U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
Commission file number: 0-28154
SMLX TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its Charter)
Colorado 84-1337509
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
376 Ansin Boulevard, Hallandale, Florida 33009
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(Address of principal executive offices, including zip code)
(954) 455-0110
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(Issuer's telephone number)
Indicate by check mark whether the Issuer (1) has 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 [ ]
There were 12,004,648 shares of the Registrant's Common Stock outstanding as
of May 15, 2000.
INDEX
Part I: Financial Information Page No.
Item 1. Financial Statements:
Unaudited Consolidated Balance Sheets - as of
December 31, 1999........................................... 3-4
Unaudited Consolidated Statements of Operations, Three
Months Ended March 31, 2000 and March 31, 1999 ............. 5
Unaudited Consolidated Statement of Cash Flows, Three
Months Ended March 31, 2000 and March 31, 1999 .............. 6
Notes to Consolidated Financial Statements................... 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............ 9
Part II: Other Information........................................ 10
Item 1. Legal Proceedings................................... 10
Item 2. Change in Securities................................ 10
Item 3. Defaults Upon Senior Securities..................... 10
Item 4. Submission of Matters to a Vote
of Security Holders................................. 10
Item 5. Other Information................................... 10
Item 6. Exhibits and Reports on Form 8-K.................... 10
Signatures ....................................................... 10
2
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
3/31/00 12/31/99
------------ ------------
CURRENT ASSETS
Cash $ 271,085 $ 215,026
Accounts Receivable (Net of allowance
for uncollectible accounts of $2,375
and $2,786 for 12/31/99 and 3/31/00,
respectively) - 6,071
Inventory 173,569 129,398
Prepaid Expenses 28,455 23,299
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Total Current Assets 473,109 373,794
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Property, Plant and Equipment, at cost
(Net of accumulated depreciation and
amortization of $23,246 and $197,336
on 03/31/00 and 12/31/00, respectively) 411,832 418,547
OTHER ASSETS
Deposits 8,192 8,192
Other Intangible Assets 300 814
Patents and Trademarks
(Net of accumulated amortization of $969
and $1,076 on 03/31/00 and 12/31/99,
respectively) 108,193 88,309
Investment in Common Stock 200,000 200,000
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Total Assets $ 1,201,626 $ 1,089,656
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The accompanying notes are an integral part of these consolidated financial
statements.
3
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
3/31/00 12/31/99
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CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 195,599 $ 190,164
Current Portion of Notes Payable 16,913 16,913
Customer Deposits 72,061 180,841
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Total Current Liabilities 284,573 387,918
LONG-TERM DEBT
Notes Payables, Net of Current Portion 324,927 310,636
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock (Par Value $.0001, Authorized
100,000,000 Shares, Issued and Outstanding
12,004,648 Shares on 3/31/00 and 11,544,648 1,200 1,154
on 12/31/99)
Preferred Stock (Par Value $.0001, Authorized
10,000,000 Shares, No Shares Issued and
Outstanding) - -
Additional Paid-In Capital 2,450,460 2,450,516
Deficit Accumulated (1,859,534) (2,060,568)
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Total Stockholders' Equity 592,126 391,102
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Total Liabilities and Stockholders' Equity $ 1,201,626 $ 1,089,656
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The accompanying notes are an integral part of these consolidated financial
statements.
4
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
3/31/00 3/31/99
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REVENUES - NET $ 572,900 $ 61,771
COST OF GOODS SOLD 126,863 22,004
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GROSS PROFIT 446,037 39,767
OPERATING EXPENSES
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 213,789 212,707
DEPRECIATION AND AMORTIZATION EXPENSE 23,592 24,150
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TOTAL OPERATING EXPENSES 237,381 236,857
OPERATING PROFIT (LOSS) 208,656 (197,090)
INTEREST EXPENSE (7,644) (10,875)
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NET PROFIT (LOSS) 201,012 (207,965)
NET PROFIT (LOSS) PER SHARE 0.017 (0.019)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 12,004,648 10,930,000
The accompanying notes are an integral part of these consolidated financial
statements.
5
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
3/31/00 3/31/99
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit (Loss) $ 201,012 $ (207,965)
Adjustment to Reconcile Net (Loss) to
Net Cash Provided By (Used in)
Operating Activities:
Depreciation and Amortization 23,592 24,276
Changes in Operating Assets and
Liabilities:
Accounts Receivable 6,071 (24,923)
Inventory (44,712) (1,848)
Deposits 500 -
Accounts Payable and Accrued Liabilities 5,434 93,481
Customer Deposits (108,780) (35,325)
Prepaid Expenses and Organization
Expenses (5,156) 453
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Net Cash (Used In) Provided By Operating
Activities 77,961 (151,851)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Fixed Assets (15,963) (10,441)
Patent Costs (20,230) (1,025)
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Net Cash Provided by (Used In)
Investing Activities (36,193) (11,466)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Private Placement - 161,803
Proceeds from Notes Payable 14,291 (873)
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Net Cash Provided By (Used In) Financing
Activities 14,291 160,930
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Net Increase (Decrease) in Cash 56,059 (2,387)
Cash - Beginning of Period 215,026 47,594
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Cash - End of Period $ 271,085 $ 45,207
============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
6
SMLX TECHNOLOGIES,INC. AND SUBISDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of SMLX
Technologies, Inc. (the "Company") and its wholly-owned subsidiaries, Simplex
Medical Systems, Inc.(a Florida corporation) and Analyte Diagnostics, Inc.,
have been prepared in accordance with the instructions and requirements of
Form 10-QSB and, therefore, do not include all information and footnotes
necessary for a fair presentation of financial position, results of
operations, and cash flows in conformity with generally accepted accounting
principles. In the opinion of management, such financial statements reflect
all adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of the results of operations and financial position for the
interim periods presented. Operating results for the interim periods are not
necessarily indicative of the results that may be expected for the full year.
These financial statements should be read in conjunction with the Company's
annual report of Form 10-KSB.
These financial statements give effect to the March 5, 1997 reverse
acquisition whereby Music Tones Ltd. (name subsequently changed to Simplex
Medical Systems, Inc.) acquired all of the outstanding common stock of Simplex
Medical Systems, Inc. as if the transaction occurred on September 15, 1995.
NOTE 2 - BASIS OF PRESENTATION AND CONTINUED EXISTENCE
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. Since inception, the Company has
experienced losses aggregating $1,859,544 and has been dependent upon loans
from stockholders and other third parties in order to satisfy operations to
date. Management believes that funds generated from operations will provide
the Company with sufficient cash flow resources to fund the operations of the
Company. The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
NOTE 3 - INVENTORY
Inventory consists of $173,569 of finished goods as of March 31, 2000.
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at March 31, 2000:
Leasehold Improvements $ 188,806
Office Furniture and Equipment 50,502
Lab Equipment 405,149
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Total Equipment 631,928
Less: Accumulated Depreciation 220,096
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Total Property, Plant and Equipment $ 411,832
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7
NOTE 5 - NOTES PAYABLE
Interest Expense for the period ended
March 31, 2000, amounted to: $ 7,644
Interest Expense for the period ended
March 31, 1999, amounted to: $ 10,875
NOTE 6 - INCOME TAXES
To date the Company has incurred tax operating losses and therefore has
generated no income tax liabilities. As of March 31, 2000, the Company has
generated net operating loss carry forwards totaling $(1,859,544) which are
available to offset future taxable income, if any, through the year 2011. As
utilization of such an operating loss for tax purposes is not assured, the
deferred tax asset has been fully reserved through the recording of 100%
valuation allowance.
The components of the net deferred tax asset are as follows at March 31, 2000:
Deferred Tax Assets:
Net Operating Loss Carry forward (1,859,544)
Valuation Allowance (1,859,544)
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANAYLSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
This Report contains forward-looking statements that involve a number of
risks and uncertainties. While these statements represent the Company's
current judgement in the future direction of the business, such risks and
uncertainties could cause actual results to differ materially from any future
performance suggested herein. Certain factors that could cause results to
differ materially from those projected in the forward-looking statements
include timing of orders and shipments, market acceptance of products, ability
to increase level of production, impact of government requisitions,
availability of capital to finance growth and general economic conditions.
The following should be read in conjunction with the attached Financial
Statements and Notes thereto of the Company.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 VERSUS THREE MONTHS ENDED MARCH 31,
1999
During the three months ended March 31, 2000, the Company had $572,900 in
revenue compared to $61,771 in revenue during the corresponding prior year
period. The increase in revenue was the result of sales of airbrators of
approximately $248,000 and revenues under a licensing agreement with Vector
Medical of approximately $324,000 during 2000. The Company had no similar
revenues during the corresponding period last year.
Expenses for the three months ended March 31, 2000, were approximately
the same for the corresponding prior year period.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had working capital of approximately
$188,536 compared to approximately $(14,241) at December 31, 1999. The
increase is due to the net income for the quarter.
The Company presently has no material commitments for capital
expenditures.
9
PART II: OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 2. Changes in Securities:
During the quarter ended March 31, 2000, the Company issued 460,000
shares of its Common Stock which were not registered under the Securities Act
of 1933, as amended. The shares were issued pursuant to a writ of mandamus
issued by the Circuit Court of Miami-Dade County in connection with a lawsuit
filed against the Company by John Faro. The shares are being held in escrow
pending a resolution of various claims against Mr. Faro.
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) Exhibit 27 Financial Data Schedule Filed herewith
electronically
(b) Reports on Form 8-K: None
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.
SMLX TECHNOLOGIES, INC.
Date: May 26, 2000 /s/ Colin N. Jones
Colin N. Jones, President
Date: May 26, 2000 /s/ Joel Marcus
Joel Marcus, Chief Financial Officer
10
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27. Financial Data Schedule Filed herewith electronically