<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from _____ to _____
Commission file number 0-21061
LAMINATING TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 58-2044990
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1160 Hightower Trail, Atlanta, GA 30350-2910
--------------------------------------------
(Address of principal executive offices)
(770) 518-6010
--------------
(Issuer's telephone number)
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
--- ---
The number of shares of the issuer's Common Stock outstanding as of July 31,
1997 was 3,185,100.
Transitional Small Business Disclosure Format Yes No X
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LAMINATING TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
Part I - Financial Information Page No.
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997 (Unaudited) 3
and March 31, 1997 (Audited)
Consolidated Statements of Operations for the Three Months 4
Ended June 30, 1997 and 1996 (Unaudited)
Consolidated Statements of Cash Flows for the Three Months 5
Ended June 30, 1997 and 1996 (Unaudited)
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
Part II - Other Information 9
</TABLE>
2
<PAGE> 3
LAMINATING TECHNOLOGIES, INC. AND SUBSIDIARY
(a development stage company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 1997 March 31, 1997
------------- --------------
(Unaudited) (Audited)
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 129,207 $ 907,850
Investments 4,382,147 4,032,267
Accounts receivable (net of allowance for
doubtful accounts) 16,446 8,772
Inventory 184,955 103,326
Other current assets 39,973 41,567
------------ ------------
Total Current Assets 4,752,728 5,093,782
Fixed assets, net 212,197 209,224
------------ ------------
Total Assets $ 4,964,925 $ 5,303,006
============ ============
LIABILITIES
Current Liabilities:
Accounts payable $ 229,459 $ 256,341
Payroll taxes payable 49,145 51,625
Accrued expenses 44,110 39,268
------------ ------------
Total Current Liabilities 322,714 347,234
------------ ------------
STOCKHOLDERS' EQUITY
Series A convertible preferred stock, par value $.01,
5,000,000 shares authorized, none issued
Common stock, par value $.01, 20,000,000 shares authorized,
3,185,100 shares and 3,185,000 shares issued and
outstanding, respectively 31,851 31,850
Additional paid-in capital 11,709,254 11,708,605
Deficit accumulated during the development stage (7,098,894) (6,784,683)
------------ ------------
Total Stockholders' Equity 4,642,211 4,955,772
------------ ------------
Total Liabilities and Stockholders' Equity $ 4,964,925 $ 5,303,006
============ ============
</TABLE>
See notes to accompanying consolidated financial statements
3
<PAGE> 4
LAMINATING TECHNOLOGIES, INC. AND SUBSIDIARY
(a development stage company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
April 19, 1993
(Commencement
of Operations)
Three Months Ended June 30 Through
1997 1996 June 30, 1997
---- ---- -------------
<S> <C> <C> <C>
Net sales $ 32,814 $ -- $ 398,517
Cost of sales 30,709 -- 1,063,233
----------- --------- -----------
Gross profit (loss) 2,105 -- (664,716)
Selling, general and administrative
expenses 393,913 666,220 5,476,297
----------- --------- -----------
Operating (loss) (391,808) (666,220) (6,141,013)
Interest expense 161 177,554 955,944
Investment income (73,146) (182,679)
Cancellation of debt (4,612) (53,241) (175,520)
Loss on abandonment of fixed assets 104,184
----------- --------- -----------
Net (loss) (314,211) (790,533) (6,842,942)
Cumulative dividend on preferred -- 12,500 150,000
stock ----------- --------- -----------
Net (loss) attributable to common $ (314,211) $(803,033) $(6,992,942)
stockholders =========== ========= ===========
Net (loss) per share of common stock $ (.11) $ (.98)
=========== =========
Weighted average number of common 2,775,078 820,000
shares outstanding =========== =========
</TABLE>
See notes to accompanying consolidated financial statements
4
<PAGE> 5
LAMINATING TECHNOLOGIES, INC. AND SUBSIDIARY
(a development stage company)
Consolidated, Condensed Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
April 19, 1993
Three Months Ended (Commencement
June 30 of Operations)
------------------------ Through
1997 1996 June 30, 1997
---------- ---------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(314,211) $ (790,533) $(6,842,942)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Provision for doubtful accounts 20,000
Depreciation and amortization 20,026 69,461 219,482
Compensation recorded for fair value of common shares
issued in excess of price paid by employee 12,707 273,763
Compensation recorded for stock options issued by
stockholders to an officer 386,000 386,000
Services contributed by stockholder 30,000
Noncash finance charge 125,712 684,551
Loss on disposal of fixed assets 122,375
Changes in current assets and liabilities (112,229) (234,889) 810,865
----------- ----------- -----------
Net cash (used) in operating activities (406,414) (431,542) (4,295,906)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of investments (349,880) (4,382,147)
Acquisitions of fixed assets (22,999) (507) (510,978)
----------- ----------- -----------
Net cash (used) in investing activities (372,879) (507) (4,893,125)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds of notes payable 1,500,000 2,557,750
(Repayment) of notes payable (324,507) (2,583,907)
Proceeds of notes payable - stockholders (net of repayment) 408,964
Proceeds from sale of common stock (413,177) 8,600,913
Proceeds from sale of preferred stock 500,000
Payment of dividends on preferred stock (150,000)
Other activities 650 (15,482)
----------- ----------- -----------
Net cash provided by financing activities 650 762,316 9,318,238
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (778,643) 330,267 129,207
Cash and cash equivalents - beginning of period 907,850 1,347 0
----------- ----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 129,207 $ 331,614 $ 129,207
=========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 161 $ 32,148 $ 673,934
Noncash transactions:
Common stock subscribed 1,250
Common stock issued for developed technology 406,875
Common stock issued as settlement of note payable
to stockholder 90,000
Due to stockholder for shares purchased for treasury 19,551
Cancellation of debt obligation in exchange for fixed assets 54,279
Settlement of related party debt by capital contribution 307,457
Conversion of debt to equity 978,572 978,572
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 6
LAMINATING TECHNOLOGIES, INC. AND SUBSIDIARY
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A. FINANCIAL INFORMATION
The accompanying financial statements have been prepared on a
consolidated basis. They include the accounts of the Company and its
wholly-owned inactive subsidiary, Revenue Process Development, Inc. All
intercompany transactions and balances have been eliminated in consolidation.
The unaudited interim condensed financial statements of Laminating
Technologies, Inc. and Subsidiary (the "Company") have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These interim condensed financial
statements should be in read in conjunction with the financial statements and
notes included in the Company's Form 10-KSB for the fiscal year ended March 31,
1997.
In the opinion of management, the interim condensed financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the interim periods. The
results of operations for the interim periods are not necessarily indicative of
the results of operations to be expected for the full year.
NOTE B. CONTINGENCY
The Company is aware of a patent issued to an unrelated entity that
relates to certain processes by which film, including polyester film, is
reverse-printed and laminated onto linerboard. Such patent may affect the
ability of the Company to obtain patent protection for some or all of the
claims included in its patent application. Moreover, there can be no assurance
that any application of the Company's technology will not infringe this or any
other patents or proprietary rights of others. Management believes that the
Company has not infringed on any patents.
A predecessor to the Company may have entered into license agreements
regarding the developed technology owned by the Company. Even though no
executed agreement has been produced by the Company or other parties, there can
be no assurance that such license agreements do not exist or as to the terms of
any such licenses. In the event that any previous license agreements exist,
they may adversely affect the Company's ability to utilize its technology or
enter into additional licenses in the future.
NOTE C. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Inventory
Inventory is recorded at lower of cost or market.
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NOTE C. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(2) Net loss per share of common stock
Net loss per share of common stock was determined by dividing
net loss, as adjusted by cumulative dividends on the Company's
preferred stock during the time it was outstanding, by the weighted
average number of shares outstanding during each period. The weighted
average number of shares outstanding excludes 410,000 shares held in
escrow. The computation of fully diluted net loss per share of common
stock would have been antidilutive in each of the periods presented.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company is a development stage company organized to develop,
design and market value-added packaging and specialty display products. Since
its inception, the Company's efforts have been principally devoted to research,
development and design of products, marketing activities and raising capital.
The Company has had only limited sales, has generated minimal revenues from
operations and has incurred substantial operating losses from these activities.
Most of the Company's sales to date did not involve significant orders
and the Company believes that these customers were primarily evaluating the
commercial potential of the Company's products. The Company also incurred
significant costs associated with such sales in part because a large percentage
of finished product was distributed free of charge as samples. The Company's
sales efforts have also been adversely affected by periods with no operations,
a lack of continuity of management and inadequate capital.
The following discussion should be read in conjunction with the
Company's audited financial statements for the year ended March 31, 1997
included in Form 10-KSB.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 and 1997. Net sales increased from
zero in the three months ended June 30, 1996 ("1996 Three Months") to $33,000
in the three months ended June 30, 1997 ("1997 Three Months"). Management
released its first commercial product, "BAKE <180>N SHIP(TM)", during 1997
Three Months generating some sales. Management invested its resources in
developing its technology for commercialization during 1996 Three Months and
thus did not pursue product sales. Gross profit was approximately $2,000 in
1997 Three Months. The gross profit margin (as a percent of sales) in 1997
Three Months includes pre-production costs and therefore is not indicative of
future margins.
Selling, general and administrative expenses decreased by 41% from
approximately $666,000 in 1996 Three Months to approximately $394,000 in 1997
Three Months. The decrease is primarily attributable to a non-recurring charge
in 1996 Three Months of approximately $386,000 relating to the fair market
value of stock options granted by two principal stockholders of the Company to
the Company's Chairman, President and Chief Executive Officer. After giving
effect to the charge, selling, general and administrative expenses actually
increased by $114,000 as a result of increased business activity prior and
subsequent to the Company's public stock offering in October, 1996.
Interest expense decreased from approximately $178,000 for 1996 Three
Months to approximately zero in the 1997 Three Months. The decrease is
primarily due to a decrease in interest bearing debt outstanding during 1996
Three Months, which was retired in October, 1996 with the use of part of the
proceeds from the October, 1996 sale of stock.
7
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Interest income increased from zero in 1996 Three Months to
approximately $73,000 in 1997 Three Months as cash proceeds from the Company's
public stock offering in October, 1996 have been invested in short term cash
investments to the extent not needed for current operations.
Net loss decreased significantly from approximately $791,000, or $
(.98) per share, in 1996 Three Months to approximately $314,000, or $ (.10) per
share, in 1997 Three Months, as a result of the foregoing factors.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the public stock offering, the Company funded its activities
through loans from principal stockholders and private placements of equity and
debt securities. On October 9, 1996, the Company sold 1,700,000 Units at $5 per
Unit in a public offering (See notes to the Company's audited financial
statements for the year ended March 31, 1997). Each Unit consists of one share
of Common Stock, one Class A Warrant and one Class B Warrant. On November 4,
1996, the underwriter exercised its over-allotment option to purchase an
additional 255,000 Units at $5 per Unit. The initial public offering resulted
in total net proceeds to the Company of approximately $7,988,000.
The net proceeds were used to: (1) repay the bridge debt of $1,995,000
plus accrued interest, (2) pay the $150,000 accrued dividends on preferred
stock, (3) repay other existing debt and payables of approximately $320,000,
and (4) provide working capital for operations. The remaining proceeds of the
offering are intended to be used by the Company to implement its business plan,
which includes the development and testing of products utilizing the LTI
Processed(TM) method and sales and marketing activities. At June 30, 1997, the
Company had approximately $4.5 million in cash and liquid investments. The
Company expects to continue to incur substantial research, development and
marketing costs in the future. The Company also expects that general and
administrative costs necessary to support manufacturing and the expansion of a
marketing and sales organization will increase in the future. Accordingly, the
Company expects to continue to incur operating losses for the foreseeable
future. Due to the Company's current cash position, management does not
currently anticipate the need to raise additional funds in the next twelve
months.
Certain common stockholders have agreed to place 410,000 shares of
Common Stock of the Company into escrow. Conditions for release of the escrowed
shares are discussed in the footnotes to the Company's audited financial
statements for the year ended March 31, 1997, Form 10-KSB, Part II, Item 7, and
in Post-Effective Amendment No. 1 to Form SB-2. In the event of the release of
the Escrow Shares, the Company will recognize during the period in which the
earnings thresholds are probable of being met or such stock price levels
achieved, a substantial non-cash charge to earnings (not deductible for income
tax purposes) equal to the fair market value of such shares on the date of
their release, which would have the effect of significantly increasing the
Company's loss or reducing or eliminating earnings, if any, at such time. There
can be no assurance that the Company will attain the targets which would enable
the Escrow Shares to be released from escrow. The recognition of the potential
charges to income described above may have a depressive effect on the market
price of the Company's securities.
At June 30, 1997, the Company had net operating loss carry-forwards
for Federal Income Tax purposes of approximately $5,250,000. The net operating
loss and credit carry-forwards expire from March, 2008 through March, 2012.
Additionally, the Company's ability to utilize its net operating loss
carry-forwards may be subject to annual limitations pursuant to Section 382 of
the Internal Revenue Code as a result of the public stock offering which
occurred on October 9, 1996.
- -------------------------------------------------------------------------------
Statements herein that are not descriptions of historical facts are
forward-looking and subject to risk and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors,
including those set forth in the Company's Securities and Exchange Commission
filings under "Risk
8
<PAGE> 9
Factors", including risks relating to the early stage of the Company and its
products under development; the uncertainty of market acceptance; and the
Company's dependence on third parties for manufacturing and marketing
activities.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - The following exhibit is filed with this report:
27.1 Financial Data Schedule (for SEC use only)
(b) One report on Form 8-K was filed on June 16, 1997. Laminating
Technologies, Inc. reported its 1997 fiscal year financial
results.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 14, 1997 LAMINATING TECHNOLOGIES, INC.
By:/s/ Michael E. Noonan
-------------------------------------
Michael E. Noonan
Chief Executive Officer and President
By:/s/ Richard B. Carlock
-------------------------------------
Richard B. Carlock
Chief Financial Officer
By:/s/ Shirley Pigg
-------------------------------------
Shirley Pigg
Controller
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENTS OF
LOSS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 129,207
<SECURITIES> 4,382,147
<RECEIVABLES> 16,446
<ALLOWANCES> 0
<INVENTORY> 184,955
<CURRENT-ASSETS> 4,752,728
<PP&E> 212,197<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,964,925
<CURRENT-LIABILITIES> 322,714
<BONDS> 0
0
0
<COMMON> 31,851
<OTHER-SE> 4,610,360
<TOTAL-LIABILITY-AND-EQUITY> 4,964,925
<SALES> 32,814
<TOTAL-REVENUES> 32,814
<CGS> 30,709
<TOTAL-COSTS> 30,709
<OTHER-EXPENSES> 393,913
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161
<INCOME-PRETAX> (314,211)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (314,211)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
<FN>
<F1>NET AMOUNTS
</FN>
</TABLE>
