<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 quarterly period ended December 31, 1999
[ ] 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 December 31, 1999.
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
Six Months Ended December 31, 1999
and 1998 (Unaudited)
CONTENTS
Financial Statements:
<TABLE>
<CAPTION>
<S> <C>
Balance Sheet for December 31, 1999 (unaudited)...............................................................1
Statements of Operations for the Three and Six Months
Ended December 31, 1999 and 1998 (unaudited)..............................................................2
Statement of Changes in Stockholders' Equity for the
Six Months Ended December 31, 1999 (unaudited)............................................................3
Statements of Cash Flows for the Six Months Ended
December 31, 1999 and 1998 (unaudited)....................................................................4
Notes to Financial Statements...............................................................................5-6
</TABLE>
<PAGE> 4
Innova Pure Water, Inc.
Balance Sheet
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 429,800
Accounts receivable, trade, net of allowance for
doubtful accounts of $8,800 17,100
Other receivables, including related party of $121,300 164,400
Inventories 91,500
Other current assets 16,000
-----------
Total current assets 718,800
Property and equipment, net 130,700
Other assets 230,800
-----------
$ 1,080,300
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 27,400
Accrued expenses 5,900
Current portion of obligation under capital lease 4,000
Current portion of long-term debt 6,800
-----------
Total current liabilities 44,100
-----------
Long-term liabilities:
Obligation under capital lease, net of current portion 4,400
Long-term debt, net of current portion 9,900
-----------
Total long-term liabilities 14,300
-----------
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 8,040,200
Accumulated deficit (7,012,900)
-----------
1,028,300
Treasury stock, at cost, 35,000 shares (6,400)
-----------
Total shareholders' equity 1,021,900
-----------
$ 1,080,300
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE> 5
Innova Pure Water, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------ -------------------------------
1999 1998 1999 1998
------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Net sales, related parties $ 96,200 $ 329,000
Net sales, other $ 46,200 193,500 $ 135,100 1,465,500
------------------------------ -------------------------------
46,200 289,700 135,100 1,794,500
Cost of sales 41,600 241,700 109,600 995,200
------------------------------ -------------------------------
Gross profit 4,600 48,000 25,500 799,300
------------------------------ -------------------------------
Operating expenses:
Selling expenses 13,800 15,700 37,300 74,300
General and administrative
expenses 264,500 185,800 533,000 617,600
Research and product
development 36,000 38,000 86,800 69,600
------------------------------ -------------------------------
314,300 239,500 657,100 761,500
------------------------------ -------------------------------
Net (loss) income from operations (309,700) (191,500) (631,600) 37,800
------------------------------ -------------------------------
Other (income) expenses:
Interest, net (5,200) (12,700) (10,200) (21,800)
Gain on disposal of assets (7,600) (7,600)
Other (1,300) (25,000) (7,400) (25,000)
------------------------------ -------------------------------
(6,500) (45,300) (17,600) (54,400)
------------------------------ -------------------------------
Net (loss) income $ (303,200) $ (146,200) $ (614,000) $ 92,200
============================== ===============================
(Loss) earnings per common
share $(.03) $(.01) $(.06) $.01
============================== ===============================
(Loss) earnings per common
share, assuming dilution $(.03) $(.01) $(.06) $.01
============================== ===============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 6
Innova Pure Water, Inc.
Statement of Changes in Stockholders' Equity
Six Months Ended December 31, 1999
(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
issued 20,800
Net loss (614,000)
-------------------------------------------------------------------------
Balance, December 31, 1999 10,078,401 $1,000 $ 8,040,200 $ (7,012,900) $ (6,400)
=========================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 7
Innova Pure Water, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
----------------------------
1999 1998
----------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (614,000) $ 92,200
----------------------------
Adjustments to reconcile net (loss) income to net cash and
cash equivalents (used) provided by operating activities:
Depreciation and amortization 80,900 49,100
Compensation stock and stock options issued for services 20,800 15,300
(Increase) decrease in:
Accounts and other receivables 369,200 754,700
Inventories 33,400 58,600
Other assets (2,300)
Decrease in accounts payable and accrued expenses (60,200) (192,800)
----------------------------
Total adjustments 444,100 682,600
----------------------------
Net cash and cash equivalents (used) provided by operating activities (169,900) 774,800
----------------------------
INVESTING ACTIVITIES
Acquisition of equipment (10,900) (40,600)
Acquisition of patents (33,600) (44,200)
Advances to related parties (37,100) (48,300)
----------------------------
Net cash and cash equivalents used by investing activities (81,600) (133,100)
----------------------------
FINANCING ACTIVITIES
Payments on long-term debt (3,300) (3,000)
Payments on capital lease obligations (1,700) (3,000)
Proceeds from issuance of common stock 1,300
Acquisition of treasury stock (6,400) (3,400)
----------------------------
Net cash and cash equivalents used by financing activities (11,400) (8,100)
----------------------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (262,900) 633,600
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 692,700 488,200
----------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 429,800 $ 1,121,800
============================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
AND NONCASH FINANCING ACTIVITIES:
Cash paid during the year for interest $ 1,200 $ 1,800
============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 8
Innova Pure Water, Inc.
Note to Financial Statements
Six Months Ended December 31, 1999 and 1998 (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 six and three-month periods ended December 31, 1999 and
1998, (b) the financial position at December 31, 1999, and (c) cash flows for
the six-month periods ended December 31, 1999 and 1998, 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 six and three-month periods ended December 31, 1999 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 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.
5
<PAGE> 9
Innova Pure Water, Inc.
Note to Financial Statements
Six Months Ended December 31, 1999 and 1998 (Unaudited)
3. STOCKHOLDERS' EQUITY
During the six months ended December 31, 1999, the Company acquired 35,000
shares of treasury stock for a total cost of $6,400. Also during the six months
ended December 31, 1999, the Company recognized $20,800 of compensation expense
for stock options issued in a prior period. No new stock options were granted
in the current period.
6
<PAGE> 10
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.
INCOME STATEMENT DATA
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
------------------------------ -------------------------------
1999 1998 1999 1998
------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Total revenue $ 46,200 $ 289,700 $ 135,100 $ 1,794,500
------------------------------ -------------------------------
Net (loss) income $ (303,200) $ (146,200) $ (614,000) $ 92,200
============================== ===============================
(Loss) earnings per
common share -
basic $(.03) $(.01) $(.06) $.01
============================== ===============================
Shares used in per
share computation 10,055,575 10,074,351 10,064,270 10,072,133
============================== ===============================
(Loss) earnings per
common share -
assuming dilution $(.03) $(.01) $(.06) $.01
============================== ===============================
Shares used in diluted
computation 10,055,575 10,074,351 10,064,270 10,169,488
============================== ===============================
</TABLE>
<PAGE> 11
BALANCE SHEET DATA
<TABLE>
<CAPTION>
December 31,
1999
-------------
<S> <C>
Total assets $ 1,080,300
=============
Working capital $ 674,700
=============
Long-term debt $ 14,300
=============
Stockholders' equity $ 1,021,900
=============
</TABLE>
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.
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> 12
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 December 31, 1999 totaled $46,200, a
decrease of 84 percent from the $289,700 of net sales for the comparable period
in 1998. Net sales for the six-month period ended December 31, 1999 totaled
$135,100, a 92 percent decrease over the $1,794,500 of net sales for the
comparable period in 1998. This decrease in sales for both the three and six
month periods ended December 31, 1999 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 December 31, 1999, the cost of sales decreased to
$41,600 from the $241,700 of costs for the three months ended December 31,
1998. This decrease is mainly due to the decrease in sales.
<PAGE> 13
Gross profit margin decreased 41 percent for the three months ended December
31, 1999, to a gross profit margin of 10 percent from an overall gross profit
margin of 17 percent for the three months ended December 31, 1998. This is
principally attributable to the lower sales volume that had to absorb the fixed
costs of manufacturing.
For the six months ended December 31, 1999, the costs of sales decreased to
$109,600 from the $995,200 of costs for the six months ended December 31, 1998.
This decrease is mainly due to the decrease in sales.
Operating Expense
Operating expenses for the three months ended December 31, 1999 were $314,300 as
compared to $239,500 for the similar period last year. This 31 percent increase
of operating expenses is principally attributable to the allocation of overhead
expenses from the manufacturing process to general administrative due to the
decrease in the level of manufacturing activity to its production capacity,
which is due to the decrease in sales.
Operating expenses for the six months ended December 31, 1999 were $657,100, or
486 percent of net sales. For the comparable period in 1998, operating costs
amounted to $761,500, or 42 percent of net sales. The 444 percent increase is
due to the decrease in sales.
Other Income
For the three months ended December 31, 1999, net interest income amounted to
$5,200 as compared to net interest income of $12,700 for the three months ended
December 31, 1998. This decrease is due to the decrease in cash invested in
interest bearing securities or accounts with a major national bank.
For the six months ended December 31, 1999, net interest income amounted to
$10,200, as compared to net interest income of $21,800 for the six months ended
December 31, 1998. Again, this decrease is attributable to the decrease in
cash.
Other income for the three and six months ended December 31, 1999 of $1,300 and
$7,400, respectively, was due to a distribution from a trust fund administered
by a law firm that represents the Company. Other income of $25,000 for the
three and six months ended December 31, 1998 was due to a trademark
infringement settlement.
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 December 31, 1999 amounted to $303,200 as
compared to a net loss of $146,200 for the three months ended December 31,
1998. This increase in the net loss is principally attributable to the
reduction in sales as indicated above.
<PAGE> 14
Net loss for the six months ended December 31, 1999 amounted to $614,000, as
compared to net income of $92,200 for the comparable period in 1998. The
decrease in income is primarily a result of the reduction in sales.
Earnings Per Share
For the three months ended December 31, 1999, basic and diluted loss per share
amounted to $(.03). For the comparable period in 1998, basic and diluted loss
per share amounted to $(.01). The reduction in loss per share is due principally
to a decrease in income during the three months ended December 31, 1999.
For the six months ended December 31, 1999, basic and diluted loss per share
amounted to $(.06). For the comparable period in 1998, basic and diluted
earnings per share amounted to $.01. This reduction is due to a decrease in
income during the six months ended December 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
For the six months ended December 31, 1999, net cash used by operating
activities amounted to $169,900, a decrease from the net cash provided by
operating activities of $774,800 for the comparable period in 1998. The
increase 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, patent
acquisitions, and net changes in related party advances.
Net cash used by investing activities for the six months ended December 31,
1999 was $81,600, as compared to net cash used by investing activities of
$133,100 for the comparable period in 1998. The decrease in cash expended for
investing activities is due primarily to a decrease in purchases of new
equipment and expenditures for patents.
Financing Activities
The Company's financing activities include payments on borrowings and capital
leases and the acquisition of treasury stock.
Net cash of $11,400 was used by financing activities for the six months ended
December 31, 1999, as compared to net cash used by financing activities of
$8,100 for the six months ended December 31, 1998. The slight increase in cash
used for financing activities results from the acquisition of treasury stock.
<PAGE> 15
CAPITAL EXPENDITURES
At December 31, 1999, 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.
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.
ITEM 2. CHANGES IN SECURITIES
During the six-month period ended December 31, 1999, 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 six-month period ended December 31, 1999, the Company was not in
default on any of its indebtedness.
<PAGE> 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the six-month period ended December 31, 1999, the Company did not submit
any matters to a vote of its security holders.
ITEM 5. OTHER MATTERS
The Company does not have any material information to report with respect to
the six-month period ended December 31, 1999.
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> 17
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: February 11, 2000 By: /s/ Rose C. Smith
--------------------- -------------------------------------
Rose C. Smith
President, Chief Executive Officer
Director
Dated: February 11, 2000 By: /s/ John E. Nohren, Jr.
--------------------- -------------------------------------
John E. Nohren, Jr.
Chairman of the Board of Directors
Chief Financial Officer
Dated: February 11, 2000 By: /s/ Robert Connell
--------------------- -------------------------------------
Robert Connell
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 429,800
<SECURITIES> 0
<RECEIVABLES> 181,500
<ALLOWANCES> (8,800)
<INVENTORY> 91,500
<CURRENT-ASSETS> 718,800
<PP&E> 656,700
<DEPRECIATION> (526,000)
<TOTAL-ASSETS> 1,080,300
<CURRENT-LIABILITIES> 44,100
<BONDS> 16,700
0
0
<COMMON> 1,000
<OTHER-SE> 1,020,900
<TOTAL-LIABILITY-AND-EQUITY> 1,080,300
<SALES> 135,100
<TOTAL-REVENUES> 135,100
<CGS> 109,600
<TOTAL-COSTS> 109,600
<OTHER-EXPENSES> 657,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (10,200)
<INCOME-PRETAX> (614,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (614,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (614,000)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
