<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1997 Commission File Number 0-21068
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SIGHT RESOURCE CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 04-3181524
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Jeffrey Avenue
Holliston, MA 01746
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(Address of principal executive offices)
508-429-6916
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year, if changed since the last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No _____
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APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
On November 5, 1997, 8,756,500 shares of common stock, par value $0.01 per
share, were outstanding.
TOTAL PAGES 13
EXHIBIT INDEX AT PAGE 12
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SIGHT RESOURCE CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets as of September 30, 1997, and December 31, 1996 3
Consolidated Statements of Operations for the Three and Six Months Ended September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for the Six Months Ended September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIGHT RESOURCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,883 $ 9,924
Accounts receivable, net of allowances of $515 and $353, respectively 2,509 1,405
Inventories 4,133 2,489
Prepaid expenses and other current assets 803 286
Assets held for sale 56 458
-------- --------
Total current assets 11,384 14,562
-------- --------
Property and equipment 10,169 6,030
Less accumulated depreciation (4,236) (1,095)
-------- --------
Net property and equipment 5,933 4,935
-------- --------
Other assets:
Intangible assets, net 15,170 11,768
Other assets 1,399 165
-------- --------
Total other assets 16,569 11,933
-------- --------
$ 33,886 $ 31,430
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Revolving note payable $ 1,475 $ 475
Current portion of long term debt 1,000 800
Accounts payable 2,678 1,843
Accrued expenses 4,682 3,670
-------- --------
Total current liabilities 9,835 6,788
-------- --------
Non-current liabilities:
Long term debt, less current maturities -- 1,600
Other liabilities 1,163 276
-------- --------
Non-current liabilities 1,163 1,876
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Stockholders' equity:
Preferred Stock, $.01 par value. Authorized 5,000,000 shares; no shares
issued and outstanding -- --
Common Stock, $.01 par value. Authorized 20,000,000 shares; issued
8,756,500 at September 30, 1997 and 8,648,768 at December 31, 1996 88 86
Additional paid-in capital 38,282 37,510
Common Stock issuable, 71,181 shares at September 30, 1997 and December
31, 1996 432 432
Treasury stock at cost (shares at September 30, 1997: 30,600) (137) --
Accumulated deficit (15,777) (15,262)
-------- --------
Total stockholders' equity 22,888 22,766
-------- --------
$ 33,886 $ 31,430
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
SIGHT RESOURCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue $ 12,674 $ 9,764 $ 33,141 $ 21,342
Cost of revenue 4,463 3,787 12,058 8,331
--------- -------- --------- ----------
Gross profit 8,211 5,977 21,083 13,011
Selling, general and administrative expenses 8,364 6,702 22,102 15,148
--------- -------- --------- ----------
Loss from operations (153) (725) (1,019) (2,137)
--------- -------- --------- ----------
Other income (expense)
Interest income 69 169 292 349
Interest expense (89) (38) (261) (151)
Gain on sale of assets 251 -- 474 --
--------- -------- --------- ----------
Total other income 231 131 505 198
--------- -------- --------- ----------
Net income (loss) $ 78 $ (594) $ (514) $ (1,939)
========= ======== ========= ==========
Earnings (loss) per common share $ 0.01 $ (0.07) $ (0.06) $ (0.28)
========= ======== ========= ==========
Weighted average number of common shares outstanding 8,782 8,158 8,639 6,988
========= ======== ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
SIGHT RESOURCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
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<S> <C> <C>
Operating activities:
Net loss $ (514) $(1,939)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 1,482 1,497
Gain on sale of assets (474) --
Changes in operating assets and liabilities:
Accounts receivable (590) (358)
Inventories (727) 30
Prepaid expenses and other current assets (530) (222)
Accounts payable and accrued expenses (527) (1,185)
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Net cash used in operating activities (1,880) (2,177)
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Investing activities:
Purchases of property and equipment (1,284) (767)
Acquisition of subsidiaries (2,075) (2,854)
Proceeds from sale of assets 1,005 --
Other assets (430) (4)
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Net cash used in investing activities (2,784) (3,625)
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Financing activities:
Principal payments on long term debt (1,279) (300)
Net proceeds from issuance of common stock -- 9,935
Other liabilities 39 (349)
Purchase of common stock for treasury (137) --
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Net cash (used in) provided by financing activities (1,377) 9,286
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Net increase (decrease) in cash and cash equivalents (6,041) 3,484
Cash and cash equivalents, beginning of period 9,924 8,035
------- -------
Cash and cash equivalents, end of period $ 3,883 $11,519
======= =======
Supplemental Disclosure:
Interest paid $ 283 $ 158
======= =======
Equity issued associated with Credit Agreement $ 180 $ --
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) THE COMPANY
(a) Nature of Business
The business of Sight Resource Corporation is to participate in the
delivery of a complete range of eye care products and services through
integrated networks of opticians, optometrists and ophthalmologists.
(b) US Acquisitions
During 1995, the Company acquired two primary eye care chains, effective
January 1, 1995 and July 1, 1995, respectively. The aggregate purchase
price paid in connection with the acquisitions consisted of (i) $2,660 in
cash, (ii) 555,525 shares of common stock, (iii) the assumption of
approximately $1,600 of net liabilities, and (iv) $660 payable over a 3
year period and $250 payable over 18 months, contingent upon the occurrence
of certain future events. The transactions were accounted for using the
purchase method of accounting.
Effective July 1, 1996, the Company purchased certain assets and assumed
certain liabilities of The E.B. Brown Optical Company and Brown Optical
Laboratories, Inc. as well as entered into a merger with E.B. Brown
Opticians, Inc. (together "EB Brown") for approximately $4,000 in cash,
521,997 shares of common stock issued, 71,181 shares of common stock to be
issued and $1,400 in notes payable over an eighteen month period. The
total value assigned to the shares of common stock issued and to be issued
is $2,333,000. The shares issued and to be issued have been recorded in
the statement of stockholders' equity. EB Brown operated forty-two eye
care centers located throughout Ohio and Western Pennsylvania which provide
optometric and audiology goods and services to persons with vision and
hearing disorders. The transaction was accounted for using the purchase
method of accounting.
Effective July 1, 1997, the Company acquired one hundred percent of the
outstanding shares of stock of Vision Holdings, Ltd. (formerly known as Dr.
Greenberg, an Optometry Corporation ("Dr. Greenberg")). The purchase price
paid in connection with this acquisition was $2,000 of cash on hand and the
assumption and payment of notes payable outstanding as of July 1, 1997 of
approximately $800. Dr. Greenberg operated seventeen eye care centers in
Southeast Louisiana and Mississippi. The acquisition was accounted for
using the purchase method of accounting.
The results of operations of the four acquisitions have been included in
the consolidated financial statements from their respective dates of
acquisition. The excess of the purchase price and expenses associated with
each acquisition over the estimated fair value of the net assets acquired
has been recorded as goodwill.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying consolidated financial statements have been prepared by
the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Company, these
consolidated financial statements contain all adjustments (consisting of
only normal, recurring adjustments) necessary to present fairly the
financial position of Sight Resource Corporation as of September 30, 1997
and the results of its operations for the three and nine months ended
September 30, 1997 and 1996 and its cash flow for the nine months ended
September 30, 1997 and 1996.
The accompanying consolidated financial statements and related notes should
be read in conjunction with the audited consolidated financial statements
which are contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
6
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SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company, its wholly-owned subsidiaries and three professional
corporations ("PCs") in which the Company's subsidiaries assume the
financial risks and rewards of such PCs through a management contract and a
stock agreement. The Company has no direct equity ownership in the PCs. All
significant intercompany balances and transactions have been eliminated.
In preparation of these consolidated financial statements, in conformity
with generally accepted accounting principles, management of the Company
has made estimates and assumptions that affect the reported amounts of
assets and liabilities, such as accounts receivable, inventory, impairment
of property and equipment and intangibles. Actual results could differ from
those estimates.
(c) Revenue Recognition
Revenue and the related costs from the sale of eyewear are recognized at
the time an order is placed. The revenue generated from eye care services
is recognized when the services are performed. The Company has fee for
service arrangements with all of its third party payors. Revenue is
reported net of the contractual allowances. Contractual allowances are
estimated in the period the related services are rendered and adjusted in
future periods as final settlements are determined. The provision and
related allowance are adjusted periodically, based upon an evaluation of
historical collection experience, industry reimbursement trends and other
relevant factors. The Company has not had any material settlement with
third-party payors nor is it aware of any material claims, disputes or
unsettled matters with any third-party payor.
Under revenue sharing arrangements for refractive surgery where the Company
is not responsible for patient billing, the Company receives a specified
payment from the hospital or center for each refractive surgical procedure
performed. Accordingly, the Company recognizes revenue on a per procedure
basis at the time procedures are performed. Under revenue-sharing
arrangements for refractive surgery where the Company is responsible for
the collection from the patient and payment to the ophthalmologist and
other operating costs, the total patient charge is recorded as revenue with
the corresponding expenses recorded in cost of revenue.
(d) Inventories
Inventories primarily consist of the costs of eyeglass frames, contact
lenses, ophthalmic lenses, sunglasses and other optical products and are
valued at the lower of cost (using the first-in, first-out method) or
market.
(e) Property and Equipment
Property and equipment is stated at cost. The Company provides for
depreciation at the time the property and equipment is placed in service.
The straight-line method is used over the estimated useful life of the
asset.
(f) Intangible Assets
Intangible assets resulting from the business acquisitions consist of
patient lists, trademarks, non-compete agreement and the excess cost of the
acquisition over the fair value of the net assets acquired (goodwill).
Certain values assigned are based upon independent appraisals and are
amortized on a straight line basis over a period of 5 to 25 years. The
Company assesses the recoverability of unamortized intangible assets on an
ongoing basis by comparing anticipated operating profits and future,
undiscounted cash flows to net book value. If anticipated operating
profits and future undiscounted cash flows are less than net book value,
then an impairment charge is recorded to reduce the carrying value of the
assets to fair value. In performing this analysis, management considers
such factors as current results, trends, and future prospects, in addition
to other economic factors.
7
<PAGE>
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(g) Deferred Revenue
The Company offers a contact lens purchasing program in which, for a set
fee, customers may purchase contacts at discounted rates for a 12 month
period. The Company recognizes revenue from the sales of its contact lens
purchasing program on a monthly basis over the life of the program.
(h) Earnings (Loss) Per Share
Earnings per share are computed based on the weighted average number of
shares outstanding plus common stock equivalents related to stock options
and warrants, if such common stock equivalents cause dilution in earnings
per share in excess of 3%.
Net loss per share of common stock is based on the weighted average number
of common shares outstanding. Common stock equivalents are not included in
the calculation because they are antidilutive.
(3) DEBT
Debt is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------------- ----------------
<S> <C> <C>
Bank term loan, secured by all assets of one of the Company's subsidiaries $ -- $ 1,000
Unsecured notes payable, 7% interest rate, $400 paid on September 18, 1997 and
$1,000 due on March 18, 1998; due on demand if the Company's cash balance is
less than $2,800 1,000 1,400
-------- -------
1,000 2,400
Less current maturities 1,000 800
======== ========
Long term debt, less current maturities $ -- $ 1,600
======== ========
</TABLE>
At December 31, 1996, the Company had available a revolving credit facility
in the amount of $500 based on eligible accounts receivable and inventory
balances. As of December 31, 1996, $25 was unused.
On February 20, 1997, the Company entered into a Credit Agreement (the
"Agreement") with a bank pursuant to which the Company can borrow $5,000 on
a term loan basis and $5,000 on a revolving credit basis, subject to
certain performance criteria. Such certain performance criteria include,
among others, financial condition covenants such as rolling EBITDA levels,
indebtedness to EBITDA ratios, current ratio of 1:1 and minimum net worth
requirement. The term loan facility bears interest at the bank's prime rate
plus 1.5% or LIBOR plus 3% at the Company's election and the revolving
credit facility bears interest at the bank's prime rate plus 1.25% or LIBOR
plus 2.75% at the Company's election. These loans are secured by all assets
of the Company and its wholly owned subsidiaries. As of September 30, 1997,
the entire term loan was unused and $1,475 was outstanding on the revolving
note. The revolving note bears interest at the bank's prime rate plus 1.25%
(9.75% at September 30, 1997). As part of the Agreement, the Company issued
to the bank warrants to purchase 150,000 shares of the common stock at a
purchase price of $4.625 per share. The warrants expire December 31, 2003.
The warrants were accounted for as additional paid in capital based upon
the fair market value of the securities. Fair value was determined by using
the relationship of the interest rate charged with the warrants versus the
rate to be charged without the warrants. This value approximated that
obtained using the Black Scholes Method.
As of September 30, 1997, the Company was not in compliance with two of its
financial covenants in the Agreement related to i.) minimum requirement of
earnings before interest, depreciation, amortization and taxes and ii.)
minimum net worth requirement. The Company obtained a waiver from the bank
for noncompliance with these covenants as of and for the quarter ended
September 30, 1997.
8
<PAGE>
PART I:
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements contained in this document which are not historical fact are
forward-looking statements based upon management's current expectations that are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements.
These risks are described in the Company's Annual Report on Form 10K for the
fiscal year ended December 31, 1996 filed with the Securities and Exchange
Commission.
OVERVIEW
The Company is in the business to manufacture, distribute and sell eyewear and
related products and services and, as necessary, to administer the business
functions of providing vision related medical services. The Company provides a
complete range of eye care products and services through integrated networks of
opticians, optometrists and ophthalmologists. The Company's services are
provided primarily to persons with common vision disorders, as well as to
persons with sight-threatening conditions. The Company's operations currently
consist of eighty-eight eye care centers, three management service organizations
("MSOs") and 5 laser vision correction ("LVC") centers which the Company has
established in association with leading hospitals, ambulatory surgery centers
and ophthalmologists. In addition, the Company operates a primary optical
laboratory and distribution center in Holliston, Massachusetts.
The Company's objective is to become the leading integrated provider of eye
care products and services in select, regional markets. To develop significant
regional integrated networks, the Company's business strategy focuses on (i)
acquiring and integrating the assets of regional eye care centers and the
practices of eye care professionals (optometrists and ophthalmologists), (ii)
employing or entering into management services contracts with these
professionals, (iii) continuing to market comprehensive and competitively priced
eye care programs to leading HMOs, insurance companies and other third party
payors in the Company's regional markets, (iv) expanding strategic affiliations,
for pathology co-management opportunities, with select hospitals, ambulatory
surgery centers and eye care professionals and (v) continuing to market and
provide access to LVC services through the Company's eye care centers.
The Company believes that its integrated approach to eye care provides
significant advantages, benefits and opportunities to patients, providers and
payors. Patients benefit from the convenience of eye care products and services
delivered at a single location. Eye care professionals benefit from the
supplemental management and administrative services and resources provided by
the Company, permitting them to continue to dedicate their time and effort to
their patients and professional practices. Payors benefit from the Company's
ability to conveniently provide a complete range of high quality eye care
products and services at competitive prices.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NET REVENUE. The Company generated net revenue of approximately $12.7 million
and $33.1 million during the three and nine months ended September 30, 1997,
respectively, from the operation of its eighty-eight eye care centers and six
LVC centers as compared to net revenue of approximately $9.8 million and $21.3
million from its seventy-one eye care centers and ten LVC centers for the same
periods in 1996. The $2.9 million, or 29.8%, increase in net revenue for the
three months ended September 30, 1997 as compared to the three months ended
September 30, 1996, relates primarily to the additional seventeen eye care
centers acquired effective July 1, 1997. Of the $11.8 million, or 55.3%,
increase in net revenue for the nine months ended September 30, 1997 as compared
to the nine months ended September 30, 1996, approximately $11.0 million relates
to the additional forty one eye care centers acquired effective July 1, 1996 and
to the additional seventeen eye care centers acquired effective July 1, 1997.
9
<PAGE>
COST OF REVENUE. Cost of revenue increased from $3.8 million for the three
months ended September 30, 1996 to $4.5 million for the three months ended
September 30, 1997. Cost of revenue as a percent of net revenue decreased from
38.8% for the three months ended September 30, 1996 to 35.2% for the three
months ended September 30, 1997. Cost of revenue increased from $8.3 million for
the nine months ended September 30, 1996 to $12.1 million for the nine months
ended September 30, 1997. Cost of revenue as a percent of net revenue decreased
from 39.0% for the nine months ended September 30, 1996 to 36.4% for the nine
months ended September 30, 1997. The decrease as a percentage of net revenue is
mainly attributable to reduced depreciation on ophthalmic equipment after the
write down due to the asset impairment recognized in the fourth quarter of 1996.
Cost of revenue for the three and nine months ended September 30, 1997 and 1996
principally consisted of (i) the cost of manufacturing, purchasing and
distributing optical products to its customers and (ii) the cost of delivering
LVC, including depreciation and maintenance on excimer lasers.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were approximately $8.4 million and $22.1 million for
the three and nine months ended September 30, 1997, respectively, as compared to
$6.7 million and $15.1 million for the three and nine months ended September 30,
1996, respectively. The increase primarily relates to payroll and facility costs
incurred in operating additional eye care centers in the first three quarters of
fiscal 1997 as compared to the first three quarters in fiscal 1996. Selling,
general and administrative expenses, as a percentage of net revenue, declined
from 68.6% and 71.0% for the three and nine months ended September 30, 1996,
respectively, to 66.0% and 66.7% for the three and nine months ended September
30, 1997, respectively. This decrease as a percent of net revenue is a result of
the Company's growth through acquisitions and the realization of certain
efficiencies related to this growth.
OTHER INCOME AND EXPENSES. Interest income totaled $69,000 and $292,000 for
the three and nine months ended September 30, 1997, respectively, as compared to
$169,000 and $349,000 for the three and nine months ended September 30, 1996,
respectively. This decrease resulted from the investment of a lower average cash
balance during 1997 as compared to the same periods for 1996. Interest expense
totaled $89,000 and $261,000 for the three and nine months ended September 30,
1997 as compared to $38,000 and $151,000 for the three and nine months ended
September 30, 1996. This increase is associated with a higher average balance of
debt outstanding during 1997 as compared to the same periods in 1996. The sale
of certain ophthalmic equipment during the three months ended September 30, 1997
generated a gain of approximately $251,000. The sale of certain ophthalmic
equipment during the nine months ended September 30, 1997 generated a gain of
approximately $474,000.
NET INCOME (LOSS). The Company realized net income of $78,000 ($0.01 per
share) and a net loss of $514,000 ($0.06 per share) for the three and nine
months ended September 30, 1997 as compared to a net loss of $594,000 ($0.07 per
share) and $1.9 million ($0.28 per share) for the three and nine months ended
September 30, 1996, respectively.
The change from net loss to net income is primarily attributable to increased
income generated by the additional forty-one eye care centers acquired by the
Company effective July 1, 1996 and the seventeen eye care centers acquired
effective July 1, 1997. The change from net loss per share to net income per
share was partially offset by an increase in the weighted average number of
common shares outstanding as of September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had approximately $3.9 million in cash and
cash equivalents and working capital of approximately $1.5 million in comparison
to approximately $9.9 million in cash and cash equivalents and working capital
of approximately $7.8 million as of December 31, 1996. Significant changes in
balance sheet line items included in working capital, such as inventory and
accrued expenses, are related to the acquisition of Vision Holdings, Ltd.
On October 9, 1997, the Company signed a definitive purchase agreement for the
sale of approximately $5 million of its Series B Convertible Preferred Stock and
warrants to purchase common stock to The Carlyle Group. The transaction is
expected to close by the end of November, 1997.
10
<PAGE>
As of September 30, 1997, the Company had securities outstanding which provide
it with potential sources of financing as outlined below:
<TABLE>
<CAPTION>
POTENTIAL
SECURITIES PROCEEDS
------------------------------------------------------ ------------
<S> <C> <C>
Warrants 2,472,100 $ 14,800,000
Class A Warrants 85,000 500,000
Unit Purchase Options 215,000 3,700,000
IPO Representative Warrants 85,000 1,300,000
Creditanstalt Warrants 150,000 694,000
Representative Warrants 170,000 1,400,000
-------------
$ 22,394,000
=============
</TABLE>
There can be no assurance that the Company will obtain any such proceeds from
the exercise of the above securities.
The Company has a Credit Agreement with a bank pursuant to which the Company
can borrow up to $5.0 million on a term loan basis and up to $5.0 million on a
revolving credit basis, subject to certain performance criteria. Such certain
performance criteria include, among others, financial condition covenants such
as rolling EBITDA levels, indebtedness to EBITDA ratios, current ratio of 1:1
and minimum net worth requirement. The term loan facility bears interest at the
bank's prime rate plus 1.5% or LIBOR plus 3% at the Company's election and the
revolving credit facility bears interest at the bank's prime rate plus 1.25% or
LIBOR plus 2.75% at the Company's election. As of September 30, 1997,
approximately $1.5 million was outstanding on the revolver. As part of the
Agreement, the Company issued to the bank warrants to purchase 150,000 shares of
the common stock at a purchase price of $4.625 per share. The warrants expire on
December 31, 2003.
As of September 30, 1997, the Company was not in compliance with two of its
financial covenants in the Agreement related to a.) minimum requirement of
earnings before interest, depreciation, amortization and taxes and b.) minimum
net worth requirement. The Company obtained a waiver from the bank for
noncompliance with these covenants.
Effective July 1, 1997, the Company acquired one hundred percent of the
outstanding shares of stock of Vision Holdings, Ltd. (formerly known as Dr.
Greenberg, an Optometry Corporation ("Dr. Greenberg")). The purchase price paid
in connection with this acquisition was $2.0 million of cash on hand and the
assumption and payment of notes payable outstanding as of July 1, 1997 of
approximately $800,000. Dr. Greenberg operated seventeen eye care centers in
Southeast Louisiana and Mississippi. The acquisition was be accounted for using
the purchase method of accounting.
The Company anticipates that its working capital and sources of capital, such
as the credit facility, cash flow from operations, revenues from operations and
interest income from cash investments, will be adequate to fund the Company's
currently proposed activities for at least the next twelve months. The Company
anticipates using financing vehicles such as bank debt and other sources of
funding, such as additional equity offerings, to achieve its business plan,
including the acquisition of eye care centers. By acquiring eye care centers,
the Company gains critical mass of locations ensuring that potential patients
and third party payors will have convenient access to a wider variety of eye
care services. It also allows the Company to deliver these services at
considerable savings by using existing corporate and operational infrastructure,
which includes store operations, MIS, manufacturing, purchasing, distribution
and training. The Company is currently evaluating potential acquisition
candidates. Without additional funding, the Company's rate of future
acquisitions and size of future acquisitions could be limited.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT
NO. Title
------- -----
10.1 Stock Purchase Agreement by and among Marjory O.
Greenberg, As Testamentary Executrix of the
Succession of Tom I. Greenberg, Peter Brown, and
Vision Plaza Corp.
10.2* Promissory Note between Sight Resource Corporation
and Mr. Stephen Blinn
27 Financial Data Schedule
* This exhibit relates to a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this form.
REPORTS ON FORM 8-K
- -------------------
NONE
12
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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.
SIGHT RESOURCE CORPORATION
Date: July 15, 1998 By: /S/ WILLIAM T. SULLIVAN
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William T. Sullivan
President
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