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: June 30, 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 12,104,648 shares of the Registrant's Common Stock outstanding as
of August 11, 2000.
INDEX
Part I: Financial Information Page No.
Item 1. Financial Statements:
Unaudited Consolidated Balance Sheets - as of
June 30, 2000 and December 31, 1999 ........................ 3-4
Unaudited Consolidated Statements of Operations, Six and
Three Months Ended June 30, 2000 and June 30, 1999 ......... 5
Unaudited Consolidated Statement of Cash Flows, Six
Months Ended June 30, 2000 and June 30, 1999 ................ 6
Notes to Consolidated Financial Statements................... 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............ 10
Part II: Other Information........................................ 11
Item 1. Legal Proceedings................................... 11
Item 2. Change in Securities................................ 11
Item 3. Defaults Upon Senior Securities..................... 11
Item 4. Submission of Matters to a Vote
of Security Holders................................. 11
Item 5. Other Information................................... 11
Item 6. Exhibits and Reports on Form 8-K.................... 11
Signatures ....................................................... 11
2
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
6/30/00 12/31/99
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ASSETS
CURRENT ASSETS
Cash $ 159,319 $ 215,026
Accounts Receivable (Net of allowance for
uncollectible accounts of $2,786 for
6/30/00 and 12/31/99 716 6,071
Inventory 228,614 129,398
Prepaid Expenses 25,972 23,299
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Total Current Assets 414,621 373,794
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Property, Plant and Equipment, at cost
(Net of accumulated depreciation and
amortization of $242,642 and $197,336
on 06/30/00 and 12/31/99, respectively) 387,962 418,547
OTHER ASSETS
Deposits 8,092 8,192
Other Intangible Assets (net of accumulated
amortization of $1,425 and $1,076 on 6/30/00
and 12/31/99, respectively) 465 814
Patents and Trademarks
(Net of accumulated amortization of $1,386
and $969 on 6/30/00 and 12/31/99,
respectively) 120,385 88,309
Investment in Common Stock 200,000 200,000
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Total Assets $1,131,525 $1,089,656
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
3
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
6/30/00 12/31/99
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LIABILITIES
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 181,893 $ 190,164
Current Portion of Notes Payable 16,913 16,913
Customer Deposits 31,870 180,841
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Total Current Liabilities 230,676 387,918
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LONG-TERM DEBT
Notes Payables, Net of Current Portion 314,446 310,636
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock (Par Value $.0001, Authorized
100,000,000 Shares, Issued and Outstanding
12,104,648 Shares on 6/30/00 and 11,544,648
on 12/31/99) 1,200 1,154
Preferred Stock (Par Value $.0001, Authorized
10,000,000 Shares, No Shares Issued and
Outstanding) - -
Additional Paid-In Capital 2,450,477 2,450,516
Deficit Accumulated (1,865,274) (2,060,568)
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Total Stockholders' Equity 586,403 391,102
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Total Liabilities and Stockholders'
Equity $1,131,525 $1,089,656
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
4
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED THREE MONTHS ENDED
6/30/00 6/30/99 6/30/00 6/30/99
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REVENUES - NET $ 962,595 $ 406,372 $ 390,106 $ 356,221
COST OF GOODS SOLD 143,467 25,506 70,122 3,502
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GROSS PROFIT 819,128 380,866 319,984 352,719
OPERATING EXPENSES
SELLING, GENERAL AND ADMINIS-
TRATIVE EXPENSES 561,062 514,328 352,069 303,838
DEPRECIATION AND AMORTIZATION
EXPENSE 47,350 29,964 23,972 29,964
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TOTAL OPERATING EXPENSES 608,412 544,292 376,041 333,802
OPERATING PROFIT (LOSS) 210,716 (163,426) (56,057) 18,917
INTEREST EXPENSE (15,422) (19,953) (7,778) (9,076)
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NET INCOME (LOSS) 195,294 (183,379) (63,835) 9,841
NET INCOME (LOSS) PER SHARE 0.016 (0.016) (0.005) 0.001
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 12,004,648 11,540,000 12,004,648 11,540,000
The accompanying notes are an integral part of these consolidated financial
statements.
5
SMLX TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
6/30/00 6/30/99
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit (Loss) $ 195,294 $ (183,379)
Adjustment to Reconcile Net (Loss) to
Net Cash Provided By (Used in)
Operating Activities:
Depreciation and Amortization 47,350 29,964
Changes in Operating Assets and
Liabilities:
Accounts Receivable (716) (3,176)
Inventory (99,216) (2,108)
Deposits (100) (123,611)
Accounts Payable and Accrued Liabilities (8,271) -
Customer Deposits (148,971) 56,720
Prepaid Expenses and Organization
Expenses 2,673 2,367
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Net Cash (Used In) Provided By Operating
Activities (11,957) (223,223)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Fixed Assets (20,724) (3,095)
Patent Costs (32,076) (8,397)
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Net Cash Provided by (Used In) Investing
Activities (52,800) (11,492)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Private Placement - 636,003
Proceeds from Notes Payable 9,050 (133,217)
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Net Cash Provided By (Used In) Financing
Activities 9,050 502,786
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Net Increase (Decrease) in Cash (55,707) 268,071
Cash - Beginning of Period 215,026 47,594
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Cash - End of Period $ 159,319 $ 315,665
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
6
SMLX TECHNOLOGIES,INC. AND SUBISDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 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 $1,865,274 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 $228,614 of finished goods as of June 30, 2000.
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following at June 30, 2000:
Leasehold Improvements $ 188,806
Office Furniture and Equipment 50,502
Lab Equipment 391,296
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Total Equipment 630,604
Less: Accumulated Depreciation 242,642
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Total Property, Plant and Equipment $ 387,962
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NOTE 5 - NOTES PAYABLE
Interest Expense for the period ended
June 30, 2000, amounted to: $ 15,422
Interest Expense for the period ended
June 30 , 1999, amounted to: $ 19,953
NOTE 6 - INCOME TAXES
To date the Company has incurred tax operating losses and therefore has
generated no income tax liabilities. As of June 30, 2000, the Company has
generated net operating loss carry forwards totaling $(1,865,274) 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 June 30, 2000:
Deferred Tax Assets:
Net Operating Loss Carry forward 634,193
Valuation Allowance (634,193)
NOTE 7 - CONCENTRATIONS
During the six months ended June 30, 2000, revenue of approximately $640,000
was earned from a single customer, Vector Medical Technologies, Inc. This
represents approximately 66% of the Company's year to date revenue.
NOTE 8 - 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 Exchange 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.
NOTE 9 - SUBSEQUENT EVENTS
In July 2000, James Whidden was elected President of the Company by a vote of
the Board of Directors. James Whidden is an officer and a member of the Board
of Directors of Vector Medical Technologies, Inc. as well as the President of
Whidden & Associates, Inc.
As of July 1, 2000, an agreement for the consulting and business development
services of James Whidden was entered into with Whidden & Associates, Inc., a
consulting company with experience in businesses similar to the Company's.
For two years, annual consulting fees of $80,000 will be paid in installments
of approximately $6,667 per month. The Company has the right to terminate
this agreement at any time, subject to certain fees, if termination is during
the first twenty-four months of this agreement.
8
In connection with this agreement, the Company has granted options to purchase
875,000 Common Shares of the Company stock at $0.46 per share to an entity
controlled by James Whidden, for five years beginning July 1, 2000. Options
to purchase 200,000 shares of the 875,000 became vested upon execution of the
agreement. The options to purchase the additional 675,000 shares become
vested upon the Company's stock reaching prices between $2.00 per share and
$6.00 per share, subject to minimum daily stock trading volume. In addition,
the Company granted options to purchase 250,000 common shares for $3.00 per
share to the entity controlled by James Whidden. These options expire on July
1, 2002.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 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 JUNE 30, 2000 VERSUS THREE MONTHS ENDED JUNE 30, 1999
During the three months ended June 30, 2000, the Company had $390,106 in
revenue compared to $356,221 in revenue during the corresponding prior year
period. The increase was the result of additional revenues from Vector
Medical of approximately $33,000 during 2000.
Expenses for the three months ended June 30, 2000, were approximately the
same for the corresponding prior year period.
SIX MONTHS ENDED JUNE 30, 2000 VERSUS SIX MONTHS ENDED JUNE 30, 1999
During the six months ended June 30, 2000, the Company had $962,595 in
revenue compared to $406,372 in revenue during the corresponding prior year
period. The increase in revenue was the result of sales of airbrators of
$284,000 (all of which occurred during the quarter ended March 31, 2000) and
increased revenues from Vector Medical of approximately $158,372 during 2000.
Expenses for the six months ended June 30, 2000, were approximately the
same for the corresponding prior year period.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company had working capital of approximately
$183,945 compared to approximately $(14,241) at December 31, 1999. The
increase is due to the net income for the six months.
As of June 30, 2000, the Company had no material commitments for capital
expenditures.
10
PART II: OTHER INFORMATION
Item 1. Legal Proceedings:
None
Item 2. Changes in Securities:
None.
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information:
In July 2000, James Whidden was elected President of the Company by a
vote of the Board of Directors. James Whidden is an officer and a member of
the Board of Directors of Vector Medical Technologies, Inc. as well as the
President of Whidden & Associates, Inc.
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: August 17, 2000 By:/s/ James Whidden
James Whidden, President
Date: Augsut 17, 2000 By:/s/ Joel Marcus
Joel Marcus, Chief Financial
Officer
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EXHIBIT INDEX
EXHIBIT METHOD OF FILING
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27. Financial Data Schedule Filed herewith electronically