SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] Quarterly report pursuant to Section
13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended June 30, 2000
or
[ ] Transition report pursuant to Section
13 or 15(d) of the Securities Exchange Act of
1934
For the transition period from to
Commission file number 2-97360-A
LIGHT MANAGEMENT GROUP, INC.
(Exact name of registrant as specified in its
charter)
Nevada 59-2091510
(State or jurisdiction (I.R.S. Employer
of incorporation Identification No.)
or organization)
Suite 301
3060 Mainway
Burlington, Ontario L7M 1A3
305-771-5255
(Registrant's telephone number, including
area code)
(Former Address, if changed since last
report)
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 that the
registrant was required to file such
reports), and (2) has shorter period been
subject to such filing requirements for the
past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY.
Indicate by check mark whether the
registrant has filed all documents and
reports required to be filed by Sections 12,
13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares
outstanding of each of the issuer's classes
of common stock, as of the latest practicable
date.
As of June 30, 2000, approximately
16,878,279 shares of the Registrant's Common
Stock, $.01 par value, were outstanding.
Part I - Financial Information.
Item 1. Financial Statements.
LIGHT MANAGEMENT GROUP, INC.
INTERIM CONSOLIDATED FINANCIAL STAEMENTS
JUNE 30, 2000
(Unaudited)
INDEX
Interim Consolidated Balance Sheet
Interim Consolidated Statement of Operations
Interim consolidated Statement Shareholders' Equity
Interim Consolidated Statement of Cash Flows
Notes to Interim Consolidated Financial Statements
LIGHT MANAGEMENT GROUP, INC.
INTERIM CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(with comparative figures at December 31, 1999)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
2000 1999
---------- ----------
US$ US$
<S> <C> <C>
CURRENT ASSETS
Cash 76,107 -
Accounts receivable 2,078,032 1,366,038
Prepaid expenses 22,702 15,506
----------- ----------
2,176,841 1,381,544
CAPITAL ASSETS (Note 3) 1,306,632 656,045
INTANGIBLE ASSETS (Note 4) 3,437,368 -
---------- ----------
6,920,841 2,037,589
========== ==========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued 395,048 641,171
Loans payable 20,000 86,401
Due to related parties 32,664 145,093
Current portion of term loan (Note 5) 30,024 -
---------- ----------
477,736 872,665
TERM LOAN PAYABLE (Note 5) 96,707 -
---------- ----------
574,443 872,665
---------- ----------
SHAREHOLDERS' EQUITY
SHARE CAPITAL (Note 6) 233,931 210,328
ADDITIONAL PAID-IN CAPITAL 5,188,354 1,500,537
COMMITMENT TO ISSUE PREFERRED SHARES (Note 7) 3,100,000 -
DEFICIT (2,055,961) (545,941)
CUMULATIVE TRANSLATION ADJUSTMENT (119,926) -
---------- ----------
6,346,398 1,164,924
---------- ----------
6,920,841 2,037,589
========== ==========
</TABLE>
Approved by the Directors
, Director
, Director
LIGHT MANAGEMENT GROUP, INC.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTH PERIOD ENDED JUNE 30, 2000
(with comparative figures for the year ended December 31, 1999)
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---------- ----------
US$ US$
<S> <C> <C>
SALES 1,084,138 1,061,572
COST OF SALES 596,042 295,205
---------- ----------
GROSS PROFIT 488,096 766,367
---------- ----------
EXPENSES
Advertising and promotion 51,509 100,151
Amortization 171,622 54,345
Commissions 32,730 -
Consulting 243,973 165,054
Interest 29,142 40,942
Investor relations 31,725 5,451
Management salary 125,499 145,833
Office and telephone 48,130 30,721
Professional fees 99,408 51,751
Rent and utilities 38,609 59,817
Salaries and benefits 188,343 171,505
Travel, meals and entertainment 71,278 38,822
Vehicle 14,989 6,351
---------- ----------
1,146,957 870,743
---------- ----------
LOSS BEFORE OTHER ITEM (658,861) (104,376)
Settlement of lawsuit (Note 8) (851,159) -
----------- ----------
LOSS FOR THE PERIOD (1,510,020) (104,376)
=========== ==========
LOSS PER COMMON SHARE ($0.091) ($0.006)
========== ==========
Weighted average common shares outstanding 16,593,433 15,568,611
========== ==========
</TABLE>
LIGHT MANAGEMENT GROUP, INC.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTH PERIOD ENDED JUNE 30, 2000
(with comparative figures for the year ended December 31, 1999)
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---------- ----------
US$ US$
<S> <C> <C>
CASH FLOWS USED FOR OPERATING ACTIVITIES
Loss for the period (1,510,020) (104,376)
Add back amortization which does not involve cash 171,622 54,345
---------- ----------
(1,338,398) (50,031)
Changes in non-cash working capital items
Accounts receivable (711,994) (1,366,038)
Prepaid expenses (7,196) (15,506)
Accounts payable and accrued (246,123) 641,171
Loans payable (66,401) 86,401
----------- ----------
(2,370,112) (704,003)
---------- -----------
CASH FLOWS USED FOR INVESTING ACTIVITIES
Additions to capital assets (653,071) (710,390)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related party 2,987,571 145,093
Proceeds of term loan 111,719 -
Proceeds from issuance of share capital - 1,269,300
---------- ----------
3,099,290 1,414,393
---------- ----------
NET CASH FLOWS BEING CASH, END OF PERIOD 76,107 -
========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Common shares issued for acquisitions 3,495,204
Common shares issued for services 216,216
Commitment to issue preferred shares 3,100,000
</TABLE>
LIGHT MANAGEMENT GROUP, INC.
INTERIM CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTH PERIOD ENDED JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Share Capital
Par value $0.02
-------------------------
Additional
Number Paid-in
of Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1998 7,950,000 159,000 277,114 (441,565) (5,451)
Reverse split (5,300,000)
-----------
2,650,000
Issuance of common stock 10,527,424 51,328 51,328
Issuance of common shares for
Acquisitions 3,000,000 1,223,423 1,223,423
Loss for the year (104,376) (104,376)
------------------------------------------------------------------------------
Balances, December 31, 1999 16,177,424 210,328 1,500,537 (545,941) 1,164,924
Issuance of common shares for
Acquisitions 647,600 12,952 3,482,252 3,495,204
Issuance of common shares for
services 53,255 10,651 205,565 216,216
Loss for the period (1,510,020) (1,510,020)
--------------------------------------------------------------------------------
Balances, June 30, 2000 16,878,279 233,931 5,188,354 (2,055,961) 3,366,324
================================================================================
</TABLE>
Page 1
LIGHT MANAGEMENT GROUP, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
1. NATURE OF THE COMPANY'S BUSINESS AND FUTURE OPERATIONS
On December 28, 1998, the company changed its state of incorporation from
Florida to Nevada by means of a merger with Triton Acquisition
Corporation, a Nevada Corporation.
On September 4, 1998, the company incorporated Laser Show Systems (Canada)
Ltd.
On February 15, 1999, the company acquired 97 percent of the outstanding
shares of Laser Shows Systems International Inc.
On March 24, 2000 the company acquired all the outstanding shares of
Exclusive Advertising Inc. (a company incorporated under the laws of
Ontario, Canada).
On March 29, 2000 the company acquired all the outstanding shares of Laser
Show Systems Investments, Ltd. (a company incorporated in the United
Kingdom).
During the six month period ended June 30, 2000 the company incurred a
loss of $1,510,020 and used cash for operating activities of $2,370,112.
From inception of the business the company has incurred cumulative losses
of $2,055,961.
These consolidated financial statements have been prepared on the going
concern basis under which an entity is considered to be able to realize
its assets and satisfy its liabilities in the ordinary course of business.
Operations to date have been primarily financed by common share issuances
and advances from a related party. The company's future operations are
dependent upon continued support of the creditors and the shareholders,
the achievement of profitable operations or the sale of company assets.
There can be no assurances that the company will be successful in any of
these areas. These consolidated financial statements do not include any
adjustments relating to the recoverability of assets and classification of
assets and liabilities that might be necessary should the company be
unable to continue as a going concern.
LIGHT MANAGEMENT GROUP, INC. Page 2 of 8
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada and include the following
significant accounting principles.
(a) Basis of consolidation
These consolidated financial statements include the accounts of the
company and its wholly owned subsidiaries, Laser Shows Systems
International Inc., (a Canadian corporation), Laser Show Systems
(Canada) Ltd., (a Canadian corporation), Exclusive Advertising
Inc.(a Canadian corporation), and Laser Shows Systems Investments,
Inc. ( a United Kingdom corporation) collectively referred to as
"the company".
All intercompany balances and transactions have been eliminated.
(b) Translation of foreign currency transactions
The company maintains its records in Unites States dollars.
Transactions in foreign currencies are translated into United States
dollars at exchange rates ruling at the transaction dates. Monetary
items in foreign currencies at the period end are translated into
United States dollars at rates of exchange at the balance sheet
date. All other exchange differences are recorded in the statement
of income.
(c) Basic earnings per share
Basic earnings per share is computed using the weighted average
number of shares of common stock outstanding.
(d) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make
estimates and assumptions which affect the reported amounts of
assets and liabilities as at the date of the financial statements
and revenues and expenses for the period then ended. Actual results
may differ from these estimates.
LIGHT MANAGEMENT GROUP, INC. Page 3 of 8
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
(e) Capital assets
Capital assets are stated at historical cost. Amortization is
provided for at the following methods and rates which are designed
to charge the cost of capital assets to income over their estimated
useful lives:
Equipment Diminishing balance 20%
Equipment under development Diminishing balance 30%
Furniture and fixtures Diminishing balance 20%
Computer equipment Diminishing balance 30%
Leasehold improvements Straight line 20%
All costs associated with acquiring, developing and testing the
advanced laser projection systems have been capitalized as equipment
under development.
In the year of acquisition, only one half of the normal amortization
is charged to expense.
(f) Patents and goodwill arising on consolidation.
The patents and goodwill representing an amount in excess of the
cost of the company's investment in its subsidiaries over the value
of net tangible assets acquired is recorded at cost. The cost will
be amortized using the straight line method over fifteen years.
3. CAPITAL ASSETS
<TABLE>
<CAPTION>
2000 1999
-------------------------------------- -----------------
Accumulated Net Net
Cost Amortization Book Value Book Value
-------------------------------------- -----------------
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Equipment 215,743 34,691 181,052 198,355
Equipment under
development 1,178,828 152,251 1,026,577 448,889
Furniture and fixtures 4,160 904 3,256 2,305
Computer equipment 19,318 3,789 15,529 5,654
Leasehold improvements 84,680 4,462 80,218 842
-------------------------------------- -----------------
1,502,729 196,097 1,306,632 656,045
========================================================
</TABLE>
LIGHT MANAGEMENT GROUP, INC. Page 4 of 8
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
4. INTANGIBLE ASSETS
2000 1999
---------- ----------
US$ US$
Goodwill and patents 3,477,785 -
Less: accumulated amortization 40,417 -
---------- -----------
3,437,368 -
========== ==========
5. TERM LOAN PAYABLE
2000 1999
---------- ----------
US$ US$
The term loan is payable by monthly
principal payments of $2,502 (C$3,753)
plus interest at prime plus 2.5
per cent. 126,730 -
Less current portion 30,024 -
---------- -----------
96,706 -
========== ==========
Principal payments due in each of the next five years:
2000 30,024
2001 30,024
2002 30,024
2003 30,024
2004 6,634
6. SHARE CAPITAL
2000 1999
---------- ----------
US$ US$
Authorized - 100,000,000 common shares with $0.02 par value
Issued - 16,878,279 common shares 233,931 210,328
========== ==========
Options and rights: see Note 13 - Subsequent Events
LIGHT MANAGEMENT GROUP, INC. Page 5 of 8
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
7. COMMITMENT TO ISSUE PREFERRED SHARES
The company intends to issue 2,766,798 non-redeemable, non-convertible,
preferred shares to settle all amounts owed to a corporate shareholder.
The preferred shares will carry a cumulative dividend of 6.5 percent,
carry voting rights equal to 27,667,980 common shares and shall be non-
dilutable.
8. LITIGATION
Pursuant to a settlement agreement dated March 10, 2000 the company
agreed to an amount of $851,159, including related legal costs, which is
reported in the income statement.
9. RELATED PARTY TRANSACTIONS
During the period the company had the following transactions with related
parties:
2000 1999
---------- ----------
US$ US$
Corporate shareholder:
Cash received 2,954,907 145,093
Rent expense 29,407 59,817
Director and Chief Executive Officer of the company:
Management salary 125,499 145,833
LIGHT MANAGEMENT GROUP, INC. Page 6 of 8
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
10. COMMITMENTS
The company subleases its office and research and development premises
from a related company and leases various computer equipment and two
automobiles under operating leases. The minimum lease commitment under
these operating lease agreements for the next five years are:
US$
2000 13,750
2001 16,500
2002 16,500
2003 16,500
2004 16,500
11. COMPARATIVE FIGURES
Certain comparative figures for the year ended December 31, 1999 have been
restated to conform with the current period's presentation.
12. FINANCIAL INSTRUMENTS
The company's financial instruments consist of cash, accounts receivable,
accounts payable, loans payable, due to related parties, and a term loan.
Unless otherwise noted, it is management's opinion that the company is not
exposed to significant interest, currency or credit risk arising from
these financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.
The company sells the majority of its equipment through one distributor
and in Canadian dollars. The company is exposed to credit and currency
risk related to these transactions.
The company maintains certain bank accounts, and receives advances from a
shareholder in Canadian dollars. The company is exposed to currency risk
related to these transactions.
LIGHT MANAGEMENT GROUP, INC. Page 7 of 8
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
13. SUBSEQUENT EVENTS
Subsequent to the period end the company has granted employee incentive
options, to its Chief Executive Officer, to purchase common shares of the
company, on or before July 5, 2005 as follows:
Number of Price per
Shares Share
100,000 $0.25
100,000 $0.50
250,000 $1.00
250,000 $1.50
500,000 $2.00
Subsequent to the period end the company has granted common share rights
to a related corporation, to purchase common shares of the company, on or
before August 1, 2003 as follows:
Number of Price per
Shares Share
250,000 $2.25
250,000 $2.50
250,000 $2.75
100,000 $3.00
100,000 $3.50
14. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the date has occurred, it
is not possible to conclude that all aspects of the Year 2000 Issue that
may affect the entity, including those related to customers, suppliers, or
other third parties, have been resolved.
LIGHT MANAGEMENT GROUP, INC. Page 8 of 8
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
These financial statements have been prepared in accordance with generally
accepted accounting principles (""GAAP"") in Canada. The principles
adopted in these financial statements conform in all material respects to
those generally accepted in the United States except as follows.
Under Canadian GAAP, new product development costs incurred during each
period are capitalized. The accumulated amount is reported on the balance
sheet. Under United States GAAP these costs are expensed in each year.
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.
The information required by this item is included
in the Company's financial statements. See Item
1 above.
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
there unto duly authorized.
Light Management Group, Inc.
(Registrant)
Date
August 21, 2000 /s/ Donald Iwacha
President
