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 DECEMBER 31, 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)
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 December 31, 1996, was 11,500,064.
<PAGE>
SUNLIGHT SYSTEMS, LTD.
INDEX
PAGE
Part I. FINANCIAL INFORMATION
Item 1. Balance Sheets
December 31, 1996 and 1995 .................................... 1-2
Statements of Operations:
Quarters and Six Months ended December 31, 1996 and 1995 ...... 3
Statements of Changes in Cash Flows
Six Months ended December 31, 1996 and 1995 ................... 4
Notes to Financial Statements ................................. 5-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation .................. 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
Sunlight Systems, Ltd.
Balance Sheets
December 31, 1996
ASSETS
1996 1995
---- ----
Current assets
Cash ............................................... $ 37,063 $1,142
Current portion of notes receivable ................ 9,147
---------- ------
Total current assets ............................... 46,210 1,142
---------- ------
Other assets
Investment in oil and gas properties ............... 300,000
Available for sale securities:
Energy Corporation common stock,
Restricted ................................. 500,000
Unrestricted, including allowance for
decrease in market value of $27,776 ..... 222,224
Intercell Corporation, common stock
Unrestricted ............................. 80,000
Notes receivable, discounted for imputed
interest at 10%,net of current portion ... 64,112
Deposits ........................................... 4,090
----------
1,170,426
----------
$1,216,636 $1,142
========== ======
See Notes to Financial Statements
-1-
<PAGE>
Sunlight Systems, Ltd.
Balance Sheets (Continued)
December 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
1996 1995
---- ----
Current liabilities
Accounts payable .................................... $ 6,017
-----------
Total current liabilities ........................... 6,017
-----------
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 ........................... 1,644,259
Unrealized loss on securities available for sale ..... (27,776)
Accumulated deficit .................................. (407,014)
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 .................................. (6,180)
---------- -------
1,210,619 1,142
----------- ------
$1,216,636 $1,142
========== ======
See Notes to Financial Statements
-2-
<PAGE>
<TABLE>
<CAPTION>
Sunlight Systems, Ltd.
Statements of Operations
Quarters Ended Six Months Ended
December 31, December 31,
--------------------------- ----------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
Revenues .......................... $ 1,206 $ 1,136 $ 1,206 $ 3,993
General and administrative
expenses ........................ 83,746 4,293 97,909 5,622
------------ ------------ ----------- -----------
Loss from continuing operations ... (82,540) (3,157) (96,703) (1,629)
------------ ------------ ----------- -----------
Discontinued Operations
Loss from operations of
discontinued segment ......... (40,654) (175,365)
Loss on sale of discontinued
segment ...................... (134,947) (134,947)
------------ -----------
(175,601) (310,312)
------------ -----------
Net loss .......................... $ (258,141) $ (3,157) $ (407,015) $ (1,629)
============ ============ =========== ===========
Net loss per common shares ........ $ (.0254) $ (.0004) $ (.0425) $ (.0002)
============ ============ =========== ===========
Weighted average number of common
shares outstanding .......... 10,147,000 7,322,077 9,576,000 7,322,077
============ ============ =========== ===========
</TABLE>
See Notes to Financial Statements
-3-
<PAGE>
Sunlight Systems, Ltd.
Statements of Cash Flows
Six Months Ended December 31, 1996 and 1995
1996 1995
---- ----
Cash flows from operating activities
Net loss ............................................... $(407,015) $(1,629)
Adjustments to reconcile net loss to net
cash from operating activities
Loss on sale of long term assets ............. 43,889
Depreciation and amortization ................ 9,704
Amortized discount on notes receivable ....... (1,206)
Change in assets and liabilities:
(Increase) decrease in:
Escrow receivable ............................ 3,032
Deposits ..................................... (4,090)
Increase (decrease) in:
Accounts payable ............................ 6,019 (2,345)
--------- --------
Net cash used by operating activities .................. (352,665) (942)
---------
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
---------
Net cash used by investing activities .................. (125,645)
---------
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 ............................. 36,656 (942)
Cash, beginning ........................................ 407 2,084
--------- --------
Cash, ending $ 37,063 $ 1,142
========= ========
Noncash investing and financing activities:
Assets acquired by issuance of common stock:
Investment in oil and gas property ............ $300,000
Marketable equity securities
of Energy Corporation ....................... $750,000
Marketable equity securities
Intercell Corporation ....................... $80,000
Note receivable acquired for sale of assets ....... $72,053
See Note to Financial Statements
-4-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements
December 31, 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 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, 1996 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 December 31, 1996, and the results of operations for the quarters
and six months ended December 31, 1996 and 1995, and cash flows for the
six months ended December 31, 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.
-5-
<PAGE>
Sunlight Systems, Ltd.
Notes to Financial Statements (continued)
December 31, 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 Registration Statement for filing
with the Securities and Exchange Commission. Unrealized gains and losses
of marketable securities available for sale as of December 31, 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 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)
December 31, 1996
4. Discontinued operations
On November 1, 1996, 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 2,083,896 300,000
166,667 shares of Energy
Corporation plus $90,000 cash 2,733,896 840,002
Cash 500,000 125,000
20,000 shares of Intercell Corporation 2,000,000 80,000
---------- -----------
11,500,064 $1,645,409
========== ==========
-7-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
LIQUIDITY:
At December 31, 1996, the Company had positive working capital of
$40,193. This positive position is from the receipt of cash proceeds for the
sale of stock less operating losses. At December 31, 1995, the Company had a
positive working capital of $1,142. 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 December 31, 1996 were $1,216,636
which consisted principally of $1,102,224 in investments acquired for common
stock, and $73,259 notes receivable.
Total assets of the Company as of December 31, 1995 were $1,142 which
consisted solely of cash.
Stockholders' equity decreased during the quarter ended December 31,
1996 due to losses recognized while operating through November 1, 1997 and
selling on November 1, 1997 its Sun Tunnel Systems, Inc. dealerships and
distributorships.
RESULTS OF OPERATION
The Company had sales of $24,776 and $37,894 for the quarter and six
months ended December 31, 1996, respectively during the period until November 1,
1996 when the company discontinued its operations as a dealer and distributor of
skylights. For the quarter ended December 31, 1995 revenues were $1,136 from tax
refunds and related interest.. For the six months ended December 31, 1995
revenues were $3,993 from tax refunds and related interest.
General and administrative expenses for the six months and quarter ended
December 31, 1996 $97,909 and $83,746, 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 six months ended December 31, 1995 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
- ------ --------------------------------------
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: January 29, 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 INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1996 AND IS QUALIFIED
IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 37,063
<SECURITIES> 0
<RECEIVABLES> 9,147
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,210
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,216,636
<CURRENT-LIABILITIES> 6,017
<BONDS> 0
0
0
<COMMON> 1,150
<OTHER-SE> 1,209,469
<TOTAL-LIABILITY-AND-EQUITY> 1,216,636
<SALES> 0
<TOTAL-REVENUES> 1,206
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 97,909
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (96,703)
<INCOME-TAX> 0
<INCOME-CONTINUING> (96,703)
<DISCONTINUED> (310,312)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (407,015)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
