10-Q: Watair Inc. Reports Dismal Q3 Results Amidst Going Concern Doubts

Watair Inc. reports a significant decrease in revenue and a net loss for the nine months ended December 31, 2011, raising substantial doubt about its ability to continue as a going concern.

Summary

• Watair Inc. reported its financial results for the quarter ended December 31, 2011.
• The company's revenue decreased significantly to $4,336 from $230,591 compared to the same period in 2010.
• Operating expenses increased to $560,690 from $482,825 in the same period of 2010.
• The company reported a net loss of $559,726 for the nine months ended December 31, 2011, compared to a net loss of $391,540 for the same period in 2010.
• The company had minimal cash reserves of $523 as of December 31, 2011.
• There is substantial doubt about the company's ability to continue as a going concern.
• The company is dependent on securing additional funding to continue operations.

Sentiment

Score: 2

Explanation: The document paints a very negative picture of the company's financial health, with declining revenue, increasing losses, minimal cash reserves, and substantial doubt about its ability to continue as a going concern.

Positives

• The company issued additional capital of common shares of 250,000,000 Common stock at a price of $0.01 per share.

Negatives

• The company's revenue decreased significantly to $4,336 from $230,591 compared to the same period in 2010.
• Operating expenses increased to $560,690 from $482,825 in the same period of 2010.
• The company reported a net loss of $559,726 for the nine months ended December 31, 2011, compared to a net loss of $391,540 for the same period in 2010.
• The company had minimal cash reserves of $523 as of December 31, 2011.
• The company has accumulated losses of $12,022,482 since its inception.
• The company has negative working capital of $665,597.

Risks

• The company is dependent on external financing and may not be able to secure additional funding.
• The company is in the early stages of development and faces a risk of business failure.
• The company is competing against larger and better-financed companies.
• The company's business and the success of its products could be harmed if it is unable to maintain its brand image.
• The company is dependent on its suppliers to provide enough inventories to meet its purchase orders.
• Demand for the company's products and services may fail to materialize.
• There is substantial doubt as to the company's ability to continue as a going concern.
• 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.
• The company's international operations expose it to political, economic and currency risks.
• The company may suffer from infringements or piracy of its trademarks, designs, brands or products.
• Unfair trade practices or government subsidization may impact the company's ability to compete profitably.
• If the company markets and sells its products in international markets, it will be subject to additional regulations.

Future Outlook

The company's future results of operation will be highly dependent upon the success of its efforts to sell and market its products and technologies.

Industry Context

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

Comparison to Industry Standards

• It is difficult to compare Watair's performance to industry standards due to its unique product and early stage of development.
• The company's financial performance is significantly below that of established companies in the water treatment and appliance industries.
• Companies like Primo Water Corporation or Nestlé Waters North America have significantly higher revenue and profitability.

Management Changes

Related Party Transactions

• During the Nine months ended December 31, 2011, directors of the company charged the Company with Management fees of $10,000.
• During the Nine months ended December 31, 2011, The Company issued additional capital of common shares of 250,000,000 Common stock at a price of $0.01 per share.

Stakeholder Impact

• Shareholders face significant risk of dilution or loss of investment.
• Employees face uncertainty regarding job security.
• Customers may be concerned about the company's ability to fulfill orders and provide warranty support.
• Suppliers may be concerned about the company's ability to pay its bills.
• Creditors face increased risk of default.

Next Steps

• The company plans to sell its products to distributors and also through multiple indirect channels, such as resellers.
• The company intends to secure additional funding sources.
• The company anticipates entering into employment contract with Mr. Rosner.

Key Dates

Keywords

Watair, atmospheric water generator, financial results, going concern, revenue, net loss, liquidity, capital resources, risk factors