UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1996
-----------------------------------------------
/ / TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______________________to________________________
Commission File Number: 0-23054
------------------------
Light Savers U.S.A., Inc.
- - - --------------------------------------------------------------------------------
(exact name of registrant as specified in its charter)
New York 11-3096379
- - - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
509 Madison Avenue Suite 1114, New York, NY 10022
- - - ------------------------------------------- -----
(Address of principle executive offices) (Zip Code)
(212) 223-0699
- - - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
969 Third Avenue, New York, NY 10022
- - - --------------------------------------------------------------------------------
(Registrant's former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports to be filed by section 13 or
15(d) of the Exchange Act 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. / X / Yes / / No
APPLICABLE ONLY TO CORPORATE ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
Securities under a plan confirmed by a court. / / Yes / / No
APPLICABLE ONLY TO CORPORATE ISSUER
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: 7,125,655 shares as of May 13, 1996.
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
TABLE OF CONTENTS
Page No.
PART I
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 3
Consolidated Statements of Operations for the three
months ended March 31, 1996 and 1995 4
Consolidated Statement of Stockholders' Equity
for the three months ended March 31, 1996 5
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 10-12
PART II
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a
Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures
2
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996 & DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
March 31, 1995 December 31, 1995
-------------- -----------------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $518,517 $390,702
Marketable securities - 715,000
Accounts receivable (net of allowance for doubtful accounts
of $0.00 & $101,000) 1,225,406 1,586,836
Current assets of discontinued operations - 145,317
Costs in excess of billings 46,509 129,734
Prepaids and other current assets 24,720 130,671
---------------------------
Total current assets 1,815,152 3,098,260
Property and equipment (net of accumulated depreciation of
$54,142 and $48,932) 83,846 97,387
Goodwill, less accumulated amortization of $279,673
and $166,048 6,319,966 6,433,591
Note receivable 375,000 350,000
Other assets 45,983 52,008
---------------------------
Total assets $8,639,947 $10,031,246
---------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Loan payable - bank - $455,926
Accounts payable 1,143,903 1,040,587
Accrued expenses and other current liabilities 1,018,571 1,073,230
Sales taxes payable 111,955 111,955
Billings in excess of costs 269,353 620,574
Accrued loss on disposal of discontinued operations - 398,806
----------------------------
Total current liabilities 2,543,782 3,701,078
----------------------------
Commitments
Stockholders' equity:
Preferred stock, $.01 par value, 2,500,000 shares
authorized, none issued and outstanding - -
Common stock. $.01 par value, 10,000,000 shares
authorized, 6,950,655 issued and outstanding 71,257 71,257
Additional paid-in capital 7,905,610 7,865,285
Accumulated deficit (1,727,577) (1,606,374)
Treasury stock at cost (153,125) -
----------------------------
Total stockholders' equity 6,096,165 6,330,168
----------------------------
Total liabilities and stockholders' equity $8,639,947 $10,031,246
===========================
</TABLE>
The accompanying notes are an integral part of these statements
3
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
1996 1995
---- ----
Net sales $1,993,321 $ -
Cost of goods sold 1,676,801 -
------------------------
Gross profit 316,520 -
Selling, general and
administrative expenses 440,431 138,018
-------------------------
(Loss) from operations (123,911) (138,018)
Interest income 2,708 34,739
-------------------------
Net (loss) from continuing operations (121,203) (103,279)
Discontinued operations
Income from discontinued operations - 163,811
--------------------------
Net income (loss) ($121,203) $60,532
=========================
Loss per share:
Continuing operations (.02) (.02)
Discontinued operations .00 .03
-------------------------
(.02) .01
=========================
Weighted average number of common
shares outstanding 6,949,556 4,625,655
=========================
The accompanying notes are an integral part of these statements
4
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------------------------- Additional Total
Paid In Accumulated Stockholders'
# of Shares Amount Amount Capital Deficit Equity
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE January 1, 1996 7,125,655 $71,257 $ 0 $7,865,285 ($1,606,374) $6,330,168
PURCHASE OF
TREASURY STOCK (500,000) (437,500) (437,500)
PRIVATE PLACEMENT
OF COMMON SHARES 325,000 284,375 40,325 324,700
NET LOSS (121,203) (121,203)
- - - --------------------------------------------------------------------------------------------------------
BALANCE March 31, 1996 6,950,655 $71,257 ($153,125) $7,905,610 ($1,727,577) $6,096,165
========================================================================================================
</TABLE>
5
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDED MARCH 31
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) ($121,203) $60,532
Adjustments to reconcile net income (loss) to net cash (used for) provided
by operating activities:
Depreciation and amortization 127,166 9,934
Allowance for doubtful accounts (101,000) 3,004
Changes in operating assets and liabilities:
Decrease (Increase)
Accounts receivable 462,430 (164,440)
Notes receivable (25,000) -
Inventory - 1,704
Current assets of discontinued operations 145,317 -
Costs in excess billings 83,225 -
Prepaids and other current assets 105,951 (7,731)
Other long term assets 6,025 350
Increase (decrease)
Accounts payable 103,316 (25,168)
Accrued expenses (54,659) (34,635)
Billings in excess of costs (351,221) -
Accrued loss on disposal of discontinued operations (398,806) -
Sales taxes payable - 20,582
------------------------------
Net cash provided (used in) by operating activities (18,459) (135,868)
------------------------------
Cash flows from investing activities
Purchase of marketable securities - (322,200)
Sale of short term marketable investment 715,000 -
Purchase of property and equipment - (9,535)
-------------------------------
Net cash provided by (used in) investing activities 715,000 (331,735)
-------------------------------
Cash flows from financing activities
Payment of loan payable - bank (455,926) -
Purchase of stock (437,500) -
Sale of treasury stock 324,700 -
-------------------------------
Net cash provided by (used in) financing activities (568,726) -
Net (decrease) increase in cash and cash equivalents 127,815 (467,603)
Cash and cash equivalents beginning of period 390,702 878,903
-------------------------------
Cash and cash equivalents end of period $518,517 $411,300
===============================
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
-------------------------------
</TABLE>
The accompanying notes are an integral part of these statements
6
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. Organization and
Basis of Presentation Light Savers U.S.A., Inc. (the "Company") was
incorporated in the State of New York on October
10, 1991. On August 1, 1995, the Company acquired
substantially all of the assets and business, and
assumed certain liabilities, of AGF Interior
Services, Inc. (d/b/a Hospitality Restorations
and Builders)("AGF"), through its newly formed
subsidiary corporation, Hospitality Restorations
and Builders, Inc. ("HRB"). HRB provides interior
and exterior cosmetic renovations and maintenance
for leading hotel and hospitality customers
nationwide. The acquisition was accounted for as
a purchase with the results of HRB included from
the acquisition date.
The consolidated financial statements and related
notes thereto as of March 31, 1996 and for the
three months ended March 31, 1996 and 1995 are
presented as unaudited but in the opinion of
management include all adjustments necessary to
present fairly the information set forth therein.
These adjustments consist solely of normal
recurring accruals. The consolidated balance
sheet information for December 31, 1995 was
derived from the audited financial statements
included in the Company's Form 10-KSB. These
interim financial statements should be read in
conjunction with that report. The interim results
are not necessarily indicative of the results for
any future period.
Income per share of Common Stock was computed by
dividing the loss by the weighted average number
of common shares and common stock equivalents
outstanding during the period. For the three
months ended March 31, 1996 and 1995, there were
no common stock equivalents included in the
calculations since they would be anti-dilutive.
2. Discontinued
Operations In December 1995, the Company determined to focus
its resources on its hospitality and restoration
business and discontinue its lighting business.
On February 26, 1996, the Company entered into a
divestiture agreement (the "Agreement") with its
former president. In accordance with the
Agreement, the Company disposed of the lighting
business, together with accounts receivable,
inventory and fixed assets to the former
president, who also assumed certain liabilities.
Additionally, in accordance with the Agreement,
the following occurred: (i) the Company
repurchased 500,000 shares
7
<PAGE>
of common stock from the former president for
$250,000, (ii) the Company retained the former
president as a consultant for a three year period
at an annual retainer of $100,000, (iii) the
former president granted to the Company the
option to purchase an additional 1,000,000 shares
of common stock over a two year period at a 33%
discount from the average trading price for the
prior 20 trading days, but not below certain
minimum set prices. The Agreement also provides
that the former president has the ability to
request that the Company to purchase the relevant
optioned shares at a 50% discount to market. If
the Company does not purchase the relevant
optioned shares, the option will be canceled with
respect to such shares.
3. Private Placement On March 29, 1996 the Company consummated a
private placement of 325,000 shares of common
stock to accredited investors at a price of $1.00
per share, for aggregate gross proceeds of
$325,000.
4. Subsequent Event On April 9, 1996 the Company completed an
additional private placement of 175,000 shares of
common stock to accredited investors at a price
of $1.00 per share, for aggregate gross proceeds
of $175,000.
5. Pro Forma
Information The following pro forma consolidated financial
information has been prepared to reflect the
acquisition of the assets and business of AGF.
The pro forma financial information is based on
the historical financial statements of the
Company and AGF, and should be read in
conjunction with the accompanying footnotes. The
accompanying pro forma operating statements are
presented as if the transaction occurred January
1, 1995. The pro forma financial information is
unaudited and is not necessarily indicative of
what the actual results of operation of the
Company would have been assuming the transaction
had been completed as of January 1, 1995, and
neither is it necessarily indicative of the
results of operations for future periods.
Three months ended March 31 1995
-------------------------------------------------
(unaudited)
Net Sales $981,177
Loss from continuing operations (181,072)
Net loss (17,261)
Loss per share from continuing
operations (.03)
Net loss per share (.00)
-------------------------------------------------
8
<PAGE>
The above unaudited pro forma statements have
been adjusted to reflect the amortization of
goodwill, as generated by the acquisition, over a
17-year period, interest income on the $350,000
note receivable, elimination of the interest
income on the $2,500,000 funds used in connection
with the acquisition, and the 2,500,000 shares
issued as consideration in the transaction. The
impact of outstanding stock options was not
included in the calculation of net loss per share
since the effect would be antidilutive.
9
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
In August 1995, the Company's wholly-owned subsidiary, HRB, acquired
substantially all of the assets and business and assumed certain liabilities of
AGF Interior Services, a company that provides renovation services to the
hospitality industry (the "Acquisition"). In December 1995, the Company
determined to focus its resources on its hospitality restoration business and to
discontinue its lighting business. In February 1996, the Company sold its
lighting business to Tova Schwartz, the Company's former President and Chief
Executive Officer.
RESULTS OF OPERATION
Net sales for the three month period ended March 31, 1996 were $1,993,321,
compared to $323,382 for the same period last year. The March 31, 1996 sales
were those of HRB as a result of the Acquisition, which was consummated on
August 1, 1995.
Gross profit for the quarter ended March 31, 1996 was $316,520, or 16%, compared
to $234,041, or 72%, for the same period last year. The decrease in the gross
profit during the quarter ended March 31, 1996 is a result of the completion of
several low margin jobs to promote the Company and the actual new work started
in January and February was limited. The high gross profit for the lighting
operation in the quarter ended March 31, 1995 was for sales of a few high margin
decorative lighting products.
Selling, general and administrative expenses for the quarter ended March 31,
1996 were $440,431 compared to $138,018 for the same period last year. The
increase in SG&A expenses in the quarter ending March 31, 1996 related to the
operation of a much larger business (HRB). As a percent of sales SG&A was
reduced from 43% in quarter ended March 31, 1995 to 22% for the quarter ended
March 31, 1996. Included in the SG&A expenses for the quarter ended March 31,
1996 was $113,625 of amortization of goodwill for the acquisition of HRB.
Loss from operations for the quarter ended March 31, 1996 was $(121,203),
compared to ($138,018) for the same period last year. The loss sustained by the
Company for the quarter ended March 31, 1996 was largely the result of low
margin work being performed during the first quarter, coupled with amortization
of good will.
Interest income for the quarter ended March 31, 1996 was $2,708, compared to
$34,739 for the same period last year. The higher interest income in 1995 was
related to the investment of the proceeds from the Company's Initial Public
Offering, consummated in January 1994.
10
<PAGE>
As a result of the above, Net income (loss) for the quarter ended March 31, 1996
was $ (121,203) or ($ .02) per share compared to income of $60.532 or $ .01 per
share for the same period last year. Contributing to the loss in the quarter
ended March 31, 1996 was for the reasons mentioned above.
THE RESULTS FOR THE QUARTER ENDED MARCH 31, 1996 ARE NOT INDICATIVE OF THE
COMPANY'S FUTURE OPERATING RESULTS SINCE THE COMPANY ACQUIRED THE ASSETS AND
BUSINESS OF AGF IN AUGUST 1995 AND DISCONTINUED ITS LIGHTING BUSINESS IN
DECEMBER 1995. THEREFORE, THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION REFLECTS THE COMPANY'S OPERATING
RESULTS ON A PRO FORMA CONSOLIDATED BASIS GIVING EFFECT TO THE ACQUISITION AND
THE DISCONTINUANCE OF THE LIGHTING BUSINESS AS IF SUCH TRANSACTIONS TOOK PLACE
ON JANUARY 1, 1995. THE PRO FORMA FINANCIAL INFORMATION IS BASED ON THE
HISTORICAL FINANCIAL STATEMENTS OF THE COMPANY AND AGF AND SHOULD BE READ IN
CONJUNCTION WITH SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED
ELSEWHERE HEREIN. THE PRO FORMA FINANCIAL INFORMATION IS UNAUDITED AND IS NOT
NECESSARILY INDICATIVE OF WHAT THE ACTUAL RESULTS OF OPERATIONS OF THE COMPANY
WOULD HAVE BEEN ASSUMING THE ACQUISITION AND THE DISCONTINUANCE OF THE LIGHTING
BUSINESS HAD BEEN COMPLETED AS OF JANUARY 1, 1994, AND NEITHER IS IT NECESSARILY
INDICATIVE OF THE RESULTS OF OPERATIONS FOR FUTURE PERIODS.
For the quarter ended March 31, 1996 sales were $1,993,321, compared to
$981,177 for the same period last year. The increase in net sales is related to
the Company's continuing investment in sales and marketing activities.
Gross profit for the quarter ended March 31, 1996 was $316,520, or 16%, compared
to $406,746, or 41% for the same period last year. The significant reduction in
gross profit is a result of the completion of several low margin jobs to promote
the Company and the actual new work started in January and February was limited.
Selling, general and administrative expenses were $440,431 for the quarter ended
March 31, 1996, compared to $603,682 for the same period last year.
Loss from operations for the quarter ended March 31, 1996 was ($123,911),
compared with net loss of ($181,072) for the same period last year. The most
significant factor contributing to the loss in the quarter ended March 31, 1996
was the reduction in the gross profit and the amortization of goodwill. Net loss
for the period ended March 31, 1996 was ($121,203), compared to a net loss of
($17,261) for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
Working capital (deficit) was approximately ($728,000) at March 31, 1996,
compared to ($602,818) at December 31, 1995.
Cash, cash equivalents and marketable securities at March 31, 1996 were
$518,517, compared to $1,105,702 at December 31, 1995. Accounts receivable at
March 31, 1996 were $1,225,406, compared to $1,586,836 at December 31, 1995.
11
<PAGE>
On April 8, 1996, the Company completed the Private Placement of 175,000 shares
of Common Stock to accredited investors at a price of $1.00 per share, for
aggregate gross proceeds of $175,000. The Company is using the proceeds of the
Private Placement for working capital. A portion of this transaction took place
during the 1st quarter with the sale of 325,000 shares at $1.00 per share.
During the first quarter of 1996, the Company signed approximately $10 million
of new contracts for the cosmetic renovation of nine hotels. In April, the
Company signed an additional $3 million of contracts for cosmetic renovation.
All of the contracts discussed above are expected to be completed during fiscal
1996. The Company believes it has sufficient resources to complete these
contracts in a timely and profitable manner.
The Company believes its present cash position is sufficient to meet its short
term operating needs.
12
<PAGE>
LIGHT SAVERS U.S.A., INC. and SUBSIDIARY
TABLE OF CONTENTS
PART II
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIGHT SAVERS U.S.A., INC.
By: /s/ Howard G. Anders
---------------------
Howard G. Anders
Executive Vice President
Dated: May 15, 1996
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS, NOTES, THERETO.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 518,517
<SECURITIES> 0
<RECEIVABLES> 1,225,406
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,815,152
<PP&E> 83,846
<DEPRECIATION> 54,142
<TOTAL-ASSETS> 639,947
<CURRENT-LIABILITIES> 2,543,782
<BONDS> 0
0
0
<COMMON> 6,950,655
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,639,947
<SALES> 1,993,321
<TOTAL-REVENUES> 1,993,321
<CGS> 1,676,801
<TOTAL-COSTS> 2,117,232
<OTHER-EXPENSES> 440,431
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,708
<INCOME-PRETAX> (121,203)
<INCOME-TAX> 0
<INCOME-CONTINUING> (121,203)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (121,203)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
