UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 29, 2001
AQUA CLARA BOTTLING AND DISTRIBUTION, INC.
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COLORADO EIN 84-1352529
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1315 Cleveland Street
Clearwater, Florida 33755-5102
(727) 446-2999
www.aquaclara.com
-----------------
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.
As of December 29, 2001, the registrant had 81,491,535 shares of common stock
outstanding at no par value.
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part I
Financial Information
Consolidated Balance Sheets
---------------------------
(unaudited)
As of
29-Dec-01
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Assets
- ------
Current assets:
Cash and cash equivalents 5,223
Accounts receivable, net of allowance for
doubtful accounts 148,420
Inventories 45,314
Prepaid expenses and other current assets 3,701
-------------
Total current assets 202,659
Property, plant, and equipment,
net of accumulated depreciation 1,649,467
Other assets 5,598
-------------
Total assets 1,857,724
=============
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable, trade 395,197
Accrued expenses 125,753
Current maturities of long term debt 113,859
Current obligations under capital leases 7,929
Due to stockholders 538,437
-------------
Total current liabilities 1,181,176
Obligation under capital lease, less current portion 6,836
-------------
Total liabilities 1,188,012
Stockholders' equity:
Preferred stock; no par value, 5,000,000 shares
authorized; 100 shares issued and outstanding 74,602
Common stock; no par value, 100,000,000 shares
authorized; 81,491,535 shares issued and outstanding 10,238,264
Additional paid in capital 3,256,942
Common stock subscription receivable 88,000
Accumulated deficit (12,988,096)
-------------
Total stockholders' equity 669,712
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Total liabilities and stockholders' equity 1,857,724
=============
See accompanying notes to consolidated financial statements.
1
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part 1
Financial Information
Statements of Operations
------------------------
(unaudited)
For The Three Months Ended For The Nine Months Ended
29-Dec-01 30-Dec-00 29-Dec-01 30-Dec-00
----------- ----------- ----------- -----------
Sales 30,654 70,197 331,523 247,161
Cost of sales 63,298 74,170 341,803 264,850
----------- ----------- ----------- -----------
Gross profit (loss) (32,644) (3,973) (10,280) (17,689)
General, administrative, and
sales expenses 626,215 226,075 1,328,692 1,057,006
Stock options forfeited 0 0 0 (410,020)
Operating loss (495,530) (230,048) (1,338,972) (664,675)
Other expense:
Interest expense (2,380) (12,708) (8,616) (49,168)
Interest and other income 0 0 0 0
Gain (loss) on sale of assets 0 0 0 0
Other expense 0 0 0 0
----------- ----------- ----------- -----------
Net other expense (2,380) (12,708) (8,616) (49,168)
Net loss (497,910) (242,756) (1,347,588) (713,843)
Dividends on preferred stock: 0 0 0 29,196
Net loss applicable to common
stock (497,910) (242,756) (1,347,588) (743,039)
Basic loss per common share $ (0.00611) $ (0.00372) $ (0.01710) $ (0.01176)
Weighted average common shares
outstanding 81,491,535 65,176,774 78,828,355 63,200,555
See accompanying notes to consolidated financial statements.
2
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part 1
Financial Information
Aqua Clara Bottling & Distribution, Inc. and Subsidiary Consolidated
Statements of Cash Flows
(unaudited)
For The Three Months Ended For The Nine Months Ended
29-Dec-01 30-Dec-00 29-Dec-01 30-Dec-00
----------- ----------- ----------- -----------
Operating activities:
Net loss $ (690,533) $ (242,756) $(1,347,588) $ (713,843)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 29,348 28,599 86,182 85,284
Issuance of stock options to employees 318,000 12,999 362,000 39,001
Forfeiture of stock options 0 0 0 (410,020)
Issuance of stock for services and fees (10,599) 29,926 57,094 209,654
Increase/(decrease) in cash casued by changes in:
Accounts receivable 40,836 404 (89,055) (23,244)
Other receivable 0 (17,820) (1,485) (17,820)
Inventories 39,851 26,413 67,830 110,913
Prepaid expenses & other current assets 644,149 44,048 758,855 370,205
Accounts payable 19,964 58,544 37,218 47,756
Deferred revenue 0 (1,524) 0 0
Accrued expenses (38,441) 38,715 3,700 (87,418)
Other liabilities (611) 17,336 83,526 58,753
Stockholder salary accrual (9,782) (5,000) (15,573) (17,697)
----------- ----------- ----------- -----------
Net cash used in operating activities 342,182 (10,116) 2,704 (348,476)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equipment 0 (7,704) (8,308) (9,951)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 0 0 0 155,010
Payments on long-term debt (41,038) (1,398) (53,825) (4,350)
Payments on capital lease obligations 0 (1,374) (793) (4,583)
Net proceeds from issuance of stock 452,853 12,220 58,771 192,220
----------- ----------- ----------- -----------
Net cash provided by financing activities 442,144 9,448 4,153 338,297
----------- ----------- ----------- -----------
Net decrease in cash (673) (8,372) (1,451) (20,130)
Cash, beginning of period 6,674 9,222 (6,674) 20,980
----------- ----------- ----------- -----------
Cash, end of period $ 6,001 $ 850 $ 5,223 $ 850
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
3
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
March 31, 2001.
Significant Accounting Policies
- -------------------------------
The consolidated financial statements include the accounts of Aqua
Clara Bottling & Distribution, Inc. and its wholly owned subsidiary,
Pocotopaug Investments, Inc. All significant intercompany accounts and
transactions have been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results may differ
from those estimates.
Cash equivalents consist of all highly liquid debt instruments
purchased with an original maturity of three months or less.
Inventories are stated at the lower of cost (first-in, first-out) or
market.
Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the
consolidated financial statements carrying amounts of existing assets
and liabilities and their respective income tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized as income in the period that included the enactment date.
The Company charges to retained earnings and credits its additional
paid-in capital for the amortization of the intrinsic value of the
conversion feature of its preferred stock in accordance with the
statements issued by the Securities and Exchange Commission.
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the estimated fair value of the service received
until the time the Company's stock began trading. At that time, the
Company valued the transactions based on quoted prices. The Company
records shares as outstanding at the time the Company becomes
contractually obligated to issue shares.
Property, plant, and equipment are recorded at cost. Depreciation is
calculated by the straight-line methods over the estimated useful
lives of the assets. Property under capital leases is amortized over
the shorter of the lease terms or the estimated economic life of the
property.
Fair value estimates discussed in these notes are based upon certain
market assumptions and pertinent information available to management.
The respective carrying value of certain financial instruments on the
balance sheet approximate their fair values. These financial
instruments include cash, investment securities, accounts payable, and
accrued expenses. Fair values were assumed to approximate carrying
values for these financial instruments since they are short-term in
nature or they are receivable or payable on demand. The fair value of
the Company's long-term debt is estimated based upon the quoted market
prices for the same or similar issues or the current rates offered to
the Company for debt of the same remaining maturities.
Basic loss per share is based on the weighted average number of common
shares outstanding during each period. The Company implemented SFAS
No. 128 Earnings Per Share during the year ended April 4, 1998.
On August 31, 1999 the Company entered into employment agreements with
Emanuel Mersis and John Plunkett to serve as the Company's Chief
Executive Officer and Chief Operating Officer, respectively. Under the
provisions of these agreements, both Mr. Mersis and Mr. Plunkett
received stock options in addition to salary. The options vested at a
rate of 20% per year over a five year term starting on the execution
date of the agreement. The number of shares available would have
incremented based upon targeted ownership percentages in relation to
the number of the Company's outstanding shares - Mersis agreement
targeted a 22.4% ownership and Plunkett a 7.6% ownership.
Additionally, the Company would have been liable to compensate the
company officer for any tax liability resulting from the exercise of
any options. An accrual for this provision was not included in the
accompanying financial statements. Mr. Mersis forfeited his options at
his resignation.
4
In January, 2001, Mr. Plunkett's options were adjusted to a fixed
6,000,000 shares, vesting at the rate of 2,000,000 shares per year.
The Company's responsibility for tax liability was removed from the
options. Mr Cifers was granted the same option agreement.
Inventories consist of the following at December 29, 2001:
Raw materials $ 40,205
Work in progress 182
Finished goods 4,928
-----------
$ 45,314
Property, plant, and equipment consist of the following at December
29, 2001:
Land $ 90,000
Building 926,520
Machinery and equipment 1,034,012
Vehicles 22,392
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Total 2,072,924
Less accumulated depreciation (423,458)
-------------
$ 1,649,466
=============
The Company has reviewed its long-lived assets for impairment and has
determined that no adjustments to the carrying value of long-lived
assets are required.
Due to stockholders consists of notes payable due upon demand.
Interest on these notes accrues at rates between 5% to 8%.
Long-term debt at December 29, 2001 consists of:
Note payable: interest at 10%, secured
by building 135,857
Installment note payable; interest at
10.5%; payments $461 per month including
interest; collateralized by a vehicle 2,538
-----------
Long-term debt $ 138,395
Less current installments 138,395
-----------
Long-term debt, less current installments $ 0
===========
The following is a schedule by year of the principal payments required
on long-term debt:
2002 $ 138,395
------------
$ 138,395
5
At December 29, 2001, the Company is obligated under a long-term
capital lease for equipment. The following is a schedule by year of
future minimum lease payments under these capital leases.
2002 $ 5,197
2003 6,791
2004 2,352
-----------
Total lease payments $ 14,340
Less amount representing interest
(6.5% - 8%) 1,147
-----------
Present value of lease payments 13,193
Less current obligation 5,163
-----------
Long-term capital lease obligation $ 8,030
At December 29, 2001, the Company has no vehicles or equipment under
operating leases.
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 $5,836,000, 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.
The components of deferred tax assets consist of the following at
March 31, 2001:
Deferred tax assets:
Net operating loss carryforwards 2,196,000
Other 267,000
-----------
Gross deferred tax assets 2,463,000
Valuation allowance 2,463,000
-----------
Total deferred tax assets $ -
Since inception, substantial changes of ownership of the Company have
occurred. Under federal tax law, these changes in ownership of the
Company will significantly restrict future utilization of the net
operating loss carryforwards. Other than the net operating losses,
which have been limited because of the change in ownership as
described above, any other net operating losses will expire if not
utilized within beginning in years after 2011.
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.
6
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 Company's sales commenced in April 1997, with the introduction of
its 5-gallon bottled water service. In the year ended April 4, 1998,
the Company had $135,710 in sales from this business. Revenues were
comprised of cooler rentals and water sales, which terminated in
March, 1998. With the proceeds from its offering of Series A Preferred
Stock, the Company entered the PET bottled water market. The sales for
the fiscal quarter ended September 30, 2000 were $86,988.
Sales for the quarter ended December 29, 2001, were $30654. This
decrease over the same quarter last year was due to delays in orders
while transitioning customers from the SerVen Rich brand to the Aqua
Clara brand.
The gross loss for the quarterly period ended December 29, 2001 was
$28,844 with general and administrative, and selling expenses for the
period totaling $637,211.
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
While the Company has identified a source for restructuring the
existing demand debt, there are no plans or arrangements in place with
respect to additional capital sources at this time. Nor does the
Company have any 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 2002, 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 March
31, 2001.
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 dissolved 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 dissolved
oxygen. The following year, the Company added 1.0- and 1.5-Liter
packages, and 6-packs of 20-oz. bottles.
INDUSTRY OVERVIEW
Oxygen is currently in the public view as an additive to a range of
consumer products. There are currently oxygen bars in Toronto, New
York City and the Los Angeles area. Oxygen in beverages has received
recent widespread media coverage through television, radio and print
media.
PRODUCTS
Oxygen Enriched Bottled Water. The Company's primary focus will be the
production/distribution of oxygen enriched bottled water in small
package, PET, containers ranging in size from .5 liter to 1.5 liters.
The points of purchase will include super markets, convenience stores,
mass merchants, health food stores, spas and hotel resorts.
The Company's oxygen enriched bottled water is made by combining super
purified water and oxygen. Through water purification processing the
source water is reduced to 3-5 parts per million of total dissolved
solids and then oxygen is introduced through a unique, proprietary
process. As a point of reference, the Food and Drug Administration's
(FDA) definition of distilled water is 5 parts per million or less of
total dissolved solids. As such, the base water is of distilled
quality, although the distillation process is not used.
The Company's market research, undertaken by a non-affiliated research
firm, has indicated that no specific medical claims have to be made to
7
consumers with regard to its product. According to this market
research, the public will readily accept the necessity and benefits of
both highly purified water and oxygen. Oxygen is literally the breath
of life; oxygen is a natural energizer and body purifier. Oxygen is
odorless and tasteless, as well as non-carbonated. As such, the
Company's water tastes like a fine premium bottled water - light and
crisp. Oxygen does not produce the unhealthy jolt associated with
caffeine products. Rather, it is believed to create a feeling of
physical well being and mental clarity.
There is one significant competitor, BevSystems, Int'l., producing
oxygen enriched bottled water. The Company is currently holding
merger discussions with BevSystems, Int'l. The resulting company will
maintain both product lines as well as adding additional products.
The Company also knows of eight other entities that are attempting to
produce and distribute oxygen enriched bottled water. None of the well
established traditional bottled water producers has an oxygen enriched
bottled water product. There can be no assurance that the Company's
products will achieve consumer acceptance. Consumer preferences are
inherently subjective and subject to change.
Initially, the Company will not carbonate or flavor its water. After
the successful introduction of the Company's oxygen enriched bottled
water product, the introduction of new products with natural flavoring
will be considered. Likewise, the Company will consider the infusion
of beneficial herbs. The Company will also consider the production of
super oxygen enriched sports drinks, providing even higher levels of
dissolved oxygen, to be marketed at a higher price. The Company
utilizes a distinctive bottle and label for its water products.
STRATEGY
The Company's objective is to build product markets in Florida,
concentrating on the Tampa area, and then expand nationally. Aspects
of the Company's strategy include the following.
The Company intends to enter into additional distribution agreements
with 2-5 non-affiliated partners. The Company intends to use these
distributors, as well as its own production/distribution facility, as
operational models. The Company then intends to expand into multiple
markets.
The Company's oxygen enriched small package bottled water product will
primarily be sold through retail outlets, including convenience
stores, gas station markets, grocery stores, health food stores, and
health spas. However, secondary distribution will be effected through
vending and private labeling.
Although the Company will distribute its own product in certain areas,
primarily the Company will sell to qualified third party distributors.
These third party distributors will have the right to distribute to
retail outlets in defined geographic areas. A large number of
potential distributors have contacted the Company regarding potential
distribution of its oxygen enriched bottled water.
In addition to several small and regional distributors, the Company
has entered into an arrangement with United Beverage Brands, LLC, for
sales and distribution of our products throughout the United States,
and overseas.
PRODUCTION
The Company currently operates out of a facility with approximately
14,000 sq. ft. under roof with an exposed four-bay loading dock
sitting on 2.1 acres in Clearwater, Florida. Approximately 2,400 sq.
ft. is utilized for office facilities, with the balance predominantly
used for bottling and warehouse operations.
Upon delivery to the Company's facilities, the source water is passed
through a number of filtration, ion exchange, and reverse osmosis
processes by which it is reduced to a very pure 3 - 5 parts per
million of dissolved solids. Water is oxygenated using the purest
oxygen commercially available in a proprietary process. The water is
then treated with ultraviolet light, which effectively kills bacteria
and other micro-organisms before delivery to the bottling area where
the various products are filled and capped.
The filling room is supplied with pressurized air from high-capacity,
high-efficiency particulate filters, resulting in a clean filling and
capping environment.
The manufacturing process was designed to be highly automated. Bottles
are mechanically de-palletized, cleaned, filled and capped. The filled
bottles are automatically coded, labeled, tamper-banded (if
applicable), and packed in cases. After palletizing and stretch-
wrapping, the product is either loaded directly onto a truck for
immediate shipment or is stored in the warehouse facility for future
shipment.
The Company maintains exacting internal quality control standards.
Each shift's production is tested in Company laboratory facilities
according to FDA and IBWA standards, and random samples are submitted
regularly to an independent laboratory for confirmation testing.
8
WATER SOURCES
Under FDA guidelines, bottled water must contain fewer than 500 parts
per million (ppm) of total dissolved solids. Varying amounts and types
of dissolved solids provide different tastes to water. The Company
uses FDA and International Bottled Water Association approved water
sources.
COMPETITION
The bottled water industry is highly competitive. According to
Beverage Marketing, there are approximately 350 bottled water filling
locations in the United States with sales increasingly concentrated
among the larger firms. Nearly all of the Company's competitors are
more experienced, have greater financial and management resources and
have more established proprietary trademarks and distribution networks
than the Company. On a national basis, the Company competes with
bottled water companies such as The Perrier Group of America, Inc.
(which includes Arrowhead Mountain Spring Water, Poland Spring, Ozarka
Spring Water, Zephyrhills Natural Spring Water, Deer Park, Great Bear
and Ice Mountain) and Great Brands of Europe (which includes Evian
Natural Spring Water and Dannon Natural Spring Water). The Company
also competes with numerous regional bottled water companies located
in the United States and Canada. Aqua Clara has chosen to compete by
focusing on a higher quality oxygen enriched purified drinking water,
innovative packaging and customer service.
SEASONALITY
The market for bottled water is seasonal, with approximately 70% of
sales taking place in the seven months of April through October. As a
result of seasonality, the Company's staffing and working capital
requirements will vary during the year.
TRADEMARKS
The Company has registrations in the U.S. Patent and Trademark Office
for the trademarks that it uses, including Aqua Clara. The Company
believes that its common law and registered trademarks have
significant value and goodwill and that some of these trademarks are
instrumental in its ability to create demand for and market its
products. There can be no assurance that the Company's common law or
registered trademarks do not or will not violate the proprietary
rights of others, that they would be upheld if challenged or that the
Company would, in such an event, not be prevented from using the
trademarks, any of which could have an adverse effect on the Company.
REGULATION
The Company's operations are subject to numerous federal, state and
local laws and regulations relating to its bottling operations,
including the identity, quality, packaging and labeling of its bottled
water. The Company's bottled water must satisfy FDA standards, which
may be periodically revised, for chemical and biological purity. The
Company's bottling operations must meet FDA good manufacturing
practices and the labels affixed to the Company's products are subject
to FDA restrictions on health and nutritional claims. In addition,
bottled water must originate from an approved source in accordance
with federal and state standards.
State health and environmental agencies, such as the Florida
Department of Agriculture and Consumer Services also regulate water
quality and the manufacturing practices of producers.
The Company's products satisfy all federal and state requirements and
the Company is proceeding with applications to obtain distribution
permits in all 50 states.
These laws and regulations are subject to change, however, and there
can be no assurance that additional or more stringent requirements
will not be imposed on the Company's operations in the future.
Although the Company believes that its water supply, products and
bottling facilities are and will be in substantial compliance with all
applicable governmental regulations, failure to comply with such laws
and regulations could have a material adverse effect on the Company.
9
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 1
Legal Proceedings
LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings except as
set forth below.
1. Gray et al. v. Aqua Clara Bottling & Dist., Inc., Case No: 00-
------------------------------------------------
2122-CI-021, Pinellas County, Florida filed on or about March
23, 2000 seeking payment for services rendered and foreclosure
on note and mortgage. The corporation has counter claimed.
The matter has not been set for trial. The claim is
approximately $300,000.00. The value of the counterclaim has
not been determined.
2. Bowne of New York City, LLC v. v. Aqua Clara Bottling &
--------------------------------------------------------
Dist., Inc., New York, New York, filed July 26, 2001 seeking
-----------
$5,920.00 and $5,481.67 plus interest and fees concerning
services ordered pursuant to former President, Manny Mersis.
3. PR Newswire Assoc. v. Aqua Clara Bottling & Dist., Inc.,
-------------------------------------------------------
Totowa, Hudson County, New Jersey, filed January 3, 2002
seeking $5,745.00 for advertising services.
4. Jihad Abuznaid et. al. v. Serven Rich, Inc. v. Aqua Clara
---------------------------------------------------------
Bottling & Dist., Inc., Case No:02001477, Broward County,
----------------------
Florida filed January 23, 2002 seeking $15,000.00 for monies
paid for product through a former distributor.
10
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 2
Changes in Securities
---------------------
Preferred A 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.
11
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 3
Defaults Upon Senior Securities
-------------------------------
(NONE)
12
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 4
Submission of Matter to a Vote of Security Holders
--------------------------------------------------
(NONE)
13
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Part II
Other Information
Item 5
Other Information
Management
----------
The following table sets forth the names, offices held with the
Company, and age of its directors and executive officers as of
December 29, 2001:
Name Position Director Since Age
- ---- -------- -------------- ---
E. Douglas Cifers Chairman 2000 50
John C. Plunkett President and Chief 1997 53
Executive Officer
All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified. There are no agreements with respect to the election of
directors. Any non-employee director of the Company is reimbursed for
reasonable expenses incurred for attendance at meetings of the Board
of Directors and any committee of the Board of Directors. The
Executive Committee of the Board of Directors, to the extent permitted
under Colorado law, exercises all of the power and authority of the
Board of Directors in the management of the business and affairs of
the Company between meetings of the Board of Directors. Each executive
officer serves at the discretion of the Board of Directors.
The business experience of each of the persons listed above during the
past five years is as follows:
Mr. Cifers is President of Florida Media, Inc., Florida's largest
statewide magazine publishing company. Mr. Cifers entrepreneurial bent
and unusual relationship-based business practices have been the focus
of a Wall Street Journal article.
Mr. Plunkett is the President and Chief Executive Officer of the
Company. Mr. Plunkett has over 20 years experience in the engineering
consulting industry and 10 years experience in real estate management.
Mr. Plunkett has been associated with the Company as an officer and
director since its inception and became President in 1998.
Subsequent to December 29, 2001, Mr. Ray McNamee was appointed to the
Board of Directors. Mr. McNamee is currently managing partner of
Pegasus Capital, a consulting firm to provide funding sources for
small to micro cap companies throughout North America and Europe.
Prior to Pegasus Capital, he had worked on Wall Street for over 24
years as a Retail and Institutional Broker primarily with Lehman
Brothers and Bear Stearns.
The Company does not have a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or
directors.
14
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
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
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 29, 2001.
(1) Incorporated by reference to the original filing of the
Registration Statement on Form SB-2, File No. 333-44315 (the
Registration Statement).
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 18, 2002 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