FORM 10-KSBA
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
ANNUAL REPORT
Pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended Commission file number
- ------------------------- ----------------------
November 30, 1999 2-76262-NY
Laser Master International, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-2564587
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1000 First Street, Harrison, N.J. 07029
- ----------------------------------------- ----------
(Address of principal executive Offices) (Zip Code)
(973) 482-7200
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ---------------------------------------- --------------------------
Common Stock Par Value $.01 Per Share Nasdaq Bulletin Board
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
Common Stock - Par Value $.01 10,615,380
----------------------------- ------------------
Class Outstanding Shares
Aggregate Market Value of Non-Affiliate Stock at February 28, 2000
approximately$5,360,767
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
-----------------------
(a) General:
Laser Master Int'l Inc. was founded in 1981 and prints for the textile industry
and the gift wrap paper industry. Laser Master sells its products and services
nationwide thru its direct sales force and resellers. In addition Laser Master
has a real estate subsidiary Harrison First Realty Corp. which owns a factory
building in Harrison, New Jersey. The building is 240,000 square feet of which
49% is rented to two unaffiliated tenants and 51% is rented to Flexo-Craft
Prints Inc. Flexo-Craft Prints Inc. is the printing subsidiary and is engaged in
the use of a computerized laser system to accomplish Flexographic printing for
industrial and commercial printing and engraving, and counts among its customers
large corporations, some of which are listed on the NY Stock Exchange.
THE FLEXO-CRAFT PROCESS
The principal operation of Flexo-Craft is to utilize a ZED laser in its process.
A laser is a device which emits a coherent wavelength (color). A large degree of
control is afforded, and as a consequence, an exceptionally high density of
power can be delivered to a well-defined area by focusing the light energy.
Using a computer driven system the laser beam makes grooves in the form of
designs and patterns onto a rubber material. The rubber material is then sealed
on a steel or aluminum cylinder which is then placed on a printing press. In the
heat transfer printing process the ink is injected into the grooves using a
computer driven process and then the rubber coated cylinder prints on heat
transfer paper. The heat transfer paper is sold to manufacturers who then seal
it onto textile materials. The same process is used for gift wrap paper except
that the paper itself is the final product. One of our six color presses prints
heat transfer paper and the other six color press prints gift wrap paper. Our
eight color press can print either paper and in addition can print for the
wallpaper, home furnishings, carpet and other industries. The 8 color press also
is two times faster than the newest six color press.
We accept patterns from the customer or can design its own patterns using a
computerized color separating system. In addition we have an extensive supply of
rubber coated cylinders with designs already engraved which can be reused
numerous times.
INDUSTRY SEGMENT INFORMATION
During the last two fiscal years ending November 30, 1999 and 1998, the
following is a listing of the percentage of revenue which contributed toward our
total revenue.
1999 l998
---- ----
Heat Transfer 42% 45%
Gift Wrap 56% 52%
Roll Covering 2% 3%
---- ----
Total % 100% 100%
We do not consider our business to be a seasonal business. However prior to the
Christmas Season the Christmas gift wrap business tends to increase.
Historically sales are greater in the second half of the year as customers need
more gift wrap paper as the Christmas holiday season approaches.
-2-
COMPETITION
Flexo-Craft is subject to competition in both laser and commercial printing
engraving. There is no assurance that other companies with greater resources
will not engage in the same business as Flexo Craft. Flexo Craft competes with a
major competitor in the use of the laser in its business. There are three
companies currently engaged in a business similar to that of Flexo-Craft. In
addition, Flexo Craft competes with many other companies who use conventional
methods of processing, which do not include the use of the laser.
Flexo-Craft presently sells to approximately 150 customers. Flexo-Craft does not
depend upon one customer or a few that would materially affect our sales,
however, the loss of a certain number of its customers would have a material
effect upon our business.
We have approximately three to four competitors in the Heat Transfer Business;
approximately twelve in its Gift Wrap Business; and two to three in its Roll
Covering Business.
We compete with our competitors principally with respect to the quality of our
product and our ability to deliver its product on a timely basis to our
customers. Generally, price is not the most significant factor with respect to a
customer, as the customer is most interested in the quality of the product
delivered to it.
We do not have sales representatives and maintain a sales staff of six
individuals who visit our customers of the Company on a national basis.
EMPLOYEES
We currently employ 85 employees, of which eight are in Management and 77 are
Members of Local 1718 of the United Production Workers. We generally enjoy
favorable relations with its union employees, and have not in our history had
any strike or any work stoppage.
OTHER INFORMATION
We are not dependent on a single customer or a limited number of customers. No
material portion of our business is subject to government contracts. Compliance
with federal, state or local environmental protection laws have no material
affect on our capital expenditures, earnings or competitive position.
Backlog of orders:
Dollar amount of backlog and percentage
expected to be filled during the fiscal year.
As of:
November 30, 1999 $4,500,000 100%
November 30, 1998 $4,000,000 100%
-3-
<PAGE>
The backlog of orders, is not affected by the seasonal cycle of the industry
throughout the year. We filled all of our backlog orders during our last fiscal
year ended November 30, 1999 and anticipated being able to fill all of our
current backlog orders during our fiscal year ending November 30, 2000.
Flexo-Craft orders are generally subject to cancelable purchase orders or
contracts. The rate of cancellation of orders has been insignificant. Although
the stated backlog may be used as a guideline in determining the orders which
may be delivered, the backlog is subject to change by reason of several factors,
including possible cancellation, and should not be relied upon as being
necessarily indicative of our revenues or profits within the indicated period,
or otherwise.
ITEM 2. DESCRIPTION OF PROPERTIES
-------------------------
Laser Master owns all the issued and outstanding common stock of Harrison First
Realty Corp., which is the owner of the real property, plant and office facility
of Laser Master. The building owned by Harrison First Realty Corp. is a single
story industrial building located at 1000 First Street, Harrison, New Jersey.
The building was refurbished in 1994 and is fully detached and contains a
sprinkler system and heavy duty electrical wires, required by the Company's
Flexo- Craft facilities for use in its printing process. The building area is
approximately 240,000 square feet, which is 51% utilized by the Company. The
building has an existing mortgage in the sum of $1,670,000 as well as a second
mortgage for $513,333.
Harrison First Realty currently has two tenants who are not affiliated with
Laser Master, and have executed leases at 1000 First Street. Additional
information about the leases is referred to in Note 1 to the financial
statements.
ITEM 3. LEGAL PROCEEDINGS
-----------------
There are no material proceedings contemplated or threatened against Laser
Master or any of its Subsidiaries. We are however involved in litigation from
time to time in the ordinary course of our business. In the opinion of
management there is no actual or pending litigation that would have a material
adverse effect on us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------
(1) The quarterly high and low prices of the Company's common stock as
traded were as follows:
1999 1998
High Low High Low
----- ----- ------ ----
First Quarter 3/8 1/4 5/8 5/16
Second Quarter 3/8 1/4 9/16 5/16
Third Quarter 7/16 5/16 1/2 3/16
Fourth Quarter 5/8 3/8 7/16 3/16
-4-
<PAGE>
(2) The Company's common shares are traded on the Nasdaq
Bulletin Board.
(3) The approximate number of shareholders of record on November 30, 1999
was 518.
(4) No cash dividends have ever been declared nor are any expected in the
near future.
(5) Mr. Mendel Klein is the owner of 3,625,000 shares. Pursuant
to Rule 144 of the 1933 Securities Act of 1933 as amended, he is
permitted to sell a certain number of restricted shares: every 3 months
sell in ordinary transactions the amount of share eligible for sale
under Rule #144 during a 3 month period gain, subject to volume
restrictions.
ITEM 6. SELECTED FINANCIAL DATA - fiscal year ended
-----------------------
11/30/99 11/30/98 11/30/97 11/30/96 11/30/95
----------- ---------- ---------- ---------- ----------
Revenues $15,947,507 $14,049,749 12,007,663 11,499,811 8,800,394
Net Income $ 776,769 $ 563,438 (573,484) 362,119 (178,957)
(Loss)
Earnings Per
Share .07 .05 (.06) .04 (.03)
Cash Dividend
per share -0- -0- -0- -0- -0-
At Year End:
Totl Asset 16,805,437 16,743,567 15,224,075 15,967,150 13,861,245
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------
PRINTING SEGMENT
Net sales for the year ended November 30, 1999 totaled $15,575,349 as compared
to $13,670,258 for the year ended November 30, 1998, for an increase of 14%.
Management attributes the increase in sales to the fact that the company entered
new markets for its printed paper products such as packaging. As the 8 color
press continues to operate properly management is expecting to be able to enter
additional markets. The 8 color press was successfully upgraded and repaired by
the manufacturer in January 98. The 8 color press which was delivered and
assembled in 1995 finally impacted sales this year and is anticipated to make an
impact in 2000 which should increase sales in the future. Through research and
development management has developed innovative packaging products which began
to be sold in the 4th quarter of 1999. Customer feedback has been favorable and
the company has acquired several national customers for these packaging products
for the current year.
-5-
<PAGE>
Gross profit percentage for 1999 was 29% compared to 29% for the year before.
This was a result of significant improvements in production efficiencies because
of contributions from the multipurpose 8 color press. This press is at least
twice as fast as the other presses and needs less manpower and less time to
complete orders. In addition it enables the company to print on a variety of
different papers that were not possible in previous years. As an offset to
improved efficiencies raw material prices increased which put pressure on
margins.
REAL ESTATE SEGMENT
Rental income for the years 1999 compared to 1998 decreased 2%. During 1999 the
operating profit from the real estate division was $ 58,583 compared to $ 84,037
in 1998. The Company has two unaffiliated tenants with monthly rental income of
$31,013. This segment expects to be profitable in the future now that the start
up expenses and renovation period is over.
CORPORATE EXPENSES
General and administrative expenses for fiscal 1999 were 17% of sales as
compared to 16% of sales for the preceding year. The increase was due to the
fact the Company had a substantial bad debt expense which management does not
expect to repeat
Interest and finance charges paid by the Company during fiscal 1999 increased
slightly from the previous year due to the fact that the company's average debt
level increased from the previous year.
The Company does not expect any significant additional borrowings for the
upcoming year.
LIQUIDITY AND CAPITAL RESOURCES:
The Company finished its 1999 fiscal year with a current ration of 1.59 compared
to 1.57 in the fiscal year 1998. Working capital and cash aggregated
approximately $2,307,912 and $618,477 respectively at November 30, 1999 as
compared to $2,421,324 and $239,216 respectively at November 30, 1998. The
Company believes its financial position at November 30, 1999 will enable it to
take advantage of any new opportunities that may arise.
In fiscal 1999 cash flow provided from operations was $2,093,058 compared to
$20,772 in 1998. The increase in net profit plus the reduction of inventory in
the amount of $537,284 was the main reason for the increase in cash from
operations. In addition significant improvements in collections in the second
half of the year resulted in lower accounts receivable at year end. Inventory
decreased because of improved inventory controls. Accounts payable decrease of
$99,990 was because of the company's ability to obtain discounts because of
faster payments. Net cash used by investing activities during 1999 was
$1,146,879 which was primarily because of fixed assets acquisitions. Management
does not anticipate any significant capital expenditures in 2000. Net cash used
by financing activities during 1999 was $566,888. This was primarily because the
company's repayment of debt.
The Company anticipates that its capital resources provided from its cash flow
from operations and anticipated financing will be sufficient to meet its
financing requirements for at least the next 12 month period.
- 6 -
<PAGE>
INFLATIONARY IMPACT:
Since the inception of operation, inflation has not significantly affected the
operating results of the company. However, inflation and changing interest rates
have had a significant effect on the economy in general and therefore could
affect the operating results of the company in the future.
YEAR 2000
Laser Master recognized the potential business impact relating to the Year 2000
computer system issue and had implemented a plan to assess and improve the
Company's state of readiness with respect to such issue. The Year 2000 issue is
one where computer systems may recognize the designation "00" as 1900 when it
means 2000, resulting in system failure or miscalculations.
In recognition of the Year 2000 issue, commencing in 1997 the company
initiated a comprehensive review of its information technology systems, which
the Company is dependent upon for the conduct of its business operations, as
well as the computer hardware and software products, components and other
equipment supplied to the Company by third parties in order to determine the
adequacy of those systems in light of the Company's future business
requirements. Year 2000 readiness was one of the factors considered in the
review of the Company's systems. Such review included testing and analysis of
the Company's systems and inquiries of third parties supplying information
technology systems, computer hardware and software products and components, and
other equipment to the Company in order to receive assurances from such third
parties that these systems, products and components are Year 2000 compliant.
Laser Master completed its review in November 1998.
As a result of its review, Laser Master had determined that its internal
financial software systems are adequate for the company's future business needs,
including Year 2000 compliance.
Laser Master did not develop a "worst case" scenario with respect to Year 2000
issues, but instead has focused its resources on identifying any material,
remediable problems and reducing uncertainties generally, through the review
procedures described above.
Laser Master had not developed Year 2000 contingency plans, other than the
review described above, and did not believe such plans are merited by the
results of its Year 2000 review. The Company maintains and deploys contingency
plans designed to address various other potential business interruptions. These
plans may be applicable to address the possible interruption of support provided
by third parties resulting from their failure to be Year 2000 compliant.
<PAGE>
If Laser Master or the third parties with which it has relationships were to not
successfully meet its or their Year 2000 compliance requirements, the Company
would likely encounter disruptions to its business that could have a material
adverse effect on its business, financial position and results of operations.
Laser Master could be materially and adversely impacted by widespread economic
or financial market disruption or by Year 2000 computer system failures of third
parties with which it has relationships. Laser Master has not experienced any
Y-2K disruptions and does not anticipate any going forward.
- 7 -
<PAGE>
LASER MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
ANNUAL REPORT ON FORM 10-KSB
YEARS ENDED NOVEMBER 30, 1999 AND 1998
TABLE OF CONTENTS
-----------------
PAGE
NO.
----
TITLE PAGE 9
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 10
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets 11 - 12
Statements of Operations 13
Statements of Changes in Stockholders' Equity 14
Statements of Cash Flows 15
Notes to Financial Statements 16 - 29
-8-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND
SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED
NOVEMBER 30, 1999 AND 1998
-9-
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
The Board of Directors and Stockholders of
Laser Master International, Inc.
and Subsidiaries
We have audited the accompanying consolidated balance sheets of Laser Master
International, Inc. and subsidiaries as of November 30, 1999 and 1998 and the
related consolidated statements of operations, stockholders equity and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Laser
Master International, Inc. and subsidiaries as of November 30, 1999 and 1998 and
the consolidated results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
New York, New York
February 16, 2000
-10-
<PAGE>
<TABLE>
<CAPTION>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1999 AND 1998
ASSETS 1999 1998*
- ------ --------------- -------------
Current assets
<S> <C> <C>
Cash $ 618,477 $ 239,216
Escrow account 211,190 198,687
Short-term investments 509,553 476,085
Accounts receivable, net of allowance for
doubtful accounts of $535,000 and $254,500 3,166,279 3,487,437
Inventories 1,515,072 2,052,356
Prepaid expenses and other 68,545 75,506
Current portion of notes receivable 103,511 107,761
-------------- --------------
Total current assets 6,192,627 6,637,048
-------------- -------------
Property, plant and equipment
Factory building and improvements 5,408,550 5,059,708
Land - factory site 215,000 215,000
Machinery and equipment 9,177,578 8,507,395
Engraving inventory 878,456 878,456
Installation cost 953,524 953,524
Furniture & fixtures 145,455 134,849
-------------- --------------
Total 16,778,563 15,748,932
Less: Accumulated depreciation 6,659,758 6,075,330
-------------- --------------
Net property, plant, and equipment 10,118,805 9,673,602
------------- --------------
Other Assets
Notes receivable, net of current portion 207,022 323,282
Deferred charges and other 72,386 109,635
Surrender value of life insurance 214,597 -
-------------- --------------
Total other assets 494,005 432,917
-------------- --------------
Total Assets $ 16,805,437 $ 16,743,567
============== ==============
<FN>
* Reclassified for comparative purposes.
</FN>
</TABLE>
See accompanying notes to the statements.
-11-
<PAGE>
<TABLE>
<CAPTION>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1999 AND 1998
LIABILITIES 1999 1998
- ------------------------------------------------ ------------ ------------
Current liabilities
<S> <C> <C>
Accounts payable $ 1,257,450 $ 1,357,440
Accrued expenses and taxes payable 55,773 87,429
Note payable 1,803,658 2,142,144
Current portion of long term debt 767,834 628,711
------------ ------------
Total current liabilities 3,884,715 4,215,724
------------ ------------
Long term liabilities
Long term debt, net of current portion 3,961,868 4,315,970
Other -- 40,065
------------ ------------
Total long term liabilities 3,961,868 4,356,035
------------ ------------
Total liabilities 7,846,583 8,571,759
------------ ------------
COMMITMENTS & CONTINGENCIES
Notes 5, 6 and 10
STOCKHOLDERS' EQUITY
Common stock - authorized 50,000,000 shares
$.01 par value issued and outstanding -
10,615,380 shares 106,154 106,154
Additional capital paid in excess of par 5,424,412 5,424,412
Accumulated other comprehensive income (loss) (850) (11,127)
Retained earnings 3,429,138 2,652,369
------------ ------------
Total stockholders' equity 8,958,854 8,171,808
------------ ------------
Total Liabilities and Stockholders'Equity $ 16,805,437 $ 16,743,567
============ ============
</TABLE>
See accompanying notes to the financial statements.
-12-
<PAGE>
<TABLE>
<CAPTION>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 1999 AND 1998
1999 1998*
------------ ------------
Revenues
<S> <C> <C>
Product revenues $ 15,575,349 $ 13,670,258
Rental income 372,158 379,491
------------ ------------
Total revenues 15,947,507 14,049,749
------------ ------------
Cost of revenues
Cost of product revenues 11,048,280 9,746,573
Cost of rental Income 313,575 295,174
------------ ------------
11,361,855 10,041,747
------------ ------------
Gross profit 4,585,652 4,008,002
------------ ------------
Operating expenses
Selling expenses 799,583 921,903
General and administrative expenses 2,662,012 2,200,041
------------ ------------
Total operating expenses 3,461,595 3,121,944
------------ ------------
Operating income 1,124,057 886,058
Interest expense (420,551) (375,238)
Investment and other income 73,263 52,618
------------ ------------
Income before income taxes 776,769 563,438
Income taxes -- --
------------ ------------
Net income $ 776,769 $ 563,438
============ ============
Earnings per common share:
Basic and diluted earnings per share $ .07 $ .05
============ ============
<FN>
* Reclassified for comparative purposes
</FN>
</TABLE>
See accompanying notes to the financial statements.
-13-
<PAGE>
<TABLE>
<CAPTION>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1999 AND 1998
ACCUMULATED
COMMON ADDITIONAL OTHER
COMMON STOCK PAID-IN RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSS) TOTAL
------------- ----------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
December 1, 1997 10,615,380 $ 106,154 $ 5,424,412 $ 2,088,931 $ 10,000 $ 7,629,497
Comprehensive income
-- -- -- 563,438 -- 563,438
Net income
Unrealized loss on securities,
-- -- -- -- (21,127) (21,127)
----------- -----------
net of tax
Total comprehensive income 542,311
----------- ----------- ----------- ----------- ----------- -----------
November 30, 1998 10,615,380 106,154 5,424,412 2,652,369 (11,127) 8,171,808
Comprehensive income
Net income -- -- -- 776,769 -- 776,769
Unrealized gains on securities,
net of tax -- -- -- -- 10,277 10,277
----------- -----------
Total comprehensive income 787,046
----------- ----------- ----------- ----------- ----------- -----------
November 30, 1999 10,615,380 $ 106,154 $ 5,424,412 $ 3,429,138 $ (850) $ 8,958,854
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to the financial statements.
-14-
<PAGE>
<TABLE>
<CAPTION>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1999 AND 1998
1999 1998
----------- -----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 776,769 $ 563,438
Adjustments to reconcile to net cash
provided by operating activities
Depreciation 584,428 516,741
Amortization 10,607 10,607
Increase (decrease) in cash flows from operating
activities resulting from changes in:
Accounts receivable 321,158 (1,249,933)
Inventories 537,284 (104,916)
Prepaid expenses and other 6,961 (10,784)
Other assets (12,503) (40,065)
Accounts payable (99,990) 416,218
Accrued expenses and taxes payable (31,656) (120,599)
Other liabilities -- 40,065
----------- -----------
Net cash provided by operations 2,093,058 20,772
----------- -----------
Cash flows from investing activities:
Surrender value of life insurance (214,597) --
Net purchase of short term investments (33,468) (13,460)
Purchase of property, plant and equipment (1,029,631) (479,520)
Notes and loans receivable 120,510 (303,696)
Other assets -- (17,604)
Unrealized gain (loss) 10,307 (21,127)
----------- -----------
Net cash used in investing (1,146,879) (835,407)
----------- -----------
Cash flows from financing activities:
Deferred charges (13,423) --
Note payable (338,486) --
Proceeds from debt 503,882 1,239,484
Repayments of long term debt (718,861) (597,986)
----------- -----------
Net cash flow provided by (used in)
financing activities (566,888) 641,498
----------- -----------
Net increase (decrease) in cash 379,261 (173,137)
Cash, beginning of year 239,216 412,353
----------- -----------
Cash, end of year $ 618,477 $ 239,216
=========== ===========
</TABLE>
See accompanying notes to the financial statements.
-15-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
- ----------------
The Company was founded in 1981 and prints for the textile and the gift wrap
paper industries. The Company sells its products nationwide through its direct
sales force and resellers. In addition the Company has a real estate division
that rents space in the factory building owned by the Company.
Name and brief description of the companies are as follows:
a. FLEXO-CRAFT PRINTS INC. The Company engaged in the business of commercial
printing and engraving, utilizing a laser technique. The Company
principally prints an extensive line of patterns and designs which are
sold to industrial customers engaged in the manufacture of textile
products and gift wrap paper.
b. PASSPORT PAPERS INC. & EAST RIVER APTS. INC. These companies sell the
products printed by Flexo Craft Prints Inc. They each sell under their
own labels and in their respective markets.
c. HARRISON FIRST REALTY CORP. The Company owns and operates a 240,000 sq.
ft. factory building in Harrison, New Jersey. There are two unaffiliated
tenants currently occupying 49% of the space. The leases expire on June
30, 2004 and January 1, 2005.
The minimum rental income from unaffiliated noncancelable leases are as
follows:
AT NOVEMBER 30,
2000 $ 373,158
2001 375,408
2002 375,408
2003 376,651
2004 304,179
2005 16,880
-----------
Total $ 1,821,684
===========
-16-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------
BASIS OF CONSOLIDATION
----------------------
The consolidated financial statements include the accounts of Laser
Master International Inc. and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.
INVENTORIES
-----------
Inventories are stated at the lower of cost (first-in, first-out) or
market.
DEPRECIATION
------------
Depreciation of property plant and equipment is calculated on the
straight line method based on estimated useful lives of 31-1/2 years for
buildings and improvements and 10 to 40 years for machinery, equipment
and furniture. Maintenance and repairs are charged to operations as
incurred. Significant renewals and betterments are capitalized.
INCOME TAXES
------------
Income taxes are computed in accordance with the provisions of Financial
Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes" ("SFAS 109"), which requires, among other things, a liability
approach to calculating deferred income taxes. SFAS 109 requires a
company to recognize deferred tax liabilities and assets for the
expected future taxconsequences of events that have been recognized in a
company's financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax
basis of assets and liabilities using enacted tax rates in effect in the
years in which the differences are expected to reverse.
USE OF ESTIMATES
----------------
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results
could differ from these estimates.
CONCENTRATIONS OF CREDIT RISK
-----------------------------
The Company's cash balances, including restricted cash, which are
maintained in various banks are insured up to $100,000 for each bank by
the Federal Deposit Insurance Corporation. The balances at times, may
exceed these limits.
FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
The carrying value amounts of cash, prepaid expenses, accrued expenses
and loans payable approximate fair value because of the short maturity
of these items. It is not practical to estimate the fair value of long
term debt because quoted market prices do not exist and estimates could
not be made through other means.
-17-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- ----------------------------------------------------
DEFERRED CHARGES
----------------
Deferred charges consists principally of costs that were incurred upon
the financing of the Company's factory building in Harrison, New Jersey
and the eight color printing press. The financing was done through a tax
exempt bond issue through the New Jersey Economic Development Authority.
These costs include EDA fees, legal fees, other professional fees and
other closing costs. The costs are being amortized over the length of
the loans using the straight line method.
EARNINGS PER COMMON SHARE
-------------------------
The consolidated financial statements are presented in accordance with
SFAS No. 128, "Earnings Per share." Basic earnings per common share are
computed using the weighted average number of common shares outstanding
during the period. Diluted earnings per common share incorporate the
incremental shares issuable upon the assumed exercise of stock options
and warrants.
NOTE 3 - INVENTORIES
- --------------------
Inventories as of November 30, 1999 and 1998
are summarized as follows:
1999 1998
----------- -----------
Raw materials $ 779,266 $ 883,313
Work-in-process 341,252 403,438
Finished goods 394,554 765,605
----------- -----------
$ 1,515,072 $ 2,052,356
=========== ===========
-18-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 4 - INCOME TAXES
- ---------------------
The components of the deferred tax asset as of November 30, 1999 and 1998 are
summarized as follows:
1999 1998
--------- ---------
Tax credit carryforwards $ 83,787 $ 83,787
Net operating loss carryforwards -- 227,460
Allowance for doubtful accounts 181,900 86,530
--------- ---------
Gross deferred tax assets 265,687 397,777
Deferred tax liabilities:
Accelerated depreciation 221,000 192,422
--------- ---------
Total net deferred tax assets 44,687 205,355
Less: valuation allowance (44,687) (205,355)
--------- ---------
Net deferred tax assets $ -- $ --
========= =========
At November 30, 1999 the Company fully utilized its net operating loss
carryforwards of $774,000 that would have expired in various years through
November 30, 2012. In addition, there are investment tax credits of
approximately $84,000 which expire in November 30, 2001.
Reconciliation between statutory tax rate and effective tax rate for the years
ended November 30, 1999 and 1998 is as follows:
1999 1998
--------- ---------
Income taxes computed at statutory rate $ 264,101 $ 191,569
Utilization carryforwards (264,101) (191,569)
Deferred income tax -- --
--------- ---------
Provision for Income taxes $ -- $ --
========= =========
-19-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 5 - EMPLOYMENT CONTRACTS
- -----------------------------
The Company has entered into a five year employment agreement with the company's
Chairman of the Board, CEO and Treasurer commencing May 1996. Under the
agreement, Mr. Mendel Klein's annual salary will be $125,000. In addition he has
the right to purchase 400,000 shares of common stock each year at fair market
value per share for three years commencing November 30, 1998.
In September 1999, the Company entered into a five year employment agreement
with the Company's President, Mr. Abraham Klein, for an annual salary of
$70,000. In July 1998 he received options to purchase 575,000 shares of the
Company's common stock; 200,000 for two years and 175,000 in the third year at
the fair market value per share.
The Company has also entered into employment contracts for the services of two
key employees for a period of five years from May 1996, for an annual salary of
$70,000 each. In July 1998 the two key employees received options to purchase
200,000 shares each year for two years and 175,000 shares in the third year at
fair market value per share. The total number of options for each employee is
575,000.
NOTE 6 - CONTINGENT LIABILITIES
- -------------------------------
The Company is contingently liable to Fleet Bank for letters of credit in the
amount of $4,184,860 issued in conjunction with the New Jersey Tax Exempt Bonds
which financed the company's New Jersey Tax Exempt Bonds which financed the
company's new factory building and 8 color press. Fleet Bank has a first lien on
the assets of Harrison Realty and second and third liens on Flexo-Craft. Per the
loan agreement the company is prohibited from paying cash dividends. The loan
agreement to Fleet Bank contains various covenants. The Company exceeded the
capital expenditures allowed pursuant to the term of the covenant for the year
ended November 30, 1999. However, a waiver from the bank was received.
NOTE 7 - PENSION PLAN
- ---------------------
The Company has a non-contributory defined benefit pension plan which covers all
eligible employees. The plan provides for normal retirement at age 65, or at
least age 62 with 30 years of service, and optional early retirement. The
benefits payable under the plan are generally determined on the basis of an
employees length of service and earnings. The Company's funding policy is to
make annual contributions to the extent such contributions are actuarially
determined and tax deductible.
The plan covers all salaried and hourly employees of the Company except those
covered under a collective bargaining agreement. Eligible employees participate
in the plan after completing one year of service and attaining age 21. The
benefit formula is 22.75% of average pay plus 22.75% average pay in excess of
covered compensation reduced proportionately for years of service less than 35.
Pension Plan Assets are primarily invested in short and intermediate term cash
investments.
-20-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7 - PENSION PLAN (CONTINUED)
- ---------------------------------
A reconciliation of changes in the plan's benefit obligations, fair
value of assets, and statement of funded status for the years ended
November 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Reconciliation of benefit obligation:
$ 271,043 $ 229,516
Obligation, beginning of year
Service cost 4,966 5,361
Interest cost 19,389 18,536
Curtailments (32,178) --
Adjustments (2,617) 17,630
--------- ---------
Obligation, end of year $ 260,603 $ 271,043
========= =========
Reconciliation of fair value of plan assets:
238,854 215,000
Fair value, beginning of year
Actual return on plan assets 20,162 (1,664)
Employer contributions 4,006 25,518
--------- ---------
Fair value of plan assets, end of year $ 263,022 $ 238,854
========= =========
Funded status:
Funded status, December 1, 2,419 (32,189)
Unrecognized (gain) loss (33,187) 3,768
Unrecognized prior service cost -- --
Unrecognized transition obligation 62,402 67,010
Adjustment for minimum liability -- (40,065)
--------- ---------
Prepaid (accrued) benefit cost $ 31,634 $ (1,476)
========= =========
The amounts recognized in the Company's consolidated
balance sheets as of November 30, 1999 and 1998 are
as follows:
Prepaid benefit cost $ 31,634 $ 38,589
Accrued benefit liability -- (40,065)
--------- ---------
$ 31,634 $ (1,476)
========= =========
Net amount recognized
</TABLE>
-21-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7 - PENSION PLAN (CONTINUED)
- ---------------------------------
1999 1998
-------- --------
Components of the net periodic pension cost for
the plan are as follows:
Service cost $ 4,966 $ 5,361
Interest cost 19,389 18,536
Expected return on plan assets (18,002) (16,691)
Amortization of transition asset 4,608 4,608
-------- --------
Net periodic pension cost 10,961 11,814
Curtailment gain (32,178) --
-------- --------
Net periodic pension cost (income) after curtailments $(21,217) $ 11,814
======== ========
The assumptions used in accounting for the Company's plan at November 30, 1999
and 1998 are as follows:
1. Mortality 1983-A
2. Discount Rate 7.50% Compounded annually
3. Withdrawal Not used
4. Salary Projection 3% per year
5. Return on Plan Assets 7.50% Compounded annually
6. Increase in 415 Limit 3.0%
Asset Valuation Method: Fair Market Value
-22-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 8 - LONG TERM DEBT
- -----------------------
Long Term debt as of November 30, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
NJ EDA Tax Exempt Bond - Interest at 72% of LIBOR rate (3.3%
average rate) - requires annual principal payment of $400,000 or
$405,000 on August 1, through maturity on August 1, 2004
collateralized by an 8 color printing press $2,020,000 $2,425,000
NJ EDA Tax Exempt Bond - Interest at 72% of LIBOR rate (3.3%
average rate) - annual principal payment of $110,000 or
$115,000 through maturity on August 1, 2014 - secured by a
first mortgage on the factory building 1,670,000 1,780,000
Mortgage Payable - Requires monthly principal payments of
$3,889 plus interest at 8.75% and matures on November 1,
2001 - secured by a second mortgage on the factory building 513,333 559,999
Capital lease obligations (See Note 9) 526,369 179,682
---------- ----------
Total 4,729,702 4,384,682
Less: current portion 767,834 628,711
---------- ----------
$3,961,868 $4,315,970
========== ==========
</TABLE>
Escrow accounts have been established for accumulating the annual principal
payments of the NJ EDA obligations as defined. These fund have been classified
as an escrow account on the balance sheet.
Debt principal maturities for the next five years are approximately as follows:
YEAR ENDING
NOVEMBER 30,
2000 $ 800,000
2001 1,195,000
2002 595,000
2003 510,000
2004 515,000
Thereafter 1,115,000
------------
$ 4,730,000
============
-23-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 9 - CAPITAL LEASE OBLIGATIONS
- ----------------------------------
The Company has entered into several leases for equipment. The leases are
classified as capital leases. Accordingly, assets have been capitalized and have
the following book value at November 30, 1999 and 1998:
1999 1998
---------- ---------
Machinery & equipment $ 714,882 $ 211,000
Less: accumulated depreciation 61,048 10,550
---------- ---------
$ 653,834 $ 200,450
========== =========
Obligations under capital leases as of November 30, 1999 and 1998 are summarized
below:
1999 1998
---------- ----------
Machinery & equipment $ 526,369 $ 179,682
Less: current portion due within one year 236,166 67,044
---------- ----------
$ 290,203 $ 112,638
========== ==========
As of November 30, 1999 and 1998 future minimum payments required under capital
leases for subsequent years are as follows:
YEARS ENDING NOVEMBER 30: 1999 1998
-------------------------- --------- ---------
2000 $ 273,222 $ 80,600
2001 230,781 80,600
2002 78,249 40,299
--------- ---------
Total minimum lease payments 582,252 201,499
Less: amount representing interest 55,883 21,817
--------- ---------
Present value of lease obligations $ 526,369 $ 179,682
========== =========
Total depreciation expense for assets under capital leases was $50,498 and
$10,550 for the years ended November 30, 1999 and 1998, respectively.
-24-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 10 - LEASING ARRANGEMENTS
- ------------------------------
The Company and its subsidiaries lease equipment under various non-cancelable
operating leases.
Future minimum payments under these lease obligations for subsequent years are
approximately as follows:
YEAR ENDING
NOVEMBER 30, AMOUNT
------------ ---------
2000 $ 212,000
2001 128,000
2002 35,000
2003 26,000
---------
$ 401,000
NOTE 11 - NOTE PAYABLE
- ----------------------
The Company has a $2,750,000 line of credit, of which $1,803,658 has been drawn
as of November 30, 1999. The Company may borrow up to 80% of its qualified
accounts receivable and 50% of raw materials inventory.
The note is secured by the accounts receivable and short-investments of
$400,000. Interest is computed at 2.6% above the 30 day commercial paper rate.
-25-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 12 - INDUSTRY SEGMENT INFORMATION
- --------------------------------------
The Company operates primarily in the printing industry and leases a portion of
the real estate it owns.
Following is a summary of segment information for the years ended November 30,
1999 and 1998:
<TABLE>
<CAPTION>
Sales to unaffiliated customers: 1999 1998
----------- -----------
<S> <C> <C>
Printing $15,575,349 $13,670,258
Real estate 372,158 379,491
----------- -----------
Total $15,947,507 $14,049,749
=========== ===========
Operating income (loss)
Printing $ 1,065,474 $ 802,021
Real estate 58,583 84,037
----------- -----------
Total $ 1,124,057 $ 886,058
=========== ===========
Identifiable property, plant and equipment:
Printing $11,155,013 $10,474,224
Real estate 5,623,550 5,274,708
----------- -----------
Total $16,778,563 $15,748,932
=========== ===========
Capital expenditures:
Printing $ 997,584 $ 396,620
Real estate 32,047 82,900
----------- -----------
Total $ 1,029,631 $ 479,520
=========== ===========
Depreciation
Printing $ 438,308 $ 369,853
Real estate 146,120 146,888
----------- -----------
Total $ 584,428 $ 516,741
=========== ===========
</TABLE>
-26-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND WHOLLY OWNED SUBSIDIARIES
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 13 - SHORT TERM INVESTMENTS
- --------------------------------
The company accounts for its investments in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Management determines the appropriate clarification
of its investments at the time of purchase and reevaluates such determination at
each balance sheet date.
The Company has classified its entire investment portfolio as
available-for-sale. Available-for-sale securities are stated at fair value with
unrealized gains and losses included in shareholders' equity. The debt
securities are reported at amortized cost. Realized gains and losses are
included in investment and other income. The cost of securities sold is based on
the specific identification method.
NOTE 14 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
- -----------------------------------------------------------
Cash paid during the years ended November 30, 1999 and 1998 is as follows:
1999 1998
--------- ---------
Interest $ 420,551 $ 375,238
========= =========
NOTE 15 - NOTES AND LOANS RECEIVABLE
- ------------------------------------
Notes receivables as of November 30, 1999 consists of amounts due from two key
employees which are repayable in three annual installments of $103,510 plus
interest at 8% per annum commencing November 20, 2000.
NOTE 16 - STOCK OPTIONS
- -----------------------
The Company adopted SFAS NO. 123, "Accounting for Stock-Based Compensation." The
provisions of SFAS NO. 123 allow companies to either expense the estimated fair
value of stock options or to continue to follow the intrinsic value method set
forth in APB Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25")
but disclose the pro forma effects on net income (loss) had the fair value of
the options been expensed. The Company has elected to continue to apply APB 25
in accounting for its stock option incentive plans. The quoted market price was
below the option price on date of grant and no expense was recorded.
A summary of option transactions, including those options granted pursuant to
the terms of certain employment and other agreements, is as follows:
-27-
<PAGE>
LASER MASTER INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 16 - STOCK OPTIONS (CONTINUED)
- ----------------------------------
<TABLE>
<CAPTION>
OPTION WEIGHTED AVERAGE
SHARES EXERCISE PRICE
<S> <C> <C>
Outstanding, December 1, 1997 2,165,000 $1.05
Granted 3,100,000 .31
Exercised -- --
Canceled (2,165,000) (1.05)
---------- --------
Outstanding, November 30, 1998 3,100,000 .31
Granted -- --
Exercised -- --
Canceled -- --
---------- --------
Outstanding, November 30, 1999 3,100,000 $ .31
========== ========
</TABLE>
A summary of options outstanding as of November 30, 1999 is as follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE REMAINING NUMBER OF SHARES
NUMBER OUTSTANDING PRICE CONTRACTUAL LIFE EXERCISABLE
- ------------------- ----------- ---------------- ----------------
<S> <C> <C> <C>
3,100,000 $ .31 3.9 2,175,000
========= ====== ==== =========
</TABLE>
Warrants to purchase common stock, 300,000 at $1.00 and 500,000 at $2.00,
expired on May 10, 1999.
The company has stock plans approved by the shareholders, which provide for the
granting of options and restricted stock to officers, key employees and
consultants. Options are granted at no less than fair market value on the date
of grant and become exercisable in increments, in some instances partially
conditioned on the attainment of specific performance objectives, and expire
five years from the date of grant. (See Note 5).
-28-
<PAGE>
LASER MASTER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 17 - EARNINGS PER SHARE INFORMATION
- ----------------------------------------
The calculation of basic and diluted earnings per share for the years ended
November 30, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Net income available to common share owners $ 776,769 $ 563,438
=========== ===========
Average shares outstanding (a) 10,615,380 10,615,380
Dilutive securities
Stock options (b) -- 65,069
Warrants (b) -- --
----------- -----------
Average shares outstanding assuming dilution (c) 10,615,380 10,680,449
=========== ===========
<FN>
(a) Used to compute basic earnings per share.
(b) Excluded in 1999 because exercise price exceeds market value.
(c) Used to compute diluted earnings per share.
</FN>
</TABLE>
NOTE 18 - DEFERRED COMPENSATION PLAN
- ------------------------------------
In January 1999, the Company adopted a non-qualified deferred compensation plan
for key employees which is payable upon the employees retirement plan or death.
The plan is funded through the purchase of corporate owned life insurance
policies in amounts necessary to meet the obligations under the plan. Retirement
benefits will be funded by the surrender value of these policies less premiums
paid.
NOTE 19 - SUBSEQUENT EVENT
- --------------------------
In December 1999, the Board of Directors authorized the company to repurchase up
to $500,000 of common stock. During the period December 1, 1999 to February 16,
2000 the Company repurchased 52,000 shares for $26,465.
-29-
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR
ACCOUNTING AND FINANCIAL DISCLOSURES
-------------------------------------------------
NONE
- 30 -
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
------------------------------------------------------------
NAME AGE POSITION TERM
- ---- --- -------- ----
Mendel Klein 68 Chief Executive Officer 1 Year
Chairman of the Board
Abraham Klein 38 President 1 Year
Leah Klein 64 Vice-President, 1 Year
Secretary, Director
Mirel Spitz 41 Vice-President, 1 Year
Director
Mendel Klein and Leah Klein are spouses.
Abraham Klein is their Son
Mirel Spitz is their daughter.
ITEM 10. EXECUTIVE COMPENSATION
- -------------------------------
CAPACITY IN WHICH REMUNERATION
NAME WAS RECEIVED ANNUAL SALARY
- ---- ------------ -------------
Mendel Klein Chief Executive Officer, $125,000
Chairman of the Board
Abraham Klein President $ 70,000
Leah Klein Vice-President, Secretary, Director -0-
Mirel Spitz Vice President, Director, -0-
Office Manager
Mr. Mendel Klein, pursuant to an employment contract entered into with the
company, which became effective upon completion of the public offering, is
entitled to receive an annual salary of $125,000.
Abraham Klein has an employment contract which entitles him to receive
an annual salary of $70,000. Additionally, Mendel Klein and Abraham Klein will
participate in group life, accident and hospitalization insurance, provided for
all key employees, and they will have the use of a company owned automobile. No
other officer or director has a contract of employment with the company. There
are no consulting agreements in existence between the company and any officers.
- 31 -
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
NAME AND ADDRESS NUMBER OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER SHARES OWNED OF CLASS
- -------------- ------------------- ------------ --------
Common Stock Mendel Klein 3,625,000 35%
$0.01 Par Value 38 Harrison Avenue
Brooklyn, N.Y. 11211
Set forth above is certain information concerning persons or firms who are known
by the Company to own beneficially more than 5% of the Company's common stock
and voting shares on March 9, 2000.
(b) Security Ownership of Management None, other than Mendel Klein, listed
above.
(c) Changes in Control
The Company knows of no contractual arrangements which may at a subsequent
date result in a change in control of the company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------
None
- 32 -
<PAGE>
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(A) Financial Statements, Financial Statement Schedules, and Exhibits
1. Financial Statements. See Item 8 for the Financial Statements
of the Company filed as a part hereof (Exhibits omitted)
2. Financial Statement Schedules. See Item 8 for the Financial
Statement Schedules of the Company filed as a part hereof.
-33-
<PAGE>
OFFICERS:
Mendel Klein, Chief Executive Officer & Chief Financial Officer
Abraham Klein, President
Leah Klein, Vice President & Secretary
Mirel Spitz, Vice President
DIRECTORS:
Mendel Klein, Chairman
Abraham Klein, Director
Leah Klein, Director
Muriel Klein, Director
AUDITORS:
Goldstein and Morris, Certified Public Accountants, P.C.
COUNSEL:
Baratta & Goldstein, P.C.
TRANSFER AGENT:
American Stock Transfer Company
- 34 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, Laser Master International Inc. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
LASER MASTER INTERNATIONAL INC.
BY ___________________________
Mendel Klein, Chief Executive
Officer & Chief Financial Officer
Dated: March 10, 2000
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant, and in the capacities and on the dates indicated.
- ----------------------
Mendel Klein, Director
March 10, 2000
- -----------------------
Abraham Klein, Director
March 10, 2000
- ----------------------
Leah Klein, Director
March 10, 2000
- ----------------------
Mirel Spitz, Director
March 10, 2000
- 35 -
