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 July 1, 2000
AQUA CLARA BOTTLING AND DISTRIBUTION, INC.
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 July 1, 2000, the registrant had 62,505,496 shares of common stock
outstanding at no par value.
Part I
Financial Information
(Item 1)
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Consolidated Balance Sheets
(unaudited)
JULY 1, 2000 APRIL 1, 2000
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 15,908 $ 20,980
Accounts receivable less allowance for doubtful accounts 22,884 10,793
Inventories 280,737 290,145
Prepaid expenses and other current assets 281,416 398,185
----------- -----------
Total Current Assets 600,945 720,103
Property, plant and equipment net of accumulated 1,806,574 1,832,669
depreciation
Other assets 1,506 1,506
----------- -----------
Total Assets $ 2,409,025 $ 2,554,278
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 167,305 $ 132,057
Accrued Expenses 54,405 237,073
Current portion of long term debt 215,602 254,693
Deferred Revenue 3,000 0
Other current liabilities 11,663 0
Current obligation under capital lease 3,702 6,042
Due to stockholders 344,049 334,153
----------- -----------
Total Current Liabilities 799,726 964,018
Long Term debt less current maturities 158,193 140,607
Obligations under capital lease less current portion 16,899 14,559
----------- -----------
Total Long Term Liabilities 175,092 155,166
Total Liabilities 974,817 1,119,184
STOCKHOLDERS' EQUITY
Preferred Stock, no par value, 5,000,000 shares 74,601 149,203
authorized, 100 shares issued and outstanding
Common Stock, no par value, 1,000,000,000 shares
authorized; 62,505,496 shares issued and outstanding 8,859,647 8,440,527
Additional Paid In Capital 2,058,182 2,454,942
Accumulated Deficit (9,558,222) (9,609,578)
----------- -----------
Total Stockholders' Equity 1,434,208 1,435,094
----------- -----------
Total Liabilities and Stockholders' Equity $ 2,409,025 $ 2,554,278
=========== ===========
Financial Information
(Item 3)
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Consolidated Statements of Operations
(unaudited)
THREE MONTHS ENDED
------------------------------
JULY 1, 2000 JULY 3, 1999
------------ ------------
Sales 89,976 103,474
Cost of Sales 61,414 62,957
----------- -----------
Gross profit 28,562 40,517
General and administrative, and sales expenses 350,099 530,288
Stock Options Forfeited (410,020) 0
----------- -----------
Operating profit / (loss) 88,483 (489,771)
Other income and (expenses)
Interest expense (7,931) (14,063)
Interest and other income
Gain (loss) on sales of assets (10,415)
Other expenses 0 7,753
----------- -----------
Net other expense (7,931) (16,725)
Net income / (loss) 80,552 (506,497)
Dividends on preferred stock 29,196
Net income / loss applicable to common stock 51,356 (506,497)
Basic income / loss per share .00085 (.03)
Weighted average common shares outstanding 60,685,328 19,250,055
Part I
Financial Information
(Item 5)
Aqua Clara Bottling & Distribution, Inc. And Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
July 1, 2000 July 3, 1999
----------- -----------
OPERATING ACTIVITIES
Net income / (loss) 80,552 (506,497)
Provided by Operations:
Depreciation 28,342 27,128
Issuance of Stock for Services and Fees 140,322 758,045
Loss on disposal of assets 0 5,578
Stock Options Forfeited (396,760) 0
Change in Assets and Liabilities
(Increase) Decrease in accounts receivable (12,091) 33,288
(Increase) Decrease in inventories 9,408 (18,715)
(Increase) Decrease in prepaid expenses 116,769 (287,325)
Increase (Decrease) in accounts payable 35,248 (98,817)
Increase (Decrease) in accrued expenses (182,668) (236,350)
Increase (Decrease) in other liabilities 8,372 (12,459)
Increase (Decrease) shareholder accrual 0 (214,758)
----------- -----------
Net cash used by operations (172,506) (550,882)
INVESTING ACTIVITIES
Acquisition of equipment (2,247) 0
----------- -----------
FINANCING ACTIVITIES
Proceeds from Debt 214,785 1,075,000
Payments on Debt (45,104) (249,799)
----------- -----------
Net cash provided (Used) in financing activities 169,681 825,201
Net Increase (Decrease) in Cash and Cash Equivalents (5,072) 274,319
Cash and Cash Equivalents at Beginning of Period 20,980 9,960
Cash and Cash Equivalents at End of Period $ 15,908 $ 284,279
=========== ===========
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. The 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
During the period ended July 1, 2000, the Company raised $55,000 through a
private offering of its common stock. Subsequent to July 1, the Company raised
an additional $125,000 as part of the same offering. The proceeds from the
offering are being used to fund operations.
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 a
maturity of three month0s 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.
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, 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 will receive stock options in addition to
salary. The options vest 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
increments based upon targeted ownership percentages in relation to the number
of the Company's outstanding shares - Mersis targets a 22.4% ownership and
Plunkett 7.6% ownership. Mr. Mersis has forfeited his options at his
resignation. Additionally, the Company will be liable to compensate the company
officer for any tax liability resulting from the exercise of any options. An
accrual for this provision is not included in the accompanying financial
statements.
Inventories consist of the following at July 1, 2000:
Raw materials $ 68,586
Work in progress 298
Finished goods 211,852
-----------
$ 280,737
===========
Property, plant, and equipment consist of the following at July 1, 1999:
Land $ 90,000
Building 926,520
Machinery and equipment 1,015,091
Vehicles 22,393
-----------
Total 2,054,004
Less accumulated depreciation (247,430)
-----------
$ 1,806,574
===========
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.
Prepaid expenses consists primarily of stock issued in lieu of cash compensation
for the performance of professional services including but not limited to public
relations, marketing and advertising, and company and as compensation to members
of the board of directors.
Due to stockholders consists of notes payable and due upon demand. Interest on
these notes accrues at rates between 5% to 8%.
Long-term debt at July 1, 2000 consists of:
Note payable: Secured 8% Series B Convertible Debenture
was raised in June 1999. The note will be converted into
common stock.
Series B Convertible Debentures $ 75,000
Note payable: interest at 10%, secured by building 134,853
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 8,932
---------
Long-term debt $ 373,795
Less current installments 215,602
---------
Long-term debt, less current installments $ 158,193
=========
The following is a schedule by year of the principal payments required on
long-term debt:
2001 $ 254,693
2002 140,607
---------
$ 395,300
At July 1, 2000, 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.
2001 $ 7,365
2002 6,791
2003 6,791
2004 2,352
--------
Total lease payments $ 23,299
Less amount representing interest (6.5% - 8%) 2,698
--------
Present value of lease payments 20,601
Less current obligation 3,702
--------
Long-term capital lease obligation $ 16,889
========
At April 1, 2000, the Company rented vehicles and equipment under operating
leases. The following is a schedule by year of future minimum rental payments
required under operating leases that have an initial or remaining
non-cancellable lease term in excess of one year as of April 1, 2000.
2001 $ 4,998
2002 400
--------
$ 5,398
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.
The components of deferred tax assets consist of the following at April 1, 2000:
Deferred tax assets:
Net operating loss carryforwards 1,723,000
Other 104,000
-----------
Gross deferred tax assets 1,827,000
Valuation allowance 1,827,000
-----------
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 immediate
delegending of his 1,796,400 shares of common stock and for amounts due under
promissory notes and deferred salaries. This suit was settled prior to April 1,
2000. In settlement of this claim, the Company paid $55,000 and guaranteed a
sales price of $.37 per share for the former officer's outstanding common
shares. The Company has been notified that the former officer is asserting a
shortfall from the sale of his common shares of approximately $118,000. This
amount is included in accrued expenses in the accompanying financial statements.
Another 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.
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 year ending April 1, 2000, are $293,980. The
lower than expected sales amount is the result of the Company's inability to
find major retailers and distributors to purchase large quantities of product.
The Company's sales comparisons to previous years will not be an indicator of
any future growth patterns because the Company was still in the process
of launching its new product.
The gross profit for the quarterly period ended July 1, 2000 was $80,552 with
general and administrative, and selling expenses period totaling $350,099. The
period performance was significantly affected by the reversal of accounting
charges, related to officers' stock options, made in the previous quarter. The
reversal was due to option forfeiture by our former Chief Executive Officer.
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 $125,000
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 2nd quarter of fiscal
year 2001 (ended September 30, 2000), 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.
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.
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 and 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 will be
reduced to 1-2 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 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, Clearly Canadian, producing oxygen enriched
bottled water. The Company also knows of eight other entities that are
attempting to produce and distribute oxygen enriched bottled water. Except for
Clearly Canadian, 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 a new product with natural flavoring or carbonation 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 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 2-4
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.
The Company has entered into arrangements for distribution of its products in
the Northeast and Southern United States. Additional possible distribution
channels are currently under development.
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 1 - 2 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 is 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
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. According to "Beverage Marketing", the ten largest
bottled water companies accounted for approximately 58.4% of wholesale dollar
sales in 1996. 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.
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.
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.
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 raised $55,000 as part of a
Limited Offering exempt from registration under Rule 506 of Regulation D.
Subsequent to July 1, 2000, the Company raised an additional $125,000 as part of
the same offering and issued 1,741,658 shares of common stock in fulfillment of
the raise.
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.
Aqua Clara Bottling & Distribution, Inc.
And Subsidiary
Part II
Other Information
Item 3
Defaults Upon Senior Securities
(NONE)
Aqua Clara Bottling & Distribution, Inc.
And Subsidiary
Part II
Other Information
Item 4
Submission of Matter to a Vote of Security Holders
(NONE)
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 July 1, 2000:
NAME POSITION DIRECTOR SINCE AGE
- ---- -------- -------------- ---
E. Douglas Cifers Chairman 2000 50
Robert F. Guthrie Secretary, Director 1997 65
Renato P. Mariani Director 1999 48
John C. Plunkett President and Chief Operations Officer 1997 51
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. The Company has
compensated its directors, for service on the Board of Directors through the end
of fiscal year 2000 by the awarding of 50,000 shares of registered common stock
to each director. 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. Guthrie has served as Director of the Company since May, 1997 and became the
Secretary in December 1998. Mr. Guthrie is an attorney licensed to practice in
Florida with affairs in Seminole, Florida.
Mr. Mariani has served as Director of the Company since May, 1999. Mr. Mariani
is the President of Eagle Diversified, Inc., a wholesale food, candy and tobacco
company.
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.
The Company does not have a bonus, profit sharing, or deferred compensation plan
for the benefit of its employees, officers or directors.
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 Articles of Amendment for Capital Structure and for
Indemnification (not previously submitted)
3.3 Bylaws (1)
21.1 Subsidiaries
27 Financial Data Schedules
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the three month
period ended July 1, 2000.
(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: August 10, 2000 AQUA CLARA BOTTLING & DISTRIBUTION, INC.
By: /s/ JOHN C. PLUNKETT
----------------------------------------
John C. Plunkett
President, Chief Executive Officer
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
3.2 Articles of Amendment for Capital Structure and for
Indemnification
21.1 Subsidiaries
27 Financial Data Schedules