UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
|X| Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended: March 31, 1998
--------------
or
|_| Transition Report Pursuance to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from to
----------------- -----------------
Commission File Number: 000-23039
---------
ORALABS HOLDING CORP.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Colorado 14-1623047
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2901 South Tejon, Englewood, Colorado 80110
------------------------------------- --------
(Address of principal executive offices) (Zip Code)
80110
(303) 783-9499
-------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
|X| Yes |_| No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the issuer filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after
the distribution of securities under a plan confirmed by a court.
| | Yes | | No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 1, 1998, Issuer had 9,123,555 shares of common stock, $.001 Par
Value, outstanding.
Transitional Small Business Disclosure Format (check one)
|_| Yes |X| No
<PAGE>
INDEX
Page
Number
------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1998
(Unaudited) and December 31, 1997.......................2
Consolidated Statements of Income Three Months Ended
March 31, 1998 and March 31, 1997 (Unaudited)...........3
Consolidated Statement of Changes in Stockholders
Equity from December 31, 1997 through March 31,
1998 (Unaudited)........................................4
Consolidated Statements of Cash Flows, Three Months
Ended March 31, 1998 and March 31, 1997 (Unaudited).....5
Notes to Consolidated Financial Statements................6
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations....................9
Part II. Other Information.........................................11
Exhibit Index ...........................................................13
1
<PAGE>
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
BALANCE SHEETS
(Unaudited)
March 31 December 31
1998 1997
---------- -----------
Current Assets
Cash in bank $1,264,483 $1,023,598
Inventory 780,426 599,270
Accounts receivable, net of allowance
for doubtful accounts 562,176 686,668
Other current assets 140,496 159,679
---------- ----------
Total Current Assets 2,747,581 2,469,215
Property and equipment, net of accumulated
depreciation 224,403 214,732
---------- ----------
Total Assets $2,971,984 $2,683,947
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable and accrued expenses $ 596,327 $ 556,865
Income taxes payable 126,910 119,586
---------- ----------
Total Current Liabilities 723,237 676,451
---------- ----------
Stockholders' Equity:
Preferred stock - $.01 par value
1,000,000 shares authorized
none issued and outstanding -- --
Common stock - $.001 par value,
100,000,000 shares authorized;
9,123,555 shares issued and
outstanding 9,124 9,124
Additional paid-in capital 1,134,427 1,134,427
Retained earnings 1,105,196 863,945
---------- ----------
Total Stockholders' Equity 2,248,747 2,007,496
---------- ----------
Total Liabilities and Stockholders' Equity $2,971,984 $2,683,947
========== ==========
The accompanying notes are an integral part of the financial statements
2
<PAGE>
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
----------- ------------
Revenue:
Sales $1,808,643 $1,719,262
Cost of sales 935,003 671,451
---------- ----------
Gross Profit 873,640 1,047,811
---------- ----------
Operating Expenses
Salaries 178,683 372,144
Bad debts 9,043 8,596
Rent 28,750 16,500
Commissions 40,496 72,671
Research and development 38,202 1,928
Depreciation 15,665 10,490
Other operating expenses 211,741 160,432
---------- ----------
Total Operating Expenses 522,580 642,761
---------- ----------
Net Operating Income 351,060 405,050
---------- ----------
Other Income
Interest income 14,515 4,784
---------- ----------
Total Other Income 14,515 4,784
---------- ----------
Net Income before taxes 365,575 409,834
Provision for Income taxes 124,324 --
---------- ----------
Net Income $ 241,251 $ 409,834
========== ==========
Net Income per Common Share $ .03 $ .05
========== ==========
Weighted Average Shares Outstanding 9,123,555 7,798,784
========== ==========
Diluted Income per Share $ .03 $ .05
========== ==========
Diluted Weighted Average Shares Outstanding 9,498,555 7,798,784
========= =========
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From December 31, 1997 through March 31, 1998
(Unaudited)
Additional
Preferred Stock Common Stock Paid-in Retained
No./Shares Amount No./Shares Amount Capital Earnings Total
---------- ------ ---------- ------ ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 -- $ -- 9,123,555 $ 9,124 $1,134,427 $ 863,945 $2,007,496
Net income for the Three
month period ended March 31,
1998 -- -- -- -- -- 241,251 241,251
----- --------- ---------- ---------- ---------- ---------- ----------
1998
Balance at March 31, 1998 -- $ -- 9,123,555 $ 9,124 $1,134,427 $1,105,196 $2,248,747
===== ========= ========== ========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
4
</TABLE>
<PAGE>
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
------------ ------------
Cash Flows from Operating Activities:
Net income $ 241,251 $ 409,834
Adjustments to reconcile net
loss to net cash used
in operating activities
Depreciation 15,665 10,490
Increase (decrease) in accounts
payable and accrued expenses 39,463 (93,828)
(Increase) decrease in accounts
receivable 124,492 (144,620)
Decrease (increase) in inventory (181,156) 121,391
Other, net 26,506 (67,131)
----------- -----------
Net Cash Provided by Operating
Activities 266,221 236,136
----------- -----------
Cash Flows from Investing Activities:
(Acquisitions) of property and
equipment (25,336) (19,692)
----------- -----------
Net Cash Provided by (Used in)
Investing Activities (25,336) (19,692)
----------- -----------
Cash Flows from Financing Activities -- --
----------- -----------
Increase in cash 240,885 216,444
Cash, Beginning of Period 1,023,598 120,399
----------- -----------
Cash, End of Period $ 1,264,483 $ 336,843
=========== ===========
Interest Paid $ -- $ --
=========== ===========
Income Taxes Paid $ 117,000 $ --
=========== ===========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and 1997
(1) Organization
------------
Oralabs Holding Corp. (OHC) a Colorado corporation was formed during
June 1997. SSI Capital Corp. (SSI) a New York corporation was
incorporated on January 30, 1981. In 1996, SSI had a November 30 year
end but in 1997 it was changed to a December 31 year end. Effective
August 22, 1997, SSI was merged into Oralabs Holding Corp. and the
outstanding shares of SSI were converted to shares of Oralabs Holding
Corp. on a one for two basis. All references to common stock in the
Company's financial statements have been retroactively adjusted for
the merger and the one for two reduction in shares outstanding.
Oralabs, Inc. (ORALABS), a Colorado corporation was incorporated on
August 10, 1990. ORALABS is in the business of manufacturing and
distributing lip balm, fresh breath and other products. ORALABS is a
wholly-owned subsidiary of OHC.
OL Sub Corp, a Colorado corporation was incorporated on October 23,
1997. As of March 31, 1998 this corporation was inactive.
The consolidated financial statements include the accounts of ORALABS
and the accounts of SSI since the date of the reverse acquisition and
the accounts of OL Sub Corp. since inception (see Note 3). All
intercompany accounts and transactions have been eliminated.
(2) Unaudited Statements
--------------------
The balance sheet as of March 31, 1998, the statements of income and
the statements of cash flows for the three month periods ended March
31, 1998 and March 31, 1997 and the statement of changes in
stockholders' equity for the three month period ended March 31, 1998
have been prepared by the Registrant without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at March 31, 1998, and for all
periods presented, have been made.
6
<PAGE>
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
---------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and 1997
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and 1997
(3) Business Combination
--------------------
Effective May 1, 1997 SSI and ORALABS completed a business combination
whereby ORALABS became a wholly-owned subsidiary of SSI. The
transaction has been accounted for as a reverse acquisition. The net
monetary assets of SSI at the time of the reverse acquisition of
approximately $161,849 have been accounted for as issuance of stock
and additional paid-in capital.
(4) Income Taxes
------------
Prior to completion of the business combination, ORALABS had elected
to be taxed under Subchapter S of the Internal Revenue Service Code.
The election was automatically terminated effective May 1, 1997. No
provision for income taxes was recorded prior to May 1, 1997 since
shareholders of ORALABS included the net income from the company on
their personal returns and were responsible for the payment of the
related income taxes.
(5) Income Per Share Information
----------------------------
Basic income per share was computed using the weighted average shares
outstanding for the respective periods. Diluted income per share for
the three month period ended March 31, 1998 was computed giving effect
to the 500,000 options outstanding exercisable at $1.00 per share,
with an approximate market value of $4.00 per share, summarized as
follows:
For the Three Month Period Ended March 31, 1998
-----------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic Income per Share:
Income available to
Common Stockholders $241,251 9,123,555 $ .03
Effect of Dilutive
Securities:
Options - 375,000
-------- ---------
Diluted Income Per Share:
Income available to
Common Stockholders $241,251 9,498,555 $ .03
======== ========= ========
7
<PAGE>
ORALABS HOLDING CORP. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998 and 1997
(5) Income Per Share Information, Continued
---------------------------------------
The computation of the dilutive shares added to the denominator
according to the provisions of the Financial Accounting Standards
Board Statement #128 is summarized as follows:
Assumed approximate market value per share of $4.00, less
exercise price of $1.00 per share, equals $3.00 per share,
divided by $4.00 per share times 500,000, the number of
options outstanding, equals 375,000 shares.
Since the options were granted subsequent to March 31, 1997, there
were no dilutive securities outstanding at March 31, 1997, and
therefore, basic and diluted income per share computations were
identical.
8
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion of the financial condition and results of
operations of the Company relates to the three (3) months ended March 31, 1998
and 1997, and should be read in conjunction with the financial statements and
notes thereto included elsewhere in this Report.
Forward-Looking Statements.
- ---------------------------
Certain statements in this Report are forward-looking, and from time to
time, the Company may publish forward-looking statements relating to such
matters as anticipated financial performance, business prospects, technological
developments, new products, research and development activities and similar
matters. Actual results of future events could differ materially from
anticipated results or other expectations expressed in the Company's
forward-looking statements. Among the factors that could cause actual results
and the Company's experience to differ are the timely availability and
acceptance of new products, the impact of competitive products and pricing and
the lack of long-term contracts with distributors and purchasers.
Results of Operations.
- ----------------------
For the period ending March 31, 1998 as compared with the period ending March
31, 1997.
Gross profit decreased by $174,000. This is predominantly attributable to
the start up cost for introduction of a new mouthwash line introduced during the
quarter as well as additional expenses for product promotions undertaken during
the quarter.
Salaries decreased by $193,000. This was the result of a non-recurring
event by which stock was issued to two employees of OraLabs, Inc. for services
in the areas of human resources and investor relations in preparation for the
Company's entry into the public marketplace. The accrual for the period ended
March 31, 1997 was in the amount of $255,000 (the balance of the accrual in the
amount of $85,000 occurred in the quarter ended June 30, 1997). The reduction in
salaries reflected in the comparison of the two quarters was partially offset by
salaries paid for additional staffing in sales and engineering in the amount of
$62,000.
Rent increased by $12,000. This was the result of additional rent incurred
to lease a second warehouse facility and a one-time adjustment in the timing of
the accrual to rent owed for the headquarters facility.
Commissions decreased by $32,000 as a result of increased in-house sales.
9
<PAGE>
Research and development increased by $36,000. This was the result of
marketing research for a proposed line of vitamin and nutritional supplements.
Other Operating Expenses increased by $51,000. This was primarily the
result of increased legal fees related to public compliance work, the hiring of
consultants for the marketing of vitamin supplements and travel abroad to expand
international business.
Income taxes increased by $124,000. This was the result of OraLabs, Inc.
having no corporate tax obligations until May 1, 1997 (corporate net income was
passed through to its stockholders through April 30, 1997), as it was an S
Corporation until that date.
Liquidity and Capital Resources.
- --------------------------------
Balance Sheet as of March 31, 1998 Compared to December 31, 1997
- ----------------------------------------------------------------
Cash increased $241,000 as a result of additional cash from operations
during the quarter.
Inventory increased by $181,000. This is a result of expanded product lines
creating a need for a broader based raw materials inventory.
Accounts receivable decreased by $124,000. This was the result of reduced
sales due to seasonal fluctuations in sales of cough and cold products.
Retained earnings increased $241,000 as a result of net income from
operations.
Trends.
- -------
The Company has been broadening its product base by capitalizing on
management's research and development abilities, while utilizing existing
packaging components and manufacturing technology of the Company. This broadened
product base has given the Company more stability in the market place by making
the Company less reliant on any individual product. The broadened product base
has expanded the Company's customer base and helped to increase business with
existing customers. In addition to a broadened product base, the Company has
established new markets for its products, such as mass retailers and drugstores,
rather than being primarily focused on convenience stores. The Company expects
this trend to continue, although sales to convenience stores remain an important
part of the Company's sales strategy.
Impact of Inflation
- -------------------
The Company's financial condition has not been affected by the modest
inflation of the recent past. The Company's revenues have not been materially
effected by inflation in part because the Company's products have been primarily
very low cost, impulse items (under $0.99 cents to consumers). To the extent
that the Company's product line consists of higher priced items, the Company
does not know how inflation will affect revenues, although the Company believes
that sales of its higher priced products, to the extent such products are
considered to be medicinal (such as products to reduce sore throat symptoms),
will not be materially affected by inflation.
10
<PAGE>
PART II - OTHER INFORMATION
Item No. 1. Legal Proceedings. None.
------------------
Item No. 2. Changes in Securities. None.
----------------------
Item No. 3. Defaults Upon Senior Securities. None.
--------------------------------
Item No. 4 Submission of Matters to a Vote of
Security Holders. None.
-----------------
Item No. 5. Other Information. None.
------------------
Item No. 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a)
(27) Financial Data Schedule
(b) There were no reports on Form 8-K filed during the quarter reported upon in
this report.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ORALABS HOLDING CORP.
By: /s/ Gary Schlatter
------------------------------------
Gary Schlatter, President
By: /s/ Emile Jordan
-----------------------------------
Emile Jordan, Chief Financial
Officer
DATED: May 19, 1998.
12
<PAGE>
EXHIBIT INDEX
(27) Financial Data Schedule (filed herewith)
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,264,483
<SECURITIES> 0
<RECEIVABLES> 605,059
<ALLOWANCES> 42,883
<INVENTORY> 780,426
<CURRENT-ASSETS> 2,747,581
<PP&E> 371,139
<DEPRECIATION> (146,736)
<TOTAL-ASSETS> 2,971,984
<CURRENT-LIABILITIES> 723,237
<BONDS> 0
0
0
<COMMON> 9,124
<OTHER-SE> 2,239,623
<TOTAL-LIABILITY-AND-EQUITY> 2,971,984
<SALES> 1,808,643
<TOTAL-REVENUES> 1,808,643
<CGS> 935,003
<TOTAL-COSTS> 935,003
<OTHER-EXPENSES> 522,580
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 365,575
<INCOME-TAX> 124,324
<INCOME-CONTINUING> 241,251
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 241,251
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
