U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
[ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to __________________
Commission file number 0-29301
LIGHTTOUCH VEIN & LASER, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 87-0575118
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
10663 MONTGOMERY ROAD, CINCINNATI, OHIO 45242
(Address of principal executive offices)
(513) 891-8346
(Issuer's telephone number)
NOT APPLICABLE
(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. Yes No X
State the number of shares outstanding of each of the issuer=s classes
of common equity, as of the last practicable date:
7,500,002 SHARES OF COMMON STOCK, $.001 PAR VALUE, AS OF
MARCH 31, 2000
Transitional Small Business Disclosure Format (check one); Yes No X
<PAGE>
LIGHTTHOUCH VEIN & LASER, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
Assets 2000 1999
------ ----------- ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 66,630 $ 2,391
Accounts receivable - trade 29,845 58,021
Accounts receivable - other 69,125 -
Prepaid expenses 6,748 -
---------- ----------
Total current assets 172,348 60,412
---------- ----------
Property and equipment - net 592,049 84,292
---------- ----------
Other assets:
Intangible assets - net 245,971 20,000
Deposits and other 6,664 -
---------- ----------
252,635 20,000
---------- ----------
$1,017,032 $164,704
========== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
2
<PAGE>
Liabilities and Shareholders' Equity (Deficit)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- ------------
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 195,577 $ 124,497
Other current liabilities 115,357 59,098
Capital lease obligation - current portion 32,888 -
----------- ----------
Total current liabilities 343,822 183,595
----------- ----------
Long-term liabilities:
Long-term debt 590,747 -
Capital lease obligation - less current portion 82,752 -
----------- ----------
673,499 -
----------- ----------
Shareholders' equity (deficit):
Common stock, $.001 par value,
100,000,000 share authorized;
7,500,002 shares isued and outstanding 7,500 7,500
Preferred stock, $.001 par value,
25,000,000 shares authorized;
no shares issued or outstanding - -
Additional paid-in capital 904,500 904,500
Note receivable exchanged for
common stock (96,238) (99,445)
Accumulated deficit (816,051) (831,446)
----------- ----------
(289) (18,891)
----------- ----------
$1,017,032 $ 164,704
=========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
3
<PAGE>
LIGHTTOUCH VEIN & LASER, INC. AND SUBSIDIARY
Consolidated Statements of Operations and Retained Deficit
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Net sales:
Cosmetic laser services $ 550,766 495,830
Laser sales and service 87,642 95,954
---------- ----------
638,408 591,784
Cost of sales 324,831 448,355
General and administrative 330,427 226,839
---------- ----------
Loss from operations (16,850) (83,410)
Other income (expense) - net 34,122 (6,784)
Interest expense (1,877) (36,066)
---------- ----------
Income before provision for income tax 15,395 (126,260)
Provision for income tax - -
---------- ----------
Net income (loss) 15,395 (126,260)
Retained deficit - beginning of period (831,446) (480,169)
---------- ----------
Retained deficit - end of period $(816,051) (606,429)
========== ==========
Earnings per common share:
Basic $ 0.00 (0.02)
========== ==========
Diluted $ 0.00 (0.02)
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
4
<PAGE>
LIGHTTOUCH VEIN & LASER, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 15,395 (126,260)
Depreciation 10,783 -
Amortization 1,250 -
Effect of change in operating assets
and liabilities:
Accounts receivable 28,176 8,461
Prepaid expenses and other assets (9,895) (3,695)
Accounts payable and accrued expenses 35,237 24,225
---------- ----------
Net cash provided (used) by
operating activities 80,946 (89,879)
---------- ----------
Cash flows from investing activities:
Capital expenditures (15,117) (11,480)
Collections on notes receivable 3,207 -
---------- ----------
Net case used by
investing activities (11,910) (11,480)
---------- ----------
Cash flows fron financing activities:
Proceeds from issuance of debt - 100,000
Repayments of debt - (155,015)
Proceeds from issuance of common stock - 125,000
Repayments on capital lease (4,797) -
---------- ----------
Net cash provided (used) by
financing activities: (4,797) 69,985
---------- ----------
Net change in cash 64,239 (31,374)
Cash -- beginning of period 2,391 55,988
---------- ----------
Cash -- end of period $ 66,630 24,614
========== ==========
Supplemental disclosure of non-cash activities:
Cash paid during the period for:
Interest $ 1,877 36,066
========== ==========
Equipment acquired through capital lease $ 101,894 -
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
5
<PAGE>
LIGHTTOUCH VEIN & LASER, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended March 31, 2000
are not necessarily indicative of the results that may be expected for the full
year. The December 31, 1999 Balance Sheet data was derived from audited
Financial Statements, but does not include all disclosures required by generally
accepted accounting principles.
The March 31, 2000 balance sheet reflects the acquisition of The Charleston
Dermatology and Cosmetic Surgery Center, which was entered into March 29, 2000.
The Statement of Operations for the three months ended March 31, 2000 does not
reflect the operations of The Charleston Dermatology and Cosmetic Surgery Center
because the acquisition was accounted for as a purchase at the end of the
quarter.
ACQUISITION
On March 29, 2000 the Company entered into an Asset Purchase Agreement with
Harley F. Freiberger, M.D. D/B/A The Charleston Dermatology and Cosmetic Surgery
Center. The assets were acquired by LightTouch Vein & Laser of South Carolina,
Inc., a wholly owned subsidiary of the Company.
The acquisition was made through the issuance of a non-interest bearing $700,000
note in exchange for acquisition and assumption of the following assets and
liabilities.
<TABLE>
<S> <C>
Accounts receivable $ 69,125
Property and equipment 401,529
Intangible assets 227,221
Other assets 3,526
Accounts payable (92,102)
Capital leases (18,543)
</TABLE>
Payments terms on the note are based on the achievement of cash flow objectives.
6
<PAGE>
Dr. Freiberger will also receive 571,429 shares of the Company's stock for the
performance of services as the company's National Medical Director over an
initial term ending April 1, 2001. The stock award will vest over the year ended
April 1, 2001 and the value of the award will be recorded as compensation
expense on the Company's financial statements over the term of the agreement.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities" which establishes standards for derivative instruments,
including derivative instruments imbedded in other contracts and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Management does not believe that the
adoption of this standard will impact the Company because, at this time, the
Company does not hold any of the instruments covered by the standard.
SFAS No. 130, "Reporting Comprehensive Income" requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. For interim period reporting,
an organization is required to report a total for comprehensive income.
The Company does not have any items characterized as "other comprehensive
income" for the periods presented.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
LightTouch is pleased to report its first quarter results for the period
ending March 31, 2000. The following is a summary of certain selected financial
information based on the pro-forma combined financial statements as of and for
the three months ended March 31, 2000, and for the three months ended March 31,
1999. Reference should be made to the financial statements attached to put the
following summary in context.
As of March 31, 2000, LightTouch completed its acquisition of a cosmetic
laser center in Charleston, South Carolina. This acquisition impacted the
balance sheet dated March 31, 2000, since it was made through the issuance of a
non-interest bearing note in the amount of $700,000. Accounts receivable of
$69,125, property and equipment of $401,529, intangible assets of $227,221, and
other assets of $3,526 were acquired and accounts payable of $92,102 and capital
leases of $13,543 were assumed. The statement of operations for the three months
ended March 31, 2000 was not affected and do not reflect the operations of the
acquired center because the acquisition was accounted for as a purchase at the
end of the quarter.
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
<S> <C> <C>
Working capital $ (171,474) $(123,183)
Long-term debt $ 673,499 $ 0
Total assets $1,071,032 $ 164,704
Shareholders' (deficiency) $ (289) $ (18,891)
</TABLE>
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
March 31, 2000 December 31, 1999
<S> <C> <C>
Net Sales $ 638,408 $ 591,784
(Loss) from operations $ (16,850) $ (83,410)
Net income (loss) $ 15,395 $(126,260)
</TABLE>
RESULTS OF OPERATIONS
LightTouch experienced a respectable same store sales increase of 7.88% in
the first quarter of 2000. Sales increased at the company's flagship location in
Cincinnati, Ohio from $591,784 in the first three months of 1999 to $638,408 in
2000. Management believes that the increase in sales from 1999 to 2000 reflects
a growing demand for the Company's products and services offered to patients.
The Company expects revenues to continue to increase on a same store basis due
to greater awareness of the Company's products and services in the public
market. Management believes that the market awareness of products and services
offered by LightTouch is less than five percent of the target market.
8
<PAGE>
As a result of increasing revenues and improved cost management, LightTouch
improved its gross profit for the quarter ended March 31, 2000. Gross profit
increased from $143,429 for the three months ended March 31, 1999 to $313,577
for the quarter ending March 31, 2000, a 118% increase. In addition to a
significant improvement in gross profit, LightTouch experienced a significant
improvement in net income as a result of improved operational performance.
Management is pleased to report its first quarterly profit of $15,395 for the
quarter ended March 31, 2000. This is a significant improvement over the first
quarter of 1999, which reported a loss of $126,260. Management does not believe
it will continue to report quarterly profits as it begins to focus on its
acquisition strategy over the next several years, but does believe it will begin
to see the benefits of its growth in the number of centers it owns through
improved operating efficiencies.
LIQUIDITY AND CAPITAL RESOURCES
Since August 1997, LightTouch has been financed primarily through the sale
of stock and loans from its officers. At December 31, 1999, the Company had
working capital deficiency of $123,183, and at March 31, 2000, the Company's
working capital deficiency increased to $171,474 due to the acquisition of a new
laser center. The Company commenced a private offering of stock for $1,000,000
and expects to sell stock over the next several quarters to fund its capital
needs required to grow its operations.
Management is not aware of any known trends, events, or uncertainties that
could have a material impact on the Company's short-term or long-term liquidity.
Management expects to address any future liquidity needs through the issuance of
debt and/or equity securities, bank loans, loans from shareholders, and lease
financing of equipment. There can be no assurance that any such financing will
be available when needed and on terms favorable to the Company. At this time,
the Company does not have any material commitments for capital expenditures.
PLAN OF OPERATION
During the first quarter, LightTouch was pleased to announce the closing of
its acquisition of its third Cosmetic Laser Center in South Carolina. The
acquisition of Dr. Harley Freiberger's center in Charleston, SC was a first step
to acquiring a large number of centers over the next two years. In addition, Dr.
Freiberger's reputation and experience in the Cosmetic Laser Industry is a
welcome addition. He will serve as medical director, and is certified by the
American Board of Dermatology, The American Board of Cosmetic Surgery, and the
American Board of MOHS Micrographic Surgery. In addition to the acquisition,
LightTouch has had a tremendous response from the medical community of
Dermatologist and Plastic Surgeons interested in joining the LightTouch Team.
Management believes that it can build strong brand name recognition for centers
and create operating efficiencies through economies of scale. LightTouch has
signed a Letter of Intent to acquire an additional center in Kentucky and
expects that transaction to close in the second quarter of 2000.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A) EXHIBITS
<TABLE>
<CAPTION>
- -------------------- -------------------------------------------------------------------------------------------------
REGULATION
S-B Number Document
- -------------------- -------------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Share Exchange (1)<F1>
- -------------------- -------------------------------------------------------------------------------------------------
2.2 Asset Purchase Agreement dated March 29, 2000 (2))<F2>
- -------------------- -------------------------------------------------------------------------------------------------
3.1 Amended and Restated Articles of Incorporation (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
3.2 Bylaws (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.1 Lease Agreement with Intram Investment Corporation dated July 30, 1997 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.2 Lease Agreement with Intram Investment Corporation dated August 22, 1997 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.3 Promissory Note to Intram Investment Corporation dated January 20, 1998 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.4 Lease Agreement with Intram Investment Corporation dated July 31, 1998 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.5 Promissory Note to Intram Investment Corporation dated August 24, 1998 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.6 Promissory Note to Intram Investment Corporation dated September 1, 1998 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.7 Promissory Note to Intram Investment Corporation dated September 4, 1998 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.8 Lease Agreement with Intram Investment Corporation dated October 23, 1998 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.9 Promissory Note to Intram Investment Corporation dated November 12, 1998 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.10 Promissory Note to Intram Investment Corporation dated January 28, 1999 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.11 Purchase Agreement between Tri-State Laser Corporation and Light Touch Vein & Laser, Inc. dated
January 15, 1999 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.12 Lease Agreement with Intram Investment Corporation dated February 19, 1999 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10
<PAGE>
- -------------------- -------------------------------------------------------------------------------------------------
10.13 Lease Agreement with Gregory F. Martini dated March 31, 1999 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.14 Lease Agreement with Intram Investment Corporation dated April 1, 1999 (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.15 Medical Director and Administrative Service Agreement (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.16 1999 Stock Option Plan (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.17 License and Distribution Agreement with VMM Enterprises, Inc. (1))<F1>
- -------------------- -------------------------------------------------------------------------------------------------
10.18 Promissory Note dated March 29, 2000 (2))<F2>
- -------------------- -------------------------------------------------------------------------------------------------
10.19 National Medical Director Agreement with Harley F. Freiberger, M.D. dated March 29, 2000 (2))<F2>
- -------------------- -------------------------------------------------------------------------------------------------
10.20 South Carolina Medical Director and Administrative Services Agreement dated March 29, 2000 (2))<F2>
- -------------------- -------------------------------------------------------------------------------------------------
21 Subsidiaries of the Registrant (1))<F2>
- -------------------- -------------------------------------------------------------------------------------------------
27 Financial Data Schedule
- -------------------- -------------------------------------------------------------------------------------------------
<FN>
(1))<F1> Incorporated by reference to the exhibits filed with the Registration Statement on Form 10-SB, File No.
0-29301.
(2))<F2> Incorporated by reference to the exhibits filed with the current report on Form 8-K dated March 31,
2000, File No. 0-29301.
</FN>
</TABLE>
B) REPORTS ON FORM 8-K:
The registrant filed a report on Form 8-K dated March 31, 2000,
reporting under Item 2. Acquisition or Disposition of Assets, the
acquisition of assets pursuant to the terms of an Asset Purchase
Agreement with Harley F. Freiberger, M.D., dba the Charleston
Dermatology and Cosmetic Surgery Center. The required financial
statements are to be filed by means of an amendment to the Form 8-K.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
LIGHTTOUCH VEIN & LASER, INC.
(Registrant)
Date: May 18, 2000 By: /S/ GREGORY F. MARTINI
--------------------------------------
Gregory F. Martini, President
(Principal financial officer)
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 66,630
<SECURITIES> 0
<RECEIVABLES> 29,845
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 172,348
<PP&E> 626,899
<DEPRECIATION> 34,850
<TOTAL-ASSETS> 1,017,032
<CURRENT-LIABILITIES> 343,822
<BONDS> 673,499
0
0
<COMMON> 7,500
<OTHER-SE> (7,789)
<TOTAL-LIABILITY-AND-EQUITY> 1,017,032
<SALES> 0
<TOTAL-REVENUES> 638,408
<CGS> 0
<TOTAL-COSTS> 324,831
<OTHER-EXPENSES> 330,427
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,877
<INCOME-PRETAX> 15,395
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,395
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
