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 October 2, 1999.
__ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to .
Commission File Number: 0-22408
PURUS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0234694
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
92 West Second Street, Morgan Hill, CA 95037
(Address of principal executive offices)(Zip code)
(408) 778-3465
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable
date.
Class Shares Outstanding as of
October 2, 1999
Common Stock 666,192
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PURUS, INC.
CONTENTS
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements 3
Balance Sheets as of October 2, 1999 and January 2, 1999 3
Statements of Operations for the Three Months and Nine Months
Ended October 2, 1999 and October 3, 1998 4
Statements of Cash Flows for the Nine Months Ended
October 2, 1999 and October 3, 1998 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8K 10
2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
CONDENSED BALANCE SHEETS
October 2, 1999 and January 2, 1999
October 2, January 2,
Assets 1999 1999
(unaudited)
Current assets:
Cash and cash equivalents $ 74,370 $ 303,268
Other current assets 184,364 158,995
Total current assets 258,734 462,263
Notes receivable and accrued interest 4,389,328 4,183,000
Other assets 13,993 13,993
$ 4,662,055 $ 4,659,256
Liabilities and Shareholders' Equity
Liabilities 876,470 914,515
Shareholders' equity:
Common stock: 5,000,000 shares authorized;
$.01 par value; 666,192 shares issued and
outstanding 6,662 6,662
Additional paid-in capital 45,126,395 45,126,395
Accumulated deficit (41,347,472) (41,388,316)
Total shareholders' equity 3,785,585 3,744,741
$ 4,662,055 $ 4,659,256
The accompanying notes are an integral
part of these financial statements.
3
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CONDENSED STATEMENTS OF OPERATIONS
for the three and nine months ended October 2, 1999 and
October 3, 1998 (unaudited)
Three Months Ended Nine Months Ended
October 2 October 3 October 2 October 3
1999 1998 1999 1998
Income (expenses) of
continuing operations
General and Administrative $ (30,801) $ (22,768) $(154,908) $(196,393)
Interest Income 71,121 75,373 195,751 205,273
Income from
continuing operations 40,320 52,605 40,844 8,880
Income (loss) from
discontinued operations 0 133 0 34,891
Tax - - - -
Net income $ 40,320 $ 52,738 $ 40,844 $ 43,771
Net income per share from
continuing operations 0.06 0.08 0.06 0.01
Net income per share from
discontinued operations 0.00 0.00 0.00 0.05
Net income per share $ 0.06 $ 0.08 $ 0.06 $ 0.06
Weighted average common shares
outstanding 666,192 666,192 666,192 666,192
The accompanying notes are an integral
part of these financial statements.
4
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CONDENSED STATEMENTS OF CASH FLOWS
for the nine months ended October 2, 1999 and October 3, 1998
(unaudited)
October 2, October 3,
1999 1998
Cash flows from operating activities:
Net cash used in operating activities (228,898) (299,336)
Cash flows from investing activities:
Issuance of notes receivable -- (4,000,000)
Proceeds from sale/maturity of short-term investments -- 4,330,882
Purchases of property and equipment -- (3,897)
Net cash provided by investing activities -- 326,985
Net increase (decrease) in cash (228,898) 27,649
Cash and cash equivalents, beginning of period 303,268 172,881
Cash and cash equivalents, end of period $ 74,370 $ 200,530
The accompanying notes are an integral
part of these financial statements.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
Financial information for the three months and nine
months ended October 2, 1999 and October 3, 1998 is unaudited
but has been prepared on the same basis as the audited
financial statements and, in the opinion of management,
includes all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly operating results and
cash flows for those periods. This Quarterly Report on Form 10-
QSB should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended January 2,
1999. The results of operations for the period ended October
2, 1999 are not necessarily indicative of the results to be
expected for any subsequent quarter or for the entire year
ending January 1, 2000.
The Company uses a reporting calendar in which quarters
end on the Saturday closest to March 31, June 30, September 30
and December 31.
2. Net Income/(Loss) per Share
Net income/(loss) per share is computed using the
weighted average number of shares of common stock outstanding.
3. Commitments and Contingencies
In July 1995, Aron Parnes, a stockholder of the Company,
filed suit against the Company and five of its former
employees, officers, and directors in the United States
District Court for the Northern District of California. The
lawsuit alleges violations of the federal securities laws, and
purports to seek damages on behalf of a class of stockholders
who purchased the Company's common stock during the period
November 1993 through March 1995. In April 1996, the Company
filed a motion to dismiss the complaint. In March 1997, the
Court issued an order granting the defendants' motion to
dismiss the complaint and granting the plaintiff 45 days leave
to amend. In May 1997, the suit was re-filed reasserting the
claims previously made, and in June 1997, the Company filed a
new motion to dismiss the re-filed complaint. In 1999, the
Court denied the Company's motion. The Company and other
defendants have obtained discovery regarding the propriety of
plaintiff's named class representative through document and
interrogatory requests. The plaintiffs have begun to pursue
formal discovery, including requesting documents from the
Company and third parties. The Company intends to defend
the suit vigorously and cannot now predict the outcome of the
litigation.
In July 1999, James Harris, a stockholder and former
officer of the Company, filed suit against the Company in the
United States District Court for the Northern District of
California. The lawsuit alleges that the Company failed to
pay certain payroll related amounts to Mr. Harris at the time
of the termination of his employment by Purus. The
6
<PAGE>
Company denies the validity of the claims and intends to
vigorously defend itself in this matter.
The Company is not a party to any other pending legal
proceedings which it believes will materially affect its
financial condition or results of operations.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
The following information should be read in conjunction
with the unaudited interim financial statements and the notes
thereto included in Item 1 of this Quarterly Report on Form 10-
QSB and the Company's 1998 Annual Report on Form 10-KSB.
The Company has incurred a cumulative net loss of
approximately $41.3 million from inception to October 2, 1999.
The Company does not expect to report operating profits unless
and until such time as a new business, or technology, is
acquired and only then if such acquisition is successful.
There can be no assurance that the Company will achieve
profitability.
The Company has completed its risk assessment plan for
year 2000 compliance. Based on this assessment, the company
has determined that each system currently in use is fully
compliant.
Results of Continuing Operations
Three and Nine Month periods Ended October 2, 1999 and October
3, 1998
The Company had no revenue from continuing operations for
the three and nine month periods ended October 2, 1999 and
October 3, 1998.
General and administrative expenses from continuing
operations for the three and nine month periods ended October
2, 1999 and October 3, 1998 consisted of general corporate
administration, legal and professional expenses, accounting
and auditing costs, public company costs, directors and
officers insurance, and similar items. These expenses were
$30,801 and $22,768 for the three month periods ended October
2, 1999, and October 3, 1998, respectively; and $154,908 and
$196,393 for the nine month periods ended October 2, 1999, and
October 3, 1998, respectively. General and administrative
expenses in the nine month period ended October 3, 1998 were
greater than in the nine month period ended October 2, 1999
primarily due to the continuing program of expense reduction
in the Company and to higher legal and professional costs in
the earlier period.
The Company had no interest expense in the three and nine
month periods ending October 2, 1999 or October 3, 1998.
Interest income in the three and nine month periods
7
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ended October 2, 1999 and October 3, 1998, respectively,
resulted from accrual of interest under the loan to Casa Solaz
and interest earned on cash deposits. Accrued interest income
was $71,121 and $75,373 in the three month periods ended
October 2, 1999, and October 3, 1998, respectively; and
$195,751 and $205,273 for the nine month periods ended October
2, 1999, and October 3, 1998, respectively.
As a result of the foregoing factors, the Company
recorded a net profit from continuing operations in the amount
of $40,320 and $52,605 for the three-month periods ending
October 2, 1999 and October 3, 1998, respectively, and $40,844
and $8,880 for the nine month periods ended October 2, 1999
and October 3, 1998, respectively.
Results of Discontinued Operations
Three and Nine Month periods Ended October 2, 1999 and
October 3, 1998
Income from discontinued operations in 1998 consisted of
royalty payments and inventory purchases by Thermatrix, and
revenues from customer services provided by the Company on
PADRE systems not sold to Thermatrix. These operations were
discontinued in 1997.
Net Income/Net Loss from Continuing and Discontinued
Operations
As a result of the foregoing factors, the Company's net
income was $40,320 and $40,844 for the three and nine month
periods ending October 2, 1999, respectively, and $52,738 and
$43,771 for the three and nine month periods ending October 3,
1998, respectively. Net income per share was $0.06 for both
the three and nine month periods ended October 2, 1999,
respectively, and $0.08 and $0.06 for the three and nine month
periods ended October 3, 1998, respectively.
Liquidity and Capital Resources
At October 2, 1999, the Company had cash of
approximately $74,000 as compared to $303,000 at January 2,
1999. Net cash used in operating activities was $228,898 for
the nine months ended October 2, 1999 compares to $299,336
during the nine months ended October 3, 1998.
Management is uncertain as to whether the Company has
sufficient cash and working capital to meet the anticipated
needs of the Company's continuing operations through the next
12 months because of uncertainties related to pending legal
actions against the Company. The Company has no operating
revenues and is subject to contingent liabilities which could
result in the depletion of its capital, including, without
limitation, any
8
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damages awarded and/or costs and expenses incurred. Judgments
or settlements against the Company in connection with such
litigation could exceed the Company's insurance coverage and
require the Company to use its limited capital resources in
satisfaction thereof. In addition, the Company may require
outside advisors to assist management in seeking and
evaluating potential acquisitions, in consummating such
transactions and/or in managing the resulting enterprises. In
the event that the Company has not reserved sufficient cash
for costs and expenses relating to pending or threatened
litigation or the acquisition of a particular business,
product or technology, the Company may require additional
financing. There can be no assurance that such financing
would be available to the Company on acceptable terms or at
all. The Company does not presently have a line of credit or
other bank credit facility.
The primary asset of the Company is represented by notes
receivable from Casa Solaz, Inc. (see Note 6 to the Company's
1998 financial statements). The interest income recorded by
Purus to date has not been collected.
The note principal and all accrued interest is due December
31, 1999. It is currently uncertain if Casa Solaz will be
able to pay the amounts then due.
9
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PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Included only with the electronic filing of this report is
the Financial Data Schedule for the nine-month period ended
October 2, 1999 (Exhibit Ref. No. 27).
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Purus, Inc.
By: /s/Adrian Leuenberger, Chief Executive Officer
Date: November 15, 1999
10
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<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> ,0
<CURRENT-ASSETS> 258,734
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,662,055
<CURRENT-LIABILITIES> 168,594
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0
0
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<SALES> 0
<TOTAL-REVENUES> 195,751
<CGS> 0
<TOTAL-COSTS> 154,908
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,844
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