<PAGE>
U.S. 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 August 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from______________ to _____________
Commission file number ___0-30276__________
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...... No.........
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 of 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes..... No.....
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 15,881,000
Transitional Small Business Disclosure Format (check one):
Yes......... No......
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
FORM 10-QSB
INDEX
Page No.
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Balance Sheets - August 31, 2000 and August 31, 1999 (Unaudited) 1
Statements of Operations - Three Months ended August 31, 2000 and
1999 and period March 7, 1997 (inception) to August 31, 2000 2-3
Statements of Cash Flows - Three Months ended August 31, 2000 and
1999 and period March 7, 1997 (inception) to August 31, 2000 4
Notes to Financial Statements 5-12
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
Part II - Other Information
Item 1 - Legal Proceeding 14
Item 2 - Changes in Securities and Use of Proceeds 14
Item 5 - Other Information 14
Item 6 - Exhibits and reports on Form 8-K 14
Signatures 16
<PAGE>
<TABLE>
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(UNAUDITED)
AUGUST 31,
<CAPTION>
===========================================================================================================
2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 17,240 $ 18,938
Accounts Receivable - Trade 25,602 31,132
Deferred Offering Costs 2,450 0
Inventory 31,716 0
-----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 77,008 50,070
-----------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Site Development 85,027 77,466
Office Equipment, Displays 15,324 7,824
Trademark 21,165 13,507
Accumulated Depreciation, Amortization (12,796) (3,365)
-----------------------------------------------------------------------------------------------------------
TOTAL PROPERTY AND EQUIPMENT 108,720 95,432
-----------------------------------------------------------------------------------------------------------
OTHER ASSET
Security Deposits 24,712 24,712
-----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 210,440 $ 170,214
===========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Debentures Payable $ 46,350 $ 0
Accounts Payable 147,916 75,301
Accrued Salary 259,648 162,333
Loan Payable 99,937 79,967
-----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 553,851 317,601
-----------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock - Authorized 40,000,000 Shares $.01 Par Value;
15,931,000 and 13,881,000 Issued and Outstanding 35,720 15,220
Preferred Stock - Series A, Authorized, 1,000,000 at $.01 Par
Value; 20,000 Shares Issued 200 200
Paid-in Capital 524,723 369,683
Deficit Accumulated During Development Stage (904,054) (532,490)
-----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (343,411) (147,387)
-----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 210,440 $ 170,214
===========================================================================================================
</TABLE>
1
<PAGE>
<TABLE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND (DEFICIT) ACCUMULATED
DURING DEVELOPMENT STAGE
(UNAUDITED)
FOR THE PERIOD
=====================================================================================================
June 1, June 1, March 7, 1997
2000 to 1999 to (inception) to
August 31, August 31, August 31,
2000 1999 2000
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales $ 25,515 $ 0 $ 84,456
COST OF SALES (33,913) 3,877 (166,298)
-----------------------------------------------------------------------------------------------------
GROSS PROFIT (LOSS) (8,398) (3,877) (81,842)
-----------------------------------------------------------------------------------------------------
EXPENSES
Officer's Salary 25,000 18,000 333,333
Promotion 5,350 25,000 5,350
Consulting, Professional Fees 4,700 6,550 201,027
Utilities, Telephone 2,365 131 20,779
Office Rent, Expenses 14,703 4,712 133,060
Taxes 0 459 11,440
Insurance 1,252 0 9,356
Travel, Auto Expense 5,014 0 28,655
Equipment Rental 0 0 8,399
Supplies, Miscellaneous 2,357 290 40,327
Depreciation, Amortization 613 561 3,534
-----------------------------------------------------------------------------------------------------
TOTAL EXPENSES 61,354 37,703 795,260
-----------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSES)
Rent Income 9,900 1,250 50,047
Startup Costs 0 0 (75,000)
Stock Placement Fees (1,500) 0 (1,999)
-----------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSES) 8,400 (40,330) (26,952)
-----------------------------------------------------------------------------------------------------
NET (LOSS) (61,352) (76,648) (904,054)
-----------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND (DEFICIT) ACCUMULATED
DURING DEVELOPMENT STAGE (Continued)
(UNAUDITED)
FOR THE PERIOD
=====================================================================================================
June 1, June 1, March 7, 1997
2000 to 1999 to (inception) to
August 31, August 31, August 31,
2000 1999 2000
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - BEGIN $ (842,702) $ (492,160) $ 0
-----------------------------------------------------------------------------------------------------
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE - END $ (904,054) $ (532,490) $ (904,054)
=====================================================================================================
(LOSS) PER SHARE - BASIC $ (.00) $ (.01) $ (.06)
(LOSS) PER SHARE - DILUTED $ (.00) $ (.01) $ (.06)
=====================================================================================================
SHARES USED IN PER SHARE
CALCULATION - Basic 15,931,000 13,547,000 15,931,000
SHARES USED IN PER SHARE
CALCULATION - Diluted 15,981,000 13,647,000 15,981,000
=====================================================================================================
</TABLE>
3
<PAGE>
<TABLE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
FOR THE PERIOD
===========================================================================================================
June 1, June 1, March 7, 1997
2000 to 1999 to (inception) to
August 31, August 31, August 31,
2000 1999 2000
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (61,352) $ (40,330) $ (904,054)
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 2,074 3,020 12,796
Increase in Accounts Receivable (15,404) (31,132) (25,602)
Increase in Inventory 9,716 0 (31,716)
Increase in Accrued Expense 25,001 19,000 259,648
(Increase) in Deferred Offering Costs 0 0 (2,450)
Increase in Accounts Payable 87 32,067 147,916
-----------------------------------------------------------------------------------------------------------
NET CASH (USED) PROVIDED BY OPERATING
ACTIVITIES (39,878) (17,375) (543,462)
-----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Site Development 0 0 (85,027)
Purchase of Equipment 0 0 (15,324)
Increase in Security Deposits 0 0 (24,712)
Payments for Trademark Acquisition 0 (13,507) (21,165)
-----------------------------------------------------------------------------------------------------------
NET CASH (USED) BY INVESTING ACTIVITIES 0 (13,507) (146,228)
-----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM BY FINANCING
ACTIVITIES
Issuance of Debentures 46,350 0 46,350
Issuance of Preferred Stock 0 0 200,233
Increase in Loan Payable 10,000 49,063 99,937
Sale of Common Stock 0 0 360,410
-----------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 56,350 49,063 706,930
-----------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH 16,472 18,181 17,240
CASH - BEGINNING 768 757 0
CASH - ENDING $ 17,240 $ 18,938 $ 17,240
===========================================================================================================
SUPPLEMENTAL DISCLOSURES:
Conversion of Loan Payable to Preferred Stock $ 0 $ 200,233 $ 200,233
Stock Placement Fees $ 499 $ 0 499
Stock Issued for Professional Fees $ 0 $ 904 $ 75,000
===========================================================================================================
</TABLE>
4
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
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.
5
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
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.
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. 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. See also Note 11.
6
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
NOTE 3 - INVESTMENT - TRADEMARK
On April 17, 2000 the Company completed it's acquisition of the Max 02
trademark from Creative Beverages of Canada, Inc. The cost of $21,165
is to be amortized over a period of ten years, its estimated useful
life. Amortization for the quarter ending August 31, 2000 was $352.
NOTE 4 - 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 fiscal year and are
non-interest bearing.
NOTE 5 - 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 6 - 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.
During February 2000, the Company sold 50,000 shares of stock with
50,000 warrants at $2.00 per share. The warrants allow the holder to
obtain additional shares at $2.00 per share.
NOTE 7 - 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
7
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
NOTE 7 - PREFERRED STOCK (CONTINUED)
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 8 - COMMITMENTS, CONTINGENCIES
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:
August 31, 2001 $ 79,993
August 31, 2002 57,929
August 31, 2003 25,947
August 31, 2004 0
---------------
$ 163,869
===============
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.
8
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
NOTE 8 - COMMITMENTS, CONTINGENCIES (CONTINUED)
The amount of compensation to Mr. Sackler recorded in these financial
statements is as follows:
June 31, 1999 March 1, March 7, 1997
to August 31, 1999 to May (inception) to
2000 31, 1999 May 31, 2000
------------------------------------------------------------------------
Compensation recorded $25,000 $18,000 $333,333
Compensation paid 0 0 73,686
Compensation deferred 25,000 18,000 259,648
Mr. Sackler's deferred salary will be paid from operating revenues and
not from the proceeds of any offering. Future commitments to Mr.
Sackler under his employment agreement referenced above are as follows:
March 1, 2000 - February 28, 2001 $ 100,000
March 1, 2001 - February 28, 2002 100,000
March 1, 2002 - April 30, 2002 16,667
-----------
$ 216,667
===========
NOTE 9 - 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.
NOTE 10 - 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.
9
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
NOTE 11 - DEVELOPMENT BOND
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 (see also
Note 11).
In June, 2000, the Company decided not to pursue the extension of the
IDA bond offering for several reasons including:
a) The potential for construction permit approval delays from the
Adirondack Park Agency (APA) regarding building size. In
March, 2000, the Company became aware of APA's authority
regarding the construction of buildings exceeding 10,000
square feet. APA approval for the larger structures was rarely
received. The Company determined that building several smaller
structures was not feasible due to the property size.
b) The bond agreement required hiring of full-time employees.
This number of full-time employees is not necessary for the
operations anticipated by the Company and based on the allowed
building size.
The Company reserves the right to resubmit for an IDA bond for a site
facility. The Company presently intends to pursue other, less costly,
forms of funding for construction for a 10,000 square foot bottling
facility.
The Company, in June, 2000, signed a sales representative agreement
with JRF Sports and Leisure Marketing, as well as Blackstone
International, to represent the sale of its products to retailers in
the sport and health and fitness markets. Under the terms of the
agreement, the sales representatives work on commission basis. As such,
they will each receive 5% of paid net sales.
10
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
NOTE 12 - SUBSEQUENT EVENTS
The Company has filed for two trademarks:
1) for the name HYDRO-LITE. The product is a spring water based,
electrolyte enhanced, flavored sports water.
2) for the name ADAMS ALE which is water contained in a beer
shaped bottle. This will be marketed to beverage distributors.
The Company's products are the official waters of the International
Federation of Bodybuilders (IFBB) and the 2000 Ms Olympia; 2000 Fitness
Olympia and the Olympia Weekend 2000.
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%.
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 intended to raise $1,500,000 pursuant to
this placement with a net to the Company of $1,305,000. This private
placement is currently in process. The Offering will consist of the 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.
11
<PAGE>
ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
AUGUST 31, 2000
================================================================================
NOTE 13 - STOCK OPTIONS
<TABLE>
Stock options issued by the Company as described in Note 2 were issued
on November 15, 1997 and expire on November 15, 2002. For the quarters
ended August 31, 2000 and 1999, the status of these options was as
follows:
<CAPTION>
2000 1999
---- ----
Number of Option Price per Number of Option Price per
Shares Share Shares Share
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options outstanding at
beginning of period 100,000 $0.20 100,000 $0.20
Options granted during the
period 0 0
Options outstanding and
exercisable at end of period 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 August 31, 2000 and 1999.
12
<PAGE>
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis should be read in conjunction
with the financial statements and accompanying notes appearing
elsewhere herein.
RESULTS OF OPERATIONS
As the Company is in its development stage, there is no relevant
comparison with operations for the three months ended August 31, 2000
as compared to the same period in 1999.
However, for the three months ended August 31, 2000, the Company had
sales of $22,296 with a gross profit of $2,800, a 12.6% gross profit
margin. The cost of sale for the quarter consisted of ground rent and
costs of bottling.
General and administrative expenses consist primarily of office rent
and expenses and accrued officer's salary. The office rent costs are
partially offset by $9,900 in sublease rental income.
LIQUIDITY AND CAPTIAL RESOURCES
The Company's operations have been financed principally by loans from
shareholder and deferring payment of the officer's salary. As of August
31, 2000 the Company's working capital is $(476,843).
Net cash used by operations for the three months ended August 31, 2000
was primarily due to the accrued officer's salary. Net cash from
financing activities was due to additional funds loaned by management.
The Company believes that its short-term liquidity need will continue
to be met through funds invested by management. These funds come from
funds put into the Company met the deferral of salary accrued to
management. Long-term liquidity is anticipated to be met through a
stock offering. The Company is currently in discussions with
underwriters towards the goal of a stock offering.
Management is also in discussion with private investor group to obtain
working capital funds. There can be no assurance that either the stock
offering or private funds will be accomplished.
13
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
The Company is not currently involved in any legal proceedings to the
best of management's knowledge.
Item 2 - Changes in Securities and Use of Proceeds
There are none.
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
In June, 2000, the Company decided not to pursue the extension of the
IDA bond offering for several reasons including:
c) The potential for construction permit approval delays from the
Adirondack Park Agency (APA) regarding building size. In
March, 2000, the Company became aware of APA's authority
regarding the construction of buildings exceeding 10,000
square feet. APA approval for the larger structures was rarely
received. The Company determined that building several smaller
structures was not feasible due to the property size.
d) The bond agreement required hiring of full-time employees.
This number of full-time employees is not necessary for the
operations anticipated by the Company and based on the allowed
building size.
The Company reserves the right to resubmit for an IDA bond for a site
facility. The Company presently intends to pursue other, less costly,
forms of funding for construction for a 10,000 square foot bottling
facility.
The Company, in June, 2000, signed a sales representative agreement
with JRF Sports and Leisure Marketing, as well as Blackstone
International, to represent the sale of its products to retailers in
the sport and health and fitness markets. Under the terms of the
agreement, the sales representatives work on commission basis. As such,
they will each receive 5% of paid net sales. The Company has filed for
trademark for the name HYDRO-LYTE. The product is a spring water based,
electrolyte enhanced, flavored sports water.
The Company's products are the official waters of the International
Federation of Bodybuilders (IFBB) and the 2000 Ms Olympia; 2000 Mr.
Olympia; 2000 Fitness Olympia and the Olympia Weekend 2000.
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibits - Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter
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ADIRONDACK PURE SPRINGS MT. WATER CO., INC.
125 MICHAEL DRIVE
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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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
October 25, 2000 /s/ David Sackler
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PRESIDENT & CHIEF EXECUTIVE OFFICER
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