U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 2-96455-LA
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WATER CHEF, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 86-0515678
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
7707 E. Acoma Dr. Suite 109, Scottsdale, Arizona 85260
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(Address of principal executive offices)
602-991-4534
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange act during the past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AS OF
CLASS March 31, 1997
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Common
Par Value $.001 per share 16,836,574
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WATER CHEF, INC.
FORM 10-QSB/A
FOR THE QUARTER ENDED MARCH 31, 1997
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page
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Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996.................................. 3
Consolidated Statements of Operations for the three
month periods ended March 31, 1997 and 1996............ 5
Consolidated Statements of Cash Flow for the three
month periods ended March 31, 1997 and 1996............ 6
Notes to Consolidated Financial Statements............. 7
Signatures....................................................... 9
2
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WATER CHEF, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1997 1996
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(Unaudited)
CURRENT ASSETS:
Cash $ 38,529 $ 18,553
Accounts receivable, net of allowance for
doubtful accounts of $51,939.97 at March 31,
1997 and $51,939.97 at December 31. 1996 21,698 91,985
Inventories, net 527,465 495,910
Deposits and other 203,883 452,138
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Total Current Assets 791,575 1,058,586
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PROPERTY AND EQUIPMENT, at cost less accumulated
depreciation of $351,418 at March 31, 1997 and
$278,375 at December 31, 1996 497,798 679,690
PATENTS, DESIGNS AND TRADEMARKS, at cost less
accumulated amortization of $20,292 at
March 31, 1997 and $18,943 at December 31, 1996 193,485 39,297
INVESTMENT IN CHINA JOINT VENTURE (Note 3) 148,000 148,000
OTHER 445,516 104,999
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$2,076,374 $2,030,572
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The accompanying notes are an integral part
of these consolidated balance sheets.
3
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WATER CHEF, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
March 31, December 31,
1997 1996
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(Unaudited)
CURRENT LIABILITIES:
Accounts payable:
Trade $ 780,296 $ 852,407
Other 338,416 54,396
Accrued expenses and other 609,198 879,966
Current portion of notes payable 312,898 232,739
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Total Current Liabilities 2,040,808 2,020,508
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NOTES PAYABLE, net of current portion 2,618,438 2,798,600
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Minority Interest (Note 3) 253,000 253,000
STOCKHOLDERS' DEFICIT:
Preferred Stock, $.001 par value,10,000,000
shares authorized; 93,000 shares issued and
outstanding at March 31, 1997 and 52,500 shares
issued and outstanding at December 31, 1996 432,330 215
Common Stock, $.001 par value, 40,000,000 shares
authorized; 16,836,574 shares issued and
16,836,574 outstanding at March 31, 1997 and
16,836,574 shares issued and 16,836,574
outstanding at December 31, 1996 16,836 16,836
Common Stock to be issued (93,000 shares) 199,660 397,342
Additional paid-in capital 2,909,914 2,892,961
Treasury stock, at cost (5,768) (5,768)
Accumulated deficit (6,388,678) (6,334,122)
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Total Stockholders' Deficit (2,835,872) (3,032,536)
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$2,076,374 $2,030,572
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The accompanying notes are an integral part
of these consolidated balance sheets.
4
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WATER CHEF, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
1997 1996
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Net sales $ 40,025 $ 18,613
Cost of sales 50,669 61,313
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Gross margin (10,644) (42,760)
Selling, general and administrative expenses 288,434 245,832
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Loss from operations (299,078) (288,592)
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Other income (expense):
Forgiveness-Debt. SBA
Sale of WaterChef Franchise: 261,221
Interest expense (24,225) (68,462)
Other, net -- --
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Total other expense (24,225) (68,462)
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Loss before provision for income taxes (62,081) (357,054)
Provision for income taxes -- --
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NET LOSS $ (62,081) $ (357,054)
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loss per common share and common
share equivalent $ ( ) $ (.04)
Weighted average number of common shares
and common share equivalents outstanding 16,836,574 15,836,574
=========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
5
<PAGE>
WATER CHEF, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (62,081) $ 341,656
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization (186,389) 13,699
Non Operating Cash Flow Adjustments 7,689 0
Change in assets and liabilities:
Increase in accounts receivable 70,287 60,982
Decrease (increase) in inventories (31,555) (167,814)
Increase in investment in China joint venture 0 0
Increase in prepaid expenses and other assets (28,817) 0
Increase (decrease) in accounts payable 72,111 230,034
Increase in accounts payable-China joint venture (148,000) (148,000)
Increase in accrued expenses and other liabilities 270,768 109,376
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Net cash used in operating activities $ (35,987) $ 439,933
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment $(133,240) $(118,149)
Acquisition of patents, designs and trademarks $(154,187) $ (60,393)
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Net cash used in investing activities $(287,427) $(178,542)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings on notes payable 92,003 $(664,486)
Payments on notes payable (10,149) (71,887)
Proceeds from preferred and common stock, net 261,536 399,361
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Net cash provided by financing activities $ 343,390 $(337,012)
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Net increase (decrease) in cash $ 19,976 $ (75,621)
Cash beginning of period $ 18,553 $ 94,174
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Cash, end of period $ 38,259 $ 18,553
========= =========
Supplemental Cash Flow Information:
Cash paid for interest $ 0 $ 0
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The accompanying notes are an integral part
of these consolidated financial statements.
6
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WATER CHEF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(1) The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made. The results of operations
for the three-month period ended March 31, 1997, are not necessarily indicative
of the operating results that may be expected for the year ending December 31,
1997. These financial statements should be read in conjunction with the
Company's December 31, 1996 Form 10-KSB, financial statements and accompanying
notes thereto.
Pursuant to a Merger Agreement and Plan of Reorganization between the Company
and Water Chef-Nevada dated June 4, 1993 ("the Agreement"), the Company issued
3,800,000 shares of its common stock to Water Chef-Nevada's three stockholders,
in exchange for all issued and outstanding common stock of Water Chef-Nevada.
The common stock issued represented 62% of the issued and outstanding shares of
its common stock after the merger. In connection with this transaction, Water
Chef-Nevada's officers and its director became officers and a director of the
Company. This resulted in Water Chef-Nevada's officers and director, and
directors appointed by Water Chef-Nevada, controlling the Company's day-to-day
operations.
In accordance with Accounting Principles Board Opinion No.16, the Water
Chef-Nevada acquisition has been accounted for as a reverse acquisition. The
historical financial statements prior to June 4, 1993 are those of Water
Chef-Nevada (Water Chef-Nevada was formed on January 25, 1993, therefore, no
financial statements are presented prior to that date). For financial statement
presentation purposes, the Company is considered to be the predecessor.
(2) As of March 31, 1997, Inventories consist of the following:
Raw Material 516,795
Finished Goods 10,670
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$527,465
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(3) In February 1994, the Company entered into an agreement (the "Agreement") to
form a joint venture, Tianjin Tahoe Cooler Co., Ltd. (the "Joint Venture") to
establish and operate a facility to manufacture the Company's Series I water
coolers in the People's Republic of China. The Company's contribution to the
Joint Venture, in which it will have a 55% interest, will be in the form of
machinery and other equipment in the approximate value of $144,000 (based on the
price of the equipment to be supplied by the Company to the joint venture),
$140,000 cash and designs and technology with an agreed upon value of $156,000.
The minority interest of $253,000 reflected in the consolidated balance sheet
represents the minority shareholder's proportionate share of the equity of the
Joint Venture. No minority interest has been reflected in the accompanying
consolidated statements of operations as the Joint Venture did not have any
material operations during the three months ended March 31, 1997.
7
<PAGE>
(4) In December 1995 the company purchased all of the outstanding common stock
of Natural Water Systems Inc. Boulder, Co for 1,Million shares of Water Chef
common. The company supplies water dispensing systems for Natural Water stores
and a shower filter of patented design that removes 95% of the chlorine.
Chlorine causes dry skin, split ends, scalp flaking and red eyes, Chlorine
absorbed by the body during a shower has been known to cause cancer of the colon
and bladder. It is believed this shower filter product can grow into a $100
Million business.
8
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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.
WATER CHEF, INC.
Date: August 22, 1997 /s/ C. Gus Grant
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C. Gus Grant
President, Director and Chief
Executive Officer
(Principal Operating Officer)
9
