SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended January 31, 2001
Commission File No. 333-45226
VERMONT PURE HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 03-0366218
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Route 66; PO Box C; Randolph, VT 05060
(Address of principal executive offices) (Zip Code)
(802) 728-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--------------- -----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class March 10, 2000
----- ----------------
Common Stock, $.001 Par Value 20,244,992
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
INDEX
Page Number
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
January 31, 2001 (unaudited) and
October 31, 2000 3
Consolidated Statements of Operations
(unaudited) for the Three Months ended
January 31, 2001 and January 29, 2000 4
Consolidated Statements of Cash Flow
(unaudited) for the Three Months ended
January 31, 2001 and January 29, 2000 5
Notes to Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-11
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 12
Part II - Other Information 13-17
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature 18
2
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31, October 31,
2001 2000
----------------- ----------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 1,294,158 $ 1,408,158
Investments - Money Market Fund (restricted balance) - 3,301,064
Investments - Certificate of Deposit ($825,000 restricted balance) 975,000 975,000
Accounts receivable - net of allowance 6,517,895 6,725,810
Inventory 3,533,860 2,778,535
Current portion of deferred tax asset 798,000 798,000
Other current assets 1,175,933 1,145,311
------------------- ------------------
TOTAL CURRENT ASSETS 14,294,846 17,131,878
------------------- ------------------
PROPERTY AND EQUIPMENT - net of accumulated depreciation 20,874,655 21,052,513
------------------- ------------------
OTHER ASSETS:
Intangible assets - net of accumulated amortization 67,834,938 68,469,382
Deferred tax asset 3,756,000 3,756,000
Other assets 646,305 415,867
------------------- ------------------
TOTAL OTHER ASSETS 72,237,243 72,641,249
------------------- ------------------
TOTAL ASSETS $ 107,406,744 $ 110,825,640
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,305,461 $ 4,535,118
Current portion of customer deposits 51,440 50,525
Accrued expenses 2,173,358 2,738,930
Current portion of long term debt 3,423,061 6,821,673
Current portion of obligations under capital leases 9,064 9,064
------------------- ------------------
TOTAL CURRENT LIABILITIES 8,962,384 14,155,310
Long term debt 50,779,878 51,411,510
Long term obligations under capital leases 15,134 16,747
Line of credit 2,635,000 460,000
Customer deposits 2,511,792 2,453,335
------------------- ------------------
TOTAL LIABILITIES 64,904,188 68,496,902
------------------- ------------------
STOCKHOLDERS' EQUITY:
Preferred stock - $.001 par value, 500,000
authorized shares, none issued and outstanding
Common stock - $.001 par value, 50,000,000
authorized shares, 20,238,395 issued and outstanding
shares at January 31, 2001 and 20,167,773 at October 31, 2000 20,238 20,218
Paid in capital 54,398,996 54,249,016
Accumulated deficit (11,916,678) (11,940,496)
------------------- ------------------
TOTAL STOCKHOLDERS' EQUITY 42,502,556 42,328,738
------------------- ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 107,406,744 $ 110,825,640
=================== ==================
See notes to consolidated financial statements
3
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
--------------------------------------------
January 31, January 29,
2001 2000
------------------- ----------------------
(unaudited) (unaudited)
SALES $ 14,218,724 $ 6,423,768
COST OF GOODS SOLD 6,227,265 2,311,370
------------------- ----------------------
GROSS PROFIT 7,991,459 4,112,398
------------------- ----------------------
OPERATING EXPENSES:
Selling, general and administrative expenses 5,415,031 3,521,629
Advertising expenses 578,060 509,462
Amortization 634,444 166,635
------------------- ----------------------
TOTAL OPERATING EXPENSES 6,627,535 4,197,726
------------------- ----------------------
INCOME (LOSS) FROM OPERATIONS 1,363,924 (85,328)
------------------- ----------------------
OTHER INCOME (EXPENSE):
Interest 1,343,607 278,713
Miscellaneous (3,500) (272,887)
------------------- ----------------------
TOTAL OTHER 1,340,107 5,826
------------------- ----------------------
NET INCOME (LOSS) $ 23,817 $ (91,154)
------------------- ----------------------
NET INCOME (LOSS) PER SHARE - BASIC $ 0.00 $ (0.01)
=================== ======================
NET INCOME (LOSS) PER SHARE - DILUTED $ 0.00 $ (0.01)
=================== ======================
Weighted Average Shares Used in Computation - Basic 20,167,773 10,289,758
=================== ======================
Weighted Average Shares Used in Computation - Diluted 20,216,865 10,289,758
=================== ======================
See notes to consolidated financial statements
4
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
---------------------------------
January 31, January 29,
2001 2000
---------------- ---------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 23,817 $ (91,154)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation 849,534 452,330
Amortization 634,443 166,635
Gain on settlement of note receivable - (295,000)
(Gain) Loss on disposal of property and equipment (3,500) 26,013
Changes in assets and liabilities (net of effect of acquisitions):
Decrease in accounts receivable 207,915 36,295
(Increase) in inventory (755,325) (85,527)
(Increase) in other current assets (30,622) (554,026)
(Increase) Decrease in other assets (230,437) 93,317
(Decrease) in accounts payable (1,229,657) (715,074)
Increase in customer deposits 59,374 93,979
(Decrease) in accrued expenses (565,572) (179,238)
---------------- ---------------
NET CASH USED IN OPERATING ACTIVITIES (1,040,030) (1,051,450)
---------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (671,676) (435,829)
Proceeds from sale of money market investment 3,301,064 -
Proceeds from sale of fixed assets 3,500 13,125
Collection of note receivable - 1,270,000
Cash used for acquisitions - net of cash acquired - (625,000)
---------------- ---------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 2,632,888 222,296
---------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of line of credit 2,175,000 1,810,208
Proceeds from debt - (114,433)
Principal payments of debt (3,881,877) (120,719)
Sale of common stock 20 -
---------------- ---------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,706,857) 1,575,056
---------------- ---------------
NET (DECREASE) INCREASE IN CASH (114,000) 745,902
CASH - Beginning of year 1,408,158 367,018
---------------- ---------------
CASH - End of period $ 1,294,158 $ 1,112,920
================ ===============
Cash paid for interest $ 883,117 $ 230,370
================ ===============
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment acquired under capital leases $ - $ 72,135
================ ===============
See notes to consolidated financial statements
5
VERMONT PURE HOLDINGS, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and in the opinion
of management contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial
position, results of operations, and cash flows for the periods
presented. The results have been determined on the basis of generally
accepted accounting principles and practices applied consistently with
the Form 10-K for the year ended October 31, 2000.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. The accompanying
consolidated financial statements should be read in conjunction with
the financial statements and notes thereto incorporated by reference
from the Company's Annual Report on Form 10-K for the year ended
October 31, 2000.
2. LONG TERM DEBT
a) Bonds
On November 1, 2000 the Company paid its obligation under its Series A
Industrial Revenue Bond issue. Proceeds for the payment of $3,207,374
were obtained from the Company's money market investment fund that was
restricted for that use under the terms of the financing for the
Crystal Rock merger.
b) Line of Credit
During the quarter the Company borrowed $2,175,000 from its working
capital line of credit with the Webster Bank. Letters of credit
totaling $373,690 secured by the line were issued on the Company's
behalf. As of January 31, 2001 the total obligation outstanding under
this facility was $3,008,690. The line of credit has a limit of
$5,000,000 and matures on October 5, 2002.
c) Debt Conversion to Stock
On January 26, 2001, the Company issued 70,621 shares of its common
stock upon conversion of $150,000 of an outstanding convertible
debenture. The original face amount of the debenture is $975,000. The
conversion leaves $825,000 to be converted by October 2001.
6
PART I - Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto as filed in the Company's Annual Report
on Form 10-K for the year ended October 31, 2000.
FORWARD-LOOKING STATEMENTS
When used in the Form 10-Q and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result"
and "the Company expects," "will continue," "is anticipated," "estimated,"
"project," or "outlook" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, each of which
speaks only as of the date made. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. Among these
risks are water supply and bottling capacity constraints in the face of
significant growth, dependence on outside distributors, and reliance on
commodity price fluctuations as they influence raw material pricing. The Company
has no obligation to publicly release the result of any revisions which may be
made to any forward-looking statements to reflect anticipated or unanticipated
events or circumstances occurring after the date of such statements.
RESULTS OF OPERATIONS
The Company completed a merger with Crystal Rock Spring Water Company in October
2000. This transaction had a significant impact on nearly all of the Company's
quantitative results. For comparison purposes only, the following table sets
forth, for the first fiscal quarter of 2000,
(1) the consolidated condensed unaudited operating results for Vermont Pure
Holdings, Ltd. for the first quarter of fiscal year 2000,
(2) the consolidated condensed unaudited operating results for Crystal Rock
Spring Water Company for the first quarter of fiscal year 2000,
(3) adjustments consistent with the pro forma financial statements
presented in the Company's Proxy Statement/Prospectus dated September 8,
2000 with respect to the transaction ("the merger proxy"), as if the merger
had occurred on October 31, 1999, and
(4) the "Combined" totals of (1), (2) and (3).
The table also sets forth, for the first fiscal quarter of 2001,
7
(5) the consolidated condensed unaudited operating results for Vermont Pure
Holdings, Ltd. for the first quarter of fiscal year 2001.
Although they are derived from the financial statements of the Company and
Crystal Rock, the figures in the table, including without limitation the " Pro
Forma Combined" column, are not, and should not be considered to be, financial
statements prepared in accordance with generally accepted accounting principles,
nor are they necessarily indicative of future results. The table is intended
solely to provide a basis for a more meaningful comparison of the consolidated
unaudited first quarter fiscal year 2001 financial information with the combined
unaudited operating results for the Company for the first quarter of fiscal year
2000. Certain expenses have been reclassified from operating expense to cost of
goods sold from the Company's operating statement of a year ago to provide
consistency between the two companies and comparison to 2001.
(000'S OF $) (1) (2) (3) (4) (5)
Three Months Three Months Three Months Three Months
Ending Ending Ending Ending
Jan. 29, 2000 Jan. 31, 2000 January 2000 Jan. 31, 2001
------------- ------------- -------------- -------------
Pro Forma FY00 Pro Forma FY01
Vermont Pure Crystal Rock Adjustments Combined Consolidated
------------- ------------- ----------- -------------- -------------
Sales $ 6,424 $ 6,086 - $ 12,510 $ 14,219
Cost of Goods Sold 2,920 2,307 $ 4 5,231 6,227
-------- -------- ------ ------- --------
Gross Margin 3,504 3,779 (4) 7,279 7,992
OPerating Expenses 3,589 2,837 317 6,743 6,628
-------- -------- ------ ------- --------
Income (Loss) from Operations (85) 942 (321) 536 1,364
Interest Expense 279 88 896 1,263 1,344
Other (Income) Expense (273) - - (273) (4)
-------- -------- ------ ------- --------
Income (Loss) before Taxes (91) 854 (1,217) (454) 24
Provision for Income Taxes - 354 (294) 60 -
-------- -------- ------ ------- --------
Net Income (Loss) $ (91) $ 500 $ (923) $ (514) $ 24
======== ======== ====== ======= ========
Sales - Sales for the first quarter of fiscal year 2001 were $14,219,000
compared to $12,510,000 for the pro forma combined companies in the
corresponding period of 2000, an increase of $1,709,000, or 14%.
Sales for the home and office category for the first quarter of fiscal 2001 were
$11,231,000 compared to the combined total of $10,191,000 for the corresponding
period of fiscal year 2000, an increase of $1,040,000 or 10%. The increase in
sales is attributable to market growth and share gains in core markets. Of the
total home and office category sales for the quarter, water sales totaled
$4,923,000, an increase of 9% over the combined total for the same period a year
ago; coffee and other products were $4,336,000, an increase of 14% over the
combined total for the same period a year ago; and cooler rentals were
$1,972,000, an increase of 8% over the combined total for same period a year
ago.
Sales for retail-size products for the first quarter of fiscal 2001 were
$2,988,000 compared to a combined total of $2,319,000 for the corresponding
period of fiscal year 2000, an increase of $669,000 or 29%. For the first
quarter of the year, sales of the Vermont Pure, Hidden Spring, and Private Label
brands increased 36%, 2% and 38%, respectively. The increase in the Vermont Pure
brand was attributable to market expansion and maturing distributor
8
relationships in established markets. The lower growth rate of the Hidden Spring
brand is reflective of activity in mature markets during the seasonal off peak
selling season. Growth of private label brands reflects both new account
acquisitions and market share gains in the established customer base during the
period. For the quarter, private label sales accounted for 27% of this category.
Average selling prices of retail-size products for the three months ending
January 31, 2001 decreased 5% from corresponding period the previous year as a
result of a more competitive marketplace. Decreases in average selling prices
were partially offset by lower promotional spending as described in further
detail below.
Cost of Goods Sold/gross Profit - For the first three months of fiscal 2001,
Cost of Goods Sold was $6,227,000 compared to the pro forma combined total of
$5,231,000 for the same period in fiscal 2000. Gross Profit for the first
quarter was $7,992,000, or 56% of sales, compared to the pro forma combined
total of $7,279,000, or 58% of sales, for the corresponding period a year ago.
Gross profit increased as result of higher sales. The decrease in gross margin
as percentage of sales reflects a higher percentage of retail packages in the
sales mix. In the quarter ending January 31, 2001 retail sales were 28% of sales
versus 19% for the same period a year ago. Sales of retail-size products are
characterized by a lower gross margin return than the home and office category.
As discussed in the merger proxy and the Company's most recent Form 10-K,
management expects to reduce cost of goods, as a percentage of sales, through
increased purchasing power as a result of the merger and redesigning and
reconfiguring its packaging to be less costly and more efficient. Although the
Company is on schedule with many of these plans, no assurance can be given that
it will be successful in improving gross profit.
Operating Expenses - For the first three months of fiscal year 2001 compared to
the pro forma combined total for the corresponding period in fiscal year 2000,
total operating expenses were $6,628,000 and $6,743,000, respectively, a
decrease of $115,000. Selling, general and administrative expenses decreased by
$80,000, for the first quarter of fiscal 2001 compared to the pro forma combined
total for corresponding period a year ago. The decrease in expenses was
primarily due to cost savings resulting from operating synergies resulting from
the merger. The savings were a result of merging overlapping distribution
infrastructure, consolidation of administrative personnel, and improved
economies of scale in certain administrative costs such as insurance and
employee benefits. As of January 31, 2001, management had not completely
implemented its consolidation plan outlined in the notes to the pro forma
financial statements of the merger proxy. Although the Company is still on
schedule to achieve these savings, no assurance can be given that it will.
Advertising and promotional expense decreased $33,000, or 5%, during the first
quarter of 2001 compared to the combined total for the corresponding period a
year earlier. The Company's advertising and promotion is predominantly
associated with the sales of the retail-size packages. As mentioned above, the
pricing environment for these products has changed such that the Company's
distributors seek price discounts instead of advertising and promotion support.
The Company's aggregate per case expense for advertising and promotion decreased
43% in the first quarter of 2001 from the comparable period the prior year. For
the first quarter of fiscal year 2001, amortization decreased $2,000 to $635,000
from the pro forma combined total of $637,000 for the same period a year ago.
Amortization decreased $2,000 because certain intangibles from prior small
acquisitions were fully amortized prior to the first quarter of fiscal year
2001.
9
Income From Operations - Income from operations for the first three months of
fiscal 2001 was $1,364,000 as compared to pro forma combined total of $536,000
for the corresponding period last year, an improvement of $828,000. The
increased income is a result of sales growth and cost savings derived from
combining the two companies. The benefit of these favorable factors was
partially offset by the large increase in amortization expense incurred as a
result of the merger.
Other Income/Expense - On a pro forma basis, net interest expense increased
$81,000 to $1,344,000 in the first quarter of fiscal 2001 from the pro forma
combined total of $1,263,000 in the first quarter of fiscal year 2000. The
increase in interest expense was a result of slightly higher borrowing than
expected to fund the Company's operations after the merger.
NET INCOME/LOSS - On a pro forma basis, the Company's net income for the first
three months of fiscal year 2001 was $24,000 compared to a pro forma combined
net loss of $514,000 for the corresponding period last year. The improvement of
$538,000 is attributable to the increased sales and the Company's ability to
implement cost savings as a result of the combination.
FUTURE EFFECTS/TRENDS - In conjunction with the merger the Company incurred a
significant amount of goodwill and substantial debt. The cost to amortize the
goodwill and service the debt on an annual basis is considerable. Goodwill
amortization expense as a result of the transaction is $2.4 million per year.
Interest in the first year is expected to be $5.3 million. The Company expects
continued sales growth and improving operating efficiencies to more than offset
these amounts. Historical sales trends of the two companies support profit
margin growth that the Company anticipates will more than offset increased costs
resulting from the merger. However, no assurance can be given that these trends
will continue.
LIQUIDITY AND CAPITAL RESOURCES
Cash used for operating activities was largely a result of paying down accrued
expenses and accounts payable during the quarter. This is a traditional seasonal
trend in the business. Cash required doubled in 2001 as a result of the merger.
In addition, cash was used to build retail inventory. The seasonal inventory
build in preparation for the summer selling season occurred earlier than the
prior year due to scheduled equipment installations.
The Company used $672,000 for equipment purchases, 54% more than the same period
a year earlier. This is a result of the increased capital requirements of a home
and office distribution system that has more than doubled in size. The Company
is also expanding and upgrading its production line for retail products that
will continue the increased need for cash for capital resources into the second
quarter of 2001.
The source for cash for the Company's operating and capital activities has been
its line of credit with Webster Bank. During the quarter, the Company borrowed
$2,175,000 from the line. Letters of credit totaling $373,690 secured by the
line were also issued on the Company's behalf. As of January 31, 2001 the total
obligation outstanding under this facility was $3,008,690. The line of credit
has a limit of $5,000,000 and matures October 5, 2002. The Company expects that
its cash on hand and the cash generated from its future operations combined with
10
the commitment from the bank will provide sufficient capital for the next two
fiscal years. However, no assurance can be given that this will be the case and
that adequate financing at reasonable interest rates will be secured if more
cash is needed either prior to or subsequent to the maturity of the line.
On November 1, 2000 the Company paid its obligation under its Series A
Industrial Revenue Bond issue. Proceeds for the principal payment of $3,195,000
were applied from the Company's money market investment fund that was restricted
for that use under the terms of the financing for the Crystal Rock merger. In
addition, the Company repaid principal totaling $625,000 on its term note with
Webster Bank during the quarter.
11
PART I - ITEM 3
QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks relating to the Company's operations result primarily from changes
in interest rates and commodity prices.
Interest Rate Risks - At January 31, 2001 the Company had approximately
$25,000,000 of long term debt subject to variable interest rates. Under the loan
and security agreement with Webster Bank the Company currently pays interest at
a rate of LIBOR plus 1.75%. A hypothetical 100 basis increase in the LIBOR rate
would result in an additional $250,000 of interest expense on an annualized
basis. The Company uses interest rate "swap" agreements to curtail interest rate
risk. On November 3, 2000, the Company entered into a swap agreement with
Webster Bank to fix $8,000,000 of its long term debt at 8.32% interest for three
years.
Commodity Price Risks
PLastic - PET
Although the Company has a three-year contract with its vendors that
sets the purchase price of its PET bottles, the vendors are entitled to pass on
to the Company any resin price increases. These prices are related to supply and
demand market factors for PET and, to a lesser extent the price of petroleum,
from where PET is derived. A hypothetical resin price increase of $.05 per pound
would result in an approximate price increase per bottle of $.003 or, at current
volume levels, $196,000 a year.
Coffee
The cost of the Company's coffee purchases are dictated by commodity
prices. It enters into contracts to mitigate market fluctuation of these costs
by fixing the price for certain periods. Currently it has fixed the price of its
anticipated supply through December 31, 2001 at "green" prices ranging from
$.83-$.91 per pound. The Company is not insulated from price fluctuations beyond
that date. At existing sales levels, an increase in pricing of $.10 per pound
would result in approximately $100,000 of additional cost annually to the
Company if it had not fixed its pricing. In this case, competitors that had
fixed pricing might have a competitive advantage.
12
PART II - Other Information
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes in Securities
(a) As reported by the Company in its Annual Report on Form 10-K for
fiscal year 1999, on October 1, 1999, the Company issued its $975,000
non-interest bearing Convertible Debenture due September 30, 2001 (the
"Debenture") to Marcon Capital Corporation, now known as Middlebury
Venture Partners ("Middlebury"). The transaction was exempt from
registration under the Securities Act of 1933 as a private placement
under Section 4(2) thereof. Middlebury is entitled to convert the
Debenture into shares of the Company's Common Stock at a conversion
price equal to 85% of the average closing price of the Common Stock
during the 20 business days prior to conversion. If the Debenture is
not sooner converted, it shall, subject to the satisfaction of various
conditions, be automatically converted into Common Stock on the
maturity date, September 30, 2001.
On January 26, 2001, Middlebury converted a face amount of
$150,000 of the Debenture into 70,621 shares of the Company's Common
Stock. The Debenture was converted at a price of $2.12 per share, or
85% of the average closing price during the relevant measurement
period. The transaction was exempt from registration under the
Securities Act of 1933 under Section 3(a)(9) thereof. The remaining
outstanding face amount of the Debenture is $825,000.
(b) None
(c) None
ITEM 3 - Defaults upon Senior Securities
None
ITEM 4 - Submission of Matters to a Vote of Security Holders
None
ITEM 5 - Other Information
None
ITEM 6 - Exhibits and Reports on Form 8-K
13
Exhibit
Number Description
2.1 Agreement and Plan of Merger and Contribution by and among
Vermont Pure Holdings, Ltd., Crystal Rock Spring Water Company,
VP Merger Parent, Inc. VP Acquisition Corp. and the stockholders
named therein, dated as of May 5, 2000. (Incorporated by
reference to Appendix A to the Form S-4 Registration Statement
filed by Vermont Pure Holdings, Ltd., f/k/a VP Merger Parent,
Inc., File No. 333-45226, on September 6, 2000 (the "S-4
Registration Statement").)
2.2 Amendment to Agreement and Plan of Merger and Contribution by and
among Vermont Pure Holdings, Ltd., Crystal Rock Spring Water
Company, VP Merger Parent, Inc., VP Acquisition Corp., and the
stockholders named therein, dated as of August 28, 2000.
(Incorporated by reference to Exhibit 2.1 of the S-4 Registration
Statement.)
2.3 Amendment to Agreement and Plan of Merger and Contribution by and
among Vermont Pure Holdings, Ltd., Crystal Rock Spring Water
Company, VP Merger Parent, Inc., VP Acquisition Corp. and the
stockholders named therein, dated as of September 20, 2000.
(Incorporated by reference to Exhibit 2.2 of Form 8-K filed by
Vermont Pure Holdings, Ltd., f/k/a VP Merger Parent, Inc., File
No. 333-45226, on October 19, 2000 (the "Merger 8-K".)
3.1 Certificate of Incorporation of the Company. (Incorporated by
reference to Exhibit B to Appendix A to the Proxy Statement
included in the S-4 Registration Statement.)
3.2 Certificate of Amendment of Certificate of Incorporation of the
Company filed October 5, 3.2 2000. (Incorporated by reference to
Exhibit 4.2 of the Merger 8-K.)
3.3 By-laws of the Company. (Incorporated by reference to Exhibit C
of Appendix A to the Proxy Statement included in the S-4
Registration Statement.)
4.1 Form of Lockup Agreement among the Company, Peter K. Baker, Henry
E. Baker, and John B. Baker. (Incorporated by reference to
Exhibit N to Appendix A to the Proxy Statement included in the
S-4 Registration Statement.)
4.2 Registration Rights Agreement among the Company, Peter K Baker,
Henry E. Baker, John B. Baker, and Ross Rapaport. (Incorporated
by reference to Exhibit 4.6 of the Merger 8-K.)
14
10.1* 1993 Performance Equity Plan. (Incorporated by reference from
Exhibit 10.9 of Registration Statement 33-72940.)
10.2* 1998 Incentive and Non-Statutory Stock Option Plan, as amended.
(Incorporated by reference to Appendix C to the Proxy Statement
included in the S-4 registration statement.)
10.3* 1999 Employee Stock Purchase Plan. (Incorporated by reference to
Exhibit A of the 1999 Proxy Statement of Vermont Pure Holdings,
Ltd. f/k/a Platinum Acquisition Corp.)
10.4 Amended and Restated Spring Water Licenses and Supply Agreement
between Vermont Pure Holdings, Ltd. and Pristine Mountain Springs
of Vermont, Inc and Amsource, LLC dated April 13, 1999.
(Incorporated by reference from Exhibit 10.25 of Form 10-K for
the Year Ended October 30, 1999.)
10.5 Convertible Debenture Agreement dated September 30, 1999 between
Vermont Pure Holdings, Ltd. and Middlebury Venture Partners, Inc.
(f/k/a Marcon Capital Corporation) in the amount of $975,000.
(Incorporated by reference from Exhibit 10.27 of Form 10-K for
the Year Ended October 30, 1999.)
10.6* Employment Agreement between the Company and Timothy G. Fallon.
(Incorporated by reference to Exhibit 10.13 of the S-4
Registration Statement.)
10.7* Employment Agreement between the Company and Bruce S. MacDonald.
(Incorporated by reference to Exhibit 10.14 of the S-4
Registration Statement.)
10.8* Employment Agreement between the Company and Peter K. Baker.
(Incorporated by reference to Exhibit 10.15 of the S-4
Registration Statement.)
10.9* Employment Agreement between the Company and John B. Baker.
(Incorporated by reference to Exhibit 10.16 of the S-4
Registration Statement.)
10.10* Employment Agreement between the Company and Henry E. Baker.
(Incorporated by reference to Exhibit 10.17 of the S-4
Registration Statement.)
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10.11 Lease of Buildings and Grounds in Watertown, Connecticut from the
Baker's Grandchildren Trust. (Incorporated by reference to
Exhibit 10.22 of the S-4 Registration Statement.)
10.12 Lease of Grounds in Stamford, Connecticut from the Henry E. Baker
(Incorporated by reference to Exhibit 10.24 of the S-4
Registration Statement.)
10.13 Lease of Building in Stamford, Connecticut from Henry E. Baker.
(Incorporated by reference to Exhibit 10.23 of the S-4
Registration Statement.)
10.14 Loan and Security Agreement between the Company and Webster Bank
dated October 5, 2000. 10.14 (Incorporated by reference to
Exhibit 10.14 of Form 10-K filed January 29, 2001 for the Year
Ended October 31, 2000.)
10.15 Term Note from the Company to Webster Bank dated October 5, 2000.
(Incorporated by reference to Exhibit 10.15 of Form 10-K filed
January 29, 2001 for the Year Ended October 31, 2000.)
10.16 Subordinated Note from the Company to Henry E. Baker dated
October 5, 2000. (Incorporated 10.16 by reference to Exhibit
10.16 of Form 10-K filed January 29, 2001 for the Year Ended
October 31, 2000.)
10.17 Subordinated Note from the Company to Joan Baker dated October 5,
2000. (Incorporated by 10.17 reference to Exhibit 10.17 of Form
10-K filed January 29, 2001 for the Year Ended October 31, 2000.)
10.18 Subordinated Note from the Company to John B. Baker dated October
5, 2000. (Incorporated 10.18 by reference to Exhibit 10.18 of
Form 10-K filed January 29, 2001 for the Year Ended October 31,
2000.)
10.19 Subordinated Note from the Company to Peter K. Baker dated
October 5, 2000. (Incorporated 10.19 by reference to Exhibit
10.19 of Form 10-K filed January 29, 2001 for the Year Ended
October 31, 2000.)
10.20 Subordinated Note from the Company to Ross S. Rapaport, Trustee,
dated October 5, 2000. (Incorporated by reference to Exhibit
10.20 of Form 10-K filed January 29, 2001 for the Year Ended
October 31, 2000.)
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10.21 Subordination and Pledge Agreement from Henry E. Baker to Webster
Bank dated October 5,2000. (Incorporated by reference to Exhibit
10.21 of Form 10-K filed January 29, 2001 for the Year Ended
October 31, 2000.)
10.22 Subordination and Pledge Agreement from Joan Baker to Webster
Bank dated October 5,2000. (Incorporated by reference to Exhibit
10.22 of Form 10-K filed January 29, 2001 for the Year Ended
October 31, 2000.)
10.23 Subordination and Pledge Agreement from John B. Baker to Webster
Bank dated October 5, 2000. (Incorporated by reference to Exhibit
10.23 of Form 10-K filed January 29, 2001 for the Year Ended
October 31, 2000.)
10.24 Subordination and Pledge Agreement from Peter K. Baker to Webster
Bank dated October 5,2000. (Incorporated by reference to Exhibit
10.24 of Form 10-K filed January 29, 2001 for the Year Ended
October 31, 2000.)
10.25 Subordination and Pledge Agreement from Ross S. Rapaport,
Trustee, to Webster Bank dated October 5,2000. (Incorporated by
reference to Exhibit 10.25 of Form 10-K filed January 29, 2001
for the Year Ended October 31, 2000.)
10.26 Agreement between Vermont Pure Springs, Inc. and
Zuckerman-Honickman Inc. dated October 15, 1998. (Incorporated by
reference to the S-4 Registration Statement.
10.27 Loan Purchase Agreement between Vermont Pure Holdings, Ltd. and
Middlebury Venture Partners, Inc., dated September 30, 1999.
(Incorporated by reference to Exhibit 10.26 to Form 10K for the
Year Ended October 30,1999.
* Relates to compensation
Reports on Form 8-K (None)
17
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 19, 2001
Randolph, Vermont
VERMONT PURE HOLDINGS, LTD.
BY: /S/ BRUCE S. MACDONALD
-----------------------
Bruce S. MacDonald
Vice President, Chief Financial Officer
(Principal Accounting Officer and
Principal Financial Officer)
18