SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
- - OR -
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 1-10428
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0148208
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
47257 FREMONT BOULEVARD, FREMONT, CALIFORNIA 94538
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 510-623-9001
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check [X] 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 []
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check [X] whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [] No []
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of June 6, 1997, the number of shares of Common Stock of the
Registrant outstanding was 27,886,247.
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INDEX
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Page
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Statements of Operations for the three
months ended March 31, 1997 and 1996 ................ 1
Consolidated Balance Sheets as of March 31, 1997 and
December 31, 1996 ................................... 2
Consolidated Statements of Cash Flows for the three
months ended
March 31, 1997 and 1996 ............................. 3
Notes to Consolidated Financial Statements .......... 4
Signatures .......................................... 6
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Consolidated Statements of Operations
(unaudited)
THREE MONTHS ENDED
MARCH 31,
1997 1996
(In thousands, except
per share amounts)
Net revenues ........................... $1,009 $1,521
Cost of revenues ....................... 958 1,139
______ ______
Gross profit ........................... 51 382
Other costs and expenses:
Engineering and development .......... 273 343
Sales, marketing and regulatory ...... 659 946
General and administrative ........... 706 567
_______ _______
Total other costs and expenses .. 1,638 1,856
_______ _______
Loss from operations ................... (1,587) (1,474)
Interest income ........................ 11 34
Interest expense, including non-cash
interest associated .................... (812) (3)
________ ________
with redeemable convertible notes
Net loss ....................... $(2,388) $(1,443)
======== ========
Net loss per share $(0.09) $(0.06)
======== ========
Shares used in calculation of net
loss per share ...................... 27,871 25,315
======== ========
See accompanying notes.
1
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SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Consolidated Balance Sheets
MARCH 31, DECEMBER
1997 31, 1996
(unaudited) (Note)
ASSETS (In thousands)
Current assets:
Cash and cash equivalents ............. $1,618 $647
Accounts receivable, net of allowance . 815 472
Inventories ........................... 2,225 2,135
Prepaid expenses ...................... 214 288
______ ______
Total current assets ............. 4,872 3,542
Property and equipment, net ............. 191 199
______ ______
Total assets ............................ $5,063 $3,741
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................... $700 $1,586
Accrued payroll and related expenses .. 252 209
Accrued warranty ...................... 199 199
Other accrued expenses ................ 456 475
______ ______
Total current liabilities ........ 1,607 2,469
Redeemable convertible notes ............ 3,530 _
Commitments and contingencies ........... _ _
Stockholders' equity:
Preferred Stock, $0.001 par value,
2,000,000 shares authorized, none
issued or outstanding ........... _ _
Common Stock, $0.001 par value,
40,000,000 shares
authorized, 27,886,247 and
27,868,613 shares
issued and outstanding at March
31, 1997 and December 31, 1996
respectively .................... 28 28
Additional paid-in capital ............ 32,730 31,688
Accumulated deficit ...................(32,832) (30,444)
________ ________
Total stockholders' equity .......... (74) 1,272
______ ______
Total liabilities and stockholders'
equity .................................. $5,063 $3,741
======== ========
NOTE: The consolidated balance sheet at December 31, 1996 has
been derived from the audited financial statements at that date
but does not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
2
<PAGE>
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(unaudited)
Three months ended
March 31,
1997 1996
(In thousands)
CASH FLOWS FOR OPERATING ACTIVITIES:
Net Loss ............................... $(2,388) $(1,443)
Adjustments to reconcile net loss to
net cash used
in operating activities:
Depreciation and amortization .......... 8 20
Provision for doubtful accounts ........ 15 _
Non-cash interest expense .............. 812 _
Changes in assets and liabilities:
Accounts receivable .................... (358) (198)
Inventories ............................ (90) (967)
Prepaid expenses ....................... 74 17
Accounts payable ....................... (886) 421
Accrued payroll and related expenses ... 43 29
Other accrued expenses ................. (19) (10)
_______ _______
Total adjustments ...................... (401) (688)
_______ _______
Net cash used in operating activities .. (2,789) (2,131)
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment ..... _ (5)
_______ _______
Net cash used in investing activities .. _ (5)
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of
offering costs ......................... 17 74
Issuance of redeemable convertible
notes, net of insurance costs .......... 3,743 _
_______ _______
Net cash provided by (used in)
financing activities ................... 3,760 74
_______ _______
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ....................... 971 (2,062)
Cash and cash equivalents at beginning
of period .............................. 647 3,514
_______ _______
CASH AND CASH EQUIVALENTS AT END OF
PERIOD ................................. $1,618 $1,452
======= =======
See accompanying notes.
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 1997
1. Basis of Presentation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries after elimination
of all material intercompany balances and transactions. Certain
reclassifications have been made to prior year amounts in order
to conform to the current presentation.
The consolidated financial data for the quarters ended March
31, 1997 and 1996 are unaudited, but include all adjustments
(consisting only of normal recurring adjustments) that the
management of Sunrise Technologies International, Inc. believes
to be necessary for fair presentation of the periods presented.
Interim results are not necessarily indicative of results for the
full year. The financial statements should be read in
conjunction with the audited financial statements for the year
ended December 31, 1996 included in the Company's annual report
on Form 10-K filed with the Securities and Exchange Commission.
The Company has incurred significant losses for the last
several years and at March 31, 1997 has an accumulated deficit of
approximately $32,832,000. The accompanying condensed financial
statements have been prepared assuming the Company will continue
as a going concern. The Company's ability to continue as a going
concern is dependent upon performing profitably or obtaining
further financing. On March 25, 1997, the Company signed a
definitive agreement to sell its dental assets to Lares Research.
Consideration for the sale will be $4,000,000 in cash at closing
and $1,500,000 in an interest bearing promissory note, with two
installments due three and four years, respectively, from the
date of closing. Should the sale of the dental assets not be
successfully completed, the Company may need to seek additional
debt or equity financing. There can be no assurance that such
financing, if necessary, will be available, in which case
management may need to curtail or suspend certain or all
operations.
2. Net Loss Per Share
Net loss per share for the three months ended March 31, 1997
and 1996 is based solely on weighted average shares of common
stock outstanding during the period. Common equivalent shares
have not been considered in the computation since their inclusion
would have an antidilutive effect.
In February 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share, which is required
to be adopted on December 31, 1997. At that time, the Company
will be required to change the method currently used to compute
earnings per share and restate all prior periods. Under the new
requirements for calculating basic earnings per share, the
dilutive effect of stock options will not be included. The
computed basic earnings per share will not be different from the
primary earnings per share for the quarters ended March 31, 1997
and March 31, 1996.
3. Revenue Recognition
Revenues are recognized at time of shipment. A provision for
the estimated future cost of warranty is made at the time a sale
is recorded.
4
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4. Inventories
Inventories are stated at the lower of cost (first-in,
first-out) or market and consisted of the following on the dates
indicated:
March 31, December
1997 31, 1996
(In thousands)
Raw materials $1,327 $1,180
Work-in-rocess 401 299
Finished goods 497 656
______ ______
$2,225 $2,135
====== ======
5. Income Taxes
Due to the Company's losses from operations, all deferred tax
assets, which primarily result from net operating loss carry
forwards, have been offset in full by a valuation allowance in
accordance with SFAS No. 109.
6. Issuance of Redeemable Convertible Notes
In February and March 1997, the Company completed a series of
private placements (collectively, the "1997 Notes Placement") of
5% redeemable convertible notes due 1999 (convertible into common
stock) (the "Notes") and warrants to purchase common stock (the
"Warrants"). The total face amount of the Notes is approximately
$4.1 million, and net proceeds aggregated approximately $3.7
million. In accordance with recent Securities and Exchange
Commission Division of Corporation Finance guidance, the Company
has recorded a premium of approximately $769,000 associated with
the conversion feature of the Notes as additional interest
associated with the Notes and paid-in-capital. Because the Notes
are immediately convertible at the holders' option, the entire
amount has been recorded as interest expense upon issuance of the
Notes. The Company has recorded the Notes net of debt offering
costs of approximately $358,000 and the value associated with the
Warrants of approximately $256,000, which will be amortized as
interest expense over the period that the Notes are outstanding.
5
<PAGE>
Signatures
Pursuant to the requirements 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.
SUNRISE TECHNOLOGIES INTERNATIONAL, INC.
Date: June 10, 1997 By: /s/ David W. Light
David W. Light
Chairman of the Board and Chief
Executive Officer
Date: June 10, 1997 By: /s/ Clara R. Munley
Clara R. Munley
Vice President, Finance and Chief
Financial Officer
(Principal Financial Officer)
6
