U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended March 31, 1996
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from to
Commission file number 0-15324
EYE TECHNOLOGY, INC.
Name of Small Business Issuer in its Charter
Delaware 52-1402131
(State or Other Jurisdiction) (I.R.S. Employer I.D. No.)
1983 Sloan Place, St. Paul, Minnesota 55117
(Address of Principal Executive Offices)
(612) 774-9060
(Issuer's Telephone Number, Including Area Code)
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__
Number of shares of Common Stock, $.01 par value, outstanding as of July 31,
1996: 3,438,656
Eye Technology, Inc.
Condensed Consolidated Balance Sheets
For the Period Ending, March 31, 1996
March 31, December 31,
1996 1995
(Unaudited) (Audited)
----------- ------------
ASSETS
Current Assets:
Cash $ 100,843 $ 5,649
Accounts receivable, net 389,816 472,695
Inventory 1,015,339 1,085,867
Prepaid expenses and deposits 36,901 39,781
---------- ----------
Total Current Assets 1,542,899 1,603,992
Property and Equipment:
Machinery and equipment 641,080 641,080
Office equipment and furniture 272,074 272,158
Leasehold improvements 39,838 39,838
952,992 953,076
Less: Accumulated Depreciation (876,287) (859,108)
---------- ----------
Property and Equipment, net 76,705 93,968
Other Assets:
Purchased technology 617,761 635,508
Other assets 10,980 25,009
Total Other Assets 628,741 660,517
---------- ----------
Total Assets $2,248,345 $2,358,477
========== ==========
See accompanying notes to the condensed consolidated balance sheets.
<TABLE>
<CAPTION>
Eye Technology, Inc.
Condensed Consolidated Balance Sheets
For the Period Ending, March 31, 1996
March 31, December 31,
1996 1995
(Unaudited) (Audited)
----------- ------------
<S> <C> <C>
LIABILITIES
Current Liabilities:
Current portion of long-term debt $ 760,783 $ 897,480
Notes payable-related party 160,000 152,000
Accounts payable-trade 615,889 598,306
Accrued liabilites:
Professional fees 492,239 466,664
Compensation 167,141 151,647
Commissions 231,703 202,596
Other 246,830 230,049
----------- ----------
Total Current Liabilities 2,674,585 2,698,742
Long-term debt net of current 73,920 73,920
Convertible preferred stock 257,000 257,000
STOCKHOLDERS' (DEFICIT) EQUITY
Common stock 34,387 34,387
Additional paid-in capital 8,777,505 8,777,505
Retained earnings (deficit) (9,569,052) (9,483,077)
----------- ----------
Total Stockholders' (Deficit) Equity (757,160) (671,185)
Total Liability and Stockholder's Equity $ 2,248,345 $2,358,477
=========== ==========
See accompanying notes to the condensed consolidated balance sheets.
</TABLE>
Eye Technology, Inc.
Condensed Consolidated Statement of Operations
(Unaudited)
Three Month Period Ended March 31,
1996 1995
------------ -------------
Net sales $ 718,437 $1,127,298
Cost of goods sold 255,811 386,250
---------- ----------
Gross Profit 462,626 741,048
Operating Expenses:
Sales and marketing 284,908 440,306
General and administrative 269,958 351,902
Research and Development 15,402 45,621
---------- ----------
Total Operating Expenses 570,268 837,829
---------- ----------
Operating Income (Loss) (107,642) (96,781)
Other (Income) Expense:
Interest expense, net 38,882 35,717
Other (income) expenses 11,182 0
---------- ----------
Total Other (Income) Expenses $ 50,064 $ 0
---------- ----------
Net Income (Loss) $ (157,706) $ (132,498)
========== ==========
Net income (loss) per common share $ (0.05) $ (0.04)
========== ==========
Weighted average common shares outstanding 3,438,656 3,401,156
========== ==========
See accompanying notes to the condensed consolidated balance sheets.
<TABLE>
<CAPTION>
Eye Technology, Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Three Month Period Ended March 31,
1996 1995
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(157,706) $ (992,573)
Adjustments to reconcile net loss
Depreciation and amortization 37,993 197,198
Write-off of investment in joint venture 0 274,422
Equity in loss of joint venture 0 94,666
Gain on disposal of property and equipment 0 (4,000)
Change in current assets and liabilities:
Accounts receivable 82,879 325,586
Inventories 70,528 225,172
Prepaid expenses and other 22,314 12,071
Accounts payable and accrued liabilities 31,102 239,930
--------- ----------
Net cash provided by operating activities 87,110 372,472
Cash flows from investing activities:
Purchase of property and equipment, net 84 (10,075)
Proceeds from disposal of property and equipment 0 4,000
--------- ----------
Net cash used in investing activities 84 (6,075)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 8,000 53,587
Repayment of long-term debt and notes payable 0 (556,961)
--------- ----------
Net Cash (used in) provided by financing activities 8,000 (503,374)
Net (decrease) increase in cash 95,194 (136,977)
========= ==========
Cash, beginning of year 5,649 142,626
--------- ----------
Cash, end of period 100,843 5,649
--------- ----------
Net (decrease ) increase in cash $ 95,194 $ (136,977)
========= ==========
See accompanying notes to the condensed consolidated balance sheets.
</TABLE>
EYE TECHNOLOGY, INC
Notes To Unaudited Condensed Consolidated Financial Statements
Note 1
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting of normal recurring
adjustments) necessary for the fair presentation of results for the interim
period. These financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations, although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. The Company's annual report on Form 10-KSB should be read in
conjunction with these financial statements.
The results of operations for the three month period ended March 31, 1996, are
not necessarily indicative of the results to be expected for the full year.
Note 2 Accounting Policies and Procedures
Earnings (loss) per common share is computed based upon the weighted average
number of common shares outstanding during the period. Common equivalents have
been excluded from the computation as their effect would be antidilutive. Income
(loss) per share computed on a fully diluted basis would not have been
significantly different than the amounts peresented in the accompanying
condensed consolidated financial statements.
Management's Discussion and Analysis or Plan of Operation
Liquidity and Capital Resources
As reflected in the accompanying financial statements, the Company has incurred
losses from operations and has a net capital deficiency. In addition, the
limited availability of additional working capital under the Company's line of
credit facility indicates uncertainty as to whether current financing
arrangements will be sufficient to fund current operations and financial
commitments. The Company has significant current debt obligations and is in
default on payments to various entities. Also, the Company is in technical
default on its obligations in conjunction with the purchase of technology.
Management continues to pursue various financing alternatives, but there can be
no assurance that the Company will be successful in these initiatives. These
matters raise substantial doubt about the Company's ability to fund operations
and financial commitments and to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amounts and classification of
liabilities that might result should the Company be unable to continue as a
going concern.
Results of Operations - Three months ended March 31, 1996 and 1995
Net sales for the three month period ended March 31, 1996, were $718,437; a
decrease of $408,861 (36%) below sales of $1,127,298 for the three month period
ended March 31, 1995. In the quarter ended March 31, 1996, 74% of the Company's
sales were in the domestic market and 26% were in the international market. This
compares to a market mix of 85% domestic sales and 15% international sales for
the quarter ended March 31, 1995.
Sales of intraocular lenses comprised 85% of net sales during the first quarter
of 1996. Sales of intraocular lenses to domestic customers decreased 33%
compared with the first quarter of 1995, due to an 20% decrease in the average
sales price and a 17% decrease in unit sales. The Company continued to
experience a reduced average sales price as a result of competitive price
pressures from the larger companies in the industry who are offering substantial
price reductions in order to capture larger market share. The reduction in unit
sales was a result of a dramatic shift in the market to foldable intraocular
lenses.
Sales of intraocular lenses to international customers during the first quarter
of 1996, decreased 59% compared with the first quarter of 1995. The decrease in
foreign sales is a result of a lower average sales price and lower unit sales.
The Company also distributes surgical instruments and related equipment for
kerato-refractive surgery. Sales generated by these products accounted for
approximately 15% and 17% of net sales during the first quarter of 1996 and
1995, respectively. In 1996, such sales were primarily derived from the
microkeratome unit which the Company began selling in May 1994.
Gross profit in 1996, as a percentage of net sales, decreased to 64% compared
with 66% for the first quarter of 1995. The decrease in gross profit relates to
the pricing factors, discussed above, and the fact that the Company's new
products do not offer the same margins as that of intraocular lenses.
Although dramatic dollar reductions were made in selling and marketing expenses,
selling and marketing expenses as a percentage of net sales increased to 40%
during the first quarter of 1996 compared with 39% in 1995 due primarily to
lower sales.
Additional dollar reductions were made in general and administrative expenses,
however, as a percentage of net sales these expenses increased to 38% during the
first quarter of 1996 compared with 31% in 1995 due primarily to lower sales.
Product development expenses, as a percentage of net sales decreased to 2%
during the first quarter of 1996 compared with 4% in 1995 due to less investment
in developing products.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Eye Technology, Inc.
--------------------------------
(Registrant)
Date July 31, 1996 /s/ Robert J. Fitzsimmons
---------------------------- --------------------------------
Robert J. Fitzsimmons
Chairman of the Board, President
and Chief Executive Officer
Date July 31, 1996 /s/ Randy H. Gestson
---------------------------- --------------------------------
Randy H. Gestson
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 100,843
<SECURITIES> 0
<RECEIVABLES> 389,816
<ALLOWANCES> 0
<INVENTORY> 1,015,339
<CURRENT-ASSETS> 1,542,899
<PP&E> 1,581,733
<DEPRECIATION> 876,287
<TOTAL-ASSETS> 2,248,345
<CURRENT-LIABILITIES> 2,674,585
<BONDS> 73,920
0
257,000
<COMMON> 34,387
<OTHER-SE> (791,547)
<TOTAL-LIABILITY-AND-EQUITY> 2,248,345
<SALES> 718,437
<TOTAL-REVENUES> 718,437
<CGS> 255,811
<TOTAL-COSTS> 255,811
<OTHER-EXPENSES> 581,450
<LOSS-PROVISION> 157,706
<INTEREST-EXPENSE> 38,882
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (157,706)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
