SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended January 30, 1999
Commission File No. 1-11254
VERMONT PURE HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 06-1325376
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Route 66; PO Box C; Randolph, VT 05060
(Address of principal executive offices) (Zip Code)
(802)728-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class March 7, 1999
Common Stock, $.001 Par Value 10,255,758
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
INDEX
Page Number
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet as of
January 30, 1999 (unaudited) and
October 31, 1998 4
Consolidated Statement of Operations
(unaudited) for the Three Months ended
January 30, 1999 and January 24, 1998 5
Consolidated Statement of Cash Flows
(unaudited) for the Three Months ended
January 30, 1999 and January 24, 1998 6
Notes to Consolidated Financial Statements
(unaudited) 7- 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operation 9-13
Part II - Other Information 14-18
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature 19
<PAGE>
PART I - Item 1
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<CAPTION>
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 30, October 31,
1999 1998
(unaudited)
<S> <C> <C>
----------------------- ----------------------
CURRENT ASSETS:
Cash $ 576,019 $ 161,271
Accounts receivable 3,605,165 3,069,699
Inventory 1,648,977 1,843,927
Current portion of deferred tax asset 330,000 330,000
Other current assets 457,044 222,970
----------------------- ----------------------
TOTAL CURRENT ASSETS 6,617,205 5,627,867
----------------------- ----------------------
PROPERTY AND EQUIPMENT - net of accumulated depreciation 9,384,822 9,174,063
OTHER ASSETS:
Intangible assets - net of accumulated amortization 9,459,653 9,595,915
Deferred tax asset 1,661,000 1,661,000
Other assets 312,973 114,658
----------------------- ----------------------
TOTAL OTHER ASSETS 11,433,626 11,371,573
----------------------- ----------------------
TOTAL ASSETS $ 27,435,653 $ 26,173,503
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,760,941 $ 3,007,630
Current portion of customer deposits 61,460 58,360
Accrued expenses 1,324,795 1,104,871
Current portion of long term debt 306,835 601,570
Current portion of obligations under capital lease 127,630 119,995
----------------------- ----------------------
TOTAL CURRENT LIABILITIES 4,581,661 4,892,426
----------------------- ----------------------
Long term debt 1,257,894 1,428,807
Long term obligations under capital lease 150,161 210,203
Line of credit 10,465,793 8,783,793
Long term portion of customer deposits 943,885 893,145
----------------------- ----------------------
TOTAL LIABILITIES 17,399,394 16,208,374
----------------------- ----------------------
STOCKHOLDERS' EQUITY:
Common stock - $.001 par value, 20,000,000 10,304 10,288
authorized shares, 10,303,758 issued
shares at January 30, 1999 and
10,287,187 issued shares at October 31, 1998.
Paid in capital 23,080,033 23,080,049
Accumulated deficit (12,885,328) (12,956,458)
Treasury stock, at cost, 50,000 shares (168,750) (168,750)
----------------------- ----------------------
TOTAL STOCKHOLDERS' EQUITY 10,036,259 9,965,129
----------------------- ----------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 27,435,653 $ 26,173,503
======================= ======================
</TABLE>
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<TABLE>
<CAPTION>
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
January 30, January 24,
1998 1999
----------------------------------------------
(unaudited)
----------------------------------------------
<S> <C> <C>
SALES $ 5,880,846 $ 4,407,086
COST OF GOODS SOLD 2,031,014 1,942,154
GROSS PROFIT 3,849,832 2,464,932
OPERATING EXPENSES:
Selling, general and administrative expense 2,716,990 2,017,100
Advertising expenses 688,541 640,897
Amortization 151,614 120,706
----------------------- -------------------
TOTAL OPERATING EXPENSES 3,557,145 2,778,703
----------------------- -------------------
PROFIT (LOSS) FROM OPERATIONS 292,687 (313,771)
OTHER INCOME (EXPENSE):
Interest - net (221,557) (151,284)
Miscellaneous 0 403
----------------------- -------------------
TOTAL OTHER INCOME (EXPENSE) (221,557) (150,881)
----------------------- -------------------
PROFIT (LOSS) BEFORE INCOME TAXES 71,130 (464,652)
PROVISION FOR INCOME TAX BENEFIT 0 0
----------------------- -------------------
NET INCOME (LOSS) $ 71,130 $ (464,652)
----------------------- -------------------
NET INCOME (LOSS) PER SHARE - BASIC $ 0.01 $ (0.05)
NET INCOME (LOSS) PER SHARE - DILUTED $ 0.01 $ (a)
======================= ===================
Weighted Average Shares Used in Computation - Basic 10,250,901 10,162,759
Weighted Average Shares Used in Computation - Diluted 10,965,327 (a)
(a) Potential shares are anti-dilutive.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
January 30, January 24,
1999 1998
----------------------------------------------
(unaudited)
----------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit/(loss) $ 71,130 $ (464,652)
Adjustments to reconcile net income(loss)
to net cash provided by operating activities:
Depreciation 333,389 292,674
Amortization 151,614 120,706
(Increase) Decrease in deferred tax asset 0 0
(Gain) loss on disposal of property and equipment (13,117) (13,029)
Changes in assets and liabilities (net of effect of acquisitions):
(Increase) Decrease in accounts receivable (535,466) 142,313
(Increase) Decrease in inventory 194,950 136,988
(Increase) Decrease in other current assets (234,074) 131,602
(Increase) Decrease in other assets (62,053) (149,694)
(Decrease) Increase in accounts payable (246,690) (63,016)
(Decrease) Increase in customer deposits 53,840 13,242
(Decrease) Increase in accrued expenses 219,924 86,409
CASH PROVIDED BY OPERATING ACTIVITIES (66,554) 233,543
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (550,553) (414,100)
Proceeds from sale of fixed assets 0 13,029
Cash used for acquistions (132,090) (1,331,169)
CASH USED IN INVESTING ACTIVITIES (682,643) (1,732,240)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (paydown) of line of credit 1,682,000 742,600
Proceeds from debt 0 1,365,489
Principal payment of debt (518,055) (243,461)
Sale of common stock 0 10,950
CASH PROVIDED BY FINANCING ACTIVITIES 1,163,945 1,875,578
NET INCREASE (DECREASE) IN CASH 414,748 376,881
CASH - Beginning of period 161,271 93,808
CASH - End of period $ 576,019 $ 470,689
------------------- -------------------
Cash paid for interest $ 214,444 $ 160,952
------------------- -------------------
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment acquired under capital leases $ 31,113 $ 0
=================== ===================
</TABLE>
<PAGE>
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion
of management contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position,
results of operations, and cash flows for the periods presented. The
results have been determined on the basis of generally accepted
accounting principles and practices applied consistently with the Form
10-KSB for the year ended October 31, 1998.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. The accompanying
consolidated financial statements should be read in conjunction with
the financial statements and notes thereto incorporated by reference
from the Company's Form 10-KSB for the year ended October 31, 1998.
2. SIGNIFICANT ACCOUNTING POLICIES
In February 1997, the Financial Accounting Standards Board issued
Statement on Financial Accounting Standards No. 128, "Earnings Per
Share" (FAS No. 128) which became effective for both interim and annual
financial statements for periods ending after December 15, 1997. FAS
No. 128 requires a presentation of "Basic" and (where applicable)
"Diluted" earnings per share. Generally Basic earnings per share are
computed on only the weighted average number of common shares actually
outstanding during the period and the Diluted computation considers
potential shares issuable upon exercise or conversion of other
outstanding instruments where dilution would result. Furthermore, FAS
No. 128 requires the restatement of prior period reported earnings to
conform to the new standard.
3. ACQUISITIONS
On November 29, 1998, the Company completed the purchase of
substantially all of the assets of Russell Distributing, a company
engaged in the distribution of spring water and cooler/dispenser
equipment for home and office customers with its principal place of
business in Merrimack, New Hampshire. The purchase price of the assets
was $200,000. The purchase was paid for with $132,000 of cash, which
was funded through the Company's acquisition line of credit at First
Union Bank, the issuance of 8,571 shares of the Company's common stock
and the assumption of a $38,000 liability.
<PAGE>
4. LINE OF CREDIT
As of January 30,1999 the Company's unused working capital line of
credit was $1,000,000.
5. COMMITMENTS
In order to increase production capacity the Company has leased new
production equipment. The equipment includes a bottle labeler and
related equipment for the PET facility in Randolph, Vermont as well as
a 5 gallon filling line and related equipment for the home and office
production facility in Randolph, Vermont. The leasing of this equipment
is for an aggregate of $192,080 and is being financed by a capital
lease with KeyCorp leasing. The lease is for seven years with a $1 buy
out at the end of that term.
6. SUBSEQUENT EVENT
On March 16, 1999 Vermont Pure Holdings, Ltd. announced that it had
terminated its distribution agreement with Coca-Cola Enterprises on
March 12, 1999 effective April 11, 1999. The Company has entered into
contracts with independent Snapple distributors to market Vermont Pure
Spring Water in the territory by Coca Cola Enterprises.
PART I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto as filed in the Company's Form 10-KSB for
the year ended October 31, 1998.
Forward-Looking Statements
When used in the Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result"
and "the Company expects," "will continue," "is anticipated," "estimated,"
"project," or "outlook" or similar expressions are intended to identify "
forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, each of which
speaks only as of the date made. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Among these
risks are water supply and bottling capacity constraints in the face of
significant growth, dependence on outside distributors, and reliance on
commodity price fluctuations as they influence raw material pricing. The Company
has no obligation to publicly release the result of any revisions which may be
made to any forward-looking statements to reflect anticipated or unanticipated
events or circumstances occurring after the date of such statements.
Results of Operations
Sales - Sales for the first three months of fiscal year 1999 were $5,881,000, an
increase of $1,474,000 or 33% over sales of $4,407,000 for the corresponding
period last year. Excluding sales attributable to acquisitions made subsequent
to the first quarter of 1998, sales in the first three months of fiscal year
1999 were 14% over the corresponding period last year. This 14% increase was
accounted for in the following distribution channels: 5% attributable to home
and office, 6% attributable to Vermont Pure sizes, 5% attributable to private
labels and a decrease of 2% attributable to secondary labels. The AKVA brand had
no material impact on sales.
<PAGE>
Sales for retail-size products increased $ 383,000 or 17%, for the three months
of fiscal year 1999 compared to the corresponding period a year ago. The
increase was a result of volume increases related to the continued growth of
both the Vermont Pure brand and private label brands. Increased promotional
expense was incurred to enhance brand awareness. This, as well as increased
market penetration and development of new markets, were responsible for the
sales growth. Average selling prices for the three months ending January 30,
1999 were down 3% for the corresponding period from the previous year. This is
indicative of the competitive marketplace as well as the increase in private
label brands.
Sales for the home and office division increased $1,091,000 or 52%, for the
first three months of fiscal year 1999 compared to the corresponding period of
the prior year. Exclusive of acquisitions, sales of home and office related
products increased approximately 12% the first quarter of fiscal 1999 compared
to the same period last year. This is reflective of increased category growth
and brand awareness.
Cost of Goods Sold - For the first three months of fiscal 1999, Cost of Goods
Sold was $2,031,000 compared to $1,942,000 for the same period in fiscal year
1998 resulting in gross profits of $3,850,000 or 65% of sales. The increase in
gross profit for the three month period was due to a considerable increase in
sales volume which resulted in a lower cost per unit. This had the effect of
spreading the overhead burden over more units thereby lowering the average unit
cost. In addition, the Company's sales continued to be skewed toward higher
margin home and office sales. Raw material pricing remained stable throughout
the first quarter of 1999. However, the Company's PET bottle prices are
dependant on the market costs of resin, and the stability of these costs cannot
be guaranteed. Significant price fluctuations in the future could result in
corresponding positive or negative effects on cost of goods sold and gross
profit.
Operating Expenses - For the first three months of fiscal year 1999 compared to
the corresponding period in fiscal year 1998, total operating expenses were
$3,557,000 and $2,779,000, an increase of $778,000 or 28%. Selling, general and
administrative expenses increased by $700,000 or 35%, for the first three months
of fiscal 1999. The increase in these costs was primarily due to the addition of
the operating costs of the acquired companies and the costs to integrate these
companies. The Company anticipates that it will continue to pursue acquisitions
in the future and that a key part of this growth strategy will be maximizing the
operating efficiencies of the acquired companies. However, no assurance can be
given that this effort will yield savings and profit. The increase of $48,000 in
advertising and promotion expenses for the respective periods was due to higher
expenses associated with increased market penetration and brand awareness. The
sales growth rate exceeded the rate of growth in promotional expenses. Given the
competitive nature of the industry, the Company anticipates that it will
continue to spend significant amounts in the future for advertising and
promotion as it continues to develop brand recognition and increase market
penetration but can give no assurances that increases in spending will result in
higher sales. For the first three months of fiscal year 1999, amortization
increased $ 31,000 from the same period one year ago as a result of increased
goodwill from new acquisitions.
<PAGE>
Profit From Operations - Profit from operations for the first three months of
fiscal 1999 was $293,000 as compared to a loss of $314,000 for the corresponding
period last year, an improvement of $607,000. The improvement is attributable to
the increase in sales combined with a decrease in raw material costs and
production and distribution volume efficiencies. The Company plans to continue
to create greater consumer awareness and to find alternate distribution channels
for its retail product and expand its less seasonal home and office distribution
business. No assurance can be given that this plan will be successful.
Other Income/Expense - Net interest expense increased $70,000 for the first
three months of fiscal year 1999 compared to the corresponding period in fiscal
year 1998. The increase in interest expense was a result of increased borrowing
to fund operations and finance acquisitions through a bank line of credit.
Net Income/Loss- The Company's net income for the first three months of fiscal
year 1999 was $71,000 compared to a net loss of $465,000 for the corresponding
period last year, an improvement of $536,000. The increase in net income for the
first three months is indicative of the improvement in results of operations
more than offsetting increased interest charges to finance growth through
acquisitions.
Possible Effect Of Change In Major Distributor - On March 12, 1999 the company
advised Coca Cola Enterprises ("CCE") of the Company's termination of its
distribution agreement with CCE effective April 11, 1999. The Company has
simultaneously entered into distribution agreements with independent Snapple
distributors throughout southern New England, New York, and New Jersey. In view
of an announcement by Coca Cola USA that it intends to market its own brand of
purified (not spring) water this year, and the likelihood that CCE will
distribute that brand when it is introduced, the Company beleives it will be
better served by controlling the timing of any change in distributors to
conincide with the onset of the warm weather selling season in the Northeast.
The Company expects to make the transition successfully and without significant
disruptions in distribution. However, as discussed in the Company's Form 10-KSB
for the 1998 fiscal year, it is possible that the transition could have a
negative impact on earnings and/or cash flow as a result of lower pricing
volume, possibly higher transport costs, and other inefficiencies involved in
bringing on a new system of distributors.
Liquidity and Capital Resources
The net cash outflow from operations was $67,000 compared to a net cash inflow
of $234,000 for the same period last year. This decline of $301,000 was
attributable to an accounts receivable buildup with a few large vendors. The
Company's primary requirements for cash continues to be for the marketing and
promotional activities needed to effect market penetration and expand sales,
acquisition of operating assets needed to accommodate the growth of the
business, and debt repayment. These requirements may result in future net cash
outflows on a seasonal basis.
<PAGE>
As of January 30, 1999, the Company had working capital of $2,035,000 compared
to $735,000 on October 31, 1998, the end of the last fiscal year. The increase
in working capital of $1,300,000 reflects, primarily, accounts receivable and
cash generated from operations. Scheduled debt repayments from the financing of
acquisitions and resulting integration costs and capital expansion continues to
be a significant use of cash for the Company. As of March 11, 1999 the Company
had borrowed $2,355,000 from the working capital portion of its line of credit
with First Union Bank compared to $844,000 of the line at the beginning of the
fiscal year. The maximum amount available to borrow under this facility is
$3,000,000. All of the First Union borrowings are under one facility and divided
into separate working capital and acquisition segments. The Company pays a fixed
interest rate of 7.84% on the outstanding loan balance. The facility is secured
by all the inventory, receivables and intangible assets of the Company and
expires April 2003.
At October 31, 1998, the Company had recorded a deferred tax asset of
$1,991,000. No adjustments were made to this amount through the first quarter
of 1999. Further recognition is dependent on future earnings.
Although the Company has increased its cash usage over the last year, due to
acquisitions, it anticipates that its working capital position will improve in
future quarters and will be adequate to fund operations when supplemented by its
operating line of credit. Future sales growth and acquisitions may require
significant capital additions. The Company anticipates that it will be able to
use its own resources and obtain financing for this expansion although no
assurance can be given that this financing will be available. The Company is
continuing to pursue an active program of evaluating acquisition options. To
complete any acquisitions, the Company anticipates using its capital resources
and the CoreStates facility described above.
Year 2000 Readiness Disclosure
Computers, software and other equipment utilizing microprocessors that use
only two digits to identify a year in a date field may be unable to
accurately process certain date-based information at or after the Year 2000.
This is commonly referred to as the "Year 2000" or "Y2K" problem.
State of Readiness. The Company is assessing its state of readiness for dealing
with the Year 2000 problem. It is investigating its information
technology ("IT") systems and non-information technology ("NIT") systems for
readiness, and expects that some remediation will be necessary. The Company's
evaluation, as well as any related contingency plan, is expected to be complete
by the end of the fiscal second quarter. With respect to IT systems, the Company
expects that it will be necessary to complete certain internal hardware and
software upgrades. With respect to NIT systems, among other things, the Company
is examining its production equipment for Year 2000 readiness. In addition, the
Company has begun to request information on the Year 2000 readiness and
contingency plans of its customers, suppliers, bankers and other third parties
to assess the potential risks to the Company. Along with the readiness and
contingency plans of the above named group the Company is also seeking written
certifications from such third parties as to their Year 2000 compliance.
However, there can be no assurance that such certifications will be obtained.
Moreover, even if such certifications are obtained, the Company will not be able
to independently verify that such third parties are, in fact, Year 2000
compliant.
<PAGE>
Costs. The Company does not currently have an estimate of its projected total
expenditures related to Year 2000 compliance efforts. It expects to have an
estimate by the end of the fiscal second quarter. To date, the Company has
not incurred any material expenditures in connection with identifying or
evaluating Year 2000 compliance issues. A number of computer hardware and
software upgrades would have been necessary even in the absence the Year 2000
situation, in order to achieve maximum cost savings and other efficiencies from
recent acquisitions.
Risks. As the Company's assessment of its Year 2000 exposure is not yet
complete, the Company cannot fully and accurately quantify the impact of its
reasonably likely worst case Year 2000 scenario at the present time. However,
the Company does not expect the Year 2000 problem to create a material
disruption in the Company's business or have a material financial impact on its
operations. In general, the Company does not rely on electronic technology to
produce or distribute its product. In addition, the Company believes that is has
sufficient time, resources and expertise to accomplish the hardware and software
upgrades that will be necessary.
To the extent that unanticipated Year 2000 problems arise at the Company
or any of its significant customers, suppliers, bankers or other third
parties, the Company's business, financial position and results of operations
could be materially adversely affected. The Company believes that the greatest
potential risk is the failure of third party customers and suppliers to achieve
an appropriate level of Year 2000 readiness. Although the company believes such
third parties have the resources and expertise to avoid significant Year 2000
problems, it would be difficult for the Company to insulate itself from any
disruptions in the operations of key third parties which may result from the
Year 2000 issue. Among other things, the Company's principal distributors could
be unable to deliver products in a timely manner, and the Company may experience
a disruption in its ability to get products to market. In addition, the Company
could suffer from shortages of bottle or water supplies if any of its third
party suppliers experience Year 2000 problems.
Contingency Plans. The Company is developing Year 2000 contingency plans to
address any critical risks that may be identified. The Company is
communicating with its external customers, suppliers, bankers and other third
parties to determine their Year 2000 contingency plans and to coordinate, to the
extent possible, with such plans. By the end of the fiscal second quarter, the
Company expects to more completely define these issues, quantify their potential
impact and complete the development of contingency plans.
The foregoing Year 2000 capital disclosure constitutes a "Year 2000
readiness disclosure" under the Year 2000 Information and Readiness Disclosure
Act.
<PAGE>
PART II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
(a) None
(b) None
The Company issued 8,571 of its unregistered common shares on November 29, 1998
as part of the purchase of the assets of Russell Distributing. The price of the
stock on that date was $3.50 per share.
Item 3 - Defaults upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
On March 16, 1999 Vermont Pure Holdings issued the following press release:
Vermont Pure Holdings, Ltd. Announced today that it gas terminated its
distribution agreement whit Coca-Cola Enterprises effective April 11,1999. The
Company has entered into contracts with independent Snapple Distributors to
markedt Vermont Pure Natural Spring Water in the territory previously serviced
by Coca-Cola Enterprises. " We are excited about moving our business to the
independent Snapple syste, " said Tim Fallon chairman and CEO of Vermont Pure
Holdings, Ltd. "Snapple, under the management of the TRIARC Beverage Group, has
experienced a resurgence in the last two years. Their cold bottle-focus and 'up
and down the street' capabilities make for a terrific combination with Vermont
Pure."
The new distributor lineup included seven distributors that service 50,000
outlets n the metropoolitan New York-New Jersey area, the company's most
successful market. In addition, another ten distributors, with similar volume of
retail coverage, will sell Vermont Pure Throughout southern New England and west
central New York State.
Fallon added, "while we anticipate that this will be a challenging transition in
the near-term, we are convinced that the Snapple-Vermont Pure marketing
relationship will enable us to continue the momentum that both the company and
industry have experienced in recent years."
"These established independent entrepreneurs understand the dynamics of bottled
water and theopportunity that Vermont Pure brings to their system," contunued
Fallon.
"Vermont Pure Springs distributes its retail products from Maine to the
Carolinas and as far West as Michigan and Ohio. With this distribution change,
it is expected that 60% of Vermont Pure retail brend sales will be through
independent Snapple Kistributors."
Reference is made to the Company's 10-KSB for the year ended October 31, 1998
where more information can be foud concerning the Company's relationship with
CCE.
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
Exhibit
Number Description
3.1 Amended and Restated Certificate of Incorporation of Registrant dated
January 12, 1994. (Incorporated by reference from Exhibit 3.3 of Form
10-KSB for fiscal year ended October 30, 1993 - File No. 1-11254.)
3.2 By-Laws of Registrant. (Incorporated by reference from Exhibit 3.4 of
Registration Statement 33-46382.)
3.3 Amendment to By-Laws of Registrant Adopted March 26, 1997.
(Incorporated by reference from Exhibit 3.3 of Form 10-KSB for fiscal
year ended October 25, 1997 - File No. 1-11254.)
10.1 Employment Agreement between the Registrant and Timothy G. Fallon
dated as of November 1, 1996. (Incorporated by reference from
Exhibit 10.1 of Form 10-KSB for fiscal year ended October 25, 1997 -
File No. 1-11254.)
10.2 Employment Agreement between the Registrant and Bruce S. MacDonald
dated as of November 1, 1997. (Incorporated by reference from Exhibit
10.2 of Form 10-KSB for fiscal year ended October 25, 1997 - File No.
1-11254.)
10.3 Stock Option Agreement between Registrant and Mr. Fallon.
(Incorporated by reference from Exhibit 10.7 of Form 10-K for fiscal
year ended October 28, 1994, File No. 1-11254.)
10.4 Termination Agreement dated as of December 12, 1997 between the
Registrant and Condor Ventures Ltd. (Incorporated by reference from
Exhibit 10.5 of Form 10-KSB for fiscal year ended October 25, 1997 -
File No. 1-11254.)
10.5 1993 Performance Equity Plan. (Incorporated by reference from Exhibit
10.9 of Registration Statement 33-72940.)
10.6 Agreement dated July 30, 1993 between Transportation Display
Industries and the Registrant. (Incorporated by reference from Exhibit
10.8 of Registration Statement 33-72940.)
10.7 Stock Purchase Agreement between Springs and Carolyn Howard relating
to the acquisition of A.M. Fridays, Inc. dated July 16, 1997.
(Incorporated by reference from Exhibit 10.1 of the Report on Form
10-QSB for the Quarter Ended July 26, 1997.)
10.8 Stock Purchase Agreement between the Registrant and David Eger dated
August 27, 1997 relating to Excelsior Spring Water Co. ("Excelsior").
(Incorporated by reference from Exhibit 10.1 of the Report on Form 8-K
dated September 11, 1997.)
10.9 Promissory Note from the Registrant to Mr. Eger in the principal
amount of $503,000.(Incorporated by reference from Exhibit 10.2 of the
Report on Form 8-K dated September 11, 1997.)
10.10 Form of Note Purchase Agreement between the Registrant and certain
note holders of Excelsior dated August 27, 1997. (Incorporated by
reference from Exhibit 10.3 of the Report on Form 8-K dated September
11, 1997.)
<PAGE>
10.11 Form of Stock Purchase Agreement between the Registrant and certain
stockholders of Excelsior dated August 27, 1997. (Incorporated by
reference from Exhibit 10.4 of the Report on Form 8-K dated September
11, 1997.)
10.12 Schedule of Stock and Note Purchase Agreement information dated August
27, 1997 regarding the Excelsior purchase. (Incorporated by reference
from Exhibit 10.7 of the Report on Form 8-K dated September 11, 1997.)
10.13 Asset Purchase Agreement between Springs and Greatwater Refreshment
Services, Inc. dated February 19, 1997. (Incorporated by reference
from Exhibit 10.1 of the Report on Form 10-QSB/A for the Quarter Ended
April 26, 1997.)
10.14 Consulting Agreement between the Registrant and Corporate Investors
Network, Inc. dated December 1, 1996. (Incorporated by reference from
Exhibit 10.1 of the Report on Form 10-QSB for the Quarter Ended
January 25, 1997.)
10.15 Warrant Agreement between the Registrant and Eugene F. Malone dated
December 1, 1996. (Incorporated by reference from Exhibit 10.2 of the
Report on Form 10-QSB for the Quarter Ended January 25, 1997.)
10.16 1998 Incentive and Non-Statutory Stock Option Plan (Incorporated by
reference to Appendix A of the Registrant 1998 Proxy Statement.)
10.17 Asset Purchase Agreement between Vermont Pure Holding, Ltd. and
Vermont Coffee Time, Inc. relating to the purchase certain assets and
liabilities dated December 19, 1997. (Incorporated by reference from
Exhibit 10.1 of the report on Form 10-QSB for the Quarter ended
January 24, 1998).
10.18 Promissory Note Between Vermont Pure Springs, Inc. and Vermont Pure
Holdings and Coffee Time, Inc. dated January 5, 1998. (Incorporated by
reference from Exhibit 10.2 of the report on Form 10-QSB for the
Quarter ended January 24, 1998).
10.19 Security Agreement between Vermont Pure Springs, Inc. and Vermont Pure
Holdings and Coffee Time, Inc. dated January 5, 1998. (Incorporated by
reference from Exhibit 10.3 of the report on Form 10-QSB for the
Quarter ended January 24, 1998).
10.20 Consulting Agreement between Amy Berger and Vermont Pure Holdings,
Ltd. dated January 5, 1998. (Incorporated by reference from Exhibit
10.4 of the report on Form 10-QSB for the Quarter ended January 24,
1998).
<PAGE>
10.21 Distribution Rights Agreement between Vermont Pure Springs, Inc. and
Akva Hf. dated December 9, 1997. (Incorporated by reference from
Exhibit 10.5 of the report on Form 10-QSB for the Quarter ended
January 24, 1998).
10.22 Packing and Distribution Agreement between Vermont Pure Springs, Inc.
and Akva Hf. dated December 9, 1997. (Incorporated by reference from
Exhibit 10.6 of the report on Form 10-QSB for the Quarter ended
January 24, 1998).
10.23 Asset Purchase Agreement between Vermont Pure Holdings, Ltd. And
Sagamon Springs, Inc. relating to the purchase certain assets and
liabilities dated January 31, 1998. (Incorporated by reference from
Exhibit 10.1 of the report on Form 10-QSB for the Quarter ended April
25, 1998).
10.24 Agreement and Collateral Assignment of Lease between Vermont Pure
Holdings, Ltd. and Sagamon Springs, Inc. dated January 30, 1998.
(Incorporated by reference from Exhibit 10.2 of the report on Form
10-QSB for the Quarter ended April 25, 1998).
10.25 Security Agreement between Vermont Pure Holdings, Ltd. and Sagamon
Springs, Inc. dated January 6, 1998. (Incorporated by reference from
Exhibit 10.3 of the report on Form 10-QSB for the Quarter ended April
25, 1998).
10.26 Term Note for $65,000 between Vermont Pure Holdings, Ltd. and Sagamon
Springs, Inc. dated January 6, 1998. (Incorporated by reference from
Exhibit 10.4 of the report on Form 10-QSB for the Quarter ended April
25, 1998).
10.27 Non Compete Agreement of Fred Beauchamp and Jim Creed between Vermont
Pure Holdings, Ltd. and Sagamon Springs, Inc. dated January 6, 1998.
(Incorporated by reference from Exhibit 10.5 of the report on Form
10-QSB for the Quarter ended April 25, 1998).
10.28 Loan and Security Agreement Between Vermont Pure Springs, Inc. and
CoreStates Bank, N.A. dated April 8, 1998. (Incorporated by reference
from Exhibit 10.6 of the report on Form 10-QSB for the Quarter ended
April 25, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 16, 1999
Randolph, Vermont
VERMONT PURE HOLDINGS, LTD.
By: /s/ Bruce S. MacDonald
Bruce S. MacDonald
Vice President, Chief Financial Officer
(Principal Accounting Officer and Principal
Financial Officer)
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