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 April 3, 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)
96 West Second Street, Morgan Hill, CA 95037
(Address of principal executive offices)(Zip code)
(408) 778-3465
(RegistrantAs 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 issuerAs
classes of common stock, as of the latest practicable date:
666,193 shares of Common Stock.
PURUS, INC.
CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheets as of April 3, 1999 and March 28, 1998 3
Statements of Operations for the Three Months Ended April
3, 1999 and March 28, 1998 4
Statements of Cash Flows for the Three Months Ended April
3, 1999 and March 28, 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 6. Exhibits and Reports on Form 8-K 8
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
April 3, 1999 and January 2, 1999
April 3, January 2,
1999 1999
Assets
Current assets:
Cash and cash equivalents $ 242,435 $ 303,268
Other current assets 124,754 158,995
Total current assets 367,189 462,263
Notes receivable and accrued interest 4,249,329 4,183,000
Other assets 13,993 13,993
$ 4,630,511 $ 4,659,256
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 179,414 $ 178,639
Other Liabilities
Accrued expenses 719,875 735,876
Total Liabilities $ 899,289 914,515
Shareholders' equity:
Common stock: 5,000,000 shares authorized;
$.01 par value;
666,193 and 666,193 shares issued and
outstanding at April 3, 1999 and January
2, 1999, respectively 6,662 6,662
Additional paid-in capital 45,126,395 45,126,395
Accumulated deficit (41,401,836) (41,388,316)
Total shareholders' equity 3,731,221 3,744,741
$ 4,630,511 $ 4,659,256
The accompanying notes are an integral
part of these financial statements.
3
STATEMENTS OF OPERATIONS
for the three months ended April 3, 1999 and March 28, 1998
April 3, March 28,
1999 1998
Operating income (expenses) of continuing operations
General and administrative $ (65,595) $ (98,792)
Interest income 52,075 53,151
Income (loss) from continuing operations (13,520) (45,681)
Income (loss) from discontinued operations - 16,665
Tax 2,053
Net income (loss) (13,520) (31,029)
Net income (loss) from continuing operations per share (0.02) (0.05)
Net income (loss) from discontinued operations per share 0.00 0.03
Net income (loss) per share (0.02) (0.02)
Weighted average common shares 666,193 666,193
The accompanying notes are an integral
part of these financial statements.
4
STATEMENTS OF CASH FLOWS
for the three months ended April 3, 1999 and March 28, 1998
April 3, March 28,
1999 1998
Cash flows from operating activities:
Net profit (loss) $ (13,520) $ (31,029)
Adjustments to reconcile net loss to net cash
used in operating activities:
Changes in operating assets and liabilities:
Other current assets 16,913 (14,068)
Interest on notes receivable (49,000) (14,069)
Accounts payable and accrued expenses 774 (176,020)
Accrued expenses (16,000) 13,767
Net cash used in operating activities (60,833) (207,350)
Cash flows from investing activities:
Purchases of short-term investments -- 2,005,020
Issuance of note receivable -- (1,800,000)
Net cash provided by (used in) investing activities -- 50,903
Net increase (decrease) in cash (60,833) 2,330
Cash and cash equivalents, beginning of period 303,268 36,753
Cash and cash equivalents, end of period $ 242,435 $ 39,083
The accompanying notes are an integral
part of these financial statements.
5
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
Financial information for the three months ended April 3,
1999 and March 28, 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 1998 Annual Report on Form 10-KSB. The results of
operations for the period ended April 3, 1999 are not necessarily
indicative of the results to be expected for any subsequent
quarter or for the entire year.
On November 17, 1995, the shareholders approved a one-for-
ten reverse stock split of the Company's common stock. The
financial statements for all periods presented have been restated
to retroactively reflect this reverse stock split as if it had
been in effect as of the beginning date of each statement.
In 1995 the Company converted to 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 current or 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.
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.
6
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 cumulative net losses of
approximately $41.4 million from inception to April 3, 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.
Results of Continuing Operations
Quarters Ended April 3, 1999 and January 2, 1999
The Company had no revenue from continuing operations for
the quarters ended April 3, 1999 and March 28, 1998.
General and administrative expenses from continuing
operations for the quarters ended April 3, 1999 and March 28,
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 $65,595 for the quarter ended April 3,
1999, and $98,792 for the quarter ended March 29, 1997. General
and administrative expenses in the quarter ended April 3, 1999
are lower than in the quarter ended March 28, 1998 due to the
elimination of certain administrative expenses.
Interest income of $52,075 and $53,151 for the quarters
ended April 3, 1999 and March 28, 1998, respectively, primarily
resulted from interest accrued on the Company's outstanding loan
to Casa Solaz, inc., which was made in 1998.
As a result of the foregoing factors, the Company's net loss
from continuing operations was $13,520 for the quarter ended
April 3, 1999 as compared to a net loss of $31,029 for the
quarter ended March 28, 1998. The smaller loss in the recent
quarter resulted from cost reduction measures implemented after
March 28, 1998.
Results of Discontinued Operations
Quarters Ended April 3, 1999 and March 28, 1998
Revenues from discontinued operations was zero and $16,665
for the quarters ended April 3, 1999 and March 28, 1998,
respectively. Revenues from discontinued operations in the
7
quarter ended March 28, 1998 consist of royalty payments from
Thermatrix. The Company does not expect any significant future
revenues from discontinued operations.
Net Income/Net Loss from Continuing and Discontinued Operations
As a result of the foregoing factors, the Company's net loss
from both continuing and discontinued operations was $13,520 for
the quarter ended April 3, 1999, as compared to a loss of $31,029
for the quarter ended March 28, 1998. The decreased loss in the
recent quarter was the result of reduced expenditures.
Liquidity and Capital Resources
At April 3, 1999, the Company had working capital of
approximately $189,775 as compared to $276,296 at January 2,
1999. Working capital as of both dates consisted substantially of
short-term investments, cash and cash equivalents, accrued
liabilities, and net liabilities from discontinued operations.
Net cash used in operating activities was approximately $60,833
for the quarter ended April 3, 1999, and $207,350 for the quarter
ended March 28, 1998.
The reduction in working capital results from continuing
losses.
Management believes that the Company has sufficient cash and
short-term investments to meet the anticipated needs of the
Company's continuing and discontinued operations through at least
the next 12 months. However, there can be no assurances to that
effect, as the Company has no assurance of significant revenues
and is subject to contingent liabilities which could result in
the depletion of its capital, including, without limitation, any
damages awarded and/or costs and expenses incurred by it in
connection with pending litigation against the Company. 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.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8K
EXHIBITS: Attached only to the electronic filing by the Company with the
Securities and Exchange Commission is the Financial Data Schedule,
Exhibit Reference Number 27, in accordance with Item 601(c) of Regulation S-B.
REPORTS ON FORM 8-K: None.
8
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/ Peter Friedli
Chief Executive Officer
Date: May 15, 1999