THIS DOCUMENT IS THE SUBMISSION OF FORM 10QSB AND CONTAINS THE QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934
For the quarterly period ended June 30, 1996
or
--- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File Number 0-13316
LASER CORPORATION
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(Exact name of small business issuer as specified in its charter)
Utah 87-0395567
----------------------------- ---------------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1832 South 3850 West
Salt Lake City, UT 84104
----------------------------- ---------------------------
(Address of principal (Zip Code)
executive office)
(801) 972-1311
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(Issuer's telephone number, including area code)
Not Applicable
------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (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
------- -------
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, .05 Par Value -- 672,098 shares as of June 30, 1996.
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INDEX
LASER CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - June 30, 1996 and December 31, 1995.
Consolidated Statements of Operations - Three months ended June 30,
1996 and 1995; Six months ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows - Six months ended June 30,
1996 and 1995.
Notes to Consolidated Financial Statements - June 30, 1996.
Item 2. Management's Discussion and Analysis.
PART II. OTHER INFORMATION
- -------- -----------------
Item 4. Submission of Matters to a Vote of Security Holders
SIGNATURES
- ----------
Page 2 of 12
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PART I. FINANCIAL INFORMATION
Item 1.
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1996 1995
Unaudited
----------- -----------
[C] [C]
CURRENT ASSETS
Cash and cash equivalents $ 669,531 $ 936,370
Receivables:
Trade accounts, less allowances of
$14,607 in 1996 and $1,500 in 1995 687,677 539,661
Other 3,789 4,241
----------- -----------
691,466 543,902
Inventories:
Raw materials 750,649 744,886
Work in process 403,410 423,291
Finished Goods 8,045 17,995
----------- -----------
1,162,104 1,186,172
Notes Receivable - current portion 169,042 171,873
Other current assets 17,856 10,025
----------- -----------
Total Current Assets 2,709,999 2,848,342
NOTES RECEIVABLE LESS CURRENT PORTION 615,300 693,320
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment 1,366,602 1,356,734
Leasehold improvements 583,330 581,180
----------- -----------
1,949,932 1,937,914
Less accumulated depreciation
and amortization (1,731,540) (1,676,807)
----------- -----------
218,392 261,107
OTHER ASSETS 2,997 4,299
----------- -----------
$ 3,546,688 $ 3,807,068
=========== ===========
See accompanying notes to consolidated financial statements
Page 3 of 12
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY ----------- -----------
[C] [C]
CURRENT LIABILITIES
Trade accounts payable $ 321,482 $ 336,955
Accrued expenses 167,414 145,483
Accrued warranty expense 140,000 140,000
Current portion of capital lease
obligations 3,782 23,410
----------- -----------
Total Current Liabilities 632,678 645,848
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $.05 par value;
Authorized Shares - 2,000,000
Issued Shares - 682,098
Outstanding Shares - 672,098 34,105 34,105
Additional paid-in capital 701,537 701,537
Retained earnings 2,278,368 2,525,578
Treasury stock, at cost (100,000) (100,000)
----------- -----------
Total Stockholders' Equity 2,914,010 3,161,220
----------- -----------
$3,546,688 $3,807,068
=========== ===========
See accompanying notes to consolidated financial statements
Page 4 of 12
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
[C] [C] [C] [C]
REVENUES:
Net sales $ 886,131 $1,122,938 $1,747,636 $2,132,052
Interest and other income 23,917 29,206 47,770 53,890
---------- ---------- ---------- ----------
910,048 1,152,144 1,795,406 2,185,942
COSTS AND EXPENSES:
Cost of products sold 709,583 846,034 1,419,180 1,606,941
Selling, general
and administrative 138,706 164,995 278,422 324,772
Research and development 158,925 91,249 312,916 180,563
Royalties 16,377 18,177 30,747 32,622
Interest 541 2,473 1,351 5,332
---------- ---------- ---------- ----------
1,024,132 1,122,928 2,042,616 2,150,230
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES (114,084) 29,216 (247,210) 35,712
---------- ---------- ---------- ----------
INCOME TAX BENEFIT
(EXPENSE) - CURRENT --- (1,000) --- (1,000)
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS (114,084) 28,216 (247,210) 34,712
INCOME FROM DISCONTINUED
OPERATIONS --- --- --- ---
INCOME ON DISPOSAL OF
DISCONTINUED OPERATION --- --- --- 53,911
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (114,084) $ 28,216 $ (247,210) $ 88,623
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE
CONTINUING OPERATIONS $ ( .17) $ .04 $ ( .37) $ .05
========== ========== ========== ==========
NET INCOME PER SHARE
DISCONTINUED OPERATIONS $ --- $ --- $ --- $ .08
========== ========== ========== ==========
NET INCOME PER SHARE $ ( .17) $ .04 $ ( .37) $ .13
========== ========== ========== ==========
Average number of shares of
Common Stock outstanding 672,000 685,000 672,000 685,000
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
Page 5 of 12
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
1996 1995
---------- ----------
[C] [C]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (247,210) $ 88,623
Less income from disposal of
discontinued operations --- (53,911)
Adjustments to reconcile net income (loss) to net
cash provided from (used in) operating activities:
Depreciation and amortization 54,733 54,194
(Increase) decrease in assets:
Trade accounts receivable (147,564) (63,472)
Inventories 24,068 (175,873)
Other current assets (7,831) (26,809)
Other assets 1,302 ---
Increase (decrease) in liabilities:
Trade accounts payable and accrued expenses 6,458 41,374
Income taxes payable --- (10,000)
---------- -----------
Net Cash Used in Operating Activities (316,044) (145,874)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (12,018) (11,629)
Payments received on long term notes 80,851 56,160
Proceeds from sale of Pro Med --- 1,000,000
---------- ----------
Net Cash Provided from Investing Activities 68,833 1,044,531
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and
capital lease obligations (19,628) (20,395)
---------- ----------
Net Cash Used in Financing Activities (19,628) (20,395)
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (266,839) 878,262
CASH AND CASH EQUIVALENTS, BEG. OF PERIOD 936,370 70,500
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 669,531 $ 948,762
========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
During 1995, the Company sold its 80% owned subsidiary. As part of the
sale price the Company received $1,000,000 in cash and notes receivable totaling
$966,778, and cancellation of notes payable to minority shareholders of Pro Med
of $795,496. A pre-tax gain on the sale of $53,911 was recognized by the
Company.
See accompanying notes to consolidated financial statements
Page 6 of 12
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LASER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended December 31, 1995
included in the Company's Annual Report on Form 10-KSB (file number 0-13316).
NOTE B - DISCONTINUED OPERATIONS
On January 1, 1995, the Company sold its 80% owned subsidiary. As part of
the sale price the Company received $1,000,000 in cash and notes receivable
totaling $966,778 and cancellation of notes payable to minority shareholders of
Pro Med of $795,496. A pre-tax gain on the sale of $53,911 was recognized by
the Company.
NOTE C - RECENT ACCOUNTING PRONOUNCEMENT
The financial Accounting Standards Board has issued Statements of
Financial Accounting Standard Statement No. 121, "Accounting for Long Lived
Assets" and No. 123 "Accounting and Disclosure of Stock-Based Compensation."
Statement No. 121 is effective for years beginning after December 15, 1995.
The effect of adoption of Statement No. 121 will not have a material effect on
the Company's financial statements. Statement No. 123 is effective for awards
granted after December 31, 1994, and has required financial presentation for
years beginning after December 15, 1995. The effect of adoption of Statement
123 will not have a material effect on the Company's financial statements.
NOTE D - RECLASSIFICATIONS
Certain 1995 financial statement amounts have been reclassified to
conform to 1996 presentations. These amounts were not material
reclassifications.
Page 7 of 12
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere herein.
RESULTS OF OPERATIONS
- ---------------------
Three months ended June 30, 1996.
Net sales for the three months ended June 30, 1996 were $886,131 as
compared to net sales of $1,122,938 for the same period in 1995, a decrease
of $236,807 or 21.0%. The decrease in net sales was primarily a result of
decreased sales to two of the Company's principal OEM customers totaling
$359,518, and $104,125, respectively. The Company believes that sales to these
two OEM customers will remain at reduced levels for at least the remainder
of this fiscal year, and there is no guarantee that sales to these two OEM
customers will not be further reduced. These net sales decreases were partially
offset by a $226,836 increase in sales to all other OEM and non-OEM customers.
The Company believes that the decrease in product and service sales for
the three months ended June 30, 1996 was primarily a result of the normal,
recurring fluctuations in the level of product and service orders received by
the Company from its OEM customers. Customer order levels fluctuate in part due
to quantity changes of Company produced products held in inventory by customers
at the time of order placement, changes in end-user demand for customer products
which use or incorporate the Company's products and services, and other factors.
For the three months ended June 30, 1996, cost of products sold as a
percent of Company net sales increased from 75.3% in 1995 to 80.1% in 1996. This
percentage increase was primarily a result of increases in labor and overhead
cost percentages resulting from decreased net sales.
Selling, general, and administrative expenses for the three months ended
June 30, 1996 decreased by $26,289 or 15.9% when compared to the same period
in 1995. This decrease resulted primarily from reduced insurance and other
administrative costs and expenses.
Research and development expenditures for the period increased by
$67,676 or 74.2% when compared to the same period in 1995. This increase was
primarily a result of the Company's efforts to develop solid state laser
technologies and other new market products.
As a result of the significant increase in research and development
expenditures, the decrease in net sales, and the other factors described above,
the Company recognized a net loss for the three months ended June 30, 1996 of
$114,084, or $.17 per share, compared to a net income from continuing operations
of $28,216, or $.04 per share, for the same period in 1995.
Page 8 of 12
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Six months ended June 30, 1996.
Net sales for the six months ended June 30, 1996 were $1,747,636 as
compared to net sales of $2,132,052 for the same period in 1995, a decrease
of $384,416 or 18.0%. The decrease in net sales was primarily a result of
decreased sales to two of the Company's principal OEM customers totaling
$497,622, and $226,702, respectively. The Company believes that sales to these
two OEM customers will remain at reduced levels for at least the remainder
of this fiscal year, and there is no guarantee that sales to these two OEM
customers will not be further reduced. These net sales decreases were partially
offset by a $339,908 increase in sales to all other OEM and non-OEM customers.
The Company believes that the decrease in product and service sales
for the six months ended June 30, 1996 was primarily a result of the normal,
recurring fluctuations in the level of product and service orders received by
the Company from its OEM customers. Customer order levels fluctuate in part
due to quantity changes of Company produced products held in inventory by
customers at the time of order placement, changes in end-user demand for
customer products which use or incorporate the Company's products and services,
and other factors.
For the six months ended June 30, 1996, cost of products sold as a
percent of Company net sales increased from 75.4% in 1995 to 81.2% in 1996. This
percentage increase was primarily a result of increases in labor and overhead
cost percentages resulting from decreased net sales.
Selling, general, and administrative expenses for the six months ended
June 30, 1996 decreased by $46,350 or 14.3% when compared to the same period in
1995. This decrease resulted primarily from reduced legal, insurance and other
administrative costs and expenses.
Research and development expenditures for the period increased by
$132,353 or 73.3% when compared to the same period in 1995. This increase
was primarily a result of the Company's efforts to develop solid state laser
technologies and other new market products.
As a result of the significant increase in research and development
expenditures, the decrease in net sales, and the other factors described above,
the Company recognized a net loss for the six months ended June 30, 1996 of
$247,210, or $.37 per share, compared to a net income from continuing operations
of $34,712, or $.05 per share, for the same period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On June 30, 1996, the Company had working capital of $2,077,321 and cash
equivalents of $669,531 compared to working capital of $2,202,494 and cash
equivalents of $936,370 at December 31, 1995. The decrease of $125,173 or
5.7% in working capital is due to the Company's financial results during the
six months ended June 30, 1996. The decrease of $266,839 or 28.5% in cash
equivalents for the six month period is the result of the Company's financial
results and to increased trade accounts receivable.
Page 9 of 12
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PART II. OTHER INFORMATION
- -------- -----------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held May 22, 1996.
Proxies for the meeting were solicited pursuant to Regulation 14A under the
Securities Exchange Act of 1934. At the meeting, the following matters were
submitted to a vote of the Company's shareholders:
(1) Election of three (3) directors
(2) Approve an amendment to the Company's Articles of Incorporation
to increase the authorized number of shares of the Company's
common stock to 10,000,000 shares
(3) Approve an amendment to the Company's Articles of Incorporation
to authorize up to 2,000,000 shares of preferred stock of the
Company issuable in one or more series
(4) Approve selection of Tanner + Co. as the independent certified
public accountants of the Company for the fiscal year ending
December 31, 1996.
The votes cast for or withheld, as well as the number of abstentions
and broker non-votes, as to each matter, including a separate tabulation with
respect to each nominee for office, were as follows:
PROPOSAL 1: ELECTION OF DIRECTORS:
Withhold Broker
For Authority Abstention Non-Voters
----- --------- ---------- ----------
[C] [C] [C] [C]
B. Joyce Wickham 449,142 5,792 --- ---
Rod O. Julander 449,242 5,692 --- ---
Mark L. Ballard 449,142 5,792 --- ---
PROPOSAL 2: APPROVE AMENDMENT TO INCREASE COMMON STOCK SHARES
TO 10,000,000 AUTHORIZED SHARES
Broker
For Against Abstention Non-Voters
----- ------- ---------- ----------
424,721 29,741 473 ---
PROPOSAL 2 WAS APPROVED.
Page 10 of 12
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PROPOSAL 3: APPROVE AMENDMENT TO AUTHORIZE UP TO 2,000,000 SHARES
OF PREFERRED STOCK
Broker
For Against Abstention Non-Voters
----- ------- ---------- ----------
[C] [C] [C] [C]
240,107 32,601 1,281 184,567
PROPOSAL 3 FAILED TO GET REQUIRED VOTES TO PASS
PROPOSAL 4: APPROVE SELECTION OF TANNER + CO.:
For Against Abstention Non-Voters
----- ------- ---------- ----------
454,213 20 701 ---
Page 11 of 12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER CORPORATION
Date: August 14, 1996 /s/ B. Joyce Wickham
------------------- ----------------------------------
B. Joyce Wickham
President, Chief Executive Officer
Treasurer and Director
Date: August 14, 1996 /s/ Reo K Larsen
------------------- ----------------------------------
Reo K Larsen
General Accounting Manager
Page 12 of 12
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LASER
CORPORATION AND SUBSIDIARIES JUNE 30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000740726
<NAME> LASER CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 669,531
<SECURITIES> 0
<RECEIVABLES> 1,490,415
<ALLOWANCES> 14,607
<INVENTORY> 1,162,104
<CURRENT-ASSETS> 2,709,999
<PP&E> 1,949,932
<DEPRECIATION> 1,731,540
<TOTAL-ASSETS> 3,546,688
<CURRENT-LIABILITIES> 632,678
<BONDS> 0
0
0
<COMMON> 34,105
<OTHER-SE> 2,879,905
<TOTAL-LIABILITY-AND-EQUITY> 3,546,688
<SALES> 1,747,636
<TOTAL-REVENUES> 1,795,406
<CGS> 1,419,180
<TOTAL-COSTS> 2,041,265
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,351
<INCOME-PRETAX> (247,210)
<INCOME-TAX> 0
<INCOME-CONTINUING> (247,210)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (247,210)
<EPS-PRIMARY> (.37)
<EPS-DILUTED> (.37)
</TABLE>
