10-Q: Watair Inc. (Now Vyre Network) Reports Continued Losses in Q3 2013, Raises Going Concern Doubts

Watair Inc., now known as Vyre Network, reports a net loss of $415,731 for the nine months ended December 31, 2012, with accumulated losses raising concerns about the company's ability to continue as a going concern.

Summary

• Watair Inc., currently Vyre Network, filed its Form 10-Q for the quarter ended December 31, 2012.
• The company markets and distributes atmospheric water generator machines and owns intellectual property related to water treatment processes.
• For the nine months ended December 31, 2012, the company reported total revenue of $10,672 compared to $4,336 for the same period in 2011.
• The net loss for the nine months ended December 31, 2012, was $415,731, compared to a net loss of $559,726 for the same period in 2011.
• The company's accumulated losses since inception totaled $12,765,088 as of December 31, 2012.
• The report expresses substantial doubt about the company's ability to continue as a going concern due to these accumulated losses and the need for additional financing.
• Management plans to secure additional funding sources to mitigate these concerns.
• The company is involved in a legal proceeding with a former distributor, which has been settled confidentially.
• The company identifies several risk factors, including dependence on external financing, early stage of development, competition, and reliance on key personnel.

Sentiment

Score: 3

Explanation: The document presents a negative outlook due to the company's continued losses, going concern doubts, and dependence on external financing. While there was some revenue growth, the overall financial situation is precarious.

Positives

• Revenue increased from $4,336 to $10,672 for the nine months ended December 31, 2012, compared to the same period in 2011, indicating some growth in sales.
• The net loss decreased from $559,726 to $415,731 for the nine months ended December 31, 2012, compared to the same period in 2011, suggesting improved cost management or increased efficiency.
• Management is actively seeking additional funding sources to address going concern issues.

Negatives

• The company has accumulated losses of $12,765,088 since its inception, indicating a history of unprofitability.
• The report expresses substantial doubt about the company's ability to continue as a going concern, which could deter investors.
• The company has negative working capital of $605,838 as of December 31, 2012.
• The company's cash balance is low, at $874 as of December 31, 2012.

Risks

• The company is dependent on external financing to continue operations and implement its business plan.
• The company is in its early stages of development and faces a risk of business failure.
• The company faces competition from larger and better-financed companies.
• The company is dependent on key management and personnel.
• The company may be subject to product liability or breach of contract claims.
• The company's business is subject to risks associated with offshore manufacturing and international operations.
• The company's independent auditors have expressed substantial doubt about its ability to continue as a going concern.

Future Outlook

The company's future plans include securing additional funding sources to continue operations and implement its business plan; however, there is no assurance that sufficient funds will be available.

Management Comments

• Management plans to further evaluate, develop and manage the commercialization, sub-license and/or commercial sale of these products.
• Management has obtained additional funds by related party advances, however there is no assurance that this additional funding is adequate and further funding may be necessary.

Industry Context

The company operates in the atmospheric water generator market, which is a relatively new and competitive market. The company faces competition from larger and better-financed companies.

Comparison to Industry Standards

• It's difficult to compare Watair's performance directly to industry standards due to its unique focus on atmospheric water generators and its small size.
• Larger water technology companies like Xylem or Danaher have significantly higher revenues and more diversified product lines.
• Startups in the water technology space often face challenges in scaling production and securing funding, which appears to be the case for Watair.
• Compared to other development stage companies, Watair's revenue generation is low, and its accumulated losses are substantial, raising concerns about its long-term viability.

Legal Proceedings

• The Company received an alleged claim in January 2009 from one of its former distributors for failing to deliver merchandise ordered and paid for by the Plaintiff.
• On July 20, 2009, the Company filed a cross-complaint for breach of contract, intentional interference with contractual relationship, intentional interference with prospective economic relationship and accounting.
• On February 2, 2010 a confidential settlement agreement and release was effected between the parties.

Related Party Transactions

• During the three months ended December 31, 2012, directors of the company charged the Company with Management fees of $10,000.

Stakeholder Impact

• Shareholders face the risk of dilution if the company raises additional capital through equity financing.
• Employees face uncertainty due to the company's going concern doubts.
• Customers may be concerned about the company's ability to fulfill warranties and provide ongoing support.
• Suppliers may be hesitant to extend credit to the company due to its financial difficulties.
• Creditors face the risk of non-payment if the company is unable to continue as a going concern.

Next Steps

• The company needs to secure additional funding to continue operations.
• The company needs to improve its financial performance to alleviate going concern doubts.
• The company needs to address the risk factors identified in the report.

Key Dates

Keywords

Watair, Vyre Network, going concern, financial statements, Form 10-Q, losses, revenue, financing, water generator, atmospheric water