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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check one): X Form 10-K __ Form 20-F X Form 10-Q __ Form N-SAR
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For period ended: March 31, 1999
[ ] Transition Report on Form 10-K and Form 10-KSB
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q and Form 10-QSB
[ ] Transition Report on Form N-SAR For the transition
period ended
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SEC File Number 0-17594
CUSIP Number - 110415 10 6
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the item(s) to which the notification relates:
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PART I-REGISTRANT INFORMATION
BRITESMILE, INC.
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Full Name of Registrant
200 Diplomat Drive, #204
Airport Business Center
Lester, PA 19113
(610) 362-1111
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Address and telephone number of
principal executive office
PART II-RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check appropriate box)
[X] (a) The reasons described in reasonable detail in Part III of
this form could not be eliminated without unreasonable effort
or expense;
[X] (b) The subject annual report, semi-annual report, transition
report on Forms 10-K, 10- KSB, 20-F, 11-K, or Form N-SAR, or
portion thereof will be filed on or before the 15th calendar
day following the prescribed due date; or the subject
quarterly report or transition report on Form 10-Q, 10-QSB, or
portion thereof will be filed on or before the fifth calendar
day following the prescribed due date; and
[ ] (c) The accountant's statement or other exhibit required by
Rule 12b-25(c) has been attached if applicable.
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PART III-NARRATIVE
State below in reasonable detail the reasons why the Form 10-K, 10-KSB,
11-K, 20-F 10-Q, 10-QSB, N-SAR or the transition report portion thereof, could
not be filed within the prescribed time period.
The annual report of the registrant on Form 10-K could not be filed
because of delays encountered in reviewing and incorporating final
comments from directors, senior management and professional advisors.
The Registrant is finalizing its review of the 10-KSB to insure
completeness and accuracy. The inability to file timely could not be
avoided by the Registrant without unreasonable effort and expense. The
Registrant intends to file the Form 10KSB within four calendar days
following the due date.
PART IV-OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification.
Michael F, Bonner, CFO and Sec. (610) 362-1111
(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) or
the Securities Exchange Act of 1934 or Section 30 of the Investment
Company Act of 1940 during the preceding 12 months (or for such shorter
period that the registrant was required to file such report(s)) been
filed? If the answer is no, identify report(s).
X Yes No
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(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject
report or portion thereof?
X Yes No
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If so: attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the
reasons why a reasonable estimate of the results cannot be
made.
See attached copy of a portion of Item 6, Management's Discussion and
Analysis--Results of Operations, from the Annual Report on Form 10-KSB
of the Registrant for the fiscal year ended March 31, 1999 which must
be filed with the SEC no later than 15 days from June 29, 1999, the due
date of the Report.
BRITESMILE, INC.
(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date June 30, 1999 By: /s/
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Michael F. Bonner, Chief Financial Officer
and Secretary
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ATTACHMENT PURSUANT TO PART IV, ITEM (3) OF FORM 12b-25 OF BRITESMILE, INC,
RESULTS OF OPERATIONS
Net Sales
Sales for the fiscal year ended March 31, 1999 totaled $547,000 compared to
$4,609,000 in the prior fiscal year, a decrease of approximately $4,062,000 or
88%. Dental sales decreased $2,716,000 in the year ended March 31, 1999, from
$2,836,000 in 1998 to $120,000 in 1999. The decrease in dental sales in fiscal
1999 was due to the Company's decision to discontinue all development and sales
efforts associated with its laser-based teeth whitening devices and focus its
resources on the development of the BriteSmile 2000 teeth whitening system.
Sales of teeth whitening chemical products decreased $408,000 or 52% from
$789,000 in fiscal 1998 to $381,000 in fiscal 1999 as a result of the Company's
discontinuation of chemical production and sale in September 1998. Sales of the
industrial and scientific lasers declined to $0 in fiscal 1999 from $984,000 in
fiscal 1998 due to the Company's sale of its remaining industrial and scientific
assets to a laser manufacturer in Salt Lake City, Utah during the first quarter
of fiscal 1999. Whitening fee revenue was $46,000 in fiscal 1999 due to the
Company opening the first BriteSmile Professional Teeth Whitening Center
("Whitening Center") during February 1999. The Company currently anticipates its
future consolidated revenue base to be derived principally from teeth whitening
fees. Teeth whitening fees are expected to increase over the next twelve months
through the opening of additional Whitening Centers and Associated Centers as
well as increased awareness and use of the service by consumers.
Cost of Sales
The Company's cost of sales, exclusive of inventory write-downs, increased from
77% of sales in fiscal year 1998 to 124% of sales in fiscal year 1999. The
increase is due to the low operating levels during the start-up of the first
Whitening Center as well as reduced sales of higher margin laser whitening
systems.
Selling & Administrative Expenses
Administrative expenses increased from $2,535,000 in fiscal 1998 to $3,523,000
in fiscal 1999 or $988,000 as a result of the Company's development of the
retail based teeth whitening center business platform. The development of the
business platform included, among other administrative activities: establishing
appropriate legal structures, identifying and securing appropriate real estate
and managing Center construction. Included in fiscal 1999 administrative
expenses were professional fees of $921,000 associated with legal proceedings,
developing and executing Center and Associated Center agreements, executing
leases, establishing rights to intellectual property and general corporate
matters.
Selling expenses in fiscal 1999 decreased $524,000 from $2,395,000 in 1998 to
$1,871,000 in 1999 reflecting the elimination of the Company's internal sales
force and laser whitening marketing efforts. These reductions were partially
offset by increased costs associated with developing marketing strategies and
materials to promote the new Whitening Centers and Associated Centers.
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Research & Development Expenses
Research and development expenses increased $2,295,000 or 253% to $3,201,000 in
1999 from $906,000 in fiscal 1998. This increase reflects the substantial
research, development and testing efforts expended by the Company in the
development of the BriteSmile 2000 teeth whitening system. The major development
efforts included the development of the BriteSmile 2000 light device and the
development of the complementary BriteSmile 2000 whitening gel. In addition the
Company spent many months testing the system and evaluating its safety. A
significant portion of the Company's research and development expenditures were
attributable to contractual research and development arrangements that are now
concluded. The Company plans to continue its research and development efforts to
improve and expand the capabilities of its technology; however, these activities
will be conducted at substantially lower levels of spending.
Asset Impairment and Write-Downs
During fiscal 1998, the Company experienced declining sales and ongoing
operating losses principally caused by the anticipated change in product
offering from the Company's laser teeth whitening system to an arc lamp teeth
whitening system, as well as product design issues related to its discontinued
laser teeth whitening systems. These conditions were indicators that certain of
the Company's assets were impaired. Furthermore, as a result of the Company's
refocus of its activities exclusively in the dental whitening market, certain of
its assets in the industrial and scientific lines were impaired as well.
Accordingly, the Company recorded total charges of $4,290,000 in fiscal 1998,
related to the impairment and write-down of certain assets, which will provide
limited or no future benefit to the Company. Included in the fiscal 1998 charges
are the following: (i) $421,000 write-down of fixed assets; (ii) $1,294,000
write-off of goodwill and patent costs relating to products or technologies
which the Company no longer intends to use and/or pursue; (iii) $302,000
write-off of deferred marketing costs related to a marketing program which has
been discontinued by the Company; and (iv) $2,273,000 write-down of inventories
which have been rendered obsolete or will be discontinued by the Company and
either scrapped or sold at substantially reduced values. The inventory
write-downs have been classified as cost of sales - inventory write-downs.
As a result of the furthering declines in operating results in the fourth
quarter of fiscal year 1998, under the direction of its Board of Directors, the
Company closed its Utah operating facility in May 1998, discontinued all
activities related to the industrial and scientific lines and relocated its
corporate office and remaining operations to Pennsylvania.
In connection with the Company's decision to relocate its operations to
Pennsylvania, a significant portion of the Company's workforce was terminated.
Because the plan of termination was not developed, approved or communicated
prior to year end 1998, the associated severance costs did not meet the
conditions for a restructuring accrual at March 31, 1998.
During fiscal 1999 the Company completed its plan of termination and charged
$200,000 to expense for termination benefits, which were paid to 63 former
employees. As the Company continued to focus on the dental whitening market, and
in particular the development of its new light activated teeth whitening system,
impairment charges and write-downs of unrelated assets in the amount of
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$2,977,000 were recognized. Included in the charges are the following: (i)
$357,000 write-down of aged accounts receivable and the receivable from the
Joint Venture; (ii) $418,000 of inventory write-down classified as cost of
sales; (iii) $418,000 impairment charge on assets available for sale; (iv)
$323,000 write-down of fixed assets; (v) $101,000 loss on sale of properties;
(vi) $426,000 write-down of patents; (vii) $225 write-down of investment in the
Joint Venture; (viii) settlement costs of $402,000 related to canceled purchase
commitments; and (ix) $307,000 of accrued liabilities associated with exiting
discontinued business lines.
Interest Income and Expense
Interest income in fiscal 1999 increased $138,000 to $221,000 from $83,000 in
1998 as a result of higher cash balances and the corresponding money market
earnings associated with those cash balances. Cash balances were higher due to
the two private placements of the Company's common stock totaling $15,000,000 in
fiscal 1999.
Interest expense decreased from $120,000 in fiscal 1998 to $83,000 in fiscal
1999 as a result of lower debt levels in 1999, attributable to the repayment of
capital lease obligations and lower interest rates on a variable rate mortgage
note. The fiscal 1999 interest expense was associated with equipment capital
lease obligations and the long-term mortgage on the Company's former Salt Lake
City facility.
Income Taxes
The Company had no income tax expense during fiscal 1999 or fiscal 1998 due to
its operating losses. Furthermore, no income tax benefit was recognized due to
the uncertainty associated with the Company's ability to realize its deferred
tax assets, comprised primarily of net operating loss carryforwards. For further
information on income taxes and the remaining net operating loss carry forward
available to the Company, see Note 8 of the Notes to Consolidated Financial
Statements.
Inflation
The Company actively strives to contain costs on parts from suppliers by
renegotiating purchase order contracts. Inflation has not been a major factor in
the past and is not seen as a major factor that will impact the Company'
operations in the immediate future.
Net Loss
The Company incurred a net loss of $11,767,000 in fiscal 1999 as compared to a
net loss of $9,113,000 in fiscal 1998. The $2,654,000 increase in the loss is
principally attributable to the significant decrease in sales and corresponding
loss of margin associated with those sales as well as the increase in research
and development expenses. These items were partially offset by a decrease in
impairment charges and write-down of assets in fiscal 1999.
