Reality Check As per Recent 10qsb: I will only speak positives...
12,662,988 and 5,279,338 issued and outstanding respectively
In March 1997, the Company received an order for a full-scale System to treat one-fifth of a major Eastern Canadian city's sewage effluent. In June, the client requested that the order be delayed until the end of the current year disinfection period (October 31, 1997). The client was able to reduce the period of UV treatment from six months per year to four months per year using its existing system, which made the economics of replacing the existing equipment less attractive. At the time of this report there is no further activity on the project and the Company has moved this project to its inactive list.
The Company has been unable to complete testing of a full-scale demonstration system at the City of Chilliwack, located in Western Canada, due to flows almost twice those contracted for through the sewage treatment plant. The Company will continue to use this site for demonstration, research and development; however, ongoing sewage plant modifications have not been completed and any further equipment research is delayed until late summer, 1998.
During the report period ended November 30, 1997, the Company was advised that an order will be forthcoming for a project near Montreal, Province of Quebec, Canada in the revised amount of C$390,809. During this most recently ended reporting period the purchase order number and document were received. The project is scheduled for delivery in November 1998. The Company received the purchase order against strong competition from its major competitor, Trojan Technologies Inc. of London, Ontario, Canada. As previously reported this project was pilot tested using the Company's PDU, and power use monitored by Hydro Quebec, a hydro power producer and
supplier for the Province of Quebec as well as to the Eastern United States. This monitoring program, as well as other test criteria, provided independent corroboration that the Company's UV system provided improved performance and cost-saving to the client.
On April 24, 1998, the Company received a purchase order in the amount of US$135,314 from its Japanese Licensee covering ultraviolet system components needed to complete 10 Industrial process water treatment systems. The project is scheduled to ship in August to be included in the 1998 fiscal year. The UV systems will be used in various industries including semiconductor plants, breweries and food processing. This order follows an initial order of 10 systems which were successfully prototype and Beta site tested at various locations in Japan. With this second order now received and verification of the product's ability to work in these industries, the Company is working to expand sales of this product to this client in Japan as well as other geographic market areas.
Shipment and billing of the majority of any of these or other sales which may be made in fiscal 1998 (which the Company cannot assure), other than the sale to Hamilton, Alabama for a fixed price of $127,000 and the sale to Japan, will not occur until fiscal 1999. Marketing of the Company's UV products continues, with bids sent out during the current quarter amounting to approximately $21 million. On April 19 - 22, the Company presented a paper in Baltimore at Disinfection 98, The Latest Trends in Wastewater Disinfection: Chlorination vs UV disinfection.
During the nine months ended May 31, 1998 and 1997 respectively, operational expenses increased 72% to $891,694 from $518,031 in the comparable 1997 period (including, general and administrative expense of $645,235 compared to $278,792, a decrease in research and development cost of $82,498 compared to $175,532 and selling expense of $163,961 compared to $103,707), bringing the Net Loss from Operations Before Other Items to $956,987 compared to $551,407 for the comparable 1997 period. The higher costs of General and Administrative were as a result of accrued (unpaid) management fees, discounts on convertible debentures, corporate relations and legal and accounting fees. Other Items, including amortization of goodwill in the amount of $363,810 in connection with the UVS acquisition (see Note 3 in the financial statements identifying the restated write-off of principal) and Interest Expense in the amount of $78,627, due largely to debt owed to minority shareholders (accrued and not paid) and interest on convertible debentures, brought net Loss for the period to $1,399,424, a per share loss amounting to $0.18.
During the quarter ended May 31, 1998, the Company entered into a development and testing program being carried out at McGill University. This R&D program is intended to demonstrate the effect of the high intensity UV output of the Company's lamp to penetrate microbiological included suspended solid contained within sewage effluent as compared to results from other lamps. Results of a portion of this testing may be available in the fourth quarter.
Long term debt: UVS issued 2,000 Class "A" preferred shares at C$1,000 per share for a total of C$2,000,000 (US$1,469,660). The holders of these shares also own 49.31% of UVS. These shares are retractable once sales reach C$10,000,000 and net income reaches C$1,000,000. All preferred shares are to be redeemed by June 30, 1999.
During the nine months ended May 31, 1998, all debentures, accrued interest, and principal outstanding at the end of the previous quarter and accrued interest to conversion date (the "Debt") were converted into common shares of the Company.
The Debt, amounting to $745,624, was converted, at an average conversion per share price of $0.1848, into 4,034,350 shares of common stock. At the end of this reporting period the balance of convertible debentures and unpaid interest not converted was zero.
On May 7, 1998, the Registrant filed a Form 8-K reflecting the issuance of the Registrant's Common Stock on April 23, 1998 to two of the Registrant's employees a total of 75,321 shares for unpaid services valued at $.20 pershare. In addition, on that date the Registrant issued in a Regulation S transaction, in repayment of loans to the Registrant, to one Canadian individual, one United Kingdom corporation and three Bahamian corporations 1,481,497 shares of common stock valued at $.20 per share. The four corporations, in addition to the common stock, were issued warrants to purchase an additional 1,446,281 shares of common stock at an exercise price
of $.40 per share. |
