<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
October 28,1999
Date of Report
(Date of Earliest Event Reported)
AQUA VIE BEVERAGE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
333 South Main Street
Ketchum, Idaho 83340
(Address of principal executive offices)
208/622-7792
Registrant's telephone number
BARHILL ACQUISITION CORPORATION
1504 R Street, N.W.
Washington, D.C. 20009
Former name and former address
Delaware 0-24801 82-0506425
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Merger (the "Merger Agreement")
dated as of August 31, 1999 between Barhill Acquisition Corporation ("Barhill"),
a Delaware corporation, and Aqua Vie Beverage Corporation, a Delaware
corporation, all the outstanding shares of common stock of Barhill Acquisition
Corporation were exchanged for 250,000 shares of common stock of Aqua Vie
Beverage Corporation ("Aqua Vie" or the "Company") in a transaction in which
Aqua Vie was the surviving company.
The Merger Agreement was adopted by the unanimous consent of the Board
of Directors of Barhill and approved by the unanimous consent of the
shareholders of Barhill on August 31, 1999. The Merger Agreement was adopted by
the unanimous consent of the Board of Directors of Aqua Vie and by the consent
of a majority of the shareholders of Aqua Vie on August 31, 1999.
Prior to the merger, Barhill had 5,000,000 shares of common stock
outstanding which shares were exchanged for 250,000 shares of common stock of
Aqua Vie. By virtue of the merger, Aqua Vie acquired 100% of the issued and
outstanding common stock of Barhill.
Prior to the effectiveness of the merger, Aqua Vie had an aggregate of
22,741,664 shares of common stock issued and outstanding, and 3,897.689 shares
of Series A preferred stock outstanding, $.001 par value, 4,987.444 shares of
Series B preferred stock outstanding, $.001 par value, and no shares of Series C
preferred stock outstanding, $.001 par value.
<PAGE> 2
Each share of Series A preferred stock is entitled to approximately
1,924.7 voting rights on all matters on which shareholders are entitled to vote
and can be converted into shares of common stock at a ratio of approximately
1,924.7 shares of common stock for each share of Series A preferred stock.
Series A preferred stock has a preference on dividends, liquidation and merger
at approximately $300 per share.
Each share of Series B preferred stock is entitled to approximately
11,548 voting rights on all matters on which shareholders are entitled to vote.
Each Series B share can be converted into shares of common stock on a sliding
scale geared to the market price of Aqua Vie's stock starting at a conversion
ratio of approximately 1,924.7 shares of common stock for each Series B share
when the common stock is trading at $2.00 per share to a maximum ratio of
approximately 11,548 shares of common stock for each Series B share when the
common stock is trading at $12.00 per share. Series B preferred stock has a
preference on dividends, liquidation and merger at $30 per share.
Both Series A and Series B preferred stock have adjustment provisions
for sales of common stock by Aqua Vie at a price of less than $1.65 per share.
Holders of both Series A and Series B preferred stock have a limited right to
convert to shares of common stock over a period of 36 months from the date of
issuance. 5% of the preferred stock may be converted after 12 months, an
additional 10% may be converted after 24 months, and the remainder after 36
months. The outstanding preferred shares were issued in October 15, 1998, and up
to 5% of both the Series A and Series B preferred shares may be converted
commencing October 15, 1999.
The Company may require conversion on various events, including the
election of 51% of the preferred shares outstanding to convert, an acquisition,
merger or other action by the Company, after the closing of a public
underwriting of $10,000,000, after the Company shall have a net worth of
$10,000,000, or after the common stock has been traded on the Nasd Market System
for at least three months. In the event of a mandatory conversion at the
election of the Company, any enhanced voting rights or increased conversion
rights will be fixed at the time of conversion.
Upon effectiveness of the merger, Aqua Vie had an aggregate of
22,741,664 shares of common stock outstanding.
The officers of Aqua Vie will continue as officers of the successor
issuer. See "Management" below. The officers, directors, and by-laws of Aqua Vie
will continue without change as the officers, directors, and by-laws of the
successor issuer. Pursuant to the Merger Agreement, the Certificate of
Incorporation was amended to increase the number of authorized shares of common
stock from 50,000,000 to 120,000,000, to permit increases or decreases in the
authorized number of shares of a class without class approval, and to elect not
to be governed by the provisions of Section 203 of the Delaware General
Corporation Law.
A copy of the Merger Agreement was previously filed and is
incorporated in its entirety herein by reference to that previous filing. The
foregoing description is modified by such reference.
(b) The following table contains information regarding the
shareholdings of Aqua Vie's current directors and executive officers and those
persons or entities who beneficially own more than 5% of its common stock
(giving effect to the exercise of the preferred stock and/or warrants held by
each such person or entity):
<TABLE>
<CAPTION>
Amount of Common Preferred Stock Percent of
Stock Beneficially Voting Common Stock
Name Owned (1) Rights Beneficially Owned (2)
<S> <C> <C> <C>
Thomas Gillespie (3) 2,053,829 57,596,001 68.8%
President, Director
Joseph J. Wozniak (4) 0 2,584,435 3%
Director
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
All directors and 2,053,829 60,180,436 71.8%
executive officers as
a group (2 persons)
</TABLE>
* Less than 1% percent
(1) Based upon 22,741,664 outstanding shares of common stock (subsequent to the
effectiveness of the merger).
(2) Assumes exercise of warrants, options or other rights to purchase securities
held by the named shareholder exercisable within six months of the date
hereof.
(3) All 4,987.444 outstanding Series B preferred stock is owned by Brace
Foundation Trust on behalf of seven members of the Gillespie family,
including Thomas Gillespie, who may be deemed to be the beneficial owner of
all the shares. The 4,987.444 Series B preferred shares have voting rights
equal to 57,596,001 common shares.
(4) Mr. Wozniak holds 1,343 shares of Series A preferred stock which have voting
rights equal to 2,584,435 common shares.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Merger Agreement was
negotiated between Barhill and Aqua Vie.
In evaluating Aqua Vie as a candidate for the proposed merger, Barhill
used criteria such as the value of the assets of Aqua Vie, its spring water
beverage products taste and design, its trademarks, the demand and use of
bottled spring water, the increased use of the Internet as a sales market, Aqua
Vie's current business operations and anticipated operations, and Aqua Vie's
business name and reputation. Barhill determined that the consideration for the
merger was reasonable.
(b) Aqua Vie intends to continue developing and marketing its flavored
water beverage business with the further development, marketing, and
distribution of its naturally flavored spring water and the possible development
of additional lines of beverage products.
BUSINESS
Aqua Vie is a development stage company that has developed and is
marketing several flavors of bottled spring water. Aqua Vie Beverage
Corporation, a Delaware corporation, was incorporated on July 30, 1998 and was
formed as a successor to BEVA Corporation, a Delaware corporation whose assets
were liquidated in bankruptcy in 1997, in a transaction under Section 251(g) of
the Delaware Business Corporation Law completed October 14, 1998. BEVA
Corporation is a wholly owned subsidiary of Aqua Vie.
Although there is intense competition in the bottled water market by
companies far larger and better capitalized than Aqua Vie, management believes
the flavors and natural quality of its products will allow it to compete
successfully with other sources of bottled water. There is no assurance that
Aqua Vie will be able to successfully compete with other bottled water products.
CURRENT OPERATIONS
Aqua Vie develops, bottles and distributes naturally flavored bottled
spring water offering such flavors as Avalanche (pear and guava flavored spring
water), Bamboo (cherry flavored spring water), Paradise (orange and peach
flavored spring water), Harvest (strawberry flavored spring water) and other
flavors. These product lines and formulations were acquired in the purchase of
assets from the predecessor company in liquidation. There are three additional
beverage product lines that are currently being developed. Aqua Vie currently
utilizes the Internet to generate sales and maintains an Internet web site at
http://www.aquavie.com.
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Aqua Vie has bottling and labeling arrangements with Lyons Magnus
Company, a large contract bottler located in Fresno California, and arrangements
for foreign bottling in France. Sales to date have been minimal, and the Company
has a small inventory of product which it is utilizing for marketing purposes.
Additional capital will be required to support the inventory required for robust
sales.
SUPPLIERS
Aqua Vie has three primary suppliers for its product: Lyons-Magnus, a
contract bottler company, Fresno, California, International Flavors &
Fragrances, a beverage syrup company, Dayton, New Jersey, and Seal-It, a shrink
wrap label company, Farmingdale, New York. The bottler has to be considered as a
single or limited source as Aqua Vie utilizes the aseptic bottling process and
it is one of the few bottlers which has this capability in the United States.
Shipments of bottled spring water are sent directly from warehouses
proximate to the bottling companies. The aseptic bottling process, utilized by
Aqua Vie, eliminates the use of preservatives. There are a limited number of
bottlers in the United States which have the aseptic bottling process available.
Aqua Vie intends to select its bottlers upon availability of the aseptic
bottling system and geographic location.
RAW MATERIALS
Aqua Vie utilizes readily available standard PET bottles and sportscaps
as its bottling medium. The main volume of the product is still water which is
generally readily available. The shrink wrap labels are available from several
major sources. The shrink wrap label supplier selected by the Company provides
the best combination of label quality, delivery schedule and pricing break
points for volume purchases. The main ingredient is the all natural flavored
syrups which gives the product its unique tastes and qualities. The main
supplier of the syrup is International Flavors and Fragrances which is a large
flavor house, although several flavors are furnished by another flavor source.
MARKETING
The company currently has distribution arrangements with BMS in Saudi
Arabia, H.A. Cosmos in Israel, and Sunryel Nutrition in China. In the U.S., the
company has distribution arrangements with Associated Food Stores Inc. in New
York, and is currently in negotiation with several national food retailers.
Domestic sales and marketing campaign plans are currently being tested on the
internet, and on national radio.
TRADEMARKS
Aqua Vie has no patents or licenses. Aqua Vie has certain trademarked
and copy righted names and proprietary secrets as regards the various beverage
formulations. It is believed that the various trademarked and copyrighted
material are unique to the Company but that replacement identities are
available.
PROPERTY
Aqua Vie maintains its administrative offices at 333 South Main Street,
Sun Valley/Ketchum, Idaho 83340 under an annual lease of $7,833 per month for
approximately 3,776 square feet.
LITIGATION
Thomas Gillespie and Joseph J. Wozniak are both party defendants in an
action for the payment of approximately $67,000 in legal fees brought by the law
firm that was engaged by Mr. Gillespie to obtain the confirmation of the
reorganization of the original Aqua Vie Beverage Corporation in bankruptcy
court. The law firm was unsuccessful in achieving reorganization confirmation or
in the obtaining of the closing of the bankruptcy liquidation sale of the
corporate assets held by the bankruptcy court. Mr. Gillespie and Mr. Wozniak
have countersued for the refunding of $117,000 paid in fees to the law firm.
MARKET FOR AQUA VIE'S SECURITIES
Aqua Vie has been a non-reporting publicly traded company with certain
of its securities exempt from registration under the Securities Act of 1933
pursuant to Rules 504 of Regulation D and Rule 701 of the General Rules and
Regulations
<PAGE> 5
of the Securities and Exchange Commission. Aqua Vie's common stock is traded on
the OTC Bulletin Board operated by Nasdaq under the symbol AVBC. Aqua Vie did
not file a registration statement with the Securities and Exchange Commission
and has not been a reporting company under the Securities Exchange Act of 1934.
The Nasdaq Stock Market has implemented a change in its rules requiring all
companies trading securities on the OTC Bulletin Board to become reporting
companies under the Securities Exchange Act of 1934.
The Company was required to become a reporting company by the close of
business on September 1, 1999 or no longer be listed on the OTC Bulletin Board.
Aqua Vie effected the merger with Barhill on august 31, 1999 and became a
successor issuer thereto in order to comply with the reporting company
requirements implemented by the Nasdaq Stock Market.
The following table represents the average prices for the Company's
common stock:
<TABLE>
<CAPTION>
Open High Low Closing
Price Bid Bid Bid Volume
<S> <C> <C> <C> <C> <C>
September, 1999 0.50 0.75 0.50 0.516 211,200
August, 1999 1.1562 1.2188 0.2812 0.50 689,000
July, 1999 0.5625 1.2188 0.5625 1.125 208,000
June, 1999 0.875 0.875 0.5312 0.5781 209,400
May, 1999 0.7656 0.875 0.75 0.8125 259,300
December, 1998 0.5312 0.5312 0.1406 0.1406 1,029,300
October, 1998 1.4844 1.56525 1.1719 1.25 110,900
May, 1998 1.875 1.9531 1.7969 1.7969 146,800
</TABLE>
MANAGEMENT
<TABLE>
<CAPTION>
Name Age Title
<S> <C> <C>
Thomas Gillespie 53 President, Director
Joseph J. Wozniak 61 Vice President, Secretary, Director
</TABLE>
THOMAS GILLESPIE is the founder of Aqua Vie and has served as President,
a director and is its controlling shareholder since its formation in 1998. Since
1996, Mr. Gillespie has owned Aqua Vie Advance Corporation. From 1991 to 1997,
Mr. Gillespie served in various positions with Aqua Vie Beverage Corporation,
the predecessor corporation to the Aqua Vie's subsidiary BEVA Corporation, which
was liquidated in bankruptcy in 1997. From 1986 to 1991, Mr. Gillespie was the
principal of Kauai Water Company, Kauai, Hawaii. Prior to 1986, Mr. Gillespie
founded and served as president of Marketing Design, a retail package design and
product development company.
JOSEPH J. WOZNIAK has served as Vice President, Secretary and a director
of Aqua Vie since its formation in 1998. From 1996 to 1997, Mr. Wozniak assisted
with the reorganization and bankruptcy of the predecessor Aqua Vie Beverage
Corporation. Since 1993, Mr. Wozniak has worked as a consultant for various
start up entities assisting in the creation of business plans and corporate
organizations and reorganizations.
EXECUTIVE COMPENSATION
Thomas Gillespie, as president, receives $20,000 per month. The company
has been accruing this compensation since November 1, 1998. The financial
statements for July 31, 1999 reflect $180,000 has been accrued from November 1,
1998 through July 31, 1999. In addition the financial statements reflect that
Mr. Gillespie has an advance due to the company of $50,500 for a net amount due
from the company to Mr. Gillespie of $129,500. He has no
form of other compensation.
Joseph J. Wozniak receives $10,000 per month. Mr. Wozniak has a stock
earn-out agreement which runs through January 15, 2000.
RELATED TRANSACTIONS
"A legal dispute exists with the bankruptcy legal counsel who was
engaged in the attempt to reorganize the predecessor corporation concerning
their legal fees. Two of the Company's officers, Mr. Gillespie, President and
CEO and Mr. Wozniak, Vice President-Administration, are being sued personally
by the former bankruptcy counsel for the unpaid portion of their fees in the
amount of $67,000. Mr. Gillespie and Mr. Wozniak are counter suing in the
amount of $117,000 for the fees previously paid. Significant costs have been
incurred in defending these suits. These costs are recorded as an expense by
the Company as incurred
From time to time the Company borrows money from its CEO, Thomas
Gillespie, and at other times advances money to the CEO. At July, 31, 1999
$50,500 was due to the Company from Mr. Gillespie under this arrangement. This
amount is due on demand and carries no interest rate. Also as of that date the
Company had accrued and unpaid compensation due Mr. Gillespie of $180,000 for a
net amount of $129,500 due to Mr. Gillespie.
<PAGE> 6
RISK FACTORS
AQUA VIE IS CURRENTLY OPERATING AT A LOSS. Revenues from Aqua Vie's
sales to date have not been sufficient to cover the costs of such operations and
Aqua Vie has borrowed funds to maintain its operations. Its ability to develop
operations is dependent upon its ability to advertise its products and generate
sales of its line of flavored spring water products. If Aqua Vie is unable to
sell sufficient amount of its flavored spring water products at a sufficiently
profitable level, it will need to raise additional capital through the placement
of its securities or from other debt or equity financing. If the Company is not
able to raise such financing or to obtain alternative sources of funding,
management will be required to curtail operations. There is no assurance that
the Company will be able to continue to operate if additional sales cannot be
generated.
AQUA VIE COMMENCED OPERATIONS IN 1998 AND HAS A LIMITED OPERATING
HISTORY. Aqua Vie commenced operations in 1998 and has only a limited history of
operations which to date have not been profitable. Its operations are subject to
the risks and competition inherent in the establishment of a relatively new
business enterprise. There can be no assurance that future operations will be
profitable. Revenues and profits, if any, will depend upon various factors,
including market acceptance of its concepts, market awareness, reliability and
acceptance of the Internet, dependability of its distribution network, and
general economic conditions. There is no assurance that Aqua Vie will achieve
its expansion goals and the failure to achieve such goals would have an adverse
impact on it.
AQUA VIE'S ISSUED PREFERRED STOCK HAS SUPER MAJORITY VOTING RIGHTS. Aqua
Vie has designated 200,000 shares of Series A preferred stock of which
3,897.689 are issued. Each share of Series A preferred stock
entitles the holder to 1,924.7 voting rights for an aggregate of approximately
7,501,882 for all Class A shares on all matters on which shareholders are
entitled to vote. Aqua Vie has designated 200,000 shares of Series B preferred
stock of which approximately 4,987.444 are issued. Each share of Series B
preferred stock entitles the holder to 11,548 voting rights for an aggregate of
approximately 57,596,001 votes for all Class B shares on all matters on which
shareholders are entitled to vote. All the outstanding Class B shares are held
by the Brace Foundation of which Thomas Gillespie is one of the beneficiaries
and for which he holds all the voting proxies. In addition, Aqua Vie may,
without further action or vote by its shareholders, designate and issue
additional series or shares of preferred stock.
The terms of the super majority preferred stock adversely affect the
voting power of the holders of the common stock and may in turn reduce the value
of the common stock. Such designation and issuance of preferred stock favorable
to current management or shareholders makes the possible takeover of the Company
or the removal of management of the Company very difficult and discourages
hostile bids for control of the Company which bids might have provided
shareholders with premiums for their shares.
VOTING CONTROL OF AQUA VIE BY PRESIDENT. Thomas Gillespie, founder,
President and a director of Aqua Vie, owns and controls beneficially the voting
rights ascribed to all the outstanding Series B preferred shares aggregating a
total of approximately 57,596,001 votes. Through such voting rights, Thomas
Gillespie may control the vote of all matters brought before the shareholders
and holders of the common stock may have no power in corporate decisions usually
brought before the shareholders for shareholder vote.
LACK OF CONTINUED DEVELOPMENT OF E-COMMERCE MARKET. The use of the
Internet and World Wide Web for commercial purposes is expanding dramatically.
There is no assurance, however, that as increased commerce takes place on the
Internet that unforeseen overloads, lack of sufficient hardware, telephone
availability or other problems may develop. In addition, consumer use of the
Internet for purchases, banking, and other commercial uses may decline for any
number of reasons such as security problems, overload difficulties, shopping
trends, or slow Internet access.
COMPETITION FROM LARGER AND MORE ESTABLISHED COMPANIES MAY HAMPER
MARKETABILITY. The competition in the bottled water industry is intense. There
are numerous well-established competitors, including national, regional and
local companies possessing substantially greater financial, marketing, personnel
and other resources than Aqua Vie. Aqua Vie may not be able to market or sell
its products if faced with direct product competition from these larger and more
established bottled water companies.
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TRADEMARK PROTECTION AND PROPRIETARY MARKS. Notwithstanding the pending
registration of certain trade names with the United States Trademark Office,
there is no assurance that Aqua Vie will be able to enforce against use of any
of its marks. There is also no assurance that Aqua Vie will be able to prevent
competitors from using the same or similar names, marks, concepts or appearances
or that it will have the financial resources necessary to protect its marks
against infringing use.
MANAGEMENT AND AFFILIATES OWN ENOUGH SHARES TO CONTROL SHAREHOLDER VOTE.
Aqua Vie's executive officers and directors beneficially own approximately 1.1%
of the outstanding common stock of Aqua Vie (not including conversion of any
preferred stock), but have voting rights equal to approximately 71.8% of the
outstanding vote. As a result, these executive officers are able to exercise
controlling interest over matters requiring stockholder approval, including the
election of directors and the approval of material corporate matters such as
change of control transactions. The effects of such control could be to delay or
prevent a change of control of Aqua Vie unless the terms are approved by such
stockholders.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTORS SHARE VALUE. The
Certificate of Incorporation as amended of Aqua Vie authorizes the issuance of
120,000,000 shares of common stock and 1,000,000 shares of preferred stock. The
future issuance of all or part of the remaining authorized common stock may
result in substantial dilution in the percentage of the Company's common stock
held by the its then existing shareholders. Moreover, any common stock issued in
the future may be valued on an arbitrary basis by Aqua Vie. The issuance of the
Company's shares for future services or acquisitions or other corporate actions
may have the effect of diluting the value of the shares held by investors, and
might have an adverse effect on any trading market, should a trading market
develop for the Company's common stock.
CURRENT TRADING MARKET FOR THE COMPANY'S SECURITIES. Aqua Vie's common
stock is traded on the OTC Bulletin Board operated by Nasdaq under the symbol
AVBC. Prior to August 31, 1999 Aqua Vie had not filed a registration statement
with the Securities and Exchange Commission and had not been a reporting company
under the Securities Exchange Act of 1934. The National Association of
Securities Dealers (NASD) Market System implemented a change in its rules
requiring all companies trading securities on the OTC Bulletin Board to be
registered as a reporting company. The Company was required to become a
reporting company by the close of business on September 1, 1999 or no longer be
listed on the OTC Bulletin Board. Aqua Vie effected the merger with Barhill and
has become a successor issuer thereto in order to comply with the reporting
company requirements implemented by the Nasdaq Stock Market. No assurance can be
given that an active trading market in the Company's securities will be
sustained if it is able to retain its listed status.
PENNY STOCK REGULATION. The Company's common stock may be deemed a
penny stock. Penny stocks generally are equity securities with a price of less
than $5.00 per share other than securities registered on certain national
securities exchanges or quoted on the Nasdaq Stock Market, provided that current
price and volume information with respect to transactions in such securities is
provided by the exchange or system. The Company's securities may be subject to
"penny stock rules" that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the "penny stock rules" require the delivery, prior to the transaction,
of a disclosure schedule prescribed by the Commission relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, monthly statements must be sent disclosing recent
price information on the limited market in penny stocks. Consequently, the
"penny stock rules" may restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny stock restrictions will not
apply to the Company's securities if such securities maintain a market price of
$5.00 or greater. There can be no assurance that the price of the Company's
securities will reach or maintain such a level.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000. Many existing computer
programs use only two digits to identify a year in such program's date field.
These programs were designed and developed without consideration of the impact
of the change in the century for which four digits will be required to
accurately report the date. If not corrected, many computer applications could
fail or create erroneous results by or following the year 2000 (the "Year 2000
problem"). Many of the computer programs containing such date language problems
have been corrected by the
<PAGE> 8
companies or governments operating such programs. The Company's operations are
dependent upon the timely delivery of supplies which deliveries and production
of bottled water may be delayed or canceled because of such Year 2000 problem
computer failures. The Company does not know what steps, if any, have been taken
by any of its suppliers or bottlers or their suppliers in regard to the Year
2000 problems. The Company's operations will be severally curtailed if one or
more of its suppliers were to suffer Year 2000 problems. Furthermore, it is
impossible to predict if the basic utilities serving the company, its bottlers,
or suppliers or any of their suppliers will continue uninterrupted.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Aqua Vie Beverage Corporation, the predecessor corporation of the
Company's subsidiary BEVA Corporation, was incorporated in the state of Delaware
on March 30, 1990 as the JIB Group, Inc. and changed its name on January 22,
1991 to Aqua Vie Beverage Corporation. The original Aqua Vie Beverage
Corporation was placed into involuntary Chapter 11 bankruptcy in January 1995 as
a move in a hostile takeover attempt and a trustee was assigned. From January
1995 to November 1996, Mr. Gillespie attempted to reorganize the original Aqua
Vie Beverage Corporation and regain management control. This was not effected
and in early November 1996 it was decided and agreed to with the trustee to
acquire the assets, and the corporate shell through a bankruptcy
liquidation sale. In September 1997, a bill of sale was obtained from the
bankruptcy trustee and the assets were purchased. Subsequently a reorganization
was effected pursuant to a merger under Section 251(g) of the Delaware General
Business Corporation Law in October 1998. Except for the time under control of
the bankruptcy trustee, Mr. Gillespie was the chief executive officer of the
original Aqua Vie Beverage Corporation.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Upon effect of the merger, pursuant to Rule 12g-3(a) of the General
Rules and Regulations of the Securities and Exchange Commission, Aqua Vie
became the successor issuer to Barhill Acquisition Corporation for reporting
purposes under the Securities Exchange Act of 1934 and elected to report under
the Act effective September 1, 1999.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of Aqua Vie for the fiscal year ending July 31,
1999 are included herein.
<PAGE> 9
AQUA VIE BEVERAGE CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
JULY 31, 1999 AND 1998
<PAGE> 10
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Aqua Vie Beverage Corporation
Ketchum, ID
I have audited the accompanying balance sheets of Aqua Vie Beverage
Corporation (a development stage company) as of July 31, 1999 and 1998, and the
related statements of operations, stockholders' deficit, and cash flows for the
years then ended, and the cumulative amounts from Inception (August 1, 1997)
through July 31, 1999. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aqua Vie Beverage
Corporation as of July 31, 1999 and 1998, and the results of its operations and
its cash flows for the years then ended, and the cumulative amounts from
Inception (August 1, 1997) through July 31, 1999 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that Aqua
Vie Beverage Corporation will continue as a going concern. The Company's
negative working capital and losses during its development stage raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1 to the financial
statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
W. Alan Jorgensen
Certified Public Accountant
October 12, 1999
Seattle, Washington
<PAGE> 11
AQUA VIE BEVERAGE CORPORATION
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31,
-----------------------------
ASSETS 1999 1998
----------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 27,298 $ 5,427
Advances to shareholder 50,505 92,921
Prepaid expenses and deposits 136,183
----------- ---------
Total current assets 213,986 98,348
Equipment 74,541 --
Intangibles (net of $9,750 amortization) 87,750
----------- ---------
TOTAL ASSETS $ 376,277 $ 98,348
=========== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 248,736 $ 6,680
Notes Payable 404,000 144,000
Accrued expenses 224,302 --
----------- ---------
TOTAL CURRENT LIABILITIES 877,038 150,680
----------- ---------
Commitments and Contingencies -- --
STOCKHOLDERS' DEFICIT
Preferred stock: $0.001 par value (authorized),
issued and outstanding: -- --
Series A (200,000), outstanding: 3,897 shares 4
Series B (200,000), outstanding: 4,987 shares 5
Series C (10,000), outstanding: none -- --
Common stock: 50,000,000 shares, $0.001 par, authorized
Issued and outstanding: 22,741,664 and 2,458,007 22,741 2,458
Additional Paid in Capital 1,293,348 190,292
Notes receivable for stock (10,000) (10,000)
Deficit accumulated during the development stage (1,806,859) (235,082)
----------- ---------
TOTAL STOCKHOLDERS' DEFICIT (500,761) (52,332)
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 376,277 $ 98,348
=========== =========
</TABLE>
See accompanying notes to the financial statements.
<PAGE> 12
AQUA VIE BEVERAGE CORPORATION.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
AUGUST 1, 1997
(INCEPTION)
TO JULY 31,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES $ 16,433 $ 582 $ 17,015
EXPENSES
Promotion and Advertising 755,583 107,897 863,480
General and administrative 629,283 94,650 723,933
Legal and accounting 193,594 33,117 226,711
Amortization 9,750 9,750
----------- ----------- -----------
TOTAL EXPENSES 1,588,210 235,664 1,823,874
Loss from operations $(1,571,777) $ (235,082) $(1,806,859)
=========== =========== ===========
Loss per share $ (0.11) $ (0.03) $ (0.16)
=========== =========== ===========
Weighted average number of
shares outstanding: 14,044,036 8,754,657 11,399,347
=========== =========== ===========
</TABLE>
See accompanying notes to the financial statements.
<PAGE> 13
AQUA VIE BEVERAGE CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FROM AUGUST 1, 1997
YEAR ENDED (INCEPTION)
JULY 31, TO JULY 31,
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,571,777) $ (235,082) $(1,806,859)
ADJUSTMENTS TO RECONCILE NET LOSS
TO NET CASH USED BY OPERATING ACTIVITY
Depreciation and amortization 9,750 -- 9,750
Accrued compensation 180,000 -- 180,000
CHANGES IN OPERATING ASSETS AND LIABILITIES
(Inc) Decr in amount advances to shareholder 42,416 (92,921) (50,505)
Accounts payable 242,055 6,680 248,735
Accrued expenses 44,302 44,302
Increase in prepaid expenses (136,183) -- (136,183)
----------- ----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (1,189,437) (321,323) (1,510,760)
INVESTING ACTIVITIES
Purchases of equipment (74,541) -- --
----------- ----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (74,541) -- (74,541)
FINANCING ACTIVITIES
Proceeds from sale of common stock 1,025,849 182,750 1,208,599
Proceeds from notes payable 260,000 144,000 404,000
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,285,849 326,750 1,612,599
----------- ----------- -----------
Increase (Decrease) in cash 21,871 5,427 27,298
Beginning of period 5,427 -- --
----------- ----------- -----------
END OF PERIOD $ 27,298 $ 5,427 $ 27,298
=========== =========== ===========
Corporate income taxes paid $ -- $ --
Interest paid -- $ 38,375
NON CASH TRANSACTIONS:
Common shares issued for a note receivable $ 10,000
1,496 Series B preferred shares were
issued for assets $ 97,500
</TABLE>
See accompanying notes to the financial statements.
<PAGE> 14
AQUA VIE BEVERAGE CORPORATION
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
SERIES A SERIES B
PREFERRED PREFERRED COMMON STOCK APIC
PER -------------- -------------- ------------------ ----------
SHARE SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT AMOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BEGINNING BALANCES
Note Receivable for shares
Shares issued for cash 0.07 $ $ 2,458,007 $ 2,458 $ 190,292
Net Loss for year ended July 31, 1998
----- --- ----- --- ---------- ------- ----------
BALANCES AT JULY 31, 1998 -- -- -- -- 2,458,007 $ 2,458 $ 190,292
----- --- ----- --- ---------- ------- ----------
Issued for cash to founders Oct. 14, 1998 0.001 9,991,876 9,992 98,815
Issued for assets Oct. 14, 1998 65.17 1,496 2 97,498
Issued to founders Oct. 14, 1998 0.001 3,491 3
Issued to founders Oct. 14, 1998 0.001 4,343 4
Issued for cash (Nov.-Mar. 1999) 0.10 9,484,640 9,484 907,550
Conversion of pref. (1,813.8 common
share for each preferred share -- in July) (446) 807,141 807 (807)
Repayment of related party receivables
Net Loss for year ended July 31, 1999
----- --- ----- --- ---------- ------- ----------
BALANCES AT JULY 31, 1999 3,897 $ 4 4,987 $ 5 22,741,664 $22,741 $1,293,348
===== === ===== === ========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
NOTE DEFICIT
PER RECEIVABLE DURING
SHARE FOR SHARES DEVELOP.STAGE TOTALS
<S> <C> <C> <C> <C>
BEGINNING BALANCES
Note Receivable for shares $(10,000) (10,000)
Shares issued for cash 0.07 192,750
Net Loss for year ended July 31, 1998 $ (235,082) (235,082)
--------- ----------- -----------
BALANCES AT JULY 31, 1998 $(10,000) $ (235,082) $ (52,332)
--------- ----------- -----------
Issued for cash to founders Oct. 14, 1998 0.001 108,807
Issued for assets Oct. 14, 1998 65.17 97,500
Issued to founders Oct. 14, 1998 0.001 3
Issued to founders Oct. 14, 1998 0.001 4
Issued for cash (Nov.-Mar. 1999) 0.10 917,034
Conversion of pref. (1,813.8 common --
share for each preferred share -- in July)
Repayment of related party receivables --
Net Loss for year ended July 31, 1999 (1,571,777) (1,571,777)
-------- ----------- -----------
BALANCES AT JULY 31, 1999 $(10,000) $(1,806,859) $ (500,761)
======== =========== ===========
</TABLE>
All common share amounts reflect a 1 for 5 reverse stock split effected on
November 13, 1998.
See accompanying notes to the financial statements
<PAGE> 15
AQUA VIE BEVERAGE CORPORATION
Notes to the Financial Statements
NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION Aqua Vie Beverage Corporation ("The Company") was incorporated on
July 31, 1998 in the state of Delaware, however, organizational activity began
prior to that time. The Company's principal assets, acquired through a
bankruptcy court ordered liquidation of the predecessor, included, among other
things, the trade name, beverage formulae and the public company status.
Subsequently, these assets were acquired by the issuance of Series B preferred
stock. The Company's business activities have been financed primarily through
the issuance of equity securities, outside loans, and loans from shareholders.
Though the Company's operations have begun, it has yet to achieve significant
sales from its planned business operations and is therefore considered to be in
the developmental stage. The Company's principal products include low calorie,
all natural, non-preservative, lightly flavored bottled water. Management plans
and believes its products will be marketed nationally and internationally.
As part of the Company's organization, the shareholders of the predecessor
corporation were included as part of the new equity ownership.
GOING CONCERN The Company's ability to continue and become a going concern is
dependent upon its success in establishing distributors and markets for its
primary developed and market tested product line, and acquiring adequate
financing. Management's plans include expenditures for advertising, inventory
production and establishing a distribution network. Management expects to
finance its initial operations through private and public offerings of its
common equity securities.
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
disclosure 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 those estimates.
CASH AND CASH EQUIVALENTS The Company considers, and the financial statements
reflect, all highly liquid short-term investments with original maturity of
three months or less as cash.
DEPRECIATION AND AMORTIZATION. The Company's equipment was acquired in July
1999, and no depreciation has been taken for 1999. Intangible assets are
amortized over 10 years.
COST OF ISSUING COMMON STOCK During fiscal 1999, the Company offered and sold
$1,000,000 of common stock pursuant to an exemption from registration from the
1933 Securities Act (Rule 504). The cost incurred in connection with this
offering, about $92,000, is accounted for as a reduction of paid in capital.
INCOME TAXES Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances have
been established to reduce tax assets to the amount expected to be realized.
Income tax expense is the tax payable or refundable for the period plus or minus
the change during the period in net deferred tax assets and liabilities.
NET LOSS PER COMMON SHARE Net loss per common share is computed based on the
weighted average number of common shares and common share equivalents
outstanding. When dilutive, stock options are included as common share
equivalents using the treasury stock method.
There was no difference between basic and fully diluted earnings per share for
all periods presented.
(Cont'd)
<PAGE> 16
NOTE 2 NET OPERATING LOSS CARRY FORWARD
The Company acquired, as part of the assets purchased in the bankruptcy
liquidation sale, the predecessor company's net operating loss carry forward
(NOL) in the approximate amount of $15 million. A valuation allowance has been
established so that no value is reflected at the balance sheet dates for any
deferred tax benefit. The value, if any, of the NOL will depend upon a number of
unknowns, including, among others, attaining profitable operations and other tax
law issues related to the acquisition of the NOL from the Company's predecessor.
The aggregate net operating loss carry forwards for federal income tax purposes
which are available to offset future taxable income expire beginning in 2001.
NOTE 3 STOCK BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 (SFAS 123), which addresses the
accounting for stock-based compensation arrangements. SFAS 123 permits a company
to choose either a new fair-value-based method or the current APB Opinion 25
intrinsic-value-based method of accounting for stock-option-based compensation
arrangements. The Company has adopted SFAS 123 for the year ending July 31, 1998
and thereafter. Management will continue to record stock-based compensation
using current APB Opinion 25 intrinsic-value-based method and, therefore,
believes adoption of SFAS 123 does not have a material impact on the Company's
financial position and results of operations.
During fiscal 1998 and 1999 there were no options issued to purchase shares of
restricted rule 144 stock.
NOTE 4 RELATED PARTY TRANSACTIONS
A legal dispute exists with the bankruptcy legal counsel who was engaged in the
attempt to reorganize the predecessor corporation concerning their legal fees.
Two of the Company's officers (CEO and Vice President of Administration) are
being sued personally by the former bankruptcy counsel for the unpaid portion of
their fees. Significant costs have been incurred in defending these suits. These
costs are recorded as an expense by the Company in the period the costs are
incurred.
NOTES RECEIVABLE FROM STOCKHOLDERS The Company has issued common shares in
return for a note receivable from a stockholder. This notes receivable has been
accounted for as a reduction of stockholders equity.
ADVANCES TO OFFICER. From time to time the Company borrows money from its CEO,
Thomas Gillespie, and at other times lends money to the CEO. At July 31, 1999,
and 1998, $50,505 and $92,921 were owed to the Company under this arrangement.
This amount is due on demand and carries no interest rate.
NOTE 5 COMMON STOCK
COMMON STOCK WARRANTS The company has issued and outstanding the following two
coupled warrants wherein a warrant holder holds one of each of them on a unit
basis: 1) A one year $1.75/restricted share warrant with a commencement date of
October 14, 1998 and an expiration date of October 13, 1999 in the amount of
4,800 shares for a total for this class of warrant of 172,800 shares; and 2) A
two year $2.50/restricted share warrant with a commencement date of October 14,
1998 and an expiration date of October 13, 2000 in the amount of 4,800 shares
for an aggregate of 172,800 shares for this class. The two classes of these
warrants total 345,600 shares.
Subsequent to July 31, 1999 1,764,928 additional shares of common stock have
been issued pursuant to exemptions from registration under the Securities Act of
1933
The Company, on July 23, 1999, made a Short Term Warrant Exercise offer that
expired at the close of business on August 3, 1999 where the warrant holder
could purchase the underlying restricted shares for $0.9375 each and receive a
replacement warrant with the same terms. 4,800 shares were issued by exercise of
warrants under this offer.
All per share amounts presented in the financial statements reflect a 1:5
reverse stock split effected November 13, 1998.
(Cont'd)
<PAGE> 17
CHANGE IN AUTHORIZED COMMON SHARE INCREASE On August 31, 1999, in connection
with the merger-acquisition of Barhill, the authorized common stock was
increased from 50,000,000 to 120,000,000 common shares. There was no change made
to any other class of stock. See Subsequent Events note to the financial
statements.
WARRANTS TO PURCHASE COMMONS SHARES On October 8, 1999 the warrants to purchase
4,800 shares of common stock for $1.75 were extended to expire on March 31,
2000.
NOTE 6 PREFERRED STOCK
The Board of Directors has the authority, without further stockholder action, to
determine the preferences, limitations, and relative rights of the preferred
stock, subject to the requirements on the Delaware Business Corporation Act.
PREFERRED SERIES A, B AND C STOCK TERMS SUMMARY The company has authorized and
issued preferred stock convertible into the common stock of the company. The
following is a summary of the preferred stock as issued and the applicable
terms.
Number of Preferred shares Authorized and Outstanding per each series:
<TABLE>
<CAPTION>
AUTHORIZED OUTSTANDING
---------- -----------
<S> <C> <C>
Series A 200,000 3,898
Series B 200,000 4,987
Series C 10,000 (none)
</TABLE>
Current Total Conversion to Common based on the current rate of 1,814 common
shares per preferred (See "Change in conversion ratio below:
<TABLE>
<CAPTION>
OUTSTANDING TOTAL COMMON
----------- ------------
<S> <C> <C>
Series A 3,898 7,069,628
Series B 4,987 9,046,226
Series C (N.A.) (N.A.)
----- ----------
Totals 9,330 16,115,854
</TABLE>
The Preferred Series B shares have two provisions that are different from the
Preferred Series A and C. Each outstanding share of Series B Preferred is
entitled to a vote on all shareholder matters equal to 6,000 Common Shares or
the adjusted conversion amount if it exceeds 6,000 per share. Each share of
Series B Preferred has an Adjustment Based on Market Success provision. If the
common shares have a market price in excess of $5.00, but not greater than
$17.50 per share, then each Preferred B share is entitled to additional
conversion shares to common based on a pro-rata formula which reflects
increased market value of the common stock.
All Preferred Series A, B and C shares have a basic conversion rate of 1,000
shares of common stock for every share of preferred. The Series A & B Preferred,
however, have a conversion adjustment provision based on any subsequent sales or
placement of Common Stock at a per share price below $1.65/ share. The current
conversion rate of 1,813.8 common shares per preferred share outstanding
resulted from the $1,000,000 placement of common stock during fiscal 1999.
The following are the terms common to all of the Preferred Series of stock with
any variation between preferred series noted:
1. Right to preferential dividends before common;
2. Liquidation Rights of each Preferred share before common; and
3. Merger, Consolidation right of each preferred share before common.
In each of the above three provisions, the following are what each outstanding
preferred share is entitled to per that provision: (a) Series A: up to $300.00,
(b) Series B: up to $6.00, and (c) Series C: up to $0.25.
(Cont'd)
<PAGE> 18
VOTING RIGHTS All Series A & C Preferred shares have the right to vote based on
their conversion rights to common shares.
CONVERSION FEATURES All Series A, B & C Preferred shares outstanding have the
right to convert per their conversion provisions subject to authorized common
stock being available. The Company can elect to convert all preferred under
certain stated limited events occurring. Holders of Preferred Series A and B
shares have the right to:
Convert 5% of their shares to common stock after holding 12 months. Convert an
additional 10% of their shares to common stock after holding 24 months. Convert
all of their shares to common stock held after holding 36 months
The Series Preferred C have the right to convert after 180 days from the
date of issue.
All Series A, B & C Preferred shares contain standard terms relative to
Adjustment for Stock Splits and Combinations, Reorganizations, Mergers, and
Consolidations or Sales of Assets, Registration of Stock Issued Upon Conversion,
and Registration Rights.
CHANGE IN CONVERSION RATIO Subsequent to July 31, 1999, 1,502,500 shares of
common stock where issued to certain officers, directors, control persons,
consultants and investors pursuant to an exemption from registration under the
1933 Securities Act. This issuance triggered an additional adjustment for rate
of conversion of preferred to common shares, from 1,814 to 1,925. After this
change, total shares of common stock for the preferred stock outstanding, if all
were converted, would be as follows.
<TABLE>
<CAPTION>
Outstanding Total Common
----------- ------------
<S> <C> <C>
Series A 3,898 7,501,882
Series B 4,987 9,599,333
Series C (N.A.) (N.A.)
----- ---------
Total 9,330 17,101,215
</TABLE>
The Series A preferred shares were reduced on October 12, 1999 by 84 shares.
On August 31, 1999 the Series B Preferred "Adjustment Based on Market Success"
provision, which applies if the common shares shall have a market price in
excess of a set amount was changed to $2.00 but not greater than $12.00 per
share. Under this provision each Preferred B share is entitled to additional
conversion shares to common based on a pro-rata formula which reflects
increased market value of the common stock.
NOTE 7 NOTES PAYABLE
At July 31, 1999 the Company had two forms of debt instruments outstanding. The
first was a series of notes payable incurred in early 1998 to facilitate and
fund the initial test production run and were to be for a period of six months
ending in about October 1998 with an interest rate of 24% with interest prepaid
for the six month period. The other debt instrument is an unsecured three year
convertible debenture commencing as of July 26, 1999 in the amount of $260,000
at July 31, 1999. The terms of this convertible debenture includes interest at
the rate of 8% paid quarterly and convertible after one year into common stock
of the Company at the rate of $0.40 common share.
NOTE 8 INCOME TAXES
Deferred tax assets primarily consist of net operating loss carry forwards as
the Company has not generated taxable income since inception. There are no
significant deferred tax liabilities. A valuation allowance has been established
to reduce the deferred tax assets to zero as a result of the development stage
of the Company and its recurring losses. Differences between the cumulative net
loss for financial reporting purposes and that available for income tax purposes
arise primarily as a result of nondeductible expenditures paid by the issuance
of securities and capitalized start up costs.
(Cont'd)
<PAGE> 19
NOTE 9 FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include cash, receivables, accounts payable,
notes payable and receivables from stockholders and related parties. Except for
notes receivable from stockholders and loans from stockholders, the Company
believes that the fair value of these financial instruments approximates their
carrying amounts based on current market indicators, such as prevailing market
rates. It is not practicable to estimate the fair value of notes receivable from
stockholders and loans from stockholders, due primarily to the uncertainty
surrounding the timing of cash flows.
NOTE 10 COMMITMENTS AND CONTINGENCIES (Also see Related Party Transaction note
above).
OFFICE LEASE The Company maintains its administrative offices at 333 South Main
Street Sun Valley/Ketchum, Idaho 83340 under an annual lease of $7,833 per month
for approximately 3,776 square feet. The term of the lease expires November 2001
with an option to renew for three years. The CEO, Thomas Gillespie, has
personally guaranteed the lease. Minimum lease payments for fiscal 2000 total
$93,996; and $86,163 through November 1, 2001. In addition the Company leases
two autos. The leases on the automobiles are for five years. The minimum lease
payments remaining for the automobiles are:
for fiscal year ended July 31,
2000 ------ $13,554
2001 ------ $13,554
2002 ------ $13,554
2003 ------ $11,295
YEAR 2000 ISSUE The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors when
data using year 2000 dates is processed. In addition, similar problems may arise
in some systems, which use certain dates in 1999 to represent something other
than a date. Management believes that at the Company's present and anticipated
level of business activity, that the Year 2000 Issue will not have an impact on
its operations for the foreseeable future.
NOTE 11 SUBSEQUENT EVENTS
MERGER ACQUISITION On August 31, 1999 the Company acquired by merger the Barhill
Acquisition Corporation ("Barhill") and elected to adopt their successor SEC
reporting status. The Company paid the transaction costs of acquisition and
initial filing in the amount of $100,000, and issued 250,000 common shares
restricted for one year to the then current shareholders of Barhill. Barhill has
only nominal assets and liabilities and no operations.
<PAGE> 20
ITEM 8. CHANGE IN FISCAL YEAR
The successor issuer is adopting a fiscal year end of July 31. The
Company will file a transitional annual report as required.
EXHIBITS
1.1 Agreement and Plan of Merger and amendment thereto between Barhill
Acquisition Corporation and Aqua Vie Beverage Corporation was previously
filed and is incorporated in its entirety by reference to that previous
filing.
1.2 The original unamended Certificate of Incorporation of Aqua Vie Beverage
Corporation-H was previously filed and is incorporated in its entirety by
reference to that previous filing.
23.1 Consent of Certified Public Accountant
27.1 Financial Data Schedule
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AQUA VIE BEVERAGE CORPORATION
By /s/ Thomas Gillespie
----------------------------------
President, Director
Date: October 28, 1999
<PAGE> 1
EXHIBIT 23.1
W. ALAN JORGENSEN
Certified Public Accountant
720 Third Avenue, Suite 1910, Seattle, WA 98104
206 521-0403 Fax 206 624-3999
October 26, 1999
Aqua Vie Beverage Corporation:
I hereby consent to the use of opinion for the financial statements as of
and for the years ended July 31, 1999 for Aqua Vie Beverage Corporation.
Sincerely,
W. Alan Jorgensen
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AQUA VIE
BEVERAGE CORPORATION AUDITED STATEMENTS AS OF JULY 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> JUL-31-1999
<CASH> 27,298
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 213,986
<PP&E> 74,541
<DEPRECIATION> 0
<TOTAL-ASSETS> 376,277
<CURRENT-LIABILITIES> 877,038
<BONDS> 0
0
9
<COMMON> 22,741
<OTHER-SE> (523,511)
<TOTAL-LIABILITY-AND-EQUITY> 376,277
<SALES> 16,433
<TOTAL-REVENUES> 16,433
<CGS> 0
<TOTAL-COSTS> 755,583
<OTHER-EXPENSES> 832,627
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,571,777)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,571,777)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,571,777)
<EPS-BASIC> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
