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 MARCH 31, 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 March 31, 1997, was 11,500,064.
<PAGE>
SUNLIGHT SYSTEMS, LTD.
INDEX
PAGE
Part I. Financial Information
Item 1. Balance Sheets
March 31, 1997 and 1996 1-2
Statements of Operations:
Quarters and Nine Months ended March 31, 1997 and 1996 3
Statements of Changes in Cash Flows
Nine Months ended March 31, 1997 and 1996 4
Notes to Financial Statements 5-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II Other Information
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matter to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
PART 1. FINANCIAL INFORMATION
---------------------
Item 1 Financial Statements
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Balance Sheets
March 31, 1997 and 1996
ASSETS
1997 1996
<S> <C> <C>
Current assets
Cash $ 3,704 $ 558
Current portion of notes receivable 25,234
---------- ------
Total current assets 28,938 558
---------- ------
Other assets
Investment in oil and gas properties 171,970
Available for sale securities:
Energy Corporation common stock,
Restricted --
Unrestricted, including allowance for
increase in market value of $93,751 93,751
Intercell Corporation, common stock
Unrestricted, including allowance for
increase in market value of $33,750 33,750
Notes receivable, discounted for imputed
interest at 10%, net of current portion 40,571
Deposits 4,090
---------
344,132
---------
$ 373,070 $ 558
========== ======
</TABLE>
See Notes to Financial Statements
-1-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Balance Sheets (Continued)
March 31, 1997 and 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
<S> <C> <C>
Current liabilities
Accounts payable-related party $ 24,500
----------
Total current liabilities 24,500
----------
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, 11,500,064
issued and outstanding 1,150
Additional paid in capital 686,229
Unrealized gain on securities available for sale 127,501
Accumulated deficit (466,310)
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, 7,322,007
shares issued and outstanding $ 7,322
Accumulated deficit (6,764)
---------- -------
348,570
---------- -------
$ 373,070 $ 558
========== =======
</TABLE>
See Notes to Financial Statements
-2-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Statements of Operations
Quarters Ended Nine Months Ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues $ 1,847 $ $ 3,053 $ 3,993
General and administrative expenses 61,142 584 159,051 6,206
----------- ---------- ----------- ---------
Loss from continuing operations (59,295) (584) (155,998) (2,213)
----------- ---------- ----------- ---------
Discontinued Operations
Loss from operations of
discontinued segment (175,365)
Loss on sale of
discontinued segment (134,947)
----------
(310,312)
----------
Net loss $ (59,295) $ (584) $ (446,310) $ (2,213)
========== ========== ========== ===========
Net loss per common shares $ (.0052) $ (.0000) $ (.0456) $ (.0003)
========== ========== ========== ===========
Weighted average number of common
shares outstanding 11,500,064 7,322,077 10,215,392 7,322,077
========== ========== ========== ===========
</TABLE>
See Notes to Financial Statements
-3-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Statements of Cash Flows
Nine Months Ended March 31, 1997 and 1996
1997 1996
<S> <C> <C>
Cash flows from operating activities
Net loss $ (466,310) $ (584)
Adjustments to reconcile net loss to net cash from
operating activities
Loss on sale of long term assets 52,118
Depreciation and amortization 9,704
Amortized discount on notes receivable (3,053)
Change in assets and liabilities:
(Increase) decrease in:
Deposits (4,090)
Increase (decrease) in:
Accounts payable 24,500
---------- --------
Net cash used by operating activities (387,131) (584)
---------- --------
Cash flows from investing activities
Purchase of property and equipment (71,172)
Purchase of distribution and dealerships (42,546)
Increase in start-up costs (30,627)
Proceeds from sale of assets 18,700
Payments received on notes receivable 1,073
----------
Net cash used by investing activities (124,572)
----------
Cash flows from financing activities
Proceeds from sale of common stock 515,000
----------
Net cash flows from financing activities 515,000
---------- --------
Net increase in cash flows 3,297 (584)
Cash, beginning 407 1,142
---------- --------
Cash, ending $ 3,704 $ 558
========== ========
Noncash investing and financing activities:
Assets acquired by issuance of common stock:
Investment in oil and gas property $ 171,970
Marketable equity securities of Energy Corporation $ --
Marketable equity securities of Intercell Corporation $ --
Note receivable acquired for sale of assets $ 72,053
</TABLE>
See Note to Financial Statements
-4-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements
March 31, 1997
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 March 31, 1997, and the results of operations for the quarters and
nine months ended March 31, 1997 and 1996, and cash flows for the nine
months ended March 31, 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,
1996.
-5-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements (continued)
March 31, 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 the 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 owns, one (1) registered share of
Intercell Corporation. Intercell Corporation is currently preparing the
Registration Statement for filing with the Securities and Exchange
Commission. 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:
<TABLE>
<CAPTION>
Gross
Unrealized Fair
Shares Cost Gains Value
Energy Corporation:
<S> <C> <C> <C> <C>
Shares with restrictions
lasting more than one year 111,111 $ -- $187,500 $187,500
Shares with restrictions
lasting less than one year 55,556 $ -- $ 93,751 $ 93,751
Intercell Corporation 20,000 $ -- $ 33,750 $ 33,750
</TABLE>
The unrealized loss on shares with restrictions lasting for more than one
year is not being recognized in the financial statements.
-6-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements (continued)
March 31, 1997
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.
5. 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(valued at the cost of
the predecessor owner) 2,083,896 171,970
166,667 shares of Energy
Corporation plus $90,000 cash 2,733,896 90,002
Cash 500,000 125,000
20,000 shares of Intercell Corporation 2,000,000 --
---------- -----------
11,500,064 $ 687,379
========== ===========
-7-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
LIQUIDITY:
At March 31, 1997, the Company had positive working capital of $4,438.
This positive position is from the receipt of cash proceeds for the sale of
stock less operating losses. At March 31, 1996, the Company had a positive
working capital of $558. 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 March 31, 1997 were $373,070 which
consisted principally of $299,471 in investments and $65,805 notes receivable.
Total assets of the Company as of March 31, 1996 were $558 which
consisted solely of cash.
Stockholders' equity decreased during the quarter ended March 31, 1997
due to general and administrative expenses which were principally legal expenses
and cost incurred in evaluating potential acquisitions.
RESULTS OF OPERATION
The Company had sales of $37,894 for the nine months ended March 31,
1997 during the period until November 1, 1996 when the company discontinued its
operations as a dealer and distributor of skylights. Revenues for the quarter
ended March 31, 1997 were entirely from amortizing the discount of the notes
receivable. For the quarter ended December 31, 1995 revenues were $1,136 from
tax refunds and related interest. For the nine months ended March 31, 1996
revenues were $3,993 from tax refunds and related interest.
General and administrative expenses for the nine months and quarter
ended March 31, 1997 of $159,051 and $61,142, respectively, were due to
initiating the Company's business activities as a dealer and distributor of
skylights and seeking other acquisition or merger opportunities. General and
administrative expenses for the quarter and nine months ended March 31, 1996
were due principally to accounting fees.
-8-
<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
--------------------------------------
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports:
None
-9-
<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: May 14, 1997 Sunlight Systems, Ltd.
(Registrant)
/s/ Patricia E. Johnston
By: -----------------------------------
Patricia E. Johnston
Chief Executive Officer, President,
Chief Financial Officer, Treasurer,
And Director
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL DATA EXTRACTED FROM THE REGISTRANT'S
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1997
<CASH> 3,704
<SECURITIES> 0
<RECEIVABLES> 25,234
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,938
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 373,070
<CURRENT-LIABILITIES> 24,500
<BONDS> 0
0
0
<COMMON> 1,150
<OTHER-SE> 347,420
<TOTAL-LIABILITY-AND-EQUITY> 373,070
<SALES> 3,053
<TOTAL-REVENUES> 3,053
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 159,051
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (155,998)
<INCOME-TAX> 0
<INCOME-CONTINUING> (155,998)
<DISCONTINUED> (310,312)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (446,310)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
