SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- ---------
Commission File No. 0-23590
SUPER VISION INTERNATIONAL, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 59-3046866
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
2442 Viscount Road
Orlando, Florida 32809
(Address of Principal Executive Offices)
(407) 857-9900
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(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.
Class Outstanding at March 31, 1996:
Class A Common Stock, $.001
par value 1,428,966 shares
Class B Common Stock, $.001
par value 3,375,134 shares
Traditional Small Business Disclosure Format
Yes X No
<PAGE>
SUPER VISION INTERNATIONAL, INC.
INDEX TO FORM 10-QSB
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Financial Statements:
Condensed Balance Sheets as of March 31, 1996 and December 31,
1995 1
Condensed Statements of Operations for the Three Months
Ended March 31, 1996 and 1995 2
Condensed Statement of Stockholders' Equity 3
Condensed Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security-Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
SUPER VISION INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
<TABLE>
March 31, December 31,
ASSETS 1996 1995
--------------- --------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,820,835 $ 2,327,775
Trade accounts receivable, less allowance for doubtful
accounts of $11,679 and $19,952 721,644 330,570
Inventory, less reserve for excess inventory of $28,340 908,968 899,348
Advances to employees 38,540 16,390
Other assets 102,518 51,236
-------------- --------------
Total current assets 3,592,505 3,625,319
-------------- --------------
Equipment and Furniture 1,555,705 1,404,368
Accumulated depreciation (208,173) (172,697)
-------------- --------------
Net equipment and furniture 1,347,532 1,231,671
-------------- --------------
Other Assets 69,288 59,176
-------------- --------------
$ 5,009,325 $ 4,916,166
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable to officer $ 22,968 $ 22,968
Accounts payable 310,056 344,853
Accrued liabilities 23,189 22,443
Accrued warranty 40,000 --
Payments in excess of costs and recognized profit on
uncompleted contracts -- 10,333
Deposits 54,884 50,834
-------------- --------------
Total current liabilities 451,097 451,431
-------------- --------------
Stockholders' Equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized; none issued - -
Class A common stock, $.001 par value, authorized 16,610,866
shares, 1,428,966 issued and outstanding 1,429 1,429
Class B common stock, $.001 par value, 3,389,134
shares authorized, 3,375,134 issued and outstanding 3,375 3,375
Additional paid-in capital 5,669,423 5,669,423
Retained earnings (1,115,999) (1,209,492)
---------------- --------------
Total stockholders' equity 4,558,228 4,464,735
---------------- --------------
$ 5,009,325 $ 4,916,166
================ ==============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
SUPER VISION INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
Three Months
Ended March 31,
1996 1995
------------- -------------
Revenues $ 1,368,989 $ 494,461
------------- -------------
Costs and Expenses:
Cost of sales 871,359 297,920
Selling, general and administrative 363,597 387,395
Research and development 62,793 53,879
------------- -------------
Total costs and expenses 1,297,749 739,194
------------- -------------
Operating Income (Loss) 71,240 (244,733)
------------- -------------
Non-Operating Income (Expenses):
Interest income 23,312 56,977
Interest expense (746) (793)
Loss on disposal of assets (313) --
------------- -------------
Total non-operating income 22,253 56,184
------------- -------------
Income (Loss) Before Income Taxes 93,493 (188,549)
Income Tax Benefit -- --
------------- -------------
Net Income (Loss) $ 93,493 $ (188,549)
============= ============
Income (Loss) Per Common Share:
Primary $ 0.05 $ (0.10)
============= ============
Weighted Average Shares of
Common Stock Outstanding:
Primary 1,886,100 1,882,100
============= ============
See accompanying notes to condensed financial statements.
<PAGE>
SUPER VISION INTERNATIONAL, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
Common Stock
----------------------------------------------------------------
Class A Class B Additional Retained
----------------------------- ----------------------------- Paid-In Earnings
<S> <C> <C> <C> <C> <C> <C>
Shares Amount Shares Amount Capital (Deficit)
------------ ------------ ----------- ------------- -------------- ----------
Balance, December 31, 1995 1,428,966 $ 1,429 3,375,134 $ 3,375 $ 5,669,423 $ (1,209,492)
Net Income for the Three Months
Ended March 31, 1996 - - - - - 93,493
------------ ------------ ----------- ------------- ------------ -------------
Balance, March 31, 1996 1,428,966 $ 1,429 3,375,134 $ 3,375 $ 5,669,423 $ (1,115,999)
============ ============ =========== ============= ============ ===========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
SUPER VISION INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
Three Months
Ended March 31,
1996 1995
--------------- ---------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 93,493 $ (188,549)
--------------- ---------------
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 44,245 35,689
Loss on disposal of fixed assets 313 --
(Increase) decrease in:
Accounts receivable, net (391,074) 28,257
Inventory (9,620) (78,020)
Other assets (86,182) (20,289)
Increase (decrease) in:
Accounts payable (34,797) 93,170
Accrued and other liabilities 30,413 30,696
Deposits 4,050 43,220
--------------- ---------------
Total adjustments (442,652) 132,723
--------------- ---------------
Net cash used in operating activities (349,159) (55,826)
--------------- ---------------
Cash Flows from Investing Activities:
Acquisition of patents and trademarks (5,656) --
Purchase of equipment and furniture (152,525) (13,094)
Proceeds from disposal of equipment and furniture 400 --
--------------- ---------------
Net cash used in investing activities (157,781) (13,094)
--------------- ---------------
Net Decrease in Cash and Cash Equivalents (506,940) (68,920)
Cash and Cash Equivalents, beginning of period 2,327,775 3,626,290
--------------- ---------------
Cash and Cash Equivalents, end of period $ 1,820,835 $ 3,557,370
=============== ===============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
SUPER VISION INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
For the Three-Month Periods Ended March 31, 1996 and 1995
1. BASIS OF PRESENTATION:
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments, consisting only of normal recurring accruals, necessary
to present fairly the Company's financial position, results of operations and
cash flows for the periods presented. The results of operations for the interim
periods presented are not necessarily indicative of the results to be expected
for the full year.
The condensed financial statements should be read in conjunction with the
financial statements and the related disclosures contained in the Company's Form
10-KSB dated March 25, 1996, filed with the Securities and Exchange Commission.
2. STOCK OPTION PLAN:
On December 27, 1993, the Company adopted a stock option plan that provides for
the grant of incentive stock options and nonqualified stock options, and
reserved 150,000 shares of the Company's Class A common stock for future
issuance under the plan. The option price must be at least 100% of market value
at the date of the grant.
The following table summarizes activity of the stock option plan for the period
ended March 31, 1996:
Options Number Option
Available for of Price
Future Grant Shares Per Share
------------------- ------------ --------------
Balance, December 31, 1995 38,809 107,091 $5.00-$7.38
Options granted (33,100) 33,100
Options exercised - -
Options cancelled 4,500 (4,500)
------------ ------------
Balance, March 31, 1996 10,209 135,691
============ ============
Options granted vest ratably over a three-year period. As of March 31, 1996,
64,311 options were vested and exercisable.
<PAGE>
SUPER VISION INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED
For the Three-Month Periods Ended March 31, 1996 and 1995
3. INCOME TAXES:
Prior to January 1, 1994, the Company had elected to be taxed as an
S-corporation and thus, all income of the Company was passed through to the sole
stockholder and taxed at his level. Effective January 1, 1994, the Company was
required to elect C-corporation status for income tax reporting purposes and at
this time adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (FAS 109). To account for this change in tax status,
the Company recorded a deferred tax liability in the amount of $43,445. This
provision reflects the temporary differences between the tax bases of assets and
liabilities and their financial statement carrying values which existed at
January 1, 1994.
The components of the net deferred tax liability recognized in the accompanying
balance sheet at March 31, 1996 are as follows:
Deferred tax liability $ -
Deferred tax asset 482,555
Valuation allowance (482,555)
--------------
$ -
==============
The types of temporary differences between the tax basis of assets and
liabilities and their financial statement reporting amounts are attributable
principally to depreciation methods, deferred gains, and different accounting
methods used.
As of March 31, 1996, the Company had approximately $1,066,000 in net operating
loss carryforwards for federal and state income tax purposes, which expire in
2009.
5. INVENTORY:
Inventory at March 31, 1996 and December 31, 1995 consisted of the following
components:
March 31, December 31,
1996 1995
------------------ -----------------
Raw materials $ 892,324 $ 665,441
Work in progress - 8,729
Finished goods 44,984 253,518
--------------- --------------
937,308 927,688
Less: Reserve for excess inventory (28,340) (28,340)
--------------- --------------
$ 908,968 $ 899,348
=============== ==============
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto appearing elsewhere in this report.
RESULTS OF OPERATIONS
Revenues are derived primarily from the sale of fiber optic side glow and end
glow cable and light sources, point of purchase fiber optic displays and signage
and sales of component parts. Total revenues for the three months ended March
31, 1996 ("1996 quarter") were approximately $1,369,000, representing a 177%
increase from the three months ended March 31, 1995 ("1995 quarter"). The
increase in revenues is primarily attributable to $710,000 of revenue received
by the Company as a result of the completion of a large contract for delivery of
a custom fiber optic display. The contract was completed in March, 1996. In
addition to this contract, sales of the Company's standard products,
particularly the new swimming pool and spa product line, contributed to the
overall revenue increase. The Company did not have sales of this product line
during the 1995 quarter.
Cost of sales were approximately $871,400, or 64% of revenues, during the 1996
quarter, compared to 60% in the 1995 quarter. The 1996 margin was reduced
slightly due to price discounts in the swimming pool market which the Company
granted to introduce builders and distributors to the Company's product line.
These discounts were given in order to obtain market recognition and market
share. The Company believes that as volume sales of these products increase and
market share is obtained, the discounts will no longer be granted. Additionally,
as the volume of sales of the Company's products increase, Management believes
that the costs of the products will decrease, leading to potential gross margin
improvements.
Selling, general and administrative expenses were approximately $364,000 during
the 1996 quarter compared to approximately $387,000 during the 1995 quarter, a
decrease of 6%. During the 1995 quarter, the Company was establishing its
distribution network and hired additional sales and marketing personnel to
support anticipated growth. This resulted in increased costs for personnel,
trade shows and advertising. Management believes these costs were necessary to
attain the current revenue levels. During the 1996 quarter, selling and
marketing expenses were incurred in further expansion of the Company's
distribution network, primarily in the Architectural Lighting market and in the
Signage market. The Company believes these markets have sufficient growth
potential as to warrant the expenses incurred.
<PAGE>
Research and development costs were approximately $62,800 during the 1996
quarter compared with approximately $53,900 for the 1995 quarter, an increase of
17%. The Company continues research into the improvement of its side glow
cables, and successfully designed a process for the manufacture of a red fiber
optic cable for use with the Company's light sources. Additionally, the Company
successfully completed a new reflector design for its light sources which
increases the brightness of the SV2000 model by approximately 15% over the prior
reflector design. The Company anticipates this level of research will continue
as the Company seeks to improve the brightness and reduce the cost of all
product lines.
Interest income is derived from the short-term investment of the proceeds of the
Company's initial public offering in March, 1994. Net interest income for the
1996 quarter was approximately $22,600 as compared to approximately $56,200 for
the 1995 quarter. The decrease is attributable to reduced cash balances
available for investment. Cash was invested in the expansion of inventory,
receivables and capital equipment during the year ended December 31, 1995.
Net income for the 1996 quarter was approximately $93,500, or $.05 per common
share, as compared to a net loss of approximately $188,500, or $(.10) per common
share, in the 1995 quarter. The improvement in net income is attributable to the
increased revenue levels from the completion of a large contract and sales of
standard products.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, the Company had working capital of $3,141,408.
During the 1996 quarter, the Company experienced an increase in accounts
receivable of approximately $391,000 related to the completion and delivery of
the aforementioned custom fiber optic display. Accounts payable increased by
approximately $86,200 related to expenses incurred in the completion of the
contract, as well as the expansion of the swimming pool product line.
The Company acquired patents and trademarks related to its side glow cables with
a cost of approximately $5,700. Additional funds were used for the expansion of
capital equipment in the fiber optic cabling and light source production areas.
Management believes these expenditures may assist in the efforts to improve the
brightness of its cables and light sources.
The Company believes that available cash, together with funds expected to be
generated from operations, will be sufficient to finance the Company's working
capital requirements as well as continued expansion.
CHARGE TO INCOME IN THE EVENT OF RELEASE OF ESCROWED SHARES
In January 1994, the Company and certain stockholders of the Company entered
into an agreement providing for the escrow of a portion of the shares held by
such individuals (see "Escrow Shares"). In the event any shares are released
from escrow to persons who are officers and other employees of the Company,
compensation expense will be recorded for financial reporting purposes as
required by GAAP. Therefore, in the event the Company attains any of the
earnings thresholds or the Company's Class A Common Stock meets certain minimum
bid prices required for the release of the Escrow Shares, such release will be
deemed additional compensation expense of the Company. Accordingly, the Company
will, in the event of the release of shares from escrow, recognize during the
period in which the earnings threshold are met or are probable of being met or
such minimum bid prices attained, what will likely be one or more substantial
charges which would have the effect of substantially increasing the Company's
loss or reducing or eliminating earnings, if any, at such time. Although the
amount of compensation expense recognized by the Company will not affect the
Company's total stockholders' equity or its working capital, it may have a
depressive effect on the market price of the Company's securities.
<PAGE>
PART II
Item 1. LEGAL PROCEEDINGS
Not Applicable
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
Item 5. OTHER INFORMATION
Not Applicable
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 4.1 - Form of Unit Purchase Option *
4.2 - Form of Warrant Agreement (including forms of Class A and
Class B Warrant Certificates) *
4.3 - Escrow Agreement *
4.4 - Form of Amendment to Escrow Agreement *
10.1 - 1994 Stock Option Plan *
10.2 - Employment Agreement with Brett Kingstone *
10.3 - Form of Indemnification Agreement *
10.4 - Lease for Facility at Viscount Row *
10.5 - Registrant's Bank Loan Agreements with Barnett Bank *
---------------
* Incorporated by reference to the Company's Registration Statement
on Form SB-2 (file no. 33-74742)
(b) No reports on Form 8-K were filed during the three months ended
March 31, 1996.
<PAGE>
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunder duly authorized.
SUPER VISION INTERNATIONAL, INC.
By: /S/ BRETT M. KINGSTONE Date: May 10, 1996
----------------------------------
Brett M. Kingstone, President and
Chief Executive Officer
(Principal Executive Officer)
By: /S/ JOHN P. STANNEY Date: May 10, 1996
----------------------------------
John P. Stanney, Chief Financial Officer
(Principal Financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,820,835
<SECURITIES> 0
<RECEIVABLES> 733,323
<ALLOWANCES> 11,679
<INVENTORY> 908,608
<CURRENT-ASSETS> 3,592,505
<PP&E> 1,555,705
<DEPRECIATION> 208,173
<TOTAL-ASSETS> 5,009,325
<CURRENT-LIABILITIES> 451,097
<BONDS> 0
0
0
<COMMON> 4,804
<OTHER-SE> 4,558,228
<TOTAL-LIABILITY-AND-EQUITY> 5,009,325
<SALES> 1,368,989
<TOTAL-REVENUES> 1,368,989
<CGS> 871,359
<TOTAL-COSTS> 363,597
<OTHER-EXPENSES> 39,794
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 746
<INCOME-PRETAX> 93,493
<INCOME-TAX> 0
<INCOME-CONTINUING> 93,493
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,493
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
