<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 September 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 October 31,
1997 was 3,185,100.
Transitional Small Business Disclosure Format Yes No X
--- ---
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LAMINATING TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1997 3
(Unaudited) and March 31, 1997 (Audited)
Consolidated Statements of Operations for the Three and Six 4
Months Ended September 30, 1997 and 1996 (Unaudited)
Consolidated Statements of Cash Flows for the Three and Six 5
Months Ended September 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>
September 30, 1997 March 31, 1997
------------------ --------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 176,723 $ 907,850
Investments 3,941,050 4,032,267
Accounts receivable (net of allowance for 72,121 8,772
doubtful accounts)
Inventory 285,980 103,326
Other Current Assets 131,876 41,567
------------ ------------
Total Current Assets 4,607,750 5,093,782
Fixed assets, net 199,725 209,224
------------ ------------
Total Assets $ 4,807,475 $ 5,303,006
============ ============
LIABILITIES
Current Liabilities:
Notes payable $ 42,705
Accounts payable 275,199 $ 256,341
Payroll taxes payable 49,145 51,625
Accrued expenses 86,709 39,268
------------ ------------
Total Current Liabilities 453,758 347,234
Notes payable, less current maturities 62,503
------------ ------------
Total Liabilities 516,261 347,234
------------ ------------
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, 31,851 31,850
3,185,100 shares and 3,185,000 shares issued and
outstanding, respectively
Additional paid-in capital 11,709,254 11,708,605
Deficit accumulated during the development stage (7,449,891) (6,784,683)
------------ ------------
Total Stockholders' Equity 4,291,214 4,955,772
------------ ------------
Total Liabilities and Stockholders' Equity $ 4,807,475 $ 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
Three Months Ended Six Months Ended (Commencement
September 30, September 30, of Operations)
------------------ ------------------- Through
1997 1996 1997 1996 September 30, 1997
---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 91,813 $ -- $ 124,627 $ -- $ 490,330
Cost of sales 73,564 -- 104,273 -- 1,136,797
---------- ---------- -----------
Gross profit (loss) 18,249 -- 20,354 -- (646,467)
Selling, general and administrative
expenses 427,497 283,658 821,410 949,878 5,903,794
---------- --------- ---------- ----------- -----------
Operating (loss) (409,248) (283,658) (801,056) (949,878) (6,550,261)
Interest expense 1,843 231,147 2,004 408,701 957,787
Investment income (64,094) (137,240) (246,773)
Cancellation of debt 4,000 7,968 (612) (45,273) (171,520)
Loss on abandonment of fixed assets 5,808 5,808 104,184
---------- --------- ---------- ----------- -----------
Net (loss) (350,997) (528,581) (665,208) (1,319,114) (7,193,939)
Cumulative dividend on preferred stock 12,500 25,000 150,000
---------- --------- ---------- ----------- -----------
Net (loss) attributable to common
stockholders $ (350,997) $(541,081) $ (665,208) $(1,344,114) $(7,343,939)
========== ========= ========== =========== ===========
Net (loss) per share of common stock (0.13) (0.66) (0.24) (1.64)
========== ========= ========== ===========
Weighted average number of common
shares outstanding 2,775,100 820,000 2,775,089 820,000
========== ========= ========== ===========
</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 Six Months Ended (Commencement
September 30, September 30, of Operations)
------------------- ----------------- Through
1997 1996 1997 1996 September 30, 1997
---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(350,997) $(528,581) $(665,208) $(1,319,114) $(7,193,939)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Provision for doubtful accounts 1,100 1,100 20,000
Depreciation and amortization 20,685 63,959 40,711 133,420 240,167
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 167,616 293,328 684,551
Loss on disposal of fixed assets 5,808 5,808 122,375
Changes in current assets and liabilities (160,264) 41,707 (272,493) (193,182) 650,601
--------- --------- --------- ----------- -----------
Net cash (used) in operating activities (490,576) (248,391) (896,990) (679,933) (4,786,482)
--------- --------- --------- ----------- -----------
Cash flows from investing activities:
Purchase of investments 441,097 91,217 (3,941,050)
Acquisitions of fixed assets (8,213) (11,986) (31,212) (12,493) (519,191)
--------- --------- --------- ----------- -----------
Net cash (used) in investing activities 432,884 (11,986) 60,005 (12,493) (4,460,241)
--------- --------- --------- ----------- -----------
Cash flows from financing activities:
Proceeds of notes payable 112,000 112,000 1,500,000 2,669,750
(Repayment) of notes payable (6,792) (6,000) (6,792) (330,507) (2,590,699)
Proceeds of notes payable - stockholders
(net of repayment) 408,964
Proceeds from sale of common stock 8,600,913
Proceeds from sale of preferred stock 500,000
Payment of dividends on preferred stock (150,000)
Other activities (52,411) 650 (465,588) (15,482)
--------- --------- --------- ----------- -----------
Net cash provided by financing activities 105,208 (58,411) 105,858 703,905 9,423,446
--------- --------- --------- ----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 47,516 (318,788) (731,127) 11,479 176,723
Cash and cash equivalents - beginning of period 129,207 331,614 907,850 1,347 --
--------- --------- --------- ----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 176,723 $ 12,826 $ 176,723 $ 12,826 $ 176,723
========= ========= ========= =========== ===========
</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 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.
(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
6
<PAGE> 7
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 September 30, 1996 and 1997.
Net sales increased from zero in the three months ended September 30,
1996 ("1996 Three Months") to approximately $92,000 in the three months ended
September 30, 1997 ("1997 Three Months"). Management released its first
commercial product, "BAKE 'N SHIP(TM)", in April 1997, thus generating revenues
in the 1997 period. Management invested its resources in developing its
technology for commercialization in the 1996 period and thus did not pursue
product sales.
Gross profit increased to approximately $18,000 in the 1997 Three
Months or 19.9% of sales. The gross profit margin does not have the benefit of
large volumes and is indicative of pressures of penetrating a market with a new
product introduction. Accordingly, it is not certain whether such margins are
indicative of future margins.
Selling, general and administrative expenses increased 50.7% from the
1996 Three Months of approximately $284,000 to approximately $427,000 in the
1997 Three Months. The increase is largely the result of increases in general
and administrative costs and product development costs.
Interest expense decreased from approximately $231,000 in the 1996
Three Months to approximately $2,000 in the 1997 Three Months. The decrease is
primarily the result of a decrease in interest bearing debt in the 1997 period,
which was retired in October, 1996 with the use of part of the proceeds from the
October, 1996 sale of stock.
Interest income increased from zero in the 1996 Three Months to
approximately $64,000 in the 1997 Three Months as cash proceeds from the
Company's public stock offering in October, 1996 have been invested in interest
bearing securities.
Net loss decreased from approximately $541,000, or ($.66) per share in
1996 Three Months to approximately $351,000, or ($.13) per share, in 1997 Three
Months as a result of the foregoing factors.
7
<PAGE> 8
Six Months ended September 30, 1996 and 1997.
Net sales increased from zero in the six months ended September 30,
1996 ("1996 Six Months") to approximately $125,000 in the six months ended
September 30, 1997 ("1997 Six Months"). Management released its first commercial
product, "BAKE 'N SHIP(TM)", during 1997 Six Months generating revenues.
Management invested its resources in developing its technology for
commercialization during 1996 Six Months and thus did not pursue product sales.
Gross profit was approximately $20,000 in 1997 Six Months. The gross profit
margin in 1997 Six Months (16.3% of sales) includes pre-production costs, does
not have the benefit of large volumes and is indicative of pressures of
penetrating a market with a new product introduction. Accordingly, it is not
certain whether such margins are indicative of future margins.
Selling, general and administrative expenses decreased by 13.5% from
approximately $950,000 in 1996 Six Months to approximately $821,000 in 1997 Six
Months. The decrease is primarily attributable to a non-recurring charge in 1996
Six 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
approximately $257,000 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 $409,000 for 1996 Six
Months to approximately $2,000 in the 1997 Six Months. The decrease is primarily
due to a decrease in interest bearing debt outstanding during 1996 Six Months,
which was retired in October, 1996 with the use of part of the proceeds from the
October, 1996 sale of stock.
Interest income increased from zero in 1996 Six Months to approximately
$137,000 in 1997 Six 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 $1,344,000, or
$(1.64) per share, in 1996 Six Months to approximately $665,000, or $(.24) per
share, in 1997 Six Months, as 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 September 30, 1997,
the Company had approximately $4.1 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.
8
<PAGE> 9
At September 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 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 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Shareholders' Meeting on August 21, 1997.
The directors elected to the board of directors and votes cast for and
against were as follows:
<TABLE>
<CAPTION>
Votes For Votes Against
--------- -------------
<S> <C> <C>
Michael E. Noonan 1,929,806 19,700
Ronald L. Christensen 1,929,806 19,700
Jerome I. Gellman 1,929,806 19,700
William J. Warren 1,883,684 65,822
</TABLE>
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) Report on Form 8-K was filed on August 1, 1997, reporting the
necessity to file a post- effective amendment to its Registration
Statement.
(c) Report on Form 8-K was filed on September 2, 1997. Laminating
Technologies, Inc. reported that the Securities and Exchange Commission
declared its post-effective amendment to its Registration Statement to
be effective.
9
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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.
LAMINATING TECHNOLOGIES, INC.
November 14, 1997 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
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS OF LAMINATING TECHNOLOGIES, INC. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 176,723
<SECURITIES> 3,941,050
<RECEIVABLES> 72,121
<ALLOWANCES> 0
<INVENTORY> 285,980
<CURRENT-ASSETS> 4,607,750
<PP&E> 199,725<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,807,475
<CURRENT-LIABILITIES> 453,758
<BONDS> 0
0
0
<COMMON> 31,851
<OTHER-SE> 4,259,363
<TOTAL-LIABILITY-AND-EQUITY> 4,807,475
<SALES> 124,627
<TOTAL-REVENUES> 124,627
<CGS> 104,273
<TOTAL-COSTS> 104,273
<OTHER-EXPENSES> 821,410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,004
<INCOME-PRETAX> (665,208)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (665,208)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
<FN>
<F1>NET AMOUNTS
</FN>
</TABLE>
