UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2000
Commission file number 0-18515
Therapy Lasers, Inc. and Subsidiary
Incorporated in the State of Nevada
Employer Identification Number 93-0960302
10450 Westoffice
Houston, Texas 77042
(713) 339-2722
Check whether the issuer (1) timely 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; Yes [ ] No [X]
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of June 30, 2000 there were outstanding 5,860,263 shares of Therapy Lasers,
Inc. Common Stock, par value $.001.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): Yes [ ] No [X]
<PAGE>
Therapy Lasers, Inc.
Index to Form 10-QSB
Part I
FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of June 30, 2000 and February 28,2000(Audited)
Statements of Operations for the Three and Six Months Ended March 31, 1999/2000
and June 30, 1999/2000
Statements of Cash Flows for the Three and Six Months Ended March 31, 1999/2000
and June 30, 1999/2000
Notes to Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part II
OTHER INFORMATION
Item 6
SIGNATURES
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial statements
THERAPY LASERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
JUNE 30, FEBRUARY 28,
2000 2000
(UNAUDITED) AUDITED
----------- -----------
ASSETS
Current assets:
Cash ....................................... $ 140,150 $ 891
Accounts receivable......................... 1,073,889
Inventory................................... 793,538
----------- -----------
Total current assets ..................... 2,007,577 891
----------- -----------
Property and equipment, net of accumulated
depreciation of $233,883 .................... 182,507 --
----------- -----------
Other assets ................................. 15,252 --
----------- -----------
Total assets ............................ $ 2,205,336 $ 891
=========== ===========
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses ...... $ 769,208 $ 22,543
Due to related parties ..................... 122,000 6,000
----------- -----------
891,208 28,543
Total current liabilities
Notes payable .............................. 2,041,453 --
----------- -----------
Total liabilities ....................... 2,932,661 28,543
----------- -----------
Commitments and contingencies ................ -- --
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share,
100,000,000 shares authorized, 5,860,263 and
11,302,627 shares, respectively, issued and
outstanding ................................ 5,830 11,303
Capital in excess of par value ............... 3,278,489 4,653,466
Accumulated deficit:
Prior operating accumulated deficit ........ (4,452,105) (4,452,105)
Accumulated during the development stage ... 440,461 (240,316)
----------- -----------
Total stockholders' equity (deficit) ..... 727,325 (27,652)
----------- -----------
Total liabilities and stockholders'
equity ................................. $ 2,205,336 $ 891
=========== ===========
See accompanying notes
<PAGE>
THERAPY LASERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, JUNE 30,
--------------------------- ---------------------------
2000 1999 2000 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues ............... 1,632,337 $ 1,346,876 $ 3,452,129 $ 2,880,134
Cost of Goods Sold ..... 938,160 843,514 2,052,871 1,773,632
----------- ----------- ----------- -----------
Gross Profit ........... 694,177 503,361 1,399,258 1,106,503
----------- ----------- ----------- -----------
Expenses:
Sales and marketing .. 95,996 72,144 198,796 126,149
Depreciation ......... 14,232 11,069 28,105 30,242
Other general and
administrative...... 540,012 387,860 719,900 858,235
----------- ----------- ----------- -----------
Total expenses ..... 650,240 471,073 946,801 1,014,626
----------- ----------- ----------- -----------
Income (loss) from
operations .... 43,937 32,288 452,457 91,877
Other income (expenses):
Interest ............. (22,291) (31,150) (59,737) (38,962)
Loss on sale of assets (20,431) (20,431)
----------- ----------- ----------- -----------
Net earnings ....... $ 1,215 $ 1,138 $ 372,489 $ 52,915
=========== =========== =========== ===========
Basic earnings per share $ 0.00 $ 0.00 $ 0.06 $ 0.00
=========== =========== =========== ===========
Weighted average number
of shares outstanding 5,816,689 5,776,262 5,860,263 5,803,263
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
THERAPY LASERS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, JUNE 30,
--------------------------- ---------------------------
2000 1999 2000 1999
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net earnings ............... $ 1,215 $ 1,138 $ 372,489 $ 52,915
Adjustments to reconcile net
earnings to net cash flows
from operating activities:
Loss on sale of equipment .. 14,233 11,069 14,233 30,242
Depreciation ............... 20,431 -- 20,431 --
(Increase) decrease in
accounts receivable ...... 20,710 434,625 (311,270) 350,003
(Increase) decrease in
inventories .............. (65,398) 95,458 (407,993) 75,927
Increase (decrease) in
accounts payable ......... 77,534 197,960 172,013 218,636
----------- ----------- ----------- -----------
Net cash flows from
operating activities ... 68,725 740,250 (140,097) 727,723
----------- ----------- ----------- -----------
Cash flows from investing
Activities - acquisitions .. -- -- (1,299,845) --
----------- ----------- ----------- -----------
Cash flows from financing
activities:
Advance from related party -- -- -- 209,555
Repayment of note payable (53,542) (865,390) (78,020) (1,076,090)
Debt issuance ............ -- -- 1,440,000 --
----------- ----------- ----------- -----------
Net cash flows from
financing activities ... (53,542) (865,390) 1,361,980 866,535
----------- ----------- ----------- -----------
Net increase in cash and
cash equivalents ....... 15,183 (126,278) (77,962) (138,812)
Cash and cash equivalents,
beginning of period ........ 218,112 314,586 218,112 314,586
----------- ----------- ----------- -----------
Cash and cash equivalents, end
of period .................. $ 233,295 $ 188,308 $ 140,150 $ 175,774
=========== =========== =========== ===========
Supplementary cash flow
information:
Cash paid for interest ..... $ 22,291 $ 31,150 $ 59,737 $ 38,962
</TABLE>
See accompanying notes.
<PAGE>
THERAPY LASERS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The financial statements include the accounts of Therapy Lasers, Inc. and its
subsidiaries. The balance sheet as of June 30, 2000, the statements of
operations for the three months ended March 31, 2000 and 1999 and the six months
ended June 30, 2000 and 1999, and the statements of cash flows for same periods
in 2000 and 1999 have been prepared by the Company without audit. In the opinion
of management, these financial statements include all adjustments necessary to
present fairly the financial position, results of operations and cash flows as
of June 30, 2000 and for all periods presented except as explained in note 2.
All adjustments made have been of a normal recurring nature. Certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have been condensed
or omitted. The Company believes that the disclosures included are adequate and
provide a fair presentation of interim period results. Interim financial
statements are not necessarily indicative of financial position or operating
results for an entire year. It is suggested that these interim financial
statements be read in conjunction with the audited financial statements and the
notes thereto included in the Company's Form 10-K for the year ended February
28, 2000 filed with the United States Securities and Exchange Commission (SEC)
on or about June 23,2000.
NOTE 2 - THE COMPANY:
Therapy Lasers, Inc. (the Company) is a Nevada corporation engaged principally
in searching for capital, in organizing and developing a wholesale electrical
components business, and in investigating other business opportunities. From
March 1, 1995 until late 1996, the Company was attempting to establish markets
in foreign countries (primarily Mexico and Canada) for medical laser products it
had developed, and was seeking financing to obtain approval of the Food and Drug
Administration to market the medical laser products in the United States. In
late 1996, the Company substantially discontinued its efforts in the laser
field, as its efforts had been unsuccessful. Also in late 1996, the Company
commenced activities in the wholesale electrical components business, serving as
a non-stocking sales representative based in Houston, Texas for an affiliated
company. In that connection, the Company sells primarily to another affiliated
company. At quarter end, the Company was investigating other opportunities in
related fields.
The Company is deemed to have been in the development stage since March 1, 1995.
Prior to that time, it was in the operating stage and was engaged in the sale
and rental of medical supplies and equipment; these operations have been sold
and/or discontinued.
On February 27, 1995, the Company changed its name from Medeci Corporation to
Therapy Lasers, Inc.
On April 24, 2000, the Board of Directors approved a 1 for 10 reverse split of
the Company's common shares. Thereafter, on April 28, 2000, the Company acquired
three companies controlled by the Company's principal shareholder, effective
April 28, 2000, for stock and notes. The companies acquired and consideration
paid were as follows:
<PAGE>
COMPANY CONSIDERATION
(1) Gulf Coast Fan & Light, Inc. 3,500,000 shares of the Company's
common stock, plus three promissory
notes in the amount of:
$1,000,000 payable $12,133 monthly,
including 8% interest,
10 years
$ 390,000 payable $7,908 monthly,
including 8% interest,
5 years
$ 50,000 payable $1,567 monthly,
including 8% interest,
3 years
(2) Builders Lighting and Hardware, Inc. 1,000,000 shares of the Company's
common stock.
(3) BuilderSource, Inc. 200,000 shares of the Company's
common stock
This transaction was recorded as a "reverse merger" in which the carrying values
of the acquired companies carried over as the basis for the investment.
For comparative purposes, the unaudited statements of operations reflect
combined activity for these companies as if the acquisitions were effected at
the beginning of 1999. Consolidated operations from date of acquisition are as
follows:
Revenues $ 2,301,400
Costs of Goods Sold $ 1,368,600
Operating expenses $ 660,000
Interest expense $ 39,800
All revenues were derived from subsidiaries sales, as the parent company had no
revenue.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Following is a summary of the Company's significant accounting policies:
BASIS OF PRESENTATION - The accounting and reporting policies of the
Company conform to generally accepted accounting principles, and,
effective March 1, 1995, the accounting and reporting policies conform to
generally accepted accounting principles of development stage enterprises.
PRINCIPLES OF CONSOLIDATION - The accompanying financial statements
include the accounts of its wholly owned subsidiary, LaserCare, Inc., also
a development stage enterprise. All significant intercompany transactions
have been eliminated.
USES OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from
those estimates. The Company's periodic filings with the Securities and
Exchange Commission include, where applicable, disclosures of estimates,
assumptions, uncertainties and concentrations in products and markets
which could affect the financial statements and future operations of the
Company.
<PAGE>
CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows,
the Company considers all cash in banks, money market funds, and
certificates of deposit with a maturity of less than one year to be cash
equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS -
The carrying amounts of cash, accounts receivable, accounts payable, notes
payable, and accrued expenses approximate fair value because of the short
maturity of these items. These fair value estimates are subjective in
nature and involve uncertainties and matters of significant judgment, and,
therefore, cannot be determined with precision. Changes in assumptions
could significantly affect these estimates. At November 30, 1999, the
Company had no derivative financial instruments.
EQUIPMENT AND FURNISHINGS - Equipment and furnishings is stated at cost
less accumulated depreciation, computed principally on the straight-line
method over the estimated useful lives of the assets. Estimated useful
lives approximate five years. Depreciation is taken on the straight-line
method for tax purposes also, using lives prescribed by the Internal
Revenue Code, which are similar to book basis lives.
Maintenance and repairs of equipment and furnishings are charged to
development stage expenses and new purchases and major improvements are
capitalized. Upon retirement, sale or other disposition, the cost and
accumulated depreciation are eliminated from the accounts, and any gain or
loss is included in operating income.
FEDERAL INCOME TAXES - Deferred income taxes are reported for timing
differences between items of income or expense reported in the financial
statements and those reported for income tax purposes in accordance with
Statement of Financial Accounting Standards number 109 ACCOUNTING FOR
INCOME TAXES, which requires the use of the asset/liability method of
accounting for income taxes. Deferred income taxes and tax benefits are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, and for tax loss and credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
The Company provides deferred taxes for the estimated future tax effects
attributable to temporary differences and carryforwards when realization
is more likely than not.
Differences between book and tax income arise primarily from the valuation
of stock issued for services.
NET INCOME PER SHARE OF COMMON STOCK - Net income per share of common
stock is computed by dividing net income by the weighed average number of
shares of common stock outstanding during the period, after giving
retroactive effect to stock splits, if any.
NOTE 4 - COMPREHENSIVE INCOME:
FASB Statement Number 130, REPORTING COMPREHENSIVE INCOME, became effective for
fiscal years beginning after December 15, 1997, and establishes standards for
reporting and display of comprehensive income
<PAGE>
and its components (revenues, expenses, gains, and losses) in a full set of
general-purpose financial statements. This Statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company had no
comprehensive income other than net income during the periods included in the
accompanying financial statements.
NOTE 5 - SUBSEQUENT EVENT
On July 31, 2000, the Board of Directors unanimously approved a resolution to
change the name of the Company to SpectraSource Corporation.
<PAGE>
THERAPY LASERS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITON AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As explained in note 2 of the financial statements, the Company had sales for
the second quarter subsequent to the acquisitions. Prior to the acquisitions,
the Company was essentially dormant. Subsequent to the acquisitions, the Company
experienced net earnings of approximately $233,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company had total liabilities approximating $2,900,000 at June 30, 2000.
This is primarily attributable to the issuance of notes payable for the
acquisition of the subsidiaries. The increase in equity from $(27,652) to
$727,325 is also attributable to the acquisitions. The Company expects that cash
requirements for development stage operations for the next fiscal year will be
provided from the three new subsidiaries. However, there can be no assurance
that these activities will, in fact, provide the necessary working capital for
operations.
This Form 10-QSB includes or may include certain forward-looking statements that
involve risks and uncertainties. This Form 10-QSB contains certain
forward-looking statements concerning the Company's financial position, business
strategy, budgets, projected costs and plans and objectives of management for
future operations as well as other statements including words such as
"anticipate," "believe," "plan," "estimate," "expect," "intend," and other
similar expressions. Although the Company believes its expectations reflected in
such forward-looking statements are based on reasonable assumptions, readers are
cautioned that no assurance can be given that such expectations will prove
correct and that actual results and developments may differ materially from
those conveyed in such forward-looking statements. Important factors that could
cause actual results to differ materially from the expectations reflected in the
forward-looking statements in this Form 10-QSB include, among others, the pace
of technological change, the Company's ability to manage growth and attract and
retain employees, general business and economic conditions in the Company's
operating regions, and competitive and other factors, all as more fully
described in the Company's Report on Form 10-K for the period ended February 28,
2000 under Management's Discussion and Analysis of Financial Condition and
Results of Operations "Assumptions Underlying Certain Forward-Looking Statements
and Factors that May Affect Future Results" and elsewhere from time to time in
the Company's other SEC reports. Such forward-looking statements speak only as
of the date on which they are made and the Company does not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of this Form 10-QSB. If the Company does update or
correct one or more forward-looking statements, investors and others should not
conclude that the Company will make additional updates or corrections with
respect thereto or with respect to other forward-looking statements. Actual
results may vary materially.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K None.
All other items in Part II are either not applicable to the
<PAGE>
Company during the current quarter, the answer is negative, or a response
has been previously reported and an additional report of the information
is not required, pursuant to the instructions to Part II.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 19th day of
September, 2000.
Therapy Lasers, Inc.
By: /s/ CHARLES SHEFFIELD Date: September 20, 2000
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Charles Sheffield,
Chairman of the Board,
President, Chief
Executive Officer
