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, 1997
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)
5222 South Holly
Greenwood Village, Colorado 80111
- --------------------------------------- ----------
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code 303-779-1900
------------
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, 1997, was 11,500,064.
<PAGE>
SUNLIGHT SYSTEMS, LTD.
INDEX PAGE
Part I. Financial Information
---------------------
Item 1. Balance Sheets
September 30, 1997 and 1996 1-2
Statements of Operations:
Quarters ended September 30, 1997 and 1996 3
Statements of Changes in Cash Flows
Quarters ended September 30, 1997 and 1996 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
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Balance Sheets
September 30, 1997 and 1996
ASSETS
1997 1996
---- ----
<S> <C> <C>
Current assets
- --------------
Cash $ 2,080 $ 6,880
Current portion of note receivable 12,536 87,233
Inventory 103,001
Prepaid expenses 4,352
--------- ---------
Total current assets 14,616 201,646
--------- ---------
Property and equipment, net of
accumulated depreciation of $3,244 66,578
--------- ---------
Other assets
Investment in oil and gas properties 171,970 171,970
Available for sale securities of
Energy Corporation common stock,
Restricted -- --
Unrestricted, including allowance for
increase in market value of $25,927 25,927 222,224
Intercell Corporation common stock
Unrestricted, including allowance for
increase in market value of $5,600 5,600
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 4,090 4,590
Note Receivable, discounted for imputed interest 34,983
at 10%, net of current portion --------- ---------
242,570 455,380
--------- ---------
$ 257,186 $ 723,604
========= =========
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Balance Sheets (continued)
September 30, 1997 and 1996
Liabilities and Stockholders' Equity
1997 1996
---- ----
<S> <C> <C>
Current liabilities
- -------------------
Accounts payable-related party $ 57,000
Accounts payable 1,174 $ 46,252
Loan payable 35,129
Payroll and sales taxes 6,494
--------- ---------
Total current liabilities 58,174 87,875
--------- ---------
Stockholders' equity
Preferred stock, $.0001 par value
5,000,000 shares authorized, none issued
Common stock, $.0001 par value
45,000,000 shares authorized, 11,500,064
issued and outstanding 1,150 900
Additional paid in capital 686,229 561,479
Unrealized gain on securities available for sale 31,527 222,224
Accumulated deficit (519,894) (148,874)
--------- ---------
199,012 635,729
--------- ---------
$ 257,186 $ 723,064
========= =========
</TABLE>
See Notes to Financial Statements
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<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Statements of Operations
Quarters Ended September 30, 1997 and 1996
1997 1996
---- ----
<S> <C> <C>
Revenues $ 1,169
General and administrative expenses 33,971 $ 27,940
---------- ----------
Loss from continuing operations (32,802) (27,940)
Discontinued Operations
Loss from operations of
Discontinued segment 120,934)
----------
Net income (loss) $ (32,802) $ (148,874)
========== ==========
Net income (loss) per common shares $(.0029) $(.0417)
======== ========
Weighted average number of common
shares outstanding 11,500,064 9,000,064
========== =========
</TABLE>
See Notes To Financial Statements
-3-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Statements of Cash Flows
Quarter Ended September 30, 1997 and 1996
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income (loss) $ (32,802) $(148,874)
Adjustments to reconcile net loss
to net cash from operating activities
Depreciation and amortization 7,275
Amortized discount on notes recievable (1,169)
Change in assets and liabilities:
(Increase) decrease in:
Inventory (103,000)
Prepaid expenses (4,531)
Deposits (4,590)
Increase (decrease) in:
Accounts payable 22,174 46,252
Payroll and sales taxes 6,494
--------- ---------
Net cash used by operating activities (11,797) (200,974)
--------- ---------
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)
Payments received on notes receivable 1,250
--------- ---------
Net cash used by investing activities 1,250 (130,449)
--------- ---------
Cash flows from financing activities
Proceeds from sale of common stock 302,767
Increase in loan payable 4,500 35,129
--------- ---------
Net cash flows from financing activities 4,500 337,896
--------- ---------
Net increase decrease in cash flows (6,047) 6,473
Cash, beginning 8,127 407
--------- ---------
Cash, ending $ 2,080 $ 6,880
========= =========
Noncash investing and financing activities:
Assets acquired by issuance of common stock:
Stock subscription note receivable $ 87,233
Investment in oil and gas property $171,970
Marketable equity securities of
Energy Corporation $ --
</TABLE>
See Note to Financial Statements
-4-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements
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 was 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. As discussed in Note 4, on November 1, 1997 the
Company sold its dealerships and distributorships. The Company is actively
seeking business opportunities for potential acquisition or merger.
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, 1997 and 1996, and the results of operations for the
quarters ended September 30, 1997 and 1996, and cash flows for the quarters
ended September 30, 1997 and 1996. 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,
1997.
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 Registration
Statement for filing with the Securities and Exchange Commission.
-5-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements (continued)
3. Investment An Energy Corporation (continued)
The shares of Energy Corporation were acquired in a noncash transaction in
exchange for shares of the Company. The shares have been recorded at no
cost because the Company is unable to determine the cost of Energy
Corporation shares of its predecessor owners.
Unrealized gains and losses of marketable securities available for sale as
of March 31, 1997 are as follows:
Gross
Shares Cost Unrealized Fair
Energy Corporation: Gains Value
Shares with restrictions
lasting more than one year 46,298 $ -- $ 12,963 $12,963
Shares with restrictions
lasting less than one year 92,596 $ -- $ 25,927 $25,927
Intercell Corporation 20,000 $ -- $ 5,600 $ 5,600
The unrealized gain on shares with restrictions lasting for more than one
year is not being recognized in the financial statements.
4. Discontinued operations
On November 1, 1997, the Company sold its dealerships and distributorships
in skylights manufactured or imported by Sun Tunnel Systems, Inc. including
all of its assets. In separate transactions, the Company received 1)$18,700
in cash 2) a note receivable for $60,000 and 3) a note receivable for
$30,000. The notes receivable are collaterialized by the assets sold and
require payments of $1,250 and $1,000, respectively. The notes receivable
are discounted to recognize an interest rate of 10%. The Company recognized
a loss on the sale of $134,947.
-6-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATION
------------------------
LIQUIDITY:
- ----------
At September 30, 1997 the Company had a negative working capital of $
(45,896). This position is due to an increase in accounts payable. 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.
CAPITAL RESOURCES
- -----------------
Total assets of the Company as of September 30, 1997 were $257,186 which
consisted principally of $203,497 in investments and $47,519 in notes
receivable. Total assets of the Company as of September 30, 1996 were $723,604
which consisted principally of $394,194 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.
Stockholders' equity decreased during the quarter ended September 30, 1997
due to general and administrative expenses which were principally and costs
incurred in evaluating potential acquisitions.
Stockholders' equity increased during the quarter ended September 30, 1996
due to the issuance of common stock for cash $302,767; investments $171,970; and
subscription receivable $87,233 net of a net loss of $148,874.
RESULTS OF OPERATION
- --------------------
Revenues for the quarter ended September 30,1997 were entirely from
amortizing the discount of the notes receivable. 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.
General and administrative expenses for the quarter ended September 30,
1997 were due to seeing other requisition or meager opportunities General and
administrative expenses for the quarter ended September 30, 1996. General and
administrative expenses for the quarter ended September 30, 1996 of $27,940 were
due to initiating the Company's business activities as a dealer and distributor
of skylights.
-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.
Item 5. Other Information
- ------- -----------------
None
Item 6 Exhibits and Other Reports On Form 8-K
- ------ --------------------------------------
Exhibit 27.1 - Financial Data Schedule
-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 13, 1997 Sunlight Systems, Ltd.
(Registrant)
By: /s/ Patricia E. Johnson
-----------------------------------
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 DATA EXTRACTED FROM THE REGISTRANT'S
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER, 1997 AND IS QUALIFIED IN ITS ENTIRETY
TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 2,080
<SECURITIES> 0
<RECEIVABLES> 12,536
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,616
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 257,186
<CURRENT-LIABILITIES> 58,174
<BONDS> 0
0
0
<COMMON> 1,150
<OTHER-SE> 717,756
<TOTAL-LIABILITY-AND-EQUITY> 257,186
<SALES> 0
<TOTAL-REVENUES> 1,169
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (32,802)
<INCOME-TAX> 0
<INCOME-CONTINUING> (32,802)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,802)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
