SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10 QSB/A
-------------
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
January 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number 0-24801
Delaware 82-0506425
(State or other Jurisdiction of incorporation) (IRS Employer Identification No.)
AQUA VIE BEVERAGE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
P.O. Box 6759 333 South Main Street Ketchum, Idaho 83340
(Address of principal executive offices)
208/622-7792
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the last 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 [ ] NO [X] As of the quarter ending October 31, 2001 the
Registrant has been subject to the filing
requirements of the Securities Act of 1934 for
less than 90 days.
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Class Outstanding at January 31, 2002
Common Stock, Par value $0.001 65,313,173
1
Item 1. Financial Statements:
AQUA VIE BEVERAGE CORPORATION
Balance Sheet
January 31, July 31,
2002 2001
(Unaudited)
(Restated)
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 370 $ 3,608
Accounts receivable 128,346 82,776
Inventory 41,050 155,372
Prepaid and other assets 22,787 24,434
----------- -----------
Total Current Assets 192,553 266,190
----------- -----------
PROPERTY AND EQUIPMENT
Equipment 201,608 201,608
Less accumulated depreciation (117,919) (85,615)
----------- -----------
Total Property and Equipment 83,689 115,993
----------- -----------
OTHER ASSETS
Intangibles 338,253 305,040
Less accumulated amortization (100,077) (58,159)
----------- -----------
Total Other Assets 238,176 246,881
----------- -----------
TOTAL ASSETS $ 514,418 $ 629,064
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 329,506 $ 362,312
Bank overdraft 16,687 52,412
Settlements payable 10,000 10,000
Notes payable - current 455,135 455,135
Accrued expenses 143,046 64,101
Loan from related party 168,238 128,520
----------- -----------
Total Current Liabilities 1,122,612 1,072,480
----------- -----------
LONG-TERM DEBT
Notes payable - net of current portion 9,908 14,632
----------- -----------
COMMITMENTS AND CONTINGENCIES -- --
----------- -----------
STOCKHOLDERS' DEFICIT
Preferred stock, Series A, B, C, D, E and F, $0.001 par
value, 1,000,000 shares authorized,15,074 and 15,074
shares issued and outstanding, respectively 15 15
Common stock, $0.001 par value, 120,000,000 shares
authorized, 65,313,173 and 58,253,173 shares
issued and outstanding, respectively 65,313 58,253
Additional paid-in capital 5,933,607 5,562,162
Subscriptions receivable (176,977) (176,977)
Accumulated deficit (6,440,060) (5,901,501)
----------- -----------
Total Stockholders' Deficit (618,102) (458,048)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 514,418 $ 629,064
=========== ===========
See notes to interim financial statements.
2
AQUA VIE BEVERAGE CORPORATION
Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31,
-------------------------- --------------------------
2002 2001 2002 2001
(Restated) (Restated)
----------- ----------- ----------- -----------
NET REVENUES $ 76,064 $ 563,133 $ 122,922 $ 725,361
COST OF GOODS SOLD 90,942 418,986 172,642 556,386
----------- ----------- ----------- -----------
GROSS PROFIT (LOSS) (14,878) 144,147 (49,720) 168,975
----------- ----------- ----------- -----------
GENERAL AND ADMINISTRATIVE EXPENSES
Promotion and advertising 9,132 64,900 77,288 325,455
Legal and accounting 12,900 714,539 59,497 1,254,628
Other general and administrative expenses 85,504 18,590 331,517 38,426
----------- ----------- ----------- -----------
Total expenses 107,536 798,029 468,302 1,618,509
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (122,414) (653,882) (518,022) (1,449,534)
OTHER EXPENSES
Interest expense (9,881) (17,433) (20,537) (35,028)
----------- ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEMS (132,295) (671,315) (538,559) (1,484,562)
EXTRAORDINARY ITEMS
Forgiveness of debt and accrued payroll -- 499,968 -- 499,968
----------- ----------- ----------- -----------
LOSS BEFORE TAXES (132,295) (171,347) (538,559) (984,594)
INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET LOSS $ (132,295) $ (171,347) $ (538,559) $ (984,594)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE
BASIC AND DILUTED $ Nil $ Nil $ (0.01) $ (0.03)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING, BASIC AND DILUTED 65,313,173 35,441,851 64,500,456 33,948,836
=========== =========== =========== ===========
See notes to interim financial statements.
3
AQAU VIE BEVERAGE CORPORATION
Statement of stockholders' Deficit
(SPLIT TABLE)
Preferred, series A,B,C, D, E and F Common Stock Additional
Number Number Paid-in Subsctiption
of shares Amount of shares Amount Capital Receivable
----------- ----------- ----------- ----------- ----------- -----------
Balance, July 31, 2000 7,410 $ 7 30,811,408 $ 30,811 $ 2,422,236 $ --
Issuance of common stock
for services at prices
ranging from $0.02
to $0.42 -- -- 5,335,000 5,335 640,783 --
Issuance of common stock
for debt conversion at
$0.40 per share -- -- 850,000 850 340,000 --
Conversion of preferred
Series A to common
stock (1,368) (2) 4,489,123 4,489 (4,487) --
Conversion of preferred
Series B to common
stock (4,608) (4) 16,567,642 16,568 (16,564) --
Conversion of preferred
Series C to common
stock (200) -- 200,000 200 (200) --
Issuance of preferred Series
D for cash and receivable
at $100 per share 12,000 12 -- -- 1,199,988 (176,952)
Issuance of preferred Series
E for cash at $100
per share 600 1 -- -- 59,999 (25)
Issuance of preferred Series
F for cash at $100
per share 1,240 1 -- -- 123,999 --
Forgiveness of debt and
accrued payroll by
officer -- -- -- -- 796,408 --
Net loss for the year ended
July 31, 2001 -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance, July 31, 2001 15,074 15 58,253,173 58,253 5,562,162 (176,977)
Issuance of common stock -- -- 6,250,000 6,250 247,645 --
for cash at $0.04 per share
Stock issued for services
at $0.08 per share -- -- 810,000 810 63,800 --
Forgiveness of payroll by
officer -- -- -- -- 60,000 --
Net loss for the six months
ended January 31, 2002
(Restated) -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance, January 31, 2002
(Unaudited) (Restated) 15,074 $ 15 65,313,173 $ 65,313 $ 5,933,607 $ (176,977)
=========== =========== =========== =========== =========== ===========
Accumulated
Deficit Total
----------- -----------
Balance, July 31, 2000 $(3,654,081) $(1,201,027)
Issuance of common stock
for services at prices
ranging from $0.02
to $0.42 -- 646,118
Issuance of common stock
for debt conversion at
$0.40 per share -- 340,850
Conversion of preferred
Series A to common
stock -- --
Conversion of preferred
Series B to common
stock -- --
Conversion of preferred
Series C to common
stock -- --
Issuance of preferred Series
D for cash and receivabl
at $100 per share -- 1,023,048
Issuance of preferred Series
E for cash at $100
per share -- 59,975
Issuance of preferred Series
F for cash at $100
per share -- 124,000
Forgiveness of debt and
accrued payroll by
officer -- 796,408
Net loss for the year ended
July 31, 2001 (2,247,420) (2,247,420)
----------- -----------
Balance, July 31, 2001 (5,901,501) (458,048)
Issuance of common stock
for cash at $0.04 per share -- 253,895
Stock issued for services
at $0.08 per share -- 64,610
Forgiveness of payroll by
officer -- 60,000
Net loss for the six months
ended January 31, 2002
(Restated) (538,559) (538,559)
----------- -----------
Balance, January 31, 2002
(Unaudited) (Restated) $(6,440,060) $ (618,102)
=========== ===========
4
AQUA VIE BEVERAGE CORPORATION
Cash Flows
(Unaudited)
Six Months Ended
January 31,
-----------------------
2002 2001
(Restated)
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(538,559) $(984,594)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 74,222 59,286
Stock issued for services 64,610 344,578
Forgiveness of debt -- 499,998
Services charged to additional paid-in capital 60,000 --
Prior year expense in retained earnings -- 11,400
Changes in assets and liabilities:
Accounts receivable (45,570) (73,923)
Note receivable -- (442,938)
Inventory 114,322 149,629
Prepaid expenses 1,647 69,392
Accounts payable (32,806) 187,658
Shareholder loans payable -- 324,000
Accrued expenses 78,945 (416,009)
Loans from related parties 39,718 135,254
--------- ---------
Net cash used by operating activities (183,471) (136,269)
--------- ---------
CASH USED BY INVESTING ACTIVITIES:
Purchase of intangibles (33,213) (7,312)
Increase in intangible assets for slotting -- (67,907)
--------- ---------
Net cash used by investing activities (33,213) (75,219)
--------- ---------
CASH PROVIDED BY FINANCING ACTIVITIES
Sale of common stock 253,895 --
Sale of preferred stock -- 296,685
Debt converted to stock -- 340,850
Bank overdraft (35,725) 55,688
Net payments on long-term debt (4,724) (18,362)
Payments to notes payable -- (474,500)
--------- ---------
Net cash provided by financing activities 213,446 200,361
--------- ---------
INCREASE (DECREASE) IN CASH (3,238) (11,127)
BEGINNING BALANCE 3,608 11,127
--------- ---------
ENDING BALANCE $ 370 $ --
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Income taxes paid $ -- $ --
Interest paid $ 1,513 $ 35,028
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt converted to stock $ -- $ 340,850
Common stock issued for services $ 64,610 $ 344,578
Forgiveness of debt and accrued payroll $ 60,000 $ 499,998
5
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
AQUA VIE BEVERAGE CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
(Restated)
January 31, 2002
NOTE 1 - BASIS OF PRESENTATION
The foregoing unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form
10-QSB and Regulation S-B as promulgated by the Securities and Exchange
Commission. Accordingly, these financial statements do not include all of the
disclosures required by accounting principles generally accepted in the United
States of America for complete financial statements. These unaudited interim
financial statements should be read in conjunction with the audited financial
statements for the period ended July 31, 2001. In the opinion of management, the
unaudited interim financial statements furnished herein include all adjustments,
all of which are of a normal recurring nature, necessary for a fair statement of
the results for the interim period presented.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires the use of estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities known to exist as of the date
the financial statements are published, and the reported amounts of revenues and
expenses during the reporting period. Uncertainties with respect to such
estimates and assumptions are inherent in the preparation of the Company's
financial statements; accordingly, it is possible that the actual results could
differ from these estimates and assumptions that could have a material effect on
the reported amounts of the Company's financial position and results of
operations.
Operating results for the three-month and six-month periods ended January 31,
2002 are not necessarily indicative of the results that may be expected for the
year ending July 31, 2002.
NOTE 2 - RESTATEMENT AND CORRECTION OF AN ERROR
The Company's financial statements for the year ended July 31, 2001 have been
restated to reflect the correction of errors as follows.
1. Settlements payable have been accrued to reflect an expected
settlement on a breach of contract claim for $10,000.
2. Forgiveness of advances and payroll by the Company's chief executive
officer is shown as a capital contribution which increased additional
paid-in capital by $796,408 and expenses by $120,000 for salary not
recognized in the last six months of the Company's fiscal year.
6
AQUA VIE BEVERAGE CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
(Restated)
January 31, 2002
NOTE 2 - RESTATEMENT AND CORRECTION OF AN ERROR
The effect of these corrections was restated financial statements, which thereby
increased net loss for the year ended July 31, 2001 by $806,408, and increased
liabilities by $10,000.
The Company's financial statements for the period ended January 31, 2002 have
been restated to reflect a reduction in cash in the amount of $15,787, a
reduction in inventory in the amount of $48,584, a reduction in prepaid and
other assets of $7,053 an increase in net intangibles in the amount of $3,999,
an increase in property and equipment in the amount of $16,152, a decrease in
deposits in the amount of $22,737, accrual of $60,000 payroll during the quarter
ended January 31, 2001 by the Company's chief executive officer, additional
accounts payable in the amount of $30,785, an increase in notes payable in the
amount of $3,469, a bank overdraft in the amount of $16,687 and forgiveness of
payroll by the Company's chief executive officer in the amount of $60,000 as a
capital contribution.
The effect of these corrections was restated financial statements, which thereby
increased net loss the six months ended January 31, 2002 by $45,490, decreased
total assets by $74,012 and increased liabilities by $103,530.
NOTE 3 - ADDITIONAL COMMENTS
During March 2001, the Company entered into a shipping and security agreement
with a central California contract manufacturer. The agreements provided the
Company with production financing and inventory expansion of its beverage
products, interest-free and without a factoring fee. Under the terms of the
agreement, the Company granted to the contract manufacturer a security interest
in the Company's inventory and receivables. Based on that agreement, the Company
began an aggressive campaign to place its products in California-based
supermarket chains by paying and/or incurring slotting fees, supporting sampling
programs, and other marketing activities.
In April 2001, the contract manufacturer commenced production under the terms of
the shipping and security agreement and began shipping product to major grocery
chain accounts in California, Arizona and Nevada. Subsequently, the Company
increased its sales and marketing efforts, and slotting fee commitments intended
to support an expanded sales program. The packer, which was experiencing quality
assurance problems, failed to sustain production levels adequate to meet the
sales levels projected by the Company notwithstanding the marketing expenses
incurred by the Company, and the packer continued in its failure to resolve past
account issues arising over defective products. This led to a demand by the
Company for an accounting resulting in a refusal
NOTE 3 - ADDITIONAL COMMENTS (Continued)
by the packer of any further production or shipment of inventory already
produced until the Company executed an indemnity in the packer's favor.
Management held steadfast in its belief that its product quality and purity are
critical and not subject to compromise. This dispute had a negative impact on
the Company by creating uncertainty relative to the Company's ability to deliver
product to fill pending and projected orders, for which the slotting payments
and marketing efforts had already been undertaken. In an effort to resolve the
dispute, the Company entered into a new production agreement, which provided for
payments to be made directly to the Company in settlement of the claims and also
effected a termination of the factoring agreement.
7
AQUA VIE BEVERAGE CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
(Restated)
January 31, 2002
Subject to third-party quality assurance testing, shipping and production
resumed in July under the new agreement. Management is confident that with
certain modifications having been made to the manufacturing process and
production line, and with strict adherence to the quality assurance, the
aforementioned issues have been resolved and the packer is capable of
maintaining production levels and consistent quality.
Notwithstanding the impact on the Company's sales and marketing efforts by the
packer's failure to perform as agreed, and the consequent loss of saleable
inventory under the shipping and security agreement to satisfy orders and
proposed orders during the period from June to August 2001 of the dispute,
through additional slotting fee commitments and other arrangements made by the
Company, the Company was able to place its products on the shelves of retail
grocery chains, and to obtain additional approvals.
Management believes that these placements and approvals provide a major foothold
and a foundation for regional expansion into 2002 as the Company expects to
begin a rapid expansion of its inventory production and its sales and marketing
programs during the current fiscal year.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
During its first three years of existence (from inception to July 31, 2001), the
Company accumulated a deficit of $5,901,501. In the subsequent six months ended
January 31, 2002, the Company's accumulated deficit grew to $6,440,060 as the
Company's marketing and executive expenses increased, creating a quarterly
operating loss of $132,295. At January 31, 2002, the Company's total assets of
$514,418 were lower than the $629,064 reported at its July 31, 2001 year-end The
Company's current liabilities increased slightly from $1,072,480 at July 31,
2001 to $1,122,612 at January 31, 2002.
The Company entered into an aggressive marketing campaign in the Spring of 2001,
which substantially increased its General and Administrative expenses for sales
personnel and marketing expenses for slotting fees and related items based on
the production financing agreement made with its contract packer in late
February 2001 (see Note 3 to the Financials). These expenses were incurred in
the anticipation of a rapid increase in sales and revenues to support the
expenditures. The dispute which arose with the packer, although resolved in late
July, 2001, did not provide compensation for the loss of revenues projected by
management for that period, and also reduced the sales activity due to
uncertainties over supply. Management had proposed to address these problems in
early September 2001 but was unable to adequately redress the issue due to the
September 11th event and its impact on retail sales.
Aqua Vie continues to offer information about its products and a subscription
service on its Internet site. Aqua Vie's revenue from Internet sales, a small
portion of current revenue, is projected to be an important part of future
revenue. Management intends to expand and develop marketing of Aqua Vie
beverages through the Internet, and redesign of the Company's Internet site to
support the Company's marketing plan is currently underway. Given Aqua Vie's
market distribution presence and order interest by major customers, the funded
slotting fee arrangements with major grocery and convenience store chains, its
present relationship with its co-packer, and the present production and overhead
cost structure, profitability is believed achievable in 2002, given adequate
bridge financing.
The immediate solution to profitability in this early growth scenario rests with
the Company's ability to obtain bridge financing adequate to meet the increased
product demand available within the account base with which the Company has
already secured shelf space. At the same time, the company will continue to
build brand awareness through immediate execution of consumer marketing programs
postponed during 2001, including radio and newspaper advertising in select
markets, which is expected to commence during the first half of the calendar
year.
9
The Company began a program to seek production financing shortly before the
September 11th event but was unable to finalize commitments with interested
investors at that time due to the market uncertainties which arose. In late
January, the company entered into an agreement in principle with a venture group
to provide $1.2 million in bridge capital for the company's operations and
inventory requirements for 2002; however, to date, arrangements have not been
finalized. The aforementioned delay in finalization of financing resulted in
lower production and inventory levels, and a postponement of additional new
product shipments until early March 2002.
In the future Aqua Vie expects to improve margins through economies of scale
and by introducing new products that management believes will support higher
gross margins even in today's competitive market environment. The first to be
introduced will be a line of Hydrators especially designed for children.
Subsequently, the Company plans to follow with a multi-flavor line of
nonalcoholic wines made from spring water. These nonalcoholic wines have been
designed to provide all of the sensual qualities of fine wines and champagnes,
without the presence of alcohol or preservatives.
Aqua Vie's product line contains no directly patented or patentable features or
components. Copyrighting, trade marking and the use of trade secret techniques
and formulations are employed extensively. Aqua Vie uses
non-disclosure/non-compete agreements with employees, suppliers and co-packer
bottlers.
At present the Company has not issued any licenses, franchises, concessions,
royalty agreements or labor contracts, though future development may include
such actions being incorporated into the corporate strategy.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's revenues of approximately $76,000 for the quarter ended January
31, 2002 were a decrease from the $563,133 of revenues in the corresponding
second quarter of the prior fiscal year, due to the time lost in the resolution
of the processor's quality assurance problem, the resultant temporary lack of
inventory available for sale, the consequent delay of advertising and marketing
programs, and a postponement of final arrangements for additional funding in
September, delayed because of events of September 11th. Discussions are ongoing
with the same third parties concerning this additional funding.
Because it has sustained recurring losses from operations, the Company cannot
assure that it will be able to fully carry out its plans as budgeted without
additional operating capital. At January 31, 2002, the Company had negative
working capital of $930,059, although this amount represents a decrease in
liquidity and capital resources from its negative working capital position of
$806,290 at July 31, 2001. The decrease is principally attributable to a
decrease in current Assets. In the six months ended January 31, 2002, the
Company funded a portion of its operations from the issuance of common stock,
valued at $253,895.
The Company anticipates a substantial use of cash for the foreseeable future.
In particular, management of the Company intends substantial expenditures in
connection with production of additional inventory for the planned increase in
sales, expansion of the Company's marketing organization, payment of slotting
fees to obtain shelf space with new retailers, and quality assurance and
distribution management.
10
The availability of sufficient future funds for Aqua Vie will depend to a
significant extent on the growth in market acceptance of the Company's primary
product line by retail chains. The Company does not expect to incur any major
capital expenditures in the next year. Aqua Vie's management expects that
additional funding for operating expenditures will be available from the
issuance of debt and/or equity securities, as needed. There can be no assurance
whether or not such financing will be available on satisfactory terms.
RESULTS OF OPERATIONS
Aqua Vie commenced operations in 1998 and has a limited history of operations,
which to date have not been profitable. Its operations are subject to the risks
and competition inherent in the establishment of a relatively new business
enterprise. Aqua Vie is currently operating at a loss. The Company's three month
revenues of approximately $76,000 were less than the comparable three-month
period of the prior fiscal year.
Though sales to date have not been sufficient to cover the costs of operations,
profitability is believed achievable assuming inventory levels are adequate to
meet demand within the Company's existing customer base. For the three months
ended January 31, 2002, the Company's sales produced negative gross profit of
($14,878) which compares with the gross profit of $144,147 for the comparable
three months of the prior fiscal year.
Operating expenses were $107,536 for the three months January 31, 2002 and were
$798,029 for the comparable period of the prior year. The year-to-year change
principally reflects a decrease in marketing expenses during the most recent
quarter resulting from the Company's decision to postpone its advertising,
marketing and promotional activities pending the development of higher inventory
levels.
During this same year-to-year time frame, the decrease in operating expenses
during the quarter ended January 31, 2002 also reflects reduction in legal and
professional expenses. While Aqua Vie continued to operate at a loss during the
most recent quarter, given inventories adequate to support its marketing
efforts, the Company's ability to generate higher revenue and realize a net
profit from operations remains primarily dependent upon the effectiveness of its
marketing efforts in generating sales of its line of flavored spring water
products.
In the quarter ending January 31, 2002, the Company's net loss of ($132,295)
for the three months ended January 31, 2002 resulted in a net loss per share of
($0.002) for the quarter. This contrasts with a net loss of ($171,347) for the
three months ended January 31, 2001, which posted a per share loss of ($0.004).
11
PART II - - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no substantial legal proceedings against the Company and the Company
is unaware of any such meaningful proceedings contemplated against it. The
Company anticipates that in the future it will have conflicts as regards certain
Accounts Payable for services invoiced but not adequately performed and for the
use of selected names for products and product lines in selected market places.
ITEM 2. CHANGES IN SECURITIES
Recent Sales of unregistered securities.
Sales of unregistered securities were pursuant to the exemption from
registration under the Securities Act of 1933 contained in Section 4(2) and
Regulations promulgated thereunder. During the three months ended January 31,
2001, the Company issued 824,000 shares of common stock for services valued at
$29,000.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
12
ITEM 5. OTHER INFORMATION
Not applicable.
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this discussion which are not historical facts may be considered
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. The words "believe", "expect", "anticipate",
"estimate" and similar expressions identify forward looking statements. Any
forward looking statements involve risks and uncertainties that could cause
actual events or results to differ, perhaps materially, from the events or
results described in forward looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
their dates. The Company undertakes no obligation to publicly update or revise
any forward looking statements, whether as a result of new information, future
events or otherwise. Risks associated with the Company's forward looking
statements include, but are not limited to, risks associated with the Company's
history of losses and uncertain profitability, need for market acceptance of the
HYDRATROR(TM) product line, the Company's reliance at this time on a single
product line, reliance on the market distribution and retail system and risks
associated with the Company's international operations, currency fluctuations,
the risk of new and different legal and regulatory requirements, governmental
approvals, tariffs and trade barriers, risks associated with competition and
technological and product innovation by competitors, dependence on proprietary
formulas, general economic conditions and conditions in the beverage industry,
reliance on key management, limited manufacturing production history with
respect to the aseptic bottling system, maintenance of quality control by the
contract bottler, dependence on key suppliers, future capital needs and
uncertainty of additional financing, potential recalls and product liability,
dilution, effects of outstanding convertible debentures and preferred stock,
limited public market, liquidity, possible volatility of stock price, recently
adopted new listing standards for NASDAQ securities and environmental matters.
13
AQUA VIE BEVERAGE CORPORATION
(Registrant)
Date June 27, 2002 By: /s/ Thomas J. Gillespie
---------------------------
Thomas J. Gillespie
Chief Executive Officer
& President
14