<PAGE> 1
US SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
( )TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM ____TO ___
COMMISSION FILE NUMBER 33-62038NY
SARATOGA BEVERAGE GROUP, INC.
DELAWARE 14-1749554
(STATE OR OTHER JURISDICTION (IRS EMPLOYER ID NUMBER)
OF INCORPORATION OR ORGANIZATION)
11 GEYSER ROAD, SARATOGA SPRINGS, NEW YORK 12866
(518) 584-6363
(ISSUER'S TELEPHONE NUMBER)
CHECK WHETHER ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR
15(D) FOR THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH SHORTER PERIOD
THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT
TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO ___
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON
EQUITY, AS OF THE LATEST PRACTICABLE DATE:
COMMONSTOCK - 2,403,705 SHARES OF CLASS A COMMON STOCK, $.01 PAR VALUE, AND
562,055 SHARES OF CLASS B COMMON STOCK, $.01 PAR VALUE,
WERE OUTSTANDING AS OF SEPTEMBER 30, 1997
TRADITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES_____ NO X__
THIS DOCUMENT CONTAINS 12 PAGES
<PAGE> 2
SARATOGA BEVERAGE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
(UNAUDITED) (A)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 1,943,993 $ 387,938
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR
DOUBTFUL
ACCOUNTS OF $171,500 AND $95,000 1,004,324 398,195
INVENTORIES 257,619 183,072
PREPAID EXPENSES AND OTHER CURRENT ASSETS 64,780 25,427
----------- -----------
TOTAL CURRENT ASSETS 3,270,716 994,632
PROPERTY, PLANT AND EQUIPMENT, NET 1,439,908 1,618,397
DEFERRED FINANCING COSTS, NET 92,044
OTHER ASSETS 17,792 16,859
----------- -----------
TOTAL ASSETS $ 4,820,460 $ 2,629,888
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 473,299 $ 301,667
SHORT-TERM DEBT AND CURRENT PORTION OF
OBLIGATION UNDER CAPITAL
LEASE 6,474 6,295
REVOLVING CREDIT FACILITY 300,000
0
TOTAL CURRENT LIABILITIES 479,773 607,962
LONG-TERM DEBT:
OBLIGATION UNDER CAPITAL LEASE 2,969
7,455
5% SUBORDINATED CONVERTIBLE NOTE 1,500,000
----------- -----------
TOTAL LONG-TERM DEBT 1,502,969
7,455
TOTAL LIABILITIES 1,982,742 615,417
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
PREFERRED STOCK, $.01 PAR VALUE; 5,000,000 SHARES AUTHORIZED,
NO SHARES ISSUED AND OUTSTANDING
CLASS A COMMON STOCK, $.01 PAR VALUE; 50,000,000 SHARES
AUTHORIZED; 2,403,705 SHARES ISSUED AND OUTSTANDING IN 1997 AND
1,691,224 ISSUED AND OUTSTANDING IN 1996 22,457 16,913
CLASS B COMMON STOCK, $.01 PAR VALUE, 2,000,000 SHARES
AUTHORIZED, 562,055 SHARES ISSUED AND OUTSTANDING IN 1997
AND 1,041,036 ISSUED AND OUTSTANDING IN 1996 7,201 10,360
PAID-IN CAPITAL 9,340,704 9,258,405
TREASURY STOCK AT COST 2,700 SHARES OF CLASS A, IN 1997 (3,990)
ACCUMULATED DEFICIT (6,532,644) (7,267,217)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 2,837,718 2,014,471
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,820,460 $ 2,629,888
=========== ===========
</TABLE>
(A) CONDENSED FROM AUDITED FINANCIAL STATEMENTS.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
1
<PAGE> 3
SARATOGA BEVERAGE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES:
PRODUCT SALES $ 1,528,044 $ 1,197,368 $ 3,470,674 $ 2,790,874
CO-PACK SALES 874,855 243,385 1,945,429 695,899
----------- ----------- ----------- -----------
NET SALES 2,402,899 1,440,753 5,416,103 3,486,773
COST OF GOODS SOLD, EXCLUSIVE OF
DEPRECIATION AND AMORTIZATION SHOWN
SEPARATELY BELOW 1,452,713 903,793 3,440,390 2,206,769
----------- ----------- ----------- -----------
GROSS PROFIT 950,186 536,960 1,975,713 1,280,004
----------- ----------- ----------- -----------
OPERATING EXPENSES:
MARKETING AND SALES 109,771 181,335 278,881 371,132
GENERAL AND ADMINISTRATIVE 291,624 245,715 772,975 646,847
DEPRECIATION AND AMORTIZATION 101,367 95,484 290,042 278,091
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 502,762 522,534 1,341,898 1,296,070
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) 447,424 14,426 633,815 (16,066)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
COMMISSION INCOME 40,062 19,598 105,143 60,164
INTEREST INCOME 18,424 312 30,848 4,091
INTEREST EXPENSE (19,171) (3,328) (27,274) (10,804)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE), NET 39,315 16,582 108,717 53,451
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 486,739 31,008 742,532 37,385
PROVISION FOR INCOME TAXES 7,959 7,959
----------- ----------- ----------- -----------
NET INCOME 478,780 31,008 734,573 37,385
ACCUMULATED DEFICIT:
BEGINNING OF PERIOD (7,011,424) (7,113,381) (7,267,217) (7,119,758)
=========== =========== =========== ===========
END OF PERIOD ($6,532,644) ($7,082,373) ($6,532,644) ($7,082,373)
=========== =========== =========== ===========
PER SHARE INFORMATION:
EARNINGS PER SHARE $ 0.16 $ 0.01 $ 0.25 $ 0.01
WEIGHTED AVERAGE NUMBER OF COMMON
AND EQUIVALENT SHARES OUTSTANDING 2,983,538 4,224,449 2,996,038 4,224,449
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
2
<PAGE> 4
SARATOGA BEVERAGE GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ 734,573 $ 37,385
ADJUSTMENT TO RECONCILE NET INCOME (LOSS) TO CASH
USED IN OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 290,042 278,091
PROVISION FOR DOUBTFUL ACCOUNTS 76,500 22,460
CHANGES IN OPERATING ASSETS AND
LIABILITIES:
ACCOUNTS RECEIVABLE (682,627) (439,543)
INVENTORIES (74,547) 107,384
PREPAID EXPENSES AND OTHER CURRENT ASSETS (39,353) (29,912)
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 171,631 3,316
----------- -----------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 476,219 (20,819)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
PURCHASE OF PROPERTY, PLANT, AND EQUIPMENT (99,180) (154,410)
DECREASE (INCREASE) IN OTHER ASSETS (1,800) 2,729
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (100,980) (151,681)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM CAPITAL LEASE OBLIGATIONS 18,393
PROCEEDS FROM LONG-TERM BORROWING 1,500,000 100,000
DEFERRED FINANCING COSTS (80,750)
PRINCIPAL PAYMENTS ON REVOLVING CREDIT FACILITY (300,000)
PRINCIPAL PAYMENTS ON LONG-TERM BORROWINGS (91,000)
PRINCIPAL REDUCTIONS ON CAPITAL LEASE OBLIGATIONS (4,307) (3,302)
PRINCIPAL PAYMENTS ON SHORT-TERM BORROWINGS (59,992)
PROCEEDS FROM EXERCISE OF STOCK WARRANTS 3,000
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 68,250
ISSUANCE (PURCHASE) OF TREASURY STOCK AT COST 3,990 (3,000)
DISTRIBUTION OF MINORITY INTEREST (9,367) (31,427)
----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 1,180,816 (70,328)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,556,055 (242,828)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 387,938 352,797
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,943,993 $ 109,969
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
INTEREST PAID DURING THE PERIOD $ 4,451 $ 8,220
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE> 5
SARATOGA BEVERAGE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the
three-month and nine month periods ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1997.
The accompanying financial statements include Saratoga Beverage Group,
Inc., and its wholly- owned subsidiary, Saratoga Springs Distribution
Corporation. Saratoga Springs Distribution Corporation owns a 51% interest in
Sample New Age Distributors ("Sample," a non-operating partnership in 1997 and
1996).
Certain sales discounts have been reclassed from marketing and sales
expense to revenue in 1996, to conform with the 1997 presentation.
2. WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING
The calculations of weighted average shares of common stock includes
outstanding options and warrants in 1996 and 1997 because of their dilutive
effect on per share data.
3. RELATED PARTY TRANSACTIONS
Included in cash and cash equivalents at September 30, 1997 and 1996 is
approximately $1,877,181 and $23,651 respectively, of cash equivalents invested
in a money market account with Dean Witter Reynolds, Inc. A principal
stockholder of the Company is an officer of Dean Witter Reynolds, Inc.
The Company agreed to compensate Peter Campbell $1,667 per month for his
services as Chairman of the Board for one year commencing July 1996.
In April, 1997, the Company's President and a principal shareholder
supplied the Company with a line-of-credit for up to $250,000. This
line-of-credit was canceled and replaced in June 1997 when the Company entered
into a Securities Purchase Agreement with Parley International, as nominee for
Maerki Baumann & Co., A.G. (Zurich) ("Purchaser"), pursuant to which Purchaser
acquired $1,500,000 principal amount of the Company's 5% Subordinated
Convertible Notes due 2000 (the "Note") for an aggregate purchase price of
$1,500,000 in a private placement effected under Section 4(2) of the Securities
Act of 1993. Interest on the unpaid principal amount accrues from the date of
issuance at a rate of 5% per annum. Interest becomes due and payable on each of
the first, second and third anniversaries.
4
<PAGE> 6
The principal amount of the Note is due and payable on the third
anniversary of the Note and is convertible at the option of the holder into
shares of the Company's Class A Common Stock at a conversion price of $3.50
principal amount per share. The Note is mandatory convertible into shares of
Class A Common Stock in the event that the closing price of Class A Common Stock
exceeds $5.25 for three consecutive trading days.
Global Financial Group, Inc. acted as placement agent in connection with
the offering of the Note and, in connection therewith, received a cash
commission in the amount of $80,750 and was issued a warrant to acquire 30,000
shares of Class A Common Stock for an exercise price of $3.50 per share. The
warrant was determined to have a fair value of $22,800, using the Black Scholes
Valuation method. The financing costs will be amortized over the life of the
Note, three years.
4. NEW ACCOUNTING PRONOUNCEMENTS
Effective December 31, 1997, the Company will be required to implement
Financial Accounting Standard No. 128 (FAS 128) "Earnings Per Share". FAS 128
replaces the presentation of primary earnings per share (EPS) with a
presentation of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the income statement and requires a reconciliation of
the numerator and denominator of the basic EPS calculation to the numerator and
denominator of the diluted EPS computation. Management does not anticipate that
the adopting this standard will have a material impact on the consolidated
financial statements.
5. INCOME TAX
For the quarter ended September 30, 1997, provision for income tax has
been provided in the amount of $7,959. The favorable impact on the tax provision
is the result of the utilization of net operating loss carryforwards and the
corresponding reduction in the valuation allowance.
5
<PAGE> 7
SARATOGA BEVERAGE GROUP, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
BUSINESS
GENERAL
The Company is primarily engaged in the bottling, marketing and
distribution of natural spring and mineral water products, and in the packaging
of products for others (private label). The Company's product line currently
includes natural essence flavored sparkling spring water, and non-carbonated
spring water, marketed as premium domestic bottled water under the proprietary
name "Saratoga." The Saratoga brand name has been in existence for over 125
years. The Company markets a line of fortified non-carbonated spring water
products under the name V2. The V2 line including ginseng enhanced and caffeine
enhanced spring water. The Company recently introduced Saratoga Splash, a line
of fruit flavored spring water products in conjunction with an agreement with
Mistic Brands, Inc.
The Company's springs and bottling facilities have been operated through
the years by a number of owners, including Anheuser-Busch and Evian Waters of
France, a division of BSN, S.A. Anheuser-Busch and Evian Waters of France each
operated the business for approximately two years. The Company was organized and
acquired the assets of its business in April 1992 from the owners of Evian
Waters of France. The Company's bottling facilities, which had been closed since
May 1991 by the previous owners, recommenced operations in May 1992. Since that
time, the Company has undertaken the task of rebuilding a distribution network
and customer base for the Saratoga brand beverage products.
On June 23, 1993, the Company consummated an initial public offering (the
"Offering") for the sale of 1,200,000 shares of Class A Common Stock at an
initial offering price of $5.00 per share. An additional 180,000 shares were
subsequently issued to cover over-allotments. The Company received proceeds of
$5,582,450, net of costs incurred in connection with the offering.
CO-PACKING
In 1995, the Company was selected by Cott USA, Inc. to co-pack Cott's
private label spring water products at its Saratoga Springs bottling facility.
Cott Corp., Cott USA, Inc.'s parent company, is the nation's largest producer of
retailer brand carbonated soft drinks and other beverages. Actual co-packing
began in April 1995.
PRODUCTS
On June 30, 1997 the Company entered into a new Agreement with Mistic
Brands, Inc. ("Mistic") that granted Saratoga Beverage Group, Inc. the
non-exclusive right to use the formulations and the exclusive right to use the
graphic designs utilized by Mistic in connection with Beverages sold under the
Saratoga Splash Trademark pursuant to the original Agreement. Saratoga will pay
to Mistic on an annual basis a royalty of $.50/case on the first 50,000 cases of
product sold and $.25/case for all cases sold thereafter.
Saratoga Splash is a non-carbonated fruit flavored spring water product.
It currently is available in four flavors: Lemon frost, Orange twist, Strawberry
mist, and Blueberry burst.
6
<PAGE> 8
On June 16, 1997, the Company entered into a three-year master
distribution agreement (the "Master Distribution Agreement") with Hype
Corporation and certain affiliates of Hype Corporation (collectively, "Hype")
whereas Hype granted the Company the exclusive right and license to act as the
master distributor for Hype beverage products currently featuring the flavors
"PASSION ATTACK," "MORING RUSH," "NIGHT BOOST" and "MFP," and using the names
"SPIKED HYPE," "HYPE SPORTS," "HYPERHOLICS" and "HYPE2o" (collectively with any
future beverages using the "HYPE" name or any derivative of the "HYPE" name, the
"Products"), in the United States and its territories (the "Territory") until
June 30, 2000. The Company will receive a commission of $1.00 per case for each
case of Products sold by Hype in the Territory plus an additional $1.00 per case
for the first 50,000 cases of Products sold by Hype in the Territory.
RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial position and
operating results for the three and nine month periods ended September 30, 1997
NET SALES
Net sales for the three month period ended September 30, 1997 was
$2,402,899 an increase of $962,146 or 67%, as compared to net sales of
$1,440,753 for the same period in 1996. Net Sales for the nine month period
ended September 30, 1997 was $5,416,103 an increase of $1,929,330 or 55% as
compared to net sales of $3,486,773 for the same period in 1996.
GROSS PROFIT
The gross profit margin, exclusive of depreciation and amortization, was
40% and 36% respectively for the three and nine month periods ended September
30, 1997 and 37% and 37% for the comparable periods ended September 30, 1996.
The increase in the gross profit margins are primarily attributable to a
reduction in cost of goods sold.
MARKETING AND SALES
Marketing and sales expenses decreased $71,564 and $92,251 to $109,771 and
$278,881 or 4% and 5% of net sales, for the three and nine month periods ended
September 30, 1997 respectively. This compares with $181,335 and $371,132 or
11%, and 10% of net sales, for both the three and nine month periods ended
September 30, 1996. The decrease in marketing and sales expenses for the three
and nine month periods ended September 30, 1997 is primarily attributable to the
elimination of commissions to Royal Crown Cola.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the three and nine month periods
ended September 30, 1997 were $291,624 and $772,975, respectively, an increase
of $45,909 or 19% and $126,128 or 19% from the same periods in 1996. The
increase for both the three and nine month periods is primarily attributable to
an increase in personnel and related expenses as well as increased professional
fees.
7
<PAGE> 9
OTHER INCOME AND EXPENSE
Net other income for the three and nine month periods ended September 30,
1997 increased $22,733 and $55,266 respectively, from the same periods in 1996.
The increase for both the three and nine month periods is primarily attributable
to commission income earned on the sale of Hype products of $40,062 and $91,347,
partially offset by a $19,598 and $46,368 decrease in commission income from
Sample. The commission income from Hype Corporation is generated from the sale
of Hype beverage products as part of the three-year master distribution
agreement entered into with the Company on June 16, 1997. The decrease in
commission income from Sample is due to the elimination of royalties from Splash
after February 1997. The commission income was generated from the sale of the
Mistic Distribution Agreement by Sample New Age Distributors in the first
quarter of 1995.
NET INCOME
Net income for the three and nine month period ended September 30, 1997
was $478,780 and $734,573 respectively, an increase of $447,772 and $697,188,
for the three and nine month periods ended September 30, 1996, respectively. The
increase in net income for the three and nine month periods is primarily
attributable to the growth in both product sales and co-pack revenue.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1997 and 1996, cash flows provided
by operating activities were $476,219 versus cash flows used in operating and
activities of $20,819. At September 30, 1997, cash and cash equivalents was
$1,943,993, while working capital was $2,790,943. The current ratio at September
30, 1997 was 6.81:1. The Company believes that it has sufficient liquidity to
meet anticipated needs for the next twelve (12) months.
On June 12, 1997 the Company entered into a Securities Purchase Agreement
with Parley International, as nominee for Maerki Baumann & Co., A.G. (Zurich)
("Purchaser"), pursuant to which Purchaser acquired $1,500,000 principal amount
of the Company's 5% Subordinated Convertible Notes due 2000 (the "Note") for an
aggregate purchase price of $1,500,000 in a private placement effected under
Section 4(2) of the Securities Act of 1933. Interest on the unpaid principal
amount accrues from the date of issuance at a rate of 5% per annum. Interest
becomes due and payable on each of the first, second and third anniversaries.
The principal amount of the Note is due and payable on the third
anniversary of the Note and is convertible at the option of the holder into
shares of the Company's Class A Common Stock at a conversion price of $3.50
principal amount per share. The Note is mandatorily convertible into shares of
Class A Common Stock in the event that the closing price of Class A Common Stock
exceeds $5.25 for three consecutive trading days.
Global Financial Group, Inc. acted as placement agent in connection with
the offering of the Note and, in connection therewith, received a cash
commission in the amount of $80,750 and was issued a warrant to acquire 30,000
shares of Class A Common Stock for an exercise price of $3.50 per share. The
commission and the fair value of the warrant were determined to be $22,800 and
were recorded as deferred financing costs and will be amortized over the life of
the Note, three years.
Debt includes the outstanding balance on the Subordinated Convertible Note
of $1,500,000 and $2,969, the long-term portion of equipment under a capital
lease.
There are no material commitments or contingencies at this time not
disclosed in the financial statements.
8
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
NONE.
ITEM 2 - CHANGES IN SECURITIES
NONE.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4 - SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the stockholders was held on August 6, 1997 for the
following purposes:
1. To elect directors of the Company by holders of Class A and Class B
Common Stock, voting together as a single class.
The directors elected were: Peter R. Campbell, Warren Lichtenstein,
John A. Morabito, Robin Prever, and Leonard Toboroff.
All of the directors received 5,114,289 votes cast for and 11,275
cast against, with no abstentions, except for Peter Campbell, who
received 5,105,087 votes cast for and 11,477 cast against, with no
abstentions.
2. To ratify the appointment of Coopers and Lybrand, L.L.P., as
auditors for the Company for the fiscal year ending December 31,
1997.
There were 5,102,462 votes cast for, 8,400 votes cast against and
5,702 abstentions.
3. Other Business. There was no other business that came before the
meeting.
Stockholders of record at the close of business on June 4, 1997 were
entitled to vote at the meeting or any adjournment thereof.
ITEM 5 - OTHER INFORMATION
Pursuant to the Escrow Agreement, 100,000 shares of Class B Common Stock
were canceled on April 30, 1997 and were contributed to the Company's capital.
9
<PAGE> 11
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Exhibits included herein:
a) Exhibits and Index
Exhibit No.
2.1* (P) Agreement and Plan of Merger
3.1* (P) Restated Certificate of Incorporation of the Company
3.2* (P) By-Laws of the Company
4.1* (P) Specimen of Class A Common Stock Certificate
4.2*** (P) Non-Callable Warrant A dated December 13, 1995 by the Company
to Triarc to purchase 25% of the number of shares of Class A
Common Stock of Saratoga then issued and outstanding, on a
fully-diluted basis
4.3*** (P) Non-Callable Warrant B dated December 13, 1995 by the
Company to Triarc to purchase 26% of the number of shares of
Class A Common Stock of Saratoga then issued and outstanding,
on a fully-diluted basis
4.4* (P) Form of Underwriter's Warrant
4.5* (P) Form of Escrow Agreement entered into by the current
stockholders of the Company and the Underwriter
9.1* (P) Agreement, dated August 12, 1992, by and between Anthony
Malatino and Robin Prever, as amended by Amendment No. 1
thereto dated as of April 30, 1993
10.1* (P) Asset Purchase Agreement, dated as of March 31, 1992, by and
between Saratoga Springs Mineral Water Company and Mineral
Springs Acquisition Group, Inc.
10.2* (P) General Assignment and Bill of Sale, dated April 3, 1992, by
Saratoga Springs Mineral Water Company to Mineral Springs
Acquisition Group, Inc.
10.3* (P) Assignment and Assumption Agreement, dated April 3, 1992,
by and between Saratoga Springs Mineral Water Company and
Mineral Springs Acquisition Group, Inc.
10.4* (P) Assignment, dated April 3, 1992, by Saratoga Springs Mineral
Water Company to Mineral Springs Acquisition Group, Inc.
10.5* (P) Assignment, dated April 3, 1992, by Saratoga Springs Mineral
Water Company to Mineral Springs Acquisition Group, Inc.
10.6* (P) Letter Agreement, dated as of May 1, 1993, by and between the
Company and Mark Wiggins
10.7**+ (P) Employment Agreement, entered into by the Registrant and
Robin Prever
10.8* (P) Form of the Saratoga Spring Water Company 1993 Stock Option
Plan
10.9**+ (P) Consulting Agreement entered into by the Company and Leonard
Toboroff
10.10* (P) Form of consulting agreement entered into by the Company and
the Underwriter
10.11* (P) Note, dated August 31, 1992, from the Company to Fleet Bank
of New York, including guarantees
10.12* (P) Letter from Fleet Bank of New York to the Company regarding
waiver of defaults
10.13* (P) Letter Agreement between the Company and Owens-Brockway Glass
Containers
10.14* (P) Form of Mergers and Acquisitions Agreement entered into by
the Company and the Underwriter
10.15** (P) Partnership Agreement, dated July 21, 1993, by and between
JNJ Distributors, Inc. and Saratoga Springs Distribution
Corp., as amended by Amendment of Partnership
10.16** (P) Stock agreement, dated July 21, 1993, by and between JNJ
Distributors, Inc. and Saratoga Spring Water Company
10.17** (P) Distribution Agreement, dated March 25, 1993, by and between
Joseph Victori Wines, Inc. and JNJ Distributors, Inc.
10.18A*** (P) Credit Agreement, dated as of July 13, 1995, by and between
the Company and Triarc
10
<PAGE> 12
10.18B# Termination Agreement dated as of January 31, 1997 between
the Company and Triarc
10.19*** (P) Termination Agreement dated as of January 31, 1997
between the Company and Triarc Amendment, Waiver and
Acknowledgment Agreement, dated as of December 13, 1995, by
and between the Company and Triarc
10.20*** (P) Sales and Marketing Services Agreement, dated as of May 1,
1995, between the Company and RCC
10.21*** (P) Cott Co-pack Agreement, dated as of June 8, 1995
10.22**** Manufacturing and Distribution Agreement, dated as of July
23, 1996, by and
between the Company and Mistic Brands, Inc.
10.23## Bottling Agreement, dated April 16, 1997, by and among the
Company, Hype Corporation, Hype Beverage Corporation,
World Wide Beverage Inc., Hype Water
Company, Inc., Hyperholics Inc., R.J. Barry Cox and Nigel
Spiro
10.24##+ Line of Credit dated as of April 10, 1997 to the Company from
Robin Prever and Anthony Malatino
10.25### Saratoga Splash Agreement, dated as of June 30, 1997, by and
between the Company and Mistic Brands, Inc.
10.26### The Master Distribution Agreement dated as of June 16, 1997
by and among Saratoga Beverage Group, Inc., Hype Corporation,
World Wide Beverage Inc., Global Brands AG, Hype Water
Company, Inc. and Hyperholics Inc.
22** (P) Subsidiaries
24*** (P) Power of Attorney
(*) Incorporated herein by reference to the Company's Registration
Statement on Form SB-2 filed with the Commission on June 16,
1993 (Registration No. 33-62038NY)
(**) Incorporated herein by reference to the Company's form 10-KSB
filed with the Commission on March 30, 1994
(***) Incorporated herein by reference to the Company's form 10-KSB
filed with the Commission on March 29, 1996
(****)Incorporated herein by reference to the Company's form 10-QSB
filed with the Commission on November 12, 1996
(#) Incorporated herein by reference to the Company's form 10-KSB
filed with the Commission on April 15, 1997
(##) Incorporated herein by reference to the Company's form 10-QSB
filed with the Commission on May 13, 1997
(###) Incorportated herein by reference to the Company's form 10-QSB
filed with the Commission on August 8, 1997.
(+) Management Agreement
(b) Reports on From 8-K: A report on Form 8-K was filed during the second
quarter with The Commission. The report was filed on June 25, 1997 whereby the
registrant entered into a Securities Purchase Agreement with Parley
International, as nominee for Maerki Baumann & Co., A.G. (Zurich) ("Purchaser"),
pursuant to which Purchaser acquired $1,500,000 principal amount of the
Company's 5% Subordinated Convertible Notes due 2000 (the "Note") for an
aggregate purchase price of $1,500,000 in a private placement effected under
Section 4(2) of the Securities Act of 1933.
11
<PAGE> 13
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE EXCHANGE ACT, THE REGISTRANT CAUSED
THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREINTO DULY
AUTHORIZED.
SARATOGA BEVERAGE GROUP, INC.
-----------------------------
(REGISTRANT)
DATE: BY: /S/ ROBIN PREVER
--------------------------------------
ROBIN PREVER
CHIEF EXECUTIVE OFFICER AND
ACTING CHIEF FINANCIAL OFFICER
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SEPTEMBER 30, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN IT ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,943,993
<SECURITIES> 0
<RECEIVABLES> 1,175,824
<ALLOWANCES> 171,500
<INVENTORY> 257,619
<CURRENT-ASSETS> 3,270,716
<PP&E> 3,064,808
<DEPRECIATION> 1,624,900
<TOTAL-ASSETS> 4,820,460
<CURRENT-LIABILITIES> 479,773
<BONDS> 1,502,969
0
0
<COMMON> 29,658
<OTHER-SE> 2,808,060
<TOTAL-LIABILITY-AND-EQUITY> 4,820,460
<SALES> 5,416,103
<TOTAL-REVENUES> 5,552,094
<CGS> 3,440,390
<TOTAL-COSTS> 3,719,271
<OTHER-EXPENSES> 1,090,291
<LOSS-PROVISION> 76,500
<INTEREST-EXPENSE> 27,274
<INCOME-PRETAX> 742,532
<INCOME-TAX> 7,959
<INCOME-CONTINUING> 734,573
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 734,573
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
