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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 0-11365
LASER PHOTONICS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 59-2058100
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
6865 FLANDERS DRIVE, SUITE G, SAN DIEGO, CA 92121
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (619) 455-7030
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N/A
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(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13, OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES
UNDER A PLAN CONFIRMED BY A COURT.
YES X NO
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AS OF MARCH 31, 1998, 9,295,694 SHARES OF COMMON STOCK, PAR VALUE $.01
PER SHARE, WERE OUTSTANDING.
1
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INDEX
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Page
Number
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PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Condensed Consolidated Balance Sheets 3
as of March 31, 1998 and December 31, 1997
Condensed Consolidated Statements of Operations for the 4
Three Months ended March 31, 1998 and 1997
Condensed Consolidated Statements of Cash Flow for the 5
Three Months ended March 31, 1998 and 1997
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis 7
of Financial Condition and Results of Operations
PART II OTHER INFORMATION
Exhibits and Reports of Form 8-K 8
Signatures 9
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2
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PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
Laser Photonics, Inc. and Subsidiaries
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1998 December 31, 1997 *
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 814,647 $ 1,225,932
Accounts receivable, net 253,830 343,465
Inventory 889,422 951,209
Prepaid expenses and other assets 132,264 91,463
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TOTAL CURRENT ASSETS 2,090,163 2,612,069
PROPERTY AND EQUIPMENT, net 199,195 141,432
PREPAID LICENSE FEE, net 3,892,078 3,958,333
OTHER 64,821 100,515
GOODWILL, NET 866,034 995,955
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TOTAL ASSETS $ 7,112,291 $ 7,808,304
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes Payable - Current portion $ 535,875 $ 610,004
Accounts Payable 891,559 859,559
Accrued payroll and related expenses 368,600 400,222
Other Accrued liabilities 618,592 631,808
Deferred revenue -- 95,000
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TOTAL CURRENT LIABILITIES 2,414,626 2,596,593
NOTES PAYABLE, LESS CURRENT PORTION 282,559 282,559
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock 92,957 92,471
Additional paid-in-capital 14,680,829 14,625,564
Accumulated Deficit (10,358,680) (9,788,883)
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TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 4,415,106 4,929,152
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$ 7,112,291 $ 7,808,304
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*Condensed from audited financial statements.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
3
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Laser Photonics, Inc. and Subsidiaries
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<CAPTION>
Three months ended
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MARCH 31, 1998 March 31, 1997
(UNAUDITED) (unaudited)
<S> <C> <C>
REVENUES
Sales $ 1,004,500 $ 937,368
Other 95,000 --
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1,099,500 937,368
COSTS AND EXPENSES
Cost of Sales 466,832 649,313
Selling, General & Administrative 603,618 226,445
Research & Development 296,713 132,541
Depreciation and Amortization 267,462 173,854
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LOSS FROM OPERATIONS (535,125) (244,785)
Interest Expense 42,991 93,294
Other expenses (income), net (8,319) 37,360
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NET LOSS ($ 569,797) ($ 375,439)
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BASIC AND DILUTED LOSS PER SHARE ($ 0.06) ($ 0.06)
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Weighted Average Shares 9,267,083 6,172,591
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
4
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Laser Photonics, Inc.
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<CAPTION>
Three months ended
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MARCH 31, 1998 March 31, 1997
(UNAUDITED) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($ 569,797) ($375,439)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and Amortization 267,462 173,854
Stock issued to pay legal fees 20,000 39,375
Changes in operating assets and liabilities:
Current assets 85,482 18,968
Current liabilities (107,838) 100,200
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NET CASH USED IN OPERATING ACTIVITIES (304,691) (43,042)
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (68,216) (22,226)
Advances from related parties -- 65,268
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NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (68,216) 43,042
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CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on debt (74,129) 0
Proceeds from issuance of common stock 35,751 0
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NET CASH USED IN FINANCING ACTIVITIES (38,378) 0
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(411,285) 0
CASH AND CASH EQUIVALENTS, beginning of period 1,225,932 0
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CASH AND CASH EQUIVALENTS, end of period $ 814,647 $ 0
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
5
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LASER PHOTONICS, INC. AND SUBSIDIARIES
March 31, 1997
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheets as of March 31, 1998 and December
31, 1997, and the related condensed consolidated statements of operations and
cash flow for the three months ended March 31, 1998 and 1997 have been
prepared by the Company without audit. In the opinion of management, the
condensed consolidated financial statements contain all adjustments,
consisting of normal recurring accruals, necessary to present fairly the
financial position of Laser Photonics, Inc. and subsidiaries as of March 31,
1998 and the results of their operations and cash flows for the three months
ended March 31, 1998 and 1997.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
report on Form 10-K for the year ended December 31, 1997.
Certain reclassifications have been made to the prior year's condensed
consolidated financial statements to conform with the current presentation.
Such reclassifications had no effect on net loss.
2. INVENTORY
Inventory consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
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<S> <C> <C>
Raw Materials $394,733 $435,583
Work in Process 426,573 435,854
Finished Goods 68,116 79,772
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TOTAL INVENTORY $889,422 $951,209
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3. SUBSEQUENT EVENTS
On April 8, 1998, the Company entered into a letter of intent to sell certain
assets, subject to the assumption of certain liabilities, to a third party.
The completion of the transaction is subject to numerous items, including but
not limited to, the final identification of specific assets and liabilities
to be transferred and the execution of a final written agreement. The
proposed sales price is $1,300,000 which would result in an approximate gain
of $300,000 to the Company
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 1998 increased by $162,132 to
$1,099,500 compared to $937,368 for the three months ended March 31, 1997.
The increase was due to the final milestone payment pursuant to the Baxter
Agreement which included the sale of two excimer lasers, offset by decreases
in sales from the operations of the Company's Florida and Massachusetts
operations.
Gross margin increased by $344,613 for the three months ended March 31, 1998
compared to the three months ended March 31, 1997 due primarily to the gross
margin earned on the sale of the two excimer lasers to Baxter.
Operating expenses increased by $634,953 for the three months ended March 31,
1998 compared to the three months ended March 31, 1997. The increase was due
to increases in consulting and professional fees, D&O insurance, marketing
expenses, and increased funding of research and development activities.
Interest expense decreased by $50,303 for the three months ended March 31,
1998 compared to the three months ended March 31, 1997 primarily due to the
purchase of a subsidiary's note payable through the issuance of common stock
during the year ended December 31, 1997.
Net loss increased by $194,358 to $569,797 for the three months ended March
31, 1998 compared to $375,439 for the three months ended March 31, 1997. The
increase in the net loss was due to the increase in operating expenses offset
by increases in revenues and gross margin.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had cash and cash equivalents of $814,647
which is a decrease of $411,285 since December 31, 1997. The Company has
utilized cash generated from the sale of common stock and from the Baxter
agreement during 1997 to fund marketing activities, increased research and
development activities, investments in inventory to support anticipated sales
of excimer lasers to Baxter and to pay off certain liabilities.
Capital expenditures in the three months ended March 31, 1998 of $68,216
related to purchases of equipment and the construction of a laser to be used
as a demonstration model.
Cash flows used in financing activities for the three months ended March 31,
1998 of $38,378 was due to principal payments on debt offset by proceeds from
the issuance of common stock.
SUBSEQUENT EVENTS
On April 8, 1998, the Company entered into a letter of intent to sell certain
assets, subject to the assumption of certain liabilities, to a third party.
The completion of the transaction is subject to numerous items, including but
not limited to, the final identification of specific assets and liabilities
to be transferred and the execution of a final written agreement. The
proposed sales price is $1,300.000 which would result in an approximate gain
of $300,000 to the Company
7
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PART II. OTHER INFORMATION
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ITEM 1 Legal Proceedings: See December 31, 1997 10-K
ITEM 2 Changes in Securities None
ITEM 3 Defaults Upon Senior Securities None
ITEM 4 Submission of Matters to Vote of
Security Holders
As of February 4, 1998, the Company's stockholders
adopted a resolution by the written consent of
4,764,241 shares, or 51.36% of the issued and
outstanding Common Stock, for the purpose of
increasing the authorized number of shares of Common
Stock of the Company from 10,000,000 shares to
15,000,000 shares.
ITEM 5 Other Information None
ITEM 6 Exhibits and Reports on Form 8-K
a) Exhibits
27 Financial Data Schedule
b) Reports on Form 8-K None
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8
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SIGNATURES TO FORM 10-Q
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
LASER PHOTONICS, INC.
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(Registrant)
Date: May 7, 1998 By: /s/ Raymond A. Hartman
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Raymond A. Hartman
Chief Executive Officer
Date: May 7, 1998 By: /s/ Chaim Markheim
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Chaim Markheim
Chief Financial Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 814,647
<SECURITIES> 0
<RECEIVABLES> 328,830
<ALLOWANCES> 75,000
<INVENTORY> 889,422
<CURRENT-ASSETS> 2,090,163
<PP&E> 372,269
<DEPRECIATION> 173,074
<TOTAL-ASSETS> 7,112,291
<CURRENT-LIABILITIES> 2,414,626
<BONDS> 0
0
0
<COMMON> 92,957
<OTHER-SE> 4,322,149
<TOTAL-LIABILITY-AND-EQUITY> 7,112,291
<SALES> 1,099,500
<TOTAL-REVENUES> 1,099,500
<CGS> 466,832
<TOTAL-COSTS> 466,832
<OTHER-EXPENSES> 1,167,793
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,991
<INCOME-PRETAX> (569,797)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (569,797)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
