<PAGE>
As filed with the Securities and Exchange Commission on August 31, 2000
Registration No. 333- __________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2054
FORM SB-2
REGISTRATION STATEMENT
Under
The Securities Act of 1933
ALPINE AIR EXPRESS, INC.
-----------------------
(Name of registrant as specified in its charter)
Delaware 4512 33-0619518
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(State or Jurisdiction of Primary SIC (IRS Employer
incorporation or organization) Identification No.)
3450 West Mike Jense Parkway, Provo, Utah 84601 (801) 373-1508
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(Address, including zip code, and telephone number, including area code (801)
373-1508 of Small Business Issuer's principal executive offices)
COPY TO:
Eugene R. Mallette Max A. Hansen, Esq.
3450 West Mike Jense Parkway Max A. Hansen & Associates, P.C.
Provo, Utah 84601 (801) 373-1508 8 South Idaho, Suite A
Name, address, including zip code P.O. Box 1301
and telephone number, including area Dillion, Montana 59725-1301
code, of agent for service) Facsimile (406) 683-4304
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the effective date of this registration
statement.
If the securities being registered on this form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933,
please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:[ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Amount of
Securities to be Registered Be Registered Per Share(1) Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock offered by Selling
Shareholders 828,908 $5.00 $4,144,540 $1,095
Total 828,908 $5.00 $4,144,540 $1,095
(1)Estimated solely for purposes of calculating the registration fee. The maximum offering price per share is
based upon anticipated offering price per share of $5.00 pursuant to Rule 457(a), as the Common Stock has never
traded on any market.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
<PAGE>
Table of Contents
Pursuant to Item 502(f) of Regulation S-B
Section Page
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PROSPECTUS SUMMARY 3
Alpine 3
Contact Information 3
Revenue 3
The Offering 3
RISK FACTORS 4
We have one major customer 4
There is no established market for our shares 4
We need money to expand 4
Competitors are interested in entering our market 5
We have a small fleet of older leased aircraft 5
Increasing fuel costs reduces profitability 5
We have high fixed costs 6
New packaging dynamics reducing profitability 6
We anticipate increasing costs 6
Government regulations limit the percentage of our
shares that can be owned by non-U.S. Citizens 7
We are subject to extensive government regulation 7
Investors may experience difficulty in selling
our stock 8
Our CEO owns the majority of our shares and controls
our operations 8
Risk associated with forward-looking statements 8
DIVIDEND POLICY 9
MARKET PRICE OF COMMON STOCK 9
BUSINESS 10
Background 10
Industry overview 10
Routes and Delivery 12
Expansion Strategy 12
Ancillary Services 12
Employees 12
Facilities 12
MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATIONS 13
General 14
Plan of operation 15
Liquidity and Capital Resources 15
October 31, 1999 15
April 30, 2000 15
Results of Operations 16
October 31, 1999 16
April 30, 2000 17
MANAGEMENT 18
Directors and Executive Officers 18
Executive Compensation 19
PRINCIPAL STOCKHOLDERS 20
CERTAIN TRANSACTIONS 21
SELLING STOCKHOLDERS 22
PLAN OF DISTRIBUTION 23
DESCRIPTION OF SECURITIES 23
Common Stock 23
Preferred Stock 23
Transfer Agent 24
LEGAL MATTERS 24
EXPERTS 24
INTEREST OF NAMED EXPERTS AND COUNSEL 24
INDEMNIFICATION 25
INDEX TO FINANCIAL STATEMENTS 26
FINANCIAL STATEMENTS F-1
<PAGE> 1
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
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PROSPECTUS
ALPINE AIR EXPRESS, INC
828,908 Shares of Common Stock
(par value $.001)
The 828,908 shares (the "Shares") of Common Stock, par value $.001 (the
"Common Stock") of Alpine Air Express, Inc., a Delaware corporation ("Alpine")
are offered by certain Selling Stockholders (the "Selling Stockholders"). See
"Selling Stockholders" on page 22. The expenses of the offering, estimated at
$50,395, will be paid by Alpine.
Alpine is applying for trading of the Common Stock on the National Association
of Securities Dealers' Electronic Bulletin Board under the proposed symbol
AALPN." There is presently no public market for the shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This investment involves a high degree of risk. You should purchase shares
only if you can afford a complete loss of your investment. See "Risk
Factors" on page 4.
Information contained in this Prospectus is subject to completion or
amendment. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such State.
The date of this Prospectus is _______, 2000.
<PAGE>
<PAGE> 2
No person has been authorized in connection with this offering to give any
information or to make any representation other than as contained in this
Prospectus. If given or made, such information or representation must not be
relied upon as having been authorized by Alpine. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any
securities covered by this Prospectus in any state or other jurisdiction to
any person to whom it is unlawful to make such offer or solicitation in such
state or jurisdiction. Neither the delivery of this Prospectus nor any sales
made hereunder shall, under any circumstances, create an implication that
there has been no change in the affairs of Alpine since the date hereof.
ADDITIONAL INFORMATION
Alpine has filed a Registration Statement under the Securities Act with
respect to the securities offered hereby with the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. This Prospectus, which is a part of
the Registration Statement, does not contain all of the information contained
in the Registration Statement and the exhibits and schedules thereto. Certain
items are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to Alpine and the securities
offered hereby, reference is made to the Registration Statement, including all
exhibits and schedules thereto, which may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at its Regional Offices located
at 7 World Trade Center, New York, New York 10048, and at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 at prescribed rates
during regular business hours. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete,
and in each instance reference is made to the copy of such contract or
document filed as an exhibit to the Registration Statement, each such
statement being qualified in its entirety by such reference. Alpine will
provide, without charge upon oral or written request of any person, a copy of
any information incorporated by reference herein. Such request should be
directed to Alpine at 3450 West Mike Jense Parkway, Provo, Utah 84601,
telephone (801) 373-1508.
Upon effectiveness of the Registration Statement Alpine will be required to
file reports and other information with the Commission. All such reports and
other information may be inspected and copied at the Commission's public
reference facilities described above. The Commission maintains a web site
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission. The address
of such site is http://www.sec.gov. In addition, Alpine intends to make
available to its shareholders annual reports, including audited financial
statements and such other reports as Alpine may determine.
<PAGE>
<PAGE> 3
PROSPECTUS SUMMARY
The following is a summary of the information, financial statements and the
notes included in this Prospectus.
Alpine............Alpine Air Express, Inc. ("Alpine") through its wholly owned
subsidiary Alpine Aviation, Inc. is a scheduled cargo air
carrier. Unless otherwise indicated, Alpine refers to both
Alpine Air Express, Inc. and Alpine Aviation, Inc.
Alpine has been in operation since 1972 and under the
current ownership and management since 1986. We transport
packages, U.S. mail and other cargo in the western part of
the United States. Currently, we fly between 19 cities in
Arizona, California, Colorado, Montana, Nevada, New Mexico,
Texas, Utah and Washington. We primarily deliver mail for
the U.S. Postal Service. Our routes cover cities in the
western part of the United States. Alpine leases 24 aircraft
including 18 Beech 99 aircraft to carry cargo between
cities. Our other planes are used for charter and pilot
training.
Contact
Information......The corporate offices of Alpine are located at 3450 West
Mike Jense Parkway, Provo, Utah 84601, and our telephone
number is (801) 373-1508.
Revenue...........Recently Alpine has been enjoying increases in revenues.
The table below illustrates this growth for the fiscal years
ended October 31:
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Revenues $7,050,026 $7,890,313 $7,247,812 $9,629,491 $12,477,816
Net income $ 96,981 $ 351,389 $ 308,106 $ 564,352 $ 1,756,484
The Offering:
Securities
Offered..........828,908 shares of Common Stock-All by Selling Stockholders.
Risk Factors......Alpine is a small regional cargo air carrier and services
one primary customer, the U.S. Postal Service. The loss of
this customer would be devastating to our business. We do
not have a public market for our securities and no support
from major brokerage houses. Accordingly, as set forth in
more detail, the securities offered involve a high degree of
risk and should not be purchased by investors who cannot
afford the loss of their entire investment. See Risk
Factors.
Common Stock
Outstanding......11,000,000 shares-no additional shares will be issued by
Alpine in this offering.
NASD Electronic
Bulletin Board
Symbol
(proposed)......."ALPN"
<PAGE> 4
RISK FACTORS
The Common Stock for sale is a speculative investment and very risky.
You should especially consider these risk factors and the information in the
rest of this Prospectus.
We have one major customer.
--------------------------
Although Alpine has been profitable with increasing revenues, we receive
approximately 80% of our revenue from the United States Postal Service
("Postal Service"). The loss of the Postal Service as a customer would have a
long term, immediate and detrimental effect on Alpine's operations resulting
in the inability of Alpine to continue business as it is now configured. This
potential loss is heightened since all air cargo contracts with the Postal
Service, including those of other carriers, are due to expire in September
2001.
The Postal Service sets its contract terms in its Air Systems Contracts,
which generally last for two or more years and covers all air carriers.
Alpine is covered under the Air Systems Contract-Regional which covers air
carriers whose average flights are 500 miles or less. Every air carrier that
meets the qualifications listed in the Air Systems Contract-Regional may ask
the Postal Service to carry mail. The contracts are awarded based on
performance, qualification and competitive pricing. Alpine presently has an
excellent relationship with the Postal Service and has no reason to believe it
would stop providing Alpine mail for transporting. This relationship could
change, however, if additional competitors entered Alpine's market,
particularly, if such competitors carry mail for the Postal Service as well
and have similar sized aircraft.
There is no established market for our Shares.
---------------------------------------------
Although this offering does not come within the normal definition of an
initial public offering, there are many similarities that place purchasers of
Shares offered pursuant to this Prospectus at particular risk. There is
presently no public market for the Shares being offered. The Shares sold
pursuant to this Prospectus will be the first shares available to the general
public. This creates a situation where purchasers of the Shares of Alpine
offered in the Prospectus do not have the ability to see how the market views
the Shares over time. Additionally, the price of the Shares may be affected
by the supply and demand principals far more than the price of securities
which have an active trading market and have been listed over a period of
time. Purchasers will be buying from a relatively small number of
stockholders with the majority of Shares in the hands of only a few selling
stockholders. If larger stockholders do not want to sell some of their
position, prices could increase because of the demand being greater than
available supply of Shares. This is often seen in initial public offerings
resulting in the prices beginning to settle as supply increases. Unlike in
the initial public offering, however, there is no underwriter with expertise
to value Alpine. Here, the investor will make his or her own determination of
price without the benefit of an underwriter's assistance.
We need money to expand.
-----------------------
Alpine has reached the point at which additional aircraft, personnel and
facilities will be needed to continue stable growth, expand operations and
increase revenue. Alpine's current funds will not support extensive expansion
due to the cost of planes. The turbo prop planes we plan to buy cost
approximately $2,000,000 each and larger jets substantially more. Our
expansion will be limited to one or two additional planes per year if we were
<PAGE> 5
to rely solely on our own funds from operations. Alpine's management has
followed a policy of maintaining as little debt as possible so we can handle
any downturns in business. Therefore, management will likely seek money to
expand through the sale of additional Alpine securities. As Alpine has never
raised money before through the sale of securities, our ability to raise
equity capital is uncertain. Most likely, the sale of additional securities
will dilute the percentage ownership of investors in this offering and may be
at prices which are less than investors in this offering are currently paying.
Competitors are interested in entering our market.
-------------------------------------------------
The domestic air cargo industry is fiercely competitive. There are
relatively few barriers to entry. Currently, any carrier deemed fit by the
U.S. Department of Transportation (DOT) is free to operate chartered or
scheduled service between any two points within the U.S. and its possessions.
As Alpine is a small cargo air carrier, the only barrier we can use to prevent
competitors from entering into our market is the quality of service we
provide.
We have been successful in establishing profitable Postal Service routes
desired by our competitors. Additionally, we are actively seeking additional
Postal Service routes and contracts from integrated carriers such as Emery and
Federal Express. As we attempt to expand and maintain our current market
share, we have to bid against competitors in the same market. Fortunately,
the Postal Service has been satisfied with our service and no competitor has
attempted to compete with us on our routes. However, other larger air cargo
carriers enjoy the same relationship with the Postal Service and may have more
clout given their size. The Postal Service contracts are also awarded on a
competitive bid process, taking into account prices charged as a factor in any
award. Our competitors, most of which are substantially larger than us, can
potentially offer lower rates in an effort to attain our routes. It is
difficult for us to reduce our prices since the Postal Service is our major
source of revenue.
We have a small fleet of older leased aircraft.
----------------------------------------------
We lease our planes on month to month contracts from CLB Corporation, a
company controlled by our CEO and largest shareholder. If CLB ever decided to
sell the planes or to change the amount we pay for the planes, our bottom line
would severely be affected. Many of the planes we use and those optimal for
the type of routes and cargo we carry have become difficult to obtain. Should
we lose our leases, it would take months to be back in operations. In an
effort to mitigate this risk, we have asked for and received a written option
to buy CLB. (See: "Business.")
Increasing fuel costs reduces profitability.
-------------------------------------------
One of Alpine's principal cost components is fuel. The cost and the
availability of fuel are subject to many economic and political factors
occurring throughout the world. Alpine has no agreement with any fuel
supplier ensuring the availability of fuel; nor have we entered into any
hedging transactions to assure the price of fuel. Alpine's contract with the
Postal Service provides for quarterly adjustments on fuel cost which the
Postal Service absorbs. Between adjustments, Alpine must bear the cost of any
fuel increases. On non Postal Service cargo, we are limited from increasing
our prices from competitive pressures and often absorb any fuel cost
increases. The recent rise of fuel cost is evidence that our profitability
will be reduced by increased fuel cost.
<PAGE> 6
We have high fixed costs.
------------------------
As is characteristic of the air cargo industry, Alpine is subject to a
high degree of operating leverage. The revenues generated from a particular
flight vary directly with the quantity of cargo carried. However, since fixed
costs comprise a high proportion of the operating costs of each flight, the
expenses of each flight do not vary proportionately with the amount of cargo
carried. Accordingly, any sustained decrease in the amount of cargo carried
or increase in operating costs that is not offset by higher rates and
increased cargo could have a material adverse effect on Alpine's financial
condition and results of operations.
New packaging dynamics reducing profitability.
---------------------------------------------
Although e-commerce has increased the amount of cargo being hauled by
airlines, the nature of this cargo has created problems. The cargo industry,
particularly air freight, is based on a weight measurement to determine cost
to ship a package. Unfortunately with the nature of the goods being ordered
over the internet, and the way in which the goods are packaged, weight
measurements do not coincide with the amount of space the packages are taking
up in a plane. As a result many of these packages take up substantial volume,
yet are very light consisting mostly of packaging material. This disparity in
size vs. weight can reduce the available cargo space and thus effect the
amount of money made per flight. Some integrated carriers which have the
clout to demand changes have started changing the way customers are charged
for a package or refuse certain customer requests to carry their cargo. Since
we are tied to the Postal Service, we do not have the clout to change the
nature of billing an end client for the cost to haul a particular item. Until
and unless, the Postal Service changes the way it charges customers, this will
be a growing problem. There are currently no indications the Postal Service
will changes its pricing structure. Although this size vs. weight issue has
not yet proven to be a drain on our profitability, as the increase in e-
commerce changes the nature of packages being carried, we expect the revenue
made per plane will decrease as less cargo in terms of weight can be carried
with large lighter package taking up available space.
We anticipate increasing costs.
------------------------------
Management believes Alpine operates with lower personnel costs than many
established air cargo carriers, principally due to a relatively junior work
force and greater flexibility in the utilization of personnel. There can be
no assurance that these advantages will continue to exist. Several factors
indicate our personnel cost may increase. Management anticipates Alpine's
personnel costs will increase as our work force gains seniority and salary
structure matures in response to profitability. The pilots and mechanics at
other airlines, whether passenger or cargo based, are heavily unionized.
Presently, our employees are not unionized. Unionization of our employees if
implemented, would restrict our flexibility in dealing with the employee
groups, resulting in a material increase in our labor costs. If unionization
efforts are successful, we may be subjected to risks of work interruption or
stoppage and incur additional expenses associated with union representation of
our employees. There is also a shortage of pilots in the marketplace. Given
the size and nature of our business, we tend to be the first job for many
pilots after obtaining their commercial license and meeting our minimum flight
time requirements. As these pilots gain experience, they are attracted to the
major airlines that hire our pilots after they reach certain levels of
experience. Even with increasing salaries, most of these pilots would leave
for the long term security and job potential of being with a larger carrier.
<PAGE> 7
Accordingly, finding qualified employees, particularly pilots, will continue
to be a problem for us and will keep training costs high. We try to build our
projections anticipating certain attrition levels, but unforeseen factors will
often result in higher attrition. Any increase in the rate of attrition
beyond our projections results in difficulty servicing our current contracts
and expanding. In addition, as the size of the Company's workforce increases,
the cost of attrition may become relatively greater since it may become more
difficult for the Company to attract and train sufficient numbers of qualified
personnel. As pilots become younger with less experience, the potential for a
plan crash also increase even with our training requirements. This potential
may cause our insurance rates to increase. As an air cargo company, we
already have fairly high insurance rates resulting from the potential damage
and loss of like which a plane crash may cause. Additionally, workers
compensation rules are changing which is requiring we pay more for our pilots
who are subject to varying rules depending on which state they may be in on a
particular trip.
Government Regulations limit the percentage of our Shares that can be owned
----------------------------------------------------------------------------
by non-U.S. citizens.
---------------------
Pursuant to law and DOT regulation, Alpine must be effectively controlled
by United States citizens. In this regard, Alpine's president and at least
two-thirds of our board of directors must be United States citizens and not
more than 25% of our voting stock can be owned by foreign nationals (although
subject to DOT approval the percentage of foreign economic ownership may be as
high as 49%). Alpine's amended by-laws contain a provision designed to ensure
that the amount of voting stock beneficially owned by foreign nationals will
not exceed 25% of the total outstanding stock of Alpine. Under such by-law
provision, (i) transfers of shares of Alpine to foreign nationals may not be
made if the transfer would result in the ownership of stock by foreign
nationals exceeding 25% of the total outstanding stock of Alpine and (ii) if
the stock of Alpine is in fact transferred to a foreign national in such
circumstances, the holder of such stock shall not be entitled to vote or to
have any other rights except the right to transfer the stock to a citizen of
the United States. Although we have adopted procedures to ensure that no more
than 25% of our voting stock will be owned by foreign nationals and will make
every effort to ensure that a foreign national will not forfeit any of his or
her operating rights by virtue of foreign ownership, there can be no assurance
that foreign ownership will not exceed such 25% threshold. The limitation on
foreign investment may also affect our stock price by reducing potential
buyers.
We are subject to other extensive government regulation.
-------------------------------------------------------
The Airline Deregulation Act of 1978, as amended, eliminated most
domestic economic regulation of passenger and freight transportation. However,
the Department of Transportation and the Federal Aviation Administration (FAA)
still exercise certain regulatory authority over air carriers. The DOT
primarily regulates passenger airlines and we have little dealings with them.
The FAA regulates flying operations, including establishing personnel,
aircraft and security standards. Many of these same requirements are also set
forth in our contract with the Postal Service. As part of that oversight, the
FAA has implemented a number of requirements that Alpine must incorporate into
our business. These matters relate to, among other things, inspection and
maintenance of aircraft, pilot training, and supervision. Alpine must prove
to the FAA that it complies with Part 135 and other regulations before we can
begin operations. Noise restrictions exist at many airports. Alpine's
current aircraft comply with these restrictions if operated correctly.
<PAGE> 8
Alpine is currently licensed as a carrier under Part 135 of the FAA
Regulations, but intends as soon as practicable to obtain operating authority
under Part 121 of those regulations. Part 121 operating authority would
permit Alpine to operate a larger and more efficient class of aircraft, such
as the Boeing 727. Obtaining a Part 121 authority is a lengthy and expensive
process, and is by no means assured.
Our future results may vary based upon any actions which the governmental
agencies with jurisdiction over our operations may take. These include the
granting and timing of certain governmental approvals, restrictions on
competitive practices, the adoption of regulations impacting maintenance
standards, and the adoption of more restrictive locally-imposed noise
restrictions.
Investors may experience difficulty in selling our stock.
--------------------------------------------------------
Alpine's Common Stock does not meet the current NASDAQ listing
requirements for the SmallCap(R) Market because it does not have 300
shareholders or an established bid price of $5.00. Until Alpine is able to
satisfy NASDAQ's requirements for listing, trading of the Shares of Common
Stock will be conducted on the NASD's OTC Bulletin Board, established for
securities not meeting the NASDAQ SmallCap(R) Market listing requirements.
Generally, companies listed on the bulletin board do not have the liquidity
ability or investor following of NASDAQ companies. Consequently, the
liquidity of Shares could be impaired. This is not only in the number of
securities which could be bought and sold, but also potential delays in the
timing of transactions, reduction in security analysts' and the news media's
coverage of Alpine resulting in lower prices for Shares than might otherwise
be attained.
Our CEO owns the majority of our shares and controls our operations.
-------------------------------------------------------------------
Management, specifically our CEO, Eugene Mallette, owns 85% of the
outstanding shares of Common Stock. Current management will be able to elect
all the board of directors and otherwise control Alpine and its operations.
Mr. Mallette also is the primary contact person with the Postal Service and
owns, through various entities all of the planes we use. See "Management."
Mr. Mallette's role is critical to the success of Alpine. If something
were to happen to Mr. Mallette, it is foreseeable that Alpine would suffer
from a downturn in business until a suitable replacement could be found and
relationships established.
Risks associated with forward-looking Statements.
------------------------------------------------
This Prospectus contains certain forward-looking statements regarding the
plans and objectives of management for future operations, including plans and
objectives relating to Alpine's future marketing efforts and the future
economic performance of Alpine. The forward-looking statements and associated
risks set forth in this Prospectus include or relate to: (i) the ability of
Alpine to comply with our Part 135 license and obtain a Part 121 license, (ii)
the ability of Alpine to market our services at competitive prices, (iii) the
ability of Alpine to attract and retain trained personnel, (iv) the ability of
Alpine to obtain required financing for our future operations, (v) success of
Alpine in forecasting demand for our services, and (vi) the ability of Alpine
to maintain pricing and thereby maintain adequate profit margins.
<PAGE> 9
The forward-looking statements herein are based on current expectations
involving a number of risks and uncertainties. Such forward-looking
statements are based on the assumptions described in the preceding paragraph.
The foregoing assumptions are based on judgments with respect to, among other
things, future economic, competitive and market conditions, and future
business decisions, which are difficult or impossible to predict accurately
and many of which are beyond Alpine's control. Accordingly, although Alpine
believes the assumptions underlying the forward-looking statements are
reasonable, any such assumption could prove to be inaccurate and there can be
no assurance that the results contemplated in forward-looking statements will
be realized. In addition, as disclosed elsewhere in the "Risk Factors"
section of this Prospectus, there are a number of other risks inherent in
Alpine's business and operations which could cause Alpine's operating results
to vary markedly and adversely from prior results or the results contemplated
by the forward-looking statements. Increases in maintenance, fuel or labor
costs, general and administrative expenses or the occurrence of extraordinary
events could cause actual results to vary materially from the results
contemplated by the forward-looking statements. Management decisions,
including budgeting, are subjective in many respects. Periodic revisions must
be made to reflect actual conditions and business developments; the impact of
which may cause Alpine to alter our marketing, capital investment and other
expenditures, which may also materially adversely affect Alpine's results of
operations. In light of significant uncertainties inherent in the
forward-looking information included in this Prospectus, the inclusion of such
information should not be regarded as a representation by Alpine or any other
person that Alpine's objectives or plans will be achieved. See "Management's
Discussion and Analysis" and "Business."
DIVIDEND POLICY
Alpine Air, prior to its merger with Riverside, paid $1,000,000 in
dividends for the 1999 fiscal year. This was a one time dividend and we do
not intend to continue such a practice in the near future. Alpine currently
intends to retain any earnings for use in its business, and therefore does not
anticipate paying cash dividends in the foreseeable future.
MARKET PRICE OF COMMON STOCK
Prior to this Offering, there has been no public market for the Alpine's
Common Stock and there can be no assurance that a significant public market
for the Common Stock will develop or be sustained after the Offering. Alpine
will seek a market maker to apply to have Alpine's Common Stock included for
quotation on the NASD's Electronic Bulletin Board on the effectiveness of
Alpine's registration statement. There can be no assurance that the market
maker's activities will be continued, or that an active trading market for the
Common Stock will be developed or maintained. The future market price of the
Common Stock may be highly volatile. There is no public market for Alpine's
stock. Alpine is registering 828,908 shares which will be the only shares
able to be sold to the public. The remaining 10,171,175 shares will be
eligible to be sold under Rule 144 in June 2001. The Company's common stock
has never been traded. As of August 15, 2000, there were approximately 111
record holders of Company common stock.
<PAGE>
<PAGE> 10
BUSINESS
Background
----------
Alpine Aviation, Inc., a Utah Corporation ("Alpine Aviation"), was
organized in 1975 and has been operated by the same management since 1986. On
June 12, 2000 Alpine Aviation entered into an Agreement and Plan of
Reorganization with Riverside Ventures, Inc. pursuant to which Riverside
Ventures, Inc. ("Riverside") acquired all of the outstanding shares of Alpine
Aviation in exchange for 9,895,000 shares of Riverside common stock making
Alpine Aviation a wholly owned subsidiary of Riverside. The 1,000,000 shares
of Riverside outstanding prior to the acquisition were unaffected. Riverside
changed its name to Alpine Air Express, Inc. Collectively, we refer to the
combined entity of Alpine Air Express and Alpine Aviation as "Alpine."
Riverside was formed in April 1994. Riverside has had no business
operations since its formation and has been actively looking for a business
with which to merge or acquire.
Alpine is an air cargo operator, transporting mail packages and other
time-sensitive cargo between 19 cities in the western portion of the United
States. Alpine began its operations in the 1970's with the intent of being a
regional charter and cargo carrier. After present management acquired control
in 1986, Alpine began to focus less on the charter or passenger services and
more on the cargo aspects of the airline industry. Throughout most of the
1990's, Alpine has focused more and more on hauling mail for the Postal
Service because of their favorable contracts, routes and payment practices.
As a result of this focus, approximately 80% of Alpine's revenues now come
from the Postal Service.
Industry overview
-----------------
The package delivery or cargo business has evolved rapidly over the last
two decades, driven by the integration of world markets, the rationalization
of corporate supply chains and the implementation of enterprise software and
internet-based information technology solutions. The ability to provide
time-definite delivery options and transfer information increasingly
determines success. Customer demands for real-time information processing and
worldwide distribution and logistics capabilities favor larger companies with
integrated services.
Customers increasingly focus on the timing and predictability of
deliveries rather than the mode of transportation. As customers re-engineer
the total distribution process, which includes order processing,
administration, warehousing, transportation and inventory management, they are
attempting to reduce the most expensive and fastest growing component
inventory carrying costs. Time-definite transportation, which is no longer
limited to air express, has become a critical part of just-in-time inventory
management and improving overall distribution efficiency.
Technology advances have made it easier for companies to analyze and
compare distribution options. Rapid advances in technology have also helped
move the traditional business model in which manufacturers "pushed" products
into the supply chain, often based on incomplete information, toward a model
where end-user demand "pulls" products into the supply chain. This evolution
has placed greater demands on transportation systems for visibility of
information at all stages of the order/delivery process, because
time-to-market is becoming a key component of financial and operating success.
As a result of these changes, individual shipments are generally smaller but
more frequent and a greater proportion of products is being delivered directly
<PAGE> 11
to end-users, particularly as e-commerce takes hold. Customers expect high
performance levels and broad product offerings as they seek to optimize supply
chain solutions.
Delivery of packages to a specific destination at a guaranteed time has
been the growth engine for the package delivery industry over the past decade.
Time-definite service has grown from 4% of the U.S. parcel delivery market in
1977 to over 60% today. Time-definite service has grown from just under 10
billion revenue ton miles in 1989 to over 14 billion revenue ton miles in
1997, for a compound annual growth rate of 4.3%, while charter, scheduled mail
and scheduled freight have remained relatively flat during that period.
Internationally, however, time-definite service represents only 6% of the
parcel delivery market, demonstrating the potential for substantial growth.
The key U.S. industry trends are:
There has been dramatic growth in the utilization of e-commerce by both
consumers and businesses for the transfer of goods. Consumers who use the
internet for home shopping and other services shop across borders and require
global delivery capabilities. According to Forrester Research, $80 billion in
goods were purchased globally over the internet in 1998, and this figure is
expected to reach over $3.2 trillion in 2003. Of this $80 billion, 80% to 85%
represented business-to-business sales, with the remainder representing
business-to-residential sales.
Customers are demanding increasingly complex supply chain management
solutions that require more sophisticated information technology systems.
Major manufacturers require increased precision in delivery time, and
customers demand precise tracking and timely information about potential
service disruptions.
Industry Consolidation. The industry has become increasingly dominated by
large integrated carriers such as FedEx and UPS that provide seamless
services, including pick-up and delivery, shipment via air and/or road
transport and customs clearance. The pace of consolidation in the package
delivery industry has increased on a global scale, particularly in Europe, due
to the following factors:
the need for global distribution networks, large vehicle fleets, global
information technology systems and the resources necessary for their
development or acquisition;
customers' desire for integrated services;
high growth in the international and cross-border delivery segments;
deregulation of European delivery markets.
Industry participants are acquiring, merging with or forming alliances
with partners that can expand global reach, breadth of services or
technological capabilities in order to better enable those participants to
compete in a rapidly changing global environment. In particular,
government-run post offices have made several recent alliances with and
acquisitions of private-sector companies. Post offices, which still maintain
numerous advantages over private-sector companies, create significant
challenges for competitors worldwide. Statistics compiled by Boeing Aircraft
Company indicated air cargo traffic will nearly triple by 2017. We feel with
the growth in cargo and with e-commerce taking hold, the need for companies
like Alpine will only continue to expand. We offer the ability to deliver
mail and cargo to smaller markets without the associated capital cost.
<PAGE> 12
Routes and Delivery
-------------------
Alpine currently has 20 routes covering 19 western cities in 9 states.
Most routes are flown every day and some several times a day. In fiscal 1999,
Alpine transported 9,360 tons of cargo. The largest component of Alpine's
cargo mix is U.S. mail, which accounted for approximately 80% of our fiscal
1999 revenue. Alpine's delivery commitment on U.S. mail and most of the cargo
ranges from one to four hours. Alpine has consistently garnered awards from
the U.S. Postal service for timeliness ranking in the top 10% of all contract
carriers for the Postal Service.
Alpine services its routes with 18 aircraft which are smaller turbo-prop
planes. Currently, the largest planes in our fleet are Beechcraft 99 which
hold 3,000 pounds of cargo. The Postal Service delivers and picks up all
cargo we carry at the plane, unless separate arrangements have been made. The
Post Office delivery and pick up plane side enables us to reduce our cost.
Expansion Strategy
------------------
Our current routes could support additional and larger planes. To meet
this need, we have located, and made an offer to purchase up to fifteen
Beechcraft 1900's along with their spare parts inventory. The Beechcraft 1900
is typically configured for 5,400 pounds and 611 cubic feet of cargo capacity.
The Beechcraft 1900 is an all-weather aircraft powered by twin, PT-6 Pratt
Whitney turbo props. It has a range of about 800 statute miles and enjoys a
sound reputation for safety. Acquisition of the Beechcraft 1900 will increase
the total cargo capacity of the Company's aircraft from 54,000 pounds to
135,000 pounds per day, an increase of 150%. With these aircraft, Alpine will
be able to bid on additional Postal Service routes and also try to receive
some of the contract hauling contracts from integrated carriers like FedEx and
Emery. The additional advantages of the Beechcraft 1900 include allowing us to
carry more freight on routes increasing our economies of scale since it does
not cost much more to operate than our current planes.
The offer is for a purchase price of approximately two million dollars
($2,000,000) per plane payable at delivery. Our offer was accepted in July
2000. Presently, management has made the decision that Alpine will assign its
rights to purchase the planes to Eugene Mallette. Mr. Mallette, in turn, has
agreed to purchase the planes and lease them back to Alpine on similar terms
as our other leases. The decision was made to transfer the purchase rights to
Mr. Mallette because management did not want Alpine to take on the debt
associated with the planes. We have agreed to loan Mr. Mallette $1,000,000
towards the down payment on the planes. As part of the terms of this loan,
Alpine will receive an irrevocable option to purchase the planes from Mr.
Mallette during the time the note remains unpaid. The purchase price will be
the fair market value on the date the option is exercised. Alpine is hopeful
that it will be able to sell our equity in the future to buy the planes. In
the meantime, Alpine is maintaining its flexibility in having the ability to
use the planes without the burdensome debt associated with the planes.
Alpine is also seeking potential acquisitions in the western portion of
the United States which would add planes, additional contracts and additional
maintenance facilities at a location which would be able to serve our routes.
Presently, Alpine does not have any agreements to acquire any other cargo
companies. Alpine has talked to its competitors in our region to see if any
are interested in being acquired by Alpine. So far, all talks are in the
early/development stages and no agreements are anticipated until Alpine is
finished with the registration of its securities and has its shares of Common
Stock listed for trading. Even then, Alpine anticipates a potential seller
would want to wait a period of time to see how shares of Alpine's Common Stock
are valued by the marketplace.
<PAGE> 13
Ancillary Services
------------------
Our Provo, Utah base contains a fixed base operation. Our fixed base
operation operates a flight school, sells aviation fuel, provides catering and
charter services, performs "outside" maintenance, and houses a training
facility for our captains and first officers. Our operation has grown to the
point the fixed base operation has become a drain in terms of the time to
manage and in trying to handle third party needs in conjunction with our own
needs for maintenance and training facilities. We, therefore, anticipate
selling the fixed base operation to a third party or parties and concentrate
our personnel resources, which would stay with Alpine on our own maintenance
and training needs. We do not anticipate a significant change in earnings as
a result of its sale to a third party. In recent years, our own expansion has
resulted in most of the fixed base operation being directed to the maintenance
of our own planes.
Employees
---------
The Company has 64 employees including 7 in administration and 57 in
flight operations which includes 19 pilots. No employees belong to any labor
union.
Facilities
----------
Alpine leases all of its real property, exclusive of buildings. Alpine
leases 41,496 square feet at the Provo Municipal Airport under a lease that
expires in 2013. The lease calls for monthly payment of $572.80. The
buildings on the lease grounds are the property of Alpine. These facilities
are not large enough to handle current and future needs and Alpine has
tentatively leased additional property at the airport under a proposed lease
that would expire in 2040. Under the terms of the proposed lease Alpine will
pay a monthly lease rate of approximately $800. We intend to build new
facilities on this property to meet our current and future operational needs.
Alpine hopes to sell our current buildings and assign the current lease to a
third party once the new facility is completed. Presently, we estimate the
new facilities will be completed around February 2001 at a cost of up to
$1,000,000.
We also lease a 10,403 square foot hangar in Billings, Montana at a lease
rate of $14,980 per year. This lease expires on October 31, 2002, if not
renewed by mutual consent.
MANAGEMENT DISCUSSION AND ANALYSIS OF OPERATIONS
General
-------
Since the mid 90's, Alpine has been profitable with consistent revenue.
Net profits have ranged from a low in 1995 of $96,981 on revenue of $7,050,026
to net profits of $1,756,484 in 1999 on revenue of $12,477,816. We believe
this increase in revenue and more importantly net income is the result of
focusing on our primary customer, the Postal Service. The focus on the Postal
Service comes after pursuing various avenues in the aviation industry. We
have tried to be a charter carrier, passenger carrier and support integrated
cargo carriers. We discovered in each of these avenues that a small carrier
such as Alpine has little negotiation capabilities and is at the discretion of
the larger carriers and customers as to terms of payment. This placed
substantial burden on our ability to meet our own financial needs, much less
grow. Although these other markets could be profitable, certain dynamics such
as size and steady cash flow had to be achieved before entering them.
<PAGE> 14
After analyzing the various options available, we determined that until a
certain size was reached, we should focus on government contracts,
specifically the Postal Service.
The Postal Service offered us the ability to have a consistent, reliable
source of revenue and immediate payments helping to solve cash flow problems
we previously faced. The Postal Service also had need for a carrier who
could expand in the western portion of the United States and would meet
certain customer service goals such as on-time performance, which is critical
to the Postal Service. By focusing our efforts to satisfy the needs of the
Postal Service, we have been able to build a strong relationship resulting in
our expansion to 20 Postal Service routes.
While we will continue to focus on maintaining our Postal Service
contracts and feel confident we will be able to acquire additional Postal
Service routes, there is always the possibility that someone will enter our
market area and take some of these routes. However, there is no indication,
at this time, that any other parties are trying to do this. We believe our
relationship with the Postal Service is strong enough to maintain our current
relationship, at a minimum.
Since we now have the established revenue flow from our Postal Service
routes, we would like to go after some of the cargo business we were not able
to handle before, including providing carrier services to integrated carriers
such as FedEx and Emery. Many of these integrated carriers use local airlines
to carry the integrated carriers cargo between smaller markets where the
economics do not make sense for them to devote manpower and planes. These
routes, however, are profitable to a carrier with the right structure. We
have proven the profitability of servicing these smaller markets through our
work with the Postal Service and now feel we can grow our business by offering
the same quality service to the integrated carriers, freight forwarding
companies and non-integrated domestic, international and regional cargo
companies. We anticipate it will take time to develop material contracts with
integrated carriers and freight forwarders. Most of these companies already
have existing relationships with air cargo companies.
Plan of Operation
-----------------
We have been successful in steadily increasing revenue and net income.
Over the next year we anticipate a new Postal Service contract being announced
which, based on current discussions, should be on similar terms as the
existing contract. We have no reason to believe we would not receive our
current routes and are hopeful that as the amount of mail continues to
increase we will be able to receive additional routes in the western portion
of the United States which can be serviced from our current facilities.
We do intend to acquire, through lease or purchase, additional planes to
meet increasing demand and allow us to bid on additional work. Management has
consistently maintained a policy of low debt ratios so we will not finance
these planes with heavy debt. We anticipate using existing cash flow and
potentially selling equity in Alpine to make up any other sums needed. A
third alternative and one we most likely will use in the short term, will be
to rely on the financing provided by Eugene Mallette who, through CLB, owns
the other planes we use. Mr. Mallette has indicated a willingness to purchase
the planes and lease them back to Alpine on similar terms to the current CLB
agreements. Mr. Mallette has stated he has the financing to purchase up to 15
additional planes.
<PAGE> 15
We are in the process of building new facilities at our Provo, Utah
headquarters. These new facilities will serve as our corporate offices,
maintenance and training facilities. We intend to sell the current
facilities in Provo to help pay for the new facilities and to pay the balance
of the cost with our current capital and ongoing revenue. The facilities will
be at the Provo Airport and be built on grounds leased from Provo City. The
lease will be for 40 years, and like our current lease be for a fairly nominal
monthly rent.
Liquidity and Capital Resources
-------------------------------
October 31, 1999
----------------
In reviewing our financial position, we have focused on Alpine Aviation's
operations prior to the merger with Riverside. We have treated the merger as
a "reverse acquisition" and we are changing year ends to October 31 to match
Alpine Aviation's.
Financially, Alpine is experiencing its best times since inception. For
the fiscal year ended October 31, 1999, we had record profits that left Alpine
with current assets of $4,432,199 compared with current liabilities of
$1,093,581 and little long term debt. With a working capital surplus of
$3,336,618 we are positioned to complete the building of our new facility in
Provo, Utah which we anticipate costing around $1,000,000. We only anticipate
having to expend approximately $500,000 out of existing funds once we complete
the sale of our existing facility. Even if our current facility does not sell
for a period of time or we receive less than anticipated, our budget will be
able to handle the in-house financing of the new facility. We do not
anticipate any problems with liquidity in the upcoming year. Revenues should
exceed the previous years, resulting in additional cash to fund operations and
expansion.
The only expenditures anticipated besides the new facility are for
additional cargo aircraft. Management anticipates following its existing
practice of not incurring large amounts of long term debt. Accordingly, if
the planes cannot be financed out of existing revenue, management will seek
alternatives. Hopefully, we will raise the necessary capital through the sale
of equity. If not, Eugene Mallette has indicated a willingness, through other
entities he controls, to purchase the planes and lease them back to Alpine.
The lease terms would be similar to the ones currently being paid on our other
planes which are also leased from an entity controlled by Mr. Mallette. We
believe these terms to be very favorable.
April 30, 2000
--------------
As of April 30, 2000, our working capital surplus improved to $4,705,700,
with current assets of $5,799,281 and total liabilities of approximately
$1,100,000. We feel good about the $1,000,000 increase in working capital
since October 31, 1999, particularly since we paid $1,000,000 in dividends
during the quarter ended April 30, 2000.
We believe the next two quarters should produce similar results leaving
us with a strong financial position for the next twelve months. Even with
anticipated expansion, the operations are producing enough cash flow that our
business should continue to remain profitable, as long as our Postal Service
routes continue.
<PAGE> 16
Results of Operation
--------------------
October 31, 1999
----------------
Our last fiscal year was our best year ever in terms of revenue and net
income. Revenue for the fiscal year ended October 31, 1999, was $12,477,816
which represented an increase of $2,848,325 or 30% over the $9,629,491 in
revenue for the same period in 1998. More importantly, net income increased
almost 211% to $1,756,484 for the fiscal year ended October 31, 1999, from
$564,352 received in 1998.
The increase in net income was the result of increased loads and expanded
route system resulting in better utilization of planes and pilots. We
consider these results even better than expected given the high fuel cost we
had to pay in 1999 and continue to pay today. As we are able to expand
routes, net income should continue to increase given our ratio of fixed cost
to variable cost.
Our contract with the Postal Service more than made up for the higher
fuel cost as they awarded us expanded routes increasing from 12 routes in 1998
to 19 in 1999. These increased routes allowed us to utilize our planes and
pilots more efficiently. This additional revenue offset the increased
variable cost of fuel and maintenance. We anticipate that fuel costs will
remain about the same for this year, somewhere near $1.65 per gallon on
average.
One advantage we have over other carriers is the Postal Service contracts
have a fuel expense increase clause. This clause automatically increases the
amount the Postal Service pays us when fuel costs increase, making adjustments
every quarter. Accordingly, as fuel costs go up, we generally only experience
a quarter lag time before we begin to be paid at a higher rate.
Wage expense increased by $524,267 for a couple of reasons. First, our
business expanded which required we hire additional pilots to fly the new
routes. However, a major increase came from bonus to our employees and
management. To show our appreciation to our employees, we gave them part of a
"bonus" received from the Postal Service. The bonus was for our on-time
performance being in the top 10% for all regional carriers. This bonus was
$135,949 for 1999. To show our appreciation for our employees making this
bonus possible, we passed along $66,200 of the bonus to the employees.
Unfortunately, the Postal Service will not be offering a performance bonus
until September 2001, at the earliest. They have indicated other incentives
will be built into the new contract but at this time we do not know how these
new incentives of the contract will affect our revenue. The other major
increase in wages related to bonuses to officers of $265,000.
One factor we anticipate might change in upcoming years is the revenue
received from our fixed based operations. We do not feel it makes long term
economic sense to continue to operate our fixed based operations for third
party use. Last year, the fixed based operation contributed about $654,000 to
our revenue. Although this seems like a lot of money for a company our size,
when matched with the related expenses, the fixed based operation operated at
only a slight profit. As, and if, this change occurs, we will refocus the
personnel used in the fixed based operation to maintenance of our own planes
and to other administrative needs.
<PAGE>
<PAGE> 17
April 30, 2000
--------------
For the six months ending April 30, 2000, operating revenue increased to
$8,791,496. This was almost a $3,000,000 increase over the same period in
1999 when revenue was $5,811,011. More importantly, our operating income
increased to $3,544,200 from $1,816,562 for the six months ending April 30,
2000, as compared to April 30, 1999. Net income after taxes was $2,213,048.
Management is pleased with these numbers and feels they show how well we
have been able to expand operations and maintain our expenses. Except for
those variable costs related to the increase in operations, expenses remained
fairly constant from prior periods. As expected flight operations,
maintenance and rental expenses increased as we added flights. These
increases, however, were more than offset by the additional revenue generated.
As a result of management's efforts to maintain cost and expand operations,
our profit margin on operating income increased to 40% from 31% from the prior
six month period. Management feels these profit margins are reflective of
future results if we are able to continue to expand operations.
For the six months ended April 30, 2000, general and administrative
expenses expanded as we continued to reward employees with payroll bonuses.
We do not anticipate paying large bonuses as we move forward. In the past as
a private company, bonuses were the best way to reward management. Now, as
we move into more of a public company, we plan on creating an option plan to
link management's performance with increasing shareholder value. As we branch
out into different revenue sources and reduce our dependency on the Postal
Service, we would anticipate that profit margins on the new business would not
be as favorable, at first, as new routes have to be developed, and additional
planes and personnel added.
We also will reduce some expenses completely in the future. Flight
instruction and rentals which were $217,535 expense item will no longer be
incurred once we sell our fixed base facility. This will also remove $262,397
in revenue from these items. Management feels the reallocation of these
resources will more than make up for the lost revenue. Particularly when
considering the maintenance on the aircraft and the managerial time devoted to
these marginal revenue activities.
<PAGE>
<PAGE> 18
MANAGEMENT
Directors and Executive Officers
--------------------------------
The members of the Board of Directors of Alpine serve until the next
annual meeting of stockholders, or until their successors have been elected.
The officers serve at the pleasure of the Board of Directors. The following
are the directors and executive officers of Alpine.
Name Age Position Held Position Since
---- -- -------- -------------------
Eugene R. Mallette 51 Chairman and CEO 1986
Bill Distefano 53 President and Director 1982
Leslie Hill 46 Chief Financial Officer 2000
Max Hansen 51 Secretary/Treasurer
and Director 1986
Charles L. Bates 76 Director 2000
Richard A. Rowack 52 Director 2000
Mr. Mallette began his career with Alpine in 1979 as its Sales Manager,
then became General Manager later in 1979. He became Chief Executive Officer
and Director upon acquiring Alpine in 1986. Prior to his employment by
Alpine, he was employed by the State of Montana as a staff auditor. He
received a B.A. in Business Administration from Carroll College in 1971. Mr.
Mallette holds a private pilot's license and maintains proficiency in many of
the Company's aircraft types. He devotes time to civic and charitable causes
and was previously Chairman of the Better Business Bureau of Utah County and
Vice-President of the Provo Chamber of Commerce.
Bill Distefano has been Director of Maintenance for Alpine since 1972.
He became a director in 1986 and president in 1992. He holds an Aircraft and
Engine Repair Certificate and an Airframe Inspector certificate from the FAA.
Leslie Hill has been our accountant since 1998 and named Chief Financial
Officer in 2000. Prior to 1998, Ms. Hill was employed by Sendsations Card
Company as controller. She received a Bachelor of Science degree from Brigham
Young University in 1991. In 1999, Ms. Hill received the "Outstanding
Achievement Award" from the Dale Carnegie Foundation in Salt Lake City, Utah.
Max Hansen has been a director since 1986. He has been practicing law
since 1976 and has had his own firm, Max A. Hansen & Associates, P.C. since
1980. Mr. Hansen provides legal services to Alpine. From 1988 to 1989, he
was President of the Montana Bar Association and is currently a member of the
American Bar Association House of Delegates. From 1982 to 1987 he was also
Chairman of the Police Commission of Dillon, Montana. He was an instructor at
Western Montana College of Law from 1980 to 1987. Mr. Hansen has received
distinguished service awards from the Montana State Bar Association and the
Montana Supreme Court. He received a JD degree from the University of San
Diego in 1976, where he was a member of law review, and received a BA in
Political Science from Carroll College.
Charles L. Bates was named a director in 2000. Mr. Bates is currently
retired. He received a Bachelor of Science degree with honors in Mechanical
Engineering from Northeastern University in Boston. Mr. Bates has been
founder and president of the Valtek Company, a producer of high pressure
automated valves, with manufacturing operations and offices in Utah, Alberta,
Canada, Houston, Los Angeles, Melbourne, Auckland, New Zealand and Japan.
Valtek products are also manufactured under license in England, Brazil, South
<PAGE> 19
Africa and Indonesia. In 1978, Valtek was named "Growth Company of the Year",
by the National Association of Investment Clubs. In 1976 the Small Business
Association named Mr. Bates the "Utah Businessman of the Year" and in 1977 he
was recognized as "Utah's Outstanding Practicing Engineer" by the Utah
Engineering Council. Mr. Bates served as a Member of the Board of Directors
of the National Association of Manufacturers and the Utah Manufacturers
Association. He was a Vice-President of the Utah Foundation and has served as
the President of the Utah County Unit of the American Cancer Society. He is a
former President of the Fluid Controls Institute and the Salt Lake City
Chapter of the Instrument Society of American. He is a member of the National
Council of Northeastern University and is a member of the Board of Directors
of Daw Technologies, Inc. and was a member of the board of directors of
Duriron Co.
Richard A. Rowack was named a director of Alpine in 2000. Mr. Rowack has
been employed by Republic Financial Corporation since 1988 working in their
international commercial aircraft group. Republic Financial Corporation is
focused on the acquisitions, sales and leasing of commercial, transport
category passenger and cargo aircraft. Mr. Rowack graduated from the
University of Colorado in 1973 with a degree in Finance.
Executive Compensation
----------------------
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of Alpine's last three completed fiscal
years to Alpine or its principal subsidiaries chief executive officer and each
of its other executive officers that received compensation in excess of
$100,000 during such period (as determined at October 1999, the end of
Alpine's last completed fiscal year):
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Other Restricted
Name and Annual Stock Options LTIP All Other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
------------------ ---- ------ -------- ------------ ------ ----- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Eugene Mallette, 1999 $57,000 $400,000 $3,843 - - - -
CEO 1998 $52,000 $300,000 $2,885 - - - -
1997 $49,000 -0- $2,947 - - - -
Bill Distefano 1999 $68,500 $204,178 $3,346 - - - -
1998 $53,000 $ 72,500 $3,040 - - - -
1997 $50,600 $ 59,000 $3,843 - - - -
</TABLE>
----------------------------
(1) At the fiscal year ends, Riverside sole officer, Jehu Hand, had
received no compensation. The numbers provided are for Alpine Air, prior to
the merger, as they provide the relevant information for the combined entities
going forward.
<PAGE>
<PAGE> 20
PRINCIPAL STOCKHOLDERS
The following table sets forth information relating to the beneficial
ownership of Alpine's Common Stock as of the date of this Prospectus by (i)
each person known by Alpine to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock and (ii) each of Alpine's directors and
executive officers. The Percentage After Offering assumes the sale of all
Shares.
Name and Address of Percentage Percentage
Principal Stockholders: (1) Common Stock Before Offering After Offering
---------------------------- ------------ --------------- --------------
Eugene R. Mallette 8,407,188(D) 76.43 75.39
3450 West Mike Jense Parkway 989,500(I) 8.99 8.99
Provo, Utah 84601 (2)
The Mallette Family Limited
Partnership
3450 West Mike Jense Parkway
Provo, Utah 84601 (2) 989,500 8.99 8.99
Smith Consulting Services, Inc.
455 East 500 South, Suite 200
Salt Lake City, Utah 84111(3) 723,850 6.58 3.61
Officers and Directors:
----------------------------
Eugene R. Mallette, CEO
and Director (2) ----------------See Table Above-----------
Bill Distefano, President
and Director 491,979 4.47 4.47
Leslie Hill, CFO - - -
Max Hanson, Director - - -
Charles L. Bates, Director - - -
Richard Rowack, Director - - -
--------- ------ ------
All officers and directors
as a group (6 persons) 9,888,667 89.89 88.86
========= ====== ======
(1) Unless otherwise noted below, Alpine believes that all persons named in
the table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. For purposes hereof, a person is
deemed to be the beneficial owner of securities that can be acquired by such
person within 60 days from the date hereof upon the exercise of warrants or
options or the conversion of convertible securities. Each beneficial owner's
percentage ownership is determined by assuming that any warrants, options or
convertible securities that are held by such person (but not those held by any
other person) and which are exercisable within 60 days from the date hereof,
have been exercised. Those shares owned directly are indicated by a (D) and
those shares owned indirectly are indicated by an (I). Unless otherwise
noted, shares are deemed to be owned directly.
[Footnotes continue on next page]
<PAGE>
<PAGE> 21
(2) The Mallette Family Limited Partnership is controlled by Eugene Mallette.
For purposes of calculating Mr. Mallette's ownership, the family partnership
is considered owned by Mr. Mallette. Mr. Mallette address is care of the
Company. As part of this offering, Mr. Mallette is gifting 114,500 shares to
various family members and friends. The percentage after offering incorporates
these gifts.
(3) Smith Consulting Services, Inc. is listed as a selling shareholder and has
indicated it intends to sell the amount listed and hold 396,925 shares after
the offering. Smith Consulting Services, Inc. is a consultant to Alpine. SCS,
Inc. is controlled by Karl Smith.
CERTAIN TRANSACTIONS
This Prospectus offers shares of Common Stock of Alpine Air Express,
Inc., a Delaware corporation which was originally organized under the name
Riverside Ventures, Inc. by Jehu Hand, with minimal capitalization, to search
for and make an acquisition of an operating company. Riverside issued
1,000,000 shares to Mr. Hand and other shareholders on organization on April
20, 1994. On June 12, 2000, Riverside Ventures, Inc. entered into an
Agreement and Plan of Reorganization (the "Agreement") with Alpine Air, a Utah
corporation majority owned by Eugene R. Mallette. Pursuant to the Agreement,
Riverside acquired 100% of Alpine Air by exchanging 9,895,000 newly issued
Riverside shares for all of the shares of Alpine Air, and Riverside changed
its name to Alpine Air Express, Inc. The terms of the Agreement, including
the terms of the share exchange, were determined by arm's length negotiation
between Messrs. Mallette and Hand. These individuals and their companies
respectively controlled by them had no relationship or affiliation prior to
this negotiation.
Alpine leases all of its aircraft from CLB Corporation which is owned by
Mr. Mallette. The terms of these leases were approved by the independent
directors of Alpine Air as fair and on the same terms as could have been
obtained from non-affiliated parties. Alpine anticipates leasing three
additional planes from another entity controlled by Mr. Mallette on similar
terms as CLB's leases. During the fiscal year ended October 31, 1999, Alpine
paid $2,960,048 to CLB in lease payments.
Alpine has acquired an option to purchase CLB for $17,000,000. The
purchase price will be paid for with shares of Alpine's Common Stock. Solely
for purposes of the CLB transaction, Alpine's Common Stock will be valued at
$3.40 per share. The option is for a period of two years. The purchase price
was determined by the "blue book" value of the planes owned by CLB less any
debt still owed on the planes. CLB has less than $840,000 in debt on its 24
planes.
Alpine will enter into a $1,000,000 promissory note and irrevocable option
with Mallette Family, L.L.C. ("Mallette"). The loan will be made to assist in
the purchase of planes that are going to be leased by Alpine from Mallette.
The note is for three years and at an interest rate of six and one half
percent. The irrevocable option will give Alpine the right, during any period
the note remains outstanding, to purchase up to four planes being acquired by
Mallette. The purchase price of the planes will be the fair market value of
the planes on the date of purchase. This transaction will be entered into to
provide a means for Alpine to have the use of 15 Beechcraft 1900 planes
without the related debt associated with the planes. It is hoped that Alpine
will eventually obtain capital either from operations or the sale of equity
securities to buy the planes. In the meantime, Mallette will be the owner of
the planes and responsible for any related debt. The note was entered into on
favorable terms to facilitate the purchase of the planes.
<PAGE> 22
SELLING STOCKHOLDERS
The shares of Common Stock of Alpine offered by the Selling Stockholders
(the "Shares") will be offered at market prices, as reflected on the National
Association of Securities Dealers Electronic Bulletin Board, or on the NASDAQ
Small Cap Market if the Common Stock is then traded on NASDAQ. It is
anticipated that registered broker-dealers will be allowed the commissions
which are usual and customary in open market transactions. There are no other
arrangements or understandings with respect to the distribution of the Common
Stock. Except as noted, the Selling Stockholders do not own any Common Stock
except as registered hereby and will own no shares after the completion of the
offering. The relationship, if any, between Alpine and any Selling
Stockholder is set forth below.
Shares Beneficially Percentage
Name and Address Owned Total Shares
---------------- ------------------ ------------
Smith Consulting Services, Inc. (1) 326,925 2.97
455 East 500 South, Suite 201
Salt Lake City, Utah 84111
Mark Anderson (2) 206,333 1.88
4101 Tempview Drive
Provo, Utah 84604
Miscellaneous Shareholder (3) 181,150 1.65
Mallette Giftees (4) 114,500 1.04
------- ----
Total 828,908 7.54
======= ====
(1) SCS, Inc. is controlled by Karl Smith who has been acting as a consultant
to Alpine in our merger with Riverside, Inc. SCS, Inc. has an additional
396,925 shares not being registered. SCS has indicated it may transfer an
additional 50,000 shares to David Nelson and 100,000 shares to Mark Anderson.
SCS has no obligation to do so and has indicated it will not make any
transfers for at least one year. Any transfers by SCS will be related to Mr.
Anderson and Mr. Nelson performing consulting services for SCS over the next
year.
(2) Mark Anderson has been acting as a consultant to Alpine and SCS in regards
to our merger with Riverside, Inc., dealings with the Postal Service and the
acquisition of additional planes.
(3) There were 104 shareholders of Riverside prior to its merger with Alpine
Air. The miscellaneous shareholders represents the small shareholders of
Riverside along with Leonard Burningham, David Nelson and Victor Schwarz who
received shares in Alpine for consulting, accounting and legal services. None
of these stockholders has 1% or more of the shares of Alpine.
(4) There are approximately 179 shareholders receiving shares from Mr.
Mallette. All of these people are friends, family and business associates of
Mr. Mallette and are receiving between 100 and 5,000 shares. These gifts are
for benevolent purposes only. Alpine is registering only the distribution of
the shares to these individuals and trust and not the shares subsequent resale
into the public markets. Alpine will deem all the shares restricted in the
hands of the new holders.
<PAGE> 23
PLAN OF DISTRIBUTION
Alpine has applied to have its shares of Common Stock registered on the
NASD's Electronic Bulletin Board. Alpine anticipates once the Shares are
trading on the Electronic Bulletin Board the Selling Stockholders will sell
their Shares directly into any market created. The prices the Selling
Stockholders will receive will be determined by the market conditions. The
Shares may be sold by the Selling Stockholders, as the case may be, from time
to time, in one or more transactions. Alpine does not intend to enter into any
arrangements with any securities dealers concerning solicitation of offers to
purchase the Shares.
Commissions and discounts paid in connection with the sale of the Shares
by the Selling Stockholders will be determined through negotiations between
them and the broker-dealers through or to which the securities are to be sold
and may vary, depending on the broker-dealers fee schedule, the size of the
transaction and other factors. The separate costs of the Selling Stockholders
will be borne by them. The Selling Stockholders and any broker-broker dealer
or agent that participates with the Selling Stockholders in the sale of the
Shares by them may be deemed an "underwriter" within the meaning of the
Securities Act, and any commissions or discounts received by them and any
profits on the resale of Shares purchased by them may be deemed to be
underwriting commissions under the Securities Act.
Alpine will bear all costs of the offering in registering the Shares but
will bear no selling expense cost. Alpine will use its best efforts to update
the registration statement and maintain its effectiveness for 120 days.
DESCRIPTION OF SECURITIES
Common Stock
------------
Alpine's Articles of Incorporation authorizes the issuance of 20,000,000
shares of Common Stock, $.001 par value per share, of which 11,000,000 shares
were outstanding as of August 14, 2000. Alpine has no plans to sell additional
shares of common stock at this time, but has the right to do so without
shareholder approval. Holders of shares of Common Stock are entitled to one
vote per share on all matters to be voted on by the stockholders. Holders of
Common Stock have no cumulative voting rights. Holders of shares of Common
Stock are entitled to share ratably in dividends, if any, as may be declared,
from time to time by the Board of Directors in its discretion, from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of Alpine, the holders of shares of Common Stock are entitled to
share pro rata all assets remaining after payment in full of all liabilities
and the liquidation preference to holders of Preferred Stock, if any. Holders
of Common Stock have no preemptive rights to purchase Common Stock. There are
no conversion rights or redemption or sinking fund provisions with respect to
the Common Stock. All of the outstanding shares of Common Stock are, and the
shares of Common Stock will be, when issued and delivered, fully paid and non-
assessable.
Preferred Stock
---------------
Alpine's Articles of Incorporation authorize the issuance of 1,000,000
shares of preferred stock, $.001 par value, of which no shares of Preferred
Stock are outstanding.
Alpine's Board of Directors has authority, without action by the
shareholders, to issue all or any portion of the authorized but unissued
Preferred Stock in one or more series and to determine the voting rights,
<PAGE> 24
preferences as to dividends and liquidation, conversion rights, and other
rights of such series. Alpine considers it desirable to have Preferred Stock
available to provide increased flexibility in structuring possible future
acquisitions and financing and in meeting corporate needs which may arise. If
opportunities arise that would make desirable the issuance of Preferred Stock
through either public offering or private placements, the provisions for
Preferred Stock in Alpine's Articles of Incorporation would avoid the possible
delay and expense of a shareholder's meeting, except as may be required by law
or regulatory authorities. Issuance of the Preferred Stock could result,
however, in a series of securities outstanding that will have certain
preferences with respect to dividends and liquidation over the Common Stock
which would result in dilution of the income per share and net book value of
the Common Stock. Issuance of additional Common Stock pursuant to any
conversion right which may be attached to the terms of any series of Preferred
Stock may also result in dilution of the net income per share and the net book
value of the Common Stock. The specific terms of any series of Preferred Stock
will depend primarily on market conditions, terms of a proposed acquisition or
financing, and other factors existing at the time of issuance. Therefore, it
is not possible at this time to determine in what respect a particular series
of Preferred Stock will be superior to Alpine's Common Stock or any other
series of Preferred Stock which Alpine may issue. The Board of Directors may
issue additional Preferred Stock in future financing, but has no current plans
to do so at this time.
The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of Alpine.
Alpine intends to furnish holders of its common stock annual reports
containing audited financial statements and to make public quarterly reports
containing unaudited financial information.
Transfer Agent
--------------
The transfer agent for the Common Stock is Colonial Stock Transfer, 455
East 400 South, Suite 100, Salt Lake City, Utah 84111, and its telephone
number is (801) 355-5740.
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon for Alpine
by Max A. Hansen & Associates, P.C.
EXPERTS
The audited financial statements included in this Prospectus of Alpine
Aviation, Inc. as of October 31, 1999 and 1998 and of Riverside Ventures, Inc.
as of October 31, 1999, and 1998, have been audited by Squire & Company, PC,
independent certified public accountants, to the extent and for the periods
set forth in their report thereon and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
INTEREST OF NAMED EXPERTS
The legality of the Shares is being passed on by Max Hansen who is a
director of Alpine. Victor D. Schwarz and Leonard Burningham have received
securities in Alpine as payment of legal fees. Messrs. Schwarz and Burningham
are "Selling Stockholders."
<PAGE> 25
INDEMNIFICATION
Alpine has adopted provisions in its Certificate of Incorporation and
bylaws that limit the liability of its directors and provide for
indemnification of its directors to the full extent permitted under the
Delaware General Corporation Law. Under Alpine's Certificate of
Incorporation, and as permitted under the Delaware General Corporation Law,
directors are not liable to Alpine or its stockholders for monetary damages
arising from a breach of their fiduciary duty of care as directors. Such
provisions do not, however, relieve liability for breach of a director's duty
of loyalty to Alpine or its stockholders, liability for acts or omissions not
in good faith or involving intentional misconduct or knowing violations of
law, liability for transactions in which the director derived an improper
personal benefit or liability for the payment of a dividend in violation of
Delaware law. Further, the provisions do not relieve a director's liability
for violation of, or otherwise relieve Alpine or its directors from the
necessity of complying with, federal or state securities laws or affect the
availability of equitable remedies such as injunctive relief or rescission.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of Alpine where indemnification will be
required or permitted. Alpine is not aware of any threatened litigation or
proceeding that may result in a claim for indemnification by any director or
officer.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of Alpine pursuant to the foregoing provisions, or
otherwise, Alpine 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 a claim for indemnification against such liabilities
(other than the payment by Alpine of expenses incurred or paid by a director,
officer or controlling person of Alpine in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, Alpine
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
<PAGE> 26
INDEX TO FINANCIAL STATEMENTS
HISTORICAL FINANCIAL INFORMATION OF ALPINE AVIATION, INC.
YEARS ENDED OCTOBER 31, 1999 AND 1998
AND PERIOD ENDED APRIL 30, 2000 (UNAUDITED)
PAGE
----
INDEPENDENT AUDITOR'S REPORT F-1
Balance Sheets F-2
Statements of Income F-4
Statements of Stockholder's Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
HISTORICAL FINANCIAL INFORMATION OF RIVERSIDE VENTURES, INC.
YEARS ENDED OCTOBER 31, 1999 AND 1998
AND PERIOD ENDED APRIL 30, 2000 (UNAUDITED)
INDEPENDENT AUDITOR'S REPORT F-14
Balance Sheets F-15
Statements of Operations F-16
Statements of Stockholders Equity F-17
Statements of Cash Flows F-18
Notes to Financial Statements F-19
PRO FORMA FINANCIAL STATEMENTS - ALPINE AIR EXPRESS, INC
Pro Forma Combined Balance Sheet - April 30, 2000
(Unaudited) F-22
Pro Forma Combined Statement of Income - April 30, 2000
(Unaudited) F-24
Pro Forma Combined Statement of Income - October 31, 1999
(Unaudited) F-25
Pro Forma Combined Notes to Financial Statements F-27
<PAGE>
<PAGE> F-1
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of Alpine Aviation, Inc.
We have audited the accompanying balance sheets of Alpine Aviation, Inc. (a
Utah corporation) as of October 31, 1999 and 1998, and the related statements
of income, stockholder's equity, and cash flows for the years then ended.
These financial statements are the responsibility of the management of Alpine
Aviation, Inc. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits 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 audits provide 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 Alpine Aviation, Inc. as of
October 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
Squire & Company, P.C.
Orem, Utah
November 17, 1999
<PAGE>
<PAGE> F-2
ALPINE AVIATION, INC.
BALANCE SHEETS
April 30, October 31, October 31,
2000 1999 1998
-------- ----------- -----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash
equivalents $ 723,689 $ 2,008,747 $ 905,537
Marketable securities 2,514,038 649,715 39,414
Accounts receivable 1,518,703 1,050,998 1,398,999
Prepaid expense 218,399 167,360 107,489
Inventories 748,310 501,791 468,496
Current portion of
deferred tax asset 76,142 53,588 -
---------- ----------- ------------
Total current assets 5,799,281 4,432,199 2,919,395
Property, Plant and
Equipment net 106,439 109,627 60,361
----------- ----------- -----------
Total assets $ 5,905,720 $ 4,541,826 $ 2,980,296
=========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $ 92,252 $ 194,322 $ 465,207
Accounts payable -
related party 276,746 210,921 237,849
Accrued expenses 416,861 472,995 484,562
Refundable deposits 20,080 - -
Current income tax payable 230,323 133,195 -
Current portion of deferred
taxes 57,319 28,068 -
----------- ----------- -----------
Total current
liabilities 1,093,581 1,039,501 1,187,618
Deferred Income Taxes 8,599 2,433 14,718
----------- ----------- -----------
Total liabilities 1,102,180 1,041,934 1,202,336
<PAGE> F-3
ALPINE AVIATION, INC.
BALANCE SHEETS
Continued
Stockholder's Equity:
Common stock, 50,000
shares authorized, 25,000
shares issued and
outstanding, no par
value 95,361 95,361 95,361
Cumulative other
comprehensive income 59,195 (31,405) 3,147
Retained earnings 4,648,984 3,435,936 1,679,452
---------- ---------- ----------
Total stockholder's
equity 4,803,540 3,499,892 1,777,960
---------- ---------- ----------
Total liabilities and
stockholder's equity $ 5,905,720 $ 4,541,826 $ 2,980,296
=========== =========== ===========
The accompanying footnotes are an integral part of these statements.
<PAGE> F-4
ALPINE AVIATION, INC.
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Six Months Ended Years Ended
April 30, October 31,
---------------- -----------
2000 1999 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
Operating Revenues $8,791,496 $5,811,011 $12,477,816 $9,629,491
---------- ---------- ----------- ----------
Operating Expenses:
Direct operating
expenses 4,713,624 3,636,071 7,756,988 7,522,051
General and
administrative 516,769 341,936 1,672,480 1,083,489
Depreciation 16,903 16,442 33,001 21,462
---------- ---------- ----------- ----------
Total operating
expenses 5,247,296 3,994,449 9,462,469 8,627,002
---------- ---------- ----------- ----------
Operating Income 3,544,200 1,816,562 3,015,347 1,002,489
Other Income (Expense) 122,202 19,561 (120,504) (80,045)
---------- ---------- ----------- ----------
Income Before Income
Taxes 3,666,402 1,836,123 2,894,843 922,444
Income Tax Expense
(Benefit):
Current income tax
expense 1,500,892 708,988 1,153,130 329,618
Deferred income tax
expense (benefit) (47,538) (31,486) (14,771) 28,474
---------- ---------- ---------- ----------
Total income tax expense
(benefit) 1,453,354 677,502 1,138,359 358,092
---------- ---------- ---------- ----------
Net Income $2,213,048 $1,158,621 $1,756,484 $ 564,352
========== ========== ========== ==========
Earnings Per Share -
Basic and Fully Diluted $ 88.52 $ 46.34 $ 70.26 $ 22.57
========== ========== ========== ==========
Weighted Average
Shares Outstanding 25,000 25,000 25,000 25,000
========== ========== ========== ==========
The accompanying footnotes are an integral part of these statements.
<PAGE>
<PAGE> F-5
ALPINE AVIATION, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Cumulative
other
Compre-
Common Stock hensive Retained
Shares Amount Income Earnings Total
------ ------ ------- -------- ----------
<S> <C> <C> <C> <C> <C>
Balance, November 1, 1997 25,000 $95,361 $ $1,115,100 $ 1,210,461
Comprehensive Net Income
Calculation:
Net income - - 564,352 564,352
Other comprehensive income -
net of tax. Unrealized holding
gains arising during the period - - 3,147 - 3,147
------ ------- ----- ---------- ---------
Comprehensive Income - - 3,147 564,352 567,499
------ ------ ----- ---------- ---------
Balance, October 31, 1998 25,000 95,361 3,147 1,679,452 1,777,960
Comprehensive Net Income
Calculation:
Net income - - - 1,756,484 1,756,484
Other comprehensive income -
net of tax. Unrealized holding
losses arising during the period - - (34,552) - (34,552)
------ ------- ------ --------- ----------
Comprehensive Income - - (34,552) 1,756,484 1,721,932
------ ------- -------- ---------- ---------
Balance, October 31, 1999 25,000 95,361 (31,405) 3,435,936 3,499,892
Comprehensive Net Income
Calculation (unaudited):
Net income - - - 2,213,048 2,213,048
Other comprehensive income
net of tax. Unrealized holding
gains arising during the period - - 90,600 - 90,600
------ ------- ------ --------- ---------
Comprehensive Income (unaudited) - - 90,600 2,213,048 2,303,648
Dividends (unaudited) - - - (1,000,000) (1,000,000)
------ ------- ------ --------- ---------
Balance, April 30, 2000
(unaudited) 25,000 $95,361 $59,195 $4,648,984 $4,803,540
====== ======= ======= ========== ==========
</TABLE>
1940:
The accompanying footnotes are an integral part of these statements.
<PAGE>
<PAGE> F-6
ALPINE AVIATION, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended Years Ended
April 30, October 31,
-------------------------------------------------------
2000 1999 1999 1998
-------------------------------------------------------
(Unaudited) (Unaudited)
Cash Flows from
Operating
Activities:
Net income $2,213,048 $1,158,621 $1,756,484 $564,352
Adjustments to
reconcile net
income to net cash
provided (used) by
operating activities:
Realized loss on
marketable securities 16,980 - - -
Gain (loss) on disposal
of fixed assets (1,036) - - (23)
Deferred tax expense
(benefit) (47,538) (31,486) (14,771) 28,474
Depreciation and
amortization 16,903 16,442 33,001 21,462
Bad debt provision - (572) - (110)
Changes in assets and
liabilities:
Accounts receivable (467,705) 324,275 348,001 (879,112)
Inventories (246,519) 53,403 (33,296) (94,693)
Prepaid expense (51,039) (5,075) (32,561) (79,036)
Accounts payable (102,070) (446,305) (273,360) 213,478
Accounts payable -
related party 65,825 2,474 (26,928) 78,144
Accrued expenses (56,134) (422,787) (9,091) 424,409
Customer deposits 20,080 - - (22,964)
Income taxes payable 97,128 539,315 105,885 (45,607)
--------- --------- -------- ------
Total adjustments (755,125) 29,684 96,880 (355,578)
--------- --------- -------- -------
Net cash provided by
operating activities 1,457,923 1,188,305 1,853,364 208,774
Cash Flows from Investing
Activities:
Purchase of marketable
securities (1,730,303) (1,635) (667,887) -
Proceeds from sale of
equipment 2,500 - - -
Purchase of
equipment (15,178) (77,035) (82,267) (2,322)
---------- ---------- --------- -------
<PAGE> F-7
ALPINE AVIATION, INC.
STATEMENTS OF CASH FLOWS
Continued
Net cash used by
investing activities (1,742,981) (78,670) (750,154) (2,322)
Cash Flows from
Financing Activities:
Dividends paid (1,000,000) - - -
---------- ---------- ---------- ---------
Net Increase (Decrease)
in Cash and
Cash Equivalents (1,285,058) 1,109,635 1,103,210 206,452
Beginning Cash and
Cash Equivalents 2,008,747 905,537 905,537 699,085
---------- ---------- ----------- --------
Ending Cash and Cash
Equivalents $ 723,689 $2,015,172 $ 2,008,747 $905,537
========== ========== =========== ========
The accompanying footnotes are an integral part of these statements
<PAGE>
<PAGE> F-8
ALPINE AVIATION, INC. NOTES TO FINANCIAL STATEMENTS
Note 1.Summary of Significant Accounting Policies
This summary of significant accounting policies of Alpine Aviation, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
Business Description - The Company was incorporated in the state of Utah on
October 3, 1975 for the purpose of, but not limited to, hauling air freight,
serving commuter routes, and providing pilot training. The Company terminated
commuter flights in July 1999. The Federal government enhances the income of
the company on some of those essential air service routes.
Interim Financial Statements - The balance sheet as of April 30, 2000 and
related statements of income, stockholder's equity and cash flows for the six-
month periods ended April 30, 2000 and 1999 are unaudited. However, in the
opinion of management these interim financial statements include all
adjustments (consisting of only normal recurring adjustments) which are
necessary for the fair presentation of the results for the interim periods
presented. The results of operations for the unaudited six-month period ended
April 30, 2000 are not necessarily indicative of the results which may be
expected for the entire 2000 fiscal year.
Marketable Securities - The Company held marketable equity and debt securities
recorded at aggregate fair market values totaling, $649,715, and $34,414 at
October 31, 1999 and 1998, respectively. These securities are classified as
available-for-sale. Gross unrealized gains and (losses) were $(57,586) and
$4,995, for the years ending October 31, 1999 and 1998, respectively.
Accounts Receivable - The Company grants credit to its customers,
substantially all of whom are businesses located in the western United States.
The Company has no policy requiring collateral on any of its accounts
receivable.
Allowances of $100,000 and $50,000 were established for accounts receivable
for each year ended October 31, 1999 and 1998, respectively.
Inventory - Inventory consists of airplane parts, fuel and oil, and supplies
and is stated at the lower of cost or market, determined using the first-in,
first-out method (FIFO).
<PAGE>
<PAGE> F-9
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies (Continued)
Depreciation - Provision for depreciation of property, plant and equipment is
computed on the straight-line method for financial reporting purposes.
Depreciation is based upon estimated useful lives as follows:
Buildings and improvements 10 to 20 Years
Equipment 2 to 7 Years
Furniture and fixtures 2 to 7 Years
Maintenance, repairs, and renewals which neither materially add to the value
of the equipment nor appreciably prolong its life are charged to expense as
incurred. Gains and losses on dispositions of equipment are included in net
income.
Accumulated depreciation consists of $328,971, and $295,970 at October 31,
1999 and 1998, respectively.
Cash and Cash Equivalents - The Company considers demand deposits at banks and
money market funds at other financial institutions with a maturity of three
months or less to be cash equivalents.
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 disclosed. Accordingly,
actual results could differ from those estimates.
Additional Cash Flow Statement Disclosures - During the six months ended April
30, 2000 and 1999, the Company paid $3,059 and $7,028 in interest and
$1,243,974 and $166,238 in income taxes, respectively. The Company paid
$12,307 and $3,953 in interest and $989,068 and $195,558 in income taxes
during the years ended October 31, 1999 and 1998, respectively. There were no
non-cash investing and financing activities.
Note 2.Accounts Receivable
Accounts receivable consist of the following at October 31,:
1999 1998
---- ----
Trade accounts receivable $1,010,273 $ 998,172
Accounts receivable - related party 30,830 400,827
Accounts receivable - employee 9,895 -
---------- ----------
$1,050,998 $1,398,999
========== ==========
<PAGE>
<PAGE> F-10
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 3.Income Taxes
The Company accounts for income taxes under the provision of SFAS 109
"Accounting for Income Taxes." This method requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences
of temporary differences between tax bases and financial reporting bases of
assets and liabilities.
The provision for income taxes consists of the following:
October 31,
----------
1999 1998
---- ----
Current:
Federal $ 982,405 $275,544
State 170,725 54,074
---------- --------
Total current 1,153,130 329,618
Deferred Expense (Benefit):
Income tax expense (benefit) (14,771) 28,474
---------- --------
Total income tax expense $1,138,359 $358,092
========== ========
The income tax provision reconciled to the tax computed at the federal
statutory rate is as follows:
October 31,
----------
1999 1998
---- ----
Income taxes at the statutory rate $ 964,667 $315,329
Non-deductible expenses 3,712 323
State income taxes, net of federal benefit 169,980 42,440
---------- --------
Total income tax provision $1,138,359 $358,092
========== ========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are as follows:
<PAGE> F-11
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
CONTINUED
Note 3.Income Taxes
Continued
October 31,
----------
1999 1998
---- ----
Deferred tax assets:
Allowance for bad debts $ 20,544 $ 4,543
Accrued vacation and sick leave 33,044 -
Valuation allowance - (4,543)
---------- --------
Total deferred assets 53,588 -
Deferred tax liabilities:
Unrealized holding gains (27,837) -
Excess tax depreciation (2,664) (14,718)
----------- --------
Total deferred liabilities (30,501) (14,718)
----------- --------
Net deferred tax assets (liabilities) $ 23,087 $(14,718)
=========== ========
<PAGE>
<PAGE> F-12
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 4.Related Party Transactions
The Company leases its aircraft from CLB Corporation (CLB) and other related
leasing entities, which are owned by the sole stockholder of the Company. The
lease terms for aircraft and equipment vary from month to month and
approximates $153,000 per month. The Company owed $210,921, and $237,849 in
lease payments to related parties, at October 31, 1999 and 1998, respectively.
Total lease expenses to related parties for the years ended October 31, 1999
and 1998 is detailed below.
October 31,
-----------
1999 1998
---- ----
CLB Corporation $ 2,690,048 $ 2,337,330
CLB Bates Partnership - 93,600
----------- -----------
$ 2,690,048 $ 2,430,930
=========== ===========
Monthly engine overhaul reserves are paid based on actual flying hours during
the month.
CLB reimburses the Company for certain qualifying repairs paid for or
performed by the Company. At October 31, 1999 and 1998, the Company had a
receivable of $30,830 and $400,827, respectively, related to these repairs.
Note 5.Operating Leases
The Company also leases real property under two operating lease agreements.
One lease has a remaining term of 13 years. The other lease will expire
October 2001. Future minimum lease payments are as follows:
2001 $ 21,914
2002 21,914
2003 6,934
2004 6,934
2005 6,934
Thereafter 58,356
--------
$122,986
========
<PAGE>
<PAGE> F-13
ALPINE AVIATION, INC.
NOTES TO FINANCIAL STATEMENTS
Note 6.401(k) Profit Sharing Plan
Employees who have been employed at least 3 months may contribute up to 17
percent of their compensation to the Company's 401(k) profit sharing plan.
The Company contributes an additional 50 percent of the amount contributed by
employees up to a maximum of 3 percent of compensation. Participants are
fully vested in employer contributions after two years of service. The
Company contributed $15,163, and $13,828 for the years ended October 31, 1999
and 1998, respectively.
Note 7.Concentrations
The Company receives the majority of its revenues from contracts with the U.S.
Postal Service (USPS). For the years ending October 31, 1999 and 1998, the
revenues from contracts with the USPS represented 79 percent and 67 percent of
total revenues, respectively. For the years ending October 31, 1999 and 1998,
accounts receivable from the USPS was $1,152,536 and $992,133, respectively.
Although a loss of contracts with the USPS would severely impact the financial
position of the Company, the Company's management believes that the
relationship with the USPS is excellent and will continue.
The Company maintains cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. As of October 31, 1999 and 1998, the Company's
uninsured cash balances totaled $1,142,849 and $721,448, respectively.
Note 8.Subsequent Events
On June 12, 2000, the Company consummated a reverse merger with a public
shell, Riverside Ventures, Inc., wherein all of the outstanding common stock
of the Company was exchanged for 9,895,000 shares of common stock of Riverside
Ventures, Inc. The transaction qualified as a tax-free exchange pursuant to
Section 368 (a)(I)(B) of the Internal Revenue Code, as amended.
The Company has acquired an option to purchase CLB for $17,000,000. The
purchase price will be paid for with shares of the Company's common stock.
Solely for purposes of the CLB transaction, the Company's common stock will be
valued at $3.40 per share. The option is for a period of two years. The
purchase price was determined by the "blue book" value of the planes owned by
CLB less any debt still owed on the planes. As of the date of the option, CLB
had less than $840,000 in debt on its 24 planes.
Note 9.Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards requiring that every
derivative instrument be recorded on the balance sheet as either an asset or
liability measure at fair value. The statement also requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. In June 1999, the FASB issued
SFAS No. 137, which deferred the application of SFAS No. 133 from fiscal years
beginning after June 15, 1999 to fiscal years beginning after June 15, 2000.
The application of SFAS No. 133 is not expected to have a material impact on
the Company's financial statements.
<PAGE> F-14
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of Riverside Ventures, Inc.
We have audited the accompanying balance sheets of Riverside Ventures, Inc. (a
Delaware corporation) as of October 31, 1999 and 1998, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the
management of Riverside Ventures, Inc. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the balance sheets of Riverside Ventures, Inc. as of
October 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
company seeking out business opportunities, including acquisitions. As
discussed in Note 1 to the financial statements, the Company's activities have
resulted in negative cash flows from operating activities and raise
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 1.
These financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Squire & Company, P.C.
Orem, Utah
July 26, 2000
<PAGE> F-15
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, October 31, October 31,
2000 1999 1998
--------- ----------- -----------
(Unaudited)
ASSETS $ - $ - $ -
-------- ------------ -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 7,608 $ 108 $ -
Accounts payable - related party 1,730 993 468
--------- ----------- -----------
Total current liabilities 9,338 1,101 468
Stockholders' Equity:
Preferred stock, $.001 par value,
1,000,000 shares authorized,
no shares issued and
outstanding - - -
Common stock, $.001 par value,
20,000,000 shares authorized,
1,000,000 shares issued
and outstanding 1,000 1,000 1,000
Additional paid-in capital 7,515 15 15
Accumulated deficit during the
development stage (17,853) (2,116) (1,483)
-------- ---------- -----------
Total stockholder deficit (9,338) (1,101) (468)
-------- ---------- -----------
Total liabilities and stockholders
equity $ - $ - $ -
========= ========== ===========
The accompanying footnotes are an integral part of these statements.
<PAGE>
<PAGE> F-16
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION> Cumulative
from
Inception
April 30, October 31, (April 20, 1994)
2000 1999 1999 1998 2000
---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES - - - - -
--------- --------- --------- --------- ---------
Operation Expenses:
General and administrative 15,737 468 633 108 17,853
--------- --------- --------- --------- ---------
Total operating expenses 15,737 468 633 108 17,853
--------- --------- --------- --------- ---------
Net Loss $ (15,737) $ (468) $ (633) $ (108) $ (17,853)
========= ========= ========= ========= =========
Net Loss Per Common Share-
Basic and Fully Diluted $ - $ - $ - $ - $ -
========= ========= ========= ========= =========
Weighted Average Shares 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
========= ========= ========= ========= =========
</TABLE>
2516:
The accompanying footnotes are an integral part of these statements.
<PAGE>
<PAGE> F-17
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Accumulated
Deficit
Common Stock Additional During the
------------ Paid-In Development
Shares Amount Capital Stage
------ ------ ------- -----------
Issuance of Common
Stock for Cash
and Services,
April 20, 1994 1,000,000 $1,000 $15 $ -
Net Loss - - - (1,015)
--------- ------ ---- --------
Balances at
October 31, 1994 1,000,000 1,000 15 (1,015)
Net Loss - - - (134)
--------- ----- ---- --------
Balances at
October 31, 1995 1,000,000 1,000 15 (1,149)
Net Loss - - - (116)
--------- ----- ---- --------
Balances at
October 31, 1996 1,000,000 1,000 15 (1,265)
Net Loss - - - (110)
--------- ----- ---- --------
Balances at
October 31, 1997 1,000,000 1,000 15 (1,375)
Net Loss - - - (108)
--------- ----- ---- --------
Balances at
October 31, 1998 1,000,000 1,000 15 (1,483)
Net Loss - - - (633)
--------- ----- ---- --------
Balances at
October 31, 1999 1,000,000 1,000 15 (2,116)
Net Loss -
(unaudited) - - - (15,737)
--------- ----- ---- --------
Balances at
April 30, 2000 -
(unaudited) 1,000,000 $1,000 $ 15 $(17,853)
========= ====== ===== ========
The accompanying footnotes are an integral part of these statements.
<PAGE> F-18
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
2596: <TABLE>
2597: <CAPTION>
Cumulative
from
Inception
April 30, October 31, (April 20, 1994)
to April 30,
2000 1999 1999 1998 2000
---- ---- ---- ---- ---------------
--------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $(15,737) $ (468) $ (633) $ (108) $(17,853)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Increase in accounts payable 8,237 468 633 108 9,338
--------- --------- --------- --------- ---------
Net cash used in operating activities (7,500) - - - (8,515)
Cash Flows from Financing Activities:
Additional paid-in capital 7,500 - - - 7,515
Sale of common stock - - - - 1,000
Total operating expenses --------- --------- --------- --------- ---------
Net cash provided by financing
activities 7,500 - - - 8,515
--------- --------- --------- --------- ---------
Net increase in Cash and Cash Equivalents - - - - -
Cash and Cash Equivalents
Balance at Beginning of Period - - - - -
--------- --------- --------- --------- ---------
Cash and Cash Equivalents
Balance at End of Period
</TABLE>
2639:
2641:
The accompanying footnotes are an integral part of these statements.
<PAGE> F-19
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1.Organization and Significant Accounting Policies
Nature of Business - The Company was incorporated under the laws of the State
of Delaware on April 20, 1994, for the purpose of seeking out business
opportunities, including acquisitions. The Company is in the development
stage and will be very dependent on the skills, talents, and abilities of
management to successfully implement its business plan.
Business Condition - Since inception, the Company's activities have been
limited to organizational matters resulting in negative cash flows from
operating activities. The Company's continued existence is dependent upon the
cash inflows from its investors. Management believes that the Company will
continue as a going concern through investor capital contributions and
profitable business ventures.
Note 2.Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of
three months or less to be cash equivalents.
Note 3.Related Party Transactions
The Company currently receives the use of office space free of charge from an
officer of the Company. The fair market value of the office space is
insignificant.
Additionally, the Company has received legal services valued at $1,730 from
stockholder's of the Company and is shown in the accounts payable - related
party account.
Note 4.Income Taxes
As of April 30, the Company has a net operating loss carry forward of $17,853
that will begin expiring in the year 2009. No deferred tax asset has been
booked due to the uncertainty of the ability of the Company to use the loss
carry forward.
<PAGE>
<PAGE> F-20
RIVERSIDE VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 5.Stock Option Plan
The Company has stock option plans for directors, officers, employees,
advisors, and employees of companies that do business with the Company, which
provide for non-qualified and qualified stock options. The Stock Options
Committee of the Board determines the option price, which cannot be less than
the fair market value at the date of the grant or 110 percent of the fair
market value if the Optionee holds 10 percent or more of the Company's common
stock. The price per share of shares subject to a Non-Qualified Option shall
not be less than 85 percent of the fair market value at the date of the grant.
Options generally expire either three months after termination of employment
or ten years after date of grant (five years if the optionee holds 10 percent
or more of the Company's common stock at the time of grant). No options have
been granted under the plan.
Note 6.Subsequent Event
On June 12, 2000, the Company acquired all of the outstanding common stock of
Alpine Aviation, Inc. in exchange for 9,895,000 shares of common stock of
Riverside Ventures, Inc. in a transaction qualifying as a tax-free exchange
pursuant to Section 368 (a)(I)(B) of the Internal Revenue Code, as amended.
The transaction will be accounted for as a reverse acquisition with the
surviving entity being Alpine Air Express, Inc. (formerly Alpine Aviation,
Inc.)
Note 7.Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. This
statement establishes accounting and reporting standards requiring that every
derivative instrument be recorded on the balance sheet as either an asset or
liability measured at fair value. The statement also requires that changes in
the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. In June 1999, the FASB issued
SFAS No. 137, which deferred the application of SFAS No. 133 from fiscal years
beginning after June 15, 1999 to fiscal years beginning after June 15, 2000.
The application of SFAS No. 133 is not expected to have a material impact on
the Company's financial statements.
<PAGE>
<PAGE> F-21
Alpine Air Express, Inc.
(Formerly Riverside Ventures, Inc. and
Alpine Aviation, Inc.)
Pro Forma Combined Financial Statements
(Unaudited)
The following unaudited pro forma combined balance sheet and statement of
income aggregate the unaudited balance sheet and statement of income of
Riverside Ventures, Inc. (Riverside) (a Delaware Corporation) as of April 30,
2000, and the unaudited balance sheet and statement of income of Alpine
Aviation, Inc. (Alpine) (a Utah Corporation) as of April 30, 2000, giving
effect to a transaction which was completed on June 12, 2000, wherein
Riverside acquired Alpine (the "Acquisition"). The business combination is
treated as a recapitalization of Alpine with Riverside issuing common stock in
exchange for all of the issued and outstanding shares of Alpine. The
following pro forma balance sheet and statements of income used management
assumptions as described in the notes and the historical financial information
available at April 30, 2000. The financial statements of Riverside included
in the October 31, 1999 pro forma income statement were audited as of October
31, 1999 and are herein included with Alpine at October 31, 1999. The
financial statements of Alpine included in the October 31, 1999 pro forma
income statement were audited as of October 31, 1999. Again, the format and
amounts used in these pro forma financial statements are based on those
financial statements.
The pro forma combined balance sheet and statements of income should be read
in conjunction with the separate financial statements and related notes
thereto of Riverside and Alpine. The pro forma combined financial statements
are not necessarily indicative of the combined balance sheet and statements of
income which might have existed for the period indicated or the results of
operations as they may be now or in the future.
<PAGE>
<PAGE> F-22
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED BALANCE SHEET
April 30, 2000
(Unaudited)
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
ASSETS
Current Assets:
Cash and cash
equivalents $ 723,689 $ - $ - $ 723,689
Marketable securities
2,514,038 - - 2,514,038
Accounts receivable 1,518,703 - - 1,518,703
Prepaid expense 218,399 - 229,807 448,206
Inventories 748,310 - - 748,310
Current portion of
deferred tax asset 76,142 - - 76,142
---------- ------- ---------- ----------
Total current assets 5,799,281 - 229,807 6,029,088
Property, Plant and
Equipment - net 106,439 - - 106,439
----------- ------- ---------- ----------
Total assets $5,905,720 $ - $ 229,807 $6,135,527
=========== ======= ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 92,252 $ 9,338 $ - $ 101,590
Accounts payable -
related party 276,746 - - 276,746
Accrued expenses 416,861 - - 416,861
Refundable deposits 20,080 - - 20,080
Current income tax payable 230,323 - (230,323) -
Current portion of
deferred taxes 57,319 - - 57,319
--------- ------- ---------- -------
Total current
liabilities 1,093,581 9,338 (230,323) 872,596
Deferred Income Taxes 8,599 - - 8,599
--------- ----- ---------- -------
Total liabilities 1,102,180 9,338 (230,323) 881,195
<PAGE> F-23
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED BALANCE SHEET
April 30, 2000
(Unaudited)
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
Stockholders' Equity:
Preferred stock,
1,000,000 shares
authorized, no shares
issued and
outstanding,
$.001 par value - - - -
Common stock, 20,000,000
shares authorized,
11,000,000 shares issued
and outstanding, $.001
par value 95,361 1,000 (85,361) 11,000
Paid-in capital- 7,515 1,497,758 1,505,273
Cumulative unrealized
holding gains
on securities 59,195 - - 59,195
Retained earnings 4,648,984 (17,853) (952,267) 3,678,864
----------- ------- --------- ---------
Total stockholders'
equity 4,803,540 (9,338) 460,130 5,254,332
----------- ------- --------- ---------
Total liabilities and
stockholders'
equity $ 5,905,720 $ - $ 229,807 $6,135,527
=========== ======= ========== ==========
The accompanying notes are an integral part of the pro forma combined
financial statements.
<PAGE> F-24
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED STATEMENT OF INCOME
For the Six Months Ended April 30, 2000
(Unaudited)
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
Operating Revenues $8,791,496 $ - $ - $8,791,496
Operating Expenses:
Direct operating
expenses 4,713,624 - - 4,713,624
General and
administrative 516,769 15,737 1,430,250 1,962,756
Depreciation 16,903 - - 16,903
--------- ---------- --------- ---------
Total operating
expenses 5,247,296 15,737 1,430,250 6,693,283
--------- --------- --------- ---------
Operating Income
(Loss) 3,544,200 (15,737) (1,430,250) 2,098,213
Other Income 122,202 - - 122,202
--------- --------- --------- ---------
Income (Loss)
Before Income
Taxes 3,666,402 (15,737) (1,430,250) 2,220,415
Income Tax Expense
(Benefit):
Current income
tax expense 1,500,892 - (460,130) 1,040,762
Deferred income
tax benefit (47,538) - - (47,538)
--------- --------- --------- ---------
Total income
tax expense
(benefit) 1,453,354 - (460,130) 993,224
---------- --------- --------- ---------
Net Income
(Loss) $ 2,213,048 $ (15,737) $ (970,120)$1,227,191
=========== =========== ============ =========
Net Income Per
Common Share -
Basic and Fully
Diluted $ .11
===========
Weighted Average
Shares Outstanding 11,000,000
==========
The accompanying notes are an integral part of the pro forma combined
financial statements.
<PAGE> F-25
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED STATEMENT OF INCOME
For the Year Ended October 31, 1999
(Unaudited)
Alpine Riverside Pro forma
Aviation, Ventures, Increase Pro forma
Inc. Inc. (Decrease) Combined
---------- --------- ---------- ---------
Operating Revenues $12,477,816 $ - $ - $12,477,816
Operating Expenses:
Direct operating
expenses 7,756,988 - - 7,756,988
General and
administrative 1,672,480 633 1,430,250 3,103,363
Depreciation 33,001 - 33,001
----------- --------- ---------- ---------
Total operating
expenses 9,462,469 633 1,430,250 10,893,352
----------- --------- ---------- ----------
Operating Income
(Loss) 3,015,347 (633) (1,430,250) 1,584,464
Other Income (120,504) - - (120,504)
----------- --------- --------- ---------
Income (Loss)
Before Income
Taxes 2,894,843 (633) (1,430,250) 1,463,960
Income Tax Expense
Current income
tax expense 1,153,130 - (460,130) 693,000
Deferred income
tax expense (14,771) - - (14,771)
----------- --------- --------- ---------
Total income
tax expense
1,138,359 - (460,130) 678,229
----------- --------- --------- ---------
Net Income
(Loss) $ 1,756,484 $ (633) $(970,120) $ 785,731
=========== ========== ========= ==========
Net Income Per
Common Share -
Basic and Fully
Diluted $ .07
==========
Weighted Average
Shares Outstanding 11,000,000
==========
The accompanying notes are an integral part of the pro forma combined
financial statements.
<PAGE> F-27
ALPINE AIR EXPRESS, INC.
(Formerly Riverside Ventures, Inc. and Alpine Aviation, Inc.)
PRO FORMA COMBINED NOTES TO FINANCIAL STATEMENTS
Riverside Ventures, Inc. - The Company was incorporated under the laws of the
State of Delaware on April 20, 1994, for the purpose of seeking out business
opportunities, including acquisitions. The Company is a development stage
company and since inception, the Company's activities have been limited to
organizational matters and has not commenced its principal business
activities.
Alpine Aviation, Inc. - The Company was organized under the laws of the State
of Utah on October 3, 1975. The Company was formed for the purpose of, but
not limited to, hauling air freight, serving commuter routes, and providing
pilot training.
Pro forma Adjustments - Riverside acquired all of the issued and outstanding
shares of Alpine in exchange for 9,895,000 shares of previously authorized but
unissued common stock of Riverside with a par value of $.001. The acquisition
has been treated as a recapitalization of Alpine. In addition, as part of the
merger, an additional 105,000 shares were issued in the merger in satisfaction
of an obligation of Riverside to Smith Consulting Services (SCS). The
agreement required a total of 1,048,850 shares to be received in payment of
fees associated with the merger. Consequently, a pro forma adjustment has
been recorded for the total value of shares issued to SCS of $1,430,250.
<PAGE>
<PAGE> 57
BACK COVER OF PROSPECTUS
No dealer, salesman or other person is authorized to give any information
or to make any representations not contained in this Prospectus in connection
with the offer made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by Alpine.
This Prospectus does not constitute an offer to sell or a solicitation to an
offer to buy the securities offered hereby to any person in any state or other
jurisdiction in which such offer or solicitation would be unlawful. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information contained herein is
correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
Additional Information 2
Prospectus Summary 3
Risk Factors 4
Dividend Policy 9
Market Price of Common Stock 9
Business and Plan of Operation 10
Management's Discussion and Analysis 13
Management 18
Principal Shareholders 20
Certain Transactions 21
Selling Shareholders 22
Description of Securities 23
Legal Matters 24
Experts 24
Financial Statements F-1
ALPINE AIR EXPRESS, INC.
828,908 SHARES
PROSPECTUS
August __, 2000
<PAGE>
<PAGE> 58
ALPINE AIR EXPRESS, INC.
PART II
Item 24. Indemnification of Directors and Officers.
--------------------------------------------------
Alpine has adopted provisions in its Certificate of Incorporation and
bylaws that limit the liability of its directors and provide for
indemnification of its directors and officers to the full extent permitted
under the Delaware General Corporation Law. Under Alpine's articles of
incorporation, and as permitted under the Delaware General Corporation Law,
directors are not liable to Alpine or its stockholders for monetary damages
arising from a breach of their fiduciary duty of care as directors. Such
provisions do not, however, relieve liability for breach of a director's duty
of loyalty to Alpine or its stockholders, liability for acts or omissions not
in good faith or involving intentional misconduct or knowing violations of
law, liability for transactions in which the director derived as improper
personal benefit or liability for the payment of a dividend in violation of
Delaware law. Further, the provisions do not relieve a director's liability
for violation of, or otherwise relieve Alpine or its directors from the
necessity of complying with, federal or state securities laws or affect the
availability of equitable remedies such as injunctive relief or rescission.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of Alpine where indemnification will be
required or permitted. Alpine is not aware of any threatened litigation or
proceeding that may result in a claim for indemnification by any director or
officer.
Item 25. Other Expenses of Issuance and Distribution.
-----------------------------------------------------
Filing fee under the Securities Act of 1933 $1,095.00
Printing and engraving (1) $300.00
Blue Sky Fees $1,000.00
Auditing Fees (1) $10,000.00
Legal Fees (1) $35,000.00
Miscellaneous (1) $3,000.00
----------
TOTAL $50,395.00
(1)Estimates ==========
Item 26. Recent Sales of Unregistered Securities.
-------------------------------------------------
In June 2000, the Company issued 9,895,000 Shares to the four
shareholders of Alpine Aviation, Inc. in exchange for all of the outstanding
shares of Alpine Air. The transaction was exempt from registration under
Section 4(6) of the Securities Act. As part of the acquisition of Alpine
Aviation, Inc. by Riverside Ventures, Inc., Alpine issued 105,000 shares to
SCS, Inc. for its consulting services to Alpine. The transaction was made in
reliance upon the exemptions available under Section 4(2) of the Securities
Act.
<PAGE>
<PAGE> 59
Item 27. Exhibits and Financial Schedules
-----------------------------------------
SEC Ref No. Exhibit No. Title of Document Location
----------- ----------- ----------------- --------
2. Plan of Acquisition, reorganization, arrangement,
liquidation or Succession
2. 2.1 Agreement and Plan of Reorganization by Incorporated
and between Riverside Ventures, Inc. and by Reference (1)
Alpine Aviation, Inc. and related amendment
3. Certificate of Incorporation and Bylaws
3.1 Articles of Incorporation Incorporated
by Reference (1)
3.2 Articles of Amendment Incorporated
by Reference (2)
3.3 Bylaws Incorporated
by Reference (1)
3.4 Amended Bylaws Incorporated
by Reference (2)
5. Opinion of Max A. Hansen & Associates, P.C. as to Incorporated
legality of securities being registered. by Reference (3)
10. Material Contracts
10.1 United States Postal Service Solicitation
ASYS-R-99-01 (Air System Contract) This Filing
10.2 Air systems Contract Amendment This Filing
10.3 Bid Offer and Acceptance-ASYS-99.01 This Filing
10.4 Consulting Agreement by and between Incorporated
Alpine Aviation, Inc. and Smith Consulting by Reference (1)
Services, Inc.
10.5 Stock Purchase and Sales Agreement (CLB) This Filing
10.6 Promissory Note with Mallette Family LLC This Filing
10.7 Irrevocable Options to Purchase by Mallette
Family LLC This Filing
10.8 Ground Lease-Provo This Filing
10.9 Ground Lease Extension-Provo This Filing
10.10 Ground Lease-Billings This Filing
10.11 CLB Lease Agreement for Planes This Filing
21. Subsidiaries of the small business issuer-Alpine Aviation, Inc., a Utah
corporation is the only subsidiary. It does business under the name
Alpine Air.
23. Consents of Experts and Counsel
23.1 Consent of Squire & Company, P.C. This Filing
23.2 Consent of Max A. Hansen & Associates, P.C. This Filing
24. Powers of Attorney
24.1 Powers of Attorney are included on signature page(3)
(1) Incorporate by reference to the Company's Current Report on Form 8-K
dated August 31, 2000.
(2) Incorporated by reference to the Company's Registration Statement on
Form 10-SB, file no. 0-27011
(3) Filed herewith.
All other Exhibits called for by Rule 601 of Regulation S-B are not
applicable to this filing.
<PAGE>
<PAGE> 60
(b) Financial Statement Schedules
All schedules are omitted because they are not applicable or because the
required information is included in the financial statements or notes thereto.
Item 28. Undertakings.
----------------------
(a) The undersigned small business issuer hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to: (i) Include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) Reflect in
the prospectus any facts or events which, individually or together represent a
fundamental change in the information in the registration statement; and (iii)
Include any material or changed information the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities as at that time to be the initial
bona fide offering thereof.
(3) File a post effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) To provide to the underwriter at the Closing specified in the
underwriting agreement certificates in such denominations and registered in
such names as may be required by the underwriter to permit prompt delivery to
each purchaser.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer 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 a claim for indemnification against such
liabilities (other than the payment by the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the small business issuer will, unless in the opinion of its
counsel that matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
(d) The undersigned small business issuer hereby undertakes that it
will:
(1) For purposes of determining any liability under the Securities Act
that the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be a part of this registration
statement as of the time the Commission declared it effective.
(2) For the purpose of determining any liability under the Securities
Act, that each post-effective amendment that contains a form of prospectus as
a new registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
<PAGE>
<PAGE> 61
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Provo, State of Utah on August 31,
2000.
ALPINE AIR EXPRESS, INC.
By: /S/
----------------
Eugene R. Mallette
Chairman and CEO
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on August 31, 2000.
By: /s/ Chairman, Chief Executive Officer and
--------------------------- Director (principal executive officer)
Eugene R. Mallette
By: /s/
--------------------------- President and Director
Bill Distefano
By: /s/ Chief Financial Officer (principal
--------------------------- accounting Leslie Hill and financial
Leslie Hill officer)
By: /s/ Director
---------------------------
Max Hansen
By: /s/ Director
---------------------------
Charles Bates
By: /s/ Director
---------------------------
Richard Rowack
The above signed officer and/or director of Alpine Air Express, Inc., a
Delaware corporation (the "Corporation"), hereby constitutes and appoints
Eugene R. Mallette and Bill Distefano, and each of them, with full power of
substitution and resubstitution, as attorney to sign for the undersigned in
any and all capacities this Registration Statement and any and all amendments
thereto, and any and all applications or other documents to be filed
pertaining to this Registration Statement with the Securities and Exchange
Commission or with any states or other jurisdictions in which registration is
necessary to provide for notice or sale of all or part of the securities to be
registered pursuant to this Registration Statement and with full power and
authority to do and perform any and all acts and things whatsoever required
and necessary to be done in the premises, as fully to all intents and purposes
as the undersigned could do if personally present. The undersigned hereby
ratifies and confirms all that said attorney-in-fact and agent, or any of his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof and incorporate such changes as any of the said attorneys-in-fact deems
appropriate.
