common control in a manner similar to a pooling of interests. Accordingly, the
accompanying financial statements reflect the operations of Snowdance, Inc. and
the Partnerships and Foods as if combined for all periods. All material
intercompany balances and transactions have been eliminated in combination. The
combined entities are hereinafter referred to as the 'Company.'
The Ascutney Mountain Resort is a four-season resort which includes a ski
area, an 18,000 square foot comprehensive fitness center, a 212 room hotel, four
restaurants, and 30,000 square feet of conference space. The resort was
purchased in the summer of 1993 for a cost of approximately $1.13 million and
reopened in December 1993.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method based upon the estimated
useful lives of the assets, ranging from 5 to 7 years for furniture and
equipment to thirty-nine years for buildings. The cost of maintenance, repairs,
minor renewals and improvements are charged to income as incurred.
The Company periodically reviews its property for impairment. Impairment is
determined to exist when estimated amounts recoverable through future operations
and sale of a property on an undiscounted basis are below that property's
carrying value. If a property is determined to be impaired, it must be written
down to its estimated fair value. Management of the Company believes that no
impairment exists at December 31, 1996.
INVENTORIES
Inventories consist primarily of food, beverages and supplies and are
stated at the lower of cost or market. Inventories are recorded using the FIFO
(first-in, first-out) method.
DEFERRED FINANCING COSTS
Deferred financing costs consist of costs directly associated with issuance
of debt and the line of credit. These costs are amortized over the life of the
related loans and credit line using the effective interest method. Accumulated
amortization was $30,345 at December 31, 1996.
F-7
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
INCOME TAXES
During the periods presented, the Company was comprised of partnerships and
Subchapter S corporations. These entities are not taxable for U.S. Federal
income tax purposes. The partners or shareholders report their distributive
share of the entities' losses in their individual income tax returns.
For income tax purposes, Partnership results are reported for the calendar
year. The principal difference between the accounting policies used for tax
reporting purposes and those used for financial reporting is that depreciation
is calculated using accelerated methods. The tax basis of the Partnerships'
assets and liabilities is approximately $131,000 lower than the amounts reported
for financial statement purposes at December 31, 1996.
After the Combination, the Company will be a taxable corporation.
Accordingly, it will account for income taxes according to Statement of
Financial Accounting Standards No. 109, 'Accounting for Income Taxes,' and
record deferred taxes for the temporary differences between the tax bases of
assets and liabilities and the amounts reported in the financial statements.
ADVERTISING EXPENSE
The Company expenses advertising costs as incurred. The Company expensed
$314,535 in 1996 and $284,788 in 1995.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 128, 'Earnings per Share' establishes
standards for computing and presenting earnings per share, and is effective for
financial statements for both interim and annual periods ending after December
15, 1997. Statement No. 129, 'Disclosure of Information about Capital Structure'
establishes standards for disclosing information about an entity's capital
structure, and is effective for financial statements for periods ending after
December 15, 1997. Statement No. 130, 'Reporting Comprehensive Income'
establishes standards for reporting and display of comprehensive income and its
components, and is effective for fiscal years beginning after December 15, 1997.
Statement No. 131, 'Disclosures about Segments of an Enterprise and Related
Information' establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers, and is effective for financial statements
for periods beginning after December 15, 1997.
Management of the Company does not believe that these new standards will
have a material effect on the Company's reported operating results, per share
amounts, financial position or cash flows.
F-8
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
INTERIM FINANCIAL DATA
The interim financial data and related notes included herein are unaudited;
however, in the opinion of management, the Company's interim financial data for
the nine month periods ended September 30, 1997 and 1996 includes all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results of the interim periods. The operating results
for interim periods may not be indicative of the results expected for the full
year.
3. PROPERTY AND EQUIPMENT -- NET
Major classifications of property and equipment are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Land........................................................................... $ 159,161
Buildings...................................................................... 820,610
Furniture, fixtures, and equipment............................................. 581,183
------------
1,560,954
------------
Less accumulated depreciation.................................................. (350,578)
------------
Property and equipment -- net.................................................. $1,210,376
------------
------------
</TABLE>
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities at December 31, 1996 are
summarized as follows:
<TABLE>
<S> <C>
Payroll and payroll benefits...................................................... $ 87,309
Taxes............................................................................. 39,513
Utilities......................................................................... 25,601
Interest.......................................................................... 21,954
Other............................................................................. 4,977
--------
Total........................................................................ $179,354
--------
--------
</TABLE>
5. LONG-TERM DEBT
a. Loans Payable -- Loans payable at December 31, 1996 consisted of:
<TABLE>
<CAPTION>
BALANCE
LENDER MATURITY INTEREST RATE DECEMBER 31, 1996
- ----------------------------------------- ------------------ --------------- -----------------
<S> <C> <C> <C>
Vermont Economic Development Authority
('VEDA')(i)............................ June 3, 2004 5.50% per annum $ 352,600
West Windsor Block Grant(ii)............. February 20, 2010 5.00% per annum 229,225
-----------------
581,825
Less: Current Maturities................. 31,367
-----------------
Total long-term loans payable....... $ 550,458
-----------------
-----------------
</TABLE>
- ------------
(i) Guaranteed by the Company's current owners and by Snowdance Ski
Company and Snowdance Hotel Company. This loan has a balloon
payment at maturity of $171,639. Under the terms of this loan
agreement, the Company may not make distributions (except certain
distributions with respect to the offset of income tax
liabilities) without consent of VEDA.
(ii) Guaranteed by the Company's current owners.
F-9
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
Under the terms of the loans, interest and principal are payable monthly
until maturity, at which time the remaining principal balance is payable plus
any accrued interest.
b. Line of Credit -- Line of Credit payable at December 31, 1996 consisted
of:
<TABLE>
<CAPTION>
BALANCE
LENDER MATURITY INTEREST RATE DECEMBER 31, 1996
- ----------------- ------------------ ----------------------- -----------------
<S> <C> <C> <C>
Fleet Bank....... February 28, 2004 Prime + 1.75% per annum $ 925,000
</TABLE>
$175,000 of the line of credit is a current liability at December 31, 1996
and was paid during February 1997. The interest rate on this debt was 10.75% per
annum at December 31, 1996. Under the terms of the revolving line of credit, the
principal amount available is reduced by $175,000 annually, beginning in
February of 1996, with a scheduled balloon payment on the balance remaining at
maturity. This line of credit was guaranteed by the Company's current owners and
by Ascutney Mountain Resort Realty, L.P., Snowdance Ski Company, Snowdance Hotel
Company, and Snowdance Realty Company.
On June 30, 1997, the Company entered into a revolving line of credit
borrowing arrangement with Mascoma Bank. Total borrowings available under this
line of credit are $1,500,000, bear interest at the prime rate plus 1.75%, which
equalled 10.25% per annum at September 30, 1997, payable monthly, with principal
due on June 30, 1998. The debt is collateralized by a security interest in all
Resort assets, a first mortgage on the Company's real estate assets, as well as
on the two private residences owned by the Company's current owners and is
guaranteed by the Company's current owners. In July of 1997, the Company
borrowed $914,425 under this line and used the proceeds to prepay the Fleet Bank
line of credit and to pay loan fees and costs. Borrowings under this line
totalled $1,202,828 at September 30, 1997.
c. Notes Payable to Related Parties -- As part of its original purchase of
the resort, the Company acquired 24.75 condominium units. One of these units was
sold in 1994. In 1995, six of these units were sold through November for a gain
on sale of $562,267. In November of 1995, the Company transferred 17 units to
its current owners (cost basis of approximately $4,305 per unit, for a total of
$73,189). The current owners arranged for financial institution mortgage
financing collateralized by the condominium units, and loaned the proceeds to
the Company on terms which mirror the terms of the mortgage financing. The
Company is also entitled to use the condominium units as rental properties and
is responsible for all expenses relating to them (see Note 9).
Notes payable to related parties at December 31, 1996 consisted of the
following:
<TABLE>
<CAPTION>
INTEREST RATE BALANCE
MATURITY DECEMBER 31, 1996 DECEMBER 31, 1996
- ------------------------------------------------------------ ----------------- -----------------
<S> <C> <C>
June 21, 2025............................................... 9.287% per annum $ 497,079
February 1, 2026............................................ 7.500 per annum 275,887
July 1, 2026(i)............................................. 7.875 per annum 139,512
April 1, 2026(ii)........................................... 7.625 per annum 278,342
-----------------
1,190,820
Less current maturities..................................... 10,253
-----------------
Long term notes payable to related party.................... $ 1,180,567
-----------------
-----------------
</TABLE>
- ------------
(i) The interest rate will reset on every July 1 and will be equal to
the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year as made
F-10
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
available by the Federal Reserve Board plus three percentage
points. The interest rate shall not exceed 13.875%.
(ii) The interest rate will reset on every April 1 and will be equal
to the weekly average yield on United States Treasury securities
adjusted to a constant maturity of one year as made available by
the Federal Reserve Board plus three percentage points. The
interest rate shall not exceed 13.625%.
Under the terms of the notes payable to related parties, interest and
principal are payable monthly until maturity.
During the nine months ended September 30, 1997, the Company's current
owners advanced the Company $537,000. These advances bear interest at the
rate of 8% beginning January 1, 1998, and mature January 1, 2008.
The scheduled principal maturities for the following five years,
including the loans payable, line of credit and notes payable to related
party are summarized below:
<TABLE>
<CAPTION>
YEAR TOTAL
- -------------------------------------------------------------------------------- ----------
<S> <C>
1997............................................................................ $ 216,620
1998............................................................................ 219,204
1999............................................................................ 221,960
2000............................................................................ 224,894
2001............................................................................ 228,019
Thereafter...................................................................... 1,586,948
----------
Total...................................................................... $2,697,645
----------
----------
</TABLE>
The Company's management believes that the fair value of its long-term
debt approximates its carrying value at December 31, 1996.
6. LEASES
The Company leases a ski rental shop to an unrelated third party. Rents
received by the Company were computed as 4.5% and 4.0% of the Company's gross
daily and season ticket sales in 1996 and 1995, respectively. Revenue earned
through this arrangement was $41,525 in 1996 and $26,679 in 1995.
7. LITIGATION
In the normal course of business, certain litigation is initiated against
the Company. Generally, those claims are insured and in the opinion of
management, disposition of litigation will not have a material adverse effect on
the Company's liquidity, financial position or results of operations.
8. EXECUTIVE COMPENSATION
The Company's current owners do not currently receive compensation from the
Company. The Company has determined that a reasonable salary expense for these
individuals would not be material to the Company's reported results of
operations or financial position for 1995 or 1996. Effective January 1, 1997,
the Company began to record compensation to its owners. Because no cash will be
paid for this compensation, it has been recorded as capital contributions by the
Company's owners; $75,000 was recorded as capital contributions during the nine
months ended September 30, 1997 (see Note 9).
F-11
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
9. SUBSEQUENT EVENTS
PLANNED EQUITY OFFERING
During 1997, the Company's management decided to seek additional equity
capital through a planned public offering of 1,500,000 shares of common stock
(the 'Offering'). The net proceeds from the Offering, anticipated to be
approximately $13,280,000, would be used for upgrades and expansion to the
resort's ski lifts, snowmaking, grooming and trail systems, purchase of
additional mountain equipment and vehicles, resort improvements, development of
a golf course on resort property, development of a vacation ownership intervals
program, repayment of debt, and for working capital. In addition, the 17
condominium units currently owned by the Company's owners (see Note 5) will be
leased to Snowdance, Inc. and approximately $1,180,567 of the related party debt
will be contributed as capital. The Company will enter into three-year
employment agreements with its current owners which will commence upon the
closing of the Offering. These agreements will provide for annual salaries of
$100,000 for each individual, annual bonuses as determined by the Company's
Board of Directors and certain benefits. The ability of the Company to
successfully complete the Offering and its timing cannot be determined at this
time.
REAL ESTATE PURCHASE
Upon the closing of the Offering, Snowdance Inc. will acquire approximately
800 acres of land known as Hogback Mountain, located in Marlboro, Vermont. The
Company plans to explore potential development opportunities for this land. As
consideration for the purchase of this land, Snowdance, Inc. will issue 292,500
shares of its common stock to the owners of the assets, one of whom is a
partnership whose principal beneficial owner will serve as a Director of
Snowdance, Inc. upon completion of the Offering. Additionally, the Company will
pay up to approximately $75,000 of expenses relating to the property.
VACATION OWNERSHIP PROGRAM
In December of 1997, the Company executed a marketing and sales agreement
with Westerly Resorts Group, Inc. regarding the marketing and sales of vacation
ownership intervals ('VOIs'), popularly known as timeshares, in the resort's
hotel.
CAPITAL RESOURCES
In addition to the borrowing capacity added by the Mascoma Bank line of
credit discussed above, the Company's current owners have set aside funds from
their personal assets in an amount they deem sufficient to fund the Company's
operations through at least June 30, 1998, or until successful completion of the
Offering or another source of capital can be secured.
F-12
<PAGE>
<PAGE>
SNOWDANCE, INC.
(FORMERLY ASCUTNEY MOUNTAIN RESORT, L.P. AND AFFILIATED ENTITIES -- SEE NOTE 1)
PRO FORMA FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31, 1995 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND 1997 (UNAUDITED)
The pro forma financial information has been prepared to show the effect of
the Hogback Acquisition and the conversion of a portion of the Related Loans to
a capital contribution to the Company. The as adjusted financial information has
been prepared to show the effect of the closing of the Offering and application
of the estimated net proceeds therefrom.
The pro forma and as adjusted balance sheets of the Company have been
prepared as if the above transactions occurred on September 30, 1997. The pro
forma statements of operations for the year ended December 31, 1996 and the nine
months ended September 30, 1997, have been prepared as if the above transactions
occurred on January 1, 1996.
The pro forma and as adjusted financial information is based upon available
information and upon certain assumptions, as set forth in the notes to the pro
forma and as adjusted financial information, that management of the Company
believes are reasonable in the circumstances.
This pro forma and as adjusted information does not purport to represent
what the Company's financial position or results of operations would actually
have been if the above transactions had in fact occurred on such dates or at the
beginning of such periods or the Company's financial position or results of
operations for any future date or period.
F-13
<PAGE>
<PAGE>
SNOWDANCE, INC.
PRO FORMA AND AS ADJUSTED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA OFFERING AS ADJUSTED
SEPTEMBER 30, 1997 ADJUSTMENTS SEPTEMBER 30, 1997 ADJUSTMENTS SEPTEMBER 30, 1997
------------------ ----------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................... $ 13,576 $ 13,576 $13,280,000(b) $ 12,091,576
(1,202,000)(c)
Accounts
receivable -- net.... 83,689 83,689 83,689
Other receivables...... 90,966 90,966 90,966
Inventories............ 32,623 32,623 32,623
Prepaid expenses....... 40,774 40,774 40,774
------------------ ------------------ ------------------
Total current
assets.......... 261,628 261,628 12,339,628
Property and
equipment -- net......... 1,156,238 $3,071,250 (a) 4,227,488 4,227,488
Deferred financing costs... 66,140 66,140 66,140
Other assets............... 67,021 67,021 67,021
------------------ ------------------ ------------------
Total assets...... $ 1,551,027 $ 4,622,277 $ 16,700,277
------------------
------------------ ------------------ ------------------
------------------ ------------------
LIABILITIES AND OWNERS'
DEFICIT
Current liabilities:
Accounts payable....... $ 238,654 $ 238,654 $ 238,654
Accrued expenses and
other liabilities.... 198,212 198,212 198,212
Advanced deposits...... 150,873 150,873 150,873
Current portion of long
term debt............ 1,259,294 1,259,294 (1,202,000)(c) 57,294
------------------ ------------------ ------------------
Total current
liabilities..... 1,847,033 1,847,033 645,033
------------------ ------------------ ------------------
Loans payable.............. 522,675 522,675 522,675
Notes to related
party................ 1,696,434 (1,180,567)(d) 515,867 515,867
------------------ ------------------ ------------------
Total long term
debt............ 2,219,109 1,038,542 1,038,542
------------------ ------------------ ------------------
Commitments and
Contingencies:
Stockholders' equity
(deficit)
Common stock $.001 par
value................ 1,208 292 (a) 1,500 1,500(b) 3,000
Additional paid in
capital.............. 1,125,225 3,070,958 (a) 5,376,750 13,278,500(b) 18,655,250
1,180,567 (d)
Accumulated deficit.... (3,641,548) (3,641,548) (3,641,548)
------------------ ------------------ ------------------
Total
stockholders'
equity
(deficit)....... (2,515,115) 1,736,702 15,016,702
------------------ ------------------ ------------------
Total liabilities and
stockholders' equity
(deficit)................ $ 1,551,027 $ 4,622,277 $ 16,700,277
------------------
------------------ ------------------ ------------------
------------------ ------------------
</TABLE>
See notes to pro forma and as adjusted financial statements
F-14
<PAGE>
<PAGE>
SNOWDANCE, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
DECEMBER 31, 1996 ADJUSTMENTS DECEMBER 31, 1996
----------------- ----------- -----------------
<S> <C> <C> <C>
Revenues:
Lodging...................................................... $ 1,695,845 $ 1,695,845
Food and beverage............................................ 970,086 970,086
Ski and fitness.............................................. 1,064,720 1,064,720
Other........................................................ 252,567 252,567
----------------- -----------------
Total revenues.......................................... 3,983,218 3,983,218
Cost of sales:
Lodging...................................................... 827,620 $85,027(e) 912,647
Food and beverage............................................ 848,513 848,513
Ski and fitness.............................................. 950,239 950,239
Other........................................................ 140,753 140,753
----------------- -----------------
Total cost of sales..................................... 2,767,125 2,852,152
Operating expenses:
Administrative and general................................... 478,411 478,411
Sales and marketing.......................................... 592,732 592,732
Depreciation................................................. 122,714 122,714
Heat, light and power........................................ 633,173 633,173
Insurance.................................................... 145,842 145,842
Real estate and other taxes.................................. 149,610 149,610
Repairs and maintenance...................................... 370,756 370,756
----------------- -----------------
Total operating expenses................................ 2,493,238 2,493,238
Net operating loss................................................ (1,277,145) (1,362,172)
----------------- -----------------
Other income (expense):
Interest income.............................................. 2,174 2,174
Gain on sale of assets....................................... 18,115 18,115
Related party interest expense............................... (85,027) 85,027(e) --
Interest expense............................................. (158,936) (158,936)
----------------- -----------------
Total other expenses.................................... (223,674) (138,647)
----------------- -----------------
Net loss.......................................................... $(1,500,819) $(1,500,819)
----------------- -----------------
----------------- -----------------
Loss Per Share.................................................... $ (1.24) $ (1.00)
----------------- -----------------
----------------- -----------------
Weighted Average Number of Shares(f).............................. 1,207,500 1,500,000
</TABLE>
See notes to pro forma and as adjusted financial statements.
F-15
<PAGE>
<PAGE>
SNOWDANCE, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
SEPTEMBER 30, 1997 ADJUSTMENTS SEPTEMBER 30, 1997
------------------ ----------- ------------------
<S> <C> <C> <C>
Revenues:
Lodging............................................... $1,255,965 $1,255,965
Food and beverage..................................... 642,398 642,398
Ski and fitness....................................... 932,707 932,707
Other................................................. 144,944 144,944
------------------ ------------------
Total revenues................................... 2,976,014 2,976,014
Cost of sales:
Lodging............................................... 513,164 $74,147(e) 587,311
Food and beverage..................................... 523,964 523,964
Ski and fitness....................................... 628,497 628,497
Other................................................. 87,666 87,666
------------------ ------------------
Total cost of sales.............................. 1.753,291 1,827,438
Operating expenses:
Administrative and general............................ 355,111 355,111
Sales and marketing................................... 381,560 381,560
Depreciation.......................................... 93,536 93,536
Heat, light and power................................. 366,349 366,349
Insurance............................................. 96,069 96,069
Real estate and other taxes........................... 68,463 68,463
Repairs and maintenance............................... 185,018 185,018
------------------ ------------------
Total operating expenses......................... 1,546,106 1,546,106
------------------ ------------------
Net operating loss......................................... (323,383) (397,530)
Other income (expense):
Interest income....................................... 830 830
Gain on sale of assets................................ -- --
Related party interest expense........................ (74,147) (74,147)(e) --
Interest expense...................................... (144,485) (144,485)
------------------ ------------------
Total other expenses............................. (217,802) (143,655)
------------------ ------------------
Net Loss................................................... $ (541,185) $ (541,185)
------------------ ------------------
------------------ ------------------
Loss per share............................................. $(.45) $(.36)
--------- ---------
--------- ---------
Weighted average number of shares(f)....................... 1,207,500 1,500,000
</TABLE>
See notes to pro forma and as adjusted financial statements.
F-16
<PAGE>
<PAGE>
SNOWDANCE, INC.
NOTES TO PRO FORMA AND AS ADJUSTED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(a) Reflects the acquisition of the Hogback assets through the issuance of
292,500 shares of common stock, par value $.001 per share, with a fair
value of $10.50 per share.
(b) Reflects the closing of the Offering and the application of the net
proceeds thereof. The Offering is assumed to include the issuance of
1,500,000 shares of common stock, par value $.001 per share, for $10.50 per
share, and offering expenses of $2,470,000 resulting in net proceeds to the
Company of $13,280,000.
(c) Reflects the assumed repayment of the balance outstanding on the Company's
line of credit as of September 30, 1997, $1,202,000, using a portion of the
net proceeds from the Offering. No other debt repayments are reflected; the
Company is evaluating appropriate application of Offering proceeds to other
debt.
(d) Reflects the conversion of $1,180,567 of the Related Loans to additional
paid-in capital of the Company.
(e) Reflects the effect of the planned lease by the Company of the 17
Mountain's Edge condominium units from Steven and Susan Plausteiner. For
purposes of the pro forma financial information, it is assumed that the
lease expense would have been equivalent to the interest expense paid on
the Related Loans contributed to capital, so this adjustment reclassifies
the related party interest expense to leasing expense, included in lodging
cost of sales.
(f) Historical loss per share is computed using 1,207,500 shares and pro forma
loss per share is computed using 1,500,000 weighted average common shares
outstanding.
F-17
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<PAGE>
<PAGE>
_______________________________ _______________________________
NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF ANY OFFER TO BUY COMMON STOCK BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH AN OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................................................................................................... 3
Risk Factors........................................................................................................... 7
Use of Proceeds........................................................................................................ 14
Dividend Policy........................................................................................................ 15
Dilution............................................................................................................... 15
Capitalization......................................................................................................... 16
Selected Financial Data................................................................................................ 17
Management's Discussion and Analysis of Financial Condition and Results of Operations.................................. 18
Business............................................................................................................... 22
Management............................................................................................................. 35
Certain Transactions................................................................................................... 40
Principal Stockholders................................................................................................. 42
Description of Capital Stock........................................................................................... 43
Shares Eligible for Future Sale........................................................................................ 45
Underwriting........................................................................................................... 46
Legal Matters.......................................................................................................... 48
Experts................................................................................................................ 48
Available Information.................................................................................................. 48
Index to Financial Statements.......................................................................................... F-1
</TABLE>
------------------------
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
1,500,000 SHARES
[LOGO]
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
JOSEPHTHAL & CO. INC.
CRUTTENDEN ROTH
INCORPORATED
, 1998
_______________________________ _______________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ('DGCL'), inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Similar indemnity is authorized for such persons against expenses (including
attorneys' fees) actually and reasonably incurred in connection with the defense
or settlement of any such threatened, pending or completed action or suit by or
in the right of the corporation if such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and provided further that (unless a court of competent
jurisdiction otherwise provides) such person shall not have been adjudged liable
to the corporation. Any such indemnification shall be made by the corporation
only as authorized in each specific case upon a determination by the
shareholders or disinterested directors or by independent legal counsel in a
written opinion that indemnification is proper in the circumstances because the
indemnitee has met the applicable standard of conduct. The Certificate of
Incorporation of the Company provides that directors and officers shall be
indemnified as described above in this paragraph to the fullest extent permitted
by the DGCL; provided, however, that any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person shall be
indemnified only if such proceeding (or part thereof) was authorized by the
board of directors of the Company.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under Section 145.
The Company's Certificate of Incorporation provides that, to the fullest
extent permitted by the DGCL, no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director. Section 102(b)(7) of the DGCL currently provides
that such provisions do not eliminate or limit the liability of a director (i)
for a breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL (relating to the declaration of dividends and purchase or redemption of
shares in violation of the DGCL), or (iv) for any transaction from which the
director derived an improper personal benefit. Reference is made to the
Company's Certificate of Incorporation and By-Laws filed as Exhibits 3.1 and 3.2
hereto, respectively.
The Company expects to maintain directors' and officers' liability
insurance policies covering certain liabilities of persons serving as officers
and directors and providing reimbursement to the Company for its indemnification
of such persons.
Pursuant to the Underwriting Agreement to be entered into among the Company
and the Underwriters, officers and directors of the Company are indemnified for
certain liabilities, including liabilities incurred under the Securities Act of
1933, as amended.
II-1
<PAGE>
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses (other than
underwriting discounts and the non-accountable expense allowance) expected to be
incurred in connection with the Offering described in this Registration
Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................................................... $ 6,181
NASD Examination Fee.................................................................................. $ 2,596
American Stock Exchange Listing Fee................................................................... $ 15,000
Accounting Fees and Expenses.......................................................................... $175,000
Printing and Engraving Expenses....................................................................... $150,000
Legal Fees and Expenses............................................................................... $450,000
Blue Sky Fees and Expenses............................................................................ $ 40,000
Transfer Agent Fees................................................................................... $ 3,600
Miscellaneous......................................................................................... $131,373
--------
Total............................................................................................ $973,750
</TABLE>
The foregoing items, except for the Securities and Exchange Commission and
NASD fees, are estimated. All expenses will be borne by the Company.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In the three years preceding the filing of this Registration Statement, the
Company has issued the following securities that were not registered under the
Securities Act:
(a) Immediately prior to the closing of the Offering, all of the
partnership interests in each of the Limited Partnerships will be exchanged
for 1,207,500 shares of Common Stock of Snowdance, Inc. (the 'Combination
Transaction'). Each of the Limited Partnerships has a corporate general
partner which has a 1% interest in the Limited Partnership of which it is
general partner. All of the issued and outstanding shares in each of the
corporate general partners are owned by Susan D. Plausteiner. All other
interests in the Limited Partnerships are owned by Steven H. Plausteiner or
Susan D. Plausteiner. As a result of the Combination Transaction,
immediately prior to the closing of this Offering, all of the outstanding
shares in Snowdance, Inc. will be owned by Steven H. Plausteiner and Susan
D. Plausteiner. It is expected that the Combination Transaction will be
treated as an Internal Revenue Code Section 351 transaction and be tax free
to the Company and the Limited Partnerships. In addition, immediately prior
to the Closing of this Offering, Steven H. Plausteiner and Susan D.
Plausteiner will contribute all of the outstanding shares of capital stock
of Foods to Snowdance, Inc. as a capital contribution and Foods will become
a wholly-owned subsidiary of Snowdance, Inc. As part of the Combination
Transaction, the Company will receive an ownership interest in 3/4 of 1
condominium unit which was previously owned by Ascutney Mountain Resort
Realty, L.P.
(b) In January 1998, the Company borrowed $50,000 from each of Richard
R. Frary and Joel A. Mael pursuant to a promissory note. The notes accrue
interest at the rate of 8% per annum and have a maturity date of the
earlier of (a) one year from the date thereof and (b) the completion by the
Company of a public offering in which gross proceeds of $5,000,000 are
raised from the sale of its securities. Should the Company not complete a
public offering by June 30, 1998, Mr. Frary and Mr. Mael each have the
option, exercisable until the maturity date of the notes, to exchange the
principal and interest owed thereunder for 2.5% of the limited partnership
interests of each of Ascutney Mountain Resort Hotel, L.P., Ascutney
Mountain Resort, L.P. and Ascutney Mountain Resort Realty, L.P.
(c) In January 1998, pursuant to an advisory and consulting agreement,
the Company issued options to purchase 40,000 shares of Common Stock. The
options have a term of 5 years from the date of the closing of this
Offering and are exercisable, in whole or in part, from the first
anniversary of the closing of this Offering at an exercise price of $5.00
per share of Common Stock.
(d) In December 1997, the Company borrowed $57,000 from International
Merona, Inc. pursuant to a promissory note. The note accrues interest at
the rate of 10% per annum and has a
II-2
<PAGE>
<PAGE>
maturity date of the earlier of (a) December 8, 1998 and (b) the date upon
which the Company receives $5,000,000 from the sale of its securities.
Such sales were made in reliance upon an exemption from the registration
provisions of the Securities Act set forth in Section 4(2) thereof relative to
sales by an issuer not involving any public offering.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
1.1** -- Revised Proposed Form of Underwriting Agreement.
1.2** -- Proposed Form of Qualified Independent Underwriter Agreement
3.1** -- Certificate of Incorporation of the Company
3.2** -- By-Laws of the Company.
4.1 -- Form of specimen certificate representing the Company's Common Stock.
4.2** -- Revised Form of Representatives' Warrant Agreement including Form of Representatives' Warrant.
5.1 -- Opinion of Sonnenschein Nath & Rosenthal.
10.1** -- Loan and Security Agreement, dated June 30, 1997, among Ascutney Mountain Resort, L.P., Ascutney
Mountain Resort Hotel, L.P., Steven H. Plausteiner, Susan D. Plausteiner and Mascoma Savings Bank,
fsb.
10.2** -- Loan Agreement, dated May 6, 1994, among Ascutney Mountain Resort, L.P., Ascutney Mountain Resort
Hotel, L.P., and the Vermont Economic Development Authority.
10.3** -- Loan and Security Agreement, dated November 3, 1994, among the Town of West Windsor, Vermont,
Ascutney Mountain Resort, L.P. and Ascutney Mountain Resort Hotel, L.P.
10.4** -- Draft Purchase and Sale Agreement, dated as of August , 1997, by and between the Company and
Skyline Partners, L.P.
10.5A** -- Form of Lock-up Agreement with respect to Company's officers, directors and existing stockholders.
10.5B** -- Form of Lock-up Agreement with respect to Skyline Partners, L.P.
10.6** -- Form of Condominium Lease Agreement, dated as of , 1997, among the Company, Steven
Plausteiner and Susan Plausteiner.
10.7** -- Form of Employment Agreement between the Company and Steven H. Plausteiner.
10.8** -- Form of Employment Agreement between the Company and Susan D. Plausteiner.
10.9** -- Form of 1997 Stock Option Plan for Non-Employee Directors.
10.10** -- Form of Exchange Agreement among Ascutney Mountain Resort, L.P., Ascutney Mountain Resort Hotel,
L.P., Ascutney Mountain Resort Realty, L.P. and the Company.
10.11** -- Agreement, dated as of September 29, 1997, between Steven H. Plausteiner, Susan D. Plausteiner and
the Company.
10.12** -- Form of Letter of Intent dated September 26, 1997, between the Company and Westerly Resorts Group,
Inc.
10.13** -- Marketing and Sales Agreement, dated December 30, 1997, between the Company and Westerly Resorts
Group, Inc.
10.14** -- Form of Consulting Agreement between the Company and Tallwood Associates, Inc.
10.15** -- Form of Unsecured Promissory Note made by the Company for the benefit of Richard S. Frary.
10.16** -- Form of Unsecured Promissory Note made by the Company for the benefit of Joel A. Mael.
10.17 -- Form of Tallwood Option Agreement.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Sonnenschein Nath & Rosenthal (to be included in Exhibit 5.1).
23.3** -- Form of Consent of Mr. Purjes, as Director Nominee.
23.4** -- Form of Consent of Mr. Lunde, as Director Nominee.
23.5** -- Form of Consent of Mr. Deutsch, as Director Nominee.
23.6** -- Form of Consent of Mr. Frary, as Director Nominee.
24.1** -- Powers of Attorney.
27.1** -- Financial Data Schedule.
</TABLE>
- ------------
** Previously filed
II-3
<PAGE>
<PAGE>
ITEM 28. UNDERTAKINGS.
The Company hereby undertakes:
(a) That it will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events which
individually or together, represent a fundamental change in the
information in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
'Calculation of Registration Fee' table in the effective registration
statement; and
(iii) include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat such
post-effective amendment as a new registration statement of the Securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) That it will provide to the Representative at the closing specified in
the Underwriting Agreement certificates in such denominations and registered in
such names as required by the Representative to permit prompt delivery to each
purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
liabilities under the Securities Act (other than the payment by the Company of
expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
Securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(d) That it will:
(1) For purposes of determining any liability under the Securities
Act, treat the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company under Rules
424(b)(1), or (4) or 497(h) under the Securities Act as part of this
Registration Statement as of the time the Commission declared it effective.
(2) For the purpose of determining any liability under the Securities
Act, treat each post-effective amendment that contains a form of prospectus
as a new registration statement for the securities offered in the
registration statement, and that offering of the securities at the time as
the initial bona fide offering of those Securities.
II-4
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form SB-2 and has authorized this Amendment No. 3
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Brownsville, State of Vermont, on this 30th day
of January, 1998.
SNOWDANCE, INC.
By: /s/ STEVEN H. PLAUSTEINER
...................................
STEVEN H. PLAUSTEINER
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/S/ STEVEN H. PLAUSTEINER Chief Executive Officer and Director January 30, 1998
......................................... (Principal Executive Officer)
(STEVEN H. PLAUSTEINER)
/S/ SUSAN D. PLAUSTEINER Chief Financial Officer and Director January 30, 1998
......................................... (Principal Financial and Accounting
(SUSAN D. PLAUSTEINER) Officer)
* Chief Operating Officer and Director January 30, 1998
.........................................
(DUSAN PLAUSTEINER)
/s/ STEVEN H. PLAUSTEINER
.........................................
STEVEN H. PLAUSTEINER
AS ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
1.1** -- Revised Proposed Form of Underwriting Agreement.........................................
1.2** -- Proposed Form of Qualified Independent Underwriter Agreement............................
3.1** -- Certificate of Incorporation of the Company.............................................
3.2** -- By-Laws of the Company..................................................................
4.1 -- Form of specimen certificate representing the Company's Common Stock....................
4.2** -- Revised Form of Representatives' Warrant Agreement including Form of Representatives'
Warrant..................................................................................
5.1 -- Opinion of Sonnenschein Nath & Rosenthal................................................
10.1** -- Loan and Security Agreement, dated June 30, 1997, among Ascutney Mountain Resort, L.P.,
Ascutney Mountain Resort Hotel, L.P., Steven H. Plausteiner, Susan D. Plausteiner and
Mascoma Savings Bank, fsb................................................................
10.2** -- Loan Agreement, dated May 6, 1994, among Ascutney Mountain Resort, L.P., Ascutney
Mountain Resort Hotel, L.P., and the Vermont Economic Development Authority..............
10.3** -- Loan and Security Agreement, dated November 3, 1994, among the Town of West Windsor,
Vermont, Ascutney Mountain Resort, L.P. and Ascutney Mountain Resort Hotel, L.P..........
10.4** -- Draft Purchase and Sale Agreement, dated as of August , 1997, by and between the
Company and Skyline Partners, L.P........................................................
10.5A** -- Form of Lock-up Agreement with respect to the Company's officers, directors and existing
stockholders.............................................................................
10.5B** -- Form of Lock-up Agreement with respect to Skyline Partners, L.P.........................
10.6** -- Form of Condominium Lease Agreement, dated as of , 1997, among the
Company, Steven Plausteiner and Susan Plausteiner........................................
10.7** -- Form of Employment Agreement between the Company and Steven H. Plausteiner..............
10.8** -- Form of Employment Agreement between the Company and Susan D. Plausteiner...............
10.9** -- Form of 1997 Stock Option Plan for Non-Employee Directors...............................
10.10** -- Form of Exchange Agreement among Ascutney Mountain Resort, L.P., Ascutney Mountain
Resort Hotel, L.P., Ascutney Mountain Resort Realty, L.P. and the Company................
10.11** -- Agreement, dated as of September 29, 1997 between Steven H. Plausteiner, Susan D.
Plausteiner and the Company..............................................................
10.12** -- Form of Letter of Intent, dated September 26, 1997, between the Company and Westerly
Resorts Group, Inc.......................................................................
10.13** -- Form of Marketing and Sales Agreement, dated December 30, 1997, between the Company and
Westerly Resorts Group, Inc..............................................................
10.14** -- Form of Consulting Agreement between the Company and Tallwood Associates, Inc...........
10.15** -- Form of Unsecured Promissory Note made by the Company for the benefit of Richard S.
Frary....................................................................................
10.16** -- Form of Unsecured Promissory Note made by the Company for the benefit of Joel A.
Mael.....................................................................................
10.17 -- Form of Tallwood Option Agreement.......................................................
23.1 -- Consent of Deloitte & Touche LLP........................................................
23.2 -- Consent of Sonnenschein Nath & Rosenthal (to be included in Exhibit 5.1)................
23.3** -- Form of Consent of Mr. Purjes, as Director Nominee......................................
23.4** -- Form of Consent of Mr. Lunde, as Director Nominee.......................................
23.5** -- Form of Consent of Mr. Deutsch, as Director Nominee.....................................
23.6** -- Form of Consent of Mr. Frary, as Director Nominee.......................................
24.1** -- Powers of Attorney......................................................................
27.1** -- Financial Data Schedule.................................................................
</TABLE>
- ------------
** Previously filed
<PAGE>
<PAGE>
GRAPHIC APPENDIX
Front Cover -- Color silhouette of Mt. Ascutney
Inside Front Cover -- Color montage of Skiers and Resort
Inside Back Cover -- Color montage of Resort during non-winter months
Outside Back Cover -- Color silhouette panorama of Mt. Ascutney with Skiers
STATEMENT OF DIFFERENCES
------------------------
The trademark symbol shall be expressed as ........................... 'tm'
<PAGE>
<PAGE>
NUMBER [SNOWDANCE LOGO] SHARES
SD SPECIMEN
CUSIP 833355 10 0
SEE REVERSE FOR
CERTAIN DEFINITIONS
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
This Certifies that
SPECIMEN SPECIMEN
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $.001 PAR
VALUE, OF Snowdance, Inc. transferable only on the books of the
Corporation by the holder hereof in person or by Attorney upon surrender of this
Certificate properly endorsed. This Certificate is not valid until countersigned
and registered by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed.
Dated:
SNOWDANCE, INC.
CORPORATE
SEAL
1997
DELAWARE
/s/ SUSAN D. PLAUSTEINER /s/ STEVE PLAUSTEINER
CHIEF FINANCIAL OFFICER CHAIRMAN AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(Jersey City, NJ)
TRANSFER AGENT
AND REGISTRAR
AUTHORIZED OFFICER
<PAGE>
<PAGE>
SNOWDANCE, INC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT........Custodian...........
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act-.........................
JT TEN - as joint tenants with right of (State)
survivorship and not as tenants
in common.
Additional abbreviations may also be used though not in the above list.
For Value Received,..............hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
................................................................................
................................................................................
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE,
OF ASSIGNEE)
................................................................................
................................................................................
......................................................................... Shares
represented by the within Certificate, and does hereby irrevocably constitute
and appoint...........................................................
....................................................................... Attorney
to transfer the said Shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated:...............................
Signature:..............................
NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the Certificate, in every particular,
without alteration or enlargement or any change whatever.
<PAGE>
<PAGE>
Exhibit 5.1
[LETTERHEAD OF SONNENSCHEIN NATH & ROSENTHAL]
January 30, 1998
Snowdance, Inc.
Route 44
Brownsville, Vermont 05037
Re: Snowdance, Inc.
Registration Statement on Form SB-2
Reg. No. 333-33369
Ladies and Gentlemen:
We have represented Snowdance, Inc., a Delaware corporation (the
"Company"), in connection with the registration of up to 1,875,000 shares of
Common Stock, $.001 par value per share, of the Company (the "Shares").
In connection with our representation, we have examined the corporate
records of the Company, including its Certificate of Incorporation, its By-laws,
and other corporate records and documents and have made such other examinations
as we consider necessary to render this opinion. Based upon the foregoing, it is
our opinion that:
1. the Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware; and
2. the Shares, when issued and sold in the manner contemplated by the
registration statement referred to above (the "Registration Statement"), will be
legally issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to this firm in such Registration
Statement.
Very truly yours,
/s/ Sonnenschein Nath & Rosenthal
SONNENSCHEIN NATH & ROSENTHAL
<PAGE>
<PAGE>
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE
SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
OPTION TO PURCHASE
40,000 SHARES
SNOWDANCE, INC.
(A DELAWARE CORPORATION)
OPTION FOR THE PURCHASE OF
COMMON STOCK, $0.001 PAR VALUE PER SHARE
This option (the "Option") certifies that, for value received,
Tallwood Associates, Inc. ("Tallwood"), or registered assigns, is entitled, at
any time on or after the first anniversary of the closing of the initial public
offering of capital stock (the "IPO") of Snowdance, Inc., a Delaware corporation
(the "Company"), and until any time prior to 12:00 midnight Eastern Standard
Time on such date as is the fifth anniversary of the closing of the IPO (the
"Expiration Date"), on all the terms and conditions hereinafter set forth, to
purchase from the Company up to the number of shares shown above (the "Option
Shares") of common stock, par value $0.001, of the Company (the "Common Stock")
by surrendering this Option with the purchase form attached hereto, duly
executed, at the principal office of the Company in Brownsville, Vermont, and by
paying an amount of consideration therefor equal to the Option Price (as
hereinafter defined) multiplied by the number of Option Shares as to which this
Option is exercised (i) in lawful money of the United States of America, by cash
or cashiers' check or (ii) by surrendering to the Company the right to purchase
a number of Option Shares equal to the product obtained by multiplying the
number of Option Shares to be purchased by a fraction, the numerator of which is
the Option Price and the denominator of which is the Current Market Price (as
hereinafter defined) in effect on such date, provided that the IPO is completed
by June 30, 1998.
1. The purchase price at which the Option Shares are purchasable
(the "Option Price") is $5.00 per share.
2. On the exercise of all or any portion of this Option in the
manner provided above, the person exercising the same shall be deemed to have
become a holder of record of Common Stock (or of the other securities or
properties to which he or it is entitled on such exercise) for all purposes,
delivered to the purchaser within a reasonable time after
<PAGE>
<PAGE>
the Option shall have been exercised as set forth above. If this Option shall be
exercised with respect to only a portion of the Option Shares covered hereby,
the holder shall be entitled to receive a similar option of like tenor and date
covering the number of Option Shares with respect to which this Option shall not
have been exercised.
3. This Option is exchangeable, on the surrender hereof by the
holder at the office of the Company, for new options of like tenor and date
representing in the aggregate the right to subscribe for and purchase the number
of Option Shares which may be subscribed for and purchased hereunder.
4. The Company covenants and agrees that the Option Shares which
may be issued on the exercise of the rights represented by this Option will, on
issuance, be fully paid and nonassessable, and free from all taxes, liens, and
charges with respect to the issue thereof. The Company further covenants and
agrees that, during the period within which the rights represented by this
Option may be exercised, the Company will have authorized and reserved a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Option.
5. The Option Price and number of Option Shares purchasable
pursuant to this Option may be subject to adjustment from time to time as
follows:
(a) If the Company shall take a record of the holders of Common
Stock for the purpose of entitling them to receive a dividend in shares,
the Option Price in effect immediately prior to such record date shall
be proportionately decreased, such adjustment to become effective
immediately after the opening of business on the day following such
record date.
(b) If the Company shall subdivide the outstanding shares of
Common Stock into a greater number of shares, combine the outstanding
shares of Common Stock into a smaller number of shares, or issue by
reclassification any of its shares, the Option Price and the number of
Option Shares in effect immediately prior thereto shall be adjusted so
that the holder of this Option thereafter surrendered for exercise shall
be entitled to receive, after the occurrence of any of the events
described, the number of Option Shares to which the holder would have
been entitled had this Option been exercised immediately prior to the
occurrence of such event. Such adjustment shall become effective
immediately after the opening of business on the day following the date
on which such subdivision, combination, or reclassification, as the case
may be, becomes effective.
(c) If any capital reorganization or reclassification of Common
Stock, or consolidation or merger of the Company with another
corporation or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities, or assets
with respect to or in exchange for Common Stock, then, as a condition of
such
-2-
<PAGE>
<PAGE>
reorganization, reclassification, consolidation, merger or sale, lawful
adequate provisions shall be made whereby the holder of this Option
shall thereafter have the right to acquire and receive on exercise
hereof such shares of stock, securities, or assets as would have been
issuable or payable (as part of such reorganization, reclassification,
consolidation, merger or sale) with respect to or in exchange for such
number of outstanding shares of Common Stock as would have been received
on exercise of this Option immediately before such reorganization,
reclassification, consolidation, merger or sale. In any such case,
appropriate provision shall be made with respect to the rights and
interests of the holder of this Option to the end that the provisions
hereof shall thereafter be applicable in relation to any shares of
stock, securities, or assets thereafter deliverable on the exercise of
this Option. In the event of a merger or consolidation of the Company
with or into another corporation or the sale of all or substantially all
of its assets as a result of which a number of shares of common stock of
the surviving or purchasing corporation greater or less than the number
of shares of Common Stock outstanding immediately prior to such merger,
consolidation, or purchase, are issuable to holders of Common Stock,
then the Option Price in effect immediately prior to such merger,
consolidation, or purchase shall be adjusted in the same manner as
though there were a subdivision or combination of the outstanding shares
of Common Stock. The Company will not effect any such consolidation,
merger, or sale unless prior to the consummation thereof the successor
corporation resulting from such consolidation or merger or the
corporation purchasing such assets shall assume, by written instrument
mailed or delivered to the holder hereof at its last address appearing
on the books of the Company, the obligation to deliver to such holder
such shares of stock, securities, or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire on exercise
of this Option.
(d) No fraction of a share shall be issued on exercise hereof,
but, in lieu thereof, the Company, notwithstanding any other provision
hereof, may pay therefor in cash at the fair value of any such
fractional share at the time of exercise.
(e) Neither the purchase or other acquisition by the Company of
any shares of Common Stock nor the sale or other disposition by the
Company of any shares of Common Stock shall affect any adjustment of the
Option Price or the number of Option Shares.
6. Prior to the first anniversary of the closing of the IPO, this
Option shall not be transferred or sold except to the family members, or a trust
for the benefit of the family members, of Joel A. Mael or Richard S. Frary who
agree to such restrictions on transfer. Subject to the foregoing restrictions
and the restrictions set forth in paragraph 7 hereof, this Option is
transferable at the offices of the Company. Upon such transfer, each holder
hereof agrees that the Company may deem and treat the registered holder of this
Option as the true and lawful owner thereof for all purposes, and the Company
shall not be affected by any notice to the contrary.
-3-
<PAGE>
<PAGE>
7. The shares issuable on exercise of this Option shall be
restricted securities within the meaning of Rule 144 promulgated under the
Securities Act, and all certificates for such shares shall contain a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED
UNDER THE SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH
RULE 144 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT."
8. The Company agrees to register or qualify the Option Shares
(but not this Option) for sale as follows:
(a) If, at any time during the period in which the rights
represented by this Option are exercisable, the Company proposes to file
a registration statement or notification under the Securities Act for
the primary or secondary sale of any debt or equity security, other than
in connection with the IPO, an acquisition registered on Form S-4 (or
similar special purpose form), a merger or an employee benefit plan, it
will give written notice at least 30 days prior to the filing of such
registration statement or notification to the holders of this Option and
the Option Shares of its intention to do so. The Company agrees that,
after receiving written notice from a majority in interest of the
holders of at least 50%, in the aggregate, of this Option and the Option
Shares of their desire to include their Option Shares in such proposed
registration statement or notification, the Company shall afford the
holders of this Option and the Option Shares the opportunity to have
their Option Shares included therein. Notwithstanding the provisions of
this paragraph 8(a), the Company shall have the right, at any time after
it shall have given written notice pursuant to this paragraph 8(a)
(whether or not a written request for inclusion of the Option Shares
shall be made), to elect not to file any such proposed registration
statement or notification or to withdraw the same after the filing but
prior to the effective date thereof. In no event shall the Company be
obligated to include the Option Shares in any registration statement or
notification under this paragraph 8(a) if, in the written opinion of the
underwriter, the inclusion of the Option Shares in such registration
statement or notification would be materially detrimental to the
proposed offering of debt or equity securities pursuant to which the
Company gave notice to the holders under this paragraph 8(a).
(b) In connection with the filing of a registration statement,
notification, or post-effective amendment under this section, the
Company covenants and agrees:
-4-
<PAGE>
<PAGE>
(i) to pay all expenses of such registration statement,
notification, or post-effective amendment, including, without
limitation, printing charges, legal fees and disbursements of
counsel for the Company, blue sky expenses, accounting fees and
filing fees, but not including legal fees and disbursements of
counsel to the holders and any sales commissions on Option Shares
offered and sold;
(ii) to take all necessary action which may reasonably be
required in qualifying or registering the Option Shares included
in a registration statement, notification or post-effective
amendment for the offer and sale under the securities or blue sky
laws of such states as requested by the holders; provided that
the Company shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such
jurisdiction; and
(iii) to utilize its best efforts to keep the same
effective for a period of not less than 90 nor more than 120
days.
(c) The holders of this Option and the Option Shares shall
cooperate with the Company and shall furnish such information as the
Company may request in connection with any such registration statement,
notification or post-effective amendment hereunder, on which the Company
shall be entitled to rely, and such holders of this Option and the
Option Shares shall indemnify and hold harmless the Company (and all
other persons who may be subject to liability under the Securities Act
or otherwise) from and against any and all claims, actions, suits,
liabilities, losses, damages, and expenses of every nature and character
(including, but without limitation, all attorneys' fees and amounts paid
in settlement of any claim, action, or suit) which arise or result
directly or indirectly from any untrue statement of a material fact
furnished by such holder(s) in connection with such registration,
notification or post-effective amendment, or from the failure of such
holder(s) to furnish material information in connection with the facts
required to be included in such registration statement, notification or
post-effective amendment necessary to make the statements therein not
misleading, or from any sales or offers of the Option Shares so
registered after 90 days from the effective date of such registration
statement or notification.
9. As used herein, the term "Common Stock" shall mean and include
the Common Stock authorized on the date of the original issue of this Option,
and shall also include any capital stock of any class of the Company thereafter
authorized that shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends and in the
distribution of assets on the voluntary or involuntary liquidation, dissolution,
or winding up of the Company; provided that the Option Shares purchasable
pursuant to this Option shall include only shares of the class designated in the
Company's Certificate of Incorporation as Common Stock on the date of the
original issue of
-5-
<PAGE>
<PAGE>
this Option or, in the case of any reorganization, reclassification,
consolidation, merger, or sale of assets of the character referred to in
paragraph 5(c) hereof, the stocks, securities, or assets provided for in such
paragraph.
10. This agreement shall be construed under and be governed by
the laws of the State of Delaware.
11. Tallwood hereby represents and warrants to the Company as
follows:
(a) This Option and the Option Shares to be acquired by Tallwood
pursuant to this Option are being acquired for Tallwood's own account
with the present intention of holding this Option and the Option Shares
for purposes of investment, and that Tallwood has no intention of
selling this Option and the Option Shares in a public distribution in
violation of the federal securities laws or any applicable state
securities laws.
(b) Tallwood has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and
risks of its investment in this Option and the Option Shares and is
capable of bearing the economic risks of such investment for an
indefinite period, including a complete loss of its investment in the
this Option and Option Shares.
(c) Tallwood has had the opportunity to ask questions of, and
receive answers from, the Company concerning the terms and conditions of
this Option and the Option Shares. Tallwood further acknowledges that
the Company has made available to Tallwood or its agents all documents
and information relating to an investment in the this Option and the
Option Shares requested by or on its behalf.
12. Any notices required or permitted hereunder shall be
sufficiently given if delivered by hand or sent by registered or certified mail,
postage prepaid, addressed as follows:
If to Tallwood, to:
Tallwood Associates, Inc.
1370 Avenue of the Americas
New York, New York 10019
If to the Company, to:
Snowdance, Inc.
Route 44
Brownsville, Vermont 05037
Attention: Susan D. Plausteiner
-6-
<PAGE>
<PAGE>
or such other address as shall be furnished in writing by any party to the
other, and any such notice or communication shall be deemed to have been given
as of the date delivered by hand or three days after being so deposited in the
mails.
13. "Current Market Price" per share of Common Stock on any date
shall mean, except as hereinafter provided, the average of the daily market
prices for the 30 consecutive trading days preceding such date. The market price
for each such day shall be the last sale price on such day as reported on the
American Stock Exchange Consolidated Tape, or, if such Common Stock is not
listed on the American Stock Exchange or reported on such Consolidated Tape,
then the last sale price on such day on the principal domestic stock exchange on
which such stock is then listed or admitted to trading, or, if no sale takes
place on such day on such exchange, the average of the closing bid and asked
prices on such day as officially quoted on such exchange, or, if such Common
Stock is not then listed or admitted to trading on any domestic stock exchange
but is traded on The Nasdaq Stock Market, Inc. ("Nasdaq"), then the Current
Market Price for each such trading day shall be the last sale price on such day
as reported by Nasdaq, or, if no sale takes place on such day or if such Common
Stock is neither listed or admitted to trading on any domestic stock exchange
nor traded on Nasdaq, then the Current Market Price for each such trading day
shall be the average of the reported closing bid and asked price quotations on
such day in the over-the-counter market, as furnished by the National Quotation
Bureau, Inc., or, if such firm at the time is not engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business as selected by the Company or if there is no such firm, as furnished by
any member of the National Association of Securities Dealers, Inc. selected by
the Company. If at any time such Common Stock is neither listed on any domestic
exchange, nor traded on Nasdaq, nor otherwise quoted in the domestic
over-the-counter market, then the Current Market Price shall be deemed to be an
amount mutually agreed upon in writing between the Company and the holder of
this Option within fifteen days immediately following the date on which the
Current Market Price is to be determined. If no agreement as to Current Market
Price is so reached, the Current Market Price shall be the fair market value per
share of Common Stock as determined by an independent appraiser selected by the
holder of this Option and consented to by the Company (such consent not to be
unreasonably withheld), whose fees and expenses shall be paid by the Company.
The determination of fair market value by such independent appraiser shall be
based upon the fair market value of the Company determined on a going concern
basis as between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and binding on
all parties. In determining the fair market value of any shares of Common Stock,
no consideration shall be given to any restrictions on transfer of the Common
Stock imposed by any agreement or by federal or state securities laws, or to the
existence or absence of, or any limitations on, voting rights.
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Dated as of January 1, 1998.
SNOWDANCE, INC.
By
_________________________________
Name:
Title:
ATTEST:
By
_________________________________
Susan D. Plausteiner, Secretary
TALLWOOD ASSOCIATES, INC.
By
_________________________________
Name:
Title:
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FORM OF PURCHASE
(to be signed only upon exercise of option)
To: SNOWDANCE, INC.
The undersigned, the owner of the attached option, hereby irrevocable
elects to exercise the purchase rights represented by the option for, and to
purchase thereunder, _________ shares of common stock of Snowdance, Inc., and
herewith makes payment of $_____ therefor, and requests that the certificate(s)
for such shares be delivered to ________________, at _____________________, and
if such shall not be all of the shares purchasable hereunder, that a new option
of like tenor for the balance of the shares purchasable under the attached
option be delivered to the undersigned.
Dated this __ day of ________________, ____.
____________________________________
Signature
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EXHIBIT 23.1
The accompanying financial statements give effect to the consummation of
the Combination as described in Note 1 to the financial statements. The
following consent is in the form that will be furnished by Deloitte & Touche LLP
upon consummation of the Combination assuming that no other material events have
occurred that would affect the accompanying financial statements or required
disclosures therein.
DELOITTE & TOUCHE LLP
New York, New York
January 29, 1998
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Snowdance, Inc. on
Form SB-2 of our report dated July 11, 1997 (February , 1998 as to Note 1),
appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the headings 'Selected
Financial Data' and 'Experts' in such Prospectus.
New York, New York
February , 1998
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