UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended - June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 0-24897
SurgiLight, Inc.
(Name of Small Business Issuer in its charter)
Delaware 35-1990562
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
7055 University Blvd, Winter Park, Florida 32792
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 657-6500
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
(Title or class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(D) of the securities Exchange Act
of 1934 during the preceding 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. YES [x] NO [ ]
As of June 30, 1999, the Registrant has outstanding 11,500,000 shares
of Common Stock.
<PAGE>
SurgiLight, Inc.
Form 10-QSB
Quarterly Report
June 30, 1999
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
<CAPTION>
(1) Financial Statements Page
<S> <C>
Balance Sheets for the three months ended March 31,
1998 and 1999, and six months ended June 30, 1999
and 1998 (unaudited) F-1
Statements of Operations for the three months ended
March 31, 1999 and 1998, and six months ended
June 30, 1999 and 1998 (unaudited) F-2
Statements of Cash Flows for the three months
ended March 31,1999 and 1998, and six months ended
June 30, 1999 and 1998 (unaudited) F-3
Statements of Changes in Stockholder's
Equity for the three months ended June 30, 1999
and 1998 and for the six months ended
June 30, 1999 and 1998 (unaudited) F-4
Notes to Unaudited Financial Statements F-5
</TABLE>
<PAGE>
SURGILIGHT, INC.
FINANCIAL STATEMENTS
(Unaudited)
FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998
<PAGE>
Rachel L. Siu
Certified Public Accountant
5100 Old Howell Branch Road
Winter Park, FL 32792
SurgiLight, Inc.
7055 University Blvd.
Winter Park, FL 32792
We have compiled the accompanying Balance Sheets of SurgiLight, Inc. as
of June 30, 1999 and 1998 and related Statements of Operations for the
six months ended June 30, 1999 and June 30, 1998, in accordance with
statements on standards for accounting and review services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management. We
have not audited or reviewed the accompanying financial statements and,
accordingly, do not express and opinion or any other form of assurance
on them.
Management has elected to omit substantially all the disclosures
ordinarily included in the financial statements. If the omitted
disclosures were included in the financial statements, they might
influence the user's conclusions about the company's financial position,
results of operations, and cash flows. Accordingly, these financial
statements are not designed for those who are not informed about such
matters.
/s/ Rachel L. Siu
Rachel L. Siu
Winter Park, Florida
July 27, 1999
<PAGE>
SURGILIGHT, INC.
BALANCE SHEETS
(Unaudited)
IN THOUSANDS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March, 31 March, 31 June, 30 June, 30
1999 1998 1999 1998
-------- -------- ------- -------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 435 $ 42 $ 532 $ 87
Accounts Receivables, Net 228 59 232 25
Inventory 879 1,359 948 1,338
Other Current Assets 3 - - -
------- ------- ------- -------
Total Current Assets 1,545 1,460 1,712 1,450
Property & Equipment, Net 1,157 483 1,105 451
Intangibles, Net 147 160 144 157
Other Assets 203 3 203 3
------- ------- ------- -------
Total Assets $ 3,052 $ 2,106 $ 3,164 $ 2,061
======= ======= ======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 176 91 106 -
Accrued Expenses 20 53 20 53
Other Current Liabilities 433 103 375 -
------- ------- ------- -------
Total Current Liabilities 629 247 501 53
Long-term Liabilities 105 - 91 103
------- ------- ------- -------
Total Liabilities 734 247 592 156
Stockholders' Equity
Common Stock 4,143 4,037 4,294 4,076
Paid In Capital 572 - 572 -
Accumulated Deficit (2,397) (2,178) (2,294) (2,171)
------- ------- ------- -------
Total Stockholders' Equity 2,318 1,859 2,572 1,905
------- ------- ------- -------
Total Liabilities &
Stockholders' Equity $ 3,052 $ 2,106 $ 3,164 $ 2,061
======= ======= ======= =======
</TABLE>
<PAGE>
SURGILIGHT, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
IN THOUSANDS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March, 31 March, 31 June, 30 June, 30
1999 1998 1999 1998
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net Sales $ 564 $ 204 $ 1,412 $ 520
Cost of Goods Sold 190 20 533 105
-------- ------- -------- -------
Gross Profit 374 184 879 415
General and Administrative
Expenses 372 241 771 467
------- ------ ------- -------
Operating Income (Loss) 2 (57) 108 (52)
Other Income (Expenses)
Interest Expense (2) - (6) -
Interest Income 4 1 6 2
------- ------- ------- -------
Net Income (Loss) $ 4 $ (56) $ 108 $ (50)
======= ======= ======= =======
</TABLE>
<PAGE>
SURGILIGHT, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
IN THOUSANDS
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
March, 31 June, 30
1999 1998 1999 1998
------- ------- ------ ------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4 $ (56) $ 108 $ (58)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation 52 31 105 63
Amortization 3 3 7 7
Increase (Decrease) in:
Receivables (72) (59) (76) (25)
Inventory (103) (164) (172) (143)
Loans Receivable (3) - - -
Accounts Payable 28 16 (42) (76)
Prepaid Expenses 3 - 3 -
------ ----- ------ -----
Net cash provided (used) by
operating activities (88) (228) (67) (224)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of equipment (119) - (119) -
----- ----- ----- -----
Net cash provided (used) by
investing activities (119) - (119) -
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowing 105 - 91 -
Repayment of long-term borrowing - (948) - (948)
Capital Contributions 339 1,138 489 1,178
Repayment of Short-Term Borrowing - - (59) -
----- ------ ----- ------
Net cash provided (used) by
financing activities 444 190 521 230
----- ------ ----- ------
NET INCREASE (DECREASE) IN CASH 237 (38) 335 6
CASH, beginning of period 197 81 197 81
----- ------ ------ ------
CASH, end of period $ 434 $ 42 $ 532 $ 87
===== ====== ====== ======
</TABLE>
<PAGE>
SURGILIGHT, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
IN THOUSANDS
<TABLE>
<CAPTION>
March, 31 March, 31 June, 30 June, 30
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Capital Stock $ 4,143 $ 4,037 $ 4,294 $ 4,076
Additional
Paid In Capital 572 - 572 -
Deficit (2,397) (2,178) (2,294) (2,172)
---------- ---------- ---------- ----------
Total $ 2,318 $ 1,859 $ 2,572 $ 1,904
========== ========== ========== ==========
</TABLLE>
<PAGE>
NOTES FOR SECOND QUARTER FINANCIAL STATEMENTS
1. The weighted average number of diluted shares is 8,827,158 shares for
the second quarter 1999, compared with 6,124,614 shares for the first
quarter 1999 and 100,000 shares for the first quarter of 1998. The
increase of the weighted average shares is attributed to the
acquisitions of the laser technology, laser centers and the thermal
imaging technology. Details of the terms of acquisitions were reported in the
Schedule 14f-1. As of June 30, 1999 the Company has a total outstanding of
11,500,000 shares of common stock.
2. The total revenue for the second quarter 1999 is $847,637, which is
attributed from the Company's four divisions: Laser Technology (for sales of
laser systems), Cosmetic Mobile Center in Ft. Lauderdale, FL, the Laser
Vision Centers in Plantation, FL and Centers outside the US. The Laser
Vision Centers have a gross revenue of $644,065 or 76% of the total
quarterly revenue. The cosmetic center has a gross revenue of $78,577, or
9% of the total quarterly revenue. $124,342 or 15% of the total quraterly
revenue is from system sales. The Company's strategy is to focus on the
recurring revenue and income from the laser centers operation. The Company,
however, will continue to develop new products for new markets mainly outside
US. These new products shall include diode lasers for microsurgery, infrared
laser for vision correction and the Company's patent pending new technology
for presbyopia correction. (See also Part II, ITEM 5, for greater details)
3. The Company foresees to keep the fast growth rate in revenue and profit
in future quarters by the expected new centers and sales of new products.
However there can be no assurance that the Company will be successful in
maintaining its current growth in revenue and profit.
F-5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITIONS.
In our Management's Discussion and Analysis of Financial Condition and
Results of Operations we review our past performance and, where appropriate,
state our expectations about future activity in forward-looking statements.
Our future results may differ from our expectations.
OVERVIEW
The Company currently has four divisions: 1) the Laser Technology, 2)
the Laser Vision Centers, 3) the Cosmetic Mobile Laser Centers and 4) the
Thermal Infrared Technology. In laser technology division , we develop and
conduct research for lasers in the UV and infrared spectra for applications
including vision correction and microsurgery. We also conduct clinical trials
outside US for various new applications. We currently operate 15 laser vision
centers internationally and one Vision Center in Plantation, FL and one
cosmetic laser center in Florida. For the thermal infrared technology , we
develop and market thermal infrared systems used in search and secure, security
and law enforcement. These technologies may also apply for medical uses in
thermal imaging of tissues and patient body.
The Company's strategy is to focus on the recurring revenue and income from
the laser centers operation. The Company, however, will continue to develop
new products for new markets mainly outside US. These new products shall
include diode lasers for microsurgery, infrared laser for vision correction
and the Company's patent pending new technology for presbyopia correction.
The medical laser industry is new and needs the approval from FDA prior to
marketing in US. Our competitors are significantly larger in financial and
several of them have now received FDA approval in vision correction using
excimer lasers. We will face increased competition from manufacturers of
vision correction lasers and from company operating laser centers in US and
internationally. Our medical lasers will need either 510(K) approval or IDE
clinical trials which may take few years to complete the final approval prior
to our market in US. Prior to the market approval, our medical products will
be limited to international sales and these products needed to be
manufactured at our Panama facility.
For laser vision corrections using UV lasers, there are several existing
patents which may prohibit our sales of the vision correction lasers without
obtaining a license. The Company has two pending patents for the use of
infrared lasers in replacing the UV lasers used by most of our competitors.
However, prior to the market approval in US these new products will be limited
to international sales.
To increase the Center revenue, we have developed promotion marketing
programs for our existing centers and plan to increase the number of centers
by either establishing new centers or acquiring existing centers. The existing
surgeons who currently worked at our Laser Centers may leave the Company if they
decide to operate their own Center or join other Centers which may offer a
better terms. All of these factors may influence our systems sales and income
from laser centers. Accordingly, our past results may not be useful in
predicting our future results.
RESULTS OF OPERATIONS
Revenues for the second quarter 1999 is $847,637 or 50% growth, compared to
$564,186 during the first quarter 1999. Revenue for the second quarter 1999
represents a 168% growth, compared to $316,000 during the second quarter 1998.
The revenue growth for the second quarter 1999 is attributed mainly to the
higher number of procedures performed at the Plantation Vision Center. In
addition, revenue increase also attributed by the sales from EMX division for
the infrared thermal imaging systems. The revenue from cosmetic laser centers
also increased 18% during the second quarter 1999 compared with the first quarter
1999.
For the second quarter 1999, the Company reported an operation income of
$156,431, excluding the facility depreciation of $52,431. The net income (after
the facility depreciation) during the second quarter 1999 is $104,000 or $0.01
per share compared with a net income of $4,000 or $0.00 per share for the same
period during 1998.
The total revenue for the second quarter 1999 is $847,637, which is
attributed from the Company's four divisions: Laser Technology (for sales of
laser systems), Cosmetic Mobile Center in Ft. Lauderdale, FL, the Laser
Vision Centers in Plantation, FL and Centers outside the US. The Laser
Vision Centers have a gross revenue of $644,065 or 76% of the total
quarterly revenue. The cosmetic center has a gross revenue of $78,577, or
9% of the total quarterly revenue. $124,342 or 15% of the total quraterly
revenue is from system sales. The Company's strategy is to focus on the
recurring revenue and income from the laser centers operation. The Company,
however, will continue to develop new products for new markets mainly outside
US. These new products shall include diode lasers for microsurgery, infrared
laser for vision correction and the Company's patent pending new technology
for presbyopia correction. (See also Part II, ITEM 5, for greater details)
The revenue from system sales is not expected to grow as fast as revenue from
the centers until new products are developed or approved for marketing.
During the second quarter 1999, the Company delivered two laser systems
from its Panama Free Zone facility for clinical trials and market promotion
purposes: one to Caro, Egypt and another to Tokyo, Japan. Two more semi-
assembled systems are in inventory in Panama for future sales. The increase
in inventory for the second quarter 1999 compared to the first quarter 1999
is attributed from the laser system inventory at Panama and optical components
and lenses at our EMX division.
The Research and Development expense is $25,750 for the second quarter 1999,
which is similar to the first quarter 1999. However, the Company expects an
increase in R&D and clinical trial cost for the next few quarters. The new
product development and clinical trials shall include two infrared laser
systems for microsurgery and presbyopia and one UV laser for skin treatment,
where clinical trials will be conducted both in the US and internationally.
The Company has on-going clinical trials at Caracas, Venezuela for laser
presbyopia reversal and at Mt. Sinai Hospital, New York, for UV-laser skin
treatments. (See Prat II, ITEM 5 for greater details).
The Company expects to keep the fast growth rate in revenue and profit in
future quarters based on the expected new centers and sales of new products.
However there can be no assurance that the Company will be successful in
maintaining its current growth rate.
LIQUIDITY AND CAPITAL RESOURCES
The net cash increased $98,000 mainly from the capital contribution from
one accredit investor and the operational income generated during this quarter.
The Company anticipates that its current cash, cash equivalents, as well as
anticipated cash flows from operations and additional capital contribution from
private placements, will be sufficient to meet its working capital and capital
equipment needs at least through the next twelve months. The Company expects
to raise addition funds via private placements during the third quarter 1999.
<PAGE>
Part II. OTHER INFORMATION
The Company is currently conducting clinical trials at Caracas, Venezuala
for the treatment of presbyopia patients using the Company's patent pending
technology. Laser presbyopia correction has a worldwide potential procedure
revenue of over $500 billions. The Company believes that it is the first
Company successfully developed the technology and the only Company that
began clinical trial treatment using laser for presbyopia. The clinical
results will be reported at the Fall World Refractive Surgery Symposium in
October 1999 held at Orlando, Florida.
The Company has another on-going clinical trial at Mt. Sinai Hospital, New
York, using a UV-laser for the treatment of Psoriasis and vilitigo which
affect a worldwide population of about 2% or 100 millions, according to the
report by Dr. Spencer at Mt. Sinai Hospital, NY. Clinical results will be
reported by Dr. Spencer in the Summer Conference of Dermatology.
The Company has recently developed and announced a new method of
topography linked computer simulation using the "mesh-point method" (MPM)
at the Summer World Refractive Surgery Symposium (July 16-18, 1999, Miami,
FL). The Company believes that its MPM technology is the first and the only
true topolink software and will offer customized corneal reshaping using a
scanning laser.
The Company will continue its R&D for several new products including the
UV-laser for skin treatment (market approval is expected in 2000, if a 510K
approval can be completed) and the new infrared lasers for microsurgery and
vision correction, which will take several years for the US market approval.
However, international marketing will start during early part of year 2000.
However there can be no assurance that the Company will be successful in
completing the clinical trials and obtain necessary approvals as scheduled.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company filed a current report on Form 8-K and two amendment reports
on Form 8-K/A during the second quarter 1999, disclosing details of merger
transactions and change in certifying accountant.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SurgiLight, Inc.
Date: July 30, 1999
By: /s/ J. T. Lin
----------------------------------
J. T. Lin
President, Chief Executive Officer
and Director
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1999 (unaudited) and the Statement of
Operations for the three months ended June 30, 1999 (unaudited) and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 532,000
<SECURITIES> 0
<RECEIVABLES> 232,000
<ALLOWANCES> 0
<INVENTORY> 948,000
<CURRENT-ASSETS> 1,712,000
<PP&E> 1,105,000
<DEPRECIATION> 99,000
<TOTAL-ASSETS> 3,164,000
<CURRENT-LIABILITIES> 501,000
<BONDS> 0
0
0
<COMMON> 2,572,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,164,000
<SALES> 1,412,000
<TOTAL-REVENUES> 1,412,000
<CGS> 533,000
<TOTAL-COSTS> 1,304,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6,000)
<INCOME-PRETAX> 108,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,000
<EPS-BASIC> 0,01
<EPS-DILUTED> 0.01
</TABLE>
