UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-QSB
[ X ] Quarterly report under Section 13 or 15 (d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
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OR
[ ] Transition report under section 13 or 15 (d) of the Exchange Act
COMMISSION FILE NUMBER 0-23402
_____________________ WATERPUR INTERNATIONAL INC._______________________
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(Exact name of registrant as specified in Charter)
_______________________________DELAWARE________________________________
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(State or other jurisdiction of incorporation)
_______________________________11-2863244______________________________
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(IRS Employer Identification No.)
1335 GREG STREET, UNIT #104
SPARKS, NEVADA 89431
____________________________ (702) 331-5524__________________________
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(Address and Telephone Number of Principal Executive Offices)
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 requirements for the past 90 days. Yes [ X]
No [ ].
As of August 12, 1998, 18,875,710 shares of the issuer's common stock were
outstanding.
This report contains 11 pages. There are no exhibits.
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<CAPTION>
WATERPUR INTERNATIONAL INC.
FORM 10-QSB
INDEX
<S> <C> <C>
PART I. Financial Information Page No.
--------
Condensed Consolidated Balance Sheet - June 30, 1998 3
Condensed Consolidated Statements of Operations - Three
Months and Nine Months ended June 30, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows - Nine
Months ended June 30, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis or Plan of Operation 8
PART II. Other Information
Item 6 - Exhibits and Reports on Form 8-K 11
Signatures 11
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<TABLE>
<CAPTION>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
------
JUNE 30, SEPTEMBER 30, 1997
1998 (AUDITED)
(UNAUDITED)
------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 43,890 $ 864,759
Accounts receivable, net 550,186 475,856
Inventories 1,104,998 1,443,738
Prepaid expenses and other assets 125,617 109,041
------------ --------------------
Total Current Assets 1,824,691 2,893,394
------------ --------------------
INVESTMENT IN AFFILIATE - 6,453
EQUIPMENT AND IMPROVEMENTS, NET 457,783 560,583
OTHER ASSETS 2,136 5,089
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TOTAL ASSETS $ 2,284,610 $ 3,465,519
============ ====================
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<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 712,230 $ 700,426
----------- -------------------
STOCKHOLDERS' EQUITY:
5% Cumulative convertible
preferred stock, $.00001
par value; 10,000,000
shares authorized; 7,900,004
shares issued and outstanding 79 79
Common stock, $.005 par value
100,000,000 shares
authorized; 12,500,710
shares issued and
outstanding; 62,504 62,504
Additional paid-in capital 23,149,494 22,614,494
Accumulated deficit ( 21,696,099) (19,969,346)
Foreign currency translation adjustment 56,402 57,362
--------------- --------------
Total Stockholders' Equity 1,572,380 2,765,093
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY $ 2,284,610 $ 3,465,519
=============== ==============
<FN>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
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<TABLE>
<CAPTION>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
SALES $ 117,251 $ 534,788 $ 496,234 $ 1,006,022
Sales Returns & Allowances - 322,826 - 406,674
------------ ------------- ------------- -------------
117,251 211,962 496,234 599,348
Cost of Goods Sold 124,907 463,361 443,031 776,388
------------ ------------- ------------- -------------
GROSS PROFIT (LOSS) ( 7,656) ( 251,399) 53,203 ( 177,040)
------------ ------------- ------------- -------------
COSTS AND EXPENSES:
Selling, general and administrative expense
426,546 665,289 1,441,700 1,910,143
Depreciation and
amortization 40,180 38,524 111,222 106,568
Research and development 65,466 79,754 222,432 302,888
------------ ------------- ------------- -------------
532,192 783,567 1,775,354 2,319,599
------------ ------------- ------------- -------------
LOSS FROM OPERATIONS (539,848) ( 1,034,966) ( 1,722,151) ( 2,496,639)
------------ ------------- ------------- -------------
INTEREST AND OTHER ( 716) ( 60,068) ( 4,602) ( 110,968)
EXPENSES
------------ ------------- ------------- -------------
NET LOSS $ ( 540,564) $ (1,095,034) $ (1,726,753) $ (2,607,607)
============ ============= ============= =============
NET LOSS PER COMMON SHARE
$ (.04) $ (.06) $ (.14) $ (.14)
============ ============= ============= =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
12,500,710 18,135,466 12,500,710 18,131,295
============ ============= ============= =============
<FN>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
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<TABLE>
<CAPTION>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<S> <C> <C>
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES $(1,348,141) $(1,883,418)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES ( 7,708) (112,916)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES 535,000 1,985,178
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(820,869) ( 11,156)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 864,759 77,553
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 43,890 $ 66,397
============ ============
<FN>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<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,
1997 Form 10-KSB. The Form 10-KSB should be read in conjunction with this
quarterly report.
RECENTLY ISSUED ACCOUNTING STANDARDS
INCOME (LOSS) PER SHARE
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 128 ("SFAS 128") in the quarter ended December 31, 1997 and has
calculated the basic loss per share information as prescribed by SFAS 128. The
calculation of the diluted earnings per share has been omitted as the assumed
conversion, exercise or contingent issuance of securities would have an
antidilutive effect on earnings per share.
RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board ("FASB") recently issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), Reporting Comprehensive
Income, which is effective for fiscal years beginning after December 15, 1997.
SFAS 130 establishes standards for reporting and displaying comprehensive income
and its components in a full set of general-purpose financial statements. The
Company will adopt the new statement for its fiscal year beginning October 1,
1998, and does not anticipate that adoption will have a significant impact on
its consolidated financial statements. Under the new statement the Company will
report the change in the foreign currency translation adjustment as a component
of comprehensive income.
The FASB recently issued Statement of Financial Accounting Standard No. 131
("SFAS 131"), Disclosure About Segments of an Enterprise and Related
Information, which is also effective for fiscal years beginning after December
15, 1997. SFAS 131 establishes standards for segment reporting in the
financial statements. It also establishes standards for related
disclosures about products and services, geographic areas and major
customers. The Company will
<PAGE>
adopt the new statement for its fiscal year
beginning October 1, 1998 and does not anticipate that providing required
disclosures will result in significantly different information from that
which is currently being disclosed.
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
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.
2. PRIVATE PLACEMENTS
(i) On March 18, 1998, the Company entered into a private placement with
three investors for the issuance of 1,375,000 security units at a price of $.20
per unit. Each unit was comprised of one share of common stock plus two share
purchase warrants. Each share purchase warrant entitles holder to purchase one
share of common stock at $.25 until March 17, 1999 and at $.30 until March 17,
2000. As at June 30, 1998, the deposit of $275,000 was included in the paid-in
capital account as part of stockholders' equity. There were no commissions
paid for this transaction. The private placement was completed on July 8, 1998
and was effected pursuant to Section 4(2) of the Securities Act of 1933 as
amended and Regulation S promulaged pursuant thereto.
(ii) On May 15, 1998, the Company entered into a private placement with
several individuals for the issuance of 5,000,000 security units at a price of
$.10 per unit. Each unit is comprised of one share of common stock plus one
share purchase warrant. Each share purchase warrant entitles the holder to
purchase one share of common stock at $.20 until May 14, 2000 . The total
proceeds from this placement is expected to be $500,000. As at June 30, 1998,
proceeds of $260,000 were included in the paid-in capital account as part of
stockholders' equity. There were no commissions paid for this transaction.
The private placement was completed on July 14, 1998 and was effected
pursuant to Section 4(2) of the Securities Acto f 1933 as amended and Regulation
S promulgated pursuant thereto.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Certain of the foregoing information constitutes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, political and economic
instability in international markets, the effect of economic conditions, the
effect of regulatory and governmental actions, fluctuations in prices, exchange
rates, tariffs, and other non-trade barriers.
NINE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 1997
Net revenues for the nine month period ended June 30, 1998, were $496,234
compared to $599,348 for the nine month
period ended June 30, 1997, a decrease of $103,114. The decrease is due mainly
to a reduction in North American consumer products sales of $247,675 which were
offset by an increase in sales in Vietnam of $144,561. The gross profit for the
nine month period ended June 30, 1998 was $53,203 or 11% compared to a gross
loss of $(177,040) or (30%) for the same period ended June 30, 1997. Gross
margin increased by $230,243 because in the period ended June 30, 1997 the
Company incurred losses related to the return of consumer product in Vietnam and
due to the sale of consumer and commercial products in Vietnam at below cost.
Costs and expenses were $1,775,354 for the nine month period ended June 30,
1998, compared to $2,319,599 for the same period ended June 30, 1997, a decrease
of $544,245. Compensation and benefits decreased $441,027 for the nine month
period ended June 30, 1998 over the same period last year due to a reduction of
staff levels primarily in Vietnam as a result of the closure of the bottling
plant in 1998. Professional services, which include legal and accounting fees,
decreased by $41,065 in the nine month period ended June 30, 1998, primarily as
a result of a reduction in auditing costs compared to the nine month period
ended June 30, 1997. Marketing costs increased by $59,019 in the third quarter
ended June 30, 1998 compared to the same period ended June 30, 1997, due to
higher advertising costs related to the promotion of the Company's consumer
water purification product line on radio and television and also as a result of
the introduction of a teleconferencing service to shareholders giving them
greater access to information about the Company. Research and development "R&D"
expenditures for the nine months ended June 30, 1998 decreased by $80,456 over
the same period last year due to a reduction in staff levels. The Company
is concentrating on the research and development of several products,
including the WP Series water filtration systems and new filtration media.
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1997
Net revenues for the three month period ended June 30, 1998, were $117,251
compared to
<PAGE>
$211,962 for the three month period ended
June 30, 1997, a decrease of $94,711. The decrease is due mainly to a reduction
in consumer and commercial sales in Vietnam of $113,338. The decrease in
consumer and commercial sales in Vietnam was offset by an increase in North
American consumer product sales of $18,627. The gross loss for the period ended
June 30, 1998, was $7,656 compared to a gross loss of $251,399 for the same
period ended June 30, 1997. Gross loss decreased $243,743 in the current year
because in the three month period ending June 30, 1997 the Company incurred
losses related to the return of consumer products in Vietnam and also the
selling of consumer and commercial products in Vietnam at below cost. Although
gross loss has decreased significantly in the three month period June 30, 1998
compared to the same period in the prior year, the consumer product and water
filtration systems sales in Vietnam have continued to yield negative margins.
Costs and expenses were $532,192 for the three month period ended June 30, 1998,
compared to $783,567 for the period ended June 30, 1997, a decrease of $251,375.
Compensation and benefits decreased $70,029 for the three month period ended
June 30, 1998, compared to the same period ended June 30, 1997, due to a
reduction in staff levels primarily in Vietnam as a result of the closure of the
bottling plant. Professional services, which include legal and audit decreased
by $3,002 in the three month period ended June 30, 1998 as a result of a
reduction in auditing costs compared to the three month period ended June 30,
1997. Travel related expenses of $6,157 during the three month period ended
June 30, 1998 were significantly lower than the $28,205 incurred during the same
period ended June 30, 1997 due to a conscious effort by management to reduce
expenditures in Vietnam. Expenses related to research and development decreased
by $14,288 for the three month period June 30, 1998 compared to the same period
of 1997 due to the reduction in staff levels. The Company is concentrating
on research and development of general products including the WP Series and new
filtration media.
CAPITAL RESOURCES AND LIQUIDITY
At June 30, 1998, the Company's working capital was $1,112,461, including
$43,890 in cash and cash equivalents. Working capital also includes $1,104,998
in inventory, realization of which is dependent on the Company's ability to sell
its products. The Company is continuing in its efforts to sell the water
bottling plant in Vietnam and its consumer product lines.
Management anticipates that the net use of cash by operations will increase
during the foreseeable future due to expenditures related to the development of
new products and of various markets for the Company's water purification
products and technologies, particularly in Africa and Europe. The Company is
actively pursuing private placement opportunities to meet its future cash
requirements. The ability of the Company to continue its business operations and
follow through on its business plan depends to a substantial extent on its
ability to raise additional capital, in the form of debt and/or equity. No
assurance can be given that the Company will be successful in raising capital on
terms which will be acceptable thus, the timing of future projects will depend
significantly on the availability of such funding.
Net Cash Used in Operating Activities.
Net cash used in operating activities was $1,348,141 for the nine months ended
June 30, 1998, compared to $1,883,418 for the nine months ended June 30, 1997.
<PAGE>
Net Cash Used in Investing Activities.
Net cash used in investing activities was $7,708 for the nine months ended
June 30, 1998 compared to $112,916 for the nine months ended June 30, 1997.
The decrease in cash use is due primarily due to less investing activities.
Net Cash Provided by Financing Activities.
Net cash provided by financing activities was $535,000 for the nine months
ended June 30, 1998, compared to $1,985,178 for the nine months ended
June 30, 1997. During the nine months ended June 30, 1998, the Company received
$735,000 as a deposit for participation in a private placements which were
completed on July 8 and 14, 1998 respectively. During the same period in
1997, the Company received $1,985,178 in additional advances from related
parties.
2. PRIVATE PLACEMENTS
(i) On March 18, 1998, the Company entered into a private placement with
three investors for the issuance of 1,375,000 security units at a price of $.20
per unit. Each unit was comprised of one share of common stock plus two share
purchase warrants. Each share purchase warrant entitles holder to purchase one
share of common stock at $.25 until March 17, 1999 and $.30 until March 17,
2000. As at June 30, 1998, the deposit of $275,000 was included in the paid-in
capital account as part of stockholders' equity. There were no commissions
paid for this transaction. The private placement was completed on July 8, 1998
and was effected pursuant to Section 4(2) of the Securities Act of 1933 as
amended and Regulation S promulgated pursuant thereto.
(ii) On May 15, 1998, the Company entered into a private placement with
several individuals for the issuance of 5,000,000 security units at a price of
$.10 per unit. Each unit is comprised of one share of common stock plus one
share purchase warrant. Each share purchase warrant entitles the holder to
purchase one share of common stock at $.20 until May 14, 2000. The total
proceeds from this placement is expected to be $500,000. As at June 30, 1998,
proceeds of $260,000 were included in the paid-in capital account as part
of stockholders' equity. There were no commissions paid for this transaction.
The private placement was completed on July 8, 1998 and was effected
pursuant to Section 4(2) of the Securities Act of 1933 as amended and Regulation
S promulgated pursuant thereto.
3. OTHER
The Company is reviewing its operations in Vietnam with a view to possibly
selling, curtailing, or ceasing operations given the economic situation in Asia
and the regulatory climate in Vietnam, including the difficulty in obtaining
payment for products sold.
WaterPur has entered into an agreement in principle with BASM Resources
Corp. for a Licensing Agreement covering the exclusive rights to treat waste
water using the Fiton Process. This process relies on the use of naturally
occurring microbes whose performance is accelerated using Fiton, a proprietary
nutrient combination, which also acts as a biostimulant and catalyst. The Fiton
Process can be used in combination with the Company's WP-100 Filtration units to
treat toxic waste. The Company has recently submitted several quotations for
olive waste treatment projects in Europe. However, no assurance can be given by
the Company as to the success of obtaining such contracts.
On May 11 the Company reached an agreement in principle to acquire an 85%
interest in Casmyn International Inc. from two shareholders of the acquiree.
Documentation and finalization of the transaction is still subject to
negotiation.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
None
B. Forms 8-K
None
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/ Debbie Barfurth-Wood
August 12, 1998 By _____________________________
Debbie Barfurth-Wood, Controller
(Duly authorized and Principal
Accounting Officer)
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<NAME> WATERPUR INTERNATIONAL INC.
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