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 JUNE 30, 1997
-------------
OR
[ ] Transition report pursuant to section 13 or 15 (d)
of the Securities Exchange Act of 1934
COMMISSION FILE NUMBER 0-23402
WATERPUR INTERNATIONAL INC.
(Exact name of registrant as specified in Charter)
DELAWARE
(State or other jurisdiction of incorporation)
11-2863244
(IRS Employer Identification No.)
1335 GREG STREET, UNIT #104
SPARKS, NEVADA 89431
(702) 331-5524
(Address and Telephone Number of Principal Executive Offices)
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15 (d) of the 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. Yes [ X ] No [ ].
As of August 11, 1997, 18,135,466 shares of the issuer's common stock were
outstanding.
This report contains 12 pages. There are no exhibits.
<PAGE>
WATERPUR INTERNATIONAL INC.
FORM 10-QSB
INDEX
PART I. FINANCIAL INFORMATION Page No.
--------
Item 1 - Financial Statements
Condensed Consolidated Balance Sheet - June 30, 1997 3
Condensed Consolidated Statements of Operations - Three Months
and Nine Months ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows - Nine Months
ended June 30,1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis or Plan of Operation 8
PART II. Other Information
Item 4 - Submission of Matters to a Vote of Security Holders 11
Item 6 - Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
ASSETS
------
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 66,397
Accounts receivable, net 528,841
Inventories 1,409,443
Prepaid expenses and other assets 90,016
----------
Total Current Assets 2,094,697
----------
INVESTMENT IN AFFILIATE 1,137,416
EQUIPMENT AND IMPROVEMENTS, NET 752,594
OTHER ASSETS 40,850
----------
TOTAL ASSETS $4,025,557
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 778,413
----------
DUE TO RELATED PARTIES, NET 3,901,005
----------
STOCKHOLDERS' DEFICIT:
5% Cumulative convertible preferred stock,
$.00001 par value; 10,000,000 shares authorized;
0 shares issued and outstanding -
Common stock, $.005 par value;
25,000,000 shares authorized; 18,135,466
shares issued and outstanding 90,677
Additional paid-in capital 18,012,036
Accumulated deficit ( 18,251,300)
Foreign currency translation adjustment 1,171
Unrealized loss on available for sale
securities ( 506,445)
------------
Total Stockholders' Deficit ( 653,861)
------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 4,025,557
============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE THREE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1996 1997 1996
------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 1,006,022 $ 692,782 $ 534,788 $ 138,503
COST OF GOODS SOLD 776,388 471,091 463,361 61,813
------------------------------------------------
GROSS PROFIT 229,634 221,691 71,427 76,690
------------------------------------------------
COSTS AND EXPENSES:
Selling, general and
administrative expense 1,910,143 2,552,912 665,289 962,545
Sales Returns &
Allowances, net 406,674 - 332,826 -
Depreciation and amortization 106,568 60,498 38,524 35,344
Research and development 302,888 179,578 79,754 43,875
------------------------------------------------
2,726,273 2,792,988 1,106,393 1,041,764
------------------------------------------------
LOSS FROM OPERATIONS (2,496,639)(2,571,297) (1,034,966) ( 965,074)
------------------------------------------------
INTEREST AND OTHER
INCOME (EXPENSE) (110,968) 113,241 ( 60,068) 35,906
------------------------------------------------
NET LOSS $(2,607,607)$(2,458,056) $(1,095,034) $(929,168)
==================================================
- ------------------------------------------------------------------------------
LOSS PER COMMON SHARE:
Net loss $(2,607,607)$(2,458,056) $(1,095,034) $(929,168)
Less: undeclared dividends
on cumulative
preferred stock - (150,000) - (50,000)
Net loss attributable to
common shares $(2,607,607)$(2,608,056) $(1,095,034) $(979,168)
==================================================
NET LOSS PER COMMON SHARE $ (.14) $ (.21) $ (.06) $ (.08)
=================================================
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 18,131,295 12,444,766 18,135,466 12,444,766
=================================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ ( 1,883,418) $ ( 3,475,378)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES ( 112,916) ( 918,226)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES 1,985,178 4,375,000
-------------- --------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ( 11,156) ( 18,604)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 77,553 459,707
------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 66,397 $ 441,103
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
WATERPUR INTERNATIONAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are unaudited;
however, in the opinion of management, such statements include all adjustments
(which are of a normal, recurring nature) necessary for a fair statement of
the results for the interim periods. The financial statements included herein
have been prepared by WaterPur International Inc. (the "Company") pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures included herein are adequate to make the
information not misleading. The results for the interim period are not
necessarily indicative of the results that will be realized for the fiscal
year.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the Company's
consolidated financial statements filed as part of the Company's September 30,
1996 Form 10-KSB. The Form 10-KSB should be read in conjunction with this
quarterly report.
RECENTLY ISSUED ACCOUNTING STANDARDS - SFAS No. 123, Accounting for Awards of
Stock-Based Compensation, was issued by the FASB in October 1995, and
established financial accounting and reporting standards for stock-based
employee compensation plans and for transactions where equity securities are
issued for goods and services. The Company adopted the provisions of SFAS No.
123 during the first quarter of the year ending September 30, 1997. This
statement requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on the fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB No. 25, Accounting
for Stock Issued to Employees, which recognizes compensation cost based upon
the intrinsic value of the equity instrument awarded. The Company will
continue to apply APB Opinion No. 25 to its stock-based compensation awards to
employees and will disclose the required pro forma effect on net income and
earnings per share.
In February 1997, the FASB issued SFAS No. 128, Earnings Per Share. The
statement is effective for financial statements of the Company for periods
ending after December 15, 1997, including interim periods. SFAS No. 128
establishes standards for computing and presenting earnings per share (EPS)
and applies to entities with publicly held common stock or potential common
stock. This statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, Earnings Per Share, and makes
them comparable to international EPS standards. It replaces the presentation
of primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income statement for
entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. The Company will adopt the new
statement for its fiscal year ending September 30, 1998, and does not
anticipate earnings per share calculations will be significantly different
from those previously calculated.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
<PAGE>
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
CHANGE OF CORPORATE NAME - At the general meeting of shareholders dated June
16, 1997, the Company's stockholders passed a special resolution approving the
change of the Company's name to WaterPur International Inc. from Vector
Environmental Technologies, Inc.
2. RELATED PARTY TRANSACTIONS
At June 30, 1997, the Company had a net amount of $3,901,005 due to Casmyn
Corp. ("Casmyn"). The advances from Casmyn bear interest at 9% per annum and
were originally due within one year. Casmyn has extended the maturity of the
loans until such time as the Company is able to generate sufficient cash flows
to repay the loans or is successful in placing additional debt and/or equity.
Casmyn owns 5,532,700 shares of the common stock of the Company (approximately
31.2%).
3. INVESTMENTS
The Company holds common stock of Casmyn Corp. for investment purposes. The
investment, which is classified as available-for-use securities, is carried at
fair value with unrealized holding losses reported as a separate component of
stockholders' equity. The investment, net of unrealized holding losses of
$506,445, amounted to $1,137,416 at June 30, 1997.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
NINE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE NINE MONTHS ENDED JUNE 30,
1996
Gross revenues for the nine month period ended June 30, 1997, were $1,006,022
compared to $692,782 for the nine month period ended June 30, 1996, an
increase of $313,240. The increase was mainly due to the implementation of
community water purification plants in Vietnam. These plants utilize hi-rate
filtration systems, designed to serve rural communities in developing
countries. Currently, these projects are comprised of design, installation &
services components and are commissioned mainly in communities with
populations up to 100,000. However, the modular nature of these products will
allow their use in small or larger communities as well. The increase in
revenue was partly offset by a reduction of sales in the United Arab Emirates
("UAE"). Operations in the UAE were curtailed in order to focus the Company's
efforts on the Asian and North American markets.
The cost of sales amounted to $776,388 for the nine months ended June 30,
1997, compared to $471,091 for the nine months ended June 30, 1996. As a
result, gross profit for current period and prior period amounted to $229,634
and $221,691, respectively.
Costs and expenses were $2,726,273 for the nine month period ended June 30,
1997 compared to $2,792,988 for the same period ended June 30, 1996, a
decrease of $66,715. Compensation and benefits decreased $84,914 for the nine
month period ended June 30, 1997 over the same period last year due to
reduction of staff levels by outsourcing its North American marketing and
sales activities. Expenses related to professional services, primarily legal,
audit and marketing decreased by $83,689 in the nine month period ended June
30, 1997 compared to the nine month period ended June 30, 1996. This decrease
is primarily due to a reduction of auditing costs from last year, which was
higher than usual as a result of the initial audit work carried out by the
current auditors. There was an expense of $406,674 for the nine months ended
June 30, 1997 due to costs associated with the return of products by a
distributor in Vietnam as part of a new territorial distribution plan.
Depreciation expense increased $46,070 in the nine month period ended June 30,
1997 compared to the period ended June 30, 1996, reflecting additions to the
Company's capital assets. Research and development for first nine months
increased by $123,310 over the same period last year due to activities
associated with the evaluation of new technologies.
There was no interest income earned on short-term investments due to full
redemption of these instruments during the first quarter. As a result, other
expenses amounted to $110,968 for the period ended June 30, 1997 compared to
an income of $ 113,241 for the same period in the prior year.
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1996
Gross revenues for the three month period ended June 30, 1997 amounted to
$534,788, compared to $138,503 for the same period ended June 30, 1996, an
increase of $396,285. The increase was attributable to the successful
implementation of community water purification plants in Vietnam.
The cost of sales amounted to $463,361 for the three months ended June 30,
1997, compared to $61,813 for the three months ended June 30, 1996, as a
result, the gross profit for the current and prior periods amounted to $71,427
and $76,690, respectively.
<PAGE>
Costs and expenses were $1,106,393 for the three month period ended June 30,
1997 compared to $1,041,764 for the period ended June 30, 1996, an increase of
$64,629. Compensation and benefits decreased $39,657 for the three month
period ended June 30, 1997 compared to the same period ended June 30, 1996 due
to reduction in the staff levels. This decrease is partially offset by an
increase of $11,644 in accounting fees in three months ended June 30, 1997
over the same period in prior year as a result of an adjustment to account due
to settlement of various outstanding invoices. On the other hand, there was
an expense of $322,826 for the three months ended June 30, 1997 due to costs
associated with the return of products by a distributor in Vietnam as part of
a new territorial distribution plan. Expenses related to research and
development increased by $35,879 for the three month period to June 30, 1997
compared to the same period of 1996 due to increased research activities.
Depreciation expense increased slightly by $3,180 in the three month period
ended June 30, 1997 over the same period of 1996 due to increases in the
Company's capital assets.
Other expenses amounted to $60,068 for the three month period ended June 30,
1997 compared to an income of $35,906 for the same period ended June 30, 1996.
The income of prior period was due to the Company's investment of its surplus
funds in short term investments during the period.
CAPITAL RESOURCES AND LIQUIDITY
At June 30, 1997, the Company's working capital was $1,316,284, including
$66,397 in cash and cash equivalents. Working capital also includes
$1,409,443 in inventory, realization of which is dependent on the Company's
ability to sell its products. The Company has active sales and marketing
programs underway in various Asian and North American countries.
Management anticipates that the net use of cash by operations will increase
during the foreseeable future due to expenditures related to the development
of various markets for the Company's water purification products and
technologies. As of June 30, 1997, the Company is indebted to Casmyn in the
amount of $3,901,005 from Casmyn Corp., arising from borrowings made by the
Company. The Company is currently in discussion with a variety of debt and
equity financing sources for its current operations and future projects
needs. The timing of future projects will depend significantly on the
availability of such funding, however, success of obtaining adequate funding
is not assured.
The Company holds common stock of Casmyn Corp (a related party) for investment
purposes. The investment, which is classified as available-for-use
securities, is carried at fair value with unrealized holding losses reported
as a separate component of stockholders' equity. The investment, net of
unrealized holding losses of $506,445, amounted to $1,137,416 at June 30,
1997.
Net Cash Used in Operating Activities. Net cash used in operating activities
was $1,883,418 for the nine months ended June 30, 1997 compared to $3,475,378
for the nine months ended June 30, 1996. The reduction in cash use is
primarily attributable to the reduction in inventory and accounts receivable
outstanding. Furthermore, higher levels of inventory were purchased during
the period in 1996 in anticipation of higher sales level.
Net Cash Used in Investing Activities. Net cash used in investing activities
was $112,916 for the nine months ended June 30, 1997 compared to $918,226 for
the nine months ended June 30, 1996. The decrease in cash use is due to fewer
additions to the capital assets. The higher cash use during the period in
1996 was due to the purchase of equipment and improvements, primarily related
to a water bottling plant under construction in Vietnam.
<PAGE>
Net Cash Provided by Financing Activities. Net cash provided by financing
activities was $1,985,178 for the nine months ended June 30, 1997 compared to
$4,375,000 for the nine months ended June 30, 1996. There was no significant
new financing during the nine months ended June 30, 1997 other than the
additional advances from related parties. During the same period in 1996, the
Company had collected the proceeds of $4,375,000 from private placements of
its common and preferred shares.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting on June 16, 1997. At the meeting the
following directors were reelected by the shareholders to hold office until
the next annual meeting of shareholders or until their respective successors
shall have been duly elected and shall have qualified:
<TABLE>
<CAPTION>
Name Votes For Votes Against Abstain
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Amyn S. Dahya - Chairman 8,097,937 54,712 91,800
Sandro Kunzle 8,097,937 54,712 91,800
Mehdi Nimjee 8,097,937 54,712 91,800
</TABLE>
The following proposals were submitted to the shareholders for approval:
1. The election of the above named directors.
2. To increase the number of authorized common shares from 25,000,000 to
100,000,000 to provide additional shares which could be issued for various
purposes and to provide flexibility to take advantage of financing
oppportunities and other general corporate purposes. The proposal was
approved by shareholders with 7,801,696 votes for, 419,552 votes against, and
23,201 abstentions.
3. To amend the Bylaws to provide for the number of directors to be set by
the Board of Directors subject to the provision that the authorized number of
dirctors will be no fewer than 3 (three) nore more than 11 (eleven). This
change would provide the Company with the flexibility to respond quickly to
changing business demands and requirements. The proposal was approved by
shareholders with 8,100,384 votes for, 125,854 votes against, and 18,211
abstentions.
4. To amend the Certificate of Incorporation to change the name of the
Company to WaterPur International Inc. This change was proposed to more
accurately reflect the Company's core business: water purification and
processing systems. The proposal was approved by shareholdrs with 8,070,629
votes for, 149,341 votes against, and 24,479 abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 27 - Financial Data Schedule (Edgar filing only)
B. Forms 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WaterPur International Inc.
/s/ Dennis E. Welling
August 11, 1997 By _____________________________
Dennis E. Welling, Controller
(Duly authorized and Principal Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000918997
<NAME> WATERPUR INTERNATIONAL INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 66
<SECURITIES> 0
<RECEIVABLES> 578
<ALLOWANCES> (49)
<INVENTORY> 1,409
<CURRENT-ASSETS> 2,095
<PP&E> 906
<DEPRECIATION> (153)
<TOTAL-ASSETS> 4,026
<CURRENT-LIABILITIES> 778
<BONDS> 0
0
0
<COMMON> 91
<OTHER-SE> (745)
<TOTAL-LIABILITY-AND-EQUITY> 4,026
<SALES> 1,006
<TOTAL-REVENUES> 1,006
<CGS> 776
<TOTAL-COSTS> 2,726
<OTHER-EXPENSES> 65
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46
<INCOME-PRETAX> (2,608)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,608)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,608)
<EPS-PRIMARY> (.14)
<EPS-DILUTED> 0
</TABLE>
