SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934
For the quarterly period ended November 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from______________ to _____________
Commission file number 000-30276
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)
(516) 921-7288
(Issuer's Telephone Number)
---------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes__X__
No_____
As of November 30, 1999 there were 15,881,000 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes_____ No__X__
Page 1
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
FORM 10-QSB
INDEX
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Balance Sheets - November 30, 1999 and 1998
Statement of Changes in Stockholders' Equity - For the Period
March 7, 1997 (inception) to November 30, 1999
Statements of Operations and Retained Earnings (Defecit) -
Three Months ended November 30, 1998 and 1999 and Nine
Months ended November 30, 1998 and 1999
Statements of Cash Flows - Nine Months ended November 30, 1999
and 1998
Notes to Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II - Other Information
Item 2 - Recent Sales of Unregistered Securities
Item 6 - Exhibits and reports on Form 8-K
Index of Exhibits
Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter.
Signatures
Exhibit 27 - Financial Data Schedule
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
===========================================
Financial Statements
November 30, 1999 and 1998
Page 3
<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
---------------------------------------------------------------------------------------------------------
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)
---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 179,606 $ 219,834
=========================================================================================================
</TABLE>
Page 4
<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 5
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
===========================================================================================================
March 7,
For the For the 1997
Three Months Ended Nine Months Ended (inception)
------------------ ----------------- to
November November November November November
30, 1998 30, 1999 30, 1998 30, 1999 30, 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales $ 0 $ 10,197 $ 0 $ 49,025 $ 49,025
-----------------------------------------------------------------------------------------------------------
COST OF SALES
Beginning Inventory 0 0 0 0 0
Bottling Units 0 31,598 0 51,521 56,956
Site Expense 0 616 2,500 2,389 2,389
Rent - Site 7,500 7,500 10,000 20,000 37,500
Salaries 0 0 0 0 45,675
Amortization 0 4,385 0 4,385 4,385
Less: Ending Inventory 0 (24,034) 0 (24,034) (24,034)
-----------------------------------------------------------------------------------------------------------
TOTAL COST OF SALES 7,500 20,065 12,500 54,261 (122,871)
-----------------------------------------------------------------------------------------------------------
GROSS PROFIT (LOSS) (7,500) (9,868) (12,500) (5,286) (73,846)
-----------------------------------------------------------------------------------------------------------
EXPENSES
Officer's Salary 75,000 31,000 75,000 75,000 258,333
Consulting, Professional Fees 54,075 24,000 55,725 78,690 160,235
Commissions 0 900 0 900 900
Office Rent, Expenses 12,762 15,769 20,355 50,532 98,822
Taxes 0 1,836 535 2,295 6,555
Insurance 250 0 250 0 7,153
Travel, Auto Expense 0 1,532 0 5,579 17,784
Equipment Rental 0 0 0 0 8,399
Supplies, Miscellaneous 0 0 0 0 6,496
Depreciation 0 (2,191) 0 1,174 1,519
-----------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 142,087 72,846 151,865 214,170 566,196
-----------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSES)
Rent Income 2,825 12,250 2,825 17,550 22,675
Startup Costs 0 (75,000) 0 (75,000) (75,000)
-----------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME
(EXPENSES) 2,825 (62,750) (2,825) (57,450) (52,325)
-----------------------------------------------------------------------------------------------------------
NET (LOSS) (146,762) (145,464) (161,540) (276,856) (692,367)
-----------------------------------------------------------------------------------------------------------
</TABLE>
Page 6
<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
September September March 1, March 1, (inception)
1, 1998 to 1, 1999 to 1998 to 1999 to to
November November November November November
30, 1998 30, 1999 30, 1998 30, 1999 30, 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DEFICIT ACCUMULATED
DURING DEVELOPMENT
STAGE - Begin $(239,024) $(546,903) $(224,246) $(415,511) $0
DEFICIT ACCUMULATED
DURING DEVELOPMENT
STAGE - End (385,786) (692,367) $(385,786) $(692,367) $(692,367)
------------------------------------------------------------------------------------------------------------
(LOSS) PER SHARE - Basic $(.03) $(.04) $(.03) $(.05) $(.05)
(LOSS) PER SHARE - Diluted $(.03) $(.04) $(.03) $(.05) $(.05)
------------------------------------------------------------------------------------------------------------
SHARES USED IN PER
SHARE CALCULATION -
Basic 13,881,000 15,881,000 13,881,000 14,192,333 14,192,333
SHARES USED IN PER
SHARE CALCULATION -
Diluted 13,981,000 15,981,000 13,981,000 14,292,333 14,292,333
============================================================================================================
</TABLE>
Page 7
<PAGE>
<TABLE>
<CAPTION>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
============================================================================================================
March 7, 1997
March 1, 1998 March 1, 1999 (inception) to
November 30 to November November 30,
30, 1998 30, 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 8
<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 products are
shipped, at which time customers are billed and revenue is recognized.
Page 9
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
================================================================================
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, 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 value of shares at the date of the grant (110%
of fair value for ten percent or more shareholders). Fair value is
determined on the option issue date using the market value of the stock
on an established exchange or the Black-Scholes model if the stock is
not listed on an exchange at the time options are issued. Options are
issued by a committee established by the board of directors based on
eligibility and must be exercised within terms specified on the grant
date.
Page 10
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
For financial statement purposes, compensation expense would be
recorded only if the options were issued below fair value. As of the
date of these financial statements, no options had been issued under
the stock incentive plan and no compensation expense is recorded.
Outside of the stock incentive plan, in conjunction with the offering
of the Company's stock referenced in Note 5, the Company issued options
as compensation to legal counsel for 100,000 shares of common stock at
$0.20 per share. This value was agreed upon between counsel and
management. No compensation expense is recorded because this value was
determined to approximate fair value on the date options were issued.
See also Note 11.
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.
Page 11
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
================================================================================
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 issued 20,000 shares of Series A redeemable preferred
stock, par value $.01 per share. Series A redeemable preferred stock
shall contain preferential liquidation rights in the amount of $200,233
but is not entitled to dividends or voting rights, except as to matters
which may adversely affect the rights of the Series A redeemable
preferred stock or as otherwise required by law. Redemption of this
stock, at the Company's option, could start January 1, 2001 through
payments of up to 20% of the Company's pre-tax profit.
NOTE 7 - COMMITMENTS, CONTINGENCIES
The Company has been approved for a bond offering loan of four million
six hundred and twenty-five thousand dollars ($4,625,000) by the
Counties of Warren and Washington Industrial Development Agency for the
purpose of constructing an up to 50,000 square foot bottling plant. The
Company has until July 31, 2000 to begin the bond offering.
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
--------
Page 12
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
================================================================================
NOTE 7 - COMMITMENTS, CONTINGENCIES (Continued)
The Company has entered into a verbal 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
a verbal employment agreement with Douglas Auer, its Project Manager,
for a term of three years at a salary of $32,500 per year. Mr. Auer's
contract will take effect upon construction of the bottling plant
referenced above; therefore, no compensation to Mr. Auer has been
recorded in these financial statements.
The amount of compensation to Mr. Sackler recorded in these financial
statements is as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended March 7, 1997
-------------------------- ------------------------- (inception)
November November November November to November 30,
30, 1998 30, 1999 30, 1998 30, 1999 1999
-------------------- ----------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Compensation $75,000 $31,000 $75,000 $75,000 $258,333
recorded
Compensation 14,000 24,000 14,000 68,000 108,333
paid
Compensation 61,000 7,000 61,000 7,000 150,333
deferred
</TABLE>
Future commitments to Mr. Sackler under his employment agreement
referenced above are as follows:
December 1, 1999 - February 29, 2000 $ 25,000
March 1, 2000 - February 28, 2001 100,000
March 1, 2001 - February 28, 2002 100,000
March 1, 2002 - April 30, 2002 16,667
---------
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 13
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
================================================================================
NOTE 9 - RELATED PARTY TRANSACTIONS
The Company has entered into a consulting agreement with CES Consulting
Co., Inc. (CES). The agreement is for five (5) years beginning December
31, 1997 at an annual cost of $100,000 per year.
The Company has entered into a business consulting agreement with
Madison Venture Capital II, Inc. (Madison), of which two shareholders
of the Company are principals. The agreement began on October 1, 1998.
The agreement is for a period of 5 years at the rate of $2,000 per
month. Services specified in the agreement have not been performed;
therefore, the parties have agreed that no fees are due to Madison
until such time as the parties agree that services will commence and
payments will accrue.
NOTE 10 - SUBSEQUENT EVENTS
Acquisition - The Company has negotiated to acquire 51% of Creative
Beverages of Canada, a Canadian corporation. The negotiations include
an option to acquire the remaining 49% within three (3) years. Creative
Beverages has current clients and is a marketing company that holds
certain trademarks and licenses. The cost of this acquisition is
estimated at $35,000. The Company has expended $13,507 on this project.
Marketing - The Company is negotiating with Leisure Concepts, Inc. for
two license agreements for supplying bottled water for World
Championship Wrestling and Pokemon. The fee arrangement has not been
completed, but management feels that the fee will be 12%.
The Company is negotiating a five (5) year licensing agreement with
Met-Rx USA-Source/One for the sale of its water, for a fee of 5% of
gross sales. The Company is also negotiating a joint marketing
agreement with the Met-RX for the Company's Aviva Springs labeled
water.
The Company is awaiting completion of negotiations with Goebel
Marketing and Sales (Goebel) for a marketing and sales agreement.
Goebel will provide the marketing and sales of the Company's Aviva
brand of water. Goebel will receive a commission of 5% of gross sales
of private labels, including Met-Rx.
Sales - The Company has negotiated an exclusive agreement with Conca
D'Oro Importers of Woodside, New York whereas the Company will act as
the exclusive provider for CDI for its private label water products.
The agreement's term is June 4, 1999 to December 3, 2000.
Page 14
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
================================================================================
NOTE 10 - SUBSEQUENT EVENTS (Continued)
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 is negotiating a sales agreement with Nutrition Club Stores
(NCS) for the national distribution of its water to local gyms.
Distribution - The Company entered into a distribution agreement on
June 4, 1999. The agreement extends until December 31, 2009. Under the
terms of the agreement, the Company will pay the distributor $1.25 per
case of the products delivered to the retailer. The distributor agrees
that during the term hereof it will not carry or distribute bottled
water other than the products.
The Company's labeled water has been named the official water for 1999
for the Ms. Olympia and Ms. Olympia Fitness 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 15
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
================================================================================
NOTE 11 - STOCK OPTIONS
Options issued by the Company as described in Note 2 were issued on
November 15, 1997 and expire on November 15, 2002. As of November 30,
the status of these options was as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
Number of Option Price per Number Option Price per
Shares Share of Shares Share
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at
beginning of quarter 100,000 $0.20 100,000 $0.20
Options granted during the
quarter 0 0
Options outstanding and
exercisable at end of quarter 100,000 $0.20 100,000 $0.20
</TABLE>
None of the options granted by the company were exercised, forfeited or
expired during the quarters ended November 30, 1999 or 1998.
Page 16
<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.
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Management's Discussion and Analysis of Financial Condition and
Results of Operations
Introduction
Adirondack Pure Springs Mt. Water Co., Inc. 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.
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.
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.
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,
including Tree of Life/Gourmet Award Natural Food and Beverage Distribution
Company, 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
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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 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 dependent 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.
The Company has an accumulated deficit of $692,367 as of November 30, 1999.
Results of operations
For the periods ended November 30, 1999 and November 30, 1998
Net Sales. Net sales were $10,197 for the quarter ended November 30, 1999; for
the quarter ended November 30, 1998 next sales were $-0- as the Company had not
commenced operations at that time.
Year to date net sales of $49,025 for the nine months ended November 30, 1999
compared to $-0- in net sales for the same period in 1998, again because the
Company had not commenced operations as of November 30, 1998.
Gross Profit. The gross profit (loss) of $(9,868) for the quarter ended November
30, 1999 represented a gross profit (loss) margin of (97)%. Gross profit (loss)
margin for the corresponding period in 1998 is not calculable, since there were
no sales during that period.
Expenses. General and administrative expenses for the quarter ended November 30,
1999 were $72,846, a decrease of $69,241 or 49% when compared to $142,087 for
the corresponding quarter in 1998. The decrease between the two periods relates
to the Company's recognition of cumulative accrued officer's salary for the nine
months ended November 30, 1998 in the third fiscal quarter of that year, as
compared to recognition of only $31,000 in cumulative accrued officer's salary
during the corresponding quarter in 1999. During the nine months ended November
30, 1999 officer's salary was recognized ratably over the year. In addition,
consulting and professional fees incurred for the quarter ended November 30,
1999 were $24,000 as compared with $54,075 for the quarter ended November 30,
1998.
Other Income (Expenses). Other income for the quarter ended November 30, 1999
consisted of $12,250 in sublease income, an increase of $9,425 or 334% when
compared to the corresponding quarter in 1998. Other expenses for the quarter
ended November 30, 1999 included $75,000 in startup costs; no startup costs were
expensed during the corresponding quarter of 1998.
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Income Tax Expense. The Company had no income tax expense for the three and nine
months ended November 30, 1999 or 1998 due to net losses incurred and the
availability of operating loss carryforwards.
Net (Loss). The net loss of $145,464 for the quarter ended November 30, 1999 is
$1,298 or 0.1% lower than the net loss for the quarter ended November 30, 1998.
For the nine months ended November 30, 1999 the Company's net loss of $276,856
exceeded the net loss for the corresponding nine month period in 1998 by 71%, or
$115,316. The increase in net loss results from expensing of startup costs, site
rent and expenses incurred upon commencement of production, and increased
administrative costs as the Company began operations.
Liquidity and Capital Resources.
The Company's net cash used by operating activities totaled $147,791 for the
nine months ended November 30, 1999. In addition, during that period the Company
made capital expenditures in the form of a deposit on the acquisition of
Creative Beverages of Canada in the amount of $13,507. Cash to meet these
expenditures was obtained from collected accounts receivable in the amount of
$17,893, a related party in the amount of $81,125 and through the sale of common
stock in the amount of $75,000.
The Company does not anticipate any additional fixed asset capital expenditures
for the fiscal year ending February 29, 2000. Expenditures for the acquisition
of Creative Beverages of Canada are anticipated to total $35,000. The Company
expects to meet cash flow requirements through increased sales and deferral of
expenses. The Company's President has agreed to a deferral of the payment of his
accrued salary until such time as cash flow is able to pay his current salary
after all other expenses. A portion of the Company's rent expense is covered
through a sublease.
The Company anticipates being in full operations by the fourth quarter of the
year 2000. It also intends to pursue the bond issuance to complete the bottling
facility. At completion of the bond issue the Company will be reimbursed for
facility costs incurred and previously paid by the Company.
Cautionary Statements.
The Company cautions investors that actual results of future operations may
differ from those anticipated in forward-looking statements due to a number of
factors. The Company has not reached full operational status and does not
anticipate reaching that point until the fourth quarter of the year 2000.
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PART II - OTHER INFORMATION
ITEM 2 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, since the maximum amount to be raised pursuant to this
offering was not more than one million dollars. 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 December 31, 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. To date, 50,000
shares were sold to approximately 10 people. This offering is ongoing.
Adirondack relied on Rule 506 in this offering, since Adirondack expected to
raise in excess of one million dollars from fewer than thirty-five investors.
Additionally, Adirondack intended this offering to be limited to accredited
investors. 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.
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ITEM 6 Index to Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
27 Financial Data Schedule
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
Date: June 22, 2000
David Sackler By: /s/ David Sackler
PRESIDENT AND CHIEF EXECUTIVE OFFICER
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EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION
Exhibit 27 Financial Data Schedule
