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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1996
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Commission File No. 0-13316
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LASER CORPORATION
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(Name of small business issuer in its charter)
Utah 87-0395567
- --------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1832 South 3850 West, Salt Lake City, Utah 84104
- ------------------------------------------- -------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 972-1311
-------------------------------
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on
which registered
(None) (None)
- -------------------------------- -------------------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.05 per share
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(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year. $3,514,263
---------------------
As of March 17, 1997, 678,088 shares of Common Stock were outstanding. The
aggregate market value of the shares held by non-affiliates of the registrant
(based upon the closing price of these shares on March 17, 1997, of $3.00 per
share) was approximately $1,324,119.
Documents Incorporated by Reference:
Proxy Statement for May 21, 1997 Annual Meeting of Shareholders which Registrant
intends to file pursuant to Regulation 14(A) by a date no later than 120 days
after December 31, 1996. If such definitive Proxy Statement is not filed in
that 120-day period, the information called for by Part III will be filed as an
amendment to this Form 10-KSB not later than the end of the 120-day period (Part
III of this report).
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PART I
ITEM 1. BUSINESS
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During 1996, Laser Corporation was engaged in the business of designing,
manufacturing, marketing and servicing of lasers and laser systems through its
wholly-owned subsidiary, American Laser Corporation ("American Laser").
Laser Corporation is a Utah corporation organized on January 12, 1983.
Unless the context indicates otherwise, all references to the "Company" include
Laser Corporation and its subsidiaries.
American Laser was incorporated in June 1970 and became a wholly-owned
subsidiary of Laser Corporation in August 1984. American Laser designs,
manufactures, markets and services lasers and related laser systems which are
primarily used by original equipment manufacturers ("OEM"). These OEMs then
manufactures equipment that incorporates the lasers into products as a component
part.
In June 1996, the Company established two developmental stage subsidiaries,
American Laser Medical, Inc. ("ALM"), formally NuvoMed, Inc. and American Laser
Software, Inc. ("ALS"). These two new wholly owned subsidiaries were established
to develop and market retail medical products.
The Company's 1996 Annual Meeting of Stockholders was held on May 22, 1996.
At that meeting, the proposed slate of Directors was elected and the
Shareholders approved the amendment to the Company's Articles of Incorporation
to increase the authorized number of shares of common stock to 10,000,000 but
failed to approve the proposal to amend 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.
Laser Products and Services
---------------------------
The word "laser" is an acronym for Light Amplification by Stimulated
Emission of Radiation. A laser is capable of generating an intense beam of
light at visible, infrared and ultraviolet wavelengths. Lasers are broadly
distinguished by whether their mediums are gas, liquid or solid. The laser's
medium determines the wavelength, power and other characteristics of the optical
radiation emitted. Lasers are also distinguished by their operational mode
(either continuous mode or pulsed mode) and the power of the beam emitted.
"Q-switching" or "mode-locking" allows the output and intensity of the laser to
be modulated to emit short, powerful bursts of laser light of greater energy
density than that emitted during continuous mode operation. Thus, the active
medium, operational mode and power determine the particular tasks lasers are
best able to perform.
The Company principally produces laser tubes filled with argon,
krypton/argon or krypton gas. A mirror is placed at one end of the tube, and a
partial mirror is placed at the opposite end. An external power supply
activates the gas within the tube and causes the gas to produce light. The
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light reflects off the mirror at one end of the tube and exits from the tube
through the partial mirror at the other end.
The Company manufacturers lasers with a variety of power outputs and other
performance specifications, often customized to the requirement of the
customer's application. The Company's laser products are used in confocal
microscopes, retinal photocoagulators in ophthalmology, laser printers,
composite material curing devices in dentistry, entertainment and display,
research and development, and other commercial and medical applications.
During 1996 the Company began expanding its business into the retail
medical marketplace. The Company has developed or is in the process of
developing three new products: the NUVOLASE 600 SERIES MEDICAL LASER SYSTEM, a
dermatology laser for the treatment of skin lesions, the SIMULEYES, an
ophthalmic educational device which simulates retinal laser treatments and, the
PAIS, an office management and patient care file system which stores a complete
patient history including a library of high resolution digital images.
The Company normally conducts quality tests on its laser systems prior to
their shipment. The Company's "Terms and Conditions of Sale" offer a standard
product warranty against defects in materials and workmanship for a period of
one year from the date of original shipment, although non-warranty terms or the
level of warranty coverage, as well as the warranty period, are subject to
negotiation. The two largest customers of the Company have modified warranty
terms and warranty periods which exceed one year. At December 31, 1996, the
reserve for anticipated warranty expenses for the laser products which had been
sold as of that date was $100,000, although no assurance can be given that this
reserve will be adequate to cover the actual warranty expenses. The lasers are
generally returned for service or repair to the Company at its Salt Lake City,
Utah, facility.
Service sales is a term used internally by the Company for the repair or
refurbishment of customer owned laser products. Service and repair typically
entail the replacement, repair or refurbishment of component parts comprising
the laser products or sub-assemblies.
Sales and Marketing
-------------------
In the past, essentially all of the Company's sales have been to OEM
customers. OEM customers manufacture equipment in which the Company's laser
products are a component part. As each OEM customer has unique needs and
product requirements, the Company markets its laser products and services
directly by executive, engineering and sales management.
The Company sells to over 100 customers worldwide. For the year ended
December 31, 1996, two companies accounted for over 10% of the Company's sales.
Company C and A accounted for 30% and 20%, respectively, of the Company's 1996
sales. For the year ended December 31, 1995, two companies accounted for over
10% of the Company's sales. Company A and B accounted for 43% and 11%,
respectively, of the 1995 sales.
Customers typically fulfill their product requirements by placing purchase
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orders with the Company which are generally filled and shipped within the
customer's requested delivery schedule. Customers sales and purchase order
levels typically can be expected to fluctuate in part due to (i) changes in the
quantity of Company products held in inventory by its customers, (ii) changes in
end user demand for customer products in which the Company's laser products are
a component part, (iii) the competitiveness, cost and customer use of
alternative products, technologies or suppliers, and (iv) other factors. The
Company's backlog of new products and service orders for its laser systems as of
December 31, 1996 was approximately $682,718, as compared to approximately
$925,647 on December 31, 1995. Based on past experience, the Company
anticipates that substantially all of its unfilled orders for laser products
will be delivered in 1997.
For many years, the Company has been and remains substantially dependent
upon a limited number of OEM customers for sales of its laser products and
service sales. The Company believes that future sales of its laser products and
service sales will depend upon its ability to attract and maintain a variety of
volume OEM customers requiring its laser products. However, there can be no
assurance that the Company will be successful in these efforts, or that its
competitors, customers or others will not introduce products or technologies
superior to those of the Company or produce comparable products at lower prices,
in which case the Company's business could be adversely affected. In addition,
rapid technological advances made by competitors, customers, or others could
make the product lines obsolete. Also, overall customer demand for laser
products and sub-assemblies may decrease as a result their replacement by
superior, alternative, or lower cost products and technologies.
In the medical markets, the Company is in the pre-market stage of its
dermatologic and ophthalmic products introductions. The Company plans to use a
distributor network as well as marketing through trade magazines and medical
conventions for the sales of its new medical products. The Company has
qualified its initial distributors for its NuvoLase product and is now in the
process of identifying additional qualified distributors in the United States
and internationally.
The Company typically bills its laser customers upon product shipment.
Payment on approved credit terms is generally due in 30 days after date of
invoice, but such terms can vary, especially in the case of foreign sales.
Collection of trade accounts receivable typically occurs within 30 to 60 days
after invoice.
Foreign Sales
-------------
The Company sells a majority of its laser products to customers in Europe
and other foreign countries. The Company's two largest customers for laser
products in 1996 were foreign customers. Foreign sales to Customer C and
Customer A accounted for approximately 26% and 20% respectively, of the total
laser products sales during 1996. Total sales to all foreign customers
accounted for approximately 66% of the Company's total laser products sales.
(See Note 10 to Consolidated Financial Statements for further discussion).
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Manufacturing and Suppliers
---------------------------
The Company relies upon unaffiliated suppliers for components used in the
fabrication of its products. For most components, the Company is not dependent
upon any one particular supplier and has not experienced significant delays in
obtaining components. Currently, certain components utilized in the manufacture
of the products are available from a limited number of suppliers. The Company
believes that its operations could be adversely affected in the event that it is
unable to obtain components on a timely basis from these suppliers.
The Company maintains an inventory of laser components as well as a minimal
level of finished goods. The Company generally manufactures its products in
response to customer orders.
Net of inventory reserves, the Company's raw material inventory at December
31, 1996 was $756,930, work in process inventory was $468,573, and the remaining
$63,500 was finished goods inventory.
Competition
-----------
The laser market is complex and fragmented as a result of the specialized
nature of laser products and the various applications required by purchasers of
lasers and laser systems. Rapid technological advances and intense competition
are characteristic of the laser industry. The Company is subject to the risk
that its competitors or customers may introduce products or technologies which
are superior to those of the Company or produce products at lower prices, which
could make its products obsolete. The Company is also subject to the risk that
customer products which incorporate its lasers may become obsolete or may be
redesigned, eliminating the need for its products. The principal competitive
factors for its OEM laser products are technology, price, service, quality,
performance and ability to meet customer specifications. The principal
competitive factors for medical products are the product's technological
capabilities and proven clinical ability, price, service, quality, and scope of
regulatory approval.
Future sales are in a large part dependent on the success of the
introduction of new or improved laser and medical products and on the Company's
ability to become and remain competitive in the medical marketplace. In
addition, future laser sales are dependent on the Company's OEM customers
remaining competitive in their marketplace.
There can be no assurance that the Company's competitors, customers or
others will not develop products or technologies which could render the products
of the Company obsolete. If such products or technologies were successfully
developed, continued sales of the existing products could rapidly diminish, in
which case the Company's business, results of operations or ability to maintain
or increase its market share could be adversely affected.
Certain of the Company's current or future competitors have substantially
greater financial, technical and marketing resources than the Company. There
can be no assurance that competition will not adversely affect the Company's
business, results of operations or ability to maintain or increase it market
share could be adversely affected.
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Patents, Licenses and Trade Secrets
-----------------------------------
Although the Company owns certain domestic patents relating to laser
technology, the Company believes that the ownership of patents is not essential
to its current OEM laser operations. However, the Company's future success may
depend, in part, on its ability to operate and introduce new products without
infringing on the rights of third parties.
The Company entered into a license agreement in March 1989 with Patlex
Corporation which requires the Company to pay royalties based on a percentage of
net sales of products covered by certain patents.
Government Regulation
---------------------
Laser Products manufactured by the Company are subject to the requirements
of the Center for Devices and Radiological Health ("CDRH") of the United States
Food and Drug Administration. The CDRH is the Federal government body
primarily responsible for the regulation and administration of laser technology
and related products. The CDRH has issued laser radiation safety regulations
which require certain laser manufacturers and end users to file new product and
annual reports, to maintain records of sales and quality control results,
conduct proper testing, and to incorporate certain design and operating
features, including warning labels and protective devices in all lasers sold to
end users. The regulations required generally do not apply to OEM laser
products which are incorporated as components in laser-based end products.
During 1996 the Company introduced a new medical laser product with
applications in the field of dermatology. These lasers manufactured by the
Company are regulated as medical devices by the FDA, CDRH under the Federal
Food, Drug and Cosmetic Act. As such, these devices require premarket approval
by the FDA prior to commercialization. The FDA classifies medical devices in
commercial distribution into one of three classes: Class I, II or III. This
classification is based on the control the FDA deems necessary to reasonably
ensure the safety and effectiveness of medical devises. The Company's laser
based medical products are classified as Class II devices. If a manufacturer of
a medical device can establish that a proposed device is "substantially
equivalent" to a legally marketed Class II medical device the manufacturer may
seek FDA clearance for the device by filing a submission of a premarket
notification to the CDRH, Office of Device Evaluation, in accordance with
Section 510(k) of the Federal Food, Drug, and Cosmetic Act.
In August 1996 the Company submitted a Section 510(k) premarket
notification to the FDA, CDRH seeking approval of its new laser product. In
November 1996 the Company received its 510(k) clearance to market its product.
The Company and its medical products manufactured, pursuant to a 510(k)
premarket clearance notification, are or will be subject to continuing
regulation by the FDA and must comply with all applicable requirements of the
FDA on an ongoing basis. The Federal Food, Drug, and Cosmetic Act also requires
the Company to manufacture its products in registered establishments and in
accordance with the quality system requirements of the Current Good
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Manufacturing Practices (CGMP), 21 CFR 820 (Technical equivalent to the ISO 9001
& ISO/DIS 13485). The Company's facilities in the United States are subject to
periodic inspections by the FDA.
Certain of the Company's products manufactured and sold in foreign
countries are required to comply with the European Community's Medical Device
Directive ("MDD") (93/42/EEC), by June 1998, and the emissions and immunity
requirements set forth by the European Community under the requirements of the
Electromagnetic Compatibility ("EMC") Directive (89/336/EEC). The Company has
received its applicable certification of Compliance as required.
Although the Company believes that it currently complies and will continue
to comply with the applicable regulations, such regulations are always subject
to change. There can be no assurance that future changes in law, regulations,
review guidelines, administrative interpretations by the FDA, any international
governing agency or other regulatory bodies will not adversely affect the
Company.
Product Development
-------------------
The Company continues to be engaged in the development of laser products
and technologies and to a lessor extent, the development of the SIMULEYES and
PAIS systems. During 1996, the Company focused its efforts on the NUVOLASE 600
SERIES MEDICAL LASER SYSTEMS and the development of solid state laser products.
In 1995, the Company entered into a joint research and development
agreement with the University of Utah and the Center for Electronics Systems
Technology to develop solid state laser products providing visible blue or green
output. However, in January 1997, the Company notified all parties that for the
present it would withhold further development funding pending the completion of
a product and performance review by the Company.
The Company spent $605,585 in 1996 and $333,325 in 1995 on research and
development activities.
Insurance
---------
The Company does not have product liability insurance on its laser
products.
Compliance with Environment Laws
--------------------------------
The costs and effects of compliance with environmental laws (federal,
state, and local) to and on the Company have been minimal.
Employees
---------
On December 31, 1996, the Company had 42 full-time equivalent employees: 5
in general and administrative services, 27 in manufacturing and support
services, 7 in Engineering and 3 in management and marketing.
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ITEM 2. DESCRIPTION OF PROPERTIES
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The Company's administrative offices and primary assembly facilities for
its laser products are located in a building of approximately 46,000 square feet
in Salt Lake City, Utah, which is owned by Dr. William H. McMahan, a significant
shareholder and former Chairman, President and Chief Executive Officer of the
Company. The Company leases the building from Dr. McMahan pursuant to a lease
agreement which terminates on April 30, 1999. In 1996, the Company paid annual
base rent of $236,725.
The Company believes that the foregoing facilities are currently more than
adequate for its activities.
Item 3. LEGAL PROCEEDINGS
- --------------------------
There are no pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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The Company's common stock trades on the NASDAQ Small-Cap Market tier of
the NASDAQ Stock Market under the symbol LSER. The following table sets forth
the prices for the periods as indicated. The high and low sales price are used
in reporting. Such quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
High Low
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1996 First quarter 2 5/8 2 1/8
Second quarter 4 1/2 2 1/4
Third quarter 2 1/2 1 5/8
Fourth quarter 2 3/4 1 3/4
1995 First quarter 5 2 15/16
Second quarter 4 2 1/2
Third quarter 3 5/8 1 1/4
Fourth quarter 2 3/4 1 7/8
As of December 31, 1996 there were approximately 500 beneficial holders of
the Company's Common Stock.
The Company did not pay dividends on its common stock in 1996 and it does
not anticipate paying any dividends thereon in the foreseeable future.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
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Results of Operations
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Net sales for the year ended December 31, 1996, were $3,419,719 as compared
to $3,809,710 for the same period in 1995, a decrease of $389,991 or 10%. This
decrease was primarily a result of decreases in laser product and service sales
during 1996 to two of the Company's major customers totaling $1,231,256. This
decrease was partially offset by an increase in product and service sales of
$920,112 to another major customer during the same 1996 period.
Sales to Company A decreased from $1,654,868 or 43% of net sales in 1995 to
$697,591, or 20% of net sales in 1996. Sales to Company B were $400,154 or 11%
of net sales in 1995 compared to $126,175, or 4% of net sales during the 1996
period. Sales to Company C increased from $122,636, or 3% of net sales during
1995 to $1,042,748 or 30% of net sales during 1996. Sales to all other
customers during 1996 decreased by $78,847. The Company believes but cannot
guarantee that normal recurring fluctuations in the overall level of product and
service orders by a limited number of OEM customers is responsible for the
decrease in sales during 1996. These fluctuations in customer sales and purchase
order levels have been influenced for years by (i) changes in the quantity of
Company products held in inventory by its customers, (ii) changes in end user
demand for customer products in which the Company's laser products are a
component part, (iii) the competitiveness, cost and customer use of alternative
products, technologies or suppliers and (iv) various other factors.
Cost of products sold as a percentage of the Company's net sales increased
from 77% in 1995 to 83% in 1996. This percentage increase was the result of
increases in labor and overhead cost percentages which resulted primarily from
the decrease in net sales. To a lesser extent, small increases in material and
warranty costs during 1996 also contributed to this percentage increase.
Selling, general and administrative costs for the year ended December 31,
1996 were $691,381 as compared to $580,759 for the same period in 1995, an
increase of $110,622 or 19%. This increase was primarily the result of pre-
market advertising and other "start up" related costs of the Company's new
dermatologic and ophthalmic medical products.
Research and development expenditures for the year ended December 31, 1996
were $605,585 as compared to $333,325 for the same period in 1995, an increase
of $272,260 or 82%. This increase was primarily the result of increased costs
associated with the development of the NUVOLASE 600 Series medical laser system,
the SIMULEYES system, the PAIS system, and solid state laser products.
Interest income and other revenue for the year ended December 31, 1996 was
$94,544 as compared to $114,022 for the same period in 1995, a decrease of
$19,478 or 17%.
As a result of the significant increase in research and development
expenditures, the increase in costs relating to the pre-market introduction of
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the Company's medical products, the decrease in net sales and other factors, the
Company recognized a net loss for the year ended December 31, 1996 of $688,024
or $1.01 per share compared to income from continuing operations of $13,651 or
$.02 per share for the same period in 1995.
On December 31, 1996 the Company had net operating loss carryforwards for
tax purposes of approximately $3,297,000, available to offset future taxable
income, which will begin to expire in the year 2004.
Liquidity and Capital Resources
-------------------------------
On December 31, 1996, the Company had working capital of $1,653,962 as
compared to $2,202,494 at December 31, 1995, a decrease of $548,532 or 25%.
Cash equivalents at December 31, 1996 were $555,204 as compared to $936,370 on
December 31, 1995, a decrease of $381,166, or 41%. Essentially all of the
Company's working capital requirements have been financed by internally
generated funds.
The decrease in working capital was the result of the Company's net loss
for the year ended December 31, 1996. The decrease in the cash equivalent
balance was primarily the result of the Company's net loss for the period ended
December 31, 1996, which was partially offset by increases in accounts payable
balances and accrued expenses.
Currently, the Company has no material commitments for capital
expenditures, and has not entered into any agreements for additional sources of
borrowing or capital.
ITEM 7. FINANCIAL STATEMENTS
- -----------------------------
The response to this item is submitted in a separate section of this
report. See page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
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FINANCIAL DISCLOSURE
--------------------
There has been no reported disagreement on any matter of accounting
principles or material financial statement disclosures of a kind described in
Item 304 of Regulation S-B.
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
- ----------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement which involves the election of
Directors to be filed pursuant to Regulation 14A and which the Company intends
to file with the Securities and Exchange Commission not later than 120 days
after December 31, 1996, the end of the year covered by this Form 10-KSB. If
such definitive Proxy Statement is not filed with the Securities and Exchange
Commission within the 120-day period, the information called for by this Item
will be filed as an amendment to this Form 10-KSB under cover of Form 8 not
later than the end of the 120-day period.
ITEM 10. EXECUTIVE COMPENSATION
- --------------------------------
The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement which involves the election of
Directors to be filed pursuant to Regulation 14A and which the Company intends
to file with the Securities and Exchange Commission not later than 120 days
after December 31, 1996, the end of the year covered by this Form 10-KSB. If
such definitive Proxy Statement is not filed with the Securities and Exchange
Commission within the 120-day period, the information called for by this Item
will be filed as an amendment to this Form 10-KSB under cover of Form 8 not
later than the end of the 120-day period.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement which involves the election of
Directors to be filed pursuant to Regulation 14A and which the Company intends
to file with the Securities and Exchange Commission not later than 120 days
after December 31, 1996, the end of the year covered by this Form 10-KSB. If
such definitive Proxy Statement is not filed with the Securities and Exchange
Commission within the 120-day period, the information called for by this Item
will be filed as an amendment to this Form 10-KSB under cover of Form 8 not
later than the end of the 120-day period.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The information called for by this Item is incorporated by reference from
the Company's definitive Proxy Statement which involves the election of
Directors to be filed pursuant to Regulation 14A and which the Company intends
to file with the Securities and Exchange Commission not later than 120 days
after December 31, 1996, the end of the year covered by this Form 10-KSB. If
such definitive Proxy Statement is not filed with the Securities and Exchange
Commission within the 120-day period, the information called for by this Item
will be filed as an amendment to this Form 10-KSB under cover of Form 8 not
later than the end of the 120-day period.
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PART IV
ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K
- -------------------------------------------
(a) Exhibits
3 (i) - Articles of Incorporation, as amended
4 (a) - *Specimen Stock Certificate
(b) - *Incentive Stock Option Plan
(c) - *Non-Statutory Stock Option Plan
(d) - *Lease Agreement between Dr. McMahan and American Laser
(Salt Lake City)
(e) - *Amendment to Lease Agreement between Dr. McMahan and
American Laser (Salt Lake City)
(f) - *Stock Purchase Agreement dated as of January 1, 1995
between Barrie Brewer, Brad Brewer and Jean Brewer and
Registrant.
(g) - *Stock Redemption Agreement dated as of January 1, 1995
between Pro Med Co. and Registrant.
21 - Statement re: Subsidiaries of the Registrant
__________________
* Previously filed and incorporated herein by reference
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LASER CORPORATION
By: /s/ B. Joyce Wickham Date March 27, 1997
----------------------------------- --------------------------
B. Joyce Wickham
President & Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Date
--------- ----
/s/ B. Joyce Wickham March 27, 1997
- -------------------------------------- -----------------------
B. Joyce Wickham
President and Chief Executive Officer
Treasurer and Director
/s/ Mark L. Ballard March 27, 1997
- -------------------------------------- -----------------------
Mark L. Ballard
Vice President and Director
/s/ Reo K. Larsen March 27, 1997
- -------------------------------------- -----------------------
Reo K. Larsen
General Accounting Manager
/s/ Rod O. Julander March 27, 1997
- -------------------------------------- -----------------------
Rod O. Julander
Secretary and Director
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LASER CORPORATION AND SUBSIDIARIES
----------------------------------
EXHIBIT 21 - STATEMENT RE: SUBSIDIARIES OF THE REGISTRANT
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Subsidiary Place of Incorporation
---------- ----------------------
American Laser Corporation Utah
American Laser Medical, Inc. (formally NuvoMed) Utah
American Laser Software, Inc. Utah
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LASER CORPORATION AND SUBSIDIARIES
Financial Statements
December 31, 1996 and 1995
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LASER CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements
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Page
----
Independent auditors' report F-1
Consolidated balance sheet F-2
Consolidated statement of operations F-3
Consolidated statement of stockholders'
equity F-4
Consolidated statement of cash flows F-5
Notes to consolidated financial statements F-7
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Laser Corporation
We have audited the accompanying consolidated balance sheet of Laser Corporation
and subsidiaries as of December 31, 1996 and 1995, 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
consolidated 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
Corporation and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.
Tanner + Co.
Salt Lake City, Utah
February 14, 1997
F-1
<PAGE>
===============================================================================
<TABLE>
LASER CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
December 31,
- -------------------------------------------------------------------------------
1996 1995
---------------------------
Assets
------
Current assets: <C> <C>
Cash and cash equivalents $ 555,204 $ 936,370
Receivables, net 572,138 543,902
Inventories 1,289,003 1,186,172
Notes receivable - current portion 176,284 171,873
Other current assets 34,829 10,025
---------------------------
Total current assets 2,627,458 2,848,342
Equipment and leasehold improvements, net 221,930 261,107
Notes receivable 534,308 693,320
Other assets 62,996 4,299
---------------------------
$ 3,446,692 $ 3,807,068
===========================
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities: <C> <C>
Accounts payable $ 696,133 $ 336,955
Accrued expenses 177,363 145,483
Accrued warranty expense 100,000 140,000
Current portion of capital lease obligations - 23,410
---------------------------
Total current liabilities 973,496 645,848
Commitments and contingency - -
Stockholders' equity:
Common stock, $.05 par value, authorized
10,000,000 shares, issued 682,088 shares 34,105 34,105
Additional paid-in capital 701,537 701,537
Retained earnings 1,837,554 2,525,578
Treasury stock, at cost (100,000) (100,000)
---------------------------
Total stockholders' equity 2,473,196 3,161,220
---------------------------
$ 3,446,692 $ 3,807,068
===========================
- -------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-2
<PAGE>
===============================================================================
</TABLE>
<TABLE>
LASER CORPORATION AND SUBSIDIARIES
Consolidated Statement of Operations
Years Ended December 31,
- -------------------------------------------------------------------------------
1996 1995
---------------------------
Revenues: <C> <C>
Net sales $ 3,419,719 $ 3,809,710
Interest and other income 94,544 114,022
---------------------------
3,514,263 3,923,732
Cost and expenses:
Cost of products sold 2,844,349 2,930,652
Selling, general and administrative 691,381 580,759
Research and development 605,585 333,325
Royalties 58,446 56,596
Interest 2,526 8,549
---------------------------
4,202,287 3,909,881
---------------------------
(Loss) income from continuing operations
before income taxes (688,024) 13,851
Income tax expense - current - (200)
---------------------------
(Loss) income from continuing operations (688,024) 13,651
Discontinued operations:
Income on disposal of discontinued operations,
net of income tax expense of $800 - 53,111
---------------------------
Net (loss) income $ (688,024) $ 66,762
===========================
Net (loss) income per share from
continuing operations $ (1.01) $ .02
Net income per share from
discontinued operations - .08
---------------------------
Net (loss) income per share $ (1.01) $ .10
===========================
Weighted average number of shares of common
and common equivalent shares outstanding 682,000 687,000
===========================
- -------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-3
<PAGE>
===============================================================================
</TABLE>
<TABLE>
LASER CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
Years Ended December 31, 1996 and 1995
- -------------------------------------------------------------------------------
Common Stock Additional Treasury Stock
------------ Paid-In Retained --------------
Shares Amount Capital Earnings Shares Amount Total
-------------------------------------------------------------------
Balance at
January 1, <C> <C> <C> <C> <C> <C> <C>
1995 682,088 $34,105 $701,537 $2,458,816 10,000 $(100,000) $3,094,458
Net income - - - 66,762 - - 66,762
-------------------------------------------------------------------
Balance at
December 31,
1995 682,088 34,105 701,537 2,525,578 10,000 (100,000) 3,161,220
Net loss - - - (688,024) - - (688,024)
-------------------------------------------------------------------
Balance at
December 31,
1996 682,088 $34,105 $701,537 $1,837,554 10,000 $(100,000) $2,473,196
===================================================================
- -------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-4
<PAGE>
===============================================================================
</TABLE>
<TABLE>
LASER CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Years Ended December 31,
- -------------------------------------------------------------------------------
1996 1995
---- ----
Cash flows from operating activities: <C> <C>
Net (loss) income $ (688,024) $ 66,762
Less income on disposal of
discontinued operations - (53,111)
Adjustments to reconcile net (loss)
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 103,058 106,712
Increase in allowance for doubtful accounts 54,500 -
Increase in other assets (60,000) -
(Increase) decrease in:
Accounts receivable (82,736) 28,516
Inventories (102,831) (189,334)
Other current assets (24,804) 2,434
Other assets 1,303 -
Increase (decrease) in:
Trade accounts payable and accrued expenses 391,058 (87,015)
Accrued warranty expense (40,000) (40,000)
Income taxes payable - (10,800)
---------------------------
Net cash used in
operating activities (448,476) (175,836)
---------------------------
Cash flows from investing activities:
Purchase of property and equipment (63,881) (21,369)
Proceeds from note receivable 154,601 101,585
---------------------------
Cash from investing activities
- continuing operations 90,720 80,216
Cash from investing activities
- discontinued operations - 1,000,000
---------------------------
Net cash provided by
investing activities 90,720 1,080,216
---------------------------
Cash flows from financing activities-
payments on capital lease obligations (23,410) (38,510)
---------------------------
Net cash used in
financing activities (23,410) (38,510)
---------------------------
(Decrease) increase in cash and cash equivalents (381,166) 865,870
Cash and cash equivalents, beginning of year 936,370 70,500
---------------------------
Cash and cash equivalents, end of year $ 555,204 $ 936,370
===========================
- -------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-5
<PAGE>
===============================================================================
</TABLE>
<TABLE>
LASER CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Continued
- -------------------------------------------------------------------------------
Supplemental disclosure of noncash transactions
- -----------------------------------------------
During 1996, the Company recorded an investment of $60,000 in exchange for
services of $60,000.
During 1995, the Company sold its 80% owned subsidiary. As part of the
sale price the Company received notes receivable totaling $966,778 and
cancellation of notes payable to minority shareholders of ProMed of $795,496.
Supplemental disclosures of cash flow information
- -------------------------------------------------
1996 1995
---------------------------
<C> <C>
Interest paid $ 2,526 $ 8,549
---------------------------
Income taxes paid $ - 0 - $ 8,000
---------------------------
- -------------------------------------------------------------------------------
See accompanying notes to financial statements. F-6
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
- -------------------------------------------------------------------------------
1. Significant Principles of Consolidation and Description of Activity
Accounting -------------------------------------------------------
Policies The consolidated financial statements include the accounts of
Laser Corporation (Laser) and its wholly-owned subsidiaries,
American Laser Corporation (American Laser), American Laser
Software, Inc. (ALS), and American Laser Medical, Inc. (ALM)
(the Company) located in Salt Lake City, Utah. All significant
intercompany account balances and transactions have been
eliminated in consolidation.
The Company is engaged in designing, manufacturing, marketing
and servicing of laser systems.
Cash and Cash Equivalents
-------------------------
For purposes of the statements of cash flows, the Company
considers all highly liquid certificates of deposit with
maturities of three months or less to be cash equivalents.
Inventories
-----------
Inventories are valued at the lower of cost (first-in,
first-out method) or market value.
Equipment and Leasehold Improvements
------------------------------------
Equipment and leasehold improvements are recorded at cost.
Depreciation and amortization are calculated using the
straight-line and declining balance methods over the estimated
useful lives or lease terms of the assets as follows:
Equipment 3-10 years
Leasehold improvements 10 years
Income Taxes
------------
Deferred income taxes are provided for temporary differences in
reporting income for financial statement and tax purposes
arising primarily from differences between financial reporting
and income tax reporting in the methods of accounting for
depreciation of property and equipment, accrued liabilities,
asset and liability research.
- -------------------------------------------------------------------------------
F-7
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
1. Significant Warranty Costs
Accounting --------------
Policies The Company records the estimated cost of warranty obligations
Continued on laser products at the time the related products are sold.
There was no warranty expense relating to the sale of emergency
medical equipment as the warranty was provided by the original
manufacturer.
Net Income (Loss) Per Common and Common Equivalent Share
--------------------------------------------------------
Net income (loss) per common and common equivalent share is
computed using the weighted average number of common and common
equivalent shares outstanding. Common equivalent shares
consist of the Company's stock options considered to be
dilutive common stock equivalents, determined using the
treasury stock method. Fully diluted earnings per share is
the same or antidilutive, and, accordingly, is not presented.
Concentration of Credit Risk
----------------------------
The Company designs, manufactures, markets and provides service
on lasers and related laser systems which are primarily used by
original equipment manufacturers in both domestic and foreign
markets. These laser products are used in items such as
printers, medical instruments, entertainment products and other
applications. The Company grants credit in these markets
without requiring collateral to substantially all its
customers.
Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of trade
receivables. In the normal course of business, the Company
provides credit terms to its customers. Accordingly, the
Company performs ongoing credit evaluations of its customers
and maintains allowances for possible losses which, when
realized, have been within the range of management's
expectations.
The Company maintains its cash in bank deposit accounts which,
at times, may exceed federally insured limits. The Company has
not experienced any losses in such account. The Company
believes it is not exposed to any significant credit risk on
cash and cash equivalents.
- -------------------------------------------------------------------------------
F-8
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
1. Significant Accounting Estimates
Accounting --------------------
Policies The preparation of financial statements in conformity with
Continued generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. Discontinued On January 1, 1995, the Company entered into two agreements
Operations where it sold its 80 percent ownership in ProMed. One
and Notes agreement is with the minority shareholders of ProMed wherein
Receivable the Company sold them 31,726 shares of ProMed stock
(approximately 40 percent of the Company's ownership). The
sales price was for $1,095,496 and consisted of a cash payment
of $300,000 and cancellation of the note payable to the
minority shareholders of ProMed which had a balance of $795,496
at December 31, 1994.
The Company sold its remaining 48,274 shares of ProMed stock
(approximately 60 percent of the Company's ownership) and
forgiveness of an intercompany note for total proceeds of
$1,666,778 to ProMed. The proceeds consisted of a $700,000
cash payment and notes receivable aggregating in a balance of
$966,778. Both notes receivable are secured by the common
stock of ProMed and the personal guarantees of the minority
shareholders of ProMed. The first note of $804,504 requires
monthly payments of $16,121 including interest at 7.5 percent
per annum. The entire remaining unpaid balance is due February
1, 1998. The second note of $162,274 does not bear interest
and is due January 1, 1998. The aggregate balance of the notes
receivable at December 31, 1996 and December 31, 1995 are
$710,592 and $865,193, respectively.
The sale of ProMed resulted in a net gain after taxes of
$53,111.
- -------------------------------------------------------------------------------
F-9
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
3. Detail of 1996 1995
Certain ---------------------------
Balance Receivables:
Sheet Trade receivables $ 624,819 $ 541,161
Accounts Less allowance for
doubtful accounts (56,000) (1,500)
Other 3,319 4,241
---------------------------
$ 572,138 $ 543,902
===========================
Inventories:
Raw materials $ 926,930 $ 934,886
Work-in-process 468,573 423,291
Finished goods 63,500 17,995
Reserve for obsolescence (170,000) (190,000)
---------------------------
$ 1,289,003 $ 1,186,172
===========================
4. Equipment Equipment and leasehold improvements consist of the following
and at December 31, 1996 and 1995:
Leasehold
Improvements 1996 1995
---------------------------
Equipment $ 1,389,535 $ 1,356,734
Leasehold improvements 612,260 581,180
---------------------------
2,001,795 1,937,914
Less accumulated depreciation
and amortization (1,779,865) (1,676,807)
---------------------------
$ 221,930 $ 261,107
===========================
- -------------------------------------------------------------------------------
F-10
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
5. Income Taxes The provision for income taxes differs from the amount
computed at federal statutory rates as follows:
Year Ended
December 31,
---------------------------
1996 1995
---------------------------
Income tax benefit (expense)
at statutory rates $ 234,000 $ (13,000)
Change in valuation allowance (234,000) 12,000
---------------------------
Total expense $ - 0 - $ (1,000)
===========================
Tax expense applicable to
continuing operations $ - 0 - $ (200)
Tax expense applicable to
discontinued operations - 0 - (800)
---------------------------
Total expense $ - 0 - $ (1,000)
===========================
Deferred tax assets (liabilities) consists of the following:
December 31,
---------------------------
1996 1995
---------------------------
Net operating loss
carryforward $ 1,222,000 $ 1,033,000
Excess tax depreciation over
book depreciation (34,000) (53,000)
Inventory reserve 58,000 65,000
Warranty reserve 34,000 16,000
Bad debt reserve 19,000 1,000
Other accruals - 0 - 3,000
---------------------------
1,299,000 1,065,000
Valuation allowance (1,299,000) (1,065,000)
----------------------------
$ - 0 - $ - 0 -
============================
- -------------------------------------------------------------------------------
F-11
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
5. Income Taxes The Company has net operating loss carry-forwards for tax
Continued purposes of approximately $3,297,000 at December 31, 1996
available to offset future taxable income which begins to
expire in 2004. Should a change of more than 50 percent in
the Company's ownership occur, any future benefits from such
carry-forwards may be substantially lost.
6. Commitments Operating Leases
and ----------------
Contingencies The Company's administrative offices and primary assembly
facilities for its laser products are located in a 46,000
square foot building in Salt Lake City, Utah. The Company
leases the building from a significant shareholder,
Dr. McMahan, pursuant to a lease agreement which terminates on
April 30, 1999. Under this lease, the Company paid annual
rent of $236,725 in 1996 and 1995.
Future minimum payments under noncancellable operating leases
are as follows at December 31, 1996:
Year Amount
---- -------------
1997 $ 236,725
1998 236,725
1999 78,908
-------------
$ 552,358
=============
Investment Agreement
--------------------
In November 1996, the Company entered into a 12 month
investment agreement with another corporate entity (the
investee). The agreement provides that the Company will
invest cash and/or services in exchange for the investee's
stock. At December 31, 1996, the Company had performed
services of $60,000 in exchange for common stock of the
investee. The investment of $60,000 has been included in
other assets.
Under the investment agreement, the Company is also required
to make another payment of cash and/or services of $60,000 on
or before August 1, 1997. In addition and contingent upon
certain requirements being met by this investee, the Company
may be required to make further payments of cash and/or
services of approximately $80,000. Upon completion of this
agreement, the Company will own up to 5% of the investee's
stock.
- -------------------------------------------------------------------------------
F-12
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
6. Commitments Royalty Agreement
and -----------------
Contingencies The Company is party to an agreement with Patlex Corporation
Continued which requires the Company to pay royalties based on a
percentage of net sales of products covered by certain
patents. Total royalty expense was $58,446 and $56,596 in
1996 and 1995, respectively.
Product Liability Insurance
---------------------------
American Laser does not have product liability insurance on
its laser products.
Employment Agreements
---------------------
The Company has employment agreements with its President and
Chief Executive Officer and with its Vice President. These
agreements have a three year term with automatic renewals for
additional terms of equal length unless terminated by either
party. The agreements also provide for twelve and eleven
month, respectively, of severance benefits at the time of
termination unless termination is for cause, lack of
performance, resignation or by reason of death.
7. Stock Plans In January 1985, the Company adopted a stock bonus plan
and Options whereby 50,000 shares of the Company's common stock have
been reserved for ultimate issuance to qualified employees.
The Company's Board of Directors has complete discretion as to
which employees qualify, the number of shares to be granted
and any restrictions to be placed upon such shares. No more
than 1,000 shares may be granted to any one employee during
any fiscal year.
- -------------------------------------------------------------------------------
F-13
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
7. Stock Plans The Company has an incentive stock option plan and a
and Options non-qualified stock option plan whereby an aggregate of
Continued 100,000 shares, or 50,000 shares for each plan, of the
Company's unissued and restricted common stock was reserved
for ultimate issuance to selected employees. The stock option
committee of the Board of Directors administers both plans and
has discretion to determine the terms of options granted under
each plan. Such terms include the exercise price of each
option, the number of shares subject to each option, and the
exercisability of such options. Options under the incentive
plan must be granted at the fair market value on the date of
grant except that the option price must be one hundred ten
percent (110%) of such fair market value if the optionee owns
more than ten percent (10%) of the outstanding common stock.
The aggregate fair market value of the shares issuable on
exercise of options granted to any employee in a calendar year
may not exceed $20,000 plus certain carry over allowances.
Options under the non-statutory plan must be granted at a
price equal to at least the fair market value of the shares on
the date of grant. For either plan, no more than 20 percent
of the shares under option may be exercised during the first
year following the date of grant, and options expire five
years from the date of grant. The incentive plan and the
non-qualified plan, as amended on May 21, 1993, expires on
June 30, 1998.
On September 10, 1992, the Board of Directors reinstated a
non-employee director option plan whereby an aggregate total
of 60,000 shares of the Company's unissued or reacquired
common stock may be issued to outside directors effective May
29, 1992. Beginning June 1, 1992, outside directors were
granted a five-year option to purchase 2,000 shares of common
stock at the end of each six months of service. On June 1,
1993, the plan was amended to change the method of calculating
the exercise price to that of the employee's Incentive Stock
Option.
- -------------------------------------------------------------------------------
F-14
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
7. Stock Plans Information regarding the Option Plans are summarized below:
and Options
Continued Number of Option Price
Options Per Share
-----------------------------
Outstanding at
December 31, 1995 58,000 $ 1.43-5.13
Granted 19,000 $ 2.50-3.00
Exercised - 0 - $ ---
Expired - 0 - $ ---
-----------------------------
Outstanding at
December 31, 1996 77,000 $ 1.43-5.13
=============================
Options exercisable and shares available for future grants are
as follows:
December 31,
-----------------------------
1996 1995
-----------------------------
Options exercisable 77,000 58,000
Shares available for grant 23,000 42,000
- -------------------------------------------------------------------------------
F-15
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
7. Stock Plans In October 1995, the Financial Accounting Standards Board
and Options issued Statement of financial Accounting Standards No. 123,
Continued "Accounting for Stock-Based Compensation" (FAS 123) which
established financial accounting and reporting standards for
stock-based compensation. The new standard defines a fair
value method of accounting for an employee stock option or
similar equity instrument. This statement gives entities the
choice between adopting the fair value method or continuing to
use the intrinsic value method under Accounting Principles
Board (APB) Opinion No. 25 with footnote disclosures of the
pro forma effects if the fair value method had been adopted.
The Corporation has opted for the latter approach.
Accordingly, no compensation expense has been recognized for
the stock option plans. Had compensation expense for the
Corporation's stock option plan been determined based on the
fair value at the grant date for awards in 1996 and 1995
consistent with the provisions of FAS No. 123, the
Corporation's results of operations would have been reduced to
the pro forma amounts indicated below:
December 31,
-----------------------------
1996 1995
-----------------------------
Net Income - as reported $ (688,024) $ 66,762
Net Income - pro forma $ (715,361) $ 36,940
Earnings per share - as reported $ (1.01) $ .10
Earnings per share - pro forma $ (1.05) $ .05
=============================
The fair value of each option grant is estimated in the date
of grant using the Black-Scholes option pricing model with the
following assumptions:
December 31,
-----------------------------
1996 1995
-----------------------------
Expected dividend yield - 0 - - 0 -
Expected stock price volatility 53.29% 53.29%
Risk-free interest rate 6.13% 5.50%
Expected life of options 5 years 5 years
=============================
The weighted average fair value of options granted during 1996
and 1995 are $1.44 and $1.57, respectively.
- -------------------------------------------------------------------------------
F-16
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
7. Stock Plans The following table summarized information about fixed stock
and Options options outstanding at December 31, 1996:
Continued
Options Outstanding Options Exercisable
----------------------------------------------------
Weighted
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise at Contractual Exercise at Exercise
Prices 12/31/96 Life Price 12/31/96 Price
(Years)
-------------------------------------------------------------
$ 1.40
to 2.00 19,500 1.8 $ 1.59 19,500 $ 1.59
$ 2.10
to 3.15 40,000 3.4 $ 2.63 40,000 $ 2.63
$ 3.60
to 5.15 17,500 3.2 $ 4.31 17,500 $ 4.31
-------------------------------------------------------------
$ 1.40
to 5.15 77,000 3.0 $ 2.75 77,000 $ 2.75
=============================================================
8. Profit American Laser adopted a 401(k) retirement savings and profit
Sharing sharing plan. All full-time employees of American Laser who
Plans are at least 21 years of age and have a minimum of three
months of service with American Laser are eligible to
participate. The plan contains a matching contribution which
is at American Laser's discretion and is limited to two
percent of the applicable employee's salary. No matching
contributions were made during 1996 and 1995.
9. Related The Company has a lease agreement with Dr. William H. McMahan,
Party a significant shareholder and former Chairman, President and
Transactions Chief Executive Officer of the Company, which is described in
note 6.
The Company has employment agreements with its President and
Chief Executive Officer and Vice President as described in
note 6.
- -------------------------------------------------------------------------------
F-17
<PAGE>
===============================================================================
LASER CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
- -------------------------------------------------------------------------------
10. Export Export sales to unaffiliated customers were as follows:
Sales
and Year Ended
Major December 31,
Customers -----------------------------
1996 1995
-----------------------------
Europe $ 2,199,169 $ 2,647,435
Other 66,864 153,300
-----------------------------
$ 2,266,033 $ 2,800,735
=============================
Combined domestic and foreign sales and service of lasers to
the Company's major customers are as follows:
Year Ended
December 31,
-----------------------------
Major customers 1996 1995
--------------- -----------------------------
Company A $ 697,591 $ 1,654,868
Company B $ 126,175 $ 400,154
Company C $ 1,042,748 $ 122,636
11. Fair Value None of the Company's financial instruments are held for
of trading purposes. The Company estimates that the fair value
Financial of all financial instruments at December 31, 1996, does not
Instruments differ materially from the aggregate carrying values of its
financial instruments recorded in the accompanying balance
sheet. The estimated fair value amounts have been determined
by the Company using available market information and
appropriate valuation methodologies. Considerable judgement
is necessarily required in interpreting market data to develop
the estimates of fair value, and, accordingly, the estimates
are not necessarily indicative of the amount that the
Company could realize in a current market exchange.
- -------------------------------------------------------------------------------
F-18
<PAGE>
===============================================================================
Co 101751
RECEIVED State of Utah
JUN 18 1996 Department of Commerce
Utah Div. of Corp. Division of Corporations and Commercial Code
& Comm. Code I Hereby certify that the foregoing has been filed
and approved on the 18 day of June 19 96
---- ------ ----
in the office of this Division and hereby issue
this Certificate thereof.
Examiner BS Date 6/19/96
----------------- ----------------
/s/ Korla T. Woods
--------------------
[State] Korla T. Woods
[Seal ] Division Director
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION /s/ BS
LASER CORPORATION
Pursuant to the provisions. of Section 16-10a-1001 a seq. of the
Utah Revised Business Corporation Act, the undersigned corporation adapts the
following Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Laser Corporation
SECOND: The following amendment of the Articles of Incorporation was
adopted by the shareholders of the corporation on May 22, 1996, in the manner
prescribed by the Utah Revised Business Corporation Act.
Article IV of the corporation's Article of Incorporation is hereby
amended to read in its entirety as follows: [6170000035]
The corporation shall have the Authority to issue 10.000,000
shares of common stock, each having a par value of $0.05 per
share. All common shares issued by the corporation shall be fully
paid and nonassessable and shall have equal rights.
THIRD: The number shares of common stock of the corporation
outstanding and entitled to vote thereon at the time of such adoption was
672,098. The designation end number of outstanding shares of the only class
entitled to vote thereon as a class were these 672,.098 shares of common stock.
FOURTH. The number of shares voted for such amendment was 424,721, and
the number of shares voted against such amendment was 29,741 with 473
abstentions.
DATED June 10, 1996
----
LASER CORPORATION
By: /s/ B. Joyce Wickham
---------------------
B. Joyce Wickham
Its: President
G.\DIANE\GEL\CLIENTS\LASER\ARTICLES.AMD
<PAGE>
================================================================================
State of Utah 101751
Department of Commerce
Division of Corporations and Commercial Code
I hereby certify that the foregoing has been filed
and approved on the 29th day of June 19 92
------ -------- ----
in the office of this Division and hereby issue
this Certificate thereof.
RECEIVED
Examiner Carmen Tery Date 6-29-92 1992 JUN 29 AM 11:45
--------------- -------------- DIVISION OF CORPORATIONS
/s/ A.P. (unreadable) STATE OF UTAH
---------------------
G.M. (unreadable)
Division Director
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
LASER CORPORATION
Pursuant to Section 16-10-57 of the Utah Business
Corporation Act as amended, the undersigned corporation hereby
adopts the following Articles of Amendment to its Articles of
Incorporation:
FIRST: The name of the corporation is Laser
Corporation (the "Company")
SECOND: The following amendment to the Articles of
Incorporation of the Company was adopted by the shareholders of
the company in the manner prescribed by the Utah Business
Corporation Act:
RESOLVED: That the Articles of Incorporation of the
Company be amended by deleting Article IV and substituting
therefor the following:
The aggregate number of shares which the
corporation shall have the aurhority to issue
is two million (2,000,000) shares of common
stock. Each such share shall have a par
value of five cents ($.05). All shares of
the Corporation's common stock shall be of
the same class and shall have the same rights
and preferences. Fully paid shares of the
Corporation shall not be liable to any
further call or assessment.
THIRD: The shareholders of the Company adopted the
foregoing amendment on May 29, 1992.
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FOURTH: The total number of shares of capital stock of
the Company outstanding at the time of such adoption was
3,360,559, and the number of shares entitled to vote on the
amendment was 3,360,559.
FIFTH: The number of shares voting for such amendment
was 2,242,585; the number of shares voting against such amendment
was 82,387; the number of shares abstaining from voting was
4,130.
SIXTH: The amendment provides for a reduction in the
total number of authorized shares from 10,000,000 to 2,000.000
and an increase in the par value of shares from one cent to five
cents per share. This amendment will create a one-for five
reverse split of the Company's Common Stock.
B. Joyce Wickham and Rod O. Julander hereby verify and
declare, under penalties of perjury, that they have examined and
executed these Articles of Amendment, and that these Articles of
Amendment are truthful and correct in all respects.
IN WITNESS WHEREOF, these Articles of Amendment have
been executed as of the 29th day of June 1992.
----- ------
LASER CORPORATION
By: /s/ B. Joyce Wickham
----------------------------
B. Joyce Wickham, President
By: /s/ Rod O. Julander
----------------------------
Rod O. Julander, Secretary
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Received in the office of the Lt.Gov./Sec- RECEIVED
retary of the State of Utah, on the 31st (unreadable)
--------- (unreadable)
day of Jan A.D. 19 84
---------- ----
DAVID S.MONSON
Lt.Gov./Sec. of State
Filing Clerk INC Fees 370.00
------- --------
CERTIFICATE OF AMENDMENT
OF ARTICLES OF INCORPORATION OF
LASER CORPORATION
LASER CORPORATION, a Utah Corporation, hereby certifies
that:
1. The name of the corporation filing this certificate
is Laser Corporation (the "Corporation").
2. On July 1. 1983, the Corporation's shareholders
adopted an amendment to Article IV of the Corporation's
Articles of Incorporation so that, as amended, Articles IV
reads as follows:
[251/569441/31/84 $ 170.00]
Article IV. Shares
------------------
The Corporation is authorized to issue an aggregate
of ten million (10,000,.000) shares of common stock. Each
such share shall have a par value of one cent ($.01)
All shares of the Corporation's common stock shall be of
the same class and shall have the same rights and prefer-
ences. Fully paid shares of the Corporation shall not be
liable to any further call or assessment.
3. On July 1, 1983, the Corporation's shareholders
adopted an amendment to Article VI of the Corporation's
Articles of Incorporation so that, as amended, Article VI
reads as follows:
Article VI. Shareholders Rights.
--------------------------------
The authorized shares of stock of the Corporation
may be issued at such time, upon such terms and condi-
tions and such consideration as the Board of
Directors shall determine. Shareholders shall not have
preemptive rights to acquire unissued shares of the stock
of the Corporation
4. On July 1. 1983, 543,000 shares of the Corporation's
common stock were issued and outstanding and entitled to vote
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on the foregoing amendments. All such shares were voted in
favor of the adoption of such amendments.
5. The foregoing amendments do not provide for an
exchange. reclassification, or cancellation of shares of the
Corporation's issued and outstanding common stock.
6. The foregoing amendments will not effect a change in
the Corporation's stated capital.
IN WITNESS WHEREOF, LASER CORPORATION'S President and
Secretary have signed this Certificate under penalties of
perjury on behalf of the Corporation and have affixed the
corporation's corporate seal hereto this 30th day of December,
---- --------
1983.
LASER CORPORATION:
(Corporate Seal)
By: /s/ William H. McMahan
----------------------------
President
Attest: /s/ Mark L. Ballard
------------------------
Secretary
<PAGE>
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CERTIFICATE OF AMENDMENT
OF ARTICLE OF INCORPORATION OF
LASER CORPORATION
LASER CORPORATION, a Utah Corporation, hereby certifies
that:
1. The name of the corporation filing this certificate
is Laser Corporation (the "Corporation")
2. On July 1, 1983, the Corporation's shareholders
adopted an amendment to Article IV of the Corporation's
Articles of Incorporation so that, as amended, Article IV
reads as follows:
Article IV. Shares
------------------
The Corporation is authorized to issue an aggregate
of ten million (10,000,000) shares of common stock. Each
such share shall have a par value one cent ($.01).
All shares of the Corporation's common stock shall be of
the same class and shall have the same rights and prefer-
ences. Fully paid shares of the Corporation shall not be
liable to any further call or assessment.
3. On July 1, 1983, the Corporation's shareholders
adopted an amendment to Article VI of the Corporation's
Articles of Incorporation so that, as amended, Article VI
reads as follows:
Article VI. Shareholders Rights.
-------------------------------
The authorized shares of stock of the Corporation
may be issued at such time. upon such terms and condi-
tions, and for such consideration as the Board of
Directors shall determine. Shareholders shall not have
preemptive rights to acquire unissued shares of the stock
of the Corporation.
4. On July 1, 1983, 543.000 shares of the Corporation's
common stock were issued and outstanding and entitled to vote
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================================================================================
on the foregoing amendments. All such shares were voted in
favor of the adoption of such amendments.
5. The foregoing amendments do not provide for an
exchange, reclassification, or cancellation of shares of the
Corporation's issued and outstanding common stock.
6. The foregoing amendments will not effect a change in
the Corporation's stated capital.
IN WITNESS WHEREOF, LASER CORPORATION'S President and
Secretary have signed this Certificate under penalties of
perjury on behalf of the Corporation and have affixed the
corporation's corporate seal hereto this 30th day of December,
---- --------
1983.
LASER CORPORATION
(Corporate Seal)
By: /s/ William H. McMahan
---------------------------
President
Attest: /s/ Mark L. Ballard
-----------------------
Secretary
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Received in the office of the Lt.Gov./Sec- RECEIVED
retary of the State of Utah, on the 12th 1983 JAN 12 PM 3:27
-------- LT.GOV./SEC. OF STATE
day of January 19 83
------------- ---- 101751
DAVID S. MONSON --------
Lieutenant Governor
Filing Clerk JNJ Fees $50.00
ARTICLES OF INCORPORATION
OF
LASER CORPORATION
We the undersigned, natural persons of the age of 21 years
or more, acting as incorporators of a corporation under the Utah
Business Corporation Act, adopt the following Articles of
Incorporation for such corporation.
[unreadable stamp]
ARTICLE I - CORPORATE NAME
--------------------------
The name of the corporation is LASER CORPORATION.
ARTICLE II - DURATION OF CORPORATION
------------------------------------
The corporation is to have perpetual existence.
ARTICLE III - CORPORATE PURPOSES
--------------------------------
The general purposes and objects for which the corporation
is organized are:
(a) To engage in commercial and industrial
consulting services. To manufacture, purchase, or
otherwise acquire, and to own, mortgage, pledge, sell,
assign, transfer, or otherwise dispose of, and to
invest in, trade in, deal in and with goods, wares,
merchandise, real and personal property, and services
of every class, kind, and description; except that it
is not to conduct a banking, safe deposit. trust,
insurance, surety, express, railroad, canal, telegraph,
telephone, or cemetery company, a building and loan
association, mutual fire insurance association,
cooperative association, fraternal benefit society,
state fair of exposition. To conduct business in, have
one or more offices in, and by, hold, mortgage, sell,
convey, lease or otherwise dispose of real and personal
property, including franchises, patents, copyrights,
trademarks. and licenses, in the State of Utah and in
all other states and countries. To contract debts and
borrow money, issue and sell or pledge bonds,
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================================================================================
debentures, notes, and other evidences of indebtedness,
and to execute such mortgages, transfers of corporate
property, or other instruments to secure the payment of
corporate indebtedness as required. To purchase the
corporate assets of any other corporation and engage in
the same or other character of business. To guarantee,
endorse, purchase, hold, sell, transfer, mortgage,
pledge, or otherwise acquire or dispose of the shares of
the capital stock of, or any bonds, securities, or
other evidences of indebtedness created by any other
corporation of the State of Utah or any other state or
government, and while owner of such stock to exercise
all the rights, powers, and privileges of ownership,
including the right to vote such stock.
(b) To acquire by purchase, exchange, gift,
bequest. subscription, or otherwise, and to hold, own,
mortgage, pledge, hypothecate, sell, assign, transfer,
exchange, or otherwise dispose of or deal in or with its
own corporate securities or stock or other securities.
including, without limitation, any shares of stock,
bonds, debentures, notes, mortgages, or other
obligations, and any certificates, receipts or other
instruments representing rights or interests therein,
or any property or assets created or issued by any
person, firm, associations, or corporations, or any
government or subdivisions, agencies or
instrumentalities thereof; to make payment therefor in
any lawful manner or to issue in exchange therefor its
own securities or to use its unrestricted and
unreserved earned surplus for the purchase of its own
shares, and to exercise as owner or holder of anv
securities any and all rights, powers and privileges in
respect thereof.
(c) To do each and every thing necessary,
suitable or proper for the accomplishment of any of the
purposes or the attainment of any one or more of the
subjects herein enumerated, or which may at any time
appear conducive to or expedient for protection or
benefit of this corporation, and to do said acts as
fully and to the same extent as natural persons might,
or could do, in any part of the world as principals,
agents, partners, trustees or otherwise, either alone
or in conjunction with any other person, association or
corporation.
(d) The foregoing clauses shall be construed
both as objects and powers and shall not be held to
limit or restrict in any manner the general powers of
the corporation and the enjoyment and exercise thereof
as conferred by the laws of the State of Utah; and it
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is the intention that the purposes, objects and powers
specified in each of the paragraphs of this Article III
shall be regarded as independent purposes, objects and
powers.
ARTICLE IV - SHARES
-------------------
The aggregate number of shares which the Corporation shall
have authority to issue is one million (1,000,000), par value of
One Cent ($O.01) per share. All shares of the Corporation shall
be of the same class and shall have the same rights and
preferences. Fully paid shares of the Corporation shall not be
liable to any further call or assessment.
ARTICLE V - COMMENCING BUSINESS
--------------------------------
The Corporation will not commence business until con-
sideration of a valve of at least $1.000 has been received for
the issuance of shares.
ARTICLE VI - SHAREHOLDER RIGHTS
--------------------------------
The authorized shares of stock of the Corporation may be
issued at such time, upon such terms and conditions, and for such
consideration as the Board of Directors shall determine.
Shareholders shall have preemptive rights to acquire unissued
shares of the stock of the Corporation.
ARTICLE VII - BYLAWS
--------------------
The Directors shall adopt Bylaws which are nor inconsistent
with law or these Articles for the regulation and management of
the affairs of the Corporation. The Bylaws may be amended from
time to time or repealed pursuant to law.
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ARTICLE VIII - REGISTERED OFFICE AND AGENT
------------------------------------------
The address of the Corporation's initial registered office
and the name of its original registered agent at such address is:
William H. McMahan
1832 South 3850 West
Salt Lake City, Utah 84104
ARTICLE IX - DIRECTORS
----------------------
The number of Directors constituting the initial Board of
Directors of the Corporation is three (3). The names and
addresses of persons who are to serve as Directors until the
first annual meeting of shareholders, or until their successors
be elected and qualify, are:
William H. McMahan
1467 Penrose Drive
Salt Lake City. Utah 84103
Eugene E. Cohen
6700 South West 117th Street
Miami, Florida 33143
Robert H. Still, Jr.
1011 Windward Way North
Jacksonville, Florida 32216
ARTICLE X - INCORPORATORS
-------------------------
The name and address of each Incorporator is:
Mark L. Ballard
1832 South 3850 West
Salt Lake City, Utah 84104
Dale E. Hulse
American Plaza II, Suite 400
57 West 200 South
Salt Lake City, Utah 84101
- 4 -
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Craig M. Lundell
American Plaza II, Suite 400
57 West 200 South
Salt Lake City. Utah 84101
ARTICLE XI - OFFICERS' AND DIRECTORS' CONTRACTS
-----------------------------------------------
No contract or other transaction between this corporation
and one or more of its directors or any other corporation, firm,
association, or entity in which one or more of its directors are
directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest,
or because such director or directors are present at the meeting
of the Board of Directors, or a committee thereof, which
authorizes, approved or ratifies such contract or transaction, or
because his or their votes are counted for such purpose if; (a)
the fact of such relationship or interest is disclosed or known
to the Board of Directors or committee which authorizes, approves
or ratifies the contract or transaction by vote or consent
sufficient for the purpose without counting the votes or consents
of such interested director; or (b) the fact of such relationship
or interest is disclosed or known to the shareholders entitled to
vote and they authorize, approve, or ratify such contract or
transaction by vote or written consent; or (c) the contract or
transaction is fair and reasonable to the corporation.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors
or committee thereof which authorizes, approves or ratifies such
contract or transaction.
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DATED this 12th day of January, 1983
/s/ Mark L. Ballard
----------------------------
Mark L. Ballard
/s/ Dale E. Hulse
----------------------------
Dale E. Hulse
/s/ Craig M. Lundell
----------------------------
Craig M. Lundell
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 12th day of January, 1983, personally appeared before
me Mark L. Ballard, Dale E. Hulse and Craig Lundell who, being
by me first duly sworn, severally declared that they are the
persons who signed the foregoing document as incorporators and
that the statements therein contained are true.
A.B. (unreadable)
------------------------------
NOTARY PUBLIC
Residing at Bountiful, Utah
My Commlssion Expires:
8-5-84
-------------------------
(Notary Seal)
NLB010/5627.18/2
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LASER
CORPORATION AND SUBSIDIARIES DECEMBER 31, 1996 FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000740726
<NAME> LASER CORP
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 555,204
<SECURITIES> 0
<RECEIVABLES> 1,338,730
<ALLOWANCES> 56,000
<INVENTORY> 1,289,003
<CURRENT-ASSETS> 2,627,458
<PP&E> 2,001,785
<DEPRECIATION> 1,779,865
<TOTAL-ASSETS> 3,446,692
<CURRENT-LIABILITIES> 973,496
<BONDS> 0
0
0
<COMMON> 34,105
<OTHER-SE> 2,439,091
<TOTAL-LIABILITY-AND-EQUITY> 3,446,692
<SALES> 3,419,719
<TOTAL-REVENUES> 3,514,263
<CGS> 2,844,349
<TOTAL-COSTS> 4,199,761
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,526
<INCOME-PRETAX> (688,024)
<INCOME-TAX> 0
<INCOME-CONTINUING> (688,024)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (688,024)
<EPS-PRIMARY> (1.01)
<EPS-DILUTED> (1.01)
</TABLE>
