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 DECEMBER 31, 1997
-----------------
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 February 3, 1998, 18,035,966 shares of the issuer's common stock were
outstanding.
This report contains 9 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 - December 31, 1997 3
Condensed Consolidated Statements of Operations - Three
Months Ended December 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows - Three
Months Ended December 31, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
- --------- --------------------------------------------------------
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures 10
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
ASSETS
CURRENT ASSETS:
<TABLE>
<CAPTION>
<S> <C>
Cash and cash equivalents $ 144,445
Accounts receivable, net 604,016
Inventories 1,443,375
Prepaid expenses and other assets 131,895
----------
Total current assets 2,323,731
PROPERTY AND EQUIPMENT, NET 527,282
OTHER ASSETS 2,106
----------
TOTAL ASSETS $2,853,119
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 756,466
----------
Total current liabilities 756,466
----------
STOCKHOLDERS' EQUITY:
5% Cumulative convertible preferred
stock, $.00001 par value; 10,000,000
shares authorized; 7,900,004 shares
issued and outstanding 79
Common stock, $.005 par value; 25,000,000
shares authorized; 18,035,966
shares issued and outstanding 60,504
Additional paid-in capital 22,614,494
Accumulated deficit (20,639,719)
Foreign currency translation adjustment 61,295
-----------
Total stockholders' equity 2,096,653
-----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,853,119
===========
</TABLE>
[FN]
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
<S> <C> <C>
1997 1996
------- -------
SALES $151,753 $288,588
COST OF GOODS SOLD 121,646 246,678
------------ -----------
GROSS PROFIT 30,107 41,910
------------ -----------
COSTS AND EXPENSES:
Selling, general and administrative
expense 614,927 686,690
Depreciation and amortization 52,852 34,022
Research and development 31,702 117,645
------------ -----------
699,481 838,357
------------ -----------
LOSS FROM OPERATIONS ( 669,374) (796,447)
------------ -----------
OTHER EXPENSES 999 46,721
------------ -----------
NET LOSS $( 670,373) (843,168)
NET LOSS PER COMMON SHARE $(.04) (.05)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 18,035,966 18,118,711
</TABLE>
[FN]
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
WATERPUR INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $( 709,149) $( 66,985)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES ( 13,098) ( 38,679)
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES 1,933 54,050
-------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS ( 720,314) ( 51,614)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 864,759 77,553
-------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 144,445 $ 25,939
============== =============
</TABLE>
[FN]
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-K. The Form 10-K 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.
<PAGE>
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.
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.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 1996
Revenues for the three months ended December 31, 1997, were $151,753 compared
to $288,588 for the three months ended December 31, 1996. The $136,835
decrease was due to a lower level of sales of products in the North American
market. The gross profit margin for the three months ended December 31, 1997
was 19.8% compared to 14.5% for the three months ended December 31, 1996 which
reflects higher profit margins obtained from consumer sales in Vietnam.
Costs and expenses were $699,481 for the three months ended December 31, 1997,
compared to $838,357 for the three months ended December 31, 1996, a decrease
of $138,876. Compensation and benefits decreased $149,148 for the three
months ended December 31, 1997 compared to the three months ended December 31,
1996 due to decreased staff levels. Expenses related to professional
services, primarily legal, and audit decreased by $37,038 in the three months
ended December 31, 1997 compared to the three months ended December 31, 1996,
as a result of higher prior period audit expenses. Marketing costs increased
$58,364 in the three months ended December 31, 1997 compared to the three
months ended December 31, 1996 due to higher advertising costs related to the
introduction of the Company's consumer water purification product line on
radio and television media. Investor relations expenses increased $31,843
due to the Company's new internet web site and increasing its exposure to the
investment community. Travel related expenses decreased $58,598 in the three
months ended December 31, 1997 compared to the three months ended December 31,
1996 due to decreased travel to Vietnam. Other general and administrative
expenses decreased $35,368 in the three months ended December 31, 1997
compared to the three months ended December 31, 1996 due to the Company's
continued efforts to reduce expenses. Depreciation expense increased a total
of $18,830 in the three months ended December 31, 1997 compared to the three
months ended December 31, 1996 due to an increase in fixed assets in the water
bottling plant in Vietnam. Research and development related expenses
decreased $85,943 in the three months ended December 31, 1997 compared to the
three months ended December 31, 1996 due to costs incurred in the three months
ended December 31, 1996 associated with the introduction of a new North
American products line; commissioning of the Vietnam bottling plant and the
pilot community water plant.
CAPITAL RESOURCES AND LIQUIDITY
At December 31, 1997, the Company had positive working capital of $1,567,265,
including $144,445 in cash and cash equivalents. Working capital also
includes $1,443,375 in inventory . Realization of inventory is dependent on
the Company's ability to sell its products. The Company launched a new sales
and marketing program such as exposure on radio media in November 1997
thoughout various states in the United States.
<PAGE>
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, particularly in the Commonwealth of Independent States 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 the raising of additional capital, in the form of debt and/or
equity. Historically, the Company has relied on Casmyn Corp. to fund its
operations. The Company does not expect nor can it rely on financial
assistance from Casmyn Corp. No assurance can be given that the Company will
be successful in raising capital on terms which will be acceptable.
Net Cash Used in Operating Activities. Net cash used in operating activities
was $709,149 for the three months ended December 31, 1997 compared to $66,985
for the three months ended December 31, 1996. The increase in the net cash
used in operating activities for the three months ended December 31, 1997 was
due principally to net operating losses.
Net Cash Used in Investing Activities. Net cash used in investing activities
was $13,098 for the three months ended December 31, 1997 compared to $38,679
for the three months ended December 31, 1996. The decrease in net cash used
in investing activities was due to the completion the water bottling plant
under construction in Vietnam for the three months ended December 31, 1996.
Net Cash Provided by Financing Activities. Net cash provided by financing
activities was $1,933 for the three months ended December 31, 1997 compared to
net cash provided of $54,050 for the three months ended December 31, 1996.
During the three months ended December 31, 1996, the Company received $50,000
from the exercise of stock options and $4,050 from a short term note.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
A. Exhibits
<S> <C> <C>
None
B. Forms 8-K
None
</TABLE>
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/Al-Karim Haji
February 12, 1998 By _____________________________
Al-Karim Haji, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000918997
<NAME> WATERPUR INTERNATIONAL INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 144
<SECURITIES> 0
<RECEIVABLES> 604
<ALLOWANCES> 0
<INVENTORY> 1443
<CURRENT-ASSETS> 2323
<PP&E> 527
<DEPRECIATION> 53
<TOTAL-ASSETS> 2853
<CURRENT-LIABILITIES> 756
<BONDS> 0
0
0
<COMMON> 60
<OTHER-SE> 2037
<TOTAL-LIABILITY-AND-EQUITY> 2853
<SALES> 151
<TOTAL-REVENUES> 151
<CGS> 121
<TOTAL-COSTS> 121
<OTHER-EXPENSES> 699
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> (670)
<INCOME-TAX> 0
<INCOME-CONTINUING> (670)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (670)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
