UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
[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, $.001 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 March 31, 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
Three Months Ended Six Months Ended
March, 31 March, 31 June, 30 June, 30
1999 1998 1999 1998
-------- -------- ------- -------
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
======= ======= ======= =======
<PAGE>
SURGILIGHT, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
IN THOUSANDS
Three Months Ended Six Months Ended
March, 31 March, 31 June, 30 June, 30
1999 1998 1999 1998
-------- ------- -------- -------
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)
======= ======= ======= =======
<PAGE>
SURGILIGHT, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
IN THOUSANDS
Three Months Six Months
Ended Ended
March, 31 June, 30
1999 1998 1999 1998
------ ----- ------ -----
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
===== ====== ====== ======
<PAGE>
SURGILIGHT, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
IN THOUSANDS
March, 31 March, 31 June, 30 June, 30
1999 1998 1999 1998
---------- ---------- ---------- ----------
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
========== ========== ========== ==========
<PAGE>
NOTES FOR SECOND QUARTER FINANCIAL STATEMENTS
1. The weighted average number of diluted shares is 9,356,573 shares for
the second quarter 1999, compared with 7,421,280 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
11,480,000 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 and infrared thermal image), Cosmetic Mobile Center in Ft.
Lauderdale, FL, the Laser Eye Centers in Plantation, FL and Centers outside the
U.S. The Laser Eye 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 quarterly
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
the U.S. 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 Eye Centers, 3) the Cosmetic Mobile Laser Centers and 4) the
Thermal Infrared Technology. In the 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 the U.S. for various new applications. The Company currently operates
15 Laser Eye Centers (LEC) internationally and one Laser Eye Center and one
Cosmetic Mobile Laser Center (CMLC) 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 the U.S. These new products shall
include diode lasers for microsurgery, UV laser for skin treatments, infrared
lasers for vision correction and the Company's patent pending new technology
for presbyopia correction. There are several public companies currently
operating Laser Centers for vision corrections which are much bigger than
the Company, including TLC Laser Center, Laser Vision Center Inc. (LCVI),
LCA Vision Center and Omega Healthcare. The Company has no connection or
affiliation with any of the competitors mentioned above.
The Company believes that it is the only company operating Laser Centers
for both vision corrections and cosmetic/dermatology applications and has the
in-house technologies to support and/or up-grade the systems used in its
Centers. The Company's start-up system cost for international Laser Centers,
in which systems were made by the Company, is only 30% of that of its
competitors which purchase systems from others. However there can be no
assurance that the Company will be successful in operating both Centers
without suffering future competitions from those that may operate Centers
in both areas and also own the in-house technology.
The presbyopia worldwide potential procedure income is estimated to be
over $500 billions, since almost 100% of the worldwide population for ages
older than 50-60 will become presbyopia. The current treatments for
presbyopia including implants and diamond-knife incision which have
drawbacks of being a complex surgical procedure and require a lot of the
surgeon's experience. Another method is to use a Ho:YAG laser for
monovision correction, a clinical trial system made by Sunrise
Technology. This method however can only treat one eye for near view and
requires the second eye un-treated to see far.
The Company's new method of using laser for presbyopia reversal (LPR)
has advantages of a being precise, fast and simple procedure which does not
require surgeon's experience. The LPR procedure will have less complications
and be more stable than the mechanical, non-laser methods. The Company is
currently conducting clinical trials in Venezuela and the results have been
submitted for presentation at the Fall World Refractive Surgery Symposium
(Orlando, Oct. 24-26, 1999). The Company believes that it is the first and
the only company offering the LPR which is now limited to the international
market prior to the US approval. However there can be no assurance that the
Company will be successful in protecting its proprietary technologies or in
completing its market approval in the U.S. on schedule. (See ITEM 5 of Part
II in this filing for greater details).
1 The Company believes that it is the only company currently owning both
the ultraviolet (UV) and infrared (IR) laser technologies for vision
corrections. For vision corrections using UV lasers, there are several
existing patents which may prohibit our sales of the UV lasers without
obtaining a license. The Company has two pending patents for the use of IR
lasers which has the potential of replacing the existing UV lasers used by
most of its competitors including Visx, Summit, Bausch & Lomb, LaserSight,
Nidek, Schwind and Meditec. The IR lasers, the Company believes, will be
safer than the UV lasers which may have potential risk of long-term
biological complications. However, prior to the market approval in US the
Company's new products will be limited to international sales. The Company
believes that its Infrared (IR) lasers for vision corrections will be
protected by its proprietary technology and its pending patents. In addition,
the users of the Company's IR lasers will not have to pay the license fee or
royalty fee which are required for the use of UV lasers. Currently, the UV
laser royalty fee in the U.S. is about $250 per case paid to the patent
owners Visx and Summit. The UV laser manufacturers also need to pay the IBM-
patent fee of about 3%-7% of their sale price. Without paying these fees,
the Company believes that its IR lasers will have advantages in both profit
margin and the market competitions. However there can be no assurance that
the Company will be successful in protecting its proprietary and pending
patents to avoid these license and or royalty fees.
The medical laser industry is new and needs the approval from FDA prior to
marketing in the U.S. Our competitors are significantly larger in their
financial condition and several of them have now received FDA approval in
vision correction using excimer lasers. We will also face increased
competition from manufacturers of vision correction lasers and from companies
operating laser centers in the U.S. and internationally. The Company's medical
lasers will need either 510(K) approval, which takes only 6-12 months, or PMA
and IDE approvals which may take a few years to complete prior to the market
approval in the U.S. Prior to these market approvals, the Company's medical
products will be limited to international sales and these products need to be
manufactured at our Panama facility. The Company believes that its UV-laser
for dermatology uses and the waterjet system (made by VisiJet and marketed by
the Company in certain countries) will only need 510(K) approval. The other
new products of the Company will require PMA approval. However there can be
no assurance that the Company will be successful in obtaining these market
approvals as scheduled.
To increase the Center revenue, the Company has developed promotion
marketing programs for our existing centers and plans to increase the number
of centers by either establishing new centers or acquiring existing centers.
These marketing programs include: direct mailing to high incomes, bonuses
offered to employees of big firms, and advertisements in media. The
Company's Plantation Eye Center currently has over 15 surgeons using the
excimer laser facility. These existing surgeons however may leave the
Company if they decide to operate their own Center or join other Centers
offering a better term than the Company. 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 Eye Center. In
addition, revenue increased also attributed from the sales of the 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
Eye Centers in Plantation, FL and Centers outside the U.S. The Laser
Eye 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 quarterly
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
the U.S. 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 Part 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 additional funds via private placements during the third quarter 1999.
<PAGE>
Part II. OTHER INFORMATION
The Company is currently conducting clinical trials at Caracas, Venezuela
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 billion. The Company believes that it is the first
Company to have 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 vitiligo (one kind
of skin cancer) which affect a worldwide population of about 2% or 100
million, 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 reported 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's competitors, such as LaserSight, Visx, Summit
and Bausch & Lomb, are currently using the "average-methods" which the
Company believes, are not accurate and can only apply to a limited small
market, whereas our MPM will apply to most cases for a much bigger market
without limitations. However there can be no assurance that the Company will
be successful in completing its final development for clinical trials.
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 U.S. market approval.
International marketing for these new products will start during the early
part of year 2000, in addition to our existing UV lasers market. However
there can be no assurance that the Company will be successful in completing
the clinical trials and obtaining 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 a change in the 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: August 8, 1999
By: /s/ J. T. Lin
----------------------------------
J. T. Lin
President, Chief Executive Officer
and Director
<PAGE>
<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 six 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> 592,000
<BONDS> 0
0
0
<COMMON> 11,500,000
<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> (4,000)
<INCOME-PRETAX> 108,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,000
<EPS-BASIC> 0,01
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</TABLE>
