TIDMHAL TIDMHALO
RNS Number : 0290Z
HaloSource Inc
15 September 2015
15 September 2015
HaloSource, Inc.
("HaloSource" or the "Company")
Interim results for the six months ended 30 June 2015
HaloSource, Inc. (HAL.LN, HALO.LN), the global clean water
technology solutions company trading on London's AIM, today
announces its unaudited interim results for the six months ended 30
June 2015.
Highlights
During the period the Company delivered revenue growth, margin
expansion and reduced cash-burn all being fuelled by the Company's
strategy of continuing to partner with industry leaders in each of
its business segments and geographies.
-- Total revenue increased 3% to $7.5 million (H1 2014: $7.3 million)
o Drinking Water revenues increased 33% to $2.7 million (H1
2014: $2.0 million) while trailing twelve month revenues increased
61%, underscoring the positive sales momentum in the Drinking Water
business
o Environmental Water revenues remained stable at $1.2 million
(H1 2014: $1.2 million)
o Recreational Water revenues decreased by 10% to $3.6 million
(H1 2014: $4.0 million)
-- Consolidated gross margin increased to 40% (H1 2014: 39%)
-- Operating expenses, excluding a one-off impairment charge for
goodwill of $0.2 million, decreased to $8.2 million (H1 2014: $8.4
million), as a result of the Company's continued focus on costs
-- Net cash at period end of $9.8 million (H1 2014: $8.3 million)
-- Debt free at period end after repaying a $1.0 million line of
credit in India during H1 2015
-- Cash flows used in operations for the period decreased 20% to
$3.8 million (H1 2014: $4.7 million)
Martin Coles, President and CEO of HaloSource, said:
"The Company's overall revenue growth in H1 2015 continued to be
driven by our Drinking Water business and the strategic decision to
take our proprietary technologies to market in partnership with
leading multi-national companies in key geographies. The
restructuring of our Recreational Water business has improved its
profitability and we are following a similar strategy in the
Environmental Water business as we drive efficiencies and
profitable growth through fewer, yet stronger, partnerships.
"We continue to sharpen our focus on delivering sustainable
growth in revenue, margins and profitability and we remain
confident in our outlook for the full year."
Enquiries:
HaloSource, Inc.
Martin Coles, Chief Executive via Newgate below
Officer
James Thompson, Chief Financial
Officer
Susan Brown, Director Corporate
Communications
Newgate (PR Adviser)
James Benjamin +44 20 7680 6550
Alex Shilov halosource@newgatecomms.com
Andre Hamlyn
Liberum Capital (NOMAD and Joint
Broker)
Richard Bootle
Jill Li
Steve Pearce +44 203 100 2222
Allenby Capital (Joint Broker)
Chris Crawford
Kat Perez +44 203 328 5656
About HaloSource
HaloSource, Inc. creates innovative solutions for water
purification that serve people, preserve the planet and protect our
most valuable resource. The Company works with scientists and
industry experts across the globe in search of new ways to improve
water quality and has been awarded more than 70 patents for its
ground breaking chemistries, which provide effective and
environmentally responsible solutions to the growing issue of water
stress.
Founded in Seattle, Washington, HaloSource has grown to become
an influential leader in three market segments: drinking water,
recreational water, and environmental water treatment and
remediation. HaloSource is headquartered in the US with operations
in China and in India. Learn more about the Company's research and
development and future cutting edge technologies by visiting
www.halosource.com.
HaloKlear, HaloPure, and SeaKlear are either trademarks or
registered trademarks of HaloSource, Inc. All other trademarks,
brand names or product names belong to their respective
holders.
This document contains certain forward-looking statements
relating to the Company. The Company considers any statements that
are not historical facts as "forward-looking statements". They
relate to events and trends that are subject to risk and
uncertainty that may cause actual results and the financial
performance of the Company to differ materially from those
contained in any forward-looking statement. These statements are
made by management in good faith based on information available to
them and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.
Financial Review
Total consolidated revenues increased by 3% to $7.5 million,
largely due to continued growth within the Drinking Water
segment.
Consolidated gross margin was 40%, up from 39% for the same
period last year, representing $0.1 million in incremental margin.
Operating expenses for H1 2015 totaled $8.4 million, unchanged from
H1 2014, including a one-time goodwill impairment charge of $0.2
million related to the termination of the patent license for our
anti-microbial coatings business during the period.
Consolidated net loss was $5.5 million for the period, down from
a net loss of $5.7 million in H1 2014, driven primarily by improved
gross profit and a reduction in interest expense related to the
repayment of a $1.0 million line of credit in India during 1H
2015.
The Company ended the period with $9.8 million of cash and cash
equivalents and short-term investments, compared with $14.8 million
in total as at 31 December 2014. Cash used in operations for the
first half was $3.8 million; down from $4.7 million during the same
period in 2014, resulting from improved gross margin and a $0.5
million reduction in non-cash working capital employed during the
period. The Company expects to continue to reduce cash flows used
in operations in the second half of 2015.
Operational Review
During the period Drinking Water continued to deliver strong
revenue growth as the Company's strategy of going to market with
and through strategic partners continued to build momentum. Our
partners, such as Perfect (China's largest direct-seller of
household products), Jarden (a global Fortune 500 Consumer Product
Goods company) and Eureka Forbes (Leading company in India with
Aquasure branded water purification devices sold via direct sales
force and in more than 18,000 retail dealers), continued to expand
sales, marketing and distribution of their water purification
devices powered by HaloPure's(c) class-leading disinfection
technology. In H1 2015, Perfect China took delivery of 225,000
cartridges powered by HaloPure(R), an increase of 47%
year-over-year. Another national partner in China using HaloPure(R)
bacteriostatic cartridges in combination with their reverse osmosis
system was the Company's second largest contributor to Drinking
Water revenue in 1H 2015, behind Perfect. This new partner
demonstrates both the potential for further revenue increases and
the opportunity that combined drinking water technologies represent
to continued growth in this segment.
As announced on 21 August 2015, HaloSource signed an agreement
with Panasonic India Private Limited, a wholly-owned subsidiary of
Panasonic Corporation, to launch a new line up of Panasonic
branded, gravity-fed, water purification devices powered by
HaloSource's HaloPure(R) class leading disinfection technology into
the Indian market. The first two devices in the line up are
scheduled to begin selling in September 2015.
While the Recreational Water segment experienced lower revenues
during the period, the packaged business is seeing continued growth
driven by partners such as Fluidra. Structural changes previously
implemented reduced the size of the Company's direct sales team
with a corresponding shift to a lower cost commission only indirect
sales model. This model broadened the Company's distribution with
more feet on the ground and removed some fixed cost resulting in
improved profitability of this business segment as profit margins
expanded.
The Environmental Water segment's revenues were stable during
the period as the Company focused on strengthening key strategic
relationships with established solutions providers in North America
such as Rain For Rent and Stormtec. New projects during the period
include a Rain For Rent project treating groundwater in the first
phase of large-scale multi-phase construction project to extend the
Bay Area Rapid Transit ("BART") rail system through Silicon Valley
in California. This is the Company's largest Rain For Rent project
completed to-date.
People
The Company's headcount at 30 June 2015 was 122, versus 119 at
30 June 2014. As we continue to reduce our cash-burn, headcount is
a critical metric, representing approximately 60% of total
operating expenses. Headcount has increased in the lower-cost
Asia-Pacific region with 50% of headcount now located in India and
China, compared with 43% in the prior period.
Subsequent to 30 June 2015 the Company has initiated a move from
partial to fully outsourced production of our Environmental Water
products and to optimise sales coverage to drive improved gross
margins, further reducing direct headcount and operating expenses
while improving profitability in this segment.
Outlook
As the issues of water contamination and drinking water
availability continue to loom large globally, we continue to focus
on developing our position as the technology integrator and
solutions provider for our strategic partners who in turn take our
technology to market. The multi-billion dollar market for water
purification and remediation solutions will continue to grow
rapidly and we remain a sought-after technology partner, helping
solve unmet needs in both the consumer and business segments.
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In the crucial Drinking Water segment, we continue to establish
strong relationships as the water technology innovation partner to
leading multi-national companies and are pleased to have recently
added Panasonic to our growing list of strategic partners deploying
our technology in China, India and Latin America. Existing partners
will continue to expand their installed base with product launches
in new markets in the coming months and a focus on driving
increased cartridge replacement rates. We are also exploring
expansion of our business into new markets, such as North America,
with prospective new partners who see the opportunity for our
HaloPure(R) technology in their product offerings as well as for
the commercialisation of our newly developed proprietary media for
the removal of dissolved contaminants such as metals, an entirely
new aspect of water purification for the Company.
Recreational Water products continue to deliver strong gross
margins and the business is expanding geographically through new
partnerships with companies such as Fluidra. In the second half of
the year, we expect to launch two new products as well as establish
a stronger presence with key retailers across all channels and
regions.
Our Environmental Water business presently has paid trials
underway for uses of our technology in oil and gas projects in
Canada, construction in the US and mining in Latin America.
We remain confident in our ability to continue to drive strong,
sustainable growth in revenue, gross margins and profitability as
we expand both existing and new partnerships while continuing to
bring meaningful technology innovation to rapidly growing markets
in all segments.
HaloSource, Inc. and Subsidiaries Six months
Unaudited Interim Condensed Consolidated Six months ended
Statements of Operations and Comprehensive ended June 30,
Loss June 30, 2014
(US $000's, except per share data) 2015
---------------------------------------------- ------------- -----------
Revenue - net 7,487 7,302
Cost of goods sold 4,466 4,435
---------------------------------------------- ------------- -----------
Gross profit 3,021 2,867
Operating expenses
Research and development 1,108 1,248
Selling, general, and administrative 7,166 7,141
Goodwill impairment 173 -
Total operating expenses 8,447 8,389
---------------------------------------------- ------------- -----------
Operating loss (5,426) (5,522)
---------------------------------------------- ------------- -----------
Other expense, net (23) (143)
---------------------------------------------- ------------- -----------
Loss before income taxes (5,449) (5,665)
Income taxes - -
---------------------------------------------- ------------- -----------
Net loss (5,449) (5,665)
---------------------------------------------- ------------- -----------
Other comprehensive loss
Unrealized (loss) gain on available-for-sale
investments (12) 4
Foreign currency translation adjustments (22) (46)
---------------------------------------------- ------------- -----------
Other comprehensive loss (34) (42)
---------------------------------------------- ------------- -----------
Comprehensive loss (5,483) (5,707)
---------------------------------------------- ------------- -----------
Basic and diluted net loss per share (0.02) (0.04)
---------------------------------------------- ------------- -----------
Shares used to compute basic and
diluted loss per share (000's) 220,246 156,518
---------------------------------------------- ------------- -----------
See accompanying notes to unaudited interim condensed
consolidated financial statements
HaloSource, Inc. and Subsidiaries
Unaudited Interim Condensed June 30, December
Consolidated Balance Sheets 31,
(US $000's) 2015 2014
------------------------------------- ----------- -----------
Assets
Current assets
Cash and cash equivalents 4,328 3,295
Short-term investments 5,503 9,985
Restricted cash - 1,552
Accounts receivable, less allowance
for doubtful
accounts of $294 and $294,
respectively 6,172 8,388
Inventories - net 3,170 3,187
Prepaid expenses and other
current assets 875 1,528
------------------------------------- ----------- -----------
Total current assets 20,048 27,935
Property and equipment - net 2,892 3,160
Goodwill 2,007 2,180
Other intangible assets - net 663 724
Deposits 212 210
------------------------------------- ----------- -----------
Total assets 25,822 34,209
------------------------------------- ----------- -----------
Liabilities and stockholders'
equity
Current liabilities
Accounts payable 1,670 2,986
Accrued expenses and other
current liabilities 1,024 1,573
Salaries and benefits payable 441 508
Current portion of debt and
capital lease obligations 19 1,050
------------------------------------- ----------- -----------
Total current liabilities 3,154 6,117
Long-term portion of debt and
capital lease obligations 16 25
Deferred rent 1,011 1,073
Deferred tax liabilities 138 138
------------------------------------- ----------- -----------
Total liabilities 4,319 7,353
------------------------------------- ----------- -----------
Stockholders' equity
Common stock, no par value 141,349 141,219
Accumulated other comprehensive
income 191 225
Accumulated deficit (120,037) (114,588)
------------------------------------- ----------- -----------
Total stockholders' equity 21,503 26,856
------------------------------------- ----------- -----------
Total liabilities and stockholders'
equity 25,822 34,209
------------------------------------- ----------- -----------
See accompanying notes to unaudited interim
condensed consolidated financial statements
HaloSource, Inc. and Subsidiaries
Unaudited Interim Condensed Consolidated Statements of
Stockholders' Equity
----------------------------------------------------------------------------------------
Accumulated
Other Total
Common Stock Comprehensive Accumulated Stockholders'
(US$000's, except
shares in 000's) Shares Amount Income Deficit Equity
---------------------- -------- -------- -------------- ------------ --------------
Balance, December
31, 2013 156,484 130,665 73 (105,958) 24,780
---------------------- -------- -------- -------------- ------------ --------------
Exercise of common
stock options 10 1 - - 1
Issuance of shares
upon vesting of
restricted stock 100 10 - - 10
Share-based
compensation - 337 - - 337
Shares issued,
net of offering
costs of $686 63,636 10,206 10,206
Other comprehensive
income - - 152 - 152
Net loss - - - (8,630) (8,630)
Balance, December
31, 2014 220,230 141,219 225 (114,588) 26,856
---------------------- -------- -------- -------------- ------------ --------------
Exercise of common
stock options 1 - - - -
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Issuance of shares
upon vesting of
restricted stock 40 10 - - 10
Share-based
compensation - 120 - - 120
Other comprehensive
loss - - (34) - (34)
Net loss - - - (5,449) (5,449)
---------------------- -------- -------- -------------- ------------ --------------
Balance, June 30,
2015 220,271 141,349 191 (120,037) 21,503
---------------------- -------- -------- -------------- ------------ --------------
See accompanying notes to unaudited interim condensed
consolidated financial statements.
HaloSource, Inc. and Subsidiaries Six months Six months
Unaudited Interim Condensed Consolidated ended ended
Statements of Cash Flows
(US $000's) June 30, June 30,
2015 2014
-------------------------------------------- ----------- -----------
Operating activities
Net loss (5,449) (5,665)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 494 505
Goodwill impairment 173 -
Allowance for inventory, sales returns
and bad debts 45 (90)
Share-based compensation 130 197
(Gain) loss on disposal of property,
equipment and other assets (8) 14
Changes in operating assets and
liabilities:
Accounts receivable 2,230 1,446
Inventories (23) (365)
Prepaid expenses and other assets 652 565
Accounts payable (1,327) (712)
Accrued expenses and other liabilities (512) (394)
Salaries and benefits payable (96) (167)
Deferred rent (72) (57)
-------------------------------------------- ----------- -----------
Net cash used in operating activities (3,763) (4,723)
-------------------------------------------- ----------- -----------
Cash flows from investing activities
Proceeds on disposal of property
and equipment 8 110
Purchase of property and equipment (159) (86)
Purchase of short-term investments (31) (415)
Sale of short-term investments 4,500 5,250
Decrease in restricted cash 1,552 390
-------------------------------------------- ----------- -----------
Net cash provided by investing activities 5,870 5,249
-------------------------------------------- ----------- -----------
Cash flows from financing activities
Repayments of debt and capital lease
obligations (1,056) (28)
Proceeds from exercise of stock
options and warrants - 1
-------------------------------------------- ----------- -----------
Net cash used in financing activities (1,056) (27)
-------------------------------------------- ----------- -----------
Effect of exchange rate changes
on cash (18) 1
-------------------------------------------- ----------- -----------
Net increase in cash and cash equivalents 1,033 500
Cash and cash equivalents, beginning
of period 3,295 1,762
-------------------------------------------- ----------- -----------
Cash and cash equivalents, end of
period 4,328 2,262
-------------------------------------------- ----------- -----------
Supplemental disclosures of noncash
investing and financing activities:
Increase in accrued property and
equipment purchases - 29
See accompanying notes to unaudited interim condensed
consolidated financial statements
Notes to Condensed Consolidated Financial Statements
1. General information
HaloSource, Inc. and its subsidiaries (together, the "Company"
or "HaloSource") is a global clean water technology company,
headquartered near Seattle in Bothell, WA, U.S.A., with
subsidiaries in India and China and operations in other markets
around the world through its relationships with distributors and
other third parties. The Company's proprietary technologies for
drinking water, recreational water and environmentally friendly
wastewater recycling, enable the Company's partners to rid the
world's water of impurities and return it responsibly to the earth.
HaloSource markets its products under its brand names of
HaloPure(R) , SeaKlear(R) , AquaPill(R) , HaloKlea(R) , Solar
Shield(TM), StormKlear(R) and Mighty Pod(R) .
2. Basis of preparation
The condensed consolidated financial information for the six
month periods ended June 30, 2015 and 2014 has been prepared in
accordance with generally accepted accounting principles in the
United States of America ("U.S. GAAP") which is appropriate given
the Company is incorporated in the State of Washington in the
United States. References to U.S. GAAP issued by the Financial
Accounting Standards Board ("FASB") in the Company's notes to its
condensed consolidated financial statements are to the FASB
Accounting Standards Codification, sometimes referred to as the
"Codification" or "ASC". The condensed consolidated financial
information should be read in conjunction with the audited annual
financial statements for the year ended December 31, 2014, which
have also been prepared in accordance with U.S. GAAP and were made
available on March 24, 2015. The financial information for the
six-month periods ended June 30, 2015 and June 30, 2014 is
unaudited.
Principles of consolidation
The consolidated financial statements include the accounts of
HaloSource and its wholly owned subsidiaries: HaloSource
International, Inc., HaloSource Asia, Inc., HaloSource Hong Kong
Ltd., HaloSource China, Inc., SeaKlear Pool Pills LLC, HaloSource
Technologies Pvt. Ltd., HaloSource Water Purification Technology
(Shanghai) Co. Ltd., and HASO Corporation. Intercompany
transactions and balances have been eliminated.
Liquidity and capital resources
The Company has incurred net losses and negative operating cash
flows since inception, and as of June 30, 2015, the Company had an
accumulated deficit of approximately $120.0 million. For the six
months ended June 30, 2015, the Company's net loss was $5.4 million
and cash used in operating activities was $3.8 million. As of June
30, 2015, the Company has $4.3 million of cash and cash equivalents
and $5.5 million of short term investments.
The Company has implemented certain cost savings measures and
implemented other plans that have reduced cash used by operations
in 2015 as compared to 2014 and expects to continue to do so. In
order to generate sufficient revenue to achieve profitability, the
Company must successfully maintain its existing relationships and
build new relationships with its customers to develop the reach and
application of the Company's technologies. There can be no
assurance that these efforts will be successful. The Company
continues to face significant risks associated with successful
execution of its strategy. These risks include, but are not limited
to, technology and product development, introduction and market
acceptance of new products and services, changes in the
marketplace, liquidity, competition from existing and new
competitors which may enter the marketplace, and retention of key
personnel. Management plans to continue to finance the Company's
operations with a combination of currently available cash and
short-term investments. Management believes current funding will be
sufficient to finance the Company's operations through the
remainder of 2015; however, if necessary, the Company may seek
other financing options. If adequate funds are not available, the
Company may be required to reduce the scope, delay or eliminate
some or all of its planned commercial activities. The accompanying
financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the
realization of assets and the settlement of liabilities and
commitments in the normal course of business. The financial
statements for the period ended June 30, 2015 do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from uncertainty
related to the Company's ability to continue as a going
concern.
Use of estimates
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The preparation of condensed consolidated financial statements
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the condensed
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could materially differ from those estimates. Estimates include,
among others, the Company's allowance for doubtful accounts, sales
returns, inventory obsolescence, share-based compensation, and
impairment evaluations for goodwill and long-lived assets.
3. Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended December 31, 2014,
except as described below.
Recent accounting pronouncements
In June 2014, the FASB issued ASU 2014-09, Revenue from
Contracts with Customers. The update gives entities a single
comprehensive model to use in reporting information about the
amount and timing of revenue resulting from contracts to provide
goods or services to customers. The ASU, which applies to any
entity that enters into contracts to provide goods or services,
will supersede current revenue recognition requirements and most
industry-specific guidance throughout the Industry Topics of the
Codification. The update is effective for the Company for its
financial year ending December 31, 2018, including interim periods
within that reporting period and early adoption is not permitted.
The Company is currently reviewing the provisions of this ASU to
determine if there will be any material effect on its consolidated
financial statements.
In August 2014, the FASB issued ASU 2014-15, Presentation of
Financial Statements - Going Concern, which added Subtopic 205-40
to the ASC (the "Subtopic"). This Subtopic requires management to
determine whether substantial doubt exists concerning the reporting
entity's ability to continue as a going concern, in which case
certain disclosures will be required. The Subtopic affects
financial statement presentation but not methods of accounting, and
is effective on a prospective basis for annual periods ending after
December 2016 and each reporting period thereafter, although early
adoption is permitted. The Company has not early adopted the
Subtopic.
4. Commitments and contingencies
Litigation and other contingencies
The Company may be subject to a variety of legal proceedings
that could arise in the ordinary course of business or from its
shareholders. The Company evaluates its exposure to threatened or
pending litigation on a regular basis. To the extent it were
required, the Company would evaluate the potential amount of loss
related to litigation as well as the potential range of outcomes
related to such loss. Determining the amount of potential loss and
the range of potential outcomes requires significant judgment. The
Company will record a loss contingency if an amount becomes both
probable and measurable. In addition, any such proceedings, whether
meritorious or not, could be time consuming, costly, and result in
the diversion of significant operational resources or management
time.
Operating and capital leases
The Company has entered into operating lease agreements for its
various office and manufacturing facilities worldwide and capital
lease agreements for certain equipment. These leases are in effect
through 2023.
Total rent expense under operating lease agreements for the six
months ended June 30, 2015 and 2014 was $428,000 and $435,000,
respectively.
5. Restricted cash
Restricted cash primarily represents cash collateral used to
secure working capital borrowing needs related to operations of the
Company's foreign subsidiaries. In April 2011, the Company
established a working capital line of credit arrangement through
Axis Bank in India (see Note 13, below). During the six months
ended June 30, 2015, the working capital line of credit was repaid
and canceled and all restrictions on cash held as collateral were
removed.
6. Segment reporting
The Company measures the results of its reportable segments
based on revenue and gross profit. The Company does not allocate
operating expenses, income taxes or interest income (expense) to
the reportable business units for purposes of reporting to the
chief operating decision maker.
Prior to January 1, 2014, the Company's operating segments were:
Drinking Water (formerly referred to as Water Purification),
Recreational Water, Environmental Water and Anti-microbial
Coatings. During the year ended December 31, 2014, the Company
determined that its Anti-microbial Coatings segment no longer met
the criteria of a reportable segment. As a result, our financial
results are now reported on the basis of three reportable segments:
Drinking Water, Recreational Water and Environmental Water.
Financial information for the six months ended June 30, 2014 has
been reclassified to be consistent with the June 30, 2015
presentation.
Information on reportable segments and reconciliation to
condensed consolidated net loss for the six-month periods ended
June 30, 2015 and 2014 are presented below. Also presented below
are total assets by operating segment as of June 30, 2015 and
December 31, 2014. The Company does not report to the chief
operating decision maker its capital expenditures or assets for the
Recreational Water or Environmental Water segments and does not
assign intangible assets to the segments.
Six months ended June 30, 2015
Recreational Environmental Drinking
(US $000's) Water Water Water Unallocated Consolidated
---------------- ------------- -------------- -------- ----------- ------------
Revenue 3,605 1,178 2,658 46 7,487
Gross profit 2,084 402 495 40 3,021
Operating
expenses - - - (8,447) (8,447)
Other expenses,
net - - - (23) (23)
Net loss - - - - (5,449)
------------
Assets - - 7,170 18,652 25,822
---------------- ------------- -------------- -------- ----------- ------------
Six months ended June 30, 2014, except assets as of December 31,
2014
Recreational Environmental Drinking
(US $000's) Water Water Water Unallocated Consolidated
---------------- ------------- -------------- -------- ----------- ------------
Revenue 4,010 1,219 1,996 77 7,302
Gross profit 2,176 312 315 64 2,867
Operating
expenses - - - (8,389) (8,389)
Other expenses,
net - - - (143) (143)
Net loss - - - - (5,665)
------------
Assets - - 7,024 27,185 34,209
---------------- ------------- -------------- -------- ----------- ------------
7. Net loss per share
Basic net loss per share is computed using the weighted average
number of common shares outstanding during the period. Diluted net
loss per share is computed using the weighted average number of
common and potentially dilutive shares outstanding during the
period. Potentially dilutive shares consist of the incremental
common shares issuable upon conversion of the exercise of common
stock options and warrants. The Company had a net loss for all
periods presented herein; therefore, none of the options or
warrants outstanding during each of the periods presented have been
included in the computation of diluted loss per share as they were
antidilutive. Total potentially dilutive shares of 8,259,000 and
7,186,000 of common stock were excluded from the calculations of
diluted loss per share for the six months ended June 30, 2015 and
2014, respectively.
8. Inventories
Inventories at June 30, 2015 and December 31, 2014 consist of
the following:
June 30, December
(US $000's) 2015 31, 2014
----------------- -------- ---------
Raw materials 1,942 1,860
Finished goods 1,228 1,327
-------- ---------
Inventories, net 3,170 3,187
----------------- -------- ---------
During the six month periods ended June 30, 2015 and 2014, the
Company recorded cost of goods sold of $0 and $98,000,
respectively, to reduce certain inventories from their recorded
cost to their estimated net realizable value. The inventory
reported in the condensed consolidated balance sheets as of June
30, 2015 and December 31, 2014 is net of write-downs of inventory
carrying values due to obsolescence of $488,000 and $533,000,
respectively.
9. Property and equipment
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