SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- -------------------------------------------
FORM 10-QSB
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997, or
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
COMMISSION FILE NUMBER 0-19622
WTC INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 38-2308668
(State or Other Jurisdiction (IRS Employer
of Incorporation) Identification No.)
14405 - 21ST AVENUE NORTH, MINNEAPOLIS, MINNESOTA 55447
(Address of Principal Executive Offices) (Zip Code)
(612) 473-1625
(Issuer's Telephone Number)
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 required 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 equity, as of the latest practicable date.
10,726,698 shares of Common Stock as of April 15, 1997
Transitional Small Business Disclosure Format (check one):
Yes ____; No __x__
WTC INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Unaudited Balance Sheets
March 31, 1997 and December 31, 1996 3
Condensed Consolidated Unaudited Statements of Operations
Three Months Ended March 31, 1997 and 1996 4
Condensed Consolidated Unaudited Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996 5
Notes to Condensed Consolidated Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WTC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1997 1996
- ------ ------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 103,142 $ 53,324
Accounts receivable, net of allowance for doubtful accounts
of $16,000 and $19,000, respectively 589,921 632,011
Inventories (Note 3) 800,273 651,895
Prepaid expenses 30,899 31,651
------------ ------------
TOTAL CURRENT ASSETS 1,524,235 1,368,881
PROPERTY AND EQUIPMENT 895,159 887,369
Less accumulated depreciation 543,733 499,382
------------ ------------
351,426 387,987
OTHER ASSETS
Restricted cash 49,584 86,823
Loan acquisition costs, net of accumulated amortization
of $41,020 and $36,739, respectively 37,105 41,386
Patents and trademarks, net of accumulated amortization
of $83,501 and $95,492, respectively 1,848 2,522
Other 13,613 13,613
------------ ------------
102,150 144,344
------------ ------------
$ 1,977,811 $ 1,901,212
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES
Notes payable and current maturities of long-term obligations $ 1,444,557 $ 945,716
Accounts payable 517,888 624,045
Accrued expenses - other 336,760 512,273
------------ ------------
TOTAL CURRENT LIABILITIES 2,299,205 2,082,034
LONG-TERM OBLIGATIONS, net of current maturities 1,462,579 1,463,941
STOCKHOLDERS' DEFICIT (Note 4)
Common stock 107,267 106,917
Additional paid-in capital 11,076,590 11,021,940
Receivable from officer on issuance of common stock (5,000)
Accumulated deficit (12,962,830) (12,773,620)
------------ ------------
(1,783,973) (1,644,763)
------------ ------------
$ 1,977,811 $ 1,901,212
============ ============
</TABLE>
See notes to consolidated condensed unaudited financial statements.
WTC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended March 31,
----------------------------
1997 1996
------------ ------------
NET SALES $ 1,057,299 $ 527,038
COST OF GOODS SOLD 793,080 509,848
------------ ------------
GROSS PROFIT 264,219 17,190
EXPENSES
Selling, general and administrative 346,618 654,755
Research and development 43,894 42,337
------------ ------------
390,512 697,092
------------ ------------
LOSS FROM OPERATIONS (126,293) (679,902)
OTHER EXPENSE, NET (62,917) (93,713)
------------ ------------
NET LOSS $ (189,210) $ (773,615)
============ ============
NET LOSS PER COMMON SHARE $ (0.02) $ (0.09)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 10,721,000 8,527,000
============ ============
See notes to consolidated condensed unaudited financial statements.
WTC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (189,210) $ (773,615)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 49,306 59,786
Provision for doubtful accounts 12,000
Changes in operating assets and liabilities:
Accounts receivable 42,090 29,113
Inventories (148,378) (105,508)
Prepaid expenses 752 (26,571)
Accounts payable (106,157) (317,985)
Accrued expenses - other (125,513) (12,726)
----------- -----------
Net cash used in operating activities (477,110) (1,135,506)
----------- -----------
INVESTING ACTIVITIES
Restricted cash 37,239 36,651
Purchases of property and equipment (7,790) (87,617)
----------- -----------
Net cash provided by (used) in investing activities 29,449 (50,966)
----------- -----------
FINANCING ACTIVITIES
Proceeds from loans by director/shareholder 400,000
Proceeds from sale of Common Stock to dirctor/shareholder 900,000
Proceeds from loans from affliated company 500,000
Payments on long-term obligations (2,521) (102,542)
----------- -----------
Net cash provided by financing activities 497,479 1,197,458
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 49,818 10,986
CASH AND CASH EQUIVALENTS:
Beginning of period 53,324 33,489
----------- -----------
End of period $ 103,142 $ 44,475
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 53,823 $ 116,353
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Common stock issued on conversion of accrued expenses $ 50,000
===========
Receivable from officer for common stock issued
from exercise of non-cash stock option $ 5,000
===========
Common stock issued on conversion of indebtedness $ 1,200,000
===========
Common stock issued in exchange for promissory note $ 900,000
===========
See notes to consolidated condensed unaudited financial statements.
</TABLE>
WTC INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED UNAUDITED
FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1. DESCRIPTION OF BUSINESS AND MANAGEMENT'S PLANS REGARDING OPERATING
LOSSES AND LIQUIDITY
BUSINESS - WTC Industries, Inc. and its wholly-owned subsidiaries (collectively
the "Company" or "WTC") develop, manufacture, and market water filtration and
purification products for commercial and personal use. Filtration products
remove or reduce many undesirable contaminants found in water including lead,
chlorine, bad taste and odor. Purification products have the added benefit of
devitalizing or removing viruses, bacteria and parasites.
Many of the Company's purification products contain PentaPure(R) iodinated resin
("PentaPure(R)") and other patented and proprietary technology and
configurations. The PentaPure(R) technology was originally developed by Kansas
State University and has been licensed to the Company by the Kansas State
University Research Foundation ("KSURF") on an exclusive basis. PentaPure(R) and
other state of the art technologies, when applied in the Company's unique
purification products, devitalize bacteria and viruses, remove protozoa and
reduce other targeted contaminants in drinking water. Such systems are capable
of making virtually any source water microbiologically fit to drink and better
tasting. The Company's products fall into the following categories: portable
systems, systems and cartridges for use by original equipment manufacturers
(OEMs), point-of-use systems, point-of-entry systems, mobile purification
systems and commercial/industrial systems and components. The Company's products
are suitable for a broad range of applications including: home, personal travel,
recreation, military, emergency use, commercial and industrial.
GOING CONCERN - The accompanying financial statements have been prepared on a
going-concern basis which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of business.
For the three month period ended March 31, 1997, the Company incurred a net loss
of $189,210, and cash used in operating activities was $477,110. In addition, as
of March 31, 1997, the Company has a deficiency in working capital of $774,970
and an accumulated deficit of $12,962,830.
These factors, among others, indicate that the Company may not be able to
continue as a going concern for a reasonable period of time. The Company's
working capital requirements for first quarter 1997 were met principally through
the issuance of notes payable of $500,000 to Tapemark Company, a company
affiliated with the Chairman of the Board.
Management's plans to continue as a going concern include the following efforts
to generate the necessary cash flow to meet the Company's working capital needs
until sufficient operating cash flows can be generated to support the Company's
cost structure: a) raising additional capital through private or public
placements of debt or equity securities or through other sources, b) increasing
sales of the new PentaPure(R) InLine point-of-use filtration and purification
systems to niche market OEM customers and international distributors, c)
developing new and expanding existing strategic relationships for marketing
representation and distribution through direct sales organizations for both the
domestic and international markets, and d) continuing to evaluate and manage
costs and expenses and utilize resources effectively to increase gross profit
margins and reduce selling and general and administrative expenses. There is no
assurance that these plans can be successfully accomplished.
The consolidated financial statements do not include any adjustments related to
the recoverability and classification of recorded asset amounts or the amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The accompanying condensed consolidated financial
statements of WTC Industries, Inc. and Subsidiaries have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission, and reflect all adjustments, consisting of normal
recurring accruals, which are, in the opinion of management, necessary for a
fair presentation of financial position, results of operations, and cash flows
for the periods shown. These statements are condensed and do not include all
information required by generally accepted accounting principles. It is
recommended that these financial statements be read in conjunction with the
Company's audited financial statements and notes thereto for the year ended
December 31, 1996, which are included in the Company's Annual Report on Form
10-KSB.
INCOME PER SHARE - In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Standards No. 128, "Earnings per Share". This
Statement specifies the computation, presentation, and disclosure requirements
for earnings per share. This Statement is effective for financial statements
issued for periods after December 15, 1997, including interim periods. Adoption
by the Company in 1997 is not expected to have a material impact on the earnings
per share computation.
3. INVENTORIES
INVENTORIES CONSIST OF THE FOLLOWING: March 31, 1997 December 31, 1996
- ------------------------------------- -------------- -----------------
Raw Materials $ 616,852 $ 459,724
Work-in-process 50,554 33,408
Finished Goods 132,867 158,763
----------- -----------
$ 800,273 $ 651,895
=========== ===========
4. COMMON AND PREFERRED STOCK
COMMON STOCK - At March 31, 1997 and December 31, 1996, the Company had
20,000,000 shares of $.01 par value common stock authorized, and 10,726,698 and
10,691,698 shares issued and outstanding, respectively.
PREFERRED STOCK - At March 31, 1997 and December 31, 1996, there were 2,000,000
shares of the Company's 9% convertible, cumulative, nonvoting, $1 par value
preferred stock authorized and 0 shares issued and outstanding.
5. LICENSE AGREEMENT
The Company manufactures and markets certain of its products pursuant to a
license agreement, amended on January 1, 1990 with KSURF. The Company pays a
royalty on annual sales of certain products equal to 3% of the first $1,000,000
of net sales and 2% of the excess, due quarterly, subject to a minimum annual
royalty of $75,000 per year. The license agreement will expire on or before the
final expiration date of the last patent or patent application contained in the
patent rights. The Company is also obligated to pay KSURF 40% of any royalties
or payments received for sublicensing the patent rights contained in the license
agreement. Royalty expenses were $18,750 for the three month periods ended March
31, 1997 and 1996.
6. ARRANGEMENTS WITH SUPPLIERS
BOWMAN INDUSTRIES, INC.
Bowman Industries, Inc. ("Bowman") provides production and assembly services
exclusively to the Company. The Company pays Bowman an amount equal to all costs
and operating expenses incurred by Bowman. The Company treats its arrangement
with Bowman as an independent contractor relationship. During the three month
period ended March 31, 1997, the Company paid Bowman a total of $70,000 under
this arrangement.
HYBRID TECHNOLOGIES CORP.
The Company utilizes the services of Hybrid Technologies Corp. ("Hybrid"), an
independent contractor, to manufacture the PentaPure(R) resins. Certain
techniques used to manufacture the PentaPure(R) resins were developed by and are
the property of Hybrid. Under the terms of an agreement, the Company has agreed
that if it elects to buy iodinated resin from an outside vendor, it will buy
iodinated resin only from Hybrid. Hybrid has agreed to sell the PentaPure(R)
resin only to the Company and DentalPure Corp. DentalPure Corp. is developing
water purification products for dental uses and does not compete with the
Company in any of its product applications.
TAPEMARK COMPANY
Tapemark Company ("Tapemark"), of West St. Paul, Minnesota, provides assembly
and related support services to the Company for the Amana(R) and PureIt(R)
InLine point-of-use systems. Mr. Robert C. Klas, Sr., the Company's CEO,
Chairman and largest stockholder, is the CEO and Chairman of the Board for
Tapemark. Tapemark also provides auxiliary support services for these product
lines in the areas of packaging, function-testing of the systems, inventory
control, quality support, receiving, warehouse and shipping. During the three
month period ended March 31, 1997 the Company paid Tapemark a total of $50,000
for services provided.
POROUS MEDIA CORPORATION
On February 4, 1997, the Company entered into a five year requirements contract
with Porous Media under which the Company will purchase all of its cyst filter
requirements for the PentaPure(R) Sport Purification System and Spring(R)
Filtration System beginning April 1, 1997. The Company agreed to purchase a
minimum of 100,000 filters per year throughout the term (each such 12-month
period is a year). The Company's performance under the contract is personally
guaranteed, up to $100,000, by Robert Klas, Sr.
7. BANK LINE OF CREDIT
The Company maintains a $750,000 bank line of credit which is not secured by the
Company, but has been guaranteed by the Chairman of the Board. Unless it is
extended or renewed, the line of credit will expire on May 31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
This Form 10-QSB contains forward looking statements within the meaning of
Section 21E of the Securities and Exchange Commission Act of 1934. Actual
results could differ significantly from those projected in the forward looking
statements as a result, in part, from changes in conditions and factors
encountered by the Company.
GOING CONCERN. The accompanying financial statements have been prepared on a
going-concern basis which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of business.
For the three month period ended March 31, 1997, the Company incurred a net loss
of $189,210, and cash used in operating activities was $477,110. In addition, as
of March 31, 1997, the Company has a deficiency in working capital of $774,970
and an accumulated deficit of $12,962,830.
These factors, among others, indicate that the Company may not be able to
continue as a going concern for a reasonable period of time. The Company's
working capital requirements for first quarter 1997 were met principally through
the issuance of notes payable of $500,000 to Tapemark Company, a company
affiliated with the Chairman of the Board.
Management's plans to continue as a going concern include the following efforts
to generate the necessary cash flow to meet the Company's working capital needs
until sufficient operating cash flows can be generated to support the Company's
cost structure: a) raising additional capital through private or public
placements of debt or equity securities or through other sources, b) increasing
sales of the new PentaPure(R) InLine point-of-use filtration and purification
systems to niche market OEM customers and international distributors, c)
developing new and expanding existing strategic relationships for marketing
representation and distribution through direct sales organizations for both the
domestic and international markets, and d) continuing to evaluate and manage
costs and expenses and utilize resources effectively to increase gross profit
margins and reduce selling and general and administrative expenses. There is no
assurance that these plans can be successfully accomplished.
The consolidated financial statements do not include any adjustments related to
the recoverability and classification of recorded asset amounts or the amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
NET SALES. The Company had net sales of $1,057,299 for the three month period
ended March 31, 1997. This was an increase of 100.6% from sales of $527,038 for
the same period in 1996.
The increase in international sales is primarily due to new international
marketing and distribution relationships that were developed in the last quarter
of 1996 which have begun to generate sales activities in their respective
countries. In addition, the Company's relationship with Ekonet, an existing
international distributor, continues to expand in Poland and Russia.
International sales, by their nature, tend to consist of a limited number of
high-value shipments. While the Company believes that the positive trend in
international sales will continue, the Company's dependence on a limited number
of high-value transactions and the inability to control the timing of some of
those transactions, as well as various other factors, will, at the current sales
levels, create the possibility, if not the probability, that sales could
fluctuate significantly from quarter to quarter.
To date, the Company has required all payments from international customers to
be in U.S. dollars, therefore, the Company has not been subject to currency
exchange rate fluctuations directly. To the extent that a foreign customer's
currency weakens against the U.S. dollar, the Company's products will become
more expensive in the foreign market, and the resulting relative price increase
would be expected to affect the demand for the Company's products. To date,
management believes that foreign currency exchange rate fluctuations have not
had a material negative effect on the demand for the Company's products in
foreign markets.
The Company's domestic sales increased compared to the same period last year
because of shipments to Amana(R) Refrigeration and shipments of the PentaPure(R)
Sport Bottle to new retail and catalog customers. Domestic sales accounted for
31% of total net sales for first quarter. In the domestic market, the Company is
focusing on OEM and direct sales organizations customers that would not require
large advertising and sales promotion expenditures.
During 1997 and 1996, the average selling prices of the Company's products have
generally remained unchanged, therefore, the increase in sales reflects
increases in the number of units sold.
COST OF GOODS SOLD. For the three month periods ended March 31, 1997 and 1996,
the cost of goods sold was $793,080 and $509,848, representing 75.0% and 96.7%
of net sales, respectively. The reduction in the cost of goods as a percentage
of sales was due in part to the Company hiring a new Director of Manufacturing
in January 1997, which allowed the Company to improve the efficiency of its
manufacturing processes and quality assurance programs. The Company is currently
evaluating the possibility of automating some of its assembly operations in
anticipation of increased sales volumes. Another significant factor in the
reduction of cost of goods sold as a percentage of sales was the increase in
sales, which allowed greater absorption of production overhead costs. The
Company has and will continue to investigate opportunities to reduce both fixed
and variable costs associated with production and inventory procurement.
GROSS PROFIT. For the three month periods ended March 31, 1997 and 1996, the
Company recognized a gross profit of $264,219 and $17,190, respectively,
representing 25.0% and 3.3%, respectively, of net sales. The increase in gross
profit was due primarily to the increase in net sales and improvements in
manufacturing efficiency discussed above. The Company is evaluating whether it
can further improve its gross profit margin through enhanced pricing strategies,
improved procurement management and revised sales representatives commission
structures.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the three month periods ended
March 31, 1997 and 1996, selling, general and administrative expenses were
$346,618 and $654,755, representing 32.8% and 124.2% of net sales, respectively.
SALES AND MARKETING EXPENSES - For the three month periods ended March 31, 1997
and 1996, sales and marketing expenses were $203,776 and $346,906, representing
19.3 % and 65.8% of net sales, respectively. During the first quarter 1997, the
Company has reduced its sales and marketing expenses by $143,000 primarily due
to lower personnel expenses and reduced promotional expenses. During 1996, in
connection with the introduction of the Spring(R), PentaPure(R) Sport Bottle and
PureIt(R) product lines, the Company made significant expenditures for sales
brochures, marketing materials, packaging, trade shows, promotion and selling
expenses.
GENERAL AND ADMINISTRATIVE EXPENSES - For the three month periods ended March
31, 1997 and 1996, general and administrative expenses were $142,842 and
$307,849, representing 13.5% and 58.4% of total net sales, respectively. The
reduction in general and administrative expenses was due primarily to reductions
in professional fees, outside services and payroll related expenses. During
first quarter 1996, the Company incurred large professional fees associated with
various litigation matters and the Company's unsuccessful efforts to raise
capital from new investors.
RESEARCH AND DEVELOPMENT EXPENSES. For the three month periods ended March 31,
1997 and 1996, research and development expenses were $43,894 and $42,337,
respectively. Such expenses, by their nature, tend to fluctuate in amount and as
a percentage of sales. The Company's current research and development focus is
to complete filtration and purification cartridge configurations for the new
PureIt(R) InLine product line.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had a working capital deficit (total current
liabilities in excess of total current assets) of $774,970 compared with a
working capital deficit of $713,153 as of December 31, 1996. During the three
month period ended March 31, 1997, the Company used short term loans from an
affiliated company as a source of working capital to fund its operations.
For the three month period ended March 31, 1997, cash increased $49,818
primarily due to $497,479 from financing activities essentially offset by cash
used in operations of $477,110. Significant cash uses by operations included a
decrease in accounts payable of $106,157, a decrease in accrued expenses of
$125,513 and an increase in inventory of $148,378, partially offset by a
decrease in accounts receivable of $42,090. Net cash provided by investing
activities consisted of applications of restricted cash of $37,239 less
purchases of property and equipment of $7,790. Net cash provided by financing
activities was from issuance of notes payable of $500,000, partially offset by
payments on long-term debt of $2,521.
During the same three month period in 1996, cash increased $10,986 primarily due
to $1,197,458 from financing activities essentially offset by cash used in
operations of $1,135,506. Significant cash used by operations included a
decrease in accounts payable of $317,985 and an increase in inventory of
$105,508, partially offset by a decrease in accounts receivable of $29,113. Net
cash used in investing activities consisted of purchases of property and
equipment of $87,617 less applications of restricted cash of $36,651. Net cash
provided by financing activities consisted primarily of $1,300,00 net proceeds
from cash advances and the sale of common stock to the Chairman of the Board
offset by payments on long-term debt of $102,542.
The Company estimates that it will have working capital needs of approximately
$1-2 million during 1997 to fund its operations and continue market introduction
of the PentaPure(R) Sport Bottle and the PureIt(R) InLine product line. The
Company also anticipates that it will have to fund growth in inventories and
accounts receivable. The Company does not anticipate that it will have
significant capital expenditures in 1997.
The Company maintains a $750,000 bank line of credit which is unsecured by the
Company, but has been guaranteed by the Chairman of the Board. Unless it is
extended or renewed, the line of credit will expire on May 31, 1997. If the line
of credit expires, and the Company is required to pay off the $750,000 balance,
the Company's liquidity will be adversely affected.
The Company's plan of operations over the next 12 months is to increase sales
and further develop its domestic and international markets. In the U.S. market,
the Company's efforts will be to expand its OEM customer base and its sales of
the PureIt(R) InLine point-of-use systems and increase sales of the PentaPure(R)
Sport Purification Bottle to niche markets such as outdoor recreation, military,
and emergency relief. In international markets, the Company will continue to
develop new marketing and distribution channels and will attempt to increase
sales of all products through existing channels.
The Company is also evaluating its available options to raise capital. These
options include, but are not limited to, private placements of debt or equity
securities to accredited investors, registered offerings of the Company's common
stock and strategic partnership or joint venture arrangements. There is no
assurance that the Company will be able to obtain additional financing, or that
the terms of any such financing will be acceptable to the Company. If the
Company's efforts to raise additional capital are not successful, the Company's
operations may be negatively impacted.
EFFECTS OF INFLATION
The Company believes that, during the periods discussed above, inflation has not
had a material impact on the Company's business.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are filed as part of the report:
(a) EXHIBITS. The following exhibits are being filed as part of
this Form 10-QSB.
Method
Exhibit No. Title of Filing
----------- ----- ---------
27 Financial Data Schedule Filed Herewith
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the first quarter of
1997.
SIGNATURES
In accordance with the Exchange Act, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: April 24, 1997 WTC Industries, Inc.
By: /s/ Robert C. Klas, Sr.
Robert C. Klas, Sr.
Chief Executive Officer
By: /s/ Gregory P. Jensen
Gregory P. Jensen
Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
WTC INDUSTRIES, INC.
14405 21ST AVENUE NORTH
MINNEAPOLIS, MINNESOTA 55447
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WTC
INDUSTRIES, INC. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF
MARCH 31, 1997 AND 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 103,142
<SECURITIES> 0
<RECEIVABLES> 589,921
<ALLOWANCES> 16,000
<INVENTORY> 800,273
<CURRENT-ASSETS> 1,524,235
<PP&E> 895,159
<DEPRECIATION> 543,733
<TOTAL-ASSETS> 1,977,811
<CURRENT-LIABILITIES> 2,299,205
<BONDS> 1,462,579
0
0
<COMMON> 107,267
<OTHER-SE> (1,891,240)
<TOTAL-LIABILITY-AND-EQUITY> 1,977,811
<SALES> 1,057,299
<TOTAL-REVENUES> 1,057,299
<CGS> 793,080
<TOTAL-COSTS> 390,512
<OTHER-EXPENSES> 62,917
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,937
<INCOME-PRETAX> (189,210)
<INCOME-TAX> 0
<INCOME-CONTINUING> (189,210)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (189,210)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
