FORM 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 33-19598-D
SUNLlGHT SYSTEMS, LTD.
------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
COLORADO 84-0992908
- ------------------------------- -------------------------------------
(State or other jurisdiction of ( I.R.S. Employer Identification No.)
incorporation or organization)
820 South Colorado Blvd.
Denver, Colorado 80222
- --------------------------------------- ----------
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 303-691-1900
Indicate by check 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 ___
The number of shares of the registrant's $.0001 par value common stock
outstanding as of September 30, 1996, was 9,000,064.
<PAGE>
SUNLIGHT SYSTEMS, LTD.
INDEX
PAGE
----
Part I. Financial Information
---------------------
Item 1. Balance Sheets
September 30, 1996 and 1995 1-2
Statements of Operations:
Quarters ended September 30, 1996 and 1995 3
Statements of Changes in Cash Flows
Quarters ended September 30, 1996 and 1995 4
Notes to Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 7
Part II Other Information
-----------------
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matter to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
<PAGE>
PART 1. FINANCIAL INFORMATION
---------------------
Item 1 Financial Statements
Sunlight Systems, Ltd.
Balance Sheets
September 30, 1996
ASSETS
1996 1995
---- ----
Current assets
- --------------
Cash ....................................... $ 6,880 $ 4,299
Stock subscriptions receivable ............. 87,233
Income tax refund receivable ............... 1,113
Inventory .................................. 103,001
Prepaid expenses ........................... 4,532
---------- -------
Total current assets ....................... 201,646 5,412
----------
Property and equipment, net of
accumulated depreciation of $3,244 ............... 66,578
----------
Other assets
Investment in oil and gas properties ....... 300,000
Available for sale securities of
Energy Corporation common stock,
Restricted ......................... 500,000
Unrestricted, including
allowance for decrease in
market value of $27,776 .......... 222,224
Start-up costs, net of accumulated
amortization of $1,531 ............... 29,096
Dealer and distributor costs, net of
accumulated amortization of $2,500 .... 27,500
Deposits ................................... 4,590
----------
1,083,410
----------
$1,351,634 $ 5,412
========== =======
-1-
<PAGE>
Liabilities and Stockholders' Equity
1996 1995
---- ----
Current liabilities
Accounts payable ....................... $ 46,252
Loan payable ........................... 35,129
Payroll and sales taxes ................ 6,494
-----------
Total current liabilities .............. 87,875
-----------
Commitments
Stockholders' equity
Sunlight Systems, Ltd. ........................
Preferred stock, $.0001 par value
5,000,000 shares authorized,
none issued
Common stock, $.0001 par value
45,000,000 shares authorized,
9,000,064 issued and
outstanding ......................... 900
Additional paid in capital ............. 1,439,509
Unrealized loss on securities
available for sale .................. (27,776)
Accumulated deficit .................... (148,874)
Stockholders' equity
Mendell-Denver Corporation
Preferred stock, $0.01 par value,
1,000,000 shares authorized,
none issued
Common stock, $0.001 par value
25,000,000 shares authorized,
5,491,558 shares issued and
outstanding ......................... $5492
Accumulated deficit .................... (80)
---------- ------
1,263,759 5,412
----------
$1,351,634 $5,412
========== ======
See Notes to Financial Statements
-2-
<PAGE>
Sunlight Systems, Ltd.
Statements of Operations
Quarters Ended September 30, 1996 and 1995
1996 1995
---- ----
Sales ....................................... $ 13,118
Cost of sales ............................... 3,685
-----------
Gross profit ................................ 9,433
Revenues .................................... $ 2,857
General and administrative expenses ......... 158,307 1,329
----------- -----------
Net income (loss) ........................... $ (148,874) $ 1,528
=========== ===========
Net income (loss) per common shares ......... $ (.04165) $ .0003
=========== ===========
Weighted average number of common
shares outstanding .................... 9,000,064 5,491,558
=========== ===========
See Notes to Financial Statements
-3-
<PAGE>
Sunlight Systems, Ltd.
Statements of Cash Flows
Quarter Ended September 30, 1996 and 1995
1996 1995
---- ----
Cash flows from operating activities
Net income (loss) ..................................... $(148,874) $ 1,528
Adjustments to reconcile net loss
to net cash from operating activities
Depreciation and amortization ............... 7,275
Change in assets and liabilities:
(Increase) decrease in:
Escrow receivable ........................... 3,032
Inventory ................................... (103,000)
Prepaid expenses ............................ (4,531)
Deposits .................................... (4,590)
Increase (decrease) in:
Accounts payable ........................... 46,252 (2,345)
Payroll and sales taxes .................... 6,494
--------- ---------
Net cash used by operating activities ................. (200,974) 2,215
Cash flows from investing activities
Purchase of property and equipment ............... (69,822)
Purchase of distribution and dealerships ......... (30,000)
Increase in start-up costs ....................... (30,627)
---------
Net cash used by investing activities ................. (130,449)
---------
Cash flows from financing activities
Proceeds from sale of common stock ............... 302,767
Increase in loan payable ......................... 35,129
---------
Net cash flows from financing activities .............. 337,896
--------- ---------
Net increase in cash flows ............................ 6,473 2,215
Cash, beginning ....................................... 407 2,084
--------- ---------
Cash, ending .......................................... $ 6,880 $ 4,299
========= =========
Noncash investing and financing activities:
Assets acquired by issuance of
common stock:
Stock subscription note receivable ............. $ 87,233
Investment in oil and gas property ............. $ 300,000
Marketable equity securities of
Energy Corporation .......................... $ 750,000
See Note to Financial Statements
-4-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements
September 30, 1996
1. Organization, Business and Merger of Mendell-Denver Corporation with
Sunlight Systems, Ltd.
Mendell-Denver Corporation (Mendell) was formed on July 22, 1985 for the
purpose of acquiring, exploring and developing oil and gas properties. On
May 1, 1992, Mendell sold all of its interests in oil and gas properties
and has since had no business operations.
Sunlight Systems, Ltd. (Sunlight) was formed on June 22, 1996. On July 17,
1996 it became a wholly-owned subsidiary of Mendell. Mendell was merged
with and into Sunlight with Sunlight being the surviving corporation.
Shareholders of Mendell received one common share of Sunlight for five
shares of Mendell.
Sunlight is a dealer in Colorado and Nevada and a distributor in Illinois,
Ohio, Michigan and Indiana of skylights manufactured or imported by Sun
Tunnel Systems, Inc.
2. Presentation of Interim Information
In the opinion of the management of Sunlight Systems, Ltd. (the Company),
the accompanying unaudited financial statements include all normal
adjustments considered necessary to present fairly the financial position
as of September 30, 1996, and the results of operations for the quarters
ended September 30, 1996 and 1995, and cash flows for the quarters ended
September 30, 1996 and 1995. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented as permitted by Form
10-QSB, and do not contain certain information included in the Company's
audited financial statements and notes for the fiscal year ended June 30,
1996.
3. Investment in Energy Corporation
The company owns One Hundred and Sixty-Six Thousand, Six Hundred and Sixty
Seven (166,667) restricted shares of Energy Corporation. Energy
Corporation is a public company whose stock, as a result of it's decision
to implement a voluntary Plan of Liquidation Dissolution, is not currently
trading. As a result of sale of all it's assets to Intercell Corporation
(NASDAQ;INCE) on July 7, 1996, Energy Corporation received Five Million,
Four Hundred and Twelve Thousand, Three Hundred and Fifty Five (5,412,355)
restricted shares of Intercell Corporation in exchange for such assets.
Energy Corporation and Intercell Corporation have agreed to register and
distribute to the shareholders of Energy Corporation the Five Million,
Four Hundred and Twelve Thousand, Three Hundred and Fifty-Five (5,412,355)
shares held by Energy Corporation. All beneficial owners of common stock
of Energy Corporation, as of July 8, 1996 will be entitled, over a three
(3) year period, in six (6) equal installments, payable in January and
April of each year commencing 1997 through 1999, to receive for each share
of Intercell Corporation, such holder own, one (1) registered share of
Intercell Corporation. Intercell Corporation is currently preparing the
RegistrationStatement for filing with the Securities and Exchange
Commission.
-5-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements (continued)
September 30, 1996
3. Investment in Energy Corporation (Continued)
Unrealized gains and losses of marketable securities available for sale
as of September 30, 1996 are as follows:
Gross Fair
Shares Cost Unrealized Value
(Losses)
------ ---- --------- -----
Shares with restrictions
lasting more than one year 111,111 $500,000 $(55,556) $444,444
Shares with restrictions
lasting less than one year 55,556 $250,000 $(27,776) $222,224
The unrealized gain on shares with restrictions lasting for more than one
year is not being recognized in the financial statements.
4. Stockholder Equity
Sunlight Systems, Ltd. issued stock as follows
Shares Value
------ -----
Exchange for 10,491,558 shares
Mendell-Denver Corporation
at five shares to one 2,098,312 $ 407
Cash 2,083,960 300,000
Oil and gas property 2,083,896 300,000
166,667 shares of Energy
Corporation plus $90,000 cash 2,733,896 840,002
--------- ----------
9,000,064 $1,444,409
========= ==========
The Company has a stock subscription note receivable which bears interest
at 8% and is collateralized by common stock of Intercell Corporation. The
note is due July 18, 1997 but the shareholder intends to liquidate the
Intercell Corporation common stock and pay the note by December 31, 1996.
-6-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
-----------------------------------------------------------
LIQUIDITY:
- ---------
At September 30, 1996, the Company had positive working capital of
$113,771. This positive position is from the receipt of cash proceeds for the
sale of stock less operating losses. At September 30, 1995, the Company had a
positive working capital of $5,412. This position was from income tax refunds
receivable and the receipt of an escrow receivable in excess of accounts
payable.
CAPITAL RESOURCES:
- -----------------
Total assets of the Company as of September 30, 1996 were $1,351,634
which consisted principally of $1,022,224 in investments, $103,001 in inventory
and $87,233 stock subscriptions receivable acquired for common stock. The
Company also had trade obligations of $52,246.
Total assets of the Company as of September 30, 1995 were $5,412 which
consisted of $4,299 in cash and $1,113 in income tax refunds receivable.
Stockholders' equity increased during the quarter ended September 30,
1996 due to the issuance of common stock for cash $302,767; investments
$1,050,000; and subscription receivable $87,233 net of a net loss of $148,874.
RESULTS OF OPERATION:
- --------------------
The Company had sales of $13,118 and a gross profit of $9,433 from the
sale of skylights during the quarter ended September 30, 1996, the initial
quarter of its business as a dealer and distributor of skylights. Revenues of
$2,857 for the quarter ended September 30, 1995 were due to tax refunds
resulting from the Company closing out its oil and gas activities.
General and administrative expenses for the quarter ended September
30, 1996 of $158,307 were due to initiating the Company's business activities as
a dealer and distributor of skylights. General and administrative expenses for
the quarter ended September 30, 1995 were due to cost of administering the
termination of the Company's previous oil and gas activities.
-7-
<PAGE>
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
-----------------
None
Item 2. Change in Securities
--------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
There were no meetings of security holders during the period
covered by this report.
The shareholders of the former Mendell-Denver Corporation and
Mendell-Denver Corporation as sole shareholder of the Company prior to the
Merger, described in note 1 to financial statements convened a meeting on July
18, 1996 to vote upon or consent to the Merger. The Merger was approved by the
necessary vote and consent of the shareholders of both corporations.
Item 5. Other Information
-----------------
None
Item 6 Exhibits and Other Reports On Form 8-K
--------------------------------------
None
-8-
<PAGE>
SIGNATURES
Pursuant to the requirement of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, the Registrant duly has caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 14, 1996 Sunlight Systems, Ltd.
(Registrant)
/s/ Patricia E. Johnston
By: ___________________________________
Patricia E. Johnston
Chief Executive Officer, President,
Chief Financial Officer, Treasurer,
and Director
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q OF SUNLIGHT SYSTEMS, LTD. FOR THE QUARTER ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,880
<SECURITIES> 0
<RECEIVABLES> 87,233
<ALLOWANCES> 0
<INVENTORY> 103,001
<CURRENT-ASSETS> 201,646
<PP&E> 69,822
<DEPRECIATION> 3,244
<TOTAL-ASSETS> 1,351,634
<CURRENT-LIABILITIES> 87,875
<BONDS> 0
0
0
<COMMON> 900
<OTHER-SE> 1,411,733
<TOTAL-LIABILITY-AND-EQUITY> 1,351,634
<SALES> 13,118
<TOTAL-REVENUES> 13,118
<CGS> 3,685
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 158,307
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (148,874)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (148,874)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
