UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20459
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTER ENDED MARCH 31, 2000
COMMISSION FILE NUMBER 033-55254-27
ADVANCED LUMITECH, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0438637
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1601 Trapelo Road
Waltham, MA 02451
(Address of principle executive (Zip Code)
offices)
781-890-2200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 ___
---
Indicate the number of shares outstanding of the registrant's Common Stock, par
value $.001 par value per share, as of May 17, 2000 was 32,697,770.
ADVANCED LUMITECH, INC.
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS 3
CONSOLIDATED STATEMENTS OF OPERATIONS 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK 15
PART II. OTHER INFORMATION
ITEM 6 EXHIBITS 16
SIGNATURES 17
EXHIBIT INDEX 18
ADVANCED LUMITECH, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
---------------------------------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 270,695 $ 490,276
Prepaid expenses and other assets 10,815 9,347
---------------------------------------
Total current assets 281,510 499,623
Property and equipment:
Office and photographic equipment 100,727 76,815
Less: accumulated depreciation (40,598) (38,454)
---------------------------------------
60,129 38,361
Other assets 7,983 -
---------------------------------------
Total assets $ 349,622 $ 537,984
=======================================
Liabilities and stockholders' deficit
Current liabilities:
Borrowings under bank line-of-credit $ 269,695 $ 376,828
Accounts payable 190,194 231,470
Accrued liabilities 184,714 362,636
Accounts payable to affiliated companies 214,640 236,594
Notes payable to related party 39,482 41,161
---------------------------------------
Total current liabilities 898,725 1,248,689
Notes payable to directors 200,116 321,273
---------------------------------------
Total liabilities 1,098,841 1,569,962
Stockholders' deficit:
Common stock, $0.001 par value;
100,000,000 shares authorized; 32,697,770 shares
in 2000 and 31,997,770 shares in 1999 issued
and outstanding 32,698 31,998
Additional paid-in capital 5,365,575 4,678,775
Stock subscriptions receivable (34,965) (34,965)
Deferred compensation (37,608) (58,083)
Deficit accumulated during the development stage (6,282,786) (5,811,742)
Cumulative translation adjustment 207,867 162,039
---------------------------------------
Total stockholders' deficit (749,219) (1,031,978)
---------------------------------------
Total liabilities and stockholders' deficit $ 349,622 $ 537,984
=======================================
See Notes to Unaudited Consolidated Financial Statements
ADVANCED LUMITECH, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months Three months
ended ended
March 31, March 31,
2000 1999
--------------------------------------------------
Operating expenses:
Research and development $ 44,253 $ 39,344
Selling and marketing 64,546 43,832
General and administrative 349,837 538,152
--------------------------------------------------
458,636 621,328
--------------------------------------------------
Operating loss (458,636) (621,328)
Interest expense (12,408) (7,983)
--------------------------------------------------
Net loss $ (471,044) $ (629,311)
==================================================
Basic and diluted
loss per share $ (0.01) $ (0.03)
Shares used to compute basic and diluted
loss per share 32,468,100 25,008,888
See Notes to Unaudited Consolidated Financial Statements
ADVANCED LUMITECH, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months Three months
ended ended
March 31, March 31,
2000 1999
----------------------------------
Operating activities
Net loss $ (471,044) $ (629,311)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 2,144 -
General and administrative expense associated with stock 207,975 300,000
based compensation
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (1,468) (840)
Accounts payable and accrued liabilities (219,198) 189,414
Accounts payable to affiliated companies (21,954) (22,578)
Other assets (7,983)
----------------------------------
Net cash used in operating activities (511,528) (163,315)
Investing activities
Purchase of property and equipment (23,912) (12,885)
----------------------------------
Net cash used in investing activities (23,912) (12,885)
Financing activities
Decrease in bank line of credit (107,133) (31,253)
Decrease in notes payable to directors (121,157) (9,884)
Decrease in note payable to related party (1,679) (2,957)
Cash received for sale of common stock and warrants 500,000 -
----------------------------------
Net cash provided by (used in) financing activities 270,031 (44,094)
Effects of changes in foreign exchange rates 45,828 68,004
----------------------------------
Decrease in cash (219,581) (152,290)
Cash and cash equivalents at beginning of period 490,276 207,938
Cash and cash equivalents at end of period $ 270,695 $ 55,648
==================================
See Notes to Unaudited Consolidated Financial Statements
ADVANCED LUMITECH, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Advanced Lumitech, Inc. ("ADLU" or the "Company") and its wholly-
owned subsidiary, Lumitech SA ("Swiss Lumitech"). The Company believes that the
unaudited consolidated financial statements reflect all adjustments (consisting
of only normal recurring adjustments), necessary for a fair presentation of the
Company's financial position, results of operations and cash flows at the dates
and for the periods indicated. The results of operations for the three months
ended March 31, 2000 are not necessarily indicative of results expected for the
full fiscal year or any other future periods. The unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements and related notes for the year ended December 31, 1999,
included in the Company's Annual Report on Form 10-K/A for such fiscal year.
2. Basic and Diluted Net Loss per Common Share
Basic and diluted net loss per common share is computed on the basis of the
weighted average number of shares of common stock outstanding. There is no
difference between basic and diluted net loss per common share since the Company
has recorded losses since inception.
3. Comprehensive Loss
For the three months ended March 31, 2000 and 1999, the Company's comprehensive
loss was as follows:
Three months ended
March 31,
2000 1999
-----------------------------------------
Net loss $ (471,044) $ (629,311)
Foreign currency translation gain 45,828 68,004
-----------------------------------------
Total comprehensive loss $ (425,216) $ (561,307)
-----------------------------------------
4. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 will become effective in January
2001. SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. To date the Company has not
utilized derivative instruments or hedging activities and, therefore, the
adoption of SFAS 133 is not expected to have a material impact on the Company's
financial position or results of operations.
In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation (the Interpretation). This
Interpretation clarifies how companies should apply the Accounting Principles
Board's Opinion No. 25, Accounting for Stock Issued to Employees. The
Interpretation will be applied prospectively to new awards, modifications to
outstanding awards, and changes in employee status on or after July 1, 2000,
except as follows: the definition of an employee applies to awards granted after
December 15, 1998; the Interpretation applies to modifications that reduce the
exercise price of an award after December 15, 1998; and the Interpretation
applies to modifications that add a reload feature to an award made after
January 12, 2000. At the present time, there are no awards granted by the
Company which would result in an adjustment at July 1, 2000 as a result of this
Interpretation.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) 101, Revenue Recognition in Financial Statements. SAB
101 clarifies the SEC staff's views on applying generally accepted accounting
principles to revenue recognition in financial statements. In March 2000, the
SEC issued an amendment, SAB 101A, which deferred the effective date of SAB 101.
The Company will adopt SAB 101 in the second quarter of 2000 in accordance with
the amendment. The adoption of this SAB is not expected to have a significant
impact on the Company's financial statements.
5. Segment Information
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131, establishes standards for the way that
public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. During the periods presented in the
consolidated financial statements, the Company has operated in only one
operating segment - Luminescence Technology development. Long-lived assets are
principally located in Switzerland.
6. Equity
At December 31, 1998, the Company and the co-inventor of the Luminescence
Technology had agreed in principle to an amendment to their agreement that
would, among other things, eliminate an obligation of the Company to pay the
co-inventor royalties calculated as a percentage of sales of products based upon
the Luminescence Technology, and instead provide for the issuance of common
stock of the Company and the making of cash payments to said co-inventor. On
March 31, 1999, the Company and the co-inventor entered into an agreement
amending the earlier royalty agreement pursuant to which the Company (i) agreed
to a cash payment of $160,000 of which the Company has paid the co-inventor
$57,000 and $25,000 in 1999 and 1998, respectively, and committed to pay an
additional $78,000 from time to time as the Company's liquidity and working
capital requirements permit, and (ii) agreed to issue 800,000 shares of the
Company's common stock to the co-inventor. The 800,000 shares of the Company's
common stock were issued on March 31, 1999. The 800,000 shares of the Company's
common stock, with a value of $300,000, was charged to expense in the three
months ended March 31, 1999.
Deferred compensation represents the cost, based on SFAS 123, of granting
options to consultants in 1999, measured under variable stock option accounting
and recognized over the vesting period of the options. The Company recognized
$20,475 of compensation expense associated with those options in the quarter
ended March 31, 2000.
In January 2000, the Company sold a $375,000 equity unit consisting of 500,000
shares of its common stock at $0.75 per share and a warrant to purchase 500,000
shares of common stock at $0.75 per share.
In the quarter ended March 31, 2000, the Company recorded non-cash compensation
expense of $187,500 in connection with the resignation of an officer.
7. Ability to Continue as a Going Concern
At March 31, 2000, the Company had not begun to commercially market Brightec and
generate revenues therefrom and the Company's operations to date have generated
accumulated losses of $6,282,786. The Company's current liabilities exceed its
current assets by $617,215, at March 31, 2000. In addition, at December 31,
1999, Swiss Lumitech was not in compliance with certain statutory capital
requirements under Swiss law. The Company's ability to remedy this condition is
uncertain due to the Company's current financial condition. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The Company believes it has the ability to obtain additional funds from
its principal stockholders or by raising additional debt or equity securities as
described below. However, there can be no assurances that the Company will be
able to raise the funds it requires, or that if such funds are available, that
they will be available on commercially reasonable terms.
In order to generate future revenues from the sale of Brightec products, the
Company anticipates making significant investments in personnel and resources
over the next 12-month period. The Company also intends to repay a significant
amount of debt, including the bank line-of-credit. The Company expects that it
may require up to approximately $10.0 million of cash or available credit during
the next 12-month period to finance payment of existing liabilities, including
the bank line-of-credit, purchases of raw materials and operating expenses. The
Company is continuing discussions with investors in its effort to obtain
additional financing.
The ability of the Company to continue to operate as a going concern is
primarily dependent upon the ability of the Company to raise the necessary
financing, to effectively market and produce Brightec products, to establish
profitable operations and to generate positive operating cash flows. If the
Company fails to raise funds, or the Company's line-of-credit is reduced or
terminated, or the Company is unable to generate operating profits and positive
cash flows, there are no assurances that the Company will be able to continue as
a going concern and it may be unable to recover the carrying value of its
assets.
In November 1999, the Company successfully placed a $375,000 equity unit
resulting in the issuance of 500,000 shares of its common stock at $0.75 per
share and a warrant to purchase 500,000 shares of its common stock at $1.00 per
share. In January 2000, the Company placed a second unit for $375,000 resulting
in the issuance of 500,000 shares of its common stock and a warrant to purchase
500,000 shares of its common stock at $1.00 per share. Management believes that
it will be successful in raising the necessary financing to fund the Company's
operations through the 2000 calendar year. Accordingly, management believes that
no adjustments or reclassifications of recorded assets and liabilities are
necessary at this time.
8. Reclassifications
Certain amounts at December 31, 1999 have been reclassified to conform with the
current presentation.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Factors That May Affect Future Results
Any statements contained in this Form 10-Q that do not describe historical
facts, including without limitation statements concerning expected revenues,
earnings, product introductions and general market conditions, may constitute
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Any such forward-looking statements contained
herein are based on current expectations, but are subject to a number of risks
and uncertainties that may cause actual results to differ materially from
expectations. The factors that could cause actual future results to differ
materially from current expectations include the following: the Company's
ability to raise the financing required to support the Company's operations; the
Company's ability to establish the intended operations; fluctuations in demand
for the Company's products and services; the Company's ability to manage its
growth; the Company's ability to develop, market and introduce new and enhanced
products on a timely basis; the Company's lack of customers; the Company's
dependence on certain sole source suppliers; and the ability of the Company to
compete successfully in the future. Further information on factors that could
cause actual results to differ from those anticipated is detailed in various
filings made by the Company from time to time with the Securities and Exchange
Commission. Any forward-looking statements should be considered in light of
those factors.
General
The Company is a developmental stage company, which, through its subsidiary,
Swiss Lumitech, has developed and patented an exclusive new luminescent imaging
media "Luminescence Product"), which can be used in a variety of products in
numerous fields such as safety and signs, consumer electronics and color
printing. The Company will market the Luminescence product and related products
under the brand name `Brightec'. The Company uses a new generation of high yield
luminescent material, based on alkaline earth chemistry, which provides
significantly greater luminescence than traditional zinc sulphide luminescent
material.
The Company will manufacture, market and sell luminescent sheets and substances
that are specially designed for state-of-the-art digital printing using pigments
with the greatest light intensity. There are various categories and sizes of
luminescent sheets, which will permit wide-spread applications in photography,
color printing, textiles, decoration and different printing technologies. The
luminescent substances are targeted for industrial and commercial applications
such as paints, inks and compounds.
During the fourth quarter of 1999, the Company moved its corporate offices to
the United States, assembled an executive team, identified preliminary market
opportunities and established a sales and distribution network. Although the
Company has not commenced commercial manufacturing or marketing of Brightec and
has generated no revenues to date, it expects, although there are no assurances,
that manufacturing, sales and marketing activities will commence in the second
half of 2000. The manufacturing, marketing and selling of Brightec products is
dependent upon the Company's successful raising of financing, as described in
"Management's Discussion and Analysis - Liquidity and Capital Resources'. As
discussed in Note 1 to the Consolidated Financial Statements, these conditions,
among others, raise substantial doubt about the Company's ability to continue as
a going concern.
The Company was incorporated on April 16, 1986 as Hyena Capital, Inc., a Nevada
corporation. For the period from incorporation to August 13, 1998, the Company
had no operations of any kind. On August 13, 1998, the Company acquired 100% of
the then outstanding common stock of Swiss Lumitech, a company founded in
Switzerland on February 7, 1992, which had developed and patented the
Luminescence Technology.
Prior to developing the Luminescence product, Swiss Lumitech's operations
consisted of unrelated activities including the publication and marketing of a
book written by Swiss Lumitech's co-founders. From that point until its
acquisition by the Company, Swiss Lumitech engaged in the development of the
Luminescence product and utilized it to develop a range of luminescent watches,
which it distributed through an affiliated company, Lumitech BV (the
"Netherlands Affiliate").
For accounting purposes, the acquisition of Swiss Lumitech was treated as a
reverse acquisition of the Company by Swiss Lumitech. Accordingly, the following
discussion reflects the combined operations of the Company and Swiss Lumitech
from the inception date of Swiss Lumitech to March 31, 2000.
Results of Operation for Quarters ended March 31, 2000 and 1999
Research and Development Expenses:
Research and development expenses were $44,253 for the quarter ended March 31,
2000, and $39,344 for the quarter 1999. Research and development expense
increased $4,909 or 12.5% due to salaries and supplies involved in the
development efforts to further develop the luminescence product and related
Brightec products and product testing. The Company intends to expend, subject to
the availability of financing, approximately the same amount in 2000 for
research and development activities as it did in 1999 to improve and broaden the
Company's Luminescence products. In this regard, the Company expects to
establish a laboratory in the U.S. and maintain only a creative laboratory in
Switzerland.
Selling and Marketing Expenses:
Selling and marketing expenses consist primarily of compensation, marketing and
promotional materials. Selling and marketing expenses were $64,546 for the
quarter ended March 31, 2000, and $43,832 for the quarter ended March 31, 1999.
Selling and marketing expenses increased $20,714 or 47.3%. The increase consists
primarily of expenses incurred for marketing materials to support the launch of
the Brightec brand name and expenses incurred in connection with establishing a
sales and distribution network in the U.S. The Company expects that selling and
marketing expenses will continue to increase in dollar amount as the Company
introduces and promotes products.
General and Administrative:
General and administrative expenses consist primarily of compensation of
executive personnel, legal and accounting costs. General and administrative
expenses were $349,837 for the quarter ended March 31, 2000 and $538,152 for the
quarter ended March 31, 1999. General and administrative expenses decreased
$188,315 or 35%, primarily due to non-cash charges of $300,000 in the quarter
ended March 31, 1999 relating to shares issued to the co-inventor and to Socol
for the transfer of technology and know-how and compensation expense related to
the issuance of stock and stock options to consultants. In the quarter ended
March 31, 2000, the Company recorded non-cash compensation expense of $187,500
in connection with the resignation of an officer. The Company expects that,
exclusive of the costs related to the agreement with the co-inventor and with
Socol, general and administrative expenses will continue to, subject to the
availability of financing, increase in dollar amount as a result of an expansion
in the Company's administrative staff to support its operations and as a result
of being a public company.
Interest Expense
Interest expense incurred on amounts due to related parties and the bank line of
credit was $12,408 for the quarter ended March 31, 2000 and $7,983 for the
quarter ended March 31, 1999, respectively.
Income Taxes
The Company has fully reserved for the tax benefits of its net operating losses
at March 31, 2000 and December 31, 1999. At December 31, 1999, the Company had
federal net operating loss carryforwards of approximately $4.3 million which
will expire in varying amounts through 2017 and foreign net operating losses of
approximately $1.5 million at December 31, 1999, which begin to expire in
varying amounts through 2006, if not utilized. Utilization of net operating loss
and tax credit carryforwards will be subject to substantial annual limitations
provided by the Internal Revenue Code of 1986, as amended. The annual limitation
may result in the expiration of net operating loss and tax credit carryforwards
before full utilization.
Liquidity and Capital Resources:
Since inception, the Company has financed its working capital requirements
primarily through private sales of its debt and equity securities. The Company's
net working capital deficit at March 31, 2000 was $617,215 compared to a deficit
of $749,066 at December 31, 1999.
Cash and cash equivalents decreased from $490,276 at December 31, 1999 to
$270,695 at March 31, 2000. Net cash used in operating activities for the
quarter ended March 31, 2000 was $511,528 and $163,315 for the quarter ended
March 31, 1999. The net cash used in operating activities for the quarter ended
March 31, 2000 was primarily the result of the net loss of $471,044 and the
payment of accounts payable and accrued liabilities.
Net cash used in investing activities for the quarter ended March 31, 2000 was
$23,912 compared to $12,885 for the quarter ended March 31, 1999, consisting of
capital expenditures for property and equipment.
Net cash provided by financing activities for the quarter ended March 31, 2000
was $270,031 compared to net cash used of $44,094 for the quarter ended March
31, 1999. The net cash provided of $ 500,000 was primarily the result of cash
received in the Company's private sale of common stock and warrants and the
exercise of stock options. Of this amount, $228,000 was used to repay bank debt
and notes payable to directors.
Ability to Continue as a Going Concern
At March 31, 2000, the Company had not begun to commercially market Brightec and
generate revenues therefrom and the Company's operations to date have generated
accumulated losses of $6,282,786. The Company's current liabilities exceed its
current assets by $617,215 at March 31, 2000. In addition, at March 31, 2000,
Swiss Lumitech was not in compliance with certain statutory capital requirements
under Swiss law. The Company's ability to remedy this condition is uncertain due
to the Company's current financial condition. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. The Company
believes it has the ability to obtain additional funds from its principal
stockholders or by raising additional debt or equity securities as described
below. However, there can be no assurances that the Company will be able to
raise the funds it requires, or that if such funds are available, that they will
be available on commercially reasonable terms.
In order to generate future revenues from the sale of Brightec products, the
Company anticipates making significant investments in personnel and resources
over the next 12-month period. The Company also intends to repay a significant
amount of debt, including the bank line-of-credit. The Company expects that it
may require up to approximately $10.0 million of cash or available credit during
the next 12-month period to finance payment of existing liabilities, including
the bank line-of-credit, purchases of raw materials and operating expenses. The
Company is continuing discussions with investors in its effort to obtain
additional financing.
The ability of the Company to continue to operate as a going concern is
primarily dependent upon the ability of the Company to raise the necessary
financing, to effectively market and produce Brightec products, to establish
profitable operations and to generate positive operating cash flows. If the
Company fails to raise funds, or the Company's line-of-credit is reduced or
terminated, or the Company is unable to generate operating profits and positive
cash flows, there are no assurances that the Company will be able to continue as
a going concern and it may be unable to recover the carrying value of its
assets.
In November 1999, the Company successfully placed a $375,000 equity unit
resulting in the issuance of 500,000 shares of its common stock at $0.75 per
share and a warrant to purchase 500,000 shares of its common stock at $1.00 per
share. In January 2000, the Company placed a second unit for $375,000 resulting
in the issuance of 500,000 shares of its common stock at $0.75 per share and a
warrant to purchase 500,000 shares of its common stock at $1.00 per share.
Management believes that it will be successful in raising the necessary
financing to fund the Company's operations through the 2000 calendar year.
Accordingly, management believes that no adjustments or reclassifications of
recorded assets and liabilities are necessary at this time.
Credit Availability
The Company, through Swiss Lumitech, has borrowings under a line-of-credit with
a Swiss bank. Pursuant to the terms of the bank line-of-credit, the Company may
borrow up to $300,000, at the December 31, 1999 rate of exchange. At December
31, 1999 and 1998, the Company had exceeded such limit, but in each instance,
the bank granted the Company a temporary extension, with no stated expiration
date, to exceed the limit by the bank. At March 31, 2000, the Company had not
exceeded this limit. The line-of-credit agreement contains terms and conditions,
restricting Swiss Lumitech's ability to pledge its assets as security for
separate borrowings and requiring the payment of interest each quarter. In
addition, any and all accounts receivable generated by the Company are
automatically pledged to the bank pursuant to the terms of the line-of-credit
agreement. At March 31, 2000, the borrowings under the bank line-of-credit
carries interest at 6.35%. The line-of-credit is guaranteed up to available
borrowings by a relative of certain directors.
Should the Company's line-of-credit be reduced or terminated, or if the Company
is unable to generate operating profits and positive cash flows, there are no
assurances that the Company will be able to continue as a going concern and it
may be unable to recover the carrying value of its assets. Although there can be
no assurances, the Company does not believe the bank line-of-credit will be
reduced or terminated in the near future and intends to repay it in full during
2000.
Commitments
The Company had no material capital expenditure commitments as of March 31,
2000.
Effects of Inflation
Management believes that financial results have not been significantly impacted
by inflation and price changes.
Euro Currency
The participating member countries of the European Union have adopted the Euro
as its common legal currency on January 1, 1999. At this early stage of its
assessment the Company cannot predict the impact of the conversion to the Euro.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Company faces exposure to financial market risks, including adverse
movements in foreign currency exchange rates and changes in interest rates.
These exposures may change over time as business practices evolve and could have
a material adverse impact on the Company's financial results. The Company's
primary exposure has been related to local currency revenue and operating
expenses in Europe. Historically, the Company has not hedged specific currency
exposures as gains and losses on foreign currency transactions have not been
material to date.
PART II. OTHER INFORMATION
ITEM 6 EXHIBITS
(a) Exhibits.
The following exhibits are filed as part of this report:
EXHIBIT NUMBER DESCRIPTION
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27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADVANCED LUMITECH, INC.
Date: May 19, 2000
By:/s/ Patrick Planche
-----------------------------------------
President, Chief Executive Officer
Principal Financial Officer
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
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27 Financial Data Schedule