|
|
|
|
|
|
|
|
|
|
|
|
|
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
November 10, 1997 (August 27, 1997)
----------------------------------------
VERMONT PURE HOLDINGS, LTD.
(Exact name of Registrant as specified in its charter)
Delaware 1-11254 06-1325376
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
Route 66; P.O. Box C; Randolph, VT 05060
(Address of principal executive offices)
(802) 728-3600
Registrant's telephone number, including area code
(Former name or former address, if changed since last report)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
VERMONT PURE HOLDINGS, LTD.
(Registrant)
Date: November 10, 1997 By: /s/ Bruce S. MacDonald
------------------ -----------------------
Bruce S. MacDonald
Vice President, Chief Financial
Officer (Principal Accounting
Officer and Principal Financial Officer)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of business acquired.
(b) Pro forma financial information.
<PAGE>
Item 7 (a)
Financial Statements of Business Acquired
<PAGE>
EXCELSIOR SPRINGS WATER CO., INC.
INDEX TO FINANCIAL STATEMENTS
PAGE NUMBER
Independent Auditor's Report 2
Balance Sheet 3
Statement of Operations 4
Statement of Changes in Stockholders' Equity 5
Statement of Cash Flows 6-7
Notes to Financial Statements 8-13
Unaudited Financial Statements 14-17
-1-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Excelsior Springs Water Co., Inc.
We have audited the accompanying balance sheet of Excelsior Springs Water
Co., Inc. as of October 31, 1996 and the related statements of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Excelsior Springs Water Co.,
Inc. as of October 31, 1996, and the results of its operations, and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
/S/ Feldman Radin $ Co., P.C.
FELDMAN RADIN & CO., P.C.
Certified Public Accountants
New York, New York
September 24 , 1997
-2-
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR SPRINGS WATER CO., INC.
BALANCE SHEET
OCTOBER 31, 1996
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 10,716
Trade accounts receivable, less allowance for doubtful
accounts of $16,128 223,532
Inventories 135,866
Prepaid expenses and other current assets 4,047
----------------
TOTAL CURRENT ASSETS 374,161
----------------
PROPERTY, PLANT & EQUIPMENT, net of accumulated
depreciation of $1,442,051 1,296,132
OTHER ASSETS 27,370
----------------
$ 1,697,663
================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 99,004
Current installments of long-term debt 486,011
Trade accounts payable 330,184
Accrued expenses 134,066
Deposits 226,256
---------------
TOTAL CURRENT LIABILITIES 1,275,521
LONG-TERM DEBT, excluding current installments 310,661
----------------
TOTAL LIABILITIES 1,586,182
----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, no par value. authorized 200 shares;
issued and outstanding 83 shares 10,000
Additional paid in-capital 1,224,005
Accumulated deficit (1,122,524)
----------------
TOTAL SHAREHOLDERS' EQUITY 111,481
----------------
$ 1,697,663
================
See notes to financial statements
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR SPRINGS WATER CO., INC.
STATEMENT OF OPERATIONS
OCTOBER 31, 1996
<S> <C>
SALES $ 2,723,172
COST OF SALES 1,277,235
----------------
GROSS PROFIT 1,445,937
EXPENSES:
Selling, general, and administrative expenses 1,380,673
----------------
OPERATING INCOME 65,264
----------------
OTHER (INCOME) EXPENSE:
Interest expense 76,793
Other Income (44,018)
----------------
32,775
----------------
INCOME BEFORE PROVISION FOR INCOME TAXES 32,489
Provision for Income Taxes 8,100
----------------
NET INCOME $ 24,389
================
See notes to financial statements
-4-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR SPRINGS WATER CO., INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
YEAR ENDED OCTOBER 31, 1996
Total
Additional Stockholders'
Common Paid-in Accumulated Equity
Stock Capital Deficit (Deficit)
--------------- ---------------- ------------------ --------------------
<S> <C> <C> <C> <C>
Balance at October 31, 1995 $ 10,000 $ 898,313 $ (1,146,913) $ (238,600)
Capital Contribution - 325,692 - 325,692
Net income - 1996 - - 24,389 24,389
--------------- ---------------- ------------------ --------------------
Balance at October 31, 1996 $ 10,000 $ 1,224,005 $ (1,122,524) $ 111,481
=============== ================ ================== ====================
See notes to financial statements
-5-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR SPRINGS WATER, CO., INC.
STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 1996
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 24,389
---------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of plant and equipment 231,818
Other amortization 25,200
Changes in assets and liabilities:
Increase in trade accounts receivable (12,264)
Decrease in inventories 24,023
Decrease in prepaid expenses and other current assets 6,154
Increase in trade accounts payable 52,451
Decrease in accrued expenses (28,094)
Increase in deposits 17,026
Decrease in other liabilities 67,731
---------------
384,045
---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 408,434
---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (416,410)
---------------
NET CASH USED IN INVESTING ACTIVITIES (416,410)
---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (11,853)
---------------
NET CASH USED IN FINANCING ACTIVITIES (11,853)
---------------
NET DECREASE IN CASH (19,829)
CASH AT BEGINNING OF YEAR 30,545
---------------
CASH AT END OF YEAR $ 10,716
===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash provided during the year for:
Interest $ 75,445
===============
Taxes $ 1,155
===============
See notes to financial statements
-6-
<PAGE>
EXCELSIOR SPRINGS WATER CO., INC.
STATEMENT OF CASH FLOWS (continued)
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Capital Contribution
Forgiveness of accrued rents, royalties and interest
by shareholders $ 325,695
===============
Additions to property and equipment through
assumption of note payable $ 74,611
===============
See notes to financial statements
-7-
</TABLE>
<PAGE>
Excelsior Springs Water Co., Inc.
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS ORGANIZATION AND BASIS OF PRESENTATION
Excelsior Springs Water Co., Inc. (the Company) bottles and
distributes natural spring water in both reusable five gallon bottles
and disposable bottles of various sizes. The Company also rents water
coolers for use with the five gallon bottles, and distributes coffee
and other related products. Water conditioning and filtration equipment
was added as an additional product for resale.
As of August 27, 1997 the Company was acquired through a
purchase type transaction by Vermont Pure Springs, Inc., a wholly owned
subsidiary of Vermont Pure Holdings, Ltd.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Inventories
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. The composition of the
Company's inventories consists of the packaging materials for water
products as well as coffee products.
B. Property and Equipment
Property and equipment are recorded at cost. Depreciation is
provided using the straight-line method and accelerated methods over
the estimated useful lives of the assets. Leasehold improvements are
amortized over the respective lease terms or the service lives of the
improvements, whichever is shorter.
C. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
D. Cash and Cash Equivalents
The Company includes as cash and cash equivalents all cash
accounts which are not subject to withdrawal restrictions or penalties,
and all highly liquid instruments, with original maturities of three
months or less.
E. Disclosures About the Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No. 107
"Disclosures About Fair Value of Financial Instruments" requires
disclosure about the fair value of all financial instruments. Carrying
amounts of all financial instruments approximate fair value as of
October 31, 1996.
-8-
<PAGE>
Excelsior Springs Water Co., Inc.
NOTES TO FINANCIAL STATEMENTS
F. Accounting for Long-Lived Assets
Under the requirements of SFAS No. 121 "Accounting for
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the
Company is obligated to recognize an impairment loss on their
long-lived assets whenever the sum of the expected future cash flows
from their use is less than their carrying amount. Based on the
Company's review as of October 31, 1996, no impairment of long-lived
assets was evident.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
October 31,
Life Range 1996
----------------- ------------------
Vehicles and equipment 5 - 20 years $ 612,937
Coolers 10 years 856,914
Bottles 5 years 655,965
Leasehold improvements 7 - 20 years 225,236
Office equipment 3 - 20 years 109,690
Coffee equipment 7 years 269,961
Crates 5 years 7,480
-------------------
Total 2,738,183
Less: Accumulated depreciation 1,442,051
-------------------
Net $ 1,296,132
===================
4. SHORT-TERM AND LONG-TERM OBLIGATIONS AND COMMITMENTS
A. Short-Term Debt
Short-term debt at October 31, 1996 consists of a demand note
payable at an interest rate of prime plus 1.75%. The note is secured by
property and equipment, trade receivables, and the guarantee of certain
shareholders.
-9-
<PAGE>
<TABLE>
<CAPTION>
Excelsior Springs Water Co., Inc.
NOTES TO FINANCIAL STATEMENTS
B. Long-Term Debt
Long-term debt at October 31, 1996 consists of the following:
<S> <C>
Notes payable at interest rates ranging from 8.00% to 9.75%.
Payable in monthly installments of principal and interest through
2002. 85% guaranteed by the U.S. Small Business Administration. $ 102,906
Notes payable based on settlement terms. Payable in monthly
installments of $2,000 through April 1997 with a balloon payment
due in the amount of $68,000 on May 1, 1997. 80,000
Notes payable at interest rates between 9.5% and 12.75%. Payable in monthly
installments of principal and interest through 2001. Secured by various assets
of the Company and personal guarantees by
shareholders. 105,201
Note payable at interest rates ranging from prime plus 2% to 10% payable until
maturity at dates ranging from December 1, 1990 to
October 31, 1992. The notes are unsecured. 245,943
Note payable at an interest rate of prime plus 2%. Payable in monthly
installments of $500 plus interest through August 1999 after which the remaining
balance will be due in full. Secured by the
personal residence of a shareholder. 262,622
---------------
796,672
Less: current installments of long-term debt 486,011
---------------
Long-term debt, excluding current installments $ 310,661
===============
</TABLE>
During 1996 the Company was notified by its bank that the
maturity of the notes payable guaranteed by the U.S. Small Business
Administration has been accelerated. The Company disputes the bank's
right to accelerate the note. Because of acceleration, the entire
balance of these notes payable has been classified as a current
liability.
During 1991, certain holders of unsecured notes issued by the
Company containing provisions allowing for their conversion into common
stock agreed to accept new notes in their place upon maturity rather
than exercise their conversion feature. The new notes, which matured on
October 31, 1992, do not contain any conversion features. One holder of
the original notes has elected to exercise its conversion feature;
however, as of October 31, 1996, the common stock has not been issued.
A number of holders of the original notes have declined to sign new
notes or exercise the conversion feature. As a result of the above, the
outstanding principal balance, including capitalized interest, of
$245,943 is included in current installments of long-term debt at
-10-
<PAGE>
Excelsior Springs Water Co., Inc.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996. Several payments were made during 1996. The Company's
management continues to negotiate for revised repayment terms and
expects to continue to repay a portion of the notes during 1997.
The aggregate principal payments on long-term debt during the years
subsequent to October 31, 1996 are as follows:
Year ending October 31:
1997 $ 486,011
1998 32,974
1999 252,150
2000 15,314
2001 9,399
Thereafter 824
--------------
$ 796,672
==============
As part of the terms of the acquisition agreement between the
Company and Vermont Pure Springs, Inc. all note holders and bank loans
were subsequently satisfied.
C. Commitments
The Company leases certain property and equipment used in its
operations under operating lease arrangements. Rent expense recorded
under operating leases during 1996 was $113,713.
Future minimum lease payments under noncancelable operating leases
(with initial or remaining lease terms in excess of one year) as of
October 31, 1996 are:
1997 $ 78,699
1998 64,897
1999 60,766
2000 21,063
2001 13,000
--------------
$ 238,425
==============
-11-
<PAGE>
Excelsior Springs Water Co., Inc.
NOTES TO FINANCIAL STATEMENTS
5. RELATED PARTY TRANSACTIONS
During 1996, one of the Company's shareholders gave up his
right to accrued rents, royalties and interest recorded by the Company
for the periods prior to October 31, 1996. Additionally, another
shareholder gave up his right to rents, royalties and interest accrued
for the fiscal year ended October 31, 1996. The amount forgiven totaled
$325,692, and is recorded as a capital contribution in the accompanying
financial statements.
As a condition to the agreement that resulted in, among other
things, the one shareholder's relinquishment of his right to accrued
rents, royalties and interest, as described above, the Company granted
a secondary security interest in the equipment located on the Company's
property, as well as a secondary interest in any and all accounts
receivable of the Company, to that shareholder.
The Company leases the property on which it is located from
the Company's shareholders. During 1996, the Company recorded rent
expense due to shareholders in the amount of $24,000. Accrued rent
included in other liabilities totaled $0 at October 31, 1996.
In addition, the Company is required to pay royalties to the
shareholders based upon the amount of water drawn from the natural
spring located on the property discussed above. During 1996, the
Company recorded royalty expense due to shareholders in the amount of
$26,260. Accrued royalties included in other liabilities totaled $0 at
October 31, 1996.
Included in long-term debt are notes payable, including
capitalized interest, to relatives of a shareholder in the amount of
$155,943 at October 31, 1996. Accrued interest on these notes included
in the accompanying balance sheet amounted to $14,161 at October 31,
1996.
6. INCOME TAXES
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities as of October 31, 1996 are
presented below:
<TABLE>
<CAPTION>
<S> <C>
Deferred income tax assets:
Allowance for doubtful accounts $ 9,000
Equipment, principally due to differences in
depreciation methods 70,000
Net operating loss carryforward 75,000
--------------------
Total gross deferred tax assets 154,000
Les valuation allowance (154,000)
--------------------
Net deferred income taxes $ -
====================
-12-
</TABLE>
<PAGE>
Excelsior Springs Water Co., Inc.
NOTES TO FINANCIAL STATEMENTS
As of October 31, 1996, the Company has Federal net operating
loss carryforwards of approximately $222,000 and New York State net
operating loss carryforwards of approximately $166,000 for both
financial reporting and income tax purposes. These net operating loss
carryforwards expire in varying amounts at various time through the
year 2007.
7. CONTINGENCIES
Certain legal claims have been filed against the Company
relative to matters which have arisen in the normal course of business.
In the opinion of management, liabilities, if any, arising from these
proceedings would not have a material adverse effect on the financial
position of the Company.
-13-
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR SPRINGS WATER CO., INC.
BALANCE SHEET
JULY 31, 1997
(Unaudited)
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 21,611
Trade accounts receivable, less allowance for doubtful
accounts of $16,128 313,327
Inventories 150,679
Prepaid expenses and other current assets 32,677
----------------
TOTAL CURRENT ASSETS 518,294
PROPERTY PLANT & EQUIPMENT, net of accumulated
depreciation of $1,619,464 1,365,467
OTHER ASSETS 15,512
----------------
$ 1,899,273
================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 198,008
Current installments of long-term debt 486,011
Trade accounts payable 327,932
Accrued expenses 253,637
Deposits 212,492
----------------
TOTAL CURRENT LIABILITIES 1,478,080
LONG-TERM DEBT, excluding current installments 92,085
----------------
TOTAL LIABILITIES 1,570,165
----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, no par value. Authorized 200 shares;
issued and outstanding 83 shares 10,000
Additional paid in-capital 1,304,657
Accumulated deficit (985,549)
----------------
TOTAL SHAREHOLDERS' EQUITY 329,108
----------------
$ 1,899,273
================
See notes to unaudited financial statements
-14-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR SPRINGS WATER CO., INC.
STATEMENT OF OPERATIONS
NINE MONTHS ENDED JULY 31, 1997
(Unaudited)
<S> <C>
SALES $ 2,322,915
COST OF SALES 927,767
----------------
GROSS PROFIT 1,395,148
EXPENSES:
Selling, general, and administrative expenses 1,202,104
----------------
OPERATING INCOME (LOSS) 193,044
----------------
OTHER EXPENSE (INCOME):
Interest expense 69,431
Other Income (17,362)
----------------
52,069
----------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 140,975
Provision for Income Taxes 4,000
----------------
NET INCOME (LOSS) $ 136,975
================
See notes to unaudited financial statements
-15-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR SPRINGS WATER, CO., INC.
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JULY 31, 1997
(Unaudited)
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 136,975
---------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of plant and equipment 177,414
Other amortization
(Gain) loss on unsalable inventory
Changes in assets and liabilities:
(Increase) in trade accounts receivable (89,795)
(Increase) in inventories (14,813)
(Increase) in prepaid expenses and other current assets (28,631)
Decrease in other assets 11,858
(Decrease) in trade accounts payable (2,252)
Increase in short-term debt 99,004
Increase in accrued expenses 119,571
(Decrease) in deposits (13,764)
---------------
258,592
---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 395,567
---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (246,748)
---------------
NET CASH USED IN INVESTING ACTIVITIES (246,748)
---------------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in paid-in-capital 80,652
Principal payments on long-term debt (218,576)
---------------
NET CASH USED IN FINANCING ACTIVITIES (137,924)
---------------
NET DECREASE IN CASH 10,895
CASH AT BEGINNING OF PERIOD 10,716
---------------
CASH AT END OF PERIOD $ 21,611
===============
See notes to unaudited financial statements
-16-
</TABLE>
<PAGE>
EXCELSIOR SPRINGS WATER CO., INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NINE MONTHS ENDED JULY 31, 1997
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited, but
reflect all adjustments which, in the opinion of management, are
necessary for a fair presentation of financial position and the results
of operations for the interim period presented. All such adjustments
are of a normal and recurring nature. The results of operations for any
interim period are not necessarily indicative of the results attainable
for a full fiscal year.
-17-
<PAGE>
Item 7 (b)
Pro Forma Financial Information
<PAGE>
VERMONT PURE HOLDINGS, LTD. AND EXCELSIOR SPRINGS WATER CO., INC.
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The accompanying pro forma consolidated financial statements have been
prepared to show the effects of the August 27,1997 acquisition of Excelsior
Springs Water Co., Inc. ("Excelsior") by Vermont Pure Holdings, Ltd. (the
"Company"). This acquisition is accounted for as a purchase business
combination.
The following unaudited pro forma consolidated balance sheet presents the
pro forma financial position of the Company at July 31, 1997 as if the
acquisition of Excelsior had occurred on such date. Included are adjustments to
record the value of the consideration paid by the Company, the acquisition costs
and the resulting goodwill.
The unaudited pro forma consolidated statements of operations for the year
ended October 31, 1996 and the nine months ended July 31, 1997 reflect the
combined results of the Company and Excelsior as if the acquisition had occurred
on November 1, 1995, adjusted to reflect goodwill amortization, amortization of
other intangibles and interest on acquisition debt.
The unaudited pro forma consolidated statements of operations do not
necessarily represent actual results that would have been achieved had the
companies been together as of November 1, 1995, nor may they be indicative of
future operations. These unaudited pro forma consolidated financial statements
should be read in conjunction with the Company's and Excelsior's historical
financial statements and notes thereto.
-1-
<PAGE>
<TABLE>
<CAPTION>
VERMONT PURE HOLDINGS LTD./EXCELSIOR SPRINGS WATER CO., INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
ASSETS
Excelsior
Vermont Pure Springs Water
Holdings, Ltd. Co., Inc. Pro Forma Adjustments
--------------------------------------
July 26, July 31,
------------- -------------- ---------------- ----------------
1997 1997 DEBIT CREDIT Total
------------- -------------- ---------------- ---------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 247,854 $ 21,611 $ (1)$ 220,995 $ 48,470
Trade accounts receivable 2,579,712 313,327 2,893,039
Inventory 550,109 150,679 700,788
Other current assets 140,562 32,677 173,239
------------- -------------- -------------
TOTAL CURRENT ASSETS 3,518,237 518,294 3,815,536
------------- -------------- -------------
------------- -------------- -------------
PROPERTY AND EQUIPMENT - Net 6,326,488 1,365,467 (1) 490,764 7,201,191
------------- -------------- -------------
OTHER ASSETS:
Intangible assets, net 2,291,299 - (1) 2,805,493 5,096,792
Other assets 21,918 15,512 37,430
------------- -------------- -------------
TOTAL OTHER ASSETS 2,313,217 15,512 5,134,222
------------- -------------- -------------
================ ================
$ 12,157,942 $ 1,899,273 $ 2,805,493 $ 711,759 $ 16,150,949
============= ============== ================ ================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,368,362 $ 327,932 $ 85,344 $ $ 1,610,950
Customer deposits 600,100 212,492 812,592
Accrued expenses 1,221,952 253,637 (1) 195,152 1,280,437
Note payable bank - 198,008 (1) 406,722 604,730
Current portion of long-term debt 550,329 486,011 (1) 282,418 753,922
Current portion of obligations
under capital lease 60,175 - 60,175
------------- -------------- ---------------
TOTAL CURRENT LIABILITIES 3,800,918 1,478,080 5,122,806
------------- -------------- ---------------
LONG-TERM DEBT:
Long-term debt 3,706,929 92,085 (1) 1,630,908 5,429,922
Obligations under capital lease 66,169 - 66,169
------------- -------------- ---------------
TOTAL LONG-TERM DEBT 3,773,098 92,085 5,496,091
------------- -------------- ---------------
------------- -------------- ---------------
TOTAL LIABILITIES 7,574,016 1,570,165 10,618,897
------------- -------------- ---------------
STOCKHOLDER'S EQUITY:
Common stock - $.001 par value,
20,000,000 authorized shares,
9,716,363 issued and outstanding,
actual and 10,131,980 pro forma 9,716 10,000 (1) 9,584 10,132
Paid-in-capital 21,499,381 1,304,657 (1) 356,947 22,447,091
Accumulated deficit (16,925,171) (985,549) (1) 985,549 (16,925,171)
------------- -------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 4,583,926 329,108 5,532,052
------------- -------------- ---------------
================ ================
$ 12,157,942 $ 1,899,273 $ 929,445 $ 3,023,179 16,150,949
============= ============== ================ ================ ===============
See notes to pro forma financial statements
-2-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VERMONT PURE HOLDINGS, LTD./EXCELSIOR SPRINGS WATER CO., INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Excelsior
Vermont Pure Springs
Holdings, Ltd. Water Co., Inc. Pro Forma Adjustments
-----------------------------------------
October 26, October 31,
------------- ------------- -------------------- -----------------
1996 1996 DEBIT CREDIT Total
------------- ------------- -------------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
SALES $ 11,878,829 $ 2,723,172 $ $ $ 14,602,001
COST OF SALES 6,162,903 1,277,235 7,440,138
------------- ------------- ---------------
GROSS PROFIT 5,715,926 1,445,937 7,161,863
------------- ------------- ---------------
OPERATING EXPENSES:
Selling, General and
administrative 4,234,104 1,380,673 (3) 19,448 5,634,225
Advertising expenses 2,348,327 - 2,348,327
Amortization 143,094 - (1) 184,493 327,587
------------- ------------- ---------------
TOTAL OPERATING
EXPENSES 6,725,525 1,380,673 8,310,139
------------- ------------- ---------------
OPERATING PROFIT (LOSS) (1,009,599) 65,264 (1,148,276)
OTHER (INCOME) EXPENSE:
Interest, net 196,630 76,793 (3) 141,116 414,539
Miscellaneous 61,102 (44,018) 17,084
-------------- ------------- --------------
NET LOSS BEFORE
INCOME TAXES (1,267,331) 32,489 (1,579,899)
PROVISION FOR INCOME TAXES - 8,100 (4) 8,100 -
------------- ------------- ---------------
================= =================
NET LOSS $ (1,267,331) $ 24,389 $ 345,057 $ 8,100 $ (1,579,899)
============= ============= ================= ================= ===============
NET LOSS PER SHARE $ (0.13) $ (0.16)
============= ===============
WEIGHTED AVERAGE SHARES 9,678,268 415,617 10,093,885
============= ================= ===============
See notes to pro forma financial statements
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VERMONT PURE HOLDINGS, LTD./EXCELSIOR SPRINGS WATER CO., INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Excelsior
Vermont Pure Springs
Holdings, Ltd. Water Co., Inc. Pro Forma Adjustments
-----------------------------------------
July 26, July 31,
-------------- -------------- -------------------- ----------------
1997 1997 DEBIT CREDIT Total
-------------- -------------- -------------------- ---------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
SALES $ 12,255,738 $ 2,322,915 $ $ $ 14,578,653
COST OF SALES 5,361,124 927,767 6,288,891
-------------- -------------- --------------
GROSS PROFIT 6,894,614 1,395,148 8,289,762
-------------- -------------- --------------
OPERATING EXPENSES:
Selling, General and
administrative 4,176,986 1,202,104 (2) 14,586 5,393,676
Advertising expenses 2,410,552 - 2,410,552
Amortization 136,659 - (1) 138,369 275,028
-------------- -------------- --------------
TOTAL OPERATING
EXPENSES 6,724,197 1,202,104 8,079,256
-------------- -------------- --------------
OPERATING PROFIT (LOSS) 170,417 193,044 210,506
OTHER (INCOME) EXPENSE:
Interest, net 230,939 69,431 (3) 105,837 406,207
Miscellaneous (17,954) (17,362) (35,316)
-------------- -------------- --------------
NET LOSS BEFORE
INCOME TAXES (42,568) 140,975 (160,385)
PROVISION FOR INCOME TAXES - 4,000 (4) 1,000 3,000
-------------- -------------- --------------
================ =================
NET LOSS $ (42,568) $ 136,975 $ 258,792 $ 1,000 $ (163,385)
============== ============== ================ ================= ==============
NET LOSS PER SHARE $ (0.00) $ (0.02)
============== ==============
WEIGHTED AVERAGE SHARES 9,697,316 415,617 10,112,933
============== ================ ==============
See notes to pro forma financial statements
-4-
</TABLE>
<PAGE>
VERMONT PURE HOLDINGS, LTD. AND EXCELSIOR SPRINGS WATER CO., INC.
NOTES TO UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
A. The following unaudited pro-forma adjustments are included in the
accompanying unaudited pro forma consolidated balance sheet at July 31,
1997:
(1) To record the acquisition of 100% of the stock of Excelsior Springs
Water Co., Inc.
The purchase price totaled $2,261,112 and consisted of 363,014 shares
of common stock with a fair value of $828,126, notes payable totaling
$533,729 and cash in the amount of $899,257. Acquisition costs totaled
$176,808. Financing was provided through an acquisition line of credit
with Chittendon Bank in the amount of $1,750,000. An additional 52,603
shares, valued at $120,000 were issued for a non-compete agreement.
Upon the closing of the acquisition, the Company immediately paid off
certain selected liabilities of Excelsior, consisting of loans payable
aggregating $599,518, accrued interest of $195,152 and certain payables
totaling $85,344.
The fair value of tangible and identifiable intangible assets acquired
aggregated $1,706,894 at the acquisition date. The Company did not
acquire certain machinery and equipment which were owned by Excelsior.
Liabilities assumed aggregated $745,774 at the acquisition date (after
the repayments discussed above). Resulting goodwill totals
approximately $2.5 million.
B. The following pro-forma adjustments are included in the accompanying
unaudited pro forma consolidated statements of operations for the nine
months ended July 31, 1997 and the year ended October 31, 1996 which have
been prepared to reflect the August 27, 1997 acquisition as if it had
occurred on November 1, 1995:
(1) To amortize goodwill recorded in the acquisition over a period of
20 years, customer list valued at $177,297 over a period of five
years and a non-compete agreement valued at $132,656 over a period
of five years.
(2) To amortize prepaid consulting agreement in the amount of $58,345,
over its contractual period of three years.
(3) To record interest expense on the increased debt levels resulting
from the acquisition.
(4) To adjust income tax expense.
-5-
|
|