<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the nine months ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________, 19__, to __________, 19__.
Commission File Number 0-29746
INNOVA PURE WATER, INC.
-----------------------
(Exact Name of Registrant as Specified in Charter)
Florida 59-2567034
------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
13130 56th Court, Suite 604, Clearwater, Florida 33760
------------------------------------------------------
(Address of Principal Executive Offices)
(727) 572-1000
--------------
(Registrant's Telephone Number, Including Area Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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.
[X] YES [ ] NO
There were 10,043,401 shares of the Registrant's $.0001 par value common stock
outstanding as of March 31, 2000.
Transitional Small Business Format (check one) Yes [ ] NO [X]
<PAGE> 2
INNOVA PURE WATER, INC.
CONTENTS
Part I - Financial Information
- ------------------------------
Item 1. Financial Statements
Item 2. Management's Discussion & Analysis of Financial
Condition and Results of Operations
Part II - Other Information
- ---------------------------
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 Matters
Item 6. Exhibits and Reports on Form 8-K
Signatures
- ----------
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Innova Pure Water, Inc.
Financial Statements
Three and Nine Months Ended
March 31, 2000 and 1999 (Unaudited)
CONTENTS
Certified Public Accountants' Review Report on Financial Statements...........1
Financial Statements:
Balance Sheet for March 31, 2000 (Unaudited)..............................2
Statements of Operations for the Three and Nine Months
Ended March 31, 2000 and 1999 (Unaudited).............................3
Statement of Changes in Stockholders' Equity for the
Nine Months Ended March 31, 2000 (Unaudited)..........................4
Statements of Cash Flows for the Nine Months Ended
March 31, 2000 and 1999 (Unaudited)...................................5
Notes to Financial Statements...........................................6-7
<PAGE> 4
Certified Public Accountants' Review Report
Board of Directors
Innova Pure Water, Inc.
Clearwater, Florida
We have reviewed the accompanying balance sheet of Innova Pure Water, Inc. as of
March 31, 2000 and the related statements of operations, changes in
stockholders' equity, and cash flows for the three and nine months then ended.
All information included in these financial statements is the responsibility of
the management of Innova Pure Water, Inc.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
Certified Public Accountants
Tampa, Florida
April 26, 2000
<PAGE> 5
Innova Pure Water, Inc.
Balance Sheet
March 31, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 200,800
Accounts receivable, trade, net of allowance for
doubtful accounts of $8,800 19,100
Other receivables, including related party of $121,500 163,100
Inventories 84,600
Other current assets 19,500
-----------
Total current assets 487,100
Property and equipment, net 112,800
Other assets 239,800
-----------
$ 839,700
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 61,300
Accrued expenses 48,400
Current portion of obligation under capital lease 4,000
Current portion of long-term debt 7,000
-----------
Total current liabilities 120,700
-----------
Long-term liabilities:
Obligation under capital lease, net of current portion 3,400
Long-term debt, net of current portion 8,100
-----------
Total long-term liabilities 11,500
-----------
Stockholders' equity:
Preferred stock; $.001 par value; 2,000,000 shares
authorized; 0 shares issued and outstanding
Common stock; $.0001 par value; 50,000,000 shares
authorized; 10,078,401 shares issued; and
10,043,401 shares outstanding 1,000
Capital in excess of par value 8,050,600
Accumulated deficit (7,337,700)
-----------
713,900
Treasury stock, at cost, 35,000 shares (6,400)
-----------
Total stockholders' equity 707,500
-----------
$ 839,700
===========
</TABLE>
Read certified public accountants' review report. The accompanying
notes are an integral part of the financial statements. 2
<PAGE> 6
Innova Pure Water, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- ------------------------
2000 1999 2000 1999
---------------------- ------------------------
<S> <C> <C> <C> <C>
Net sales, related parties $ 329,000
Net sales, other $ 55,600 $667,800 $ 190,700 2,133,300
---------------------- ------------------------
55,600 667,800 190,700 2,462,300
Cost of sales 46,900 304,000 156,500 1,299,200
---------------------- ------------------------
Gross profit 8,700 363,800 34,200 1,163,100
---------------------- ------------------------
Operating expenses:
Selling expenses 4,500 20,800 41,800 95,100
General and administrative
expenses 278,100 273,600 811,100 891,200
Research and product
development 53,100 45,000 139,900 114,600
---------------------- ------------------------
335,700 339,400 992,800 1,100,900
---------------------- ------------------------
Net (loss) income from operations (327,000) 24,400 (958,600) 62,200
---------------------- ------------------------
Other income:
Interest, net 2,200 9,800 12,400 31,600
Gain on disposal of assets 7,600
Other 2,400 7,400 27,400
---------------------- ------------------------
2,200 12,200 19,800 66,600
---------------------- ------------------------
Net (loss) income $(324,800) $ 36,600 $(938,800) $ 128,800
====================== ========================
Earnings (loss) per common
share $ (.03) $ .00 $ (.09) $ .01
====================== ========================
Earnings (loss) per common
share, assuming dilution $ (.03) $ .00 $ (.09) $ .01
====================== ========================
</TABLE>
Read certified public accountants' review report. The accompanying
notes are an integral part of the financial statements. 3
<PAGE> 7
Innova Pure Water, Inc.
Statement of Changes in Stockholders' Equity
Nine Months Ended March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Capital In
--------------------- Excess Of Accumulated Treasury
Shares Amount Par Value Deficit Stock
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1999 10,078,401 $1,000 $8,019,400 $(6,398,900)
Acquisition of treasury stock,
35,000 shares $(6,400)
Compensation for stock options
vested 31,200
Net loss (938,800)
-------------------------------------------------------------------
Balance, March 31, 2000 10,078,401 $1,000 $8,050,600 $(7,337,700) $(6,400)
===================================================================
</TABLE>
Read certified public accountants' review report. The accompanying
notes are an integral part of the financial statements. 4
<PAGE> 8
Innova Pure Water, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
-----------------------
2000 1999
-----------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $(938,800) $ 128,800
-----------------------
Adjustments to reconcile net (loss) income to net cash and
cash equivalents (used) provided by operating activities:
Depreciation and amortization 111,500 86,900
Gain on disposal of equipment (7,600)
Stock and stock options issued for services 31,200 25,700
(Increase) decrease in:
Accounts and other receivables 368,700 637,800
Inventories 40,300 217,400
Other current assets (3,500) (2,300)
Increase (decrease) in accounts payable, accrued
expenses, and customer deposits 16,200 (575,200)
-----------------------
Total adjustments 564,400 382,700
-----------------------
Net cash and cash equivalents (used) provided by operating activities (374,400) 511,500
-----------------------
INVESTING ACTIVITIES
Acquisition of equipment (11,900) (40,600)
Expended on patents and patent litigation (54,300) (65,500)
(Payments) advances to related parties (37,300) 17,900
-----------------------
Net cash and cash equivalents used by investing activities (103,500) (88,200)
-----------------------
FINANCING ACTIVITIES
Repurchase of stock (3,400)
Payments on loans (4,900) (4,500)
Payments on capital lease obligations (2,700) (3,900)
Proceeds from issuance of common stock 1,300
Acquisition of treasury stock (6,400)
-----------------------
Net cash and cash equivalents used by financing activities (14,000) (10,500)
-----------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (491,900) 412,800
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 692,700 488,200
-----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 200,800 $ 901,000
=======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
AND NONCASH FINANCING ACTIVITIES:
Cash paid during the period for interest $ 1,700 $ 2,600
=======================
</TABLE>
Read certified public accountants' review report. The accompanying
notes are an integral part of the financial statements. 5
<PAGE> 9
Innova Pure Water, Inc.
Notes to Financial Statements
Three and Nine Months Ended
March 31, 2000 and 1999 (Unaudited)
1. FINANCIAL STATEMENTS
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the three- and nine-month periods ended March 31, 2000 and 1999,
(b) the financial position at March 31, 2000, and (c) cash flows for the
nine-month periods ended March 31, 2000 and 1999, have been made.
The unaudited financial statements and notes are presented as permitted by Form
10-QSB. Accordingly, certain information and note disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted. The accompanying financial statements
and notes should be read in conjunction with the audited financial statements
and notes of the Company for the fiscal year ended June 30, 1999. The results of
operations for the three- and nine-month periods ended March 31, 2000 are not
necessarily indicative of those to be expected for the entire year.
2. CONTINGENCIES
The Company was the plaintiff in a patent infringement and unfair competition
lawsuit entitled Innova/Pure Water, Inc. v. Aladdin Sales & Marketing, Inc.,
Filtex USA, Ltd., ACT Marketing, Inc., ACT Marketing, Ltd., Advanced Consumer
Technologies, Inc., and Robert Luzenberg, Case No. 97-924-Civ-T-25D (M.D. Fla.)
filed by the Company on April 18, 1997. The Company claimed patent infringement
for one patent and false advertising on the part of the Defendants. Prior to
trial, the Company resolved the false advertising claims on terms deemed
favorable to the Company by management. A subsequent judgment was handed down by
the Federal Circuit Court on August 10, 1999, ruling that the Aladdin and Filtex
products infringed the Company's U.S. Patent 5,609,759 and was enforceable.
Damage payments were negotiated, recorded as of June 30, 1999, and paid to the
satisfaction of the Company.
The Company is currently the plaintiff in a second patent infringement lawsuit
entitled Innova/Pure Water, Inc., Plaintiff v. Safari Water Filtration Systems,
Inc. d/b/a Safari Outdoor Products, Defendant; Case No. 99-1781-Civ-T-23F filed
by the Company on August 4, 1999. The case was filed with the U.S. District
Court, Middle District of Florida, Tampa Division. The Company has claimed
patent infringement of U.S. Patent 5,609,759 on the part of the Defendants.
Read certified public accountants' review report. 6
<PAGE> 10
Innova Pure Water, Inc.
Notes to Financial Statements
Three and Nine Months Ended
March 31, 2000 and 1999 (Unaudited)
2. CONTINGENCIES (CONTINUED)
The Company is currently the plaintiff in a patent infringement lawsuit entitled
Innova/Pure Water, Inc., Plaintiff v. Brita Products Company, Defendant; Case
No. 00-157-Civ-T-26C filed by the Company on February 29, 2000. The case was
filed with the U.S. District Court, Middle District of Florida, Tampa Division.
The Company has claimed patent infringement of U.S. Patent 5,609,759 on the part
of the Defendants.
3. STOCKHOLDERS' EQUITY
During the nine months ended March 31, 2000, the Company acquired 35,000 shares
of treasury stock for a total cost of $6,400. Also during the nine months ended
March 31, 2000, the Company recognized $31,200 of compensation expense for stock
options issued in a prior period. No new stock options were granted in the
current period.
Read certified public accountants' review report. 7
<PAGE> 11
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED,"
"BELIEVE," "EXPECT," "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT," "WILL,"
"COULD," "MAY," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE
OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH
STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND
FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT
LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN,
POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND
COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET
PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH
ARE BEYOND THE COMPANY'S CONTROL, INCLUDING, WITHOUT LIMITATION, THE RISKS
DESCRIBED UNDER THE CAPTION "BUSINESS." SHOULD ONE OR MORE OF THESE RISKS OR
UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE
FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY
STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
Innova cautions readers that in addition to important factors described
elsewhere, the following important facts, among others, sometimes have affected,
and in the future could affect, the Company's actual results, and could cause
the Company's actual results during 1999 and beyond, to differ materially from
those expressed in any forward-looking statements made by, or on behalf of,
Innova.
INCOME STATEMENT DATA
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
--------------------------- ----------------------------
2000 1999 2000 1999
--------------------------- ----------------------------
<S> <C> <C> <C> <C>
Total revenue $ 55,600 $ 667,800 $ 190,700 $2,462,300
=========================== ============================
Net (loss) income $ (324,800) $ 36,600 $ (938,800) $ 128,800
=========================== ============================
(Loss) earnings per
common share -
basic $ (.03) $ (.00) $ (.09) $ .01
=========================== ============================
Shares used in per
share computation 10,043,401 10,072,638 10,057,237 10,070,437
=========================== ============================
(Loss) earnings per
common share -
assuming dilution $ (.03) $ (.00) $ (.09) $ .01
=========================== ============================
Shares used in diluted
computation 10,043,401 10,072,638 10,057,237 10,099,630
=========================== ============================
</TABLE>
<PAGE> 12
BALANCE SHEET DATA
<TABLE>
<CAPTION>
March 31,
2000
---------
<S> <C>
Total assets $839,700
========
Working capital $366,400
========
Long-term debt $ 11,500
========
Stockholders' equity $707,500
========
</TABLE>
Year 2000
- ---------
The "Year 2000" issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Programs with this
problem may recognize a date using "00" as the year 1900 rather than the Year
2000, resulting in system failures or miscalculations. Given this uncertainty,
the Company has recognized the need to remain vigilant in its Year 2000
analysis.
Determination of Year 2000 Readiness
- ------------------------------------
The Company has completed a review of its information technology (IT) and
non-information technology systems (non-IT). An inventory was taken of the
Company's essential data processing equipment as well as the equipment used in
the Company's manufacturing processes.
The Company has information on the Year 2000 compliance of its essential data
processing hardware, which include its computers, printers, scanners, modems,
copiers, and facsimile machines or any other equipment that may process date
data. This information was gathered by actual testing by the Company or from the
manufacturer either by direct correspondence or information that is available
from the manufacturer's Internet website. The Company has found that all
essential data processing hardware is Year 2000 compliant.
A review of the Company's essential data processing equipment firmware and
software has found it to be either Year 2000 compliant when it was purchased or
was able to be fixed by the download of a "patch" from the software
manufacturer's Internet website.
A review of the equipment used in the Company's manufacturing processes did not
find any potential problem areas due to date processing, including embedded
technologies. The potential for problems occurring in this area is decreased
because the Company essentially assembles complete components from outside
manufacturers into its finished products.
The manufacturer of the Company's telephone equipment does not list our
particular system as Year 2000 compliant. The flaw concerns the printing out of
voicemail reports where the year would be listed as 00 instead of 2000. Since
the system should operate fine after January 1, 2000 and the Company does not
use this particular reporting function, it is not necessary to replace the
telephone system. This was the only potential problem area found in the review
of the Company's non-information technology systems. The telephone system has
worked normally since January 1, 2000.
As a result of these reviews, the Company feels that we are Year 2000 compliant
and that nothing further must be done to our IT and non-IT systems in order to
be prepared for the Year 2000 internally.
<PAGE> 13
An assessment of external risks, which are outside the Company's control, was
conducted. The Company has identified four major suppliers and two major
customers that were contacted and asked to fill out a questionnaire about their
Year 2000 capabilities and remediation programs. All but one responded that they
were Year 2000 compliant. The Company feels that the one unresponsive supplier
could be replaced without any major interruption to the business should the need
arise.
A survey of the Company's financial institution and utility companies, by direct
correspondence, Internet website, or published statements, found that they are
or will be Year 2000 compliant by December 31, 1999 with little risk of service
interruption due to untested systems or processes.
The Company's computer systems did not encounter any Year 2000 related problems
on January 1, 2000. All internal system clocks have the correct time and date,
and no problems have occurred with any of them to date.
Contingencies
- -------------
The Company determined that it did not need to have increased inventory levels
on December 31, 1999 or need to purchase any additional liability insurance due
to any litigation that may result from the Year 2000 changeover.
The Company feels that the continued internal risk of a Year 2000 system failure
is minimal, but has taken the following steps in order to recover from such a
failure:
1. All records were backed up before the end of business on December 31, 1999.
2. Some essential systems had their internal system clocks turned back two
weeks and were maintained in December 1999 "time" until a determination
could be made to see if there were any system failures, related to the Year
2000 changeover, on similar systems on January 1, 2000. This could have
caused an error in date reporting, but essential services were still
performed. There were no Year 2000 problems encountered on January 1, 2000
and all internal system clocks have been returned to the correct time and
date. There will be no errors in date reporting.
RESULTS OF OPERATIONS
Net Sales
- ---------
Net sales for the three-month period ended March 31, 2000 totaled $55,600, a
decrease of 92 percent from the $667,800 of net sales for the comparable period
in 1999. Net sales for the nine-month period ended March 31, 2000 totaled
$190,700, a 92 percent decrease from the $2,462,300 of net sales for the
comparable period in 1999. This decrease in sales for both the three- and
nine-month periods ended March 31, 2000 is attributable to the decision by
Newell, after the acquisition of Rubbermaid, to alter priorities away from water
filtration and other new programs to concentrate on Rubbermaid's historic core
business.
Cost of Sales
- -------------
For the three months ended March 31, 2000, the cost of sales decreased to
$46,900 from the $304,000 of costs for the three months ended March 31, 1999.
This decrease is mainly due to the decrease in sales.
<PAGE> 14
Gross profit margin decreased 38 percent for the three months ended March 31,
2000 to a gross profit margin of 16 percent, from an overall gross profit margin
of 54 percent for the three months ended March 31, 1999. This is principally
attributable to the lower sales volume that had to absorb the fixed costs of
manufacturing.
For the nine months ended March 31, 2000, the costs of sales decreased to
$156,500 from the $1,299,200 of costs for the nine months ended March 31, 1999.
This decrease is mainly due to the decrease in sales.
Operating Expense
- -----------------
Operating expenses for the three months ended March 31, 2000 were $335,700,
which is comparable to the $339,400 of operating expenses for the similar period
last year.
Operating expenses for the nine months ended March 31, 2000 were $992,800, or
521 percent of net sales. For the comparable period in 1999, operating costs
amounted to $1,100,900, or 45 percent of net sales. The 476 percent increase is
due to the decrease in sales.
Other Income
- ------------
For the three months ended March 31, 2000, net interest income amounted to
$2,200 as compared to net interest income of $9,800 for the three months ended
March 31, 1999. This decrease is due to the decrease in cash invested in
interest bearing securities or accounts with a major national bank.
For the nine months ended March 31, 2000, net interest income amounted to
$12,400 as compared to net interest income of $31,600 for the nine months ended
March 31, 1999. Again, this decrease is attributable to the decrease in cash.
Other income for the nine months ended March 31, 2000 of $7,400 was due to a
distribution from a trust fund administered by a law firm that represents the
Company.
Income Taxes
- ------------
Due to the Company's history of operating losses, management has established a
valuation allowance in the full amount of the deferred tax assets arising from
these losses because management believes it is more likely than not that the
Company will not generate sufficient taxable income within the appropriate
period to offset these operating loss carryforwards.
Net Income
- ----------
Net loss for the three months ended March 31, 2000 amounted to $(324,800) as
compared to a net income of $36,600 for the three months ended March 31, 1999.
This increase in the net loss is principally attributable to the reduction in
sales as indicated above.
Net loss for the nine months ended March 31, 2000 amounted to $(938,900), as
compared to net income of $128,800 for the comparable period in 1999. The
decrease in income is primarily a result of the reduction in sales.
<PAGE> 15
Earnings Per Share
- ------------------
For the three months ended March 31, 2000, basic and diluted loss per share
amounted to $(.03). For the comparable period in 1999, basic and diluted loss
per share amounted to $(.00). The increase in loss per share is due principally
to a decrease in income during the three months ended March 31, 2000.
For the nine months ended March 31, 2000, basic and diluted loss per share
amounted to $(.09). For the comparable period in 1999, basic and diluted
earnings per share amounted to $.01. This turnaround is due to a decrease in
income between comparable periods.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
- --------------------
For the nine months ended March 31, 2000, net cash used by operating activities
amounted to $374,400, a decrease from the net cash provided by operating
activities of $511,500 for the comparable period in 1999. The decrease in cash
used is primarily a result of the reduction in sales as indicated above.
Investment Activities
- ---------------------
The Company's investment activities include equipment purchases, litigation
involving patents, and net changes in related party advances.
Net cash used by investing activities for the nine months ended March 31, 2000
was $103,500 as compared to net cash used by investing activities of $88,200 for
the comparable period in 1999. The increase in cash expended for investing
activities is due primarily to an increase in advances made to related parties.
Financing Activities
- --------------------
The Company's financing activities include payments on borrowings and capital
leases and the acquisition of treasury stock.
Net cash of $14,000 was used by financing activities for the nine months ended
March 31, 2000 as compared to net cash used by financing activities of $10,500
for the nine months ended March 31, 1999. The slight increase in cash used for
financing activities results from the acquisition of treasury stock.
CAPITAL RESOURCES
At March 31, 2000, the Company does not have any material commitments for
capital expenditures other than for those expenditures incurred in the ordinary
course of business.
The Company believes that its current operations and cash balances will be
sufficient to satisfy its currently anticipated cash requirements for the next
12 months. However, additional capital could be required in excess of the
Company's liquidity, requiring it to raise additional capital through an equity
offering, secured or unsecured debt financing. The availability of additional
capital resources will depend on prevailing market conditions, interest rates,
and the existing financial position and results of operations of the Company.
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was the plaintiff in a patent infringement and unfair competition
lawsuit entitled Innova/Pure Water, Inc. v. Aladdin Sales & Marketing, Inc.,
Filtex USA, Ltd., ACT Marketing, Inc., ACT Marketing, Ltd., Advanced Consumer
Technologies, Inc., and Robert Luzenberg, Case No. 97-924-Civ-T-25D (M.D. Fla.)
filed by the Company on April 18, 1997. The Company claimed patent infringement
for one patent and false advertising on the part of the defendants. Prior to
trial, the Company resolved the false advertising claims on terms deemed
favorable to the Company by management. A subsequent judgment was handed down by
the Federal Circuit Court on August 10, 1999, ruling that the Aladdin and Filtex
products infringed the Company's U.S. Patent 5,609,759 and was enforceable.
Damage payments were negotiated and paid to the satisfaction of the Company.
The Company is currently the plaintiff in a second patent infringement lawsuit
entitled Innova/Pure Water, Inc., Plaintiff v. Safari Water Filtration Systems,
Inc. d/b/a Safari Outdoor Products, Defendant; Case No. 99-1781-Civ-T-23F filed
by the Company on August 4, 1999. The case was filed with the U.S. District
Court, Middle District of Florida, Tampa Division. The Company has claimed
patent infringement of U.S. Patent 5,609,759 on the part of the defendants.
The Company is currently the plaintiff in a patent infringement lawsuit entitled
Innova/Pure Water, Inc., Plaintiff v. Brita Products Company, Defendant; Case
No. 00-157-Civ-T-26C filed by the Company on February 29, 2000. The case was
filed with the U.S. District Court, Middle District of Florida, Tampa Division.
The Company has claimed patent infringement of U.S. Patent 5,609,759 on the part
of the Defendants.
ITEM 2. CHANGES IN SECURITIES
During the nine-month period ended March 31, 2000, there was no modification of
any instruments defining the rights of holders of the Company's common stock and
no limitation or qualification of the rights evidenced by the Company's common
stock as a result of the issuance of any other class of securities or the
modification thereof.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the nine-month period ended March 31, 2000, the Company was not in
default on any of its indebtedness.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the nine-month period ended March 31, 2000, the Company did not submit
any matters to a vote of its security holders.
<PAGE> 17
ITEM 5. OTHER MATTERS
The Company does not have any material information to report with respect to the
nine-month period ended March 31, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits included herewith are:
(27) Financial Data Schedule
(b) Reports on Form 8-K - None
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized:
INNOVA PURE WATER, INC.
Dated: May 11, 2000 By: /s/ Rose C. Smith
-------------------------------------
Rose C. Smith
President, Chief Executive Officer
Director
Dated: May 11, 2000 By: /s/ John E. Nohren, Jr.
------------- -------------------------------------
John E. Nohren, Jr.
Chairman of the Board of Directors
Chief Financial Officer
Dated: May 11, 2000 By: /s/ Robert Connell
------------- -------------------------------------
Robert Connell
Principal Accounting Officer
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<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> DEC-31-1999
<PERIOD-END> MAR-30-2000
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