Water Cooler Firm Completes Stock Sale
Acqua Group Inc., a Van Nuys company that assembles and markets bottle-less water coolers, completed a $3-million initial public stock offering last month. The company will use the proceeds to pay off debts and expand operations.
The offering consisted of 500,000 units, each made up of two shares of common stock and an option to purchase additional stock.
The company’s water coolers use a filter that reduces chemicals and metals that may be present in tap water. From February through July, 1990, the company sold about 1,800 coolers and rented about 90 coolers to 590 customers, including hospitals, offices and hotels, according to a company prospectus. The company began selling coolers in September, 1988.
Acqua says its coolers are easier to handle and more cost-efficient than their bottle-equipped counterparts. Instead of paying monthly bills for bottled water, customers pay about $1,475 for each cooler. Most customers opt for a lease-to-buy program under which they pay for the coolers in installments, said Albert A. Parisi, chairman of the board and chief executive officer.
Acqua plans to use about $500,000 from the public offering to finance five additional sales offices in the next year. It hopes to commit $850,000 to pay off debt, and $100,000 is expected to go toward a retail water store in a small shopping center.
So far, the company has been only marginally profitable. During the six months ended July 31, Acqua earned $233,000 on revenues of $2.16 million, compared to a loss of $235,000 on revenues of $477,400 during the same period in 1989. Acqua’s prospectus states that the company was only marginally profitable in the three months ended Oct. 31.
Last month’s offering is the second time in four months that Acqua has attempted to sell stock to the public. And it’s the second time that Acqua has used a troubled underwriter to handle the offering.
The first stock offering fell through because Denver underwriter Stuart-James Co., once the nation’s largest penny-stock brokerage firm, left the securities business in November amid declining commissions. In May, Stuart-James was fined $1.9 million by the National Assn. of Securities Dealers for overcharging customers, and it faces a Securities and Exchange Commission complaint charging that it used fraudulent sales practices and excessive markups of stock prices.
Acqua’s current underwriter, Rochester, N.Y.-based Thomas James Associates Inc., and its two co-founders were fined $1.5 million in July by a federal district judge for excessive markups of four stocks that the company had underwritten. One of the co-founders, Brian Thomas, consented to be barred permanently from the securities industry.
In addition, the National Assn. of Securities Dealers has begun proceedings to revoke the NASD membership of James A. Villa, the other co-founder, and to require him to divest his ownership interest in Thomas James.
Parisi said Acqua chose Thomas James because “they were ready, willing and able.” He said the company might have had difficulty finding other underwriters because of the depressed stock market.
Despite the successful stock offering, Acqua must still worry about competing with well-established bottled water companies such as Arrowhead and Sparkletts, and with water-purification companies such as Culligan and Rainsoft.
Also, the company does not own special rights to any water purifying technology, and is not able to develop such technology. Instead, Acqua depends on other companies which have developed the technology used in the company’s coolers.
