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 July 31, 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 September 9, 1999
Common Stock, $.001 Par Value 10,289,758
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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
July 31, 1999 (unaudited) and
October 31, 1998 3
Consolidated Statement of Operations
(unaudited) for the Nine Months and Three
Months ended July 31, 1999 and
July 25, 1998 4
Consolidated Statement of Cash Flows
(unaudited) for the Nine Months ended
July 31, 1999 and July 25, 1998 5
Notes to Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operation 7 - 9
Item 3. Quantitative and Qualitative Disclosure about
Market Risk 9
Part II - Other Information 10 - 12
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 13
Exhibit Index 10 - 12
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31 October 31,
1999 1998
------------------------- -------------------------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,508,725 $ 161,271
Accounts receivable 4,744,098 3,069,699
Inventory 1,671,854 1,843,927
Current portion of deferred tax asset 330,000 330,000
Other current assets 519,547 222,970
------------------------- -------------------------
TOTAL CURRENT ASSETS 8,774,224 5,627,867
------------------------- -------------------------
PROPERTY AND EQUIPMENT - net of accumulated depreciation 11,678,227 9,174,063
------------------------- -------------------------
OTHER ASSETS:
Intangible assets - net of accumulated amortization 9,426,820 9,595,915
Deferred tax asset 1,661,000 1,661,000
Other assets 139,498 114,658
------------------------- -------------------------
TOTAL OTHER ASSETS 11,227,318 11,371,573
------------------------- -------------------------
TOTAL ASSETS $ 31,679,769 $ 26,173,503
========================= =========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,368,738 $ 3,007,630
Current portion of customer deposits 74,896 58,360
Accrued expenses 1,430,898 1,104,871
Current portion of long term debt 309,705 601,570
Current portion of obligations under capital lease 149,138 119,995
------------------------- -------------------------
TOTAL CURRENT LIABILITIES 4,333,375 4,892,426
Long term debt 1,761,283 1,428,807
Long term obligations under capital lease 288,973 210,203
Line of credit 12,544,793 8,783,793
Long term portion of customer deposits 1,175,107 893,145
------------------------- -------------------------
TOTAL LIABILITIES 20,103,531 16,208,374
------------------------- -------------------------
STOCKHOLDERS' EQUITY:
Common stock - $.001 par value, 50,000,000 10,280 10,288
authorized shares, 10,279,758 issued
shares at July 31, 1999 and 10,287,187
issued shares at October 31, 1998.
Paid in capital 23,167,368 23,080,049
Accumulated deficit (11,432,660) (12,956,458)
Treasury stock, at cost, 50,000 shares (168,750) (168,750)
------------------------- -------------------------
TOTAL STOCKHOLDERS' EQUITY 11,576,238 9,965,129
------------------------- -------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,679,769 $ 26,173,503
========================= =========================
</TABLE>
See Notes to Consolidated Financial Statements
3
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended Three Months Ended
----------------------------------- -----------------------------------
July 31, July 25, July 31, July 25,
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
SALES $ 23,112,438 $ 19,717,417 $ 9,432,119 $ 9,155,404
COST OF GOODS SOLD 8,666,220 7,907,932 3,682,347 3,447,622
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 14,446,218 11,809,485 5,749,772 5,707,782
---------------- -------------- ---------------- ----------------
OPERATING EXPENSES:
Selling, general and administrative expense 9,364,321 7,155,741 3,511,264 2,784,268
Advertising expenses 2,366,258 2,887,685 818,407 1,407,505
Amortization 450,199 436,948 146,773 174,267
---------------- ---------------- ---------------- ----------------
TOTAL OPERATING EXPENSES 12,180,778 10,480,374 4,476,444 4,366,040
---------------- ---------------- ---------------- ----------------
PROFIT (LOSS) FROM OPERATIONS 2,265,440 1,329,111 1,273,328 1,341,742
---------------- ---------------- ---------------- ----------------
OTHER INCOME (EXPENSE):
Interest - net (753,752) (574,526) (272,436) (228,746)
Miscellaneous 12,110 17,045 12,110 15,521
---------------- ---------------- ---------------- ----------------
TOTAL OTHER INCOME (EXPENSE) (741,642) (557,481) (260,326) (213,225)
---------------- ---------------- ---------------- ----------------
NET INCOME (LOSS) $ 1,523,798 $ 771,630 $ 1,013,002 $ 1,128,517
================ ================ ================ ================
NET INCOME (LOSS) PER SHARE - BASIC $ 0.15 $ 0.08 $ 0.10 $ 0.11
NET INCOME (LOSS) PER SHARE - DILUTED $ 0.14 $ 0.07 $ 0.09 $ 0.10
================ ================ ================ ================
Weighted Average Shares Used in Computation - Basic 10,255,917 10,240,294 10,259,758 10,284,633
Weighted Average Shares Used in Computation - Diluted 10,816,068 11,021,476 10,758,862 11,044,279
================ ================ ================ ================
See Notes to Consolidated Financial Statements
4
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VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended
----------------------------------------------------
July 31, July 25,
1999 1998
------------------------ ------------------------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit/(loss) $ 1,523,798 $ 771,630
Adjustments to reconcile net income(loss) to net cash provided
by operating activities:
Depreciation 1,021,115 747,292
Amortization 450,199 436,948
(Gain) loss on disposal of property and equipment 7,100
Changes in assets and liabilities (net of effect of acquisitions):
(Increase) Decrease in accounts receivable (1,469,336) (1,729,996)
(Increase) Decrease in inventory 319,330 (718,518)
(Increase) Decrease in other current assets (296,577) 190,191
(Increase) Decrease in other assets 144,255 262,414
(Decrease) Increase in accounts payable (638,892) 1,943,987
(Decrease) Increase in customer deposits 298,498 245,328
(Decrease) Increase in accrued expenses 326,027 148,552
------------------------ ------------------------
CASH PROVIDED BY OPERATING ACTIVITIES 1,678,416 2,304,928
------------------------ ------------------------
CASH FLOWS FROM INVESTING ACTIVITIES (net of effect of acquisitions):
Purchase of property, plant and equipment (1,839,615) (1,792,544)
Cash used for acquistions (339,665) (3,927,899)
------------------------ ------------------------
CASH USED IN INVESTING ACTIVITIES (2,179,280) (5,720,443)
------------------------ ------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (paydown) of line of credit 1,966,642 879,855
Proceeds from debt 479,895 10,419,756
Principal payment of debt (635,939) (7,606,826)
Sale of common stock 37,720 10,950
------------------------ ------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 1,848,318 3,703,735
------------------------ ------------------------
NET INCREASE (DECREASE) IN CASH 1,347,454 288,220
CASH - Beginning of period 161,271 93,808
------------------------ ------------------------
CASH - End of period $ 1,508,725 $ 382,028
======================== ========================
Cash paid for interest $ 753,752 $ 574,526
======================== ========================
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment acquired under capital leases $ 131,913 $ 87,115
======================== ========================
</TABLE>
See Notes to Consolidated Financial Statements
5
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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 and Annual Report 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. LINE OF CREDIT
As of July 31, 1999 the Company's unused working capital line of credit
was $529,000. On that date the Company's unused acquisition line of credit was
$1,926,207.
4. COMMITMENTS
The Company has leased new production equipment for the PET and home
and office production facilities located in Randolph, Vermont. The leasing of
this equipment amounts to $192,080. It is payable over seven years and is
financed by a capital lease with KeyCorp leasing.
The Company entered into a $650,000 five year lease with Softech
Financial. This lease is funding the upgrading and standardizing of its home and
office software.
5. MAJOR CUSTOMER
The Company terminated its distribution agreement with Coca-Cola
Enterprises effective April 11, 1999. The Company has entered into contracts
with independent Snapple distributors to market Vermont Pure Spring Water in the
territory previously serviced by Coca Cola Enterprises.
6
<PAGE>
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 nine months of fiscal year 1999 were $23,112,438, an
increase of $3,395,021 or 17% over the sales of $19,717,417 for the
corresponding period last year. Sales for the third quarter of fiscal year 1999
were $9,432,119, an increase of $276,715 or 3% over sales of $9,155,404 for the
corresponding period last year. Excluding sales attributable to the acquisitions
in the nine and three months ending July 31, 1999, sales increased approximately
14% and 2%, respectively, over the corresponding periods last year.
Sales for retail-size products increased $449,851 or 4%, for the nine months of
fiscal year 1999 compared to the corresponding period a year ago. Sales
decreased $645,202 or 11%, for the third quarter of fiscal 1999 compared to the
corresponding period a year ago. The decrease was a result of a decline in
average selling prices, which is indicative of the competitive marketplace.
Average selling prices for the nine and three months ending July 31, 1999 were
down 13% and 20%, respectively for the corresponding periods from the previous
year. This decline was partially offset by a decrease in advertising and
promotional expenses.
Sales of products in the home and office delivery category increased $2,945,170
or 37 %, for the first nine months of fiscal year 1999 compared to the
corresponding period of the prior year. Sales for the category increased
$921,917 or 28%, for the third quarter 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% and 13% for nine months
and third quarter of fiscal 1999, respectively.
Cost of Goods Sold - For the first nine months of fiscal 1999, Cost of Goods
Sold was $8,666,220 compared to $7,907,932 for the same period in fiscal year
1998 resulting in gross profits of $14,446,218 or 63% of sales, and $11,809,485
or 60% of sales, for the respective periods. For the third quarter, Cost of
Goods Sold was $3,682,347 compared to $3,447,622 for the same period in fiscal
1998 resulting in gross profits of $5,749,772 or 61% of sales, and $5,707,782 or
62% of sales, for the respective periods. The increase in gross profit for the
respective nine and three month periods was due to an increase in sales volume
which resulted in a lower cost per unit. The slight decrease in the gross profit
percentage of sales in the third quarter was due to a lower average selling
price of retail sized products. The Company's sales continued to be skewed
toward higher margin home and office sales. Raw material pricing increased
slightly throughout the first three quarters of 1999. The Company's PET bottle
prices are dependent 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.
7
<PAGE>
Operating Expenses - For the first nine months of fiscal year 1999 compared to
the corresponding period in fiscal year 1998, total operating expenses were
$12,180,778 and $10,480,374, an increase of $1,700,404 or 16%. For the third
quarter, operating expenses were $4,476,444 in 1999 compared to $4,366,040 in
1998, this was an increase of 3%. Selling, general and administrative expenses
increased by $2,208,580 or 31%, for the first nine months of fiscal 1999 and
$726,996 or 26% for the third quarter of fiscal 1999. The increase in these
costs was primarily due to the addition of the operating costs of acquired
businesses as well as to support internal sales growth. 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. Advertising and promotional expense decreased $521,427
and $589,098 during the nine and three month periods during 1999, respectively,
over the corresponding periods last year. These decreases are related primarily
to the Company using different distribution channels that require less
promotional support. Advertising expense was relatively unchanged period to
period. The sales growth rate exceeded the rate of growth in promotional
expenses. However, given the competitive nature of the industry, the Company
anticipates that it may 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.
Profit From Operations - Profit from operations for the first nine months of
fiscal 1999 was $2,265,440 as compared to gain of $1,329,111 for the
corresponding period last year, an improvement of $936,329. Profit from
operations for the third quarter of fiscal 1999 was $1,273,328 as compared to
$1,341,742 for the corresponding period last year, a decrease of $68,414. The
decrease is attributable to the decline in average selling price combined with
an increase in raw material costs. 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. In addition it plans to increase volume to further lower per unit
costs. No assurance can be given that this plan will be successful.
Other Income/Expense - Net interest expense increased $179,226 or 31% and
$43,690 or 19% for the first nine months and third quarter of fiscal year 1999,
respectively, compared to the corresponding periods 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 profit for the first nine months of fiscal
year 1999 was $1,523,798 compared to a net profit of $771,630 for the
corresponding period last year, an improvement of $752,168 or 97%. The net
profit for the third quarter of fiscal 1999 was $1,013,002 compared to a
net profit of $1,128,517 for the same quarter in 1998, a decrease of $115,515 or
10%. This is partly attributable to the average price decline for retail
sized products.
Liquidity and Capital Resources
Cash flow provided by operations was $1,678,416 compared to $2,304,928 for the
same period last year. 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.
As of July 31, 1999, the Company had working capital of $4,440,849 compared to
$735,441 on October 31, 1998. The increase in working capital of $3,705,408
reflects, primarily, increased accounts receivable and cash generated from
operations and borrowing. Scheduled debt repayments from the financing of
acquisitions and resulting integration costs and capital expansion continue to
be a significant use of cash for the Company. As of September 7, 1999 the
Company had borrowed $2,040,000 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 8.29% on most of the outstanding loan balance and LIBOR
plus 2.5% on the rest. The facility is secured by all the inventory, receivables
and intangible assets of the Company and expires April 2003. The Company is
currently exploring increasing its credit facilities.
8
<PAGE>
Although the Company has increased its cash balance over the last year, it
anticipates that its working capital position will improve further in future
periods and will be adequate to fund operations when supplemented by its
operating line of credit. Future 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, stock and its
existing bank line of credit.
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 has assessed its state of readiness for
dealing with the Year 2000 problem. It has investigated its information
technology ("IT") systems and non-information technology ("NIT") systems for
readiness and some remediation was necessary. With respect to IT systems, the
Company is currently completing certain internal hardware and software upgrades.
These upgrades will be completed and tested by December 1, 1999. With respect to
NIT systems, among other things, the Company has examined its production
equipment for Year 2000 readiness and believes that they are compliant. In
addition, the Company continues to request information on the Year 2000
readiness and contingency plans of its customers, suppliers, bankers and other
third parties. 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. The Company has received compliance
confirmation from the majority of its critical vendors and customers. The
Company is seeking alternate vendors to act as a backup for those vendors that
have not responded to our compliance requests. Even though the Company continues
to request certifications, 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.
Costs. The Company will not incur 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. 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.
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. Our contingency plan is to have alternate vendors
available to use should our current vendors have disruptive Y2K issues. However,
there can be no assurance that these vendors will be able to substitute us in to
their production on a timely basis.
The foregoing Year 2000 capital disclosure constitutes a "Year 2000
readiness disclosure" under the Year 2000 Information and Readiness Disclosure
Act.
PART I - Item 3.
Not applicable
9
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PART II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
(a) None
(b) None
None
Item 3 - Defaults upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
On June 15, 1999, the Company held its annual shareholders meeting at
1:30 p.m. at the Sheraton Conference Center in South Burlington, Vermont. There
were three matters of business requiring shareholder vote, election of
directors, approval the Vermont Pure Holdings, Ltd. 1999 Employee Stock Purchase
Plan, and to amend the Certificate of Incorporation of the Company to increase
the number of authorized shares of Common Stock of the Company from 20,000,000
to 50,000,000.
Concerning the election of directors, a total of votes were cast and
the following directors were elected to one year terms with the corresponding
vote tally:
"For" "Withheld"
Frank G. McDougall 8,429,703 7,850
Timothy G. Fallon 8,429,703 7,850
Robert C. Getchell 8,429,703 7,850
David R. Preston 8,429,703 7,850
Norman E. Rickard 8,429,703 7,850
Beat Schlagenhauf 8,429,703 7,850
Richard S. Worth 8,429,703 7,850
Phillip Davidowitz 8,429,703 7,850
Concerning the approval of the Vermont Pure Holdings, Ltd. 1999
Employee Stock Purchase Plan, 8,373,558 shares were voted "for", 51,595 shares
"against", and 12,400 abstained.
Concerning the approval to amend the Certificate of Incorporation of
the Company to increase the number of authorized shares of Common Stock of the
Company from 20,000,000 to 50,000,000, 8,274,581 shares were "for", 146,872
"against", and 16,100 abstained.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
10
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Exhibit Description
Number
<S> <C>
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 Certificate of Amendment of Restated Certificate of Incorporation of Registrant dated June 15, 1999.
3.3 By-Laws of Registrant. (Incorporated by reference from Exhibit 3.4 of Registration Statement 33-46382.)
3.4 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.)
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
11
<PAGE>
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).
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 Apri
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.
12
</TABLE>
<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: September 10, 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)
13
<PAGE>
Exhibit 3.2
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
VERMONT PURE HOLDINGS, LTD.
Vermont Pure Holdings, Ltd., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation has adopted
resolutions proposing and declaring advisable that the Restated Certificate of
Incorporation of the Corporation be amended and that such amendment be submitted
to the stockholders of the Corporation for their consideration, as follows:
That the Company's Restated Certificate of Incorporation, as
amended to date, be further amended by deleting in its entirety the first
sentence of Article 4 thereof and replacing said first sentence with the
following sentence:
"The total number of shares of capital stock which the
Corporation shall have authority to issue is Fifty Million
Five Hundred Thousand (50,500,000) shares, of which Fifty
Million (50,000,000) shares will be Common Stock, par value
$.001 per share, and Five Hundred Thousand (500,000) shares
shall be Preferred Stock, par value $.001 per share",
it being understood that the other provisions of said Article
4 shall be and remain unchanged.
SECOND: That the aforesaid amendment was duly adopted in
accordance with the applicable provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by Timothy Fallon, its President, this 15th day of June, 1999.
/s/ Timothy Fallon
Timothy Fallon, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000885040
<NAME> VERMONT PURE
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> JUL-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,508,725
<SECURITIES> 0
<RECEIVABLES> 5,111,535
<ALLOWANCES> 367,437
<INVENTORY> 1,671,854
<CURRENT-ASSETS> 8,774,224
<PP&E> 16,289,361
<DEPRECIATION> 4,611,134
<TOTAL-ASSETS> 31,679,769
<CURRENT-LIABILITIES> 4,333,375
<BONDS> 0
0
0
<COMMON> 10,280
<OTHER-SE> 11,565,958
<TOTAL-LIABILITY-AND-EQUITY> 31,679,769
<SALES> 23,112,438
<TOTAL-REVENUES> 23,112,438
<CGS> 8,666,220
<TOTAL-COSTS> 8,666,220
<OTHER-EXPENSES> 12,180,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 753,752
<INCOME-PRETAX> 1,523,798
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,523,798
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,523,798
<EPS-BASIC> 0.15
<EPS-DILUTED> 0.14
</TABLE>
