SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 4
FORM 10-SB
General Form for Registration of Securities of
Small Business Issuers
Under Section 12 (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 (g) of the Act:
Common Stock, $.01, par value
Securities to be registered pursuant to Section 12 (b) of the Act:
None
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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. We are filing this
Form 10-SB-A on a voluntary basis in order to become a reporting company under
the Securities Exchange Act of 1934. 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. Private label bottled water, is water bottled by Adirondack under
another company's brand name (i.e. Ciro for Conca D'Oro), or a brand name
created and designed exclusively for use by an Adirondack client (i.e. Siena
Springs for Jetro/Restaurant Depot). 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 used on an exclusive basis by its private
label clients. Alternatively, we will bottle private label products for
customers who seek to sell bottled water under their established brand name.
Additionally, we have developed our own proprietary brand of water, AVIVA
SPRINGS, for
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which we have filed for a Trademark. Additionally, we have filed for a Trademark
for an additional proprietary branded product called Adam's Ale, which is a
bottled water product that is to be produced and sold at the end of 2000, or
early 2001. 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. As per the
terms of this agreement, Adirondack is obligated to retain an underwriter for
the bond offering and to build its planned facility with the offering proceeds.
Adirondack is permitted to build a facility up to 50,000 square feet. In return,
the counties of Warren and Washington's Industrial Development Agency will loan
Adirondack $4,650,000. Adirondack intends to issue the bonds once it has
retained an underwriter for such offering. There can be no assurance such bond
offering will be completed.
Industry Overview
According to the 1999 Beverage World Magazine Beverage Market Index, the Bottled
Water market has grown in Wholesale Sales ($3.95 billion in 1997 to $4.33
billion in 1988), Retail Sales ($4.74 billion in 1997 to $5.2 billion in 1998),
and Gallonage Volume, or Consumption (3.43 billion in 1997 to 3.77 billion in
1998). Additionally, Bottled Water Gallonage, or Consumption, in the convenient
or PET size category grew by 27.8% over 1997 and increased its share of the New
Age beverage market (i.e. Ready to Drink Teas, Sports Drinks, Fruit Beverages,
etc.) to 34.5% of the entire New Age Market Segment. In the entire Beverage
Market, Bottled Water gallonage grew by 10.1% over 1997, and as a category now
comprises 12.2% of the entire Beverage Market Gallonage, behind only Soft Drinks
(49%), Beer (19.4%), and Fruit Beverages (13.2%).Only 42.1% of the Bottled Water
market is sold by the Top 10 Brands in the United States, leaving 57.9% of the
market available to smaller companies and private label brands.
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
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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 newbrands 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 labeled water in addition to 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
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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
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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 HDP bottles
5 gallon PLASTIC 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 Distributors 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.
Since August 1999, Adirondack has been producing water for its own proprietary
brand, AVIVA SPRINGS. Adirondack sells AVIVA SPRINGS to wholesalers,
distributors 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
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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 products for the private
label clients and other customers 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
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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, although Adirondack has the right to
file a request for an annual extension with the Warren and Washington County
Industrial Development Authority. There can be no assurance the extension will
be granted.
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: off-premises retail (supermarkets,
convenience store, and drug store); on-premises retail (restaurants); vending
machines; institutions (hospitals, schools); and bulk sales by either direct
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contact, through brokers and wholesale/distributors.
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. Accordingly, 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, as well as a representative that will act as an independent contractor
on an exclusive basis in the bottled water category in the specialty/gourmet
food industry. All independent representatives 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 created and developed the "Siena" brand for private
label bottled water 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
designed and developed the "Ciro" label for Conca D'Oro Importers of Woodside,
New York, their own trademarked 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
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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 1999 Beverage World Magazine Beverage Market Index, the bottled
water segment does not have a dominant market force in the same manner as soft
drinks and beer, as only 42.1% of the Bottled Water market is sold by the Top 10
Brands in the United States, leaving 57.9% of the market available to smaller
companies and private label brands.
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 1991, because after five
years the government still found 130 million people exposed to unacceptable lead
levels.
The 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
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"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. Adirondack's
proprietary brand, AVIVA SPRINGS will initially focus its sales effort 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.
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
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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 upon erection of the bottling plant, with an additional
payment of $.0025 per gallon for each gallon bottled at the plant in excess of
50,000,000 gallons per year. 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 it's 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 up to
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 550,000 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.
Page 12 of 51
<PAGE>
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,
although Adirondack has the right to file a request for an annual extension with
the Warren and Washington County Industrial Development Authority. There can be
no assurance the extension will be granted, or that 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. 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 nine month period ended November 30, 1999, Adirondack had sales
revenues of $49,025, with a loss of $276,856.
Adirondack will acquire 51% of Creative Beverages of Canada, a Canadian
corporation and have an option to acquire the remaining 49% within three (3)
years. Adirondack funded this acquisition through sales revenues and proceeds of
a private placement offering which was commenced in October, 1999 and is
currently ongoing. Creative Beverages has current private label clients and is a
marketing company that holds certain trademarks and license for the brand name
MAX O2. The cost of this acquisition is estimated at $35,000.
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 has signed an agreement 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.
In October 1999, Adirondack commenced a private offering of its securities in
which 750,000 units were offered at $2.00 per unit. To date, $100,000 has been
raised in such offering which is still ongoing. Further, Adirondack intends to
engage in an offering of industrial development
Page 13 of 51
<PAGE>
bonds to raise up to $4,625,00. Unless at least $ 2,000,000 is raised,
Adirondack will be unable to build its proposed bottling plant which will keep
it dependant on outside bottlers. Adirondack believes it will be able to satisfy
its cash requirements for the next three to four months without raising
additional funds. Failure to raise a minimum of $ 500,000 over the next twelve
months will prevent Adirondack from adequately marketing its product and
services, and will have a materially adverse effect on Adirondack. Adirondack
intends to hire approximately five salespeople within the next twelve months.
Such salespeople will work on a commission bases. Adirondack, through its
president, David Sackler, retained MRK Enterprises, Inc. to assist Adirondack in
obtaining a broker-dealer to serve as a market maker for Adirondack's
securities. MRK Enterprises Inc. contacted Joel Schonfeld, Esq., of Schonfeld &
Weinstein, L.L.P., special counsel to Adirondack, who contacted Citadel
Securities Corp., Freeport New York, requesting that Citadel file a Form 15c2-11
on behalf of Adirondack, and act as a market maker for Adirondack's securities.
No financial arrangements have been made between Adirondack and Citadel
Securities Corp. Citadel Securities Corp. is not a shareholder of Adirondack.
Adirondack has issued 2,000,000 shares of common stock to MRK Enterprises, Inc.
for its assistance with this Form 10-SB and obtaining a market maker for
Adirondack's securities. Adirondack has not contacted other broker-dealers
regarding a future trading market for Adirondack's securities.
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 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
is $.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:
February 29, 2000 $87,490
February 28, 2001 89,790
February 28, 2002 92,182
February 28, 2003 69,669
February 28, 2004 0
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
Page 14 of 51
<PAGE>
stock.
Percent of Class
Shareholders Number of shares Beneficially Owned
CES Holding Corp. (1) 9,843,474 61.5%
125 Michael Drive
Sysosett, NY 11791
David Sackler
125 Michael Drive
Syosset, NY 11791 0 0%
Eugene Stricker 1,291,842 8.1%
42 Barret Road
Lawrence, NY 11559
Mark Schindler(2) 891,842 5.0%
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
MRK Enterprises, Inc. 2,000,000 12.5%
150 East 59th Street
24th Floor
New York, NY 10022
Ronald Berk -0- 0%
211 East 70 St.
New York, NY 10021
SBS Limited Partnership(2) 235,271 1.5%
c/o Mark Schindler
Page 15 of 51
<PAGE>
330 East 75th Street #11C
New York, NY 10021
Directors and Officers
as a Group (1) 9,843,474 61.5%
(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. 235,271 shares are held in the name of SBS Limited
Partnership, and 891,842 shares are held in the name of Mark Schindler.
ITEM 5 Directors, Executive Officers, Promoters and Control Persons
Name Age Period served as director Other Capacities in which
currently serving
David Sackler 33 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 Director
Nick Namit 45 Since 1997 Director
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. Since 1997, he has been President, CEO and Chairman of
the Board of Directors of Adirondack. From 1989 to date, Mr. Sackler has worked
as an independent real estate broker and sales agent. 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. Mr. Sackler currently
devotes approximately 40 hours per week to work at Adirondack.
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
Page 16 of 51
<PAGE>
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.) Mr. Miller currently
devotes approximately 10 hours per month to work at Adirondack.
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. Mr. Rashkow currently devotes approximately
five hours per month to work at Adirondack.
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 $100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal Position Year Salary
Page 17 of 51
<PAGE>
David Sackler, President 1999 $100,000 (1)
1998 $100,000 (2)
1997 $100,000 (2)
(1) $36,000 was paid to Mr. Sackler with the balance deferred.
(2) 100% of this salary was deferred.
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 Incentive 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 converted 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.
On December 31, 1997, Adirondack entered into a consulting agreement with CES
Consulting Co., Inc., pursuant to which, CES Consulting Co., Inc. is to provide
consulting services to Adirondack for a five year period commencing December 31,
1997 and ending December 30, 2002, for an annual fee of $100,000. Harry Sackler,
the father of Adirondack's president, David Sackler is the President of CES
Consulting Co., Inc.
Page 18 of 51
<PAGE>
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, but Adirondack has not
paid Madison Venture to date.
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 November 30, 1999,
Adirondack has 15,881,000 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 therefore.
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.
Page 19 of 51
<PAGE>
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.
Penny Stock Regulation.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Commission that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from such rules the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. If Adirondack's common stock becomes subject to the Penny
Stock rules, investors in Adirondack may find it more difficult to sell their
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.
Page 20 of 51
<PAGE>
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). On October 18, 1999, Adirondack commenced a private offering of its
securities pursuant to which 750,000 units were offered at $2.00 per unit. Each
unit consists of one share of common stock and one common stock purchase
warrant, exercisable at $3.00 and expiring October 18, 2001. 50,000 shares were
sold to approximately 10 people, this offering is still ongoing. Adirondack
relied on Rule 506 in this offering on June 2, 1999, Adirondack issued 2,000,000
shares to MRK Enterprises, Inc. for work, labor and services. Adirondack relied
on Section 4(2) of the Act for this offering.
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
therefore, 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
Page 21 of 51
<PAGE>
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.
Page 22 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
================================================================================
FINANCIAL STATEMENTS
FEBRUARY 28, 1999 AND 1998
Page 23 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
TABLE OF CONTENTS
================================================================================
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
BALANCE SHEETS 2
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT) 3 - 4
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY 5
STATEMENTS OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7 - 13
Page 24 of 51
<PAGE>
SIMON KROWITZ BOLIN & ASSOCIATES, P.A.
11300 ROCKVILLE PIKE
SUITE 800
ROCKVILLE, MARYLAND 20852-3003
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
the period March 7, 1997 (inception) to February 28, 1999. 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.
July 17, 1999
Page 25 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
FEBRUARY 28,
======================================================================================================================
1999 1998
- ----------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT ASSET
Cash $ 9,557 $ 542
- ----------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Leasehold Improvements - Site 77,466 60,170
Office Equipment 7,824 0
Accumulated Depreciation (345) 0
- ----------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTY AND EQUIPMENT 89,945 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 $ 119,214 $ 88,212
======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accrued Salary - Officer $ 143,333 $ 83,333
Payroll Taxes Payable 5,947 0
Accounts Payable 0 35,000
Loan Payable 342 184,125
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 149,622 302,458
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock - Authorized 40,000,000 Shares $.01 Par Value;
13,359,000 and 13,881,000 Issued and Outstanding,
Respectively 15,220 10,000
Preferred Stock - Series A, Authorized, 1,000,000 at $.01 Par
Value; 20,000 Shares Issued and Outstanding 200 0
Paid-in Capital - Common 169,650 0
Paid-in Capital - Preferred 200,033 0
Deficit Accumulated During Development Stage (415,511) (224,246)
- -------------------------------------------------------------------------------- ------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY (30,408) (214,246)
- -------------------------------------------------------------------------------- ------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 119,214 $ 88,212
======================================================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Page 26 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
======================================================================================================================
For the Year March 7, 1997 March 7, 1997
Ended February (inception) to (inception) to
February 28, February 28, February 28,
1999 1998 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
Bottling Costs 2,970 2,465 5,435
Officers Salaries 100,000 83,333 183,333
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
Depreciation 345 0 345
Supplies 0 6,496 6,496
- ----------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 196,390 224,246 420,636
- ----------------------------------------------------------------------------------------------------------------------
OTHER INCOME
Rent Income 5,125 0 5,125
- ----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) (191,265) (224,246) (415,511)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 27 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
======================================================================================================================
For the Year March 7, 1997 March 7, 1997
Ended February (inception) to (inception) to
February 28, February 28, February 28,
1999 1998 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - BEGIN $ (224,246) $ 0 $ 0
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - END $ (415,511) $ (224,246) $ (415,511)
- ----------------------------------------------------------------------------------------------------------------------
(LOSS) PER SHARE - BASIC $ (.03) $ (.02) $ (.03)
(LOSS) PER SHARE - DILUTED $ (.03) $ (.02) $ (.03)
- ----------------------------------------------------------------------------------------------------------------------
SHARES USED IN PER SHARE CALCULATION
- Basic 13,547,000 13,359,000 13,547,000
SHARES USED IN PER SHARE CALCULATION
- Diluted 13,547,000 13,359,000 13,547,000
======================================================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Page 28 of 51
<PAGE>
<TABLE>
<CAPTION>
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
======================================================================================================================
Accum-
Preferred Stock Common Stock Paid-in ulated
Shares Amount Shares Amount Capital Deficit
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance - March 7, 1997
(inception) 0 $ 0 0 $ 0 $ 0 $ 0
Sale of Stock 13,359,000 10,000
Loss for Period (224,246)
- ----------------------------------------------------------------------------------------------------------------------
Balance - February 28, 1998 0 0 13,359,000 10,000 0 (224,246)
Conversion of Loan to
Preferred Stock 20,000 200 200,033 0
Sale of Stock 0 0 522,000 5,220 169,650 0
Loss for Year (191,265)
- ----------------------------------------------------------------------------------------------------------------------
Balance - February 28, 1999 20,000 $200 13,881,000 $ 15,220 $369,683 $ (415,511)
======================================================================================================================
SEE AUDITORS' REPORT AND NOTES TO FINANCIAL STATEMENTS.
</TABLE>
Page 29 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
======================================================================================================================
For the Year March 7, 1997 March 7, 1997
Ended (inception) to (inception) to
February 28, February 28, February 28,
1999 1998 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (191,265) $ (224,246) $ (415,511)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation 345 0 345
Increase in Accrued Salary Payable 60,000 83,333 143,333
(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) BY OPERATING
ACTIVITIES (152,473) (113,413) (265,886)
- ----------------------------------------------------------------------------------------------------------------------
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
Increase in Loan Payable 16,450 184,125 200,575
Sale of Common Stock 174,870 10,000 184,870
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 191,320 194,125 385,445
- ----------------------------------------------------------------------------------------------------------------------
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.
</TABLE>
Page 30 of 51
<PAGE>
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 in 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. Income is considered earned when customers are
billed for delivered products.
Page 31 of 51
<PAGE>
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.
INCENTIVE STOCK OPTIONS - The Company adopted a stock incentive plan on
July 1, 1998. The plan enables the Company to grant incentive stock
options, nonqualified options and stock appreciation rights for up to
1.5 million shares of the Company's common stock. All options must
conform to federal income tax regulations and have an exercise price of
not less than the fair market value of shares at the date of the grant
(110% of fair market value for ten percent or more shareholders).
For financial statement purposes, compensation expense would be
recorded only if the options were issued below fair market value. As of
August 4, 1998, the Company had issued incentive stock options to
purchase 100,000 shares of common stock at an exercise price of $.20
per share.
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).
Page 32 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
================================================================================
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 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.
Page 33 of 51
<PAGE>
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. As of the
date of this report, no agreements had been signed; the expenses and
liabilities associated with the verbal agreements have been reported in
these financial statements, with an effective date of March 1, 1997.
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 34 of 51
<PAGE>
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.
Condensed financial data as of November 30, 1998:
BALANCE SHEET
ASSETS
Advances to shareholders $ 600
================================================================
Liabilities
Accounts Payable 500
----------------------------------------------------------------
Equity
Common Stock 600
Retained Deficit (500)
----------------------------------------------------------------
Total Equity (100)
----------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY $ 600
================================================================
Page 35 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
================================================================================
NOTE 10 - SUBSEQUENT EVENTS (CONTINUED)
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
For the Year Ended November 30, 1998
Revenue $ 0
Cost of Goods Sold 0
----------------------------------------------------------------
Gross Margin 0
General and Administrative Expenses 500
----------------------------------------------------------------
Net Income (Loss) $ (500)
================================================================
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. Conca D'Oro
committed to the purchase of 500,000 bottles at $5.45 per case. This
contract is renewable at Conca D'oro's option in increments of 250,000
bottles at a price to be determined at the time any renewal is
requested, for a period of one year after expiration of the original
agreement. Conca D'oro must compensate the Company for any units not
purchased under the minimum commitment.
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 Company's 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 was 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.
Page 36 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1999
================================================================================
NOTE 10 - SUBSEQUENT EVENTS (CONTINUED)
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 $1,500,000. 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 150% of the
Offering price for a period of two (2) 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 10SB with the SEC for
2,000,000 common shares.
Page 37 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
================================================================================
FINANCIAL STATEMENTS
NOVEMBER 30, 1999 AND 1998
Page 38 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
NOVEMBER 30,
======================================================================================================================
1999 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 4,384 $ 104,944
Accounts Receivable - Trade 31,132 0
Deferred Offering Costs 2,450 7,500
Inventory 24,034 0
- ----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 62,000 112,444
- ----------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Site Development 77,466 77,466
Office Equipment 7,824 5,300
Accumulated Depreciation, Amortization (5,903) (88)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTY AND EQUIPMENT 79,387 82,678
- ----------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Deposits 13,507 0
Security Deposits 24,712 24,712
- ----------------------------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 38,219 24,712
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 179,606 $ 219,834
======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable $ 147,694 $ 35,065
Accrued Salary 150,333 158,333
Payroll Taxes Payable 32,376 4,564
Loan Payable 81,467 22,555
- ----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 411,870 220,517
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock - Authorized 40,000,000 Shares $.01 Par Value;
15,881,000 and 13,881,000 Issued and Outstanding 35,220 15,220
Preferred Stock - Series A, Authorized, 1,000,000 at $.01 Par
Value; 20,000 Shares Issued 200 200
Paid-in Capital - Common 224,650 169,650
Paid-in Capital - Preferred 200,033 200,033
Deficit Accumulated During Development Stage (692,367) (385,786)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (232,264) (683)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 179,606 $ 219,834
======================================================================================================================
</TABLE>
Page 39 of 51
<PAGE>
<TABLE>
<CAPTION>
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 NOVEMBER 30, 1999
======================================================================================================================
Accum-
Preferred Stock Common Stock Paid-in ulated
Shares Amount Shares Amount Capital Deficit
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance - March 7, 1997
(inception) 0 $ 0 0 $ 0 $ 0 $ 0
Sale of Stock 100 10,000 0
Loss for Period (224,246)
- ----------------------------------------------------------------------------------------------------------------------
Balance - February 28, 1998 0 0 100 10,000 0 (224,246)
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 522,000 5,220 169,650 0
Loss for Nine Months Ended
November 30, 1998 (161,540)
- ----------------------------------------------------------------------------------------------------------------------
Balance - November 30, 1998 20,000 200 13,881,000 15,220 369,683 (385,786)
Stock Issued for Professional
Fees 2,000,000 20,000 55,000 0
Loss for the Year Ended
November 30, 1999 (306,581)
- ----------------------------------------------------------------------------------------------------------------------
Balance - November 30, 1999 20,000 $200 15,881,000 $35,220 $424,683 (692,367)
======================================================================================================================
</TABLE>
Page 40 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
======================================================================================================================
March 7, 1997
March 1, 1998 March 1, 1999 (inception) to
to November to November 30, November 30,
30, 1998 1999 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales $ 0 $ 49,025 $ 49,025
- ----------------------------------------------------------------------------------------------------------------------
COST OF SALES
Beginning Inventory 0 0 0
Bottling Units 0 51,521 56,956
Site Expense 2,500 2,389 2,389
Rent - Site 10,000 20,000 37,500
Salaries 0 0 45,675
Amortization 0 4,385 4,385
Less: Ending Inventory 0 (24,034) (24,034)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL COST OF SALES 12,500 54,261 (122,871)
- ----------------------------------------------------------------------------------------------------------------------
GROSS PROFIT (LOSS) (12,500) (5,286) (73,846)
- ----------------------------------------------------------------------------------------------------------------------
EXPENSES
Officer's Salary 75,000 75,000 258,333
Consulting, Professional Fees 55,725 78,690 160,235
Commissions 0 900 900
Office Rent, Expenses 20,355 50,532 98,822
Taxes 535 2,295 6,555
Insurance 250 0 7,153
Travel, Auto Expense 0 5,579 17,784
Equipment Rental 0 0 8,399
Supplies, Miscellaneous 0 0 6,496
Depreciation 0 1,174 1,519
- ----------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 151,865 214,170 566,196
- ----------------------------------------------------------------------------------------------------------------------
OTHER INCOME EXPENSES
Rent Income 2,825 17,550 22,675
Startup Costs 0 (75,000) (75,000)
TOTAL OTHER INCOME (EXPENSES) 2,825 (57,450) (52,325)
- ----------------------------------------------------------------------------------------------------------------------
NET (LOSS) (161,540) (276,856) (692,367)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 41 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(CONTINUED)
======================================================================================================================
March 7, 1997
March 1, 1998 March 1, 1999 (inception) to
to November to November 30, November 30,
30, 1998 1999 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - BEGIN $ (224,246) $ (415,511) $ 0
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - END $ (385,786) $ (692,367) $ (692,367)
- ----------------------------------------------------------------------------------------------------------------------
(LOSS) PER SHARE - BASIC $ (.03) $ (.05) $ (.05)
(LOSS) PER SHARE - DILUTED $ (.03) $ (.05) $ (.05)
- ----------------------------------------------------------------------------------------------------------------------
SHARES USED IN PER SHARE
CALCULATION - Basic 13,881,000 14,192,333 14,192,333
SHARES USED IN PER SHARE
CALCULATION - Diluted 13,881,000 14,192,333 14,192,333
======================================================================================================================
</TABLE>
Page 42 of 51
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
======================================================================================================================
March 7, 1997
March 1, 1998 March 1, 1999 (inception) to
to November to November 30, November 30,
30, 1998 1999 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (161,540) $ (276,856) $ (692,367)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 88 5,558 5,903
Increase in Accounts Receivable (31,132) (31,132)
Increase in Inventory (24,034) (24,034)
Increase in Accrued Expense 75,000 7,000 150,333
Increase in Deferred Offering Costs (2,450) (2,450)
(Decrease) Increase in Accounts Payable (65) 147,694 147,694
Increase in Payroll Taxes Payable 4,564 26,429 32,376
- ----------------------------------------------------------------------------------------------------------------------
NET CASH (USED) PROVIDED BY
OPERATING ACTIVITIES (81,823) (147,791) (413,677)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Site Development (17,296) 0 (77,466)
Purchase of Office Equipment (5,300) 0 (7,824)
Increase in Security Deposits (4,712) 0 (24,712)
Deposits for Acquisition 0 (13,507) (13,507)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH (USED) BY INVESTING
ACTIVITIES (27,308) (13,507) (123,509)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM BY FINANCING ACTIVITIES
Issuance of Preferred Stock 0 0 200,233
Increase in Loan Payable 38,663 81,125 81,467
Sale of Common Stock 174,870 75,000 259,870
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 213,533 156,125 541,570
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 104,402 (5,173) 4,384
CASH - BEGINNING 542 9,557 0
- ----------------------------------------------------------------------------------------------------------------------
CASH - ENDING $ 104,944 $ 4,384 $ 4,384
======================================================================================================================
SUPPLEMENTAL DISCLOSURES:
Conversion of Loan Payable to Preferred Stock $ $ 0 $ 200,233
Stock Issued for Professional Fees $ $ 75,000 $ 75,000
======================================================================================================================
</TABLE>
Page 43 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 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. Income is considered earned when customers are
billed for delivered products.
Page 44 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTS RECEIVABLE - Management considers all accounts receivable to
be collectible. Therefore, no allowance for bad debts has been included
in the statements.
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.
INVENTORY - The Company reports inventory at the lower of cost or
market value using the first-in, first-out method. Inventory consists
of bottles and packaging materials. Inventory is decreased based on the
number of units bottled per customer orders.
INCENTIVE STOCK OPTIONS - The Company adopted its stock incentive plan
on July 1, 1999. The Plan enables the company to grant incentive stock
options, nonqualified options and stock appreciation rights for up to
1.5 million shares of the Company's common stock. All options must
conform to federal income tax regulations and have an exercise price of
not less than the fair market value of shares at the date of the grant
(110% of fair market value for ten percent or more shareholders).
The Company issued options for 100,000 shares at $0.20 per share on
August 4, 1998. This price per share was determined to approximate fair
market value and therefore, no compensation expense has been reported
in these financial statements.
Page 45 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
================================================================================
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.
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 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 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.
Page 46 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
================================================================================
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.
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:
November 30, 2000 $ 88,842
November 30, 2001 89,132
November 30, 2002 75,126
November 30, 2003 37,743
November 30, 2004 8,712
-----------
$ 299,555
===========
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 47 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 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.
Condensed financial data as of November 30, 1999
BALANCE SHEET
Assets
Accounts Receivable $ 11,832
Investments 88,731
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Total Assets 100,563
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Liabilities
Accounts Payable 44,890
Shareholder Loans 103,155
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Total Liabilities 148,045
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Equity
Common Stock 600
Retained Deficit (48,082)
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Total Equity (47,482)
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TOTAL LIABILITIES AND EQUITY $ 100,563
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Page 48 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1999
================================================================================
NOTE 10 - SUBSEQUENT EVENTS (CONTINUED)
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
For the Year Ended November 30, 1998
Revenue $ 192,930
Cost of Goods Sold 176,620
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Gross Margin 16,310
General and Administrative Expenses 64,092
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Net Income (Loss) $ (47,782)
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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.
Conca D'oro committed to the purchase of 500,000 bottles at $5.45 per
case. This contract is renewable at Conca D'oro's option in increments
of 250,000 bottles at a price to be determined at the time any renewal
is requested, for a period of one year after expiration of the original
agreement. Conca D'oro must compensate the company for any units not
purchased under the minimum commitment.
The Company has negotiated a sales agreement with Nutrition Club Stores
(NCS) for the national distribution of its water to local gyms.
Page 49 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 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 was 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. Management originally intended to raise $1,500,000
pursuant to this placement, but currently expects 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 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 150% of the Offering price for a period of two
(2) 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.
Page 50 of 51
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
125 MICHAEL DRIVE, SUITE 101
SYOSSET, NEW YORK 11791
In accordance with Item 310(b) of Regulation S-B, it is the opinion of
management that all adjustments necessary in order to make the financial
statements not misleading have been made.
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
Exh 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 1074075
<NAME> Adirondack Pure Springs Mt Water Co. Inc.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 9,557
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,557
<PP&E> 84,945
<DEPRECIATION> 0
<TOTAL-ASSETS> 119,214
<CURRENT-LIABILITIES> 149,622
<BONDS> 0
0
200,233
<COMMON> 185,070
<OTHER-SE> (415,511)
<TOTAL-LIABILITY-AND-EQUITY> 119,214
<SALES> 0
<TOTAL-REVENUES> 5,125
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 196,390
<LOSS-PROVISION> (191,265)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (191,265)
<INCOME-TAX> 0
<INCOME-CONTINUING> (191,265)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (191,265)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
