SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities of
Small Business Issuers
Under Section 12 (b) or (g) of the Securities exchange Act of 1934
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(Exact Name of Small Business Issuer in its Charter)
NEW YORK 11-3377469
(State or other jurisdiction (I.R.S. Employer
incorporated or organization) Identification No.)
125 Michael Drive, Suite 101, Syosset, NY 11791
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (516) 921-7288
Securities to be registered pursuant to Section 12 (b) of the Act:
Common Stock, $.01, par value
Securities to be registered pursuant to Section 12 (g) of the Act:
None
ITEM 1. DESCRIPTION OF BUSINESS
Introduction
Adirondack Pure Springs Mt. Water Co., Inc. a New York corporation
("Adirondack" "we" or "us") was organized on March 6, 1997. Adirondack was
founded to extract, distribute and bottle its natural mountain and spring
water from a stream and spring fed natural reservoir in the northeastern
United States. Once we raise sufficient funds to construct a bottling
facility, we plan to bottle our drinking water at the source in the
Incorporated Village of Lake George, New York. However, there can be no
assurance such facility will be completed.
Adirondack has an exclusive ground and water lease with the Incorporated
Village of Lake George, which provides for exclusive rights to four water
sources, as well as five acres of property to build up to a 50,000 square foot
bottling plant from the proceeds of a proposed bond offering, which has been
authorized by the (New York) Counties of Warren and Washington Industrial
Development Agency ("IDA"). Adirondack's primary water source is located 2700
feet up a mountain from the proposed bottling plant site, and flows into a
protected, natural mountain and spring reservoir at an approximate minimum
rate of 550,000 gallons per day of natural mountain and spring water. At this
rate, our primary source is capable of producing an estimated minimum
200,000,000 gallons of natural mountain and spring water per year. Our three
other sources flow at more that 50% of the primary source's flow rate, with a
product of similar high quality. The three other sources are within one mile
of our proposed bottling plant site. See "Properties."
Adirondack's business to date has focused on the still water segments of
the bottled water market because of its quality natural mountain and spring
water, the quantity of its available water and contributing market factors,
including its central location in the northeastern United States market,
increased government regulation of water quality and increased public
awareness and demand for bottled water.
We have targeted and will continue to target the market for private
labeled bottled water, which allows us to sell our products without the
expense of an advertising budget that is required to establish brand
recognition and market identity. We are seeking to develop separate brand
names for customers who desire a brand name and who would not otherwise
distribute a private label bottled water. Adirondack intends to retain
ownership of the trademark for each brand that it develops, although some
exclusivity regarding use may be granted to the customers. Currently,
Adirondack does not own the trademarks for any brand names. Alternatively, we
will private label product for customers who seek to sell bottled water under
an established brand name of their own.
Additionally, we have developed our own proprietary brand of water,
AVIVA SPRINGS. Adirondack intends to market AVIVA SPRINGS through its
established relationships with those distributors and end users that are
interested in purchasing Adirondack's premium quality product, but do not have
the interest or ability to properly market a private label of their own.
AVIVA SPRINGS sales will initially focus on the health and fitness field to
offset the seasonality of sales generally attributed to the beverage and water
industry in the northeast. The revenue/sales high point of the health and
fitness season is the same time of year as the low revenue/sales point of the
beverage season.
Until construction of our bottling facility, Adirondack will continue to
utilize independent bottlers to produce its products. Adirondack has a
preliminary agreement for the authorization of tax-exempt industrial
development bonds in the principal amount of up to $4,650,000 with the
Counties of Warren and Washington Industrial Development Agency, which
offering is subject to several conditions. The proceeds of such bond offering
will be utilized to construct a facility on land the company has leased from
the Village of Lake George, and will have a capacity for up to three
production lines. There can be no assurance such bond offering will be
completed.
Industry Overview
According to the 1997 Beverage world Market Index, the multiple beverage
market, which consists of soft drinks, fruit beverages, bottled teas, sports
drinks and bottled water, beer, wine, and spirits, accounted for retail
revenue of $173.7 billion in 1996, representing an increase of 1.2% from 1995.
Soft drinks are the largest segment of the Multiple Beverage Market, with
retail sales of $$52.6 billion and 14.2 billion gallons in 1996. Sales of
bottled water in the United States have increased since 1987 form 1.56
billions gallons to 3.12 billion gallons in 1996, representing $4.3 billion in
sale sin 1996.
The growth of the still water segment of the bottled water market is
most important to Adirondack. The bottled still water business experienced
growth of 20% in 1994, 27% in 1995 and 30% in 1996. Still water comprises
over 92% of all of the bottled water gallonage sold in the United States.
The bottled water market comprises three major segments: non-sparkling,
sparkling and imported water.
* Non-sparkling, or still water contains no carbonation and is
consumed as an "alternative to tap water." Non-sparkling water is
generally distributed directly to homes and offices, through
retail outlets and through vending machines. Distinctions are
often made among brands of non-sparkling water based on their
source, level of mineral content and the method of purification
(ozonation, distillation, deionization or reverse osmosis).
* Sparkling water contains either natural or artificial carbonation
and is positioned to compete in the broad "refreshment beverage"
field. Sparkling water includes domestic and imported sparkling
water, club soda and seltzer, and is typically sold through normal
food and beverage retail channels.
* Imported water, which includes both sparkling and non-sparkling
water produced and bottled outside the U.S., is targeted to
"image-conscious consumers." Imported water is sold through
normal food and beverage retail channels, typically at
significantly higher prices than other bottled water alternatives.
Adirondack believes that a significant constraint on the entry of new
brands is limited retail shelf space. Retailers have limited ability to
display a variety of brands, despite the many different bottled water brands
available. Most waters displayed are either regional brands, national brands,
and private labeled or store brands. Because of competition for available
shelf space, food and beverage distributors, as well as retailers themselves,
have realized the profit potential of private labeling water in conjunction
with selling regional and national brand water. Subsequently, according to
Beverage Aisle magazine, supermarket private label bottled waters outsell
regional and national brands by 3 to 1 margin.
Water is sold through various channels, including:
1. Home delivery (1 to 5 gallons bottles)
2. Commercial and Office delivery (1 to 5 gallon bottles)
3. Off-Premises Retail (supermarkets, convenience stores, and drug stores)
4. On-Premises Retail (restaurants)
5. Vending machines
6. Institutional Usage (hospitals, schools)
7. Bulk sales (domestic and international sales of potable water)
Off-Premises Retail (supermarkets, convenience store, drug store, and
similar outlets) comprises over 40% of bottled water sales.
Adirondack currently participates, only in the non-sparkling, or still
water, market. Non-sparkling bottled water is distributed through commercial
and home delivery, retail stores for on and off premises usage, on premises
usage, institutional usage, and vending machines. Within the non-sparkling
segment, retail pricing generally reflects the costs associated with the
maintenance of each distribution channel. As a result, on-premise retail has
the highest per gallon price, with off-the-shelf bottled water for off-premise
use sold through retail channels, home delivery and, bulk water, having the
next highest per gallon prices, respectively.
The northeastern region is the second largest bottled water market
(total gallonage) in the United States. The largest market is the western
United States. Adirondack believes it will benefit from its location within a
five hour drive of all of the major markets of the northeastern United States.
Our water source is located approximately 40 miles from the Port of Albany,
which facilitates transportation for any bulk and other sales abroad to be
sent via ship. The filling station/bottling plant site is 100 yards from
Route 9N, a local, paved major roadway, which connects, seven tenths (.7) of a
mile away, to Interstate 87, a major northeast road artery. The proximity of
the proposed plant to I-87 will facilitate access for all transport vehicles
coming to and from the site. As of the date hereof, Adirondack has not yet
begun construction of its plant, nor is there any guarantee that it will
complete construction, once begun.
Products
Bottled Water
Through our production relationship with an established bottler,
Adirondack currently produces bottled natural mountain and spring water, which
is one of several recognized categories of bottled water products, in
containers of between 8 ounces and 1.5 liters, the "Premium" polyethylene
plastic ("PET") market. Pursuant to federal regulation, our natural mountain
and spring water bottled products will be labeled in the following categories:
Natural Water: Bottled spring, mineral, artesian or well water which is
derived from an underground formation or water from surface water that only
requires minimal processing, is not derived from a municipal system or public
water supply, and is unmodified except for limited treatment (e.g.,
filtration, ozonation or equivalent disinfection process).
Spring Water: Water derived from an underground formation from which
water flows naturally to the surface of the earth. Spring water may be
collected only at the spring or through a bore hole tapping the underground
formation feeding the spring. There must be a natural force causing water to
flow to the surface through a natural orifice. The location of the spring
must be identified and such identification maintained in the company's
records. Spring water collected with the use of an external force must be
from the same underground striation as the spring, as shown by a measurable
hydraulic connection using a hydro-geologically valid method between the bore
hole and the natural spring, and it should have all the physical properties,
before treatment, and be of the same composition and quality, as the water
that flows naturally to the surface of the earth.
Natural mountain and spring waters are not always free from
contamination problems. Springs can be contaminated with coliform (bacteria
in the water). Natural mountain springs need to be monitored and tested on a
regular basis to make sure they are without contamination. We have installed
ozonation and micro filtration equipment to remove organic contaminants and
reduce mineral content. We have had no known contamination problems with our
primary spring or three spring sources. Our water has not been determined to
be better or less contaminated than municipal water. Adirondack believes,
however, that natural mountain and spring water has advantages over municipal
water because, unlike municipal water, natural mountain and spring water is
not treated with chlorine and other chemicals. However, there can be no
assurance that our source will not experience contaminated water related
problems.
We will have the ability to provide natural mountain and spring water
for the following:
8 ounce PET bottles (standard twist cap)
12 ounce PET bottles (standard twist cap)
16.9 ounce PET bottles (standard twist cap)
16.9 ounce PET bottles (sports cap)
20 ounce PET bottles (sports cap)
1 liter PET bottles (standard twist cap)
1 liter PET bottles (sports cap)
1.5 liter PET bottles (standard twist cap)
1 gallon PET bottles
5 gallon PET bottles
Tanker trucks for bulk water
Adirondack currently produces water for the following private label
brands: Siena Springs and Ciro. These brands are sold throughout the Northeast
in grocery and convenience stores, as sold by the clients, Jetro/Restaurant
Depot and Conca D'Oro Importers and Distributors, respectively. Adirondack
utilizes a contract bottler for the bottling of Siena Spring and Ciro Water.
Adirondack intends to file for the Siena trademark. In June 1999, Adirondack
entered into a contract with Conca D'Oro Importers and Distributers which owns
the Ciro brand. Production of Ciro water commenced in August 1999. In May
1999, Adirondack commenced production of Siena Springs water as per purchase
orders issued by Jetro/Restaurant Depot. Adirondack expects to enter into a
formal agreement with Jetro/Restaurant Depot by the end of 1999.
Since August 1999, Adirondack has been producing water for its own
proprietary brand, AVIVA SPRINGS. Adirondack sells AVIVA SPRINGS to
wholesalers, distributers and end users throughout the Northeast. AVIVA is
also sold in several health club chains in the Northeast. AVIVA SPRINGS is
sold primarily in 16.9 ounce size bottles.
Adirondack is currently negotiating with, and expects to enter into a
joint marketing agreement with MET-Rx, U.S.A., Inc., a manufacturer of meal
replacement bars and shakes and body building supplements. As of the date
hereof, no agreement has been executed between the two parties.
In July 1999, Adirondack entered into an agreement with Creative
Beverages of Canada, pursuant to which Adirondack will acquire 51% of Creative
Beverages of Canada, which includes its trademark of MAX O2 brand oxygenated
water and its client list of private label clients, including Tree of
Life/Gourmet Award Natural Food and Beverage Distribution Company.
Water Source
Adirondack's primary water source creates an average minimum flow of
approximately 550,000 gallons per day, or an estimated minimum of 200,000,000
gallons of natural mountain and spring water per year. In addition, in
accordance with our exclusive long term lease with the Incorporated Village of
Lake George, we have secured exclusive rights to three other similar sources
in the Lake George, New York area that are within one (1) mile of the proposed
bottling plant site. These three alternate sources each flow at a rate of
more than 50% of the primary sources flow rate, with a product of similar high
quality. We believe this will allow Adirondack to market itself as a premium
quality American natural mountain and spring water bottled at the source.
Many bottled waters are not bottled at the source, and have secondary sources
for the same brand that are equally distant or further from the bottling plant
than the primary source. Adirondack's source is 2700 feet from the proposed
plant site.
Adirondack believes that its water is clean, refreshing and lightly
mineralized. When tested directly from its source, prior to micro filtration,
ozonation, or any other treatment whatsoever our natural mountain and spring
water exceeds the requirements of the state and federal regulations in quality
and definition. After basic micro filtration and ozonation as required by New
York State law, our water will become cleaner and with less mineral presence,
so as to ensure its high quality.
Production
Adirondack commenced production operations in May 1999 with the Siena
brand. In August, 1999 it commenced production of the Ciro brand, and in
August 1999, it commenced production of its own proprietary brand, AVIVA
SPRINGS. All three (3) brands are bottled in Saratoga, New York, pursuant to
separate bottling agreements. We currently have one on site employee, working
as demand requires, to capture natural mountain and spring water through the
pumping station and fill transportation trucks.
For water extraction, Adirondack has built over 2700 linear feet of 4"
piping from the natural spring reservoir down the mountain reserve to the
pumping station/building site. We do not need to install a pump to extract
the natural mountain and spring water as water flow and gravity provide more
than enough force to bring water to the pumping station/building site. This
line will accommodate both bulk water and the eventual plant water flow.
Adirondack has the right to add additional piping lines.
Additionally, Adirondack has installed an HMBI OREC Ozone
Generator/Ozonator and a filtration unit as required by the New York State
Health Department for the specific intent of eliminating any microbial
organisms inherent in fresh water. We will only ozonate and micro-filter for
this purpose. At the base of the pipeline, Adirondack has erected a 16' x 24'
structure to house the ozonator, micro-filtration unit and the metered pumping
station that will accommodate tanker trucks for its initial operation as well
as initial and future bulk water sale. However, natural occurrences beyond
the control, such as contamination of the springs or failure of the water
supply to comply with all applicable governmental requirements for mineral and
chemical concentration, could have a material adverse effect on our business.
After extraction, the water is transported to our contract bottler.
Utilizing a contract bottler allows Adirondack to bottle water for the
products for which we are currently providing water. Contract bottling has
enabled us to commence operations prior to building our own bottling facility.
Bottlers used by Adirondack all have plants that have been inspected and
received high quality assurance ratings by both the National Sanitary
Foundation, and the International Bottled Water Association. The water is
bottled, labeled, and packaged by the contract bottlers and then trucked by
independent trucking companies to its final destination.
Bottling Plant
Adirondack has an agreement for the authorization of tax-exempt
industrial development bonds in the principal amount of $4,650,000 with the
New York Counties of Warren and Washington Industrial Development Agency for
the purpose of constructing a bottling plant of up to 50,000 square feet and
purchasing equipment. Within 12-18 months after completion of the
contemplated bond offering, Adirondack expects to have an operational,
automated, water bottling plant, consisting of up to 50,000 square feet of
office, warehouse, water analyzes laboratory, and production space.
The production space will initially consist of one bottling and packaging
line that will allow for product line and size flexibility, with an expansion
capacity. The bulk water filling station will remain at its current location
outside of the main facility.
The proposed offering of the bonds is contingent upon several conditions,
including agreement by Adirondack and the purchasers of the bonds upon
mutually acceptable terms for the bonds, the sale of the bonds, obtaining
an underwriter, obtaining all necessary government approvals and compliance
with New York State Department of Taxation. Adirondack anticipates that the
tax free nature of the bonds will lower Adirondack's borrowing costs. This
bond offering, if it occurs at all, must be commenced by July 2000.
During the initial stages of the contemplated bottling plant's
operation, Adirondack anticipates that all PET bottles will be purchased from
outside sources. Adirondack anticipates that within several years after
completion of the bottling plant, it will develop the capability to produce
PET bottles at the facility. By initially purchasing and storing bulk
quantities of PET bottles, Adirondack will be able to take advantage of the
economies of purchasing greater quantities of product and be more resistant to
market fluctuations in the cost and availability of PET bottles. Until and
unless Adirondack produces bottles for its own use, Adirondack expects to
purchase and warehouse various sizes of PET bottles at the plant, as well as
contract purchases as the need arises.
Marketing and Distribution
Still Water
Adirondack's goal is to provide private labeled bottled water for
distribution in the northeastern United States. We seek to sell our still
water products through five methods of distribution by either direct contact
or through brokers or wholesale/distributors: off-premises retail
(supermarkets, convenience store, and drug store); on-premises retail
(restaurants); vending machines; institutions (hospitals, schools); and bulk
sales.
Private label bottling enables Adirondack to sell its products without
the expenses of the advertising budget that is normally required to establish
brand recognition and market identity.
Many retail chains and distributors are starting to sell their own house
brand products together with or in lieu of national brands. According, we
expect that more North American chains of on and off-premise retailers,
including those in the northeast region, will begin to offer their house
brands.
In March 1997, Adirondack initially approached the northeast market
through distributors of bottled water who did not have their own private
labels. Since that time, we have begun to pursue other distributors in the
northeast, as well as in other U.S. markets and abroad. Our bulk sales will
be conducted through direct contacts and our international bulk water
representative. Currently, Adirondack has no bulk sales. We have also begun
to pursue other non-distributor revenue sources including hotels, theaters and
restaurant chains.
In addition to direct contact by employees and sales representatives
engaged by Adirondack, we expect to work with consultants and food brokers to
coordinate sales as necessary, as well as contacting other potential sources
of sales. Adirondack intends to sell its products through sales
representatives. Adirondack has a sales representative that is engaged by
Adirondack as an independent contractor on a non-exclusive basis for the
broadline food service industry. The representative's compensation will
consist solely of commissions based on a percentage of net sales.
Additionally, we have developed our own proprietary brand, AVIVA SPRINGS which
is being sold and distributed in the Northeast to non-traditional sales
sources including recreational, entertainment, and fitness and health
facilities.
In March 1999, Adirondack developed the "Siena" trademark for private
labels for the Jetro/Restaurant Depot Corp. Delivery commenced on May 1999.
Jetro/Restaurant Depot Corp. is based in New York and has been operating for
approximately 20 years with locations in New York, New Jersey, Massachusetts,
Illinois, Florida, and California. In March 1999, Adirondack developed the
"Ciro" label for Conca D'Oro Importers of Woodside, New York, as their
proprietary brand.
Competition
The bottled water market is highly competitive. Adirondack competes in
the non-sparkling segment of the bottled water market directly with office
delivery water companies and indirectly with companies that provide vending
machines and with off-the-shelf marketers. Our water products compete not
only with other bottled water products but also with other types of beverages,
including soft drinks, coffee, beer, wine and fruit juices. We compete with
vended water and off-the-shelf marketers on the basis of (1) quality, (2)
taste, (3) the convenience of on-site delivery, and (4) the features offered
by the water dispenser (i.e. the ability to have heated, chilled or room
temperature water, depending on the dispenser rented). Such competition
includes bottles and distributors of water products, several of which are more
experienced and have greater financial and management resources that
Adirondack and have established proprietary trademarks, distribution
facilities and bottling facilities.
The bottled water segment of the beverage industry is less concentrated
than other important segments of the beverage industry, but remains
concentrated. According to the 1997 Beverage Market Index, the bottled water
segment does not have a dominant market force in the same manner as soft
drinks and beer, but in 1996 the four largest companies, each of whom market
several brands, accounted for 50% of the revenues of bottled water.
Government Regulation
Prior to 1996, bottled water was regulated in the same fashion as
municipal water. Municipal water is regulated not as food by the FDA, but as
a commodity by the Environmental Protection Agency pursuant to the Safe
Drinking Water Act which only provided for certain mineral/chemical content
requirements so as to ensure water safety, not product definition.
In 1996, the United States enacted statutes and regulations to regulate
bottled water as a food. Accordingly, Adirondack's bottled water must meet
FDA standards for manufacturing practices and chemical and biological purity,
Furthermore, these standards undergo a continuous process of revision. The
labels affixed to bottles and other packaging of the water are subject to FDA
restrictions on health and nutritional claims for foods.
As of 1996, bottled water is fully regulated as a food by the FDA under
the Federal Food, Drug, and Cosmetic Act ("FFDCA"). The FFDCA defines food as
"articles used for food or drink for man or other animal." This includes
packaged (bottled) water sold in containers at retail outlets as well as
containers distributed to the home and office market. This legislation was
designed to ensure that bottled water companies clearly and accurately define
the type of water that was being bottled and sold to the public. The FDA
adopted the basic mineral/chemical guidelines employed by the EPA, while
making some aspects more stringent.
In addition, all drinking water must meet EPA standards established
under the Safe drinking Water Act ("SDWA") for mineral and chemical
concentration. The 1986 amendments to the SDWA mandated the establishment of
new drinking water quality and treatment regulations. Most municipalities
meet or exceed EPA drinking water regulations, many of which reflect recent
public awareness of the issue of contaminated water. For example, EPA
standards for leading drinking water did not exist prior to 1986, when 50 ppb
(parts per billion) was established. This standard was lowered to 15 ppb in
199, because after five years the government still found 130 million people
exposed to unacceptable lead levels.
This United States government also enacted Safe Drinking Water
Reauthorization Act of 1996. This law requires all local water utilities to
issue reports to their consumers disclosing all, chemicals and bacteria in
their water.
Bottled water is also subject to state and local regulation. Bottled
water must originate from an "approved source" in accordance with standards
prescribed by the state health department in each of the states in which
Adirondack's products will be sold. The source must be inspected and the
water sampled, analyzed and found to be of safe and wholesome quality. There
are annual "compliance monitoring tests" of both the source and the bottled
water. The health department of the individual states also govern water
purity and safety, labeling of bottled water products and manufacturing
practices of producers.
Adirondack's water supply is located in State of New York, and has
received the required certification as a bulk water facility by the New York
State Department of Health. In the event Adirondack constructs its own
bottling facility in the future it will require a state certificate as a
manufacturer approving Adirondack to operate the bottling facility. The
application, report and proposed labels and caps are reviewed by the
Department of Health. In addition, samples of the water are tested. After
this review and testing, arrangements are made for the local county public
health unit to inspect the water bottling facilities.
Adirondack currently has all required approvals and believes that its
contemplated bottling facilities, once constructed, will be in substantial
compliance with all applicable governmental regulations.
Seasonality
Adirondack currently conducts its business exclusively in the
northeastern United States. In the beverage industry, sales typically
increase in the second and third calendar quarters. This seasonality can be
attributed to the weather and annual seasons, in that, as the weather gets
warmer and people are outside and more active, beverage demand and sales,
including bottled water demand and sales, increase.
In order to reduce the expected seasonality of its business in the
northeastern United States, Adirondack intends to pursue institutional
clientele, who are less seasonal in their purchases, and clientele in other
United States markets, specifically the western and southeast markets, and
international markets as costs of shipping and availability allow.
Suppliers
Adirondack purchases production material, including various labels from
Wisconsin Label Group, Inc., PET bottles from Plastipak Packaging, Inc. and
Wine Bottle & Packaging, Inc., and production of product from the Saratoga
Beverage Group. All material and work is done on a purchase/production order
basis. Adirondack has entered into no formal agreements with any of these
companies.
Properties
Adirondack has a ground and water lease with the Incorporated Village of
Lake George, which provides for exclusive rights to four (4) pure water
sources, as well as five (5) acres of property to build up to 50,000 square
foot bottling plant. The initial term of the lease for the water source
expires in May 2002, with two separate options to renew for additional five
year terms through 2012. If Adirondack erects a bottling plant, Adirondack
will have the right to purchase water from the water source until 2029.
Provided Adirondack pays the minimum base rent under the lease, it maintains
its exclusive right to use the water source for wholesale or retail sales of
the water. The initial base rent is $.001 per gallon, with a minimum payment
of $30,000 commencing in the second year lease. The rent increases to $.01
per gallon commencing in the second renewal period, with a minimum base rent
of $75,000 per year. Adirondack is obligated under the lease to construct all
necessary improvements, including, but not limited to, a pipeline, filling
station and two separately-metered outlets. The terms of the lease with
respect to the land for the bottling plant expires in May 2029. The base rent
for the five acres for the bottling plant is $75,000 commencing in the second
year of the lease with an addition payment of $.0025 per gallon for each
gallon bottled at the plant in excess of 50,000,000 gallons. The base rent
increases to $200,000 per year in the year 2023 with an additional payment of
$.025 per gallon bottled at the plant in excess of 50,000,000. There is no
assurance that Adirondack will be able to meet its financial obligations and
therefore, no assurance can be made that it will retain these property rights.
Our principal offices are located in Syosset, New York where we leases
3,750 square feet of office space for which we pay a monthly rent of $4,712.
Adirondack has a sublease with an unrelated party for $2,000 per month
expiring in August 2001. Adirondack believes that current facilities are
adequate for its current needs.
Employees
As of August 1, 1999, Adirondack employed 4 people, 1 in production and
3 in management and administration. None of our employees are subject to a
collective bargaining agreement and we believe that our relations with our
employees are satisfactory.
Plan of Operation
Adirondack was incorporated in March 1997 to extract, distribute and
contract private label mountain water from a stream and spring fed reservoir
in both bulk and bottled forms in the northeastern United States. Since May
1999, Adirondack has been bottling water taken from its source near the
Village of Lake George, New York. Adirondack has an exclusive ground and
water lease with the Incorporated Village of Lake George which provides
exclusive rights to four water sources, as well as five acres on which
Adirondack intends to build a 50,000 square foot bottling plant. The lease
term for the water source is five (5) years expiring 2002 with two five (5)
year renewal options. If the plant is constructed, the lease term extends to
2029. At the termination of the lease all improvements become property of the
Village. Initial base rent for water is $.001 per gallon with a minimum of
$30,000 commencing in the second year of the lease. Adirondack's primary
water source at a minimum rate of 560,000 gallons per day of high quality,
natural and mountain spring water. The reservoir is located 2,700 feet up a
mountain from the proposed bottling site.
In July 1997, Adirondack was approved for a $4,625,000 bond issue loan
by the (New York) counties of Warren and Washington Industrial Development
Agency for the plant. Adirondack has until July 31, 2000 to commence the bond
offering. There can be no assurance such bond offering will be completed.
In May 1999 Adirondack commenced operations, producing, through our
relationship with an established bottler, bottled water under the Siena
Springs label for Jetro/Restaurant Depot pursuant to purchase orders we
received. Adirondack expects to enter into an agreement with Jetro/Restaurant
Depot by the end of 1999, but can not so guarantee. In August 1999,
Adirondack began to produce Ciro brand water, a trade name owned by Conca
D'Oro Importers of Woodside, New York. Pursuant to a contract entered into
June 4, 1999 by Adirondack and Conca D'Oro Importers of Woodside, New York,
Adirondack is the exclusive provider for CDI for all its private label water
products. Adirondack outsources the bottling and distribution for any water it
produces.
In August 1999, Adirondack began producing its own private label brand
water, AVIVA SPRINGS. The bottling and distribution are outsourced for AVIVA
SPRINGS. Adirondack currently market its AVIVA SPRINGS water in health and
fitness facilities throughout the Northeast, through existing contacts and
relationships.
For the 4 month period ended October 31, 1999, Adirondack
had sales revenues of $3,197, with a loss of $80,170.
Adirondack has agreed to acquire 51% of Creative Beverages of Canada, a
Canadian corporation. The negotiations include an option to acquire the
remaining 49% within three (3) years. Creative Beverages has current private
label clients and is a marketing company that holds certain trademarks and
licence for the brand name MAX O2. The cost of this acquisition is estimated
at $35,000, minus operational and production expenses accumulated by
Adirondack prior to final closing which is anticipated to occur on or before
October 1999.
Adirondack is also negotiating with several marketing companies for the
rights to license trade and brand names for bottled water products.
Adirondack is negotiating with Leisure Concepts Inc. for the right to bottle
water under licensed brands World Championship Wrestling and Pokemon, and with
Met-Rx USA for the rights to bottle water under its Source/One Brand of
nutrition supplements. Adirondack is also negotiating with Goebel Marketing
and Sales with regard to Goebel providing the marketing and sales of
Adirondack's products, including the AVIVA SPRINGS brand of water, to certain
retail clients.
On June 4, 1999, Adirondack entered into a distribution agreement with
GPR Trucking, Inc. pursuant to which GPR will distribute Adirondack's AVIVA
SPRINGS and Adirondack products, and will not distribute water products other
than Adirondack brands.
Adirondack intends to engage in a private and/or public offering of its
securities within the next few months to raise approximately $5,000,000.
Further, Adirondack intends to engage in an offering of industrial development
bonds to raise up to $4,625,00. Unless at least $4,000,000 is raised,
Adirondack will be unable to build its proposed bottling plant which will keep
it dependant on outside bottlers. Failure to raise a minimum of $ $2,000,000
over the next twelve months will prevent Adirondack from adequately marketing
its product and services, and will have a materially adverse effect on
Adirondack.
ITEM 3. Description of Property
Adirondack has an exclusive ground and water lease with the Incorporated
Village of Lake George, which provides rights to four (4) pure water sources,
as well as five (5) acres of property for construction of up to a 50,000
square foot bottling plant. The lease term for the water source if for five
(5) years expiring May 2002 with two five (5) year renewal options. If the
plant is constructed, the lease term extends to 2029. At the termination of
the lease, all improvements become the property of the Village. Initial base
rent for water $.001 per gallon with a minimum $30,000 commencing in the
second year of the lease.
Adirondack has entered into five-year lease for office space. The lease
term is from October 1, 1998 through September 30, 2003.
Minimum annual rentals for both leases for the year ending:
July 31, 2000 $88,260
July 31, 2001 90,592
July 31, 2002 84,680
July 31, 2003 46,448
July 31, 2004 11,612
ITEM 3 Security ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to officers,
directors, and persons who are known by Adirondack to be beneficial owners of
more than 5% of Adirondack's common stock.
Percent of Class
Shareholders Number of shares Beneficially Owned
CES Holding Corp. (1) 9,843,474 62.1%
125 Michael Drive
Sysosett, NY 11791
Eugene Stricker 1,291,842 8.1%
42 Barret Road
Lawrence, NY 11559
Mark Schindler(2) 891,842 5.6%
330 East 75th Street #11C
New York, NY 10021
Doug Auer -0- 0%
16 Oakwood Dr.
Queensbury, NY 12804
David Miller -0- 0%
19A Chestnut Street
Greenvale, NY 11548
Jeff Rashkow -0- 0%
51 Anderson Ave.
Scarsdale, NY 10583
Nick Namit -0- 0%
3728 East End
Seaford, NY 11783
Ronald Berk -0- 0%
211 East 70 St.
New York, NY 10021
SBS Limited Partnership(2) 235,271 1.5%
c/o Mark Schindler
330 East 75th Street #11C
New York, NY 10021
Directors and Officers
as a Group (1) 9,843,474 62.1%
(1) David Sackler, the president of Adirondack, is the President and sole
shareholder of CES Holding Corp.
(2) Mark Schindler, a shareholder of Adirondack, is a principal shareholder
of SBS Limited Partnership.
ITEM 5 Directors, Executive Officers, Promoters and Control Persons
Name Age Period served as director Other Capacities in which
currently serving
David Sackler 32 Since 1997 President, Chief
Executive Officer,
Chairman of the Board
David Miller 51 Vice President-
Marketing
Jeff Rashkow 48 Since 1999 National Sales
Manager/Health and
Fitness
Doug Auer 52 Since 1997 Project Manger
Ronald Berk 50 Since 1997
Nick Namit 45 Since 1997
Directors and Officers
David Sackler Mr. Sackler founded Adirondack in 1997. Mr. Sackler has overall
responsibility for operations of the company, but will focus on marketing,
sales, and operations. From October 10, 1996 through May 1, 1997, he was
President of Adirondack Mountain Spring Water Inc., which was created to
develop spring water facilities at another location but ceased being an
operating entity before the establishment of Adirondack because it could not
locate a commercially viable source of water. During such period, he
researched market trends and water company operations. From 1998 through the
present, Mr. Sackler has been an independent commercial and residential real
estate manager and broker/agent.
David Miller Mr. Miller has been the Vice President - Marketing and a Director
of the company since its inception. Since 1988, he has been a marketing and
sales consultant for Surgical Instrument Corp. From 1988 through 1996, he
represented Assistance Services in the selling of their administrative
services. Since January 1997, he has served as sales and marketing agent for
Barrie House Coffee, Inc. and Omni Services Group, Inc. From 1985 through
August 1997, he represented Atlantic Marketing, a food/beverage brokerage firm
that distributed Ocean Spray and Lipton products. He has 28 years of
experience as a former Marketing Director and then President of two Aerospace
companies (General Aerospace Corp. and Ragen Nuclear Corp.)
Jeff Rashkow Mr. Rashkow joined Adirondack in August, 1999. For 21 years
prior to March, 1999, Mr. Rashkow worked at Bally Total Fitness, Inc., where
his last title prior to leaving the company was Director of Added Revenue. In
that capacity he sought and procured ancillary revenue from areas other than
the fitness industries traditional revenue source, membership fees,
essentially creating new income for the company.
Douglas Auer Mr. Auer has been the project manager of Adirondack since its
inception. Mr. Auer has overseen the installation and construction of the
pipelines and filling station, and operates and maintains the filling station.
He served as a consultant to Adirondack Mountain Springs Inc. from 1995
through May 1997. From 1987 through 1995 he was self employed as a
construction/ engineering consultant. From 1972 through 1987 he worked for
Pitney Bowes as a mechanical engineer specializing in mechanical diagnostics
and repair for automated equipment, product evaluation controller.
Ronald Berk, Esq. Mr. Berk has been a Director of Adirondack since November
1997. He has been a corporate and real estate attorney in private practice
since 1977.
Nick Namit Mr. Namit has been a Director of Adirondack since November 1997.
From 1992 to the present, he has been President of Intelligent Monitoring
Technologies, which provides navigational systems for the aircraft industry.
From 1993 to the present, he has been a partner in Electro Mechanical
Industries, which supplies replacement parts to metropolitan transit
authorities. From 1994 to present he has been Chief Executive Officer of Four
Winds Tour & Travel, which provides tour packages for students. He is the
holder of three patents related to beverages bottling.
ITEM 6 Executive Compensation
The following table provides certain summary information concerning the
compensation paid or accrued by Adirondack during the fiscal years ended 1998,
and 1999 to or on behalf of Adirondack's president and the executive officers
of Adirondack for services rendered an all capacities to Adirondack whose
total aggregate salary and bonus exceed $100,00.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal Position Year Salary Bonus Other Annual Compensation Long
term Compensation Awards options/ Shares All other Compensation
David Sackler, President 1998 1999 $100,000 - -
David Miller, Vice President-Marketing 1998 1999
DougAuer, Project Manager 1998 1999
Adirondack intends to enter into an employment agreement with David Sackler,
its President and Chief executive Officer, for a term of five years at a
salary of $100,000 per year. Mr. Sackler has been accruing salary at the rate
of $100,000 per year since May 1997. Adirondack will repay such accrued
salary from operating revenues and not from the proceeds of any offering.
Upon commencement of construction of the bottling facility, Adirondack intends
to enter into an employment agreement with Douglas Auer, its Project Manager,
for a term of three years at a salary of $32,500 per year. As Vice-President-
Marketing, David Miller will be paid a commission based on the sales for which
he is responsible. As National Sales Manager/Health and Fitness, Mr. Rashkow
will be compensated on the sales for which he is responsible.
Stock Option Plan
Adirondack has adopted the Adirondack 1998 Stock Incentive Plan. The
Plan enables Adirondack to grant incentive stock options, nonqualified options
and stock appreciation rights for up to 1,500,000 shares of the Adirondack's
common stock. Incentive stock options granted under the plan must conform to
applicable Federal income tax regulations. All options must have an exercise
price not less that the fair market value of shares at the date of grant (110%
of fair market value for ten percent or more stockholders). Adirondack had
issued incentive stock options to purchase 100,000 shares of common stock at
an exercise price of $.20 per share as of August 1, 1999.
ITEM 7 Certain Relationships and Related Transactions
On May 31, 1998, Adirondack entered into an agreement with CES Consulting
Corp., of which Harry Sackler, father of David Sackler, president of
Adirondack, is president and sole shareholder. Pursuant to this agreement
CES shall convert debt owed by Adirondack to CES in the amount of $200,233
into Series A preferred stock. This agreement also provides that commencing
January 1, 2001 Adirondack, at its option, may redeem any portion of the
preferred stock by paying up to 20% of Adirondack's pre-tax profits of the
fiscal year ended December 31, 2000 and each year thereafter until payment of
an aggregate of $200,233 to the holders of the Series A Preferred, subject to
approval of the Board of Directors. Adirondack intends to issue such shares
of preferred stock to CES.
In addition, Adirondack has agreed to enter into a business consulting
agreement with Madison Venture Capital II, Inc., of which two shareholders of
the Company, Eugene Stricker and Mark Schindler, are principals. The
agreement was to begin September 1, 1998 for a period of 5 years.
ITEM 8 Description of Securities
Adirondack's certificate of incorporation originally provided authorized
capital stock of 200 shares of common stock, with no par value. On August 5,
1998, Adirondack's board of directors resolved to amend its certificate of
incorporation to authorize 40,000,000 shares of common stock, par value $.01
per share, and 1,000,000 shares of Preferred Stock, par value $.01 per share.
After giving effect to such amendment, Adirondack instituted a 133,590 for one
stock split for the common stock and the issuance of 20,000 shares of Series A
Preferred stock to an affiliate in exchange for certain indebtedness. The
certificate of amendment was filed in December 1998. As of August 1, 1999,
Adirondack has 15,859,000 shares of common stock and 20,000 shares of Series A
preferred stock issued and outstanding.
Common Stock
The holders of common stock are entitled to one vote per share held of
record on all matters to be voted on by shareholders. There is no cumulative
voting with respect to the election of directors, with the result that holders
of more than 50% of the shares voting for the election of directors can elect
all of the directors. The holders of common stock are entitled to receive
dividends when, as and if declared by the Board of Directors from sources
available therefor. In the event of liquidation, dissolution, or winding up
of the company, whether voluntary or involuntary, the holders of common stock
are entitled to share ratably in the assets of the company available for
distribution to stockholders after payment of liabilities and after provisions
for each class of stock, if any, having preference over the common stock. All
outstanding shares are fully paid and non-assessable and legally issued. The
Board of Directors is authorized to issue additional shares of common stock
within the limits authorized by Adirondack's charter and without stockholder
action.
Preferred Stock
Adirondack has authorized the issuance of 1,000,000 shares of
undesignated 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 obtaining stockholder approval,
to issue such preferred stock with dividend, liquidation, conversation, voting
or other rights that could adversely affect the voting power or other rights
of the holders of the 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 the control of the company.
Adirondack has issued 20,000 shares of Series A Redeemable Preferred
Stock, par value $.01 per share. The shares were issued to an affiliated
entity as satisfaction of a debt owed to the affiliated entity by Adirondack
in the amount of $200,233. The Series A Redeemable Preferred Stock contains
preferential liquidation rights in the amount of $200,233. The Series A
Redeemable Preferred Stock is not be entitled to any dividends and shall not
be entitled to any voting rights, except as to matters which may adversely
affect the rights of the Series A Redeemable Preferred Stock or as otherwise
required by law. The series A Redeemable Preferred Stock provides that the
preferred stock may be redeemed commencing January 1, 2001 by Adirondack, at
its option, through payments of up to 20% of Adirondack's pre-tax profits (as
determined in accordance with generally accepted accounting principals) of
each year commencing with fiscal year ended December 31, 2000 until payment of
an aggregate of $200,233 for all 20,000 shares.
PART II
ITEM 1 Market for Common equity and Related Stockholder Matters.
All of Adirondack's currently issued and outstanding shares were issued
in private transactions. There is currently no public trading market for
Adirondack's securities.
There are approximately 36 shareholders of Adirondacks common stock,
including management and controlling shareholders. Adirondack has declared no
dividends on its securities.
ITEM 2 Legal Proceedings
Adirondack is not a party to any legal proceedings, either actual or
pending.
ITEM 3 Charges in and Disagreements with Accountants
Not Applicable
ITEM 4 Recent Sales of Unregistered Securities
Between August 4, 1998 and December 31, 1998, Adirondack engaged in a
private offering of its securities pursuant to Rule 504 of Regulation D of the
Securities Act of 1933. In such offering, Adirondack offered for sale a
minimum of 500,000 shares and a maximum of 2,000,000 shares of common stock at
$.50 per share. The offering closed on October 16, 1998, with 522,000 shares
sold to 29 shareholders.
In 1997, Adirondack issued 100 shares to 8 people for work,
labor and services performed. This offering was conducted pursuant to Section
4(2) of the Securities Act. On August 5, 1998, Adirondack instituted a stock
split (133,590:1).
ITEM 5 Indemnification of Directors and Officers
Indemnification. Adirondack shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of New
York, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officers of Adirondack, or
served any other enterprise as director, officer or employee at the request of
Adirondack. The Board of Directors, in its discretion, shall have then power
on behalf of Adirondack to indemnify any person, other than a director or
officer, made a party to any action, suit or proceeding by reason of the fact
that he/she is or was an employee of Adirondack.
Insofar as indemnification for liabilities arising under the Act may be
permitted to director, officers and controlling person of Adirondack,
Adirondack 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 therefor, unenforceable. In the event that claim for
indemnification against such liabilities (other than the payment by Adirondack
of expenses incurred or paid by a director, officer or controlling person of
Adirondack in the successful defense of any action, suit or proceedings) is
asserted by such director, officer or controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by its
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issues.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IS HELD TO
BE AGAINST PUBLIC POLICY NY THE SECURITIES AND EXCHANGE COMMISSION, AND IS
THEREFOR UNENFORCEABLE.
PART F/S
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
Financial Statements
February 28, 1999
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
Table of Contents
Independent Auditors' Report
Financial Statements
Balance Sheets
Statements of Operations and Retained Earnings (Deficit)
Statement of Changes in Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
Independent Auditors' Report
To the Board of Directors of
Adirondack Pure Springs Mt. Water Co., Inc.
Syosset, New York
We have audited the accompanying balance sheets of Adirondack Pure Springs Mt.
Water Co., Inc. (a corporation) as of February 28, 1999 and 1998 and the
related statements of operations and retained earnings, changes in
stockholders' equity and cash flows for the year ended February 28, 1999 and
March 7, 1997 (inception) to February 28, 1998. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Adirondack Pure Springs Mt.
Water Co., Inc. as of February 28, 1999 and 1998 and the results of its
operations, changes in stockholders' equity and its cash flows for the periods
indicated above in conformity with generally accepted accounting principles.
Simon Krowitz Bolin & Associates
July 17, 1999
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
BALANCE SHEETS
February 28,
1999 1998
ASSETS
Current Asset
Cash $ 9,557 $ 542
Property and Equipment
Site Development 77,466 60,170
Office Equipment 7,824 0
Accumulated Depreciation,
Amortization 0 0
Total Property and Equipment 85,290 60,170
Other Assets
Security Deposits 24,712 20,000
Deferred Offering Costs 0 7,500
Total Other Assets 24,712 27,500
TOTAL ASSETS $ 119,559 $ 88,212
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Payroll Taxes Payable $ 5,947 $ 0
Accounts Payable 0 35,000
Loan Payable 342 184,125
Total Liabilities 6,289 219,125
Stockholders' Equity
Common Stock - Authorized 40,000,000
Shares $.01 Par Value; 13,881,000
Issued and Outstanding 15,220 10,000
Preferred Stock - Series A, Authorized,
1,000,000 at $.01 Par Value;
20,000 Shares Issued 200 0
Paid-in Capital - Common 255,780 0
Paid-in Capital - Preferred 200,033 0
Deficit Accumulated During
Development Stage (357,963) (140,913)
Total Stockholders' Equity 113,270 (130,913)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 119,559 $ 88,212
See Auditors' Report and Notes to Financial Statements.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
For the Year March 7, 1997 Cumulative
Ended February 28, 1999 (inception) to Total
February 28, 1999
REVENUES
Sales $ 0 $ 0 $ 0
EXPENSES
Bottling Costs 2,970 2,465 5,435
Officers Salaries 40,000 0 40,000
Salaries 0 45,675 45,675
Consulting Fees 23,525 35,300 58,825
Professional Fees 5,700 17,020 22,720
Rent 48,562 0 48,562
Office Expenses 7,361 4,034 11,395
Taxes 4,260 0 4,260
Insurance 1,333 5,820 7,153
Utilities 2,334 3,499 5,833
Travel 0 8,600 8,600
Equipment Rental 0 8,399 8,399
Auto Expense 0 3,605 3,605
Supplies 0 6,496 6,496
TOTAL EXPENSES 136,045 140,913 276,958
OTHER INCOME (EXPENSE)
Rent Income 5,125 0 5,125
Stock Placement
Expenses (86,130) 0 (86,130)
TOTAL OTHER INCOME (EXPENSE) (81,005) 0 (81,005)
NET INCOME (LOSS) (217,050) (140,913) (357,963)
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
For the Year March 7, 1997 Cumulative
Ended February 28, 1999 (inception) to Total
February 28, 1999
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - Begin
$ (140,913) $ 0 $ 0
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - End
$ (357,963) $ (140,913) $ (357,963)
(LOSS) PER SHARE - Basic
$ (.02) $ (1,409) $ (.02)
(LOSS) PER SHARE - Diluted
$ (.02) $ (1,409) $ (.02)
SHARES USED IN PER SHARE CALCULATION
- Basic 13,547,000 100
SHARES USED IN PER SHARE CALCULATION
- Diluted 13,547,000 100
See Auditors' Report and Notes to Financial Statements.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended February 28, 1999 and 1998
Preferred Stock Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
Balance -
March 7, 1997
(inception)
0 $0 0 $0 $0 $0
Sale of Stock 100 10,000
Loss for Period (140,913)
Balance -
February 28,
1998 0 0 100 10,000 0 (140,913)
Amendment to
Certificate of
Incorporation -
Stock Split
13,358,900 10,000 0 0
Conversion of
Loan to Preferred
Stock 20,000 200 200,033 0
Sale of Stock 0 0 522,000 5,220 255,780 0
Loss for Year (217,050)
Balance -
February 28,
1999 20,000 $200 13,881,000 $15,220 $455,813 $(357,963)
See Auditors' Report and Notes to Financial Statements.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Year March 7, 1997 Cumulative
Ended February 28, 1999 (inception) to Total
February 28, 1999
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $(217,050) $(140,913) $(357,963)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Increase in Loan
Payable 16,450 184,125 200,575
(Decrease) Increase in
Accounts Payable (35,000) 35,000
Increase in Payroll
Taxes Payable 5,947 5,947
Increase (Decrease)
in Deferred Offering
Costs 7,500 (7,500)
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (222,153) 70,712 (151,441)
CASH FLOWS FROM INVESTING
ACTIVITIES
Site Development (17,296) (60,170) (77,466)
Purchase of Office
Equipment (7,824) (7,824)
Increase in Security
Deposits (4,712) (20,000) (24,712)
NET CASH (USED) BY INVESTING
ACTIVITIES (29,832) (80,170) (110,002)
CASH FLOWS FROM BY FINANCING
ACTIVITIES
Sale of Common
Stock 261,000 10,000 271,000
NET INCREASE IN CASH 9,015 542 9,557
CASH - Beginning 542 0 0
CASH - Ending $9,557 $542 $9,557
Supplemental Disclosures:
Conversion of Loan
Payable to Preferred
Stock $200,233 $0 $200,233
See Auditors' Report and Notes to Financial Statements.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
NOTE 1 - ORGANIZATION
Adirondack Pure Springs Mt. Water Co., Inc. (the Company) is a New York
corporation established March, 1997. It was formed to extract, distribute and
contract private label mountain water from a stream and spring fed reservoir
in both bulk and bottled forms in the northeastern United States. The Company
plans to bottle its drinking water at the source near the village of Lake
George, New York. The Company has an exclusive ground and water lease with
the Incorporated Village of Lake George, which provides exclusive rights to
four water sources, as well as five acres of property to build a 50,000 square
foot bottling plant. The Company's primary water source flows into a
protected, natural mountain and spring reservoir at a minimum rate of 560,000
gallons per day of high quality, natural and mountain spring water. This
reservoir is located 2,700 feet up a mountain from the proposed bottling plant
site.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment - Property and equipment are recorded at cost when
acquired. Improvements that significantly add to the productive capacity or
extend the useful life of the related asset are capitalized. Site development
costs will be amortized over the lesser of the life of the lease or asset.
Office equipment will be depreciated over the estimated useful lives of the
assets ranging from 3 to 7 years. When property or equipment is sold or
otherwise disposed of, the related cost and accumulated depreciation or
amortization are removed from the accounts and any gain or loss is included in
income. Maintenance and repairs are charged to expense in the period
incurred.
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 revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Income Taxes - The Company accounts for income taxes according to the
liability method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and income tax
bases of assets and liabilities and are measured using enacted tax rates and
laws that are in effect.
Method of Accounting - The Company prepares its financial statements on the
accrual method of accounting, recognizing income when earned and expenses when
incurred.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets - Long-lived assets (i.e., property , plant
and equipment) held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the net book value
of the asset may not be recoverable. An impairment loss will be recognized if
the sum of the expected future cash flows (undiscounted and before interest)
from the use of the asset is less than the net book value of the asset.
Generally, the amount of the impairment loss is measured as the difference
between the net book value of the assets and the estimated fair value of the
related asset.
Earnings per Share - Effective for the year ended February 28, 1998, the
Company adopted Statement of Financial Standards No. 128. Earnings Per Share
("FAS 128"). FAS 128 replaces prior earnings per share ("EPS") reporting
requirements and requires the dual presentation of basic and diluted EPS.
Basis EPS excludes dilution and is computed by dividing net income by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
NOTE 3 - LOAN PAYABLE
At February 28, 1998, the Company had been advanced funds from a related
party. These amounts were non-interest bearing. During the subsequent fiscal
year $200,233 of such loans were converted into preferred stock (see also Note
6).
NOTE 4 - INCOME TAXES
No provision for income taxes is required as the Company has incurred losses
during its development stage. These losses are available to offset taxable
years in the future. The losses will be available until 2017 and 2018,
respectively.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
NOTE 5 - COMMON STOCK (Continued)
The Company's certificate of incorporation provided for 200 shares of common
stock, no par value. On August 5, 1998, the shareholders amended the
certificate of incorporation. The Company is now authorized for 40,000,000
shares of common stock, $.01 par value. Consequently, the initial
shareholders were given a 133,590 for one stock split.
Also, during 1998, the Company entered into an offering of 2,000,000 shares of
common stock at an offering price of $.50 per share. Under this offering
522,000 shares were issued.
NOTE 6 - PREFERRED STOCK
In August, 1998, the Company amended its certificate of incorporation to
authorize the issuance of 1,000,000 shares of undesignated preferred stock
with a $.01 par value. The Board of Directors is authorized to issue
preferred stock in one or more series with varying designations, preferences
or other special rights.
The Board has authorized the issue of 20,000 shares of Series A redeemable
preferred stock, par value $.01 per share. Series A redeemable preferred
stock shall contain preferential liquidation rights in the amount of $200,233
but is not entitled to dividends or voting rights, except as to matters which
may adversely affect the rights of the Series A redeemable preferred stock or
as otherwise required by law. Redemption of this stock, at the Company's
options, could start January 1, 2000 through payments of up to 20% of the
Company's pre-tax profit.
NOTE 7 - COMMITMENTS, CONTINGENCIES
The Company has been approved for a four million six hundred and twenty-five
thousand dollars ($4,625,000) by the Counties of Warren and Washington
Industrial Development Agency bond issue loan for the purpose of constructing
up to 50,000 square foot bottling plant. The Company has until July 31, 2000
to begin the bond offering.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
NOTE 7 - COMMITMENTS, CONTINGENCIES (Continued)
Properties - The Company has an exclusive ground and water lease with the
Incorporated Village of Lake George, which provides rights to four (4) pure
water sources, as well as five (5) acres of property for construction of up to
a 50,000 square foot bottling plant. The lease term for the water source is
for five (5) years expiring May 2002 with two five (5) year renewal options.
If the plant is constructed, the lease term extends to 2029. At the
termination of the lease, all improvements become the property of the Village.
Initial base rent for water $.001 per gallon with a minimum $30,000 commencing
in the second year of the lease.
The Company has entered into a five-year lease for office space. The lease
term is from October 1, 1998 through September 30, 2003.
Minimum annual rentals for the year ending:
February 29, 2000 $87,490
February 28, 2001 89,790
February 28, 2002 92,182
February 28, 2003 69,669
February 28, 2004 0
The Company intends to enter into an employment agreement with David Sackler,
its President and Chief Executive Officer, for a term of five years at a
salary of $100,000 per year. The Company intends to enter into an employment
agreement with Douglas Aver, its Project Manager, for a term of three years at
a salary of $32,500 per year.
NOTE 8 - RENTAL INCOME
The Company entered into a sublease agreement for a portion of its office
space. The sublease term is October 1, 1998 to September 30, 2003 at a
minimum annual rental of $28,500. As of February 28, 1999, the subtenant is
in default of the terms of the lease and has not made the required lease
payments. Consequently, no income accrual has been made pending resolution of
this matter.
The Company has negotiated with a new subtenant for a two-year lease beginning
August 1, 1999 with rent at $24,000 for Year 1 and $25,200 for Year 2. There
is a two-year renewal option.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
NOTE 9 - RELATED PARTY TRANSACTION
The Company has entered into a consulting agreement with CES Consulting Co.,
Inc. (CES). The agreement is for five (5) years beginning September 1, 1998
at an annual cost of $100,000 per year.
NOTE 10 - SUBSEQUENT EVENTS
Acquisition - The Company is currently in negotiations to acquire 51% of
Creative Beverages of Canada, a Canadian corporation. The negotiations
include an option to acquire the remaining 49% within three (3) years.
Creative Beverages has current clients and is a marketing company that holds
certain trademarks and licenses. The cost of this acquisition is estimated at
$35,000.
Marketing - The Company is negotiating with Titan Sports for supplying the
World Wrestling Federation with water and other licensed products. The fee to
the Company is up to 12% of gross sales.
The Company is negotiating a five (5) year licensing agreement with Met-Rx
USA-Source\One for the sale of its water, for a fee of 5% of gross sales.
The Company is awaiting completion of negotiations with Goebel Marketing and
Sales (Goebel) for a marketing and sales agreement. Goebel will provide the
marketing and sales of the Company's Aviva brand of water. Goebel will
receive a commission of 5% of gross sales of private labels, including Met-Rx.
Sales - The Company has negotiated an exclusive agreement with Conca D'Oro
Importers of Woodside, New York whereas the Company will act as the exclusive
provider for CDI for its private label water products. The agreement's term
is June 4, 1999 to December 3, 2000.
Distribution - The Company entered into a distribution agreement on June 4,
1999. The agreement extends until December 31, 2009. Under the terms of the
agreement, the Company will pay the distributor $1.25 per case of the products
delivered to the retailer. The distributor agrees that during the term hereof
it will not carry or distribute bottled water other than the products.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 28, 1999
NOTE 10 - SUBSEQUENT EVENTS (Continued)
Other - The Company has agreed to enter into a business consulting agreement
with Madison Venture Capital II, Inc., of which two shareholders of the
Company are principals. The agreement is to begin on September 1, 1998 or
upon the achievement of certain conditions. The agreement is for a period of
5 years at the rate of $2,000 per month. As of February 28, 1999, these
conditions have not been achieved.
Private Placement - The Company has signed a letter of intent concerning an
underwriting agreement with First Madison Securities to effectuate a public
offering of its securities (the "Offering") and a private placement that is to
raise $725,000. This private placement is currently in process. It is
anticipated that the Offering will consist of the sale by the Company of a
$4,625,000 Industrial Development bond, and/or a "best efforts" equity
offering of up to five million dollars ($5,000,000) . Provided all units
being offered are sold within the Offering period, the Company shall issue and
sell at the closing of the proposed underwriting, to the Underwriter warrants
to purchase from the Company one (1) unit for every ten (10) units sold (the
"Underwriter's Warrants") in the offering at a price of $.001 per warrant.
The Underwriter's Warrants will be exercisable at 120% of the Offering price
for a period of five (5) years commencing one year from the date of the
prospectus.
The Company has an agreement (dated June 2, 1999) for the services of MRK
Enterprises, Inc. for the preparation of the offering memorandum, printing
costs, filing of 15c211 and Form 10 with the SEC for 2,000,000 common shares.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
Financial Statements
July 31, 1999
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
Table of Contents
Financial Statements
Balance Sheet
Statement of Changes in Stockholders' Equity
Statements of Operations and Retained Earnings (Deficit)
Statements of Cash Flows
Notes to Financial Statements
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
BALANCE SHEET July 31, 1999
ASSETS
Current Assets
Cash $ 3,758
Accounts Receivable - Trade 31,132
Total Current Assets 34,890
Property and Equipment
Site Development 77,466
Office Equipment 7,824
Accumulated Depreciation, Amortization (2,804)
Total Property and Equipment 82,486
Other Assets
Deposits - Future Acquisition 13,507
Security Deposits 24,712
Total Other Assets 38,219
TOTAL ASSETS $ 155,595
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 71,143
Payroll Taxes Payable 20,291
Loan Payable 60,954
Total Current Liabilities 152,388
Stockholders' Equity
Common Stock - Authorized 40,000,000
Shares $.01 Par Value;
13,881,000 Issued and Outstanding 15,220
Preferred Stock - Series A, Authorized,
1,000,000 at $.01 Par Value;
20,000 Shares Issued 200
Paid-in Capital - Common 255,780
Paid-in Capital - Preferred 200,033
Deficit Accumulated During
Development Stage (468,026)
Total Stockholders' Equity 3,207
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 155,595
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period March 7, 1997 (inception) to July 31, 1999
Preferred Stock Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
Balance -
March 7, 1997
(inception) 0 $0 0 $0 $0 $0
Sale of Stock 100 10,000
Loss for Period (140,913)
Balance -
February 28,
1998 0 0 100 10,000 0 (140,913)
Amendment to Certificate of
Incorporation -
Stock Split 13,358,900 10,000 0 0
Conversion of Loan to
Preferred
Stock 20,000 200 200,033 0
Sale of Stock 0 0 522,000 5,220 255,780 0
Loss for Year (217,050)
Balance -
February 28,
1999 20,000 200 13,881,000 15,220 455,813 (357,963)
Loss for Five Months Ended
July 31, 1999 (110,063)
Balance -
July 31,
1999 20,000 $200 13,881,000 $15,220 $455,813 $(468,026)
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
For the Five March 7, 1997
Months Ended (inception) to Cumulative
July 31, 1999 February 28, 1999 Total
REVENUES
Sales $ 38,828 $ 0 $ 38,828
COST OF SALES
Bottling Units 18,545 5,435 23,980
Site Expense 4,048 5,833 9,881
Rent - Site 10,000 0 10,000
Salaries 0 45,675 45,675
TOTAL COST OF SALES 32,593 56,943 89,536
GROSS PROFIT (LOSS) 6,235 (56,943) (50,708)
EXPENSES
Officer's Salary 44,000 40,000 84,000
Consulting Professional
Fees 48,000 81,545 129,545
Office Rent,
Expenses 20,862 59,957 80,819
Taxes 0 4,260 4,260
Insurance 0 7,153 7,153
Travel, Auto Expense 4,047 12,205 16,252
Equipment Rental 0 8,399 8,399
Supplies, Miscellaneous 635 6,496 7,131
Depreciation 2,804 0 2,804
TOTAL EXPENSES 120,348 220,015 340,363
OTHER INCOME EXPENSES
Rent Income 4,050 5,125 9,175
Stock Placement Expenses 0 (86,130) (86,130)
TOTAL OTHER INCOME
(EXPENSES) 4,050 (81,005) (76,955)
NET (LOSS) (110,063) (357,963) (468,026)
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
For the Five March 7, 1997
Months Ended (inception) to Cumulative
July 31, 1999 February 28, 1999 Total
DEFICIT ACCUMULATED
DURING DEVELOPMENT
STAGE - Begin $ (357,963) $ 0 $ 0
DEFICIT ACCUMULATED
DURING DEVELOPMENT
STAGE - End $ (468,026) $ (357,963) $ (468,026)
(LOSS) PER SHARE -
Basic $ (.03) $ (.02) $ (.03)
(LOSS) PER SHARE -
Diluted $ (.03) $ (.02) $ (.03)
SHARES USED IN PER SHARE CALCULATION
- Basic 13,547,000 13,547,000
SHARES USED IN PER SHARE CALCULATION
- Diluted 13,547,000 13,547,000
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Five March 7, 1997
Months Ended (inception) to Cumulative
July 31, 1999 February 28, 1999 Total
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $ (110,063) $(357,963) $(468,026)
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating Activities:
Increase in
Accounts Receivable (31,132) 0 (31,132)
Increase in Loan Payable 60,612 200,575 261,187
(Decrease) Increase in
Accounts Payable 71,143 0 71,143
Increase in Payroll
Taxes Payable 14,344 5,947 20,291
Depreciation 2,804 0 2,804
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES 7,708 (151,441) (143,733)
CASH FLOWS FROM INVESTING
ACTIVITIES
Site Development 0 (77,466) (77,466)
Purchase of Office Equipment 0 (7,824) (7,824)
Increase in Security Deposits 0 (24,712) (24,712)
Deposits for Acquisition 13,507 0 (13,507)
NET CASH (USED) BY INVESTING
ACTIVITIES (13,507) (110,002) (123,509)
CASH FLOWS FROM BY FINANCING
ACTIVITIES
Sale of Common Stock 0 271,000 271,000
NET INCREASE (DECREASE)
IN CASH (5,799) 9,557 3,758
CASH - Beginning 9,557 0 0
CASH - Ending $ 3,758 $ 9,557 $ 3,758
Supplemental Disclosures:
Conversion of Loan Payable
to Preferred Stock $ 0 $ 200,233 $ 200,233
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
July 31, 1999
NOTE 1 - ORGANIZATION
Adirondack Pure Springs Mt. Water Co., Inc. (the Company) is a New York
corporation established March, 1997. It was formed to extract, distribute and
contract private label mountain water from a stream and spring fed reservoir
in both bulk and bottled forms in the northeastern United States. The Company
plans to bottle its drinking water at the source near the village of Lake
George, New York. The Company has an exclusive ground and water lease with
the Incorporated Village of Lake George, which provides exclusive rights to
four water sources, as well as five acres of property to build a 50,000 square
foot bottling plant. The Company's primary water source flows into a
protected, natural mountain and spring reservoir at a minimum rate of 560,000
gallons per day of high quality, natural and mountain spring water. This
reservoir is located 2,700 feet up a mountain from the proposed bottling plant
site.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment - Property and equipment are recorded at cost when
acquired. Improvements that significantly add to the productive capacity or
extend the useful life of the related asset are capitalized. Site development
costs will be amortized over the lesser of the life of the lease or asset.
Office equipment will be depreciated over the estimated useful lives of the
assets ranging from 3 to 7 years. When property or equipment is sold or
otherwise disposed of, the related cost and accumulated depreciation or
amortization are removed from the accounts and any gain or loss is included in
income. Maintenance and repairs are charged to expense in the period
incurred.
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 revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Income Taxes - The Company accounts for income taxes according to the
liability method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and income tax
bases of assets and liabilities and are measured using enacted tax rates and
laws that are in effect.
Method of Accounting - The Company prepares its financial statements on the
accrual method of accounting, recognizing income when earned and expenses when
incurred.
Impairment of Long-Lived Assets - Long-lived assets (i.e., property , plant
and equipment) held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the net book value
of the asset may not be recoverable. An impairment loss will be recognized if
the sum of the expected future cash flows (undiscounted and before interest)
from the use of the asset is less than the net book value of the asset.
Generally, the amount of the impairment loss is measured as the difference
between the net book value of the assets and the estimated fair value of the
related asset.
Earnings per Share - Effective for the year ended February 28, 1998, the
Company adopted Statement of Financial Standards No. 128. Earnings Per Share
("FAS 128"). FAS 128 replaces prior earnings per share ("EPS") reporting
requirements and requires the dual presentation of basic and diluted EPS.
Basis EPS excludes dilution and is computed by dividing net income by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
NOTE 3 - LOAN PAYABLE
At February 28, 1998, the Company had been advanced funds from a related
party. These amounts were non-interest bearing. During the subsequent fiscal
year $200,233 of such loans were converted into preferred stock (see also Note
6). The balance represents additional advances during the current five month
period and are non-interest bearing.
NOTE 4 - INCOME TAXES
No provision for income taxes is required as the Company has incurred losses
during its development stage. These losses are available to offset taxable
years in the future. The losses will be available until 2017 and 2018,
respectively.
NOTE 5 - COMMON STOCK (Continued)
The Company's Certificate of Incorporation provided for 200 shares of common
stock, no par value. On August 5, 1998, the shareholders amended the
certificate of incorporation. The Company is now authorized for 40,000,000
shares of common stock, $.01 par value. Consequently, the initial
shareholders were given a 133,590 for one stock split.
Also, during 1998, the Company entered into an offering of 2,000,000 shares of
common stock at an offering price of $.50 per share. Under this offering
522,000 shares were issued.
NOTE 6 - PREFERRED STOCK
In August, 1998, the Company amended its certificate of incorporation to
authorize the issuance of 1,000,000 shares of undesignated preferred stock
with a $.01 par value. The Board of Directors is authorized to issue
preferred stock in one or more series with varying designations, preferences
or other special rights.
The Board has authorized the issue of 20,000 shares of Series A redeemable
preferred stock, par value $.01 per share. Series A redeemable preferred
stock shall contain preferential liquidation rights in the amount of $200,233
but is not entitled to dividends or voting rights, except as to matters which
may adversely affect the rights of the Series A redeemable preferred stock or
as otherwise required by law. Redemption of this stock, at the Company's
option, could start January 1, 2001 through payments of up to 20% of the
Company's pre-tax profit.
NOTE 7 - COMMITMENTS, CONTINGENCIES
The Company has been approved for a four million six hundred and twenty-five
thousand dollars ($4,625,000) by the Counties of Warren and Washington
Industrial Development Agency bond issue loan for the purpose of constructing
up to 50,000 square foot bottling plant. The Company has until July 31, 2000
to begin the bond offering.
Properties - The Company has an exclusive ground and water lease with the
Incorporated Village of Lake George, which provides rights to four (4) pure
water sources, as well as five (5) acres of property for construction of up to
a 50,000 square foot bottling plant. The lease term for the water source is
for five (5) years expiring May 2002 with two five (5) year renewal options.
If the plant is constructed, the lease term extends to 2029. At the
termination of the lease, all improvements become the property of the Village.
Initial base rent for water $.001 per gallon with a minimum $30,000 commencing
in the second year of the lease.
The Company has entered into a five-year lease for office space. The lease
term is from October 1, 1998 through September 30, 2003.
Minimum annual rentals for the year ending:
July 31, 2000 $88,260
July 31, 2001 90,592
July 31, 2002 84,680
July 31, 2003 46,448
July 31, 2004 11,612
The Company intends to enter into an employment agreement with David Sackler,
its President and Chief Executive Officer, for a term of five years at a
salary of $100,000 per year. The Company intends to enter into an employment
agreement with Douglas Aver, its Project Manager, for a term of three years at
a salary of $32,500 per year.
NOTE 8 - RENTAL INCOME
The Company entered into a sublease agreement for a portion of its office
space. The sublease term is October 1, 1998 to September 30, 2003 at a
minimum annual rental of $28,500. As of February 28, 1999, the subtenant is
in default of the terms of the lease and has not made the required lease
payments. Consequently, no income accrual has been made pending resolution of
this matter.
The Company has negotiated with a new subtenant for a two-year lease beginning
August 1, 1999 with rent at $24,000 for Year 1 and $25,200 for Year 2. There
is a two-year renewal option.
NOTE 9 - RELATED PARTY TRANSACTION
The Company has entered into a consulting agreement with CES Consulting Co.,
Inc. (CES). The agreement is for five (5) years beginning September 1, 1998
at an annual cost of $100,000 per year.
NOTE 10 - SUBSEQUENT EVENTS
Acquisition - The Company has agreed in principal to acquire 51% of Creative
Beverages of Canada, a Canadian corporation. The negotiations include an
option to acquire the remaining 49% within three (3) years. Creative
Beverages has current clients and is a marketing company that holds certain
trademarks and licenses. The cost of this acquisition is estimated at
$35,000. The Company has expended $13,507 on this project.
Marketing - The Company is negotiating with Leisure Concepts, Inc. for two
license agreements for supplying bottled water for World Championship
Wrestling and Pokemon. The fee arrangement has not been completed, but
management feels that the fee will be 12%.
The Company is negotiating a five (5) year licensing agreement with Met-Rx
USA-Source\One for the sale of its water, for a fee of 5% of gross sales. The
Company is also negotiating a joint marketing agreement with the Met-RX for
the Company's Aviva Springs labeled water.
The Company is awaiting completion of negotiations with Goebel Marketing and
Sales (Goebel) for a marketing and sales agreement. Goebel will provide the
marketing and sales of the Company's Aviva brand of water. Goebel will
receive a commission of 5% of gross sales of private labels, including Met-Rx.
Sales - The Company has negotiated an exclusive agreement with Conca D'Oro
Importers of Woodside, New York whereas the Company will act as the exclusive
provider for CDI for its private label water products. The agreement's term
is June 4, 1999 to December 3, 2000.
The Company has negotiated a sales agreement with Nutrition Club Stores (NCS)
for the national distribution of its water to local gyms.
Distribution - The Company entered into a distribution agreement on June 4,
1999. The agreement extends until December 31, 2009. Under the terms of the
agreement, the Company will pay the distributor $1.25 per case of the products
delivered to the retailer. The distributor agrees that during the term hereof
it will not carry or distribute bottled water other than the products.
Other - The Company has agreed to enter into a business consulting agreement
with Madison Venture Capital II, Inc., of which two shareholders of the
Company are principals. The agreement is to begin on September 1, 1998 or
upon the achievement of certain conditions. The agreement is for a period of
5 years at the rate of $2,000 per month. As of February 28, 1999, these
conditions have not been achieved.
The Company's labeled water has been named the official water for 1999 for the
Mr. Fitness Olympia and Ms. Fitness Olympia contest by the International
Federation of Body Builders.
Private Placement - The Company has signed a letter of intent concerning an
underwriting agreement with First Madison Securities to effectuate a public
offering of its securities (the "Offering") and a private placement that is to
raise $725,000. This private placement is currently in process. It is
anticipated that the Offering will consist of the sale by the Company of a
$4,625,000 Industrial Development bond, and/or a "best efforts" equity
offering of up to five million dollars ($5,000,000) . Provided all units
being offered are sold within the Offering period, the Company shall issue and
sell at the closing of the proposed underwriting, to the Underwriter warrants
to purchase from the Company one (1) unit for every ten (10) units sold (the
"Underwriter's Warrants") in the offering at a price of $.001 per warrant.
The Underwriter's Warrants will be exercisable at 120% of the Offering price
for a period of five (5) years commencing one year from the date of the
prospectus.
The Company has an agreement (dated June 2, 1999) for the services of MRK
Enterprises, Inc. for the preparation of the offering memorandum, printing
costs, filing of 15c211 and Form 10 with the SEC for 2,000,000 common shares.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
BALANCE SHEET
August 31, 1999
ASSETS
Current Assets
Cash $ 18,937
Accounts Receivable - Trade 31,132
Total Current Assets 50,069
Property and Equipment
Site Development 77,466
Office Equipment 7,824
Accumulated Depreciation, Amortization (3,364)
Total Property and Equipment 81,926
Other Assets
Deposits - Future Acquisition 13,507
Security Deposits 24,712
Startup Costs 75,000
Total Other Assets 113,219
TOTAL ASSETS $ 245,214
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 85,664
Payroll Taxes Payable 22,706
Loan Payable 79,967
Total Current Liabilities 188,337
Stockholders' Equity
Common Stock Authorized 40,000,000 Shares $.01
Par Value; 15,859,000 Issued and Outstanding 35,000
Preferred Stock - Series A, Authorized,
1,000,000 at $.01 Par Value; 20,000 Shares Issued 200
Paid-in Capital - Common 311,000
Paid-in Capital - Preferred 200,033
Deficit Accumulated During Development Stage (489,356)
Total Stockholders' Equity 56,877
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 245,214
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period March 7, 1997 (inception) to August 31, 1999
Preferred Stock Common Stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
Balance - March 7, 1997
(inception) 0 $ 0 0 $ 0 $ 0 $ 0
Sale of Stock 100 10,000 0
Loss for Period (140,913)
Balance - February 28, 1998 0 0 100 10,000 0 (140,913)
Amendment to Certificate of
Incorporation - Stock Split 13,358,900 10,000 0 0
Loss for Five Months Ended July 31, 1998 (10,766)
Balance - July 31, 1998 0 0 13,359,000 10,000 0 (151,679)
Conversion of Loan to
Preferred Stock 20,000 200 200,033 0
Sale of Stock 500,000 5,000 256,000 0
Loss for Seven Months Ended February 28, 1998 (206,284)
Balance -
February 28, 1999 20,000 200 13,859,000 15,000 456,033 (357,963)
Stock Issued for
Professional Fees 2,000,000 20,000 55,000 0
Loss for Five Months Ended July 31, 1999 (110,063)
Balance -
July 31, 1999 20,000 200 15,859,000 35,000 511,033 (468,026)
Loss for One Month Ended August 31, 1999 (21,330)
Balance -
August 31, 1999 20,000 $200 15,859,000 $35,000 $511,033 $(489,356)
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
July 31, 1999 to March 7, 1997 (inception)
August 31, 1999 to August 31, 1999
REVENUES
Sales $ 0 $ 38,828
COST OF SALES
Bottling Units 1,378 25,358
Site Expense 0 9,881
Rent - Site 2,500 12,500
Salaries 0 45,675
TOTAL COST OF SALES 3,878 93,414
GROSS PROFIT (LOSS) 3,878 (54,586)
EXPENSES
Officer's Salary 6,000 90,000
Consulting, Professional Fees 6,550 136,095
Office Rent, Expenses 4,712 85,531
Taxes 459 4,719
Insurance 0 7,153
Travel, Auto Expense 0 16,252
Equipment Rental 0 8,399
Supplies, Miscellaneous 140 7,271
Depreciation 560 3,364
Office Expense 150 150
Utilities 131 131
TOTAL EXPENSES 18,702 359,065
OTHER INCOME EXPENSES
Rent Income 1,250 10,425
Stock Placement Expenses 0 (86,130)
TOTAL OTHER INCOME (EXPENSES) 1,250 (75,705)
NET (LOSS) (21,330) (489,356)
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
August 1, 1999 to March 7, 1997 (inception)
August 31, 1999 to August 31, 1999
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - Begin $ (468,026) $ 0
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - End $ (489,356) $ (489,356)
(LOSS) PER SHARE - Basic $ (.03) $ (.03)
(LOSS) PER SHARE - Diluted $ (.03) $ (.03)
SHARES USED IN PER SHARE CALCULATION
- Basic 14,192,333 14,192,333
SHARES USED IN PER SHARE CALCULATION
- Diluted 14,192,333 14,192,333
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
August 1, 1999 to March 7, 1997 (inception)
August 31, 1999 to August 31, 1999
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $ (21,330) $ (489,356)
Adjustments to Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Increase in Accounts Receivable 0 (31,132)
Increase in Loan Payable 19,012 280,200
(Decrease) Increase in
Accounts Payable 14,521 85,664
Increase in Payroll Taxes Payable 2,415 22,706
Depreciation 561 3,364
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES 15,179 (128,554)
CASH FLOWS FROM INVESTING
ACTIVITIES
Site Development 0 (77,466)
Purchase of Office Equipment 0 (7,824)
Increase in Security Deposits 0 (24,712)
Deposits for Acquisition 0 (13,507)
NET CASH (USED) BY INVESTING
ACTIVITIES 0 (123,509)
CASH FLOWS FROM BY FINANCING
ACTIVITIES
Sale of Common Stock 0 271,000
NET INCREASE (DECREASE) IN CASH 15,179 18,937
CASH - Beginning 3,758 0
CASH - Ending $ 18,937 $ 18,937
Supplemental Disclosures:
Conversion of Loan Payable to Preferred Stock $ 200,233
Stock Issued for Professional Fees $ 75,000
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 1 - ORGANIZATION
Adirondack Pure Springs Mt. Water Co., Inc. (the Company) is a New York
corporation established March, 1997. It was formed to extract, distribute and
contract private label mountain water from a stream and spring fed reservoir
in both bulk and bottled forms in the northeastern United States. The Company
plans to bottle its drinking water at the source near the village of Lake
George, New York. The Company has an exclusive ground and water lease with the
Incorporated Village of Lake George, which provides exclusive rights to four
water sources, as well as five acres of property to build a 50,000 square foot
bottling plant. The Company's primary water source flows into a protected,
natural mountain and spring reservoir at a minimum rate of 560,000 gallons per
day of high quality, natural and mountain spring water. This reservoir is
located 2,700 feet up a mountain from the proposed bottling site.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment - Property and equipment are recorded at cost when
acquired. Improvements that significantly add to the productive capacity or
extend the useful life of the related asset are capitalized. Site development
costs will be amortized over the lesser of the life of the lease or asset.
Office equipment will be depreciated over the estimated useful lives of the
assets ranging from 3 to 7 years. When property or equipment is sold or
otherwise disposed of, the related cost and accumulated depreciation or
amortization are removed from the accounts and any gain or loss is included in
income. Maintenance and repairs are charged to expense in the period incurred.
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 revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Income Taxes The Company accounts for income taxes according to the
liability method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and income tax
bases of assets and liabilities and are measured using enacted tax rates and
laws that are in effect.
Method of Accounting - The Company prepares its financial statements on the
accrual method of accounting, recognizing income when earned and expenses
when incurred.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets - Long-lived assets (i.e., property , plant
and equipment) held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the net book value
of the asset may not be recoverable. An impairment loss will be recognized if
the sum of the expected future cash flows (undiscounted and before interest)
from the use of the asset is less than the net book value of the asset.
Generally, the amount of the impairment loss is measured as the difference
between the net book value of the assets and the estimated fair value of the
related asset.
Earnings per Share Effective for the year ended February 28, 1998, the
Company adopted Statement of Financial Standards No. 128, Earnings Per Share
("FAS 128"). FAS 128 replaces prior earnings per share ("EPS") reporting
requirements and requires the dual presentation of basic and diluted EPS.
Basic EPS excludes dilution and is computed by dividing net income by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
NOTE 3 LOAN PAYABLE
At February 28, 1998, the Company had been advanced funds from a related
party. These amounts were non-interest bearing. During the subsequent
fiscal year $200,233 of such loans were converted into preferred stock (see
also Note 6). The balance represents additional advances during the current
five month period and are non-interest bearing.
NOTE 4 INCOME TAXES
No provision for income taxes is required as the Company has incurred losses
during its development stage. These losses are available to offset taxable
years in the future. The losses will be available until 2017 and 2018,
respectively.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 5 COMMON STOCK
The Company's Certificate of Incorporation provided for 200 shares of common
stock, no par value. On August 5, 1998, the shareholders amended the
Certificate of Incorporation. The Company is now authorized for 40,000,000
shares of common stock, $.01 par value. Consequently, the initial
shareholders were given a 133,590 for one stock split.
Also, during 1998, the Company entered into an offering of 2,000,000 shares of
common stock at an offering price of $.50 per share. Under this offering
500,000 shares were issued.
NOTE 6 PREFERRED STOCK
In August, 1998, the Company amended its Certificate of Incorporation to
authorize the issuance of 1,000,000 shares of undesignated preferred stock
with a $.01 par value. The Board of Directors is authorized to issue
preferred stock in one or more series with varying designations, preferences
or other special rights.
The Board has authorized the issuance of 20,000 shares of Series A redeemable
preferred stock, par value $.01 per share. Series A redeemable preferred
stock shall contain preferential liquidation rights in the amount of $200,233
but is not entitled to dividends or voting rights, except as to matters which
may adversely affect the rights of the Series A redeemable preferred stock or
as otherwise required by law. Redemption of this stock, at the Company's
option, could start January 1, 2001 through payments of up to 20% of the
Company's pre-tax profit.
NOTE 7 - COMMITMENTS, CONTINGENCIES
The Company has been approved for a bond offering loan of four million six
hundred and twenty-five thousand dollars ($4,625,000) by the Counties of
Warren and Washington Industrial Development Agency for the purpose of
constructing an up to 50,000 square foot bottling plant. The Company has
until July 31, 2000 to begin the bond offering.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 7 - COMMITMENTS, CONTINGENCIES (Continued)
Properties - The Company has an exclusive ground and water lease with the
Incorporated Village of Lake George, which provides rights to four (4) pure
water sources, as well as five (5) acres of property for construction of an
up to a 50,000 square foot bottling plant. The lease term for the water
source is for five (5) years expiring May 2002 with two five (5) year renewal
options. If the plant is constructed, the lease term extends to 2029. At the
termination of the lease, all improvements become the property of the Village.
Initial base rent for water $.001 per gallon with a minimum $30,000 commencing
in the second year of the lease.
The Company has entered into a five-year lease for office space. The lease
term is from October 1, 1998 through September 30, 2003.
Minimum annual rentals for the year ending:
July 31, 2000 $88,260
July 31, 2001 90,592
July 31, 2002 84,680
July 31, 2003 46,448
July 31, 2004 11,612
The Company has entered into an employment agreement with David Sackler, its
President and Chief Executive Officer, for a term of five years at a salary
of $100,000 per year. The Company has entered into an employment agreement
with Douglas Aver, its Project Manager, for a term of three years at a salary
of $32,500 per year.
NOTE 8 - RENTAL INCOME
The Company entered into a sublease agreement for a portion of its office
space. The sublease term is October 1, 1998 to September 30, 2003 at a
minimum annual rental of $28,500. As of February 28, 1999, the subtenant is
in default of the terms of the lease and has not made the required lease
payments. Consequently, no income accrual has been made pending resolution
of this matter.
The Company has negotiated with a new subtenant for a two-year lease
beginning August 1, 1999 with rent at $24,000 for Year 1 and $25,200 for Year
2. There is a two-year renewal option.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 9 - RELATED PARTY TRANSACTION
The Company has entered into a consulting agreement with CES Consulting Co.,
Inc. (CES). The agreement is for five (5) years beginning September 1, 1998
at an annual cost of $100,000 per year.
NOTE 10 - SUBSEQUENT EVENTS
Acquisition - The Company has agreed in principal to acquire 51% of Creative
Beverages of Canada, a Canadian corporation. The negotiations include an
option to acquire the remaining 49% within three (3) years. Creative Beverages
has current clients and is a marketing company that holds certain trademarks
and licenses. The cost of this acquisition is estimated at $35,000. The
Company has expended $13,507 on this project.
Marketing - The Company is negotiating with Leisure Concepts, Inc. for two
license agreements for supplying bottled water for World Championship
Wrestling and Pokemon. The fee arrangement has not been completed, but
management feels that the fee will be 12%.
The Company is negotiating a five (5) year licensing agreement with Met-Rx
USA-Source\One for the sale of its water, for a fee of 5% of gross sales.
The Company is also negotiating a joint marketing agreement with the Met-RX
for the Company's Aviva Springs labeled water.
The Company is awaiting completion of negotiations with Goebel Marketing and
Sales (Goebel) for a marketing and sales agreement. Goebel will provide the
marketing and sales of the Company's Aviva brand of water. Goebel will
receive a commission of 5% of gross sales of private labels, including Met-Rx.
Sales - The Company has negotiated an exclusive agreement with Conca D'Oro
Importers of Woodside, New York whereas the Company will act as the exclusive
provider for CDI for its private label water products. The agreement's term
is June 4, 1999 to December 3, 2000.
The Company has negotiated a sales agreement with Nutrition Club Stores (NCS)
for the national distribution of its water to local gyms.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 10 - SUBSEQUENT EVENTS (Continued)
Distribution - The Company entered into a distribution agreement on June 4,
1999. The agreement extends until December 31, 2009. Under the terms of the
agreement, the Company will pay the distributor $1.25 per case of the products
delivered to the retailer. The distributor agrees that during the term
hereof it will not carry or distribute bottled water other than the products.
Other - The Company has agreed to enter into a business consulting agreement
with Madison Venture Capital II, Inc., of which two shareholders of the
Company are principals. The agreement is to begin on September 1, 1998 or
upon the achievement of certain conditions. The agreement is for a period of
5 years at the rate of $2,000 per month. As of February 28, 1999, these
conditions have not been achieved.
The Company's labeled water has been named the official water for 1999 for the
Mr. Olympia and Fitness Olympia contest by the International Federation of
Body Builders.
Private Placement - The Company has signed a letter of intent concerning an
underwriting agreement with First Madison Securities to effectuate a public
offering of its securities (the "Offering") and a private placement that is to
raise $1,305,000. This private placement is currently in process. It is
anticipated that the Offering will consist of the sale by the Company of a
$4,625,000 Industrial Development bond, and/or a "best efforts" equity
offering of up to five million dollars ($5,000,000) . Provided all units
offered are sold within the Offering period, the Company shall issue and sell
at the closing of the proposed underwriting, to the Underwriter warrants to
purchase from the Company one (1) unit for every ten (10) units sold (the
"Underwriter's Warrants") in the offering at a price of $.001 per warrant. The
Underwriter's Warrants will be exercisable at 120% of the Offering price for a
period of five (5) years commencing one year from the date of the prospectus.
The Company has an agreement (dated June 2, 1999) for the services of MRK
Enterprises, Inc. for the preparation of the offering memorandum, printing
costs, filing of 15c211 and Form 10 with the SEC for 2,000,000 common shares.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 1999
ASSETS
Current Assets
Cash $ 3,349
Accounts Receivable - Trade 24,132
Total Current Assets 27,481
Property and Equipment
Site Development 77,466
Office Equipment 7,824
Accumulated Depreciation, Amortization (4,486)
Total Property and Equipment 80,804
Other Assets
Deferred Offering Costs 2,450
Deposits - Future Acquisition 13,507
Security Deposits 24,712
Startup Costs 75,000
Total Other Assets 115,669
TOTAL ASSETS $ 223,954
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 114,498
Payroll Taxes Payable 29,951
Loan Payable 81,468
Total Current Liabilities 225,917
Stockholders' Equity
Common Stock Authorized 40,000,000 Shares
$.01 Par Value; 15,859,000 Issued and
Outstanding 35,000
Preferred Stock - Series A, Authorized,
1,000,000 at $.01 Par Value; 20,000 Shares
Issued 200
Paid-in Capital - Common 311,000
Paid-in Capital - Preferred 200,033
Deficit Accumulated During Development Stage (548,196)
Total Stockholders' Equity (1,963)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 223,954
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period March 7, 1997 (inception) to October 31, 1999
Preferred Stock Common Stock Paid-in Accumulated
Stock Amount Shares Amount Capital Deficit
Balance - March 7, 1997
(inception) 0 $ 0 0 $ 0 $ 0 $ 0
Sale of Stock 100 10,000 0
Loss for Period (140,913)
Balance -
February 28, 1998 0 0 100 10,000 0 (140,913)
Amendment to Certificate of
Incorporation - Stock Split 13,358,900 10,000 0 0
Loss for Five Months Ended July 31, 1998 (10,766)
Balance - July 31, 1998 0 0 13,359,000 10,000 0 (151,679)
Conversion of Loan to
Preferred Stock 20,000 200 200,033 0
Sale of Stock 500,000 5,000 256,000 0
Loss for Seven Months Ended February 28, 1998 (206,284)
Balance -
February 28, 1999 20,000 200 13,859,000 15,000 456,033 (357,963)
Stock Issued for Professional
Fees 2,000,000 20,000 55,000 0
Loss for Five Months Ended July 31, 1999 (110,063)
Balance -
July 31, 1999 20,000 200 15,859,000 35,000 511,033 (468,026)
Loss for Three Months Ended October 31, 1999 (80,170)
Balance -
October 31, 1999 20,000 $200 15,859,000 $35,000 $511,033 $(548,196)
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
August 1, 1999 to March 7, 1997 (inception)
October 31, 1999 to October 31, 1999
REVENUES
Sales $ 3,197 $ 42,025
COST OF SALES
Bottling Units 14,476 38,456
Site Expense 616 10,497
Rent - Site 7,500 17,500
Salaries 0 45,675
TOTAL COST OF SALES 22,592 112,128
GROSS PROFIT (LOSS) (19,395) (70,103)
EXPENSES
Officer's Salary 24,000 108,000
Consulting, Professional Fees 24,550 154,095
Office Rent, Expenses 14,137 94,956
Taxes 1,836 6,096
Insurance 0 7,153
Travel, Auto Expense 1,532 17,784
Equipment Rental 0 8,399
Supplies, Miscellaneous 0 7,131
Bank Charges 155 155
Office Expenses 600 600
Utilities 1,283 1,283
Depreciation 1,682 4,486
TOTAL EXPENSES 69,775 410,138
OTHER INCOME EXPENSES
Rent Income 9,000 18,175
Stock Placement Expenses 0 (86,130)
TOTAL OTHER INCOME (EXPENSES) 9,000 (67,955)
NET (LOSS) (80,170) (548,196)
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
August 1, 1999 to March 7, 1997 (inception) to
October 31, 1999 October 31, 1999
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - Begin $ (468,026) $ 0
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - End $ (548,196) $ (548,196)
(LOSS) PER SHARE - Basic $ (.04) $ (.04)
(LOSS) PER SHARE - Diluted $ (.04) $ (.04)
SHARES USED IN PER SHARE CALCULATION
- Basic 14,192,333 14,192,333
SHARES USED IN PER SHARE CALCULATION
- Diluted 14,192,333 14,192,333
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
August 1, 1999 to March 7, 1997 (inception)
October 31, 1999 to October 31, 1999
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $ (80,170) $ (548,196)
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
(Decrease) in Accounts Receivable 7,000 (24,132)
Increase in Loan Payable 20,514 281,701
(Decrease) Increase in Accounts
Payable 43,355 114,498
Increase in Payroll Taxes Payable 9,660 29,951
Depreciation 1,682 4,486
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES 2,041 (141,692)
CASH FLOWS FROM INVESTING
ACTIVITIES
Deferred Offering Costs (2,450) (2,450)
Site Development 0 (77,466)
Purchase of Office Equipment 0 (7,824)
Increase in Security Deposits 0 (24,712)
Deposits for Acquisition 0 (13,507)
NET CASH (USED) BY INVESTING
ACTIVITIES (2,450) (125,959)
CASH FLOWS FROM BY FINANCING
ACTIVITIES
Sale of Common Stock 0 271,000
NET INCREASE (DECREASE) IN CASH (409) 3,349
CASH - Beginning 3,758 0
CASH - Ending $ 3,349 $ 3,349
Supplemental Disclosures:
Conversion of Loan Payable to Preferred Stock $ 200,233
Stock Issued for Professional Fees $ 75,000
See Accountants' Report and Notes to Financial Statements.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1 - ORGANIZATION
Adirondack Pure Springs Mt. Water Co., Inc. (the Company) is a New York
corporation established March, 1997. It was formed to extract, distribute and
contract private label mountain water from a stream and spring fed reservoir
in both bulk and bottled forms in the northeastern United States. The
Company plans to bottle its drinking water at the source near the village of
Lake George, New York. The Company has an exclusive ground and water lease
with the Incorporated Village of Lake George, which provides exclusive rights
to four water sources, as well as five acres of property to build a 50,000
square foot bottling plant. The Company's primary water source flows into a
protected, natural mountain and spring reservoir at a minimum rate of 560,000
gallons per day of high quality, natural and mountain spring water. This
reservoir is located 2,700 feet up mountain from the proposed bottling plant
site.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Equipment - Property and equipment are recorded at cost when
acquired. Improvements that significantly add to the productive capacity or
extend the useful life of the related asset are capitalized. Site development
costs will be amortized over the lesser of the life of the lease or asset.
Office equipment will be depreciated over the estimated useful lives of the
assets ranging from 3 to 7 years. When property or equipment is sold or
otherwise disposed of, the related cost and accumulated depreciation or
amortization are removed from the accounts and any gain or loss is included
in income. Maintenance and repairs are charged to expense in the period
incurred.
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 revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Income Taxes The Company accounts for income taxes according to the
liability method. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and income tax
bases of assets and liabilities and are measured using enacted tax rates and
laws that are in effect.
Method of Accounting - The Company prepares its financial statements on the
accrual method of accounting, recognizing income when earned and expenses
when incurred.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets - Long-lived assets (i.e., property , plant
and equipment) held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the net book value
of the asset may not be recoverable. An impairment loss will be recognized if
the sum of the expected future cash flows (undiscounted and before interest)
from the use of the asset is less than the net book value of the asset.
Generally, the amount of the impairment loss is measured as the difference
between the net book valu of the assets and the estimated fair value of the
related asset.
Earnings per Share Effective for the year ended February 28, 1998, the
Company adopted Statement of Financial Standards No. 128, Earnings Per Share
("FAS 128"). FAS 128 replaces prior earnings per share ("EPS") reporting
requirements and requires the dual presentation of basic and diluted EPS.
Basic EPS excludes dilution and is computed by dividing net income by the
weighted average number of shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
NOTE 3 LOAN PAYABLE
At February 28, 1998, the Company had been advanced funds from a related
party. These amounts were non-interest bearing. During the subsequent
fiscal year $200,233 of such loans were converted into preferred stock (see
also Note 6). The balance represents additional advances during the current
three-month period and are non-interest bearing.
NOTE 4 INCOME TAXES
No provision for income taxes is required as the Company has incurred losses
during its development stage. These losses are available to offset taxable
years in the future. The losses will be available until 2017 and 2018,
respectively.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 5 COMMON STOCK
The Company's Certificate of Incorporation provided for 200 shares of common
stock, no par value. On August 5, 1998, the shareholders amended the
Certificate of Incorporation. The Company is now authorized for 40,000,000
shares of common stock, $.01 par value. Consequently, the initial
shareholders were given a 133,590 for one stock split.
Also, during 1998, the Company entered into an offering of 2,000,000 shares of
common stock at an offering price of $.50 per share. Under this offering
500,000 shares were issued.
NOTE 6 PREFERRED STOCK
In August, 1998, the Company amended its Certificate of Incorporation to
authorize the issuance of 1,000,000 shares of undesignated preferred stock
with a $.01 par value. The Board of Directors is authorized to issue
preferred stock in one or more series with varying designations, preferences
or other special rights.
The Board has authorized the issuance of 20,000 shares of Series A redeemable
preferred stock, par value $.01 per share. Series A redeemable preferred
stock shall contain preferential liquidation rights in the amount of $200,233
but is not entitled to dividends or voting rights, except as to matters which
may adversely affect the rights of the Series A redeemable preferred stock or
as otherwise required by law. Redemption of this stock, at the Company's
option, could start January 1, 2001 through payments of up to 20% of the
Company's pre-tax profit.
NOTE 7 - COMMITMENTS, CONTINGENCIES
The Company has been approved for a bond offering loan of four million six
hundred and twenty-five thousand dollars ($4,625,000) by the Counties of
Warren and Washington Industrial Development Agency for the purpose of
constructing an up to 50,000 square foot bottling plant. The Company has
until July 31, 2000 to begin the bond offering.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 7 - COMMITMENTS, CONTINGENCIES (Continued)
Properties - The Company has an exclusive ground and water lease with the
Incorporated Village of Lake George, which provides rights to four (4) pure
water sources, as well as five (5) acres of property for construction of an
up to a 50,000 square foot bottling plant. The lease term for the water
source is for five (5) years expiring May 2002 with two five (5) year renewal
options. If the plant is constructed, the lease term extends to 2029. At the
termination of the lease, all improvements become the property of the Village.
Initial base rent for water $.001 per gallon with a minimum $30,000 commencing
in the second year of the lease.
The Company has entered into a five-year lease for office space. The lease
term is from October 1, 1998 through September 30, 2003.
Minimum annual rentals for the year ending:
July 31, 2000 $88,260
July 31, 2001 90,592
July 31, 2002 84,680
July 31, 2003 46,448
July 31, 2004 11,612
The Company has entered into an employment agreement with David Sackler, its
President and Chief Executive Officer, for a term of five years at a salary
of $100,000 per year. The Company has to entered into an employment
agreement with Douglas Aver, its Project Manager, for a term of three years
at a salary of $32,500 per year.
NOTE 8 - RENTAL INCOME
The Company has negotiated with a subtenant for a two-year sublease
beginning August 1, 1999 with rent at $24,000 for Year 1 and $25,200 for Year
2. There is a two-year renewal option.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 9 - RELATED PARTY TRANSACTION
The Company has entered into a consulting agreement with CES Consulting Co.,
Inc. (CES). The agreement is for five (5) years beginning September 1, 1998
at an annual cost of $100,000 per year.
NOTE 10 - SUBSEQUENT EVENTS
Acquisition - The Company has agreed in principal to acquire 51% of Creative
Beverages of Canada, a Canadian corporation. The negotiations include an
option to acquire the remaining 49% within three (3) years. Creative
Beverages has current clients and is a marketing company that holds certain
trademarks and licenses. The cost of this acquisition is estimated at
$35,000. The Company has expended $13,507 on this project.
Marketing - The Company is negotiating with Leisure Concepts, Inc. for two
license agreements for supplying bottled water for World Championship
Wrestling and Pokemon. The fee arrangement has not been completed, but
management feels that the fee will be 12%.
The Company is negotiating a five (5) year licensing agreement with Met-Rx
USA-Source\One for the sale of its water, for a fee of 5% of gross sales.
The Company is also negotiating a joint marketing agreement with the Met-RX
for the Company's Aviva Springs labeled water.
The Company is awaiting completion of negotiations with Goebel Marketing and
Sales (Goebel) for a marketing and sales agreement. Goebel will provide the
marketing and sales of the Company's Aviva brand of water. Goebel will
receive a commission of 5% of gross sales of private labels, including Met-Rx.
Sales - The Company has negotiated an exclusive agreement with Conca D'Oro
Importers of Woodside, New York whereas the Company will act as the exclusive
provider for CDI for its private label water products. The agreement's term
is June 4, 1999 to December 3, 2000.
The Company has negotiated a sales agreement with Nutrition Club Stores (NCS)
for the national distribution of its water to local gyms.
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 10 - SUBSEQUENT EVENTS (Continued)
Distribution - The Company entered into a distribution agreement on June 4,
1999. The agreement extends until December 31, 2009. Under the terms of the
agreement, the Company will pay the distributor $1.25 per case of the
products delivered to the retailer. The distributor agrees that during the
term hereof it will not carry or distribute bottled water other than the
products.
Other - The Company has agreed to enter into a business consulting agreement
with Madison Venture Capital II, Inc., of which two shareholders of the
Company are principals. The agreement is to begin on September 1, 1998 or
upon the achievement of certain conditions. The agreement is for a period of
5 years at the rate of $2,000 per month. As of February 28, 1999, these
conditions have not been achieved.
The Company's labeled water has been named the official water for 1999 for
the Mr. Olympia and Fitness Olympia contest by the International Federation
of Body Builders.
Private Placement - The Company has signed a letter of intent concerning an
underwriting agreement with First Madison Securities to effectuate a public
offering of its securities (the "Offering") and a private placement that is
to raise $1,305,000. This private placement is currently in process. It is
anticipated that the Offering will consist of the sale by the Company of a
$4,625,000 Industrial Development bond, and/or a "best efforts" equity
offering of up to five million dollars ($5,000,000) . Provided all units being
offered are sold within the Offering period, the Company shall issue and sell
warrants to purchase from the Company one (1) unit for every ten (10) units
sold (the "Underwriter's Warrants") in the offering at a price of $.001 per
warrant. The Underwriter's Warrants will be exercisable at 120% of the
Offering price for a period of five (5) years commencing one year from the
date of the prospectus.
The Company has an agreement (dated June 2, 1999) for the services of MRK
Enterprises, Inc. for the preparation of the offering memorandum, printing
costs, filing of 15(c)2-11 and Form 10 with the SEC for 2,000,000 common shares.
ITEM 1 Index to Exhibits
Exhibits
3 (i) Articles of Incorporation
(ii) By-laws
10 Material contracts
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereto duly authorized.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(Registrant)
Date:August 27, 1999 By: David Sackler
David Sackler, President
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
Under Section 402 of the Business Corporation Law
The undersigned, a natural person of the age of eighteen years or over,
desiring to form a corporation pursuant to the provisions of the Business
Corporation Law of the State of New York, hereby certifies as follows:
FIRST: The name of the corporation is:
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
SECOND: The purpose for which it is formed is as follows:
To engage in any lawful act or activity for which corporations may be
formed under the Business Corporation Law provided that the corporation is not
formed to engage in any act or activity which requires the consent or approval
of any state official, department, board agency or other body, without such
approval or consent first being obtained.
For the accomplishment of the aforesaid purposes, and in furtherance
thereof, the corporation shall have and may exercises all of the powers
conferred by the Business Corporation Law upon corporations formed thereunder,
subject to any limitations contained in Article 2 of said law or in accordance
with the provisions of any other statute of the State of New York.
THIRD: The office of the corporation in the State of New York is to
be located in the County of Nassau.
FOURTH: The aggregate number of shares which the corporation shall
have the authority to issue is 200, no par value.
FIFTH: The Secretary of State is designated as agent of the
corporation upon whom process against the corporation may be served, and the
address to which the Secretary of State shall mail a copy of any process
against the corporation served upon him is; c/o Ronald Berk, 1101 Stewart
Avenue, Garden City, New York 11530.
SIXTH: A director of the corporation shall not be personally liable
to the corporation or its shareholders for damages for any breach of duty in
such capacity except for liability if a judgment or other final adjudication
adverse to a director establishes that his or her acts or omissions were in
bad faith or involved intentional misconduct or a knowing violation of law or
that the director personally gained in fact a financial profit or other
advantage to which he or she was not legally entitled or that the director's
acts violated Section 719 of the Business Corporation Law; or liability for
any act or omission prior to the adoption of this provision.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the
statements made herein are true under the penalties of perjury.
Dated: March 6, 1997.
Scott J. Schuster, Incorporator
283 Washington Avenue
Albany, New York 12206
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
OF
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
Under Section 805 of the Business Corporation Law
WE, THE UNDERSIGNED, David Sackler and David Miller, being respectively
the President and Secretary of Adirondack Pure Springs Mt. Water Co., Inc.
hereby certify:
FIRST: The name of the corporation is Adirondack Pure Springs Mt.
Water Co., Inc. (the "Corporation").
SECOND: The certificate of incorporation of the Corporation was
filed by the Department of State on March 7, 1997.
THIRD: (a) The certificate of incorporation, is hereby amended
to:
(i) Change the aggregate number of shares which the corporation shall
have authority to issue from 200 at no par value to 40,000,000
shares, $.01 par value. To accomplish the foregoing, the 100
issued shares at no par value will change into 13,359,000 shares
at $.01 par value at the rate of 133,590 shares, $.01 par value,
for each share of no par value common stock. The 100 unissued
shares of common stock, no par value, will change into 26,641,000
unissued shares, $.01 par value at the rate of 266,410 shares,
$.01 par value, for each share of no par value stock Create a new
class of 1,000,000 shares of preferred stock, $.01 par value to
designate 20,000 shares of such preferred stock with preferential
liquidation rights.
(ii) State that corporate action may be taken without a meeting upon
written consent of shareholders of outstanding shares having not
less than the minimum of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
(iii) Clarify the elimination of the personal liability of directors
to the Corporation or its shareholders for damages for any breach of duty in
such capacity.
(b) To accomplish the foregoing amendments:
(i) Article Fourth is hereby amended and restated in its entirety as
follows:
"FOURTH The aggregate number of shares of capital stock which the
Corporation shall be authorized to issue shall be Forty One
Million (41,000,000) shares, of which Forty Million
(40,000,000) shares of Common Stock, $.01 par value share
(the "Common Stock") and One Million (1,000,000) shares are
Preferred Stock, $.01 par value per share (the "Preferred
Stock"). The Board of Directors of the Corporation is
expressly authorized at any time, and from time to time, to
provide for the issuance of shares of Preferred Stock in one
or more series, with such designations, preferences and
relative, participating, optional or other special rights,
and qualifications, limitations, or restrictions thereof, as
shall be stated and expressed in the resolution or
resolutions providing for the issue thereof adopted by the
Board of Directors. Holders of capital stock shall have no
pre-emptive rights with respect to any authorized but
unissued shares of Common Stock or Preferred Stock.
No holder of any of the shares of any class of the Corporation shall ne
entitled as of right to subscribe for, purchase, or otherwise acquire, any
shares of any class of the Corporation which the Corporation proposes to
issue, or any rights or options which the Corporation proposes to grant for
the purchase of shares of any class of the Corporation or for the purchase of
any shares, bonds, securities, or obligations of the Corporation which are
convertible into, or exchangeable for, or which carry any rights to subscribe
for, purchase, or otherwise acquire, shares of any class of the Corporation;
and any and all of such shares, bonds, securities or obligations of the
Corporation, whether now or hereafter authorized or created, may be issued, or
may be reissued or transferred if the same have been reacquired by the
Corporation and have treasury status, and any and all of such rights and
options may be granted by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and on such
terms, as the Board of Directors in its sole discretion may determine, without
first offering the same, or any portion thereof, to any said holder. Without
limiting the generality of the foregoing stated denial of any and all
preemptive rights, no holder of shares of any class of the Corporation shall
have any preemptive rights in respect of the matters, proceedings, or
transactions specified in subparagraphs (1) to (6), inclusive, of paragraph
(e) of Section 622 of the Business Corporation Law.
The Corporation shall also authorize and issue 20,000 shares of Series A
Preferred Stock (the "Series A Preferred Stock") with preferential liquidation
rights. Such rights shall be designated as follows:
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the net assets of the
corporation (whether stated capital; or surplus) shall be distributed to the
holders of record of the issue and outstanding Series A Preferred Stock, each
issued and outstanding Series A Preferred Stock entitling the holder of record
thereof to receive an equal portion of the assets before any other holders of
shares of the Corporation's Common or Preferred Stock."
(ii) Article Sixth is hereby amended and restated in its entirety as
follows:
" SIXTH Except as otherwise specifically provided in this
Certificate of Incorporation, no provision of this
Certificate of Incorporation is intended by the Corporation
to be constructed as limiting, prohibiting, denying, or
abrogating any of the general or specific powers or rights
conferred under the Business Corporation Law upon the
Corporation, upon its shareholders, bondholders, and
security holders, and upon its directors, officers, and
other corporate personnel, including, in particular, the
power of the Corporation to furnish indemnification, as such
powers or rights are conferred by the Business Corporation
Law.
The personal liability of directors to the Corporation or its
shareholders for damages for any breach of duty in such capacity is hereby
eliminated, provided, however, that, if a judgement or other final
adjudication adverse to such director establishes that such director's acts or
omissions were in bad faith or involved intentional misconduct or a knowing
violation of law, or that such director in fact personally gained a financial
profit or other advantage to which such director was not legally entitled, or
that such director's acts violated Section 719 of the Business Corporation
Law, the elimination of personal liability shall not apply."
(iii) The following Article Seventh is added to the Certificate of
Incorporation:
"SEVENTH Corporate action may be taken without a meeting upon written
consent of shareholders of outstanding shares having not
less than the minimum of votes that would be necessary to
authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted."
FOURTH: The amendment of the certificate of incorporation of the
Corporation herein provided for was authorized by the vote
on August 5, 1998 of holders of outstanding shares of the
Corporation entitled to vote on the said restatement of the
certificate of incorporation, having not less than the
minimum requisite proportion of votes, subsequent to the
vote at a meeting of the Board of Directors.
IN WITNESS WHEREOF, we have subscribed this document on the 9th day of
October, 1998 and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and
correct.
David Sackler, President
David Miller, Secretary
