<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Amendment No. 1)
[X] Quarterly Report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
[ ] Transition Report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended: JUNE 30, 1996
-------------
Commission File No. 0-23142
VISTA TECHNOLOGIES INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 13-3687830
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
167 S. San Antonio Road, Suite 9, Los Altos, California 94022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 947-1750
--------------------------
Former Address:
1250 Oakmead Parkway, Suite 210, Sunnyvale, California 92088-3599
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(Former name, former address and former fiscal year,
if changed since 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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: Common Stock, par value
$.005 per share, outstanding as of August 31, 1996: 7,626,112 shares.
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
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<PAGE>
VISTA TECHNOLOGIES INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C> <C>
Part I. FINANCIAL INFORMATION ........................................ 1
Item 1. Financial Statements:
Consolidated Balance Sheets at June 30, 1996
and March 31, 1996 ...................................... 1
Consolidated Statements of Operations for the
Three Months ended June 30, 1996 and 1995 ............... 3
Consolidated Statements of Cash Flows for the
Three Months ended June 30, 1996 and 1995 ............... 4
Consolidated Statement of Changes in Stockholders'
Equity for the Three Months ended June 30, 1996 ......... 5
Notes to Unaudited Consolidated Financial Statements
at June 30, 1996 ........................................ 6
Item 2. Management's Discussion and Analysis or Plan of Operation:
Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 13
Part II. Other Information:
Item 5. Other Events ...................................... 18
Item 6. Exhibits and Reports on Form 8-K .................. 21
Signatures ............................................................. 22
</TABLE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Report under the caption "Management's
Discussion and Analysis or Plan of Operation" and elsewhere constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results or performance of the Company to be materially different from future
results or performance expressed or implied by such forward-looking
statements. Such factors, include, among others: market acceptance of new
technologies and services; the sufficiency of financial resources available to
the Company and its corporate affiliates; economic, competitive, governmental
and technological factors affecting the Company's operations, markets,
services and prices; and other factors described in this Report and in prior
filings by the Company with the Securities and Exchange Commission. The
Company's actual results could differ materially from those suggested or
implied by any forward-looking statements as a result of such risks.
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PART I. FINANCIAL INFORMATION
VISTA TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
------------- -------------
<S> <C> <C>
ASSETS:
Current assets:
Cash ...................................... $ 576,350 $ 288,312
Accounts receivable:
Trade .................................. 75,612 29,515
VAT .................................... 2,973 41,434
Related parties ........................ 768,231 214,454
Stock subscriptions receivable ............ 500,000 962,500
Prepaid expenses and other ................ 219,628 256,081
------------ ------------
Total current assets .................. 2,142,794 1,792,296
Investment securities:
Available for sale ........................ 2,850,000 2,475,000
Held to maturity .......................... 116,450 115,468
Long-term VAT receivables ................... 193,200 191,571
Property and equipment, net ................. 1,178,281 1,219,798
Investment in equity investees .............. 1,388,185 468,350
Other assets ................................ 3,220 7,299
------------ ------------
Total Assets ................................ $ 7,872,131 $ 6,269,782
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
VISTA TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable, trade ................... $ 419,791 $ 520,825
Accounts payable, officers ................ -- 29,535
Accrued expenses .......................... 735,238 633,206
Current portion of notes payable .......... 371,591 296,591
Current portion of long-term debt ......... 138,362 137,351
Current portion of obligations under
capital leases ......................... 67,588 67,588
------------ ------------
Total current liabilities ............. 1,732,570 1,685,096
------------ ------------
Long-term liabilities:
Notes payable, net of current portion ..... 277,777 277,777
Long-term debt, net of current portion .... 471,228 463,240
Obligations under capital leases, net
of current portion ..................... 155,241 196,956
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Total long-term liabilities ........... 904,246 937,973
------------ ------------
Minority Interest ........................... 705,563 653,306
------------ ------------
Commitments and Contingencies
Total liabilities ..................... 3,342,379 3,276,375
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Stockholders' Equity:
Preferred stock, $.001 par value,
15,000,000 shares authorized,
none issued or outstanding ............ -- --
Common stock, $.005 par value;
15,000,000 shares authorized,
issued and outstanding,
7,006,105 shares at June 30, 1996 and
5,256,105 shares at March 31, 1996 .... 35,032 26,281
Additional paid-in capital ................ 20,122,346 18,026,096
Unrealized loss on securities
available for sale ...................... 187,500 (187,500)
Accumulated deficit ....................... (16,051,073) (15,247,045)
Foreign currency translation adjustments .. 235,947 375,575
------------ ------------
Total stockholders' equity ............ 4,529,752 2,993,407
------------ ------------
Total Liabilities and Stockholders' Equity .. $ 7,872,131 $ 6,269,782
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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VISTA TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months ended June 30,
---------------------------
1996 1995
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<S> <C> <C>
REVENUES ....................................... $ 786,075 $ 471,973
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COSTS AND EXPENSES:
General and administrative .................. 1,004,567 1,133,457
Depreciation and amortization ............... 56,654 45,857
------------ ------------
Total costs and expenses ............... 1,061,221 1,179,314
------------ ------------
OTHER (INCOME) EXPENSES:
Foreign currency exchange loss .............. (4,480) --
Realized loss (gains) on
trading securities ........................ -- 152,496
Interest .................................... 8,439 --
Other ....................................... -- 223,684
------------ ------------
Net other (income) expense ............. 3,959 376,180
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LOSS FROM OPERATIONS ................... (279,105) (1,083,521)
EQUITY INVESTEES INCOME (LOSS) ................. (472,665) --
------------ ------------
LOSS BEFORE INCOME TAXES AND
MINORITY INTEREST .................... (751,770) (1,083,521)
INCOME TAXES ................................... -- --
------------ ------------
LOSS BEFORE MINORITY INTEREST .......... (751,770) (1,083,521)
MINORITY INTEREST .............................. (52,257) (563)
------------ ------------
NET LOSS ............................... $ (804,027) $ (1,084,084)
============ ============
NET LOSS PER COMMON SHARE ...................... $ (0.12) $ (0.77)
============ ============
Weighted average number of
common shares outstanding .................... 6,778,160 1,411,523
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
VISTA TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months ended June 30,
--------------------------------
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ............................................. $ (804,027) $ (1,084,084)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization ................... 56,654 45,857
Write off of impaired and abandoned assets, net . -- --
Realized (gain) loss on trading securities ...... -- 152,496
Minority interest ............................... 52,257 563
Equity investees (income) loss, net ............. -- --
Stock issued for services ....................... -- --
Compensation related to issued non-employee
stock options ................................. -- --
Changes in operating assets and liabilities,
net of foreign currency translation:
Accounts receivable:
Trade ..................................... (46,097) 134,562
VAT ....................................... 38,461
Related parties ........................... (553,777)
Prepaid expenses ............................ 36,453 8,786
Other current assets ........................ -- (17,787)
Other assets ................................ 4,079 (7,746)
Bank overdraft protection ................... -- 36,983
Accounts payable, trade ..................... (101,034) 237,359
Accounts payable, officers .................. (29,535) --
Accrued expenses ............................ 102,032 44,894
Other liabilities ........................... 39,672 --
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Net Cash Provided By (Used By) Operating Activities .. (1,204,863) (448,117)
------------ ------------
INVESTING ACTIVITIES:
Proceeds from sales of trading securities ............ -- 250,630
Repayment of capital lease obligations ............... -- --
Purchase of trading securities ....................... -- --
Purchase of property and equipment ................... (15,137) (73,608)
Loss on investment -- held to maturity ............... -- (5,596)
Purchase of investment -- held to maturity ........... (919,835) --
------------ ------------
Net Cash Provided By (Used By) Investing Activities .. (934,972) 171,426
------------ ------------
FINANCING ACTIVITIES:
Issuance of notes payable ............................ -- 115,315
Payment of long-term debt ............................ -- --
Sale of common stock ................................. 2,567,501 --
Redeemed stock of subsidiary ......................... -- (277,777)
------------ ------------
Net Cash Provided By (Used By) Financing Activities .. 2,567,501 (162,462)
------------ ------------
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH ...... (139,628) 12,639
------------ ------------
NET INCREASE (DECREASE) IN CASH ...................... 288,038 (426,514)
Cash at beginning of period .......................... 288,312 649,708
------------ ------------
CASH AT END OF PERIOD ................................ $ 576,350 $ 223,194
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ....................................... $ 24,655 $ 23,548
Income taxes ................................... -- $ --
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
VISTA TECHNOLOGIES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Common Stock Additional Foreign Total
--------------------- Paid-in Unrealized Accumulated currency Stockholders'
Shares Amount Capital Loss deficit adjustments Equity
---------- --------- ------------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1996... 5,256,105 $ 26,281 $ 18,026,096 $ (187,500) $(15,247,045) $ 375,575 $ 2,993,407
Common stock
issued for cash
in private
placement....... 100,000 500 212,000 -- -- -- 212,500
Common stock
issued to
Vista Laser
Centers of
the Pacific Inc.
in exchange for
500,000 shares of
series B
preferred stock
of VLC-Pacific.. 500,000 2,500 485,350 -- -- -- 487,850
Common stock
issued to
Vista Laser
Centers of
the Northeast Inc.
in exchange for
675,000 shares of
series B
preferred stock
of VLC-Northeast 450,000 2,250 537,750 -- -- -- 540,000
Common stock
issued to
Vista Laser
Centers of
the Northwest Inc.
in exchange for
500,000 shares of
series B
preferred stock
of VLC-Northwest 500,000 2,500 397,500 -- -- -- 400,000
Exercise of
stock option by
Pharma Patch.... 200,000 1,000 499,000 -- -- -- 500,000
Adjustment for
investment in
VLC-Southwest... -- -- (35,350) -- -- -- (35,350)
Foreign
currency
adjustments..... -- -- -- 375,000 -- (139,628) 235,372
Net loss for
the three
months ended
June 30, 1996... -- -- -- -- (804,027) -- (804,027)
---------- --------- ------------ ---------- ------------ ----------- -------------
Balance at
June 30, 1996 ... 7,006,105 $ 35,032 $ 20,122,346 $ 187,500 $(16,051,073) $ 235,947 $ 4,529,752
========== ========= ============ ========== ============ =========== =============
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
VISTA TECHNOLOGIES INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 -- INTERIM FINANCIAL INFORMATION
The accompanying unaudited consolidated financial statements of Vista
Technologies Inc., a Nevada corporation (the "Company" or "Vista") at June 30,
1996, and for the three months periods ended June 30, 1996 and 1995 have been
prepared by the Company pursuant to the rules of the Securities and Exchange
Commission (the "Commission"). In the opinion of the Company's management,
such unaudited financial statements include all adjustments necessary for a
fair presentation of financial position, results of operations and cash flows
for the interim periods covered by such statements. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to the Commission's rules. Reference is made to Note 1 of
the Notes to Consolidated Financial Statements contained in the Company's
Annual Report on Form 10-KSB for the fiscal year ended March 31, 1996 for a
summary of significant accounting policies utilized by the Company. It is
suggested that the financial statements at June 30, 1996 be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company's latest Annual Report on Form 10-KSB.
Results of operations for the three months ended June 30, 1996 and 1995 may
not necessarily be indicative of results for the full fiscal year.
NOTE 2 -- PRINCIPLES OF CONSOLIDATION; FOREIGN CURRENCY TRANSLATION;
INTEREST IN CONSOLIDATED SUBSIDIARIES
(a) Principles of Consolidation
The consolidated financial statements include accounts of the Company, and all
wholly-owned and majority-owned subsidiaries. Investments in companies in
which the Company's ownership interests range from 20 to 50 percent, and in
which the Company exercises influence over operating and financial policies,
are accounted for using the equity method. Investments in companies in which
the Company's ownership interest is currently in excess of 50% but for which
majority interest is considered only temporary and investments in companies in
which the Company's financial interest exceeds 20 percent but in which the
Company may have limited or no voting rights are accounted for using the
equity method. Other investments are accounted for using the cost method.
All significant intercompany accounts and transactions have been eliminated.
The Company's subsidiaries in Italy, Sweden and the Netherlands have been
consolidated at June 30, 1996 using the subsidiaries' respective fiscal
quarters ended March 31, 1996 and have been consolidated at June 30, 1995
using their respective fiscal quarters ended March 31, 1995.
(b) Foreign Currency Translation
Financial statements of international subsidiaries are translated into US
dollars using the exchange rate at each balance sheet date for assets and
liabilities and an average exchange rate for each period for revenues,
expenses, gains and losses. Where the local currency is the functional
currency, translation adjustments are recorded as a separate component of
stockholders' equity.
The balance sheet and income statement data for the foreign subsidiaries have
been translated from their respective foreign currency to U.S. dollars using
the following exchange rates:
-6-
<PAGE>
<TABLE>
<CAPTION>
Average Rate Average Rate
for the for the
Three Months Three Months
Foreign June 30, 1996 Ended Ended
Subsidiary Currency Spot Rate June 30, 1996 June 30, 1995
- ---------- -------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Vista-UK Pounds Sterling n/a n/a $ 1.598
Vista-Italy Lira $ 0.001 $ 0.001 0.001
ConVista Gilders 0.585 0.614 0.647
Vista-Sweden Krona 0.149 0.144 0.138
</TABLE>
(c) Minority Interest
Minority interest represents the minority stockholders' proportionate share of
the equity in Vista-Italy. At June 30, 1996, the Company owned 73.57% of the
capital stock of Vista-Italy.
NOTE 3 -- LOSS PER COMMON SHARE
Loss per common share is based on the weighted average number of common shares
outstanding. Common equivalent shares relating to stock options and warrants
are excluded from the computation as their effect is anti-dilutive.
NOTE 4 -- CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments with an original maturity
of three months or less to be cash equivalents.
NOTE 5 -- STOCK SUBSCRIPTIONS RECEIVABLE
The Company has recorded stock subscriptions receivable as a current asset as
of March 31, 1996 and June 30, 1996, because all such receivables were paid
before the issuance of the Company's financial statements.
NOTE 6 -- INVESTMENT SECURITIES
The Company accounts for investment securities under the provisions of SFAS
No. 115. This standard requires that individual debt and equity securities be
classified into one of three categories: trading, held-to-maturity or
available-for-sale.
Trading securities are bought and held principally for the purpose of selling
them in the near term. Held-to-maturity securities are those securities in
which the Company has the ability and intent to hold the security until
maturity. All other securities not included in trading or held-to-maturity
are classified as available-for-sale.
Trading securities and available-for-sale securities are recorded at fair
value. Held-to-maturity securities are recorded at amortized cost, adjusted
for the amortization or accretion of premiums or discounts. Unrealized
holding gains and losses on trading securities are included in earnings.
Unrealized holding gains and losses, net of the related tax effect, on
available-for-sale securities are excluded from earnings and are reported as a
separate component of stockholders' equity until realized. Realized gains and
losses from the sale of securities are determined on a specific identification
basis.
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<PAGE>
A decline in the market value of any available-for-sale or held-to-maturity
security below cost that is deemed other than temporary results in a reduction
in carrying amount to fair value. The impairment is charged to earnings and a
new cost basis for the security is established. Premiums and discounts are
amortized or accreted over the life of the related held-to-maturity security
as an adjustment to yield using the effective interest method. Dividend and
interest income are recognized when earned.
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and fair value for available-for-sale and held-to-maturity securities
by major security type and class of security at June 30, 1996, were as
follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Amortized Holding Holding Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Available-for-sale:
Equity securities .... $ 2,662,500 $ 187,500 $ -- $ 2.850,000
Held-to-maturity:
8.75% Italian bonds .. 115,468 -- (5,343) 110,125
</TABLE>
The 8.75% Italian bonds mature in 1997.
NOTE 7 -- RECLASSIFICATION
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
NOTE 8 -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at June 30, 1996 and
March 31, 1996:
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
------------ ------------
<S> <C> <C>
Excimer lasers and other technical equipment .. $ 1,896,394 $ 1,896,394
Office furniture and equipment ................ 82,522 67,385
----------- -----------
1,978,916 1,963,779
Less accumulated depreciation ................. (800,635) (743,981)
----------- -----------
$ 1,178,281 $ 1,219,798
=========== ===========
</TABLE>
-8-
<PAGE>
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
(a) Employment Agreements
The Company has employment agreements with its executive officers, the terms
of which expire at various times through January 15, 1999. Such agreements
provide for minimum salary levels, as well as for incentive bonuses which are
payable if specified management and operational goals are attained.
(b) Exchange Agreement
In order to induce a stockholder to advance $100,000 under a deed of debenture
to MICRA Instruments Limited (a wholly owned subsidiary of Medical Development
and Research, Inc.), the Company entered into an exchange agreement on June
28, 1995 with the stockholder. The exchange agreement provides the
stockholder with the option of exchanging the unpaid principal and interest of
the debenture for fully paid and nonassessable shares of the Company's common
stock issued under Regulation S at a conversion price of $1.25 per share at
any time prior to repayment of the debenture by MICRA. As of June 30, 1996,
the stockholder had not exercised this option. See Note 11 below.
(c) Legal Judgment
In 1991 and 1993, Vista-Italy and Laser Vision Centers, Inc. ("LVCI") entered
into agreements to license trademarks and develop territorial marketing
strategies. The companies exchanged shares of their respective common stock
as consideration under the agreements. In 1993, LVCI filed suit for
termination of these agreements and a default judgment was entered in LVCI's
favor rescinding all prior agreements among the parties. In connection with
this judgment, Vista-Italy recorded the cancellation of Vista-Italy shares of
common stock it had issued to LVCI, a return of LVCI shares previously
delivered to Vista-Italy and an accrued liability of $175,000. Vista-Italy's
motion to vacate the judgment was denied by the trial court and an appeal to
the Missouri Supreme Court also has been denied. The unfavorable
determination in these proceedings will not adversely affect the business
operations of the Company or Vista-Italy.
(d) Insurance and Indemnification
Use of laser systems by health care professionals using laser equipment and
other laser vision correction ("LVC") services may give rise to claims against
the Company or its affiliates by persons alleging injury. The Company's
subsidiaries generally do not currently have malpractice liability insurance.
The Company believes that claims alleging defects in laser systems will be
covered by manufacturers' warranties and the manufacturer's product liability
insurance, and that the Company and its affiliates could take advantage of
such insurance by adding such suppliers to potentially adverse lawsuits.
There can be no assurance that laser suppliers will carry product liability
insurance or that any such insurance will be adequate to protect the Company.
Generally speaking, the policy of the Company's operating subsidiaries and
regional joint ventures is to require that ophthalmologists who perform laser
procedures by use of LVC equipment maintain their own professional liability
insurance.
(e) Physician Commitments
In two separate instances, a physician planning to associate with a Regional
Joint Venture sponsored by the Company has been advised by a third party that
it contends the physician breached commitments or obligations to the third
party by the physician's decision to associate with one of the Company's
Regional Joint Ventures.
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<PAGE>
In one of these matters, the third party contends that its plan of operations
to enter the business of providing access to LVC equipment in association with
a physician in Hawaii has been damaged due to that physician's decision to
affiliate with a Regional Joint Venture sponsored by Vista. The third party
recently filed a civil action in the state court of Hawaii seeking injunctive
relief and damages which names two physicians and the Company as defendants.
On the date the action was filed, at a hearing not attended by the defendants,
the court issued an ex parte temporary restraining order expiring on September
6, 1996 which prohibits the defendants from using confidential information, if
any, obtained by them from the plaintiff. Although discovery has not yet
commenced, the Company does not believe that any of the defendants received
confidential information from the plaintiff. The terms of the temporary
restraining order do not prohibit either physician from affiliating with
Regional Joint Ventures sponsored by Vista, and the Company believes the
plaintiff's claims are without merit and will not result in material liability
to the Company or its Regional Joint Venture affiliate.
In the other dispute, the third party contends that a physician breached
fiduciary duties to the third party and misappropriated client lists and data,
and the claimant also has threatened to hold the Company and certain other
parties responsible as well as the physician. To date, this dispute has not
resulted in the filing of legal proceedings. Based on information currently
known to the Company, the Company believes these claims are without merit.
NOTE 10 -- ESTABLISHMENT OF ADDITIONAL REGIONAL JOINT VENTURES
The Company's business strategy is to expand in North America by organizing
and sponsoring independently financed regional enterprises ("Regional Joint
Ventures") in which the Company will obtain a significant equity interest and
long-term fee-based consulting arrangements. As of March 31, 1996, two such
Regional Joint Ventures, Vista Laser Centers of Michigan, Inc. and Vista Laser
Centers of the Southwest, Inc. had been formed.
During the current fiscal period, the Company made additional investments in
Regional Joint Ventures as follows:
In May 1996, the Company issued 450,000 shares of its common stock in
exchange for 675,000 shares of 5% Series B convertible preferred stock
in Vista Laser Centers of the Northeast, Inc. (VLC-Northeast).
In May 1996, the Company issued 500,000 shares of its common stock in
exchange for 500,000 shares of 5% Series B convertible preferred stock
in Vista Laser Centers of the Northwest, Inc. VLC-Northwest).
In May 1996, the Company issued 500,000 shares of its common stock in
exchange for 500,000 shares of 5% Series B convertible preferred stock
in Vista Laser Centers of the Pacific, Inc. (VLC-Pacific).
In assigning values to the Vista common stock issued to the Regional Joint
Venture, Vista gave consideration to an independent appraisal obtained on the
value for the consideration received from the Regional Joint Ventures in
exchange for such common stock, the estimated market value of Vista's common
stock based upon recent private placements, the quoted price of Vista's common
stock in the over-the-counter market, and the voting and other restrictions on
the issued stock.
Each of VLC-Michigan, VLC-Northeast, VLC-Northwest, VLC-Pacific and VLC-
Southwest have been organized to establish, own and manage laser vision
correction centers.
-10-
<PAGE>
The Company has granted or has committed to grant to one or more local
affiliates of each of the Regional Joint Ventures an irrevocable five year
proxy to vote the shares owned by the Company in the respective Regional Joint
Ventures. The Company will retain rights to a minimum of 20% representation
on each of the Regional Joint Ventures' Board of Directors.
NOTE 11 -- SUBSEQUENT EVENTS
(a) Cash Received
Subsequent to June 30, 1996 the Company received cash related to the
following:
(i) In July 1996, Pharma Patch PLC exercised options to purchase
200,000 shares of the Company's common stock resulting in
proceeds to the Company of $500,000.
(ii) In August, the Company completed the sale of 100,000 shares of
its common stock on a Regulation S basis for cash proceeds of
$212,500.
(iii) In August, the Company received $800,000 from the sale of an 8%
promissory note to Pharma Patch PLC. The Company has pledged
200,000 shares of Technical Chemical and Products, Inc. common
stock (the "TCPI Shares") as collateral to secure the
promissory note due on December 31, 1996, but the maturity date
may be extended by Vista up to two times for an additional six
months each so long as Vista is not in default on its loan
obligations. The Company and Pharma Patch subsequently agreed
to amend the terms of the 8% Secured Note to provide that
proceeds from the sale of TCPI Shares by the Company will be
allocated 50% to the Company and 50% to repayment of the 8%
Secured Note. The Company sold most of its TCPI Shares in late
November 1996 and expects to fully discharge the 8% Secured
Note to Pharma Patch in December 1996 from a portion of the net
proceeds of sale.
(iv) On October 15, 1996, Pharma Patch PLC exercised its rights to
purchase 50,000 shares of the Company's common stock at a total
option exercise price of $125,000 ($2.50 per share).
(b) Agreement With Refractive Services-800, Inc.
From July 1995 through June 1996, a foreign corporate investor named
Refractive Services-800, Inc. provided at least $100,000 in initial seed
capital to each of five Regional Joint Ventures (for an aggregate investment
of $520,00) to finance initial organizational expenses and costs of
negotiating agreements with vision care professionals and seeking additional
financing. In exchange for that investment, and in view of the high risks
associated with a start-up enterprise, Refractive Services-800, Inc. received
shares of a 10% Series A convertible preferred issue of the Regional Joint
Venture with a liquidation preference equal to five times its cash investment
in four Regional Joint Ventures and six times its cash investment in one other
Regional Joint Venture.
The Company recently negotiated an agreement effective July 18, 1996 to
acquire the Series A preferred shares owned by Refractive Services-800, Inc.
in all five of these Regional Joint Ventures in exchange for 520,000 shares of
Vista common stock. The shares purchased consisted of 100,000 Series A
preferred shares in each of VLC-Michigan, VLC-Northeast, VLC-Northwest, VLC-
Pacific and VLC-Southwest with an estimated value of approximately $0.99 a
share issuance.
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<PAGE>
In assigning values to the Vista common stock issued to Refractive
Services-800, Inc., the Company gave consideration to an independent appraisal
obtained on the value for the consideration received from the Regional Joint
Ventures in exchange for such common stock, the estimated market value of
Vista's common stock based upon recent private placements, the quoted price of
Vista's common stock in the over-the-counter market, and the voting and other
restrictions on the issued stock.
(c) Conversion of Interests in Regional Joint Ventures from Preferred to
Common Stock
The Company has agreed to convert shares of Series A and Series B preferred
stock held by the Company in certain Regional Joint Ventures (VLC-Michigan,
VLC-Northeast, VLC-Northwest, VLC-Pacific and VLC-Southwest) into shares of
common stock of the Regional Joint Ventures, in each instance at a one-for-one
conversion ratio.
(d) Vista Laser Centers of the Southwest, Inc.
On October 1, 1996, the Company and Vista Laser Centers of the Southwest, Inc.
("VLC-Southwest") agreed that the Company's account receivable of $383,634 for
advances to VLC-Southwest would be extinguished in exchange for the surrender
of 250,000 shares of the Company's common stock held by VLC-Southwest that
were previously issued to VLC-Southwest in March 1996. The agreement further
provides that additional advances by the Company to VLC-Southwest after
October 1, 1996 will be made in exchange for the Company's investment in
additional common stock of VLC-Southwest based upon a share price value of
$3.00 per share of VLC-Southwest common stock. As of approximately November
10, 1996, the Company had invested an additional $40,000 in VLC-Southwest
under this agreement. The agreement will remain in effect as to additional
advances until the earlier of May 31, 1997 or completion by VLC-Southwest of a
private placement offering of its securities.
(e) Surrender for Cancellation of 500,000 shares of Common Stock
During October 1996, Vista Laser Centers of the Northwest, Inc.
("VLC-Northwest") and an affiliate of Dr. Donald G. Johnson terminated
negotiations that contemplated the possible future acquisition by VLC-
Northwest of an existing laser vision correction services business from an
affiliate of Dr. Johnson. Dr. Johnson is the Chairman of the Board and a
director of the Company. VLC-Northwest refunded Dr. Johnson's original cash
investment in VLC-Northwest due to the termination of these negotiations. As
a result, the Company currently owns 100% of the outstanding capital stock in
VLC-Northwest, which in turn owns 500,000 shares of the Company's common
stock. The Company has agreed to cause the 500,000 shares of its common stock
held by VLC-Northwest to be surrendered in exchange for cancellation of the
Company's advances to VLC-Northwest in an amount to be determined.
(f) Exercise of Exchange Rights
In November 1996, the Company was notified by the holder of an exchange
agreement that the holder intends to exercise its right of exchanging the
unpaid principal and interest of a MICRA debenture for unregistered shares of
the Company's common stock in a Regulation S offshore transaction at a
conversion price of $1.25 per share (see Note 9(b) above) effective as of
December 28, 1996 in the aggregate amount of $122,500. At that time, the
Company will be obligated to issue 98,000 shares of its common stock in
exchange for the MICRA debenture which the Company believes is doubtful of
collection.
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<PAGE>
VISTA TECHNOLOGIES INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and notes thereto appearing elsewhere in
this Report.
INTRODUCTION AND PLAN OF OPERATION
Vista commenced business operations in February 1994. The Company
acquired controlling equity interests in European subsidiaries during 1994.
Vista developed a strategic plan in mid-1995 to sponsor and invest in Regional
Joint Ventures to conduct additional businesses engaged in providing access to
laser vision correction ("LVC") equipment and related services ("LVC
Services") in regional markets of North America.
Since commencing operations, the Company has financed its business
operations, acquisition and expansion activities primarily from the issuance
or sale of equity securities. From February 1994 through March 31, 1996, the
Company had received approximately $7,437,500 from the sale of 1,197,500
shares of common stock and 1,225,000 warrants, approximately $278,000 from the
sale of convertible debt instruments, and had issued an additional 3,692,756
shares of common stock and 259,000 warrants in connection with the acquisition
of other assets and investments. During the quarter ended March 31, 1996,
Vista also received approximately $712,500 from the sale of 300,000 shares of
common stock and issued an additional 1,450,000 shares of common stock in
connection with the acquisition of other assets and investments.
At June 30, 1996, the Company had an accumulated deficit of $16,051,000.
The Company's net loss for the most recent three months ended June 30, 1996
was $804,000 and its net loss for the fiscal year ended March 31, 1996 was
$3,815,000. Vista's European subsidiaries have not operated profitably since
their inception. Although its Italian subsidiary generated positive cash flow
from operations in fiscal 1996 and for the most recent three months ended June
30, 1996, and Vista-Sweden's cash flow from operations was approximately cash
neutral during such periods, there can be no assurance that European
operations will be profitable in the future.
The Company's operating management anticipates Vista will continue to
incur losses for the immediate near term due to the Company's current level of
fixed expenses for general and administrative expenses and depreciation, but
at a lower rate than that experienced in the fiscal year ended March 31, 1996.
Losses are expected to continue until such time as revenues increase to a
level necessary to absorb fixed costs. No assurances can be given as to
whether or when revenue increases may be achieved. Revenue increases will be
dependent, among other things, in part upon expanding use of the Company's
services by physicians, general public acceptance of laser surgery to correct
refractive disorders and competitive factors.
Management's strategy developed in mid-1995 has been to expand its
participation in a developing market for LVC Services in the United States,
while at the same time minimizing Vista's short-term cash requirements for
such expansion. Since insurance reimbursement is not available, the Company's
management believes the skills and reputation of health care professionals
involved in recommending and performing refractive eye procedures are an
important and often critical element in the patient's decision to elect an LVC
refractive procedure. Vista has therefore designed and is implementing a
program to organize and sponsor U.S. and Canadian Regional Joint Ventures in
alliance with prominent physicians that are to be largely independently
financed and will offer advantages of equity incentives and management control
to skilled and prominent ophthalmologists experienced in a variety of LVC
treatments, procedures and post-operative care.
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<PAGE>
Vista plans to continue to seek additional capital through the private
placement and/or public sale of its equity securities, use of equipment lease
financing, and sale of marketable securities to finance the Company's
operations and expansion plans in North America.
The Company's business activities are subject to both predictable and
unforeseen risks incident to the creation of new businesses with a limited
history of operations. Prospective investors should consider the frequency
with which newly developed businesses encounter unforeseen expenses,
difficulties, complications and delays, and other factors such as the
Company's losses from its continuing operations.
RESULTS OF OPERATIONS: THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1995
REVENUES: During the three months ended June 30, 1996 (the "1996
Period"), Vista's consolidated revenues from operations were $786,000, an
increase of 66.5% compared to $472,000 in consolidated revenues for the three
months ended June 30, 1995 (the "1995 Period"). Consolidated revenues in the
1996 Period principally included $379,000 attributable to the operations of
Vista-Italy, approximately a 59% increase compared to $239,000 in the 1995
Year, and $402,000 from the operations of Vista-Sweden, an increase of
approximately 77% over $227,000 in the 1995 Year. These increases were in
part attributable to $48,000 of revenues in the 1996 Period at a new LVC
Services center opened in August 1995 in Malmo, Sweden, and otherwise are
attributable to a 54% increase in the number of LVC procedures performed at
other locations of Vista-Italy and Vista-Sweden.
The following chart summarizes certain information as to the number of
LVC surgical procedures performed at Vista's European centers for the periods
indicated.
<TABLE>
<CAPTION>
3 Months ended June 30,
-------------------------
1996 1995
------ ------
<S> <C> <C>
Italy (3 centers in each period)............ 431 388
Sweden (1 center in 1995 period and
2 centers in 1996 period) ................ 266 65
------ ------
Totals ......................... 697 453
====== ======
</TABLE>
During July 1996, Vita-Italy established a fourth Italian center in Palermo,
Italy.
OPERATING EXPENSES: Costs and expenses of operations for the 1996
Period were $1,061,000 a decrease of 10% compared to costs and expenses of
operations of $1,179,000 in the 1995 Year. Costs and expenses in the 1996
Period consisted of $1,005,000 in general and administrative expenses, a 11%
decrease compared to the 1995 Period, and $57,000 in depreciation and
amortization, a $11,000 increase compared to the 1995 Period. General and
administrative expenses for the 1996 Year included $136,000 for Vista-Italy
and $308,000 for Vista-Sweden. Costs and expenses of operations were reduced
in part by the absence of costs of operations in England closed in June 1995.
The Company's European subsidiaries sustained losses from operations in the
1996 Period that were significantly reduced compared to the 1995 Period.
Vista-Italy generated positive cash flow from operations in the 1996 Period
and Vista-Sweden's cash flow from operations was marginally cash positive.
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<PAGE>
Profitable operations from European operating subsidiaries in the future will
be dependent upon increasing revenues, as to which there can be no assurance.
Other major components of the Company's general and administrative expenses in
the 1996 Period included approximately $518,000 of general and administrative
expenses at the Vista parent corporation level.
OTHER EXPENSES AND INCOME: Other net expenses in the 1996 Period
totalled $4,000, a reduction of $372,000 compared to $376,000 in other net
expenses in the prior 1995 Period. Interest expense in the 1996 Period
remained approximately the same compared to the prior 1995 Period.
NET LOSS: Net loss for the 1996 Period was $804,000, equal to a net
loss of $0.12 per common share, compared to a net loss in the 1995 Period of
$1,084,000, or $0.77 per common share.
LIQUIDITY AND CAPITAL RESOURCES
Vista's principal capital requirements include cash requirements to
finance programs to acquire additional LVC equipment and support activities of
Regional Joint Ventures sponsored by the Company since June 1995, working
capital for management and administration and, in the future, anticipated
requirements to finance sales and marketing. Subject to the availability of
adequate capital, as to which there can be no assurance, expenditures for
additional excimer laser equipment may be significant during the foreseeable
future to support the Company's program of expanding LVC Services and
supporting the activities of Regional Joint Ventures.
As of June 30, 1996, the Company had $576,000 in cash and consolidated
working capital of $410,000. Consolidated working capital improved by
$303,000 from consolidated working capital of $107,000 at March 31, 1996.
Consolidated working capital during the three months ended June 30, 1996
increased by $2,568,000 in cash received from the sale of common stock that
was partially offset by $1,205,000 of net cash used by operating activities
and $919,000 applied to equity investments. Additional cash was generated
subsequent to June 30, 1996 by (i) the exercise of a stock option by Pharma
Patch Plc in July 1996 for $500,000, (ii) the private placement sale of
100,000 shares of common stock in August 1996 for $212,500 and (iii) the sale
of an 8% promissory note to Pharma Patch in August 1996 for $800,000. The
Company's assets include 200,000 restricted shares of Technical Chemicals and
Products, Inc. common stock (the "TCPI Shares") which were registered under
the Securities Act of 1933 on June 20, 1996 for possible resale by the Company
after approximately October 23, 1996. See "Investment in Technical Chemicals
and Products, Inc." in Item 1 of the Company's Report on Form 10-KSB for the
fiscal year ended March 31, 1996. The TCPI Shares have been pledged as
collateral by the Company to secure its $800,000 promissory note to Pharma
Patch that is due on December 31, 1996, but may be extended by Vista up to two
times for an additional six months each so long as Vista is not in default on
its loan obligations. The Company sold most of its TCPI Shares in late
November 1996 and expects to fully discharge the 8% Secured Note to Pharma
Patch in December 1996 from a portion of the net proceeds of sale.
Vista plans to continue to seek additional capital through the private
placement and/or public sale of its equity securities, use of equipment lease
financing, and sale of marketable securities to finance the Company's
operations and expansion plans in North America.
Although the Company's European operating subsidiaries appear to have
achieved positive or neutral cash flow levels of operations, Vista's
management anticipates that its consolidated operations will incur negative
cash flows for the immediate future, primarily due to fixed expenses for
corporate general and administrative overhead. Management is actively
pursuing strategies to increase the Company's revenues and reduce its negative
cash flow. Based on currently planned activities, management believes that
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<PAGE>
its cash and marketable securities resources at June 30, 1996 are sufficient
to fund the Company's operations for at least the next 12 months. There can
be no assurance that the Company's consolidated revenues will increase to the
point that operating expenses will be fully absorbed by revenues from
operations.
EXPANSION PLANS
Vista plans to continue to seek additional capital through the private
placement and/or public sale of its equity securities, use of equipment lease
financing, and sale of marketable securities to finance the Company's
expansion plans in North America.
The Company's strategic plan is to expand its laser vision correction
center network and locations as quickly as possible within the limits of
available financial resources and prudent operating and financial policies.
This growth strategy includes: (i) rapidly increasing market penetration,
principally in the United States, through expansion of the number of locations
at which LVC equipment and services are offered by the Company's subsidiaries,
(ii) continuing to promote development of alliances with experienced
ophthalmologists and optometrists with the goal of maximizing excimer laser
usage; (iii) actively training additional physicians in advanced LVC
procedures; and (iv) developing marketing and advertising programs targeted to
specific regional markets and key demographic groups within those markets.
The Company and its Regional Joint Ventures plan to select strategically
located sites for additional expansion, each of which will be equipped with
state-of-the-art laser equipment systems permitted for commercial use in the
state or province in which such equipment is located, as well as diagnostic,
pre-operative and post-operative facilities. The Company or its corporate
affiliate will own or lease and maintain the LVC equipment at each site, will
lease real estate facilities for each location, and will offer physicians
billing, accounting, administrative, marketing and management services, as
well as access to a trained support staff and necessary LVC equipment and
supplies, so that health care professionals may concentrate their efforts on
patient care.
The current cost of an excimer laser ranges from approximately $475,000
to $525,000, plus sales tax. For laser equipment purchased from VISX,
Incorporated or Summit Technology, Inc., which currently offer the only laser
equipment approved to date for commercial use in the United States, the
manufacturer generally requires an additional royalty equal to $250 per PRK
procedure to be paid to Pillar Point Partners, a partnership between VISX and
Summit that holds certain patent rights with respect to their current laser
technology. The purchase price typically includes a one or two year warranty
on all parts except the optics (mirror and glass components) which generally
carry a 30-day warranty. Annual maintenance and service fees are contracted
for separately at the time of purchase and range from approximately $40,000 to
$60,000 per year, but these estimates may vary with usage. Due to the
equipment cost, the Company believes that most ophthalmologists interested in
LVC surgery will not be able or willing to purchase a laser, seek financing
for the purchase and/or arrange for required maintenance of the laser
equipment.
Vista's European subsidiaries currently own or lease and maintain six
excimer lasers, and at present the Company's Regional Joint Ventures in the
United States and Canada collectively own or lease and maintain six excimer
lasers. Expenditures for additional excimer laser equipment to support the
Company's program of expanding LVC Services offered by Vista and its corporate
affiliates may be significant. To date, the Company been able to provide a
deposit of approximately $50,000 per laser and has not experienced difficulty
in arranging for equipment financing of the balance of the purchase price,
either from the equipment manufacturer or a third party, by means of a capital
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<PAGE>
equipment lease or an installment note secured by the equipment. Due to
current demand for and the cost of excimer lasers, the Company believes that
the resale value of an excimer laser has facilitated obtaining equipment
financing for a substantial portion of the equipment price, especially when
the third party financing source has reason to believe the laser will be
utilized on a consistent basis by experienced professionals. The Company
intends to continue to rely upon such third party financing techniques to
finance a substantial portion of additional equipment acquisitions, as well as
raising additional capital through future offerings of equity securities by
the Company. In addition, Regional Joint Ventures sponsored by Vista each
plan to raise additional capital through either the private placement and/or
initial public offerings of their securities to enhance their ability to
obtain additional equipment to expand operations in their region. There can
be no assurance that additional equipment financing will continue to be
available to the Company or that either Vista or any of its Regional Joint
Ventures will be successful in obtaining additional equity capital from
private and/or public offerings of their securities.
The Company is currently seeking additional private placement equity
capital in an amount of at least $5 million up to $10 million. Although it
has identified a source through which a financing may be sought, the Company
has not received any binding commitments to obtain such financing. Subject to
its ability to obtain additional private placement capital, as to which there
can be no assurance, Vista currently projects that additional capital
expenditures for investment in equipment and facilities of its Regional Joint
Ventures in North American during the six months ending June 30, 1997 will be
as much as $6,600,00. Additional projected requirements during that period
for the implementation of sales and marketing programs are approximately
$400,000 and Vista anticipates it will also seek to expand its administrative
and management personnel and systems at an projected expense of approximately
$600,000 for that period. The Company's management anticipates that
substantial additional public and/or private financings in excess of the above
amounts will be required after June 30, 1997, in amounts not yet determined,
to finance continued growth of its laser vision correction center network and
that purchase money equipment financing and/or leasing arrangements will be
utilized to the extent available, if any, to leverage the amount of additional
equipment available to expand the Company's operations. Vista's actual future
capital requirements will depend on numerous factors, including, but not
limited to, progress in acquiring additional laser equipment and facilities
for LVC centers, the ability of the Company and Regional Joint Ventures to
establish additional affiliations with vision care professionals, the
availability, amount and terms of additional equipment lease and/or
installment purchase financing, competing technological and market
developments, and the cost of marketing and advertising programs. The
Company is currently unable to state the amount or potential source of
additional financing.
Because of the Company's potential long-term capital requirements, it
may undertake additional equity offerings whenever conditions are favorable,
even if it does not have an immediate need for additional capital at that
time. There can be no assurance that Vista will be able to obtain additional
funding when needed, or that such funding, if available, will be obtainable on
reasonable terms. Any such additional funding may result in significant
dilution to existing stockholders of Vista. If adequate funds are not
available, Vista may be required to accept unfavorable alternatives, including
(i) the delay, reduction or elimination of its planned expansion, capital
expenditures, marketing and advertising and other operating programs, or (ii)
arrangements with collaborative partners that may require Vista to relinquish
material interests in its operating subsidiaries that it would not otherwise
relinquish.
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<PAGE>
U.S. DOLLAR PRESENTATION AND FOREIGN CURRENCY FLUCTUATIONS
The Company publishes its consolidated financial statements in U.S.
dollars after translating transactions in foreign currencies to U.S. dollars.
A significant portion of the Company's consolidated revenues and expenses are
collected and paid in local currency of its European operating subsidiaries,
i.e. Italian lira and Swedish krona. Income and expense items in foreign
currencies are translated at the weighted average exchange rate prevailing
during the period, except that expenses related to nonmonetary assets and
liabilities are translated at historical rates. In periods when the U.S.
dollar depreciates against relevant foreign currencies, reported earnings
attributable to transactions in foreign currencies may be materially enhanced.
In periods when the U.S. dollar appreciates against the relevant foreign
currencies, however, reported earnings attributable to transactions in foreign
currencies may be materially reduced. Fluctuations in the exchange rate
between relevant foreign currencies and the U.S. dollar may also affect the
book value of the Company's consolidated assets and the amount of its
stockholders' equity. Except as otherwise stated in this Report, all monetary
amounts have been presented in U.S. dollars.
PART II -- OTHER INFORMATION
ITEM 5. OTHER EVENTS
RELOCATION OF PRINCIPAL OFFICE
In late August 1996, the Company relocated its principal executive
offices to 167 S. San Antonio Road, Suite 9, Los Altos, California 94022,
telephone numbers (800) 249-3819 or (415) 947-1750. The lease for the
Company's new corporate offices in Los Altos, California provides for a base
rental of $2,084 per month adjusted at the end of each year during the
five-year term for changes in the consumer price index and in any event not
less than a 3% increase nor more than a 7% increase per year.
SALES OF COMMON STOCK SUBSEQUENT TO JUNE 30, 1996
As part of certain agreement and financing transactions between the
Company and Pharma Patch Plc in March 1996, Vista granted Pharma Patch PLC an
option exercisable at any time on or before September 30, 1996 to purchase up
to an additional 250,000 newly issued shares of the Company's common stock at
an option exercise price of $2.50 per share in cash (the "Six Month Option").
On July 18, 1996, Pharma Patch PLC exercised 200,000 shares subject to the Six
Month Option at an exercise price of $500,000 paid to the Company in cash.
On June 13, 1996, the Company received $212,500 in proceeds from the
sale of 100,000 shares of the Company's common stock at $2.125 per share under
a Regulation S offshore private placement transaction with two foreign
investors, Solar Ventures Limited as to 50,000 shares and Armilla Holdings
Limited as to 50,000 shares. The quoted closing market price for the
Company's common stock on June 13, 1996 was $3.25 per share. No fees or
commissions to third parties were paid in connection with this offering.
On August 14, 1996, the Company received $212,500 in proceeds from the
sale of 100,000 shares of the Company's common stock at $2.125 per share under
a Regulation S offshore private placement transaction with one foreign
investor, Paget Trading Ltd. The quoted closing market price for the
Company's common stock on August 9, 1996, the date of the agreement, was
$2.875 per share. No fees or commissions to third parties were paid in
connection with this offering.
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<PAGE>
PURCHASE OF CERTAIN ASSETS FROM REFRACTIVE SERVICES-800, INC.
From July 1995 through June 1996 date, a foreign corporate investor
named Refractive Services-800, Inc. invested $520,000 in cash in five Regional
Joint Ventures sponsored by the Company. See "North American Regional Joint
Venture Investments and Affiliates" in Item 1 of the Company's Annual Report
on Form 10-KSB for the fiscal year ended March 31, 1996. In exchange for that
investment, and in view of the high risks associated with making the initial
investment in start-up enterprises that had yet to negotiate any agreements
for proposed business operations, Refractive Services-800, Inc. received
shares of a 10% Series A convertible preferred issue of the five Regional
Joint Ventures with a liquidation preference equal to five times its cash
investment (six times its cash investment in the case of VLC-Northeast).
Vista negotiated an agreement on July 18, 1996 to acquire all Series A
Preferred shares in five Regional Joint Ventures originally purchased by
Refractive Services-800, Inc. for $520,000. In exchange, Vista has agreed to
issue to Refractive Services-800, Inc. a total of 520,000 shares of Vista
common stock. The Company also agreed to purchase for $50,000 in cash all of
the capital stock in Refractive Services 800 Corp., a Nevada corporation
organized by Refractive Services-800, Inc. in 1995 to acquire rights to
certain 800 and 900 telephone numbers for telemarketing purposes at the
election of Regional Joint Ventures.
$800,000 SECURED LOAN FROM PHARMA PATCH PLC
On August 26, 1996, the Company borrowed $800,000 from Pharma Patch PLC
in exchange for an 8% Secured Promissory Note (the "8% Secured Note"). The
Company's assets include 200,000 restricted shares of Technical Chemicals and
Products, Inc. common stock (the "TCPI Shares") which were registered under
the Securities Act of 1933 on June 20, 1996 for possible resale by the Company
after approximately October 23, 1996. See "Investment in Technical Chemicals
and Products, Inc." in Item 1 of the Company's Report on Form 10-KSB for the
fiscal year ended March 31, 1996. The TCPI Shares have been pledged as
collateral by the Company to secure its obligations under the 8% Secured Note.
Principal and interest on the 8% Secured Note are payable on December
31, 1996, or earlier in the event Vista elects to sell all or any portion of
its interest in the TCPI Shares. In the event net proceeds from a sale of a
portion of the TCPI Shares is insufficient to provide for full payment of the
8% Secured Note, the unpaid balance of the 8% Secured Note will remain due on
its original maturity date of December 31, 1996 or earlier in the event of a
subsequent sale of TCPI Shares for the account of the Company.
The original maturity date of the 8% Secured Note may be extended by
Vista up to two times, for an additional six months each, so long as Vista
pays all accrued interest at the date of each renewal and is not otherwise in
default on its loan obligations. Pharma Patch PLC has the right to accelerate
the maturity date of the loan if the fair value market of TCPI Shares pledged
as collateral falls to less than 150% of the unpaid principal of the 8%
Secured Note unless Vista, within five business days after notice, prepays a
sufficient amount of the note principal so that the fair market value of TCPI
Shares then pledged as collateral is not less than 150% of the remaining
unpaid principal of the 8% Secured Note.
The Company sold most of its TCPI Shares in late November 1996 and
expects to fully discharge the 8% Secured Note in December 1996 from a portion
of the net proceeds of sale.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: The following exhibits are incorporated by reference to the
Company's prior filings with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ ---------------------------------------------------
<S> <C>
10.35 Regulation S Offshore Transaction Subscription Agreement dated
June 7, 1996 between the Registrant and Armilla Holdings
Limited as to the sale of 50,000 shares of common stock for
$106,250 (incorporated by reference to Exhibit 10.35 filed
with Registrant's Report on Form 10-QSB for the Period Ended
June 30, 1996 as filed with the Securities and Exchange
Commission on September 6, 1996).
10.36 Regulation S Offshore Transaction Subscription Agreement dated
June 7, 1996 between the Registrant and Solar Ventures Ltd. as
to the sale of 50,000 shares of common stock for $106,250
(incorporated by reference to Exhibit 10.36 filed with
Registrant's Report on Form 10-QSB for the Period Ended June
30, 1996 as filed with the Securities and Exchange Commission
on September 6, 1996).
10.37 Notice of Election to Exercise Stock Option dated July 18, 1996
by Pharma Patch PLC as to 200,000 shares at $2.50 per share
(incorporated by reference to Exhibit 10.37 filed with
Registrant's Report on Form 10-QSB for the Period Ended June
30, 1996 as filed with the Securities and Exchange Commission
on September 6, 1996).
10.38 Regulation S Offshore Transaction Subscription Agreement dated
August 9, 1996 between the Registrant and Paget Trading Ltd. as
to the sale of 100,000 shares of common stock for $212,500
(incorporated by reference to Exhibit 10.38 filed with
Registrant's Report on Form 10-QSB for the Period Ended June
30, 1996 as filed with the Securities and Exchange Commission
on September 6, 1996).
10.39 8% Secured Promissory Note for $800,000 dated August 26, 1996
issued by the Registrant to Pharma Patch PLC (incorporated by
reference to Exhibit 10.39 filed with Registrant's Report on
Form 10-QSB for the Period Ended June 30, 1996 as filed with
the Securities and Exchange Commission on September 6, 1996).
10.40 Pledge Agreement dated August 26, 1996 between the Registrant
and Pharma Patch PLC as to collateral security interest in
200,000 shares of Technical Chemicals and Products, Inc. common
stock securing Registrant's $800,000 secured promissory note
(incorporated by reference to Exhibit 10.40 filed with
Registrant's Report on Form 10-QSB for the Period Ended June
30, 1996 as filed with the Securities and Exchange Commission
on September 6, 1996).
27 Financial Data Schedule at June 30, 1996 (incorporated by
reference to Exhibit 27 filed with Registrant's Report on Form
10-QSB for the Period Ended June 30, 1996 as filed with the
Securities and Exchange Commission on September 6, 1996).
</TABLE>
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<PAGE>
(b) REPORTS ON FORM 8-K: The Company filed a Current Report on Form 8-K
dated as of May 13, 1996 concerning a change in its independent accountants.
SIGNATURES
Pursuant to the requirements of Section 13 of 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.
Date: December 6, 1996
VISTA TECHNOLOGIES INC.
---------------------------------
(Registrant)
By: /s/ Thomas A. Schultz
-----------------------------
Thomas A. Schultz, President and
Chief Executive Officer
By: /s/ Kenneth G. Howling
-----------------------------
Kenneth G. Howling, Vice President of Finance,
Treasurer, Chief Financial Officer and
Chief Accounting Officer
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