<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _________ to __________
Commission file number 0-27889
EYE CARE INTERNATIONAL, INC.
----------------------------
DELAWARE 59-3206480
------------------------------- -------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1511 North Westshore Boulevard, Suite 925
Tampa , Florida 33607
--------------------------------------------------
(Address of principal executive offices) Zip Code)
(813) 289-5552
--------------------------------------------------
(Issuer's Telephone Number Including Area Code)
Check whether the issuer: (1) filed all reports required 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.
Yes [X] No [ ]
APPLICABLE ONLY TO 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 ISSUERS
As of November 30, 2000, the issuer had 11,218,030 shares of common stock, $.001
par value, outstanding.
<PAGE> 2
EYE CARE INTERNATIONAL, INC.
Index
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I. Financial Information ............................................. 1
Item 1. Consolidated Financial Statements (Unaudited) ..................... 1
Consolidated Balance Sheet - September 30, 2000 ............... 2
Consolidated Statements of Income - Three Months
Ended September 30, 2000 and 1999, and
Year to Date September 30, 2000 and 1999..................... 3
Consolidated Statements of Cash Flows - Three Months
Ended September 30, 2000 and 1999, and Year to Date
September 30, 2000 and 1999.................................. 4
Consolidated Statement of Changes in Shareholders' Deficiency.. 5
Notes to Consolidated Financial Statements -
September 30, 2000........................................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation.......... 12
Part II Other Information.................................................. 16
Item 2. Changes in Securities.............................................. 16
Item 6. Exhibits and Reports on Form 8-K................................... 16
Signatures................................................................... 17
</TABLE>
i
<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
In the opinion of management, the unaudited financial statement include all
adjustments necessary to present fairly the results for the three months ended
September 30, 2000, and year to date September 30, 2000.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounted principles for interim financial
information and with the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three months and nine months ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto included in Eye Care International, Inc.'s
annual report on Form 10KSB for the year ended December 31, 1999.
<PAGE> 4
EYE CARE INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
------------------
(Unaudited)
ASSETS
Current Assets
Cash $ 26,565
Accounts receivable $ 39,563
Miscellaneous receivables
and advances $ 309,745
-----------
$ 375,873
Fixed Assets - net of accumulated
depreciation $ 38,248
-----------
Total Assets $ 414,122
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued expenses and
taxes payable $ 901,767
Deferred revenue $ 282,540
Notes payable $ 50,000
-----------
$ 1,234,306
-----------
Stockholders' Equity
Capital stock
-30,000,000 shares of $.001 par value
common stock authorized; 10,831,170
issued at 9/30/00 $ 10,831
-10,000,000 shares of $.001 par value
preferred stock authorized:
745 Series A issued at 6/30/00 $ 1
685,714 Series B issued at 6/30/00 $ 686
Paid-in capital $ 7,912,986
Accumulated deficit $(8,744,688)
-----------
$ (820,184)
Total liabilities and stockholders' equity $ 414,122
===========
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
EYE CARE INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR TO DATE SEPTEMBER 30, QUARTER ENDED SEPTEMBER 30,
---------------------------- ----------------------------
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Revenues
Memberships $ 378,051 $ 334,436 $ 150,293 $ 129,772
Interest $ 926 $ 10,028 $ 153 $ 3,381
------------ ------------ ------------ ------------
$ 378,977 $ 344,465 $ 150,446 $ 133,153
General and administrative expenses $ 1,871,104 $ 1,662,327 $ 527,643 $ 621,214
Interest $ 3,875 $ 3,686 $ 1,875 $ 1,019
Depreciation and amortization $ 41,853 $ 23,944 $ 27,132 $ 7,864
------------ ------------ ------------ ------------
$ 1,916,832 $ 1,689,956 $ 556,650 $ 630,097
Income/(loss) before cumulative effect of
accounting change $ (1,537,855) $( 1,345,492) $( 406,204) $( 496,944)
Cumulative effect of accounting change
to adopt SOP 98-5 $ 0 $ 749,433 $ 0 $ 0
Net income/(loss) $ (1,537,855) $ (2,094,925) $( 406,204) $ (496,944)
Average common shares outstanding 10,138,233 8,779,304 10,054,233 8,980,304
Loss per Share $ (0.15) $ (0.24) $( 0.04) $ (0.06)
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
EYE CARE INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR TO DATE SEPTEMBER 30, QUARTER ENDED SEPTEMBER 30,
--------------------------- ---------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash flow from operating activities
Net income/(loss) $(1,537,855) $(2,094,925) $ (406,204) $ (496,944)
Adjustment to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization $ 41,853 $ 23,944 $ 27,132 $ 7,864
Accounting Change $ 0 $ 749,433 $ 0 $ 0
Changes in operating assets and liabilities
Decrease in accounts receivables $ (18,313) $ (39,962) $ 6,926 $ (19,101)
Increase in miscellaneous receivables $ (78,995) $ (27,393) $ (28,476) $ (2,658)
Increase/(Decrease in deferred revenue $ (66,857) $ 19,788 $ (58,308) $ 28,094
Increase/(Decrease) in accrued
expenses and taxes payable $ 448,788 $ 246,541 $ 141,022 $ 216,113
----------- ----------- ----------- -----------
Net cash used by operating activities $(1,211,379) $(1,122,574) $ (317,908) $ (266,632)
Cash flow from investing activities
Purchases of fixed assets $ 0 $ (2,472) $ 0 $ 0
Cash flows from financing activities
Proceeds from sale of common and
preferred stock $ 1,108,462 $ 752,309 $ 331,087 $ 345,809
----------- ----------- ----------- -----------
Net cash provided by financing activities $ 1,108,462 $ 749,837 $ 331,087 $ 345,809
Increase/(Decrease) in cash $ (102,917) $ (372,737) $ 13,179 $ 79,177
Cash - beginning of period $ 129,482 $ 658,743 $ 13,386 $ 206,829
----------- ----------- ----------- -----------
Cash - June 30, $ 26,565 $ 286,006 $ 26,565 $ 286,006
=========== =========== =========== ===========
Supplemental disclosures
Interest paid $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
Income taxes paid $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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EYE CARE INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
COMMON PREFERRED PAID-IN RETAINED
STOCK STOCK CAPITAL DEFICIT TOTAL
------ --------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance December 31, 1998 $ 8,504 $ 0 $ 5,893,252 $(4,574,183) $ 1,327,573
Net income/(loss) $(2,632,650) $(2,632,650)
Issuance of capital stock $ 506 $ 1 $ 893,993 $ 894,500
-----------
Balance December 31, 1999 $ 9,010 $ 1 $ 6,787,245 $(7,206,833) $ (410,577)
Net income/(loss) $ (501,037) $ (501,037)
Issuance of capital stock $ 380 $ 523,870 $ 524,250
-----------
Balance March 31, 2000 $ 9,390 $ 1 $ 7,311,115 $(7,707,870) $ (387,364)
Net income/(loss) $ (630,614) $ (630,614)
Issuance of capital stock $ 600 $ 686 $ 251,839 $ 253,125
-----------
Balance June 30, 2000 $ 9,990 $ 687 $ 7,562,954 $(8,338,484) $ (764,853)
Net income/(loss) $ (406,204) $ (406,204)
Issuance of capital stock $ 841 $ $ 350,032 $ 350,873
Balance September 30, 2000 $ 10,831 $ 687 $ 7,912,986 $(8,744,688) $ (820,184)
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 8
EYE CARE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
Note A - NATURE OF THE ORGANIZATION
Eye Care International, Inc. and Subsidiary ( the Company) markets
vision care benefit plans and enhancements to plans provided by others. The
Company's benefit plans and plan enhancements afford its member, and those of
its plan sponsors (employers, associations, etc.) and other organizations, the
opportunity to obtain discounted services from its national network of
ophthalmic physicians. Through contractual arrangements with others, the
Company's plan also provides its members with access to providers of eyewear and
other benefits on a discounted basis.
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Principles of Consolidation
The consolidated financial statements include the accounts of the
Company intercompany transactions and balances have been eliminated in
consolidation.
2. Revenue Recognition
The Company sells one, two and three year memberships in its vision
plan. Although, at the time of enrollment (when the Company enters the
membership data into its system), the Company issues a membership kit that
includes a membership card, network provider list and other material, its
obligation to its members is not totally fulfilled because of the twenty-four
hour customer service feature of its plan and its guarantee to save at least the
cost of the membership or the Company will refund the difference. In addition,
memberships can be cancelled at any time during the first thirty days of the
membership. However, historically said thirty-day cancellations have been
diminimus and requests for refunds equal to the difference between the cost of
the card and the member's savings have been non-existence. Therefore, revenues
are recognized on a straight-line basis over the membership period, beginning in
the month of enrollment. Membership fees, however, can neither be determined nor
estimated until reported to the Company by the selling organizations and are
subject to possible subsequent audit by the Company at its option under the
terms of the related agreement. Accordingly, depending upon the timeliness and
accuracy of membership reports received, membership income is not recognized in
the Company's financial statements until reported by the selling organization,
which may be in periods later than those in which they were earned and subject
6
<PAGE> 9
EYE CARE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
to adjustment in subsequent periods. To the Company's knowledge, these reports
have always been filed on a timely basis. If reports were delayed, revenue and
commissions would be understated, as would net income.
Prior to 1998, the Company recognized revenue at the time of
enrollment instead of on a straight-line basis. The Company has made an
adjustment to its Statement of Shareholders' Equity and Retained Deficit to
reflect the deferral of revenues previously recognized in the years prior to
1998. Said adjustment amounted to $537,626 being deferred and to be recognized
in periods after 1997.
3. Fixed Assets and Depreciation
Fixed assets are recorded at cost. Depreciation of fixed assets is
recorded using accelerated and straight line methods over the estimated useful
lives of the related assets.
4. Income Taxes
Income taxes are to be provided for the tax effects of transactions
reported in the financial statements. Provisions will be made for deferred
income taxes, which result from timing differences between expenses and income
as reported for financial statement purposes and their deductibility or
exclusion for income tax purposes, when appropriate.
5. Warrants
During the year 2000, the Company has issued a total of 2,040,858
warrants for the purchase of common stock. Of these warrants, the Company
issued, in June, 1,200,000 warrants to individuals purchasing Preferred Stock
from the Company. These warrants are exercisable at the price of $0.50 per share
of common stock and expire in 2005. During the third quarter of 2000, the
Company issued 840,858 warrants to individuals purchasing common stock. These
warrants also have an exercise price of $0.50 per share of common stock and
expire in 2005.
7
<PAGE> 10
EYE CARE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. Warrants (continued)
The fair value of these warrants at their grant date was zero. The
estimated fair value of each warrant granted is calculated using the Black
Scholes option pricing model. The following summarizes the assumptions used in
the model:
1999
----
Risk-free interest rate 5.83% - 6.15%
Expected years until exercise 5
Expected Dividend yield 0
Estimated fair market value of
underlying stock $0.24 - $0.44
The following is a summary of the stock warrant activity during the
year 2000
WEIGHTED
AVERAGE
NUMBER EXERCISE
OF SHARES PRICE
--------- -----
Warrants granted and outstanding
December 31, 1999 482,500 $1.41
Warrants granted during the year 2,040,858 $0.50
Warrants expired in 2000 0
Warrants forfeited in 2000 0
Warrants exercised in 2000 0
----------
Warrants granted and outstanding
September 30, 2000 2,523,358 $0.83
==========
8
<PAGE> 11
EYE CARE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
5. Warrants (continued)
The following table summarizes the status of the warrants
outstanding at September 30, 2000:
WEIGHTED
AVERAGE
REMAINING
EXERCISE NUMBER CONTRACTUAL
PRICE OF SHARES LIFE
-------- ---------- -----------
1996 stock warrants $1.00 32,500 .59 years
1997 stock warrants $1.00 50,000 1.58 years
1999 stock warrants $1.50 400,000 .67 years
2000 stock warrants $0.50 2,040,858 4.88 years
---------
2,523,358
=========
As of September 30, 2000, the Company had reserved 2,523,358 common
shares for issuance under the stock warrants issued in 1996, 1997, 1999 and
2000.
6. Preferred Stock
In late 1999 the Company issued 495 shares of Series A convertible
preferred stock at a price of $1,000 per share. Each share of preferred stock is
convertible into 2,000 shares of common stock and has a liquidation preference
of $1,000 per share. The Company has the right to redeem shares of Series A
convertible preferred stock on the third anniversary of the date shares of said
stock were first issued at a redemption price of $1,200 per share.
In May 2000, the Company issued 685,714 shares of Series B
convertible preferred stock at a price of $0.4375 per share. Each preferred
share is convertible into one share of common stock. This stock has no
liquidation preference nor redemption features.
9
<PAGE> 12
EYE CARE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
7. Change in Accounting Principle
Effective January 1, 1999, the Company adopted Statement of
Position 98-5, Reporting on the Costs of Start-up Activities. This statement
requires that certain costs of start-up activities and organization costs be
expensed as incurred rather than capitalized and amortized under previous
accounting principles. The cumulative effect of the change on net income was
$749,433.
8. Loss Per Share
Loss per share is calculated by dividing net loss by the average
weighted number of common shares outstanding for the period. Since the Company
shows a loss per share for each of the periods presented, no diluted loss per
share calculations have been presented. Showing the affect of including the
outstanding warrants in the loss per share calculation would have an
anti-dilution effect and would be misleading.
9. Comprehensive Income
SFAS 130 requires a company to disclose comprehensive income, if
any, in its financial statements. Comprehensive income is defined as "the change
in equity (net assets) of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. It
includes all changes in equity during a period except those resulting from
investments by owners and distributions to owners." Since the Company had no
such transactions, the Company's net loss and comprehensive net loss are the
same.
Note C - NOTES PAYABLE
The Company is indebted to two stockholders in the amount of
$25,000 each. These monies bear interest at the rate of 8% and are payable upon
demand.
10
<PAGE> 13
EYE CARE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
Note D - INCOME TAXES
Substantially all of the Company's retained earnings deficit will
be available as an operating loss carryforward to reduce future income tax
obligations as may be incurred through the year 2015. However, because of the
Company's relative short operating history, the potential tax benefit of this
loss has been valued at zero in the financial statements and will remain so
until realized or until the criterion in Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes, for recognition of a deferred
tax asset has been met.
Note E - COMMITMENTS AND CONTINGENCIES
The Company leases its present offices under an operating lease
expiring on July 31, 2003 with an option to renew for one year. Rent expense for
the years 1999 and 1998 amounted to $87,576 and $54,416, respectively. Future
minimum rental commitments, at December 31, 1999 are as follows:
2000 $ 92,408
2001 $ 96,523
2002 $100,992
2003 $ 42,855
--------
$419,994
========
Note F - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company has
sustained substantial operating losses since its inception. In addition, the
Company has used substantial amounts of working capital in its operations. In
view of these matters, the continuation of the Company is dependent upon its
ability to raise capital and its success of future operations. Absent an
increase in revenue or the sale of capital stock, there may be uncertainty about
the Company's ability to continue as a going concern. Management believes that
the Company will generate significant new business in the future and will also
be able to sell shares of its capital stock to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
11
<PAGE> 14
EYE CARE INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSIONS AND ANALYSIS
OR PLAN OF OPERATION
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion and analysis of our financial condition
and results of operation should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999.
SALES. Sales for the three months ended September 30, 2000, of $150,293 were
nearly $21,000 higher than the $129,772 recorded during the same period in 1999.
This increase was primarily due to increased sales in December 1999 which
results in a larger amortization amount in the following months of the
membership sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The major components of Selling,
General & Administrative expenses (G&A) are Payroll, Commissions, Business
Travel Postage & Printing, and Profession/Consulting Fees. G&A expenses of
$527,643 were approximately $93,000, or about 15%, lower than the $621,214 for
the quarter ended September 30, 1999. While all other expenses remained
relatively level for the comparative periods, commissions decreased
approximately $78,000 because of a change in commission arrangements.
INTEREST INCOME. Interest income for the third quarter of 2000 of $153 was about
$3,200 lower than the interest earned during the same period in 1999. The
company maintained a cash balance significantly higher in the third quarter of
1999 than in the current year's quarter and was thus able to invest more
principal in interest bearing securities.
INTEREST EXPENSE. Interest expense of $1,875 was nearly the same as in the
quarter ended September 30, 1999.
DEPRECIATION AND AMORTIZATION EXPENSE. Since no major depreciable assets were
added during 1999 or the first three quarters of 2000, depreciation and
amortization expense of $27,132 was nearly $20,000 higher than in the third
quarter of 1999 due to the expensing of financing costs associated with the
issuance of warrants in the third quarter of 2000.
12
<PAGE> 15
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999
SALES. Sales for the nine months ended September 30, 2000, of $378,051 were
nearly $43,000 higher than the $334,436 recorded during the same period in 1999.
This increase was primarily due to increased sales in the last quarter of 1999
which results in a larger amortization amount in the following months of the
membership period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The major components of Selling,
General & Administrative expenses (G&A) are Payroll, Commissions, Business
Travel Postage & Printing, and Profession/Consulting Fees. G&A expenses of
$1,871,104 were approximately $209,000, or about 13%, higher than the $1,662,327
for the nine months ended September 30, 1999.
The increase in G&A expenses was primarily due a $73,000 increase in payroll, a
$68,000 increase in professional fees and a $145,000 increase in contract labor,
partially offset by a $74,000 decrease in commissions.
Payroll increased to $783,929 from $710,659 in the same period of 1999 because
of the addition of three regional account executives, payroll increases and the
increased cost of benefits due to increased rates as well as the increase in the
number of covered employees.
Professional fees increased to $145,601 from $77,738 in the first nine months of
1999 primarily due to increased legal activities including fees associated with
the filing of Securities and Exchange documents and fees incurred in determining
the licensing requirements, if any, in certain states.
Contract labor increased approximately $145,000 to $151,219 for the first nine
months of 2000 as the Company elected to utilize temporary and placement agency
employees in lieu of immediately hiring additional employees and the use of a
celebrity to help market the Company's plan.
INTEREST INCOME. Interest income for the first nine months of 2000 of $926 was
about $9,100 lower than the interest earned during the same period in 1999. The
Company maintained a cash balance significantly higher in the 1999 than in the
current year and was thus able to invest more principal in interest bearing
securities.
INTEREST EXPENSE. Interest expense of $3,875 was nearly the same as in the first
nine months of 1999.
DEPRECIATION AND AMORTIZATION EXPENSE. Since no major depreciable assets were
added during 1999 or the three quarters of 2000, depreciation and amortization
expense of $41,853 was about $18,000 higher than for the first nine months of
13
<PAGE> 16
1999 due to the expensing of financing costs associated with the issuance of
warrants during the third qwuarter of 2000.
CHANGE IN ACCOUNTING PRINCIPLE. Effective January 1, 1999, the Company adopted
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities",.
This statement requires that certain costs of start-up activities and
organization costs be expensed as incurred rather than capitalized and amortized
under previous accounting principles. The cumulative effect of the change on net
income was $749,433, net of taxes in the amount of $0, since the Company has
loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's expenses has consistently exceeded its revenues.
Operations have primarily been funded from the issuance of debt and equity
securities aggregating approximately $7.9 million, which includes $50,000 in
notes payable.
The Company used cash in its operating activities totaling $1.2 million and $1.1
million during the first nine months of 2000 and 1999, respectively, primarily
for payroll, professional fees and contract labor. The Company did not acquire
any fixed assets during the first nine months of 2000 but did invest $2,472
during the first nine months of 1999 to acquire computers and office furniture.
During the first nine months of 2000 the Company raised $1.1 million as compared
to $.7 million during the first nine months of 1999 through financing
activities; primarily the sale of convertible preferred stock and common stock
in 2000 and the sale of common stock in 1999. In the first quarter of 2000, the
Company issued 550 shares of Series A convertible preferred stock at a price of
$1,000 per share. Each of these shares may be converted into 2,000 shares of
common stock.
The Company issued 685,714 shares of Series B convertible preferred stock at a
price of $.4375 per share during the second quarter of 2000. Each of these
shares may be converted to one share of common stock.
During the third quarter of 2000, the Company issued 840,858 shares of common
stock at a price of $.4375 per share.
14
<PAGE> 17
GOING CONCERN.
Note F to the audited financials expresses the uncertainty of the Company's
ability to continue as a going concern. Management believes that significant
revenues will be generated commencing in the fourth quarter of 2000 as a result
of marketing arrangements entered into since September 1999. During the year
2000 the Company has secured major marketing arrangements with large
member-based companies and/or sellers of various health care programs such as
RewardsPlus, First InHealth, Intersections Inc., New York Business Group, and
the Pennsylvania State Chamber of Commerce. These groups collectively have in
excess of fifty million members and/or employees and/or individual accounts who
subscribe to or purchase their various health care plans. Each of these groups,
in the fourth quarter, commence marketing the Company's vision plan to their
members, employees or individual accounts. Since these selling/marketing groups
have proven selling track records in the health care field, the Company believes
it is reasonable to anticipate that these groups will produce material sales of
the Company's vision plan, along with the groups continued sales of their other
health care programs. The Company believes that in excess of $5 million in sales
will result from these arrangements and will eliminate the uncertainty of the
Company as a going concern.
FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements that are not based upon
historical facts. These statements, which discuss future expectations, estimate
the happening of future events, or our results of operations or financial
condition for future periods, can be identified by the use of forward-looking
terminology such as "may", "will", "expect", "believe", 'intend", "anticipate",
"estimate", "continue", or similar words. These forward-looking statements are
subject to certain uncertainties, and there are important factors that may cause
actual results to differ materially from those expressed or implied by these
forward-looking statements. The forward-looking statements made in this report
relate only to events as of the date on which the statement is made.
15
<PAGE> 18
PART II
Item 2. Changes in Securities
During the first quarter of 2000 the Company sold an aggregate 550
shares of Series A Convertible Preferred Stock to six accredited investors for a
total purchase price of $550,000 $(1,000 per share). Each share can be converted
into 2,000 shares of class A common stock.
During the second quarter of 2000, the Company sold an aggregate of
685,714 shares of Series B convertible preferred stock to three accredited
investors for a total purchase price of $300,000 $(.4375 per share). Each share
can be converted into one share of class A common stock.
During the third quarter of 2000, the Company issued 840,858 shares
of class A common stock at a price of $.4375 per share.
These transactions were exempt from the registration requirements
of the Securities Act under Section 4 (2) of the Securities Act and Rule 506 of
Registration D. There were underwriters fees involved in these transactions, but
no underwriting discounts paid in connection with these transactions. The
purchasers in each transaction represented their intention to acquire the
securities for investment only and not with a view to or offer for sale in
connection with any distribution of the securities and appropriate legends were
affixed to the certificates for the securities issued in such transactions. All
purchasers of securities in these transactions had adequate access to
information about the Company and were sophisticated investors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 -- Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
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Signatures
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EYE CARE INTERNATIONAL, INC.
Date: December 1, 2000 By: /s/ James L. Koenig
---------------------------------------
James L. Koenig, Chief Financial Officer
17
