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 MARCH 31, 1998
--------------
OR
[ ] Transition report under section 13 or 15 (d) of the Exchange Act
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)
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 May 15, 1998, 12,500,710 shares of the issuer's common stock were
outstanding.
This report contains 10 pages. There are no exhibits.
<PAGE>
WATERPUR INTERNATIONAL INC.
FORM 10-QSB
INDEX
PART I. Financial Information Page No.
--------
Condensed Consolidated Balance Sheet - March 31, 1998 3
Condensed Consolidated Statements of Operations - Three
Months and Six Months ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows - Six
Months ended March 31,1998 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 10
Signatures 10
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WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
ASSETS
------
<TABLE>
<CAPTION>
MARCH 31, 1998 SEPTEMBER 30, 1997
(UNAUDITED) (AUDITED)
--------------------------------------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $58,322 $864,759
Accounts receivable, net 803,701 475,856
Inventories 1,221,025 1,443,738
Prepaid expenses and other assets 132,076 109,041
--------------------------------------
Total Current Assets 2,215,124 2,893,394
--------------------------------------
INVESTMENT IN AFFILIATE - 6,453
EQUIPMENT AND IMPROVEMENTS, NET 488,430 560,583
RESEARCH AND DEVELOPMENT 156,966 -
OTHER ASSETS 2,091 5,089
--------------------------------------
TOTAL ASSETS $2,862,611 $3,465,519
======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $804,574 $700,426
--------------------------------------
STOCKHOLDERS' EQUITY:
5% Cumulative convertible
preferred stock, $.00001 par value;
10,000,000 shares authorized;
0 shares issued and outstanding 79 79
Common stock, $.005 par value;
25,000,000 shares authorized;
12,500,710 shares issued and outstanding 62,504 62,504
Additional paid-in capital 22,889,494 22,614,494
Accumulated deficit (20,998,569) (19,969,346)
Foreign currency translation adjustment 104,529 57,362
--------------------------------------
Total Stockholders' Equity 2,058,037 2,765,093
--------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,862,611 $3,465,519
======================================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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<TABLE>
<CAPTION>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
FOR THE THREE MONTHS
ENDED MARCH 31,
1998 1997
-----------------------------
<S> <C> <C>
SALES $ 227,231 $ 182,646
Sales Returns & Allowances - (83,848)
-----------------------------
227,231 98,798
Cost of Goods Sold 178,340 66,349
----------------------------
GROSS PROFIT 48,891 32,449
-----------------------------
COSTS AND EXPENSES:
Selling, general and administrative expense 453,022 558,164
Depreciation and amortization 36,328 34,022
Research and development - 105,489
----------------------------
489,350 697,675
----------------------------
LOSS FROM OPERATIONS (440,459) (665,226)
----------------------------
INTEREST AND OTHER EXPENSE (2,887) (4,179)
----------------------------
NET LOSS $ (443,346) $(669,405)
=============================
NET LOSS PER COMMON SHARE $ (.04) $ (.04)
=============================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,500,710 18,135,466
=============================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
CONTINUED
FOR THE SIX MONTHS
ENDED MARCH 31,
1998 1997
-----------------------------
<S> <C> <C>
SALES $378,983 $471,234
Sales Returns & Allowances - (83,848)
-----------------------------
378,983 387,386
Cost of Goods Sold 318,124 313,027
-----------------------------
GROSS PROFIT 60,859 74,359
-----------------------------
COSTS AND EXPENSES:
Selling, general and administrative expense 1,015,154 1,244,854
Depreciation and amortization 71,042 68,044
Research and development - 223,134
-----------------------------
1,086,196 1,536,032
-----------------------------
LOSS FROM OPERATIONS (1,025,337) (1,461,673)
-----------------------------
INTEREST AND OTHER EXPENSE (3,886) (50,900)
-----------------------------
NET LOSS $(1,029,223) $(1,512,573)
=============================
NET LOSS PER COMMON SHARE $ (.08) $ (.08)
=============================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,500,710 18,127,089
=============================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
1998 1997
-----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $(904,845) $(1,077,149)
-----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES (176,592) ( 147,010)
-----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES 275,000 1,263,590
-----------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (806,437) 39,431
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 864,759 77,553
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 58,322 $ 116,984
============================
</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,
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 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.
<PAGE>
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. SUBSCRIPTION OF SECURITY UNITS
During the period ended March 31, 1998, the Company had received a deposit
amount of $275,000 from three investors with respect to a private placement of
1,375,000 security units. Each unit comprises 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 during the first year and at $.30
during the second year. At March 31, 1997, the deposit of $275,000 had
been included in the paid-in capital account as part of stockholders' equity.
The Company anticipates that the units will be issued during the third quarter
of 1998.
3. SUBSEQUENT EVENT
As of May 15, 1998, the Company has reached an agreement in principle,
subject to documentation, related to the acquisition of an 85 % interest in
Casmyn International Inc. from two shareholders of the acquiree. Casmyn
International Inc., currently a 55% owned subsidiary of Casmyn Corp.
("Casmyn"), is actively exploring joint-venture water projects with
various governmental agencies in the Commonwealth of Independent
States (CIS). The Company is related to Casmyn through certain common
directors and officers. Under the terms of the sale arrangement, the Company
will pay $30,000 in cash to a minority shareholder of Casmyn International
Inc.; and will pay cash or issue common shares equivalent to $55,000 to
Casmyn at the time the transaction is concluded.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
RESULTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1998 COMPARED TO THE SIX MONTHS ENDED MARCH 31,
1997
Gross revenues for the six month period ended March 31, 1998, were $378,983
compared to $471,234 for the six month period ended March 31, 1997, a decrease
of $92,251. The decrease is due to a reduction in the sales of consumer
products primarily in the North American market. The gross profit for the six
month period ended March 31, 1998 was $60,859 (16%) compared to $74,359 (19%)
for the same period ended March 31, 1997. The decrease in gross margin of 3%
is due to the six month period ended March 31, 1998, having lower profit
margins from the consumer product sales in Vietnam compared to the same period
in the prior year. The six month period ended March 31, 1997, included an
adjustment of $83,848 to revenue caused by the return of products by a
distributor in Vietnam as part of a new territorial distribution plan.
Costs and expenses were $1,086,196 for the six month period ended March 31,
1998, compared to $1,536,032 for the same period ended March 31, 1997, a
decrease of $449,836. Compensation and benefits decreased $265,411 for the
six month period ended March 31, 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. Professional services, which include legal and accounting
fees, decreased by $38,064 in the six month period ended March 31, 1998,
primarily as a result of a reduction in auditing costs compared to the six
month period ended March 31, 1997. Marketing costs increased by $52,677
compared to the six month period ended March 31, 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
expenditures for the first six months ended March 31, 1998 decreased by
$66,168 over the same period last year due to the capitalization of these
costs. The Company is concentrating on the research and development of
several products, including the WP Series water filtration systems.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THE THREE MONTHS ENDED MARCH
31, 1997
Gross revenues for the three month period ended March 31, 1998, amounted to
$227,231 compared to $182,646 for the three month period ended March 31, 1997,
an increase of $44,585 before the adjustment in 1997 for the return of
products in Vietnam totaling $83,848. The gross profit margin for the period
ended March 31, 1998, was $48,891 (22%) compared to gross profit of $32,449
(32%) for the same period ended March 31, 1997. The decrease in gross margin
of 10% is due to lower margins on consumer product sales for the three month
period ended March 31, 1998 compared to the same period in the prior year.
Costs and expenses were $489,350 for the three month period ended March 31,
1998, compared to $697,675 for the period ended March 31, 1997, a decrease of
$208,325. Compensation and benefits decreased $87,331 for the three month
period ended March 31, 1998, compared to the same period ended March 31, 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 $30,984 in the three month period ended March 31, 1998 as a
result of a reduction in auditing costs compared to the three month period
ended March 31, 1997. Travel related expenses of $31,285 during the three
month period ended March 31, 1998 were comparable to the $30,552 incurred
during the same period ended March 31, 1997. Expenses related to research and
development decreased by $33,019 for the three month period March 31, 1998
compared to the same period of 1997 due to the capitalization of these costs.
The Company is concentrating on research and development of new products
including the WP series and new filtration media.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
At March 31, 1998, the Company's working capital was $1,410,550, including
$58,322 in cash and cash equivalents. Working capital also includes
$1,221,025 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 Vietnam and North American.
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 the Commonwealth of Independent
States, Africa and Asia. 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 $904,845 for the six months ended March 31, 1998, compared to $1,077,149
for the six months ended March 31, 1997. The reduction in cash use is
primarily attributable to the increase in accounts receivable.
Net Cash Used in Investing Activities. Net cash used in investing activities
was $176,592 for the six months ended March 31, 1998 compared to $147,010 for
the six months ended March 31, 1997. The increase in cash use is due
primarily to the capitalization of research and development costs related to
the research and development of several products including the WP Series
water filtration systems and new filtration media.
Net Cash Provided by Financing Activities. Net cash provided by financing
activities was $275,000 for the six months ended March 31, 1998, compared to
$1,263,590 for the six months ended March 31, 1997. During the six months
ended March 31, 1998, the Company received $275,000 as a deposit for
participation in a private placement which has not been completed as at May
15, 1998. During the same period in 1997, the Company received $1,263,590 in
additional advances from related parties.
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
May 15, 1997 By _____________________________
Debbie Barfurth-Wood, Controller
(Duly authorized and Principal
Accounting Officer)
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<CIK> 0000918997
<NAME> WATERPUR INTERNATIONAL INC.
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<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
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