<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, 1998
[ ] 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,
1998 was 3,185,100.
Transitional Small Business Disclosure Format Yes No X
--- ---
<PAGE> 2
LAMINATING TECHNOLOGIES, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Part I - Financial Information Page No.
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1998 3
(Unaudited) and March 31, 1998 (Audited)
Consolidated Statements of Operations for the Three 4
Months Ended June 30, 1998 and 1997 (Unaudited)
Consolidated Statements of Cash Flows for the Three 5
Months Ended June 30, 1998 and 1997 (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 8
</TABLE>
2
<PAGE> 3
LAMINATING TECHNOLOGIES, INC. AND SUBSIDIARY
(a development stage company)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, 1998 March 31, 1998
------------- --------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
------
Current Assets:
Cash $ 730,238 $ 738,933
Investments 1,987,876 2,459,011
Accounts receivable (net of allowance for 127,647 68,923
doubtful accounts)
Inventory 412,300 398,304
Other Current Assets 101,032 153,585
------------ ------------
Total Current Assets 3,359,093 3,818,756
Property and equipment, net 303,392 180,634
------------ ------------
Total Assets $ 3,662,485 $ 3,999,390
============ ============
LIABILITIES
-----------
Current Liabilities:
Current maturity of note payable $ 45,336 $ 44,441
Accounts payable 327,806 186,559
Accrued expenses 135,838 124,200
------------ ------------
Total Current Liabilities 508,980 355,200
Notes payable, less current maturities 28,164 39,840
------------ ------------
Total Liabilities 537,144 395,040
------------ ------------
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 31,851
3,185,100 shares and 3,185,100 shares issued and
outstanding, respectively
Additional paid-in capital 11,709,254 11,709,254
Deficit accumulated during the development stage (8,615,764) (8,136,755)
------------ ------------
Total Stockholders' Equity 3,125,341 3,604,350
------------ ------------
Total Liabilities and Stockholders' Equity $ 3,662,485 $ 3,999,390
============ ============
</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 (Commencement
June 30, of Operations)
-------- Through
1998 1997 June 30, 1998
---- ---- -------------
<S> <C> <C> <C>
Net sales $ 263,945 $ 32,814 $ 1,148,717
Cost of sales 242,057 30,709 1,675,700
----------- ----------- -----------
Gross profit (loss) 21,888 2,105 (526,983)
Selling, general and administrative expenses 307,205 276,039 6,150,568
Research and development expenses 232,524 117,874 1,169,074
----------- ----------- -----------
Operating (loss) (517,841) (391,808) (7,846,625)
Interest expense 1,614 161 963,264
Investment income (40,446) (73,146) (382,741)
Cancellation of debt -- (4,612) (171,520)
Loss on abandonment of fixed assets -- -- 104,184
----------- ----------- -----------
Net (loss) (479,009) (314,211) (8,359,812)
=========== =========== ===========
Net (loss) per share of common stock (0.17) (0.11)
=========== ===========
Weighted average number of common 2,775,100 2,775,078
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
1998 1997 June 30, 1998
---- ---- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (479,009) $ (314,211) $(8,359,812)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Provision for doubtful accounts 45,000
Depreciation and amortization 22,882 20,026 310,889
Compensation recorded for fair value of common shares
issued in excess of price paid by employee 273,763
Compensation recorded for stock options issued by
stockholders to an officer 386,000
Services contributed by stockholder 30,000
Noncash finance charge 684,551
Loss on disposal of fixed assets 122,375
Changes in current assets and liabilities 132,716 (112,229) 527,188
----------- ----------- -----------
Net cash (used) in operating activities (323,411) (406,414) (5,980,046)
----------- ----------- -----------
Cash flows from investing activities:
Proceeds from investments 471,135 (349,880) (1,987,876)
Acquisitions of fixed assets (145,639) (22,999) (693,579)
----------- ----------- -----------
Net cash (used) in investing activities 325,496 (372,879) (2,681,455)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds of notes payable 2,669,750
(Repayment) of notes payable (10,780) (2,622,406)
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 650 (15,482)
----------- ----------- -----------
Net cash provided by financing activities (10,780) 650 9,391,739
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (8,695) (778,643) 730,238
Cash and cash equivalents - beginning of period 738,933 907,850
----------- ----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 730,238 $ 129,207 $ 730,238
=========== =========== ===========
</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, 1998.
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. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Investments
Investments consist primarily of commercial paper. These
investments are accounted for as available for sale securities
and are stated at fair value, which approximates cost.
(2) Inventory
Inventory is recorded at lower of cost or market, using the
first-in, first-out (FIFO) cost flow method.
(3) Net loss per share of common stock
Net loss per share of common stock was determined by dividing
net loss 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.
6
<PAGE> 7
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 and has incurred substantial operating
losses from these activities. The Company has only recently been experiencing
repeat orders from customers. Previously, the Company believed customers were
ordering primarily to evaluate the commercial potential of the Company's
products.
The following discussion should be read in conjunction with the
Company's audited financial statements for the year ended March 31, 1998
included in Form 10-KSB.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 and 1998.
Net sales increased from approximately $33,000 in the three months
ended June 30, 1997 ("1997 Three Months") to approximately $264,000 in the three
months ended June 30, 1998 ("1998 Three Months"). The Company's presentation
line of baking products has shown steady sales growth since its introduction in
the fall of 1997. The Company continues to invest its resources in further
developing its current products and in expanding its product sales.
Gross profit increased from approximately $2,000 in the 1997 Three
Months, or 6.3% of sales, to approximately $22,000 in the 1998 Three Months, or
8.3% 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 11.2% from the
1997 Three Months of approximately $276,000 to approximately $307,000 in the
1998 Three Months. This increase is primarily due to the costs of obtaining a
patent for the LTI Processed(R) methodology.
Research and development expense increased by approximately 100% from
the 1997 Three Months of approximately $118,000 to approximately $233,000 in the
1998 Three Months. This increase is the result of "fine tuning" the Company's
gold presentation line of bakery products and further development of the Hot 'N
Cooler(TM) product line.
Interest expense increased from approximately zero in the 1997 Three
Months to approximately $2,000 in the 1998 Three Months. The increase is due to
financing an insurance premium.
Interest income decreased from approximately $73,000 in the 1997 Three
Months to approximately $40,000 in the 1998 Three Months. This decrease is
primarily due to the reduction in cash available for investment.
Net loss increased from approximately $314,000, or ($.11) per share in
1997 Three Months to approximately $479,000, or ($.17) per share, in 1998 Three
Months as a result of the foregoing factors.
7
<PAGE> 8
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, 1998). 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(R) method and sales and marketing activities. At June 30, 1998, the
Company had approximately $2.7 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.
At June 30, 1998, the Company had net operating loss carry-forwards for
Federal Income Tax purposes of approximately $7,402,000. 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 2(d). Information Required by Item 701(f) of Regulation S-B
Reference is made hereby to Form SR, which was filed by the Company on
January 15, 1997. The following information is provided to update the
information contained in said Form SR:
8
<PAGE> 9
<TABLE>
<S> <C> <C> <C> <C>
(01) UNITS:
For the Account of the Issuer:
Amount Registered: 1,955,000
(INCLUDES 1,955,000 SHARES OF COMMON STOCK AND 1,955,000 CLASS A WARRANTS AND
1,955,000 CLASS B WARRANTS COMPRISING THE UNITS.)
Aggregate Price of Offering Amount Registered: $9,775,000
Amount Sold: 1,955,000
Aggregate Offering Price of Amount Sold: $9,775,000
For the Account(s) of any Selling Security holder(s):
Amount Registered: --
Aggregate Offering Price of Amount Registered: --
Amount Sold: --
Aggregate Offering Price of Amount Sold: --
(02) COMMON STOCK:
For the Account of the Issuer:
Amount Registered: 5,865,000
(ISSUABLE UPON EXERCISE OF THE CLASS A WARRANTS AND THE
CLASS B WARRANTS)
Aggregate Price of Offering Amount Registered: $46,920,000
Amount Sold: 0 (TO DATE, NO
CLASS A WARRANTS AND NO CLASS B WARRANTS HAVE BEEN
EXERCISED)
Aggregate Offering Price of Amount Sold: N/A
For the Account(s) of any Selling Security holder(s):
Amount Registered: 1,955,000
(ISSUABLE UPON THE EXERCISE OF THE CLASS A WARRANTS
AND THE CLASS B WARRANTS UNDERLYING THE CLASS A
WARRANTS HELD BY THE SELLING SECURITY HOLDERS)
Aggregate Offering Price of Amount Registered $15,211,875
Amount Sold: 100 (TO DATE,
100 CLASS WARRANTS AND NO CLASS B WARRANTS HELD
BY THE SELLING SECURITY HOLDERS HAVE BEEN
EXERCISED)
Aggregate Offering Price of Amount Sold: $650
(03) CLASS A WARRANTS:
For the Account of the Issuer:
Amount Registered: --
Aggregate Price of Offering Amount Registered: --
Amount Sold: --
Aggregate Offering Price of Amount Sold: --
For the Account(s) of any Selling Security holder(s):
Amount Registered: 997,500 (HELD
BY THE SELLING SECURITY HOLDERS)
Aggregate Offering Price of Amount Registered: N/A
Amount Sold: 0
Aggregate Offering Price of Amount Sold: N/A
</TABLE>
9
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C>
(04) CLASS B WARRANTS:
For the Account of the Issuer:
Amount Registered: --
Aggregate Price of Offering Amount Registered: --
Amount Sold: --
Aggregate Offering Price of Amount Sold: --
For the Account(s) of any Selling Security holder(s):
Amount Registered: 997,500
(UNDERLYING THE CLASS A WARRANTS ISSUED TO THE
SELLING SECURITY HOLDERS)
Aggregate Offering Price of Amount Registered: N/A
Amount Sold: 0
Aggregate Offering Price of Amount Sold: N/A
(05) UNIT PURCHASE OPTIONS:
For the Account of the Issuer:
Amount Registered: 170,000
Aggregate Price of Offering Amount Registered: $170
Amount Sold: 170,000
Aggregate Offering Price of Amount Sold: $170
For the Account(s) of any Selling Security holder(s):
Amount Registered: --
Aggregate Offering Price of Amount Registered: --
Amount Sold: --
Aggregate Offering Price of Amount Sold: --
(06) UNITS:
For the Account of the Issuer:
Amount Registered: 170,000
Aggregate Price of Offering Amount Registered: $1,020,000
Amount Sold: 0 (TO DATE, THE
UNIT PURCHASE OPTION HAS NOT BEEN EXERCISED)
Aggregate Offering Price of Amount Sold: N/A
For the Account(s) of any Selling Security holder(s):
Amount Registered: --
Aggregate Offering Price of Amount Registered: --
Amount Sold: --
Aggregate Offering Price of Amount Sold: --
(02) COMMON STOCK:
For the Account of the Issuer:
Amount Registered: 510,000
(ISSUABLE UPON EXERCISE OF
THE CLASS A WARRANTS AND CLASS B WARRANTS ISSUABLE
UNDER THE UNIT PURCHASE OPTION)
Aggregate Price of Offering Amount Registered: $4,080,000
Amount Sold: 0 (ISSUABLE UPON
EXERCISE OF THE CLASS A WARRANTS AND CLASS B WARRANTS
ISSUABLE UNDER THE UNIT PURCHASE OPTION)
Aggregate Offering Price of Amount Sold: N/A
For the Account(s) of any Selling Security holder(s):
Amount Registered: --
Aggregate Offering Price of Amount Registered: --
Amount Sold: --
Aggregate Offering Price of Amount Sold: --
</TABLE>
10
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C>
TOTALS:
For the Account of the Issuer:
Amount Registered: --
Aggregate Price of Offering Amount Registered: $61,795,170
Amount Sold: 2,125,100
Aggregate Offering Price of Amount Sold: $9,775,820
For the Account(s) of any Selling Security holder(s):
Amount Registered: --
Aggregate Offering Price of Amount Registered: $15,211,875
Amount Sold: --
Aggregate Offering Price of Amount Sold: --
AMOUNT OF NET OFFERING PROCEEDS TO ISSUER USED FOR FOLLOWING PURPOSES:
Direct or indirect
payments to directors,
officers, general partners
of the issuer or
their associates; to persons
owning ten percent or
more of any class of Direct or
equity securities of the indirect
issuer; and to affiliates payments to
of the issuer others
</TABLE>
<TABLE>
---------------------------------------------------------------------------
<S> <C> <C>
(01) Construction of plant,
building and facilities
---------------------------------------------------------------------------
(02) Purchase and installation of $ 5,897 $ 393,680
machinery and equipment
---------------------------------------------------------------------------
(03) Purchase of Real Estate
---------------------------------------------------------------------------
(04) Acquisition of other
business(es)
---------------------------------------------------------------------------
(05) Repayment of Indebtedness $2,129,388
---------------------------------------------------------------------------
(06) Working Capital $351,134 $1,328,776
---------------------------------------------------------------------------
TEMPORARY INVESTMENT:
---------------------------------------------------------------------------
(07) Merrill Lynch $2,685,430
---------------------------------------------------------------------------
(08) NationsBank Checking Account $ 32,512
---------------------------------------------------------------------------
(09)
---------------------------------------------------------------------------
(10)
---------------------------------------------------------------------------
OTHER PURPOSES:
---------------------------------------------------------------------------
(11) Preferred Stock Dividends $150,000
---------------------------------------------------------------------------
(12) Repayment of Trade Payable $96,770 $ 84,139
Outstanding at IPO Date
---------------------------------------------------------------------------
(13) Product Design and Development $90,347 $ 712,476
---------------------------------------------------------------------------
(14) Sales and Marketing $175,923 $ 297,922
---------------------------------------------------------------------------
</TABLE>
The use(s) of proceeds described above do not represent a material
change in the use(s) of proceeds described in the applicable
prospectus.
11
<PAGE> 12
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) Two reports were filed on Form 8-K.
- On April 2, 1998 Form 8-K was filed reporting changes
in Registrant's certifying accountant.
- On May 6, 1998 Form 8-K/A was filed amending the
Registrant's Form 8-K filed on April 2, 1998 to
include a letter from the Registrant's former
accountant stating their agreement with the
statements made in the aforementioned 8-K.
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 11, 1998 LAMINATING TECHNOLOGIES, INC.
By: s/s Michael E. Noonan
------------------------------------
Michael E. Noonan
Chief Executive Officer and President
By: s/s Donald L. Aldridge
------------------------------------
Donald L. Aldridge
Chief Financial Officer
By: s/s Shirley Pigg
------------------------------------
Shirley Pigg
Controller
12
<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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 730,238
<SECURITIES> 1,987,876
<RECEIVABLES> 127,647<F1>
<ALLOWANCES> 0
<INVENTORY> 412,300
<CURRENT-ASSETS> 3,359,093
<PP&E> 303,392<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,662,485
<CURRENT-LIABILITIES> 508,980
<BONDS> 0
0
0
<COMMON> 31,851
<OTHER-SE> 3,093,490
<TOTAL-LIABILITY-AND-EQUITY> 3,662,485
<SALES> 263,945
<TOTAL-REVENUES> 263,945
<CGS> 242,057
<TOTAL-COSTS> 242,057
<OTHER-EXPENSES> 539,729
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,614
<INCOME-PRETAX> (479,009)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (479,009)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
<FN>
<F1>NET AMOUNT
</FN>
</TABLE>
