-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QDg96g7eXcbuUdtoPGRxtRZFbImoFHzWYCvSRdovTOQ3AZfxLx11yG3QtLc1Tav9 wcQNSApMJ+YFRp9Y0bSu1w== 0000943440-02-000126.txt : 20020426 0000943440-02-000126.hdr.sgml : 20020426 ACCESSION NUMBER: 0000943440-02-000126 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020115 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEVSYSTEMS INTERNATIONAL INC CENTRAL INDEX KEY: 0001020477 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-44315 FILM NUMBER: 02622719 BUSINESS ADDRESS: STREET 1: 501 BRICKELL KEY DRIVE STREET 2: SUITE 407 CITY: MIAMI STATE: FL ZIP: 33151 BUSINESS PHONE: 786-425-2201 MAIL ADDRESS: STREET 1: 501 BRICKELL KEY DRIVE STREET 2: SUITE 407 CITY: MIAMI STATE: FL ZIP: 33151 FORMER COMPANY: FORMER CONFORMED NAME: AQUA CLARA BOTTLING & DISTRIBUTION INC DATE OF NAME CHANGE: 19971219 8-K 1 form8k-115.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 15, 2002 ------------------ BEVsystems International, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Colorado 84-1352529 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 501 Brickell Key Drive, Suite 407, Miami, Florida 33151 ------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) 786.425.2201 --------------------------------------------------- Registrant's telephone number, including area code: (Former name or former address, if changed since last report) Page 1 of 4 Index to Exhibits specified on Page 4 ITEM 1. CHANGES IN CONTROL OF REGISTRANT. Not applicable. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On January 15, 2002, we entered into an Agreement for the Purchase and Sale of Stock, with BEVsystems International, Ltd., a Bermuda corporation ("BEVsystems"), which provides, among other things, for our acquisition of 14,817,647 shares of BEVsystems stock, as specified by the terms in that agreement. In connection with that agreement, we will issue 30,432,410 shares of our common stock to BEVsystems. The Board of Directors of BEVsystems and our Board of Directors have approved the terms and conditions of that agreement. That transaction became effective on February 25, 2002. ITEM 3. BANKRUPTCY OR RECEIVERSHIP. Not applicable. ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT. Not applicable. ITEM 5. OTHER EVENTS. Not applicable. ITEM 6. RESIGNATIONS OF REGISTRANT'S OFFICERS AND DIRECTORS. Not applicable. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. A copy of the unaudited pro forma condensed consolidated financial statements specifying the combined results of operations of BEVsystems International, Inc., a Bermuda corporation, and our operations is attached to thsi report marked Exhibit 7.1 A copy of the audited financial statements for BEVsystems International, Ltd., a Bermuda corporation, for the period commencing on March 20, 2001, and continuing through December 31, 2001, is attached to this report marked Exhibit 7.2. ITEM 8. CHANGE IN FISCAL YEAR. Not applicable. ITEM 9. REGULATION FD DISCLOSURE. Not applicable. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf of the undersigned, thereunto duly authorized. BEVsystems International, Inc., a Colorado corporation DATED: April 26, 2002 By: /s/ G. Robert Tatum III ------------------------------- G. Robert Tatum III President, Chief Executive Officer and Director 3 INDEX TO EXHIBITS Exhibit No. - ----------- 7.1 A copy of the unaudited pro form condensed consolidated financial statements specifying the combined results of operations of BEVsystems International, Inc., a Bermuda corporation, and our operations. 7.2 A copy of the audited financial statements of BEVsystems International, Ltd., a Bermuda corporation, for the period commencing on March 20, 2001, and continuing through December 31, 2001. 4 EX-7.1 3 proforma1.txt PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) BEVsystems International, Ltd. and Aqua Clara Bottling & Distribution, Inc. Pro forma Balance Sheet December 2001 (Unaudited)
Aqua Clara BEVsystems Bottling & International, Ltd. Distribution, Inc. Period ended Period ended Pro Forma December 31,2001 December 29,2001 Adjustments Combined ------------------ ------------------ ----------- ----------- Assets Cash $ 84,961 $ 5,223 $ 90,184 Accounts receivable 23,791 148,420 172,211 Inventories 21,297 45,315 66,612 Prepaid expenses 17,000 3,701 20,701 ------------ ------------ ----------- ----------- Total current assets 147,049 202,659 0 349,708 ------------ ------------ ----------- ----------- Property, plant & equipment, net 232,068 1,649,467 1,409,303 (A) 3,290,838 Other assets 5,598 5,598 Intangible assets 5,913,490 9,058,741 (A) 14,972,231 ------------ ------------ ----------- ----------- Total Assets $ 6,292,607 $ 1,857,724 $10,468,044 $18,618,375 ============ ============ =========== =========== Liabilities and equity Accounts payable and accrued $ 1,158,817 $ 1,148,929 $ 2,307,746 Notes payable 1,020,638 128,625 1,149,263 ------------ ------------ ----------- ----------- Total liabilities 2,179,455 1,277,554 0 3,457,009 ------------ ------------ ----------- ----------- Equity Preferred stock 74,602 74,602 Common stock & additional paid-in capital 6,535,671 13,583,206 (13,583,206) (A) 17,509,283 10,468,044 (A) 505,568 (A) Accumulated deficit (2,422,519) (13,077,638) 13,077,638 (A) (2,422,519) ------------ ------------ ----------- ----------- Total stockholders' equity 4,113,152 580,170 10,468,044 15,161,366 ------------ ------------ ----------- ----------- Total Liabilities and Equity $ 6,292,607 $ 1,857,724 $10,468,044 $18,618,375 ============ ============ =========== ===========
BEVsystems International, Ltd. and Aqua Clara Bottling & Distribution, Inc. Pro forma Condensed Statement of Operations For the period ended December 2001 (Unaudited)
Aqua Clara BEVsystems Bottling & International, Ltd. Distribution, Inc. Period ended Period ended Pro Forma December 31,2001 December 29,2001 Adjustments Combined ------------------ ------------------ ----------- ----------- Revenues $ 1,499,645 $ 331,523 $ 1,831,168 Cost of revenues 1,353,135 341,803 1,694,938 Gross profit (loss) 146,510 (10,280) 136,230 General, administrative and sales expenses 2,569,029 1,337,308 15,315 (B) 3,921,652 ------------ ------------ ----------- ----------- Net loss from continuing operations (2,422,519) (1,347,588) (15,315) (3,785,422) ------------ ------------ ----------- ----------- Net loss applicable to common stock (2,422,519) (1,347,588) (15,315) (3,785,422) ============ ============ =========== =========== Basic and diluted loss per share: Net loss per common share $ (0.17100) $ (0.14669) Weighted average shares of common ============ =========== stock outstanding 7,882,836 (C) 25,805,170 ============ ===========
BEVsystems International, Ltd. and Aqua Clara Bottling & Distribution, Inc. Unaudited Pro Forma Financial Statements BEVsystems International, Inc. (Aqua Clara) (a Colorado corporation, formerly known as Aqua Clara Bottling and Distribution, Inc.) issued 30,432,410 shares of common stock for all of the outstanding stock of BEVsystems International, Ltd. (BEV Ltd.) (a Bermuda corporation) pursuant to an acquisition agreement entered into January 15, 2002. The acquisition was accounted for using the purchase method of accounting with BEV Ltd. treated as the acquirer for accounting purposes. As a result, the assets and liabilities of BEV Ltd. are recorded at historical values and the assets and liabilities of Aqua Clara are recorded at their estimated fair values at the date of the merger. The following unaudited pro forma statements reflect the combined results of BEV Ltd. and Aqua Clara. The balance sheet is as of December 31, 2001 for BEV Ltd. and December 29, 2001 for Aqua Clara, the end of the most recent fiscal quarter. The statement of operations reflects the activity of BEV Ltd. for the period from April 1, 2001 through December 31, 2001 and Aqua Clara for the period from April 1, 2001 through December 29, 2001 (three thirteen week quarters). The information was prepared as if the acquisition had occurred on April 1, 2001. In preparing the pro forma information, various assumptions were made. The pro forma financial statements are unaudited and do not purport to be indicative of the actual results of operations or financial position that would have been reported had these transactions occurred on April 1, 2001, nor is it indicative of the results of future combined operations. The pro forma statements should be read in conjunction with the audited historical financial statements of BEV Ltd. and Aqua Clara. BEVsystems International, Ltd. and Aqua Clara Bottling & Distribution, Inc. Notes to Unaudited Pro Forma Financial Statements BEVsystems International, Inc. effected a 10 for 1 reverse stock split on March 15, 2002. This stock split has been reflected in the financial statements and footnotes for all periods. A) Reflects the accounting for the purchase of Aqua Clara Bottling & Distribution, Inc., as if the purchase were transacted December 29, 2001. The purchase price of $12,110,741 is based on the market capitalization of Aqua Clara calculated on the closing price of $1.10 per share on February 25, 2002, the closing date the transaction. For accounting purposes, the acquisition has been treated as an acquisition of Aqua Clara by BEV Ltd. and as a recapitalization of Aqua Clara. The intangible asset adjustment amount reflects the excess purchase price over the estimated fair value of Aqua Clara's identifiable assets and liabilities. B) Amortization of the purchase adjustment to the tangible depreciable assets over the remaining useful lives of the assets. C) Reflects the weighted average number of shares outstanding for the period, after giving effect to the merger. EX-7.2 4 form8k-422fin.txt AUDITED FINANCIAL STATEMENTS [Gerson, Preston, Robinson & Company, P.A. Certified Public Accountants Letterhead] Board of Directors and Shareholders BEVsystems International, Ltd. Miami, Florida INDEPENDENT AUDITORS' REPORT We have audited the accompanying balance sheet of BEVsystems International, Ltd. as of December 31, 2001 and the related statements of operations, shareholders' equity and cash flows for the nine months ended December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BEVsystems International, Ltd. as of December 31, 2001 and the results of its operations and its cash flows for the nine months ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. The financial statements referred to above have been prepared assuming that BEVsystems International, Ltd. will continue as a going concern. As more fully described in Note 3, the Company has incurred operating losses, negative cash flows from operating activities and has a working capital deficit. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans as to these matters are also described in Note 3. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty. /s/Gerson, Preston, Robinson & Company, P.A. April 22, 2002 Miami Beach, Florida CERTIFIED PUBLIC ACCOUNTANTS BEVsystems International, Ltd. BALANCE SHEET At December 31, 2001 ============================================================================ ASSETS Current assets Cash $ 84,961 Accounts receivable 23,791 Inventory 21,297 Other current assets 17,000 - --------------------------------------------------------------------------- Total current assets 147,049 Furniture and equipment 232,068 Intangible assets 5,913,490 - --------------------------------------------------------------------------- Total assets $ 6,292,607 =========================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 1,158,817 Bank notes payable; interest payable monthly at 9%; collateralized by transportation equipment with a net book value of $92,423 at December 31; subsequent to December 31 the notes were extended to July 17, 2002 73,938 Convertible notes payable, net of debt discount; interest payable monthly at 10.5%; maturities range from April 2002 to November 2002; $540,000 due to shareholders and related parties 946,700 - --------------------------------------------------------------------------- Total liabilities 2,179,455 Shareholders' equity Common stock; $.01 par value; 100,000,000 shares authorized; 14,817,647 shares issued and outstanding and additional paid-in capital 6,535,671 Accumulated deficit (2,422,519) - --------------------------------------------------------------------------- Total shareholders' equity 4,113,152 - --------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 6,292,607 =========================================================================== See accompanying notes. 1 BEVsystems International, Ltd. STATEMENT OF OPERATIONS Nine Months Ended December 31, 2001 =========================================================================== Revenues $ 1,499,645 - --------------------------------------------------------------------------- Costs and expenses Cost of revenues 1,353,135 Payroll, benefits and related expenses 711,357 Selling, general and administrative 1,857,672 - --------------------------------------------------------------------------- Total costs and expenses 3,922,164 - --------------------------------------------------------------------------- Net loss $ (2,422,519) =========================================================================== See accompanying notes. 2
BEVsystems International, Ltd. STATEMENT OF SHAREHOLDERS' EQUITY Nine Months Ended December 31, 2001 ======================================================================================================================= Common Stock Additional Number of Paid-In Accumulated Shares Amount Capital Deficit Total - ----------------------------------------------------------------------------------------------------------------------- Balance at April 1, 2001 - $ - $ - $ - $ - Issuance of common stock 4,200,000 42,000 - - 42,000 Issuance of common stock and warrants in a private placement net of issuance costs 3,700,000 37,000 1,483,000 1,520,000 Issuance of common stock and warrants for the acquisition of Life International 6,917,647 69,176 4,830,695 - 4,899,871 Issuance of options in connection with convertible notes payable - - 73,800 - 73,800 Net loss - - - (2,422,519) (2,422,519) - ----------------------------------------------------------------------------------------------------------------------- Balance at December 31, 2001 14,817,647 $ 148,176 $ 6,387,495 $(2,422,519) $ 4,113,152 =======================================================================================================================
See accompanying notes. 3 BEVsystems International, Ltd. STATEMENT OF CASH FLOWS Nine Months Ended December 31, 2001 =========================================================================== Operating activities Net loss $ (2,422,519) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 23,679 Amortization of debt discount 20,500 Changes in operating assets and liabilities, net of acquisition: (Increase) in accounts receivable (23,791) (Increase) in inventory (21,297) (Increase) in other current assets (17,000) Increase in accounts payable and accrued expenses 1,068,817 - --------------------------------------------------------------------------- Net cash (used) in operating activities (1,371,611) - --------------------------------------------------------------------------- Investing activities Purchase of furniture and equipment (60,781) Acquisition of Life International (1,020,000) - --------------------------------------------------------------------------- Net cash (used) in investing activities (1,080,781) - --------------------------------------------------------------------------- Financing activities Issuance of common stock 1,562,000 Proceeds from convertible note payable 1,000,000 - --------------------------------------------------------------------------- Total inflows 2,562,000 Cash outflows for principal payments of bank notes payable 24,647 - --------------------------------------------------------------------------- Net cash provided by financing activities 2,537,353 - --------------------------------------------------------------------------- Net increase in cash 84,961 Cash, beginning of period - - --------------------------------------------------------------------------- Cash, end of period $ 84,961 =========================================================================== Supplemental disclosures of cash flow information: Supplemental schedule of non-cash investing and financing activities: Stock and warrants issued in connection with the acquisition of Life International $ 4,899,871 Transportation equipment acquired through bank notes payable $ 98,585 Warrants issued in connection with convertible notes payable $ 73,800 See accompanying notes. 4 BEVsystems International, Ltd. NOTES TO FINANCIAL STATEMENTS =========================================================================== 1. NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES BEVsystems International, Ltd. (the "Company") was formed in Bermuda on March 20, 2001 and is a provider of oxygenated beverages. The Company had no activity from March 20, 2001 through March 31, 2001. July 12, 2001, the Company acquired the net assets of the beverage division of Life International, a provider of oxygenated beverages. The net assets included oxygenation equipment, bottles, proprietary seals, marketing materials, office equipment, trademarks, patent rights and other intangible assets (see Note 4). The Company distributes the products primarily through an international distribution network. Approximately 92% of the Company sales were made to one distributor in Japan. Domestic sales, which are approximately 5% of total revenues, are through local distributors and home delivery. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition. The Company's revenues are derived principally from the delivery of oxygenated beverages. Revenues are recognized upon delivery of the product to the customers. Upon delivery, the Company has no further obligations. Inventory. Inventories consist primarily of labels, bottles and caps and are priced at cost. Intangible Assets. Intangible assets consist primarily of process technology, trademarks and goodwill. Goodwill is not amortized. All other intangible assets are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely and are, therefore, not amortized. The Company evaluates the recoverability of intangible assets for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such evaluation involves the use of an independent appraisal or is based on various analyses, including cash flows and profitability projections. If the sum of the expected future cash flows or the appraised value is less than the carrying amount of the assets, an impairment loss is recognized. Accordingly, impairment loss is the difference between the sum of the estimated future cash flows or appraised value and the carrying amount of the asset. Management believes that there is no impairment as of December 31, 2001. 5 BEVsystems International, Ltd. NOTES TO FINANCIAL STATEMENTS =========================================================================== 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) Income Taxes. The Company will incur United States income taxes for income generated in this country. The financial statements do not provide for any income taxes, as there was no income generated in the United States. There is no Bermuda tax on income or capital gains. Furniture and equipment. Furniture and equipment are stated at cost. Depreciation is provided over estimated useful lives of the assets using the straight-line method. The costs of significant improvements are capitalized. Costs of normal repairs are charged to expense as incurred. The cost and accumulated depreciation of furniture and equipment retired or otherwise disposed of are eliminated from the respective accounts and any resulting gain or loss is included in income. Concentration of credit risk. The Company maintains its cash in bank accounts, which at times exceed federally insured limits. The Company has not experienced any losses in such accounts. Use of Estimates. The preparation of financial statements in conformity accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Estimates are used for, but not limited to, allowance for doubtful accounts; accounts payable; asset impairments; depreciable lives of assets; useful lives of intangible assets; and valuation of intangibles. Future events and their effects cannot be perceived with certainty. Accordingly our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. Actual results could differ from those estimates. Fair Value of Financial Instruments. The Company's financial instruments, primarily consisting of cash, accounts receivable, accounts payable and accrued expenses, approximate fair value due to their short-term nature or interest rates that approximate market. New Accounting Pronouncements. On June 29, 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, Business Combinations (Statement 141), and No. 142, Goodwill and Other Intangible Assets (Statement 142). Statement 141 eliminates the pooling-of-interests method of accounting for business combinations except for qualifying business combinations that were initiated prior to July 1, 2001. Statement 141 changes the criteria to recognize intangible assets apart from goodwill. The requirements of Statement 141 are effective for any business combination accounted for by the purchase method that is completed after June 30, 2001. 6 BEVsystems International, Ltd. NOTES TO FINANCIAL STATEMENTS =========================================================================== 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd) Under Statement 142, goodwill and indefinite lived intangible assets are no longer amortized but will be reviewed annually, or more frequently if impairment indicators arise. Identifiable intangible assets will continue to be amortized over their estimated useful lives. 3. GOING CONCERN - UNCERTAINTY As shown in the accompanying financial statements, the Company has incurred recurring losses and negative cash flows from operating activities and has negative working capital and shareholders' deficit. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company has initiated several actions to generate working capital and improve operating performances, including equity and debt financing and cost reduction measures. There can be no assurance that the Company will be able to successfully implement its plans, or if such plans are successfully implemented, that the Company will achieve its goals. Furthermore, if the Company is unable to raise additional funds, it may be required to reduce its workforce, reduce compensation levels, reduce dependency on outside consultants, modify its growth and operating plans, and even be forced to terminate operations completely. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty. 4. LIFE INTERNATIONAL ACQUISITION Effective July 12, 2001, the Company consummated a merger with Life International, an oxygenated beverage company. Pursuant to the merger, the Company issued 6,917,647 shares of common stock to Life International and 1,991,210 warrants for additional shares. The warrants were exercised subsequent to December 31, 2001 and provided Life International with a 49% ownership interest in the Company. There was no cost to exercise the warrants and they had no expiration date. The stocks and warrants were assigned a value of $4,899,871 based on the sales price of common stock sold by the Company in two separate private placements which occurred before and after the acquisition. 7 BEVsystems International, Ltd. NOTES TO FINANCIAL STATEMENTS =========================================================================== 4. LIFE INTERNATIONAL ACQUISITION (Cont'd) The merger was accounted for using the purchase method of accounting. The Company has determined the purchase price to be allocated to be $5,913,490, which consists of a cash payment of $1,020,000, the value of the shares and warrants of $4,899,871, less the net assets of $6,381, which consists of $96,381 of fixed assets less the liabilities assumed of $90,000. The purchase price in excess of net assets has been allocated as follows: Description Amount ------------------------------------------------ Process technology $ 3,887,000 Trademarks 830,000 Goodwill 796,490 Distribution network (customer relationships 400,000 ------------------------------------------------ $ 5,913,490 ================================================ The Company obtained an independent valuation of the assets of Life International in order to determine the fair value of assets purchased. The following unaudited pro forma financial information reflects the results of operations for the nine months ended December 31, 2001 as if the acquisition has occurred at the beginning of the period presented, and after giving effect to purchase accounting adjustments. This unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations in future periods or results that would have been achieved had the Company and Life International been combined during the period. Nine Months Ended December 31, 2001 ------------------------------------------------------ Net revenues $ 2,639,482 ====================================================== Net loss $(2,405,619) ====================================================== 8 BEVsystems International, Ltd. NOTES TO FINANCIAL STATEMENTS =========================================================================== 5. FURNITURE AND EQUIPMENT Useful At December 31, 2001 Lives ---------------------------------------------------------------------- Office furniture $ 24,578 3 years Transporation equipment - Pledged 98,585 4 years Other equipment 132,584 4 years ------------------------------------------------- 255,747 Less accumulated depreciation (23,679) ------------------------------------------------- Furniture and equipment, net $ 232,068 ================================================= Depreciation expense was $23,679 for the nine months ended December 31, 2001. 6. INTANGIBLE ASSETS Description Amount ------------------------------------------------ Process technology $ 3,887,000 Trademarks 830,000 Goodwill 796,490 Distribution network (customer relationships 400,000 ------------------------------------------------ $ 5,913,490 ================================================ There was no amortization expense for intangible assets for the nine months ended December 31, 2001. 7. STOCK OPTION PLAN In April 2001, the Company adopted a Stock Option Plan intended to provide officers, directors, key employees and consultants of the Company an opportunity to acquire stock in the Company. As of December 31, 2001, 1,045,000 options to purchase shares at $0.55 per share had been issued. 475,000 of the options are vested at December 31, 2001, with the remainder of 570,000 options to be vested over the next two years. No options have been exercised at December 31, 2001. The fair value of the options on the grant date was $94,050 calculated using the Black-Scholes Option Pricing Model. 9 BEVsystems International, Ltd. NOTES TO FINANCIAL STATEMENTS =========================================================================== 7. STOCK OPTION PLAN (Cont'd) The Company applies Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for stock based employee compensation arrangements whereby no compensation cost related to stock options is deducted in determining net loss. Had the compensation cost for stock option grants to the Company's employees been determined by SFAS No. 123, "Accounting for Stock Based Compensation", the Company's net loss would have increased for the nine months ended December 31, 2001 as presented in the table below. Using the Black-Scholes Option Pricing Model, the Company's pro forma net loss is as follows: Pro Forma Net Loss $ 2,484,506 Risk Free Interest Rate 5.71% Expected Lives 2 Years Expected Volatility None For purposes of these pro forma disclosures, the estimated fair value of the options granted is amortized to expense over the options' vesting period. 8. COMMON STOCK TRANSACTIONS In July 2001, the Company completed a private placement of $1,787,500, consisting of 3,250,000 shares of the Company's common stock at $0.55 per share and 3,250,000 warrants, exercisable at $1.10 and expiring on May 1, 2003. The options had no value using the Black-Scholes Option Pricing Model. In December 2001, the Company raised an additional $247,500 through a private placement of 450,000 shares of common stock at $0.55 per share. The issuance costs associated with these two private placements were $515,000 and is reflected in the net proceeds. The holders of the convertible notes payable have 820,000 options to acquire shares of the Company's stock at $0.55 per share. The options expire in three to five years. The proceeds from the issuance of the notes payable with the warrants, were allocated between the warrants and the notes payable based on their relative fair values at the time of issuance. The fair value of the options on the grant date was $73,800 calculated using the Black- Scholes Option Pricing Model and was accounted for as additional paid-in capital and as a debt discount which is amortized to interest expense over the term of the notes. $20,500 was charged to interest expense during the nine months ended December 31, 2001. 10 BEVsystems International, Ltd. NOTES TO FINANCIAL STATEMENTS =========================================================================== 9. RELATED PARTY TRANSACTIONS Financial Partners Network Corporation ("FPN"), a corporation owned by the Company's chairman and Chief Executive Officer, advanced funds and provided services to the Company. A fee of $250,000 was paid for services rendered in connection with the private placement stock offering. FPN also advanced $262,584 for operating expenses incurred by the Company. The operating expenses are reflected on the statement of operations in selling, general and administrative expenses. The Company entered into a convertible note payable with FPN for repayment of the advances. The Company has engaged The Better Image Company, a marketing consulting firm, to execute certain product development and marketing plans for the Company. The Company's Senior Vice President of Marketing owns The Better Image Company. As of December 31, 2001, the Company had incurred $309,800 in marketing materials and product development costs for current marketing programs. $180,894 is included in accounts payable and accrued expenses and $77,416 is included in convertible notes payable at December 31, 2001. As of December 31, 2001, the Company owed certain employees $221,099 for payment of accrued salaries and reimbursement of expenses. 10. SUBSEQUENT EVENTS On January 15, 2002, the Company entered into an agreement for the purchase and sale of stock with Aqua Clara Bottling & Distribution, Inc. The merger was consummated on February 25, 2002. 11 -----END PRIVACY-ENHANCED MESSAGE-----