UNITED STATES
SECURITY AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2004
Or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transmission period from _________ to __________
------------------------------------------------------------------------------
Commission file number 0-4846-3
------------------------------------------------------------------------------
MEMS USA, INC.
(Formerly Lumalite Holdings, Inc.)
(Exact name of registrant as specified in charter)
Nevada 82-0288840
--------------------------------------------------------------------------------
State or other jurisdiction IRS employer ID number
of Incorporation
5701 Lindero Canyon Road., #2-100
Westlake Village, CA 91362
(Address of Principal Executive Offices)
Registrants telephone number (818)-735-4750
State the number of shares outstanding of each of the issuers classes of common
equity as of the last practicable date (May 24, 2004) 13,385,779 shares
----------
--------------------------------------------------------------------------------
Part I - FINANCIAL INFORMATION
MEMS USA, INC.
--------------
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31,
2004
---------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 101,648
Contracts in progress, net of reserves 56,667
------------
Total current assets 158,315
PROPERTY AND EQUIPMENT, NET 154,977
DEPOSITS 190,140
------------
Total assets $ 503,432
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 237,649
Deferred revenue 38,333
Liability to be satisfied though the issuance of shares 989,500
------------
Total current liabilities 1,265,482
------------
STOCKHOLDERS' DEFICIT:
Convertible preferred stock, Series A $.001
par value, --
1,200,000 shares authorized, none issued 6r
outstanding
Common stock, par value $.001 per share,
100,000,000 13,386
authorized, 13,385,779 shares issued and
outstanding
Additional paid in capital 1,419,424
Accumulated deficit during development stage (2,194,860)
------------
Total stockholders' deficit (762,050)
------------
$ 503,432
============
The accompanying notes form an integral part of these financial statements
MEMS USA, INC.
--------------
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six-Months Ended Three-Months Ended From November 17,
March 31, March 31, 2000 (inception) to
2004 2003 2004 2003 March 31, 2004
----------- ----------- ---------- ----------- ---------------
REVENUES: -- -- -- -- --
COSTS:
Contract costs $ 313,309 $ 11,973 $ 209,193 $ 11,973 $ 331,366
General and administrative expenses 679,986 275,146 325,813 53,828 1,513,134
Expenses related to merger 350,360 -- -- -- 350,360
------------ ----------- ---------- ----------- ---------------
Net (loss)
from continuing operations (1,343,655) (287,119) (535,006) (65,801) (2,194,860)
------------ ----------- ---------- ----------- ---------------
Net income (loss) $(1,343,655) $ (287,119) $(535,006) $ (65,801) $ (2,194,860)
============ =========== ========== =========== ===============
NET INCOME (LOSS) PER SHARE, BASIC AND DILUTED
$ (0.12) $ (0.04) $ (0.04) (0.01)
======================================= ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING, BASIC AND DILUTED: 11,177,326 8,131,821 12,281,553 8,071,860
============ =========== ========== ===========
The accompanying notes form an integral part of these financial statements
MEMS USA, INC.
--------------
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six-Months Ended From November 17,
March 31, 2000 (inception) to
2004 2003 March 31, 2004
---------- --------- ----------------
Cash flows provided by (used for) operating activities:
Net Loss $(1,343,655) $(287,119) $ (2,194,860)
----------- --------- ------------
Adjustments to reconcile net loss to net cash
provided by (used for) operating
activities:
Depreciation 12,380 3,475 30,538
Common stock issued for services 433,360 -- 620,960
(Increase) decrease in assets:
Contracts in progress 13,333 -- (56,667)
Deposits (141,000) -- (190,140)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (310,672) 191,117 237,649
Deferred revenue 10,000 -- 38,333
----------- --------- ------------
Total adjustments 17,401 194,592 680,673
----------- --------- ------------
Net cash used for operating activities (1,326,254) (92,527) (1,514,187)
----------- --------- ------------
Cash flows from investing activities:
Purchase of fixed assets (5,177) (5,177) (185,515)
----------- --------- ------------
Net cash used for investing activities: (5,177) (5,177) (185,515)
----------- --------- ------------
Cash flows from financing activities:
Decrease in subscriptions receivable 50,300 -- -
Common stock issued for cash 1,369,787 98,000 1,801,350
----------- --------- ------------
Net cash flows provided by financing activities: 1,420,087 98,000 1,801,350
----------- --------- ------------
Net Increase in cash and cash
equivalents during the period 88,656 296 101,648
Cash and cash equivalents, beginning of period 12,992 43,147 --
----------- --------- ------------
Cash and cash equivalents, end of period $ 101,648 $ 43,443 $ 101,648
=========== ========= ============
Supplemental disclosure of cash flow information:
Income taxes paid $ -- $ -- $ --
=========== ========= ============
Interest paid $ -- $ -- $ --
=========== ========= ============
Supplemtental disclosure of non-cash financing activities:
Common stock issued for services $ 433,360 $ 620,960
=========== ========= ============
Dividends accrued $ 6,100 $ 6,100 $ 6,100
=========== ========= ============
Issuance of Series A preferred stock in satisfaction
of accrued salaries $ $ 228,250
=========== ========= ============
The accompanying notes form an integral part of these financial statements
The following should be read in conjunction with the Conmpany's financial
statments and the notes thereto contained elsewhere in this filing
CAUTIONARY STATMENT REGARDING FORWARD LOOKING STATEMENTS
With the exception of historical matters, the matters discussed herein are
forward-looking statements that involve risks and uncertainties. Forward-looking
statements include, but are not limited to, statements concerning anticipated
trends in revenues and net income, projections concerning operations and
available cash flow. The Company's actual results could differ materially from
the results discussed in such forward-looking statements. The following
discussion of the Company's financial condition and results of operations should
be read in conjunction with the Company's financial statements and the related
notes thereto appearing elsewhere herein.
The Company wishes to caution investors that any forward-looking statements made
by or on behalf of the Company are subject to uncertainties and other factors
that could cause actual results to differ materially from such statements. These
uncertainties and other factors include, but are not limited to the Risk Factors
listed below (many of which have been discussed in prior SEC filings by the
Company). Though the Company has attempted to list comprehensively these
important factors, the Company wishes to caution investors that other factors
could in the future prove to be important in affecting the Company's results of
operations. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
Readers are further cautioned not to place undue reliance on such
forward-looking statements as they speak only of the Company's views as of the
date the statement was made. The Company undertakes no obligation to publicly
update or revise any forward- looking statements, whether as a result of new
information, future events or otherwise.
MEMS USA, INC.
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED MARCH 31, 2004 AND 2003 (UNAUDITED)
(1) NATURE OF BUSINESS:
MEMS USA, Inc. (the "Company") is currently a development
stage company under the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 7 "Accounting and Reporting
by Development Stage Enterprises" and was incorporated under
the laws of the State of California on November 17, 2000. The
Company is in the business of providing Micro Electrical
Mechanical Solutions for major scientific and engineering
companies, using existing technology and patent rights
furnished by the customers. The Company designs and engineers
prototypes and manufactures products and systems for
distribution by the customer.
The accompanying unaudited consolidated financial statements
of MEMS USA, Inc., (MEMS USA, Inc. - a Nevada "public shell"
company "MEMS NV" and its subsidiary MEMS USA, Inc. - a
California non-public corporation "MEMS CA" together), "The
Company" have been prepared in conformity with accounting
principles generally accepted in the United States of America
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 accounting principles
generally accepted in the United States of America for
complete financial statements. In the opinion of management,
all adjustments considered necessary for fair presentation
have been included
(2) EXCHANGE TRANSACTION:
On January 28, 2004 the Registrant entered into an Agreement
and Plan of Reorganization to acquire all of the issued and
outstanding common stock of MEMS USA, Inc. (a California
Corporation and private company "MEMS CA in echange for up to
10,000,000 shares (post split) of the registrants common
stock. Each of MEMS CA's outstanding common shares will be
converted into 1.7125634 shares of MEMS NV (formerly known as
Lumalite Holdings, Inc a public company with 3,385,779 shares
outstanding prior to the transaction), subject to adjustment
for the elimination of fractional shares. No fractional shares
were issued. Instead, cash equal to $2.50 per share of
eliminated fractional shares will be paid to the stockholders.
At the closing, MEMS CA became a wholly-owned subsidiary and
the MEMS CA stockholders were issued 10,000,000 shares, owning
approximately 80% of the outstanding common stock. Since the
former stockholders of MEMS CA became the controlling
shareholders of the company after the transaction, it was
accounted for as an acquisition of MEMS NV by MEMS CA, using
reverse merger accounting.
(3) STOCK SPLIT:
In connection with the aforementioned exchange transaction,
the Company effected a 1.7125634 to one stock split. The
retroactive effect of the split has been made for all periods
presented.
(4) INTERIM FINANCIAL STATEMENTS:
The accompanying unaudited financial statements for the six
months ended March 31, 2004 and 2003 include all adjustments
(consisting of only normal recurring accruals), which, in the
opinion of management, are necessary for a fair presentation
of the results of operations for the periods presented.
Interim results are not necessarily indicative of the results
to be expected for a full year. These unaudited financial
statements should be read in conjunction with the audited
financial statements for the period from November 17, 2000
(inception) to September 30, 2003, to be included in an
amendment to the company's Form 8-K.
(5) GOING CONCERN CONSIDERATION:
As discussed above (Nature of Business), the accompanying
financial statements have been prepared in conformity with
accounting principles generally accepted in the United States
of America, which contemplate continuation of the Company as a
going concern. The Company's primary operations and sources of
revenue are currently being developed. MEMS CA revenue streams
have been established, yet as a development stage enterprise,
these streams remain to be classified as consistently
substantial on an ongoing basis. This characteristic raises
doubt about the Company's ability to continue as a going
concern. The financial statements do not include any
adjustments relating to the recover ability and classification
of recorded asset amounts, or amounts and classification of
liabilities that might be necessary, should the Company be
unable to continue as a going concern.
The Company has undergone a merger and plan of reorganization,
obtaining all outstanding shares of MEMS CA as of February 18,
2004. MEMS NV exchanged 10,000,000 shares of MEMS NV common
stock for all of the outstanding common and preferred stock of
MEMS CA. Management plans to issue remaining shares of MEMS NV
through syndicators and investment bankers in order to provide
financing for ongoing operations. During the six months ended
March 31, 2004, the Company generated common stock
subscription totaling $989,500. The funds for these shares
have been collected and the shares will be issued upon the
closing of the current offering.
(6) PRIVATE PLACEMENT OF SECURITIES:
In connection with a private placement of securities in the
quarter ended March 31, 2004, the Company received $989,500
for the sale of its shares in a private offering transaction.
The transaction provides for the sale of up to $1,500,000 in
shares of the Company's unregistered common stock, $.001 par
value per share, in minimum investment amounts of $10,000,
sold to accredited investors within the meaning of Rule 501(a)
of regulation D of the Securities Act of 1933. The shares will
be priced at a 30% discount from the closing price posted on
the OTCBB on the day that the investment amount is received by
the Company.
(6) PRIVATE PLACEMENT OF SECURITIES, CONTINUED:
As the shares related to the $989,500 receipts have not yet
been issued the amounts are classified in the accompanying
balance sheet as a liability to be satisfied through issuance
of shares.
Item 1 - FINANCIAL STATEMENTS PER REGULATION S-B
Attached to following page
Note: Additional Financial Statements required for Entity Acquired
pursuant to Regulation S-B, section 228.310 are included in Exhibits as
indicated in Item 6.
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(a) Plan of Operation
(i) The Company can satisfy its cash requirements and will raise additional
funds in the next twelve months through the issuance of common stock.
(ii) Please refer to form 8 - K filed with the Securities and Exchange
Commission on February 18, 2004, which discusses product research and
development and other relevant business plans for the term, as well as the
overall nature of business for MEMS USA, INC.
(b)(1) Micro-Electro-Mechanical-Systems (MEMS) technology is a developing
technology integrating electronics with miniature devices designed to assist
companies seeking to monitor and improve various aspects within the production
process. By improving, and in some cases developing, the monitoring processes of
temperature, pressure, flow rate, particle count, conductivity, PH/acidity,
lubricity, viscosity, and pressure differential, MEMS USA, INC intends to
transform the production processes for many companies by allowing them to more
effectively monitor the development of critical business assets and to more
efficiently implement the utilization of valuable production resources. Oil &
gas companies, (exploring and developing), Pharmaceutical companies, the
Food/Beverage industry and even Car rental enterprises could potentially obtain
significant and substantial savings by investing, today, in the production
processes of tomorrow.
The Company's primary operations are carried out at the subsidiary level. The
subsidiary, as a
development stage company, is pursuing several activities to establish core
revenue generating sources: selling products and systems developed by and
manufactured for MEMS USA, obtaining revenue from products and systems on a
contract basis, developing and out-licensing Intellectual Property
internationally, increasing Principal Investigator Contracts that provide
product development revenues from private and publicly funded projects,
developing the operations as a Center of Excellence in its areas of
technological expertise. Success of the company will be determined by its
ability to attract, develop and then maintain these significant core revenue
streams.
(2) Interim Periods MEMS USA, INC divested itself of a previous subsidiary in
the same interim reporting period for the prior fiscal year. That divestiture
produced both results from discontinued operations and a gain on the divestiture
of the subsidiary which are reflected on the statement of operations for the
interim period in the prior fiscal year. Now divested those amounts are not
recurring items and should be noted when reviewing the relevant comparative
statements of operation for the interim periods.
Item 3. - CONTROLS AND PROCEDURES
As of the date of this report, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
our Chief Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of our "disclosure controls and
procedures" (as defined in Rule12a-15(e) under the Securities Exchange Act of
1934, as amended). Based upon that evaluation, our Chief Executive Officer and
the Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that material information relating to us and
our consolidated subsidiaries is recorded, processed, summarized and reported in
a timely manner. Management will continue to review this matter with particular
emphasis on the documentation of the Company's disclosure controls and
procedures. There has been no change in the Company's internal control over
financial reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
Part II - OTHER INFORMATION
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. 1 Financial Statements required by Section 228.310
of the Act relating to Acquired Entities for MEMS USA, INC (a
California corporation). Audited for previous two fiscal
years, and compiled for the quarter-ending
Exhibit No. 2 Financial Statements required by Section 228.310
of the Act relating to Acquired Entities for MEMS USA, INC (a
California corporation). Compiled for the quarter-ending March
31, 2004.
Exhibit No. 3 Certification of Chief Executive Officer and
Chief Financial Officer pursuant to Section 302 of
Sarbanes-Oxley Act of 2002.
Exhibit No. 4 Certification of Chief Executive Officer
Pursuant to 18 U.S.C. 1350 As Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
Forms 8-K were filed during the current reporting quarter. The
first, on February 5, 2004 provided the company's likelihood
of change of ownership and intent to acquire the outstanding
shares of MEMS USA, INC (a California corporation). The
second, on February 25, 2004 reporting the consummation of the
reorganization and merger plan. Financial Statements for this
quarter are submitted with this Form 10-QSB.
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.
Date: May 14, 2004
/s/ Lawrence Weisdorn
----------------------------
Lawrence Weisdorn
Chief Executive Officer
Chief Financial Officer
EXHIBITS 1 - Financial Statements (Audited by Stonefield and Josephson, Inc.)
EXHIBITS 2 - Compiled Financial Statements as of March 31, 2004