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 SEPTEMBER 30, 1996.
<PAGE>
================================================================================
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 September 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
--------------------------------------------------------------------
(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
--------------------------------------------------------------------
(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 September 30,
1996.
Page 1 of 11
<PAGE>
================================================================================
INDEX
LASER CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- ------- ----------------------
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1996 and December 31,
1995.
Consolidated Statements of Operations - Three months ended September
30, 1996 and 1995; Nine months ended September 30, 1996 and 1995
Consolidated Statements of Cash Flows - Nine months ended September
30, 1996 and 1995.
Notes to Consolidated Financial Statements - September 30, 1996.
Item 2. Management's Discussion and Analysis.
PART II. OTHER INFORMATION
- -------- -----------------
SIGNATURES
- ----------
Page 2 of 11
<PAGE>
================================================================================
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1.
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
ASSETS 1996 1995
Unaudited
------------ ------------
[C] [C]
CURRENT ASSETS
Cash and cash equivalents $ 550,306 $ 936,370
Receivables:
Trade accounts, less allowances of
$20,705 in 1996 and $1,500 in 1995 648,478 539,661
Other 3,556 4,241
------------ ------------
652,034 543,902
Inventories:
Raw materials 752,158 744,886
Work in process 421,371 423,291
Finished Goods 26,275 17,995
------------ ------------
1,199,804 1,186,172
Notes Receivable - current portion 172,636 171,873
Other current assets 21,440 10,025
------------ ------------
Total Current Assets 2,596,220 2,848,342
NOTES RECEIVABLE LESS CURRENT PORTION 575,182 693,320
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 (1,758,184) (1,676,807)
------------ ------------
191,748 261,107
OTHER ASSETS 2,997 4,299
------------ ------------
$ 3,366,147 $ 3,807,068
============ ============
See accompanying notes to consolidated financial statements
Page 3 of 11
<PAGE>
================================================================================
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
------------ ------------
[C] [C]
CURRENT LIABILITIES
Trade accounts payable $ 355,106 $ 336,955
Accrued expenses 153,404 145,483
Accrued warranty expense 135,000 140,000
Current portion of capital lease
obligations --- 23,410
------------ ------------
Total Current Liabilities 643,510 645,848
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 2,086,995 2,525,578
Treasury stock, at cost (100,000) (100,000)
------------ ------------
Total Stockholders' Equity 2,722,637 3,161,220
------------ ------------
$ 3,366,147 $ 3,807,068
============ ============
See accompanying notes to consolidated financial statements
Page 4 of 11
<PAGE>
================================================================================
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
----------------------- -----------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
[C] [C] [C] [C]
REVENUES:
Net sales $ 807,992 $ 906,471 $2,555,629 $3,038,523
Interest and other income 21,656 27,691 69,426 81,581
---------- ---------- ---------- ----------
829,648 934,162 2,625,055 3,120,104
COSTS AND EXPENSES:
Cost of products sold 682,917 705,248 2,102,097 2,312,189
Selling, general
and administrative 170,718 130,276 449,140 441,298
Research and development 150,457 77,667 463,374 271,980
Royalties 16,308 12,496 47,056 45,118
Interest 1,176 2,029 2,526 7,361
---------- ---------- ---------- ----------
1,021,576 927,716 3,064,193 3,077,946
INCOME (LOSS) FROM ---------- ---------- ---------- ----------
CONTINUING OPERATIONS
BEFORE INCOME TAXES (191,928) 6,446 (439,138) 42,158
INCOME TAX BENEFIT
(EXPENSE) - CURRENT 555 --- 555 (1,000)
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS (191,373) 6,446 (438,583) 41,158
INCOME FROM DISCONTINUED
OPERATIONS --- --- --- ---
INCOME ON DISPOSAL OF
DISCONTINUED OPERATION --- --- --- 53,911
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (191,373) $ 6,446 $ (438,583) $ 95,069
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE
CONTINUING OPERATIONS $ ( .28) $ .01 $ ( .65) $ .06
========== ========== ========== ==========
NET INCOME PER SHARE
DISCONTINUED OPERATIONS $ --- $ --- $ --- $ .08
========== ========== ========== ==========
NET INCOME PER SHARE $ ( .28) $ .01 $ ( .65) $ .14
========== ========== ========== ==========
Average number of shares of
Common Stock outstanding 672,000 681,000 672,000 681,000
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
Page 5 of 11
<PAGE>
================================================================================
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES: ----------- -----------
[C] [C]
Net income (loss) $ (438,583) $ 95,069
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 81,377 80,290
(Increase) decrease in assets:
Trade accounts receivable (108,132) 805
Inventories (13,632) (213,388)
Other current assets (11,415) (20,216)
Other assets 1,302 ---
Increase (decrease) in liabilities:
Trade accounts payable and accrued expenses 21,072 (134,011)
Income taxes payable --- (7,000)
----------- -----------
Net Cash Used in Operating Activities (468,011) (252,362)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (12,018) (12,458)
Payments received on long term notes 117,375 90,705
Proceeds from sale of Pro Med --- 1,000,000
----------- -----------
Net Cash Provided from Investing Activities 105,357 1,078,247
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and
capital lease obligations (23,410) (29,271)
----------- -----------
Net Cash Used in Financing Activities (23,410) (29,271)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (386,064) 796,614
CASH AND CASH EQUIVALENTS, BEG. OF PERIOD 936,370 70,500
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 550,306 $ 867,114
=========== ===========
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 11
<PAGE>
================================================================================
LASER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
September 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 nine months ended September 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 11
<PAGE>
================================================================================
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 September 30, 1996.
- --------------------------------------
Net sales for the three months ended September 30, 1996 were $807,992 as
compared to net sales of $906,471 for the same period in 1995, a decrease of
$98,479 or 10.9%. The decrease in net sales was primarily a result of decreased
sales to two of the Company's principal OEM customers totaling $283,451, and
$108,527, 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 $293,499 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 September 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 September 30, 1996, cost of products sold as
a percent of Company net sales increased from 77.8% in 1995 to 84.5% 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
September 30, 1996 increased by $40,442 or 31.0% when compared to the same
period in 1995. This increase resulted primarily from increased marketing and
administrative expenses relating to the introduction of the Company's new
products which was partially offset by reduced insurance costs.
Research and development expenditures for the period increased by
$72,790 or 93.7% 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 increases in marketing and administrative costs relating to
the introduction of new products, the decrease in net sales, and the other
factors described above, the Company recognized a net loss for the three months
ended September 30, 1996 of $191,373 or $.28 per share, compared to a net income
from continuing operations of $6,446, or $.01 per share, for the same period in
1995.
Page 8 of 11
<PAGE>
================================================================================
Nine months ended September 30, 1996.
- -------------------------------------
Net sales for the nine months ended September 30, 1996 were $2,555,629 as
compared to net sales of $3,038,523 for the same period in 1995, a decrease of
$482,894 or 15.9%. The decrease in net sales was primarily a result of
decreased sales to two of the Company's principal OEM customers totaling
$781,073 and $335,229, 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 $633,408 increase in sales to all other OEM and non-OEM customers.
The Company believes that the decrease in product and service sales for
the nine months ended September 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 nine months ended September 30, 1996, cost of products sold
as a percent of Company net sales increased from 76.1% in 1995 to 82.3% 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 nine months ended
September 30, 1996 increased by $7,842 or 1.8% when compared to the same period
in 1995. This increase resulted primarily from increased marketing costs in
the introduction of the companies new products which was partially offset by
reduced insurance costs.
Research and development expenditures for the period increased by
$191,394 or 70.4% 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 increases in marketing and administrative expenses relating
to the introduction of new products, the decrease in net sales, and the other
factors described above, the Company recognized a net loss for the nine months
ended September 30, 1996 of $438,583, or $.65 per share, compared to a net
income from continuing operations of $41,158, or $.06 per share, for the same
period in 1995.
Page 9 of 11
<PAGE>
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On September 30, 1996, the Company had working capital of $1,952,710
and cash equivalents of $550,306 compared to working capital of $2,202,494 and
cash equivalents of $936,370 at December 31, 1995. The decrease of $249,784
or 11.3% in working capital is due to the Company's financial results during
the nine months ended September 30, 1996. The decrease of $386,064 or 41.2%
in cash equivalents for the nine month period is the result of the Company's
financial results and to increased trade accounts receivable.
PART II. OTHER INFORMATION
- -------- -----------------
Page 10 of 11
<PAGE>
================================================================================
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: November 15, 1996 /s/ B. Joyce Wickham
---------------------- ----------------------------------
B. Joyce Wickham
President, Chief Executive Officer
Treasurer and Director
Date: November 15, 1996 /s/ Reo K Larsen
----------------------- ----------------------------------
Reo K Larsen
General Accounting Manager
Page 11 of 11
<PAGE>
================================================================================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LASER
CORPORATION AND SUBSIDIARIES SEPTEMBER 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 550,306
<SECURITIES> 0
<RECEIVABLES> 1,420,557
<ALLOWANCES> 20,705
<INVENTORY> 1,199,804
<CURRENT-ASSETS> 2,596,220
<PP&E> 1,949,932
<DEPRECIATION> 1,758,184
<TOTAL-ASSETS> 3,366,147
<CURRENT-LIABILITIES> 643,510
<BONDS> 0
0
0
<COMMON> 34,105
<OTHER-SE> 2,688,532
<TOTAL-LIABILITY-AND-EQUITY> 3,366,147
<SALES> 2,555,629
<TOTAL-REVENUES> 2,625,055
<CGS> 2,102,097
<TOTAL-COSTS> 3,061,667
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,526
<INCOME-PRETAX> (439,138)
<INCOME-TAX> 555
<INCOME-CONTINUING> (438,583)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (438,583)
<EPS-PRIMARY> (.65)
<EPS-DILUTED> (.65)
</TABLE>
