THIS DOCUMENT IS THE SUBMISSION OF FORM 10QSB AND CONTAINS THE QUARTERLY
REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997.
<PAGE>
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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934
For the quarterly period ended June 30, 1997
or
--- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________to_______________
Commission File Number 0-13316
LASER CORPORATION
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(Exact name of small business issuer as specified in its charter)
Utah 87-0395567
-------------------------------- --------------------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
1832 South 3850 West
Salt Lake City, UT 84104
-------------------------------- --------------------------------
(Address of principal (Zip Code)
executive office)
(801) 972-1311
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(Issuer's telephone number, including area code)
Not Applicable
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(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 -- 682,088 shares as of June 30, 1997
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INDEX
LASER CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - June 30, 1997 and December 31, 1996
Consolidated Statements of Operations - Three months ended June 30,
1997 and 1996; Six months ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows - Six months ended June 30,
1997 and 1996
Notes to Consolidated Financial Statements - June 30, 1997
Item 2. Management's Discussion and Analysis
PART II. OTHER INFORMATION
- -------- -----------------
Item 4. Submission of Matters to a Vote of Security Holders
SIGNATURES
- ----------
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PART I. FINANCIAL INFORMATION
Item 1.
LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1997 1996
Unaudited
CURRENT ASSETS ----------- -----------
[C] [C]
Cash and cash equivalents $ 297,630 $ 555,204
Receivables:
Trade receivables, net 761,085 568,819
Other 2,831 3,319
----------- -----------
763,916 572,138
Inventories:
Raw materials 903,660 756,930
Work in process 622,134 468,573
Finished Goods 62,227 63,500
----------- -----------
1,588,021 1,289,003
Notes Receivable - current portion 632,573 176,284
Other current assets 38,572 34,829
----------- -----------
Total Current Assets 3,320,712 2,627,458
NOTES RECEIVABLE LESS CURRENT PORTION --- 534,308
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment 1,398,868 1,389,535
Leasehold improvements 617,656 612,260
----------- -----------
2,016,524 2,001,795
Less accumulated depreciation
and amortization (1,823,756) (1,779,865)
----------- -----------
192,768 221,930
OTHER ASSETS 119,292 62,996
----------- -----------
$ 3,632,772 $ 3,446,692
=========== ===========
See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
----------- -----------
CURRENT LIABILITIES [C] [C]
Trade accounts payable $ 935,828 $ 696,133
Accrued expenses 183,697 177,363
Accrued warranty expense 115,000 100,000
----------- -----------
Total Current Liabilities 1,234,525 973,496
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, $.05 par value;
Authorized Shares - 2,000,000
Issued Shares - 682,088
Outstanding Shares - 682,088 34,105 34,105
Additional paid-in capital 701,537 701,537
Retained earnings 1,762,605 1,837,554
Treasury stock, at cost (100,000) (100,000)
----------- -----------
Total Stockholders' Equity 2,398,247 2,473,196
----------- -----------
$ 3,632,772 $ 3,446,692
=========== ===========
See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
REVENUES: [C] [C] [C] [C]
Net sales $1,440,194 $ 886,131 $2,420,585 $1,747,636
Interest and other income 13,521 23,917 29,300 47,770
---------- ---------- ---------- ----------
1,453,715 910,048 2,449,885 1,795,406
COSTS AND EXPENSES:
Cost of products sold 1,049,013 709,583 1,829,016 1,419,180
Selling, general
and administrative 193,602 138,706 382,687 278,422
Research and development 99,143 158,925 269,384 312,916
Royalties 26,462 16,377 43,171 30,747
Interest 76 541 76 1,351
---------- ---------- ---------- ----------
1,368,296 1,024,132 2,524,334 2,042,616
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES 85,419 (114,084) (74,449) (247,210)
INCOME TAX BENEFIT
(EXPENSE) - CURRENT (500) --- (500) ---
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS 84,919 (114,084) (74,949) (247,210)
INCOME FROM DISCONTINUED
OPERATIONS --- --- --- ---
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 84,919 $ (114,084) $ (74,949) $ (247,210)
========== ========== ========== ==========
NET INCOME (LOSS) PER SHARE
CONTINUING OPERATIONS $ .12 $ (.17) $ ( .11) $ (.36)
========== ========== ========== ==========
NET INCOME PER SHARE
DISCONTINUED OPERATIONS $ --- $ --- $ --- $ ---
========== ========== ========== ==========
NET INCOME PER SHARE $ .12 $ (.17) $ ( .11) $ (.36)
========== ========== ========== ==========
Average number of shares of
Common Stock outstanding 701,000 682,000 682,000 682,000
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES: ---------- ----------
[C] [C]
Net income (loss) $ (74,949) $ (247,210)
Adjustments to reconcile net income (loss) to net
cash provided from (used in) operating activities:
Depreciation and amortization 43,891 54,733
(Increase) decrease in assets:
Net receivables (191,778) (147,564)
Inventories (299,018) 24,068
Other current assets (3,743) (7,831)
Other assets (56,296) 1,302
Increase (decrease) in liabilities:
Trade accounts payable and accrued expenses 261,029 6,458
---------- ----------
Net Cash Used in Operating Activities (320,864) (316,044)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (14,729) (12,018)
Payments received on long term notes 78,019 80,851
---------- ----------
Net Cash Provided from Investing Activities 63,290 68,833
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt and
capital lease obligations --- (19,628)
---------- ----------
Net Cash Used in Financing Activities --- (19,628)
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (257,574) (266,839)
CASH AND CASH EQUIVALENTS, BEG. OF PERIOD 555,204 936,370
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 297,630 $ 669,531
========== ==========
See accompanying notes to consolidated financial statements
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LASER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months and the six months
ended June 30, 1997 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto for the
year ended December 31, 1996 included in the Company's Annual Report on Form
10-KSB (file number 0-13316).
NOTE B - RECLASSIFICATIONS
Certain 1996 financial statement amounts have been reclassified to conform
to 1997 presentations. These amounts were not material reclassifications.
NOTE C - 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 are the same as earnings per share for the
three months ended June 30, 1997. For all other accounting periods, fully
diluted earnings are antidilutive, and accordingly, are not presented.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere herein.
RESULTS OF OPERATIONS
- ---------------------
Three months ended June 30, 1997.
Net sales for the three months ended June 30, 1997 were $1,440,194 as
compared to $886,131 for the same period in 1996, an increase of $554,063 or
63%. This increase was primarily a result of increased laser product and
service sales to the Company's major original equipment manufacturer ("OEM")
customers. Sales to this consolidated group increased by 119% when compared to
the same period in 1996. This increase was partially offset by a decrease in
product and service sales to all other customers of 10%. The Company believes
that the increase in net sales resulted from the normal quarter to quarter
variations in product and service orders received from its OEM customers. OEM
customer orders are based in part on the end-user demand for customer products
which use or incorporate the Company's products and services.
Cost of products sold as a percent of Company net sales were 73% for the
three months ended June 30, 1997 as compared to 80% for the same period in 1996,
a decrease of 7%. This decrease was primarily the result of decreases in labor
and overhead cost percentages due to the increase in net sales.
Selling, general, and administrative expenses for the three months ended
June 30, 1997 were $193,602 as compared to $138,706 for the same period in
1996, an increase of $54,896 or 40%. 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 three months ended June 30,
1997 were $99,143 as compared to $158,925 for the same period in 1996, a
decrease of $59,782 or 38%. This decrease was primarily a result of the
Company's decision to narrow its current engineering focus to that of laser-
based dermatology and ophthalmic medical systems and to a lesser extent the
product needs of certain of its OEM customers.
As a result of the increase in net sales, the decrease in the cost of goods
sold as a percentage of net sales, the decrease in research and development
expenditures which were partially offset by increases in costs relating to the
introduction of the Company's medical products, the Company recognized net
income for the three months ended June 30, 1997 of $84,919 or $.12 per share.
This compares to a net loss of $114,084 or $.17 per share for the same period of
1996, an improvement of $199,003.
<PAGE> Page 8 of 11
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Six months ended June 30, 1997.
Net sales for the six months ended June 30, 1997 were $2,420,585 as
compared to $1,747,636 for the same period in 1996, an increase of $672,949
or 39%. This increase was primarily a result of increased laser product and
service sales to the Company's major original equipment manufacturer ("OEM")
customers. Sales to this consolidated group increased by 73% when compared
to the same six month period in 1996. This increase was partially offset by
a 20% decrease in product and service sales to all other customers. The
Company believes that the increase in net sales resulted from the normal quarter
to quarter variations in product and service orders received from its OEM
customers. OEM customer orders are based in part on the end-user demand for
customer products which use or incorporate the Company's products and services.
Cost of products sold as a percent of Company net sales were 76% for the
six months ended June 30, 1997 as compared to 81% for the same period in 1996,
a decrease of 5%. This decrease was primarily the result of decreases in labor
and overhead cost percentages due to the increase in net sales.
Selling, general, and administrative expenses for the six months ended June
30, 1997 were $382,687 as compared to $278,422 for the same period in 1996,
an increase of $104,265 or 37%. 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 six months ended June 30,
1997 were $269,384 as compared to $312,916 for the same period in 1996, a
decrease of $43,532 or 14%. This decrease was primarily a result of the
Company's decision to narrow its current engineering focus to that of laser-
based dermatology and ophthalmic medical systems and to a lesser extent the
product needs of certain of its OEM customers.
As a result of the increase in net sales, the decrease in the cost of goods
sold as a percentage of net sales, the decrease in research and development
expenditures which were partially offset by increases in costs relating to the
introduction of the Company's medical products, the Company recognized a net
loss for the six months ended June 30, 1997 of $74,949 or $.11 per share. This
compares to a net loss of $247,210 or $.36 per share for the same period of
1996, an improvement of $172,261.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On June 30, 1997, the Company had working capital of $2,086,187 as compared
to $1,653,962 at December 31, 1996, an increase of $432,225 or 26%. This
increase was primarily a result of the reclassification of $492,663 of notes
receivable from long term assets to current assets on the Company's balance
sheets. The notes receivable become due the first quarter of 1998. This
increase was partially offset by decreases in other working capital account
categories during the quarter ended June 30, 1997. Essentially all of the
Company's working capital requirements have been financed by internally
generated funds.
<PAGE> Page 9 of 11
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Cash equivalents at June 30, 1997 were $297,630 compared to $555,204 on
December 31, 1996, a decrease of $257,574 or 46%. This decrease in the cash
equivalent balance was primarily the result of the Company's net loss for the
period ended June 30, 1997 and to increases in the accounts receivable and
inventory balances in excess of the increase in accounts payable and accrued
expense balances.
PART II. OTHER INFORMATION
- -------- -----------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held May 21, 1997.
Proxies for the meeting were solicited pursuant to Regulation 14A under the
Securities Exchange Act of 1934. At the meeting, the following matters were
submitted to a vote of the Company's shareholders:
(1) Election of three (3) directors
(2) Approve selection of Tanner + Co. as the independent certified public
accountants of the Company for the fiscal year ending December 31,
1997.
The votes cast for or withheld, as well as the number of abstentions and
broker non-votes, as to each matter, including a separate tabulation with
respect to each nominee for office, were as follows:
PROPOSAL 1: ELECTION OF DIRECTORS:
Withhold Broker
For Authority Abstention Non-Voters
------- --------- ---------- ----------
[C] [C] [C] [C]
B. Joyce Wickham 449,991 4,983 --- 6,422
Rod O. Julander 450,071 4,903 --- 6,422
Mark L. Ballard 450,071 4,903 --- 6,422
PROPOSAL 2: APPROVE SELECTION OF TANNER + CO.:
For Against Abstention Non-Voters
------- ------- ---------- ----------
[C] [C] [C] [C]
448,471 5,823 680 6,422
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LASER CORPORATION
Date: August 12, 1997 /s/ B. Joyce Wickham
--------------- -------------------------
B. Joyce Wickham
President, Chief Executive Officer
Treasurer and Director
Date: August 12, 1997 /s/ Reo K Larsen
--------------- -------------------------
Reo K Larsen
General Accounting Manager
<PAGE> Page 11 of 11
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM LASER
CORPORATION AND SUBSIDIARIES JUNE 30, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000740726
<NAME> LASER CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 297,630
<SECURITIES> 0
<RECEIVABLES> 1,425,124
<ALLOWANCES> 28,635
<INVENTORY> 1,588,021
<CURRENT-ASSETS> 3,320,712
<PP&E> 2,016,524
<DEPRECIATION> 1,823,756
<TOTAL-ASSETS> 3,632,772
<CURRENT-LIABILITIES> 1,234,525
<BONDS> 0
0
0
<COMMON> 34,105
<OTHER-SE> 2,364,142
<TOTAL-LIABILITY-AND-EQUITY> 3,632,772
<SALES> 2,420,585
<TOTAL-REVENUES> 2,449,885
<CGS> 1,829,016
<TOTAL-COSTS> 2,524,258
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 76
<INCOME-PRETAX> (74,449)
<INCOME-TAX> 500
<INCOME-CONTINUING> (74,949)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (74,949)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
