UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 30, 2000
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AQUA CLARA BOTTLING AND DISTRIBUTION, INC. AND SUBSIDARY
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FLORIDA EIN 84-1352529
1315 Cleveland Street
Clearwater, Florida 33755-5102
(727) 446-2999
www.aquaclara.com
Indicate by check mark whether the Registrant (1) has filed all report
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.
As of December 30, 2000, the registrant had 65,463,946 shares of common stock
outstanding at no par value.
1
Part 1
Financial Information
(Item 1)
Aqua Clara Bottling & Distribution, Inc. and Subsidiary
Consolidated Balance Sheet
(unaudited)
As Of
December 30, 2000
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Assets
Current assets:
Cash 850
Accounts receivable 34,037
Other receivable 17,820
Inventories 179,232
Prepaid expenses and other current assets 27,980
----------
Total Current Assets 259,919
Property, plant, and equipment,
net of accumulated depreciation 1,757,337
Other assets 1,506
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Total Assets 2,018,762
==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable, trade 179,813
Accrued expenses 149,655
Current maturities of long term debt 189,823
Current obligations under capital leases 5,589
Due to stockholders 316,456
Other current liabilities 58,754
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Total current liabilities 900,090
Long-term debt, less current maturities 156,137
Obligation under capital leases, less
current portion 10,429
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Total Liabilities 1,066,655
Stockholders' equity:
Preferred stock; no par value, 5,000,000 shares
authorized; 100 shares issued
and outstanding 74,601
Common stock; no par value, 100,000,000 shares
authorized; 65,463,946 shares
issued and outstanding 9,146,199
Additional paid in capital 2,083,923
Accumulated deficit (10,352,617)
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Total Stockholders' Equity 952,107
Total Liabilities and Stockholders' Equity 2,018,762
==========
See accompanying notes to consolidated financial statements.
2
Part 1
Financial Information
(Item 3)
Aqua Clara Bottling & Distribution, Inc. and Subsidiary
Consolidated Statements of Operations
(unaudited)
For The Three Months Ended For The Nine Months Ended
Dec 30, 2000 Jan 1, 2000 Dec 30, 2000 Jan 1, 2000
------------ ----------- ------------ -----------
Sales 70,197 29,755 247,161 207,663
Cost of sales 74,170 87,457 264,850 187,660
----------- ----------- ------------ ------------
Gross profit (3,972) (57,702) (17,688) 20,003
General, administrative,
and sales expenses 226,075 489,543 1,057,006 1,398,523
Stock Options Forfeited 0 0 (410,020) 0
Operating profit/(loss) (230,048) (547,245) (664,675) (1,378,520)
Other income (expense):
Interest expense (12,708) (151,335) (49,168) (159,400)
Interest and other income 0 1,070 0 1,070
Gain (loss) on sale of assets 0 0 0 (10,415)
Other expense 0 (110,525) 0 (110,782)
----------- ----------- ------------ ------------
Net other income (expense) (12,708) (260,790) (49,168) (279,527)
Net income/(loss) (242,756) (808,035) (713,843) (1,658,047)
Dividends on preferred stock: 0 142,565 29,196 253,238
Net income/(loss) applicable
to common stock (242,756) (950,600) (743,039) (1,911,285)
Basic loss per common share $ (0.00372) $ (0.02409) $ (0.01135) $ (0.06568)
Weighted average common
shares outstanding 65,176,774 39,461,824 63,200,555 29,100,937
See accompanying notes to consolidated financial statements.
3
Part 1
Financial Information
(Item 5)
Aqua Clara Bottling & Distribution, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
For the three months ended For the nine months ended
Dec 30, 2000 Jan 1, 2000 Dec 30, 2000 Jan 1, 2000
------------ ----------- ------------ -----------
Operating activities:
Net income / (loss) $ (242,756) $ (814,035) $ (713,843) $(1,658,047)
Adjustments to reconcile net loss to net cash
used in operating activities:
Allowance for doubtful accounts 0 0 0 0
Loss (gain) on sales of assets 0 0 0 10,415
Depreciation 28,599 29,027 85,284 83,510
Issuance of stock options to employees 12,999 416,000 39,001 0
Forfiture of stock options 0 0 (410,020) 0
Issuance of stock options for S-1 0 0 0 0
Beneficial conversion feature of debentures 0 0 0 0
Issuance of common stock for services 29,926 142,823 209,654 0
(Increase) decrease in cash casued by changes in:
Accounts receivable 404 (21,089) (23,244) 46,147
Other receivable (17,820) 0 (17,820) 0
Inventories 26,413 21,618 110,913 (38,389)
Prepaid expenses & other current assets 44,048 12,417 370,205 (395,181)
Accounts payable 58,544 (42,253) 47,756 (336,707)
Accrued expenses 38,715 (160) (87,418) (225,588)
Deferred revenue (1,524) (3,000) 0 0
Other current liabilities 17,336 2,444 58,753 (39,293)
Stockholder accrual (5,000) (75,468) (17,697) (247,656)
------------ ----------- ------------ -----------
Net cash used in operating activities (10,116) (331,676) (348,476) (2,800,789)
Investing activities:
Purchase of property, plant and equipment (7,704) 0 (9,951) (40,472)
------------ ----------- ------------ -----------
Financing activities:
Proceeds from borrowings 0 75,000 155,010 3,059,762
Payments on borrowings (1,398) 0 (4,350) (208,244)
Payments on capital lease obligations (1,374) 0 (4,583) 0
Net proceeds from issuance of stock 12,220 250,000 192,220 0
------------ ----------- ------------ -----------
Net cash provided by financing activities 9,448 325,000 338,297 2,851,518
------------ ----------- ------------ -----------
Net (decrease) increase in cash (8,372) (6,676) (20,130) 10,257
Cash, beginning of period 9,222 26,893 20,980 9,960
------------ ----------- ------------ -----------
Cash, end of period $ 850 $ 20,217 $ 850 $ 20,217
============ =========== ============ ===========
See accompanying notes to consolidated financial statements.
4
Part 1
Financial Information
(Item 1)
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Notes To The Unaudited Consolidated Financial Statements
Interim Consolidated Financial Statements
The accompanying unaudited interim consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission for reporting on Form 10-QSB. Accordingly, certain
principles for complete financial statement are not applied within these
statements. They have been prepared on a consistent basis including normal
recurring adjustments and should be read in conjunction with the
consolidated financial statements and related notes contained in the Annual
Report for the fiscal year ended April 1,2000.
Organization, Background, Sale of Assets, and Going Concern
(1) Description of Business, Going Concern and Management
Plans and Intentions
The accompanying consolidated financial statements of Aqua
Clara Bottling & Distribution, Inc. (the "Company") include
the financial statements of its wholly owned subsidiary,
Pocotopaug Investment, Inc. Intercompany transactions and
accounts have been eliminated upon consolidation.
The Company is engaged in the production, bottling, selling
and distribution of non-sparkling purified drinking water
products in containers ranging from .5 to 1.5 liters in size.
During the year ended April 3, 1999, the Company began
producing oxygenated water. It is the Company's intent to
find a market niche in oxygen-enriched water.
The Company continues to experience net losses and a working
capital deficit. These factors, combined with the fact that
the Company has not generated positive cash flows from
operations, raise substantial doubt about the Company's
ability to continue as a going concern. Management intends
to fund its operations through the offering of additional
shares of common stock for sale, refinancing its existing
debt and obtaining a line of credit. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets or
amounts and classifications of liabilities that might be
necessary in the event the Company cannot continue in
existence.
During the period ended July 1, 2000, the Company raised
$55,000 through a private offering of its common stock.
During the period ended September 30, 2000, the Company
raised an additional $125,000 as part of the same offering.
During the period ended December 30, 2000, the Company raised
an additional $12,220.00 as part of the same offering. The
proceeds from the offering are being used to fund operations.
5
(2) Inventories
Inventories consist of the following at December 30, 2000:
Raw materials $ 48,217
Work in progress 182
Finished goods 130,833
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$ 179,232
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(3) Property, Plant, and Equipment
Property, plant, and equipment consist of the following at
December 30, 2000:
Land $ 90,000
Building 926,520
Machinery and equipment 1,022,795
Vehicles 22,393
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Total 2,061,708
Less accumulated depreciation (304,371)
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$ 1,757,337
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The Company has reviewed its long-lived assets for impairment
and has determined that no adjustments to the carrying value of
long-lived assets is required.
(4) Due To Stockholders
Due to stockholders consists of notes payable and due upon
demand. Interest on these notes accrues at rates between 5%
to 8%.
(5) Long-Term Debt
Long-term debt at December 30, 2000 consists of:
Note payable: Secured 8% Series B Convertible Debenture was
raised in June 1999. The Company anticipates that the
remainder of the note will be converted into common stock
Series B Convertible Debentures $ 50,000
Note payable: interest at 10%, secured
by building 134,451
Note payable: Interest at 5%, secured
by building 155,010
Installment note payable; interest at
10.5%; payments $461 per month including
interest; collateralized by a vehicle 6,499
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Long-term debt $ 345,960
Less current installments 189,823
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Long-term debt, less current
installments $ 156,137
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6
(6) Income Taxes
No provision for income taxes is recorded due to the amount
of tax losses incurred since inception. The Company had
unused net operating loss carryforwards to carry forward
against future years' taxable income of approximately
$4,600,000, which will begin to expire in years after 2011.
Temporary differences giving rise to the deferred tax assets
consist primarily of the deferral and amortization of start-
up costs for tax reporting purposes. Management has
established a valuation allowance equal to the amount of the
deferred tax assets due to the uncertainty of the Company's
realization of this benefit.
(7) Commitments and Contingencies
A former officer of the Company filed suit against the
Company for approximately $80,000 of accrued wages and loans
that took the form of a mortgage on the property. This
claim also seeks 1,350,000 shares of the Company's common
stock. The Company has accrued $80,000, relating to the
accrued wages and loans, in the accompanying financial
statements. However, the Company asserts that all or a
majority of the number of common shares due is a frivolous
claim and has not included any amount related to these
shares in the accompanying financial statements.
7
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Management's Discussion and Analysis
Of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
The operation profit for the 9 month period ended December 30,
2000 was ($664,675) with general and administrative, and selling
expenses totaling $1,057,006. Sales for the period were
$274,161. The period performance was significantly affected by
charges for prepaid and professional services and for previously
committed services.
The Company intends to increase spending over the next six months
in advertising, marketing and distribution, which amounts are
expected to be expended prior to the receipt of significant
revenues. There can be no assurance as to when, if ever, the
Company will realize significant operating revenues or attain
profitability.
LIQUIDITY AND CAPITAL RESOURCES
During the period ending July 1, 2000, the Company raised $55,000
through a Rule 506 Offering. Subsequent to July 1, the Company
raised an additional $137,220 via the same Offering. The
proceeds of this raise are being used to fund continued operation
of the Company.
The Company has no plans or arrangements in place with respect to
additional capital sources at this time. The Company has no
significant lines of credit available to it at this time. There
are no assurances that additional capital will be available to
the Company when or if required.
Although the Company expects to experience losses in the 4th
quarter of fiscal year 2001 (ended March 31, 2001), management
believes that the losses will continue to decrease and a break-
even point could be reached in the near term. Inflation has not
had a significant impact on the Company's results of operations.
BUSINESS AND PLAN OF OPERATION
GENERAL
Prior information pertaining to Aqua Clara Bottling &
Distribution, Inc. can be found in the Annual Report for the
fiscal year ended April 1, 2000, and in the Quarterly report for
the period ended September 30, 2000.
During the year ending April 3, 1999, the Company began producing
20-oz. bottles of oxygenated water packaged in a PET container.
The Company's oxygen enriched water contains approximately 32
parts per million of oxygen. Normal tap water contains
approximately 3 parts per million of dissolved oxygen. As such,
the company's oxygen enriched bottled water contains
approximately 800% more oxygen.
During the year ended April 1, 2000, the Company expanded its
product line to include 1 Liter and 1.5 Liter packages, and
introduced a six-pack to the market.
8
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 1
Legal Proceedings
LEGAL PROCEEDINGS
The Company is not a party to legal proceedings except as set
forth below.
Civil Litigation in the Circuit Court of the Sixth Judicial
Circuit in and for Pinellas County - Rand L. Gray and Kathleen
Gray v. Aqua Clara Bottling & Distribution, Inc. et al., Pinellas
County, Case No. 00-2122-C1-021. This case arises out of an
alleged breach of an employment contract. An Amended Complaint
was filed by the Plaintiffs on June 26, 2000. The Amended
Complaint alleges 6 counts: Count I - Foreclosure of Mortgage;
Count II - Foreclosure of Security Interest on Personal Property;
Count III - Damages on Promissory Note; Count IV - Damages for
Breach of Employment Agreement; Count V - Damages for Breach of
Severance Agreement; and Count VI - Damages for Breach of
Indemnity Agreement. Our response to Plaintiffs' Amended
Complaint was filed August 1, 2000. Settlement offers have been
filed by both sides.
9
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 2
Changes In Securities
Regulation D, Rule 506 Offering
During the period ended July 1, 2000, the Company issued 532,173
shares of common stock in exchange for $55,000 as part of a
Limited Offering exempt from registration under Rule 506 of
Regulation D. During the period ended September 30, 2000, the
Company issued an additional 1,209,485 common shares in exchange
for an additional $125,000 as part of the same offering. During
the period ended December 30, 2000, the Company issued an
additional 200,000 common shares in exchange for an additional
$12,220.00 as part of the same offering.
Preferred stock
The Company's Board of Directors has authority, without action by
the shareholders, to issue all or any portion of the authorized
but unissued preferred stock in one or more series and to
determine the voting rights, preferences as to dividends and
liquidation, conversion rights, and other rights of such series.
The Company considers it desirable to have preferred stock
available to provide increased flexibility in structuring possible
future acquisitions and financing and in meeting corporate needs
which may arise. If opportunities arise that would make desirable
the issuance of preferred stock through either public offering or
private placements, the provisions for preferred stock in the
Company's Articles of Incorporation would avoid the possible delay
and expense of a shareholder's meeting, except as may be required
by law or regulatory authorities. Issuance of the preferred stock
could result, however, in a series of securities outstanding that
will have certain preferences with respect to dividends and
liquidation over the Common Stock which would result in dilution
of the income per share and net book value of the Common Stock.
Issuance of additional Common Stock pursuant to any conversion
right, which may be attached to the terms of any series of
preferred stock, may also result in dilution of the net income per
share and the net book value of the Common Stock. The specific
terms of any series of preferred stock will depend primarily on
market conditions, terms of a proposed acquisition or financing,
and other factors existing at the time of issuance. Therefore, it
is not possible at this time to determine in what respect a
particular series of preferred stock will be superior to the
Company's Common Stock or any other series of preferred stock,
which the Company may issue. The Board of Directors may issue
additional preferred tock in future financing, but has no current
plans to do so at this time.
The issuance of Preferred Stock could have the effect of making it
more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company.
10
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 3
Defaults Upon Senior Securities
(NONE)
11
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 4
Submission of Matter to a Vote of Security Holders
(NONE)
12
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 5
Other Information
During the period ended December 30, 2000, Mr. Rentao P. Mariani
resigned from the Board of Directors of Aqua Clara Bottling &
Distribution, Inc. Mr. Mariani did not provide any reason for
his resignation and his position on the Board has not been
filled.
13
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 6
Exhibits and Reports
Exhibits and Reports on Form 8-K
(a) Exhibits
21.1 Subsidiaries
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the three month
period ended December 30, 2000.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: February 15, 2001 AQUA CLARA BOTTLING & DISTRIBUTION, INC.
By:____/S/John C. Plunkett____________
John C. Plunkett
President, Chief Executive Officer
15
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
21.1 Subsidiaries
16